81 FR 45270 - Health and Human Services Grants Regulation

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Federal Register Volume 81, Issue 134 (July 13, 2016)

This notice of proposed rulemaking (NPRM) proposes changes to the Department of Health and Human Services' (HHS) adoption of the Office of Management and Budget's (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (``Uniform Administrative Requirements'') published on December 19, 2014 (79 FR 75871) and the technical amendments published by HHS on January 20, 2016 (81 FR 3004). HHS codified the OMB language, with noted modifications as explained in the preamble to the December promulgation, in 45 CFR part 75. The HHS-specific modifications to the Uniform Administrative Requirements adopted prior regulatory language that was not in conflict with OMB's language, and provided additional guidance to the regulated community. Unlike all of the other modifications to the Uniform Administrative Requirements, these proposed changes, although based on existing law or HHS policy, were not previously codified in regulation. This NPRM seeks comments on these important proposed regulatory changes.

[Federal Register Volume 81, Number 134 (Wednesday, July 13, 2016)]
[Proposed Rules]
[Pages 45270-45273]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-15014]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 75

RIN 0991-AC06


Health and Human Services Grants Regulation

AGENCY: Department of Health and Human Services; Office of the 
Assistant Secretary for Financial Resources, Division of Grants, Office 
of Grants Policy, Oversight, and Evaluation.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This notice of proposed rulemaking (NPRM) proposes changes to 
the Department of Health and Human Services' (HHS) adoption of the 
Office of Management and Budget's (OMB) Uniform Administrative 
Requirements, Cost Principles, and Audit Requirements for Federal 
Awards (``Uniform Administrative Requirements'') published on December 
19, 2014 (79 FR 75871) and the technical amendments published by HHS on 
January 20, 2016 (81 FR 3004). HHS codified the OMB language, with 
noted modifications as explained in the preamble to the December 
promulgation, in 45 CFR part 75. The HHS-specific modifications to the 
Uniform Administrative Requirements adopted prior regulatory language 
that was not in conflict with OMB's language, and provided additional 
guidance to the regulated community. Unlike all of the other 
modifications to the Uniform Administrative Requirements, these 
proposed changes, although based on existing law or HHS policy, were 
not previously codified in regulation. This NPRM seeks comments on 
these important proposed regulatory changes.

DATES: To be assured consideration, comments must be received at the 
address provided below, no later than 5 p.m. on August 12, 2016.

ADDRESSES: In commenting, please refer to file code 0991-AC06. Because 
of staff and resource limitations, comments must be submitted 
electronically to www.regulations.gov. Follow the ``Submit a comment'' 
instructions.

FOR FURTHER INFORMATION CONTACT: Dr. Audrey Clarke at HHS at 202-720-
1908.

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including personally identifiable or confidential business information 
that is included in a comment. We post all comments received before the 
end of the comment period on the following Web site as soon as possible 
after they have been received: http://regulations.gov. Follow the 
search instructions on that Web site to view the public comments.

Background

    This NPRM proposes changes to the HHS's adoption of the Uniform 
Administrative Requirements, Cost Principles, and Audit Requirements 
for Federal Awards published on December 19, 2014 (79 FR 75871) and the 
technical amendments published by HHS on January 20, 2016 (81 FR 3004). 
HHS codified the OMB language, with noted modifications, in 45 CFR part 
75. Unlike all of the other modifications to the Uniform Administrative 
Requirements, these proposed changes, although based on existing law or 
HHS policy, were not previously codified in regulation. This NPRM seeks 
comments for these important regulatory changes.
    In order to give full effect to other important government-wide 
initiatives, HHS is proposing further amendments at this time, which 
HHS intends to finalize as soon as possible. HHS proposes several 
additional changes to the codification of 2 CFR part 200 in 45 CFR part 
75. First, HHS proposes to add language to 45 CFR 75.102, clarifying 
that the audit requirements and cost principles applicable to contracts 
and compacts awarded pursuant to the Indian Self Determination and 
Education Assistance Act (ISDEAA) are

[[Page 45271]]

governed by subparts E and F including Sec.  75.505 Sanctions, 
enforceable through Sec.  75.371 Remedies for noncompliance, and that 
certain other sections and subparts of these regulations do not apply 
to ISDEAA contracts and compacts.
    Notably, the ISDEAA itself specifies that contracts and compacts 
awarded pursuant to the ISDEAA are subject to the Single Audit Act and 
OMB Circulars A-133, A-87, and A-122 and that ISDEAA contracts are not 
subject to federal grant and cooperative agreement requirements. 25 
U.S.C. 450c(f), 458aaa-5(c). In order to clarify how the Uniform 
Administrative Requirements interact with the prior-enacted Federal 
statute, and to minimize confusion regarding applicability, HHS has 
determined that this clarification is required. This will additionally 
ensure that Indian tribes and tribal organizations are fully apprised 
of their rights and responsibilities. Although HHS considers this 
amendment to be a requirement of existing statute and regulation, HHS 
proposes this change with notice and an opportunity for comment to 
ensure that the regulated community is aware of this clarification.
    In addition, HHS proposes to add language to clarify the meaning of 
disallowed cost as used in 25 U.S.C. 450j-1(f) to reflect that the 
meaning must adhere to the audit requirements of 45 CFR part 75, 
subpart F. Because subpart F applies to ISDEAA contracts and compacts, 
and the ISDEAA contains a stringent time limitation on certain claims 
pursuant to the Single Audit Act Amendments of 1996 (31 U.S.C. 7501-
7507), HHS proposes to clarify that the scope of the time limitation 
applies only to cost disallowances arising under such Act, and not to 
other claims or disallowances identified through other audits or 
investigations. Without the addition of this clarifying language a 
different interpretation of the time limitation (which has been adopted 
in a few isolated judicial and administrative cases) would place 
additional administrative burdens on the Indian Health Service and 
entities holding ISDEAA contracts and compacts by compelling the 
government and the entities to perform burdensome and intrusive program 
compliance reviews in addition to the annual single audit required by 
the Single Audit Act. HHS believes the proposed language avoids 
imposing unreasonable burdens on the government and tribes and limits 
the need for yearly program compliance reviews.
    Second, HHS proposes two changes to 45 CFR 75.300. First, HHS is 
codifying a prohibition in the provision of services of discrimination 
on the basis of age, disability, sex, race, color, national origin, 
religion, sexual orientation, or gender identity. This provision 
codifies for all HHS service grants what is already applicable for all 
HHS service contracts, as required by the HHS Acquisition Regulation 
(HHSAR) 352.237-74. The HHSAR provision makes explicit HHS's non-
discrimination policy when obligating appropriations for solicitations, 
contracts and orders that deliver service under HHS's programs directly 
to the public. In order to ensure that this same provision applies 
equally to grants, HHS proposes an addition to make this explicit in 
the grants context.
    This provision does not apply to funding under the Temporary 
Assistance for Needy Families Program (TANF) (title IV-A of the Social 
Security Act, 42, U.S.C. 601-619). The TANF statute, 42 U.S.C. 608(d), 
already identifies the nondiscrimination provisions that can be applied 
to TANF.
    In addition, HHS is codifying its implementation of the decisions 
in U.S. v. Windsor, 570 U.S. __(2013), 133 S.Ct. 2675 and Obergefell v. 
Hodges, 576 U.S. __(2015), 135 S.Ct. 2584. The HHS codification of its 
interpretation of these Supreme Court decisions ensures that same-sex 
spouses, marriages, and households are treated the same as opposite-sex 
spouses, marriages, and households in terms of determining beneficiary 
eligibility or participation in grant-related activities.
    Because these two codifications are being proposed for consistency 
with law and current HHS policy, HHS believes that they are non-
controversial, but nonetheless requests public comment. Third, HHS is 
proposing to clarify the language currently codified in 45 CFR part 75 
regarding the applicability to states of certain payment provisions. 
Because the current language applies the provisions of Treasury--State 
Cash Management Improvement Act agreements and default procedures 
codified at 31 CFR part 205 and TM 4A-2000, and such agreements may not 
contain specific provisions addressed by 45 CFR 75.305, HHS seeks to 
modify the language to ensure clarity. In doing so, to the extent that 
the governing provisions are silent as to the payment provisions 
described in the Uniform Administrative Requirements, there should be 
no effect on states, as they had been subject to these same provisions 
pursuant to 45 CFR 92.21. However, HHS proposes the clarification so 
that all states are aware of the necessity to, for example, expend 
refunds and rebates prior to drawing down additional grant funds.
    Fourth, HHS is proposing to amend 45 CFR 75.365, related to 
restrictions on public access to records, in order to implement the 
President's Executive Order 13,642 (May 9, 2013), and corresponding 
law. See, e.g., http://www.whitehouse.gov/the-press-office/2013/05/09/executive-order-making-open-and-machine-readable-new-default-government-, and Departments of Labor, Health and Human Services, and 
Education, and Related Agencies Appropriations Act of 2014, Public Law 
113-76, Div. H, Sec. 527. HHS proposes to codify permissive authority 
for HHS awarding agencies to require public access to manuscripts, 
publications, and data produced under an award, consistent with 
applicable law.
    Fifth, HHS is proposing to amend 45 CFR 75.414(c) to add a 
provision to restrict indirect cost rates for certain grants. It is 
long-standing HHS policy to restrict training grants to a maximum eight 
percent indirect cost rate. HHS proposes additionally to impose this 
same limitation on foreign organizations and foreign public entities, 
which typically do not negotiate indirect cost rates. In the proposed 
rule, American University, Beirut, and the World Health Organization 
are exempted specifically from the indirect cost rate limitation 
because they are eligible for negotiated facilities and administration 
(F&A) cost reimbursement. This restriction on indirect costs, as 
indicated by 45 CFR 75.101, flows down to subawards and subrecipients.
    Finally, HHS proposes a new selected item of cost for codification 
in the cost principles as 45 CFR 75.477, regarding shared 
responsibility payments. As HHS has already announced in policy for the 
Ryan White HIV/AIDS Program, any payments or assessments imposed on an 
individual or individuals pursuant to 26 U.S.C. 5000A(b) as a result of 
any failure to maintain minimum essential coverage as required by 26 
U.S.C. 5000A(a), are not allowable costs under a grant. See HAB Policy 
Notice 13-04, at 2-3; http://hab.hrsa.gov/manageyourgrant/pinspals/pcn1304privateinsurance.pdf. Because this is a sound public policy 
requirement for all grants, not just the Ryan White HIV/AIDS Program 
grants, HHS proposes to codify this provision in the Uniform 
Administrative Requirements. Furthermore, HHS proposes to adopt the 
same stance with regard to payments for failure to offer health 
coverage to employees. Because the provision codified at 26 U.S.C. 
4980H has not yet been enforced against any employers, HHS has not had 
the need previously to announce a stance on this issue. HHS does so 
now, and seeks comments from the public.

[[Page 45272]]

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Ch. 3506; 5 CFR 1320 Appendix A.1), HHS reviewed this NPRM and 
determined that there are no new collections of information contained 
therein.

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires that an agency 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. This NPRM aligns 45 CFR part 75 with various regulatory and 
statutory provisions, implements Supreme Court decisions, and codifies 
long-standing policies thus clarifying and enhancing the provisions in 
HHS's interim final guidance issued December 19, 2014, and amended on 
January 20, 2016. In order to ensure that the public receives the most 
value, it is essential that HHS grant programs function as effectively 
and efficiently as possible, and that there is a high level of 
accountability to prevent waste, fraud, and abuse. The proposed 
additions provide enhanced direction for the public and will not have a 
significant economic impact beyond HHS's current regulations.

Executive Order 12866 Determination

    Pursuant to Executive Order 12866, HHS has designated this NPRM to 
be economically non-significant. This rule is not being treated as a 
``significant regulatory action'' under section 3(f) of Executive Order 
12866. Accordingly, the rule has not been reviewed by the Office of 
Management and Budget.

Unfunded Mandates Reform Act of 1995 Determination

    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. HHS has determined 
that this NPRM 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, HHS has not prepared a budgetary impact 
statement or specifically addressed the regulatory alternatives 
considered.

Executive Order 13132 Determination

    HHS has determined that this NPRM does not have any Federalism 
implications, as required by Executive Order 13132.

Sylvia M. Burwell,
Secretary, Department of Health and Human Services.

List of Subjects in 45 CFR Part 75

    Accounting, Administrative practice and procedure, Cost principles, 
Grant programs, Grant programs--health, Grants administration, 
Hospitals, Indians, Nonprofit organizations reporting and recordkeeping 
requirements, and State and local governments.

    For the reasons set forth in the preamble, part 75 of title 45 of 
the Code of Federal Regulations is proposed to be amended as follows:

0
1. The authority citation for 45 CFR part 75 continues to read as 
follows:

    Authority: 5 U.S.C. 301.

0
2. Amend Sec.  75.101 by adding paragraph (f) to read as follows:


Sec.  75.101  Applicability.

* * * * *
    (f) Section 75.300(c) does not apply to the Temporary Assistance 
for Needy Families Program (title IV-A of the Social Security Act, 42 
U.S.C. 601-619).
0
3. Amend Sec.  75.102 by adding paragraph (e) to read as follows:


Sec.  75.102  Exceptions.

* * * * *
    (e)(1) Indian tribes and tribal organizations carrying out a 
compact or contract under the ISDEAA must comply with Subpart E, Cost 
Principles, and Subpart F, Audit Requirements, including Sec.  75.505 
Sanctions, enforceable through Sec.  75.371 Remedies for noncompliance. 
References to cost principles and audit requirements in the ISDEAA and 
its implementing regulations, including OMB Circulars A-87, A-122, and 
A-133 (which were superseded by 2 CFR 200), shall be deemed to be 
references to subparts E and F. Except for statutorily mandated grants 
added to a funding agreement in accordance with 42 CFR part 137, 
subpart F, certain sections of this part, applicable to grants and 
cooperative agreements, do not apply to ISDEAA contracts and compacts, 
including 45 CFR 75.111, 75.112, and 75.113 and subparts C and D.
    (2) Cost disallowances to which the limitation on remedies under 25 
U.S.C. 450j-1(f) applies shall include only disallowed costs that are 
identified through a Single Agency Audit conducted pursuant to the 
Single Audit Act and subject to the requirements of subpart F, and 
shall not include claims or disallowances identified through other 
audits or investigations.
0
4. Amend Sec.  75.300 by adding paragraphs (c) and (d) to read as 
follows:


Sec.  75.300  Statutory and national policy requirements.

* * * * *
    (c) It is a public policy requirement of HHS that no person 
otherwise eligible will be excluded from participation in, denied the 
benefits of, or subjected to discrimination in the administration of 
HHS programs and services based on non-merit factors such as age, 
disability, sex, race, color, national origin, religion, gender 
identity, or sexual orientation. Recipients must comply with this 
public policy requirement in the administration of programs supported 
by HHS awards.
    (d) In accordance with the Supreme Court decisions in United States 
v. Windsor and in Obergefell v. Hodges, all recipients must treat as 
valid the marriages of same-sex couples. This does not apply to 
registered domestic partnerships, civil unions or similar formal 
relationships recognized under state law as something other than a 
marriage.
0
5. Revise Sec.  75.305(a) to read as follows:


Sec.  75.305  Payment.

    (a)(1) For states, payments are governed by Treasury-State CMIA 
agreements and default procedures codified at 31 CFR part 205 and TFM 
4A-2000 Overall Disbursing Rules for All Federal Agencies.
    (2) To the extent that Treasury-State CMIA agreements and default 
procedures do not address expenditure of program income, rebates, 
refunds, contract settlements, audit recoveries and interest earned on 
such funds, such funds must be expended before requesting additional 
cash payments.
* * * * *
0
6. Revise Sec.  75.365 to read as follows:


Sec.  75.365  Restrictions on public access to records.

    Consistent with section 75.322 of this part, HHS awarding agencies 
may require recipients to permit public access to manuscripts, 
publications, and data produced under an award. However, no HHS 
awarding agency may place restrictions on the non-Federal entity that 
limit public access to the records of the non-Federal entity pertinent 
to a Federal award identified

[[Page 45273]]

in sections 75.361 through 75.364, except for protected personally 
identifiable information (PII) or when the HHS awarding agency can 
demonstrate that such records will be kept confidential and would have 
been exempted from disclosure pursuant to the Freedom of Information 
Act (5 U.S.C. 552) or controlled unclassified information pursuant to 
Executive Order 13556 if the records had belonged to the HHS awarding 
agency. The Freedom of Information Act (5 U.S.C. 552) (FOIA) does not 
apply to those records that remain under a non-Federal entity's control 
except as required under Sec.  75.322. Unless required by Federal, 
state, local, or tribal statute, non-Federal entities are not required 
to permit public access to their records identified in sections 75.361 
through 75.364. The non-Federal entity's records provided to a Federal 
agency generally will be subject to FOIA and applicable exemptions.
0
7. In Sec.  75.414(c)(1) add paragraphs (c)(1)(i) through (iii):


Sec.  75.414  Indirect (F&A) costs.

* * * * *
    (c)(1) * * *
    (i) indirect costs on training grants are limited to a fixed rate 
of eight percent of MTDC exclusive of tuition and related fees, direct 
expenditures for equipment, and subawards in excess of $25,000;
    (ii) indirect costs on grants awarded to foreign organizations and 
foreign public entities and performed fully outside of the territorial 
limits of the U.S. may be paid to support the costs of compliance with 
federal requirements at a fixed rate of eight percent of MTDC exclusive 
of tuition and related fees, direct expenditures for equipment, and 
subawards in excess of $25,000; and,
    (iii) negotiated indirect costs may be paid to the American 
University, Beirut, and the World Health Organization.
* * * * *
0
8. Add Sec.  75.477 to read as follows:


Sec.  75.477  Shared responsibility payments.

    (a) Payments for failure to maintain minimum essential health 
coverage. Any payments or assessments imposed on an individual or 
individuals pursuant to 26 U.S.C. 5000A(b) as a result of any failure 
to maintain minimum essential coverage as required by 26 U.S.C. 
5000A(a) are not allowable expenses under Federal awards from an HHS 
awarding agency.
    (b) Payments for failure to offer health coverage to employees. Any 
payments or assessments imposed on an employer pursuant to 26 U.S.C. 
4980H as a result of the employer's failure to offer to its full-time 
employees (and their dependents) the opportunity to enroll in minimum 
essential coverage under an eligible employer-sponsored plan are not 
allowable expenses under Federal awards from an HHS awarding agency.

[FR Doc. 2016-15014 Filed 7-12-16; 8:45 am]
 BILLING CODE 4150-24-P