Department of the Treasury Regulations for the Gulf Coast Restoration Trust Fund, 48039-48062 [2014-19324]

Agencies

• DEPARTMENT OF THE TREASURY

[Federal Register Volume 79, Number 158 (Friday, August 15, 2014)]
[Rules and Regulations]
[Pages 48039-48062]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-19324]


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DEPARTMENT OF THE TREASURY

31 CFR Part 34

RIN 1505-AC44


Department of the Treasury Regulations for the Gulf Coast 
Restoration Trust Fund

AGENCY: Office of the Fiscal Assistant Secretary, Treasury.

ACTION: Interim Final Rule.

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SUMMARY: The Department of the Treasury is issuing regulations 
concerning the investment and use of amounts deposited in the Gulf 
Coast Restoration Trust Fund, which was established in the Treasury of 
the United States by the Resources and Ecosystem Sustainability, 
Tourist Opportunities, and Revived Economies of the Gulf Coast States 
Act of 2012 (RESTORE Act).

DATES: Effective date for the Interim Final Rule: October 14, 2014. 
Comments on the Interim Final Rule are due: September 15, 2014.

ADDRESSES: Treasury invites comments on the topics addressed in this 
Interim Final Rule. Comments may be submitted through one of these 
methods:
    Electronic Submission of Comments: Interested persons may submit 
comments electronically through the Federal eRulemaking Portal at 
https://www.regulations.gov. Electronic submission of comments allows 
the commenter maximum time to prepare and submit a comment, ensures 
timely receipt, and enables the Department to make them available to 
the public. Comments submitted electronically through the https://www.regulations.gov Web site can be viewed by other commenters and 
interested members of the public.
    Mail: Send to Department of the Treasury, Attention: Janet Vail, 
Room 1132; 1500 Pennsylvania Avenue NW.; Washington, DC 20220.
    Email: Send to RESTORErule@treasury.gov.
    In general, Treasury will post all comments to www.regulations.gov 
without change, including any business or personal information 
provided, such as names, addresses, email addresses, or telephone 
numbers. Treasury will also make such comments available for public 
inspection and copying in Treasury's Library, Department of the 
Treasury, 1500 Pennsylvania Avenue NW., Washington, DC 20220, on 
official business days between the hours of 10:00 a.m. and 5:00 p.m. 
Eastern Time. You can make an appointment to inspect comments by 
telephoning (202) 622-0990. All comments received, including 
attachments and other supporting materials, will be part of the public 
record and subject to public disclosure. You should only submit 
information that you wish to make publicly available.

FOR FURTHER INFORMATION CONTACT: Please send questions by email to 
RESTORErule@treasury.gov or contact Janet Vail, 202-622-6873.

SUPPLEMENTARY INFORMATION: 

I. Background

    The RESTORE Act makes funds available for the restoration and 
protection of the Gulf Coast region through a new trust fund in the 
Treasury of the United States, known as the Gulf Coast Restoration 
Trust Fund. The trust fund will contain 80 percent of the 
administrative and civil penalties paid after July 6, 2012, under the 
Federal Water Pollution Control Act in connection with the Deepwater 
Horizon oil spill. These funds will be invested and made available 
through five components of the Act described below.
    The Direct Component sets aside 35 percent of the penalties paid 
into the trust fund for eligible activities proposed by the State of 
Alabama, the State of Mississippi, the State of Texas, the State of 
Louisiana and 20 Louisiana parishes, and 23 Florida counties. The 
Comprehensive Plan Component sets aside 30 percent of the penalties, 
plus half of all interest earned on trust fund investments, to be 
managed by a new independent Federal entity called the Gulf Coast 
Ecosystem Restoration Council (Council). The Council includes members 
from six Federal agencies or departments and the five Gulf Coast 
States. One of the Federal members, the Secretary of Commerce, at this 
time serves as Chairperson of the Council. The Council will direct 
those funds to projects and programs for the restoration of the Gulf 
Coast region, pursuant to a comprehensive plan that will be developed 
by the Council. Under the Spill Impact Component, entities representing 
the Gulf Coast States can use an additional 30 percent of penalties in 
the trust fund for eligible activities pursuant to State Expenditure 
Plans approved by the Council. The remaining five percent of penalties, 
plus one-half of all interest earned on trust fund investments, will be 
divided equally between the NOAA RESTORE Act Science Program 
established by the National Oceanic and Atmospheric Administration 
(NOAA), an operating unit of the Department of Commerce, and the 
Centers of Excellence Research Grants Program.
    Treasury has several roles in administering the trust fund. One 
role is to establish procedures, in consultation with the Departments 
of the Interior and Commerce, concerning the deposit and expenditure of 
amounts from the trust fund. The procedures must include compliance 
measures for the programs and activities carried out under the Act, as 
well as auditing requirements to determine whether amounts are expended 
as intended. Treasury will also administer grants for the Direct 
Component and Centers of Excellence Research Grants Program. The 
Treasury Inspector General is authorized to conduct, supervise, and 
coordinate audits and investigations of projects, programs, and 
activities funded under the Act. In addition, the Act requires Treasury 
to withhold funds from a Gulf Coast State, Florida county, or Louisiana 
parish if Treasury determines that trust fund monies have been used for 
an unauthorized purpose, or if a condition on the use of funds has been 
violated.
    Treasury published a proposed rule on September 6, 2013, containing 
procedures regarding trust fund investments, as well as procedures to 
implement the five components of the

[[Page 48040]]

Act. These procedures recognized that each component makes funds 
available through grants. Accordingly, the procedures contained not 
only requirements in the Act, but also administrative requirements 
common to Federal grant programs. The procedures also outlined a 
structure for compliance monitoring. The Federal and state entities 
that administer grants under the Act will be primarily responsible for 
overseeing compliance with the terms of their award agreements. In 
addition, Treasury will have an important and supplemental role in 
overseeing the states' compliance with requirements in the 
Comprehensive Plan Component and the Spill Impact Component.

II. Public Comments and Summary of Interim Final Rule

    Treasury received over 1,200 comment letters on the proposed rule 
from individuals, public interest groups, state and local governments, 
and research institutions. The comments were generally positive. Most 
comments offered views or requested information regarding the 
activities eligible for funding, the process and timing for issuing 
grants, and other aspects of grant administration. Several comments 
also urged that Treasury provide additional opportunities for public 
comment.
    Treasury is issuing its regulations as an Interim Final Rule, which 
will take effect 60 days after publication in the Federal Register. 
Treasury will accept comments on the Interim Final Rule for 30 days 
after publication, and publish a Final Rule after considering any 
comments. Separately, Treasury has published a proposed rule that 
allocates shares to individual Louisiana parishes under the Direct 
Component. Treasury is accepting public comments on the proposed rule 
for 30 days after publication.
    As noted in the preamble to the September 6, 2013, proposed rule, 
requirements for RESTORE Act grants are partly defined by the Act and 
Treasury's regulations, and partly by an extensive body of pre-existing 
requirements. Some of these pre-existing requirements are 
administrative requirements in circulars issued by the Office of 
Management and Budget (OMB). When Treasury published its proposed rule, 
OMB was completing a compilation and modification of uniform 
requirements for grants awarded by Federal agencies to states, local 
governments, Indian tribes, institutions of higher learning, and 
nonprofit organizations. OMB published an Advanced Notice of Proposed 
Guidance on February 12, 2012, (ANPG available at www.regulations.gov 
under docket number OMB-2012-0002), and a Notice of Proposed Guidance 
on February 1, 2013 (NPG available at www.regulations.gov under docket 
number OMB-2013-0001). After considering more than 300 public comments, 
OMB issued its final guidance on December 26, 2013. The final guidance, 
Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards (Uniform Guidance), will be published 
in the Code of Federal Regulations at 2 CFR Part 200, and is currently 
available at 78 FR 78590.
    Because OMB's Uniform Guidance has already undergone an extensive 
public review, its requirements do not need additional public comment 
before they are applied to grants under the RESTORE Act. Readers 
seeking information about the requirements applying to audits, 
allowable costs, disbursements, payments, procurements, recordkeeping, 
and reporting, among other topics, should consult OMB's Uniform 
Guidance. Requirements in areas covered by the guidance will be applied 
to individual grants through a grant agreement.
    The Interim Final Rule continues to require compliance with 
applicable Federal laws and policies for grants, and does not refer 
specifically to OMB's Uniform Guidance. Treasury received many comments 
requesting that Treasury's regulation specifically identify the 
requirements that apply. Each individual grant agreement is the 
appropriate place to comprehensively identify these requirements. As 
stated in the Uniform Guidance, the Federal awarding agency must 
communicate to the non-Federal entity all relevant public policy 
requirements, including those in general appropriation provisions, and 
incorporate them either directly or by reference in the terms and 
conditions of the award. 2 CFR 200.300. The Uniform Guidance describes 
most administrative requirements, cost principles, and audit 
requirements applying to Federal awards under the Act. All federal 
agencies, however, are required to implement the policies and 
procedures in the Uniform Guidance by promulgating a regulation that 
will be effective by the end of the year. Because regulations to 
implement the Uniform Guidance must still be published, Treasury's 
RESTORE Act regulations generally refer to Federal laws and policies 
applying to grants.

Section-by-Section Analysis

Section 34.1 (Purpose)
    This section describes the general scope of the Interim Final Rule. 
Editorial changes have been made for clarity.
Section 34.2 (Definitions)
    This section defines terms used in the Interim Final Rule. The 
Interim Final Rule has several new definitions from the proposed rule. 
Activity has been defined to mean ``activity, project, or program.'' 
The Act uses the term activity broadly to encompass projects, programs, 
and other activities that may be funded under the Act. When the Interim 
Final Rule uses the term activity, it has the same broad meaning. In 
response to a comment, infrastructure has been defined as well, in 
order to assist the Council and the Gulf Coast States in applying the 
limits on infrastructure projects in the Spill Impact Component. The 
Interim Final Rule also includes a definition of assignee, a term used 
in the Comprehensive Plan Component of the Interim Final Rule. An 
assignee is a Federal agency or a Gulf Coast State that has been 
assigned primary authority and responsibility for a project or program 
included in the Comprehensive Plan.
    The definitions of administrative costs and administrative expenses 
have been revised in response to comments on the proposed rule. Several 
comments asked Treasury to clarify the scope of these terms, and 
questioned why the terms were defined differently. Other comments 
suggested revisions. At least one comment suggested that administrative 
costs should not be defined at all.
    The statute specifically authorizes and the rule defines 
administrative expenses and administrative costs. Funds are also 
available for other costs authorized by the five RESTORE Act components 
or programs. Treasury encourages grantees to minimize administrative 
expenses, administrative costs, and indirect costs within these 
components or programs to the extent possible.
    The Act uses the term administrative expenses with reference to the 
Council and NOAA. The Act does not define the term, and it does not 
have a precise, commonly accepted meaning in government accounting. The 
Act does cap administrative expenses at 3 percent of funds made 
available to the Council and NOAA. Because the cap effectively limits 
administrative activities, the term should be construed to avoid 
unintended limits on the restoration, protection, and scientific 
activities Congress requires the Council and NOAA to perform.
    In light of public comments, the Interim Final Rule defines 
administrative expenses to mean

[[Page 48041]]

expenses incurred for administration by the Council or NOAA, including 
expenses for general management functions, general ledger accounting, 
budgeting, human resource services, general procurement services, and 
general legal services. Administrative expenses do not include expenses 
that are identified specifically with, or readily assignable to, (a) 
facilities; (b) eligible projects, programs, or planning activities; 
(c) activities related to grant applications, awards, audit 
requirements, or post-award management, including payments and 
collections; (d) the Council's development, publication, and 
implementation of the Comprehensive Plan and any subsequent amendments; 
(e) the Council's development and publication of regulations and 
procedures for implementing the Spill Impact Component, and the review 
of State Expenditure Plans submitted under the Spill Impact Component; 
(f) preparation of reports required by the Act; (g) establishment and 
operation of advisory committees; or (h) collection and consideration 
of scientific and other research associated with restoration of the 
Gulf Coast ecosystem. The definition applies to administrative expenses 
for services provided by the Council and NOAA staff, as well as such 
services provided through an interagency agreement, or by contract. 
When an expense has a mixed purpose, the Council and NOAA will need to 
make reasonable judgments about the percentage attributable to 
administrative activities.
    Treasury is also clarifying the definition of administrative costs 
in the Interim Final Rule. The term administrative costs is used with 
reference to the Gulf Coast States, Florida counties, and Louisiana 
parishes, which receive their funds through grants. The revised 
definition is similar, but not identical, to the definition of 
administrative expenses. Under the Interim Final Rule, administrative 
costs are indirect costs for administration incurred by the Gulf Coast 
States, coastal political subdivisions, and coastal zone parishes that 
are allocable to activities authorized under the Act. Administrative 
costs may include costs for general management functions, general 
ledger accounting, budgeting, human resource services, general 
procurement services, and general legal services. Administrative costs 
do not include indirect costs that are identified specifically with, or 
readily assignable to, (a) facilities; (b) eligible projects, programs, 
or planning activities; or (c) activities relating to grant 
applications, awards, audit requirements, or post-award management, 
including payments and collections. When a cost can be attributed to 
more than one purpose, states and local governments will need to make 
reasonable judgments about the percentage that is administrative. OMB's 
Uniform Guidance provides an extensive discussion of allowable and 
allocable costs, which applies to administrative costs under the Act. 
See 2 CFR 200.402--200.414.
    Treasury has added a new definition of planning assistance, an 
eligible activity listed in Sec.  34.201. This definition is discussed 
later in the preamble.
    In addition to these changes, the Interim Final Rule includes 
editorial changes to the definition of Gulf Coast State entity, a new 
definition of Multiyear Implementation Plan and pass-through entity for 
the reader's convenience, and a technical change to the definition of 
recipient. The technical change makes clear that a recipient also 
includes a pass-through entity that provides a subaward to a recipient 
to carry out part of the RESTORE Act program.
    Treasury is not revising the definition of best available science. 
Like the proposed rule, the Interim Final Rule defines this term 
exactly as stated in the Act. The term means science that maximizes the 
quality, objectivity, and integrity of information, including 
statistical information; uses peer-reviewed and publicly available 
data; and clearly documents and communicates risks and uncertainties in 
the scientific basis for such projects.
    Some comments proposed broader definitions of best available 
science, asserting that the statutory definition is inadequate. Other 
comments urged Treasury to require consideration of cultural and social 
knowledge and other factors, and proposed characteristics of best 
available science. Treasury does not have authority to change the 
definition Congress wrote into the Act. Treasury recognizes, however, 
that guidelines regarding interpretation and application of this term 
may be helpful. In consultation with Council members, Treasury is 
developing guidelines for use in evaluating the best available science 
criteria for grants under the Direct Component. Treasury will provide 
further information at a later time.
    Treasury received other comments suggesting additional definitions 
and editorial changes. OMB's Uniform Guidance includes an extensive 
list of definitions pertaining to grants, audits, and cost principles. 
These definitions will apply to grants issued under the Act.
Section 34.100 (The Trust Fund)
    This section describes the deposit of amounts into the trust fund, 
and when the trust fund terminates. Minor editorial changes were made 
to clarify when the trust fund terminates.
Section 34.101 (Investments)
    This section describes how Treasury will invest amounts in the 
trust fund. There are no changes in this section from the proposed 
rule.
Section 34.102 (Interest Earned)
    This section describes the availability of interest earned on 
amounts in the trust fund. There are no changes in this section from 
the proposed rule.
Section 34.103 (Allocation of Funds)
    This section describes the general allocation of trust fund 
amounts. In response to comments, editorial changes have been made for 
consistency with the Act.
Section 34.104 (Expenditures)
    The Interim Final Rule states that trust fund amounts are available 
for expenditure solely for direct and indirect expenses of eligible 
activities without fiscal year limitation. Treasury has deleted a 
reference in the proposed rule to administrative costs and 
administrative expenses, because these costs and expenses are included 
among other allowable costs. The proposed rule also stated that 
grantees must minimize the time between the receipt of funds and the 
disbursement of funds. Treasury received several comments seeking 
clarification on this statement and more generally on requirements 
pertaining to payments and program income.
    OMB's Uniform Guidance has an extensive discussion of the 
requirements applying to payments at 2 CFR 200.305. To ensure 
consistency between the Interim Final Rule and OMB's Uniform Guidance, 
Treasury is deleting the sentence from Sec.  34.104 in the proposed 
rule regarding the timing of disbursements. The Uniform Guidance also 
has a discussion about program income at 2 CFR 200.307. Please refer to 
the Uniform Guidance for detailed information about general 
requirements that apply to payments and program income.
Section 34.105 (Waiver)
    This section describes the circumstances when Treasury may waive or 
modify in a single case or class of cases a requirement in the 
regulations. Several comments asked

[[Page 48042]]

Treasury to clarify when this section will be used, and to seek public 
comment before applying it. Treasury expects to use its waiver 
authority sparingly, and never in a manner that is inconsistent with 
applicable law. Treasury included this section because it is difficult 
to foresee, at an early stage in implementing the Act, how the 
regulations will apply to all circumstances. Treasury will provide 
public notice whenever a waiver or modification under this section 
would materially change a regulatory requirement.

Subpart C--Eligible Activities for the Section 311(t) Gulf RESTORE 
Program Components

Gulf RESTORE Program--Eligibility Criteria

    Treasury received numerous comments proposing uniform requirements 
for the Direct Component, Comprehensive Plan Component, and Spill 
Impact Component of the Gulf RESTORE Program. Several comments urged 
uniform eligibility criteria. Other comments suggested criteria that 
would give priority to certain project proposals, based on whether they 
provide an overall net benefit, benefit a variety of resources, are 
cost effective, or other factors. Additional comments proposed changes 
that would allow individuals to submit project proposals, and other 
changes that would require uniform requirements for public engagement.
    The Act does not mandate uniform requirements for the Direct 
Component, Comprehensive Plan Component, and Spill Impact Component. 
For each component, there are different eligibility criteria, different 
processes for selecting activities, and different entities responsible 
for making those selections. Accordingly, the Interim Final Rule has 
different requirements for each component. The Interim Final Rule and 
the Council's own procedures provide opportunities for the public to 
offer views on project selection and design. Members of the public who 
have views in these areas should present them to the entities that will 
propose activities for funding.
Section 34.200 (General)
    This section generally describes the policies and procedures for 
eligible activities under the Direct Component, Comprehensive Plan 
Component, and Spill Impact Component. Treasury has revised this 
section in the Interim Final Rule.
    In the proposed rule, Sec.  34.200(a)(1) stated that costs 
incurred, whether charged on a direct or indirect basis, must conform 
with the applicable OMB circulars and guidance. Treasury received 
several comments seeking clarification of the rules applying to costs. 
OMB's Uniform Guidance includes an extensive discussion of 
administrative requirements, including information about allowable 
costs. At this time, the Uniform Guidance applies to grants issued 
under the Act. Within the year, all Federal agencies are required to 
incorporate the Uniform Guidance into their own regulations. Because 
the governing rule in the future will likely be an agency regulation, 
rather than the Uniform Guidance, the Interim Final Rule refers to 
``applicable Federal law and policies on grants.''
    Section 34.200(a)(3) in the proposed rule stated that environmental 
review and compliance procedures must be complied with for each 
program, project, or activity, as applicable. Treasury has deleted this 
sentence because it is unnecessary, given broader and more descriptive 
requirements in OMB's Uniform Guidance. The Uniform Guidance states, 
that the Federal awarding agency must manage and administer the Federal 
award in a manner so as to ensure that Federal funding is expended and 
associated programs are implemented in full accordance with U.S. 
statutory and public policy requirements: Including, but not limited 
to, those protecting public welfare, the environment, and prohibiting 
discrimination. The Federal awarding agency must communicate to the 
non-Federal entity all relevant public policy requirements, including 
those in general appropriations provisions, and incorporate them either 
directly or by reference in the terms and conditions of the Federal 
award. 2 CFR 200.300(a).
    Section 34.200(a)(3) in the proposed rule also mentioned pre-award 
costs. The proposed rule stated that grant agreements may provide for 
pre-award costs of environmental review and compliance in the manner 
prescribed by applicable OMB circulars and guidance. Treasury received 
a number of requests, particularly from Florida counties, to make a 
more definite statement in the Interim Final Rule about the 
availability of pre-award costs.
    OMB's Uniform Guidance states that pre-award costs are allowable 
only to the extent that they would have been allowable if incurred 
after the date of the Federal award and only with the written approval 
of the Federal awarding agency. 2 CFR 200.458. Treasury cannot, in the 
context of a rulemaking, determine whether any particular pre-award 
cost is eligible for reimbursement under future grants. In addition, 
Treasury is not the Federal awarding agency for three of the five 
components in the Act. To avoid inconsistency with the Uniform 
Guidance, the sentence about pre-award costs has been deleted from the 
Interim Final Rule. Entities should contact the appropriate Federal 
awarding agency for guidance about reimbursement of particular pre-
award costs.
    Finally, Sec.  34.200(b) of the proposed rule stated that a Gulf 
Coast State, coastal political subdivision, and coastal zone parish may 
use funds available under the Direct Component or Spill Impact 
Component to satisfy the non-Federal cost-share of a project or program 
that is an eligible activity and authorized by Federal law. Treasury 
received several comments about this provision. One comment suggested 
that Treasury prohibit other Federal agencies from reducing their 
funding to states by the amount of RESTORE Act funds used for cost 
sharing or matching. Another comment suggested that this provision be 
extended to the Centers of Excellence Research Grants Program. Other 
comments asked for clarification about the scope of the provision.
    Treasury has not substantively changed the text of Sec.  34.200(b) 
in the Interim Final Rule, which closely follows the statutory language 
at section 311(t)(1)(N) and (t)(3)(F) of the Federal Water Pollution 
Control Act. Under OMB's Uniform Guidance, a non-Federal entity cannot 
use amounts paid by the Federal government under a Federal award to 
satisfy the entity's cost sharing or matching responsibilities under 
another Federal award, unless certain criteria are met. One criterion 
is when a Federal statute authorizing a program specifically provides 
that Federal funds made available for such program can be applied to 
matching or cost sharing requirements of other Federal programs. 2 CFR 
200.306(b)(5). The Act allows funds made available under the Direct 
Component and Spill Impact Component to satisfy the cost-sharing 
requirements of other Federal programs, but not funds made available 
under other parts of the Act.
    Minor editorial changes have been made to other parts of Sec.  
34.200 for clarity.
Section 34.201 (Eligible Activities for the Direct Component)
    This section describes the activities that are eligible for funding 
under the Direct Component. Treasury received many comments about this 
section. Several comments urged Treasury to defer to the states' 
judgment on selection and design. As stated in the

[[Page 48043]]

preamble to the proposed rule, Treasury will review applications to 
determine that they document, with some specificity, compliance with 
eligibility and other requirements in the RESTORE Act and these 
regulations. On matters requiring special expertise, such as the 
application of best available science, Treasury will apply a 
``reasonable person'' standard of review that recognizes the 
substantive expertise of the states, Florida counties, and Louisiana 
parishes, while still requiring the submittal of supporting 
documentation. Treasury is using a similar standard when evaluating an 
activity's geographic scope, as discussed below. This approach 
acknowledges the expertise and important role that states, Florida 
counties, and Louisiana parishes have in selecting projects for the 
Direct Component, while going beyond mere ``check the box'' review.
    Several comments also addressed the geographic scope of eligible 
activities. The proposed rule stated that certain activities are 
eligible for funding to the extent they are carried out in the Gulf 
Coast region. Several comments urged Treasury to interpret this 
language broadly, in order to allow activities benefitting that 
geographic area regardless of where the work is done. Treasury agrees 
that a broad interpretation is most consistent with the statute and 
Congressional intent. Repeatedly, the Act refers to the Gulf Coast 
region as the place where results occur, not necessarily where work is 
done. An interpretation that focused solely on the geographic location 
of the project site--rather than project benefits--would unnecessarily 
exclude activities contemplated by the Act, and be difficult to apply 
when work is done in multiple locations.
    In response to these comments, the Interim Final Rule explains when 
a Direct Component activity is ``carried out'' in the Gulf Coast 
region. The rule states that activities are carried out in the Gulf 
Coast Region when, in the reasonable judgment of the entity applying to 
Treasury for a grant, each severable part of the activity is primarily 
designed to restore or protect that geographic area. Applicants must 
demonstrate that the activity will be carried out in the Gulf Coast 
Region when they apply for a grant.
    Treasury intends this new language to achieve several goals. The 
language recognizes the expertise of the entity applying for a grant, 
as well as Treasury's limited role in grant review and the applicant's 
knowledge and understanding of Gulf Coast restoration. Potential 
applicants for funds will be Gulf Coast States, counties, and parishes, 
each of which has significant local and technical expertise. The 
language focuses on ``each severable part'' of an activity, to 
discourage grant applicants from seeking approval of ineligible 
projects by grouping them with eligible ones. The language also 
requires that each severable part be ``primarily designed'' to restore 
or protect the Gulf Coast region. Treasury anticipates that some 
activities which are designed to benefit the Gulf Coast region may also 
provide secondary benefits to other areas. An upstream water quality 
project that is designed to reduce nutrient loading at the coast may 
also improve water quality within the watershed. By focusing on what an 
activity is primarily designed to accomplish, Treasury seeks to avoid 
arguments that secondary benefits to other geographic areas are enough 
to disqualify otherwise eligible activities.
    Additional comments urged Treasury to add eligibility requirements, 
or to declare that particular kinds of activities are eligible for 
funding, such as long-term stewardship activities. Treasury is not 
adding new eligibility criteria for activities under the Act, or 
singling out particular activities that are not mentioned in the Act. 
The Act sets broad criteria for selecting activities, and leaves to the 
Gulf Coast States, Florida counties, and Louisiana parishes whether to 
apply additional criteria to achieve economic or environmental goals. 
Members of the public should direct their suggestions for additional 
eligibility factors to the entities that will propose activities for 
funding.
    Treasury also received several comments regarding planning 
assistance. Some comments asked Treasury to add public engagement as a 
type of planning activity. Florida counties urged that planning costs 
should include costs for the Gulf Consortium, which is an entity formed 
under Florida law and made up of 23 Florida counties. Several comments 
also asserted that funds should be available to pay for Multiyear 
Implementation Plans. Other comments asserted that planning activities 
should not be defined at all.
    The Interim Final Rule has been revised to address the comments on 
planning. The Interim Final Rule now uses the term planning assistance, 
to be consistent with the Act, and defines that term in Sec.  34.2. 
Planning assistance means tasks required to prepare plans for eligible 
activities, as well as one-time preparations that will allow the 
recipient to establish systems and processes needed to review grant 
applications, award grants, and monitor grants after award, and audit 
compliance with respect to activities in a Multiyear Implementation 
Plan or State Expenditure Plan. This change addresses comments, 
particularly from Florida counties, that noted the expense of starting 
up an operation to manage grants. Effective grants management may 
require one-time investments to track payments, develop policies and 
internal controls, and make other preparations necessary to comply with 
the Act and Treasury regulations. Eligible entities may seek grants to 
fund preparations of this kind with respect to activities in a 
Multiyear Implementation Plan or State Expenditure Plan. Planning 
assistance is not intended to cover ongoing activities or operations 
and maintenance, although costs for activities, operations, and 
maintenance may be allocable to grants for other eligible activities.
    The revised language is broad enough to include public engagement 
activities that are part of data gathering, studies, analysis, or the 
preparation of plans for eligible activities. For example, obtaining 
public comment on Multiyear Implementation Plans and State Expenditure 
Plans is an eligible planning activity, because it is a necessary part 
of preparing the plans.
    Additional language, new in the Interim Final Rule, requires that 
all Direct Component activities be included in and conform to the 
Multiyear Implementation Plan required by Sec.  34.303. As stated in 
the rule, states must seek public review and comment on their Multiyear 
Implementation Plans before submitting them to Treasury. This step 
allows the public to offer views on particular projects, the order in 
which they will be funded, and the overall strategy for using funds 
under the Act. The new language added to Sec.  34.201 will help ensure 
that activities submitted in a grant application have been presented to 
the public and incorporated into the Multiyear Implementation Plan.
Section 34.202 (Eligible Activities for the Comprehensive Plan 
Component)
    The section identifies the activities eligible for funding under 
the Comprehensive Plan Component. The list includes not only projects 
and programs, but also activities that the Act specifically requires or 
allows the Council to perform. Many comments addressed project 
selection under the Comprehensive Plan Component. In response to these 
comments and for clarity, Treasury has revised the proposed rule to 
provide that the Council may expend funds to carry out activities in 
the Gulf Coast region that are included in the Comprehensive

[[Page 48044]]

Plan, as described in 33 U.S.C. 1321(t)(2).
    Among other things, the statute prescribes priorities that the 
Council must follow when selecting projects and programs for the 
Initial Comprehensive Plan that will be carried out in the first three 
years, subject to available funds. Except for certain projects and 
programs that were authorized prior to July 6, 2012, the Council's 
three-year list must give highest priority to projects meeting one or 
more of the following criteria:
    1. Projects that are projected to make the greatest contribution to 
restoring and protecting the natural resources, ecosystems, fisheries, 
marine and wildlife habitats, beaches, and coastal wetlands of the Gulf 
Coast region, without regard to geographic location within the Gulf 
Coast region.
    2. Large-scale projects and programs that are projected to 
substantially contribute to restoring and protecting the natural 
resources, ecosystems, fisheries, marine and wildlife habitats, 
beaches, and coastal wetlands of the Gulf Coast ecosystem.
    3. Projects contained in existing Gulf Coast State comprehensive 
plans for the restoration and protection of natural resources, 
ecosystems, fisheries, marine and wildlife habitats, beaches, and 
coastal wetlands of the Gulf Coast region.
    4. Projects that restore long-term resiliency of the natural 
resources, ecosystems, fisheries, marine and wildlife habitats, 
beaches, and coastal wetlands most impacted by the Deepwater Horizon 
oil spill.

See 33 U.S.C. 1321(t)(2)(D)(iii). The Council is responsible for making 
selections within statutory parameters. The Council's selection 
process, described in the Initial Comprehensive Plan, will provide many 
opportunities for the public to comment on the activities the Council 
should fund.
    The proposed rule allowed the Council to use funds from the 
Comprehensive Plan Component to fund its activities under the Spill 
Impact Component. Some comments questioned this use. The Act requires 
the Council to undertake several functions with regard to the Spill 
Impact Component. The Council must issue regulations allocating funds 
between the five Gulf Coast States, review State Expenditure Plans, and 
disburse amounts for eligible projects and programs, among other 
things. Because all of the Council's funding to operate comes through 
the Comprehensive Plan Component, the Council must use funds from that 
component to perform its statutory obligations. For this reason, the 
Council included its responsibilities under the Spill Impact Component 
in the Initial Comprehensive Plan.
    In response to comments, Treasury has added new language to Sec.  
34.202 to clarify when a project or program selected by the Council is 
carried out in the Gulf Coast region, as required by 33 U.S.C. 
1321(t)(2)(E)(IV). That occurs when, in the reasonable judgment of the 
Council, each severable part of the project or program is primarily 
designed to restore or protect that geographic area. The Interim Final 
Rule requires the Council to document the basis for its judgment when 
it selects the project or program. Similar language also appears in the 
Direct Component and the Spill Impact Component of Treasury's 
regulation. In each case, the language gives deference to the 
reasonable judgment of the entity that selects an activity to restore 
or protect the Gulf Coast region.
    One activity that is not specifically mentioned in the 
Comprehensive Plan Component is public engagement. Public engagement 
can be an eligible activity. It is a necessary part of selecting 
projects and programs, conducting assessments under the National 
Environmental Policy Act, as well as performing other programmatic and 
administrative activities. To the extent public engagement costs can be 
identified specifically with, or readily assignable to the programmatic 
activities excluded from the definition of administrative expenses, 
they will not be subject to a three percent cap.
Section 34.203 (Eligible Activities for the Spill Impact Component)
    This section describes the activities that are eligible for funding 
under the Spill Impact Component. Several comments suggested additional 
or different eligibility criteria, such as the criteria applying to 
activities under the Comprehensive Plan Component. Other comments 
proposed that Treasury give the states guidance on how they demonstrate 
ecological, fisheries restoration, and economic recovery in their State 
Expenditure Plans. Several comments offered views about how particular 
states should spend their funds. Comments also requested that funds be 
available for the preparation of State Expenditure Plans.
    The Act gives the Council responsibility for administering the 
Spill Impact Component. Among other things, the Council determines each 
state's share, based on criteria in the Act, and disburses funds for 
eligible activities. The Council chair also must approve State 
Expenditure Plans. Given these important roles, the Council is an 
appropriate body to determine whether and how to elaborate on the 
statutory eligibility criteria. Accordingly, the Interim Final Rule 
preserves the Council's discretion to issue guidance or regulations on 
this subject that are consistent with the Act.
    Treasury made other changes, however, in response to comments. 
Treasury added a provision describing when an activity in a State 
Expenditure Plan is carried out in the Gulf Coast region. Treasury also 
clarified that funding is available for developing State Expenditure 
Plans. The Interim Final Rule also states that eligible activities must 
be included in, and conform to, the State Expenditure Plan. This 
clarification helps ensure that all funded activities have gone through 
the public comment process required of State Expenditure Plans.
Proposed Rule Sec.  34.204 (Limitations on Activities)
    This section described statutory limitations on activities funded 
through the Direct Component, Comprehensive Plan Component, and Spill 
Impact Component. Treasury received several comments suggesting that 
Treasury remove limitations here and clarify how grant recipients 
demonstrate the criteria in Sec.  34.204(b).
    Treasury has deleted this section and moved its provisions to Sec.  
34.803 of the Interim Final Rule, so that they apply to all five 
components of the Act. This change, along with minor wording changes, 
makes the regulation consistent with section 1607 of the Act. The 
limitations cannot be removed entirely from the Interim Final Rule 
because they are statutorily required. There is not a bright-line test 
for documenting that an acquisition is necessary for the restoration 
and protection of the natural resources, ecosystems, fisheries, marine 
and wildlife habitats, beaches, and coastal wetlands. However, the 
documentation required may well be useful for other purposes, such as 
demonstrating that an activity is being carried out in the Gulf Coast 
region. Treasury will consider issuing further guidance if needed.
Interim Final Rule Sec.  34.204 (Limitations on Administrative Costs 
and Administrative Expenses)
    This section implements the three percent cap on administrative 
costs and administrative expenses. The proposed rule used different 
methods for calculating the cap on administrative costs and expenses, 
because the Gulf Coast States, coastal political subdivisions, and 
coastal zone parishes

[[Page 48045]]

receive their funds episodically through grants. Measuring costs on an 
individual grant basis is easier to monitor. The Council, however, 
receives its funds through an annual apportionment from OMB. Treasury 
received several comments seeking an explanation of this section.
    The Interim Final Rule contains the same method for calculating the 
Council's and NOAA's administrative expenses. This method gives the 
Council and NOAA some flexibility to incur administrative expenses 
above three percent during a start-up period, so long as the total does 
not exceed three percent of amounts received by the end of the fourth, 
or most recent, fiscal year, whichever is later. For the sake of 
consistency, Treasury has amended the language applying to NOAA in 
Sec.  34.604 of the Interim Final Rule to be consistent with language 
applying to the Council.
    Some comments questioned why the cap applies to administrative 
expenses and costs attributable to staff, when the statute is silent on 
this point. Treasury has clarified the rule by removing the reference 
to staff. The regulation defines ``administrative expenses'' and 
``administrative costs.'' To the extent that staff costs are captured 
by these definitions, they are subject to the three percent cap.
    Other comments questioned why the three percent cap applies to 
funds received under the Spill Impact Component. The Act states that 
the three percent cap applies to amounts received by a Gulf Coast State 
under section 311(t) of the Federal Water Pollution Control Act, which 
includes the Direct Component, Comprehensive Plan Component, and Spill 
Impact Component. See 33 U.S.C. 1321(t)(1)(B)(iii).
    Several comments asked whether the three percent cap applies to 
subawards that state and local governments make under the Direct 
Component, Comprehensive Plan Component, or Spill Impact Component. 
Treasury interprets the Act to impose a cap based on amounts that Gulf 
Coast States, coastal political subdivisions, and coastal zone parishes 
receive directly from Treasury, the Council, or a Federal agency 
designated by the Council to issue grants. The cap does not apply to 
the administrative costs of subrecipients. These costs will be governed 
by general requirements in OMB's Uniform Guidance.
    Some comments asked how the cap on administrative costs affects a 
state's negotiated indirect cost rate. The cap may reduce an award for 
the indirect costs of a state, county, or parish, depending on the 
circumstances. The amount of the cap must be calculated for each grant, 
and will equal three percent of all funds a state, county, or parish 
receives in that grant. If the amount of the cap is greater than the 
indirect costs of a state, county, or parish, no reduction is needed. 
If indirect costs exceed the administrative cost cap, there are two 
options. The state, county, or parish can reduce its claim for indirect 
costs to an amount at or below the cap. Alternatively, the state, 
county, or parish can demonstrate that its administrative costs--a 
subset of all indirect costs--do not exceed the cap. Treasury will 
issue guidance, as necessary, to resolve indirect cost questions.
    The Interim Final Rule applies the three percent cap on 
administrative costs to amounts received under an award. Treasury has 
amended Sec.  34.204(a) to clarify that the three percent limit will be 
applied to the total amount received under each award, not to amounts 
received in individual fiscal years. Administrative and other costs may 
be monitored throughout the award period, however, by the Federal 
awarding agency.
    The Interim Final Rule does not include a cap on administrative 
costs for the Centers of Excellence Research Grants Program, because 
the Act does not include one. In the absence of a statutory cap, the 
general rule is that all costs charged to a Federal award must be 
``necessary and reasonable for performance of the Federal award and be 
allocable thereto'' under the principles in OMB's Uniform Guidance. 2 
CFR 200.403(a). The Uniform Guidance lists other factors as well. 
Whether a state's administrative costs are allowable under the Centers 
of Excellence Research Grants Program will be measured against the 
standards in the Uniform Guidance.
    Treasury has moved a provision regarding the Alabama Gulf Coast 
Recovery Council to Sec.  34.302(a) of the Interim Final Rule, and 
clarified its meaning. The Act states that ``Administrative duties for 
the Alabama Gulf Coast Recovery Council may only be performed by public 
officials and employees that are subject to the ethics laws of the 
State of Alabama.'' 33 U.S.C. 1321(t)(1)(F). Treasury interprets this 
requirement to govern who performs duties for the Alabama council, not 
just to limit how the Alabama council spends RESTORE Act funds.
Interim Final Rule Sec.  34.205 (Council's Audited Financial Statements 
and Audits)
    This section describes an auditing requirement for the Council. The 
provision regarding audits by the Treasury Inspector General has been 
clarified to be consistent with the Act.

Subpart D--Gulf RESTORE Program--Direct Component

Section 34.300 (General)
    This section introduces a subpart on the Direct Component, and 
states that funds provided to the Gulf Coast States, Florida counties, 
and Louisiana parishes will be in the form of grants.
Section 34.301 (Responsibility for Administration)
    This section states that Treasury will be the Federal awarding 
agency for Direct Component grants. Editorial changes have been made 
for clarity.
Section 34.302 (Allocation of Funds)
    This section describes how funds will be allocated between Alabama, 
Florida counties, Louisiana state government and parishes, Mississippi, 
and Texas. Treasury received comments relating to the shares allocated 
to the Florida counties and the Louisiana parishes.
    The Act allocates funds to 15 nondisproportionately impacted 
counties in Florida according to a weighted formula, and a share to 8 
disproportionately affected counties. The Act did not state each 
county's specific share. Treasury's proposed rule stated that Treasury 
would divide funds among the eight disproportionately affected counties 
according to the formula mutually agreed upon by the counties and 
included in the Multiyear Implementation Plan submitted by each county. 
The proposed rule did not further specify the share allocated to each 
nondisproportionately impacted county.
    Treasury received several comments from the Florida counties 
regarding their shares. The 23 counties have formed a consortium under 
Florida law, called the Gulf Consortium. According to a comment 
submitted by the Gulf Consortium, the consortium is a public entity 
that adheres to Florida's public records and public meeting 
requirements, and provides reports to the Florida Auditor General and 
Florida's Chief Financial Officer. The Gulf Consortium states that the 
eight disproportionately affected counties have agreed upon a formula, 
which distributes 20 percent among the counties equally, and 80 percent 
based on oiled shoreline, per capita sales tax

[[Page 48046]]

collections, population and distance from the Deepwater Horizon oil 
rig. Treasury accepts the counties' allocation formula; however, the 
proposed calculation only distributes 99.997 percent of the counties' 
share. In order to distribute the full amount, Treasury added a 
proportionate amount of the difference between 99.997 percent and 100 
percent to each county's share, and rounded the result to nine decimal 
places.
    The Gulf Consortium also proposed a specific allocation for the 15 
nondisproportionately impacted counties. This allocation uses the 2010 
population census, the per capita sales tax collections for 2012, and 
data from NOAA for the distance to the Deepwater Horizon oil rig. 
Treasury agrees that these data sources are appropriate, and that the 
methodology used is reasonable. However, the proposed allocation adds 
up to 100.16 percent of the nondisproportionately impacted counties' 
share. In order to distribute the correct amount, Treasury subtracted a 
proportionate amount of the difference between 100.16 percent and 100 
percent from each county's share, and rounded the result to three 
decimal places. The resulting shares are stated in the Interim Final 
Rule.
    The proposed rule requested comments on the best methodology for 
determining the allocation for the Louisiana parishes. The Act says 
that the parish allocation should be determined according to a weighted 
formula of three elements: (a) 40 percent based on the weighted average 
of miles of parish shoreline oiled, (b) 40 percent based on the 
weighted average of the population of the parish, and (c) 20 percent 
based on the weighted average of the land mass of the parish. The State 
of Louisiana and one parish proposed that Treasury include additional 
factors, in order to account for the degree of oiling, measures of re-
oiling, the type of shoreline that experienced oiling, and several 
other factors. They suggested that an approach which takes these 
factors into account would provide a more comprehensive assessment of 
injury and fairer allocation of funds. Louisiana did not describe how 
these factors should be weighed, identify an authoritative source for 
the data, or provide a statutory basis for applying these new criteria.
    Treasury has published a separate Notice of Proposed Rulemaking 
addressing these comments. In that notice, Treasury proposes an 
allocation for each of the eligible Louisiana parishes, to be 
incorporated into Sec.  34.302(e). Treasury will consider any public 
comments on the allocation to Louisiana parishes before issuing a final 
rule.
Section 34.303 (Application Procedure)
    This section describes how to apply for grants under the Direct 
Component. Treasury requires that applicants submit a Multiyear 
Implementation Plan describing the activities they intend to fund, and 
a grant application for each activity. Applicants must publish the 
Multiyear Implementation Plan for public review and comment before 
submitting it to Treasury. The Multiyear Implementation Plan and grant 
application serve related but different purposes. Requirements for the 
Multiyear Implementation Plan are designed to help applicants plan 
strategically, and to involve the public in the process of selecting 
activities. Treasury will use the grant application to determine 
whether proposed activities comply with requirements in the Act and 
these regulations, and to prepare an enforceable grant agreement that 
meets requirements in OMB's Uniform Guidance.
    Treasury received many comments about the grant application 
process. Several comments stated that the rule should allow applicants 
to develop Multiyear Implementation Plans incrementally, and to modify 
them over time. Other comments recommended that Treasury collect 
additional information, in order to identify an activity's potential 
environmental, social, and economic effects, as well as conflicts with 
projects funded from other sources. Some comments expressed concerns 
about the adequacy of the public comment process. Additional comments 
requested that applicants give assurances about an activity's 
environmental benefits, and about how applicants will monitor projects. 
Other comments asserted that the proposed rule required too much 
information.
    Treasury has revised the proposed rule to address public comments. 
The Interim Final Rule clarifies that Multiyear Implementation Plans 
can be amended and prepared incrementally. With litigation ongoing and 
the ultimate size of the trust fund still unknown, applicants will be 
allowed to adjust their plans to accommodate new information. The 
Interim Final Rule clarifies that funding is available for preparing 
Multiyear Implementation Plans. The Interim Final Rule also extends the 
public comment period to a minimum of 45 days, and requires applicants 
to make their Multiyear Implementation Plans available for public 
review and comment in a manner calculated to obtain broad-based 
participation from individuals, businesses, Indian tribes, and non-
profit organizations. Applicants will need to consider the methods most 
appropriate to obtain broad-based participation, such as accessible 
public meetings, presentations in languages other than English, and 
postings on the Internet. Other editorial changes were made for 
clarity.
Section 34.304 (Grant Award Process)
    This section states that Treasury will execute a grant agreement 
with the recipient after determining that the Multiyear Implementation 
Plan and application meet the requirements of the Act and these 
regulations. Editorial changes have been made for clarity.
Section 34.305 (Use of Funds)
    This section generally describes how funds can be used. Treasury 
has amended the proposed rule in several respects in response to 
comments. A sentence in Sec.  34.305(a) regarding unexpended funds has 
been removed as unnecessary. Grant recipients should refer to OMB's 
Uniform Guidance at 2 CFR 200.343 for more detailed requirements 
concerning the closeout of grants. Treasury has also added a new 
provision at Sec.  34.305(c) regarding a grant recipient's ability to 
issue subawards. Under this provision, a Gulf Coast State, coastal 
political subdivision, or coastal zone parish that proposes to issue 
subawards must demonstrate its ability to manage and monitor these 
subawards in compliance with Federal law and policies on grants. For 
requirements applying to the monitoring and management of 
subrecipients, see OMB's Uniform Guidance at 2 CFR 200.330-200.332.
    Several comments addressed the topic of contracting preferences, 
which are discussed in Sec.  34.305(b). Comments asked for 
clarification on whether Federal, state, or local procurement rules 
will apply to grant recipients. Comments also recommended that Treasury 
include local or special hiring preferences for all five components as 
a means of achieving the goals of the Act.
    OMB's Uniform Guidance has an extensive discussion of the 
administrative rules that apply to procurements under a Federal award. 
See 2 CFR 200.317-200.332. In general, states will use the same 
policies and procedures that apply to procurements using non-Federal 
funds, with certain narrow exceptions. Other non-Federal entities, 
including the Florida counties and Louisiana parishes and subrecipients 
of states, will use their own documented procurement procedures 
reflecting applicable state

[[Page 48047]]

and local laws and regulations, provided that the procurements conform 
to applicable Federal law and the standards in the Uniform Guidance. 2 
CFR 200.317.
    The Act discusses geographic preferences for contracts in only two 
places. In the Direct Component, the Act allows a Gulf Coast State or 
coastal political subdivision to ``give preference to individuals and 
companies that reside in, are headquartered in, or are principally 
engaged in business in the State of project execution.'' 33 U.S.C. 
1321(t)(1)(K). The Act requires the Council to develop standard terms 
to include in contracts for projects and programs awarded pursuant to 
the Comprehensive Plan ``that provide a preference to individuals and 
companies that reside in, are headquartered in, or are principally 
engaged in business in a Gulf Coast State. . . .'' 33 U.S.C. 
1321(t)(2)(C)(vii)(V). Because the Act does not include geographic 
preferences for other components, the Interim Final Rule does not 
either.
    OMB's Uniform Guidance makes clear that geographic preferences are 
allowed only when permitted by Federal law. The Uniform Guidance 
provides in part, that the non-Federal entity must conduct procurements 
in a manner that prohibits the use of statutorily or administratively 
imposed state or local preferences in the evaluation of bids or 
proposals, except in those cases where applicable Federal statutes 
expressly mandate or encourage geographic preference. 2 CFR 200.319(b). 
OMB's Uniform Guidance does encourage, however, non-Federal entities to 
take ``all necessary steps'' to assure that small and minority 
businesses, women's business enterprises, and labor surplus area firms 
are offered contracts when possible. The Uniform Guidance has more 
information at 2 CFR 200.321.
Sections 34.306 (Reports), 34.307 (Recordkeeping), 34.308 (Audits)
    These sections generally discuss reporting, recordkeeping, and 
audits. Some editorial changes were made to conform to the terms used 
in OMB's Uniform Guidance, which has a robust discussion of these 
topics.

Subpart E--Gulf RESTORE Program--Comprehensive Plan Component

Section 34.400 (General)
    This section introduces the subpart discussing the Comprehensive 
Plan Component.
Section 34.401 (Responsibility for Administration)
    This section generally describes the Council's responsibility for 
administering the Comprehensive Plan Component and certain requirements 
in the Act. Editorial changes have been made for the sake of clarity.
Section 34.402 (Grant Administration)
    This section broadly describes the Council's responsibility to 
establish an application procedure and grant award process. Several 
comments on the proposed rule requested that Treasury provide more 
direction to the Council concerning grant administration. The Council, 
an independent Federal entity, has a great deal of discretion under the 
Act in its choice of projects and programs, as well as the manner in 
which these projects and programs are carried out. The Act requires the 
Council to assign projects and programs to its member states and 
Federal agencies. Without standards to govern how its members carry out 
their responsibilities, there is potential for inconsistent application 
of the Act and OMB's Uniform Guidance, as well as potential 
difficulties in compliance monitoring after award. For this reason, the 
Interim Final Rule requires the Council to develop standards for 
administering grants under the Comprehensive Plan Component, and to 
make these standards publicly available.
Section 34.403 (Use of funds)
    This section generally states the requirements for funding 
activities under the Comprehensive Plan Component.
Sections 34.404 (Reports), 34.405 (Recordkeeping), 34.406 (Audits)
    These sections generally discuss reporting, recordkeeping, and 
audits. OMB's Uniform Guidance has a robust discussion of each of these 
topics.

Subpart F--Gulf RESTORE Program--Spill Impact Component

Section 34.500 (General)
    This section introduces the subpart discussing the Spill Impact 
Component, and states that funds will be made available as grants.
Section 34.501 (Responsibility for Administration)
    This section states that the Council is responsible for awarding 
and administering grants under this subpart. A sentence regarding 
compliance monitoring has been moved to the section on grant 
administration.
Section 34.502 (Allocation of Funds)
    This section states that the Council will allocate amounts to the 
Gulf Coast States through regulations they will publish.
Section 34.503 (State Expenditure Plans)
    This section describes the content of State Expenditure Plans and 
which entities will prepare them. Treasury received several comments on 
this section. Comments suggested that requirements in this section be 
more consistent with those for Multiyear Implementation Plans under the 
Direct Component. State entities requested that funding be available to 
develop these plans. Public interest groups also sought opportunities 
for public comment on these plans.
    The Interim Final Rule makes several changes to the requirements 
for State Expenditure Plans. The rule is more explicit about the 
content of these plans, and now requires states to make their plans 
available for public review and comment before submitting them to the 
Council for approval. As in the Direct Component, the public comment 
process can help states select projects and plan strategically to use 
RESTORE Act funds. The plans can be incremental and modified at a later 
date, to provide the states with flexibility. The Interim Final Rule 
requires the Council to develop requirements specifying when 
modifications to a State Expenditure Plan require the Council's 
approval. Other clarifying changes have also been added to the 
regulation.
    A clarifying change has also been made to the restrictions on 
infrastructure spending. The Act limits the amounts that can be spent 
on infrastructure, unless the State Expenditure Plan has required 
certifications. The Interim Final Rule clarifies that the 25 percent 
limit applies to the amount the state spends, not to the amount a state 
proposes to spend in its plan. Because a state may not execute all the 
projects in its plan, the original language did not carry out the 
statutory intent of limiting actual expenditures.
Section 34.504 (Grant Administration)
    This section generally describes the Council's responsibility to 
establish policies and procedures for administration of the grants it 
awards, and to make these policies and procedures publicly available. 
The Interim Final Rule deletes a sentence that requires a state's grant 
application to demonstrate all the elements of the State Expenditure 
Plan to the satisfaction of the Federal grant

[[Page 48048]]

administrator. While the Federal awarding agency cannot proceed with a 
grant if it has grounds to believe that the underlying facts are 
inaccurate, requiring a secondary review of the State Expenditure Plan 
after the Council has approved it was redundant.
Section 34.505 (Use of Funds)
    This section generally describes the requirements applying to 
expenditures under the Spill Impact Component.
Sections 34.506 (Reports), 34.507 (Recordkeeping), 34.508 (Audits)
    These sections generally discuss reporting, recordkeeping, and 
audits. OMB's Uniform Guidance has a robust discussion of these topics.

Subpart G--NOAA RESTORE Act Science Program

Section 34.600 (General)
    This section introduces requirements for the NOAA RESTORE Act 
Science Program.
Section 34.601 (Responsibility for Administration)
    This section generally describes the responsibilities of NOAA and 
the United States Fish and Wildlife Service for administering this 
component. Treasury received several comments on this subpart. One 
comment recommended that Treasury develop guidelines and procedures for 
NOAA to use when making grant applications and monitoring compliance. 
Another comment proposed that NOAA use a science-based, competitive 
process for selecting grant recipients, and that all research findings 
initiated through the program be publicly accessible and released in a 
timely manner. A third comment encouraged NOAA to engage with 
underserved, environmental justice populations by working with 
community-based organizations.
    The Act gives NOAA wide discretion in using RESTORE Act funds, 
which it may use to fund work through grants, cooperative agreements, 
contracts, and interagency agreements. Treasury's Interim Final Rule 
preserves this discretion. NOAA currently plans to award grants and 
cooperative agreements through its National Center for Coastal Ocean 
Science within the National Ocean Service. This Center has administered 
large regional ecosystem science initiatives using competitive 
processes for more than two decades.
    As planned, the science-based, competitive process for selecting 
successful applicants will include three steps. First, NOAA intends to 
screen all applications for consistency with the NOAA RESTORE Act 
Science Framework. Second, NOAA intends to screen applications to 
ensure they meet the minimum requirements that are spelled-out in the 
federal funding opportunity. Next, eligible proposals will enter the 
review process, which may include mail reviews by scientific experts in 
the field prior to being reviewed by a panel of 5 to 10 individuals 
with the needed subject matter expertise. NOAA intends to screen all 
mail and panel members for conflicts of interest. Ratings will be 
compiled by the program manager, along with a comprehensive written 
justification for selecting proposals recommended for funding. These 
recommendations will travel along a supervisory approval chain to the 
selecting official for final approval.
    Treasury has no compliance role with respect to NOAA's program, 
other than functions reserved to the Treasury Inspector General. NOAA 
reports that it plans to use program managers to ensure that the teams 
of investigators stay on track with milestones, progress reporting and 
other measures of project performance. Through comprehensive oversight, 
NOAA anticipates a high rate of return for complex projects that 
advance knowledge and predictive capabilities for management and 
restoration of ecosystems.
    The Interim Final Rule also does not prescribe how NOAA should 
engage with the public. NOAA has informed Treasury that it is working 
with the U.S. Fish and Wildlife Service to conduct a broad set of 
engagement activities to connect with stakeholders, including 
community-based organizations throughout the Gulf. Thus far, NOAA has 
invited the public to in-person events as well as virtual meetings. 
NOAA plans to connect, as appropriate, with community organizations 
serving underserved and environmental justice populations in a manner 
that aligns with the Commerce Department's environmental justice 
strategy. NOAA also intends to seek input from researchers at 
institutions of higher education throughout the Gulf of Mexico region, 
including institutions that focus on the needs of under-served 
communities. NOAA expects to provide the public with timely access to 
environmental data and information that are collected and created using 
RESTORE Act funds, typically no later than two years after the data are 
collected or created, except where limited by law, regulation, policy 
or by security requirements.
    Further information about the NOAA RESTORE Act Science Program is 
available at https://restoreactscienceprogram.noaa.gov/.
Section 34.602 (Use of Funds and Eligible Activities)
    This section describes the activities that can be funded using 
amounts from the trust fund. Treasury has amended this section to 
capture all activities permitted by section 1604 of the Act.
Section 34.603 (Limitations on Activities)
    This section describes limitations on the activities NOAA can fund 
under the Act. The Interim Final Rule has not changed this section from 
the proposed rule.
Section 34.604 (Limitations on Administrative Expenses)
    This section describes how the statutory cap is applied to NOAA's 
administrative expenses, as well as NOAA's ability to seek 
reimbursement from the trust fund for administrative expenses incurred 
before the effective date of Treasury's regulations. A sentence from 
Sec.  34.604(b) has been deleted to be consistent with the cap applying 
to the Council's administrative expenses.
Sections 34.605 (Reports), 34.606 (Recordkeeping), 34.607 (Audits)
    These sections describe general requirements for reports, 
recordkeeping, and audits. Editorial changes have been made for clarity 
and consistency with OMB's Uniform Guidance.

Subpart H--Centers of Excellence Research Grants Program

Section 34.700 (General)
    This section introduces the subpart containing requirements for the 
Centers of Excellence Research Grants Program.
Section 34.701 (Responsibility for Administration)
    This section states that Treasury is responsible for administering 
grants to the Gulf Coast States. Treasury has developed an application 
process for these grants, which is consistent with requirements in 
OMB's Uniform Guidance.
Section 34.702 (Allocation of Funds)
    This section identifies the state entities which can apply for 
grants from Treasury, and the percentage of funds they are entitled to 
receive. Consistent with the Act, the proposed rule stated that 
Florida's share would be administered by a consortium of public and 
private research institutions within the State which will include the 
Florida Department of Environmental Protection and the Florida Fish and 
Wildlife Conservation Commission. Treasury

[[Page 48049]]

received comments urging that the Florida Institute of Oceanography be 
designated in the final rule as the consortium mentioned in the 
statute. The statute does not identify the consortium, but it does say 
that the consortium must include the Florida Department of 
Environmental Protection and the Florida Fish and Wildlife Conservation 
Commission. According to their comment on the proposed rule, these 
agencies agree that the Florida Institute of Oceanography is the proper 
entity. Given that no other entity could fit the statutory description 
without the cooperation of these agencies, the Interim Final Rule 
states that the Florida Institute of Oceanography is Florida's 
representative for the Centers of Excellence Research Grants Program.
Section 34.703 (Application Procedure)
    This section generally describes the demonstration a Gulf Coast 
State must make when it applies for grants. Treasury received several 
comments concerning the selection of Centers of Excellence.
    Several comments pertained to states that announced their selection 
in advance of Treasury's proposed rule. Some comments proposed that 
Treasury should allow these selections to stand. Although the Act 
requires states to issue competitive grants, some comments asserted 
that the competition requirements should apply to how the centers award 
research funding. Other comments proposed additional criteria for 
selecting the Centers of Excellence, including the centers' geographic 
location and whether they partner with industry.
    Treasury's regulations must implement the language of the Act. 
Section 1605(a) of the Act makes funds available ``to establish centers 
of excellence to conduct research only on the Gulf Coast Region. . . 
.'' Later, section 1605(c) makes clear that states must make funds 
available through competitive grants to nongovernmental entities and 
consortia in the Gulf Coast region, including public and private 
institutions of higher education, and ``give priority to entities and 
consortia that demonstrate the ability to establish the broadest cross-
section of participants with interest and expertise'' in the 
disciplines mentioned in the Act. The Act gives no latitude to excuse 
states from using a competitive process when they award grants to 
establish centers of excellence.
    Additional comments requested that Treasury clarify the selection 
criteria in the rule. One comment urged that entities and consortia 
have priority if they agree to partner with industry. Another comment 
requested additional details on the weight states should give to 
applicants having a cross-section of participants. Other comments 
stated that the connection required to the Gulf Coast region was 
unclear, and suggested instead that entities headquartered in and 
primarily operating in the Gulf Coast region be designated as Centers 
of Excellence. Another comment asked for clarification that a state may 
select one center of excellence, and that the states receive equal 
shares.
    The Interim Final Rule does not add any new eligibility criteria 
for Centers of Excellence. The Act gives states discretion to decide 
what information to request from institutions applying to become 
Centers of Excellence, as well as discretion on the science, 
technology, and monitoring projects to fund. Accordingly, the Interim 
Final Rule also gives states discretion in these areas. A state also 
has discretion in choosing the location of a Center of Excellence. 
While states must use a competitive selection process that complies 
with the Act, they do have discretion regarding the geographic location 
of Centers of Excellence. Accordingly, Treasury has revised the 
proposed rule to remove the sentence on geographic location.
    Treasury has also amended the proposed rule to require more details 
in state grant applications. The new requirements are designed to 
measure a state's program against the statutory criteria.
Section 34.704 (Use of Funds and Eligible Activities)
    This section describes the activities that can be funded from 
amounts made available under the Centers of Excellence Research 
Program. This provision makes grants available to establish Centers of 
Excellence. Treasury interprets the scope of eligible activities to 
include the founding of Centers of Excellence, as well as research into 
the disciplines identified in section 1605(d) of the Act.
    Treasury received comments on how the Centers of Excellence should 
award grants. One comment, made on behalf of several research 
institutions, suggested that Centers of Excellence prepare a five year 
progress report for review by independent experts, who would recommend 
whether the Center should continue or a new competition be held. 
Another comment requested that the Centers engage with underserved, 
environmental justice populations.
    Treasury is not incorporating performance requirements into its 
regulations at this time. Because of the discretion afforded states 
under this program, there may be several approaches for measuring and 
monitoring the success of grants. Treasury will expect states to 
identify appropriate measures for defining and measuring success of the 
Centers of Excellence, as well as appropriate engagement with affected 
communities.
Section 34.705 (Ineligible Activities)
    This section states that activities that are not authorized under 
Sec.  34.704 are ineligible for funding.
Sections 34.706 (Reports), 34.707 (Recordkeeping), 34.708 (Audits)
    These sections generally describe the reporting, recordkeeping, and 
auditing requirements for the Centers of Excellence Research Grants 
Program. OMB's Uniform Guidance provides additional details about these 
requirements. Editorial changes have been made for consistency with the 
Uniform Guidance.

Subpart I--Agreements

Section 34.800 (General)
    This section introduces the subpart that contains requirements 
pertaining to grants awarded by the Council, NOAA, Gulf Coast States, 
coastal political subdivisions, and coastal zone parishes. It also 
describes Treasury's authority to inspect records and the authority of 
the Treasury Inspector General. Treasury has revised this section to 
more accurately describe the content of this subpart.
Section 34.801 (Grant Agreements)
    This section states that grant agreements must conform to 
applicable law and Federal policies pertaining to grants.
Section 34.802 (Certifications)
    This section includes certifications that must be in grant 
agreements for the Direct Component, Comprehensive Plan Component, and 
Spill Impact Component. In response to comments, the Interim Final Rule 
clarifies who can sign a certification. The certification pertaining to 
consideration of public comments has been amended for consistency with 
the Act. The rule also includes a revised certification pertaining to 
procurements. The proposed rule required grant recipients to certify 
that they had followed state procurement laws. While recipients are 
generally required to comply with state procurement laws, the Uniform 
Guidance contains exceptions. Recipients should refer to 2 CFR 200.317-
200.326 for more specific information.

[[Page 48050]]

Section 34.803 (Conditions)
    This section contains conditions that apply to every grant 
agreement. The list of conditions is not comprehensive. As noted 
throughout the regulation, all grant agreements must comply with 
Federal laws and policies on grants, which include the requirements in 
OMB's Uniform Guidance.
    Treasury has deleted a condition stating that grant recipients must 
deposit all grant funds into accounts dedicated for that purpose 
because that condition is inconsistent with OMB's Uniform Guidance. At 
2 CFR 200.305(b)(7)(1), the Uniform Guidance precludes Federal awarding 
agencies from requiring separate depository accounts for funds provided 
to non-Federal entities. The Uniform Guidance does require non-Federal 
entities to account for the receipt, obligation, and expenditure of 
funds. Treasury's regulation retains that requirement as a condition 
for all grant agreements.
    Treasury received several comments pertaining to the condition on 
program income. The Interim Final Rule continues to provide that grant 
recipients track program income, but does not discuss how program 
income should be used. Grant recipients should refer to OMB's Uniform 
Guidance for further information on the use of program income. In 
addition to this change, minor editorial changes have been made for 
consistency with the Uniform Guidance.
Proposed Rule Sec.  34.804 (Records and Reporting)
    This section in the proposed rule has been deleted. Section 
34.804(a) in the proposed rule gave Treasury broad access to the 
Council's and NOAA's records and personnel for purposes of assessing 
compliance with their own obligations under the Act. Because the Act 
does not authorize Treasury to take enforcement actions with respect to 
the Council or the NOAA RESTORE Act Science Program, Sec.  34.804(a) 
went further than necessary. A more narrowly tailored provision now 
appears in the section addressing Treasury's remedies for 
noncompliance. Treasury has also deleted Sec.  34.804(b) in the 
proposed rule. This provision described a reporting requirement for 
grants lasting more than three years. Because the Federal awarding 
agency already has authority to require reports as necessary, this 
requirement was redundant of other authorities in the rule.
Interim Final Rule Sec.  34.804 (Noncompliance)
    This section describes Treasury's authority to withhold funds from 
the Gulf Coast States, coastal political subdivisions, and coastal zone 
parishes under the Direct Component, Comprehensive Plan Component, and 
Spill Impact Component. This section implements authorities in section 
1603 of the Act (33 U.S.C. 1321(t)(1)(G) and (H)). An introductory 
statement in the proposed rule was unnecessary and has been deleted.
    Treasury received several comments on its compliance functions. 
Several comments noted overlapping compliance roles for Treasury, the 
Treasury Inspector General, and the Council. Other comments requested 
that Treasury develop a review or grievance procedure for the public to 
use when funds are not being used in compliance with the Act. Comments 
also asked Treasury to assess penalties for violations of the Act.
    Under the Uniform Guidance, the Federal awarding agency has primary 
responsibility for overseeing compliance by the recipient. If the 
recipient, acting as a ``pass-through entity,'' issues a subaward under 
the Act, the recipient is responsible for overseeing compliance by the 
subrecipient. If a non-Federal entity fails to comply with the award 
agreement, the Federal awarding agency or pass-through entity may 
impose special conditions, temporarily withhold cash payments, disallow 
costs, suspend or terminate the Federal award, and take other actions. 
See 2 CFR 200.338. All of these remedies are available to Treasury, the 
Council, and NOAA when they are awarding funds under the Act, and to 
the states and other non-Federal entities when they are the pass-
through entity.
    Congress gave Treasury supplemental compliance responsibilities 
with respect to a grant recipient's use of funds under the 
Comprehensive Plan Component and the Spill Impact Component. Treasury 
can withhold funds under appropriate circumstances, but Treasury has no 
ability to assess monetary penalties under these or the other 
components. Treasury's authorities, described in section 1603 of the 
Act (33 U.S.C. 1321(t)(1)(G) and (H)), do not apply to grants issued by 
NOAA. Treasury anticipates exercising these authorities only if the 
entities primarily responsible for compliance under the Uniform 
Guidance fail to act. Public concerns about compliance with the Act 
should be referred, in the first instance, to the Federal awarding 
agency and pass-through entity for resolution.
    The Treasury Inspector General will also receive reports from the 
public about violations of law and information concerning possible 
waste, fraud, and abuse. Congress gave the Treasury Inspector General 
broad authority to conduct, supervise, and coordinate audits and 
investigations of projects, programs, and activities funded under the 
Act. Nothing in the Interim Final Rule limits this authority, or 
constrains the public's ability to bring their concerns to the Treasury 
Inspector General's office.
Section 34.806 (Treasury Inspector General)
    This section is new to the Interim Final Rule, and restates the 
Treasury Inspector General's authority under the Act.

Audits

    Treasury received several comments concerning audits. Some comments 
sought clarity about the scope and timing of required audits, including 
whether the Single Audit Act will apply. Other comments suggested using 
state auditors and raising the ceiling on administrative costs to pay 
for audits. Several comments also asked Treasury to clarify when it 
would use its audit authority, and how audits would be coordinated with 
the Treasury Inspector General and the Council.
    The Act does not describe specific audit requirements. Rather, 
section 1602 of the Act authorizes Treasury to identify ``auditing 
requirements to ensure that amounts in the trust fund are expended as 
intended. . . .'' The general audit requirements for the Act are 
described in OMB's Uniform Guidance, 2 CFR 200.500-200.521. These 
provisions describe not only audit requirements applying to grant 
recipients, but also requirements that apply to the Federal awarding 
agency. Treasury (including the Treasury Inspector General) and the 
Federal awarding agency may conduct or arrange for additional audits 
and evaluations of Federal awards. 2 CFR 200.503. If additional audits 
are needed, the Uniform Guidance encourages Federal agencies to 
minimize duplication and to build upon work performed by other 
auditors. 2 CFR 200.503(b). Because these audits and evaluations may 
depend on risks associated with individual awards, Treasury's 
regulations do not address them in detail.
    Audit services can be an allowable cost under a Federal award, as 
described in 2 CFR 200.425. Treasury does not anticipate that the cap 
on administrative costs will limit a grant recipient's ability to 
perform required audits, given the definition of administrative costs 
and the provisions at 2 CFR 200.503(d), concerning the cost of audits 
not required under the Uniform Guidance.

[[Page 48051]]

III. National Environmental Policy Act

    The National Environmental Policy Act (NEPA), 42 U.S.C. 4321-4347, 
and its implementing regulations, 40 CFR Parts 1500-1508, establish a 
broad national policy to protect and enhance the quality of the human 
environment, and develop programs and measures to meet national 
environmental goals. Under NEPA, Federal agencies are required to 
prepare an environmental analysis for ``Federal actions.'' 42 U.S.C. 
4332(C); see also 40 CFR 1508.18(a) and (b). The purpose of NEPA review 
is to help public officials make decisions with an understanding of 
their environmental consequences. An action under consideration must be 
``potentially subject to Federal control and responsibility.'' 40 CFR 
1508.18. If the Federal agency has no discretion to exercise and no 
decision to make, and its action is administrative or ministerial, NEPA 
review would not affect the decision and is therefore not required.
    Treasury received several comments about NEPA's application to 
eligible activities. Comments requested guidance about whether and how 
NEPA applies to Multiyear Implementation Plans and State Expenditure 
Plans. Several comments also expressed concern about whether NEPA 
compliance would delay the completion of plans and the issuance of 
grants.
    The Interim Final Rule does not specifically address NEPA. The 
Federal agency awarding the funds is primarily responsible for 
determining how NEPA applies to its actions, and Treasury is not the 
awarding agency for a majority of funds made available under the Act. 
The Council has completed a programmatic environmental assessment under 
NEPA for the Initial Comprehensive Plan, and has begun developing NEPA 
compliance procedures for projects and programs it decides to fund. The 
Council is also developing processes to further engage with the public. 
The Council will determine how NEPA applies to its activities.
    Treasury is the Federal awarding agency for grants under the Direct 
Component and Centers of Excellence Research Grants Program. Treasury 
will soon publish agency-wide NEPA policy and procedures in the Federal 
Register for public comment. At this time, however, Treasury does not 
anticipate that its review of Multiyear Implementation Plans or the 
issuance of individual grants will require a NEPA review. Other Federal 
actions connected with activities funded through a RESTORE Act grant, 
such as issuance of a permit, may require NEPA review by the agency 
issuing the permit. Treasury's view is based on its statutory role for 
the administration of the Direct Component and Centers of Excellence 
Research Grants Program.
    The RESTORE Act gives Treasury a very limited role in awarding 
grants. The Direct Component gives Treasury no role in project 
selection or design; these roles are given to Gulf Coast States, 
Florida counties, and Louisiana parishes. Treasury also has no role in 
approving Multiyear Implementation Plans. Treasury's limited role for 
the Centers of Excellence Research Grants Program is particularly 
evident in section 1605 of the Act, where Treasury is not mentioned at 
all. Treasury's role in awarding grants arises in part from its 
responsibility to establish procedures, and to identify conditions and 
certifications, necessary to ensure compliance with the Act. RESTORE 
Act section 1602(e); 33 U.S.C. 1321(t)(1)(E). Treasury's role also 
arises from its authority to withhold funds under 33 U.S.C. 
1321(t)(1)(G) and (H) for non-compliance with the Act. Without explicit 
instructions in the Act about how to make grant awards, Treasury will 
review Multiyear Implementation Plans and grant applications to 
determine whether they satisfy financial and administrative 
requirements in the Act and these regulations, and apply the 
administrative requirements in OMB's Uniform Guidance. These are 
determined to be administrative and ministerial duties that do not 
require an environmental analysis under NEPA.

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 Procedure 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. In the preamble to the proposed 
rule, Treasury certified that this rule will not have a significant 
economic impact on a substantial number of small entities, and thus no 
initial regulatory flexibility analysis is required. While this rule 
describes procedures concerning the allocation and expenditure of 
amounts from the trust fund, most of these requirements come from the 
Act itself or other Federal law. Treasury invited comments on this 
certification.
    Treasury received comments on behalf of seven counties in Florida 
that will receive funds under the Direct Component and have populations 
of less than 50,000 people. According to the comments, the State of 
Florida recognizes these counties as ``fiscally constrained counties'' 
that have limited resources to meet requirements of a safe society. The 
comments observed that compliance with the rule will be costly, in 
relation to the budgets of these counties. The comments did not 
quantify the compliance costs.
    While these seven counties provided many comments on the proposed 
rule, directly and through the Gulf Consortium, Levy County's comments 
provided the most detail about the regulations' cost. Levy County's 
situation may be representative of the other fiscally constrained 
counties. Levy County stated that its tax base is so low that it 
struggles to provide basic government services, and as a result, ``the 
County cannot afford to acquire staff or consultants with the expertise 
and educational background necessary to comply with the provisions of 
the Proposed Rule.'' \1\ In particular, Levy County stated that it may 
not be able to hire people with expertise to develop the Multiyear 
Implementation Plan or grant application, or to develop and implement 
projects and programs. To address these needs, Levy County requested 
that Treasury make funding available for planning and administrative 
costs prior to the grant application stage, including funding to 
educate the public, form an advisory committee, develop a Multiyear 
Implementation Plan, and develop potential projects.
---------------------------------------------------------------------------

    \1\ Letter from Anne Bast Brown, Levy County Office of the 
County Attorney, to Dept. of the Treasury (Nov. 4, 2013) at 2-3 
(available at www.regulations.gov under number Treas-DO-2013-0005-
0016).
---------------------------------------------------------------------------

    In general, the costs of developing plans and projects, and of 
complying with Federal grant requirements, arise from the Act and not 
Treasury's regulations. The Act makes funds available subject to 
conditions that include plans, public engagement, and financial 
controls. The counties, however, have considerable discretion in how 
they comply with these requirements, which enables them to control some 
of their costs. The Act also provides some latitude concerning when 
funds are made available. In response to these comments, Treasury has 
revised the rule to make grants available to develop Multiyear 
Implementation Plans, including related public engagement activities. 
These grants will include funds to cover

[[Page 48052]]

administrative costs. As noted elsewhere in this preamble, the Florida 
counties and other grant recipients may also negotiate reimbursement of 
pre-award costs, as described in OMB's Uniform Guidance. These measures 
will not reduce the counties' costs in complying with the Act, or 
exempt the counties from any legal requirement. Every grant recipient 
is expected to comply with the Act and other Federal requirements that 
apply to Federal awards. However, these measures do make funding 
available for allowable costs.
    For these reasons, Treasury concludes that the rule will not have a 
significant economic impact on a substantial number of small entities.

B. Paperwork Reduction Act

    The collections of information contained in the notice of proposed 
rulemaking were submitted to the Office of Management and Budget (OMB) 
for review in accordance with the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)) and approved under control number 1505-0250. Treasury 
requested comments in the following areas:
     Whether the proposed collection[s] of information is 
necessary for the proper performance of the functions of the Treasury 
Department, including whether the information will have practical 
utility;
     The accuracy of the estimated burden associated with the 
proposed collection[s] of information (see below);
     How to enhance the quality, utility, and clarity of the 
information to be collected;
     How to minimize the burden of complying with the proposed 
collections of information, including the application of automated 
collection techniques or other forms of information technology.
    Treasury received comments concerning the content of Multiyear 
Implementation Plans and State Expenditure Plans and grant 
applications. Comments also requested more specific information about 
the reporting requirements stated in the rule. These comments, and 
resulting changes in the regulation, have been discussed in the 
section-by-section analysis in this preamble. Treasury received no 
comments on the accuracy of the burden assessments or suggestions for 
minimizing the burden of complying with the proposed collections of 
information.
    The collections of information in this Interim Final Rule are in 31 
CFR Part 34. This information is required to support applications for 
grants under the Act and monitor the use of RESTORE Act funds. 
Respondents will be recipients of these funds. For the Direct 
Component, recipients will be Alabama, certain Florida counties, 
Louisiana and certain Louisiana parishes, Mississippi, and Texas. For 
the Centers of Excellence Research Grants Program, recipients will be 
Alabama, the Florida Institute of Oceanography, Louisiana, Mississippi, 
and Texas.

------------------------------------------------------------------------
                                                          Centers of
                                                          Excellence
                                  Direct  component     Research Grants
                                                            Program
------------------------------------------------------------------------
Application--number of           47.................  5
 respondents.
Application--frequency of        2..................  2
 responses.
Application--burden hours per    10.................  10
 response.
Application--total burden hours  940................  100
Reports--number of respondents.  47.................  5
Reports--frequency of responses  Quarterly..........  Quarterly
Reports--burden hours per        3..................  3
 response.
Reports--total burden hours....  564................  60
Recordkeeping..................  4,700..............  500
                                ----------------------------------------
    Total burden hours.........  6,204..............  660
------------------------------------------------------------------------

    Estimated total annual burden hours for applications, reporting and 
recordkeeping: 6,864 hours for the Direct Component and the Centers of 
Excellence Research Grants Program. The Federal entities who administer 
the Comprehensive Plan Component, Spill Impact Component, and the NOAA 
RESTORE Act Science Program will submit their estimates separately to 
OMB. The public will have the opportunity to comment at that time.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number assigned by OMB.

C. Regulatory Planning and Review (Executive Orders 12866 and 13563)

    This regulation is a significant regulatory action as defined in 
Executive Order 12866, as supplemented by Executive Order 13563. OMB 
has reviewed the regulation. If adopted, this rule may have an annual 
effect on the economy of $100 million or more. The Regulatory Impact 
Assessment prepared by Treasury for this regulation is provided below.
    This rule deals with the transfer of amounts in the Gulf Coast 
Ecosystem Trust Fund. On March 21, 2013, $323,392,877 was deposited 
into the trust fund and invested in Treasury securities. A second 
deposit was made on March 5, 2014, in the amount of $329,641,425. The 
amount in the trust fund is expected to increase due to investments and 
additional deposits of civil penalties from ongoing litigation.

Description of Need for the Regulatory Action

    The Act requires Treasury to establish procedures necessary for the 
deposit into, and expenditure of amounts from, the Gulf Coast Ecosystem 
Trust Fund. The Interim Final Rule implements those responsibilities. 
Included in this rulemaking are procedures for issuing grants to the 
Gulf Coast States, Florida counties, and Louisiana parishes, as well as 
reporting and auditing requirements. The procedures supplement 
responsibilities in other Federal laws and policy that apply to grants.

Affected Population

    This rulemaking affects those entities in the five Gulf Coast 
States that are eligible to receive funding under the RESTORE Act. In 
general, funds will be made available to state and local

[[Page 48053]]

governments in the form of grants, and to Federal agencies through 
interagency agreements, for projects, programs, and activities they 
select within the broad parameters of the Act. Funds are also available 
to NOAA for a science program, and to the Council, a body comprised of 
state and Federal entities, for projects and programs the Council 
identifies in its Comprehensive Plan.
    Under the Direct Component and Spill Impact Component, 65 percent 
of the trust fund is available to support projects, programs, and 
activities proposed by governmental entities in the five Gulf Coast 
States. The Act lists a broad range of eligible activities, including 
the restoration and protection of natural resources, mitigation of 
damage to fish and wildlife, and workforce development and job 
creation. State entities may apply to the Treasury Department for grant 
funds under the Direct Component, and to the Council for grant funds 
under the Spill Impact Component.
    The Comprehensive Plan Component makes 30 percent of the trust 
fund, plus a portion of accrued interest, available to the Council to 
carry out activities in the Gulf Coast region that are included in the 
Comprehensive Plan, as described in 33 U.S.C. 1321(t)(2). The Council 
will identify the projects and programs it wants to fund in its 
Comprehensive Plan, and assign primary responsibility for them to its 
members. The Council will provide funds to the states in the form of 
grants and to agencies through interagency agreements, and may permit 
its Federal and state members to issue grants to or contract with 
nongovernmental entities.
    The Act also makes 2.5 percent of the trust fund, plus a portion of 
accrued interest, available to NOAA for the NOAA RESTORE Act Science 
Program. In this program, NOAA may use funds to carry out research, 
observation, and monitoring to support the long-term sustainability of 
the ecosystem, fish stocks, fish habitat, and the recreational, 
commercial, and charter fishing industry in the Gulf of Mexico. NOAA 
may carry out these functions directly, transfer funds to the Gulf 
States Marine Fisheries Commission, and expend funds through grants, 
cooperative agreements, contracts, and interagency agreements.
    The fifth component is the Centers of Excellence Research Grants 
Program. In this program, Treasury will issue grants to governmental 
entities in the five Gulf Coast States using 2.5 percent of the trust 
fund, plus a portion of accrued interest. The state entities will use 
the funds to issue their own competitive grants to establish centers of 
excellence. These centers will be nongovernmental entities and 
consortia in the Gulf Coast region, including public and private 
institutions of higher education. They will focus on science, 
technology, and monitoring in five disciplines described in the RESTORE 
Act.

Baseline

    The Interim Final Rule helps implement the Act, which is generally 
focused on the environmental restoration and economic recovery of the 
Gulf Coast region. This region is an area in which the people, animals, 
minerals, land, and water are interconnected. The ecosystem and 
resources are vitally important to the United States economy, 
contributing about 30 percent of the nation's gross domestic product in 
2009 (National Oceanic and Atmospheric Administration, 2010). The 
region provides more than 90 percent of the nation's offshore oil and 
natural gas production (US Information Agency, 2010) and one-third of 
the nation's seafood (National Marine Fisheries Service, 2010). The 
region also has significant recreation and tourism.
    On April 20, 2010, the largest oil spill in United States history 
occurred, exacerbating the effects of previous natural disasters. Oil 
flowed unchecked for three months. The cause was an explosion of the 
Deepwater Horizon, an oil drilling rig in the Gulf of Mexico. Before 
the well was capped, millions of barrels of crude oil were released, 
closing tens of thousands of square miles of federal waters for fishing 
while contaminating hundreds of miles of shoreline, bayous, bays, and 
islands with oil and chemicals used during response activities. The 
released oil dispersed over Gulf waters, wildlife, and coasts, causing 
extensive damage to marine and wildlife habitats, fishing, and tourism.
    This Interim Final Rule describes procedures concerning the 
expenditure of amounts from the trust fund, including compliance and 
auditing requirements. The amounts made available from the trust fund 
will continue efforts that provide for the long-term health of the 
ecosystems and economy of the Gulf Coast region. The Council, NOAA, and 
program grant recipients will determine how to advance these efforts 
using trust fund amounts.

D. Administrative Procedure Act

    The Administrative Procedure Act (5 U.S.C. 551 et seq.) (APA) 
generally requires public notice and comment procedures before 
promulgation of regulations and a delay in effective date. See 5 U.S.C. 
553(b). The APA allows agencies to dispense with notice and comment 
procedures when the agency finds that good cause exists under 5 U.S.C. 
553(b) that such procedures would be unnecessary, impracticable, or 
contrary to the public interest.
    The Department published a notice of proposed rulemaking requesting 
comment on the proposed rule on September 6, 2013. As explained earlier 
in this preamble, the Department is issuing this rule as an Interim 
Final Rule because it believes the rulemaking would benefit from 
additional public comment on previously proposed provisions as well as 
provisions adopted in this interim rule. Further, the Department 
believes that it would be contrary to the public interest to delay 
implementation of the rule pending further public comment because of 
the overwhelming public interest in making funds available under the 
Act.

E. 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 a ``major rule'' 
as defined by 5 U.S.C. 804(2) and will be effective 60 days after 
publication.

F. 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 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 the 
regulatory impact assessment provided in this preamble provides the 
analysis required by the Unfunded Mandates Reform Act.

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, Wildlife.


0
For the reasons set forth in the preamble, the Department of the 
Treasury amends 31 CFR subtitle A by adding new part 34 to read as 
follows:

[[Page 48054]]

PART 34--RESOURCES AND ECOSYSTEMS SUSTAINABILITY, TOURIST 
OPPORTUNITIES, AND REVIVED ECONOMIES OF THE GULF COAST STATES

Subpart A--General Provisions
Sec.
34.1 Purpose.
34.2 Definitions.
Subpart B--Trust Fund
Sec.
34.100 The Trust Fund.
34.101 Investments.
34.102 Interest earned.
34.103 Allocation of funds.
34.104 Expenditures.
34.105 Waiver.
Subpart C--Eligible Activities for the Section 311(t) Gulf RESTORE 
Program Components
Sec.
34.200 General.
34.201 Eligible activities for the Direct Component.
34.202 Eligible activities for the Comprehensive Plan Component.
34.203 Eligible activities for the Spill Impact Component.
34.204 Limitations on administrative costs and administrative 
expenses.
34.205 Council's audited financial statements and audits.
Subpart D--Gulf RESTORE Program--Direct Component
Sec.
34.300 General.
34.301 Responsibility for administration--Direct Component.
34.302 Allocation of funds--Direct Component.
34.303 Application procedure--Direct Component.
34.304 Grant award process--Direct Component.
34.305 Use of funds--Direct Component.
34.306 Reports--Direct Component.
34.307 Recordkeeping--Direct Component.
34.308 Audits--Direct Component.
Subpart E--Gulf RESTORE Program--Comprehensive Plan Component
Sec.
34.400 General.
34.401 Responsibility for administration--Comprehensive Plan 
Component.
34.402 Grant administration--Comprehensive Plan Component.
34.403 Use of funds--Comprehensive Plan Component.
34.404 Reports--Comprehensive Plan Component.
34.405 Recordkeeping--Comprehensive Plan Component.
34.406 Audits--Comprehensive Plan Component.
Subpart F--Gulf RESTORE Program--Spill Impact Component
Sec.
34.500 General.
34.501 Responsibility for administration--Spill Impact Component.
34.502 Allocation of funds--Spill Impact Component.
34.503 State Expenditure Plans--Spill Impact Component.
34.504 Grant administration--Spill Impact Component.
34.505 Use of funds--Spill Impact Component.
34.506 Reports--Spill Impact Component.
34.507 Recordkeeping--Spill Impact Component.
34.508 Audits--Spill Impact Component.
Subpart G--NOAA RESTORE Act Science Program
Sec.
34.600 General.
34.601 Responsibility for administration--NOAA RESTORE Act Science 
Program.
34.602 Use of funds and eligible activities--NOAA RESTORE Act 
Science Program.
34.603 Limitations on activities--NOAA RESTORE Act Science Program.
34.604 Limitations on administrative expenses--NOAA RESTORE Act 
Science Program.
34.605 Reports--NOAA RESTORE Act Science Program.
34.606 Recordkeeping--NOAA RESTORE Act Science Program.
34.607 Audits--NOAA RESTORE Act Science Program.
Subpart H--Centers of Excellence Research Grants Program
Sec.
34.700 General.
34.701 Responsibility for administration--Centers of Excellence 
Research Grants Program.
34.702 Allocation of funds--Centers of Excellence Research Grants 
Program.
34.703 Application procedure--Centers of Excellence Research Grants 
Program.
34.704 Use of funds and eligible activities--Centers of Excellence 
Research Grants Program.
34.705 Ineligible activities--Centers of Excellence Research Grants 
Program.
34.706 Reports--Centers of Excellence Research Grants Program.
34.707 Recordkeeping--Centers of Excellence Research Grants Program.
34.708 Audits--Centers of Excellence Research Grants Program.
Subpart I--Agreements
Sec.
34.800 General.
34.801 Grant agreements.
34.802 Certifications.
34.803 Conditions.
34.804 Noncompliance.
34.805 Treasury Inspector General.

    Authority:  31 U.S.C. 301; 31 U.S.C. 321; 33 U.S.C. 1251 et seq.

Subpart A--General Provisions


Sec.  34.1  Purpose.

    This part describes policies and procedures applicable to the 
following programs authorized under the Resources and Ecosystems 
Sustainability, Tourist Opportunities, and Revived Economies of the 
Gulf Coast States Act of 2012 (RESTORE Act).
    (a) The Gulf RESTORE Program is authorized under section 311(t) of 
the Federal Water Pollution Control Act (33 U.S.C. 1221(t)), as amended 
by the RESTORE Act, and includes the following components:
    (1) Direct Component (subpart D of this part), administered by the 
Department of the Treasury.
    (2) Comprehensive Plan Component (subpart E of this part), 
administered by the Gulf Coast Ecosystem Restoration Council.
    (3) Spill Impact Component (subpart F of this part), administered 
by the Gulf Coast Ecosystem Restoration Council.
    (b) NOAA RESTORE Act Science Program (subpart G of this part) is 
administered by the National Oceanic and Atmospheric Administration.
    (c) Centers of Excellence Research Grants Program (subpart H of 
this part) is administered by the Department of the Treasury.


Sec.  34.2  Definitions.

    As used in this part:
    Act or RESTORE Act means the Resources and Ecosystems 
Sustainability, Tourist Opportunities, and Revived Economies of the 
Gulf Coast States Act of 2012.
    Activity means an activity, project, or program, including research 
and monitoring, eligible for funding under the Act.
    Administrative costs means those indirect costs for administration 
incurred by the Gulf Coast States, coastal political subdivisions, and 
coastal zone parishes that are allocable to activities authorized under 
the Act. Administrative costs may include costs for general management 
functions, general ledger accounting, budgeting, human resource 
services, general procurement services, and general legal services. 
Administrative costs do not include indirect costs that are identified 
specifically with, or readily assignable to:
    (1) Facilities;
    (2) Eligible projects, programs, or planning activities; or
    (3) Activities relating to grant applications, awards, audit 
requirements, or post-award management, including payments and 
collections.
    Administrative expenses means those expenses incurred for 
administration by the Council or NOAA, including expenses for general 
management functions, general ledger accounting, budgeting, human 
resource services, general procurement services, and general legal 
services. Administrative

[[Page 48055]]

expenses do not include expenses that are identified specifically with, 
or readily assignable to:
    (1) Facilities;
    (2) Eligible projects, programs, or planning activities;
    (3) Activities related to grant applications, awards, audit 
requirements, or post-award management, including payments and 
collections;
    (4) The Council's development, publication, and implementation of 
the Comprehensive Plan and any subsequent amendments;
    (5) The Council's development and publication of regulations and 
procedures for implementing the Spill Impact Component, and the review 
of State Expenditure Plans submitted under the Spill Impact Component;
    (6) Preparation of reports required by the Act;
    (7) Establishment and operation of advisory committees; or
    (8) Collection and consideration of scientific and other research 
associated with restoration of the Gulf Coast ecosystem.
    Alabama Gulf Coast Recovery Council means the entity identified in 
section 311(t)(1)(F)(i) of the Federal Water Pollution Control Act, as 
amended by the RESTORE Act.
    Assignee means a member of the Gulf Coast Ecosystem Restoration 
Council who has been assigned primary authority and responsibility for 
a project or program included in the Comprehensive Plan through a grant 
or interagency agreement.
    Best available science means science that maximizes the quality, 
objectivity, and integrity of information, including statistical 
information; uses peer-reviewed and publicly available data; and 
clearly documents and communicates risks and uncertainties in the 
scientific basis for such projects.
    Centers of Excellence Research Grants Program means the program 
authorized by section 1605 of the Act.
    Coastal political subdivision means any local political 
jurisdiction that is immediately below the state level of government, 
including a county, parish, or borough, with a coastline that is 
contiguous with any portion of the United States Gulf of Mexico. The 
term includes any of the disproportionately affected counties and 
nondisproportionately impacted counties in Florida, as defined below.
    Coastal zone parishes means the parishes of Ascension, Assumption, 
Calcasieu, Cameron, Iberia, Jefferson, Lafourche, Livingston, Orleans, 
Plaquemines, St. Bernard, St. Charles, St. James, St. John the Baptist, 
St. Martin, St. Mary, St. Tammany, Terrebonne, Tangipahoa, and 
Vermilion in the State of Louisiana.
    Comprehensive Plan Component means the component of the Gulf 
RESTORE Program authorized by section 311(t)(2) of the Federal Water 
Pollution Control Act, as added by section 1603 of the Act, in which 
funds are provided through the Council, in accordance with a plan 
developed by the Council, to entities to carry out the purposes of the 
Act.
    Council means the Gulf Coast Ecosystem Restoration Council, an 
independent entity in the Federal Government whose members are the 
Governors of the Gulf Coast States; the Secretaries of Agriculture, the 
Army, Commerce, and the Interior; the head of the department in which 
the Coast Guard is operating, and the Administrator of the 
Environmental Protection Agency (or their designees at the level of 
Assistant Secretary or the equivalent).
    Deepwater Horizon oil spill means the blowout and explosion of the 
mobile offshore drilling unit Deepwater Horizon that occurred on April 
20, 2010, and resulting hydrocarbon releases into the environment.
    Direct Component means the component of the Gulf RESTORE Program 
authorized by section 311(t)(1) of the Federal Water Pollution Control 
Act, as added by section 1603 of the Act, in which Gulf Coast States, 
coastal zone parishes, disproportionately affected counties, and 
nondisproportionately impacted counties are provided funds directly by 
Treasury through grants to carry out the purposes of the Act.
    Disproportionately affected counties means the counties of Bay, 
Escambia, Franklin, Gulf, Okaloosa, Santa Rosa, Wakulla, and Walton in 
the State of Florida.
    Federal Water Pollution Control Act means 33 U.S.C. 1251 et seq.
    Gulf Coast Region means:
    (1) In the Gulf Coast States, the coastal zones defined under 
section 304 of the Coastal Zone Management Act of 1972 that border the 
Gulf of Mexico;
    (2) Land within the coastal zones described in paragraph (1) of 
this definition that is held in trust by, or the use of which is by law 
subject solely to the discretion of, the Federal Government or officers 
or agents of the Federal Government;
    (3) Any adjacent land, water, and watersheds, that are within 25 
miles of the coastal zone described in paragraphs (1) and (2) of this 
definition; and
    (4) All Federal waters in the Gulf of Mexico.
    Gulf Coast State means any of the States of Alabama, Florida, 
Louisiana, Mississippi, and Texas.
    Gulf Coast State entity means a party that carries out the duties 
of a state for the Centers of Excellence Research Grants Program under 
Sec.  34.702.
    Infrastructure means the public facilities or systems needed to 
support commerce and economic development. These installations and 
facilities span a wide range, including highways, airports, roads, 
buildings, transit systems, port facilities, railways, 
telecommunications, water and sewer systems, public electric and gas 
utilities, levees, seawalls, breakwaters, major pumping stations, and 
flood gates. Infrastructure encompasses new construction, upgrades and 
repairs to existing facilities or systems, and associated land 
acquisition and planning.
    Multiyear Implementation Plan means the plan submitted by entities 
eligible for funding directly from Treasury under the Direct Component, 
and described at Sec.  34.303.
    NOAA means the National Oceanic and Atmospheric Administration.
    NOAA RESTORE Act Science Program means the program authorized by 
section 1604 of the Act.
    Nondisproportionately impacted counties means the counties of 
Charlotte, Citrus, Collier, Dixie, Hernando, Hillsborough, Jefferson, 
Lee, Levy, Manatee, Monroe, Pasco, Pinellas, Sarasota, and Taylor in 
the State of Florida.
    Pass-through entity means a non-Federal entity that provides a 
subaward to a subrecipient to carry out part of a program under the 
Act.
    Planning assistance means data gathering, studies, modeling, 
analysis and other tasks required to prepare plans for eligible 
activities under Sec.  34.201(a) through (i), including environmental 
review and compliance tasks and architectural and engineering studies. 
Planning assistance also means one-time preparations that will allow 
the recipient to establish systems and processes needed to review grant 
applications, award grants, monitor grants after award, and audit 
compliance with respect to eligible activities under Sec.  34.201 in a 
Multiyear Implementation Plan or State Expenditure Plan.
    Recipient means a non-Federal entity that receives a Federal award 
directly from a Federal awarding agency to carry out an activity under 
the Act. As used in these regulations, a recipient also includes a 
pass-through entity. The term recipient does not include subrecipients.

[[Page 48056]]

    Spill Impact Component means the component of the Gulf RESTORE 
Program authorized by section 311(t)(3) of the Federal Water Pollution 
Control Act, as added by section 1603 of the Act, in which Gulf Coast 
States are provided funds by the Council according to a formula that 
the Council establishes by regulation, using criteria listed in the 
Act.
    State Expenditure Plan means the plan that each Gulf Coast State 
must submit to the Council for the expenditure of amounts disbursed 
under the Spill Impact Component, and described at Sec.  34.503.
    Subrecipient means a non-Federal entity that receives a subaward 
from a recipient to carry out an activity under the Act.
    Treasury means the U.S. Department of the Treasury, the Secretary 
of the Treasury, or his/her designee.
    Trust Fund means the Gulf Coast Restoration Trust Fund.

Subpart B--Trust Fund


Sec.  34.100  The Trust Fund.

    Treasury will deposit into the Trust Fund an amount equal to 80 
percent of all administrative and civil penalties paid after July 6, 
2012 by responsible parties in connection with the explosion on, and 
sinking of, the mobile offshore drilling unit Deepwater Horizon 
pursuant to a court order, negotiated settlement, or other instrument 
under section 311 of the Federal Water Pollution Control Act. After 
these administrative and civil penalties have been deposited into the 
Trust Fund, the Trust Fund will terminate on the date all amounts owed 
to the Trust Fund have been returned to the Trust Fund, and all amounts 
have been expended.


Sec.  34.101  Investments.

    The Secretary of the Treasury will invest such amounts in the Trust 
Fund that are not, in the judgment of the Secretary, required to meet 
needs for current withdrawals. The Secretary may invest in interest-
bearing obligations of the United States, having maturities suitable to 
the needs of the Trust Fund as determined by the Secretary. These 
obligations will bear interest at rates described in 31 U.S.C. 9702, 
unless the Secretary determines that such rates are unavailable for 
obligations with suitable maturities. In that event, the Secretary will 
select obligations of the United States bearing interest at rates 
determined by the Secretary, taking into consideration current market 
yields on outstanding marketable obligations of the United States of 
comparable maturities.


Sec.  34.102  Interest earned.

    Interest earned on Trust Fund investments will be available as 
described in Sec.  34.103(b).


Sec.  34.103  Allocation of funds.

    The amounts in the Trust Fund are allocated among the programs in 
Sec.  34.1.
    (a) Available funds in the Trust Fund, other than interest, are 
allocated as follows:
    (1) Thirty-five percent in equal shares for the Gulf Coast States 
to be used for the Direct Component of the Gulf RESTORE Program. 
Section 34.302 describes the allocation for each Gulf Coast State.
    (2) Thirty percent for the Council to be used for the Comprehensive 
Plan Component of the Gulf RESTORE Program.
    (3) Thirty percent for formula distribution to Gulf Coast States to 
be used for the Spill Impact Component of the Gulf RESTORE Program.
    (4) Two and one-half percent to be used for the NOAA RESTORE Act 
Science Program.
    (5) Two and one-half percent in equal shares for the Gulf Coast 
States to be used for the Centers of Excellence Research Grants 
Program.
    (b) Within ten days of the close of a Federal fiscal year, 
available funds equal to the interest earned on the Trust Fund 
investments will be allocated, as follows:
    (1) Twenty-five percent to be used for the NOAA RESTORE Act Science 
Program.
    (2) Twenty-five percent for the Centers of Excellence Research 
Grants Program.
    (3) Fifty percent for the Comprehensive Plan Component of the Gulf 
RESTORE Program.


Sec.  34.104  Expenditures.

    Subject to limitations in the Act and these regulations, amounts in 
the Trust Fund will be available for the direct and indirect expenses 
of eligible activities without fiscal year limitation. Recipients must 
minimize the time between receipt of funds and the disbursement of 
those funds for authorized expenses.


Sec.  34.105  Waiver.

    To the extent not inconsistent with applicable law, Treasury may 
waive or modify a requirement in the regulations in this part in a 
single case or class of cases if the Secretary determines, in his or 
her sole discretion, that the requirement is not necessary for the 
deposit of amounts into, or the expenditure of amounts from, the Trust 
Fund. Treasury will provide public notice of any waivers or 
modifications granted that materially change a regulatory requirement.

Subpart C--Eligible Activities for the Section 311(t) Gulf RESTORE 
Program Components


Sec.  34.200  General.

    This subpart describes policies and procedures regarding eligible 
activities applicable to the Direct Component, Comprehensive Plan 
Component, and Spill Impact Component of the Gulf RESTORE Program. 
Subparts D, E, F, and I of this part describe additional requirements 
that must be met before an activity can receive funding.
    (a) Trust Fund amounts may be used to carry out an activity in 
whole or in part only if the following requirements are met:
    (1) Costs must comply with administrative requirements and cost 
principles in applicable Federal law and policies on grants.
    (2) The activity must meet the eligibility requirements of the Gulf 
RESTORE Program as defined in Sec. Sec.  34.201, 34.202, or 34.203, 
according to component.
    (3) Activities funded through the Direct Component, Comprehensive 
Plan Component, and Spill Impact Component must not be included in any 
claim for compensation presented after July 6, 2012, to the Oil Spill 
Liability Trust Fund authorized by 26 U.S.C. 9509.
    (b) A Gulf Coast State, coastal political subdivision, and coastal 
zone parish may use funds available under the Direct Component or Spill 
Impact Component to satisfy the non-Federal cost-share of an activity 
that is eligible under Sec. Sec.  34.201 and 34.203 and authorized by 
Federal law.


Sec.  34.201  Eligible activities for the Direct Component.

    The following activities are eligible for funding under the Direct 
Component. Activities in paragraphs (a) through (g) of this section are 
eligible for funding to the extent they are carried out in the Gulf 
Coast Region. Direct Component activities are carried out in the Gulf 
Coast Region when, in the reasonable judgment of the entity applying to 
Treasury for a grant, each severable part of the activity is primarily 
designed to restore or protect that geographic area. Applicants must 
demonstrate that the activity will be carried out in the Gulf Coast 
Region when they apply for a grant. Activities designed to protect or 
restore natural resources must be based on the best available science. 
All Direct Component

[[Page 48057]]

activities must be included in and conform to the description in the 
Multiyear Implementation Plan required by Sec.  34.303.
    (a) Restoration and protection of the natural resources, 
ecosystems, fisheries, marine and wildlife habitats, beaches, and 
coastal wetlands of the Gulf Coast Region.
    (b) Mitigation of damage to fish, wildlife, and natural resources.
    (c) Implementation of a Federally-approved marine, coastal, or 
comprehensive conservation management plan, including fisheries 
monitoring.
    (d) Workforce development and job creation.
    (e) Improvements to or on state parks located in coastal areas 
affected by the Deepwater Horizon oil spill.
    (f) Infrastructure projects benefitting the economy or ecological 
resources, including port infrastructure.
    (g) Coastal flood protection and related infrastructure.
    (h) Promotion of tourism in the Gulf Coast Region, including 
promotion of recreational fishing.
    (i) Promotion of the consumption of seafood harvested from the Gulf 
Coast Region.
    (j) Planning assistance. Eligible entities under Sec.  34.202 may 
apply for planning assistance grants that are necessary to develop and 
submit the Multiyear Implementation Plan before the plan is submitted 
to Treasury.
    (k) Administrative costs.


Sec.  34.202  Eligible activities for the Comprehensive Plan Component.

    The Council may expend funds that are available under the 
Comprehensive Plan Component for eligible activities under 33 U.S.C. 
1321(t)(2) and (3), including the following:
    (a) The Council may expend funds to carry out activities in the 
Gulf Coast Region that are included in the Comprehensive Plan, as 
described in 33 U.S.C. 1321(t)(2). An activity selected by the Council 
is carried out in the Gulf Coast Region when, in the reasonable 
judgment of the Council, each severable part of the activity is 
primarily designed to restore or protect that geographic area. The 
Council must document the basis for its judgment when it selects the 
activity.
    (b) The Council may expend funds to develop and publish the 
proposed and initial Comprehensive Plans, and to implement, amend, and 
update the Comprehensive Plan as required by the Act or as necessary.
    (c) The Council may expend funds to prepare annual reports to 
Congress, and other reports and audits required by the Act, these 
regulations, and other Federal law.
    (d) The Council may expend funds to establish and operate one or 
more advisory committees as may be necessary to assist the Council.
    (e) The Council may expend funds to collect and consider scientific 
and other research associated with restoration of the Gulf Coast 
ecosystem, including research, observation, and monitoring.
    (f) Administrative expenses.


Sec.  34.203  Eligible activities for the Spill Impact Component.

    Activities eligible for funding under the Spill Impact Component 
must meet the eligibility criteria in Sec.  34.201(a) through (k), as 
well as the following:
    (a) The activities must be included in and conform to the 
description in a State Expenditure Plan required in Sec.  34.503 and 
approved by the Council. State entities may apply for a grant from the 
total amount allocated to that state under the Spill Impact Component 
before the Council has approved the State Expenditure Plan to fund 
eligible activities that are necessary to develop and submit that plan.
    (b) The activities included in the State Expenditure Plan must 
contribute to the overall economic and ecological recovery of the Gulf 
Coast.
    (c) Activities listed in Sec.  34.201(a) through (g) are eligible 
for funding from the Spill Impact Component to the extent they are 
carried out in the Gulf Coast Region. For purposes of this component, 
an activity is carried out in the Gulf Coast Region when, in the 
reasonable judgment of the entity developing the State Expenditure Plan 
under Sec.  34.503, each severable part of the activity is primarily 
designed to restore or protect that geographic area. State Expenditure 
Plans must include a demonstration that activities in the plan will be 
carried out in the Gulf Coast Region.


Sec.  34.204  Limitations on administrative costs and administrative 
expenses.

    (a) Of the amounts received by a Gulf Coast State, coastal 
political subdivision, or coastal zone parish in a grant from Treasury 
under the Direct Component, or in a grant 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 is applied to the total amount of funds received by a recipient 
under each grant. The three percent limit does not apply to the 
administrative costs of subrecipients. All subrecipient costs are 
subject to the cost principles in Federal law and policies on grants.
    (b) Of the amounts received by the Council under the Comprehensive 
Plan Component, not more than three percent may be used for 
administrative expenses. The three percent limit is applied to the 
total amount of funds received by the Council, beginning with the first 
fiscal year the Council receives funds through the end of the fourth, 
or most recent fiscal year, whichever is later.


Sec.  34.205  Council's audited financial statements and audits.

    (a) Not later than December 1, 2014 and each year thereafter, the 
Council must prepare and submit to the Secretary of the Treasury an 
audited financial statement for the preceding Federal fiscal year, 
covering all accounts and associated activities of the Council.
    (b) Each audited financial statement under this section must 
reflect:
    (1) The overall financial position of the accounts and activities 
covered by the statement, including assets and liabilities thereof.
    (2) Results of operations of the Council.
    (c) The financial statements must be prepared in accordance with 
the form and content of the financial statements prescribed by the 
Director of the Office of Management and Budget for executive agencies 
pursuant to 31 U.S.C. 3515, consistent with applicable accounting and 
financial reporting principles, standards, and requirements.
    (d) The Treasury Inspector General may conduct audits and reviews 
of the Council's accounts and activities as the Inspector General deems 
appropriate.

Subpart D--Gulf RESTORE Program--Direct Component


Sec.  34.300  General.

    This subpart describes the policies and procedures applicable to 
the Direct Component of the Gulf RESTORE Program. The funds made 
available under this subpart will be in the form of a grant.


Sec.  34.301  Responsibility for administration--Direct Component.

    Treasury is responsible for awarding and administering grants and 
grant agreements under this subpart. Treasury will develop and apply 
policies and procedures consistent with the Act and Federal law and 
policies on grants. Treasury also will establish and implement a 
program to monitor compliance with its grant agreements.


Sec.  34.302  Allocation of funds--Direct Component.

    The amounts made available in any fiscal year from the Trust Fund 
and

[[Page 48058]]

allocated to this component will be available in equal shares for the 
Gulf Coast States for expenditure on eligible activities. The following 
entities are eligible to receive Direct Component grants.
    (a) The amounts available to Alabama will be provided directly to 
the Alabama Gulf Coast Recovery Council, or such administrative agent 
as it may designate. All administrative duties of the Alabama Gulf 
Coast Recovery Council must be performed by public officials and 
employees that are subject to the ethics laws of the State of Alabama.
    (b) Of the amounts available to Florida, 75 percent of funding will 
be provided directly to the eight disproportionately affected counties. 
Each disproportionately affected county's share is as follows: Bay 
County, 15.101453044%; Escambia County, 25.334760043%; Franklin County, 
8.441253238%; Gulf County, 6.743202296%; Okaloosa County, 
15.226456794%; Santa Rosa County, 10.497314919%; Wakulla County, 
4.943148294%; and Walton County, 13.712411372%.
    (c) Of the amounts available to Florida, 25 percent of funding will 
be provided directly to the nondisproportionately impacted counties. 
Each nondisproportionately impacted county's share is as follows: 
Charlotte County, 5.162%; Citrus County, 4.692%; Collier County, 
7.019%; Dixie County, 3.484%; Hernando County, 4.982%; Hillsborough 
County, 13.339%; Jefferson County, 3.834%; Lee County, 8.776%; Levy 
County, 3.894%; Manatee County, 6.809%; Monroe County, 8.297%; Pasco 
County, 7.079%; Pinellas County, 11.002%; Sarasota County, 7.248%; and 
Taylor County, 4.383%.
    (d) Of the amounts available to Louisiana, 70 percent will be 
provided directly to the Coastal Protection and Restoration Authority 
Board of Louisiana.
    (e) Of the amounts available to Louisiana, 30 percent will be 
provided directly to the coastal zone parishes.
    (f) No parish will receive funds until the parish chief executive 
has certified to the Governor of Louisiana, in a form satisfactory to 
the Governor or the Governor's designee, that the parish has completed 
a comprehensive land use plan that is consistent with, or complementary 
to, the most recent version of the state's Coastal Master Plan approved 
by the Louisiana legislature.
    (g) The amounts available to Mississippi will be provided directly 
to the Mississippi Department of Environmental Quality.
    (h) The amounts available to Texas will be provided directly to the 
Office of the Governor or to an appointee of the Governor.


Sec.  34.303  Application procedure--Direct Component.

    The entities identified in Sec.  34.302 are eligible to apply for 
their allocation as a grant. Treasury will develop an application 
process for grants available under this subpart that is consistent with 
the Act and Federal policies on grants. At a minimum, the procedure 
will include the following:
    (a) Before an eligible entity may receive a Direct Component 
activity grant, the grant applicant must submit a Multiyear 
Implementation Plan describing each activity for which it seeks funding 
under the Direct Component. Applications to fund preparation and 
amendment of the Multiyear Implementation Plan are exempt from this 
requirement.
    (b) For each activity, the plan must include a narrative 
description demonstrating:
    (1) The need for, purpose, and objectives of the activity;
    (2) How the activity is eligible for funding and meets all 
requirements;
    (3) Location;
    (4) Budget;
    (5) Milestones;
    (6) Projected completion dates;
    (7) Criteria the applicant will use to evaluate the success of each 
activity in helping to restore and protect the Gulf Coast Region 
impacted by the Deepwater Horizon oil spill;
    (8) The plan was made available for public review and comment for a 
minimum of 45 days in a manner calculated to obtain broad-based 
participation from individuals, businesses, Indian tribes, and non-
profit organizations; and
    (9) Each activity in the plan was adopted after consideration of 
meaningful input from the public. Treasury may require a standard 
format and additional information in the plans. Plans can be phased and 
incremental and may be modified later by the applicant, subject to the 
same submittal requirements. If the applicant has requested or 
anticipates requesting funding for any part of the activity from other 
sources, including other components in the Act, the applicant must 
identify the source, state the amount of funding, and provide the 
current status of the request. For the State of Louisiana parishes, the 
applicant must submit information demonstrating compliance with Sec.  
34.302(e).
    (c) The applicant must include supporting information in each grant 
application that:
    (1) Proposed activities meet the statutory requirements for 
eligibility; and
    (2) Each activity designed to protect or restore natural resources 
is based on best available science.
    (d) An applicant may satisfy some or all of the requirements in 
Sec. Sec.  34.303 and 34.802(a) through (e) if it can demonstrate in 
its application to Treasury that before July 6, 2012:
    (1) The applicant established conditions to carry out activities 
that are substantively the same as the requirements in Sec.  34.303 and 
34.802(a) through (e).
    (2) The applicable activity qualified as one or more of the 
eligible activities in Sec.  34.201.


Sec.  34.304  Grant award--Direct Component.

    Upon determining that the Multiyear Implementation Plan and the 
grant application meet the requirements of these regulations and the 
Act, Treasury will execute a grant agreement with the recipient that 
complies with subpart I of this part, the Act, and other Federal laws 
and policies on grants.


Sec.  34.305  Use of funds--Direct Component.

    (a) An activity may be funded in whole or in part if the applicable 
requirements of subparts C and D of this part are met.
    (b) When awarding contracts to carry out an activity under the 
Direct Component, a Gulf Coast State, coastal political subdivision, or 
coastal zone parish may give preference to individuals and companies 
that reside in, are headquartered in, or are principally engaged in 
business in the state of project execution.
    (c) A Gulf Coast State, coastal political subdivision, or coastal 
zone parish may propose to issue subawards for eligible activities. 
Recipients that propose to issue subawards must demonstrate their 
ability to conduct subrecipient monitoring and management, as required 
by Federal law and policies on grants.


Sec.  34.306  Reports--Direct Component.

    Recipients must submit reports as prescribed by Treasury.


Sec.  34.307  Recordkeeping--Direct Component.

    Recipients must maintain records as prescribed by Treasury and 
Federal policies on grants, and make the records available to Treasury, 
including the Treasury Inspector General.

[[Page 48059]]

Sec.  34.308  Audits--Direct Component.

    Treasury, including the Treasury Inspector General, may conduct 
audits and reviews of recipient's accounts and activities relating to 
the Act as deemed appropriate by Treasury.

Subpart E--Gulf RESTORE Program--Comprehensive Plan Component


Sec.  34.400  General.

    This subpart describes the policies and procedures applicable to 
the Comprehensive Plan Component. The Comprehensive Plan is developed 
by the Council in accordance with 33 U.S.C. 1321(t)(2) and will include 
activities the Council intends to carry out, subject to available 
funding. When selecting activities to carry out in the first three 
years, except for certain projects and programs that were authorized 
prior to July 6, 2012, the Council will give highest priority to 
projects meeting one or more of the criteria in 33 U.S.C. 
1321(t)(2)(D)(iii).


Sec.  34.401  Responsibility for administration--Comprehensive Plan 
Component.

    (a) After selecting Comprehensive Plan projects and programs to be 
funded, the Council must assign primary authority and responsibility 
for overseeing and implementing projects and programs to a Gulf Coast 
State or Federal agency represented on the Council, which are called 
assignees in these regulations. In assigning responsibility, the 
Council must enter into a grant agreement with the Gulf Coast State or 
an interagency agreement with the Federal agency. Any grant agreement 
must be consistent with applicable Federal laws and policies on grants. 
The Council must specify whether any part of an assignee's 
responsibility may be further assigned to another entity and under what 
terms.
    (b) When an assignee's grant or subaward to, or cooperative 
agreement with, a nongovernmental entity would equal or exceed ten 
percent of the total amount provided to the assignee for that activity, 
the Council must publish in the Federal Register and deliver to the 
following Congressional Committees at least 30 days prior to the 
assignee entering into an agreement the name of the recipient or 
subrecipient; a brief description of the activity, including its 
purpose; and the amount of the award.
    (1) House of Representatives committees: Committee on Science, 
Space, and Technology; Committee on Natural Resources; Committee on 
Transportation and Infrastructure; Committee on Appropriations.
    (2) Senate committees: Committee on Environment and Public Works; 
Committee on Commerce, Science, and Transportation; Committee on Energy 
and Natural Resources; Committee on Appropriations.
    (c) The Council must establish and implement a program to monitor 
compliance with its grant agreements and interagency agreements.


Sec.  34.402  Grant administration--Comprehensive Plan Component.

    The Council must publish policies and procedures for administration 
of Comprehensive Plan Component grants that are consistent with 
applicable Federal laws and policies for grants. These grant policies 
and procedures must include uniform guidelines for assignees to use 
when selecting subrecipients, awarding grants and subawards, and 
monitoring compliance. The Council must also establish and implement a 
program to monitor compliance with its grant agreements.


Sec.  34.403  Use of funds--Comprehensive Plan Component.

    An activity may be funded in whole or in part if the applicable 
requirements of subparts C and E of this part are met.


Sec.  34.404  Reports--Comprehensive Plan Component.

    Assignees must submit reports as prescribed by the Council or 
Treasury.


Sec.  34.405  Recordkeeping--Comprehensive Plan Component.

    Assignees must maintain records as prescribed by the Council and 
Treasury, and make the records available to the Council and Treasury, 
including the Treasury Inspector General.


Sec.  34.406  Audits--Comprehensive Plan Component.

    The Council and Treasury, including the Treasury Inspector General, 
may conduct audits and reviews of assignee's accounts and activities 
relating to the Act as any of them deems appropriate.

Subpart F--Gulf RESTORE Program--Spill Impact Component


Sec.  34.500  General.

    This subpart describes the policies and procedures applicable to 
the Spill Impact Component of the Gulf RESTORE Program. The funds made 
available under this subpart will be in the form of grants.


Sec.  34.501  Responsibility for administration--Spill Impact 
Component.

    The Council is responsible for awarding and administering grants 
under this subpart.


Sec.  34.502  Allocation of funds--Spill Impact Component.

    The Council will allocate amounts to the Gulf Coast States based on 
the Act and regulations promulgated by the Council. The Council will 
make allocated funds available through grants for activities described 
in a State Expenditure Plan approved by the Council.


Sec.  34.503  State Expenditure Plans--Spill Impact Component.

    Each Gulf Coast State, through its Governor or the Governor's 
designee, must submit a State Expenditure Plan to the Council for its 
approval that describes each activity for which the state seeks 
funding. The Council must develop requirements for these plans, 
including the requirements below.
    (a) The State Expenditure Plan must be developed by:
    (1) In Alabama, the Alabama Gulf Coast Recovery Council.
    (2) In Florida, a consortium of local political subdivisions that 
includes, at a minimum, one representative of each county affected by 
the Deepwater Horizon oil spill.
    (3) In Louisiana, the Coastal Protection and Restoration Authority 
of Louisiana, as approved by the Board.
    (4) In Mississippi, the Office of the Governor or an appointee of 
the Office of the Governor.
    (5) In Texas, the Office of the Governor or an appointee of the 
Office of the Governor.
    (b) The State Expenditure Plan must describe how it takes into 
consideration the Comprehensive Plan and is consistent with the goals 
and objectives of the Comprehensive Plan. In addition, the State 
Expenditure Plan must describe the processes used:
    (1) To evaluate and select activities included in the plan;
    (2) To assess the capability of third party entities that will 
implement activities in the plan;
    (3) To prevent conflicts of interest in the development and 
implementation of the plan;
    (4) To obtain public review and comment in accordance with Sec.  
34.503(g); and
    (5) To verify compliance with the requirements of Sec.  34.203 and 
this subpart.
    (c) For each activity in the State Expenditure Plan, the plan must 
include a narrative description demonstrating:
    (1) The need for, purpose, and objectives of the activity;
    (2) How the activity is eligible for funding and meets all 
requirements of Sec.  34.203 and this subpart;
    (3) Location;

[[Page 48060]]

    (4) Budget;
    (5) Milestones;
    (6) Projected completion dates; and
    (7) Criteria the applicant will use to evaluate the success of each 
activity in helping to restore and protect the Gulf Coast Region. Plans 
can be phased or incremental and may be modified with the Council's 
approval. If funding has been requested from other sources, including 
other components of the Act, the plan must identify the source, state 
how much funding was requested, and provide the current status of the 
request.
    (d) The State Expenditure Plan must demonstrate how the activities 
in the plan will contribute to the overall economic and ecological 
recovery of the Gulf Coast, and how each activity that would restore 
and protect natural resources, ecosystems, fisheries, marine and 
wildlife habitats, beaches, coastal wetlands or the economy of the Gulf 
Coast is based on the best available science.
    (e) The State Expenditure Plan must demonstrate that activities 
described in Sec.  34.201(a) through (g) will be carried out in the 
Gulf Coast Region, as described in Sec.  34.203(c).
    (f) No more than 25 percent of funding under the Spill Impact 
Component is available to a Gulf Coast State under this subpart to pay 
for infrastructure, unless the Governor or the Governor's 
representative on the Council certifies that:
    (1) The ecosystem restoration needs in the state will be addressed 
by the activities in the proposed plan; and
    (2) Additional investment in infrastructure is required to mitigate 
the impacts of the Deepwater Horizon Oil Spill to the ecosystem or 
economy.
    (g) Before being submitted to the Council for approval, a State 
Expenditure Plan must be available for public review and comment for a 
minimum of 45 days, in a manner calculated to obtain broad-based 
participation from individuals, businesses, Indian tribes, and non-
profit organizations.
    (h) If the Council disapproves a State Expenditure Plan, the 
Council must notify the impacted state in writing and consult with the 
state to address any identified deficiencies with the plan. If the 
Council fails to approve or take action within 60 days after the date 
on which the Council receives the plan, the state may obtain expedited 
judicial review within 90 days in a United States district court 
located in the state seeking the review.
    (i) The Council must publish guidelines explaining when 
modifications to a State Expenditure Plan require the Council's 
approval.


Sec.  34.504  Grant administration--Spill Impact Component.

    The Council must publish policies and procedures for administration 
of the Spill Impact Component grants that are consistent with 
applicable Federal law and policies for grants. The Council must also 
establish and implement a program to monitor compliance with its grant 
agreements.


Sec.  34.505  Use of funds--Spill Impact Component.

    An activity may be funded in whole or in part if the applicable 
requirements of subparts C and F of this part are met.


Sec.  34.506  Reports--Spill Impact Component.

    Recipients must submit reports as prescribed by the Council or 
Treasury.


Sec.  34.507  Recordkeeping--Spill Impact Component.

    Recipients must maintain records as prescribed by the Council and 
make the records available to the Council, and Treasury, including the 
Treasury Inspector General.


Sec.  34.508  Audits--Spill Impact Component.

    The Council and Treasury, including the Treasury Inspector General, 
may conduct audits and reviews of a recipient's accounts and activities 
relating to the Act as any of them deem appropriate.

Subpart G--NOAA RESTORE Act Science Program


Sec.  34.600  General.

    This subpart describes policies and procedures applicable to the 
NOAA RESTORE Act Science Program. The program's purpose is to carry out 
research, observation, and monitoring to support, to the maximum extent 
practicable, the long-term sustainability of the ecosystem, fish 
stocks, fish habitat, and the recreational, commercial, and charter 
fishing industries in the Gulf of Mexico.


Sec.  34.601  Responsibility for administration--NOAA RESTORE Act 
Science Program.

    NOAA is responsible for establishing and administering this 
program, in consultation with the United States Fish and Wildlife 
Service. NOAA must develop, publish, and apply policies and procedures 
for the NOAA RESTORE Act Science Program consistent with the Act, this 
subpart, and Federal law and policies for grants. NOAA must monitor 
compliance with its grant agreements, cooperative agreements, contracts 
and agreements funded through the Trust Fund. NOAA and the United 
States Fish and Wildlife Service will consult with the Regional Gulf of 
Mexico Fishery Management Council and the Gulf States Marine Fisheries 
Commission in carrying out the program.


Sec.  34.602  Use of funds and eligible activities.

    (a) Amounts made available to NOAA may be expended to carry out a 
program comprised of activities described in section 1604 of the Act. 
These activities include coordination of science and technology 
programs and stakeholder engagement, in accordance with section 1604(f) 
of the Act, as well as the following activities with respect to the 
Gulf of Mexico:
    (1) Marine and estuarine research.
    (2) Marine and estuarine ecosystem monitoring and ocean 
observation.
    (3) Data collection and stock assessments.
    (4) Pilot programs for fishery independent data and reduction of 
exploitation of spawning aggregations.
    (5) Cooperative research.
    (b) NOAA may also expend amounts made available from the Trust Fund 
for administrative expenses connected with the program. All funds must 
be expended in compliance with the Act, these regulations, and other 
applicable law.


Sec.  34.603  Limitations on activities--NOAA RESTORE Act Science 
Program.

    None of the Trust Fund amounts may be used for the following 
activities:
    (a) For any existing or planned research led by NOAA, unless agreed 
to in writing by the grant recipient.
    (b) To implement existing regulations or initiate new regulations 
promulgated or proposed by NOAA.
    (c) To develop or approve a new limited access privilege program 
(as that term is used in section 303A of the Magnuson-Stevens Fishery 
Conservation and Management Act [16 U.S.C. 1853(a)]) for any fishery 
under the jurisdiction of the South Atlantic, Mid-Atlantic, New 
England, or Gulf of Mexico Fishery Management Councils.


Sec.  34.604  Limitations on administrative expenses--NOAA RESTORE Act 
Science Program.

    (a) Of the amounts received by NOAA under the NOAA RESTORE Act 
Science Program, not more than three percent may be used for 
administrative expenses.
    (b) The three percent limit is applied to the total amount of funds 
received by NOAA, beginning with the first fiscal year it receives 
funds through the end of the fourth, or most recent fiscal year, 
whichever is later.
    (c) NOAA may seek reimbursement of administrative expenses incurred 
after

[[Page 48061]]

the first deposit into the Trust Fund, to the extent permitted by 
Federal law. Administrative expenses incurred prior to the first 
deposit into the Trust Fund are not reimbursable.


Sec.  34.605  Reports--NOAA RESTORE Act Science Program.

    NOAA must submit reports as prescribed by Treasury.


Sec.  34.606  Recordkeeping--NOAA RESTORE Act Science Program.

    Recipients and other entities receiving funds under the NOAA 
RESTORE Act Science Program must maintain records as prescribed by NOAA 
and make the records available to NOAA.


Sec.  34.607  Audits--NOAA RESTORE Act Science Program.

    NOAA and the Treasury Inspector General may conduct audits and 
reviews of recipient's accounts and activities relating to the Act as 
either of them deems appropriate.

Subpart H--Centers of Excellence Research Grants Program


Sec.  34.700  General.

    This subpart describes the policies and procedures applicable to 
the Centers of Excellence Research Grants Program. The program's 
purpose is to establish centers of excellence to conduct research only 
on the Gulf Coast Region. The funds made available to the Gulf Coast 
States under this subpart will be in the form of a grant.


Sec.  34.701  Responsibility for administration--Centers of Excellence 
Research Grants Program.

    Treasury is responsible for awarding grants to the Gulf Coast 
States, which will use the amounts made available to award grants to 
nongovernmental entities and consortia in the Gulf Coast Region for the 
establishment of Centers of Excellence. Treasury will develop and apply 
policies and procedures consistent with this Act and Federal law and 
policies on grants. Each Gulf Coast State entity issuing grants must 
establish and implement a program to monitor compliance with its grant 
agreements.


Sec.  34.702  Allocation of funds--Centers of Excellence Research 
Grants Program.

    An equal share of funds will be available to each Gulf Coast State 
to carry out eligible activities. The duties of a Gulf Coast State will 
be carried out by the following entities:
    (a) In Alabama, the Alabama Gulf Coast Recovery Council, or such 
administrative agent as it may designate.
    (b) In Florida, the Florida Institute of Oceanography.
    (c) In Louisiana, the Coastal Protection and Restoration Authority 
of Louisiana.
    (d) In Mississippi, the Mississippi Department of Environmental 
Quality.
    (e) In Texas, the Office of the Governor or an appointee of the 
Office of the Governor.


Sec.  34.703  Application procedure--Centers of Excellence Research 
Grants Program.

    Treasury will develop an application process for grants available 
to the Gulf Coast States under this subpart that is consistent with the 
Act and Federal law and policies on grants. At a minimum, the process 
will include the following:
    (a) Each Gulf Coast State must describe the competitive process 
that the state will use to select one or more Centers of Excellence. 
The competitive process must allow nongovernmental entities and 
consortia in the Gulf Coast Region, including public and private 
institutions of higher education, to compete. The process must give 
priority to entities and consortia that demonstrate the ability to 
establish the broadest cross-section of participants in the grant with 
interest and expertise in science, technology, and monitoring in the 
discipline(s) on which the proposal is focused. The process must also 
guard against conflicts of interest.
    (b) Each Gulf Coast State must describe rules and policies for the 
grants it will issue to subrecipients to ensure compliance with the Act 
and Federal law and policies for grants. Each Gulf Coast State must 
demonstrate in its application that its rules and policies, including 
the competitive selection process, were published and available for 
public review and comment for a minimum of 45 days, and that they were 
adopted after consideration of meaningful input from the public, 
including broad-based participation from individuals, businesses, 
Indian tribes, and non-profit organizations. This requirement does not 
apply to state statutes and regulations that may apply to grants made 
by the state under this subpart.
    (c) Each application must state the amount of funding requested and 
the purposes for which the funds will be used.


Sec.  34.704  Use of funds and eligible activities--Centers of 
Excellence Research Grants Program.

    (a) A Gulf Coast State receiving funds under this subpart must 
establish a grant program that complies with the Act and Federal law 
and policies for grants.
    (b) Gulf Coast States may use funds available under this subpart to 
award competitive subawards for the establishment of Centers of 
Excellence that focus on science, technology, and monitoring in at 
least one of the following disciplines:
    (1) Coastal and deltaic sustainability, restoration, and 
protection, including solutions and technology that allow citizens to 
live in a safe and sustainable manner in a coastal delta in the Gulf 
Coast Region.
    (2) Coastal fisheries and wildlife ecosystem research and 
monitoring in the Gulf Coast Region.
    (3) Offshore energy development, including research and technology 
to improve the sustainable and safe development of energy resources in 
the Gulf of Mexico.
    (4) Sustainable and resilient growth and economic and commercial 
development in the Gulf Coast Region.
    (5) Comprehensive observation, monitoring, and mapping of the Gulf 
of Mexico.


Sec.  34.705  Ineligible activities--Centers of Excellence Research 
Grants Program.

    Any activity that is not authorized under the provisions of Sec.  
34.704 is ineligible for funding under this subpart.


Sec.  34.706  Reports--Centers of Excellence Research Grants Program.

    Each Gulf Coast State entity must submit the following reports:
    (a) An annual report to the Council in a form set by the Council 
that includes information on subrecipients, subaward amounts, 
disciplines addressed, and any other information required by the 
Council. When the subrecipient is a consortium, the annual report must 
also identify the consortium members. This information will be included 
in the Council's annual report to Congress.
    (b) Reports as prescribed by Treasury.


Sec.  34.707  Recordkeeping--Centers of Excellence Research Grants 
Program.

    Recipients must maintain records as prescribed by Treasury and make 
the records available to Treasury, including the Treasury Inspector 
General.


Sec.  34.708  Audits--Centers of Excellence Research Grants Program.

    Treasury, including the Treasury Inspector General, may conduct 
audits and reviews of each recipient's accounts and activities relating 
to the Act as deemed appropriate by Treasury.

Subpart I--Agreements


Sec.  34.800  General.

    This subpart describes procedures applicable to grant agreements 
used by Treasury, the Council (including

[[Page 48062]]

Federal agencies carrying out responsibilities for the Council), NOAA, 
Gulf Coast States, coastal political subdivisions, and coastal zone 
parishes in making awards under subparts D, E, F, G, and H of this 
part. It also describes Treasury's authority to inspect records and the 
Treasury Inspector General's authority under the Act.


Sec.  34.801  Grant agreements.

    The grant agreements used must conform to the Act and Federal laws 
and policies on grants, including audit requirements.


Sec.  34.802  Certifications.

    At a minimum, grant agreements for the Direct Component, 
Comprehensive Plan Component, and Spill Impact Component must contain 
the following certifications. The certification must be signed by an 
authorized senior official of the entity receiving grant funds who can 
legally bind the organization or entity, and who has oversight for the 
administration and use of the funds in question.
    (a) I certify that each activity funded under this Agreement has 
been primarily designed to restore and protect [select all that are 
appropriate: the natural resources, ecosystems, fisheries, marine and 
wildlife habitats, beaches, coastal wetlands, economy] of the Gulf 
Coast Region.
    (b) I certify that each activity funded under this Agreement is 
designed to carry out one or more of the eligible activities for this 
component.
    (c) I certify that each activity funded under this Agreement was 
selected after consideration of meaningful input from the public, 
including broad-based participation from individuals, businesses, 
Indian tribes, and nonprofit organizations, as described in the grant 
application.
    (d) I certify that each activity funded under this Agreement that 
protects or restores natural resources is based on the best available 
science, as that term is defined in 31 CFR part 34.
    (e) I certify that this recipient has procedures in place for 
procuring property and services under this award that are consistent 
with the procurement standards applying to Federal grants. This 
recipient agrees that it will not request funds under this award for 
any contract unless this certification remains true and accurate.
    (f) I certify that a conflict of interest policy is in effect and 
covering each activity funded under this Agreement.
    (g) I make each of these certifications based on my personal 
knowledge and belief after reasonable and diligent inquiry, and I 
affirm that this recipient maintains written documentation sufficient 
to support each certification made above, and that this recipient's 
compliance with each of these certifications is a condition of this 
recipient's initial and continuing receipt and use of the funds 
provided under this Agreement.


Sec.  34.803  Conditions.

    At a minimum, each grant agreement under subparts D, E, F, G, and H 
of this part must contain the following conditions:
    (a) The recipient must immediately report any indication of fraud, 
waste, abuse, or potentially criminal activity pertaining to grant 
funds to Treasury and the Treasury Inspector General.
    (b) The recipient must maintain detailed records sufficient to 
account for the receipt, obligation, and expenditure of grant funds. 
The recipient must track program income.
    (c) Prior to disbursing funds to a subrecipient, the recipient must 
execute a legally binding written agreement with the entity receiving 
the subaward. The written agreement will extend all the applicable 
program requirements to the subrecipient.
    (d) The recipient must use the funds only for the purposes 
identified in the Agreement.
    (e) The recipient must report at the conclusion of the grant 
period, or other period specified by the Federal agency administering 
the grant, on the use of funds pursuant to the agreement. The report 
must be sent to the Federal agency administering the grant and include 
the following information:
    (1) A description of the use of all funds received.
    (2) A statement that funds were used only for purposes identified 
in the agreement.
    (3) A certification that the recipient maintains written 
documentation sufficient to demonstrate the accuracy of these 
statements.
    (4) A certification that the foregoing elements are reported 
accurately and that the certification is made from personal knowledge 
and belief after reasonable and diligent inquiry. The certification 
must be signed by a senior authorized official of the organization or 
entity receiving grant funds who can legally bind the organization, and 
who has oversight and authority over the administration and use of the 
funds in question.
    (f) Trust Fund amounts may only be used to acquire land or 
interests in land by purchase, exchange, or donation from a willing 
seller.
    (g) None of the Trust Fund amounts may be used to acquire land in 
fee title by the Federal Government unless the land is acquired by 
exchange or donation or the acquisition is necessary for the 
restoration and protection of the natural resources, ecosystems, 
fisheries, marine and wildlife habitats, beaches, and coastal wetlands 
of the Gulf Coast Region and has the concurrence of the Governor of the 
state in which the acquisition will take place.


Sec.  34.804  Noncompliance.

    (a) If Treasury determines that a Gulf Coast State, coastal 
political subdivision, or coastal zone parish has expended funds 
received under the Direct Component, Comprehensive Plan Component, or 
Spill Impact Component on an ineligible activity, Treasury will make no 
additional funds available to that recipient from any part of the Trust 
Fund until the recipient has deposited in the Trust Fund an amount 
equal to the amount expended for an ineligible activity, or Treasury 
has authorized the recipient to expend an equal amount from the 
recipient's own funds for an activity that meets the requirements of 
the Act.
    (b) If Treasury determines that a Gulf Coast State, coastal 
political subdivision, or coastal zone parish has materially violated a 
grant agreement under the Direct Component, Comprehensive Plan 
Component, or Spill Impact Component, Treasury will make no additional 
funds available to that recipient from any part of the Trust Fund until 
the recipient corrects the violation.
    (c) As a condition of receiving funds, recipients and subrecipients 
shall make available their records and personnel to Treasury in order 
to carry out the purposes of this section.


Sec.  34.805  Treasury Inspector General.

    In addition to other authorities available under the Act, the 
Office of the Inspector General of the Department of the Treasury is 
authorized to conduct, supervise, and coordinate audits and 
investigations of activities funded through grants under the Act.

David A. Lebryk,
Fiscal Assistant Secretary.
[FR Doc. 2014-19324 Filed 8-13-14; 11:15 am]
BILLING CODE 4810-25-P