Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 57509-57512 [2015-24276]

Agencies

• DEPARTMENT OF ENERGY

[Federal Register Volume 80, Number 185 (Thursday, September 24, 2015)]
[Rules and Regulations]
[Pages 57509-57512]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-24276]



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Federal Register / Vol. 80, No. 185 / Thursday, September 24, 2015 / 
Rules and Regulations

[[Page 57509]]



DEPARTMENT OF ENERGY

2 CFR Part 910

RIN 1991-AB94


Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards

AGENCY: Department of Energy.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This rule finalizes the Department of Energy (DOE)'s part of 
the Federal Awarding Agency Regulatory Implementation of Office of 
Management and Budget's Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards joint interim 
rule which was issued December 19, 2014 and makes several technical 
corrections to DOE's portion of the interim final rule.
    DOE is not making new policy with either the interim final rule or 
this final rule. All regulatory language included here is consistent 
with either the policies in the Uniform Guidance or DOE's existing 
policies and practices.

DATES: Effective: October 26, 2015.

FOR FURTHER INFORMATION CONTACT: Ellen Colligan, Procurement Analyst, 
U.S. Department of Energy, Office of Acquisition Management, Contract 
and Financial Assistance Policy Division MA-611, Telephone: (202) 287-
1776. Email: ellen.colligan@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary
II. Procedural Requirements
    A. Review under Executive Orders 12866 and 13563.
    B. Review under Executive Order 12988.
    C. Review under the Regulatory Flexibility Act.
    D. Review under the Paperwork Reduction Act.
    E. Review under the National Environmental Policy Act.
    F. Review under Executive Order 13132.
    G. Review under the Unfunded Mandates Reform Act of 1995.
    H. Review under Executive Order 13211.
    I. Review under the Treasury and General Government 
Appropriations Act, 2001.
    J. Review under the Administrative Procedure Act
    K. Congressional Notification
    L. Approval by the Office of the Secretary of Energy

I. Summary

    The Department makes substantial use of financial assistance awards 
(grants and cooperative agreements) to meet its mission goals. To 
manage these awards, the Department added requirements specifying 
changes and additions to its Administrative Requirements for Grants and 
Cooperative Agreements.
    On December 19, 2014, OMB published a rulemaking in the Federal 
Register finalizing the guidance on Uniform Administrative 
Requirements, Cost Principles, and Audit Requirements for Federal 
Awards (79 FR 75867). As a part of the same rulemaking, OMB issued the 
interim final Federal Awarding Agency Regulatory Implementation of 
Office of Management and Budget's Uniform Administrative Requirements, 
Cost Principles, and Audit Requirements for Federal Awards which 
contained a separate section for each federal awarding agency. DOE's 
regulations are contained in 2 CFR part 910 (79 FR 76024).
    DOE is finalizing this rule with technical corrections as detailed 
below.
    DOE received no comments from members of the public in response to 
its section of the joint interim final rule. However, DOE has found 
areas where technical corrections are necessary. Corrections are 
included only where it has come to the attention of DOE that particular 
language in the final guidance did not match with DOE's intent and 
would result in an erroneous implementation of the guidance. The 
technical corrections include:
    a. Adding the national interest exception from competition 
(consistent with the existing requirement in section 600.6(b)(8)). When 
carrying requirements forward from our current regulations, this 
section was inadvertently dropped from the regulations. We need this 
exception for instances where non-competitive awards are necessary to 
meet the national interest of the United States.
    b. Clarifying that restricted eligibility needs to be approved one 
level above CO. In an attempt to clarify this section of the 
regulations when carrying the requirement forward to our new 
regulations, the approval level was omitted. We need to add this back 
since regulations as written do not require any higher level approval.
    c. Adding section 910.127, Legal Authority and Effect which is 
consistent with 10 CFR 600.16. There is nothing in the new regulations 
to indicate what constitutes a legal award or exactly how the recipient 
acknowledges that they have agreed to the terms and conditions of the 
award. Therefore, we are carrying forward a section from our current 
regulations which clarifies this issue.
    d. Clarifying sections 910.501 and 910.507 to update some 
references from ``program-specific'' to ``compliance'' audits. The 
major difference between program-specific audits and compliance audits 
is that program-specific audits require that the auditee prepare a 
financial statement and that the auditor perform an audit of the 
financial statements. The guidance provided in 2 CFR 910 corresponding 
to Compliance Audits by for-profit entities is consistent with prior 
DOE guidance. The requirements in 2 CFR 910 do not require an auditee 
to prepare financial statements and do not require an auditor to 
perform an audit of financial statements. Instead, the guidance in 2 
CFR 910 specifies requirements to be met by the auditee and auditor 
that ensures the audit complies with Generally Accepted Government 
Auditing Standards (GAGAS), Federal statutes and regulations, and the 
terms and conditions of Federal award. The effect is that 2 CFR 910 
does not ``create new policy or requirements . . .'' in accordance with 
OMB implementing guidance (consistent with the existing requirement in 
section 600.316). The corrections primarily replace the term ``Program-
Specific'' Audit with the term ``Compliance'' Audit in order to 
eliminate potential confusion between the two types of audits.
    e. Making a wording change to 910.502 to parallel a technical 
correction made by OMB December 19, 2014. Wording change is to say that 
``. . . determination of when a Federal award is expended must be based 
on

[[Page 57510]]

when the activity related to the Federal award occurs . . .''. The 
previous wording said that it should be based on when the activity 
related to the Federal award occurs. Making this change clarifies that 
there are no other factors to consider when determining when an 
expenses are incurred under the Federal award.

II. Procedural Requirements

A. Review Under Executive Orders 12866 and 13563

    The regulatory action today has been determined not to be a 
``significant regulatory action'' under Executive Order 12866, 
``Regulatory Planning and Review,'' 58 FR 51735 (October 4, 1993). 
Accordingly, this rule is not subject to review under the Executive 
Order by the Office of Information and Regulatory Affairs within the 
Office of Management and Budget.
    DOE has also reviewed the regulation pursuant to Executive Order 
13563, issued on January 18, 2011 (76 FR 3281 (Jan. 21, 2011)). 
Executive Order 13563 is supplemental to and explicitly reaffirms the 
principles, structures, and definitions governing regulatory review 
established in Executive Order 12866. To the extent permitted by law, 
agencies are required by Executive Order 13563 to: (1) Propose or adopt 
a regulation only upon a reasoned determination that its benefits 
justify its costs (recognizing that some benefits and costs are 
difficult to quantify); (2) tailor regulations to impose the least 
burden on society, consistent with obtaining regulatory objectives, 
taking into account, among other things, and to the extent practicable, 
the costs of cumulative regulations; (3) select, in choosing among 
alternative regulatory approaches, those approaches that maximize net 
benefits (including potential economic, environmental, public health 
and safety, and other advantages; distributive impacts; and equity); 
(4) to the extent feasible, specify performance objectives, rather than 
specifying the behavior or manner of compliance that regulated entities 
must adopt; and (5) identify and assess available alternatives to 
direct regulation, including providing economic incentives to encourage 
the desired behavior, such as user fees or marketable permits, or 
providing information upon which choices can be made by the public.
    DOE emphasizes as well that Executive Order 13563 requires agencies 
to use the best available techniques to quantify anticipated present 
and future benefits and costs as accurately as possible. In its 
guidance, the Office of Information and Regulatory Affairs has 
emphasized that such techniques may include identifying changing future 
compliance costs that might result from technological innovation or 
anticipated behavioral changes. DOE believes that today's NOPR is 
consistent with these principles, including the requirement that, to 
the extent permitted by law, agencies adopt a regulation only upon a 
reasoned determination that its benefits justify its costs and, in 
choosing among alternative regulatory approaches, those approaches 
maximize net benefits.

B. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on 
Executive agencies the general duty to adhere to the following 
requirements: (1) Eliminate drafting errors and ambiguity; (2) write 
regulations to minimize litigation; and (3) provide a clear legal 
standard for affected conduct rather than a general standard and 
promote simplification and burden reduction.
    With regard to the review required by section 3(a), section 3(b) of 
Executive Order 12988 specifically requires that Executive agencies 
make every reasonable effort to ensure that the regulation: (1) Clearly 
specifies the preemptive effect, if any; (2) clearly specifies any 
effect on existing Federal law or regulation; (3) provides a clear 
legal standard for affected conduct while promoting simplification and 
burden reduction; (4) specifies the retroactive effect, if any; (5) 
adequately defines key terms; and (6) addresses other important issues 
affecting clarity and general draftsmanship under any guidelines issued 
by the Attorney General. Section 3(c) of Executive Order 12988 requires 
Executive agencies to review regulations in light of applicable 
standards in section 3(a) and section 3(b) to determine whether they 
are met or it is unreasonable to meet one or more of them. DOE has 
completed the required review and determined that, to the extent 
permitted by law; these regulations meet the relevant standards of 
Executive Order 12988.

C. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) requires an agency that is 
issuing a final rule to provide a final regulatory flexibility analysis 
or to certify that the rule will not have a significant economic impact 
on a substantial number of small entities. OMB determined that the 
common interim final rule implements OMB final guidance issued on 
December 26, 2013, and will not have a significant economic impact 
beyond the impact of the December 2013 guidance.

D. Review Under the Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Ch. 3506; 5 CFR 1320 Appendix A.1) (PRA), DOE reviewed the interim 
final rule and determined that there are no new collections of 
information contained therein. DOE's procurement reporting and 
recordkeeping burdens have been approved under OMB Control No. 1910-
4100.

E. Review Under the National Environmental Policy Act

    DOE has concluded that promulgation of this rule falls into a class 
of actions which would not individually or cumulatively have 
significant impact on the human environment, as determined by DOE's 
regulations (10 CFR part 1021, subpart D) implementing the National 
Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 et seq.).

F. Review Under Executive Order 13132

    OMB determined that the joint interim final rule does not have any 
Federalism implications, as required by Executive Order 13132

G. Review Under the Unfunded Mandates Reform Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded 
Mandates Act) (2 U.S.C. 1532) requires that covered agencies prepare a 
budgetary impact statement before promulgating a rule that includes any 
Federal mandate that may result in the expenditure by State, local, and 
tribal governments, in the aggregate, or by the private sector, of $100 
million or more in any one year. If a budgetary impact statement is 
required, section 205 of the Unfunded Mandates Act also requires 
covered agencies to identify and consider a reasonable number of 
regulatory alternatives before promulgating a rule. OMB has determined 
that this joint interim final rule will not result in expenditures by 
State, local, and tribal governments, or by the private sector, of $100 
million or more in any one year. Accordingly, the Federal agencies 
participating in this joint interim final rule have not prepared a 
budgetary impact statement or specifically addressed the regulatory 
alternatives considered.

[[Page 57511]]

H. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use'', 66 FR 28355 
(May 22, 2001), requires Federal agencies to prepare and submit to the 
Office of Information and Regulatory Affairs (OIRA), Office of 
Management and Budget, a Statement of Energy Effects for any 
significant energy action. A ``significant energy action'' is defined 
as any action by an agency that promulgates or is expected to lead to 
promulgation of a Final Rule, and that: (1) Is a significant regulatory 
action under Executive Order 12866, or any successor order; and (2) is 
likely to have a significant adverse effect on the supply, 
distribution, or use of energy, or (3) is designated by the 
Administrator of OIRA as a significant energy action. For any 
significant energy action, the agency must give a detailed statement of 
any adverse effects on energy supply, distribution or use should the 
proposal be implemented, and of reasonable alternatives to the action 
and their expected benefits on energy supply, distribution and use. 
Today's rule is not a significant energy action. Accordingly, DOE has 
not prepared a Statement of Energy Effects.

I. Review Under the Treasury and General Government Appropriations Act, 
2001

    The Treasury and General Government Appropriations Act, 2001 (44 
U.S.C. 3516, note) provides for agencies to review most disseminations 
of information to the public under implementing guidelines established 
by each agency pursuant to general guidelines issued by OMB. OMB's 
guidelines were published at 67 FR 8452 (February 22, 2002), and DOE's 
guidelines were published at 67 FR 62446 (October 7, 2002). DOE has 
reviewed today's notice under the OMB and DOE guidelines and has 
concluded that it is consistent with applicable policies in those 
guidelines.

J. Review Under the Administrative Procedure Act

    An agency may find good cause to exempt a rule from the requirement 
for a notice of rulemaking and the opportunity for public under the 
Administrative Procedure Act (APA) if the requirement is determined to 
be unnecessary, impracticable, or contrary to the public interest under 
5 U.S.C. 533(b)(3)(B). Today's rule finalizes DOE portion of issued the 
interim final Federal Awarding Agency Regulatory Implementation of 
Office of Management and Budget's Uniform Administrative Requirements, 
Cost Principles, and Audit Requirements for Federal Awards (79 FR 
75867; DOE's portion begins at 76024). In addition DOE is publishing as 
final certain technical amendments which were omitted from the interim 
final rule. These amendments address internal agency practices 
concerning how DOE administers and have effect on members of the public 
in general or on financial assistance applicants in particular. 
Consequently, good cause exists for issuing these amendments as a final 
rule as notice and comment is unnecessary.

K. Congressional Notification

    As required by 5 U.S.C. 801, DOE will report to Congress on the 
promulgation of this rule prior to its effective date. The report will 
state that it has been determined that the rule is not a ``major rule'' 
as defined by 5 U.S.C. 804(2).

L. Approval by the Office of the Secretary of Energy

    The Office of the Secretary of Energy has approved issuance of this 
rule.

List of Subjects in 2 CFR Part 910

    Accounting, Administrative practice and procedure, Grant programs, 
Reporting and recordkeeping requirements.

    Issued in Washington, DC, on September 17, 2015.
Patrick Ferraro,
Director, Office of Acquisition Management.
Joseph Waddell,
Deputy Associate Administrator, Acquisition and Project, Management, 
National Nuclear Security Administration.

    Accordingly, the interim rule amending 2 CFR part 910 which was 
published at 79 FR 75867 on December 19, 2014, is adopted as a final 
rule with the following changes:

PART 910--UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND 
AUDIT REQUIREMENTS FOR FEDERAL AWARDS

0
1. The authority citation for part 910 continues to read as follows:

    Authority: 42 U.S.C. 7101, et seq.; 31 U.S.C. 6301-6308; 50 
U.S.C. 2401 et seq.; 2 CFR part 200.


0
2. Section 910.126 is amended by:
0
a. Removing ``and'' at the end of paragraph (b)(1);
0
b. Removing the punctuation at the end of paragraph (b)(2), and adding 
in its place ``; and''; and
0
c. Adding paragraphs (b)(3) and (c)(8).
    The additions read as follows:


Sec.  910.126  Competition.

* * * * *
    (b) * * *
    (3) Approved, prior to award, by an approver at least one level 
above the Contracting Officer.
    (c) * * *
    (8) The responsible program Assistant Secretary, Deputy 
Administrator, or other official of equivalent authority has determined 
that making the award non-competitively is in the public interest. This 
authority cannot not be delegated.
* * * * *

0
3. Section 910.127 is added to read as follows:


Sec.  910.127  Legal authority and effect.

    (a) A DOE financial assistance award is valid only if it is in 
writing and is signed, either in writing or electronically, by a DOE 
Contracting Officer.
    (b) Recipients are free to accept or reject the award. A request to 
draw down DOE funds constitutes the Recipient's acceptance of the terms 
and conditions of this Award.
0
4. Section 910.501 is amended by revising paragraphs (b)(1) and (2) to 
read as follows:


Sec.  910.501  Audit requirements.

* * * * *
    (b) Compliance audit. (1) If a for-profit entity has one or more 
DOE awards with expenditures of $750,000 or more during the for-profit 
entity's fiscal year, they must have a compliance audit for each of the 
awards with $750,000 or more in expenditures. A compliance audit should 
comply with the applicable provisions in Sec.  910.514--Scope of Audit. 
The remaining awards do not require, individually or in the aggregate, 
a compliance audit.
    (2) If a for-profit entity receives more than one award from DOE 
with a sum total of expenditures of $750,000 or more during the for-
profit entity's fiscal year, but does not have any single award with 
expenditures of $750,000 or more; the entity must determine whether any 
or all of the awards have common compliance requirements (i.e., are 
considered a cluster of awards) and determine the total expenditures of 
the awards with common compliance requirements. A compliance audit is 
required for the largest cluster of awards (if multiple clusters of 
awards exist) or the largest award not in a cluster of awards, 
whichever corresponding expenditure total is greater. A compliance 
audit should comply with the applicable provisions in Sec.  910.514--
Scope of Audit. The remaining awards

[[Page 57512]]

do not require, individually or in the aggregate, a compliance audit;
* * * * *

0
5. Section 910.507 is amended by:
0
a. Revising the section heading;
0
b. Removing the second occurrence of ``program-specific audit'' in the 
last sentence in paragraph (a) introductory text and adding in its 
place ``compliance audit'';
0
c. Removing ``Program-specific audits'' in the second sentence in 
paragraph (b) introductory text and adding in its place ``Compliance 
audits''.
    The revision reads as follows:


Sec.  910.507  Compliance audits.

* * * * *

0
6. In Sec.  910.502 introductory text, revise the subject heading and 
the first sentence to read as follows:


Sec.  910.502  Basis for determining DOE awards expended.

    Determining Federal awards expended. The determination of when a 
Federal award is expended must be based on when the activity related to 
the DOE award occurs. * * *
* * * * *
[FR Doc. 2015-24276 Filed 9-23-15; 8:45 am]
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