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Proposed Rule

Uniform Administrative Requirements for Awards and Subawards to Institutions of Higher Education, Hospitals, Other Nonprofit Organizations, and Commercial Organizations; and Certain Grants and Agreements With States, Local Governments and Indian Tribal Governments and Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments

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Department of Health and Human Services (HHS).


Notice of proposed rulemaking (NPRM).


The Department of Health and Human Services proposes to revise its grants management regulations in order to bring the entitlement grant programs it administers under the same regulations that already apply to non-entitlement programs for grants and cooperative agreements to State, local, and tribal governments.


Comments must be submitted by January 16, 2001.


Comments must be in writing and should be mailed or faxed to Charles Gale, Director, Office of Grants Management, HHS, Room 517-D, 200 Independence Avenue SW, Washington, D.C. 20201; Fax (202) 690-6902. Written comments may be inspected at the identified address during agency business hours from 9:30 am to 5:30 p.m., Monday through Friday, Federal Holidays excepted.

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Charles Gale, Director, Office of Grants Management at the above address; (202) 690-6377. For the hearing impaired only: TDD (202) 690-6415. These are not toll-free numbers.

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Background and Purpose

On March 11, 1988, HHS joined other Federal agencies in publishing a final grants management “common rule” which provides a uniform system for the administration of grants and cooperative agreements, and by subawards thereunder, to State, local, and tribal governments. Prior to that date, administrative requirements for awards and subawards under all HHS programs were codified under 45 CFR Part 74. HHS implemented the Common Rule at 45 CFR Part 92. At the time, entitlement grant programs of the Social Security Act (the Act) administered by HHS and the Department of Agriculture were excepted from the common rule, because it was believed that the States operated entitlement programs differently than non-entitlement programs. Therefore, Subpart E was reserved in the rule to subsequently address provisions specific to entitlement programs. Pending the publication of Subpart E to Part 92, the HHS entitlement programs have remained under Part 74. As cited in 45 CFR 92.4, these programs included:

(1) Aid to Needy Families with Dependent Children (Title IV-A of the Start Printed Page 68970Act, not including the Work Incentive Program (WIN) authorized by section 402(a)19(G));

(2) Child Support Enforcement and Establishment of Paternity (Title IV-D of the Act);

(3) Foster Care and Adoption Assistance (Title IV-E of the Act);

(4) Aid to the Aged, Blind, and Disabled (Titles I, X, XIV, and XVI-AABD of the Act);

(5) Medical Assistance (Medicaid) (Title XIX of the Act) not including the State Medicaid Fraud Control program authorized by section 1903(a)(6)(B); and

(6) Certain grant funds awarded under subsection 412(e) of the Immigration and Nationality Act and subsection 501(a) of the Refugee Education Assistance Act of 1980.

Experimental, pilot, or demonstrations involving the above programs also remained under Part 74.

Although it was initially believed that States operated entitlement programs differently than non-entitlement programs, over the years we have found that belief to be untrue. Based upon our experience, we believe that States operate entitlement grant programs like non-entitlement programs. Furthermore, HHS and USDA consulted with State officials and their staffs and found that they applied the same fundamental administrative rules to both entitlement and non-entitlement programs. Since the States are currently applying the substance of the common rule requirements to their entitlement programs, HHS and USDA plan to synchronize the administrative requirements for all entitlement grant programs by bringing them under the common rule. USDA issued a final rule which applies its Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments to its entitlement grant programs. 65 Fed. Reg. 49474 (August 14, 2000). By way of this proposed rule, HHS is likewise proceeding with application of the common rule to its entitlement grant programs.

This proposed rule would expand the scope of 45 CFR Part 92 to include the entitlement grant programs cited above and remove such programs from the scope of Part 74. Therefore, both entitlement and non-entitlement awards to State, local, and tribal governments will be under the same administrative rules. This will enable State, local, and tribal grantees and other affected parties, such as auditors, to use the same administrative rules for the vast majority of their Federal programs. This action will also reduce unnecessary confusion and inefficiency in program administration.

There are technical distinctions between Part 74 and Part 92, e.g., wording and format. Also, while the substance of the cost principles and audit requirements remains the same, there are differences in wording and organization. While the wording and organization are different, we believe there are no significant differences in the meaning of these standard administrative provisions. With respect to program income, for example, while Part 92 provides more specific information and Part 74 is different with respect to research grants, there is no practical difference in the way States will treat program income earned under the entitlement programs. That is, unless instructed otherwise by the HHS awarding agency or superseded by other legislative requirements, States will use the deduction alternative. Similarly, with respect to termination for convenience, while Part 92 covers the subject as a separate section, the requirements in Part 74 provide for essentially the same treatment in such cases. That is, termination for convenience may occur upon mutual consent between the HHS awarding agency and the grantee or upon written notification on the part of the grantee under certain conditions. We invite comment on the effect of these examples and any other differences detected. Additionally, HHS has decided to apply the rule prospectively to grants awarded after the effective date of the rule. We welcome questions regarding the application of the rule to specific types of entitlement grant programs.

In publishing this proposed rule, HHS solicits comments on applying the provisions of Part 92 to HHS entitlement program awards and subawards to State, local, and tribal governmental organizations. This proposed rule will not affect HHS non-entitlement grant programs. As noted above, Part 92 has covered grants and subgrants to State, local, and tribal governments relating to non-entitlement grant programs since its publication. HHS also solicits comments regarding whether certain provisions of the common rule should not be applied to entitlement grant programs but whether, instead, certain provisions of 45 CFR Part 74 should remain applicable.

Regulatory Impact Analysis

Executive Order 12866

In accordance with the provisions of Executive Order 12866, the Office of Management and Budget did not review this rule because it is not a significant regulatory action as defined in Executive Order 12866.

Regulatory Flexibility Act

In accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), the Secretary has reviewed this proposed rule before publication and, by approving it, certifies that it will not have a significant impact on a substantial number of small entities. The proposed rule does not affect the amount of funds provided in the covered programs but, instead, modifies and updates the administrative and procedural requirements.

Unfunded Mandates Reform Act

The Department has determined that this proposed rule is not a significant regulatory action within the meaning of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1501, et seq., because it will not result in State, local, or tribal government expenditures of $100 million or more.

Paperwork Reduction Act of 1995

The reporting and recordkeeping requirements of this rule are the same as those required by OMB Circulars A-102 and A-110 and have already been cleared by OMB. Therefore, HHS believes this rule will not impose additional information collection requirements on grantees and subgrantees.

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List of Subjects

45 CFR Part 74

  • Accounting
  • Administrative practice and procedure
  • Colleges and universities
  • Grant programs
  • Hospitals
  • Indians
  • Intergovernmental relations
  • Nonprofit organizations, and Reporting and recordkeeping requirements

45 CFR Part 92

  • Accounting
  • Grant programs
  • Indians
  • Intergovernmental relations
  • Reporting and recordkeeping requirements
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(Catalog of Federal Domestic Assistance number does not apply.)

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Dated: November 2, 2000.

Donna E. Shalala,


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Accordingly, for the reasons set forth above it is proposed that Title 45 of the Code of Federal Regulations be amended as follows:

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1. The heading of part 74 is revised to read as set forth above.

2. The authority citation for Part 74 is revised to read as follows:

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Authority: 5 U.S.C. 301; OMB Circular A-110 (58 FR 62992, November 29, 1993), as amended (64 FR 54926, October 8, 1999). 3. In 74.1 remove paragraph (a)(3).

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1. The authority citation for part 92 would continue to read as follows:

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Authority: 5 U.S.C. 301. 2. In 92.4 remove paragraphs (a)(3), (7) and (8) and redesignate paragraphs (a)(4) through (10) as (a)(3) through (7) and remove and reserve paragraph (b). 3. Remove Subpart E, Entitlement.

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[FR Doc. 00-29111 Filed 11-14-00; 8:45 am]