[Federal Register Volume 89, Number 190 (Tuesday, October 1, 2024)]
[Rules and Regulations]
[Pages 79731-79733]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-22520]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
========================================================================
Federal Register / Vol. 89, No. 190 / Tuesday, October 1, 2024 /
Rules and Regulations
[[Page 79731]]
OFFICE OF MANAGEMENT AND BUDGET
2 CFR Parts 170, 184, and 200
Guidance for Federal Financial Assistance; Corrections
AGENCY: Office of Federal Financial Management, Office of Management
and Budget.
ACTION: Final rule; correction and correcting amendments.
-----------------------------------------------------------------------
SUMMARY: The Office of Management and Budget (OMB) is correcting the
final guidance that appeared in the Federal Register on April 22, 2024.
This document reverses a change to a title heading and makes technical
amendments clarifying specific language in three parts.
DATES: Effective on October 1, 2024.
FOR FURTHER INFORMATION CONTACT: Steven Mackey or Andrew Reisig at the
OMB Office of Federal Financial Management at
[email protected] or 202-395-3993.
SUPPLEMENTARY INFORMATION: This is a summary of the revisions to OMB's
Guidance for Federal financial assistance published April 22, 2024 (89
FR 30046).
Section-by-Section Discussion
Title 2--Grants and Agreements
In the document published by OMB in the Federal Register in April,
instruction 1 at 89 FR 30107 attempted to change the heading of title 2
from ``Grants and Agreements'' to ``Federal Financial Assistance.''
However, unlike chapters, subchapters, and parts, which are under the
direct control of an agency (1 CFR 21.8), each CFR title is arranged by
subject matter and only the Director of the Federal Register can
establish new or update existing titles (1 CFR 8.2). Therefore, instead
of directly changing the heading and subject matter of title 2, the
Director of OMB has communicated the request to change the heading of
title 2 to the Director of the Federal Register.
Subtitle A of title 2 has been specifically assigned to OMB, so, in
this case, the subtitle heading is treated as an OMB chapter or part
heading. Therefore, instructions 2 and 4 in OMB's April document are
both acceptable instructions, which will be implemented.
Appendix A to Part 170--Award Term
In paragraph I(a)(2)(i) of appendix A to 2 CFR part 170, OMB
mistakenly stated that the ``entity or Federal agency'' must report
subawards described in paragraph (a)(1) of the award term to the
Federal Funding Accountability and Transparency Act Subaward Reporting
System (FSRS). OMB intended to state that the ``recipient'' is
responsible for such reporting to FSRS. The technical correction is
consistent with the prior version of the award term in appendix A to 2
CFR part 170, which is directed at recipients--but refers to them
throughout as ``you.'' In the revised version of the award term, OMB
generally replaced the word ``you'' with ``recipient'' throughout for
greater clarity, but inadvertently included the wrong terms in this
particular instance. Consistent with 2 CFR 170.220(a), the award term
is directed at recipients, and recipients are responsible for reporting
subawards in FSRS. Thus, through this document, OMB replaced ``entity
or Federal agency'' with ``recipient'' in paragraph (a)(1) of the award
term.
Section 184.3--Definitions (Introductory Text)
In the introductory text for the definitions in part 184, which
implements the Build America, Buy America Act (BABA), Public Law 117-
58, OMB incorporated the meanings of acronyms and definitions from 2
CFR 200.0 and 200.1. 88 FR 57750, 57788. OMB did this to incorporate
the meanings of terms such as ``Federal award,'' ``subaward,''
``Federal agencies,'' ``recipient,'' and others, which are used in the
same way in both parts 184 and 200. However, the document published by
OMB in the Federal Register in April 2024 revising part 200 adjusted
the meanings and thresholds for the terms ``equipment'' and ``supply,''
which OMB does not intend to apply under part 184. 89 FR 30046, 30139-
44. OMB has amended the introductory text before the definitions in
Sec. 184.3 to clarify that the definitions of ``equipment'' and
``supply'' are not incorporated under part 184.
Based on the use of ``expenditures'' at Sec. 184.8 (Exemptions to
the Buy America Preference), OMB has also amended the introductory text
to exclude the definition of ``expenditures'' from part 200. The use of
that term in Sec. 184.8 (i.e., ``expenditures for assistance'') refers
to expenditures of funds by a Federal agency ``for assistance,'' as
opposed to the definition in Sec. 200.1, which refers to expenditures
``by a recipient or subrecipient to a project or program for which a
Federal award is received.'' 89 FR 30046, 30139.
OMB is not providing revised definitions of the terms
``equipment,'' ``supply,'' or ``expenditure'' through this document,
but merely clarifying that the definitions from Sec. 200.1 do not
apply under part 184.
Section 200.1--Definitions
In the document published by OMB in the Federal Register in August
2023 establishing 2 CFR part 184, which implements BABA, Public Law
117-58, OMB explained how the term Federal financial assistance, as
defined at 2 CFR 200.1, should be applied under part 184. 88 FR 57750,
57774. The preamble explained that, through issuance of the final
guidance, OMB did not modify the existing guidance in M-22-11 on the
proper application of that term for the purposes of BABA. Specifically,
OMB explained that the existing guidance in OMB Memorandum M-22-11 was
based on the definition of Federal financial assistance at section
70912(4)(A) of BABA, providing that the term has the meaning given in
``section 200.1 of title 2, Code of Federal Regulations (or successor
regulations).'' Based on certain forms of assistance listed in section
200.1, Memorandum M-22-11 established the policy that, for the purposes
of BABA, Federal financial assistance means ``assistance that non-
Federal entities receive or administer in the form of grants,
cooperative agreements, non-cash contributions or donations of
property, direct assistance, loans, loan guarantees, and other types of
financial assistance.'' (Emphasis added) Section 70912(4)(B) of BABA
also provides that the term Federal financial assistance includes, but
is not
[[Page 79732]]
limited to, all expenditures ``by a Federal agency to a non-Federal
entity [for assistance] for an infrastructure project,'' except that it
does not include certain specified expenditures relating to a major
disaster or emergency. Based on the policy in Memorandum M-22-11, which
applied BABA to loans and loan guarantees, the part 184 preamble
explained how the definition from BABA 70912(4)(A) and 2 CFR 200.1
should be applied for the purposes of part 184. 88 FR 57750, 57774.
OMB subsequently rescinded and replaced Memorandum M-22-11 on
October 25, 2023, by issuing Memorandum M-24-02. Memorandum M-24-02
continues to provide that, for the purposes of BABA, Federal financial
assistance means ``assistance that non-Federal entities receive or
administer in the form of grants, cooperative agreements, non-cash
contributions or donations of property, direct assistance, loans, loan
guarantees, and other types of financial assistance.''
To clarify how the term ``Federal financial assistance'' is applied
for purposes of BABA under part 184, OMB has added a new paragraph to
the definition at Sec. 200.1 specifically addressing this topic based
on the part 184 preamble and associated OMB guidance memoranda. This
revision is intended to reduce any ambiguity in the 2 CFR text on which
forms of Federal financial assistance are included for purposes of part
184. The revision is consistent with OMB's existing policy with respect
to BABA applicability to loans and loan guarantees, which is reflected
in the part 184 preamble and associated policy memoranda.
Section 200.431--Compensation--Fringe Benefits
In the document published by OMB in the Federal Register in April,
OMB explained in the preamble at 89 FR 30095 that, in the proposed
guidance, ``OMB proposed revising section 200.431 on fringe benefits to
require recipients and subrecipients to allocate payments for unused
leave as general administrative expenses or include them in a fringe
benefit rate with cognizant agency approval.'' In its response to
comments at 89 FR 30095, OMB stated that it revised paragraph (b)(3)(i)
of Sec. 200.431 ``to remove the requirement that agencies must include
certain costs in fringe benefit rates only with the approval of the
cognizant agency for indirect costs.'' (Emphasis added) OMB explained
that it made this change in recognition ``that some recipients might
not have a cognizant agency for indirect costs.'' However, in removing
the requirement to obtain cognizant agency approval, OMB also
inadvertently removed the option to include these payments in a fringe
benefit rate under any circumstances, which--as the preamble text
reflected--was not its intent. Thus, through this document, OMB
inserted the following text at the end of paragraph (b)(3)(i) of Sec.
200.431: ``or included in the fringe benefit rate.''
In addition, OMB further revised paragraph (b)(3)(i) of Sec.
200.431 through this document to replace the word ``must'' with
``should'' in the instruction to either allocate these payments for
unused leave as a general administrative expense to all activities or
include them in fringe benefit rates. This revision is consistent with
prior OMB guidance on this topic in the ``2 CFR Frequently Asked
Questions'' (2 CFR FAQ) published on May 3, 2021, which was a source of
the text at paragraph (b)(3)(i) of Sec. 200.431. See 2 CFR FAQ, at Q-
104. All payments for unused leave must still be allocated in
accordance with the cost principles in subpart E. See, e.g., 2 CFR
200.401(a). Paragraph (b)(3)(i), as revised, continues to describe the
two options that will generally be used for these types of payments
under subpart E.
Correction to Final Rule Published April 2024
In FR Doc. 2024-07496, appearing at 89 FR 30046 in the Federal
Register of April 22, 2024, on page 30108, in the first column, remove
instruction 1 for title 2.
List of Subjects
2 CFR Part 170
Colleges and universities, Grant programs, Hospitals, International
organizations, Loan programs, Reporting and recordkeeping requirements.
2 CFR Parts 184 and 200
Administration of Federal financial assistance, Administrative
practice and procedure, Federal financial assistance programs.
For the reasons stated in the preamble, the Office of Management
and Budget corrects 2 CFR chapters I and II by making the following
correcting amendments:
PART 170--REPORTING SUBAWARD AND EXECUTIVE COMPENSATION INFORMATION
0
1. The authority citation for part 170 continues to read as follows:
Authority: 31 U.S.C. 503; 31 U.S.C. 6102; 31 U.S.C. 6307; Pub.
L. 109-282; Pub. L. 110-252, Pub. L. 113-101, Pub. L. 117-40.
Appendix A to part 170 [Amended]
0
2. In appendix A to part 170, amend paragraph I(a)(2)(i) by removing
the words ``entity or Federal agency'' and adding, in their place, the
word ``recipient''.
PART 184--BUY AMERICA PREFERENCES FOR INFRASTRUCTURE PROJECTS
0
3. The authority citation for part 184 continues to read as follows:
Authority: Pub. L. 117-58, 135 Stat. 429.
0
4. In Sec. 184.3, revise the introductory text to read as follows:
Sec. 184.3 Definitions.
Acronyms used in this part have the same meaning as provided in 2
CFR 200.0. Terms not defined in this part have the same meaning as
provided in 2 CFR 200.1, except for the terms ``equipment,''
``expenditures,'' and ``supplies,'' which are not specifically defined
for this part. As used in this part:
* * * * *
PART 200--UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND
AUDIT REQUIREMENTS FOR FEDERAL AWARDS
0
5. The authority citation for part 200 continues to read as follows:
Authority: 31 U.S.C. 503; 31 U.S.C. 6101-6106; 31 U.S.C. 6307;
31 U.S.C. 7501-7507.
0
6. In Sec. 200.1, in the definition of ``Federal financial
assistance,'' add paragraph (5) to read as follows:
Sec. 200.1 Definitions.
* * * * *
Federal financial assistance * * *
(5) For part 184 of this title, in addition to the forms of
assistance listed in paragraph (1) of this definition, Federal
financial assistance also includes assistance that recipients or
subrecipients receive or administer in the form of:
(i) Loans; and
(ii) Loan Guarantees.
* * * * *
0
7. In Sec. 200.431, revise paragraph (b)(3)(i) to read as follows:
Sec. 200.431 Compensation--fringe benefits.
* * * * *
(b) * * *
(3) * * *
(i) When a recipient or subrecipient uses the cash basis of
accounting, the cost of leave is recognized in the period that the
leave is taken and paid for. Payments for unused leave when an
[[Page 79733]]
employee retires or terminates employment are allowable in the year of
payment and should be allocated as a general administrative expense to
all activities or included in the fringe benefit rate.
* * * * *
Deidre A. Harrison,
Deputy Controller, performing the delegated duties of the Controller
Office of Federal Financial Management.
[FR Doc. 2024-22520 Filed 9-26-24; 4:15 pm]
BILLING CODE 3110-01-P