Gulf Coast Restoration Trust Fund, 12929-12932 [2019-06404]
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Federal Register / Vol. 84, No. 64 / Wednesday, April 3, 2019 / Rules and Regulations
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posed by uncleared swaps to swap dealers,
major swap participants, and the overall U.S.
financial system.1 In this regard, the CFTC
Margin Rules—and other rules around the
world requiring margin for uncleared
swaps—are a fundamental component of the
regulatory reforms adopted in the wake of the
2008 financial crisis.
In 2016, the CFTC adopted its cross-border
margin rule to permit swap dealers and major
swap participants located in non-U.S.
jurisdictions to comply with the CFTC’s
Margin Rules by meeting the similar rules of
their home jurisdiction if the Commission
has deemed those rules comparable.2 This
framework for ‘‘substituted compliance’’
supports the global nature of the swaps
market and conforms to the directive in the
Dodd-Frank Act for the Commission to
consult and coordinate with international
regulators to establish consistent
international standards for the regulation of
swaps entities and activities.3 The
substituted compliance framework helps
reduce duplicative and overlapping
regulatory requirements where effective
comparable regulation exists, facilitates the
ability of U.S. market participants to compete
in foreign jurisdictions, and is consistent
with the principle of international comity.
The CFTC’s cross-border margin rule
establishes an outcomes-based approach that
considers a number of factors and does not
require strict conformity with the CFTC
Margin Rules. As I have said before, a
comparability determination should not be
based solely on the home country’s written
laws and regulations, but also consider the
country’s broader system of regulation,
including oversight and enforcement. In
addition, the nature of the other country’s
relevant markets may be taken into account.
Finally, in considering these issues, the
Commission should keep in mind the
principle of comity: The reciprocal
recognition of the legislative, executive, and
judicial acts of another jurisdiction.4
The Australia Determination finds the
margin requirements for uncleared swaps
under Australian laws, regulations,
standards, and other materials comparable in
outcome to the CFTC’s Margin Rules. The
CFTC staff engaged with staff of the
Australian Prudential Regulation Authority
(‘‘APRA’’), and evaluated prudential
standards and other materials provided by
APRA to develop an understanding of
APRA’s regulatory objectives, the products
and entities subject to margin requirements,
the treatment of inter-affiliate swaps, and
other aspects of APRA’s margin rules. The indepth analysis outlined in today’s Australia
1 See Margin Requirements for Uncleared Swaps
for Swap Dealers and Major Swap Participants, 81
FR 636 (Jan. 6, 2016).
2 See Margin Requirements for Uncleared Swaps
for Swap Dealers and Major Swap Participants–
Cross-Border Application of the Margin
Requirements, 81 FR 34818 (May 31, 2016).
3 See Dodd-Frank Wall Street Reform and
Consumer Protection Act, Public Law 111–203, 124
Stat. 1376, at section 752 (2010).
4 See Restatement (Third) of The Foreign
Relations Law in the United States, section 101
(1987) (Am. Law Inst. 2019); https://
www.law.cornell.edu/wex/comity.
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Determination reflects a holistic
understanding by the Commission of APRA’s
margin rules and its prudential oversight
practices. The analysis also observes that the
CFTC Margin Rules and APRA’s margin
requirements for uncleared swaps are not
identical. In a number of instances, APRA’s
specific requirements are not as
comprehensive as the CFTC’s Margin Rules.
However, the determination explains how
mitigating factors—such as certain of APRA’s
risk management requirements and
differences in the size of the two countries’
swap markets and of the market participants
in them—support a determination that the
two systems of regulation have similar
outcomes.
For example, unlike the CFTC Margin
Rule, APRA only requires that variation
margin be exchanged between counterparties
whose average notional amount of uncleared
swaps exceeds a certain threshold. However,
as noted in the determination, Australia’s
non-centrally cleared swaps market is highly
concentrated in large entities that exceed that
threshold, and the large majority of
transactions would therefore be subject to
variation margin. Furthermore, as noted in
the determination, if an Australian entity that
would otherwise be subject to the CFTC
Margin Rules, but for substituted compliance,
enters into swaps with any U.S. entity
covered by the CFTC Margin Rules, then both
entities are required to exchange margin
under our rules. This reduces the potential
for risks from swap activities overseas
finding their way to the United States.
As with other jurisdictions where the legal
and regulatory structure does not mirror our
own, and the substituted compliance
determinations are based on the overall
outcome of the regulatory system, subsequent
monitoring may be appropriate to confirm
that our initial understanding of the
regulatory structure and the expected
outcomes is accurate. Accordingly, I
encourage the CFTC staff to periodically
assess the implementation of this
determination to confirm our expectations
are accurate.
I thank the CFTC staff for their thorough
work on this determination and appreciate
their responsiveness to our comments and
suggestions. I would also like to thank my
fellow Commissioners for their collaboration
in helping us reach this positive outcome.
[FR Doc. 2019–06319 Filed 4–2–19; 8:45 am]
BILLING CODE 6351–01–P
DEPARTMENT OF THE TREASURY
31 CFR Part 34
RIN 1505–AC55
Gulf Coast Restoration Trust Fund
Office of the Fiscal Assistant
Secretary, Treasury.
ACTION: Final rule.
AGENCY:
The Department of the
Treasury (Treasury) is issuing a final
rule to revise the method by which the
SUMMARY:
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statutory three percent limitation on
administrative costs (referred to
throughout this notice as the ‘‘three
percent administrative cost cap’’) is
applied under the Direct Component,
Comprehensive Plan Component, and
Spill Impact Component under the
Resources and Ecosystem Sustainability,
Tourist Opportunities, and Revived
Economies of the Gulf Coast States Act
of 2012, (RESTORE Act or Act). This
revision will help ensure that the Gulf
Coast States and localities have the
necessary funding to efficiently and
effectively oversee and manage projects
and programs for ecological and
economic restoration of the Gulf Coast
Region while ensuring compliance with
the statutory three percent
administrative cost cap.
DATES: Effective May 3, 2019.
FOR FURTHER INFORMATION CONTACT: The
Office of Gulf Coast Restoration at
restoreact@treasury.gov, or Laurie
McGilvray, Program Director, at 202–
622–7340.
SUPPLEMENTARY INFORMATION:
I. Background
The RESTORE Act makes funds
available for the ecological and
economic restoration of the Gulf Coast
Region, and certain programs with
respect to the Gulf of Mexico, through
a trust fund in the Treasury of the
United States known as the Gulf Coast
Restoration Trust Fund (trust fund). The
trust fund holds 80 percent of the
administrative and civil penalties paid
under the Federal Water Pollution
Control Act after July 6, 2012, in
connection with the Deepwater Horizon
Oil Spill.
Treasury administers two of the five
components established by the Act, the
Direct Component and Centers of
Excellence Research Grants Program.
The Act also established an
independent Federal entity, the Gulf
Coast Ecosystem Restoration Council
(Council), to administer two
components of the Act, the
Comprehensive Plan Component and
the Spill Impact Component. The
National Oceanic and Atmospheric
Administration (NOAA) administers
one component, the NOAA RESTORE
Act Science Program. This final rule
only affects grants under the Direct
Component, Comprehensive Plan
Component, and Spill Impact
Component of the Act, which are
collectively referred to throughout this
notice as the three ‘‘components.’’
On December 14, 2015, Treasury
promulgated final regulations
concerning the RESTORE Act, codified
at 31 CFR part 34, which became
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Federal Register / Vol. 84, No. 64 / Wednesday, April 3, 2019 / Rules and Regulations
effective on February 12, 2016 (the
‘‘regulations’’). 80 FR 77239. They
contain two relevant limitations on the
amount of grant funds that may be used
for administrative costs.
First, the regulations subject grants to
government-wide cost principles. They
define ‘‘administrative costs’’ as
‘‘indirect costs for administration’’ and
provide that such ‘‘[c]osts must comply
with administrative requirements and
cost principles in applicable federal
laws and policies on grants.’’ 31 CFR
34.2, 34.200(a)(1). They exclude
‘‘indirect costs that are identified
specifically with, or readily assignable
to, facilities’’ from the definition of
‘‘administrative costs.’’
Indirect cost principles are contained
in the Office of Management and Budget
(OMB) ‘‘Uniform Administrative
Requirements, Cost Principles, and
Audit Requirements for Federal
Awards’’ (the Uniform Guidance) in 2
CFR part 200, which Treasury has
adopted. 2 CFR 1000.10. Indirect costs
are defined in 2 CFR 200.56 and are
allowable subject to Subpart E of 2 CFR
part 200 and Appendix VII.
Under Subpart E, a grant recipient’s
negotiated indirect cost rate agreement
(NICRA) with its cognizant agency
determines the allowable indirect cost
rate for the recipient’s grants, taking into
account the unique circumstances and
cost structure of the recipient. The
NICRA, or a de minimis rate if elected,
must be used across all of the recipient’s
federal grants.1 2 CFR 200.414(c)(1). In
accordance with the Uniform Guidance,
Appendix VII—State and Local
Government and Indian Tribe Indirect
Cost Proposals, these allowable indirect
costs are computed on each individual
Federal award.
The second limitation on the amount
of RESTORE Act grant funds that can be
used for administrative costs under the
three components is a three percent
administrative cost cap. The Act
provides that ‘‘[o]f the amounts received
by a Gulf Coast State . . ., not more
than 3 percent may be used for
administrative costs . . . .’’ 33 U.S.C.
1321(t)(1)(B)(iii)(I). The Act does not
specify the method by which this three
percent administrative cost cap is to be
applied. Treasury’s regulations,
however, currently provide that the
three percent administrative cost cap is
to be applied on a grant-by-grant basis:
‘‘The three percent limit is applied to
1 Subpart E provides that when a recipient has
never had a NICRA and receives $35 million or less
in direct federal funding, a de minimis rate of 10
percent of modified total direct costs may be used
to calculate its allowable indirect costs in lieu of
establishing a NICRA. 2 CFR 200.414(f), 2 CFR part
200, Appendix VII(D)(1)(b).
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the total amount of funds received by a
recipient under each grant.’’ 31 CFR
34.204(a). In other words, under the
current regulations, the administrative
costs associated with each particular
grant may not exceed three percent of
the total amount of that grant.
II. Description of the Proposed Rule
On June 20, 2018, Treasury published
a Notice of Proposed Rulemaking
(NPRM) proposing to provide a
recipient the option to apply the three
percent administrative cost cap, within
each component, on either a grant-bygrant basis or on an aggregate basis. 83
FR 28563. The NPRM proposed that the
three percent administrative cost cap
may be applied, for each component, to
a Gulf Coast State, coastal political
subdivision, or coastal zone parish’s
trust fund allocation, i.e., to the
aggregate of (1) all grants received by it
under that component and (2) the
amount in the trust fund for the same
component that is allocated to, but not
yet received by it. Amounts ‘‘allocated
to, but not yet received’’ refer only to
funds presently in the trust fund and
not to future deposits into the trust
fund 2 and include the following
amounts with respect to each
component: (1) With respect to the
Direct Component, amounts made
available in equal shares for the Gulf
Coast States in accordance with 31 CFR
34.302; (2) with respect to the
Comprehensive Plan Component, the
estimated aggregate cost of all projects
approved for funding included in all
approved Funded Priorities Lists; and
(3) with respect to the Spill Impact
Component, amounts allocated to the
Gulf Coast States in accordance with 31
CFR 34.502 and 40 CFR 1800.500.
The Act does not require that
Treasury administer the administrative
cost cap on a grant-by-grant basis, and
because Treasury’s regulations allocate
precise sums to specific entities based
on criteria in the Act, it is possible to
administer it on an aggregate basis. In
the NPRM, Treasury proposed
permitting recipients, if they so choose,
to allocate administrative costs by
component from their ‘‘pool’’ in the
trust fund toward the indirect costs in
their grants to recover the maximum
2 BP Exploration & Production Inc. began making
annual civil penalty payments in April 2017, and
is expected to continue to make annual payments
through mid-2031 pursuant to a consent decree
entered on April 4, 2016 under the Federal Water
Pollution Control Act (Clean Water Act), of which
eighty percent of the total will be deposited into the
Gulf Coast Restoration Trust Fund and invested.
The annual payments into the trust fund through
2031 are expected to total $4.4 billion. In 2032, BP
will make a final payment in the form of penalty
interest.
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amount of indirect costs allowed under
the Act, and to more efficiently and
effectively oversee and manage projects
and programs. Under the proposal, if a
recipient’s allowable indirect costs for
administration for one grant are less
than three percent of the total amount
of that grant, the difference would be
available to cover allowable indirect
costs for administration exceeding three
percent on other grants. However, at no
time would the total amount of
administrative costs of a Gulf Coast
State, coastal political subdivision, or
coastal zone parish be permitted to
exceed three percent of the aggregate of
(1) all grants received by it under one of
the three components, and (2) the
amount in the trust fund for the same
component that is allocated to, but not
yet received by such Gulf Coast State,
coastal political subdivision, or coastal
zone parish. Also, at no time would a
recipient be able to recover more in
indirect costs under an individual
award than it would receive under its
NICRA or its de minimis rate. Treasury
will address a recipient’s selection of its
method for calculating administrative
indirect costs during the application
submission and review process or in
reviewing a request to amend a prior
award. At least annually, Treasury will
post publicly the amounts available in
the administrative cost ‘‘pool’’ by
component, simultaneously with its
updates to the trust fund allocations.
In § 34.204(a)(1)(ii) of the proposed
rule, Treasury also added ‘‘recipient
and’’ before ‘‘subrecipient’’ in the last
sentence to clarify that Federal grant
law and policies apply to recipient costs
as well as to subrecipient costs. (As
discussed below, this addition is located
at section 34.204(a)(2) in the final rule.)
Treasury also stated in the proposed
rule that it would conduct a
retrospective analysis of the aggregate
method no later than seven years after
the date this final rule becomes
effective, to ‘‘consider whether the
revision ensures that the Gulf Coast
states, coastal political subdivisions,
and coastal zone parishes have the
necessary funding to efficiently and
effectively oversee and manage projects
and programs for ecological and
economic restoration of the Gulf Coast
Region while ensuring compliance with
the statutory three percent
administrative cost cap, and whether it
helps them to administer RESTORE Act
grant projects effectively and
efficiently.’’ NPRM § 34.204(a)(2).
Treasury has removed the second use of
‘‘effectively and efficiently’’ as
redundant with the first use of it in the
sentence. (As explained below, Treasury
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Federal Register / Vol. 84, No. 64 / Wednesday, April 3, 2019 / Rules and Regulations
has also moved the language in
§ 34.204(a)(2) of the proposed rule to
§ 34.204(a)(3) of the final rule.)
III. Public Comments and Changes
From the Proposed Rule
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The NPRM invited public comments
on all aspects of the proposed revision
for 30 days. Nine commenters submitted
written responses to the NPRM, all of
which Treasury has reviewed. The
following is a discussion of relevant
comments and Treasury’s responses.
Treasury is adopting the rule as
proposed with only two changes, as
discussed below.
One commenter asked whether the
three percent for administrative costs
may be used by a grantee together with
the de minimis ten percent for indirect
cost limits.3 Under Treasury’s
regulations, administrative costs are
defined as ‘‘indirect costs for
administration’’ (i.e., not direct costs for
administration). If a recipient has a de
minimis rate of ten percent of modified
total direct costs, the recipient may be
reimbursed for indirect costs for
administration up to three percent of the
total award amount. This calculation
currently is applied to each grant. Under
this final rule, a recipient eligible to use
the de minimis rate may be able to be
reimbursed for indirect costs for
administration that exceed the three
percent cap for a particular grant, up to
ten percent of the modified total direct
costs, if that recipient has received less
than three percent of the total award
amount for indirect costs for
administration on the total of the
aggregate of (1) all grants received by it
under that component and (2) the
amount in the trust fund for the same
component that is allocated to, but not
yet received by it.
Three commenters expressed support
for the aggregate method because it
would allow greater reimbursement for
indirect costs incurred.4 One
commenter expressed support for the
greater flexibility the proposed rule
would provide to recipients in applying
the three percent administrative cost
cap.5
Four commenters requested
clarification as to whether the proposed
rule would apply to previously awarded
grants.6 This final rule does not require
3 Tangipahoa
Parish, Louisiana.
Commission on Environmental Quality,
Alabama Gulf Coast Recovery Council, and
Mississippi Department of Environmental Quality.
5 Mississippi Department of Environmental
Quality.
6 Texas Commission on Environmental Quality,
Alabama Gulf Coast Recovery Council, Mississippi
Department of Environmental Quality, and Gulf
Coast Ecosystem Restoration Council.
4 Texas
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that recipients change the method by
which they calculate their
administrative costs. It provides an
alternative to the grant-by-grant method
required under Treasury’s current
regulation. Indirect costs on previously
awarded grants under each of the three
components may be reimbursed using
the aggregate method, up to the amount
of the recipient’s NICRA or de minimis
rate, provided sufficient funds are
available in the recipient’s
administrative cost pool. A Direct
Component, Comprehensive Plan
Component or Spill Impact Component
recipient with sufficient funds available
in its administrative cost pool wishing
to recover indirect costs in an amount
up to its NICRA or de minimis rate on
a prior award may request a grant
amendment. Treasury and the Council
will provide guidance to their respective
recipients to assist them in applying the
aggregate method to calculate
administrative costs and to keep track of
the amount available for administrative
costs in their administrative cost pool
for each component.
Treasury also solicited information
from eligible recipients as to how they
would manage and track administrative
indirect costs under each method. One
eligible recipient explained that under
the aggregate method, for each
component, it will update the
calculations of its administrative cost
pools at least annually and reconcile its
calculations with Treasury’s
calculations.7 Treasury and the Council
will provide technical assistance to their
respective recipients to help ensure that
administrative indirect costs are
accurately tracked across grants.
Treasury also asked eligible recipients
in the NPRM whether there was any
additional burden associated with
managing the administrative indirect
cost cap using the aggregate method.
One eligible recipient responded that
the use of the aggregate method would
impose an ‘‘additional burden’’ under
all three components, but added that the
additional burden would be less than
the burden currently imposed under the
grant-by-grant method, so that the net
effect would be less of a burden upon
recipients.8
Two commenters suggested that the
language in § 34.204(a)(1)(ii) of the
proposed rule be reorganized for
clarity.9 Specifically, they pointed out
that the final two sentences of
§ 34.204(a)(1)(ii) of the proposed rule
differ in subject matter from the rest of
7 Texas
Commission on Environmental Quality.
Commission on Environmental Quality.
9 Texas Commission on Environmental Quality
and Gulf Coast Ecosystem Restoration Council.
8 Texas
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12931
the paragraph and should therefore be
in a different paragraph. Treasury agrees
and has moved those sentences to
§ 34.204(a)(2) of the final rule. Treasury
also has moved the language in
§ 34.204(a)(2) of the proposed rule to
§ 34.204(a)(3) of the final rule.
One commenter requested that
Treasury clarify in the preamble that
projects under the Comprehensive Plan
Component that are under consideration
by the Council but not yet approved for
funding are not included in the
aggregate three percent cost
calculation.10 The clarification has been
made to the reference to the
Comprehensive Plan Component’s
Funded Priorities List in Section II.
Description of the Proposed Rule above.
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
Procedures 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.
Six of the 20 Louisiana parishes and
six of the 23 Florida counties eligible to
receive grants under the RESTORE Act
have fewer than 50,000 residents. (2010
U.S. Census) and thus qualify as small
governmental jurisdictions under the
Regulatory Flexibility Act. (5 U.S.C.
601(5)). Treasury anticipates that this
final rule will have no significant
economic impact on these small entities
because all recipients have the option to
continue applying the three percent
administrative cost cap on a grant-bygrant basis. Accordingly, Treasury
certifies that this final rule will not have
a significant impact upon a substantial
number of small entities, and no
regulatory flexibility analysis is
required.
B. Regulatory Planning and Review
(Executive Orders 12866 and 13563)
This final rule affects those entities in
the five Gulf Coast States that are
eligible to receive funding under the
RESTORE Act, and is focused on the
environmental restoration and economic
recovery of the Gulf Coast Region in the
aftermath of the Deepwater Horizon oil
spill. The amounts made available from
the trust fund will continue efforts that
provide for the long-term health of the
ecosystems and economy of this region.
10 Gulf
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Coast Ecosystem Restoration Council.
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Because it increases recipients’
flexibility in how they apply the
statutory three percent administrative
cost cap, Treasury believes this final
rule is an Executive Order 13771
deregulatory action. In accordance with
Executive Order 12866, as
supplemented by Executive Order
13563, OMB has designated this rule as
a significant regulatory action and has
reviewed this final rule. This final rule
finalizes without significant change the
proposed rule discussed above.
C. 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 not a ‘‘major rule’’ as
defined by 5 U.S.C. 804(2) and will
become effective 30 days after
publication.
D. Catalog of Federal Domestic
Assistance
The affected program for Treasury is
listed in the Catalog of Federal Domestic
Assistance under 21.015, Resources and
Ecosystems Sustainability, Tourist
Opportunities, and Revived Economies
of the Gulf Coast States. The affected
programs for the Council are listed
under 87.051, and 87.052, for its
Comprehensive Plan and Spill Impact
Components, respectively.
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E. 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 Unfunded Mandates Reform 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 because this final
rule will not result in an aggregate
expenditure by a state, local, or tribal
government, or by the private sector of
$100,000,000 or more, the Unfunded
Mandates Reform Act does not require
an analysis of this final rule.
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
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technology, Trusts and trustees,
Wildlife.
For the reasons set forth herein, the
Department of the Treasury amends 31
CFR part 34 to read as follows:
PART 34—RESOURCES AND
ECOSYSTEMS SUSTAINABILITY,
TOURIST OPPORTUNITIES, AND
REVIVED ECONOMIES OF THE GULF
COAST STATES
1. The authority citation continues to
read as follows:
■
compliance with the statutory three
percent administrative cost cap.
*
*
*
*
*
David A. Lebryk,
Fiscal Assistant Secretary.
[FR Doc. 2019–06404 Filed 4–2–19; 8:45 am]
BILLING CODE 4810–25–P
DEPARTMENT OF DEFENSE
Office of the Secretary
Authority: 31 U.S.C. 301; 31 U.S.C. 321;
33 U.S.C. 1251 et seq.
32 CFR Part 54
2. Amend § 34.204 by revising
paragraph (a) to read as follows:
[Docket ID: DOD–2017–OS–0045]
§ 34.204 Limitations on administrative
costs and administrative expenses.
RIN 0790–AJ98
■
(a)(1) Of the amounts received by a
Gulf Coast State, coastal political
subdivision, or coastal zone parish from
Treasury under the Direct Component,
or 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 on administrative costs may be
applied to the total amount of funds
received by a recipient under each of
the three components either on a grantby-grant basis or on an aggregate basis.
For the latter method, amounts used for
administrative costs under each of the
three components may not at any time
exceed three percent of the aggregate of:
(i) The amounts received under a
component by a recipient, beginning
with the first grant through the most
recent grant, and
(ii) The amounts in the Trust Fund
that are allocated to, but not yet
received under such component by a
Gulf Coast State, coastal political
subdivision, or coastal zone parish
under § 34.103, consistent with the
definition of administrative costs in
§ 34.2.
(2) The three percent limit does not
apply to the administrative costs of
subrecipients. All recipient and
subrecipient costs are subject to the cost
principles in Federal laws and policies
on grants.
(3) Treasury will conduct a
retrospective analysis of this provision
no later than seven years after the date
it becomes effective. This review will
consider whether the revision ensures
that the Gulf Coast States, coastal
political subdivisions, and coastal zone
parishes have the necessary funding to
efficiently and effectively oversee and
manage projects and programs for
ecological and economic restoration of
the Gulf Coast Region while ensuring
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Allotments for Child and Spousal
Support
Office of the Under Secretary of
Defense (Comptroller), DoD.
ACTION: Final rule.
AGENCY:
This final rule removes DoD’s
regulation that relates to allotments for
child and spousal support because it
duplicates DoD’s internal policy on
statutorily required child or child and
spousal support allotments that cover
members of the Military Services on
extended active duty. This internal
policy is located in the DoD Financial
Management Regulation, Volume 7A,
Chapter 41 ‘‘Garnishments and Other
Involuntary Allotments.’’
DATES: This rule is effective on April 3,
2019.
FOR FURTHER INFORMATION CONTACT:
Kellie Allison at 703–614–0410.
SUPPLEMENTARY INFORMATION: It has been
determined that publication of this CFR
part removal for public comment is
impracticable, unnecessary, and
contrary to public interest since it is
based on removing DoD internal
policies and procedures that are
publically available on the Department’s
website.
DoD internal guidance will continue
to be published in DoD’s Financial
Management Regulation, Volume 7A,
Chapter 41, available at https://
comptroller.defense.gov/Portals/45/
documents/fmr/archive/07aarch/07a_
41_Dec10.pdf.
Removal of this part does not reduce
burden or costs to the public as it will
not change how notification is provided
under Volume 7A, Chapter 41. This rule
is not significant, therefore the
requirements of Executive Order 13771,
‘‘Reducing Regulation and Controlling
Regulatory Costs,’’ do not apply.
SUMMARY:
E:\FR\FM\03APR1.SGM
03APR1
]]>Agencies
[Federal Register Volume 84, Number 64 (Wednesday, April 3, 2019)]
[Rules and Regulations]
[Pages 12929-12932]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-06404]
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DEPARTMENT OF THE TREASURY
31 CFR Part 34
RIN 1505-AC55
Gulf Coast Restoration Trust Fund
AGENCY: Office of the Fiscal Assistant Secretary, Treasury.
ACTION: Final rule.
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SUMMARY: The Department of the Treasury (Treasury) is issuing a final
rule to revise the method by which the statutory three percent
limitation on administrative costs (referred to throughout this notice
as the ``three percent administrative cost cap'') is applied under the
Direct Component, Comprehensive Plan Component, and Spill Impact
Component under the Resources and Ecosystem Sustainability, Tourist
Opportunities, and Revived Economies of the Gulf Coast States Act of
2012, (RESTORE Act or Act). This revision will help ensure that the
Gulf Coast States and localities have the necessary funding to
efficiently and effectively oversee and manage projects and programs
for ecological and economic restoration of the Gulf Coast Region while
ensuring compliance with the statutory three percent administrative
cost cap.
DATES: Effective May 3, 2019.
FOR FURTHER INFORMATION CONTACT: The Office of Gulf Coast Restoration
at [email protected], or Laurie McGilvray, Program Director, at
202-622-7340.
SUPPLEMENTARY INFORMATION:
I. Background
The RESTORE Act makes funds available for the ecological and
economic restoration of the Gulf Coast Region, and certain programs
with respect to the Gulf of Mexico, through a trust fund in the
Treasury of the United States known as the Gulf Coast Restoration Trust
Fund (trust fund). The trust fund holds 80 percent of the
administrative and civil penalties paid under the Federal Water
Pollution Control Act after July 6, 2012, in connection with the
Deepwater Horizon Oil Spill.
Treasury administers two of the five components established by the
Act, the Direct Component and Centers of Excellence Research Grants
Program. The Act also established an independent Federal entity, the
Gulf Coast Ecosystem Restoration Council (Council), to administer two
components of the Act, the Comprehensive Plan Component and the Spill
Impact Component. The National Oceanic and Atmospheric Administration
(NOAA) administers one component, the NOAA RESTORE Act Science Program.
This final rule only affects grants under the Direct Component,
Comprehensive Plan Component, and Spill Impact Component of the Act,
which are collectively referred to throughout this notice as the three
``components.''
On December 14, 2015, Treasury promulgated final regulations
concerning the RESTORE Act, codified at 31 CFR part 34, which became
[[Page 12930]]
effective on February 12, 2016 (the ``regulations''). 80 FR 77239. They
contain two relevant limitations on the amount of grant funds that may
be used for administrative costs.
First, the regulations subject grants to government-wide cost
principles. They define ``administrative costs'' as ``indirect costs
for administration'' and provide that such ``[c]osts must comply with
administrative requirements and cost principles in applicable federal
laws and policies on grants.'' 31 CFR 34.2, 34.200(a)(1). They exclude
``indirect costs that are identified specifically with, or readily
assignable to, facilities'' from the definition of ``administrative
costs.''
Indirect cost principles are contained in the Office of Management
and Budget (OMB) ``Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards'' (the Uniform
Guidance) in 2 CFR part 200, which Treasury has adopted. 2 CFR 1000.10.
Indirect costs are defined in 2 CFR 200.56 and are allowable subject to
Subpart E of 2 CFR part 200 and Appendix VII.
Under Subpart E, a grant recipient's negotiated indirect cost rate
agreement (NICRA) with its cognizant agency determines the allowable
indirect cost rate for the recipient's grants, taking into account the
unique circumstances and cost structure of the recipient. The NICRA, or
a de minimis rate if elected, must be used across all of the
recipient's federal grants.\1\ 2 CFR 200.414(c)(1). In accordance with
the Uniform Guidance, Appendix VII--State and Local Government and
Indian Tribe Indirect Cost Proposals, these allowable indirect costs
are computed on each individual Federal award.
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\1\ Subpart E provides that when a recipient has never had a
NICRA and receives $35 million or less in direct federal funding, a
de minimis rate of 10 percent of modified total direct costs may be
used to calculate its allowable indirect costs in lieu of
establishing a NICRA. 2 CFR 200.414(f), 2 CFR part 200, Appendix
VII(D)(1)(b).
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The second limitation on the amount of RESTORE Act grant funds that
can be used for administrative costs under the three components is a
three percent administrative cost cap. The Act provides that ``[o]f the
amounts received by a Gulf Coast State . . ., not more than 3 percent
may be used for administrative costs . . . .'' 33 U.S.C.
1321(t)(1)(B)(iii)(I). The Act does not specify the method by which
this three percent administrative cost cap is to be applied. Treasury's
regulations, however, currently provide that the three percent
administrative cost cap is to be applied on a grant-by-grant basis:
``The three percent limit is applied to the total amount of funds
received by a recipient under each grant.'' 31 CFR 34.204(a). In other
words, under the current regulations, the administrative costs
associated with each particular grant may not exceed three percent of
the total amount of that grant.
II. Description of the Proposed Rule
On June 20, 2018, Treasury published a Notice of Proposed
Rulemaking (NPRM) proposing to provide a recipient the option to apply
the three percent administrative cost cap, within each component, on
either a grant-by-grant basis or on an aggregate basis. 83 FR 28563.
The NPRM proposed that the three percent administrative cost cap may be
applied, for each component, to a Gulf Coast State, coastal political
subdivision, or coastal zone parish's trust fund allocation, i.e., to
the aggregate of (1) all grants received by it under that component and
(2) the amount in the trust fund for the same component that is
allocated to, but not yet received by it. Amounts ``allocated to, but
not yet received'' refer only to funds presently in the trust fund and
not to future deposits into the trust fund \2\ and include the
following amounts with respect to each component: (1) With respect to
the Direct Component, amounts made available in equal shares for the
Gulf Coast States in accordance with 31 CFR 34.302; (2) with respect to
the Comprehensive Plan Component, the estimated aggregate cost of all
projects approved for funding included in all approved Funded
Priorities Lists; and (3) with respect to the Spill Impact Component,
amounts allocated to the Gulf Coast States in accordance with 31 CFR
34.502 and 40 CFR 1800.500.
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\2\ BP Exploration & Production Inc. began making annual civil
penalty payments in April 2017, and is expected to continue to make
annual payments through mid-2031 pursuant to a consent decree
entered on April 4, 2016 under the Federal Water Pollution Control
Act (Clean Water Act), of which eighty percent of the total will be
deposited into the Gulf Coast Restoration Trust Fund and invested.
The annual payments into the trust fund through 2031 are expected to
total $4.4 billion. In 2032, BP will make a final payment in the
form of penalty interest.
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The Act does not require that Treasury administer the
administrative cost cap on a grant-by-grant basis, and because
Treasury's regulations allocate precise sums to specific entities based
on criteria in the Act, it is possible to administer it on an aggregate
basis. In the NPRM, Treasury proposed permitting recipients, if they so
choose, to allocate administrative costs by component from their
``pool'' in the trust fund toward the indirect costs in their grants to
recover the maximum amount of indirect costs allowed under the Act, and
to more efficiently and effectively oversee and manage projects and
programs. Under the proposal, if a recipient's allowable indirect costs
for administration for one grant are less than three percent of the
total amount of that grant, the difference would be available to cover
allowable indirect costs for administration exceeding three percent on
other grants. However, at no time would the total amount of
administrative costs of a Gulf Coast State, coastal political
subdivision, or coastal zone parish be permitted to exceed three
percent of the aggregate of (1) all grants received by it under one of
the three components, and (2) the amount in the trust fund for the same
component that is allocated to, but not yet received by such Gulf Coast
State, coastal political subdivision, or coastal zone parish. Also, at
no time would a recipient be able to recover more in indirect costs
under an individual award than it would receive under its NICRA or its
de minimis rate. Treasury will address a recipient's selection of its
method for calculating administrative indirect costs during the
application submission and review process or in reviewing a request to
amend a prior award. At least annually, Treasury will post publicly the
amounts available in the administrative cost ``pool'' by component,
simultaneously with its updates to the trust fund allocations.
In Sec. 34.204(a)(1)(ii) of the proposed rule, Treasury also added
``recipient and'' before ``subrecipient'' in the last sentence to
clarify that Federal grant law and policies apply to recipient costs as
well as to subrecipient costs. (As discussed below, this addition is
located at section 34.204(a)(2) in the final rule.) Treasury also
stated in the proposed rule that it would conduct a retrospective
analysis of the aggregate method no later than seven years after the
date this final rule becomes effective, to ``consider whether the
revision ensures that the Gulf Coast states, coastal political
subdivisions, and coastal zone parishes have the necessary funding to
efficiently and effectively oversee and manage projects and programs
for ecological and economic restoration of the Gulf Coast Region while
ensuring compliance with the statutory three percent administrative
cost cap, and whether it helps them to administer RESTORE Act grant
projects effectively and efficiently.'' NPRM Sec. 34.204(a)(2).
Treasury has removed the second use of ``effectively and efficiently''
as redundant with the first use of it in the sentence. (As explained
below, Treasury
[[Page 12931]]
has also moved the language in Sec. 34.204(a)(2) of the proposed rule
to Sec. 34.204(a)(3) of the final rule.)
III. Public Comments and Changes From the Proposed Rule
The NPRM invited public comments on all aspects of the proposed
revision for 30 days. Nine commenters submitted written responses to
the NPRM, all of which Treasury has reviewed. The following is a
discussion of relevant comments and Treasury's responses. Treasury is
adopting the rule as proposed with only two changes, as discussed
below.
One commenter asked whether the three percent for administrative
costs may be used by a grantee together with the de minimis ten percent
for indirect cost limits.\3\ Under Treasury's regulations,
administrative costs are defined as ``indirect costs for
administration'' (i.e., not direct costs for administration). If a
recipient has a de minimis rate of ten percent of modified total direct
costs, the recipient may be reimbursed for indirect costs for
administration up to three percent of the total award amount. This
calculation currently is applied to each grant. Under this final rule,
a recipient eligible to use the de minimis rate may be able to be
reimbursed for indirect costs for administration that exceed the three
percent cap for a particular grant, up to ten percent of the modified
total direct costs, if that recipient has received less than three
percent of the total award amount for indirect costs for administration
on the total of the aggregate of (1) all grants received by it under
that component and (2) the amount in the trust fund for the same
component that is allocated to, but not yet received by it.
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\3\ Tangipahoa Parish, Louisiana.
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Three commenters expressed support for the aggregate method because
it would allow greater reimbursement for indirect costs incurred.\4\
One commenter expressed support for the greater flexibility the
proposed rule would provide to recipients in applying the three percent
administrative cost cap.\5\
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\4\ Texas Commission on Environmental Quality, Alabama Gulf
Coast Recovery Council, and Mississippi Department of Environmental
Quality.
\5\ Mississippi Department of Environmental Quality.
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Four commenters requested clarification as to whether the proposed
rule would apply to previously awarded grants.\6\ This final rule does
not require that recipients change the method by which they calculate
their administrative costs. It provides an alternative to the grant-by-
grant method required under Treasury's current regulation. Indirect
costs on previously awarded grants under each of the three components
may be reimbursed using the aggregate method, up to the amount of the
recipient's NICRA or de minimis rate, provided sufficient funds are
available in the recipient's administrative cost pool. A Direct
Component, Comprehensive Plan Component or Spill Impact Component
recipient with sufficient funds available in its administrative cost
pool wishing to recover indirect costs in an amount up to its NICRA or
de minimis rate on a prior award may request a grant amendment.
Treasury and the Council will provide guidance to their respective
recipients to assist them in applying the aggregate method to calculate
administrative costs and to keep track of the amount available for
administrative costs in their administrative cost pool for each
component.
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\6\ Texas Commission on Environmental Quality, Alabama Gulf
Coast Recovery Council, Mississippi Department of Environmental
Quality, and Gulf Coast Ecosystem Restoration Council.
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Treasury also solicited information from eligible recipients as to
how they would manage and track administrative indirect costs under
each method. One eligible recipient explained that under the aggregate
method, for each component, it will update the calculations of its
administrative cost pools at least annually and reconcile its
calculations with Treasury's calculations.\7\ Treasury and the Council
will provide technical assistance to their respective recipients to
help ensure that administrative indirect costs are accurately tracked
across grants.
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\7\ Texas Commission on Environmental Quality.
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Treasury also asked eligible recipients in the NPRM whether there
was any additional burden associated with managing the administrative
indirect cost cap using the aggregate method. One eligible recipient
responded that the use of the aggregate method would impose an
``additional burden'' under all three components, but added that the
additional burden would be less than the burden currently imposed under
the grant-by-grant method, so that the net effect would be less of a
burden upon recipients.\8\
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\8\ Texas Commission on Environmental Quality.
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Two commenters suggested that the language in Sec.
34.204(a)(1)(ii) of the proposed rule be reorganized for clarity.\9\
Specifically, they pointed out that the final two sentences of Sec.
34.204(a)(1)(ii) of the proposed rule differ in subject matter from the
rest of the paragraph and should therefore be in a different paragraph.
Treasury agrees and has moved those sentences to Sec. 34.204(a)(2) of
the final rule. Treasury also has moved the language in Sec.
34.204(a)(2) of the proposed rule to Sec. 34.204(a)(3) of the final
rule.
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\9\ Texas Commission on Environmental Quality and Gulf Coast
Ecosystem Restoration Council.
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One commenter requested that Treasury clarify in the preamble that
projects under the Comprehensive Plan Component that are under
consideration by the Council but not yet approved for funding are not
included in the aggregate three percent cost calculation.\10\ The
clarification has been made to the reference to the Comprehensive Plan
Component's Funded Priorities List in Section II. Description of the
Proposed Rule above.
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\10\ Gulf Coast Ecosystem Restoration Council.
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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 Procedures 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.
Six of the 20 Louisiana parishes and six of the 23 Florida counties
eligible to receive grants under the RESTORE Act have fewer than 50,000
residents. (2010 U.S. Census) and thus qualify as small governmental
jurisdictions under the Regulatory Flexibility Act. (5 U.S.C. 601(5)).
Treasury anticipates that this final rule will have no significant
economic impact on these small entities because all recipients have the
option to continue applying the three percent administrative cost cap
on a grant-by-grant basis. Accordingly, Treasury certifies that this
final rule will not have a significant impact upon a substantial number
of small entities, and no regulatory flexibility analysis is required.
B. Regulatory Planning and Review (Executive Orders 12866 and 13563)
This final rule affects those entities in the five Gulf Coast
States that are eligible to receive funding under the RESTORE Act, and
is focused on the environmental restoration and economic recovery of
the Gulf Coast Region in the aftermath of the Deepwater Horizon oil
spill. The amounts made available from the trust fund will continue
efforts that provide for the long-term health of the ecosystems and
economy of this region.
[[Page 12932]]
Because it increases recipients' flexibility in how they apply the
statutory three percent administrative cost cap, Treasury believes this
final rule is an Executive Order 13771 deregulatory action. In
accordance with Executive Order 12866, as supplemented by Executive
Order 13563, OMB has designated this rule as a significant regulatory
action and has reviewed this final rule. This final rule finalizes
without significant change the proposed rule discussed above.
C. 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 not a ``major
rule'' as defined by 5 U.S.C. 804(2) and will become effective 30 days
after publication.
D. Catalog of Federal Domestic Assistance
The affected program for Treasury is listed in the Catalog of
Federal Domestic Assistance under 21.015, Resources and Ecosystems
Sustainability, Tourist Opportunities, and Revived Economies of the
Gulf Coast States. The affected programs for the Council are listed
under 87.051, and 87.052, for its Comprehensive Plan and Spill Impact
Components, respectively.
E. 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 Unfunded Mandates Reform 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 because this final rule will not result in an aggregate
expenditure by a state, local, or tribal government, or by the private
sector of $100,000,000 or more, the Unfunded Mandates Reform Act does
not require an analysis of this final rule.
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 and trustees,
Wildlife.
For the reasons set forth herein, the Department of the Treasury
amends 31 CFR part 34 to read as follows:
PART 34--RESOURCES AND ECOSYSTEMS SUSTAINABILITY, TOURIST
OPPORTUNITIES, AND REVIVED ECONOMIES OF THE GULF COAST STATES
0
1. The authority citation continues to read as follows:
Authority: 31 U.S.C. 301; 31 U.S.C. 321; 33 U.S.C. 1251 et seq.
0
2. Amend Sec. 34.204 by revising paragraph (a) to read as follows:
Sec. 34.204 Limitations on administrative costs and administrative
expenses.
(a)(1) Of the amounts received by a Gulf Coast State, coastal
political subdivision, or coastal zone parish from Treasury under the
Direct Component, or 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 on
administrative costs may be applied to the total amount of funds
received by a recipient under each of the three components either on a
grant-by-grant basis or on an aggregate basis. For the latter method,
amounts used for administrative costs under each of the three
components may not at any time exceed three percent of the aggregate
of:
(i) The amounts received under a component by a recipient,
beginning with the first grant through the most recent grant, and
(ii) The amounts in the Trust Fund that are allocated to, but not
yet received under such component by a Gulf Coast State, coastal
political subdivision, or coastal zone parish under Sec. 34.103,
consistent with the definition of administrative costs in Sec. 34.2.
(2) The three percent limit does not apply to the administrative
costs of subrecipients. All recipient and subrecipient costs are
subject to the cost principles in Federal laws and policies on grants.
(3) Treasury will conduct a retrospective analysis of this
provision no later than seven years after the date it becomes
effective. This review will consider whether the revision ensures that
the Gulf Coast States, coastal political subdivisions, and coastal zone
parishes have the necessary funding to efficiently and effectively
oversee and manage projects and programs for ecological and economic
restoration of the Gulf Coast Region while ensuring compliance with the
statutory three percent administrative cost cap.
* * * * *
David A. Lebryk,
Fiscal Assistant Secretary.
[FR Doc. 2019-06404 Filed 4-2-19; 8:45 am]
BILLING CODE 4810-25-P
