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Notice of Indirect Cost Rates for the National Marine Sanctuary Program

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AGENCY:

National Oceanic and Atmospheric Administration (NOAA), DOC.

ACTION:

Notice.

SUMMARY:

NOAA's National Marine Sanctuary Program (NMSP) is announcing the establishment of indirect cost rates and a policy on the recovery of indirect costs for its involvement in natural resource damage assessment and restoration activities. These rates and the NMSP policy will be applied to all damage assessment and restoration case costs as of October 1, 2001, for cases not settled prior to that date. More information on these rates and the NMSP policy can be obtained from the address provided below.

EFFECTIVE DATE:

October 1, 2001.

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FOR FURTHER INFORMATION CONTACT:

Harriet Sopher, 301-713-3125, ext. 109; (Fax: 301-713-0404; e-mail: Harriet.Sopher@noaa.gov.

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SUPPLEMENTARY INFORMATION:

The mission of the NMSP under the National Marine Sanctuaries Act (NMSA) (16 U.S.C. 1431 et seq.) is to manage and protect specifically designated areas of the nation's oceans and Great Lakes for their habitats, ecological value, threatened and endangered species, and historical archaeological, recreational and esthetic resources. The NOAA NMSP is part of the National Ocean Service, and consists of a system of individual sanctuary sites (13 at present) and a headquarters office.

The NMSP has the mandate to restore sanctuary resources injured as the result of physical harm (section 312, NMSA), or caused by releases of hazardous substances or oil (Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. 9601 et seq. and Oil Pollution Act of 1990 (OPA), 33 U.S.C. 2701 et seq.) The NMSP conducts Natural Resource Damage Assessments (NRDAs) as a basis for recovering damages from responsible parties and uses the funds recovered to restore injured sanctuary resources and to reimburse the NMSP for assessment costs incurred.

NOAA has promulgated natural resource damage regulations under the Oil Pollution Act (OPA), 33 U.S.C. 2701 et seq. While oriented towards claims arising under OPA, the regulations provide guidance to NOAA in developing natural resource damage claims under a variety of statutes including the NMSA. The OPA regulations define the scope of the costs of the damage assessment and specifically allow for the inclusion of indirect costs provided, however, that those costs are developed according to generally acceptable accounting practices. Specifically, the regulations state that “both direct and indirect costs contribute to the full cost of the assessment and restoration * * *” and are defined to mean “expenses that are jointly or commonly incurred to produce two or more products or services * * *. Indirect costs are not specifically identifiable with any of the products or services, but are necessary for the organization to function and produce the products or services. An indirect cost rate, developed in Start Printed Page 75493accordance with generally accepted accounting principles, may be used to allocate indirect costs to specific assessment and restoration activities.” 15 CFR 990.30.

Accordingly, the NMSP includes both direct and indirect costs in damage assessment claims it presents to responsible parties. Direct costs are costs for activities that are clearly and readily attributable to a specific output. Outputs may be associated with on-scene emergency response as well as the damage assessment. In contrast, indirect costs reflect the costs for activities that collectively support the NMSP's damage assessment, restoration, and emergency response capabilities. For example, indirect costs include general administrative support and traditional overheads. Although these costs may not be readily traced back to a specific direct activity, indirect costs may be allocated to direct activities using an indirect cost distribution rate.

Consistent with Federal accounting requirements, the NMSP is required to account for and report the full costs of its programs and activities. Further, the NMSP is authorized by law to recover reasonable costs of damage assessment and restoration activities under the NMSA, CERCLA, and OPA. Within the constraints of these legal provisions and their regulatory applications, the NMSP has the discretion to develop indirect cost rates for its components and formulate policies on the recovery of indirect cost rates subject to its requirements.

The NMSP's Indirect Cost Effort

In October 2002, the NMSP hired the public accounting firm of Cotton & Company (C&C) to: (1) Evaluate the cost accounting system and allocation practices; (2) recommend the appropriate indirect cost allocation methodology; and, (3) determine the indirect cost rates for the components of the NMSP. The NMSP requested an analysis of its indirect costs for fiscal year 2002. The goal was to develop the most appropriate indirect cost rate allocation methodology and rates for the NMSP components.

C&C concluded that the cost accounting system and allocation practices of the NMSP are consistent with Federal accounting requirements. C&C also determined that the most appropriate indirect allocation method was the Direct Labor Cost Base for all NMSP components. The Direct Labor Cost Base is computed by allocating total indirect costs over the sum of direct labor dollars plus the application of NOAA's leave surcharge and benefits rates to direct labor. The indirect cost rates that C&C has computed for the NMSP were further assessed as being fair and equitable. A report on C&C's effort, their assessment of the NMSP's cost accounting system and practices, and their determination respecting the most appropriate indirect cost methodology and rates can be obtained from Michelle Chapman, 1305 East West Highway, Silver Spring, MD 20910, michelle.chapman@noaa.gov.

The NMSP's Indirect Cost Policy

The NMSP will include the costs of program policy work and techniques and methods development in indirect cost pools of its component organizations, but will monitor these activities annually to control costs. The indirect cost pools also include the cost of general management and administrative support and preparedness for emergency response work.

The NMSP will apply the rates recommended by C&C for fiscal year 2002 for each of the NMSP components as provided below:

Headquarters and all sanctuary field sites except as specified: 154.62%,

Florida Keys National Marine Sanctuary: 249.41%

Different components of the NMSP have different rates because of their different roles and responsibilities with respect to damage assessment and restoration. The Headquarters staff serves a coordinating function, providing overall policy direction and administrative support. Individual sanctuary sites support policy development, but also conduct techniques development and perform the field operational role, providing on-the-water emergency response and biological assessment of the injuries and conducting or overseeing restoration efforts. A separate rate was calculated for the Florida Keys National Marine Sanctuary (FKNMS) because the vast majority of incidents occur at that site. The FKNMS maintains an entire team of emergency response, damage assessment and restoration personnel, equipped and trained for their field operational role.

The rates identified in this policy will be applied to all damage assessment and restoration case costs as of October 1, 2001, using the Direct Labor Cost base allocation methodology. For cases that have settled and for cost claims paid prior to October 1, 2001, the NMSP will not reopen any resolved matters for the purpose of applying the rates in this policy. For cases not settled and cost claims not paid prior to October 1, 2001, costs will be recalculated using the rates in this policy. The NMSP will use the FY 2002 rates for future fiscal years until year-specific rates can be developed.

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Alan Neuschatz,

Associate Assistant Administrator for Management, Ocean Services and Coastal Zone Management, National Oceanic and Atmospheric Administration.

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[FR Doc. 03-32137 Filed 12-30-03; 8:45 am]

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