[Federal Register Volume 80, Number 167 (Friday, August 28, 2015)]
[Notices]
[Pages 52258-52264]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-21355]


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DEPARTMENT OF DEFENSE

Department of the Army, Corps of Engineers


Guidelines for Carrying Out Section 221(a)(4) of the Flood 
Control Act of 1970, as Amended

AGENCY: United States Army Corps of Engineers, Department of Defense.

ACTION: Notice.

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SUMMARY: The U.S. Army Corps of Engineers (Corps) has updated the 
existing guidance for providing in-kind credit under Section 221(a)(4) 
of the Flood Control Act of 1970, as further amended by Section 1018 of 
the Water Resources Reform and Development Act of 2014.

DATES: Written comments must be submitted on or before September 28, 
2015.

ADDRESSES: You may submit comments, identified by docket number COE-
2015-0013 by any of the following methods:
    Federal eRulemaking Portal: http://www.regulations.gov . Follow the 
instructions for submitting comments.
    Email: [email protected]. Include the docket number, 
COE-2015-0013, in the subject line of the message.
    Mail: U.S. Army Corps of Engineers, Attn: CECW-CE, Janice E. 
Rasgus, 441 G Street NW., Washington, DC 20314-1000.
    Hand Delivery/Courier: Due to security requirements, we cannot 
receive comments by hand delivery or courier.
    Instructions: Direct your comments to docket number COE-2015-0013. 
All comments received will be included in the public docket without 
change and may be made available on-line at http://www.regulations.gov, 
including any personal information provided, unless the commenter 
indicates that the comment includes information claimed to be 
Confidential Business Information (CBI) or other information whose 
disclosure is restricted by statute. Do not submit information that you 
consider to be CBI, or otherwise protected, through regulations.gov or 
email. The regulations.gov Web site is an anonymous access system, 
which means we will not know your identity or contact information 
unless you provide it in the body of your comment. If you send an email 
directly to the Corps without going through regulations.gov, your email 
address will be automatically captured and included as part of the 
comment that is placed in the public docket and made available on the 
Internet. If you submit an electronic comment, we recommend that you 
include your name and other contact information in the body of your 
comment and with any disk or CD-ROM you submit. If we cannot read your 
comment because of technical difficulties and cannot contact you for 
clarification, we may not be able to consider your comment. Electronic 
comments should avoid the use of any special characters, any form of 
encryption, and be free of any defects or viruses.
    Docket: For access to the docket to read background documents or 
comments received, go to www.regulations.gov. All documents in the 
docket are listed. Although listed in the index, some information is 
not publicly available, such as CBI or other information whose 
disclosure is restricted by statute. Certain other material, such as 
copyrighted material, is not placed on the Internet and will be 
publicly available only in hard copy form.

FOR FURTHER INFORMATION CONTACT: Janice E. Rasgus, Planning and Policy 
Division, Washington, DC at 202-761-7674.

SUPPLEMENTARY INFORMATION: Section 1018(d) of WRRDA 2014 requires the 
Corps to update and publish this draft of ER 1165-2-208 in the Federal 
Register and offer the public an opportunity to comment on the proposed 
guidelines. The Corps will review all comments received by the deadline 
and will make its response to those comments available when then ER is 
finalized and published on the Corps Web site.
    Authority: We are proposing to issue this Engineering Regulation 
under the authority of Section 221 (a)(4) of the Flood Control Act of 
1970, as amended.

    Dated: August 24, 2015.
Theodore A. Brown,
Chief, Planning and Policy Division, Directorate of Civil Works.

Engineering Regulation, ER 1165-2-208, In-Kind Contribution Credit 
Provisions of Section 221(a)(4) of the Flood Control Act of 1970, as 
amended.

    1. Purpose. This regulation provides guidance on the implementation 
of the in-kind contribution credit provisions of Section 221(a)(4) of 
the Flood Control Act of 1970, as further amended by Section 1018 of 
the Water Resources Reform and Development Act of 2014 (WRRDA 2014) (42 
U.S.C. 1962d-5b(a)(4)) (hereinafter referred to as ``Section 221''). 
Section 221(a)(4) of the Flood Control Act of 1970, as amended, and 
Section 1018 of WRRDA 2014 are provided in Appendix A. This regulation 
supersedes ER 1165-2-208 dated 17 February 2012.
    2. Distribution Statement. Approved for public release. 
Distribution is unlimited.
    3. Applicability. This regulation applies to all HQUSACE elements, 
Major Subordinate Commands (MSCs), and district commands having Civil 
Works responsibility and is effective immediately.
    a. The Section 221 crediting provisions apply to the study, design, 
and construction of water resources development projects authorized in 
the Water Resources Development Act of 1986 or later laws, including 
projects initiated after November 16, 1986 without specific 
authorization in law. In addition, the crediting provisions apply to 
the correction of design deficiencies for projects authorized prior to 
the Water Resources Development Act of 1986. Finally, these provisions 
are also applicable to a project under the an environmental 
infrastructure assistance program.
    (1) For a project with a project partnership agreement (PPA) that 
was executed on or after November 8, 2007, such PPA may be amended to 
include work by the non-Federal sponsor that

[[Page 52259]]

has not yet been initiated for credit toward any remaining non-Federal 
cost share under that agreement.
    (2) Furthermore, in general, the crediting provisions of Section 
221 will be used in lieu of Section 104 of WRDA 1986 and Section 215 of 
the Flood Control Act of 1968. However, any eligibility for credit 
under Section 104 of WRDA 1986 that was approved previously by the 
Secretary will be honored.
    b. The authority for credit under Section 221 credit is in addition 
to any other authority to provide credit for in-kind contributions. 
Section 221 credit may be applied in lieu of other crediting provisions 
if requested by the non-federal sponsor.
    4. Key Principles.
    a. In General. Section 221 is a comprehensive authority that 
addresses the affording of credit for the value of in-kind 
contributions provided by a non-Federal sponsor toward its required 
cost share (excluding the required 5 percent cash for structural flood 
damage reduction projects and the additional 10 percent cash payment 
over 30 years for navigation projects) if those in-kind contributions 
are determined to be integral to a study or project.
    b. Types of In-Kind Contributions. The types of in-kind 
contributions eligible for credit include planning activities 
(including data collection and other services needed for a feasibility 
study); design related to construction; and construction (including 
management; mitigation; and construction materials and services).
    c. Compliance with Applicable Federal Laws, Regulations, and 
Policies. Eligibility for credit is subject to the non-Federal sponsor 
complying with all applicable Federal laws and implementing 
regulations, including, but not limited to Section 601 of the Civil 
Rights Act of 1964, as amended (42 U.S.C. 2000d), and Department of 
Defense Directive 5500.11 issued pursuant thereto; the Age 
Discrimination Act of 1975 (42 U.S.C. 6102); the Rehabilitation Act of 
1973, as amended (29 U.S.C. 794), and Army Regulation 600-7 issued 
pursuant thereto; and 40 U.S.C. 3141-3148 and 40 U.S.C. 3701-3708 
(labor standards originally enacted as the Davis-Bacon Act, the 
Contract Work Hours and Safety Standards Act, the Copeland Anti-
Kickback Act); and the National Environmental Policy Act and other 
environmental laws and regulations.
    d. In-Kind Memorandum of Understanding (MOU).
    (1) Construction. Section 221 provides that any construction work 
that has not been carried out as of November 8, 2007 is eligible for 
credit only if the non-Federal sponsor executes an agreement with the 
Secretary prior to carrying out such work. For purposes of section 221 
crediting only, ``carrying out'' construction work means initiation of 
construction using the non-Federal sponsor's labor force or issuance of 
the notice to proceed for such construction if undertaken by contract. 
Therefore, in those cases where there is not yet an executed PPA, the 
non-Federal sponsor must execute an in-kind MOU with the Corps of 
Engineers prior to initiating construction or issuing the notice to 
proceed. Design work associated with that construction is eligible for 
credit as long as an in-kind MOU or PPA is executed prior to the 
construction being carried out. In addition, the construction carried 
out by the non-Federal sponsor is not considered as part of the future 
without project condition.
    (a) Projects Specifically Authorized. For projects that are or will 
be specifically authorized for construction, an In-Kind MOU for 
construction may be executed once there is vertical team concurrence 
with the Tentatively Selected Plan (TSP Milestone). The TSP milestone 
is the point at which there is vertical team concurrence on the plan 
that will be released in the draft study report for public and agency 
review. Given the new SMART Planning Process, the TSP Milestone should 
occur much earlier in the planning process than what was previously 
achieved. Requests from non-Federal sponsors to execute an in-kind MOU 
for construction prior to the TSP Milestone will be considered on a 
case-by- case basis and must be approved by the Assistant Secretary of 
the Army (Civil Works). Since each project presents its own unique 
combination of circumstances, each request will require an individual 
evaluation that will include consideration of, but not limited to, the 
following criteria:
    (i) Whether the proposed work is a modification of an existing 
Federal project;
    (ii) Whether the proposed work will follow an existing levee 
alignment in the case of a flood risk management project;
    (iii) Whether the proposed work balances and integrates the wise 
use of flood plains to ensure public safety;
    (iv) Whether the proposed work significantly reduces flood damage 
risk to human life, property or critical infrastructure; and
    (iv) Whether the proposed work will likely be included in the final 
project recommendation.
    (b) Continuing Authority Program. For projects implemented under 
the Continuing Authority Program or a regional authority that does not 
require additional authorization to implement the project, an In-Kind 
MOU for design and implementation may be executed after the MSC 
Commander approves the decision document for the project.
    (2) Design. For projects that are or will be specifically 
authorized for construction, an In-Kind MOU for design may be executed 
after the TSP milestone, i.e., the point at which there is vertical 
team concurrence on the tentatively selected plan that will be released 
in the draft study report for public and agency review.
    (3) Planning.
    (a) Projects Specifically Authorized. For projects that are or will 
be specifically authorized for construction, Section 1002 of WRRDA 2014 
eliminated the full Federal reconnaissance phase that used to be 
undertaken prior to execution of a feasibility cost sharing agreement. 
In the past, a project management plan, which established the scope of 
the planning, including activities needed to carry out the study, was 
developed during this reconnaissance phase. Under the new single phase 
study process mandated by WRRDA 2014, the project management plan will 
not be developed until after execution of feasibility cost sharing 
agreement. Therefore, an In-Kind MOU for planning is not permitted as 
the project management plan, including a determination of the scope of 
the study, will not be developed until after execution of a feasibility 
cost sharing agreement.
    (b) Continuing Authority Program. For projects implemented under 
the Continuing Authority Program or a regional authority that does not 
require additional authorization to implement the project, sections 
905(c) and 105(a)(3) of WRDA 1986, as amended, provide that the first 
$100,000 of these studies is a Federal expense. Therefore, once a PMP 
has been developed and the MSC Commander has approved initiation of the 
feasibility study, an In-Kind MOU for planning may be executed.
    (4) Any work undertaken by a non-Federal sponsor pursuant to an In-
Kind MOU is at its own risk and responsibility. An In-Kind MOU provides 
no assurance that the non-Federal sponsor's work will be determined to 
be integral to the Federal project or that any construction undertaken 
by the non-Federal sponsor will be included as part of any ultimately 
recommended Federal project. Execution of an In-Kind MOU in no way 
obligates the Corps to enter

[[Page 52260]]

into any future agreement for the project.
    (5) MSC Commanders may approve a District Engineer's execution of 
Model In-Kind MOUs for Construction or for Design, provided that the 
MOUs do not include any deviations. Any proposed deviations must be 
submitted to HQUSACE for approval prior to execution. Models for the 
In-kind MOU for construction, including design work, and for design 
work only are available at www.Corpsplanning.us.
    e. Integral Determinations.
    (1) Section 221 provides that credit may be afforded only if the 
Secretary determines that the material or service provided as an in-
kind contribution by a non-Federal sponsor is integral to the study or 
project.\1\ To be integral to the study or project, the material or 
service must be part of the work that the Federal Government would 
otherwise have undertaken for the study or for construction of what is 
ultimately determined to be the Federal project. See Appendix B for 
additional guidance on criteria and procedures for processing integral 
determinations.
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    \1\ The costs of Coordination Team participation and audits are 
not in-kind contributions and are not included in ``shared costs'' 
for cost sharing purposes. The costs of the non-Federal Sponsor's 
performance of investigations for hazardous substances are eligible 
for inclusion as a shared costs and for credit as an in-kind 
contribution and do not require a separate integral determination.
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    (2) The approval of integral determinations is delegated to the MSC 
Commander. The approval authority delegated to the MSC Commander is 
subject to the full compliance of each integral determination to law 
and policy and may not be further delegated within the MSC or to the 
District Commander. A separate integral determination is not required 
for planning activities included in the project management plan, 
approved by the MSC Commander, as required for the study effort.
    f. Determining the Amount of Credit.
    (1) The amount of in-kind contributions that may be eligible for 
inclusion in shared costs for cost sharing purposes under the 
applicable cost sharing agreement will be subject to an audit by the 
Government to determine the reasonableness, allocability, and 
allowability of such amount.
    (2) The creditable amount is the lesser of the costs incurred by 
the non-Federal sponsor to obtain such materials or services; the 
market value of such materials or services as of the date that the non-
Federal sponsor provides such materials or services for use in the 
study or project; or the Government's estimate of the cost for such 
work if it had been accomplished by the Government. This amount is not 
subject to interest charges or to adjustment to reflect changes in 
price levels between the time the in-kind contributions were completed 
and the time the amount is credited.
    (3) Any in-kind contributions performed or paid for by the non-
Federal sponsor using funds provided by another Federal agency (as well 
as any non-Federal matching share or contribution that was required by 
such Federal agency for such program or grant) are not eligible for 
credit unless the Federal agency providing the Federal portion of such 
funds verifies in writing that the funds are authorized to be used to 
carry out the study or project.
    (4) After execution of the applicable FCSA, DA, or PPA, the non-
Federal sponsor will submit to the Government (not less frequently than 
every 6 months) credit request(s) for eligible in-kind contributions 
under that agreement. The credit requests will contain the following: 
(a) Written certification by the non-Federal sponsor of the payments 
made to contractors, suppliers, or employees for in-kind contributions; 
(b) copies of all relevant invoices and evidence of such payments; (c) 
written identification of costs that have been paid with funds or 
grants provided by a Federal agency as well as any non-Federal matching 
share or contribution that was required by such Federal agency for such 
program or grant; and (d) a written request for credit of a specific 
amount not in excess of such specified payments. Failure to provide 
sufficient documentation supporting the credit request will result in a 
denial of credit in accordance with the terms of the applicable cost 
sharing agreement.
    (5) In-kind contributions are subject to a review (for feasibility 
level and design activities) or on-site inspection (construction), as 
applicable, and certification by the Government that the work was 
accomplished in a satisfactory manner and in accordance with applicable 
Federal laws, regulations, and policies. The Government will not 
include in the costs to be shared under the applicable cost sharing 
agreement or afford credit for any work the Government determines was 
not accomplished in a satisfactory manner or in accordance with 
applicable Federal laws, regulations, and policies.
    (6) In general, the amount of credit for in-kind contributions that 
can be afforded under a FCSA or a PPA is limited to the amount of the 
non-Federal sponsor's cost share under that agreement. As the costs of 
design under a Design Agreement (DA) are included in total project 
costs under a PPA, credit for in-kind contributions under a DA is 
carried over to the PPA, and the maximum of amount of credit for in-
kind contributions under a PPA is limited to the non-Federal sponsor's 
required cost share under the PPA. Credit for in-kind contributions may 
not be afforded toward the required 5 percent cash payment for 
structural flood damage reduction projects or the additional 10 percent 
cash payment for navigation projects.
    (7) Credit for in-kind contributions for planning is limited to 
credit that can be afforded under a specific FCSA. In other words, 
excess credit may not be carried over to design or construction of the 
project. Credit for planning work by the non-Federal sponsor is limited 
to its 50 percent of planning costs and will be done in accordance with 
the PMP, under the terms and conditions in the FCSA.
    (8) Credit for in-kind contributions provided by a non-Federal 
sponsor for the construction of a project, or separable element 
thereof, that are in excess of the non-Federal cost share for an 
authorized separable element of a project may be applied toward the 
non-federal cost share for a different authorized separable element of 
the same project. Additional Federal appropriations will be required to 
offset the application of any excess credit to another separable 
element.
    (9) If the value of eligible in-kind contributions exceeds the 
amount of credit that can be afforded pursuant to the provisions of a 
PPA (i.e., exceeds the required non-Federal cost share for all features 
covered by that PPA), only the amount of credit afforded should be 
included in total project costs. Recalculation of total project costs 
will be required to exclude from total project costs the value of in-
kind contributions that exceed the amount of credit that can be 
afforded. In addition, the amount excluded will not be considered part 
of total costs for the purposes of Section 902 of WRDA 1986 
calculations.
    (10) No reimbursements are authorized for in-kind contributions 
under Section 221 except as provided in paragraph 4 g., below.
    g. Lands, Easements, Relocations, Rights-of-Way, and Areas for 
Disposal of Dredged Material (LERRDs). Section 221 does not alter any 
other requirement for the non-Federal sponsor to provide LERRDs for a 
project. Any LERRDs associated with in-kind contributions determined to 
be integral to the project will be credited to the project as LERRDs. 
For a navigation project, LERRs are creditable only toward the 
requirement for the non-Federal sponsor

[[Page 52261]]

to pay an additional 10 percent of the cost of the general navigation 
features.
    (1) Previously, credit for in-kind contributions was afforded only 
toward the non-Federal sponsor's required cash contribution after 
consideration of the value of LERRDs provided by the non-Federal 
sponsor. WRRDA 2014 changes how credit for in-kind contributions is 
calculated. For projects other than navigation projects, to the extent 
that credit for LERRDs combined with credit for the value of in-kind 
contributions exceed the non-Federal share of the cost of a project, 
WRRDA 2014 provides that the Secretary, subject to the availability of 
funds, shall enter into a separate reimbursement agreement to reimburse 
the non-Federal sponsor for the difference between creditable LERRDs 
and in-kind contributions and the non-Federal cost share. Therefore, at 
the final accounting for the project, to the extent funds for the 
project remain available, the Secretary shall execute an agreement with 
the non-Federal sponsor for reimbursement of the difference.
    (2) If funds remaining on a project are insufficient to provide 
full reimbursement under paragraph f.(1), the non-Federal sponsor may 
request reimbursement. The Secretary shall prioritize such requests, 
and enter into reimbursements agreements, in the order the requests 
were received, as funds become available for reimbursements.
    5. Design. Design by the non-Federal sponsor must be performed in 
accordance with the requirements in ER 1110-2-1150, reviewed in 
accordance with ER 1110-1-12, and subject to the applicable peer review 
guidance. In accordance with section 105(c) of WRDA 1986, the costs of 
design shall be shared in the same percentages as the purposes of such 
project.
    a. If the value of eligible in-kind contributions is less than the 
non-Federal sponsor's share of design costs, the non-Federal sponsor 
must contribute sufficient funds to equal its share of total design 
costs.
    b. If the value of eligible in-kind contributions is greater than 
the non-Federal sponsor's share of total design costs, then no cash 
payment from the non-Federal sponsor is required. The value of all of 
the non-Federal sponsor's eligible in-kind contributions (including 
those in excess of its share of total design costs) will be included in 
total project costs in the PPA. The maximum amount of credit that may 
be afforded pursuant to the PPA is limited to the non-Federal sponsor's 
cost share under that agreement.
    6. Construction.
    a. To be eligible for credit, in-kind contributions prior to 
execution of the PPA must have been provided or performed after 
execution of an In-Kind MOU. Credit for in-kind contributions will not 
be afforded toward the non-Federal sponsor's requirement to provide in 
cash 5 percent of the costs for structural flood damage reduction 
projects (either specifically authorized or implemented pursuant to 
Continuing Authority Program Sections 14, 205, or 208 projects); the 
non-Federal sponsor's requirement to pay for betterments or any other 
work performed by the Government on behalf of the non-Federal sponsor; 
the non-Federal sponsor's requirement to provide lands, easements, 
rights-of-way, relocations, or improvements to enable the disposal of 
dredged or excavated material required for the project or separable 
element of the project; or the non-Federal sponsor's additional payment 
of 10 percent of the cost of general navigation features for a 
navigation project.
    b. The non-Federal sponsor may not initiate construction following 
execution of a PPA until the designs, detailed plans and 
specifications, and arrangements for the prosecution of such work have 
been approved by the Government. In addition, any proposed changes to 
approved designs and plans and specifications must be approved by the 
Government in advance of such construction. Upon completion of 
construction, the non-Federal sponsor will furnish to the Government a 
copy of all final as-built drawings.
    c. For CAP authorities and regional authorities that are 
implemented with a single agreement covering design and implementation, 
if a non-Federal sponsor proposes to provide or perform all or a 
portion of the design for a project as in-kind contributions, a PPA 
addressing both design and construction is required.

FOR THE COMMANDER:
Colonel, Corps of Engineers
Chief of Staff

Enclosures: 2 Appendices
Appendix A--Section 221(a)(4) of the Flood Control Act of 1970, as 
amended (42 U.S.C. 1962d-5b(a)(4) Section 221(a)(4) of the Flood 
Control Act of 1970, as amended, and Section 1018 of WRRDA 2014
Appendix B--Criteria for In-Kind Contribution Integral Determinations

APPENDIX A

Section 221(a)(4) of the Flood Control Act of 1970, as amended (42 
U.S.C. 1962d-5b(a)(4))

SEC. 221. WRITTEN AGREEMENT REQUIREMENT FOR WATER RESOURCES PROJECTS.

COOPERATION OF NON-FEDERAL INTEREST.

    (4) Credit for in-kind contributions.
    (A) In general. A partnership agreement described in paragraph (1) 
may provide with respect to a project that the Secretary shall credit 
toward the non-Federal share of the cost of the project, including a 
project implemented without specific authorization in law or a project 
under an environmental infrastructure assistance program, the value of 
in-kind contributions made by the non-Federal interest, including--
    (i) the costs of planning (including data collection), design, 
management, mitigation, construction, and construction services that 
are provided by the non-Federal interest for implementation of the 
project;
    (ii) the value of materials or services provided before execution 
of the partnership agreement, including efforts on constructed elements 
incorporated into the project; and
    (iii) the value of materials and services provided after execution 
of the partnership agreement.
    (B) Condition. The Secretary may credit an in-kind contribution 
under subparagraph (A) only if the Secretary determines that the 
material or service provided as an in-kind contribution is integral to 
the project.
    (C) Work performed before partnership agreement.
    (i) Construction.
    (I) In general. In any case in which the non-Federal interest is to 
receive credit under subparagraph (A) for the cost of construction 
carried out by the non-Federal interest before execution of a 
partnership agreement and that construction has not been carried out as 
of November 8, 2007, the Secretary and the non-Federal interest shall 
enter into an agreement under which the non-Federal interest shall 
carry out such work and shall do so prior to the non-Federal interest 
initiating construction or issuing a written notice to proceed for the 
construction.
    (II) Eligibility. Construction that is carried out after the 
execution of an agreement to carry out work described in subclause (I) 
and any design activities that are required for that construction, even 
if the design activity is carried out prior to the execution of the 
agreement to carry out work, shall be eligible for credit.
    (ii) Planning.
    (I) In general. In any case in which the non-Federal interest is to 
receive credit

[[Page 52262]]

under subparagraph (A) for the cost of planning carried out by the non-
Federal interest before execution of a feasibility cost-sharing 
agreement, the Secretary and the non-Federal interest shall enter into 
an agreement under which the non-Federal interest shall carry out such 
work and shall do so prior to the non-Federal interest initiating that 
planning.
    (II) Eligibility. Planning that is carried out by the non-Federal 
interest after the execution of an agreement to carry out work 
described in subclause (I) shall be eligible for credit.
    (D) Limitations. Credit authorized under this paragraph for a 
project--
    (i) shall not exceed the non-Federal share of the cost of the 
project;
    (ii) shall not alter any other requirement that a non-Federal 
interest provide lands, easements, relocations, rights-of-way, or areas 
for disposal of dredged material for the project;
    (iii) shall not alter any requirement that a non-Federal interest 
pay a portion of the costs of construction of the project under 
sections 101(a)(2) and 103(a)(1)(A) of the Water Resources Development 
Act of 1986 (33 U.S.C. 2211(a)(2); 33 U.S.C. 2213(a)(1)(A)) of the 
Water Resources Development Act of 1986 (33 U.S.C. 2211; 33 U.S.C. 
2213); and
    (iv) shall not exceed the actual and reasonable costs of the 
materials, services, or other things provided by the non-Federal 
interest, as determined by the Secretary.
    (E) Analysis of costs and benefits. In the evaluation of the costs 
and benefits of a project, the Secretary shall not consider 
construction carried out by a non-Federal interest under this 
subsection as part of the future without project condition.
    (F) Transfer of credit between separable elements of a project. 
Credit for in-kind contributions provided by a non-Federal interest 
that are in excess of the non-Federal cost share for an authorized 
separable element of a project may be applied toward the non-Federal 
cost share for a different authorized separable element of the same 
project.
    (G) Application of credit.
    (i) In general. To the extent that credit for in-kind 
contributions, as limited by subparagraph (D), and credit for required 
land, easements, rights-of-way, dredged material disposal areas, and 
relocations provided by the non-Federal interest exceed the non-Federal 
share of the cost of construction of a project other than a navigation 
project, the Secretary, subject to the availability of funds, shall 
enter into a reimbursement agreement with the non-Federal interest, 
which shall be in addition to a partnership agreement under 
subparagraph (A), to reimburse the difference to the non-Federal 
interest.
    (ii) Priority. If appropriated funds are insufficient to cover the 
full cost of all requested reimbursement agreements under clause (i), 
the Secretary shall enter into reimbursement agreements in the order in 
which requests for such agreements are received.''; and
    (H) Applicability.
    (i) In general. This paragraph shall apply to water resources 
projects authorized after November 16, 1986, including projects 
initiated after November 16, 1986, without specific authorization in 
law, and to water resources projects authorized prior to the date of 
enactment of the Water Resources Development Act of 1986 (Public Law 
99-662) [enacted June 10, 2014], if correction of design deficiencies 
is necessary.
    (ii) Authorization as addition to other authorizations. The 
authority of the Secretary to provide credit for in-kind contributions 
pursuant to this paragraph shall be in addition to any other 
authorization to provide credit for in-kind contributions and shall not 
be construed as a limitation on such other authorization. The Secretary 
shall apply the provisions of this paragraph, in lieu of provisions 
under other crediting authority, only if so requested by the non-
Federal interest.
Section 1018 of the Water Resources Reform and Development Act of 2014

Sec. 1018. CREDIT FOR IN-KIND CONTRIBUTIONS.

    (a) In General.--Section 221(a)(4) of the Flood Control Act of 1970 
(42 U.S.C. 1962d-5b(a)(4)) is amended--
    (1) in subparagraph (A), in the matter preceding clause (i), by 
inserting ``or a project under an environmental infrastructure 
assistance program'' after ``law'';
    (2) in subparagraph (C) by striking ``In any case'' and all that 
follows through the period at the end and inserting the following:
    ``(i) CONSTRUCTION.--
    ``(I) In General.--In any case in which the non-Federal interest is 
to receive credit under subparagraph (A) for the cost of construction 
carried out by the non-Federal interest before execution of a 
partnership agreement and that construction has not been carried out as 
of November 8, 2007, the Secretary and the non-Federal interest shall 
enter into an agreement under which the non-Federal interest shall 
carry out such work and shall do so prior to the non-Federal interest 
initiating construction or issuing a written notice to proceed for the 
construction.
    ``(II) Eligibility.--Construction that is carried out after the 
execution of an agreement to carry out work described in subclause (I) 
and any design activities that are required for that construction, even 
if the design activity is carried out prior to the execution of the 
agreement to carry out work, shall be eligible for credit.
    ``(ii) PLANNING.--
    ``(I) In General.--In any case in which the non-Federal interest is 
to receive credit under subparagraph (A) for the cost of planning 
carried out by the non-Federal interest before execution of a 
feasibility cost-sharing agreement, the Secretary and the non-Federal 
interest shall enter into an agreement under which the non-Federal 
interest shall carry out such work and shall do so prior to the non-
Federal interest initiating that planning.
    ``(II) Eligibility.--Planning that is carried out by the non-
Federal interest after the execution of an agreement to carry out work 
described in subclause (I) shall be eligible for credit.'';
    (3) in subparagraph (D)(iii) by striking ``sections 101 and 103'' 
and inserting ``sections 101(a)(2) and 103(a)(1)(A) of the Water 
Resources Development Act of 1986 (33 U.S.C. 2211(a)(2); 33 U.S.C. 
2213(a)(1)(A))'';
    (4) by redesignating subparagraph (E) as subparagraph (H);
    (5) by inserting after subparagraph (D) the following:
    ``(E) Analysis of Costs and Benefits.--In the evaluation of the 
costs and benefits of a project, the Secretary shall not consider 
construction carried out by a non-Federal interest under this 
subsection as part of the future without project condition.
    ``(F) Transfer of Credit Between Separable Elements of a Project.--
Credit for in-kind contributions provided by a non-Federal interest 
that are in excess of the non-Federal cost share for an authorized 
separable element of a project may be applied toward the non-Federal 
cost share for a different authorized separable element of the same 
project.
    ``(G) APPLICATION OF CREDIT.--
    ``(i) In General.--To the extent that credit for in-kind 
contributions, as limited by subparagraph (D), and credit for required 
land, easements, rights-of-way, dredged material disposal areas, and 
relocations provided by the non-Federal interest exceed the non-Federal 
share of the cost of construction of a project other than a navigation 
project, the Secretary, subject to the availability of funds, shall 
enter into a reimbursement agreement with the non-Federal interest, 
which shall be in addition to a partnership agreement

[[Page 52263]]

under subparagraph (A), to reimburse the difference to the non-Federal 
interest.
    ``(ii) Priority.--If appropriated funds are insufficient to cover 
the full cost of all requested reimbursement agreements under clause 
(i), the Secretary shall enter into reimbursement agreements in the 
order in which requests for such agreements are received.''; and
    (6) in subparagraph (H) (as redesignated by paragraph (4))--
    (A) in clause (i) by inserting ``, and to water resources projects 
authorized prior to the date of enactment of the Water Resources 
Development Act of 1986 (Public Law 99-662), if correction of design 
deficiencies is necessary'' before the period at the end; and
    (B) by striking clause (ii) and inserting the following:
    ``(ii) Authorization As Addition to Other Authorizations.--The 
authority of the Secretary to provide credit for in-kind contributions 
pursuant to this paragraph shall be in addition to any other 
authorization to provide credit for in-kind contributions and shall not 
be construed as a limitation on such other authorization. The Secretary 
shall apply the provisions of this paragraph, in lieu of provisions 
under other crediting authority, only if so requested by the non-
Federal interest.''.
    (b) Applicability.--Section 2003(e) of the Water Resources 
Development Act of 2007 (42 U.S.C. 1962d-5b note) is amended--
    (1) by inserting ``, or construction of design deficiency 
corrections on the project,'' after ``construction on the project''; 
and
    (2) by inserting ``, or under which construction of the project has 
not been completed and the work to be performed by the non-Federal 
interests has not been carried out and is creditable only toward any 
remaining non-Federal cost share,'' after ``has not been initiated''.
    (c) Effective Date.--The amendments made by subsections (a) and (b) 
take effect on November 8, 2007.
    (d) Guidelines.--
    (1) In General.-- Not later than 1 year after the date of enactment 
of this Act, the Secretary shall update any guidance or regulations for 
carrying out section 221(a)(4) of the Flood Control Act of 1970 (42 
U.S.C. 1962d-5b(a)(4)) (as amended by subsection (a)) that are in 
existence on the date of enactment of this Act or issue new guidelines, 
as determined to be appropriate by the Secretary.
    (2) Inclusions.-- Any guidance, regulations, or guidelines updated 
or issued under paragraph (1) shall include, at a minimum--
    (A) the milestone for executing an in-kind memorandum of 
understanding for construction by a non-Federal interest;
    (B) criteria and procedures for evaluating a request to execute an 
in-kind memorandum of understanding for construction by a non-Federal 
interest that is earlier than the milestone under subparagraph (A) for 
that execution; and
    (C) criteria and procedures for determining whether work carried 
out by a non-Federal interest is integral to a project.
    (3) Public and Stakeholder Participation.-- Before issuing any new 
or revised guidance, regulations, or guidelines or any subsequent 
updates to those documents, the Secretary shall--
    (A) consult with affected non-Federal interests;
    (B) publish the proposed guidelines developed under this subsection 
in the Federal Register; and
    (C) provide the public with an opportunity to comment on the 
proposed guidelines.
    (e) Other Credit.--Nothing in section 221(a)(4) of the Flood 
Control Act of 1970 (42 U.S.C. 1962d-5b(a)(4)) (as amended by 
subsection (a)) affects any eligibility for credit under section 104 of 
the Water Resources Development of 1986 (33 U.S.C. 2214) that was 
approved by the Secretary prior to the date of enactment of this Act.

APPENDIX B

Criteria and Procedures for In-Kind Contribution Integral 
Determinations
    C-1. Determining if In-Kind Contributions Are Integral to the 
Study/Project. Establishing and allowing credit is a two step process 
whereby: 1) eligibility is determined by performing the integral 
determination, and 2) actual affording of credit is accomplished by 
audit of the non-Federal work by the District Engineer under the terms 
of the FCSA, DA, or PPA, as appropriate. The Government must determine 
that the in-kind contributions are integral to the study or project for 
those contributions to be considered eligible for credit.
    a. Approval Level of Integral Determinations. Under the terms of 
Paragraph 4.e.. of this regulation, approval of integral determinations 
is delegated to the MSC Commander. This authority may not be further 
delegated.
    b. Timing of Integral Determinations.
    (1) The integral determination must be completed immediately prior 
to review and approval of a DA or PPA, or amendment as applicable, that 
provides for the affording of credit. The integral determination for 
planning efforts is accomplished as part of the development of the PMP. 
An integral determination is not required prior to execution of an In-
Kind MOU for design or construction.
    (2) Include at least 30 days in the project schedule for processing 
at the MSC of the Integral Determinations by the MSC Commander. These 
times are recommended for scheduling purposes and should be extended if 
processing identifies significant issues requiring resolution.
    c. Procedures for Processing.
    (1) For a feasibility study, planning activities, including data 
collection, must be included in the approved Project Management Plan in 
order for those contributions to be eligible for credit.
    (2) The District will prepare an Integral Determination Report 
(IDR) for design and construction work that includes at a minimum the 
information contained in the following paragraphs. A suggested format 
for an IDR can be found at www.Corpsplanning.us. The IDR shall contain 
a description of the activities required to perform the design or 
construction, as applicable, of the Federal project or separable 
element in sufficient detail to allow a comparison with the description 
of the proposed in-kind contributions; a detailed description of the 
work items proposed to be provided or performed as in-kind 
contributions; a discussion of how each work item proposed to be 
provided or performed as an in-kind contribution is integral to the 
project; an estimate of the costs of each work item proposed to be 
provided or performed as an in-kind contribution; the estimated amount 
of credit to be afforded for each work item proposed to be provided or 
performed as an in-kind contribution; and a District Commander 
recommendation identifying which of the proposed in-kind contributions 
should be considered integral to the project. If the in-kind 
contributions were provided or performed prior to execution of the 
applicable cost sharing agreement, then also include in the IDR the 
results of the review or inspection, as applicable, and certification 
by the District Commander on whether the work was accomplished in a 
satisfactory manner and in accordance with applicable Federal laws, 
regulations, and policies; and documentation of satisfactory 
environmental compliance for the construction portion of the in-kind 
contributions.
    (3) The district will submit the IDR to the MSC District Support 
Team for action. The MSC District Support Team will perform the MSC 
review of the IDR. The MSC review team also will include members from 
the MSC Office of Counsel and from the MSC Planning Community of 
Practice (CoP), MSC

[[Page 52264]]

Engineering and Construction CoP, MSC Real Estate CoP, and other CoPs, 
as needed. In addition, if the proposed in-kind contributions consist 
of design or construction of dams, levees, or bridges, the MSC review 
team must include the MSC Dam, Levee, or Bridge Safety Officer. After 
satisfactory resolution of all comments on the IDR and a determination 
that the IDR complies with all applicable law and policy, the MSC 
District Support Team shall prepare an Integral Determination memo for 
approval and signature by the MSC Commander. If the IDR does not or 
cannot be modified to comply with law and policy, then the MSC should 
contact the HQUSACE RIT to facilitate the resolution of the concerns.
    (4) The Integral Determination approval memo will state whether the 
work identified in the IDR, or a portion thereof, has been determined 
to be integral to the project. In addition, the memo should state that 
determination of the actual value of the in-kind contributions and 
affording credit for such amount will be accomplished by the Government 
in accordance with the limitations, conditions, and terms of the 
applicable cost sharing agreement.
    C-2. The following may be accepted as integral:
    The proposed in-kind contributions are a part of the Federal 
project.
    b. The proposed in-kind contributions consist of work that the 
Government would have otherwise provided or performed for the project, 
except for performance of activities that are inherently Governmental 
responsibilities (see paragraph C-3 below). Examples of activities that 
are acceptable in-kind contributions: performance of design of all or a 
portion of the Federal project, including data collection related to 
design work; demolition of buildings on lands required for the project; 
performance of design or construction related studies for historic 
preservation activities; performance of cost shared monitoring and 
adaptive management; and construction of a portion of the project.
    c. For proposed in-kind contributions performed prior to execution 
of the applicable cost sharing agreement, the in-kind contributions 
have been reviewed or inspected, as applicable, and certified by the 
Government that the work was accomplished in a satisfactory manner and 
in accordance with applicable Federal laws, regulations, and policies.
    d. For any proposed in-kind contributions proposed to be performed 
after execution of the PPA, the plans and specifications will be 
approved by the District Commander prior to initiation of the 
construction work.
    e. For materials provided for use in construction work managed by 
the Government, the materials meet the minimum Government requirements 
for materials and any substitute materials have been determined to be a 
functional equivalent in accordance with policies governing contractor 
substitution of materials.
    C-3. The following will not be accepted as integral:
    a. The proposed in-kind contributions are not part of the Federal 
project.
    b. The proposed in-kind contributions consist of performance of 
activities that are inherently Governmental responsibilities (e.g., 
management of Government contracts; performance of District Quality 
Review, Agency Technical Review, Independent External Peer Review, or 
Policy Compliance Review; determining if Value Engineering evaluations 
are acceptable; determining the LERRD required for the project or 
separable element of the project; determining the value of LERRD for 
crediting purposes; or making determinations as to compliance with 
applicable environmental laws and regulations).
    c. The proposed in-kind contributions are features or obligations 
that are a 100 percent non-Federal sponsor responsibility (e.g., 
purposes of land reclamation, local drainage, to protect against land 
or bank erosion, and/or the removal of hazardous, toxic, or radioactive 
wastes; local service facilities; betterments; acquisition and 
performance of LERRD, except for the provision of dredged or excavated 
material disposal facilities for commercial navigation projects; and 
performance of OMRR&R);
    d. The proposed in-kind contributions have or will create a hazard 
to human life or property.
    e. The proposed in-kind contributions have been determined to be 
environmentally unacceptable.
    f. For proposed in-kind contributions performed prior to execution 
of the applicable cost sharing agreement, after review or inspection, 
as applicable, the Government cannot certify the proposed in-kind 
contributions were accomplished in a satisfactory manner and in 
accordance with applicable Federal laws, regulations, and policies.
    g. For proposed in-kind contributions performed prior to execution 
of the applicable cost sharing agreement, the non-Federal sponsor has 
not performed the necessary operation, maintenance, repair, 
rehabilitation, or replacement.

[FR Doc. 2015-21355 Filed 8-27-15; 8:45 am]
 BILLING CODE 3720-58-P