FRN (July 1, 2016)

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impose a civil penalty in the following
amounts:
(1) For violations that occurred on or
before November 2, 2015, $10,000 per
violation, up to a total of $50,000 per
civil penalty action, in the case of an
individual or small business concern, as
defined in section 3 of the Small
Business Act (15 U.S.C. 632). For
violations that occurred after November
2, 2015, $12,856 per violation, up to a
total of 64,281 per civil penalty action,
in the case of an individual (except an
airman serving as an airman), or a small
business concern.
(2) For violations that occurred on or
before November 2, 2015, $10,000 per
violation, up to a total of $400,000 per
civil penalty action, in the case of any
other person (except an airman serving
as an airman) not operating an aircraft
for the transportation of passengers or
property for compensation. For
violations that occurred after November
2, 2015, $12,856 per violation, up to a
total of $514,244 per civil penalty
action, in the case of any other person
(except an airman serving as an airman)
not operating an aircraft for the
transportation of passengers or property
for compensation.
(3) For violations that occurred on or
before November 2, 2015, $25,000 per
violation, up to a total of $400,000 per
civil penalty action, in the case of a
person operating an aircraft for the
transportation of passengers or property
for compensation (except an individual
serving as an airman). For violations
that occurred after November 2, 2015,
$32,140 per violation, up to a total of
$514,244 per civil penalty action, in the
case of a person (except an individual
serving as an airman) operating an
aircraft for the transportation of
passengers or property for
compensation.
Jeh Charles Johnson,
Secretary.
[FR Doc. 2016–15673 Filed 6–30–16; 8:45 am]
BILLING CODE 9110–09–P; 9111–14–P; 9111–28–P;
9110–04–P; 9110–05–P

This document establishes
rules to govern the award of funds by
the Foreign Agricultural Service (FAS)
to recipients under the USDA Local and
Regional Food Aid Procurement
Program (USDA LRP Program). Section
3206 of the Food, Conservation, and
Energy Act of 2008, as amended by the
Agricultural Act of 2014, provides that
the Secretary of Agriculture will provide
grants to, or enter into cooperative
agreements with, eligible organizations
to implement field-based projects that
consist of local or regional
procurements of eligible commodities in
developing countries to provide
development assistance and respond to
food crises and disasters. The intended
effects of the USDA LRP Program are to
support development activities aimed at
strengthening the trade capacity of foodinsecure developing countries and to
address the cause of chronic food
insecurity. The regulation also
addresses how emergency programming
will be addressed.
DATES: Effective July 1, 2016.
Comment Dates: Written comments
must be received by FAS or carry a
postmark or equivalent no later than
August 30, 2016.
ADDRESSES: Submit comments to:
• Federal Rulemaking Portal: Go to
http://www.regulations.gov. Follow the
instructions for submitting comments.
• 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:
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: FAD_Contact@
fas.usda.gov.
SUMMARY:

SUPPLEMENTARY INFORMATION:

Background
Overview

DEPARTMENT OF AGRICULTURE
Foreign Agricultural Service

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7 CFR Part 1590
RIN 0551–AA87

Local and Regional Food Aid
Procurement Program
Foreign Agricultural Service,
USDA.
ACTION: Final rule with request for
comments.
AGENCY:

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the World Food Program (WFP), have
successfully utilized local and regional
procurement over the last decade. Local
and regional procurement, which has
increasingly become a key element in
the multilateral food aid response, is
used to purchase food in countries
affected by disasters and food crises or
in a different country within the same
region.
Currently many bilateral food
assistance donors have shifted from
commodity-based in-kind food aid to a
cash-based food assistance program. The
World Food Program has cited that the
use of cash-based programs enables
NGOs and intergovernmental
organizations to purchase food locally
or regionally in order to deliver
assistance to beneficiaries quickly and
cost-effectively, while also providing
development benefits to local
communities by strengthening
agricultural markets where the food is
purchased.
Several academic and other studies
have cited significant cost and time
savings for certain commodities and in
certain areas.1 For example, GAO found
that in Sub-Saharan Africa, local
procurement cost about 34 percent less
than similar in-kind U.S. food aid
shipments. Some studies cited by the
Government Accountability Office
noted that large cash purchases in some
developing countries could have
detrimental effects on local market
conditions if not carefully done. In cases
where local purchases might
substantially raise local market prices,
in-kind donations of commodities may
be more beneficial. Similarly, GAO and
others have noted that in-kind
donations can also have detrimental
effects depending on local market
conditions, depressing local farmers’
prices if not carefully done. As the
largest international food aid donor,
contributing over half of all global food
aid supplies to alleviate hunger and
support development, the United States
plays an important role in responding to

Section 3206 of the Food,
Conservation, and Energy Act of 2008
(the ‘‘2008 Farm Bill’’), as amended by
the Agricultural Act of 2014 (the ‘‘2014
Farm Bill’’), provides that the Secretary
of Agriculture will establish a program
to provide grants to, or enter into
cooperative agreements with, eligible
organizations to procure locally or
regionally produced commodities to
respond to food crises and disasters.
International nongovernmental
organizations (NGOs) and
intergovernmental organizations, like

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1 See, for example, Erin C. Lentz, Simone
Passarelli, Christopher B. Barrett, ‘‘The Timeliness
and Cost-Effectiveness of the Local and Regional
Procurement of Food Aid,’’ World Development,
Available online 1 March 2013, ISSN 0305–750X,
10.1016/j.worlddev.2013.01.017; Barrett,
Christopher B., Samuel D. Bell, Teevrat Garg,
Miguel I. Gomez, Aure´lie P. Harou, Erin C. Lentz,
Simone Passarelli, Joanna B. Upton and William J.
Violette. ‘‘Final Report: A Multidimensional
Analysis of Local and Regional Procurement of US
Food Aid,’’ January 2012. Cornell University; and
General Accountability Office, Local and Regional
Procurement Can Enhance the Efficiency of U.S.
Food Aid, but Challenges May Constrain Its
Implementation, GAO–09–570: Published: May 29,
2009. Publicly Released: Jun 4, 2009, http://
www.gao.gov/products/GAO-09-570. Appendix VI
of the GAO report includes a review of literature
on local and regional procurement.

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food assistance needs and ensuring
global food security. U.S. international
food assistance programs must maintain
flexibility and use the approach that
best serves the in-country food security
situation.
The USDA LRP Program adds another
mechanism to deliver food assistance to
the federal programs currently
providing assistance, including Title II
of the Food for Peace Act and
International Disaster Assistance under
the Foreign Assistance Act of 1961, both
of which currently utilize local and
regional procurement and are
administered by the U.S. Agency for
International Development, and USDA’s
Food for Progress Program and
McGovern-Dole International Food for
Education and Child Nutrition
(‘‘McGovern-Dole’’) Program. The USDA
LRP Program aims to support
development activities to strengthen the
capacity of food-insecure developing
countries and address the cause of
chronic food insecurity. Other
objectives of the USDA LRP Program are
to support the consumption of locally
produced food and strengthen local
value chains and all associated
procurement activities. The USDA LRP
Program will focus primarily on
development programs, although the
rule also provides for the furnishing of
food assistance through an emergency
response. Given the role of the United
States Agency for International
Development (USAID) as the lead
agency in the provision of U.S.
emergency humanitarian assistance, any
emergency response will be determined
in consultation with the USAID
Administrator, as provided for in
section 3206(b)(2) of the 2008 Farm Bill,
as amended, to ensure programs address
the highest priority needs only and are
not duplicative.
Lessons From Pilot Program
The 2008 Farm Bill, as enacted on
June 18, 2008, authorized and funded a
pilot program (the USDA LRP pilot
program) to test different approaches
and study practical lessons regarding
the timeliness, cost effectiveness,
impacts on market, and quality and
other benefits of locally procured food
assistance. Twenty-one local and
regional procurement pilot projects
were funded in nineteen countries. An
independent evaluation that examined
the activities of the final twenty projects
in eighteen countries (due to the
cancellation of one project)
demonstrated that locally procured food
assistance can provide food assistance at
lower cost, with a shorter delivery time,
and in some cases has other
development benefits. The full

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evaluation can be viewed at http://
www.fas.usda.gov/newsroom/local-andregional-food-aid-procurement-pilotproject-independent-evaluation-report.
To address food safety and quality
and market sensitivities, the USDA LRP
Program will build capacity to meet
quality standards and product
specifications to ensure food safety and
nutritional content within each project
and with its beneficiaries. To address
market sensitivities around local and
regional purchases, the USDA LRP
Program will work with its recipients to
improve the reliability and utility of
market intelligence in areas where the
USDA LRP Program is implemented,
seeking to ensure that the USDA LRP
Program minimizes potential adverse
impacts and maximizes potential
benefits.
Program Essentials
The 2008 Farm Bill, as amended by
the 2014 Farm Bill, authorizes the
Secretary to provide grants to, or enter
into cooperative agreements with,
eligible organizations to implement
international field-based projects that
consist of local or regional
procurements of eligible commodities to
fill nutritional gaps for targeted
populations and respond to food
availability gaps generated by
unexpected emergencies. The USDA
LRP program will use the local or
regional procurement of commodities
for distribution in developing countries
to complement existing food aid
programs, giving preference to the
McGovern-Dole Program. The Food and
Agricultural Organization of the United
Nations states that there is global
consensus recognizing child nutrition as
an essential element to improve not
only the health and well-being of
children around the world, but also the
social and economic development of
communities and countries. Under the
USDA LRP Program, FAS will provide
grants to, or enter into cooperative
agreements with, private voluntary
organizations, cooperatives, and the
World Food Program to undertake
activities such as strengthening value
chains and other procurement activities.
The USDA LRP Program will be used
for development projects, and focus on
supplementing U.S. commodity
purchases through the McGovern-Dole
Program. The USDA LRP Program will
focus on developing appropriate supply
chains for the procurement of
commodities from local producers.
School meals using locally purchased
foods will add locally known varieties
to the meals, which may make them
more appealing to the children and help
increase nutrition. In cases where

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supply chains need to be strengthened
in order to support a workable and
reliable supply of food for the
McGovern-Dole Program, the USDA LRP
Program can work with producers,
school authorities, and local
municipalities in communities around
schools to provide technical and
management expertise to build reliable
supply systems, as well as to procure
commodities.
The USDA LRP Program will aim to
strengthen rural farm communities
economically and incentivize school
attendance in order to improve
education, while at the same time work
with host country governments to build
a type of safety net for those populations
in great need. For example, this type of
programing can address multiple issues
in many developing countries, of which
many have large, agricultural based
economies with rural populations in
need of education and market
opportunities.
Notice and Comment
This rule is being issued as a final
rule without prior notice and
opportunity for comment. The
Administrative Procedure Act exempts
rules ‘‘relating to agency management or
personnel or to public property, loans,
grants, benefits, or contracts’’ from the
statutory requirement in 5 U.S.C. 553,
which includes the requirement for
prior notice and opportunity for
comment (5 U.S.C. 553(a)(2)). 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 60 days after publication of this
rule in the Federal Register.
Effective Date
The Administrative Procedure Act (5
U.S.C. 553) provides generally that
before rules are issued by Government
agencies, the rule must be published in
the Federal Register, and the required
publication of a substantive rule is to be
not less than 30 days before its effective
date. However, noted above, one of the
exceptions is that section 553 does not
apply to rulemaking that involves a
matter relating to benefits. Therefore,
because this rule relates to benefits, this
final rule is effective when published in
the Federal Register. This will allow us
to provide greater access to local and
regional procured food aid as soon as
possible during the 2016 school year.

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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:
10.612, USDA LRP Program.
Paperwork Reduction Act of 1995
In accordance with the Paperwork
Reduction Act of 1995, the following
new information collection request that
supports USDA’s Local and Regional
Food Aid Procurement Program was
submitted to OMB for emergency
approval. FAS is requesting comments
from interested individuals and
organizations on the information
collection activities related to USDA’s
Local and Regional Food Aid
Procurement application process and
reporting requirements.
Title: USDA’s Local and Regional
Food Aid Procurement Program.
OMB Control Number: 0551–New.
Type of Request: New Collection.
Abstract: Under the USDA Local and
Regional Food Aid Procurement
Program, information will be gathered
from applicants desiring to receive
grants or enter into cooperative
agreements under the USDA LRP
Program to determine the viability of
requests for resources to implement
activities in foreign countries.
Recipients of grants or cooperative
agreements under the USDA LRP
Program must submit performance and
financial reports until funds provided
by FAS and commodities purchased
with such funds are utilized. Documents
are used to develop effective grant or
cooperative agreements and assure that
statutory requirements and program
objectives are met.
Estimate of Burden: The public
reporting burden for each respondent
resulting from information collection
under the USDA Local and Regional
Food Aid Procurement Program varies
in direct relation to the number and
type of agreements entered into by such
respondent. The estimated average
reporting burden for USDA Local and
Regional Food Aid Procurement
Program is 78 hours per response.
Type of Respondents: Private
voluntary organizations, cooperatives,
and intergovernmental organizations.
Estimated Number of Respondents: 22
per annum.
Estimated Number of Responses per
Respondent: 17 per annum.
Estimated Total Annual Burden of
Respondents: 29,172 hours.
Copies of this information collection
can be obtained from Connie Ehrhart,
the Agency Information Collection
Coordinator, at (202) 690–1578 or email
at [email protected].

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Request for Comments: Send
comments regarding (a) whether the
proposed collection of information is
necessary for the proper performance of
the functions of the agency, including
whether the information will have
practical utility; (b) the accuracy of the
agency’s estimate of the burden of the
proposed collection of information; (c)
ways to enhance the quality, utility and
clarity of the information to be
collected; and (d) ways to minimize the
burden of the collection of information
on those who are to respond, including
through the use of automated,
electronic, mechanical, or other
technological collection techniques or
other forms of information technology.
Comments may be sent to:
• Federal Rulemaking Portal: Go to
http://www.regulations.gov. Follow the
instructions for submitting comments.
• Director, Food Assistance Division,
Office of Capacity Building and
Development, Foreign Agricultural
Service, 1400 Independence Ave. SW.,
STOP 1034, Washington, DC 20250.
All comments received in response to
this notice, including names and
addresses when provided, will be a
matter of public record. Comments will
be summarized and included in the
submission for Office of Management
and Budget approval.
On February 16, 2016, FAS published
in the Federal Register a notice entitled
‘‘Notice of Request for Approval of a
New Information Collection’’ at 81 FR
7742. This notice included a 60 day
comment period for interested
individuals to provide comments on the
information collection burden of the
USDA LRP Program. As such, the notice
duplicates the request for comments
above pertaining to the information
collection burden of the USDA LRP
Program. Interested parties may provide
comments on the information collection
burden either by providing comments
on this rule or on the Federal Register
notice that was published on February
16, 2016. It is not necessary to provide
comments on both documents.
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 Orders 12866 and 13563
Executive Order 12866, ‘‘Regulatory
Planning and Review,’’ and Executive
Order 13563, ‘‘Improving Regulation
and Regulatory Review,’’ direct agencies

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to assess all costs and benefits of
available regulatory alternatives and, if
regulation is necessary, to select
regulatory approaches that maximize
net benefits (including potential
economic, environmental, public health
and safety effects, distributive impacts,
and equity). Executive Order 13563
emphasizes the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility.
The Office of Management and Budget
(OMB) designated this rule as
significant under Executive Order
12866, ‘‘Regulatory Planning and
Review,’’ and therefore, OMB has
reviewed this rule. The costs and
benefits of this final rule are
summarized below. The full cost benefit
analysis is available on regulations.gov.
Summary of Economic Impacts
The economic benefits of local and
regional procurement have been
identified in a number of studies 2 in
addition to the USDA LRP pilot program
during the period of 2009–2012, the
results of which are documented in an
independent evaluation report (http://
www.fas.usda.gov/newsroom/local-andregional-food-aid-procurement-pilotproject-independent-evaluation-report).
For example, the results of the USDA
LRP pilot program included: Cost
savings in transport, shipping, and
handling; better match between
recipients’ needs and program
commodity availability; and time
savings between the procurement and
delivery of food, which is especially
important in emergency situations.
Since commodities purchased under the
USDA LRP pilot program did not need
to be shipped across oceans and were
purchased nearer the final destination,
the transport, shipping, and handling
costs were on average lower than inkind food assistance. In projects where
recipients were children, improved
commodity match resulted in more of
the food provided being consumed,
yielding nutritional gains. Delivery
times for emergency food aid under the
USDA LRP pilot program yielded faster
delivery than in-kind food aid shipped
from the United States. As a result of the
USDA LRP pilot program, small-scale
producers and suppliers began pooling
resources to achieve economies of scale
to increase their profitability. The USDA
LRP Program is intended to maximize
the impact of food assistance, consistent
with the positive results achieved under
the USDA LRP pilot program.
2 See, for example, the references included in
footnote 1.

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Executive Order 12988

Executive Order 13175

This rule has been reviewed in
accordance with Executive Order 12988.
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.

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 governmentto-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.

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.

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.

Regulatory Flexibility Act

List of Subjects in 7 CFR Part 1590

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. FAS is unaware of
any possible negative effects for U.S.
small entities as a result of the USDA
LRP Program.

Food assistance programs, Grant
programs—agriculture, Technical
assistance, Local and regional
procurement.
For the reasons stated in the
preamble, the Foreign Agricultural
Service amends 7 CFR chapter XV by
adding part 1590 to read as follows:

Executive Order 13132

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Unfunded Mandates

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.

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PART 1590—UNITED STATES
DEPARTMENT OF AGRICULTURE
LOCAL AND REGIONAL FOOD AID
PROCUREMENT PROGRAM
Sec.
1590.1 Purpose and applicability.
1590.2 Definitions.
1590.3 Eligibility and conflicts of interest.
1590.4 Application process.
1590.5 Agreements.
1590.6 Procurement of eligible
commodities.
1590.7 Payments.
1590.8 Transportation of procured
commodities.
1590.9 Entry, handling, and labeling of
commodities and notification
requirements.
1590.10 Damage to or loss of procured
commodities.
1590.11 Claims for damage to or loss of
procured commodities.
1590.12 Use of procured commodities,
FAS-provided funds, and program
income.
1590.13 Monitoring and evaluation
requirements.
1590.14 Reporting and record keeping
requirements.
1590.15 Subrecipients.

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1590.16 Noncompliance with an agreement.
1590.17 Suspension and termination of
agreements.
1590.18 Opportunities to object and
appeals.
1590.19 Audit requirements.
1590.20 Paperwork Reduction Act.
Authority: 7 U.S.C. 1726c.
§ 1590.1

Purpose and applicability.

(a)(1) This part sets forth the general
terms and conditions governing the
award of funds by the Foreign
Agricultural Service (FAS) to recipients
under the U.S. Department of
Agriculture (USDA) Local and Regional
Food Aid Procurement Program (USDA
LRP Program). Under the USDA LRP
Program, recipients use FAS-provided
funds to purchase eligible commodities
in developing countries and pay for
associated administrative and
operational costs related to the
implementation of field-based projects
in a foreign country pursuant to an
agreement with FAS.
(2) Funds provided by FAS under the
USDA LRP Program may be used to
provide food assistance in the form of
development assistance, an emergency
response, or both through a field-based
project. Field-based projects intended to
provide development assistance will be
implemented for a period of not less
than one year. Food assistance may be
provided under the USDA LRP Program
through local and regional procurement,
food vouchers, and cash transfers.
(3) FAS will consult with the United
States Agency for International
Development in the development and
implementation of field-based projects
that will provide food assistance in the
form of an emergency response.
(b)(1) The Office of Management and
Budget (OMB) issued guidance on
Uniform Administrative Requirements,
Cost Principles, and Audit
Requirements for Federal Awards at 2
CFR part 200. In 2 CFR 400.1, USDA
adopted OMB’s guidance in subparts A
through F of 2 CFR part 200, as
supplemented by 2 CFR part 400, as
USDA’s 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 by this part, applies to the USDA
LRP Program, except as provided in
paragraph (e) 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 USDA LRP Program.

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(d) In accordance with 7 U.S.C.
1726c(a)(4), assistance under the USDA
LRP Program may be provided to a
private voluntary organization or a
cooperative that is, to the extent
practicable, registered with the
Administrator of the U.S. Agency for
International Development or to an
intergovernmental organization, such as
the World Food Program.
(e)(1) The OMB guidance at subparts
A through E of 2 CFR part 200, and the
corresponding provisions of 2 CFR part
400 and of this part, apply to all awards
by FAS under the USDA LRP Program
to all recipients that are private
voluntary organizations or cooperatives,
including a private voluntary
organization that is a foreign
organization, as defined in 2 CFR
200.47, and a cooperative that is a forprofit entity or a foreign organization.
Subpart F of 2 CFR part 200, and the
corresponding provisions of 2 CFR part
400 and this part, apply only to awards
by FAS to recipients that are private
voluntary organizations or non-profit
cooperatives but that are not foreign
organizations. 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
USDA LRP Program to a recipient that
is a foreign public entity, as defined in
2 CFR 200.46, and, therefore, they do
not apply to an intergovernmental
organization.
(2) The OMB guidance at subparts A
through E of 2 CFR part 200, and the
corresponding provisions of 2 CFR part
400 and of this part, apply 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.

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§ 1590.2

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

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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 field-based project under
the USDA LRP Program.
Codex Alimentarius means the
program of the United Nations Food and
Agriculture Organization and the World
Health Organization that was created to
develop food standards, guidelines, and
related texts, such as codes of practice
to protect the health of consumers,
ensure fair trade practices in the food
trade, and promote the coordination of
all food standards work undertaken by
international governmental and
nongovernmental organizations.
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
the 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.
Country of origin means the country
in which the procured commodities
were produced.
Developing country means a country
that has a shortage of foreign exchange
earnings and has difficulty meeting all
of its food needs through commercial
channels.
Development assistance means an
activity or activities that will enhance
the availability of, access to, or the
utilization of adequate food to meet the
caloric and nutritional needs of
populations suffering from chronic food
insecurity, or enhance the ability of
such populations to build assets to
protect against chronic food insecurity.
Disaster means an event or a series of
events that creates a need for emergency
food assistance by threatening or
resulting in significantly decreased
availability of, or access to, food or the
erosion of the ability of populations to
meet food needs. Disasters include, but
are not limited to, natural events such
as floods, earthquakes, and drought;
crop failure; disease; civil strife and
war; and economic turmoil. Disasters
can be characterized as slow or rapidonset. The situation caused by a disaster
is a ‘‘food crisis.’’
Disburse means to make a payment to
liquidate an obligation.

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Eligible commodity means an
agricultural commodity, or the product
of an agricultural commodity, that is
produced in and procured from a
developing country, and that meets each
nutritional, quality, and labeling
standard of the target country, as
determined by the Secretary of
Agriculture, as well as any other criteria
specified in section § 1590.6(b).
Emergency response means an activity
that is designed to meet the urgent food
and nutritional needs of those affected
by acute or transitory food insecurity as
a result of a disaster.
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 for the
purchase, ocean and overland
transportation, and storage and handling
of the procured commodities; expenses
involved in the administration,
monitoring, and evaluation of the
activities under the agreement; and
operational costs related to the
implementation of the field-based
project under the agreement.
Field-based project or 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. It can either stand alone
or be an add-on component to another
program that provides other forms of
assistance to the food insecure.
Food assistance means assistance that
is provided to members of a targeted
vulnerable group to meet their food
needs.
Local procurement means the
procurement of food by a recipient,
directly or through a subrecipient, in the
target country to assist beneficiaries
within that same country. The use of
food vouchers to obtain food under an
agreement is a form of local
procurement.
Overland transportation means any
transportation other than ocean
transportation. It includes internal
transportation within the target country
and regional transportation within the
target region.
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 inkind support from the public, and that
is engaged in or is planning to engage
in voluntary, charitable, or development

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assistance activities (other than religious
activities).
Procured commodities means the
eligible commodities that are procured
by a recipient, directly or through a
subrecipient, under an agreement.
Program Income means 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 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.
Purchase country means a developing
country in which the procured
commodities are purchased.
Recipient means an entity that enters
into an agreement with FAS and
receives FAS-provided funds to carry
out activities under the agreement. The
term recipient does not include a
subrecipient.
Regional procurement means the
procurement of food by a recipient,
directly or through a subrecipient, in a
developing country that is located on
the same continent as the target country.
Regional procurement does not include
the purchase of food in the target
country.
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 developing
country in which activities are
implemented under an agreement.
Target region means the continent on
which the target country is located or
nearby.
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 in its proposal,
which become binding as part of an
agreement. Voluntary committed cost
sharing or matching contributions may
be provided in the form of cash or inkind contributions.

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§ 1590.3 Eligibility and conflicts of
interest.

(a)(1) A private voluntary organization
or a cooperative is eligible to submit an
application under this part to become a
recipient under the USDA LRP Program
if it is either registered with the
Administrator of the U.S. Agency for
International Development or FAS has
determined that such registration is
impracticable. 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.
(2) FAS may give preference for
funding to eligible entities that have, or
are working toward, projects under the
McGovern-Dole International Food for
Education and Child Nutrition Program
established under section 3107 of the
Farm Security and Rural Investment Act
of 2002 (7 U.S.C. 1736o–1).
(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.
§ 1590.4

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 USDA LRP
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 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 amount(s) of any FASprovided funds, program income, and
voluntary committed cost sharing or
matching contributions that the
applicant proposes to use to fund:
(A) Administrative costs;

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(B) Commodity procurement costs,
including costs for locally and
regionally procured commodities, and
food vouchers;
(C) Transportation, storage, and
handling costs; and
(D) 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
USDA LRP Program-level results
framework;
(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.
§ 1590.5

Agreements.

(a) After FAS approves a proposal 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) A plan of operation, which will
include the following:
(i) The objectives to be accomplished
under the project;

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(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 method(s) and criteria for
selecting the beneficiaries of the
activities;
(v) Any contributions for cost sharing
or matching, including cash and noncash 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; and
(viii) Any additional items specified
by FAS during the negotiation of the
agreement;
(2) Requirements relating to the
procurement of the eligible
commodities, as set forth in § 1590.6;
(3) A budget, which will set forth the
maximum amounts of FAS-provided
funds, program income, and voluntary
committed cost sharing or matching
contributions that may be used for each
line item; and
(4) Performance goals for the
agreement, including a list of results to
be achieved by the 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
use of the procured commodities, food
vouchers, or cash transfers for any
purpose other than food assistance;
(2) The agreement will prohibit the
resale or transshipment of the procured
commodities by the recipient to a
country other than the target country
specified in the agreement for so long as
the recipient has title to such
commodities;
(3) The recipient will assert that it has
taken action to ensure that any eligible
commodities that will be procured
regionally will be imported free from all
customs, duties, tolls, and taxes. The
recipient must submit information to
FAS to support this assertion;
(4) The recipient will assert that, to
the best of its knowledge, the eligible
commodities can be procured locally or
regionally without a disruptive impact

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on farmers located in, or the economy
of, the target country or any country in
the target region. The recipient will also
assert that, to the best of its knowledge,
the eligible commodities can be
procured without unduly disrupting
world prices for agricultural
commodities or normal patterns of
commercial trade with foreign
countries. The recipient must submit
information to FAS to support these
assertions; and
(5) The recipient will assert that
adequate transportation and storage
facilities are available in the target
country to prevent spoilage or waste of
the eligible commodities. The recipient
must submit information to FAS to
support these assertions.
(f) FAS may enter into a multicountry
agreement.
(g) FAS may provide funds under a
multiyear agreement contingent upon
the availability of funds.
§ 1590.6 Procurement of eligible
commodities.

(a)(1) When using funds provided by
FAS under the USDA LRP Program to
make a local or regional procurement of
food, including through the use of food
vouchers, the recipient, or a
subrecipient, must procure eligible
commodities.
(2) The agreement will specify the
types of eligible commodities approved
for procurement; the approved purchase
country(ies); and the approved
method(s) of procurement (local
procurement, regional procurement,
food vouchers, or a combination of these
methods). The agreement will prohibit
the recipient from procuring eligible
commodities from any country not
specified in the agreement or utilizing
methods of procurement that differ from
those approved in the agreement.
(b) In carrying out an agreement, the
recipient must comply with the
following requirements, as applicable,
relating to the procurement of eligible
commodities under the agreement:
(1) The recipient must procure
eligible commodities at a reasonable
market price with respect to the
economy of the purchase country, as
determined by FAS.
(2) If the recipient procures eligible
commodities that are grains, legumes,
and pulses, the commodities must meet
the food safety standards of the target
country; provided, however, that if the
target country does not have food safety
standards for grains, legumes, and
pulses, then the recipient must ensure
that such commodities meet the Codex
Alimentarius Recommended
International Code of Practice: General
Principles of Food Hygiene CAC/RCP 1–

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1969 Rev 4–2003, including Annex
Hazard Analysis and Critical Control
Point (HACCP) System and Guidelines.
(3) If the recipient procures eligible
commodities that are food products
other than grains, legumes or pulses,
such as processed foods, fortified
blended foods, and enriched foods, the
commodities must comply, in terms of
raw materials, composition, or
manufacture, unless otherwise specified
in the agreement, with the Codex
Alimentarius Recommended
International Code of Practice: General
Principles of Food Hygiene CAC/RCP 1–
1969 Rev 4–2003 including Annex
Hazard Analysis and Critical Control
Point (HACCP) System and Guidelines.
(4) If the recipient procures eligible
commodities that are cereals,
groundnuts, or tree nuts, or food
products derived from or containing
cereals, groundnuts, or tree nuts, the
commodities must be tested for
aflatoxin and have their moisture
content certified. The maximum
acceptable total aflatoxin level is 20
parts per billion, the U.S. Food and
Drug Administration action level for
aflatoxin in human foods.
(5) If the recipient procures an
unprocessed commodity, it must ensure
that the commodity has been produced
either in the target country or in another
developing country within the target
region.
(6) If the recipient purchases a
processed commodity, it must ensure
that the processing took place, and the
primary ingredient has been produced,
either in the target country or in another
developing country within the target
region. The primary ingredient is
determined on the basis of weight in the
case of solid foods, or volume in the
case of liquids.
(7) If the recipient purchases eligible
commodities through a competitive
tender, the recipient must specify the
minimally acceptable commodity
specifications and food safety and
quality assurance standards in the
tender. Purchases that are made from
commercial wholesalers in a local or
regional market must meet the food
safety and quality assurance standards
specified in paragraphs (b)(2), (3) and
(4) of this section.
(8) The recipient must enter into a
contract that complies with this
paragraph for every local or regional
procurement of eligible commodities,
other than through food vouchers, from
a commodity vendor. The recipient
must ensure that the contract between
the recipient and the commodity vendor
clearly specifies the country of origin
and specific market(s) in which the
procurement will take place, commodity

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safety and quality assurance standards,
product specifications, price per metric
ton, and delivery terms. Recipients will
be required to make such contracts
available to FAS upon request.
(9) The recipient must enter into a
contract with an established inspection
service to survey and report on the
safety, quality, and condition of all
procured commodities, other than those
procured through food vouchers, prior
to their shipment and distribution. The
recipient will be required to submit any
survey reports or certificates issued by
such inspection service to FAS upon
request.
(10) The recipient must enter into a
contract with each vendor expected to
redeem food vouchers distributed under
an agreement that specifies the
conditions under which the vouchers
will be redeemed for food. The recipient
must ensure that beneficiaries use food
vouchers to purchase eligible
commodities that meet the food safety
and quality assurance standards
specified in paragraphs (b)(2), (3) and
(4) of this section.
(c) The agreement will require the
recipient to submit a procurement plan
for FAS’s approval within the time
period specified in the agreement. The
procurement plan will include time
periods, broken down by month, for
commodity procurement, delivery, and
distribution and, where applicable, the
distribution of food vouchers. The
agreement will require the recipient to
comply with the procurement plan, as
approved by FAS, and will prohibit the
recipient from making any changes to
the procurement plan without obtaining
the prior written approval of FAS.

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§ 1590.7

Payments.

(a) 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

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into account any program income
earned since the preceding advance.
(2) Whenever possible, the 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 unexpended 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 the 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
not been disbursed as of the 91st day
after the advance was made; provided,
however, that paragraphs (a)(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 (a)(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.

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(iv) If the recipient must return funds
to FAS in accordance with paragraph
(a)(6) of this section, the recipient must
return the funds on 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, the recipient
must deposit and maintain in an
insured bank account located in the
United States all funds advanced by
FAS. The account must be interestbearing, 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 purposes, 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
the Federal fiscal year on such funds, in
accordance with the procedures in 2
CFR 200.305(b)(9).
(b) 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.
§ 1590.8 Transportation of procured
commodities.

(a) The recipient must acquire all
transportation of procured commodities
under the USDA LRP Program. FAS will
pay for the transportation, as provided
for in the agreement, through an
advance payment or reimbursement to
the recipient.
(b) A recipient that acquires ocean
transportation in accordance with
paragraph (a) of this section must
comply with the requirements of 46
U.S.C. 55305, regarding carriage on
U.S.-flag vessels.
(c) The recipient may only use the
services of a transportation company
that is legally operating in the target
country or another country within the
target region, and that would not have
a conflict of interest in transporting the
commodities.

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(d) The recipient must declare in the
transportation contract the point at
which the ocean carrier or overland
transportation company will take
custody of the eligible commodities to
be transported.

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§ 1590.9 Entry, handling, and labeling of
procured commodities and notification
requirements.

(a) The recipient must make all
necessary arrangements for receiving
regionally procured 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 regionally procured
commodities to be imported and
distributed free from all customs duties,
tolls, and taxes, unless otherwise
specified in the agreement.
(b) The recipient must, as provided in
the agreement, arrange for transporting,
storing, and distributing the procured
commodities from the designated point
and time where title to the commodities
passes to the recipient.
(c) The recipient must store and
maintain all of the procured
commodities in good condition from the
time of delivery at the port of entry or
the point of receipt from the commodity
vendor(s) until their distribution.
(d)(1) If a recipient arranges for the
packaging or repackaging of the
procured commodities, the recipient
must ensure that the packaging:
(i) Is plainly labeled in the language
of the target country;
(ii) Contains the name of the procured
commodities;
(iii) Contains the name of the country
of origin;
(iv) Includes a statement indicating
that the procured commodities are being
furnished through a project funded by
the United States Department of
Agriculture; and
(v) Includes a statement indicating
that the procured commodities must not
be sold, bartered, or exchanged.
(2) If a recipient distributes procured
commodities that are prepackaged or
not packaged, the recipient must display
a sign at the distribution site that
includes the name of the procured
commodities, the country of origin, a
statement indicating that the procured
commodities are being furnished
through a project funded by the United
States Department of Agriculture, and a
statement indicating that the procured
commodities must not be sold, bartered,
or exchanged.
(3) If a recipient distributes food
vouchers or cash transfers, the recipient
must display a sign at the distribution
site that includes a statement indicating

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that the food vouchers or cash transfers
are being furnished through a project
funded by the United States Department
of Agriculture. The recipient must
ensure that all paper vouchers or
receipts for electronic vouchers are
printed with a statement indicating that
the vouchers are being furnished
through a project funded by the United
States Department of Agriculture. The
vouchers must also include a statement
indicating that they must not be sold,
bartered, or exchanged.
(e) The recipient must ensure that
signs are displayed at all activity
implementation and commodity, food
voucher, or cash transfer distribution
sites to inform beneficiaries that funding
for the project was provided by the
United States Department of
Agriculture.
(f) The recipient must also ensure that
all public communications in relation to
the project, the activities, or the
procured 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.
§ 1590.10 Damage to or loss of procured
commodities.

(a) The recipient will be responsible
for the procured commodities following
the transfer of title to the procured
commodities from the commodity
vendor(s) to the recipient. FAS may
require the recipient to purchase
transportation insurance against
commodity loss or damage.
(b) A recipient must inform FAS, in
the manner and within the time period

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set forth in the agreement, of any
damage to or loss of the procured
commodities that occurs following the
transfer of title to the procured
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 procured commodities that
occurs after title has been transferred to
the recipient.
(c) The recipient will be responsible
for arranging for an independent cargo
surveyor to inspect any procured
commodities transported by ocean upon
discharge from the vessel and to prepare
a survey or outturn report. The report
must show the quantity and condition
of the procured commodities discharged
from the vessel 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 vessel, unless
FAS determines that failure to do so was
justified under the circumstances. For
procured 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) When procured commodities are
transported overland, the recipient will
ensure that overland transportation
contracts include a requirement that a
loading and offloading report be
prepared and provided to the recipient.
The report must show the quantity and
condition of the procured commodities
loaded on the overland conveyance, as
well as the time and place that the
loading and offloading occurred. The
recipient must obtain a copy of the
report from the overland transportation
company within 45 days after the
completion of the commodity delivery.
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.

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(e) If procured commodities are
damaged or lost during the time that
they are in the care of an ocean carrier
or overland transportation company:
(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 procured
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 vessel
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 the recipient has title to the
procured commodities, and procured
commodities valued in excess of $5,000
are damaged at any time prior to their
distribution 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

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regarding the exact quantity and
condition of the damaged commodities.
The value of damaged procured
commodities must be determined on the
basis of the commodity acquisition,
transportation, and related costs
incurred by the recipient and paid by
FAS with respect to such commodities.
The recipient must inform FAS of the
results of the inspection and indicate
whether the damaged procured
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 the recipient has title to the
procured commodities, the recipient
must arrange for the recovery of that
portion of the procured commodities
designated as suitable for the use
authorized in the agreement. The
recipient must dispose of procured
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 procured
commodities if they are unfit for any
use, in such manner as to prevent their
use for any purpose.
(2) The recipient must arrange for all
U.S. Government markings to be
obliterated or removed before the
procured commodities are transferred
by sale or donation under paragraph
(f)(1) of this section.
(g) A recipient may retain any
proceeds generated by the disposal of
the procured commodities in
accordance with paragraph (f)(1) of this
section and must use the retained
proceeds for expenses related to the
disposal of the procured commodities
and for activities specified in the
agreement.
(h) The 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 procured
commodities determined to be unfit.
§ 1590.11 Claims for damage to or loss of
procured commodities.

(a) The recipient will be responsible
for claims arising out of damage to or
loss of a quantity of the procured
commodities after the transfer of title to
the procured commodities from the
commodity vendor(s) to the recipient.

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(b) If the recipient has title to
procured commodities that have been
damaged or lost, and the value of the
damaged or lost procured 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 procured 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 the recipient has title to
procured commodities that have been
damaged or lost, and the value of the
damaged or lost procured 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 § 1590.14(e).
(d)(1) The value of a claim for lost
procured commodities will be
determined on the basis of the
commodity acquisition, transportation,
and related costs incurred by the
recipient and paid by FAS with respect
to such commodities.
(2) The value of a claim for damaged
procured commodities will be
determined on the basis of the
commodity acquisition, transportation,
and related costs incurred by the
recipient and paid by FAS with respect
to such commodities, less any funds
generated if such commodities are sold
in accordance with § 1590.10(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 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 proposals for subsequent food
assistance awards.
(f)(1) The 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 as provided for in the

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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
procured commodities or a portion
thereof, FAS will use a portion of such
funds to reimburse the recipient for
such expense on a prorated basis.

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§ 1590.12 Use of procured commodities,
FAS-provided funds, and program income.

(a) A recipient must use the procured
commodities, FAS-provided funds,
interest, and program income in
accordance with the agreement.
(b) A recipient must not use procured
commodities, 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
procured 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
procured commodities by the military
forces of any government or insurgent
group without the specific authorization
of FAS.
(e) A recipient must not use FASprovided funds 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 the procured
commodities only if the recipient is
disposing of damaged procured
commodities as specified in § 1590.10.
(g) A recipient must deposit and
maintain all FAS-provided funds and
program income in a bank account until
they are used for a purpose authorized
under the agreement or the FASprovided funds are returned to FAS in
accordance with § 1590.7(a)(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 § 1590.7(a)(7) with
regard to the deposit of advance
payments by FAS.

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(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 FAS-provided
funds or program income to purchase
real or personal property only if local
law permits the recipient to retain title
to such property. However, the recipient
must not use 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 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
procured commodities, but only if the
structure is not used in whole or in part
for any religious or sectarian purposes
while the procured commodities are
stored in it. If the use of 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 FAS-provided funds or program
income for this purpose until it receives
written approval from FAS.
(j) The 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, the recipient should
endeavor to comply with 2 CFR 200.321
where practicable.
(k) As provided for in the agreement,
the recipient must enter into a written
contract with each provider of goods,
services, or construction work that is
valued in excess of 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. The recipient must submit a
copy of the signed contracts to FAS
upon request.

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§ 1590.13 Monitoring and evaluation
requirements.

(a) The 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) The 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) The 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) The 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
§ 1590.4(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, quasiexperimental designs, randomized field
experiments, cost-effectiveness

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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, the 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.
(2) The 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) The 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
separate budgets for monitoring and
evaluation, and separate budget line
items for dedicated recipient monitoring
and evaluation staff and independent
third-party evaluation contracts.
(2) Personnel at the 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

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FAS-hired external evaluation
contractor.
§ 1590.14 Reporting and recordkeeping
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.
(b) The recipient must submit
financial reports to FAS in accordance
with the schedule provided in the
agreement. Such reports must provide
an accurate accounting of FAS-provided
funds, interest earned, program income,
and voluntary committed cost sharing or
matching contributions.
(c)(1) The recipient must submit
performance reports to FAS, in the
manner 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) The 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. A 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 for development assistance
projects, unless otherwise specified in
the agreement. A rapid needs
assessment and a final evaluation report
are required for all agreements for
emergency response projects, unless
otherwise specified in the agreement.
An interim evaluation report is not
required for emergency response
projects, unless otherwise specified in
the agreement. The reports must be
submitted in accordance with the
timeline provided in the FAS-approved
evaluation plan. Evaluation reports
submitted to FAS will be made public
in an effort to increase accountability
and transparency and share lessons
learned and best practices.

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(e) A recipient must submit reports to
FAS, using a form as prescribed by FAS,
covering the receipt, handling, and
disposition of the procured
commodities and, if applicable, food
vouchers and cash transfers. Such
reports must be submitted to FAS, by
the dates and for the reporting periods
specified in the agreement, until all of
the procured commodities and, if
applicable, food vouchers and cash
transfers have been distributed and such
disposition has been reported to FAS.
(f) If requested by FAS, the recipient
must provide to FAS additional
information or reports relating to the
agreement.
(g) 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.
(h) 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 paragraph (e) 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 procurement of eligible
commodities, as well as records of
dispatch received from ocean carriers or
overland transportation companies.
§ 1590.15

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 procured
commodities, 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 each subagreement to
FAS, in the manner set forth in the
agreement, prior to the transfer of any
procured commodities, FAS-provided
funds, or program income to the
subrecipient.

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(b) The recipient must include the
following requirements in the
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
subrecipients because they directly
concern the implementation 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 FAS-provided funds to
acquire goods and services, either
directly or indirectly through another
party, in a manner that violates countryspecific economic sanction programs, as
specified in the agreement.
(3) The subrecipient must pay to the
recipient the value of any procured
commodities, FAS-provided funds, 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 § 1590.19 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) The recipient must monitor the
actions of a subrecipient as necessary to
ensure that procured commodities, FASprovided 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 activities and results
under the agreement.

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§ 1590.16 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 procured commodities are
damaged or lost, or the FAS-provided
funds, interest, or program income are
misused or lost, due to an action or
omission of the recipient.

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§ 1590.17 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 procured
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 procured
commodities and must dispose of such
commodities only as agreed to by FAS;
and
(2) Must comply with the closeout
and post-closeout procedures specified
in the agreement and 2 CFR 200.343 and
200.344.
§ 1590.18
appeals.

Opportunities to object and

(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 § 1590.16. 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. In the absence of such other
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 that FAS notified the
recipient that FAS was taking the 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

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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.
§ 1590.19

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 from FAS, is required
to obtain an audit. Such a recipient or
subrecipient has the following two
options to satisfy this requirement:
(1)(i) A financial related audit (as
defined in the Government Auditing
Standards, GPO Stock #020–000–00–
265–4) of the agreement or
subagreement, in accordance with
Government Auditing Standards, if the
recipient or subrecipient receives
Federal awards under only one FAS
program; or
(ii) A financial related audit of all
Federal awards from FAS, in accordance
with Government Auditing Standards, if
the recipient or subrecipient receives
Federal awards under multiple FAS
programs; 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 from FAS, is
exempt from requirements for a nonFederal audit for that year, except as
provided in paragraph (d) 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

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Federal Register / Vol. 81, No. 127 / Friday, July 1, 2016 / Rules and Regulations
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 the U.S. Government
Accountability Office 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).
Dated: June 24, 2016.
Suzanne Palmieri,
Acting Administrator, Foreign Agricultural
Service.
[FR Doc. 2016–15537 Filed 6–30–16; 8:45 am]
BILLING CODE 3410–10–P

NUCLEAR REGULATORY
COMMISSION
10 CFR Parts 2 and 13
[NRC–2016–0057]
RIN 3150–AJ72

Adjustment of Civil Penalties for
Inflation
Nuclear Regulatory
Commission.
ACTION: Interim final rule.
AGENCY:

The U.S. Nuclear Regulatory
Commission (NRC) is amending its
regulations to adjust the maximum Civil
Monetary Penalties (CMPs) it can assess
under statutes enforced by the agency.
These changes are mandated by the
Federal Civil Penalties Inflation
Adjustment Act of 1990 (FCPIAA), as
amended by the Federal Civil Penalties
Inflation Adjustment Act Improvements
Act of 2015 (2015 Improvements Act).
The NRC is amending its regulations to
adjust the maximum CMP for a violation
of the Atomic Energy Act of 1954, as
amended (AEA), or any regulation or
order issued under the AEA from
$140,000 to $280,469 per violation, per
day. Additionally, the NRC is amending
provisions concerning program fraud
civil penalties by adjusting the
maximum CMP under the Program
Fraud Civil Remedies Act from $7,000
to $10,781 for each false claim or
statement.

asabaliauskas on DSK3SPTVN1PROD with RULES

SUMMARY:

This interim final rule is
effective on August 1, 2016.

DATES:

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Please refer to Docket ID
NRC–2016–0057 when contacting the
NRC about the availability of
information for this action. You may
obtain publicly-available information
related to this action by any of the
following methods:
• Federal Rulemaking Web site: Go to
http://www.regulations.gov and search
for Docket ID NRC–2016–0057. Address
questions about NRC dockets to Carol
Gallagher; telephone: 301–415–3463;
email: [email protected]. For
technical questions, contact the
individual listed in the FOR FURTHER
INFORMATION CONTACT section of this
document.
• NRC’s Agencywide Documents
Access and Management System
(ADAMS): You may obtain publiclyavailable documents online in the
ADAMS Public Documents collection at
http://www.nrc.gov/reading-rm/
adams.html. To begin the search, select
‘‘ADAMS Public Documents’’ and then
select ‘‘Begin Web-based ADAMS
Search.’’ For problems with ADAMS,
please contact the NRC’s Public
Document Room (PDR) reference staff at
1–800–397–4209, 301–415–4737, or by
email to [email protected]. The
ADAMS accession number for each
document referenced (if it is available in
ADAMS) is provided the first time that
it is mentioned in the SUPPLEMENTARY
INFORMATION section.
• NRC’s PDR: You may examine and
purchase copies of public documents at
the NRC’s PDR, Room O1–F21, One
White Flint North, 11555 Rockville
Pike, Rockville, Maryland 20852.
FOR FURTHER INFORMATION CONTACT: Eric
Michel, Office of the General Counsel,
telephone: 301–287–3704, email:
[email protected], U.S. Nuclear
Regulatory Commission, Washington,
DC 20555–0001.
SUPPLEMENTARY INFORMATION:
ADDRESSES:

Table of Contents
I. Background
II. Discussion
III. Procedural Background
IV. Section-by-Section Analysis
V. Regulatory Flexibility Certification
VI. Regulatory Analysis
VII. Backfitting and Issue Finality
VIII. Plain Writing
IX. National Environmental Policy Act
X. Paperwork Reduction Act
XI. Congressional Review Act

I. Background
Congress passed the FCPIAA in 1990
to allow for regular adjustment for
inflation of CMPs, maintain the
deterrent effect of civil monetary
penalties and promote compliance with
the law, and improve the collection of

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43019

CMPs by the Federal government (Pub.
L. 101–410, 104 Stat. 890; 28 U.S.C.
2461 note). As amended by the Debt
Collection Improvement Act of 1996,
the FCPIAA required that the head of
each agency review, and if necessary
adjust by regulation, the CMPs assessed
under statutes enforced by that agency
at least once every 4 years, in
accordance with a statutory formula
linked to the percentage change in the
Consumer Price Index (CPI) (Pub. L.
104–134, 110 Stat. 1321–373). The NRC
has amended the CMP amounts under
statutes it enforces (the AEA and
Program Fraud Civil Remedies Act) four
times, most recently in 2008 (September
23, 2008; 73 FR 54671). An adjustment
was not performed in 2012 because the
FCPIAA required agencies to round
their CMP amounts to the nearest
multiple of $1,000 or $10,000,
depending on the size of the CMP
amount, and the 2012 adjustments
based on the statutory formula were
small enough that no adjustment
resulted.
On November 2, 2015, the FCPIAA
was amended by the 2015
Improvements Act (Sec. 701, Pub. L.
114–74, 129 Stat. 599). The 2015
Improvements Act requires that the
head of each agency through an interim
final rulemaking make an initial ‘‘catchup’’ adjustment of the CMPs assessed
under statutes enforced by that agency
by July 1, 2016, to be effective no later
than August 1, 2016. This initial catchup adjustment is to be calculated
according to the percentage change
between the CPI for the month of
October 2015 and the CPI for the month
of October of the calendar year when the
CMP amount was last established by
some means other than a FCPIAA
adjustment. The increase for the initial
catch up adjustment may not exceed
150 percent of the CMP amount as of the
date of the enactment of the 2015
Improvements Act. Following the initial
catch-up adjustment, agencies must
continue to adjust their CMPs by
January 15 of each year. This calculation
is based on the percentage change
between the CPI for the preceding
month of October and the CPI for the
month of October in the preceding year.
All increases under the 2015
Improvements Act are to be rounded to
the nearest multiple of one dollar.
II. Discussion
Section 234 of the AEA limits civil
penalties for violations of the AEA to
$100,000 per day, per violation (42
U.S.C. 2282). Congress established the
$100,000 amount in 1980 (Pub. L. 96–
295, 94 Stat. 787). As discussed in
Section I, ‘‘Background,’’ of this

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