[Federal Register Volume 81, Number 238 (Monday, December 12, 2016)]
[Rules and Regulations]
[Pages 89393-89396]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29752]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 75

RIN 0991-AC06


Health and Human Services Grants Regulation

AGENCY: Division of Grants, Office of Grants Policy, Oversight, and 
Evaluation, Office of the Assistant Secretary for Financial Resources, 
Department of Health and Human Services.

ACTION: Final rule.

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SUMMARY: This final rule makes changes to the Department of Health and 
Human Services' (HHS) adoption of the Office of Management and Budget's 
(OMB) (``Uniform Administrative Requirements'') published on December 
19, 2014 and the technical amendments published by HHS on January 20, 
2016. HHS codified the OMB language, with noted modifications as 
explained in the preamble to the December promulgation. The HHS-
specific modifications to the Uniform Administrative Requirements 
adopted prior regulatory language that was not in conflict with OMB's 
language, and provided additional guidance to the regulated community. 
Unlike all of the other modifications to the Uniform Administrative 
Requirements, these additional changes, although based on existing law 
or HHS policy, were not previously codified in regulation. HHS sought 
comment on these proposed changes in a notice of proposed rulemaking 
published on July 13, 2016. This final rule implements these regulatory 
changes. It also corrects one typographical error that was recently 
discovered in the most recent promulgation of the Uniform 
Administrative Requirements.

DATES: This rule is effective on January 11, 2017.

FOR FURTHER INFORMATION CONTACT: Quadira Dantro, MSHS, CRA at (202) 
260-6825.

SUPPLEMENTARY INFORMATION: 

Background

    This final rule makes changes to the HHS's adoption of the Uniform 
Administrative Requirements, Cost Principles, and Audit Requirements 
for Federal Awards published on December 19, 2014 (79 FR 75871) and the 
technical amendments published by HHS on January 20, 2016 (81 FR 3004). 
HHS codified the OMB language, with noted modifications, in 45 CFR part 
75. Unlike all of the other modifications to the Uniform Administrative 
Requirements, these additional changes, although based on existing law 
or HHS policy, were not previously codified in regulation. This final 
rule implements these regulatory changes.
    HHS received 24 relevant comments on the notice of proposed 
rulemaking, half of which were strongly supportive of the proposed 
rule. HHS addresses all of the comments below.

A. Nondiscrimination Provisions

    Comment: HHS received twelve comments on these provisions, all of 
which were strongly supportive of the codification of the 
nondiscrimination provisions in HHS awards and the recognition of same-
sex marriages. Several of these supportive comments also provided 
additional areas for consideration specifically regarding the 
definition of discrimination on the basis of sex. Collectively, the 
comments indicated that HHS should define discrimination on the basis 
of sex explicitly to include discrimination on

[[Page 89394]]

the basis of sex stereotyping, gender identity, sexual orientation, 
pregnancy, intersex traits, and the presence of atypical sex 
characteristics.
    Response: HHS appreciates the comments received, and thanks 
commenters for their positive reactions and helpful suggestions. For 
the time being, HHS does not believe it is necessary to add additional 
categories to the list of non-merit based factors. We note that the 
determination whether a factor is merit-based for purposes of applying 
the prohibition will depend on the nature of the particular grant at 
issue. HHS has therefore decided not to amend the nondiscrimination 
language proposed in 45 CFR 75.300.
    Comment: One comment urged HHS and its partner federal agencies to 
broadly construe age discrimination protections to support young people 
as well as older Americans. The comment noted that while many age 
discrimination laws are enacted with older adults in mind, it is 
important to recognize the stigmatization of young people and 
adolescents, particularly in the healthcare arena.
    Response: HHS agrees that young people and adolescents should have 
access to health care and services free from discrimination. No 
alterations of the regulatory text are necessary to implement these 
protections. We note that, while employment laws enforced by the Equal 
Employment Opportunity Commission apply to applicants and employees 
forty or older, youth have additional rights under other federal, 
state, or local laws. The Age Discrimination Act of 1975 (Age Act), for 
instance, prohibits discrimination against young people and older 
Americans on the basis of age in federally funded programs and 
activities. In some cases, the Age Act permits age distinctions that 
reasonably take into account age as a factor necessary to the normal 
operation or the achievement of any statutory objective. State and 
local discrimination laws may offer broader protection.
    Comment: One commenter indicated that HHS should specify that the 
nondiscrimination provisions included in Sec.  75.300(c) flow down to 
subawards.
    Response: HHS notes that the provisions of 45 CFR part 75 already 
address the flow down of requirements. 45 CFR 75.101(b)(1) stating that 
the terms and conditions of Federal awards flow down to subawards to 
subrecipients unless a particular section of this part or the terms and 
conditions of the Federal award specifically indicate otherwise.
    Comment: Several commenters noted that the provisions of Sec.  
75.300(c) do not apply to funding under the Temporary Assistance for 
Needy Families Program (TANF) (title IV-A of the Social Security Act, 
42, U.S.C. 601-619). These commenters suggested that HHS should provide 
additional guidance to TANF grantees on nondiscrimination.
    Response: HHS appreciates the importance of continued education on 
the full scope of nondiscrimination obligations. The Administration for 
Children and Families shares this commitment.

B. Indirect Cost Rates

    Comment: HHS received three comments regarding the proposed eight 
percent cap on indirect cost rates for foreign organizations. Notably, 
HHS did not receive any comments that objected to the imposition of the 
same eight percent cost cap on indirect cost rates for training grants. 
The comments received suggested that the proposed provision was in 
conflict with Sec.  75.414(f), and that HHS should instead adopt a ten 
percent cap on indirect cost rates for these organizations.
    Response: A non-Federal entity that has never received an indirect 
cost rate that is a foreign organization or foreign public entity, or 
that would conduct a training grant, would be limited to the eight 
percent modified total direct cost rate as articulated in Sec.  
75.414(c)(3). Commenters indicated that this limitation conflicts with 
Sec.  75.414(f), which would permit an entity that had never received 
an indirect cost rate to charge a de minimis rate of ten percent.
    HHS agrees that this is inconsistent, and has added clarifying 
language to paragraph (f) to ensure that there is no conflict.

C. Indian Self Determination and Education Assistance Act

    Comment: HHS received numerous comments, both through the 
regulations.gov portal and separately through the HHS Office of 
Intergovernmental and External Affairs, on the proposed language 
clarifying that applicability of certain provisions of the Uniform 
Administrative Requirements to contracts and compacts awarded pursuant 
to the Indian Self Determination and Education Assistance Act (ISDEAA). 
The comments received requested additional tribal consultation on these 
issues.
    Response: The Department is in the process of conducting this 
tribal consultation, and will proceed as appropriate after that 
consultation has concluded. The regulatory language from the notice of 
proposed rulemaking is not included in this final rule.

D. Other Issues

    HHS received no comments on the portions of the notice of proposed 
rulemaking suggesting changes to the proposed language regarding same-
sex spouses, marriages, and households, payment provisions as applied 
to states, public access to records, or shared responsibility payments. 
Consequently, HHS is finalizing the regulatory language without 
modification. In addition, HHS is amending one provision to correct a 
typographical error that was inadvertently included in the most recent 
promulgation of the Uniform Administrative Requirements, so that the 
HHS promulgation matches the OMB guidance as intended.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Ch. 3506; 5 CFR 1320 Appendix A.1), HHS reviewed this final rule and 
determined that there are no new collections of information contained 
therein.

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires that an agency provide a 
final regulatory flexibility analysis or to certify that the rule will 
not have a significant economic impact on a substantial number of small 
entities. This final rule aligns 45 CFR part 75 with various regulatory 
and statutory provisions, implements Supreme Court decisions, and 
codifies long-standing policies thus clarifying and enhancing the 
provisions in HHS's interim final guidance issued December 19, 2014, 
and amended on January 20, 2016. In order to ensure that the public 
receives the most value, it is essential that HHS grant programs 
function as effectively and efficiently as possible, and that there is 
a high level of accountability to prevent waste, fraud, and abuse. The 
additions provide enhanced direction for the public and will not have a 
significant economic impact beyond HHS's current regulations.

Executive Order 12866 Determination

    Pursuant to Executive Order 12866, HHS has designated this final 
rule to be economically non-significant. This rule is not being treated 
as a ``significant regulatory action'' under section 3(f) of Executive 
Order 12866. Accordingly, the rule has not been reviewed by the Office 
of Management and Budget.

Unfunded Mandates Reform Act of 1995 Determination

    Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded 
Mandates Act) (2 U.S.C. 1532) requires that covered agencies

[[Page 89395]]

prepare a budgetary impact statement before promulgating a rule that 
includes any Federal mandate that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more in any one year. If a budgetary 
impact statement is required, section 205 of the Unfunded Mandates Act 
also requires covered agencies to identify and consider a reasonable 
number of regulatory alternatives before promulgating a rule. HHS has 
determined that this final rule will not result in expenditures by 
State, local, and tribal governments, or by the private sector, of $100 
million or more in any one year. Accordingly, HHS has not prepared a 
budgetary impact statement or specifically addressed the regulatory 
alternatives considered.

Executive Order 13132 Determination

    HHS has determined that this final rule does not have any 
Federalism implications, as required by Executive Order 13132.

List of Subjects in 45 CFR Part 75

    Accounting, Administrative practice and procedure, Cost principles, 
Grant programs, Grant programs--health, Grants administration, 
Hospitals, Indians, Nonprofit organizations reporting and recordkeeping 
requirements, State and local governments.

    Dated: November 25, 2016.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.

    For the reasons set forth in the preamble, part 75 of title 45 of 
the Code of Federal Regulations is amended as follows:

PART 75--UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND 
AUDIT REQUIREMENTS FOR HHS AWARDS

0
1. The authority citation for 45 CFR part 75 continues to read as 
follows:

    Authority: 5 U.S.C. 301.


0
2. Amend Sec.  75.101 by adding paragraph (f) to read as follows:


Sec.  75.101  Applicability.

* * * * *
    (f) Section 75.300(c) does not apply to the Temporary Assistance 
for Needy Families Program (title IV-A of the Social Security Act, 42 
U.S.C. 601-619).


Sec.  75.110  [Amended]

0
3. Amend Sec.  75.110(a) by removing ``75.355'' and adding, in its 
place, ``75.335''.

0
4. Amend Sec.  75.300 by adding paragraphs (c) and (d) to read as 
follows:


Sec.  75.300  Statutory and national policy requirements.

* * * * *
    (c) It is a public policy requirement of HHS that no person 
otherwise eligible will be excluded from participation in, denied the 
benefits of, or subjected to discrimination in the administration of 
HHS programs and services based on non-merit factors such as age, 
disability, sex, race, color, national origin, religion, gender 
identity, or sexual orientation. Recipients must comply with this 
public policy requirement in the administration of programs supported 
by HHS awards.
    (d) In accordance with the Supreme Court decisions in United States 
v. Windsor and in Obergefell v. Hodges, all recipients must treat as 
valid the marriages of same-sex couples. This does not apply to 
registered domestic partnerships, civil unions or similar formal 
relationships recognized under state law as something other than a 
marriage.

0
5. Revise Sec.  75.305(a) to read as follows:


Sec.  75.305  Payment.

    (a)(1) For states, payments are governed by Treasury-State CMIA 
agreements and default procedures codified at 31 CFR part 205 and TFM 
4A-2000 Overall Disbursing Rules for All Federal Agencies.
    (2) To the extent that Treasury-State CMIA agreements and default 
procedures do not address expenditure of program income, rebates, 
refunds, contract settlements, audit recoveries and interest earned on 
such funds, such funds must be expended before requesting additional 
cash payments.
* * * * *

0
6. Revise Sec.  75.365 to read as follows:


Sec.  75.365  Restrictions on public access to records.

    Consistent with Sec.  75.322, HHS awarding agencies may require 
recipients to permit public access to manuscripts, publications, and 
data produced under an award. However, no HHS awarding agency may place 
restrictions on the non-Federal entity that limit public access to the 
records of the non-Federal entity pertinent to a Federal award 
identified in Sec. Sec.  75.361 through 75.364, except for protected 
personally identifiable information (PII) or when the HHS awarding 
agency can demonstrate that such records will be kept confidential and 
would have been exempted from disclosure pursuant to the Freedom of 
Information Act (5 U.S.C. 552) or controlled unclassified information 
pursuant to Executive Order 13556 if the records had belonged to the 
HHS awarding agency. The Freedom of Information Act (5 U.S.C. 552) 
(FOIA) does not apply to those records that remain under a non-Federal 
entity's control except as required under Sec.  75.322. Unless required 
by Federal, state, local, or tribal statute, non-Federal entities are 
not required to permit public access to their records identified in 
Sec. Sec.  75.361 through 75.364. The non-Federal entity's records 
provided to a Federal agency generally will be subject to FOIA and 
applicable exemptions.

0
7. In Sec.  75.414, add paragraphs (c)(1)(i) through (iii) and revise 
the first sentence of paragraph (f) to read as follows:


Sec.  75.414  Indirect (F&A) costs.

* * * * *
    (c) * * *
    (1) * * *
    (i) Indirect costs on training grants are limited to a fixed rate 
of eight percent of MTDC exclusive of tuition and related fees, direct 
expenditures for equipment, and subawards in excess of $25,000;
    (ii) Indirect costs on grants awarded to foreign organizations and 
foreign public entities and performed fully outside of the territorial 
limits of the U.S. may be paid to support the costs of compliance with 
federal requirements at a fixed rate of eight percent of MTDC exclusive 
of tuition and related fees, direct expenditures for equipment, and 
subawards in excess of $25,000; and,
    (iii) Negotiated indirect costs may be paid to the American 
University, Beirut, and the World Health Organization.
* * * * *
    (f) In addition to the procedures outlined in the appendices in 
paragraph (e) of this section, any non-Federal entity that has never 
received a negotiated indirect cost rate, except for those non-Federal 
entities described in paragraphs (c)(1)(i) and (ii) and section 
(D)(1)(b) of appendix VII to this part, may elect to charge a de 
minimis rate of 10% of modified total direct costs (MTDC) which may be 
used indefinitely.* * *
* * * * *

0
8. Add Sec.  75.477 to read as follows:


Sec.  75.477  Shared responsibility payments.

    (a) Payments for failure to maintain minimum essential health 
coverage. Any payments or assessments imposed on an individual or 
individuals pursuant to 26 U.S.C. 5000A(b) as a result of any failure 
to maintain minimum essential coverage as required by 26 U.S.C. 
5000A(a) are not allowable

[[Page 89396]]

expenses under Federal awards from an HHS awarding agency.
    (b) Payments for failure to offer health coverage to employees. Any 
payments or assessments imposed on an employer pursuant to 26 U.S.C. 
4980H as a result of the employer's failure to offer to its full-time 
employees (and their dependents) the opportunity to enroll in minimum 
essential coverage under an eligible employer-sponsored plan are not 
allowable expenses under Federal awards from an HHS awarding agency.

[FR Doc. 2016-29752 Filed 12-9-16; 8:45 am]
 BILLING CODE 4150-24-P