[Federal Register Volume 68, Number 136 (Wednesday, July 16, 2003)]
[Proposed Rules]
[Pages 41947-41962]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-17777]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 68, No. 136 / Wednesday, July 16, 2003 / 
Proposed Rules  

[[Page 41947]]



DEPARTMENT OF AGRICULTURE

7 CFR Parts 3015, 3019 and 3020


Office of the Chief Financial Officer; General Program 
Administration Regulations

AGENCY: Office of the Chief Financial Officer, USDA.

ACTION: Proposed rule.

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

SUMMARY: The U.S. Department of Agriculture (USDA) proposes to amend 
the administrative requirements for all USDA grants and cooperative 
agreements that are used to document Federal assistance transactions. 
USDA also proposes to remove the outdated regulations and replace them 
with streamlined regulations that are applicable to non-profit and for-
profit Federal financial assistance recipients. USDA further proposes 
to implement several additional administrative policies and new 
requirements.

DATES: Submit comments on or before August 15, 2003.

ADDRESSES: Questions and comments may be addressed to: Ava Lee, 
Director, Planning and Accountability Division, Office of the Chief 
Financial Officer, USDA, Stop 9020, 1400 Independence Avenue, SW., 
Washington DC 20250; FAX (202) 690-3561; telephone (202) 720-1179; E-
mail [email protected].

FOR FURTHER INFORMATION CONTACT: Ava Lee, (202) 720-1179.

SUPPLEMENTARY INFORMATION:

Background

    Prior to 1981, departmental regulations required USDA agencies to 
issue individual, program-specific regulations and directives to 
implement USDA, Office of Management and Budget (OMB), and other 
applicable guidance and polices related to Federal program 
administrative requirements. This was practiced throughout the Federal 
government and frequently resulted in complaints from program 
participants about the confusion and duplication in the administration 
and management of Federal programs.
    Public Law No. 95-224, the ``Federal Grant and Cooperative 
Agreement Act of 1977,'' (FGCA) and the related OMB guidance (43 FR 
36860, Aug. 18, 1978), emphasized the need for a uniform policy and the 
standardization of common administrative requirements for all Federal 
assistance programs. Consequently, in November 1981, USDA published 7 
CFR part 3015, ``Uniform Federal Assistance Regulations'' (46 FR 55636, 
Nov. 10, 1981). The original purpose for part 3015 was to set out in a 
single ``uniform'' regulation all requirements that applied to 
recipients and subrecipients of USDA Federal assistance. In terms of 
agreement coverage, part 3015 was limited to grants and cooperative 
agreements as defined by the FGCA.
    Experience with this approach soon demonstrated a definite need for 
specific regulations that recognized the differences between types of 
recipients, especially as between State and local governments and the 
various kinds of nonprofit organizations, including universities. 
Therefore, USDA subsequently participated in a series of government-
wide initiatives establishing more specific rules applicable based on 
the type of recipient. These initiatives simultaneously reduced the 
scope and effect of part 3015.
    In March 1988, USDA joined with other Federal agencies in 
simultaneously publishing a common rule applicable to State and local 
government recipients. The USDA rule was codified in 7 CFR part 3016, 
``Uniform Administrative Requirements for Grants and Cooperative 
Agreements to State and Local Governments.'' (53 FR 8034, Mar. 11, 
1988). In November 1993, OMB revised OMB Circular A-110 (58 FR 62992, 
Nov. 29, 1993). In August 1995, USDA published 7 CFR part 3019, 
``Uniform Administrative Requirements for Grants and Agreements with 
Institutions of Higher Education, Hospitals and Other Nonprofit 
Organizations,'' to implement the revised A-110 (60 FR 44122, Aug. 24, 
1995). The definition of ``recipient'' in section 3019.2 authorizes 
agencies at their discretion to apply part 3019 to for-profit 
organizations as well. In August 1997, USDA published 7 CFR part 3052, 
``Audits of States, Local Governments and Non-Profit Organizations'' 
(62 FR 45947, Aug. 29, 1997) to implement the requirements of the 
Single Audit Act Amendments of 1996 and the related revision to OMB 
Circular A-133. In August 2000, USDA published a final rule to include 
USDA's entitlement programs within the scope of part 3016 and part 3019 
as appropriate (65 FR 49474, Aug. 14, 2000).
    As the result of these actions, a substantial portion of the 
original purpose and scope of part 3015 was transferred to other rules. 
Currently, part 3015 may be used by USDA agencies as an option to using 
part 3019 for one remaining type of recipient, for-profit 
organizations. Part 3015 also includes certain requirements that: (1) 
Are not included in one or more of the other parts identified above; 
and (2) are generally applicable to any assistance transactions between 
USDA and any type of recipient.
    In the period since the enactment of the FGCA, and concurrent with 
all of the regulatory changes set out above, Congress passed a number 
of acts which included language excluding certain USDA authorities from 
the FGCA. At a later date and as a separate action, USDA plans to 
develop a uniform rule for the agreements not covered by this rule such 
as those that are issued under sections 1472(b) and 1473A of the 
National Agricultural Research, Extension, and Teaching Policy Act of 
1977, as amended, 7 U.S.C. 3318 and 3319a, and similar authorities.
    Congress has recently taken actions both to improve the general 
financial management of the Federal government and to specifically 
improve the effectiveness and performance of Federal assistance 
programs. Congress enacted the Chief Financial Officers Act of 1990 
(CFO Act) for various reasons, including bringing ``* * * more 
effective general and financial management practices to the Federal 
Government through statutory provisions which would * * * designate a 
Chief Financial Officer (CFO) in each executive department and in each 
major executive agency in the Federal Government'' (31 U.S.C. 501 note, 
CFO Act sec.102(b)). The CFO Act specifies that the agency CFO ``shall 
* * * oversee all financial management activities relating to the 
programs and operations of the agency; * * *'' (31 U.S.C. 902(a)). The 
Federal Financial

[[Page 41948]]

Assistance Management Improvement Act of 1999 (FFAMIA) (Pub. L. 106-
107) requires USDA to ``* * * develop and implement a plan that * * * 
streamlines and simplifies the application, administrative, and 
reporting procedures for Federal financial assistance programs 
administered by the agency.'' (31 U.S.C. 6101 note, FFAMIA sec.5).
    USDA now proposes the following actions: (1) USDA has concluded 
that allowing awarding agencies the discretion to choose between two 
rules for the administration of assistance agreements with for-profit 
organizations is both unnecessary and confusing. Therefore, USDA 
proposes to revise part 3019 to require that agencies entering into 
assistance agreements with for-profit organizations use part 3019 
exclusively for the administration of these agreements; (2) The 
combination of the recent transfer of the entitlement programs and the 
proposed transfer of for-profit organizations to the administrative 
requirements of other regulations make much of the text currently in 
part 3015 unnecessary. Furthermore, a substantial portion of part 3015 
is based on superceded OMB guidance that is no longer used by any other 
Federal agency. Therefore, USDA proposes to revise the current text to 
remove unneeded language and to improve readability. In addition, to 
avoid potential confusion, USDA proposes to remove part 3015 in its 
entirety and replace it with a new part 3020 entitled ``General Program 
Administration Regulations.'' The table at the end of this preamble 
provides cross-references between the sections in the current part 3015 
and the equivalent sections in the existing parts 3016 and 3019 as well 
as the proposed part 3020. The proposed part 3020 will apply to all 
types of recipients, supplementing the regulations in parts 3016 and 
3019; (3) To carry out the OCFO oversight responsibilities for 
financial management activities, USDA proposes to make parts 3020, 
3016, and 3019 applicable, as appropriate, to nearly all parties 
entering into assistance transactions with USDA relating to USDA's 
programs, including non-governmental international recipients. The 
proposed rule is intended to establish the basic requirements for 
USDA's financial management of programs; (4) The proposed rule will be 
a major step toward conformance with the FFAMIA initiative to simplify 
the application, administrative, and reporting procedures for the 
covered Federal programs administered by the agency. In terms of 
streamlining, the current version of part 3015 consists of 123 sections 
containing 302KB of information while the proposed version of part 3020 
consists of 28 sections containing 90KB of information. In terms of 
uniformity, the proposed rule will have the effect of placing nearly 
all of USDA's assistance relationships with non-Federal entities under 
two administrative rules that codify for USDA the same policies used by 
the majority of other Federal Departments. Further streamlining is 
expected to occur over the coming months and years. OMB published 
notices in the Federal Register on August 12, 2002 (67 FR 52544-52560, 
Aug. 12, 2002) that propose to standardize the announcement format for 
discretionary grants and cooperative agreements across government 
agencies. Also, a standard set of data elements has been proposed to 
standardize the electronic posting of funding announcements. When they 
are finalized, USDA expects that parts 3016, 3019 and 3020, and 
particularly Sec. Sec.  3016.10, 3019.12 and 3020.15 will be amended to 
reflect the implementation of FFAMIA; (5) USDA has corrected the 
reference to USDA's audit regulation in 7 CFR 3019.26 to reflect the 
correct citation of 7 CFR part 3052; and, (6) USDA also proposes to 
include in part 3020 the additional specific requirements itemized 
below.

Summary of Proposed Rule 3020

    The following paragraphs provide a summary of the various revisions 
and sections of this proposed rule 3020. Following the summary is a 
table that cross-references each section of part 3015 and indicates the 
comparable sections in parts 3016 and 3019 and proposed part 3020.

Changes to Part 3019

    USDA proposes to amend the title of part 3019 and revise Sec. Sec.  
3019.1, 3019.2, and 3019.5 to include for-profit organizations within 
the scope of part 3019. The proposed revision in Sec.  3019.26(a) 
replaces the reference to the Single Audit Act Amendments of 1996 (31 
U.S.C. 7501-7507) and the OMB Circular A-133 with a reference to part 
3052, ``AUDITS OF STATES, LOCAL GOVERNMENTS, AND NON-PROFIT 
ORGANIZATIONS,'' the USDA regulation implementing OMB Circular A-133.

Part 3020--General Program Administration Regulations

Subpart A--General

    Section 3020.1 Purpose. No substantive change from part 3015.
    Section 3020.2 Applicability. This section lists which USDA 
agreements and recipients are covered by this rule and the exceptions 
to this rule. The applicability of proposed part 3020 is broader than 
that of part 3015. Proposed part 3020 will apply to all USDA 
agreements, including memoranda of understanding, not explicitly 
excepted. Part 3015 applies only to assistance agreements.
    Section 3020.3 Conflicting policies and deviations. This section 
simplifies current section 3015.3. Proposed section 3020.3 clarifies 
that unless authorized by statute or by a waiver by OCFO, the 
requirements in part 3020 will take precedence over any USDA agency 
specific regulations.
    Section 3020.4 Other regulations applicable to USDA agreements. 
This section lists other regulations that currently apply to some or 
all cover USDA agreements. The only new requirement proposed is that 
awarding agencies are to apply the rules in part 3019 of this chapter 
to for-profit entities.

Subpart B--Basic Requirements

    Section 3020.10 Authority clause. USDA proposes this section to 
codify the requirement to include a section in all covered USDA 
agreements addressing the statutory authority and funding authority for 
any financial transaction and the statutory authority for any non-
financial transaction.
    Section 3020.11 Identification and use of USDA agreements. USDA 
proposes this section to resolve questions as to the primary types of 
USDA agreements. This section defines the agreements commonly entered 
into by USDA agencies, subject to each agency's specific 
authorizations. This section specifically addresses the use of 
procurement contracts, cooperative agreements, grants, memoranda of 
understanding, interagency agreements, and intra-agency agreements.
    Section 3020.12 Program reporting requirements. The Federal Program 
Information Act (31 U.S.C. chapter 61) requires Federal agencies to 
report specified information for programs involving non-procurement 
transactions. The USDA complies with the requirements through 
submission of data to the Catalog of Federal Domestic Assistance (CFDA) 
and the Federal Assistance Award Data System (FAADS). While these are 
not new requirements and USDA has complied with the reporting 
requirements since their inception, the requirements were never 
codified in our regulations. USDA proposes this section to codify these 
reporting requirements.

[[Page 41949]]

    Section 3020.13 Acknowledgment of support on publications and 
audiovisuals. USDA is proposing no substantive changes from Sec.  
3015.200. This section states when a recipient shall acknowledge the 
awarding agency support in publications or audiovisual media.
    Section 3020.14 Competing discretionary awards. There is no 
substantive change from Sec.  3015.158 ``Competition in the awarding of 
discretionary grants and cooperative agreements.'' This section covers 
the standards for competition, approval of applications and exceptions.
    Section 3020.15 Program regulations and announcements. USDA is 
proposing no major substantive changes from Sec.  3015.204. Proposed 
Sec.  3020.15 addresses program announcements, program regulations, 
program solicitations, evaluation criteria and procedures, funding 
priorities, projects building on prior awards, and discussions with 
applicants. Proposed Sec.  3020.15 clarifies and standardizes basic 
program notice and fairness requirements.
    Section 3020.16 Nondiscrimination requirement. USDA proposes to 
establish a mandatory nondiscrimination statement that is to be 
included in covered USDA agreements.
    Section 3020.17 Waiver of ``single'' State agency requirements. 
USDA is proposing no substantive changes from current Sec.  3015.30. 
This section implements section 204 of the Intergovernmental 
Cooperation Act, which authorizes and establishes criteria for waiver 
of requirements that a single State agency or multimember agency 
administer a program.

Subpart C--Management of Agreements

    Section 3020.20 Use of consultants. USDA is proposing no major 
substantive changes from Sec.  3015.201. The Definitions and 
Applicability subsections have been removed. The Definitions are now 
covered in Sec.  3020.50 and Applicability is addressed in Sec. Sec.  
3020.20(a) and 3020.20(b)(2). Unlike Sec.  3015.201, applicability of 
Sec.  3020.20 is not limited to grants, subgrants, and cost-type 
contracts. All other subsections are virtually the same. The proposed 
section addresses the basic policy for recipient use of consultants, 
exceptions, requirements for approval, and documentation standards.
    Section 3020.21 Disposition of long term financial interests in 
real property, personal property, and equipment. This section creates a 
new departmental policy to terminate any departmental financial 
interest in property or equipment acquired by a recipient, under a USDA 
agreement, after 20 years have passed since the last Federal need or 
use of the property or equipment. Executive Order 12803, 
``Infrastructure Privatization,'' directs Federal agencies to ``Approve 
State and local governments' requests to privatize infrastructure 
assets, * * * and, where necessary, grant exceptions to the disposition 
requirements of the Uniform Administrative Requirements for Grants and 
Cooperative Agreements to State and Local Governments' common rule'' 
(57 FR 19063, May 4, 1992). As set out in Executive Order 12803, to 
privatize an asset means to dispose of, or transfer, an asset from a 
State or local government to a private party. Examples of 
infrastructure assets include roads, electrical supply facilities, 
water supply facilities, recycling plants, waste water treatment 
facilities, solid waste disposal facilities, housing, schools and 
hospitals. Executive Order 12803 provides that, ``To the extent 
permitted by law,'' Federal agencies should revise the existing common 
rule requirements for the recuperation of Federal financial interests 
from State or local government grantees when the State or local 
government grantee privatizes a Federally funded infrastructure asset. 
The revised method set out in Executive Order 12803, Section 3(c)(iii) 
calls for use of the Internal Revenue Service accelerated depreciation 
schedules in calculating the value of the Federal interest in the 
asset.

Subpart D--Management of Funds

    Section 3020.30 Management of indirect costs. In Sec.  3020.30, 
USDA is proposing to codify the Federal indirect cost policies 
established in OMB Circulars numbers A-21, Cost Principles for 
Educational Institutions, and A-87, Cost Principles for State, Local, 
and Indian Tribal Governments. This section allows for a provisional 
indirect cost rate to be used pending determination of a final rate. 
These indirect costs may be paid only after establishing an indirect 
cost rate as required by Sec. Sec.  3016.22 and 3019.27 of this chapter 
and the applicable cost principles or in the case of for-profit 
entities, the cost accounting standards. This section also explains 
which agency shall negotiate and establish the rate.
    Section 3020.31 Physical segregation and eligibility. USDA proposes 
in this section to codify the requirement in OMB Circular number A-110, 
Uniform Administrative Requirements for Grants and Agreements With 
Institutions of Higher Education, Hospitals, and Other Non-Profit 
Organizations, that awarding agencies shall not require the recipient 
to use a separate bank account for the deposit of Federal funds or 
establish any eligibility requirements for banks or other financial 
institutions in which recipients deposit Federal funds for USDA 
agreements. Exceptions are found in Sec. Sec.  3020.32, 3016.21 (h), 
and 3019.22 (i), (j), and (k) of this chapter.
    Section 3020.32 Funds advanced to recipients. USDA proposes no 
substantive changes from section 3015.12. All moneys advanced to a 
recipient must be deposited in an FDIC insured bank whenever possible 
and anything over the FDIC limit must be collaterally secured.
    Section 3020.33 Source of bonds. USDA is proposing no substantive 
changes in this section. Any bonds required under Sec.  3016.36 (h) (1) 
through (3) or Sec. Sec.  3019.21 (c) and (d) and 3019.48 (c) (1) 
through (3) of this chapter shall be obtained from companies holding 
certificates of authority as acceptable sureties listed by the 
Department of the Treasury in its Department Circular 570.
    Section 3020.34 Limits on total payments to the recipient. USDA 
proposes in this section to codify the four most widely applicable 
legal limits on the total amount of money a recipient is entitled to 
receive from USDA as a result of a Federal award.

Subpart E--Intergovernmental Review of Department of Agriculture 
Programs and Activities

    This subpart implements Executive Order 12372, Intergovernmental 
Review of Federal Programs, and the applicable provisions of section 
401 of the Intergovernmental Cooperation Act of 1968 and section 204 of 
the Demonstration Cities and Metropolitan Development Act of 1966, and 
has been completely rewritten in consultation with active State Single 
Points of Contacts (SPOCs). These consultations were conducted over an 
extended period of time and the various draft revisions of this section 
were circulated to all active SPOC States. This was followed by 
discussions with individual SPOCs and a final review session held at 
the 1999 National SPOC Network Conference held in Washington, D.C. The 
proposed language reflects the ideas and comments presented by the 
SPOCs throughout this consultation process.
    Section 3020.40 Purpose. USDA proposes no substantive changes from 
part 3105.300 ``Purpose.'' This subpart is intended to foster an 
intergovernmental partnership for the review of proposed Federal 
financial assistance and direct Federal development.

[[Page 41950]]

    Section 3020.41 State responsibilities. This proposed section 
addresses the State option to establish a coordinated review process 
consisting of a Single Point Of Contact (SPOC) within the State to 
review proposed Federal awards. The proposed section describes the 
SPOC's assigned functions.
    Section 3020.42 USDA awarding agency responsibilities. This 
proposed section defines the USDA awarding agency responsibilities to 
publish certain information in the Federal Register and obtain 
clearance from the OCFO for any Federal Register publications regarding 
implementation of this subpart. The USDA awarding agency must 
coordinate with the SPOC to maintain a current list of the programs and 
activities selected by the SPOC for review. The awarding agency is 
responsible for notifying all State and local governments that would be 
directly affected by proposed Federal financial awards from, or direct 
Federal development by, USDA.
    Section 3020.43 Office of the Chief Financial Officer 
responsibilities. This proposed section lists OCFO's responsibilities 
regarding intergovernmental cooperation and codifies OCFO's 
responsibility within USDA for the Federal Assistance Awards Data 
System (FAADS). OCFO will coordinate the resolution of any conflicts 
between the USDA awarding agency and the SPOC and, to the extent 
practicable, shall consult with all other substantially affected 
Federal departments and agencies to ensure full coordination between 
such agencies and the Department regarding programs and activities 
covered under this subpart.
    Section 3020.44 Processing comments. This proposed section provides 
guidance to address how USDA agencies will process comments on proposed 
awards.
    Section 3020.45 Accommodation of intergovernmental concerns. This 
proposed section covers how issues and concerns about an award are 
handled and the timeframes in which they should be addressed.
    Section 3020.46 State plans. This proposed section indicates that 
Federal programs that statutorily require States to submit plans before 
receiving awards are subject to the requirements set out in Sec.  
3016.11 of this chapter. This section also indicates when plans may be 
submitted for review, without prior approval.
    Section 3020.47 Waivers. This proposed section states that in an 
emergency, the Secretary of Agriculture may waive any provision of 
subpart E of this part.

Subpart F--Definitions

    Section 3020.50 Definitions and acronyms. This proposed section 
lists definitions for the terms used throughout part 3020.

    Cross Reference--Transition of Part 3015--Transfers and Deletions
------------------------------------------------------------------------
           3015 Section--title           3016, 3019, 3020 Section--title
------------------------------------------------------------------------
                           Subpart A--General
------------------------------------------------------------------------
3015.1 Purpose and scope of this part..  3020.1 Purpose.
                                         3020.4 Other regulations
                                          applicable to USDA grants.
3015.2 Applicability...................  3020.2 Applicability.
3015.3 Conflicting policies and          3020.3 Conflicting policies and
 deviations.                              deviations.
3015.4 Special restrictive terms.......  3016.12 Special grant or
                                          subgrant conditions for ``high-
                                          risk'' grantees.
                                         3019.14 Special award
                                          conditions.
----------------------------------------
                      Subpart B--Cash Depositories
------------------------------------------------------------------------
3015.10 Physical segregation and         3020.31 Physical segregation
 eligibility.                             and eligibility.
3015.11 Separate bank accounts.........  3016.21(h)(2) Payment.
                                         3019.22(i)(1) Payment.
3015.12 Moneys advanced to recipients..  3020.32 Funds advanced to
                                          recipients.
3015.13 Minority and women owned banks.  3016.21(h)(1) Payment.
                                         3019.22(j) Payment.
----------------------------------------
                    Subpart C--Bonding and Insurance
------------------------------------------------------------------------
3015.15 General........................  Deleted.
3015.16 Construction and facility        3016.36(h) Procurement.
 improvement.                            3019.48(c) Contract provisions.
3015.17 Fidelity bonds.................  3019.21(d) Standards for
                                          financial management systems.
3015.18 Source of bonds................  3020.33 Source of bonds.
----------------------------------------
           Subpart D--Record Retention and Access Requirements
------------------------------------------------------------------------
3015.20 Applicability..................  Deleted.
3015.21 Retention period...............  3016.42(b) Retention * * * for
                                          records.
                                         3019.53(b) Retention * * * for
                                          records.
3015.22 Starting date of retention       3016.42(c) Retention * * * for
 period.                                  records.
                                         3019.53(b) Retention * * * for
                                          records.
3015.23 Microfilm......................  3016.42(d) Retention * * * for
                                          records.
                                         3019.53(c) Retention * * * for
                                          records
3015.24 Access to records..............  3016.42(e) Retention * * * for
                                          records.
                                         3019.53(e) Retention * * * for
                                          records.
3015.25 Restrictions to public access..  3016.42(f) Retention * * * for
                                          records.
                                         3019.53(f) Retention * * * for
                                          records.
----------------------------------------

[[Page 41951]]

 
        Subpart E--Waiver of ``Single'' State Agency Requirements
------------------------------------------------------------------------
3015.30 Waiver of ``single'' State       3020.17 Waiver of ``single''
 agency requirements.                     State agency requirements.
----------------------------------------
                     Subpart F--Grant Related Income
------------------------------------------------------------------------
3015.40 Scope..........................  Deleted.
3015.41 General program income.........  3016.25(a) Program income.
                                         3019.24 Program income.
3015.42 Proceeds from sale of real       3016.25(f) Program income.
 property * * * acquired for use.        3019.24(g) Program income.
3015.43 Royalties * * * from a           3016.25(e)-(g) Program income.
 copyright.                              3019.24(h) Program income.
3015.44 Royalties * * * from inventions  3016.25(e)-(g) Program income.
                                         3019.24(h) Program income.
3015.45 Other program income...........  3016.25(h) Program income.
                                         3019.24(e) Program income.
3015.46 Interest earned on advances....  3016.21(i) Payment.
                                         3019.22(1) Payment.
----------------------------------------
                   Subpart G--Cost-Sharing or Matching
------------------------------------------------------------------------
3015.50 Scope..........................  Deleted.
3015.51 Acceptable contributions and     3016.24(a) Matching or cost
 costs.                                   sharing.
                                         3019.23(a) Cost sharing or
                                          matching.
3015.52 Qualifications and exceptions..  3016.24(b) Matching or cost
                                          sharing.
                                         3019.23(a)(2) & (5) Cost
                                          sharing or matching.
3015.53 Valuation of donated services..  3016.24(c) Matching or cost
                                          sharing.
                                         3019.23(d), (e), (h)(5) Cost
                                          sharing or matching.
3015.54 Valuation of donated supplies *  3016.24(d) Matching or cost
 * * loaned equipment or space.           sharing.
                                         3019.23(f), (h)(4) Cost sharing
                                          or matching.
3015.55 Valuation of donated equipment,  3016.24(e) Matching or cost
 buildings, and land.                     sharing.
                                         3019.23(g), (h)(1) Cost sharing
                                          or matching.
3015.56 Appraisal of real property.....  3016.24(g) Matching or cost
                                          sharing.
                                         3019.23(h)(1) Cost sharing or
                                          matching.
----------------------------------------
          Subpart H--Standards for Financial Management Systems
------------------------------------------------------------------------
3015.60 Scope..........................  Deleted.
3015.61 Financial management standards.  3016.20 Standards for financial
                                          management systems.
                                         3019.21 Standards for financial
                                          management systems.
----------------------------------------
                          Subpart I--(Reserved)
------------------------------------------------------------------------
               Subpart J--Financial Reporting Requirements
------------------------------------------------------------------------
3015.80 Scope and applicability........  Deleted.
3015.81 General........................  3016.41(a) Financial reporting.
                                         3019.52(a) Financial reporting.
3015.82 Financial status report........  3016.41(b) Financial reporting.
                                         3019.52(a)(1) Financial
                                          reporting.
3015.83 Federal cash transactions        3016.41(c) Financial reporting.
 report.                                 3019.52(a)(2) Financial
                                          reporting.
3015.84 Request for * * * reimbursement  3016.41(d) Financial reporting.
                                         3019.22(d) and (m)(1) Payment.
3015.85 Outlay report * * *              3016.41(e) Financial reporting.
 construction.                           3019.22(m)(2) Payment.
----------------------------------------
         Subpart K--Monitoring and Reporting Program Performance
------------------------------------------------------------------------
3015.90 Scope..........................  Deleted.
3015.91 Monitoring by recipients.......  3016.40(a) Monitoring * * *
                                          performance.
                                         3019.51(a) Monitoring * * *
                                          performance.
3015.92 Performance reports............  3016.40(b) Monitoring * * *
                                          performance,
                                         3019.51(b)-(e) Monitoring * * *
                                          performance
3015.93 Significant developments.......  3016.40(d) Monitoring * * *
                                          performance,
                                         3019.51(f) Monitoring * * *
                                          performance.
3015.94 Site visits....................  3016.40(e) Monitoring * * *
                                          performance.
                                         3019.51(g) Monitoring * * *
                                          performance.
3015.95 Waivers, extensions and          3016.40(f) Monitoring * * *
 enforcement actions.                     performance.
                                         3019.4 Deviations.
----------------------------------------

[[Page 41952]]

 
                     Subpart L--Payment Requirements
------------------------------------------------------------------------
3015.100 Scope.........................  Deleted.
3015.101 General.......................  3016.21(b) Payment.
                                         3019.22(a) Payment.
3015.102 Payment methods...............  3016.21 Payment.
                                         3019.22 Payment.
3015.103 Withholding payments..........  3016.21(g) Payment.
                                         3019.22(h) Payment.
3015.104 Requesting * * *                3016.41(d) & (e) Financial
 reimbursements.                          reporting.
                                         3019.22(d) & (m) Payment.
3015.105 Payments to subrecipients.....  3016.21 Payment.
                                         3019.5 Subawards.
----------------------------------------
          Subpart M--Programmatic Changes and Budget Revisions
------------------------------------------------------------------------
3015.110 Scope and applicability.......  Deleted.
3015.111 Cost principles...............  3016.22 Allowable costs.
                                         3016.30(b) Changes.
                                         3019.25(c)(6) Revision of
                                          budget & program plans.
                                         3019.27 Allowable costs.
3015.112 Approval procedures...........  3016.30(a) & (f) Changes.
                                         3019.5 Subawards.
                                         3019.25 Revision of budget &
                                          program plans.
3019.13 Programmatic changes...........  3016.30(d)(1) & (3) Changes.
                                         3019.25(c)(1) & (2) Revision of
                                          budget & program plans.
3015.114 Budgets general...............  3019.25(a) Revision of budget &
                                          program plans.
3015.115 Budget revisions..............  3016.30(c)(1) & (e) Changes.
                                         3019.25(c)(4), (c)(6), (c)(7),
                                          (d), & (e) Revision of budget
                                          & program plans.
3015.116 Construction and                3016.30(c)(3) Changes.
 nonconstruction * * * under same        3019.25(j) Revision of budget &
 agreement.                               program plans.
----------------------------------------
   Subpart N--Grant and Subgrant Closeout, Suspension and Termination
------------------------------------------------------------------------
3015.120 Closeout......................  3016.50 Closeout.
                                         3019.71 Closeout procedures.
3015.121 Amounts payable to the Federal  3016.52 Collection of amounts
 government.                              due.
                                         3019.73 Collection of amounts
                                          due.
3015.122 Violation of terms............  3016.43(a) Enforcement.
                                         3019.62(a) Enforcement.
3015.123 Suspension....................  3016.43(a)(3) & (c)
                                          Enforcement.
                                         3019.62(a)(3) & (c)
                                          Enforcement.
3015.124 Termination...................  3016.43(a)(3) Enforcement.
                                         3016.44 Termination for
                                          convenience.
                                         3019.62(a)(3) & (c)
                                          Enforcement.
                                         3019.61(a) Termination.
3015.125 Applicability to subgrants....  3019.5 Subawards
----------------------------------------
                        Subparts O--P (Reserved)
------------------------------------------------------------------------
              Subpart Q--Application for Federal Assistance
------------------------------------------------------------------------
3015.150 Scope and applicability.......  Deleted.
3015.151 Authorized forms..............  3016.10 Forms for applying for
                                          grants.
                                         3019.12 (a) & (b) Forms for
                                          applying for Federal
                                          assistance.
3015.152 Preapplication for Federal      3016.10 Forms for applying for
 assistance.                              grants.
3015.153 Notice of preapplication        3016.10 Forms for applying for
 review action.                           grants.
3015.154 Application * * * non           3016.10 Forms for applying for
 construction.                            grants.
3015.155 Application for * * *           3016.10 Forms for applying for
 construction.                            grants.
3015.156 Application * * * short form..  3016.10 Forms for applying for
                                          grants.
3015.157 Authorized form for             3019.12 Forms for applying for
 nongovernmental organizations.           Federal assistance.
3015.158 Competition in the awarding of  3020.14 Competing discretionary
 * * * agreements.                        awards.
----------------------------------------
                           Subpart R--Property
------------------------------------------------------------------------
3015.160 Scope and applicability.......  Deleted.
3015.161 Additional requirements.......  Deleted.
3015.162 Title to real *** property      3016.31(a) Real property.
 supplies.                               3019.32(a) Real property.
3015.163 Real property.................  3016.31(b) & (c) Real property.
                                         3019.32 Real property.

[[Page 41953]]

 
3015.164 Statutory * * * exemptions      Deleted.
 supplies.
3015.165 Rights to require transfer of   3016.32(a) & (g) Equipment.
 equipment.                              3019.34(g) Equipment.
3015.166 Use of equipment..............  3016.32(c) Equipment.
                                         3019.34(c) Equipment.
3015.167 Replacement of equipment......  3016.32(c)(4) Equipment.
                                         3019.34(e) Equipment.
3015.168 Disposal of equipment.........  3016.32(e) Equipment.
                                         3019.34(g) Equipment.
3015.169 Equipment * * * requirements..  3016.32(d) Equipment.
                                         3019.34(f) Equipment.
3015.170 Damage of * * * of equipment..  Deleted.
3015.171 Unused supplies...............  3016.33(b) Supplies.
                                         3019.35(a) Supplies and other
                                          expendable property.
3015.172 Federal share real property,    3016.31(c) Real property.
 equipment, and supplies.                3016.32(e)(2) Equipment.
                                         3016.33(b) Supplies.
                                         3019.32(c)(2) Real property.
                                         3019.34 Equipment.
                                         3020.21 Disposition of long
                                          term * * * equipment.
3015.173 Using * * * returning * * *     3016.31(c) Real property.
 Federal share.                          3016.32(e) Equipment.
                                         3019.32 Real property.
                                         3019.33 Federally-owned * * *
                                          property.
                                         3019.34 Equipment.
                                         3020.21 Disposition of long
                                          term * * * equipment.
3015.174 Subrecipient's share..........  3016.31(c) Real property.
                                         3016.32(e)(2) Equipment.
                                         3016.33(b) Supplies.
                                         3019.5 Subawards.
                                         3019.32 Real property.
                                         3020.21 Disposition of long
                                          term * * * equipment.
3015.175 Intangible personal property..  3016.34 Copyrights.
                                         3019.36 Intangible property.
----------------------------------------
                         Subpart S--Procurement
------------------------------------------------------------------------
3015.180 Scope and applicability.......  Deleted.
3015.181 Standards of conduct..........  3016.36(b)(3) Procurement.
                                         3019.42 Codes of conduct.
3015.182 Open and free competition.....  3016.36(c)(1) Procurement.
                                         3019.43 Competition.
                                         3020.14 Competition in * * *
                                          agreements.
3015.183 Access to contractor records..  3016.36(i)(10) & (11)
                                          Procurement.
                                         3019 Appendix A--Contract
                                          provisions.
3015.184 Equal employment opportunity..  3016.36(i)(3) Procurement.
                                         3019 Appendix A--Contract
                                          provisions.
                                         3020.16 Nondiscrimination
                                          requirements.
----------------------------------------
                       Subpart T--Cost Principles
------------------------------------------------------------------------
3015.190 Scope.........................  Deleted.
3015.191 Governments...................  3016.22(b) Allowable costs.
                                         3019.27 Allowable costs.
3015.192 Institutions of higher          3016.22(b) Allowable costs.
 education.                              3019.27 Allowable costs.
3015.193 Other non-profit organizations  3016.22(b) Allowable costs.
                                         3019.27 Allowable costs.
3015.194 For-profit organizations......  3016.22(b) Allowable costs.
                                         3019.27 Allowable costs.
3015.195 Subgrants and cost-type         3016.22(b) Allowable costs.
 contracts.                              3019.5 Subawards.
                                         3019.27 Allowable costs.
3015.196 Costs allowable with approval.  3016.22(b) Allowable costs.
                                         3019.27 Allowable costs.
----------------------------------------
                        Subpart U--Miscellaneous
------------------------------------------------------------------------
3015.200 Acknowledgment of support on    3020.13 Acknowledgment of
 publications and audiovisuals.           support * * * audiovisuals.
3015.201 Use of consultants............  3020.20 Use of consultants.
3015.202 Limits on total payments to     3020.34 Limits on total
 the recipients.                          payments to the recipient.

[[Page 41954]]

 
3015.203 Reserved......................  Deleted.
3015.204 Federal Register publications.  3020.15 Program regulations and
                                          announcements.
3015.205 General provisions for grants   3019.12 Forms for * * *
 and cooperative agreements with          assistance.
 institutions of higher education,
 other non-profit organizations and
 hospitals.
----------------------------------------
    Subpart V--Intergovernmental Review of Department of Agriculture
                         Programs and Activities
------------------------------------------------------------------------
3015.300 Purpose.......................  3020.40 Purpose.
3015.301 Definitions...................  3020.50 Definitions and
                                          acronyms.
3015.302 Applicability.................  3020.42 USDA awarding agency
                                          responsibilities.
3015.303 Secretary's * * *               3020.42 USDA awarding agency
 responsibilities.                        responsibilities.
3015.304 Federal interagency             3020.43 Office of the Chief
 coordination.                            Financial Officer
                                          responsibilities.
3015.305 State selection of * * *        3020.41 State responsibilities.
 activities.
3015.306 Communication with State and    3020.42 USDA awarding agency
 local elected officials.                 responsibilities.
3015.307 State comments * * *            3020.42 USDA awarding agency
 development.                             responsibilities.
                                         3020.44 Processing comments.
3015.308 Processing comments...........  3020.44 Processing comments.
3015.309 Accommodation of * * *          3020.45 Accommodation of * * *
 concerns..                               concerns
3015.310 Interstate situations.........  3020.42 USDA awarding agency
                                          responsibilities.
3015.311 Simplification * * * of State   3016.11 State plans.
 plans.                                  3020.46 State plans.
3015.312 Waivers.......................  3020.47 Waivers.
Appendix A--Definitions................  3016.3 Definitions.
                                         3019.2 Definitions.
                                         3020.50 Definitions and
                                          acronyms.
Appendix B--OMB Circular A-128 ``Audits  Deleted. See 7 CFR part 3052
 of State and Local Governments''.        ``Audits of States, Local
                                          Governments, and Non-profit
                                          Organizations''.
------------------------------------------------------------------------

Regulatory Impact Analysis

Executive Order 12866

    Executive Order 12866 requires that a regulatory impact analysis be 
prepared for ``significant regulatory actions'' which are defined in 
Executive Order 12866 as any rule that has an annual effect on the 
national economy of $100 million or more or certain other specified 
effects.
    USDA does not believe that the proposed rule will have an annual 
impact of $100 million or more or any other effects listed in Executive 
Order 12866. For this reason, USDA has determined that this proposed 
rule is not a significant regulatory action within the meaning of 
Executive Order 12866.

Executive Order 12988

    This proposed rule has been reviewed in accordance with Executive 
Order 12988, Civil Justice Reform. The provisions of this proposed rule 
do not preempt State laws, are not retroactive, and do not involve 
administrative appeals.

Executive Order 13132

    It has been determined that this proposed rule does not have 
sufficient Federalism implications to warrant the preparation of a 
Federalism Assessment. The provisions contained in this proposed rule 
will not have a substantial direct effect on States or their political 
subdivisions or on the distribution of power and responsibilities among 
the various levels of government.
    USDA recognizes that the proposed rule has component language that 
may have some federalism impact. First, the proposed rule removes the 
existing regulatory language in 7 CFR part 3015 subpart V addressing 
Intergovernmental Review of Department of Agriculture Programs and 
Activities, and promulgates revised regulatory language at 7 CFR part 
3020. As explained above, USDA consulted extensively with the active 
State Single Points of Contact throughout the drafting process. These 
consultations were conducted over an extended period of time and the 
various draft revisions of this section were circulated to all active 
SPOC States. This was followed by discussions with individual SPOCs and 
a final review session held at the 1999 National SPOC Network 
Conference held in Washington, DC. The proposed language reflects the 
ideas and comments presented by the SPOCs throughout this consultation 
process.
    Second, the proposed rule also implements Executive Order 12803, 
``Infrastructure Privatization,'' in Sec.  3020.21, authorizing 
exceptions to the disposition requirements for infrastructure assets 
applicable to State, local, and Indian tribal government recipients 
under 7 CFR part 3016. This proposed regulation essentially provides 
that such recipients may request a waiver in accordance with Executive 
Order 12803. USDA intends to incorporate, and not to alter, the 
provisions of Executive Order 12803 allowing for such waivers. 
Implementation of Executive Order 12803 in the departmental regulations 
codifies the waiver policy, increasing the awareness of State, local, 
and Indian tribal governments of their ability to request such waivers. 
USDA considers the proposed rule to have minimal federalism 
implications, and those minimal implications to be positive because of 
the added flexibility and awareness of such flexibility in USDA 
relationships with State, local, and Indian tribal government 
recipients.
    Finally, the rule proposes codification of the applicability of the 
current regulations at 7 CFR part 3016 to all USDA agreements, as 
defined in proposed Sec.  3020.2, with State, local, and Indian tribal 
governments. USDA is not revising the substantive requirements of 7 CFR 
part 3016. USDA again considers the proposed rule to have minimal 
federalism implications because State governments are already subject 
to these requirements for assistance awards.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612) requires that, 
for each

[[Page 41955]]

rule with ``a significant economic impact on a substantial number of 
small entities,'' an analysis must be prepared describing the rule's 
impact on small entities and identifying any significant alternatives 
to the rule that would minimize the economic impact on small entities. 
USDA certifies that this proposed rule would not have a significant 
economic impact on a substantial number of small entities.

Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. chapter 25) 
requires agencies to prepare several analyses before proposing any rule 
that may result in annual expenditures of $100 million or more in any 
one year by State, local, and Indian tribal governments or the private 
sector. USDA certifies that this proposed rule will not result in 
expenditures of this magnitude.

Paperwork Reduction Act of 1995

    This proposed rule will not impose additional reporting or record 
keeping requirements under the Paperwork Reduction Act of 1995 (44 
U.S.C. chapter 35).

List of Subjects

7 CFR Part 3015

    Accounting, Grant programs, Intergovernmental relations, Reporting 
and recordkeeping requirements.

7 CFR Parts 3019 and 3020

    Accounting, Colleges and universities, Grant programs, Hospitals, 
Intergovernmental relations, Nonprofit organizations, Reporting and 
recordkeeping requirements.

Edward R. McPherson,
Chief Financial Officer.
Ann M. Veneman,
Secretary of Agriculture.

    For the reasons stated in the preamble, USDA proposes to amend 
parts 3015, 3019 and 3020 of 7 CFR chapter XXX as follows:

PART 3015--[REMOVED AND RESERVED]

    1. Remove and reserve part 3015.

PART 3019--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND 
AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, OTHER 
NONPROFIT, AND FOR-PROFIT ORGANIZATIONS

    2. The authority citation for part 3019 is revised to read as 
follows:

    Authority: 5 U.S.C. 301, Pub. L. 101-576, 7 CFR 2.2, 7 CFR 2.28.

    3. The heading for part 3019 is revised to read as set forth above.
    4. Amend subpart A of 7 CFR part 3019 as follows:

Subpart A--General

    a. Revise Sec.  3019.1 to read as follows:


Sec.  3019.1  Purpose.

    This part establishes uniform administrative requirements for 
Federal grants and agreements awarded to institutions of higher 
education, hospitals, other non-profit organizations, and for-profit 
organizations. USDA awarding agencies shall not impose additional or 
inconsistent requirements, except as provided in Sec. Sec.  3019.4 and 
3019.14 or unless specifically required by Federal statute or executive 
order. Non-profit and for-profit organizations that implement Federal 
programs for the States are also subject to State requirements.
    b. Revise Sec.  3019.2 (cc) to read as follows:


Sec.  3019.2  Definitions.

* * * * *
    (cc) Recipient means an organization receiving financial assistance 
directly from Federal awarding agencies 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 and for-profit organizations such as, 
but not limited to, community action agencies, research institutes, 
educational associations, health centers, commercial organizations, and 
foreign or international organizations (such as agencies of the United 
Nations) which are recipients, subrecipients, or contractors or 
subcontractors of recipients or subrecipients. The term does not 
include procurement contracts or other agreements, that are otherwise 
subject to the Federal Acquisition Regulation (FAR) or the Agriculture 
Acquisition Regulation (AgAR).
* * * * *
    c. Revise Sec.  3019.5 to read as follows:


Sec.  3019.5  Subawards.

    Unless sections of this part specifically exclude subrecipients 
from coverage, the provisions of this part shall be applied to 
subrecipients performing work under awards if such subrecipients are 
institutions of higher education, hospitals, other non-profit 
organizations or for-profit organizations such as, but not limited to, 
community action agencies, research institutes, educational 
associations, health centers, commercial organizations, and foreign or 
international organizations (such as agencies of the United Nations). 
State and local government subrecipients are subject to the provisions 
of regulations implementing the common rule, ``Uniform Administrative 
Requirements for Grants and Cooperative Agreements to State and Local 
Governments,'' codified by USDA at 7 CFR part 3016.
* * * * *
    d. Revise Sec.  3019.26(a) to read as follows:


Sec.  3019.26  Non-Federal audits.

    (a) Non-Federal recipients and subrecipients that receive funds 
from a Federal awarding agency shall be subject to the audit 
requirements codified at 7 CFR part 3052, ``Audits of States, Local 
Governments, and Non-Profit Organizations.''
* * * * *
    5. Add part 3020 as follows:

PART 3020--GENERAL PROGRAM ADMINISTRATION REGULATIONS

Subpart A--General
Sec.
3020.1 Purpose.
3020.2 Applicability.
3020.3 Conflicting policies and deviations.
3020.4 Other regulations applicable to USDA agreements.
Subpart B--Basic Requirements
3020.10 Authority clause.
3020.11 Identification and use of USDA agreements.
3020.12 Program reporting requirements.
3020.13 Acknowledgment of support on publications and audiovisuals.
3020.14 Competing discretionary awards.
3020.15 Program regulations and announcements.
3020.16 Nondiscrimination requirement.
3020.17 Waiver of ``single'' State agency requirements.
Subpart C--Management of Agreements
3020.20 Use of consultants.
3020.21 Disposition of long-term financial interests in real 
property, personal property and equipment.
Subpart D--Management of Funds
3020.30 Management of indirect costs.
3020.31 Physical segregation and eligibility.
3020.32 Funds advanced to recipients.
3020.33 Source of bonds.
3020.34 Limits on total payments to the recipient.
Subpart E--Intergovernmental Review of Department of Agriculture 
Programs and Activities
3020.40 Purpose.
3020.41 State responsibilities.
3020.42 USDA awarding agency responsibilities.

[[Page 41956]]

3020.43 Office of the Chief Financial Officer responsibilities.
3020.44 Processing comments.
3020.45 Accommodation of intergovernmental concerns.
3020.46 State plans.
3020.47 Waivers.
Subpart F--Definitions
3020.50 Definitions and acronyms.

    Authority: 5 U.S.C. 301; Pub. L. 101-576, 104 Stat. 2838.

Subpart A--General


Sec.  3020.1  Purpose.

    This part establishes Department wide standards for USDA's 
administration of Federal programs.


Sec.  3020.2  Applicability.

    (a) USDA agreements. Except as provided for in paragraph (c) of 
this section, this part applies to all USDA agreements.
    (b) USDA agreement recipients. Except as provided for in paragraph 
(c) of this section, this part is applicable to all USDA agreement 
recipients including subrecipients.
    (c) Exceptions. This part does not apply to:
    (1) Procurement contracts or other agreements subject to the 
Federal Acquisition Regulation (FAR) or the Agriculture Acquisition 
Regulation (AgAR).
    (2) Agreements providing loans or insurance directly to an 
individual.
    (3) Agreements with foreign governments.
    (4) Agreements entered into under statutory authorities that 
explicitly exempt such agreements from chapter 63 of title 31, United 
States Code.
    (5) Cooperative research and development agreements entered into 
under 15 U.S.C. 3710a.


Sec.  3020.3  Conflicting policies and deviations.

    (a) Except when authorized to act otherwise by statute or by a 
waiver by the Office of the Chief Financial Officer (OCFO), the 
provisions in this part apply and take precedence over any individual 
USDA agency regulations, directives, and policies dealing with the 
administration of USDA agreements.
    (b) Responsibility for developing, interpreting, and updating this 
part is assigned to the OCFO.


Sec.  3020.4  Other regulations applicable to USDA agreements.

    (a) Related issuances are in other parts of title 7 as follows:
    (1) 7 CFR part 3016 ``Uniform Administrative Requirements for 
Grants and Cooperative Agreements to State and Local Governments;''
    (2) 7 CFR part 3017 subparts A-E ``Governmentwide Debarment and 
Suspension (Nonprocurement);''
    (3) 7 CFR part 3017 subpart F ``Governmentwide requirements for 
Drug-Free Workplace (Grants);''
    (4) 7 CFR part 3018 ``New Restrictions on Lobbying;''
    (5) 7 CFR part 3019 ``Uniform Administrative Requirements for 
Grants and Agreements With Institutions of Higher Education, Hospitals, 
Other Nonprofit Organizations, and For-Profit Organizations;''
    (6) 7 CFR part 3052 ``Audits of States, Local Governments, and 
Nonprofit Organizations,''
    (b) Entitlement and mandatory awards are included in the scope of 
part 3016 and part 3019 of this chapter as determined by the type of 
recipient.
    (c) Awarding agencies are to apply the rules in part 3019 of this 
chapter to for-profit entities.

Subpart B--Basic Requirements


Sec.  3020.10  Authority clause.

    (a) USDA agencies must include in every USDA agreement a clause 
citing the appropriate statutory and funding authority for the 
agreement.
    (b) USDA agencies shall ensure that only those statutorily 
authorized Federal resources are used in support of any agreement.
    (c) USDA agencies shall establish appropriate internal control 
systems to ensure that each agreement is administered within the 
related statutory authority.


Sec.  3020.11  Identification and use of USDA agreements.

    (a) In accordance with 31 U.S.C. Chapter 63, a USDA agency shall 
use the following criteria in identifying the proper type of instrument 
to document a procurement or an assistance relationship with a non-
Federal party.
    (1) Procurement relationship. A USDA agency shall use a procurement 
contract when ``the principal purpose of the relationship is to acquire 
(by purchase, lease, or barter) property or services for the direct 
benefit or use of the United States Government.'' The administration of 
these agreements is subject to the rules set out in the Federal 
Acquisition Regulation (FAR), 48 CFR Chapter 1, and the Agriculture 
Acquisition Regulation (AgAR), 48 CFR Chapter 4.
    (2) Federal assistance relationship.
    (i) Grant agreement. A USDA agency shall use a grant agreement when 
``the principal purpose of the relationship is to transfer a thing of 
value (money, property, services, etc.) to the recipient to carry out a 
public purpose of support or stimulation authorized by a law of the 
United States instead of acquiring (by purchase, lease, or barter) 
property or services for the direct benefit or use of the United States 
Government,'' and ``substantial involvement is not expected'' between 
the USDA agency and the recipient when carrying out the contemplated 
activity.
    (ii) Cooperative agreement. A USDA agency shall use a cooperative 
agreement when ``the principal purpose of the relationship is to 
transfer a thing of value to the recipient to carry out a public 
purpose of support or stimulation authorized by law of the United 
States instead of acquiring (by purchase, lease, or barter) property or 
services for the direct benefit or use of the United States 
Government,'' and ``substantial involvement is expected'' between the 
USDA agency and the recipient when carrying out the contemplated 
activity.
    (b) Memorandum of Understanding (MOU). A USDA agency may use an MOU 
as a planning document to define the nature, terms, and conditions for 
facilitating and coordinating efforts of mutual interest to the parties 
involved. An MOU is not an obligating document and may not be used to 
commit USDA assets or resources in any manner. Other types of 
agreements may be used in conjunction with an MOU to achieve any needed 
commitments.
    (c) Interagency and intra-agency agreements. Agreements between two 
or more Federal entities which result in the transfer of funds or other 
resources for the purpose of carrying out a program, initiative, 
activity or function of the Federal government shall be either an 
inter- or intra-agency transfer.
    (d) Agreements with institutions of higher education, hospitals, 
non-profit, and for-profit organizations. Any USDA agreement, 
regardless of title but excluding agreements subject to the rules set 
out in the FAR and the AgAR, between a USDA agency and any institution 
of higher education, hospital, non-profit, or for-profit organization 
will be governed by this part and part 3019 of this chapter. This 
includes USDA agreements with these types of foreign organizations 
unless specifically excluded or exempted by treaty or statute.
    (e) Agreements with State, local and tribal Governments. Any USDA 
agreement, regardless of title except for agreements subject to the 
rules set out in the FAR and the AgAR, between a USDA agency and any 
State, local or tribal government will be governed by this part and 
part 3016 of this chapter.

[[Page 41957]]

Sec.  3020.12  Program reporting requirements.

    The following are mandatory reporting requirements for all USDA 
agreements:
    (a) Catalog of Federal Domestic Assistance (CFDA). (1) In 
accordance with the Federal Program Information Act (31 U.S.C. chapter 
61), USDA agencies shall submit CFDA information consistent with 
standards, time lines, and formats established by the General Services 
Administration (GSA) or any successor central guidance agency for any 
program that has been determined to be a domestic assistance program as 
defined in that Act.
    (2) Based on the information submitted, the OCFO, in consultation 
with GSA, shall assign an appropriate permanent or temporary CFDA 
number.
    (3) USDA agencies shall include the CFDA number in any printed or 
electronic information available to any non-Federal entity, including 
but not limited to regulatory actions published in the Federal Register 
and program announcements.
    (b) Federal Assistance Award Data System (FAADS). (1) In accordance 
with the Federal Program Information Act and section 201 of the 
Intergovernmental Cooperation Act of 1968 (31 U.S.C. 6502), USDA 
agencies shall submit FAADS information consistent with standards, time 
lines, and formats established by the OCFO and the Department of 
Commerce or any successor central guidance agency for programs 
involving financial transactions that have been determined to be 
domestic assistance as defined in the Federal Program Information Act. 
Non-financial transactions such as dissemination of technical 
information, advisory services or consulting by Federal employees are 
not to be reported in FAADS.
    (2) Agencies are encouraged to transmit FAADS data on-line. 
Agencies may also transmit FAADS data using the batch or tape methods 
of data collection and transmission provided that such methods meet 
established FAADS standards and are approved in advance by the OCFO.


Sec.  3020.13  Acknowledgment of support on publications and 
audiovisuals.

    (a) Publications. Recipients shall acknowledge USDA awarding agency 
support, whether cash or in-kind, in any publications written or 
published with Federal support and, if feasible, on any publication 
reporting the results of, or describing, a Federally supported 
activity.
    (b) Audiovisuals. Recipients shall acknowledge USDA awarding agency 
support in any audiovisual produced with Federal support that has a 
direct production cost to the recipient of over $5,000. Unless the 
terms of the Federal award provide otherwise, this requirement does not 
apply to:
    (1) Audiovisuals produced under mandatory or formula grants or 
under subawards.
    (2) Audiovisuals produced as research instruments or for 
documenting experimentation or findings and not intended for 
presentation or distribution to the general public.
    (c) Waivers. USDA awarding agencies may waive any requirement of 
Sec.  3020.13. USDA awarding agencies may establish such requirements 
and procedures for the waiver process as they deem necessary.


Sec.  3020.14  Competing discretionary awards.

    (a) Standards for competition. Except as provided in paragraph (c) 
of this section, USDA awarding agencies shall enter into discretionary 
assistance agreements only after competition. A USDA agency's 
competitive award process shall adhere to the following standards:
    (1) Potential applicants must be invited to submit proposals 
through publications and electronic media to achieve the broadest 
dissemination of project solicitations in order to reach the highest 
number of potential applicants.
    (2)(i) Proposals are to be evaluated objectively by independent 
reviewers in accordance with written criteria set forth in program 
solicitations. Independent reviewers may be from the public or private 
sector as long as they do not include:
    (A) Anyone who has approval authority for the applications being 
reviewed; or
    (B) Anyone who appears to have a conflict of interest in reviewing 
applications.
    (ii) The appearance of a conflict of interest arises when the 
reviewer or the reviewer's immediate family members have been 
associated with the applicant or applicant organization within the past 
two to five years, as determined by the agency, as an owner, partner, 
officer, director, employee, or consultant; has any financial interest 
in the applicant or applicant organization; or is negotiating for, or 
has any arrangement, concerning prospective employment with the 
applicant. If the awarding agency makes a written determination that 
the pool of qualified individual reviewers is so small that all or 
almost all qualified reviewers would have the appearance of or an 
actual conflict of interest, the awarding agency may waive the 
appearance of conflicts of interest to allow a qualified individual to 
serve as a reviewer. However, the agency may not allow that individual 
to review any applications for which an actual conflict of interest 
exists.
    (3) An unsolicited application that is not unique and innovative 
shall be competed under the USDA program solicitation it comes closest 
to fitting. USDA officials will determine the solicitation under which 
the application is to be competed. When the USDA awarding agency 
official decides that the unsolicited application does not fall under a 
recent, current, or planned solicitation, a noncompetitive award may be 
made, if appropriate to do so under the criteria of paragraph (c) of 
this section. Otherwise, the application should be returned to the 
applicant.
    (b) Approval of applications. The final decision to award is at the 
discretion of the awarding official in each agency. The awarding 
official shall consider the ranking, comments, and recommendations from 
the independent reviewers, and any other pertinent information before 
deciding which applications to fund and their order of funding. Any 
appeals by applicants regarding the award decision shall be handled by 
the awarding agency using existing agency appeal procedures or, in the 
absence of established agency appeal procedures, good administrative 
practice and sound business judgment.
    (c) Exceptions. The awarding official may make a written 
determination that competition is not deemed appropriate for a 
particular transaction. Such determination shall be limited to 
transactions for which a noncompetitive award can be adequately 
justified as being in the best interest of the Government and necessary 
to accomplish the program goals. Reasons to consider noncompetitive 
award may include, but are not limited to, the following:
    (1) Non-monetary awards of property or services;
    (2) Awards of less than $75,000;
    (3) Awards to fund continuing work started under a previous award;
    (4) Awards relating to a current emergency or substantial danger to 
health or safety;
    (5) Awards for which competition is impracticable; or
    (6) Awards to fund unique and innovative unsolicited applications.


Sec.  3020.15  Program regulations and announcements.

    (a) Publication method. The Federal Register is the preferred, and 
in certain instances mandatory, method for providing information to the 
public on

[[Page 41958]]

matters related to USDA agreements and programs.
    (b) Program regulations. Regulations or other documents that 
establish requirements or procedures binding on the public related to 
USDA's programs or activities shall be published in the Federal 
Register.
    (c) Program announcements. For each competition for funds under a 
program, the awarding agency must publicize the availability of Federal 
assistance under the program in either the Federal Register or through 
other methods reasonably expected to notify the targeted audience. 
Program announcements invite applications for one or more stated 
program objectives. They should include at least the following 
information:
    (1) The CFDA number and title;
    (2) An estimate of how much money will be available for awards and 
the expected size of the awards, broken down by subprogram or priority 
area when appropriate;
    (3) Who is eligible;
    (4) How to obtain application kits;
    (5) Where to submit applications;
    (6) The deadline for submitting applications; and
    (7) Whether any or all of the awards are likely to be cooperative 
agreements rather than grants. In that case, if feasible, the program 
announcement should also describe the anticipated substantial Federal 
involvement in performance. (This paragraph does not prevent the award 
of cooperative agreements under a program announcement that mentioned 
only grants. Nor does it prevent the award of grants under a program 
announcement that mentioned only cooperative agreements.)
    (d) Program solicitations. A program solicitation for competitive 
assistance awards by the awarding agency shall include or reference the 
following, as appropriate:
    (1) A description of the eligible activities that the awarding 
agency proposes to support and the program priorities;
    (2) Eligible applicants;
    (3) The dates and amounts of funds expected to be available for 
awards;
    (4) Evaluation criteria and weights, if appropriate, assigned to 
each;
    (5) Methods for evaluating and ranking applications;
    (6) Name and address where proposals should be mailed and 
submission deadlines(s);
    (7) Any required forms and how to obtain them;
    (8) Applicable cost principles and administrative requirements;
    (9) Type of funding instrument intended to be used (grant or 
cooperative agreement); and
    (10) The CFDA number and title.
    (e) Evaluation criteria and procedures. The awarding agency may 
elect to publish its criteria and procedures for evaluating 
applications for competitive awards either in the program regulations 
or the program announcement in addition to the program solicitation. If 
the criteria are not all equal in importance, their relative weights 
should also be published. Failure to identify any relative weights 
creates a presumption that all criteria are weighted equally. The 
criteria should cover at least the following factors (except where the 
nature of the eligible projects makes one or more of these factors 
irrelevant):
    (1) The qualifications of proposed project personnel;
    (2) The adequacy of the applicant's facilities and resources;
    (3) The adequacy of the project plan or methodology;
    (4) The cost-effectiveness of the project; and
    (5) How closely the project objectives fit the objectives for which 
applications were invited.
    (f) Funding priorities. If the awarding agency intends to give 
priority to one or more particular kinds of projects, the priority (and 
how it will be applied in deciding which applications to fund) should 
be described in the program announcement.
    (g) Projects building on prior awards. If the awarding agency 
intends to give a preference to applications proposing to further 
previously funded projects over applications for projects not 
previously receiving support under the program, or vice versa, the 
preference should be described in the program announcement.
    (h) Programs with specific identifiable potential applicants. For 
programs with limited eligibility for which all potential applicants 
can be specifically and accurately identified (for example, State 
Governments), the awarding agency may elect to create a complete list 
of potential applicants and to send a copy of the program announcement 
or program solicitation directly to every potential applicant instead 
of publishing it in the Federal Register, provided that the awarding 
agency establishes an adequate internal control system to ensure that:
    (1) Prior to each use of the list, the list is verified for 
completeness and accuracy; and
    (2) Use of the list does not violate the intent of Sec.  
3020.14(a)(1).
    (i) Additional information to be made available. In addition to the 
items specified in paragraphs (b) through (g) of this section, each 
awarding agency shall make available to the public the following 
information and materials for each program:
    (1) A copy of, or reference to, the authorizing statutes for the 
program; and
    (2) All guidelines generally applicable to administration of the 
program.
    (j) Discussions with applicants. Each awarding agency should 
publish as much information as practicable to reduce the need for 
individual discussions with potential applicants. If the awarding 
agency does engage in consultations or discussions with any potential 
applicants, the agency shall give consistent interpretations and fair 
treatment to all potential applicants. The agency shall ensure that any 
discussions do not knowingly prejudice any applicant or undermine the 
competitive process of the program.


Sec.  3020.16  Nondiscrimination requirement.

    It shall be a condition of every USDA agreement that the recipient 
assures compliance with the following statement:

    No person in the United States shall be excluded from 
participation in, be denied the benefits of, or be otherwise 
subjected to prohibited discrimination in programs and activities 
funded in whole or part by USDA based on race, color, national 
origin, age, disability, and, where applicable, sex, religion or 
political beliefs.


Sec.  3020.17  Waiver of ``single'' State agency requirements.

    (a) Waiver authority. In the event that Federal law requires that a 
single State agency or multi member board or commission be established 
to administer or supervise the administration of a program, then 
section 204 of the Intergovernmental Cooperation Act of 1968 (31 U.S.C. 
6504) authorizes the Federal awarding agency to waive the ``single'' 
State agency requirements upon request of the Governor or other 
authorized State authorities.
    (b) Approval authority. The USDA awarding agency has approval 
authority for waiver requests, and shall handle them as quickly as 
feasible. Approval should be given whenever possible under the 
statutory criteria.
    (c) Refusal procedures. When it is necessary to refuse a request 
for the waiver of the ``single'' State agency requirements, the USDA 
awarding agency shall, through the OCFO, advise the Office of 
Management and Budget (OMB) that the request cannot be granted. Such 
advice should indicate

[[Page 41959]]

the reasons for the denial of the request. The notification to OMB 
shall occur prior to informing the State of the refusal.

Subpart C--Management of Agreements


Sec.  3020.20  Use of consultants.

    (a) Basic policy--(1) Prior approval. Awarding agencies shall not 
require prior approval for the use of consultants, except as noted in 
paragraphs (a)(2) and (b) of this section.
    (2) Exceptions. (i) In unusual cases, using a consultant may 
constitute a transfer of substantive programmatic work, which requires 
prior approval under discretionary Federal awards.
    (ii) Consulting fees paid by an organization to its own employees 
require prior approval.
    (b) Use of an organization's own employees--(1) Faculty members of 
educational institutions. Charges representing extra compensation 
(above base salary) paid by an educational institution to a salaried 
member of its faculty for consulting work are allowable only in unusual 
cases, and only if both of the following conditions exist:
    (i) The consultation is across departmental lines or involves a 
separate or remote operation; and
    (ii) The work performed by the consultant is in addition to his or 
her regular departmental load.
    (2) All other cases. In all other cases, consulting fees paid in 
addition to salary by recipients to people who are also their employees 
may be supported by a Federal award or subaward only in unusual cases, 
and only if all of the following three conditions exist:
    (i) The policies of the recipient permit such consulting fee 
payments to its own employees regardless of whether Federal funds are 
involved;
    (ii) The work involved is clearly outside the scope of the person's 
salaried employment; and
    (iii) It would be inappropriate or not feasible to compensate for 
the additional work by paying additional salary to the employee.
    (3) Requirement for approval. Consulting fees paid under paragraphs 
(a)(2) and (b)(1) and (2) of this section must have a specific prior 
approval in writing from the Head of the recipient organization or from 
his or her designated representative. If the recipient is a government, 
the approval may be given by the Head (or a designated representative 
of the Head) of the government agency that is primarily responsible for 
administering or carrying out the project or program. If the designated 
representative is personally involved in the project or program under 
consideration, only the Head may give the approval. If the Head is 
personally involved in the project or program under consideration, 
prior approval from the awarding agency is required. Such prior 
approval must include a determination that the applicable requirements 
in paragraph (b) (1) or (2) of this section are present.
    (c) Documentation standards. (1) Charges for consulting payments 
must be supported in the records of the recipient by an invoice from 
the consultant and a copy of the written report (if a report is 
appropriate) or other documented evidence of the work performed from 
the consultant.
    (2) If any of the following information is not shown on the invoice 
or report from the consultant, the information must be shown in a 
memorandum or other document prepared by the recipient for its files, 
or noted in handwriting on the consultant's invoice by the recipient. 
The memorandum, other document, or handwritten notation must be signed 
by an official of the recipient and show:
    (i) The name of the consultant;
    (ii) The nature of the services provided (such as statistical 
analysis of data, participation on project advisory committee, or 
specified medical services to eligible beneficiaries);
    (iii) The relevance of the services to the project or program, if 
not apparent from the nature of the services; and
    (iv) Whichever of the following is applicable:
    (A) If the fee was based on a rate per day or hours worked, the 
rate and the dates or hours worked;
    (B) If the fee was based on a rate per unit of service provided, 
such as the number of patients examined by a physician, the rate, the 
number of units of service provided, and the beginning and ending dates 
of the overall period of service; or
    (C) If the fee was determined on some other basis, the basis for 
determining the fee and the beginning and ending dates of the period in 
which services were provided.


Sec.  3020.21  Disposition of long term financial interests in real 
property, personal property, and equipment.

    (a) When a USDA agency acquires a financial interest in real 
property in accordance with the rules set out in part 3016 or part 3019 
of this chapter, and the originally authorized purpose for the property 
has been met, agencies shall follow the appropriate rules set out in 
part 3016 or part 3019 of this chapter for the disposal of such real 
property except:
    (1) When the recipient is a State or local government requesting 
authority to dispose of the property by sale to a domestic, non-
governmental entity in accordance with Executive Order 12803 
``Infrastructure Privatization,'' then the USDA awarding agency shall 
follow the method set out in Executive Order12803 provided that the 
real property portion of the transaction is not depreciated in any 
manner.
    (2) When the recipient has not requested disposal instructions and 
20 years have passed since the last Federal need or use of the real 
property, then any Federal financial interest in the property shall be 
deemed to have ended.
    (b) When a USDA agency acquires a financial interest in personal 
property or equipment in accordance with the rules set out in part 3016 
or part 3019 of this chapter, and the originally authorized purpose for 
the property or equipment has been met, the agency shall follow the 
appropriate rules set out in part 3016 or part 3019 of this chapter for 
the disposal of such property or equipment except:
    (1) When the recipient has not requested disposal instructions and 
20 years have passed since the last Federal need or use of the property 
or equipment, then any Federal financial interest in the property or 
equipment shall be deemed to have ended.
    (2) [Reserved]

Subpart D--Management of Funds


Sec.  3020.30  Management of indirect costs.

    (a) Indirect costs may be paid only subsequent to the establishment 
of an indirect cost rate as required by Sec. Sec.  3016.22 and 3019.27 
of this chapter and the applicable cost principles or in the case of 
for-profit entities, the cost accounting standards. A provisional rate 
may be used pending the establishment of a final rate. In the absence 
of either a final or provisional indirect cost rate, awarding agencies 
are not authorized to advance or reimburse payments to entities for 
these costs.
    (b) An awarding agency should pay the established indirect cost 
rate. Only where statutory authority exists, an awarding agency may pay 
an increase in the established direct cost rate. An awarding agency may 
pay a lesser amount than the established indirect cost rate if required 
by statute or if the recipient waives some or all of its indirect 
costs.
    (c)(1) Recipients requesting payment of indirect costs may request 
the establishment of a negotiated indirect

[[Page 41960]]

cost rate. Such requests should be made to:
    (i) The Federal department designated by the OMB to be the lead 
agency;
    (ii) The Federal department providing the most Federal money in the 
current fiscal year; or
    (iii) The Federal department with which the entity has had the 
longest standing relationship.
    (2) When USDA is the Federal department responsible for negotiating 
the indirect cost rate, the request shall be made to the OCFO. The OCFO 
will determine which of the USDA agencies shall conduct the 
negotiation. Only those USDA agencies that have been delegated 
negotiation authority by the OCFO may conduct indirect cost rate 
negotiations.


Sec.  3020.31  Physical segregation and eligibility.

    (a) Except as provided in Sec. Sec.  3020.32, 3016.21 (h), and 
3019.22 (i),(j), and (k) of this chapter, awarding agencies shall not 
impose conditions which:
    (1) Require the recipient to use a separate bank account for the 
deposit of Federal funds; or
    (2) Establish any eligibility requirements for banks or other 
financial institutions in which recipients deposit Federal funds for 
USDA agreements.
    (b) [Reserved]


Sec.  3020.32  Funds advanced to recipients.

    Any moneys advanced to recipients that remain subject to the 
control or regulation of the United States or any of its officers, 
agents, or employees (public moneys as defined in 31 CFR 202.1), must 
be deposited in a bank with FDIC insurance coverage whenever possible, 
and the balance exceeding the FDIC coverage must be collaterally 
secured.


Sec.  3020.33  Source of bonds.

    Any bonds required under Sec.  3016.36 (h)(1) through (3) or 
Sec. Sec.  3019.21 (c) and (d) and 3019.48 (c)(1) through (3) of this 
chapter shall be obtained from companies holding certificates of 
authority as acceptable sureties listed by the Department of the 
Treasury in its Department Circular 570.


Sec.  3020.34  Limits on total payments to the recipient.

    (a) This section summarizes the four most widely applicable limits 
on the total amount of money the recipient is entitled to receive from 
USDA as a result of a Federal award. It is permissible for the terms of 
a USDA agreement to provide one or more additional limits.
    (b) For each Federal award, the lowest of the applicable limits is 
the one that governs the final settlement upon expiration or 
termination of the award.
    (c) The following two limits apply to every Federal award:
    (1) The amount of Federal funds authorized; and
    (2) The Federal share of the allowable costs incurred by the 
recipient.
    (d) Federal awards that require a specified percentage of cost 
sharing or matching are subject to the applicable limits described in 
Sec. Sec.  3016.24 and 3019.23 of this chapter.
    (e) For each budget period of an incrementally funded discretionary 
Federal award, the limit is the Federal share of the allowable costs 
for that period's approved budget.

Subpart E--Intergovernmental Review of Department of Agriculture 
Programs and Activities


Sec.  3020.40  Purpose.

    (a) This subpart establishes regulations implementing Executive 
Order 12372, ``Intergovernmental Review of Federal Programs'' and the 
applicable provisions of section 401 of the Intergovernmental 
Cooperation Act of 1968 (31 U.S.C. 6506) and section 204 of the 
Demonstration Cities and Metropolitan Development Act of 1966 (42 
U.S.C. 3334).
    (b) This subpart is intended to foster an intergovernmental 
partnership for review of proposed Federal financial assistance and 
direct Federal development.


Sec.  3020.41  State responsibilities.

    (a) A State may elect to establish a coordinated review process 
within the State to review proposed Federal awards. The State review 
process shall consist of a Single Point Of Contact (SPOC) with the 
assigned functions of:
    (1) Selecting any of the programs or activities published in the 
Federal Register in accordance with Sec.  3020.42 (a) for 
intergovernmental review. Each SPOC, before selecting programs and 
activities, should consult with local elected officials;
    (2) Notifying the USDA awarding agency of the Department's programs 
and activities selected for the State review process. A State may 
notify the USDA awarding agency of changes in its selections anytime;
    (3) Reviewing proposed Federal awards forwarded to the SPOC by the 
USDA awarding agency;
    (4) Distributing for comment the proposed award to all interested 
or affected local governments or other interested parties within the 
State, and compiling and analyzing any comments received;
    (5) Providing the USDA awarding agency with a consolidated State 
recommendation for or against the proposed Federal award;
    (6) Providing the USDA awarding agency with the State Agency 
Identification (SAI) number on each SPOC recommendation, if the SPOC 
process includes a State tracking system that assigns SAI numbers.
    (b) If a State elects not to establish a SPOC in accordance with 
paragraph (a) of this section or the SPOC does not select a particular 
program or activity, the State, area wide, regional and local officials 
and entities may submit comments in accordance with Sec.  3020.42 
(b)(2).


Sec.  3020.42  USDA awarding agency responsibilities.

    (a) The USDA awarding agency is required to publish in the Federal 
Register a list of the agency's programs and activities that are 
subject to this subpart and identify which of these are also subject to 
the requirements of section 204 of the Demonstration Cities and 
Metropolitan Development Act (42 U.S.C. 3334).
    (1) The USDA awarding agency shall obtain clearance from the OCFO 
for any Federal Register publications regarding implementation of this 
subpart.
    (2) In coordination with the SPOC, each USDA awarding agency shall 
maintain a current list of the programs and activities selected by the 
SPOC for review in accordance withSec.  3020.41 (a) (2).
    (b) The USDA awarding agency is responsible for notifying all State 
and local governments that would be directly affected by proposed 
Federal financial awards from, or direct Federal development by, USDA:
    (1) When a State has established a process under Sec.  3020.41 (a), 
the USDA awarding agency shall exclusively use that process adopted by 
the State to review and coordinate proposed awards and shall allow a 
minimum of 60 days for the SPOC to comment on proposed awards. The USDA 
awarding agency shall allow for a comment period of less than 60 days 
only with the formal concurrence of the SPOC.
    (2) When a State has not established a process or a program or 
activity has not been selected by the SPOC for review, the USDA 
awarding agency shall notify each of the affected State and local 
government officials directly and shall allow a minimum of 30 days for 
comments on proposed awards.
    (c) The USDA awarding agency shall establish a system for accepting 
and evaluating comments when received

[[Page 41961]]

from the SPOC or individual entities and shall maintain appropriate 
records.
    (1) The USDA awarding agency should make every effort to coordinate 
the process adopted by States at the Federal organizational level 
geographically closest to the State and local government affected.
    (2) The USDA awarding agency shall establish a system to ensure 
that the SPOC assigned SAI number is entered into the FAADS database in 
an accurate and timely manner.
    (3) The USDA awarding agency shall make every effort to resolve 
State and local elected officials' concerns with proposed awards.


Sec.  3020.43  Office of the Chief Financial Officer responsibilities.

    (a) OCFO approval is a required prerequisite for any Federal 
Register publication listing USDA programs and activities that are 
subject to these regulations and subject to the requirements of section 
204 of the Demonstration Cities and Metropolitan Development Act (42 
U.S.C. 3334).
    (b) The OCFO will coordinate the resolution of any conflicts 
between the USDA awarding agency and the SPOC in accordance with Sec.  
3020.45 (b).
    (c) The OCFO ensures that the USDA central database, FAADS, 
supports the requirements of this system, including accurate SAI 
numbers.
    (d) The OCFO, to the extent practicable, shall consult with and 
seek advice from all other substantially affected Federal departments 
and agencies in an effort to ensure full coordination between such 
agencies and the Department regarding programs and activities covered 
under this subpart.


Sec.  3020.44  Processing comments.

    (a) Application. The USDA awarding agency shall provide a copy of 
the award application to all affected entities either through the SPOC 
in States where a process has been established or to each entity 
directly in non-SPOC States.
    (b) Comments. All comments on proposed awards shall be sent to the 
USDA awarding agency and processed in accordance with this section 
before the USDA awarding agency makes a final decision on the award.
    (1) Comments shall be sent to the USDA awarding agency in the 30 or 
60 days time period as required in Sec.  3020.42 (b)(1) or (2). If this 
time expires or if all relevant substantive comments are favorable, the 
USDA awarding agency may move to a final decision on the application 
provided only that the action be documented in the award file.
    (2) [Reserved]
    (c) Opposition comments. If comments are in opposition to the 
proposed award or request a substantive change to the award, the USDA 
awarding agency shall make every effort to resolve the differences.
    (1) In non-SPOC States, the USDA awarding agency shall notify each 
commenter of agency's final decision. Other than documenting this 
action in the award file, no further action is required on the part of 
the USDA awarding agency.
    (2) In SPOC States, if the USDA awarding agency and the SPOC 
resolve their differences then the USDA awarding agency may move to a 
final decision on the application provided only that the action be 
documented in the award file.
    (3) If the SPOC issues are not resolved then the process set out in 
Sec.  3020.45 shall be followed.


Sec.  3020.45  Accommodation of intergovernmental concerns.

    (a) When any issues raised by the SPOC in opposition to the award 
are not resolved informally as set out in Sec.  3020.44, the USDA 
awarding agency shall provide the SPOC with a written explanation of 
the agency's reasons for not accepting the SPOC recommendations. The 
USDA awarding agency may supplement the written explanation by also 
providing the explanation to the SPOC by telephone, other 
telecommunication, or other means. In any explanation the USDA awarding 
agency shall inform the SPOC that:
    (1) The SPOC has 10 days to respond to the agency's position. For 
purposes of computing the waiting period, a SPOC is presumed to have 
received written notification five days after the date of mailing of 
such notification;
    (2) The USDA awarding agency will not implement its decision during 
this period.
    (3) If the SPOC response is favorable or if no response is received 
from the SPOC within the time set out in paragraph (a) (1) of this 
section, the USDA awarding agency may proceed to a final decision on 
the award with appropriate documentation to the file.
    (b) When the SPOC does not accept the USDA awarding agency's 
explanation, the SPOC may file an appeal to the Department by sending 
written notification, including background information, to both the 
agency and the OCFO within the time frame set out in paragraph (a) (1) 
of this section.
    (1) The OCFO will notify the appropriate Under or Assistant 
Secretary and the Head of the USDA awarding agency and prepare the 
disputed issue for presentation to the Secretary of Agriculture for 
final decision.
    (2) At any point prior to the Secretary of Agriculture's decision, 
the parties to the dispute may resolve the issues and immediately 
notify the OCFO. The OCFO will withdraw the request for a Secretarial 
decision and notify the USDA awarding agency to proceed to final 
decision on the award.


Sec.  3020.46  State plans.

    The statutes authorizing some Federal programs require States to 
submit plans before receiving awards.
    (a) Such plans are subject to the requirements set out in Sec.  
3016.11 of this chapter.
    (b) If not inconsistent with law, a State may elect to submit for 
review, without prior approval, a plan that:
    (1) Consists of a State developed format, planning period, and 
submission date;
    (2) Consolidates two or more plans; or
    (3) Was developed for the State's own purposes.
    (c) The USDA awarding agency shall reject such plans only when they 
fail to meet those Federal administrative or programmatic requirements 
that are in statutes or codified regulations.


Sec.  3020.47  Waivers.

    In an emergency, the Secretary of Agriculture may waive any 
provision of this subpart E.

Subpart F--Definitions


Sec.  3020.50  Definitions and acronyms.

    Approved budget means a budget (including any revised budget) that 
has been approved in writing by the awarding agency. (See the 
definition of ``budget'').
    Audiovisual means a product containing visual imagery or sound or 
both. Examples of audiovisuals are motion pictures, live or prerecorded 
radio or television programs, slide shows, filmstrips, audio 
recordings, and multimedia presentations. The term does not include the 
placing of captions for the hearing impaired on films or videotapes not 
originally produced for use by the hearing impaired.
    Awarding agency means:
    (1) The USDA agency, such as the Forest Service, making the award, 
and
    (2) For subawards, the recipient.
    Budget means the recipient's financial expenditure plan approved by 
the awarding agency to carry out the purposes of the Federally 
supported project. The budget is comprised of both the Federal share 
and any non-Federal

[[Page 41962]]

share of such plan and any subsequent authorized rebudgeting of funds. 
For those programs that do not involve Federal approval of the non-
Federal share of costs the term budget means the financial expenditure 
plan approved by the awarding agency including any subsequent 
authorized rebudgeting of funds, for the use of Federal funds only. Any 
expenditure charged to an approved budget consisting of Federal and 
non-Federal shares is deemed to be supported by the agreement in the 
same proportion as the percentage of Federal/non-Federal participation 
in the overall budget.
    Budget period means the period specified in the agreement during 
which Federal funds awarded are authorized to be expended, obligated, 
or firmly committed by the recipient for the purposes specified in the 
agreement.
    CFR means the Code of Federal Regulations.
    Consultant means a person who gives advice or services for a fee, 
but not as an employee. The term includes guest speakers when not 
acting as employees of the party that engages them. Note that in 
unusual cases it is possible for a person to be both an employee and a 
consultant at the same time. (See Sec.  3020.20.)
    Cost-sharing and matching each mean that portion of the allowable 
costs not supported by the Federal Government including the value of 
any third party in-kind contributions. (The terms cost-sharing and 
matching, in this part, are synonymous.)
    Department means the U. S. Department of Agriculture
    Discretionary Federal agreements are ones which a Federal statute 
authorizes but does not require USDA to award.
    FDIC means the Federal Deposit Insurance Corporation.
    Federal funds authorized means the total amount of Federal funds 
obligated by the Federal Government for use by the recipient. This 
amount is a limit on the total amount of money that the recipient is 
entitled to receive from the Federal Government as a result of the 
award.
    GSA means the General Services Administration.
    Local government means a local unit of government including 
specifically, a county, municipality, city, town, township, local 
public authority, school district, special district, intrastate 
district, council of governments (whether or not incorporated as a 
nonprofit corporation under State law), sponsor or sponsoring local 
organization of a watershed project (as defined in 7 CFR 622.10), any 
other regional or interstate government entity, or any agency or 
instrumentality of a local government.
    Mandatory or formula Federal agreements are ones which a Federal 
statute requires USDA to award if the applicant meets specified 
conditions.
    Obligations mean the amounts of orders placed, contracts and 
subgrants awarded, services received, and similar transactions during a 
given period, which will require payment during the same or future 
period.
    OCFO means the Office of the Chief Financial Officer, which is an 
organizational component in USDA reporting to the Secretary of 
Agriculture, or any successor organizational unit.
    OMB means the Office of Management and Budget in the Executive 
Office of the President.
    Publication means a book, periodical, pamphlet, brochure, flier, or 
similar item, whether published by paper or electronic means.
    Recipient means a State or local government, Federally recognized 
Indian Tribe, institution of higher education, non-profit organization, 
for profit organization, or other non-Federal organization such as, but 
not limited to, community action agencies, research institutes, 
educational associations, health centers, commercial organizations, 
foreign or international organizations (such as agencies of the United 
Nations) that are a party to or a subrecipient, or contractor or 
subcontractor of a party to or subrecipient of a USDA agreement.
    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, the Republic of Palau, the Federated 
States of Micronesia, the Republic of the Marshall Islands, or any 
agency or instrumentality of a State. The term does not include local 
governments.
    Subaward means: (1) An award of money or property that:
    (i) Is made under a USDA agreement by the recipient; and
    (ii) Is made principally to accomplish a purpose of support or 
stimulation rather than to establish a buyer-seller relationship 
between the two parties.
    (2) Any award by a recipient that meets that definition is a 
subaward even if the parties to the award use some other label such as 
grant, agreement, cooperative agreement, contract, allotment, or 
delegation agreement. Also, if the award meets that definition, it is a 
subaward whether or not the awarding agency is expected to be 
substantially involved in its performance. However, the term subaward 
does not include any type of relationship under an agreement excluded 
from the scope of USDA agreements in Sec.  3020.2;
    Termination of an award means permanent withdrawal or voluntary 
relinquishment of the recipient's authority to obligate previously 
awarded funds before that authority would otherwise expire. Termination 
does not include:
    (1) Withdrawal of the unobligated balance upon expiration of award;
    (2) Refusal by the awarding agency to extend an award or to award 
additional funds (such as refusal to make a competitive or 
noncompetitive continuation, renewal, extension, or supplemental 
award);
    (3) Annulment, i.e., voiding of an award upon determination that 
the award was obtained fraudulently or was otherwise illegal or invalid 
from inception;
    (4) Withdrawal of surplus Federal funds under a discretionary award 
or any analogous withdrawal of funds by a recipient from a 
subrecipient; or
    (5) Withdrawal under a mandatory or formula USDA award of surplus 
Federal funds authorized which the recipient will not obligate during 
the fiscal year, or any analogous withdrawal of funds by a recipient 
from a subrecipient.
    Terms mean all rights and duties created by the award, whether by 
statute, regulation, the award document or any other document.
    Third party means, with respect to a USDA agreement, any entity 
except:
    (1) The Federal government,
    (2) The recipient of the agreement, and
    (3) Subrecipients under that agreement.
    Third party in-kind contributions mean property or services 
benefiting the USDA assisted project or program that are contributed by 
third parties without charge.
    Unobligated balance means the portion of Federal funds authorized 
that has not been obligated by the recipient. It is calculated by 
subtracting the Federal share of the recipient's cumulative obligations 
from the cumulative Federal funds authorized.
    USDA Agency means any USDA agency, office or comparable 
organizational unit established by statute, by the President of the 
United States, or by the Secretary of Agriculture.

[FR Doc. 03-17777 Filed 7-15-03; 8:45 am]
BILLING CODE 3410-90-P