81_FR_62790 81 FR 62614 - McGovern-Dole International Food for Education and Child Nutrition Program

81 FR 62614 - McGovern-Dole International Food for Education and Child Nutrition Program

DEPARTMENT OF AGRICULTURE
Foreign Agricultural Service

Federal Register Volume 81, Issue 176 (September 12, 2016)

Page Range62614-62626
FR Document2016-21347

The Foreign Agricultural Service (FAS) revises the regulations governing the award of agricultural commodities and financial and technical assistance to recipients under the McGovern-Dole International Food for Education and Child Nutrition (McGovern-Dole) Program. This revision is necessary to clarify requirements for applicants for, and recipients of, awards under the McGovern-Dole Program and to inform interested parties that the OMB guidance on Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, as supplemented by USDA regulations, applies to awards under the McGovern-Dole Program other than awards to foreign public entities. The revised regulations will enable applicants and recipients to better understand program requirements and FAS to more effectively implement the McGovern-Dole Program.

Federal Register, Volume 81 Issue 176 (Monday, September 12, 2016)
[Federal Register Volume 81, Number 176 (Monday, September 12, 2016)]
[Rules and Regulations]
[Pages 62614-62626]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-21347]


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DEPARTMENT OF AGRICULTURE

Foreign Agricultural Service

7 CFR Part 1599

RIN 0551-AA88


McGovern-Dole International Food for Education and Child 
Nutrition Program

AGENCY: Foreign Agricultural Service, USDA.

ACTION: Final rule with request for comments.

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SUMMARY: The Foreign Agricultural Service (FAS) revises the regulations 
governing the award of agricultural commodities and financial and 
technical assistance to recipients under the McGovern-Dole 
International Food for Education and Child Nutrition (McGovern-Dole) 
Program. This revision is necessary to clarify requirements for 
applicants for, and recipients of, awards under the McGovern-Dole 
Program and to inform interested parties that the OMB guidance on 
Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards, as supplemented by USDA regulations, 
applies to awards under the McGovern-Dole Program other than awards to 
foreign public entities. The revised regulations will enable applicants 
and recipients to better understand program requirements and FAS to 
more effectively implement the McGovern-Dole Program.

DATES: This rule is effective September 12, 2016. Written comments must 
be received by FAS or carry a postmark or equivalent no later than 
October 12, 2016.

ADDRESSES: Submit comments to Director, Food Assistance Division, 
Office of Capacity Building and Development, Foreign Agricultural 
Service, 1400 Independence Ave. SW., STOP 1034, Washington, DC 20250.

FOR FURTHER INFORMATION CONTACT: Benjamin Muskovitz, Director, Food 
Assistance Division, Office of Capacity Building and Development, 
Foreign Agricultural Service, 1400 Independence Ave. SW., STOP 1034, 
Washington, DC 20250. Telephone: (202) 720-4221; Fax: (202) 690-0251; 
Email: [email protected].

SUPPLEMENTARY INFORMATION:

Background

    The McGovern-Dole International Food for Education and Child 
Nutrition Program helps support food security, child development, and 
education in low-income, food-deficit countries around the world. The 
program

[[Page 62615]]

provides for the donation of U.S. agricultural commodities, as well as 
financial and technical assistance, to support school feeding and 
maternal and child health and nutrition projects. The McGovern-Dole 
Program is authorized in section 3107 of the Farm Security and Rural 
Investment Act of 2002 (7 U.S.C. 1736o-1).
    FAS uses the regulations in 7 CFR part 1599, McGovern-Dole 
International Food for Education and Child Nutrition Program, in the 
administration of the McGovern-Dole Program. The previous version of 
the regulations was published as a final rule on March 26, 2009 (74 FR 
13062).
    On December 26, 2013, the Office of Management and Budget (OMB) 
issued guidance on Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards in 2 CFR part 200 
(78 FR 78608). In 2 CFR 400.1, the United States Department of 
Agriculture (USDA) adopted OMB's guidance in subparts A through F of 2 
CFR part 200, as supplemented by 2 CFR part 400, as USDA policies and 
procedures for uniform administrative requirements, cost principles, 
and audit requirements for Federal awards (79 FR 75982, December 19, 
2014).

Revision of Regulations

    FAS is revising the McGovern-Dole Program regulations in 7 CFR part 
1599 through this final rule. Many of the changes to the regulations 
are technical in nature and intended to improve the efficiency and 
effectiveness of the McGovern-Dole Program. Some of the detail that was 
previously included in the program regulations will now be included in 
the applicable notice of funding opportunity.
    The more significant changes to 7 CFR part 1599 include:
    (1) Updating 7 CFR part 1599 to make it clear that the guidance in 
2 CFR part 200, as supplemented by 2 CFR part 400 and 7 CFR part 1599, 
applies to awards under the McGovern-Dole Program other than awards to 
foreign public entities. Applicants for, and recipients of, awards 
under the McGovern-Dole Program must consult all three parts to be 
informed of all regulatory requirements. Because 7 CFR part 1599 deals 
specifically with the McGovern-Dole Program, the provisions of 7 CFR 
part 1599 will apply if they differ from the provisions of 2 CFR part 
200 or part 400.
    (2) Clarifying the types of entities eligible for awards under the 
McGovern-Dole Program and the applicability of the regulations in 7 CFR 
part 1599 to each type of eligible entity (7 CFR 1599.1(d)-(g) and 
1599.3(a)).
    In accordance with 7 U.S.C. 1736o-1(e), assistance under the 
McGovern-Dole Program may be provided to private voluntary 
organizations, cooperatives, intergovernmental organizations, 
governments of developing countries and their agencies, and other 
organizations. However, the regulations do not apply to all of these 
entities. The guidance in 2 CFR part 200 does not generally apply to 
for-profit entities, foreign public entities, or foreign organizations. 
According to 2 CFR 200.101(c), Federal awarding agencies may apply 
subparts A through E of 2 CFR part 200 to for-profit entities, foreign 
public entities, or foreign organizations, except where the Federal 
awarding agency determines that the application of these subparts would 
be inconsistent with the international obligations of the United States 
or the statutes or regulations of a foreign government.
    FAS has determined not to apply 2 CFR parts 200 and 400 and 7 CFR 
part 1599 to foreign public entities. Therefore, they do not apply to 
foreign governments or their agencies or to intergovernmental 
organizations (such as the World Food Program), because these entities 
are included within the definition of a foreign public entity in 2 CFR 
200.46.
    FAS has determined to apply subparts A through E of 2 CFR part 200, 
as supplemented by 2 CFR part 400 and 7 CFR part 1599, to for-profit 
entities and foreign organizations. Accordingly, they apply to 
applicants for, and recipients of, awards under the McGovern-Dole 
Program that are private voluntary organizations, including those that 
are foreign organizations; cooperatives, including those that are for-
profit entities or foreign organizations; and other organizations, 
including those that are for-profit entities or foreign organizations, 
but not including intergovernmental organizations.
    FAS has determined to apply subparts A through E of 2 CFR part 200, 
as supplemented by 2 CFR part 400 and 7 CFR part 1599, to all subawards 
to all subrecipients under this part, except where the subrecipient is 
a foreign public entity or where FAS determines that the application of 
these provisions to a subrecipient that is a foreign organization would 
be inconsistent with the international obligations of the United States 
or the statutes or regulations of a foreign government or would not be 
in the best interest of the United States.
    Subpart F of 2 CFR part 200, as supplemented by 2 CFR part 400 and 
7 CFR part 1599, applies only to awards by FAS to recipients that are 
private voluntary organizations, cooperatives or other organizations, 
but that are not for-profit entities or foreign organizations. Subpart 
F of 2 CFR part 200, as supplemented by 2 CFR part 400 and 7 CFR part 
1499, applies to subawards to subrecipients, except where the 
subrecipient is a for-profit entity, foreign public entity, or foreign 
organization. In 7 CFR part 1599, FAS sets forth other audit 
requirements that apply to recipients and subrecipients that are for-
profit entities or foreign organizations (7 CFR 1599.18).
    (3) Adding and updating definitions of terms used in the 
regulations and removing definitions of terms that are no longer needed 
(7 CFR 1599.2).
    (4) Including a requirement for an applicant to include in its 
application the amount of funding that will be provided to each 
proposed subrecipient under the agreement (7 CFR 1599.4(b)(4)(iii)).
    (5) Adding new and modifying existing provisions relating to cash 
advances and reimbursements for expenses (7 CFR 1599.6(f)).
    (6) Adding new and modifying existing labeling and notification 
requirements applicable to the packaging, identification, source, 
funding, and use of the donated commodities, while allowing for the 
waiver of these labeling and notification requirements in exceptional 
circumstances (7 CFR 1599.8(d)-(h)).
    (7) Updating and clarifying language requiring recipients to report 
on the loss of or damage to donated commodities and pursue claims in 
the event of loss or damage (7 CFR 1599.9 and 1599.10).
    (8) Incorporating new performance monitoring and evaluation 
requirements (7 CFR 1599.12).
    (9) Updating reporting requirements (7 CFR 1599.13).
    (10) Adding a section setting forth audit requirements for 
recipients and subrecipients (7 CFR 1599.18). Although the audit 
requirements in subpart F of 2 CFR part 200 do not apply to recipients 
or subrecipients that are for-profit entities or foreign organizations, 
FAS has determined to require such recipients and subrecipients to 
obtain an audit, provided that they expend, during the fiscal year, a 
total of at least the audit requirement threshold in 2 CFR 200.501 in 
Federal awards. The regulations lay out two options for satisfying this 
audit requirement.

Notice and Comment

    This rule is being issued as a final rule without prior notice and 
opportunity for comment. The

[[Page 62616]]

Administrative Procedure Act exempts rules ``relating to agency 
management or personnel or to public property, loans, grants, benefits, 
or contracts'' from the statutory requirement for prior notice and 
opportunity for comment (5 U.S.C. 553(a)(2)). Accordingly, this rule 
may be made effective less than 30 days after publication in the 
Federal Register. However, members of the public may participate in 
this rulemaking by submitting written comments, data, or views. FAS 
will consider the comments received and may conduct additional 
rulemaking based on the comments. Written comments must be received by 
FAS or carry a postmark or equivalent no later than October 12, 2016.

Catalog of Federal Domestic Assistance

    The program covered by this regulation is listed in the Catalog of 
Federal Domestic Assistance (CFDA) under the following FAS CFDA number: 
10.608, Food for Education.

E-Government Act Compliance

    FAS is committed to complying with the E-Government Act of 2002 (44 
U.S.C. chapter 36), to promote the use of the Internet and other 
information technologies to provide increased opportunities for 
citizens' access to Government information and services, and for other 
purposes.

Executive Order 12866

    This rule is issued in conformance with Executive Order 12866, 
``Regulatory Planning and Review.'' It has been determined to be not 
significant for the purposes of Executive Order 12866 and, therefore, 
was not reviewed by OMB.

Executive Order 12988

    This rule has been reviewed in accordance with Executive Order 
12988, ``Civil Justice Reform.'' This rule does not preempt State or 
local laws, regulations, or policies unless they present an 
irreconcilable conflict with this rule. This rule will not be 
retroactive.

Executive Order 12372

    Executive Order 12372, ``Intergovernmental Review of Federal 
Programs,'' requires consultation with officials of State and local 
governments that would be directly affected by the proposed Federal 
financial assistance. The objectives of the Executive Order are to 
foster an intergovernmental partnership and a strengthened federalism 
by relying on State and local processes for the State and local 
government coordination and review of proposed Federal financial 
assistance and direct Federal development. This rule will not directly 
affect State or local officials and, for this reason, it is excluded 
from the scope of Executive Order 12372.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996, 
generally requires an agency to prepare a regulatory flexibility 
analysis of any rule that is subject to notice and comment rulemaking 
under the Administrative Procedure Act (APA) or any other law, unless 
the agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. The Regulatory 
Flexibility Act does not apply to this rule because FAS is not required 
by the APA or any other law to publish a notice of proposed rulemaking 
with respect to the subject matter of the rule.

Executive Order 13132

    This rule has been reviewed under Executive Order 13132, 
``Federalism.'' This rule will not have any substantial direct effect 
on States, on the relationship between the Federal government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government, except as required by law. This rule does 
not impose substantial direct compliance costs on State and local 
governments. Therefore, consultation with the States was not required.

Executive Order 13175

    This rule has been reviewed in accordance with the requirements of 
Executive Order 13175, ``Consultation and Coordination with Indian 
Tribal Governments.'' Executive Order 13175 requires Federal agencies 
to consult and coordinate with tribes on a government-to-government 
basis on policies that have tribal implications, including regulations, 
legislative comments or proposed legislation, and other policy 
statements or actions that have substantial direct effects on one or 
more Indian tribes, on the relationship between the Federal Government 
and Indian tribes, or on the distribution of power and responsibilities 
between the Federal Government and Indian tribes. FAS does not expect 
this rule to have any effect on Indian tribes.

Unfunded Mandates

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) does 
not apply to this rule because it does not impose any enforceable duty 
or contain any unfunded mandate as described under the UMRA.

List of Subjects in 7 CFR Part 1599

    Agricultural commodities, Cooperative agreements, Exports, Food 
assistance programs, Foreign aid, Grant programs-agriculture, Technical 
assistance.

0
For the reasons stated in the preamble, the Foreign Agricultural 
Service revises 7 CFR part 1599 to read as follows:

PART 1599--McGOVERN-DOLE INTERNATIONAL FOOD FOR EDUCATION AND CHILD 
NUTRITION PROGRAM

Sec.
1599.1 Purpose and applicability.
1599.2 Definitions.
1599.3 Eligibility and conflicts of interest.
1599.4 Application process.
1599.5 Agreements.
1599.6 Payments.
1599.7 Transportation of donated commodities.
1599.8 Entry, handling, and labeling of donated commodities and 
notification requirements.
1599.9 Damage to or loss of donated commodities.
1599.10 Claims for damage to or loss of donated commodities.
1599.11 Use of donated commodities, sale proceeds, FAS-provided 
funds, and program income.
1599.12 Monitoring and evaluation requirements.
1599.13 Reporting and record keeping requirements.
1599.14 Subrecipients.
1599.15 Noncompliance with an agreement.
1599.16 Suspension and termination of agreements.
1599.17 Opportunities to object and appeals.
1599.18 Audit requirements.
1599.19 Paperwork Reduction Act.

    Authority:  7 U.S.C. 1736o-1.


Sec.  1599.1  Purpose and applicability.

    (a) This part sets forth the general terms and conditions governing 
the award of donated commodities and funds by the Foreign Agricultural 
Service (FAS) to recipients under the McGovern-Dole International Food 
for Education and Child Nutrition Program (McGovern-Dole Program). 
Under the McGovern-Dole Program, recipients use the donated 
commodities, proceeds from any sale of such commodities, FAS-provided 
funds, and program income to implement a project in a foreign country 
pursuant to an agreement with FAS.
    (b)(1) The Office of Management and Budget (OMB) issued guidance on 
Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards in 2

[[Page 62617]]

CFR part 200. In 2 CFR 400.1, the United States Department of 
Agriculture (USDA) adopted OMB's guidance in subparts A through F of 2 
CFR part 200, as supplemented by 2 CFR part 400, as USDA policies and 
procedures for uniform administrative requirements, cost principles, 
and audit requirements for Federal awards.
    (2) The OMB guidance at 2 CFR part 200, as supplemented by 2 CFR 
part 400 and this part, applies to the McGovern-Dole Program, except as 
provided in paragraphs (e), (f) and (g) of this section.
    (c) Except as otherwise provided in this part, other regulations 
that are generally applicable to grants and cooperative agreements of 
USDA, including the applicable regulations set forth in 2 CFR chapters 
I, II, and IV, also apply to the McGovern-Dole Program.
    (d) In accordance with 7 U.S.C. 1736o-1(e), assistance under the 
McGovern-Dole Program may be provided to private voluntary 
organizations, cooperatives, intergovernmental organizations, 
governments of developing countries and their agencies, and other 
organizations.
    (e) The OMB guidance at 2 CFR part 200, and the provisions of 2 CFR 
part 400 and of this part, do not apply to an award by FAS under the 
McGovern-Dole Program to a recipient that is a foreign public entity, 
as defined in 2 CFR 200.46, and, therefore, they do not apply to a 
foreign government or its agency or an intergovernmental organization.
    (f)(1) The OMB guidance at subparts A through E of 2 CFR part 200, 
as supplemented by 2 CFR part 400 and this part, applies to all awards 
by FAS under the McGovern-Dole Program to all recipients that are 
private voluntary organizations, including a private voluntary 
organization that is a foreign organization, as defined in 2 CFR 
200.47; cooperatives, including a cooperative that is a for-profit 
entity or a foreign organization; or other organizations, including 
organizations that are for-profit entities or foreign organizations, 
but not including intergovernmental organizations.
    (2) The OMB guidance at subparts A through E of 2 CFR part 200, as 
supplemented by 2 CFR part 400 and this part, applies to all subawards 
to all subrecipients under this part, except in cases:
    (i) Where the subrecipient is a foreign public entity; or
    (ii) Where FAS determines that the application of these provisions 
to a subaward to a subrecipient that is a foreign organization would be 
inconsistent with the international obligations of the United States or 
the statutes or regulations of a foreign government or would not be in 
the best interest of the United States.
    (g)(1) The OMB guidance at subpart F of 2 CFR part 200, as 
supplemented by 2 CFR part 400 and this part, applies only to awards by 
FAS to recipients that are private voluntary organizations, 
cooperatives, or other organizations, but that are not for-profit 
entities or foreign organizations.
    (2) The OMB guidance at subpart F of 2 CFR part 200, as 
supplemented by 2 CFR part 400 and this part, applies to subawards to 
subrecipients under this part, except where the subrecipient is a for-
profit entity, foreign public entity, or foreign organization.
    (3) Audit requirements for recipients and subrecipients that are 
for-profit entities or foreign organizations are set forth in Sec.  
1599.18.


Sec.  1599.2  Definitions.

    These are definitions for terms used in this part. The definitions 
in 2 CFR part 200, as supplemented in 2 CFR part 400, are also 
applicable to this part, with the exception that, if a term that is 
defined in this section is defined differently in 2 CFR part 200 or 
part 400, the definition in this section will apply to such term as 
used in this part.
    Activity means a discrete undertaking within a project to be 
carried out by a recipient, directly or through a subrecipient, that is 
specified in an agreement and is intended to fulfill a specific 
objective of the agreement.
    Agreement means a legally binding grant or cooperative agreement 
entered into between FAS and a recipient to implement a project under 
the McGovern-Dole Program.
    Commodities mean agricultural commodities, or products of 
agricultural commodities, that are produced in the United States.
    Cooperative means a private sector organization whose members own 
and control the organization and share in its services and its profits 
and that provides business services and outreach in cooperative 
development for its membership.
    Cost sharing or matching means the portion of project expenses, or 
necessary goods and services provided to carry out a project, not paid 
or acquired with Federal funds. The term may include cash or in-kind 
contributions provided by recipients, subrecipients, foreign public 
entities, foreign organizations, or private donors.
    Disburse means to make a payment to liquidate an obligation.
    Donated commodities means the commodities donated by FAS to a 
recipient under an agreement. The term may include donated commodities 
that are used to produce a further processed product for use under the 
agreement.
    FAS means the Foreign Agricultural Service of the United States 
Department of Agriculture.
    FAS-provided funds means U.S. dollars provided under an agreement 
to a recipient, or through a subagreement to a subrecipient, for 
expenses authorized in the agreement, such as expenses for the internal 
transportation, storage and handling of the donated commodities; 
expenses involved in the administration, monitoring, and evaluation of 
the activities under the agreement; and the costs of activities 
conducted in the target country that would enhance the effectiveness of 
the activities implemented under the McGovern-Dole Program.
    McGovern-Dole Program means the McGovern-Dole International Food 
for Education and Child Nutrition Program.
    Private voluntary organization means a not-for-profit, 
nongovernmental organization (in the case of a United States 
organization, an organization that is exempt from Federal income taxes 
under section 501(c)(3) of the Internal Revenue Code of 1986) that 
receives funds from private sources, voluntary contributions of money, 
staff time, or in-kind support from the public, and that is engaged in 
or is planning to engage in voluntary, charitable, or development 
assistance activities (other than religious activities).
    Program income means interest earned on proceeds from the sale of 
donated commodities, as well as funds received by a recipient or 
subrecipient as a direct result of carrying out an approved activity 
under an agreement. The term includes but is not limited to income from 
fees for services performed, the use or rental of real or personal 
property acquired under a Federal award, the sale of items fabricated 
under a Federal award, license fees and royalties on patents and 
copyrights, and principal and interest on loans made with Federal award 
funds. Program income does not include proceeds from the sale of 
donated commodities; FAS-provided funds or interest earned on such 
funds; or funds provided for cost sharing or matching contributions, 
refunds or rebates, credits, discounts, or interest earned on any of 
them.
    Project means the totality of the activities to be carried out by a 
recipient, directly or through a subrecipient, to fulfill the 
objectives of an agreement.
    Recipient means an entity that enters into an agreement with FAS 
and

[[Page 62618]]

receives donated commodities and FAS-provided funds to carry out 
activities under the agreement. The term recipient does not include a 
subrecipient.
    Sale proceeds means funds received by a recipient from the sale of 
donated commodities.
    Subrecipient means an entity that enters into a subagreement with a 
recipient for the purpose of implementing in the target country 
activities described in an agreement. The term does not include an 
individual that is a beneficiary under the agreement.
    Target country means the foreign country in which activities are 
implemented under an agreement.
    USDA means the United States Department of Agriculture.
    Voluntary committed cost sharing or matching contributions means 
cost sharing or matching contributions specifically pledged on a 
voluntary basis by an applicant or recipient, which become binding as 
part of an agreement. Voluntary committed cost sharing or matching 
contributions may be provided in the form of cash or in-kind 
contributions.


Sec.  1599.3  Eligibility and conflicts of interest.

    (a) A private voluntary organization, a cooperative, or another 
organization that is not an intergovernmental organization is eligible 
to submit an application under this part to become a recipient under 
the McGovern-Dole Program. FAS will set forth specific eligibility 
information, including any factors or priorities that will affect the 
eligibility of an applicant or application for selection, in the full 
text of the applicable notice of funding opportunity posted on the U.S. 
Government Web site for grant opportunities.
    (b) Applicants, recipients, and subrecipients must comply with 
policies established by FAS pursuant to 2 CFR 400.2(a), and with the 
requirements in 2 CFR 400.2(b), regarding conflicts of interest.


Sec.  1599.4  Application process.

    (a) An applicant seeking to enter into an agreement with FAS must 
submit an application, in accordance with this section, that sets forth 
its proposal to carry out activities under the McGovern-Dole Program in 
a proposed target country(ies). An application must contain the items 
specified in paragraph (b) of this section and any other items required 
by the notice of funding opportunity and must be submitted 
electronically to FAS at the address set forth in the notice of funding 
opportunity.
    (b) An applicant must include the following items in its 
application:
    (1) A completed Form SF-424, which is a standard application for 
Federal assistance;
    (2) An introduction and a strategic analysis, which includes an 
impact analysis, as specified in the notice of funding opportunity;
    (3) A plan of operation that contains the elements specified in the 
notice of funding opportunity;
    (4) A summary line item budget and a budget narrative that 
indicate:
    (i) The amounts of any sale proceeds, FAS-provided funds, interest, 
program income, and voluntary committed cost sharing or matching 
contributions that the applicant proposes to use to fund:
    (A) Administrative costs;
    (B) Inland and internal transportation, storage and handling (ITSH) 
costs; and
    (C) Activity costs;
    (ii) Where applicable, how the applicant's indirect cost rate will 
be applied to each type of expense; and
    (iii) The amount of funding that will be provided to each proposed 
subrecipient under the agreement;
    (5) A project-level results framework that outlines the changes 
that the applicant expects to accomplish through the proposed project 
and is based on the McGovern-Dole Program-level results framework, as 
set forth in the notice of funding opportunity;
    (6) Unless otherwise specified in the notice of funding 
opportunity, an evaluation plan that describes the proposed design, 
methodology, and time frame of the project's evaluation activities, and 
how the applicant intends to manage these activities, and that will 
include a baseline study, interim evaluation, final evaluation, and any 
applicable special studies; and
    (7) Any additional required items set forth in the notice of 
funding opportunity.
    (c) Each applicant (unless the applicant has an exception approved 
by FAS under 2 CFR 25.110(d)) is required to:
    (1) Be registered in the System for Award Management (SAM) before 
submitting its application;
    (2) Provide a valid unique entity identifier in its application; 
and
    (3) Continue to maintain an active SAM registration with current 
information at all times during which it has an active Federal award or 
an application or plan under consideration by a Federal awarding 
agency.


Sec.  1599.5  Agreements.

    (a) After FAS approves an application by an applicant, FAS will 
negotiate an agreement with the applicant. The agreement will set forth 
the obligations of FAS and the recipient.
    (b) The agreement will specify the general information required in 
2 CFR 200.210(a), as applicable.
    (c) The agreement will incorporate general terms and conditions, 
pursuant to 2 CFR 200.210(b), as applicable.
    (d) To the extent that this information is not already included in 
the agreement pursuant to paragraphs (b) and (c) of this section, the 
agreement will also include the following:
    (1) The kind, quantity, and use of the donated commodities and an 
estimated commodity call forward schedule, with the month and year 
indicated for each expected commodity shipment;
    (2) A plan of operation, which will include the following:
    (i) The objectives to be accomplished under the project;
    (ii) A detailed description of each activity to be implemented;
    (iii) The target country(ies) and the areas of the target 
country(ies) in which the activities will be implemented;
    (iv) The methods and criteria for selecting the beneficiaries of 
the activities;
    (v) Any contributions for cost sharing or matching, including cash 
and non-cash contributions, that the recipient expects to receive from 
non-FAS sources that:
    (A) Are critical to the implementation of the activities; or
    (B) Enhance the implementation of the activities;
    (vi) Any subrecipient that will be involved in the implementation 
of the activities, and the criteria for selecting a subrecipient that 
has not yet been identified;
    (vii) Any other governmental or nongovernmental entities that will 
be involved in the implementation of the activities;
    (viii) Any processing, packaging or repackaging of the donated 
commodities that will take place prior to their distribution, sale or 
barter by the recipient; and
    (ix) Any additional provisions specified by FAS during the 
negotiation of the agreement;
    (3) A budget, which will set forth the maximum amounts of sale 
proceeds, FAS-provided funds, interest, program income, and voluntary 
committed cost sharing or matching contributions that may be used for 
each line item, as well as other applicable budget requirements; and
    (4) Performance goals for the agreement, including a list of 
results, with long-term benefits where applicable, to be achieved by 
the

[[Page 62619]]

activities and corresponding indicators, targets, and time frames.
    (e) The agreement will also include specific terms and conditions, 
and certifications and representations, including the following:
    (1) The agreement will prohibit the sale or transshipment of the 
donated commodities by the recipient to a country not specified in the 
agreement for as long as the recipient has title to such donated 
commodities;
    (2) The recipient will assert that it has taken action to ensure 
that any donated commodities that will be distributed to beneficiaries 
will be imported and distributed free from all customs, duties, tolls, 
and taxes. The recipient must submit information to FAS to support this 
assertion;
    (3) The recipient will assert that, to the best of its knowledge, 
the importation and distribution of the donated commodities in the 
target country will not result in a substantial disincentive to or 
interference with domestic production or marketing in that country. The 
recipient must submit information to FAS to support this assertion;
    (4) The recipient will assert that, to the best of its knowledge, 
any sale or barter of the donated commodities will not displace or 
interfere with any sales of like commodities that may otherwise be made 
within the target country. The recipient must submit information to FAS 
to support this assertion; and
    (5) The recipient will assert that adequate transportation and 
storage facilities will be available in the target country to prevent 
spoilage or waste of the donated commodities. The recipient must submit 
information to FAS to support this assertion.
    (f) FAS may enter into a multicountry agreement in which donated 
commodities are delivered to one country and activities are carried out 
in another.
    (g) FAS may provide donated commodities and FAS-provided funds 
under a multiyear agreement contingent upon the availability of 
commodities and funds.


Sec.  1599.6  Payments.

    (a) If a recipient arranges for transportation in accordance with 
Sec.  1599.7(b)(2), FAS will, as specified in the agreement, pay the 
costs of such transportation to the ocean carrier or to the recipient. 
The recipient must, as specified in the agreement, submit to FAS, 
arrange to be submitted to FAS, or maintain on file and make available 
to FAS, the following documents:
    (1) The original, or a true copy, of each on board bill of lading 
indicating the freight rate and signed by the originating ocean 
carrier;
    (2) For all non-containerized cargoes:
    (i) A signed copy of the Federal Grain Inspection Service (FGIS) 
Official Stowage Examination Certificate;
    (ii) A signed copy of the National Cargo Bureau Certificate of 
Readiness; and
    (iii) A signed copy of the Certificate of Loading issued by the 
National Cargo Bureau or a similar qualified independent surveyor;
    (3) For all containerized cargoes, a copy of the FGIS Container 
Condition Inspection Certificate;
    (4) A signed copy of the U.S. Food Aid Booking Note or charter 
party covering ocean transportation of the cargo;
    (5) In the case of charter shipments, a signed notice of arrival at 
the first discharge port, unless FAS has determined that circumstances 
that could not have been reasonably anticipated or controlled (force 
majeure) have prevented the ocean carrier's arrival at the first port 
of discharge; and
    (6) A request for payment of freight, survey costs other than at 
load port, and other expenses approved by FAS.
    (b) If the agreement specifies that some or all of the documents 
listed in paragraph (a) of this section will be submitted to FAS, then 
FAS will not render payment for transportation services until it has 
received all of the specified documents.
    (c) If a recipient arranges for transportation in accordance with 
Sec.  1599.7(b)(2), and the recipient uses a freight forwarder, the 
recipient must ensure that the freight forwarder is registered in the 
SAM and require the freight forwarder to submit the documents specified 
in paragraph (a) of this section. The recipient will ensure that the 
total commission or fees paid to intermediaries in the transportation 
procurement process will not exceed two and a half percent of the total 
transportation costs.
    (d) In no case will FAS provide payment to a recipient for 
demurrage costs or pay demurrage to any other entity.
    (e) If FAS has agreed to be responsible for the costs of 
transporting, storing, and distributing the donated commodities from 
the designated discharge port or point of entry, and if the recipient 
will bear or has borne any of these costs, in accordance with the 
agreement, FAS will either provide an advance payment or a 
reimbursement to the recipient in the amount of such costs, in the 
manner set forth in the agreement.
    (f) If the agreement authorizes the payment of FAS-provided funds, 
FAS will generally provide the funds to the recipient on an advance 
payment basis, in accordance with 2 CFR 200.305(b). In addition, the 
following procedures will apply to advance payments:
    (1) A recipient may request advance payments of FAS-provided funds, 
up to the total amount specified in the agreement. When making an 
advance payment request, a recipient must provide, for each agreement 
for which it is requesting an advance, total expenditures to date; an 
estimate of expenses to be covered by the advance; total advances 
previously requested, if any; the amount of cash on hand from the 
preceding advance; and, if necessary, a request to roll over any unused 
funds from the preceding advance to the current request period. The 
advance payment request must take into account any program income 
earned since the preceding advance.
    (2) Whenever possible, a recipient should consolidate advance 
payment requests to cover anticipated cash needs for all food 
assistance program awards made by FAS to the recipient. A recipient may 
request advance payments with no minimum time required between 
requests.
    (3) A recipient must minimize the amount of time that elapses 
between the transfer of funds by FAS and the disbursement of funds by 
the recipient. A recipient must fully disburse funds from the preceding 
advance before it submits a new advance request for the same agreement, 
with the exception that the recipient may request to retain the balance 
of any funds that have not been disbursed and roll it over into a new 
advance request if the new advance request is made within 90 days after 
the preceding advance was made.
    (4) FAS will review all requests to roll over funds from the 
preceding advance that have not been disbursed and make a decision 
based on the merits of the request. FAS will consider factors such as 
the amount of funding that a recipient is requesting to roll over, the 
length of time that the recipient has been in possession of the funds, 
any unforeseen or extenuating circumstances, the recipient's history of 
performance, and findings from recent financial audits or compliance 
reviews.
    (5) FAS will not approve any request for an advance or rollover of 
funds if the most recent financial report, as specified in the 
agreement, is past due, or if any required report, as specified in any 
open agreement between the recipient and FAS or the Commodity Credit 
Corporation (CCC), is more than three months in arrears.
    (6)(i) A recipient must return to FAS any funds advanced by FAS 
that have

[[Page 62620]]

not been disbursed as of the 91st day after the advance was made; 
provided, however, that paragraphs (f)(6)(ii) and (iii) of this section 
will apply if the recipient submits a request to FAS before that date 
to roll over the funds into a new advance.
    (ii) If a recipient submits a request to roll over funds into a new 
advance, and FAS approves the rollover of funds, such funds will be 
considered to have been advanced on the date that the recipient 
receives the approval notice from FAS, for the purposes of complying 
with the requirement in paragraph (f)(6)(i) of this section.
    (iii) If a recipient submits a request to roll over funds into a 
new advance, and FAS does not approve the rollover of some or all of 
the funds, such funds must be returned to FAS.
    (iv) If a recipient must return funds to FAS in accordance with 
paragraph (e)(6) of this section, the recipient must return the funds 
by the later of five business days after the 91st day after the funds 
were advanced, or five business days after the date on which the 
recipient receives notice from FAS that it has denied the recipient's 
request to roll over the funds; provided, however, that FAS may specify 
a different date for the return of funds in a written communication to 
the recipient.
    (7) Except as may otherwise be provided in the agreement, a 
recipient must deposit and maintain in an insured bank account located 
in the United States all funds advanced by FAS. The account must be 
interest-bearing, unless one of the exceptions in 2 CFR 200.305(b)(8) 
applies or FAS determines that this requirement would constitute an 
undue burden. A recipient will not be required to maintain a separate 
bank account for advance payments of FAS-provided funds. However, a 
recipient must be able to separately account for the receipt, 
obligation, and expenditure of funds under each agreement.
    (8) A recipient may retain, for administrative expenses, up to $500 
per Federal fiscal year of any interest earned on funds advanced under 
an agreement. The recipient must remit to the U.S. Department of Health 
and Human Services, Payment Management System, any additional interest 
earned during a Federal fiscal year on such funds, in accordance with 
the procedures in 2 CFR 200.305(b)(9).
    (g) If a recipient is required to pay funds to FAS in connection 
with an agreement, the recipient must make such payment in U.S. 
dollars, unless otherwise approved in advance by FAS.


Sec.  1599.7  Transportation of donated commodities.

    (a) Shipments of donated commodities are subject to the 
requirements of 46 U.S.C. 55305, regarding carriage on U.S.-flag 
vessels.
    (b) Transportation of donated commodities and other goods such as 
bags that may be provided by FAS under the McGovern-Dole Program will 
be arranged for under a specific agreement in the manner determined by 
FAS. Such transportation will be arranged for by:
    (1) FAS in accordance with the Federal Acquisition Regulation (FAR) 
in chapter 1 of title 48, the Agriculture Acquisition Regulation (AGAR) 
in chapter 4 of title 48, and directives issued by the Director, Office 
of Procurement and Property Management, USDA; or
    (2) The recipient, with payment by FAS, in the manner specified in 
the agreement.
    (c) A recipient that is responsible for transportation under 
paragraph (b)(2) of this section must declare in the transportation 
contract the point at which the ocean carrier will take custody of 
donated commodities to be transported.
    (d) A recipient that arranges for transportation in accordance with 
paragraph (b)(2) of this section may only use the services of a freight 
forwarder that is licensed by the Federal Maritime Commission and that 
would not have a conflict of interest in carrying out the freight 
forwarder duties. To assist FAS in determining whether there is a 
potential conflict of interest, the recipient must submit to FAS a 
certification indicating that the freight forwarder:
    (1) Is not engaged in, and will not engage in, supplying 
commodities or furnishing ocean transportation or ocean transportation-
related services for commodities provided under any McGovern-Dole 
Program agreement to which the recipient is a party; and
    (2) Is not affiliated with the recipient and has not made 
arrangements to give or receive any payment, kickback, or illegal 
benefit in connection with its selection as an agent of the recipient.


Sec.  1599.8  Entry, handling, and labeling of donated commodities and 
notification requirements.

    (a) A recipient must make all necessary arrangements for receiving 
the donated commodities in the target country, including obtaining 
appropriate approvals for entry and transit. The recipient must make 
arrangements with the target country government for all donated 
commodities that will be distributed to beneficiaries to be imported 
and distributed free from all customs duties, tolls, and taxes. A 
recipient is encouraged to make similar arrangements, where possible, 
with the government of a country where donated commodities to be sold 
or bartered are delivered.
    (b) A recipient must, as provided in the agreement, arrange for 
transporting, storing, and distributing the donated commodities from 
the designated point and time where title to the donated commodities 
passes to the recipient.
    (c) A recipient must store and maintain the donated commodities in 
good condition from the time of delivery at the port of entry or the 
point of receipt from the originating carrier until their distribution, 
sale or barter.
    (d)(1) If a recipient arranges for the packaging or repackaging of 
donated commodities that are to be distributed, the recipient must 
ensure that the packaging:
    (i) Is plainly labeled in the language of the target country;
    (ii) Contains the name of the donated commodities;
    (iii) Includes a statement indicating that the donated commodities 
are furnished by the United States Department of Agriculture; and
    (iv) Includes a statement indicating that the donated commodities 
must not be sold, exchanged or bartered.
    (2) If a recipient arranges for the processing and repackaging of 
donated commodities that are to be distributed, the recipient must 
ensure that the packaging:
    (i) Is plainly labeled in the language of the target country;
    (ii) Contains the name of the processed product;
    (iii) Includes a statement indicating that the processed product 
was made with commodities furnished by the United States Department of 
Agriculture; and
    (iv) Includes a statement indicating that the processed product 
must not be sold, exchanged or bartered.
    (3) If a recipient distributes donated commodities that are not 
packaged, the recipient must display a sign at the distribution site 
that includes the name of the donated commodities, a statement 
indicating that the donated commodities are being furnished by the 
United States Department of Agriculture, and a statement indicating 
that the donated commodities must not be sold, exchanged, or bartered.
    (e) A recipient must ensure that signs are displayed at all 
activity implementation and commodity distribution sites to inform 
beneficiaries that funding for the project was

[[Page 62621]]

provided by the United States Department of Agriculture.
    (f) A recipient must also ensure that all public communications 
relating to the project, the activities, or the donated commodities, 
whether made through print, broadcast, digital, or other media, include 
a statement acknowledging that funding was provided by the United 
States Department of Agriculture.
    (g) FAS may waive compliance with one or more of the labeling and 
notification requirements in paragraphs (d), (e) and (f) of this 
section if a recipient demonstrates to FAS that the requirement 
presents a safety or security risk in the target country. If a 
recipient determines that compliance with a labeling or notification 
requirement poses an imminent threat of destruction of property, 
injury, or loss of life, the recipient must submit a waiver request to 
FAS as soon as possible. The recipient will not have to comply with 
such requirement during the period prior to the issuance of a waiver 
determination by FAS. A recipient may submit a written request for a 
waiver at any time after the agreement has been signed.
    (h) In exceptional circumstances, FAS may, on its own initiative, 
waive one or more of the labeling and notification requirements in 
paragraphs (d), (e) and (f) of this section for programmatic reasons.


Sec.  1599.9  Damage to or loss of donated commodities.

    (a) FAS will be responsible for the donated commodities prior to 
the transfer of title to the commodities to the recipient. The 
recipient will be responsible for the donated commodities following the 
transfer of title to the donated commodities to the recipient. The 
title will transfer as specified in the agreement.
    (b) A recipient must inform FAS, in the manner and within the time 
period set forth in the agreement, of any damage to or loss of the 
donated commodities that occurs following the transfer of title to the 
donated commodities to the recipient. The recipient must take all steps 
necessary to protect its interests and the interests of FAS with 
respect to any damage to or loss of the donated commodities that occurs 
after title has been transferred to the recipient.
    (c) A recipient will be responsible for arranging for an 
independent cargo surveyor to inspect the donated commodities upon 
discharge from the ocean carrier and prepare a survey or outturn 
report. The report must show the quantity and condition of the donated 
commodities discharged from the ocean carrier and must indicate the 
most likely cause of any damage noted in the report. The report must 
also indicate the time and place when the survey took place. All 
discharge surveys must be conducted contemporaneously with the 
discharge of the ocean carrier, unless FAS determines that failure to 
do so was justified under the circumstances. For donated commodities 
shipped on a through bill of lading, the recipient must also obtain a 
delivery survey. All surveys obtained by the recipient must, to the 
extent practicable, be conducted jointly by the surveyor, the 
recipient, and the carrier, and the survey report must be signed by all 
three parties. The recipient must obtain a copy of each discharge or 
delivery survey report within 45 days after the completion of the 
survey. The recipient must make each such report available to FAS upon 
request, or in the manner specified in the agreement. FAS will 
reimburse the recipient for the reasonable costs of these services, as 
determined by FAS, in the manner specified in the agreement.
    (d) If donated commodities are damaged or lost during the time that 
they are in the care of the ocean carrier:
    (1) The recipient must ensure that any reports, narrative 
chronology, or other commentary prepared by the independent cargo 
surveyor, and any such documentation prepared by a port authority, 
stevedoring service, or customs official, or an official of the transit 
or target country government or the transportation company, are 
provided to FAS;
    (2) The recipient must provide to FAS the names and addresses of 
any individuals known to be present at the time of discharge or 
unloading, or during the survey, who can verify the quantity of damaged 
or lost donated commodities;
    (3) If the damage or loss occurred with respect to a bulk shipment 
on an ocean carrier, the recipient must ensure that the independent 
cargo surveyor:
    (i) Observes the discharge of the cargo;
    (ii) Reports on discharging methods, including scale type, 
calibrations, and any other factors that may affect the accuracy of 
scale weights, and, if scales are not used, states the reason therefor 
and describes the actual method used to determine weight;
    (iii) Estimates the quantity of cargo, if any, lost during 
discharge through carrier negligence;
    (iv) Advises on the quality of sweepings;
    (v) Obtains copies of port or ocean carrier records, if possible, 
showing the quantity discharged; and
    (vi) Notifies the recipient immediately if the surveyor has reason 
to believe that the correct quantity was not discharged or if 
additional services are necessary to protect the cargo; and
    (4) If the damage or loss occurred with respect to a container 
shipment on an ocean carrier, the recipient must ensure that the 
independent cargo surveyor lists the container numbers and seal numbers 
shown on the containers, indicates whether the seals were intact at the 
time the containers were opened, and notes whether the containers were 
in any way damaged.
    (e) If a recipient has title to the donated commodities, and 
donated commodities valued in excess of $5,000 are damaged at any time 
prior to their distribution or sale under the agreement, regardless of 
the party at fault, the recipient must immediately arrange for an 
inspection by a public health official or other competent authority 
approved by FAS and provide to FAS a certification by such public 
health official or other competent authority regarding the exact 
quantity and condition of the damaged donated commodities. The value of 
damaged donated commodities must be determined on the basis of the 
commodity acquisition, transportation, and related costs incurred by 
FAS with respect to such commodities, as well as such costs incurred by 
the recipient and paid by FAS. The recipient must inform FAS of the 
results of the inspection and indicate whether the damaged donated 
commodities are:
    (1) Fit for the use authorized in the agreement and, if so, whether 
there has been a diminution in quality; or
    (2) Unfit for the use authorized in the agreement.
    (f)(1) If a recipient has title to the donated commodities, the 
recipient must arrange for the recovery of that portion of the donated 
commodities designated as fit for the use authorized in the agreement. 
The recipient must dispose of donated commodities that are unfit for 
such use in the following order of priority:
    (i) Sale for the most appropriate use, i.e., animal feed, 
fertilizer, industrial use, or another use approved by FAS, at the 
highest obtainable price;
    (ii) Donation to a governmental or charitable organization for use 
as animal feed or another non-food use; or
    (iii) Destruction of the donated commodities if they are unfit for 
any use, in such manner as to prevent their use for any purpose.
    (2) A recipient must arrange for all U.S. Government markings to be 
obliterated or removed before the donated commodities are transferred 
by

[[Page 62622]]

sale or donation under paragraph (f)(1) of this section.
    (g) A recipient may retain any proceeds generated by the disposal 
of the donated commodities in accordance with paragraph (f)(1) of this 
section and must use the retained proceeds for expenses related to the 
disposal of the donated commodities and for activities specified in the 
agreement.
    (h) A recipient must notify FAS immediately and provide detailed 
information about the actions taken in accordance with paragraph (f) of 
this section, including the quantities, values, and dispositions of 
donated commodities determined to be unfit.


Sec.  1599.10  Claims for damage to or loss of donated commodities.

    (a) FAS will be responsible for claims arising out of damage to or 
loss of a quantity of the donated commodities prior to the transfer of 
title to the donated commodities to the recipient. The recipient will 
be responsible for claims arising out of damage to or loss of a 
quantity of the donated commodities after the transfer of title to the 
donated commodities.
    (b) If a recipient has title to donated commodities that have been 
damaged or lost, and the value of the damaged or lost donated 
commodities is estimated to be in excess of $20,000, the recipient 
must:
    (1) Notify FAS immediately and provide detailed information about 
the circumstances surrounding such damage or loss, the quantity of 
damaged or lost donated commodities, and the value of the damage or 
loss;
    (2) Promptly upon discovery of the damage or loss, initiate a claim 
arising out of such damage or loss, including, if appropriate, 
initiating an action to collect pursuant to a commercial insurance 
contract;
    (3) Take all necessary action to pursue the claim diligently and 
within any applicable periods of limitations; and
    (4) Provide to FAS copies of all documentation relating to the 
claim.
    (c) If a recipient has title to donated commodities that have been 
damaged or lost, and the value of the damaged or lost donated 
commodities is estimated to be $20,000 or less, the recipient must 
notify FAS in accordance with the agreement and provide detailed 
information about the damage or loss in the next report required to be 
filed under Sec.  1599.13(f)(1) or (2).
    (d)(1) The value of a claim for lost donated commodities will be 
determined on the basis of the commodity acquisition, transportation, 
and related costs incurred by FAS with respect to such commodities, as 
well as such costs incurred by the recipient and paid by FAS.
    (2) The value of a claim for damaged donated commodities will be 
determined on the basis of the commodity acquisition, transportation, 
and related costs incurred by FAS with respect to such commodities, as 
well as such costs incurred by the recipient and paid by FAS, less any 
funds generated if such commodities are sold in accordance with Sec.  
1599.9(f)(1).
    (e) If FAS determines that a recipient has not initiated a claim or 
is not exercising due diligence in the pursuit of a claim, FAS may 
require the recipient to assign its rights to initiate or pursue the 
claim to FAS. Failure by the recipient to initiate a claim or exercise 
due diligence in the pursuit of a claim will be considered by FAS 
during the review of applications for subsequent food assistance 
awards.
    (f)(1) A recipient may retain any funds obtained as a result of a 
claims collection action initiated by it in accordance with this 
section, or recovered pursuant to any insurance policy or other similar 
form of indemnification, but such funds must be expended in accordance 
with the agreement or for other purposes approved in advance by FAS.
    (2) FAS will retain any funds obtained as a result of a claims 
collection action initiated by it under this section; provided, 
however, that if the recipient paid for the transportation of the 
donated commodities or a portion thereof, FAS will use a portion of 
such funds to reimburse the recipient for such expense on a prorated 
basis.


Sec.  1599.11  Use of donated commodities, sale proceeds, FAS-provided 
funds, and program income.

    (a) A recipient must use the donated commodities, any sale 
proceeds, FAS-provided funds, interest, and program income in 
accordance with the agreement.
    (b) A recipient must not use donated commodities, sale proceeds, 
FAS-provided funds, interest, or program income for any activity or any 
expense incurred by the recipient or a subrecipient prior to the start 
date of the period of performance of the agreement or after the 
agreement is suspended or terminated, without the prior written 
approval of FAS.
    (c) A recipient must not permit the distribution, handling, or 
allocation of donated commodities on the basis of political 
affiliation, geographic location, or the ethnic, tribal or religious 
identity or affiliation of the potential consumers or beneficiaries.
    (d) A recipient must not permit the distribution, handling, or 
allocation of donated commodities by the military forces of any 
government or insurgent group without the specific authorization of 
FAS.
    (e) A recipient must not use sale proceeds, FAS-provided funds, 
interest, or program income to acquire goods and services, either 
directly or indirectly through another party, in a manner that violates 
country-specific economic sanction programs, as specified in the 
agreement.
    (f) A recipient may sell or barter donated commodities only if such 
sale or barter is provided for in the agreement or the recipient is 
disposing of damaged donated commodities as specified in Sec.  
1599.9(f). The recipient must sell donated commodities at a reasonable 
market price. The recipient must obtain approval of its proposed sale 
price from FAS before selling donated commodities. The recipient must 
use any sale proceeds, interest, program income, or goods or services 
derived from the sale or barter of the donated commodities only as 
provided in the agreement.
    (g) A recipient must deposit and maintain all sale proceeds, FAS-
provided funds, and program income in a bank account until they are 
used for a purpose authorized under the agreement or the FAS-provided 
funds are returned to FAS in accordance with Sec.  1599.6(f)(6). The 
account must be insured unless it is in a country where insurance is 
unavailable. The account must be interest-bearing, unless one of the 
exceptions in 2 CFR 200.305(b)(8) applies or FAS determines that this 
requirement would constitute an undue burden. The recipient must comply 
with the requirements in Sec.  1599.6(f)(7) with regard to the deposit 
of advance payments by FAS.
    (h)(1) Except as provided in paragraph (h)(2) of this section, a 
recipient may make adjustments within the agreement budget between 
direct cost line items without further approval, provided that the 
total amount of adjustments does not exceed ten percent of the Grand 
Total Costs, excluding any voluntary committed cost sharing or matching 
contributions, in the agreement budget. Adjustments beyond these limits 
require the prior approval of FAS.
    (2) A recipient must not transfer any funds budgeted for 
participant support costs, as defined in 2 CFR 200.75, to other 
categories of expense without the prior approval of FAS.
    (i) A recipient may use sale proceeds, FAS-provided funds, or 
program income to purchase real or personal property only if local law 
permits the recipient to

[[Page 62623]]

retain title to such property. However, a recipient must not use sale 
proceeds, FAS-provided funds, or program income to pay for the 
acquisition, development, construction, alteration or upgrade of real 
property that is:
    (1) Owned or managed by a church or other organization engaged 
exclusively in religious pursuits; or
    (2) Used in whole or in part for sectarian purposes, except that a 
recipient may use sale proceeds, FAS-provided funds, or program income 
to pay for repairs to or rehabilitation of a structure located on such 
real property to the extent necessary to avoid spoilage or loss of 
donated commodities, but only if the structure is not used in whole or 
in part for any religious or sectarian purposes while the donated 
commodities are stored in it. If the use of sale proceeds, FAS-provided 
funds, or program income to pay for repairs to or rehabilitation of 
such a structure is not specifically provided for in the agreement, the 
recipient must not use the sale proceeds, FAS-provided funds, or 
program income for this purpose until it receives written approval from 
FAS.
    (j) A recipient must comply with 2 CFR 200.321 when procuring goods 
and services in the United States. When procuring goods and services 
outside of the United States, a recipient should endeavor to comply 
with 2 CFR 200.321 where practicable.
    (k) A recipient must enter into a written contract with each 
provider of goods, services, or construction work that is valued at or 
above the Simplified Acquisition Threshold. Each such contract must 
require the provider to maintain adequate records to account for all 
donated commodities, funds, or both furnished to the provider by the 
recipient and to comply with any other applicable requirements that may 
be specified by FAS in the agreement. The recipient must submit a copy 
of the signed contracts to FAS upon request.


Sec.  1599.12  Monitoring and evaluation requirements.

    (a) A recipient will be responsible for designing a performance 
monitoring plan for the project, obtaining written approval of the plan 
from FAS before putting it into effect, and managing and implementing 
the plan, unless otherwise specified in the agreement.
    (b) A recipient must establish baseline values, annual targets, and 
life of activity targets for each performance indicator included in the 
recipient's approved performance monitoring plan, unless otherwise 
specified in the agreement.
    (c) A recipient must inform FAS, in the manner and within the time 
period specified in the agreement, of any problems, delays, or adverse 
conditions that materially impair the recipient's ability to meet the 
objectives of the agreement. This notification must include a statement 
of any corrective actions taken or contemplated by the recipient, and 
any additional assistance requested from FAS to resolve the situation.
    (d) A recipient will be responsible for designing an evaluation 
plan for the project, obtaining written approval of the plan from FAS 
before putting it into effect, and arranging for an independent third 
party to implement the evaluation, unless otherwise specified in the 
agreement. This evaluation plan will detail the evaluation purpose and 
scope, key evaluation questions, evaluation methodology, time frame, 
evaluation management, and cost. This plan will generally be based upon 
the evaluation plan that the recipient submitted to FAS as part of its 
application, pursuant to Sec.  1599.4(b)(6), unless the notice of 
funding opportunity specified that an evaluation plan was not required 
to be included in the application. The recipient must ensure that the 
evaluation plan:
    (1) Is designed using the most rigorous methodology that is 
appropriate and feasible, taking into account available resources, 
strategy, current knowledge and evaluation practices in the sector, and 
the implementing environment;
    (2) Is designed to inform management, activity implementation, and 
strategic decision-making;
    (3) Utilizes analytical approaches and methodologies, based on the 
questions to be addressed, project design, budgetary resources 
available, and level of rigor and evidence required, which may be 
implemented through methods such as case studies, surveys, quasi-
experimental designs, randomized field experiments, cost-effectiveness 
analyses, implementation reviews, or a combination of methods;
    (4) Adheres to generally accepted evaluation standards and 
principles;
    (5) Uses participatory approaches that seek to include the 
perspectives of diverse parties and all relevant stakeholders; and
    (6) Where possible, utilizes local consultants and seeks to build 
local capacity in evaluation.
    (e)(1) Unless otherwise provided in the agreement, a recipient must 
arrange for evaluations of the project to be conducted by an 
independent third party that:
    (i) Is financially and legally separate from the recipient's 
organization; and
    (ii) Has staff with demonstrated methodological, cultural and 
language competencies, and specialized experience in conducting 
evaluations of international development programs involving 
agriculture, trade, education, and nutrition, provided that FAS may 
determine that, for a particular agreement, the staff of the 
independent third party evaluator is not required to have specialized 
experience in conducting evaluations of programs involving one or more 
of these four areas.
    (2) A recipient must provide a written certification to FAS that 
there is no real or apparent conflict of interest on the part of any 
recipient staff member or third party entity designated or hired to 
play a substantive role in the evaluation of activities under the 
agreement.
    (f) FAS will be considered a key stakeholder in all evaluations 
conducted as part of the agreement.
    (g)(1) A recipient is responsible for establishing the required 
financial and human capital resources for monitoring and evaluation of 
activities under the agreement. The recipient must maintain a separate 
budget for monitoring and evaluation, with separate budget line items 
for dedicated recipient monitoring and evaluation staff and independent 
third-party evaluation contracts.
    (2) Personnel at a recipient's headquarters offices and field 
offices with specialized expertise and experience in monitoring and 
evaluation may be used by the recipient for dedicated monitoring and 
evaluation. Unless otherwise specified in the agreement or approved 
evaluation plan, all evaluations must be managed by the recipient's 
evaluation experts outside of the recipient's line management for the 
activities.
    (h) FAS may independently conduct or commission an evaluation of a 
single agreement or an evaluation that includes multiple agreements. A 
recipient must cooperate, and comply with any demands for information 
or materials made in connection, with any evaluation conducted or 
commissioned by FAS. Such evaluations may be conducted by FAS 
internally or by an FAS-hired external evaluation contractor.


Sec.  1599.13  Reporting and record keeping requirements.

    (a) A recipient must comply with the performance and financial 
monitoring and reporting requirements in the agreement and 2 CFR 
200.327 through 200.329.

[[Page 62624]]

    (b) A recipient must submit financial reports to FAS, by the dates 
and for the reporting periods specified in the agreement. Such reports 
must provide an accurate accounting of sale proceeds, FAS-provided 
funds, interest, program income, and voluntary committed cost sharing 
or matching contributions.
    (c)(1) A recipient must submit performance reports to FAS, by the 
dates and for the reporting periods specified in the agreement. These 
reports must include the information required in 2 CFR 200.328(b)(2), 
including additional pertinent information regarding the recipient's 
progress, measured against established indicators, baselines, and 
targets, towards achieving the expected results specified in the 
agreement. This reporting must include, for each performance indicator, 
a comparison of actual accomplishments with the baseline and the 
targets established for the period. When actual accomplishments deviate 
significantly from targeted goals, the recipient must provide an 
explanation in the report.
    (2) A recipient must ensure the accuracy and reliability of the 
performance data submitted to FAS in performance reports. At any time 
during the period of performance of the agreement, FAS may review the 
recipient's performance data to determine whether it is accurate and 
reliable. The recipient must comply with all requests made by FAS or an 
entity designated by FAS in relation to such reviews.
    (d) Baseline, interim, and final evaluation reports are required 
for all agreements, unless otherwise specified in the agreement. The 
reports must be submitted in accordance with the timeline in the FAS-
approved evaluation plan. Evaluation reports submitted to FAS may be 
made public in an effort to increase accountability and transparency 
and share lessons learned and best practices.
    (e) A recipient must, within 30 days after export of all or a 
portion of the donated commodities, submit evidence of such export to 
FAS, in the manner set forth in the agreement. The evidence may be 
submitted through an electronic media approved by FAS or by providing 
the carrier's on board bill of lading. The evidence of export must show 
the kind and quantity of commodities exported, the date of export, and 
the country where the commodities will be delivered. The date of export 
is the date that the ocean carrier carrying the donated commodities 
sails from the final U.S. load port.
    (f)(1) A recipient must submit reports to FAS, using a form 
prescribed by FAS, covering the receipt, handling, and disposition of 
the donated commodities. Such reports must be submitted to FAS, by the 
dates and for the reporting periods specified in the agreement, until 
all of the donated commodities have been distributed, sold or bartered 
and such disposition has been reported to FAS.
    (2) If the agreement authorizes the sale or barter of donated 
commodities, the recipient must submit to FAS, using a form prescribed 
by FAS, reports covering the receipt and use of the sale proceeds when 
the donated commodities were sold, the goods and services derived from 
barter when the donated commodities were bartered, and program income. 
Such reports must be submitted to FAS, by the dates and for the 
reporting periods specified in the agreement, until all of the sale 
proceeds and program income have been disbursed and reported to FAS. 
When reporting financial information, the recipient must include the 
amounts in U.S. dollars and the exchange rate if proceeds are held in 
local currency.
    (g) If requested by FAS, a recipient must provide to FAS additional 
information or reports relating to the agreement.
    (h) If a recipient requires an extension of a reporting deadline, 
it must ensure that FAS receives an extension request at least five 
business days prior to the reporting deadline. FAS may decline to 
consider a request for an extension that it receives after this time 
period. FAS will consider requests for reporting deadline extensions on 
a case by case basis and make a decision based on the merits of each 
request. FAS will consider factors such as unforeseen or extenuating 
circumstances and past performance history when evaluating requests for 
extensions.
    (i) A recipient must retain records and permit access to records in 
accordance with the requirements of 2 CFR 200.333 through 200.337. The 
date of submission of the final expenditure report, as referenced in 2 
CFR 200.333, will be the final date of submission of the reports 
required by paragraphs (f)(1) and (2) of this section, as prescribed by 
FAS. The recipient must retain copies of and make available to FAS all 
sales receipts, contracts, or other documents related to the sale or 
barter of donated commodities and any goods or services derived from 
such barter, as well as records of dispatch received from ocean 
carriers.


Sec.  1599.14  Subrecipients.

    (a) A recipient may utilize the services of a subrecipient to 
implement activities under the agreement if this is provided for in the 
agreement. The subrecipient may receive donated commodities, sale 
proceeds, FAS-provided funds, program income, or other resources from 
the recipient for this purpose. The recipient must enter into a written 
subagreement with the subrecipient and comply with the applicable 
provisions of 2 CFR 200.331. The recipient must provide a copy of such 
subagreement to FAS, in the manner set forth in the agreement, prior to 
the transfer of any donated commodities, sale proceeds, FAS-provided 
funds, or program income to the subrecipient.
    (b) A recipient must include the following requirements in a 
subagreement:
    (1) The subrecipient is required to comply with the applicable 
provisions of this part and 2 CFR parts 200 and 400. The applicable 
provisions are those that relate specifically to subrecipients, as well 
as those relating to non-Federal entities that impose requirements that 
would be reasonable to pass through to a subrecipient because they 
directly concern the implementation by the subrecipient of one or more 
activities under the agreement. If there is a question about whether a 
particular provision is applicable, FAS will make the determination.
    (2) The subrecipient is prohibited from using sale proceeds, FAS-
provided funds, interest, or program income to acquire goods and 
services, either directly or indirectly through another party, in a 
manner that violates country-specific economic sanction programs, as 
specified in the agreement.
    (3) The subrecipient must pay to the recipient the value of any 
donated commodities, sale proceeds, FAS-provided funds, interest, or 
program income that are not used in accordance with the subagreement, 
or that are lost, damaged, or misused as a result of the subrecipient's 
failure to exercise reasonable care.
    (4) In accordance with Sec.  1599.18 and 2 CFR 200.501(h), a 
description of the applicable compliance requirements and the 
subrecipient's compliance responsibility. Methods to ensure compliance 
may include pre-award audits, monitoring during the agreement, and 
post-award audits.
    (c) A recipient must monitor the actions of a subrecipient as 
necessary to ensure that donated commodities, sale proceeds, FAS-
provided funds, and program income provided to the subrecipient are 
used for authorized purposes in compliance with applicable U.S. Federal 
laws and regulations and the subagreement and that performance 
indicator targets are achieved for both

[[Page 62625]]

activities and results under the agreement.


Sec.  1599.15  Noncompliance with an agreement.

    If a recipient fails to comply with a Federal statute or regulation 
or the terms and conditions of the agreement, and FAS determines that 
the noncompliance cannot be remedied by imposing additional conditions, 
FAS may take one or more of the actions set forth in 2 CFR 200.338, 
including initiating a claim as a remedy. FAS may also initiate a claim 
against a recipient if the donated commodities are damaged or lost, or 
the sale proceeds, goods received through barter, FAS-provided funds, 
interest, or program income are misused or lost, due to an action or 
omission of the recipient.


Sec.  1599.16  Suspension and termination of agreements.

    (a) An agreement or subagreement may be suspended or terminated in 
accordance with 2 CFR 200.338 or 200.339. FAS may suspend or terminate 
an agreement if it determines that:
    (1) One of the bases in 2 CFR 200.338 or 200.339 for termination or 
suspension by FAS has been satisfied;
    (2) The continuation of the assistance provided under the agreement 
is no longer necessary or desirable; or
    (3) Storage facilities are inadequate to prevent spoilage or waste, 
or distribution of the donated commodities will result in substantial 
disincentive to, or interference with, domestic production or marketing 
in the target country.
    (b) If an agreement is terminated, the recipient:
    (1) Is responsible for the security and integrity of any 
undistributed donated commodities and must dispose of such commodities 
only as agreed to by FAS;
    (2) Is responsible for any sale proceeds, FAS-provided funds, 
interest, or program income that have not been disbursed and must use 
or return them only as agreed to by FAS; and
    (3) Must comply with the closeout and post-closeout provisions 
specified in the agreement and 2 CFR 200.343 and 200.344.


Sec.  1599.17  Opportunities to object and appeals.

    (a) FAS will provide an opportunity to a recipient to object to, 
and provide information and documentation challenging, any action taken 
by FAS pursuant to Sec.  1599.15. FAS will comply with any requirements 
for hearings, appeals, or other administrative proceedings to which the 
recipient is entitled under any other statute or regulation applicable 
to the action involved. For example, if the action taken by FAS 
pursuant to Sec.  1599.15 is to initiate suspension or debarment 
proceedings as authorized under 2 CFR parts 180 and 417, then the 
requirements in 2 CFR parts 180 and 417 will apply instead of the 
requirements in this section. In the absence of other applicable 
statutory or regulatory requirements, the requirements set forth in 
this section will apply.
    (b) The recipient must submit its objection in writing, along with 
any documentation, to the FAS official specified in the agreement 
within 30 days after the date of FAS's written notification to the 
recipient of the FAS action being challenged. This official will 
endeavor to notify the recipient of his or her determination within 60 
days after the date that FAS received the recipient's written 
objection.
    (c) The recipient may appeal the determination of the official to 
the Administrator, FAS. An appeal must be in writing and be submitted 
to the Office of the Administrator within 30 days after the date of the 
initial determination by the FAS official. The recipient may submit 
additional documentation with its appeal.
    (d) The Administrator will base the determination on appeal upon 
information contained in the administrative record and will endeavor to 
make a determination within 60 days after the date that FAS received 
the appeal. The determination of the Administrator will be the final 
determination of FAS. The recipient must exhaust all administrative 
remedies contained in this section before pursuing judicial review of a 
determination by the Administrator.


Sec.  1599.18  Audit requirements.

    (a) Subpart F, Audit Requirements, of 2 CFR part 200 applies to 
recipients and subrecipients under this part other than those that are 
for-profit entities, foreign public entities, or foreign organizations.
    (b) A recipient or subrecipient that is a for-profit entity or a 
foreign organization, and that expends, during its fiscal year, a total 
of at least the audit requirement threshold in 2 CFR 200.501 in Federal 
awards, is required to obtain an audit. Such a recipient or 
subrecipient has the following two options to satisfy this requirement:
    (1)(i) A financial audit of the agreement or subagreement, in 
accordance with the Government Auditing Standards issued by the United 
States Government Accountability Office (GAO), if the recipient or 
subrecipient expends Federal awards under only one FAS program during 
such fiscal year; or
    (ii) A financial audit of all Federal awards from FAS, in 
accordance with GAO's Government Auditing Standards, if the recipient 
or subrecipient expends Federal awards under multiple FAS programs 
during such fiscal year; or
    (2) An audit that meets the requirements contained in subpart F of 
2 CFR part 200.
    (c) A recipient or subrecipient that is a for-profit entity or a 
foreign organization, and that expends, during its fiscal year, a total 
that is less than the audit requirement threshold in 2 CFR 200.501 in 
Federal awards, is exempt from requirements under this section for an 
audit for that year, except as provided in paragraphs (d) and (f) of 
this section, but it must make records available for review by 
appropriate officials of Federal agencies.
    (d) FAS may require an annual financial audit of an agreement or 
subagreement when the audit requirement threshold in 2 CFR 200.501 is 
not met. In that case, FAS must provide funds under the agreement for 
this purpose, and the recipient or subrecipient, as applicable, must 
arrange for such audit and submit it to FAS.
    (e) When a recipient or subrecipient that is a for-profit entity or 
a foreign organization is required to obtain a financial audit under 
this section, it must provide a copy of the audit to FAS within 60 days 
after the end of its fiscal year.
    (f) FAS, the USDA Office of Inspector General, or GAO may conduct 
or arrange for additional audits of any recipients or subrecipients, 
including for-profit entities and foreign organizations. Recipients and 
subrecipients must promptly comply with all requests related to such 
audits. If FAS conducts or arranges for an additional audit, such as an 
audit with respect to a particular agreement, FAS will fund the full 
cost of such an audit, in accordance with 2 CFR 200.503(d).


Sec.  1599.19  Paperwork Reduction Act.

    The information collection requirements contained in this 
regulation have been approved by OMB under the Paperwork Reduction Act 
of 1995, 44 U.S.C. Chapter 35, and have been assigned OMB control 
number 0551-0035. A person is not required to respond to a collection 
of information unless it displays a currently valid OMB control number.


[[Page 62626]]


    Dated: July 29, 2016.
Suzanne Palmieri,
Acting Administrator, Foreign Agricultural Service.
[FR Doc. 2016-21347 Filed 9-9-16; 8:45 am]
BILLING CODE 3410-10-P



                                                  62614            Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Rules and Regulations

                                                  417 will apply instead of the                           Federal awards under multiple CCC                     DEPARTMENT OF AGRICULTURE
                                                  requirements in this section. In the                    programs during such fiscal year; or
                                                  absence of other applicable statutory or                   (2) An audit that meets the                        Foreign Agricultural Service
                                                  regulatory requirements, the                            requirements contained in subpart F of
                                                  requirements set forth in this section                  2 CFR part 200.                                       7 CFR Part 1599
                                                  will apply.                                                                                                   RIN 0551–AA88
                                                     (b) The recipient must submit its                       (c) A recipient or subrecipient that is
                                                  objection in writing, along with any                    a for-profit entity or a foreign
                                                                                                                                                                McGovern-Dole International Food for
                                                  documentation, to the CCC official                      organization, and that expends, during
                                                                                                                                                                Education and Child Nutrition Program
                                                  specified in the agreement within 30                    its fiscal year, a total that is less than the
                                                  days after the date of CCC’s written                    audit requirement threshold in 2 CFR                  AGENCY:  Foreign Agricultural Service,
                                                  notification to the recipient of the CCC                200.501 in Federal awards, is exempt                  USDA.
                                                  action being challenged. This official                  from requirements under this section for              ACTION: Final rule with request for
                                                  will endeavor to notify the recipient of                an audit for that year, except as                     comments.
                                                  his or her determination within 60 days                 provided in paragraphs (d) and (f) of
                                                  after the date that CCC received the                    this section, but it must make records                SUMMARY:   The Foreign Agricultural
                                                  recipient’s written objection.                          available for review by appropriate                   Service (FAS) revises the regulations
                                                     (c) The recipient may appeal the                     officials of Federal agencies.                        governing the award of agricultural
                                                  determination of the official to the                       (d) CCC may require an annual                      commodities and financial and
                                                  Administrator, FAS, who is also a Vice                  financial audit of an agreement or                    technical assistance to recipients under
                                                  President of CCC. An appeal must be in                  subagreement when the audit                           the McGovern-Dole International Food
                                                  writing and be submitted to the Office                  requirement threshold in 2 CFR 200.501                for Education and Child Nutrition
                                                  of the Administrator within 30 days                     is not met. In that case, CCC must                    (McGovern-Dole) Program. This revision
                                                  after the date of the initial                           provide funds under the agreement for                 is necessary to clarify requirements for
                                                  determination by the CCC official. The                  this purpose, and the recipient or                    applicants for, and recipients of, awards
                                                  recipient may submit additional                         subrecipient, as applicable, must                     under the McGovern-Dole Program and
                                                  documentation with its appeal.                          arrange for such audit and submit it to               to inform interested parties that the
                                                     (d) The Administrator will base the                  CCC.                                                  OMB guidance on Uniform
                                                  determination on appeal upon                                                                                  Administrative Requirements, Cost
                                                                                                             (e) When a recipient or subrecipient               Principles, and Audit Requirements for
                                                  information contained in the
                                                                                                          that is a for-profit entity or a foreign              Federal Awards, as supplemented by
                                                  administrative record and will endeavor
                                                                                                          organization is required to obtain a                  USDA regulations, applies to awards
                                                  to make a determination within 60 days
                                                                                                          financial audit under this section, it                under the McGovern-Dole Program
                                                  after the date that CCC received the
                                                                                                          must provide a copy of the audit to CCC               other than awards to foreign public
                                                  appeal. The determination of the
                                                                                                          within 60 days after the end of its fiscal            entities. The revised regulations will
                                                  Administrator will be the final
                                                                                                          year.                                                 enable applicants and recipients to
                                                  determination of CCC. The recipient
                                                  must exhaust all administrative                            (f) CCC, the USDA Office of Inspector              better understand program requirements
                                                  remedies contained in this section                      General, or GAO may conduct or                        and FAS to more effectively implement
                                                  before pursuing judicial review of a                    arrange for additional audits of any                  the McGovern-Dole Program.
                                                  determination by the Administrator.                     recipients or subrecipients, including                DATES: This rule is effective September
                                                                                                          for-profit entities and foreign                       12, 2016. Written comments must be
                                                  § 1499.18   Audit requirements.                         organizations. Recipients and                         received by FAS or carry a postmark or
                                                     (a) Subpart F, Audit Requirements, of                subrecipients must promptly comply                    equivalent no later than October 12,
                                                  2 CFR part 200 applies to recipients and                with all requests related to such audits.             2016.
                                                  subrecipients under this part other than                If CCC conducts or arranges for an
                                                  those that are for-profit entities, foreign                                                                   ADDRESSES:  Submit comments to
                                                                                                          additional audit, such as an audit with
                                                  public entities, or foreign organizations.                                                                    Director, Food Assistance Division,
                                                                                                          respect to a particular agreement, CCC
                                                     (b) A recipient or subrecipient that is                                                                    Office of Capacity Building and
                                                                                                          will fund the full cost of such an audit,
                                                  a for-profit entity or a foreign                                                                              Development, Foreign Agricultural
                                                                                                          in accordance with 2 CFR 200.503(d).
                                                  organization, and that expends, during                                                                        Service, 1400 Independence Ave. SW.,
                                                  its fiscal year, a total of at least the audit          § 1499.19    Paperwork Reduction Act.                 STOP 1034, Washington, DC 20250.
                                                  requirement threshold in 2 CFR 200.501                                                                        FOR FURTHER INFORMATION CONTACT:
                                                                                                            The information collection
                                                  in Federal awards, is required to obtain                requirements contained in this                        Benjamin Muskovitz, Director, Food
                                                  an audit. Such a recipient or                           regulation have been submitted for                    Assistance Division, Office of Capacity
                                                  subrecipient has the following two                      approval by OMB under the Paperwork                   Building and Development, Foreign
                                                  options to satisfy this requirement:                    Reduction Act of 1995, 44 U.S.C.                      Agricultural Service, 1400
                                                     (1)(i) A financial audit of the                      Chapter 35, and have been assigned                    Independence Ave. SW., STOP 1034,
                                                  agreement or subagreement, in                           OMB control number 0551–0035. A                       Washington, DC 20250. Telephone:
                                                  accordance with the Government                          person is not required to respond to a                (202) 720–4221; Fax: (202) 690–0251;
                                                  Auditing Standards issued by the                        collection of information unless it                   Email: FAD_Contact@fas.usda.gov.
                                                  United States Government                                displays a currently valid OMB control                SUPPLEMENTARY INFORMATION:
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                                                  Accountability Office (GAO), if the                     number.
                                                  recipient or subrecipient expends                                                                             Background
                                                  Federal awards under only one CCC                         Dated: July 29, 2016.                                 The McGovern-Dole International
                                                  program during such fiscal year; or                     Suzanne Palmieri,                                     Food for Education and Child Nutrition
                                                     (ii) A financial audit of all Federal                Acting Administrator, Foreign Agricultural            Program helps support food security,
                                                  awards from CCC, in accordance with                     Service.                                              child development, and education in
                                                  GAO’s Government Auditing Standards,                    [FR Doc. 2016–21343 Filed 9–9–16; 8:45 am]            low-income, food-deficit countries
                                                  if the recipient or subrecipient expends                BILLING CODE 3410–05–P                                around the world. The program


                                             VerDate Sep<11>2014   21:01 Sep 09, 2016   Jkt 238001   PO 00000   Frm 00012   Fmt 4700   Sfmt 4700   E:\FR\FM\12SER1.SGM   12SER1


                                                                   Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Rules and Regulations                                        62615

                                                  provides for the donation of U.S.                       each type of eligible entity (7 CFR                   CFR part 1599, applies only to awards
                                                  agricultural commodities, as well as                    1599.1(d)–(g) and 1599.3(a)).                         by FAS to recipients that are private
                                                  financial and technical assistance, to                    In accordance with 7 U.S.C. 1736o-                  voluntary organizations, cooperatives or
                                                  support school feeding and maternal                     1(e), assistance under the McGovern-                  other organizations, but that are not for-
                                                  and child health and nutrition projects.                Dole Program may be provided to                       profit entities or foreign organizations.
                                                  The McGovern-Dole Program is                            private voluntary organizations,                      Subpart F of 2 CFR part 200, as
                                                  authorized in section 3107 of the Farm                  cooperatives, intergovernmental                       supplemented by 2 CFR part 400 and 7
                                                  Security and Rural Investment Act of                    organizations, governments of                         CFR part 1499, applies to subawards to
                                                  2002 (7 U.S.C. 1736o–1).                                developing countries and their agencies,              subrecipients, except where the
                                                     FAS uses the regulations in 7 CFR                    and other organizations. However, the                 subrecipient is a for-profit entity,
                                                  part 1599, McGovern-Dole International                  regulations do not apply to all of these              foreign public entity, or foreign
                                                  Food for Education and Child Nutrition                  entities. The guidance in 2 CFR part 200              organization. In 7 CFR part 1599, FAS
                                                  Program, in the administration of the                   does not generally apply to for-profit                sets forth other audit requirements that
                                                  McGovern-Dole Program. The previous                     entities, foreign public entities, or                 apply to recipients and subrecipients
                                                  version of the regulations was published                foreign organizations. According to 2                 that are for-profit entities or foreign
                                                  as a final rule on March 26, 2009 (74 FR                CFR 200.101(c), Federal awarding                      organizations (7 CFR 1599.18).
                                                  13062).                                                 agencies may apply subparts A through                   (3) Adding and updating definitions
                                                     On December 26, 2013, the Office of                  E of 2 CFR part 200 to for-profit entities,           of terms used in the regulations and
                                                  Management and Budget (OMB) issued                      foreign public entities, or foreign                   removing definitions of terms that are
                                                  guidance on Uniform Administrative                      organizations, except where the Federal               no longer needed (7 CFR 1599.2).
                                                  Requirements, Cost Principles, and                      awarding agency determines that the                     (4) Including a requirement for an
                                                  Audit Requirements for Federal Awards                   application of these subparts would be                applicant to include in its application
                                                  in 2 CFR part 200 (78 FR 78608). In 2                   inconsistent with the international                   the amount of funding that will be
                                                  CFR 400.1, the United States                            obligations of the United States or the               provided to each proposed subrecipient
                                                  Department of Agriculture (USDA)                        statutes or regulations of a foreign                  under the agreement (7 CFR
                                                  adopted OMB’s guidance in subparts A                    government.                                           1599.4(b)(4)(iii)).
                                                                                                            FAS has determined not to apply 2                     (5) Adding new and modifying
                                                  through F of 2 CFR part 200, as
                                                                                                          CFR parts 200 and 400 and 7 CFR part                  existing provisions relating to cash
                                                  supplemented by 2 CFR part 400, as
                                                                                                          1599 to foreign public entities.                      advances and reimbursements for
                                                  USDA policies and procedures for
                                                                                                          Therefore, they do not apply to foreign               expenses (7 CFR 1599.6(f)).
                                                  uniform administrative requirements,
                                                                                                          governments or their agencies or to                     (6) Adding new and modifying
                                                  cost principles, and audit requirements                 intergovernmental organizations (such
                                                  for Federal awards (79 FR 75982,                                                                              existing labeling and notification
                                                                                                          as the World Food Program), because                   requirements applicable to the
                                                  December 19, 2014).                                     these entities are included within the                packaging, identification, source,
                                                  Revision of Regulations                                 definition of a foreign public entity in              funding, and use of the donated
                                                                                                          2 CFR 200.46.                                         commodities, while allowing for the
                                                     FAS is revising the McGovern-Dole                      FAS has determined to apply subparts
                                                  Program regulations in 7 CFR part 1599                                                                        waiver of these labeling and notification
                                                                                                          A through E of 2 CFR part 200, as                     requirements in exceptional
                                                  through this final rule. Many of the                    supplemented by 2 CFR part 400 and 7
                                                  changes to the regulations are technical                                                                      circumstances (7 CFR 1599.8(d)–(h)).
                                                                                                          CFR part 1599, to for-profit entities and               (7) Updating and clarifying language
                                                  in nature and intended to improve the                   foreign organizations. Accordingly, they              requiring recipients to report on the loss
                                                  efficiency and effectiveness of the                     apply to applicants for, and recipients               of or damage to donated commodities
                                                  McGovern-Dole Program. Some of the                      of, awards under the McGovern-Dole                    and pursue claims in the event of loss
                                                  detail that was previously included in                  Program that are private voluntary                    or damage (7 CFR 1599.9 and 1599.10).
                                                  the program regulations will now be                     organizations, including those that are                 (8) Incorporating new performance
                                                  included in the applicable notice of                    foreign organizations; cooperatives,                  monitoring and evaluation requirements
                                                  funding opportunity.                                    including those that are for-profit                   (7 CFR 1599.12).
                                                     The more significant changes to 7 CFR                entities or foreign organizations; and                  (9) Updating reporting requirements
                                                  part 1599 include:                                      other organizations, including those that             (7 CFR 1599.13).
                                                     (1) Updating 7 CFR part 1599 to make                 are for-profit entities or foreign                      (10) Adding a section setting forth
                                                  it clear that the guidance in 2 CFR part                organizations, but not including                      audit requirements for recipients and
                                                  200, as supplemented by 2 CFR part 400                  intergovernmental organizations.                      subrecipients (7 CFR 1599.18). Although
                                                  and 7 CFR part 1599, applies to awards                    FAS has determined to apply subparts                the audit requirements in subpart F of
                                                  under the McGovern-Dole Program                         A through E of 2 CFR part 200, as                     2 CFR part 200 do not apply to
                                                  other than awards to foreign public                     supplemented by 2 CFR part 400 and 7                  recipients or subrecipients that are for-
                                                  entities. Applicants for, and recipients                CFR part 1599, to all subawards to all                profit entities or foreign organizations,
                                                  of, awards under the McGovern-Dole                      subrecipients under this part, except                 FAS has determined to require such
                                                  Program must consult all three parts to                 where the subrecipient is a foreign                   recipients and subrecipients to obtain
                                                  be informed of all regulatory                           public entity or where FAS determines                 an audit, provided that they expend,
                                                  requirements. Because 7 CFR part 1599                   that the application of these provisions              during the fiscal year, a total of at least
                                                  deals specifically with the McGovern-                   to a subrecipient that is a foreign                   the audit requirement threshold in 2
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                                                  Dole Program, the provisions of 7 CFR                   organization would be inconsistent with               CFR 200.501 in Federal awards. The
                                                  part 1599 will apply if they differ from                the international obligations of the                  regulations lay out two options for
                                                  the provisions of 2 CFR part 200 or part                United States or the statutes or                      satisfying this audit requirement.
                                                  400.                                                    regulations of a foreign government or
                                                     (2) Clarifying the types of entities                 would not be in the best interest of the              Notice and Comment
                                                  eligible for awards under the McGovern-                 United States.                                          This rule is being issued as a final
                                                  Dole Program and the applicability of                     Subpart F of 2 CFR part 200, as                     rule without prior notice and
                                                  the regulations in 7 CFR part 1599 to                   supplemented by 2 CFR part 400 and 7                  opportunity for comment. The


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                                                  62616            Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Rules and Regulations

                                                  Administrative Procedure Act exempts                    and direct Federal development. This                  any unfunded mandate as described
                                                  rules ‘‘relating to agency management or                rule will not directly affect State or local          under the UMRA.
                                                  personnel or to public property, loans,                 officials and, for this reason, it is
                                                                                                                                                                List of Subjects in 7 CFR Part 1599
                                                  grants, benefits, or contracts’’ from the               excluded from the scope of Executive
                                                  statutory requirement for prior notice                  Order 12372.                                            Agricultural commodities,
                                                  and opportunity for comment (5 U.S.C.                                                                         Cooperative agreements, Exports, Food
                                                                                                          Regulatory Flexibility Act                            assistance programs, Foreign aid, Grant
                                                  553(a)(2)). Accordingly, this rule may be
                                                  made effective less than 30 days after                     The Regulatory Flexibility Act (5                  programs-agriculture, Technical
                                                  publication in the Federal Register.                    U.S.C. 601–612), as amended by the                    assistance.
                                                  However, members of the public may                      Small Business Regulatory Enforcement                 ■ For the reasons stated in the preamble,
                                                  participate in this rulemaking by                       Fairness Act of 1996, generally requires              the Foreign Agricultural Service revises
                                                  submitting written comments, data, or                   an agency to prepare a regulatory                     7 CFR part 1599 to read as follows:
                                                  views. FAS will consider the comments                   flexibility analysis of any rule that is
                                                  received and may conduct additional                     subject to notice and comment                         PART 1599—McGOVERN-DOLE
                                                  rulemaking based on the comments.                       rulemaking under the Administrative                   INTERNATIONAL FOOD FOR
                                                  Written comments must be received by                    Procedure Act (APA) or any other law,                 EDUCATION AND CHILD NUTRITION
                                                  FAS or carry a postmark or equivalent                   unless the agency certifies that the rule             PROGRAM
                                                  no later than October 12, 2016.                         will not have a significant economic
                                                                                                                                                                Sec.
                                                                                                          impact on a substantial number of small               1599.1 Purpose and applicability.
                                                  Catalog of Federal Domestic Assistance                  entities. The Regulatory Flexibility Act              1599.2 Definitions.
                                                    The program covered by this                           does not apply to this rule because FAS               1599.3 Eligibility and conflicts of interest.
                                                  regulation is listed in the Catalog of                  is not required by the APA or any other               1599.4 Application process.
                                                  Federal Domestic Assistance (CFDA)                      law to publish a notice of proposed                   1599.5 Agreements.
                                                  under the following FAS CFDA number:                    rulemaking with respect to the subject                1599.6 Payments.
                                                  10.608, Food for Education.                             matter of the rule.                                   1599.7 Transportation of donated
                                                                                                                                                                     commodities.
                                                  E-Government Act Compliance                             Executive Order 13132                                 1599.8 Entry, handling, and labeling of
                                                                                                            This rule has been reviewed under                        donated commodities and notification
                                                    FAS is committed to complying with
                                                                                                                                                                     requirements.
                                                  the E-Government Act of 2002 (44                        Executive Order 13132, ‘‘Federalism.’’
                                                                                                                                                                1599.9 Damage to or loss of donated
                                                  U.S.C. chapter 36), to promote the use                  This rule will not have any substantial                    commodities.
                                                  of the Internet and other information                   direct effect on States, on the                       1599.10 Claims for damage to or loss of
                                                  technologies to provide increased                       relationship between the Federal                           donated commodities.
                                                  opportunities for citizens’ access to                   government and the States, or on the                  1599.11 Use of donated commodities, sale
                                                  Government information and services,                    distribution of power and                                  proceeds, FAS-provided funds, and
                                                  and for other purposes.                                 responsibilities among the various                         program income.
                                                                                                          levels of government, except as required              1599.12 Monitoring and evaluation
                                                  Executive Order 12866                                   by law. This rule does not impose                          requirements.
                                                     This rule is issued in conformance                                                                         1599.13 Reporting and record keeping
                                                                                                          substantial direct compliance costs on
                                                                                                                                                                     requirements.
                                                  with Executive Order 12866,                             State and local governments. Therefore,               1599.14 Subrecipients.
                                                  ‘‘Regulatory Planning and Review.’’ It                  consultation with the States was not                  1599.15 Noncompliance with an agreement.
                                                  has been determined to be not                           required.                                             1599.16 Suspension and termination of
                                                  significant for the purposes of Executive                                                                          agreements.
                                                  Order 12866 and, therefore, was not                     Executive Order 13175
                                                                                                                                                                1599.17 Opportunities to object and
                                                  reviewed by OMB.                                          This rule has been reviewed in                           appeals.
                                                                                                          accordance with the requirements of                   1599.18 Audit requirements.
                                                  Executive Order 12988                                   Executive Order 13175, ‘‘Consultation                 1599.19 Paperwork Reduction Act.
                                                     This rule has been reviewed in                       and Coordination with Indian Tribal                     Authority: 7 U.S.C. 1736o–1.
                                                  accordance with Executive Order 12988,                  Governments.’’ Executive Order 13175
                                                  ‘‘Civil Justice Reform.’’ This rule does                requires Federal agencies to consult and              § 1599.1   Purpose and applicability.
                                                  not preempt State or local laws,                        coordinate with tribes on a government-                  (a) This part sets forth the general
                                                  regulations, or policies unless they                    to-government basis on policies that                  terms and conditions governing the
                                                  present an irreconcilable conflict with                 have tribal implications, including                   award of donated commodities and
                                                  this rule. This rule will not be                        regulations, legislative comments or                  funds by the Foreign Agricultural
                                                  retroactive.                                            proposed legislation, and other policy                Service (FAS) to recipients under the
                                                                                                          statements or actions that have                       McGovern-Dole International Food for
                                                  Executive Order 12372                                                                                         Education and Child Nutrition Program
                                                                                                          substantial direct effects on one or more
                                                     Executive Order 12372,                               Indian tribes, on the relationship                    (McGovern-Dole Program). Under the
                                                  ‘‘Intergovernmental Review of Federal                   between the Federal Government and                    McGovern-Dole Program, recipients use
                                                  Programs,’’ requires consultation with                  Indian tribes, or on the distribution of              the donated commodities, proceeds
                                                  officials of State and local governments                power and responsibilities between the                from any sale of such commodities,
                                                  that would be directly affected by the                  Federal Government and Indian tribes.                 FAS-provided funds, and program
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                                                  proposed Federal financial assistance.                  FAS does not expect this rule to have                 income to implement a project in a
                                                  The objectives of the Executive Order                   any effect on Indian tribes.                          foreign country pursuant to an
                                                  are to foster an intergovernmental                                                                            agreement with FAS.
                                                  partnership and a strengthened                          Unfunded Mandates                                        (b)(1) The Office of Management and
                                                  federalism by relying on State and local                  Title II of the Unfunded Mandates                   Budget (OMB) issued guidance on
                                                  processes for the State and local                       Reform Act of 1995 (UMRA) does not                    Uniform Administrative Requirements,
                                                  government coordination and review of                   apply to this rule because it does not                Cost Principles, and Audit
                                                  proposed Federal financial assistance                   impose any enforceable duty or contain                Requirements for Federal Awards in 2


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                                                                   Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Rules and Regulations                                        62617

                                                  CFR part 200. In 2 CFR 400.1, the                       obligations of the United States or the               recipient under an agreement. The term
                                                  United States Department of Agriculture                 statutes or regulations of a foreign                  may include donated commodities that
                                                  (USDA) adopted OMB’s guidance in                        government or would not be in the best                are used to produce a further processed
                                                  subparts A through F of 2 CFR part 200,                 interest of the United States.                        product for use under the agreement.
                                                  as supplemented by 2 CFR part 400, as                     (g)(1) The OMB guidance at subpart F                   FAS means the Foreign Agricultural
                                                  USDA policies and procedures for                        of 2 CFR part 200, as supplemented by                 Service of the United States Department
                                                  uniform administrative requirements,                    2 CFR part 400 and this part, applies                 of Agriculture.
                                                  cost principles, and audit requirements                 only to awards by FAS to recipients that                 FAS-provided funds means U.S.
                                                  for Federal awards.                                     are private voluntary organizations,                  dollars provided under an agreement to
                                                     (2) The OMB guidance at 2 CFR part                   cooperatives, or other organizations, but             a recipient, or through a subagreement
                                                  200, as supplemented by 2 CFR part 400                  that are not for-profit entities or foreign           to a subrecipient, for expenses
                                                  and this part, applies to the McGovern-                 organizations.                                        authorized in the agreement, such as
                                                  Dole Program, except as provided in                       (2) The OMB guidance at subpart F of                expenses for the internal transportation,
                                                  paragraphs (e), (f) and (g) of this section.            2 CFR part 200, as supplemented by 2                  storage and handling of the donated
                                                     (c) Except as otherwise provided in                  CFR part 400 and this part, applies to                commodities; expenses involved in the
                                                  this part, other regulations that are                   subawards to subrecipients under this                 administration, monitoring, and
                                                  generally applicable to grants and                      part, except where the subrecipient is a              evaluation of the activities under the
                                                  cooperative agreements of USDA,                         for-profit entity, foreign public entity, or          agreement; and the costs of activities
                                                  including the applicable regulations set                foreign organization.                                 conducted in the target country that
                                                  forth in 2 CFR chapters I, II, and IV, also               (3) Audit requirements for recipients               would enhance the effectiveness of the
                                                  apply to the McGovern-Dole Program.                     and subrecipients that are for-profit                 activities implemented under the
                                                     (d) In accordance with 7 U.S.C.                      entities or foreign organizations are set             McGovern-Dole Program.
                                                  1736o–1(e), assistance under the                        forth in § 1599.18.                                      McGovern-Dole Program means the
                                                  McGovern-Dole Program may be                                                                                  McGovern-Dole International Food for
                                                  provided to private voluntary                           § 1599.2    Definitions.                              Education and Child Nutrition Program.
                                                  organizations, cooperatives,                               These are definitions for terms used                  Private voluntary organization means
                                                  intergovernmental organizations,                        in this part. The definitions in 2 CFR                a not-for-profit, nongovernmental
                                                  governments of developing countries                     part 200, as supplemented in 2 CFR part               organization (in the case of a United
                                                  and their agencies, and other                           400, are also applicable to this part,                States organization, an organization that
                                                  organizations.                                          with the exception that, if a term that is            is exempt from Federal income taxes
                                                     (e) The OMB guidance at 2 CFR part                   defined in this section is defined                    under section 501(c)(3) of the Internal
                                                  200, and the provisions of 2 CFR part                   differently in 2 CFR part 200 or part                 Revenue Code of 1986) that receives
                                                  400 and of this part, do not apply to an                400, the definition in this section will              funds from private sources, voluntary
                                                  award by FAS under the McGovern-                        apply to such term as used in this part.              contributions of money, staff time, or in-
                                                  Dole Program to a recipient that is a                      Activity means a discrete undertaking              kind support from the public, and that
                                                  foreign public entity, as defined in 2                  within a project to be carried out by a               is engaged in or is planning to engage
                                                  CFR 200.46, and, therefore, they do not                 recipient, directly or through a                      in voluntary, charitable, or development
                                                  apply to a foreign government or its                    subrecipient, that is specified in an                 assistance activities (other than religious
                                                  agency or an intergovernmental                          agreement and is intended to fulfill a                activities).
                                                  organization.                                           specific objective of the agreement.                     Program income means interest
                                                     (f)(1) The OMB guidance at subparts                     Agreement means a legally binding                  earned on proceeds from the sale of
                                                  A through E of 2 CFR part 200, as                       grant or cooperative agreement entered                donated commodities, as well as funds
                                                  supplemented by 2 CFR part 400 and                      into between FAS and a recipient to                   received by a recipient or subrecipient
                                                  this part, applies to all awards by FAS                 implement a project under the                         as a direct result of carrying out an
                                                  under the McGovern-Dole Program to all                  McGovern-Dole Program.                                approved activity under an agreement.
                                                  recipients that are private voluntary                      Commodities mean agricultural                      The term includes but is not limited to
                                                  organizations, including a private                      commodities, or products of agricultural              income from fees for services
                                                  voluntary organization that is a foreign                commodities, that are produced in the                 performed, the use or rental of real or
                                                  organization, as defined in 2 CFR                       United States.                                        personal property acquired under a
                                                  200.47; cooperatives, including a                          Cooperative means a private sector                 Federal award, the sale of items
                                                  cooperative that is a for-profit entity or              organization whose members own and                    fabricated under a Federal award,
                                                  a foreign organization; or other                        control the organization and share in its             license fees and royalties on patents and
                                                  organizations, including organizations                  services and its profits and that provides            copyrights, and principal and interest
                                                  that are for-profit entities or foreign                 business services and outreach in                     on loans made with Federal award
                                                  organizations, but not including                        cooperative development for its                       funds. Program income does not include
                                                  intergovernmental organizations.                        membership.                                           proceeds from the sale of donated
                                                     (2) The OMB guidance at subparts A                      Cost sharing or matching means the                 commodities; FAS-provided funds or
                                                  through E of 2 CFR part 200, as                         portion of project expenses, or necessary             interest earned on such funds; or funds
                                                  supplemented by 2 CFR part 400 and                      goods and services provided to carry out              provided for cost sharing or matching
                                                  this part, applies to all subawards to all              a project, not paid or acquired with                  contributions, refunds or rebates,
                                                  subrecipients under this part, except in                Federal funds. The term may include                   credits, discounts, or interest earned on
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                                                  cases:                                                  cash or in-kind contributions provided                any of them.
                                                     (i) Where the subrecipient is a foreign              by recipients, subrecipients, foreign                    Project means the totality of the
                                                  public entity; or                                       public entities, foreign organizations, or            activities to be carried out by a
                                                     (ii) Where FAS determines that the                   private donors.                                       recipient, directly or through a
                                                  application of these provisions to a                       Disburse means to make a payment to                subrecipient, to fulfill the objectives of
                                                  subaward to a subrecipient that is a                    liquidate an obligation.                              an agreement.
                                                  foreign organization would be                              Donated commodities means the                         Recipient means an entity that enters
                                                  inconsistent with the international                     commodities donated by FAS to a                       into an agreement with FAS and


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                                                  62618            Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Rules and Regulations

                                                  receives donated commodities and FAS-                   forth in the notice of funding                        agreement with the applicant. The
                                                  provided funds to carry out activities                  opportunity.                                          agreement will set forth the obligations
                                                  under the agreement. The term recipient                    (b) An applicant must include the                  of FAS and the recipient.
                                                  does not include a subrecipient.                        following items in its application:                      (b) The agreement will specify the
                                                    Sale proceeds means funds received                       (1) A completed Form SF–424, which                 general information required in 2 CFR
                                                  by a recipient from the sale of donated                 is a standard application for Federal                 200.210(a), as applicable.
                                                  commodities.                                            assistance;                                              (c) The agreement will incorporate
                                                                                                             (2) An introduction and a strategic                general terms and conditions, pursuant
                                                    Subrecipient means an entity that
                                                                                                          analysis, which includes an impact                    to 2 CFR 200.210(b), as applicable.
                                                  enters into a subagreement with a
                                                                                                          analysis, as specified in the notice of                  (d) To the extent that this information
                                                  recipient for the purpose of
                                                                                                          funding opportunity;                                  is not already included in the agreement
                                                  implementing in the target country                         (3) A plan of operation that contains
                                                  activities described in an agreement.                                                                         pursuant to paragraphs (b) and (c) of
                                                                                                          the elements specified in the notice of               this section, the agreement will also
                                                  The term does not include an individual                 funding opportunity;
                                                  that is a beneficiary under the                                                                               include the following:
                                                                                                             (4) A summary line item budget and                    (1) The kind, quantity, and use of the
                                                  agreement.                                              a budget narrative that indicate:                     donated commodities and an estimated
                                                    Target country means the foreign                         (i) The amounts of any sale proceeds,              commodity call forward schedule, with
                                                  country in which activities are                         FAS-provided funds, interest, program                 the month and year indicated for each
                                                  implemented under an agreement.                         income, and voluntary committed cost                  expected commodity shipment;
                                                    USDA means the United States                          sharing or matching contributions that                   (2) A plan of operation, which will
                                                  Department of Agriculture.                              the applicant proposes to use to fund:                include the following:
                                                    Voluntary committed cost sharing or                      (A) Administrative costs;                             (i) The objectives to be accomplished
                                                  matching contributions means cost                          (B) Inland and internal transportation,            under the project;
                                                  sharing or matching contributions                       storage and handling (ITSH) costs; and                   (ii) A detailed description of each
                                                  specifically pledged on a voluntary                        (C) Activity costs;                                activity to be implemented;
                                                  basis by an applicant or recipient,                        (ii) Where applicable, how the
                                                                                                                                                                   (iii) The target country(ies) and the
                                                  which become binding as part of an                      applicant’s indirect cost rate will be
                                                                                                                                                                areas of the target country(ies) in which
                                                  agreement. Voluntary committed cost                     applied to each type of expense; and
                                                                                                                                                                the activities will be implemented;
                                                  sharing or matching contributions may                      (iii) The amount of funding that will
                                                                                                                                                                   (iv) The methods and criteria for
                                                  be provided in the form of cash or in-                  be provided to each proposed
                                                                                                                                                                selecting the beneficiaries of the
                                                  kind contributions.                                     subrecipient under the agreement;
                                                                                                             (5) A project-level results framework              activities;
                                                                                                                                                                   (v) Any contributions for cost sharing
                                                  § 1599.3 Eligibility and conflicts of                   that outlines the changes that the
                                                                                                                                                                or matching, including cash and non-
                                                  interest.                                               applicant expects to accomplish through
                                                                                                                                                                cash contributions, that the recipient
                                                     (a) A private voluntary organization, a              the proposed project and is based on the
                                                                                                                                                                expects to receive from non-FAS
                                                  cooperative, or another organization that               McGovern-Dole Program-level results
                                                                                                                                                                sources that:
                                                  is not an intergovernmental organization                framework, as set forth in the notice of
                                                                                                                                                                   (A) Are critical to the implementation
                                                  is eligible to submit an application                    funding opportunity;
                                                                                                             (6) Unless otherwise specified in the              of the activities; or
                                                  under this part to become a recipient                                                                            (B) Enhance the implementation of
                                                  under the McGovern-Dole Program. FAS                    notice of funding opportunity, an
                                                                                                                                                                the activities;
                                                  will set forth specific eligibility                     evaluation plan that describes the
                                                                                                                                                                   (vi) Any subrecipient that will be
                                                  information, including any factors or                   proposed design, methodology, and
                                                                                                                                                                involved in the implementation of the
                                                  priorities that will affect the eligibility             time frame of the project’s evaluation
                                                                                                                                                                activities, and the criteria for selecting
                                                  of an applicant or application for                      activities, and how the applicant
                                                                                                                                                                a subrecipient that has not yet been
                                                  selection, in the full text of the                      intends to manage these activities, and
                                                                                                                                                                identified;
                                                  applicable notice of funding                            that will include a baseline study,
                                                                                                                                                                   (vii) Any other governmental or
                                                  opportunity posted on the U.S.                          interim evaluation, final evaluation, and
                                                                                                                                                                nongovernmental entities that will be
                                                  Government Web site for grant                           any applicable special studies; and
                                                                                                                                                                involved in the implementation of the
                                                  opportunities.                                             (7) Any additional required items set
                                                                                                                                                                activities;
                                                                                                          forth in the notice of funding
                                                     (b) Applicants, recipients, and                                                                               (viii) Any processing, packaging or
                                                                                                          opportunity.
                                                  subrecipients must comply with                             (c) Each applicant (unless the                     repackaging of the donated commodities
                                                  policies established by FAS pursuant to                 applicant has an exception approved by                that will take place prior to their
                                                  2 CFR 400.2(a), and with the                            FAS under 2 CFR 25.110(d)) is required                distribution, sale or barter by the
                                                  requirements in 2 CFR 400.2(b),                         to:                                                   recipient; and
                                                  regarding conflicts of interest.                           (1) Be registered in the System for                   (ix) Any additional provisions
                                                                                                          Award Management (SAM) before                         specified by FAS during the negotiation
                                                  § 1599.4   Application process.                                                                               of the agreement;
                                                                                                          submitting its application;
                                                    (a) An applicant seeking to enter into                   (2) Provide a valid unique entity                     (3) A budget, which will set forth the
                                                  an agreement with FAS must submit an                    identifier in its application; and                    maximum amounts of sale proceeds,
                                                  application, in accordance with this                       (3) Continue to maintain an active                 FAS-provided funds, interest, program
                                                  section, that sets forth its proposal to                SAM registration with current                         income, and voluntary committed cost
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                                                  carry out activities under the McGovern-                information at all times during which it              sharing or matching contributions that
                                                  Dole Program in a proposed target                       has an active Federal award or an                     may be used for each line item, as well
                                                  country(ies). An application must                       application or plan under consideration               as other applicable budget requirements;
                                                  contain the items specified in paragraph                by a Federal awarding agency.                         and
                                                  (b) of this section and any other items                                                                          (4) Performance goals for the
                                                  required by the notice of funding                       § 1599.5    Agreements.                               agreement, including a list of results,
                                                  opportunity and must be submitted                         (a) After FAS approves an application               with long-term benefits where
                                                  electronically to FAS at the address set                by an applicant, FAS will negotiate an                applicable, to be achieved by the


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                                                                   Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Rules and Regulations                                        62619

                                                  activities and corresponding indicators,                the freight rate and signed by the                    will generally provide the funds to the
                                                  targets, and time frames.                               originating ocean carrier;                            recipient on an advance payment basis,
                                                    (e) The agreement will also include                      (2) For all non-containerized cargoes:             in accordance with 2 CFR 200.305(b). In
                                                  specific terms and conditions, and                         (i) A signed copy of the Federal Grain             addition, the following procedures will
                                                  certifications and representations,                     Inspection Service (FGIS) Official                    apply to advance payments:
                                                  including the following:                                Stowage Examination Certificate;                         (1) A recipient may request advance
                                                    (1) The agreement will prohibit the                      (ii) A signed copy of the National                 payments of FAS-provided funds, up to
                                                  sale or transshipment of the donated                    Cargo Bureau Certificate of Readiness;                the total amount specified in the
                                                  commodities by the recipient to a                       and                                                   agreement. When making an advance
                                                  country not specified in the agreement                     (iii) A signed copy of the Certificate             payment request, a recipient must
                                                  for as long as the recipient has title to               of Loading issued by the National Cargo               provide, for each agreement for which it
                                                  such donated commodities;                               Bureau or a similar qualified                         is requesting an advance, total
                                                    (2) The recipient will assert that it has             independent surveyor;                                 expenditures to date; an estimate of
                                                  taken action to ensure that any donated                    (3) For all containerized cargoes, a               expenses to be covered by the advance;
                                                  commodities that will be distributed to                 copy of the FGIS Container Condition                  total advances previously requested, if
                                                  beneficiaries will be imported and                      Inspection Certificate;                               any; the amount of cash on hand from
                                                  distributed free from all customs, duties,                 (4) A signed copy of the U.S. Food                 the preceding advance; and, if
                                                  tolls, and taxes. The recipient must                    Aid Booking Note or charter party                     necessary, a request to roll over any
                                                  submit information to FAS to support                    covering ocean transportation of the                  unused funds from the preceding
                                                  this assertion;                                         cargo;                                                advance to the current request period.
                                                    (3) The recipient will assert that, to                   (5) In the case of charter shipments,              The advance payment request must take
                                                  the best of its knowledge, the                          a signed notice of arrival at the first               into account any program income
                                                  importation and distribution of the                     discharge port, unless FAS has                        earned since the preceding advance.
                                                  donated commodities in the target                       determined that circumstances that                       (2) Whenever possible, a recipient
                                                  country will not result in a substantial                could not have been reasonably                        should consolidate advance payment
                                                  disincentive to or interference with                    anticipated or controlled (force majeure)             requests to cover anticipated cash needs
                                                  domestic production or marketing in                     have prevented the ocean carrier’s                    for all food assistance program awards
                                                  that country. The recipient must submit                 arrival at the first port of discharge; and           made by FAS to the recipient. A
                                                  information to FAS to support this                         (6) A request for payment of freight,              recipient may request advance
                                                  assertion;                                              survey costs other than at load port, and             payments with no minimum time
                                                    (4) The recipient will assert that, to                other expenses approved by FAS.                       required between requests.
                                                  the best of its knowledge, any sale or                     (b) If the agreement specifies that                   (3) A recipient must minimize the
                                                  barter of the donated commodities will                  some or all of the documents listed in                amount of time that elapses between the
                                                  not displace or interfere with any sales                paragraph (a) of this section will be                 transfer of funds by FAS and the
                                                  of like commodities that may otherwise                  submitted to FAS, then FAS will not                   disbursement of funds by the recipient.
                                                  be made within the target country. The                  render payment for transportation                     A recipient must fully disburse funds
                                                  recipient must submit information to                    services until it has received all of the             from the preceding advance before it
                                                  FAS to support this assertion; and                      specified documents.                                  submits a new advance request for the
                                                    (5) The recipient will assert that                       (c) If a recipient arranges for                    same agreement, with the exception that
                                                  adequate transportation and storage                     transportation in accordance with                     the recipient may request to retain the
                                                  facilities will be available in the target              § 1599.7(b)(2), and the recipient uses a              balance of any funds that have not been
                                                  country to prevent spoilage or waste of                 freight forwarder, the recipient must                 disbursed and roll it over into a new
                                                  the donated commodities. The recipient                  ensure that the freight forwarder is                  advance request if the new advance
                                                  must submit information to FAS to                       registered in the SAM and require the                 request is made within 90 days after the
                                                  support this assertion.                                 freight forwarder to submit the                       preceding advance was made.
                                                    (f) FAS may enter into a multicountry                 documents specified in paragraph (a) of                  (4) FAS will review all requests to roll
                                                  agreement in which donated                              this section. The recipient will ensure               over funds from the preceding advance
                                                  commodities are delivered to one                        that the total commission or fees paid to             that have not been disbursed and make
                                                  country and activities are carried out in               intermediaries in the transportation                  a decision based on the merits of the
                                                  another.                                                procurement process will not exceed                   request. FAS will consider factors such
                                                    (g) FAS may provide donated                           two and a half percent of the total                   as the amount of funding that a
                                                  commodities and FAS-provided funds                      transportation costs.                                 recipient is requesting to roll over, the
                                                  under a multiyear agreement contingent                     (d) In no case will FAS provide                    length of time that the recipient has
                                                  upon the availability of commodities                    payment to a recipient for demurrage                  been in possession of the funds, any
                                                  and funds.                                              costs or pay demurrage to any other                   unforeseen or extenuating
                                                                                                          entity.                                               circumstances, the recipient’s history of
                                                  § 1599.6   Payments.                                       (e) If FAS has agreed to be responsible            performance, and findings from recent
                                                     (a) If a recipient arranges for                      for the costs of transporting, storing, and           financial audits or compliance reviews.
                                                  transportation in accordance with                       distributing the donated commodities                     (5) FAS will not approve any request
                                                  § 1599.7(b)(2), FAS will, as specified in               from the designated discharge port or                 for an advance or rollover of funds if the
                                                  the agreement, pay the costs of such                    point of entry, and if the recipient will             most recent financial report, as specified
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                                                  transportation to the ocean carrier or to               bear or has borne any of these costs, in              in the agreement, is past due, or if any
                                                  the recipient. The recipient must, as                   accordance with the agreement, FAS                    required report, as specified in any open
                                                  specified in the agreement, submit to                   will either provide an advance payment                agreement between the recipient and
                                                  FAS, arrange to be submitted to FAS, or                 or a reimbursement to the recipient in                FAS or the Commodity Credit
                                                  maintain on file and make available to                  the amount of such costs, in the manner               Corporation (CCC), is more than three
                                                  FAS, the following documents:                           set forth in the agreement.                           months in arrears.
                                                     (1) The original, or a true copy, of                    (f) If the agreement authorizes the                   (6)(i) A recipient must return to FAS
                                                  each on board bill of lading indicating                 payment of FAS-provided funds, FAS                    any funds advanced by FAS that have


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                                                  62620            Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Rules and Regulations

                                                  not been disbursed as of the 91st day                   § 1599.7 Transportation of donated                    that will be distributed to beneficiaries
                                                  after the advance was made; provided,                   commodities.                                          to be imported and distributed free from
                                                  however, that paragraphs (f)(6)(ii) and                    (a) Shipments of donated                           all customs duties, tolls, and taxes. A
                                                  (iii) of this section will apply if the                 commodities are subject to the                        recipient is encouraged to make similar
                                                  recipient submits a request to FAS                      requirements of 46 U.S.C. 55305,                      arrangements, where possible, with the
                                                  before that date to roll over the funds                 regarding carriage on U.S.-flag vessels.              government of a country where donated
                                                  into a new advance.                                        (b) Transportation of donated                      commodities to be sold or bartered are
                                                     (ii) If a recipient submits a request to             commodities and other goods such as                   delivered.
                                                  roll over funds into a new advance, and                 bags that may be provided by FAS                         (b) A recipient must, as provided in
                                                  FAS approves the rollover of funds,                     under the McGovern-Dole Program will                  the agreement, arrange for transporting,
                                                  such funds will be considered to have                   be arranged for under a specific                      storing, and distributing the donated
                                                  been advanced on the date that the                      agreement in the manner determined by                 commodities from the designated point
                                                  recipient receives the approval notice                  FAS. Such transportation will be                      and time where title to the donated
                                                  from FAS, for the purposes of                           arranged for by:                                      commodities passes to the recipient.
                                                  complying with the requirement in                          (1) FAS in accordance with the                        (c) A recipient must store and
                                                  paragraph (f)(6)(i) of this section.                    Federal Acquisition Regulation (FAR) in               maintain the donated commodities in
                                                                                                          chapter 1 of title 48, the Agriculture                good condition from the time of delivery
                                                     (iii) If a recipient submits a request to
                                                                                                          Acquisition Regulation (AGAR) in                      at the port of entry or the point of
                                                  roll over funds into a new advance, and
                                                                                                          chapter 4 of title 48, and directives                 receipt from the originating carrier until
                                                  FAS does not approve the rollover of
                                                                                                          issued by the Director, Office of                     their distribution, sale or barter.
                                                  some or all of the funds, such funds                                                                             (d)(1) If a recipient arranges for the
                                                                                                          Procurement and Property Management,
                                                  must be returned to FAS.                                                                                      packaging or repackaging of donated
                                                                                                          USDA; or
                                                     (iv) If a recipient must return funds to                (2) The recipient, with payment by                 commodities that are to be distributed,
                                                  FAS in accordance with paragraph (e)(6)                 FAS, in the manner specified in the                   the recipient must ensure that the
                                                  of this section, the recipient must return              agreement.                                            packaging:
                                                  the funds by the later of five business                    (c) A recipient that is responsible for               (i) Is plainly labeled in the language
                                                  days after the 91st day after the funds                 transportation under paragraph (b)(2) of              of the target country;
                                                  were advanced, or five business days                    this section must declare in the                         (ii) Contains the name of the donated
                                                  after the date on which the recipient                   transportation contract the point at                  commodities;
                                                  receives notice from FAS that it has                    which the ocean carrier will take                        (iii) Includes a statement indicating
                                                  denied the recipient’s request to roll                  custody of donated commodities to be                  that the donated commodities are
                                                  over the funds; provided, however, that                 transported.                                          furnished by the United States
                                                  FAS may specify a different date for the                   (d) A recipient that arranges for                  Department of Agriculture; and
                                                  return of funds in a written                            transportation in accordance with                        (iv) Includes a statement indicating
                                                  communication to the recipient.                         paragraph (b)(2) of this section may only             that the donated commodities must not
                                                     (7) Except as may otherwise be                       use the services of a freight forwarder               be sold, exchanged or bartered.
                                                  provided in the agreement, a recipient                  that is licensed by the Federal Maritime                 (2) If a recipient arranges for the
                                                  must deposit and maintain in an                         Commission and that would not have a                  processing and repackaging of donated
                                                  insured bank account located in the                     conflict of interest in carrying out the              commodities that are to be distributed,
                                                  United States all funds advanced by                     freight forwarder duties. To assist FAS               the recipient must ensure that the
                                                  FAS. The account must be interest-                      in determining whether there is a                     packaging:
                                                  bearing, unless one of the exceptions in                potential conflict of interest, the                      (i) Is plainly labeled in the language
                                                  2 CFR 200.305(b)(8) applies or FAS                      recipient must submit to FAS a                        of the target country;
                                                  determines that this requirement would                  certification indicating that the freight                (ii) Contains the name of the
                                                  constitute an undue burden. A recipient                 forwarder:                                            processed product;
                                                                                                             (1) Is not engaged in, and will not                   (iii) Includes a statement indicating
                                                  will not be required to maintain a
                                                                                                          engage in, supplying commodities or                   that the processed product was made
                                                  separate bank account for advance
                                                                                                          furnishing ocean transportation or ocean              with commodities furnished by the
                                                  payments of FAS-provided funds.
                                                                                                          transportation-related services for                   United States Department of
                                                  However, a recipient must be able to
                                                                                                          commodities provided under any                        Agriculture; and
                                                  separately account for the receipt,
                                                                                                          McGovern-Dole Program agreement to                       (iv) Includes a statement indicating
                                                  obligation, and expenditure of funds
                                                                                                          which the recipient is a party; and                   that the processed product must not be
                                                  under each agreement.
                                                                                                             (2) Is not affiliated with the recipient           sold, exchanged or bartered.
                                                     (8) A recipient may retain, for                                                                               (3) If a recipient distributes donated
                                                  administrative expenses, up to $500 per                 and has not made arrangements to give
                                                                                                          or receive any payment, kickback, or                  commodities that are not packaged, the
                                                  Federal fiscal year of any interest earned                                                                    recipient must display a sign at the
                                                  on funds advanced under an agreement.                   illegal benefit in connection with its
                                                                                                          selection as an agent of the recipient.               distribution site that includes the name
                                                  The recipient must remit to the U.S.                                                                          of the donated commodities, a statement
                                                  Department of Health and Human                          § 1599.8 Entry, handling, and labeling of             indicating that the donated commodities
                                                  Services, Payment Management System,                    donated commodities and notification                  are being furnished by the United States
                                                  any additional interest earned during a                 requirements.                                         Department of Agriculture, and a
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                                                  Federal fiscal year on such funds, in                      (a) A recipient must make all                      statement indicating that the donated
                                                  accordance with the procedures in 2                     necessary arrangements for receiving the              commodities must not be sold,
                                                  CFR 200.305(b)(9).                                      donated commodities in the target                     exchanged, or bartered.
                                                     (g) If a recipient is required to pay                country, including obtaining                             (e) A recipient must ensure that signs
                                                  funds to FAS in connection with an                      appropriate approvals for entry and                   are displayed at all activity
                                                  agreement, the recipient must make                      transit. The recipient must make                      implementation and commodity
                                                  such payment in U.S. dollars, unless                    arrangements with the target country                  distribution sites to inform beneficiaries
                                                  otherwise approved in advance by FAS.                   government for all donated commodities                that funding for the project was


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                                                                   Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Rules and Regulations                                       62621

                                                  provided by the United States                           the ocean carrier and must indicate the                  (vi) Notifies the recipient immediately
                                                  Department of Agriculture.                              most likely cause of any damage noted                 if the surveyor has reason to believe that
                                                     (f) A recipient must also ensure that                in the report. The report must also                   the correct quantity was not discharged
                                                  all public communications relating to                   indicate the time and place when the                  or if additional services are necessary to
                                                  the project, the activities, or the donated             survey took place. All discharge surveys              protect the cargo; and
                                                  commodities, whether made through                       must be conducted contemporaneously                      (4) If the damage or loss occurred with
                                                  print, broadcast, digital, or other media,              with the discharge of the ocean carrier,              respect to a container shipment on an
                                                  include a statement acknowledging that                  unless FAS determines that failure to do              ocean carrier, the recipient must ensure
                                                  funding was provided by the United                      so was justified under the                            that the independent cargo surveyor
                                                  States Department of Agriculture.                       circumstances. For donated                            lists the container numbers and seal
                                                     (g) FAS may waive compliance with                    commodities shipped on a through bill                 numbers shown on the containers,
                                                  one or more of the labeling and                         of lading, the recipient must also obtain             indicates whether the seals were intact
                                                  notification requirements in paragraphs                 a delivery survey. All surveys obtained               at the time the containers were opened,
                                                  (d), (e) and (f) of this section if a                   by the recipient must, to the extent                  and notes whether the containers were
                                                  recipient demonstrates to FAS that the                  practicable, be conducted jointly by the              in any way damaged.
                                                  requirement presents a safety or security               surveyor, the recipient, and the carrier,                (e) If a recipient has title to the
                                                  risk in the target country. If a recipient              and the survey report must be signed by               donated commodities, and donated
                                                  determines that compliance with a                       all three parties. The recipient must                 commodities valued in excess of $5,000
                                                  labeling or notification requirement                    obtain a copy of each discharge or                    are damaged at any time prior to their
                                                  poses an imminent threat of destruction                 delivery survey report within 45 days                 distribution or sale under the
                                                  of property, injury, or loss of life, the               after the completion of the survey. The               agreement, regardless of the party at
                                                  recipient must submit a waiver request                  recipient must make each such report                  fault, the recipient must immediately
                                                  to FAS as soon as possible. The                         available to FAS upon request, or in the              arrange for an inspection by a public
                                                  recipient will not have to comply with                  manner specified in the agreement. FAS                health official or other competent
                                                  such requirement during the period                      will reimburse the recipient for the                  authority approved by FAS and provide
                                                  prior to the issuance of a waiver                       reasonable costs of these services, as                to FAS a certification by such public
                                                  determination by FAS. A recipient may                   determined by FAS, in the manner                      health official or other competent
                                                  submit a written request for a waiver at                specified in the agreement.                           authority regarding the exact quantity
                                                  any time after the agreement has been                      (d) If donated commodities are                     and condition of the damaged donated
                                                  signed.                                                 damaged or lost during the time that                  commodities. The value of damaged
                                                     (h) In exceptional circumstances, FAS                they are in the care of the ocean carrier:            donated commodities must be
                                                  may, on its own initiative, waive one or                   (1) The recipient must ensure that any             determined on the basis of the
                                                  more of the labeling and notification                   reports, narrative chronology, or other               commodity acquisition, transportation,
                                                  requirements in paragraphs (d), (e) and                 commentary prepared by the                            and related costs incurred by FAS with
                                                  (f) of this section for programmatic                    independent cargo surveyor, and any                   respect to such commodities, as well as
                                                  reasons.                                                such documentation prepared by a port                 such costs incurred by the recipient and
                                                                                                          authority, stevedoring service, or                    paid by FAS. The recipient must inform
                                                  § 1599.9 Damage to or loss of donated
                                                                                                          customs official, or an official of the               FAS of the results of the inspection and
                                                  commodities.
                                                                                                          transit or target country government or               indicate whether the damaged donated
                                                     (a) FAS will be responsible for the                  the transportation company, are                       commodities are:
                                                  donated commodities prior to the                        provided to FAS;                                         (1) Fit for the use authorized in the
                                                  transfer of title to the commodities to                    (2) The recipient must provide to FAS              agreement and, if so, whether there has
                                                  the recipient. The recipient will be                    the names and addresses of any                        been a diminution in quality; or
                                                  responsible for the donated                             individuals known to be present at the                   (2) Unfit for the use authorized in the
                                                  commodities following the transfer of                   time of discharge or unloading, or                    agreement.
                                                  title to the donated commodities to the                 during the survey, who can verify the                    (f)(1) If a recipient has title to the
                                                  recipient. The title will transfer as                   quantity of damaged or lost donated                   donated commodities, the recipient
                                                  specified in the agreement.                             commodities;                                          must arrange for the recovery of that
                                                     (b) A recipient must inform FAS, in                     (3) If the damage or loss occurred with            portion of the donated commodities
                                                  the manner and within the time period                   respect to a bulk shipment on an ocean                designated as fit for the use authorized
                                                  set forth in the agreement, of any                      carrier, the recipient must ensure that               in the agreement. The recipient must
                                                  damage to or loss of the donated                        the independent cargo surveyor:                       dispose of donated commodities that are
                                                  commodities that occurs following the                      (i) Observes the discharge of the                  unfit for such use in the following order
                                                  transfer of title to the donated                        cargo;                                                of priority:
                                                  commodities to the recipient. The                          (ii) Reports on discharging methods,                  (i) Sale for the most appropriate use,
                                                  recipient must take all steps necessary                 including scale type, calibrations, and               i.e., animal feed, fertilizer, industrial
                                                  to protect its interests and the interests              any other factors that may affect the                 use, or another use approved by FAS, at
                                                  of FAS with respect to any damage to                    accuracy of scale weights, and, if scales             the highest obtainable price;
                                                  or loss of the donated commodities that                 are not used, states the reason therefor                 (ii) Donation to a governmental or
                                                  occurs after title has been transferred to              and describes the actual method used to               charitable organization for use as animal
                                                  the recipient.                                          determine weight;                                     feed or another non-food use; or
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                                                     (c) A recipient will be responsible for                 (iii) Estimates the quantity of cargo, if             (iii) Destruction of the donated
                                                  arranging for an independent cargo                      any, lost during discharge through                    commodities if they are unfit for any
                                                  surveyor to inspect the donated                         carrier negligence;                                   use, in such manner as to prevent their
                                                  commodities upon discharge from the                        (iv) Advises on the quality of                     use for any purpose.
                                                  ocean carrier and prepare a survey or                   sweepings;                                               (2) A recipient must arrange for all
                                                  outturn report. The report must show                       (v) Obtains copies of port or ocean                U.S. Government markings to be
                                                  the quantity and condition of the                       carrier records, if possible, showing the             obliterated or removed before the
                                                  donated commodities discharged from                     quantity discharged; and                              donated commodities are transferred by


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                                                  62622            Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Rules and Regulations

                                                  sale or donation under paragraph (f)(1)                 such costs incurred by the recipient and                (d) A recipient must not permit the
                                                  of this section.                                        paid by FAS.                                          distribution, handling, or allocation of
                                                    (g) A recipient may retain any                           (2) The value of a claim for damaged               donated commodities by the military
                                                  proceeds generated by the disposal of                   donated commodities will be                           forces of any government or insurgent
                                                  the donated commodities in accordance                   determined on the basis of the                        group without the specific authorization
                                                  with paragraph (f)(1) of this section and               commodity acquisition, transportation,                of FAS.
                                                  must use the retained proceeds for                      and related costs incurred by FAS with                  (e) A recipient must not use sale
                                                  expenses related to the disposal of the                 respect to such commodities, as well as               proceeds, FAS-provided funds, interest,
                                                  donated commodities and for activities                  such costs incurred by the recipient and              or program income to acquire goods and
                                                  specified in the agreement.                             paid by FAS, less any funds generated                 services, either directly or indirectly
                                                    (h) A recipient must notify FAS                       if such commodities are sold in                       through another party, in a manner that
                                                  immediately and provide detailed                        accordance with § 1599.9(f)(1).                       violates country-specific economic
                                                  information about the actions taken in                     (e) If FAS determines that a recipient             sanction programs, as specified in the
                                                  accordance with paragraph (f) of this                   has not initiated a claim or is not                   agreement.
                                                  section, including the quantities, values,                                                                      (f) A recipient may sell or barter
                                                                                                          exercising due diligence in the pursuit
                                                  and dispositions of donated                                                                                   donated commodities only if such sale
                                                                                                          of a claim, FAS may require the
                                                  commodities determined to be unfit.                                                                           or barter is provided for in the
                                                                                                          recipient to assign its rights to initiate
                                                                                                                                                                agreement or the recipient is disposing
                                                  § 1599.10 Claims for damage to or loss of               or pursue the claim to FAS. Failure by
                                                                                                                                                                of damaged donated commodities as
                                                  donated commodities.                                    the recipient to initiate a claim or
                                                                                                                                                                specified in § 1599.9(f). The recipient
                                                     (a) FAS will be responsible for claims               exercise due diligence in the pursuit of
                                                                                                                                                                must sell donated commodities at a
                                                  arising out of damage to or loss of a                   a claim will be considered by FAS
                                                                                                                                                                reasonable market price. The recipient
                                                  quantity of the donated commodities                     during the review of applications for
                                                                                                                                                                must obtain approval of its proposed
                                                  prior to the transfer of title to the                   subsequent food assistance awards.
                                                                                                                                                                sale price from FAS before selling
                                                  donated commodities to the recipient.                      (f)(1) A recipient may retain any funds            donated commodities. The recipient
                                                  The recipient will be responsible for                   obtained as a result of a claims                      must use any sale proceeds, interest,
                                                  claims arising out of damage to or loss                 collection action initiated by it in                  program income, or goods or services
                                                  of a quantity of the donated                            accordance with this section, or                      derived from the sale or barter of the
                                                  commodities after the transfer of title to              recovered pursuant to any insurance                   donated commodities only as provided
                                                  the donated commodities.                                policy or other similar form of                       in the agreement.
                                                     (b) If a recipient has title to donated              indemnification, but such funds must be                 (g) A recipient must deposit and
                                                  commodities that have been damaged or                   expended in accordance with the                       maintain all sale proceeds, FAS-
                                                  lost, and the value of the damaged or                   agreement or for other purposes                       provided funds, and program income in
                                                  lost donated commodities is estimated                   approved in advance by FAS.                           a bank account until they are used for
                                                  to be in excess of $20,000, the recipient                  (2) FAS will retain any funds obtained             a purpose authorized under the
                                                  must:                                                   as a result of a claims collection action             agreement or the FAS-provided funds
                                                     (1) Notify FAS immediately and                       initiated by it under this section;                   are returned to FAS in accordance with
                                                  provide detailed information about the                  provided, however, that if the recipient              § 1599.6(f)(6). The account must be
                                                  circumstances surrounding such                          paid for the transportation of the                    insured unless it is in a country where
                                                  damage or loss, the quantity of damaged                 donated commodities or a portion                      insurance is unavailable. The account
                                                  or lost donated commodities, and the                    thereof, FAS will use a portion of such               must be interest-bearing, unless one of
                                                  value of the damage or loss;                            funds to reimburse the recipient for                  the exceptions in 2 CFR 200.305(b)(8)
                                                     (2) Promptly upon discovery of the                   such expense on a prorated basis.                     applies or FAS determines that this
                                                  damage or loss, initiate a claim arising                                                                      requirement would constitute an undue
                                                                                                          § 1599.11 Use of donated commodities,
                                                  out of such damage or loss, including,                                                                        burden. The recipient must comply with
                                                                                                          sale proceeds, FAS-provided funds, and
                                                  if appropriate, initiating an action to                 program income.                                       the requirements in § 1599.6(f)(7) with
                                                  collect pursuant to a commercial                                                                              regard to the deposit of advance
                                                  insurance contract;                                       (a) A recipient must use the donated                payments by FAS.
                                                     (3) Take all necessary action to pursue              commodities, any sale proceeds, FAS-                    (h)(1) Except as provided in paragraph
                                                  the claim diligently and within any                     provided funds, interest, and program                 (h)(2) of this section, a recipient may
                                                  applicable periods of limitations; and                  income in accordance with the                         make adjustments within the agreement
                                                     (4) Provide to FAS copies of all                     agreement.                                            budget between direct cost line items
                                                  documentation relating to the claim.                      (b) A recipient must not use donated                without further approval, provided that
                                                     (c) If a recipient has title to donated              commodities, sale proceeds, FAS-                      the total amount of adjustments does
                                                  commodities that have been damaged or                   provided funds, interest, or program                  not exceed ten percent of the Grand
                                                  lost, and the value of the damaged or                   income for any activity or any expense                Total Costs, excluding any voluntary
                                                  lost donated commodities is estimated                   incurred by the recipient or a                        committed cost sharing or matching
                                                  to be $20,000 or less, the recipient must               subrecipient prior to the start date of the           contributions, in the agreement budget.
                                                  notify FAS in accordance with the                       period of performance of the agreement                Adjustments beyond these limits require
                                                  agreement and provide detailed                          or after the agreement is suspended or                the prior approval of FAS.
                                                  information about the damage or loss in                 terminated, without the prior written                   (2) A recipient must not transfer any
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                                                  the next report required to be filed                    approval of FAS.                                      funds budgeted for participant support
                                                  under § 1599.13(f)(1) or (2).                             (c) A recipient must not permit the                 costs, as defined in 2 CFR 200.75, to
                                                     (d)(1) The value of a claim for lost                 distribution, handling, or allocation of              other categories of expense without the
                                                  donated commodities will be                             donated commodities on the basis of                   prior approval of FAS.
                                                  determined on the basis of the                          political affiliation, geographic location,             (i) A recipient may use sale proceeds,
                                                  commodity acquisition, transportation,                  or the ethnic, tribal or religious identity           FAS-provided funds, or program income
                                                  and related costs incurred by FAS with                  or affiliation of the potential consumers             to purchase real or personal property
                                                  respect to such commodities, as well as                 or beneficiaries.                                     only if local law permits the recipient to


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                                                                   Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Rules and Regulations                                       62623

                                                  retain title to such property. However, a                  (c) A recipient must inform FAS, in                   (i) Is financially and legally separate
                                                  recipient must not use sale proceeds,                   the manner and within the time period                 from the recipient’s organization; and
                                                  FAS-provided funds, or program income                   specified in the agreement, of any                       (ii) Has staff with demonstrated
                                                  to pay for the acquisition, development,                problems, delays, or adverse conditions               methodological, cultural and language
                                                  construction, alteration or upgrade of                  that materially impair the recipient’s                competencies, and specialized
                                                  real property that is:                                  ability to meet the objectives of the                 experience in conducting evaluations of
                                                     (1) Owned or managed by a church or                  agreement. This notification must                     international development programs
                                                  other organization engaged exclusively                  include a statement of any corrective                 involving agriculture, trade, education,
                                                  in religious pursuits; or                               actions taken or contemplated by the                  and nutrition, provided that FAS may
                                                     (2) Used in whole or in part for                     recipient, and any additional assistance              determine that, for a particular
                                                  sectarian purposes, except that a                       requested from FAS to resolve the                     agreement, the staff of the independent
                                                  recipient may use sale proceeds, FAS-                   situation.                                            third party evaluator is not required to
                                                  provided funds, or program income to                       (d) A recipient will be responsible for            have specialized experience in
                                                  pay for repairs to or rehabilitation of a               designing an evaluation plan for the                  conducting evaluations of programs
                                                  structure located on such real property                 project, obtaining written approval of                involving one or more of these four
                                                  to the extent necessary to avoid spoilage               the plan from FAS before putting it into              areas.
                                                  or loss of donated commodities, but                     effect, and arranging for an independent                 (2) A recipient must provide a written
                                                  only if the structure is not used in                    third party to implement the evaluation,              certification to FAS that there is no real
                                                  whole or in part for any religious or                   unless otherwise specified in the                     or apparent conflict of interest on the
                                                  sectarian purposes while the donated                    agreement. This evaluation plan will                  part of any recipient staff member or
                                                  commodities are stored in it. If the use                detail the evaluation purpose and scope,              third party entity designated or hired to
                                                  of sale proceeds, FAS-provided funds,                   key evaluation questions, evaluation                  play a substantive role in the evaluation
                                                  or program income to pay for repairs to                 methodology, time frame, evaluation                   of activities under the agreement.
                                                  or rehabilitation of such a structure is                management, and cost. This plan will                     (f) FAS will be considered a key
                                                  not specifically provided for in the                    generally be based upon the evaluation                stakeholder in all evaluations conducted
                                                  agreement, the recipient must not use                   plan that the recipient submitted to FAS              as part of the agreement.
                                                  the sale proceeds, FAS-provided funds,                  as part of its application, pursuant to                  (g)(1) A recipient is responsible for
                                                  or program income for this purpose                      § 1599.4(b)(6), unless the notice of                  establishing the required financial and
                                                  until it receives written approval from                 funding opportunity specified that an                 human capital resources for monitoring
                                                  FAS.                                                    evaluation plan was not required to be                and evaluation of activities under the
                                                     (j) A recipient must comply with 2                   included in the application. The                      agreement. The recipient must maintain
                                                  CFR 200.321 when procuring goods and                    recipient must ensure that the                        a separate budget for monitoring and
                                                  services in the United States. When                     evaluation plan:                                      evaluation, with separate budget line
                                                  procuring goods and services outside of                    (1) Is designed using the most                     items for dedicated recipient monitoring
                                                  the United States, a recipient should                   rigorous methodology that is                          and evaluation staff and independent
                                                  endeavor to comply with 2 CFR 200.321                   appropriate and feasible, taking into                 third-party evaluation contracts.
                                                  where practicable.                                      account available resources, strategy,                   (2) Personnel at a recipient’s
                                                     (k) A recipient must enter into a                    current knowledge and evaluation                      headquarters offices and field offices
                                                  written contract with each provider of                  practices in the sector, and the                      with specialized expertise and
                                                  goods, services, or construction work                   implementing environment;                             experience in monitoring and
                                                  that is valued at or above the Simplified                  (2) Is designed to inform management,              evaluation may be used by the recipient
                                                  Acquisition Threshold. Each such                        activity implementation, and strategic                for dedicated monitoring and
                                                  contract must require the provider to                   decision-making;                                      evaluation. Unless otherwise specified
                                                  maintain adequate records to account                       (3) Utilizes analytical approaches and             in the agreement or approved evaluation
                                                  for all donated commodities, funds, or                  methodologies, based on the questions                 plan, all evaluations must be managed
                                                  both furnished to the provider by the                   to be addressed, project design,                      by the recipient’s evaluation experts
                                                  recipient and to comply with any other                  budgetary resources available, and level              outside of the recipient’s line
                                                  applicable requirements that may be                     of rigor and evidence required, which                 management for the activities.
                                                  specified by FAS in the agreement. The                  may be implemented through methods                       (h) FAS may independently conduct
                                                  recipient must submit a copy of the                     such as case studies, surveys, quasi-                 or commission an evaluation of a single
                                                  signed contracts to FAS upon request.                   experimental designs, randomized field                agreement or an evaluation that
                                                                                                          experiments, cost-effectiveness                       includes multiple agreements. A
                                                  § 1599.12 Monitoring and evaluation                     analyses, implementation reviews, or a
                                                  requirements.
                                                                                                                                                                recipient must cooperate, and comply
                                                                                                          combination of methods;                               with any demands for information or
                                                    (a) A recipient will be responsible for                  (4) Adheres to generally accepted                  materials made in connection, with any
                                                  designing a performance monitoring                      evaluation standards and principles;                  evaluation conducted or commissioned
                                                  plan for the project, obtaining written                    (5) Uses participatory approaches that             by FAS. Such evaluations may be
                                                  approval of the plan from FAS before                    seek to include the perspectives of                   conducted by FAS internally or by an
                                                  putting it into effect, and managing and                diverse parties and all relevant                      FAS-hired external evaluation
                                                  implementing the plan, unless                           stakeholders; and                                     contractor.
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                                                  otherwise specified in the agreement.                      (6) Where possible, utilizes local
                                                    (b) A recipient must establish baseline               consultants and seeks to build local                  § 1599.13 Reporting and record keeping
                                                  values, annual targets, and life of                     capacity in evaluation.                               requirements.
                                                  activity targets for each performance                      (e)(1) Unless otherwise provided in                  (a) A recipient must comply with the
                                                  indicator included in the recipient’s                   the agreement, a recipient must arrange               performance and financial monitoring
                                                  approved performance monitoring plan,                   for evaluations of the project to be                  and reporting requirements in the
                                                  unless otherwise specified in the                       conducted by an independent third                     agreement and 2 CFR 200.327 through
                                                  agreement.                                              party that:                                           200.329.


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                                                  62624            Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Rules and Regulations

                                                     (b) A recipient must submit financial                covering the receipt, handling, and                   provided for in the agreement. The
                                                  reports to FAS, by the dates and for the                disposition of the donated commodities.               subrecipient may receive donated
                                                  reporting periods specified in the                      Such reports must be submitted to FAS,                commodities, sale proceeds, FAS-
                                                  agreement. Such reports must provide                    by the dates and for the reporting                    provided funds, program income, or
                                                  an accurate accounting of sale proceeds,                periods specified in the agreement, until             other resources from the recipient for
                                                  FAS-provided funds, interest, program                   all of the donated commodities have                   this purpose. The recipient must enter
                                                  income, and voluntary committed cost                    been distributed, sold or bartered and                into a written subagreement with the
                                                  sharing or matching contributions.                      such disposition has been reported to                 subrecipient and comply with the
                                                     (c)(1) A recipient must submit                       FAS.                                                  applicable provisions of 2 CFR 200.331.
                                                  performance reports to FAS, by the                         (2) If the agreement authorizes the                The recipient must provide a copy of
                                                  dates and for the reporting periods                     sale or barter of donated commodities,                such subagreement to FAS, in the
                                                  specified in the agreement. These                       the recipient must submit to FAS, using               manner set forth in the agreement, prior
                                                  reports must include the information                    a form prescribed by FAS, reports                     to the transfer of any donated
                                                  required in 2 CFR 200.328(b)(2),                        covering the receipt and use of the sale              commodities, sale proceeds, FAS-
                                                  including additional pertinent                          proceeds when the donated                             provided funds, or program income to
                                                  information regarding the recipient’s                   commodities were sold, the goods and                  the subrecipient.
                                                  progress, measured against established                  services derived from barter when the                    (b) A recipient must include the
                                                  indicators, baselines, and targets,                     donated commodities were bartered,                    following requirements in a
                                                  towards achieving the expected results                  and program income. Such reports must                 subagreement:
                                                  specified in the agreement. This                        be submitted to FAS, by the dates and                    (1) The subrecipient is required to
                                                  reporting must include, for each                        for the reporting periods specified in the            comply with the applicable provisions
                                                  performance indicator, a comparison of                  agreement, until all of the sale proceeds             of this part and 2 CFR parts 200 and
                                                  actual accomplishments with the                         and program income have been                          400. The applicable provisions are those
                                                  baseline and the targets established for                disbursed and reported to FAS. When                   that relate specifically to subrecipients,
                                                  the period. When actual                                 reporting financial information, the                  as well as those relating to non-Federal
                                                  accomplishments deviate significantly                   recipient must include the amounts in                 entities that impose requirements that
                                                  from targeted goals, the recipient must                 U.S. dollars and the exchange rate if                 would be reasonable to pass through to
                                                  provide an explanation in the report.                   proceeds are held in local currency.                  a subrecipient because they directly
                                                     (2) A recipient must ensure the                         (g) If requested by FAS, a recipient               concern the implementation by the
                                                  accuracy and reliability of the                         must provide to FAS additional                        subrecipient of one or more activities
                                                  performance data submitted to FAS in                    information or reports relating to the                under the agreement. If there is a
                                                  performance reports. At any time during                 agreement.                                            question about whether a particular
                                                  the period of performance of the                           (h) If a recipient requires an extension           provision is applicable, FAS will make
                                                  agreement, FAS may review the                           of a reporting deadline, it must ensure               the determination.
                                                  recipient’s performance data to                         that FAS receives an extension request                   (2) The subrecipient is prohibited
                                                  determine whether it is accurate and                    at least five business days prior to the              from using sale proceeds, FAS-provided
                                                  reliable. The recipient must comply                     reporting deadline. FAS may decline to                funds, interest, or program income to
                                                  with all requests made by FAS or an                     consider a request for an extension that              acquire goods and services, either
                                                  entity designated by FAS in relation to                 it receives after this time period. FAS               directly or indirectly through another
                                                  such reviews.                                           will consider requests for reporting                  party, in a manner that violates country-
                                                     (d) Baseline, interim, and final                     deadline extensions on a case by case                 specific economic sanction programs, as
                                                  evaluation reports are required for all                 basis and make a decision based on the                specified in the agreement.
                                                  agreements, unless otherwise specified                  merits of each request. FAS will                         (3) The subrecipient must pay to the
                                                  in the agreement. The reports must be                   consider factors such as unforeseen or                recipient the value of any donated
                                                  submitted in accordance with the                        extenuating circumstances and past                    commodities, sale proceeds, FAS-
                                                  timeline in the FAS-approved                            performance history when evaluating                   provided funds, interest, or program
                                                  evaluation plan. Evaluation reports                     requests for extensions.                              income that are not used in accordance
                                                  submitted to FAS may be made public                        (i) A recipient must retain records and            with the subagreement, or that are lost,
                                                  in an effort to increase accountability                 permit access to records in accordance                damaged, or misused as a result of the
                                                  and transparency and share lessons                      with the requirements of 2 CFR 200.333                subrecipient’s failure to exercise
                                                  learned and best practices.                             through 200.337. The date of                          reasonable care.
                                                     (e) A recipient must, within 30 days                 submission of the final expenditure                      (4) In accordance with § 1599.18 and
                                                  after export of all or a portion of the                 report, as referenced in 2 CFR 200.333,               2 CFR 200.501(h), a description of the
                                                  donated commodities, submit evidence                    will be the final date of submission of               applicable compliance requirements
                                                  of such export to FAS, in the manner set                the reports required by paragraphs (f)(1)             and the subrecipient’s compliance
                                                  forth in the agreement. The evidence                    and (2) of this section, as prescribed by             responsibility. Methods to ensure
                                                  may be submitted through an electronic                  FAS. The recipient must retain copies of              compliance may include pre-award
                                                  media approved by FAS or by providing                   and make available to FAS all sales                   audits, monitoring during the
                                                  the carrier’s on board bill of lading. The              receipts, contracts, or other documents               agreement, and post-award audits.
                                                  evidence of export must show the kind                   related to the sale or barter of donated                 (c) A recipient must monitor the
                                                  and quantity of commodities exported,                   commodities and any goods or services                 actions of a subrecipient as necessary to
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                                                  the date of export, and the country                     derived from such barter, as well as                  ensure that donated commodities, sale
                                                  where the commodities will be                           records of dispatch received from ocean               proceeds, FAS-provided funds, and
                                                  delivered. The date of export is the date               carriers.                                             program income provided to the
                                                  that the ocean carrier carrying the                                                                           subrecipient are used for authorized
                                                  donated commodities sails from the                      § 1599.14    Subrecipients.                           purposes in compliance with applicable
                                                  final U.S. load port.                                     (a) A recipient may utilize the                     U.S. Federal laws and regulations and
                                                     (f)(1) A recipient must submit reports               services of a subrecipient to implement               the subagreement and that performance
                                                  to FAS, using a form prescribed by FAS,                 activities under the agreement if this is             indicator targets are achieved for both


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                                                                   Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Rules and Regulations                                          62625

                                                  activities and results under the                        involved. For example, if the action                  Federal awards under only one FAS
                                                  agreement.                                              taken by FAS pursuant to § 1599.15 is                 program during such fiscal year; or
                                                                                                          to initiate suspension or debarment                      (ii) A financial audit of all Federal
                                                  § 1599.15 Noncompliance with an
                                                                                                          proceedings as authorized under 2 CFR                 awards from FAS, in accordance with
                                                  agreement.
                                                                                                          parts 180 and 417, then the                           GAO’s Government Auditing Standards,
                                                     If a recipient fails to comply with a                requirements in 2 CFR parts 180 and
                                                  Federal statute or regulation or the                                                                          if the recipient or subrecipient expends
                                                                                                          417 will apply instead of the                         Federal awards under multiple FAS
                                                  terms and conditions of the agreement,                  requirements in this section. In the
                                                  and FAS determines that the                                                                                   programs during such fiscal year; or
                                                                                                          absence of other applicable statutory or
                                                  noncompliance cannot be remedied by                     regulatory requirements, the                             (2) An audit that meets the
                                                  imposing additional conditions, FAS                     requirements set forth in this section                requirements contained in subpart F of
                                                  may take one or more of the actions set                 will apply.                                           2 CFR part 200.
                                                  forth in 2 CFR 200.338, including
                                                                                                             (b) The recipient must submit its                     (c) A recipient or subrecipient that is
                                                  initiating a claim as a remedy. FAS may
                                                                                                          objection in writing, along with any                  a for-profit entity or a foreign
                                                  also initiate a claim against a recipient
                                                                                                          documentation, to the FAS official                    organization, and that expends, during
                                                  if the donated commodities are damaged
                                                                                                          specified in the agreement within 30                  its fiscal year, a total that is less than the
                                                  or lost, or the sale proceeds, goods
                                                                                                          days after the date of FAS’s written                  audit requirement threshold in 2 CFR
                                                  received through barter, FAS-provided
                                                                                                          notification to the recipient of the FAS              200.501 in Federal awards, is exempt
                                                  funds, interest, or program income are
                                                                                                          action being challenged. This official                from requirements under this section for
                                                  misused or lost, due to an action or
                                                                                                          will endeavor to notify the recipient of              an audit for that year, except as
                                                  omission of the recipient.
                                                                                                          his or her determination within 60 days               provided in paragraphs (d) and (f) of
                                                  § 1599.16 Suspension and termination of                 after the date that FAS received the                  this section, but it must make records
                                                  agreements.                                             recipient’s written objection.                        available for review by appropriate
                                                    (a) An agreement or subagreement                         (c) The recipient may appeal the                   officials of Federal agencies.
                                                  may be suspended or terminated in                       determination of the official to the
                                                                                                                                                                   (d) FAS may require an annual
                                                  accordance with 2 CFR 200.338 or                        Administrator, FAS. An appeal must be
                                                                                                                                                                financial audit of an agreement or
                                                  200.339. FAS may suspend or terminate                   in writing and be submitted to the
                                                                                                          Office of the Administrator within 30                 subagreement when the audit
                                                  an agreement if it determines that:
                                                    (1) One of the bases in 2 CFR 200.338                 days after the date of the initial                    requirement threshold in 2 CFR 200.501
                                                  or 200.339 for termination or                           determination by the FAS official. The                is not met. In that case, FAS must
                                                  suspension by FAS has been satisfied;                   recipient may submit additional                       provide funds under the agreement for
                                                    (2) The continuation of the assistance                documentation with its appeal.                        this purpose, and the recipient or
                                                  provided under the agreement is no                         (d) The Administrator will base the                subrecipient, as applicable, must
                                                  longer necessary or desirable; or                       determination on appeal upon                          arrange for such audit and submit it to
                                                    (3) Storage facilities are inadequate to              information contained in the                          FAS.
                                                  prevent spoilage or waste, or                           administrative record and will endeavor                  (e) When a recipient or subrecipient
                                                  distribution of the donated commodities                 to make a determination within 60 days                that is a for-profit entity or a foreign
                                                  will result in substantial disincentive to,             after the date that FAS received the                  organization is required to obtain a
                                                  or interference with, domestic                          appeal. The determination of the                      financial audit under this section, it
                                                  production or marketing in the target                   Administrator will be the final                       must provide a copy of the audit to FAS
                                                  country.                                                determination of FAS. The recipient                   within 60 days after the end of its fiscal
                                                    (b) If an agreement is terminated, the                must exhaust all administrative                       year.
                                                  recipient:                                              remedies contained in this section
                                                    (1) Is responsible for the security and                                                                        (f) FAS, the USDA Office of Inspector
                                                                                                          before pursuing judicial review of a                  General, or GAO may conduct or
                                                  integrity of any undistributed donated                  determination by the Administrator.
                                                  commodities and must dispose of such                                                                          arrange for additional audits of any
                                                  commodities only as agreed to by FAS;                   § 1599.18    Audit requirements.                      recipients or subrecipients, including
                                                    (2) Is responsible for any sale                          (a) Subpart F, Audit Requirements, of              for-profit entities and foreign
                                                  proceeds, FAS-provided funds, interest,                 2 CFR part 200 applies to recipients and              organizations. Recipients and
                                                  or program income that have not been                    subrecipients under this part other than              subrecipients must promptly comply
                                                  disbursed and must use or return them                   those that are for-profit entities, foreign           with all requests related to such audits.
                                                  only as agreed to by FAS; and                           public entities, or foreign organizations.            If FAS conducts or arranges for an
                                                    (3) Must comply with the closeout                                                                           additional audit, such as an audit with
                                                                                                             (b) A recipient or subrecipient that is
                                                  and post-closeout provisions specified                                                                        respect to a particular agreement, FAS
                                                                                                          a for-profit entity or a foreign
                                                  in the agreement and 2 CFR 200.343 and                                                                        will fund the full cost of such an audit,
                                                                                                          organization, and that expends, during
                                                  200.344.                                                                                                      in accordance with 2 CFR 200.503(d).
                                                                                                          its fiscal year, a total of at least the audit
                                                  § 1599.17   Opportunities to object and                 requirement threshold in 2 CFR 200.501                § 1599.19   Paperwork Reduction Act.
                                                  appeals.                                                in Federal awards, is required to obtain
                                                    (a) FAS will provide an opportunity                   an audit. Such a recipient or                           The information collection
                                                  to a recipient to object to, and provide                subrecipient has the following two                    requirements contained in this
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                                                  information and documentation                           options to satisfy this requirement:                  regulation have been approved by OMB
                                                  challenging, any action taken by FAS                       (1)(i) A financial audit of the                    under the Paperwork Reduction Act of
                                                  pursuant to § 1599.15. FAS will comply                  agreement or subagreement, in                         1995, 44 U.S.C. Chapter 35, and have
                                                  with any requirements for hearings,                     accordance with the Government                        been assigned OMB control number
                                                  appeals, or other administrative                        Auditing Standards issued by the                      0551–0035. A person is not required to
                                                  proceedings to which the recipient is                   United States Government                              respond to a collection of information
                                                  entitled under any other statute or                     Accountability Office (GAO), if the                   unless it displays a currently valid OMB
                                                  regulation applicable to the action                     recipient or subrecipient expends                     control number.


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                                                  62626            Federal Register / Vol. 81, No. 176 / Monday, September 12, 2016 / Rules and Regulations

                                                    Dated: July 29, 2016.                                 Secretary has delegated various                       and distinguish it from adjacent areas
                                                  Suzanne Palmieri,                                       authorities through Treasury                          outside the proposed AVA boundary;
                                                  Acting Administrator, Foreign Agricultural              Department Order 120–01, dated                          • The appropriate United States
                                                  Service.                                                December 10, 2013 (superseding                        Geological Survey (USGS) map(s)
                                                  [FR Doc. 2016–21347 Filed 9–9–16; 8:45 am]              Treasury Order 120–01, dated January                  showing the location of the proposed
                                                  BILLING CODE 3410–10–P                                  24, 2003), to the TTB Administrator to                AVA, with the boundary of the
                                                                                                          perform the functions and duties in the               proposed AVA clearly drawn thereon;
                                                                                                          administration and enforcement of these               and
                                                                                                          laws.                                                   • A detailed narrative description of
                                                  DEPARTMENT OF THE TREASURY
                                                                                                             Part 4 of the TTB regulations (27 CFR              the proposed AVA boundary based on
                                                  Alcohol and Tobacco Tax and Trade                       part 4) authorizes TTB to establish                   USGS map markings.
                                                  Bureau                                                  definitive viticultural areas and regulate            Willcox Petition
                                                                                                          the use of their names as appellations of
                                                                                                          origin on wine labels and in wine                        TTB received a petition from Paul S.
                                                  27 CFR Part 9
                                                                                                          advertisements. Part 9 of the TTB                     Hagar, the special projects manager of
                                                  [Docket No. TTB–2016–0002; T.D. TTB–143;                regulations (27 CFR part 9) sets forth                Dragoon Mountain Vineyard, on behalf
                                                  Ref: Notice No. 157]
                                                                                                          standards for the preparation and                     of Dragoon Mountain Vineyard and
                                                  RIN 1513–AC23                                           submission of petitions for the                       other local winery and vineyard owners,
                                                                                                          establishment or modification of                      proposing the establishment of the
                                                  Establishment of the Willcox                            American viticultural areas (AVAs) and                ‘‘Willcox’’ AVA. The proposed AVA
                                                  Viticultural Area                                       lists the approved AVAs.                              contains approximately 526,000 acres,
                                                                                                                                                                and there are 21 commercially-
                                                  AGENCY:  Alcohol and Tobacco Tax and                    Definition                                            producing vineyards covering a total of
                                                  Trade Bureau, Treasury.                                   Section 4.25(e)(1)(i) of the TTB                    approximately 454 acres distributed
                                                  ACTION: Final rule; Treasury decision.                  regulations (27 CFR 4.25(e)(1)(i)) defines            throughout the proposed AVA, along
                                                                                                          a viticultural area for American wine as              with 18 wineries. According to the
                                                  SUMMARY:   The Alcohol and Tobacco Tax                  a delimited grape-growing region having               petition, an additional 650 acres of
                                                  and Trade Bureau (TTB) establishes the                  distinguishing features, as described in              vineyards are planned for the near
                                                  approximately 526,000-acre ‘‘Willcox’’                  part 9 of the regulations, and a name                 future. The proposed Willcox AVA is
                                                  viticultural area in portions of Graham                 and a delineated boundary, as                         not located within any established AVA.
                                                  and Cochise Counties in southeastern                    established in part 9 of the regulations.             According to the petition, the
                                                  Arizona. The ‘‘Willcox’’ viticultural area              These designations allow vintners and                 distinguishing features of the proposed
                                                  is not located within any other                         consumers to attribute a given quality,               Willcox AVA are its geology,
                                                  viticultural area. TTB designates                       reputation, or other characteristic of a              topography, soils, and climate.
                                                  viticultural areas to allow vintners to                 wine made from grapes grown in an area                   The proposed AVA is in the Arizona
                                                  better describe the origin of their wines               to the wine’s geographic origin. The                  geological province known as the
                                                  and to allow consumers to better                        establishment of AVAs allows vintners                 ‘‘basin-and-range’’ province, which is
                                                  identify wines they may purchase.                       to describe more accurately the origin of             characterized by high mountain ranges
                                                  DATES: This final rule is effective                     their wines to consumers and helps                    that are separated by valleys. The
                                                  October 12, 2016.                                       consumers to identify wines they may                  proposed Willcox AVA is located
                                                  FOR FURTHER INFORMATION CONTACT:                        purchase. Establishment of an AVA is                  within a broad, shallow basin and is
                                                  Karen A. Thornton, Regulations and                      neither an approval nor an endorsement                surrounded by higher mountain ranges
                                                  Rulings Division, Alcohol and Tobacco                   by TTB of the wine produced in that                   including the Chiricahua, Dos Cabezas,
                                                  Tax and Trade Bureau, 1310 G Street                     area.                                                 Pinalenos, Dragoon, Little Dragoon, and
                                                  NW., Box 12, Washington, DC 20005;                                                                            Winchester Mountains. The underlying
                                                                                                          Requirements                                          geology of the proposed AVA is
                                                  phone 202–453–1039, ext. 175.
                                                                                                            Section 4.25(e)(2) of the TTB                       comprised mainly of water-borne and
                                                  SUPPLEMENTARY INFORMATION:
                                                                                                          regulations (27 CFR 4.25(e)(2)) outlines              wind-borne deposits, in contrast to the
                                                  Background on Viticultural Areas                        the procedure for proposing an AVA                    surrounding mountain ranges which are
                                                                                                          and provides that any interested party                comprised of igneous rock and other
                                                  TTB Authority
                                                                                                          may petition TTB to establish a grape-                volcanic materials. Over time, the
                                                    Section 105(e) of the Federal Alcohol                 growing region as an AVA. Section 9.12                geologic activity of the region has
                                                  Administration Act (FAA Act), 27                        of the TTB regulations (27 CFR 9.12)                  disrupted the flow of creeks, rivers, and
                                                  U.S.C. 205(e), authorizes the Secretary                 prescribes standards for petitions for the            drainage systems and has left the
                                                  of the Treasury to prescribe regulations                establishment or modification of AVAs.                proposed AVA in a ‘‘closed basin.’’
                                                  for the labeling of wine, distilled spirits,            Petitions to establish an AVA must                    Because the basin is ‘‘closed,’’ the
                                                  and malt beverages. The FAA Act                         include the following:                                aquifer beneath the proposed AVA is
                                                  provides that these regulations should,                   • Evidence that the area within the                 recharged only through rainfall, in
                                                  among other things, prohibit consumer                   proposed AVA boundary is nationally                   contrast to the nearby ‘‘open basin’’
                                                  deception and the use of misleading                     or locally known by the AVA name                      valleys which have year-round or
                                                  statements on labels and ensure that                    specified in the petition;                            seasonal creeks. Therefore, vineyard
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                                                  labels provide the consumer with                          • An explanation of the basis for                   owners within the proposed AVA use
                                                  adequate information as to the identity                 defining the boundary of the proposed                 drip irrigation to conserve water.
                                                  and quality of the product. The Alcohol                 AVA;                                                     The topography within the proposed
                                                  and Tobacco Tax and Trade Bureau                          • A narrative description of the                    Willcox AVA is relatively uniform and
                                                  (TTB) administers the FAA Act                           features of the proposed AVA affecting                very flat, with slope angles ranging from
                                                  pursuant to section 1111(d) of the                      viticulture, such as climate, geology,                0 to 1.5 percent. The very shallow
                                                  Homeland Security Act of 2002,                          soils, physical features, and elevation,              slopes, combined with the lack of creeks
                                                  codified at 6 U.S.C. 531(d). The                        that make the proposed AVA distinctive                or streams, reduces the risk of erosion


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Document Created: 2016-09-10 00:56:31
Document Modified: 2016-09-10 00:56:31
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal rule with request for comments.
DatesThis rule is effective September 12, 2016. Written comments must be received by FAS or carry a postmark or equivalent no later than October 12, 2016.
ContactBenjamin Muskovitz, Director, Food Assistance Division, Office of Capacity Building and Development, Foreign Agricultural Service, 1400 Independence Ave. SW., STOP 1034, Washington, DC 20250. Telephone: (202) 720-4221; Fax: (202) 690-0251; Email: [email protected]
FR Citation81 FR 62614 
RIN Number0551-AA88
CFR AssociatedAgricultural Commodities; Cooperative Agreements; Exports; Food Assistance Programs; Foreign Aid; Grant Programs-Agriculture and Technical Assistance

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