[Federal Register Volume 84, Number 64 (Wednesday, April 3, 2019)]
[Rules and Regulations]
[Pages 12929-12932]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-06404]
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DEPARTMENT OF THE TREASURY
31 CFR Part 34
RIN 1505-AC55
Gulf Coast Restoration Trust Fund
AGENCY: Office of the Fiscal Assistant Secretary, Treasury.
ACTION: Final rule.
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SUMMARY: The Department of the Treasury (Treasury) is issuing a final
rule to revise the method by which the statutory three percent
limitation on administrative costs (referred to throughout this notice
as the ``three percent administrative cost cap'') is applied under the
Direct Component, Comprehensive Plan Component, and Spill Impact
Component under the Resources and Ecosystem Sustainability, Tourist
Opportunities, and Revived Economies of the Gulf Coast States Act of
2012, (RESTORE Act or Act). This revision will help ensure that the
Gulf Coast States and localities have the necessary funding to
efficiently and effectively oversee and manage projects and programs
for ecological and economic restoration of the Gulf Coast Region while
ensuring compliance with the statutory three percent administrative
cost cap.
DATES: Effective May 3, 2019.
FOR FURTHER INFORMATION CONTACT: The Office of Gulf Coast Restoration
at [email protected], or Laurie McGilvray, Program Director, at
202-622-7340.
SUPPLEMENTARY INFORMATION:
I. Background
The RESTORE Act makes funds available for the ecological and
economic restoration of the Gulf Coast Region, and certain programs
with respect to the Gulf of Mexico, through a trust fund in the
Treasury of the United States known as the Gulf Coast Restoration Trust
Fund (trust fund). The trust fund holds 80 percent of the
administrative and civil penalties paid under the Federal Water
Pollution Control Act after July 6, 2012, in connection with the
Deepwater Horizon Oil Spill.
Treasury administers two of the five components established by the
Act, the Direct Component and Centers of Excellence Research Grants
Program. The Act also established an independent Federal entity, the
Gulf Coast Ecosystem Restoration Council (Council), to administer two
components of the Act, the Comprehensive Plan Component and the Spill
Impact Component. The National Oceanic and Atmospheric Administration
(NOAA) administers one component, the NOAA RESTORE Act Science Program.
This final rule only affects grants under the Direct Component,
Comprehensive Plan Component, and Spill Impact Component of the Act,
which are collectively referred to throughout this notice as the three
``components.''
On December 14, 2015, Treasury promulgated final regulations
concerning the RESTORE Act, codified at 31 CFR part 34, which became
[[Page 12930]]
effective on February 12, 2016 (the ``regulations''). 80 FR 77239. They
contain two relevant limitations on the amount of grant funds that may
be used for administrative costs.
First, the regulations subject grants to government-wide cost
principles. They define ``administrative costs'' as ``indirect costs
for administration'' and provide that such ``[c]osts must comply with
administrative requirements and cost principles in applicable federal
laws and policies on grants.'' 31 CFR 34.2, 34.200(a)(1). They exclude
``indirect costs that are identified specifically with, or readily
assignable to, facilities'' from the definition of ``administrative
costs.''
Indirect cost principles are contained in the Office of Management
and Budget (OMB) ``Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards'' (the Uniform
Guidance) in 2 CFR part 200, which Treasury has adopted. 2 CFR 1000.10.
Indirect costs are defined in 2 CFR 200.56 and are allowable subject to
Subpart E of 2 CFR part 200 and Appendix VII.
Under Subpart E, a grant recipient's negotiated indirect cost rate
agreement (NICRA) with its cognizant agency determines the allowable
indirect cost rate for the recipient's grants, taking into account the
unique circumstances and cost structure of the recipient. The NICRA, or
a de minimis rate if elected, must be used across all of the
recipient's federal grants.\1\ 2 CFR 200.414(c)(1). In accordance with
the Uniform Guidance, Appendix VII--State and Local Government and
Indian Tribe Indirect Cost Proposals, these allowable indirect costs
are computed on each individual Federal award.
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\1\ Subpart E provides that when a recipient has never had a
NICRA and receives $35 million or less in direct federal funding, a
de minimis rate of 10 percent of modified total direct costs may be
used to calculate its allowable indirect costs in lieu of
establishing a NICRA. 2 CFR 200.414(f), 2 CFR part 200, Appendix
VII(D)(1)(b).
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The second limitation on the amount of RESTORE Act grant funds that
can be used for administrative costs under the three components is a
three percent administrative cost cap. The Act provides that ``[o]f the
amounts received by a Gulf Coast State . . ., not more than 3 percent
may be used for administrative costs . . . .'' 33 U.S.C.
1321(t)(1)(B)(iii)(I). The Act does not specify the method by which
this three percent administrative cost cap is to be applied. Treasury's
regulations, however, currently provide that the three percent
administrative cost cap is to be applied on a grant-by-grant basis:
``The three percent limit is applied to the total amount of funds
received by a recipient under each grant.'' 31 CFR 34.204(a). In other
words, under the current regulations, the administrative costs
associated with each particular grant may not exceed three percent of
the total amount of that grant.
II. Description of the Proposed Rule
On June 20, 2018, Treasury published a Notice of Proposed
Rulemaking (NPRM) proposing to provide a recipient the option to apply
the three percent administrative cost cap, within each component, on
either a grant-by-grant basis or on an aggregate basis. 83 FR 28563.
The NPRM proposed that the three percent administrative cost cap may be
applied, for each component, to a Gulf Coast State, coastal political
subdivision, or coastal zone parish's trust fund allocation, i.e., to
the aggregate of (1) all grants received by it under that component and
(2) the amount in the trust fund for the same component that is
allocated to, but not yet received by it. Amounts ``allocated to, but
not yet received'' refer only to funds presently in the trust fund and
not to future deposits into the trust fund \2\ and include the
following amounts with respect to each component: (1) With respect to
the Direct Component, amounts made available in equal shares for the
Gulf Coast States in accordance with 31 CFR 34.302; (2) with respect to
the Comprehensive Plan Component, the estimated aggregate cost of all
projects approved for funding included in all approved Funded
Priorities Lists; and (3) with respect to the Spill Impact Component,
amounts allocated to the Gulf Coast States in accordance with 31 CFR
34.502 and 40 CFR 1800.500.
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\2\ BP Exploration & Production Inc. began making annual civil
penalty payments in April 2017, and is expected to continue to make
annual payments through mid-2031 pursuant to a consent decree
entered on April 4, 2016 under the Federal Water Pollution Control
Act (Clean Water Act), of which eighty percent of the total will be
deposited into the Gulf Coast Restoration Trust Fund and invested.
The annual payments into the trust fund through 2031 are expected to
total $4.4 billion. In 2032, BP will make a final payment in the
form of penalty interest.
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The Act does not require that Treasury administer the
administrative cost cap on a grant-by-grant basis, and because
Treasury's regulations allocate precise sums to specific entities based
on criteria in the Act, it is possible to administer it on an aggregate
basis. In the NPRM, Treasury proposed permitting recipients, if they so
choose, to allocate administrative costs by component from their
``pool'' in the trust fund toward the indirect costs in their grants to
recover the maximum amount of indirect costs allowed under the Act, and
to more efficiently and effectively oversee and manage projects and
programs. Under the proposal, if a recipient's allowable indirect costs
for administration for one grant are less than three percent of the
total amount of that grant, the difference would be available to cover
allowable indirect costs for administration exceeding three percent on
other grants. However, at no time would the total amount of
administrative costs of a Gulf Coast State, coastal political
subdivision, or coastal zone parish be permitted to exceed three
percent of the aggregate of (1) all grants received by it under one of
the three components, and (2) the amount in the trust fund for the same
component that is allocated to, but not yet received by such Gulf Coast
State, coastal political subdivision, or coastal zone parish. Also, at
no time would a recipient be able to recover more in indirect costs
under an individual award than it would receive under its NICRA or its
de minimis rate. Treasury will address a recipient's selection of its
method for calculating administrative indirect costs during the
application submission and review process or in reviewing a request to
amend a prior award. At least annually, Treasury will post publicly the
amounts available in the administrative cost ``pool'' by component,
simultaneously with its updates to the trust fund allocations.
In Sec. 34.204(a)(1)(ii) of the proposed rule, Treasury also added
``recipient and'' before ``subrecipient'' in the last sentence to
clarify that Federal grant law and policies apply to recipient costs as
well as to subrecipient costs. (As discussed below, this addition is
located at section 34.204(a)(2) in the final rule.) Treasury also
stated in the proposed rule that it would conduct a retrospective
analysis of the aggregate method no later than seven years after the
date this final rule becomes effective, to ``consider whether the
revision ensures that the Gulf Coast states, coastal political
subdivisions, and coastal zone parishes have the necessary funding to
efficiently and effectively oversee and manage projects and programs
for ecological and economic restoration of the Gulf Coast Region while
ensuring compliance with the statutory three percent administrative
cost cap, and whether it helps them to administer RESTORE Act grant
projects effectively and efficiently.'' NPRM Sec. 34.204(a)(2).
Treasury has removed the second use of ``effectively and efficiently''
as redundant with the first use of it in the sentence. (As explained
below, Treasury
[[Page 12931]]
has also moved the language in Sec. 34.204(a)(2) of the proposed rule
to Sec. 34.204(a)(3) of the final rule.)
III. Public Comments and Changes From the Proposed Rule
The NPRM invited public comments on all aspects of the proposed
revision for 30 days. Nine commenters submitted written responses to
the NPRM, all of which Treasury has reviewed. The following is a
discussion of relevant comments and Treasury's responses. Treasury is
adopting the rule as proposed with only two changes, as discussed
below.
One commenter asked whether the three percent for administrative
costs may be used by a grantee together with the de minimis ten percent
for indirect cost limits.\3\ Under Treasury's regulations,
administrative costs are defined as ``indirect costs for
administration'' (i.e., not direct costs for administration). If a
recipient has a de minimis rate of ten percent of modified total direct
costs, the recipient may be reimbursed for indirect costs for
administration up to three percent of the total award amount. This
calculation currently is applied to each grant. Under this final rule,
a recipient eligible to use the de minimis rate may be able to be
reimbursed for indirect costs for administration that exceed the three
percent cap for a particular grant, up to ten percent of the modified
total direct costs, if that recipient has received less than three
percent of the total award amount for indirect costs for administration
on the total of the aggregate of (1) all grants received by it under
that component and (2) the amount in the trust fund for the same
component that is allocated to, but not yet received by it.
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\3\ Tangipahoa Parish, Louisiana.
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Three commenters expressed support for the aggregate method because
it would allow greater reimbursement for indirect costs incurred.\4\
One commenter expressed support for the greater flexibility the
proposed rule would provide to recipients in applying the three percent
administrative cost cap.\5\
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\4\ Texas Commission on Environmental Quality, Alabama Gulf
Coast Recovery Council, and Mississippi Department of Environmental
Quality.
\5\ Mississippi Department of Environmental Quality.
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Four commenters requested clarification as to whether the proposed
rule would apply to previously awarded grants.\6\ This final rule does
not require that recipients change the method by which they calculate
their administrative costs. It provides an alternative to the grant-by-
grant method required under Treasury's current regulation. Indirect
costs on previously awarded grants under each of the three components
may be reimbursed using the aggregate method, up to the amount of the
recipient's NICRA or de minimis rate, provided sufficient funds are
available in the recipient's administrative cost pool. A Direct
Component, Comprehensive Plan Component or Spill Impact Component
recipient with sufficient funds available in its administrative cost
pool wishing to recover indirect costs in an amount up to its NICRA or
de minimis rate on a prior award may request a grant amendment.
Treasury and the Council will provide guidance to their respective
recipients to assist them in applying the aggregate method to calculate
administrative costs and to keep track of the amount available for
administrative costs in their administrative cost pool for each
component.
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\6\ Texas Commission on Environmental Quality, Alabama Gulf
Coast Recovery Council, Mississippi Department of Environmental
Quality, and Gulf Coast Ecosystem Restoration Council.
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Treasury also solicited information from eligible recipients as to
how they would manage and track administrative indirect costs under
each method. One eligible recipient explained that under the aggregate
method, for each component, it will update the calculations of its
administrative cost pools at least annually and reconcile its
calculations with Treasury's calculations.\7\ Treasury and the Council
will provide technical assistance to their respective recipients to
help ensure that administrative indirect costs are accurately tracked
across grants.
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\7\ Texas Commission on Environmental Quality.
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Treasury also asked eligible recipients in the NPRM whether there
was any additional burden associated with managing the administrative
indirect cost cap using the aggregate method. One eligible recipient
responded that the use of the aggregate method would impose an
``additional burden'' under all three components, but added that the
additional burden would be less than the burden currently imposed under
the grant-by-grant method, so that the net effect would be less of a
burden upon recipients.\8\
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\8\ Texas Commission on Environmental Quality.
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Two commenters suggested that the language in Sec.
34.204(a)(1)(ii) of the proposed rule be reorganized for clarity.\9\
Specifically, they pointed out that the final two sentences of Sec.
34.204(a)(1)(ii) of the proposed rule differ in subject matter from the
rest of the paragraph and should therefore be in a different paragraph.
Treasury agrees and has moved those sentences to Sec. 34.204(a)(2) of
the final rule. Treasury also has moved the language in Sec.
34.204(a)(2) of the proposed rule to Sec. 34.204(a)(3) of the final
rule.
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\9\ Texas Commission on Environmental Quality and Gulf Coast
Ecosystem Restoration Council.
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One commenter requested that Treasury clarify in the preamble that
projects under the Comprehensive Plan Component that are under
consideration by the Council but not yet approved for funding are not
included in the aggregate three percent cost calculation.\10\ The
clarification has been made to the reference to the Comprehensive Plan
Component's Funded Priorities List in Section II. Description of the
Proposed Rule above.
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\10\ Gulf Coast Ecosystem Restoration Council.
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IV. Procedural Requirements
A. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) generally
requires agencies to prepare a regulatory flexibility analysis of any
rule subject to notice and comment rulemaking requirements under the
Administrative Procedures Act or any other statute, unless the agency
certifies that the rule will not have a significant economic impact on
a substantial number of small entities.
Six of the 20 Louisiana parishes and six of the 23 Florida counties
eligible to receive grants under the RESTORE Act have fewer than 50,000
residents. (2010 U.S. Census) and thus qualify as small governmental
jurisdictions under the Regulatory Flexibility Act. (5 U.S.C. 601(5)).
Treasury anticipates that this final rule will have no significant
economic impact on these small entities because all recipients have the
option to continue applying the three percent administrative cost cap
on a grant-by-grant basis. Accordingly, Treasury certifies that this
final rule will not have a significant impact upon a substantial number
of small entities, and no regulatory flexibility analysis is required.
B. Regulatory Planning and Review (Executive Orders 12866 and 13563)
This final rule affects those entities in the five Gulf Coast
States that are eligible to receive funding under the RESTORE Act, and
is focused on the environmental restoration and economic recovery of
the Gulf Coast Region in the aftermath of the Deepwater Horizon oil
spill. The amounts made available from the trust fund will continue
efforts that provide for the long-term health of the ecosystems and
economy of this region.
[[Page 12932]]
Because it increases recipients' flexibility in how they apply the
statutory three percent administrative cost cap, Treasury believes this
final rule is an Executive Order 13771 deregulatory action. In
accordance with Executive Order 12866, as supplemented by Executive
Order 13563, OMB has designated this rule as a significant regulatory
action and has reviewed this final rule. This final rule finalizes
without significant change the proposed rule discussed above.
C. Congressional Review Act
The Congressional Review Act (5 U.S.C. 801 et seq.) generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. A major rule cannot take effect until 60 days after it
is published in the Federal Register. This action is not a ``major
rule'' as defined by 5 U.S.C. 804(2) and will become effective 30 days
after publication.
D. Catalog of Federal Domestic Assistance
The affected program for Treasury is listed in the Catalog of
Federal Domestic Assistance under 21.015, Resources and Ecosystems
Sustainability, Tourist Opportunities, and Revived Economies of the
Gulf Coast States. The affected programs for the Council are listed
under 87.051, and 87.052, for its Comprehensive Plan and Spill Impact
Components, respectively.
E. Unfunded Mandates Reform Act
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538)
requires federal agencies to assess the effects of their regulatory
actions. In particular, the Unfunded Mandates Reform Act addresses
actions that may result in the expenditure by a state, local, or tribal
government, in the aggregate, or by the private sector of $100,000,000
(adjusted for inflation) or more in any one year. Treasury believes
that because this final rule will not result in an aggregate
expenditure by a state, local, or tribal government, or by the private
sector of $100,000,000 or more, the Unfunded Mandates Reform Act does
not require an analysis of this final rule.
List of Subjects in 31 CFR Part 34
Coastal zone, Fisheries, Grant Programs, Grants administration,
Intergovernmental relations, Marine resources, Natural resources, Oil
pollution, Research, Science and technology, Trusts and trustees,
Wildlife.
For the reasons set forth herein, the Department of the Treasury
amends 31 CFR part 34 to read as follows:
PART 34--RESOURCES AND ECOSYSTEMS SUSTAINABILITY, TOURIST
OPPORTUNITIES, AND REVIVED ECONOMIES OF THE GULF COAST STATES
0
1. The authority citation continues to read as follows:
Authority: 31 U.S.C. 301; 31 U.S.C. 321; 33 U.S.C. 1251 et seq.
0
2. Amend Sec. 34.204 by revising paragraph (a) to read as follows:
Sec. 34.204 Limitations on administrative costs and administrative
expenses.
(a)(1) Of the amounts received by a Gulf Coast State, coastal
political subdivision, or coastal zone parish from Treasury under the
Direct Component, or from the Council under the Comprehensive Plan
Component or Spill Impact Component, not more than three percent may be
used for administrative costs. The three percent limit on
administrative costs may be applied to the total amount of funds
received by a recipient under each of the three components either on a
grant-by-grant basis or on an aggregate basis. For the latter method,
amounts used for administrative costs under each of the three
components may not at any time exceed three percent of the aggregate
of:
(i) The amounts received under a component by a recipient,
beginning with the first grant through the most recent grant, and
(ii) The amounts in the Trust Fund that are allocated to, but not
yet received under such component by a Gulf Coast State, coastal
political subdivision, or coastal zone parish under Sec. 34.103,
consistent with the definition of administrative costs in Sec. 34.2.
(2) The three percent limit does not apply to the administrative
costs of subrecipients. All recipient and subrecipient costs are
subject to the cost principles in Federal laws and policies on grants.
(3) Treasury will conduct a retrospective analysis of this
provision no later than seven years after the date it becomes
effective. This review will consider whether the revision ensures that
the Gulf Coast States, coastal political subdivisions, and coastal zone
parishes have the necessary funding to efficiently and effectively
oversee and manage projects and programs for ecological and economic
restoration of the Gulf Coast Region while ensuring compliance with the
statutory three percent administrative cost cap.
* * * * *
David A. Lebryk,
Fiscal Assistant Secretary.
[FR Doc. 2019-06404 Filed 4-2-19; 8:45 am]
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