SUPPLEMENTARY INFORMATION:

Background

Prior to August 14, 2000, the administrative requirements for awards and subawards for all USDA entitlement programs were located in 7 CFR part 3015, Uniform Federal Assistance Regulations. Those programs covered by 7 CFR part 3015 included the National School Lunch Program (NSLP), the School Breakfast Program (SBP), the Summer Food Service Program (SFSP), the Child and Adult Care Food Program (CACFP), the Special Milk Program for Children (SMP), and State Administrative Expense Funds (SAE). The corresponding requirements for awards and subawards to State and local governmental organizations under USDA nonentitlement programs were found at subparts A through D of 7 CFR part 3016, Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments. The administrative requirements for awards and subawards to nongovernmental, non-profit organizations were found at 7 CFR part 3019, Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations.

On August 14, 2000, USDA published a final rule at 65 FR 49474 revising the Department's grants management regulations to bring its entitlement programs under the same regulations that already applied to nonentitlement programs. The rule expanded the scope of 7 CFR part 3016 and 7 CFR part 3019 to include entitlement programs and deleted administrative requirements for awards and subawards under such programs from the scope of 7 CFR part 3015. It also established, in subpart E to 7 CFR part 3016, certain exceptions to the general administrative requirements that apply only to the entitlement programs.

This final rule makes technical changes to the program regulations governing the NSLP (7 CFR part 210), SMP (7 CFR part 215), SBP (7 CFR part 220), SFSP (7 CFR part 225), CACFP (7 CFR part 226) and SAE (7 CFR part 235) by incorporating those changes made in the August 14, 2000 final rule, and revising references to procurement and audit procedures.

Previously, program regulations required that State agencies, school food authorities, sponsors and institutions comply with the requirements of 7 CFR part 3015 concerning the procurement of supplies, food, equipment and other services with program funds. As a result of the August 14, 2000 grants management rule, the requirements for procurement procedures are now governed by 7 CFR part 3016 and 7 CFR part 3019, as applicable. This final rule changes program regulations at 7 CFR part 210.21(c), 7 CFR part 215.14a(c), 7 CFR part 220.16(c), 7 CFR part 225.17(a), 7 CFR part 226.22(c), 7 CFR part 235.9(a), 7 CFR part 235.9(c) and 7 CFR part 235.9(d) to reflect this change.

Furthermore, program regulations regarding audit procedures previously required that State agencies, school food authorities and institutions comply with the requirements of 7 CFR part 3015 concerning the audit requirements for recipients and subrecipients of the Department's financial assistance. This final rule makes technical revisions to 7 CFR part 210.22(a), 7 CFR part 215.13(a), 7 CFR part 220.15(a), 7 CFR part 225.10(a), and 7 CFR part 235.8(a) to replace reference to 7 CFR part 3015 with reference to 7 CFR part 3052, Audits of State, Local Governments and Nonprofit Organizations.

Specific Changes

• Revises the definition of7 CFR part 3015 in 7 CFR parts 210, 215, 220, 225, 226 and 235.
• Adds definitions of7 CFR part 3016 and 7 CFR part 3019 to 7 CFR parts 210, 215, 220, 225, 226 and 235.
• Removes the definition of7 CFR part 3017 wherever it appears, because this definition is no longer applicable.
• Adds a definition of7 CFR part 3052 to 7 CFR parts 225 and 226.
• Amends procurement and audit procedures.

Definition of 7 CFR Part 3015

One of the purposes of this final rule is to revise the definition of 7 CFR part 3015 in 7 CFR parts 210, 215, 220, 225, 226 and 235. This revision notes the applicability of 7 CFR part 3015 with regards to competition for discretionary grants and cooperative agreements, costs requiring prior approval, acknowledgement of USDA in support of publications and audiovisuals ( printed page 39514) produced under USDA programs, intergovernmental review of USDA programs, and certain miscellaneous USDA requirements.

Definition of 7 CFR Part 3016

A new definition, 7 CFR part 3016, is added by this final rule to 7 CFR parts 210, 215, 220, 225, 226 and 235. 7 CFR part 3016 refers to the Department's Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments. Awards and subawards to State and local governmental organizations under USDA programs are also covered under 7 CFR part 3016.

Definition of 7 CFR Part 3019

A new definition, 7 CFR part 3019, is added by this final rule to 7 CFR parts 210, 215, 220, 225, 226 and 235. 7 CFR part 3019 refers to the Department's Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations. Requirements for awards and subawards to nongovernmental, non-profit organizations are also covered under 7 CFR part 3019.

Definition of 7 CFR Part 3052

A new definition, 7 CFR part 3052, is added by this final rule to 7 CFR parts 225 and 226. 7 CFR part 3052 refers to the Department's regulations implementing OMB Circular A-133.

Procurement Procedure

This final rule amends the procurement procedures outlined in 7 CFR part 210.21(c), 7 CFR part 215.14a(c), 7 CFR part 220.16(c), 7 CFR part 225.17(a) and 7 CFR part 226.22(c) stating that the school food authority, sponsor or institution, as applicable, may use its own procurement procedures which reflect applicable State and local laws and regulations, provided that procurements made with Program funds adhere to the standards set forth in 7 CFR part 3016 or 7 CFR part 3019, as applicable. This final rule also amends 7 CFR part 235.9(a) and 7 CFR part 235.9(c) to require State agencies to comply with the procurement procedures of 7 CFR part 3016.

Audits

This final rule amends the audit procedures outlined in 7 CFR part 210.22(a), 7 CFR part 215.13(a), 7 CFR part 220.15(a), 7 CFR part 225.10(a), and 7 CFR part 235.8(a). According to these procedures, unless otherwise exempt, audits at the State, school food authority and institution levels shall be conducted in accordance with Office of Management and Budget Circular A-133 and the Department's implementing regulations at 7 CFR part 3052.

Executive Order 12866

This final rule has been determined to be not significant for purposes of Executive Order 12866 and therefore has not been reviewed by the Office of Management and Budget.

Regulatory Impact Analysis

Need for Action

This action is needed because of changes to Departmental regulations on grants management. The Departmental regulations on entitlement programs are now under the same regulations that already apply to nonentitlement programs. In addition, this action identifies exceptions to these general rules that apply only to entitlement programs.

Benefits

The change simplifies grants management regulations for all recipients and is consistent with Departmental policy.

Costs

These revisions in grants management requirements will have no cost to grant recipients.

Regulatory Flexibility Act

This final rule has been reviewed with regard to the requirements of the Regulatory Flexibility Act (5 U.S.C. 601-612). Roberto Salazar, Administrator of the Food and Nutrition Service, has certified that this rule will not have a significant economic impact on a substantial number of small entities. This final rule will affect recipients of entitlement programs by placing their grants management requirements under the same regulations that already apply to nonentitlement programs. Uniform requirements will ease the overall administrative burden on recipients.

Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, the Department generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures of $100 million or more in any one year by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year. When such a statement is needed for a rule, section 205 of the UMRA generally requires the Department to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, more cost-effective or least burdensome alternative that achieves the objectives of the rule.

This final rule contains no Federal mandates (under the regulatory provisions of Title II of the UMRA) that impose costs on State, local, or tribal governments or to the private sector of $100 million or more in any one year. This final rule is, therefore, not subject to the requirements of sections 202 and 205 of the UMRA.

Executive Order 12372

The National School Lunch Program, Special Milk Program for Children, and School Breakfast Program are listed in the Catalog of Federal Domestic Assistance under No. 10.555, 10.556 and 10.553, respectively. The Child and Adult Care Food Program, the Summer Food Service Program, and the State Administrative Expense Funds are listed under No. 10.558, No. 10.559 and No. 10.560, respectively. For reasons set forth in the final rule in 7 CFR part 3015, subpart V and related Notice (48 FR 29115), these programs are included in the scope of Executive Order 12372, which requires intergovernmental consultation with State and local officials.

Federalism Summary Impact Statement

Executive Order 13132 requires Federal agencies to consider the impact of their regulatory actions on State and local governments. Where such actions have federalism implications, agencies are directed to provide a statement for inclusion in the preamble to the regulations describing the agency's considerations in terms of the three categories called for under section (6)(b)(2)(B) of Executive Order 13132. FNS has considered the impact of this rule on State and local governments and has determined that this rule does not have Federalism implications. This final rule does not impose substantial or direct compliance costs on State and local governments. Therefore, under Section 6(b) of the Executive Order, a federalism summary impact statement is not required.

Executive Order 12988

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This final rule is intended to have preemptive effect with respect to any State or local laws, ( printed page 39515) regulations or policies which conflict with its provisions or which would impede its full implementation. This final rule is not intended to have retroactive effect unless that is specified in the DATES section of this preamble. Prior to any judicial challenge to the provisions of this final rule or the application of its provisions, all applicable administrative procedures must be exhausted.

Civil Rights Impact Analysis

FNS has reviewed this final rule in accordance with the Department Regulation 4300-4, “Civil Rights Impact Analysis,” to identify and address any major civil rights impacts the final rule might have on minorities, women, and persons with disabilities. After a careful review of the rule's intent and provisions, FNS has determined that this final rule will not in any way limit or reduce participants' ability to participate in the Child Nutrition Programs on the basis of an individual's or group's race, color, national origin, sex, age, or disability. FNS found no factors that would negatively and disproportionately affect any group of individuals.

Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35; see 5 CFR 1320) requires that the Office of Management and Budget (OMB) approve all collections of information by a Federal agency before they can be implemented. Respondents are not required to respond to any collection of information unless it displays a current valid OMB control number. This final rule does not contain any information collection requirements subject to approval by OMB under the Paperwork Reduction Act of 1995. Existing information collections have been approved under the following OMB control numbers: For the National School Lunch Program—0584-0006; for the Special Milk Program for Children—0584-0005; for the School Breakfast Program—0584-0012; for the Summer Food Service Program—0584-0280; for the Child and Adult Care Food Program—0584-0055; and for State Administrative Expense Funds—0584-0067.

Government Paperwork Elimination Act

FNS is committed to compliance with the Government Paperwork Elimination Act (GPEA), which requires Government agencies to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. This rule does not require the submission of additional information.

Public Participation

This action is being finalized without prior notice or public comment under authority of 5 U.S.C. 553(b)(3)(A) and (B) because it only revises references to procurement and audit procedures in the Child Nutrition Programs. Thus, the Department has determined in accordance with 5 U.S.C. 553(b) that Notice of Proposed Rulemaking and Opportunity for Public Comments is unnecessary and contrary to the public interest and, in accordance with 5 U.S.C. 553(d), finds that good cause exists for making this action effective without prior public comment.

Accordingly, 7 CFR parts 210, 215, 220, 225, 226 and 235 are amended as follows:

1. The authority citation for 7 CFR part 210 continues to read as follows:

Authority: 42 U.S.C. 1751-1760, 1779.

2. In § 210.2:

a. Revise the definition of 7 CFR part 3015;

b. Remove the definition of 7 CFR part 3017; and

c. Add new definitions, 7 CFR part 3016 and 7 CFR part 3019 in alphabetical order.

The additions and revision read as follows:

3. In § 210.3:

a. Amend the third sentence of paragraph (b) by removing the words “part 235; part 245; parts 15, 15a, 15b, and 3015 of Departmental regulations” and adding in their place the words ( printed page 39516) “parts 235 and 245 of this chapter; parts 15, 15a, 15b, 3015 and 3016 of this title”; and

b. Amend the second sentence of paragraph (d) by removing the words “part 245; parts 15, 15a, 15b, and 3015 of Departmental regulations” and adding in their place the words “part 245 of this chapter; parts 15, 15a, 15b, and 3016 or 3019, as applicable, of this title”.

4. In § 210.5:

a. Amend the second sentence of paragraph (a) by removing the words “ 7 CFR part 3015” and adding in their place the words “7 CFR part 3016”.

b. Amend the last sentence of paragraph (d)(3) by removing the words “ 7 CFR part 3015” and adding in their place the words “7 CFR part 3016”.

5. In § 210.9, amend paragraph (b)(4) by removing the words “ 7 CFR part 3015” and adding in their place the words “7 CFR part 3015 and 7 CFR part 3016, or 7 CFR part 3019, as applicable”.

6. In § 210.19, amend the second sentence of paragraph (a)(2) by removing the words “, as applicable, 7 CFR part 3015” and adding in their place the words “7 CFR part 3015 and 7 CFR part 3016, or 7 CFR part 3019, as applicable”.

7. In § 210.21,

a. Amend the first sentence of paragraph (a) by removing the words “ 7 CFR part 3015” and adding in their place the words “7 CFR part 3016 or 7 CFR part 3019, as applicable,”.

b. Amend the first sentence of paragraph (b) by removing the words “ 7 CFR part 3015” and adding in their place the words “this part and 7 CFR part 3015, 7 CFR part 3016 and 7 CFR part 3019, as applicable,”.

c. Revise paragraph (c).

The revision reads as follows:

8. In § 210.22, revise paragraph (a) to read as follows:

9. In § 210.24, amend the first sentence by removing the words “§ 3015.103 of this title” and adding in their place the words “ 7 CFR part 3016 and 7 CFR part 3019, as applicable”.

10. In § 210.25:

a. Amend the third sentence by removing the words “the Department's Uniform Federal Assistance Regulations, 7 CFR part 3015, subpart N” and adding in their place the words “7 CFR part 3016”; and

b. Amend the fourth sentence by adding, after the word “provisions”, the words “, or the parallel provisions of 7 CFR part 3019, as applicable,”.

1. The authority citation for 7 CFR part 215 continues to read as follows:

Authority: 42 U.S.C. 1772 and 1779.

2. In § 215.2:

a. Revise paragraph (x-1);

b. Remove paragraph (x-2);

c. Redesignate paragraph (x-4) and (x-5) as paragraphs (x-5) and (x-6), respectively; and

d. Add new paragraphs (x-2) and (x-4).

The additions and revision read as follows:

3. In § 215.3, the first sentence of paragraph (d) is revised to read as follows:

4. In § 215.13:

a. Revise paragraph (a);

b. Remove paragraph (b) and redesignate paragraphs (c) and (d) as paragraphs (b) and (c), respectively; and

c. Amend newly designated paragraph (b) by removing the word “OA” wherever it appears and adding in its place the word “OIG”.

The revision reads as follows:

5. In § 215.14a:

a. Amend the first sentence of paragraph (a) by removing the words “the Office of Management and Budget ( printed page 39517) (OMB) Circular A-102 and the Department's Uniform Federal Assistance Regulations, 7 CFR part 3015, subpart S (46 FR 55658)” and adding in their place the words “this part and 7 CFR part 3015, 7 CFR part 3016 and 7 CFR part 3019, as applicable,”;

b. Amend the first sentence of paragraph (b) by removing the words “OMB Circular A-102 and 7 CFR part 3015” and adding in their place the words “this part and 7 CFR part 3015, 7 CFR part 3016 and 7 CFR part 3019, as applicable”; and

c. Revise paragraph (c).

The revision reads as follows:

6. In § 215.15:

a. Amend the third sentence by removing the words “the Department's Uniform Federal Assistance Regulations, 7 CFR part 3015, subpart N” and adding in their place the words “7 CFR part 3016”.

b. Amend the fourth sentence by adding, after the word “provisions”, the words “, or the parallel provisions of 7 CFR part 3019, as applicable,”.

1. The authority citation for 7 CFR part 220 continues to read as follows:

Authority: 42 U.S.C. 1773, 1779, unless otherwise noted.

2. In § 220.2:

a. Revise paragraph (x-1);

b. Remove paragraph (x-2);

c. Redesignate paragraph (x-4) as paragraph (x-5); and

d. Add new paragraphs (x-2) and (x-4).

The additions and revision read as follows:

3. In § 220.3, revise the first sentence of paragraph (e) to read as follows:

4. In § 220.13, amend the second sentence of paragraph (i) by removing the words “, as applicable, the cost principles contained in OMB Circular A-87 and 7 CFR part 3015” and adding in their place the words “7 CFR part 3015, and 7 CFR part 3016 or 7 CFR part 3019, as applicable”.

5. In § 220.15:

a. Revise paragraph (a);

b. Remove paragraph (b) and redesignate paragraphs (c) and (d) as paragraphs (b) and (c), respectively; and

c. Amend newly redesignated paragraph (b) by removing the word “OA” each time it appears and adding in its place the word “OIG”.

The revision reads as follows:

6. In § 220.16:

a. Amend the first sentence of paragraph (a) by removing the words “the Office of Management and Budget (OMB) Circular A-102 and the Department's Uniform Federal Assistance Regulations, 7 CFR part 3015, subpart S (46 FR 55658)” and adding in their place the words “7 CFR part 3016 or 7 CFR part 3019, as applicable,”;

b. Amend the first sentence of paragraph (b) by removing the words “OMB Circular A-102 and 7 CFR 3015” and adding in their place the words “7 CFR part 3016 or 7 CFR part 3019, as applicable”; and

c. Revise paragraph (c).

The revision reads as follows:

7. In § 220.18:

a. Amend the third sentence by removing the words “the Department's Uniform Federal Assistance Regulations, 7 CFR part 3015, subpart N” and adding in their place the words “7 CFR part 3016”; and

b. Amend the fourth sentence by adding, after the word “provisions”, the words “, or the parallel provisions of 7 CFR part 3019, as applicable,”.

1. The authority citation for 7 CFR part 225 is revised to read as follows:

Authority: Secs. 9, 13 and 14, Richard B. Russell National School Lunch Act, as amended (42 U.S.C. 1758, 1761 and 1762a).

2. In § 225.2, new definitions, 7 CFR part 3015, 7 CFR part 3016, 7 CFR part 3019, and 7 CFR part 3052, are added in alphanumerical order.

The additions read as follows:

3. In § 225.10, amend paragraph (a) by removing the first sentence and by revising the second sentence, to read as set forth below.

4. In § 225.7, amend the first sentence of paragraph (f) by removing the words “the Department's Uniform Financial Assistance Regulations ( 7 CFR part 3015)” and adding in their place the words “7 CFR part 3015, and 7 CFR part 3016 or 7 CFR part 3019, as applicable,”.

5. In § 225.17:

a. Revise paragraph (a);

b. Amend paragraph (b) by removing the words “ 7 CFR part 3015” and adding in their place the words “7 CFR part 3016 or 7 CFR part 3019, as applicable”.

c. Amend the introductory text of paragraph (d) by removing the words “all sponsors are” and adding in their place the words “each sponsor is” and by removing the words “ 7 CFR part 3015” and adding in their place the words “7 CFR part 3016 or 7 CFR part 3019, as applicable”.

The revision reads as follows:

6. In § 225.18, amend paragraph (a) by removing the words “the Department's Uniform Federal Assistance Regulations ( 7 CFR part 3015), subpart N” and adding in their place the words “7 CFR part 3016 or 7 CFR part 3019, as applicable”.

1. The authority citation for 7 CFR part 226 continues to read as follows:

Authority: Secs. 9, 11, 14, 16, and 17, Richard B. Russell National School Lunch Act, as amended (42 U.S.C. 1758, 1759a, 1762a, 1765 and 1766).

2. In § 226.2:

a. New definitions, 7 CFR part 3015, 7 CFR part 3016, 7 CFR part 3019, and 7 CFR part 3052, are added in alphabetical order; and

b. The definition of Uniform Federal Assistance Regulations is removed.

The additions read as follows:

3. In § 226.4, revise paragraph (j) to read as follows:

4. In § 226.7: ( printed page 39519)

a. Amend the first sentence of paragraph (b) by removing the words “as delineated in the Uniform Federal Assistance Regulations, at 7 CFR part 3015” and adding in their place the words “in accordance with 7 CFR part 3015, 7 CFR part 3016 and 7 CFR part 3019, as applicable”; and

b. Amend the first sentence of paragraph (m) by removing the words “the Uniform Federal Assistance Regulations, 7 CFR part 3015” and adding in their place the words “7 CFR part 3015, 7 CFR part 3016 and 7 CFR part 3019, as applicable”.

5. In § 226.10, amend paragraph (b)(4) by removing the words “the Department's Uniform Federal Assistance Regulations ( 7 CFR part 3015)” and adding in their place the words “7 CFR part 3016 or 7 CFR part 3019, as applicable”.

6. In § 226.22:

a. Revise paragraph (c); and

b. Revise the second sentence of paragraph (l)(5).

The revisions read as follows:

7. Amend § 226.24 by removing the words “the Department's Uniform Federal Assistance Regulations ( 7 CFR part 3015)” and adding in their place the words “7 CFR part 3016 or 7 CFR part 3019, as applicable”.

8. In § 226.25, amend paragraph (a) by removing the words “the Uniform Federal Assistance Regulations” and adding in their place the words “ 7 CFR part 3016 or 7 CFR part 3019, as applicable”.

1. The authority citation for 7 CFR part 235 continues to read as follows:

Authority: Secs. 7 and 10 of the Child Nutrition Act of 1966, 80 Stat. 888, 889, as amended (42 U.S.C. 1776, 1779).

2. In § 235.2:

a. Revise paragraph (q-1);

b. Remove paragraph (q-2);

c. Redesignate paragraph (q-4) as paragraph (q-5); and

d. Add a new paragraphs (q-2) and (q-4).

The revision and additions read as follows:

3. In § 235.3, revise the first sentence of paragraph (b) to read as follows:

4. In § 235.8:

a. Revise paragraph (a);

b. Remove paragraphs (b) and (d) and redesignate paragraphs (c) and (e) as paragraphs (b) and (c), respectively;

c. Amend the first sentence of newly redesignated paragraph (b) by removing the word “OA” and adding in its place the word “OIG”; and

d. Amend newly redesignated paragraph (c) by removing the word “OA” wherever it appears and adding in its place the word “OIG”.

The revision reads as follows:

5. In § 235.9:

a. Amend the first sentence of paragraph (a) by removing the words “the Office of Management and Budget (OMB) Circular A-102 and the Department's Uniform Federal Assistance Regulations, 7 CFR part 3015, subpart S (46 FR 55658)” and adding in their place the words “7 CFR part 3016”;

b. Remove the second sentence of paragraph (a);

c. Amend the first sentence of paragraph (b) by removing the words “OMB Circular A-102 and 7 CFR part 3015” and adding in their place the words “7 CFR part 3016”;

d. Revise paragraph (c); and

e. Amend paragraph (d) by removing the words “OMB Circular A-102 and 7 CFR part 3015, subpart R (46 FR 55654)” and adding in their place the words “7 CFR part 3016”.

The revision reads as follows:

6. In § 235.11:

a. Amend the third sentence of paragraph (a) by removing the words “, ( printed page 39520) as applicable, the provisions of Office of Management and Budget Circular A-102, Attachments F and G and 7 CFR part 3015, subparts G and H” and adding in their place the words “the provisions of 7 CFR part 3016”;

b. Amend the first sentence of paragraph (b)(5)(v) by removing the words “ 7 CFR part 3015, subpart L” and adding in their place the words “7 CFR part 3016”; and

c. Amend paragraph (d) by removing the words “the Department's Uniform Federal Assistance Regulations, 7 CFR part 3015 subpart N” and adding in their place the words “7 CFR part 3016”.