[Federal Register Volume 82, Number 217 (Monday, November 13, 2017)]
[Proposed Rules]
[Pages 52250-52253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-24327]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 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. 82, No. 217 / Monday, November 13, 2017 / 
Proposed Rules  

[[Page 52250]]



DEPARTMENT OF AGRICULTURE

National Institute of Food and Agriculture

7 CFR Part 3419

RIN 0524-AA68


Matching Funds Requirements for Agricultural Research and 
Extension Capacity Funds at 1890 Land-Grant Institutions and 1862 Land-
Grant Institutions in Insular Areas

AGENCY: National Institute of Food and Agriculture

ACTION: Proposed rule and withdrawal of proposed rule.

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

SUMMARY: The National Institute of Food and Agriculture (NIFA) 
withdraws the Notice of Proposed Rulemaking (RIN 0524-AA25) published 
on April 29, 2003. In addition, NIFA proposes to revise its regulations 
for the purpose of implementing the statutory amendments applicable to 
the matching requirements for Federal agricultural research and 
extension capacity (formula) funds for 1890 land-grant institutions 
(LGUs), including Central State University, Tuskegee University, and 
West Virginia State University, and 1862 land-grant institutions in 
insular areas, and to remove the term ``qualifying educational 
activities.'' These matching requirements were amended by the Farm 
Security and Rural Investment Act; the Food, Conservation, and Energy 
Act of 2008; and the Agricultural Act of 2014.

DATES: As of November 13, 2017, the proposed rule published April 29, 
2003, at 68 FR 23013, is withdrawn. Submit comments on the proposed 
rule on or before January 12, 2018.

ADDRESSES: You must submit comments, identified by 7 CFR part 3419, 
electronically through the Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions online for submitting 
comments.

FOR FURTHER INFORMATION CONTACT: Maggie Ewell, Senior Policy Advisor, 
202-401-0222.

SUPPLEMENTARY INFORMATION: 

I. Background and Purpose

    The National Institute of Food and Agriculture (NIFA) is revising 
part 3419 of Title 7, subtitle B, chapter XXXIV of the Code of Federal 
Regulations which implements the matching requirements provided under 
section 1449 of the National Agricultural Research, Extension, and 
Teaching Policy Act of 1977 (NARETPA) for agricultural research and 
extension capacity (formula) funds authorized for the 1890 land-grant 
institutions, including Central State University, Tuskegee University, 
and West Virginia State University and 1862 land-grant institutions in 
insular areas. This revision is required due to the statutory 
amendments of sections 7212 of the Farm Security and Rural Investment 
Act of 2002 (FSRIA); section 7127 of the Food, Conservation, and Energy 
Act of 2008; and section 7129 of the Agricultural Act of 2014. 
Additionally, NIFA is making changes to the Definitions and Use of 
Matching Funds sections to provide clarity on allowable uses of 
matching funds. NIFA rescinds the previous, not yet finalized, Notice 
of Proposed Rulemaking published in the Federal Register on April 29, 
2003, RIN 0524-AA25 (68 FR 23013).
    Sec.  3419.1 Definitions. The definition of eligible institution 
was updated to include West Virginia State University (formerly West 
Virginia State College) and Central State University. Section 753 of 
the Agricultural, Rural Development, Food and Drug Administration, and 
Related Agencies Appropriations Act, 2002 (Pub. L. 107-76) restored 
1890 land-grant institution status to West Virginia State College. In 
2004, the West Virginia Legislature approved West Virginia State 
College's transition to University status. Central State University was 
recognized as an 1890 land-grant institution under section 7129 of the 
Agricultural Act of 2014.
    In 2014, NIFA re-branded its formula grant programs as ``capacity 
grants.'' Therefore, the definition of formula funds is changed to 
reflect this terminology, capacity funds, and the words ``by formula'' 
were inserted to clarify that capacity funds are provided by formula to 
eligible institutions.
    The term and definition for qualifying educational activities was 
removed due to the fact that this term has caused confusion regarding 
what constitutes an allowable qualifying educational activity. NIFA 
follows the authorized uses of funds in NARETPA, codified at 7 U.S.C. 
3221 and 3222, for extension and research programs. Research funds are 
for conducting agricultural research, printing, disseminating the 
results of research, administration, planning and direction, purchase 
and rental of land, and the construction, acquisition, alteration, or 
repair of buildings necessary for conducting agricultural research. 
Extension funds are for the expenses of conducting extension programs 
and activities. 7 U.S.C. 3221(e) expressly prohibits extension funds 
from being spent on college course teaching or lectures in college.
    NARETPA also contains definitions that explain the difference 
between education in conjunction with extension programs and education 
and teaching. Extension education is defined as ``informal'' while 
teaching and education is defined as ``formal classroom instruction,'' 
which is expressly prohibited under 7 U.S.C. 3221(e).
    Because the authorized uses related to education expenses are 
clearly outlined in NARETPA and in 7 U.S.C. 3221 and 3222, NIFA does 
not see value in including the term ``qualifying educational activity'' 
as a term in regulation and, further, wants to ensure there is no 
conflict between its regulatory authorizations and the law. Therefore, 
NIFA is removing the term ``qualifying educational activity'' and will 
allow only informal educational activities, as authorized by statute.
    Sec.  3419.2 Matching funds requirements. Revisions to this section 
were required due to statutory amendments of sections 7212 of FSRIA; 
section 7127 of the Food, Conservation, and Energy Act of 2008; and 
section 7129 of the Agricultural Act of 2014. The information regarding 
Fiscal Years 2000, 2001, and 2002 were removed as they are outdated and 
no longer applicable. NIFA proposes replacing this text with the 
matching requirements for 1862 land-grant institutions in insular areas 
for the Smith-Lever 3(b) and (c) program (7

[[Page 52251]]

U.S.C. 343(e)(4)(A)) and the Hatch Act program (7 U.S.C. 
361c(d)(4)(A)), which state that insular areas will provide matching 
funds from non-Federal sources in an amount equal to not less than 50 
percent of the formula funds distributed by NIFA to each of the 1862 
land-grant institutions in insular areas, respectively. NIFA proposes 
replacing existing text with the matching requirement to the Evans 
Allen/Section 1445 fund program (7 U.S.C. 3222d) and Extension/Section 
1444 fund programs (7 U.S.C. 3221) which state that the State will 
provide equal matching funds from non-Federal sources.
    Sec.  3419.3 Limited Waiver Authority. The section entitled, 
``Determination of non-Federal sources of funds,'' Sec.  3419.3, has 
been removed, because it reiterated a statutory requirement to submit, 
in the year 1999, a report on non-Federal funds used as match to be 
submitted. There is no further statutory requirement or authority to 
submit reports on the sources of non-Federal funds, therefore NIFA 
proposes the removal of this section. Section 3419.4 Limited Waiver 
Authority will be re-designated as Sec.  3419.3 and modified to include 
the provisions of 7 U.S.C. 3222d(d): Authorization of a 50% waiver of 
matching funds authority for 1890 land-grant institutions. 
Additionally, Sec.  3419.3 includes the authority to waive up to 100% 
of the required match for 1862 land-grant institutions in insular areas 
that is present in 7 U.S.C. 343(e)(4)(B).
    NIFA also proposes to add to this section a description of the 
criteria a land-grant institution must demonstrate in order to be 
eligible for a waiver. The three criteria are: Impacts from natural 
disaster, flood, fire, tornado, hurricane, or drought; State and/or 
Institution facing a financial crisis; or lack of matching funds after 
demonstrating a good faith effort to obtain funds.
    Sec.  3419.4 Application for waivers for both 1890 land-grant 
institutions and 1862 land-grant institutions in insular areas. NIFA 
proposes to add Sec.  3419.4 to outline how 1890 land-grant 
institutions and 1862 land-grant institutions in insular areas may 
request a matching waiver. To request a waiver, the president of the 
institution must submit in writing a request for a waiver of the 
matching requirements. The request must include the name of the 
eligible institution, the type of capacity funds, which would include 
Section 1444 Extension, Section 1445 Research; Smith-Lever; or Hatch 
Act; the fiscal year of the match; and the basis of the request, i.e., 
one or more of the criteria identified in 3419.3. Requests for waivers 
may be submitted with the application for funds or at any time during 
the period of performance of the award. Additionally, NIFA includes a 
requirement for current supporting documentation, where current is 
defined as within the past two years from the date of the letter 
requesting the waiver. It is critical that NIFA base its decisions for 
matching waivers on the current state of affairs within the State and 
institution. Using older data does not provide adequate rationale for 
NIFA to waive the statutorily required match for capacity programs.
    Sec.  3419.5 Certification of matching funds. The only proposed 
change in this section is changing the word ``formula'' to 
``capacity,'' consistent with the current terminology used by NIFA.
    Sec.  3419.6 Use of matching funds. NIFA proposes minor technical 
changes to this section, use of the term ``capacity'' in place of 
``formula'' and ``must'' in place of ``shall.'' These technical changes 
have no impact on the requirements from the existing to the proposed 
regulation. Additionally, NIFA proposes to add clarifying language that 
matching funds must be used for the same purpose as Federal dollars as 
well as a specific prohibition on the use of tuition dollars and 
student fees as match.
    The intent of the proposed rule is to clarify two requirements. 
First, the revised proposed rule clarifies that matching funds must be 
used by an eligible institution for the same purpose as Federal award 
dollars: Agricultural research and extension activities that have been 
approved in the plan of work. Second, the revised proposed rule removes 
the end phrase: ``or for approved qualifying educational activities.'' 
As discussed in Sec.  3419.1 Definitions, the use of the phrase 
``qualifying educational activities'' has caused confusion regarding 
what constitutes an allowable qualifying educational activity. NIFA 
supports the position, as required under 2 CFR 200.306, that all 
matching funds must be necessary and reasonable for accomplishment of 
project or program objectives. In other words, to be allowable as a 
match, the costs must be allowable under the Federal award. This 
principle applies to matching funds 1890 land-grant institutions 
receive for Research and Extension programs, as well as the funds 
received by 1862 land-grant institutions in insular areas for Smith-
Lever and Hatch programs.
    NIFA follows the authorized uses of funds in the authorizing 
statutes for determining what is allowable under the Federal award. For 
1862 land-grant institutions in insular areas, this would be the 
authorized uses under 7 U.S.C. 343 for Smith-Lever programs and 7 
U.S.C. 361a for Hatch Act programs.
    For 1890 Extension and Research programs, NIFA follows the 
authorizations included in NARETPA, codified at 7 U.S.C. 3221 and 3222. 
Research funds are for conducting agricultural research; printing; 
disseminating the results of research, administration, planning and 
direction; purchase and rental of land; and the construction, 
acquisition, alteration, or repair of buildings necessary for 
conducting agricultural research. Extension funds are for the expenses 
of conduction extension programs and activities. 7 U.S.C. 3221(e) 
expressly prohibits extension funds from being spent on college course 
teaching or lectures in college.
    NARETPA also contains definitions that explain the difference 
between education in conjunction with extension programs versus 
education and teaching. Extension education is defined as ``informal'' 
while teaching and education is defined as ``formal classroom 
instruction,'' which is expressly prohibited under 7 U.S.C. 3221(e).
    Because the authorized uses related to education expenses are 
clearly outlined in NARETPA and 7 U.S.C. 3221 and 3222, NIFA does not 
see value in including the term ``qualifying educational activity'' as 
a term in regulation and further, wants to ensure there is no conflict 
between its regulatory authorizations and the law. Therefore, NIFA is 
removing the term ``qualifying educational activity;'' however, the 
removal is intended to prohibit expenditures related to formal 
education activities. NIFA will allow only informal education 
activities, as authorized by statute.
    Under 7 U.S.C. 3221(a)(3), funds appropriated for extension must be 
used for the expenses of conducting extension programs and activities, 
and for contributing to the retirement of employees subject to the 
provisions of 7 U.S.C. 331. 7 U.S.C. 3222(e) expressly prohibits 
extension funds from being spent on college course teaching and 
lectures in college. Section 1404(7) of NARETPA defines the term 
extension to mean informal education programs conducted in the States 
in cooperation with the Department of Education. Therefore, NIFA has 
determined that the current authorizations allow for informal education 
programs to be conducted with extension funding, but not for formal 
classroom instruction.
    7 U.S.C. 3222(a)(3) states that: ``research funding must be used 
for the expenses of conducting agricultural research, printing, 
disseminating the

[[Page 52252]]

results of such research, contributing to the retirement of employees 
subject to the provisions of 7 U.S.C. 331 of this title, administrative 
planning and direction, and purchase and rental of land and the 
construction, acquisition, alteration, or repair of buildings necessary 
for conducting agricultural research.''
    Because the authorizing statutes so clearly identify authorized 
uses and prohibitions, NIFA believes that no further explanation or 
inclusion of qualifying educational activities is needed in this 
regulation.
    Sec.  3419.7 Reporting of matching funds. The revised proposed rule 
adds a section on reporting of matching funds to clarify an existing 
requirement that 1890 land-grant institutions and 1862 land-grant 
institutions in insular areas report all capacity funds expended on an 
annual basis using Standard Form (SF) 425, in accordance with 7 CFR 
part 3430. This ensures that the information on matching funds is 
reported to NIFA.
    Sec.  3419.8 Redistribution of funds. The revised proposed rule 
removes the first sentence of the existing provision as the timing of 
reapportionment may vary. Removing this sentence does not change the 
statutory requirements for reapportionment. The only significance of 
the deletion is to remove the July 1 date for action.
    Additionally, one other technical correction is changing ``shall'' 
to ``must,'' consistent with the plain English provisions relating to 
rulemaking.

Executive Order 12866 and Executive Order 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying the costs and 
benefits of simplifying and harmonizing rules, and of promoting 
flexibility. This rulemaking has been determined to be not significant 
for purposes of Executive Order 12866.

Executive Order 13771

    This proposed rule is not expected to be an EO 13771 regulatory 
action because this rulemaking is not significant under EO 12866.

Regulatory Flexibility Act

    This revised proposed rule has been reviewed in accordance with the 
Regulatory Flexibility Act of 1980, as amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996, (5 U.S.C. 601-612). The 
Director of the NIFA certifies that this proposed regulation will not 
have a significant economic impact on a substantial number of small 
entities. This proposed regulation will affect institutions of higher 
education receiving Federal funds under this program. The U.S. Small 
Business Administration Size Standards define institutions as ``small 
entities'' if they are for-profit or nonprofit institutions with total 
annual revenue below $5,000,000 or if they are institutions controlled 
by governmental entities with populations below 50,000. The rulemaking 
does not involve regulatory and informational requirements regarding 
businesses, organizations, and governmental jurisdictions subject to 
regulation.

Catalogue of Federal Domestic Assistance

    The programs affected by this revised proposed rule are listed in 
the Catalogue of Federal Domestic Assistance under 10.500, Cooperative 
Extension Service; and 10.205, Payments to 1890 Land-Grant Colleges and 
Tuskegee University.

Paperwork Reduction Act

    The Department certifies that this revised proposed rule has been 
assessed in accordance with the requirements of the Paperwork Reduction 
Act (PRA), 44 U.S.C. 3501 et seq. The Department concludes that this 
proposed rule does not impose any new information collection 
requirements or change the burden estimate on existing information 
collection requirements. In addition to the SF-424 form families (i.e., 
Research and Related and Mandatory) and the SF-425 Federal Financial 
Report (FFR) No. 0348-0061, NIFA has three currently approved OMB 
information collections associated with this rulemaking: OMB 
Information Collection No. 0524- 0042, NIFA REEport; No. 0524-0041, 
NIFA Application Review Process; and No. 0524-0026, Organizational 
Information.

Unfunded Mandates Reform Act of 1995 and Executive Order 13132

    The Department has reviewed this revised proposed rule in 
accordance with the requirements of Executive Order No. 13132 and the 
Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1501 et seq., and has 
found no potential or substantial direct effects on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. As there is no Federal mandate contained herein that could 
result in increased expenditures by State, local, or tribal 
governments, or by the private sector, the Department has not prepared 
a budgetary impact statement.

Clarity of This Regulation

    Executive Order 12866 and the President's Memorandum of June 1, 
1998, require each agency to write all rulemaking in plain language. 
The Department invites comments on how to make this proposed rule 
easier to understand.

List of Subjects in 7 CFR Part 3419

    Agricultural extension, Agricultural research; 1890 land-grant 
institutions; insular areas; 1862 land-grant institutions in insular 
areas; matching funds.

    For the reasons stated in the preamble, the National Institute of 
Food and Agriculture rescinds the previous Notice of Proposed 
Rulemaking RIN-0524-AA25 issued April 29, 2003 (68 FR 23013) and 
proposes to amend 7 CFR part 3419 as follows:

PART 3419--MATCHING FUNDS REQUIREMENT FOR AGRICULTURAL RESEARCH AND 
EXTENSION CAPACITY FUNDS AT 1890 LAND-GRANT INSTITUTIONS, AND 1862 
LAND-GRANT INSTITUTIONS IN INSULAR AREAS

0
1. The authority citation for part 3419 is revised to read as follows:

    Authority:  7 U.S.C. 3222d; 7 U.S.C. 343(e); 7 U.S.C. 361c; Pub. 
L. 107-171; Pub. L. 110-234; Pub. L. 113-79
0
2. Amend Sec.  3419.1 as follows:
0
a. Add a definition for ``Capacity funds'';
0
b. Revise the definition of ``Eligible institution'';
0
c. Remove the definition of ``Formula funds'';
0
d. Revise the definition of ``Matching funds'';
0
e. Remove the definition of ``Qualifying educational activities''
    The addition and revisions read as follows:


Sec.  3419.1   Definitions.

    As used in this part:
    Capacity funds means agricultural extension and research funds 
provided by formula to the eligible institutions under sections 1444 
and 1445 of the National Agricultural Research, Extension, and Teaching 
Policy Act of

[[Page 52253]]

1977 (NARETPA), as amended, or under sections 3(b) and (c) of the 
Smith-Lever Act, 7 U.S.C. 343(b) and (c) or under section 3 of the 
Hatch Act of 1887, 7 U.S.C. 361c.
    Eligible institution means a college or university eligible to 
receive funds under the Act of August 30, 1890 (7 U.S.C. 321 et seq.) 
(commonly known as the Second Morrill Act), including Central State 
University, Tuskegee University, and West Virginia State University 
(1890 land-grant institutions), and a college or university designated 
under the Act of July 2, 1862 (7 U.S.C. 301, et seq.) (commonly known 
as the First Morrill Act) and located in the Commonwealth of Puerto 
Rico and the insular areas of American Samoa, Guam, Micronesia, 
Northern Marianas, and the Virgin Islands (1862 land-grant institutions 
in insular areas).
    Matching funds means funds from non-Federal sources, including 
those made available by the State to the eligible institutions, for 
programs or activities that fall within the purposes of agricultural 
research and cooperative extension under: sections 1444 and 1445 of 
NARETPA; the Hatch Act of 1887; and the Smith-Lever Act.
* * * * *
0
2. Amend Sec.  3419.2 as follows:
0
a. Remove the introductory text;
0
b. Revise Paragraphs (a) and (b).
    The revisions read as follows:


Sec.  3419.2   Matching funds requirement.

    (a) 1890 land-grant institutions: The distribution of capacity 
funds are subject to a matching requirement. Matching funds will equal 
not less than 100% of the capacity funds to be distributed to the 
institution.
    (b) 1862 land-grant institutions in insular areas: The distribution 
of capacity funds are subject to a matching requirement. Matching funds 
will equal not less than 50% of the capacity funds to be distributed to 
the institution.
* * * * *


Sec.  3419.3   [Removed]

0
3. Remove Sec.  3419.3


Sec.  3419.4   [Redesignated as Sec.  3419.3]

0
4. Redesignate Sec.  3419.4 as Sec.  3419.3 and revise it to read as 
follows:


Sec.  3419.3   Limited waiver authority.

    (a) 1890 land-grant institutions: The Secretary may waive the 
matching funds requirement in 7 CFR 3419.2 above the 50% level for any 
fiscal year for an eligible institution of a State if the Secretary 
determines that the State will be unlikely to satisfy the matching 
requirement.
    (b) 1862 land-grant institutions in insular areas: The Secretary 
may waive up to 100% of the matching funds requirements in 7 CFR 3419.2 
for any fiscal year for an eligible institution in an insular area.
    (c) The criteria to waive the applicable matching requirement for 
1890 land-grant institutions and 1862 land-grant institutions in 
insular areas is demonstration of one or more of the following:
    (1) Impacts from natural disaster, flood, fire, tornado, hurricane, 
or drought;
    (2) State and/or institution facing a financial crisis; or
    (3) Lack of matching funds after demonstration of good faith 
efforts to obtain funds.
    (d) Approval or disapproval of the request for a waiver will be 
based on the application submitted, as defined under Sec.  3419.4.
0
5. Add new Sec.  3419.4 to read as follows:


Sec.  3419.4   Applications for waivers for both 1890 land-grant 
institutions and 1862 land-grant institutions in insular areas.

    Application for waivers for both 1890 land-grant institutions and 
1862 land-grant institutions in insular areas. The president of the 
eligible institution must submit any request for a waiver for matching 
requirements. A waiver application must include the name of the 
eligible institution, the type of Federal capacity funds (i.e. 
research, extension, Hatch, etc.), appropriate fiscal year, the basis 
for the request (e.g. one or more of the criteria identified in Sec.  
3419.3); current supporting documentation, where current is defined as 
within the past two years from the date of the letter requesting the 
waiver; and the amount of the request.


Sec.  3419.5   [Amended]

0
6. Amend Sec.  3419.5 by removing the word ``formula'' and adding, in 
its place, the word ``capacity''.
0
7. Revise Sec.  3419.6 to read as follows:


Sec.  3419.6  Use of matching funds.

    The required matching funds for the capacity programs must be used 
by an eligible institution for the same purpose as Federal award 
dollars: Agricultural research and extension activities that have been 
approved in the plan of work required under sections 1445(c) and 
1444(d) of the National Agricultural Research, Extension, and Teaching 
Policy Act of 1977, section 7 of the Hatch Act of 1887, and section 4 
of the Smith-Lever Act. For all programs, tuition dollars and student 
fees may not be used as matching funds.


Sec.  3419.7   [Redesignated as Sec.  3419.8]

0
8. Redesignate Sec.  3419.7 as Sec.  3419.8, and add a new Sec.  3419.7 
to read as follows:


Sec.  3419.7   Reporting of matching funds.

    Institutions will report all capacity matching funds expended 
annually using Standard Form (SF) 425, in accordance with 7 CFR 
3430.56(a).
0
9. Revise newly redesignated Sec.  3419.8 to read as follows:


Sec.  3419.8   Redistribution of Funds.

    Unmatched research and extension funds will be reapportioned in 
accordance with the research and extension statutory distribution 
formulas applicable to the 1890 and 1862 land-grant institutions in 
insular areas, respectively. Any redistribution of funds must be 
subject to the same matching requirement under Sec.  3419.2.

    Done at Washington, DC, on November 2, 2017.
Sonny Ramaswamy,
NIFA Director, National Institute of Food and Agriculture.
[FR Doc. 2017-24327 Filed 11-9-17; 8:45 am]
 BILLING CODE 3410-22-P