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

DEPARTMENT OF AGRICULTURE <CFR>2 CFR Chapter IV</CFR> <DEPDOC>[Docket No. USDA-2024-0002]</DEPDOC> <RIN>RIN 0505-AA18</RIN> <SUBJECT>USDA Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Office of the Chief Financial Officer, USDA. <HD SOURCE="HED">ACTION:</HD> Proposed rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The U.S. Department of Agriculture (USDA) proposes to revise parts of the USDA Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. USDA proposes both policy changes and clarifications to existing requirements including plain language revisions. USDA is proposing revisions intended in many cases to reduce agency and recipient burden. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> We will consider comments that we receive by July 1, 2024. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> We invite you to submit comments in response to this proposed rule. You may submit your comments through the following method below: • <E T="03">Federal eRulemaking Portal:</E> Go to <E T="03">http://www.regulations.gov</E> and search for Docket ID USDA-2024-0002. Follow the instructions for submitting comments. All comments received will be made publicly available on <E T="03">http://www.regulations.gov</E> . <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Tyson P. Whitney, Office of the Chief Financial Officer, Director, Transparency and Accountability Reporting Division, U.S. Department of Agriculture, 1400 Independence Avenue SW, Washington, DC 20250-9011, 202-720-8978, <E T="03">tyson.whitney@usda.gov</E> . Individuals who require alternative means for communication should contact the U.S. Department of Agriculture (USDA) Target Center at (202) 720-2600 (voice). </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Background</HD> The purpose of USDA's action is to provide conforming updates to OMB's April 22, 2024 updates to 2 CFR part 200, implement plain language use, and to propose revisions intended in many cases to reduce agency and recipient burden. USDA proposes both policy changes and clarifications to existing requirements. Except for minor or technical corrections, such as updates to citations, the proposed changes and the reasons for them are explained in detail in the <E T="03">Proposed Regulations</E> section of this notice of proposed rulemaking (NPRM). <HD SOURCE="HD1">Regulatory History</HD> USDA conducted a comprehensive review of the regulatory history of 2 CFR Chapter IV and has identified that much of the current language is relatively unchanged from the time of each respective regulatory implementation over the past several decades. Reviewing the regulatory history of USDA's assistance regulations is valuable as it illustrates historic administrative priorities active at the time of implementation, both at USDA and across the Federal government. In addition, a full review of the regulatory history demonstrates that USDA has maintained an enduring commitment over more than forty years to reducing burden on applicants across its financial assistance landscape. The regulatory history of USDA-wide financial assistance begins on November 10, 1981, when USDA issued a final rule to establish at 7 CFR part 3015 Department-wide policies and standards for administration of grants and cooperative agreements, to provide uniformity in policy and standardization of guidance for all of USDA. See 46 FR 55636. Prior to the issuance of this final rule, USDA issued internal regulations on the administration of grants and cooperative agreements which directed the agencies to implement USDA, OMB and other guidance agencies' policies and directives through issuance of their own individual agency assistance regulations or directives. This action was intended to reduce confusion, duplication and complexity in the administration and management of Federal financial assistance provided by USDA. USDA also issued rules in response to several laws, Executive Orders, and OMB Circulars, which expanded the footprint of USDA assistance regulations. For example, on June 24, 1983, USDA issued a final rule to amend 7 CFR part 3015 to implement E.O. 12372, “Intergovernmental Review of Federal Programs,” section 401 of the Intergovernmental Cooperation Act of 1968, as amended (31 U.S.C. 6506), and section 204 of the Demonstration Cities and Metropolitan Development Act, as amended (42 U.S.C. 3334), and thereby replace the intergovernmental consultation system developed under OMB Circular A-95. See 48 FR 29100. This language remains unchanged to date. Other changes to the USDA assistance regulations originate from past administrative priorities. For example, on May 9, 1986, USDA issued a final rule to amend 7 CFR part 3015 to add a new section to implement requirements found in Secretary's Memorandum (SM) 5000-2 to all discretionary grants and cooperative agreements. See 51 FR 17169. SM 5000-2 established USDA policy regarding competition in the awarding of grants and cooperative agreements to further research, extension, or teaching programs in the food and agricultural sciences. This action expanded the application of the competition requirement to all discretionary awards as the Department determined that there was no logical reason to distinguish between awards made to further research, extension, and teaching programs and other discretionary awards, as competition was deemed beneficial in either instance. Over the next several years, USDA joined in several government-wide common rules, which demonstrates a commitment to the establishment of a uniform applicant experience with compliance requirements. For example, on March 11, 1988, USDA adopted a final common rule to establish at 7 CFR part 3016 administrative requirements applicable to assistance relationships established by grants and cooperative agreements, including subawards, to State and local governments. See 53 FR 8042. Prior to that date, administrative requirements for awards and subawards under all USDA programs were codified at 7 CFR part 3015. At that time, note that the common rule applied to USDA's non-entitlement programs, but did not apply to certain entitlement programs. USDA joined several other common rules focused on government-wide priorities, such as nonprocurement debarment and suspension, drug-free workplace, and lobbying. On January 30, 1989, USDA adopted a final common rule to establish at 7 CFR part 3017 the uniform system of nonprocurement debarment and suspension as required under Executive Order (E.O.) 12549. See 54 FR 4722. On January 31, 1989, USDA adopted an interim final common rule requiring grantees to take steps to provide a drug-free workplace as required by the Drug-Free Workplace Act of 1988 (Pub. L. 100-690). See 54 FR 4947. This action established a new Subpart F at 7 CFR part 3017. On December 18, 1989, OMB issued interim final government-wide guidance on lobbying as required by the Department of the Interior and Related Agencies Appropriations Act for Fiscal Year 1990, Section 319 (Pub. L. 101-121). See 54 FR 52306. On February 26, 1990, USDA adopted an interim final common rule to establish at 7 CFR part 3018 the OMB government-wide guidance on lobbying. See 55 FR 6736. On May 25, 1990, USDA adopted a final common rule related to drug-free workplace requirements for financial assistance. See 55 FR 21681. This action amended the earlier interim final rule. During this time, Federal financial assistance continued to be managed through OMB's issuance of Circulars which agencies subsequently adopted. Accordingly, on August 24, 1995, USDA issued an interim final rule to implement OMB's Circular A-110, “Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations.” See 60 FR 44122. This action established 7 CFR part 3019 and consequently amended 7 CFR part 3015. Later, on March 16, 2000, USDA adopted an interim final rule to amend the earlier codification of OMB Circular A-110 at 7 CFR part 3019. See 65 FR 14406. This action required data produced under a financial assistance award to be made available to the public through procedures established under the Freedom of Information Act and provided for a reasonable fee to cover costs responding to such a request. Reviewing the regulatory history has revealed one area where OMB issued guidance, but no common rule was subsequently issued or amended. On January 19, 1996, OMB issued interim final amendments to the OMB government-wide guidance on lobbying following the passage of the “Lobbying Disclosure Act of 1995” (Pub. L. 104-65). See 61 FR 1412. This action removed the reporting requirements at Subpart F and made technical corrections to the lobbying disclosure form. This NPRM proposes conforming edits to 2 CFR part 418 which will align USDA with the 1996 interim final amendments. On August 14, 2000, USDA issued a final rule to revise its grants management regulations at 7 CFR 3016 to include provisions specific to USDA entitlement programs. See 65 FR 49474. This language serves as the basis for the present-day 2 CFR part 416. On December 6, 2000, the Office of Science and Technology Policy issued the Federal Policy on Research Misconduct which addresses research misconduct in research conducted by Federal agencies, conducted or managed for the Federal government by contractors, or supported by the Federal government and performed at research institutions. USDA initially implemented these requirements as interim policy through SM 2400-007. On August 13, 2010, USDA issued a final rule to establish at 7 CFR part 3022 the codification of the Office of Science and Technology Policy's Federal Policy on Research Misconduct. See 75 F ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 153k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━