Block Grant Programs

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of the Secretary

45 CFR Part 96

RIN 0991-AA97

Block Grant Programs

AGENCY: Department of Health and Human Services (HHS).

ACTION: Final rule with comment period.

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SUMMARY: This final rule amends the regulations of the Department of

Health and Human Services (HHS) governing the administration of block

grant programs. It updates the current regulations to reflect current

statutory citations for the block grants. It establishes a requirement

for grantees to submit obligation and expenditure reports for all of

the block grants. Additionally, this rule establishes submission dates

and completion dates for applications for funding from States and

territories for Low-Income Home Energy Assistance Program (LIHEAP) and

Social Services Block Grant Program (SSBG). It also establishes a

completion date for applications for direct funding from Indian tribes

and tribal organizations for LIHEAP and clarifies procedures related to

the withholding of funds for these programs. In addition, it modifies

the requirements for reallotment of funds under LIHEAP. This regulation

also includes an amendment to Sec. 96.82, regarding the required

submission of reports on households applying for and receiving LIHEAP

assistance that is being issued as an interim final rule with

opportunity for comment.

DATES: Effective Date: This final rule and the interim Sec. 96.82 are

effective November 15, 1999, except that Secs. 96.10(c), 96.10(d) and

96.49, are effective March 1, 2000. The information collection

requirements contained in Sec. 96.30 will take effect upon OMB

approval.

Comment Period: Comments on Sec. 96.82 will be considered, if

received at the appropriate address, as provided below, no later than 5

p.m on December 14, 1999. We will not consider comments concerning

provisions that remain unchanged from the July 17, 1992 or November 16,

1993 proposed rules or that were revised based on public comment.

ADDRESSES: Mail written comments on Sec. 96.82 to Janet M. Fox,

Director, Division of Energy Assistance, Office of Community Services,

Administration for Children and Families, 370 L'Enfant Promenade SW,

Washington, DC 20447.

The comments received in response to the requirements in Sec. 96.82

may be inspected or reviewed at the above address, Monday through

Friday, between 9 a.m. and 5 p.m., beginning one week after the

publication of this rule.

FOR FURTHER INFORMATION CONTACT: Mike Herrell, 202/690-5739.

SUPPLEMENTARY INFORMATION:

Background

The Omnibus Budget Reconciliation Act of 1981 (Pub. L. 97-35)

established seven block grants to be administered by the Department of

Health and Human Services (HHS). Subsequent legislation repealed the

Primary Care Block Grant. Additional legislation divided the Alcohol

and Drug Abuse and Mental Health Services Block Grant into two,

resulting in the Community Mental Health Services Block Grant and the

Substance Abuse Prevention and Treatment Block Grant. An interim final

regulation to implement the block grants was published in the Federal

Register on October 1, 1981 (46 FR 48582) and the final regulation was

issued on July 6, 1982 (47 FR 29472). Subsequent legislation changed

certain provisions of the block grants and the regulation was modified

several times. The regulation was modified most recently on May 1, 1995

(60 FR 21332) to address requirements for LIHEAP. Based on our

experience in administering the block grants, we have identified

several aspects of the block grant rules that require, or would benefit

from, clarification. Some of those changes were proposed in a notice of

proposed rulemaking (NPRM) issued by HHS for block grant programs dated

July 17, 1992 (57 FR 31685) and are discussed below.

The Augustus F. Hawkins Human Services Reauthorization Act of 1990,

Public Law 101-501, was enacted on November 3, 1990. Title VII of this

public law contains amendments to the Low-Income Home Energy Assistance

Act of 1981 (title XXVI of Pub. L. 97-35, as amended), including

several changes affecting LIHEAP grantee program administration. An

interim final rule published January 16, 1992, in the Federal Register

(57 FR 1960 et seq.) promulgated regulatory changes for several

provisions which were effective for fiscal years (FY) 1991 and FY 1992,

including a leveraging incentive program. It also indicated that

regulations concerning additional changes resulting from Public Law

101-501 would be issued at a later date. A final rule relating to the

provisions included in the interim final rule was published on May 1,

1995 (60 FR 21332). An NPRM dated November 16, 1993 (58 FR 60498)

proposed additional regulatory changes for provisions included in

Public Law 101-501 that were scheduled to become effective in FY 1993

and FY 1994. The later changes concerned ``forward funding'' and the

end of authority to transfer LIHEAP funds to other HHS block grants.

Other provisions relating to application submission and completion

dates were included in the NPRM. Some of the provisions included in the

Department's NPRM of July 17, 1992, were also included in the November

16, 1993 NPRM.

This final rule includes provisions which were originally contained

in both the NPRM issued by the Department of Health and Human Services

on July 17, 1992 (57 FR 31685) and the NPRM issued on November 16, 1993

(58 FR 60498) concerning LIHEAP, CSBG and SSBG, all of which are

administered by the Administration for Children and Families (ACF). It

includes a due date for completion of applications for direct funding

of Indian tribes and tribal organizations under LIHEAP. Other issues

proposed in the NPRM of July 17, 1992 which address LIHEAP, CSBG, and

SSBG as well as some of the other block grant programs which are

administered by agencies of the Public Health Service (PHS), are also

finalized in this rule. It clarifies procedures related to the

withholding and reallotment of funds and requires obligation and

expenditure reports. Some of those items in the July 17, 1992 NPRM

which relate to the block grants that are administered by agencies of

the PHS may be addressed in a separate action. Therefore, this final

rule excludes the following sections relating to the block grants

administered by the PHS contained in the July 1992 NPRM: 96.121,

96.122, 96.123 and 96.124. In addition, this final rule finalizes

proposals from the November

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16, 1993 NPRM. It establishes submission and completion dates for block

grant applications from States and territories for LIHEAP and SSBG. It

also codifies the end of transfer authority under LIHEAP. Since the

publication of the November 16, 1993 NPRM, legislation changed the

forward funding program year for LIHEAP to October 1 through September

30, the same dates as the current Federal fiscal year, but funded one

year in advance. The issue of forward funding for LIHEAP is discussed

below. Also, this final rule adds new provisions to update the

regulation to reflect the current names and statutory citations for the

block grants. The NPRM dated November 16, 1993 also included technical

changes to Sec. 96.82, concerning a statutorily required report on

households assisted under the LIHEAP program. Subsequently, however,

the Human Services Amendments of 1994 (Pub. L. 103-252) amended the

statutory requirements applying to that report. This amendment includes

changes to the existing regulations to reflect implementation of those

new requirements, which we are issuing as an interim final rule with

opportunity for comment.

Provisions in both the July 17, 1992 NPRM and the November 16, 1993

NPRM included provisions relating to requirements for CSBG. Since the

publication of those NPRMs, new legislation has significantly amended

certain provisions of the Community Services Block Grant Act.

Accordingly, this final rule deletes the following provisions relating

to CSBG: Sections 96.49(a), 96.92 and 96.95 of the July 17, 1992 NPRM

and Secs. 96.10(c)(1), 96.10(d)(1) and 96.49(a) of the November 16,

1993 NPRM.

The NPRM dated July 17, 1992 (57 FR 31682) allowed a comment period

of 60 days. Thirteen letters were received in response to that NPRM and

are discussed below. The NPRM dated November 16, 1993 allowed a 45-day

comment period. Three letters were received in response to that NPRM

and are also discussed below.

A final rule to replace the interim final rule of January 16, 1992

on the leveraging incentive program and other issues was published on

May 1, 1995 (60 FR 21322). In some cases, provisions from the July 1992

and November 1993 NPRM's were included in that final rule, if they were

related to issues already being addressed in that rule. This applies to

Secs. 96.14, 96.83, 96.84 and 96.87.

Waiver of Notice and Comment Procedures

The Human Services Amendments of 1994 (Pub. L. 103-252) amended

section 2605(c)(1)(G) of the LIHEAP statute regarding data required to

be submitted to the Department as part of a grantee's annual

application for funds under the LIHEAP program. Section 96.82 of this

amendment to the block grant statute, which implements these statutory

changes, is being published in interim final form. The Administrative

Procedures Act (5 U.S.C. 553(b)(B)) provides that, if the Department

for good cause finds that a notice of proposed rulemaking (NPRM) is

unnecessary, impracticable, or contrary to public interest, it may

dispense with the NPRM if it incorporates a brief statement in the

interim final rule of the reasons for doing so.

The Department finds that there is good cause to dispense with an

NPRM with respect to proposed changes to Sec. 96.82 of the block grant

regulations. First, it is important that grantees have timely notice of

the rules for operating their LIHEAP programs consistent with the 1994

statutory provisions. Second, LIHEAP grantees and interested parties

were notified by information memorandum of the opportunity to comment

on these requirements as part of the Department's request for approval

by the Office of Management and Budget of the collection of the

information. No objections were submitted to the information collection

approval request.

We are interested in receiving formal comments on this interim

final rule for Sec. 96.82. We will review any comments which we receive

by December 14, 1999. We will revise the rule, as appropriate, based on

the comments we receive and our experience in implementing the

requirement.

Forward Funding of LIHEAP. Sections in the November 16, 1993 NPRM

relating to the program year dates are being deleted because of a

change in the law. A new section, 2602(c), was added to the LIHEAP

statute by Public Law 101-501. This section provided that LIHEAP funds

would be available for obligation on the basis of a new ``program

year'' of July 1 through June 30, rather than on the normal Federal

fiscal year basis of October 1 to September 30. The law provided that

this change from a fiscal year to a program year basis, known as

``forward funding'', would take place beginning in fiscal year (FY)

1993, and that it would be implemented by appropriating funds in the FY

1993 HHS appropriations law for a nine-month transition period of

October 1, 1992 to June 30, 1993, and also for the new program year of

July 1, 1993 to June 30, 1994, a period of 21 months.

The FY 1993 appropriations law for HHS (Pub. L. 102-394) provided

funding for the regular Federal fiscal year 1993, which began October

1, 1992 and ended September 30, 1993. It also provided advance funding

for FY 1994 to operate the program for a nine-month transition period

of October 1, 1993 to June 30, 1994, thus providing partial

implementation of forward funding a year later than authorized.

The FY 1994 appropriations law, Public Law 103-112, provided

advance FY 1995 funds for the period beginning October 1, 1994. This

left a three-month funding gap of July 1 to September 30, 1994. To

eliminate that funding gap, an amendment to the Emergency Supplemental

Appropriations Act of 1994 (Pub. L. 103-211) made the FY 1994 funds

available until September 30, 1994.

The Budget of the United States Government for Fiscal Year 1995

requested funds for the normal Federal fiscal year of October 1, 1994

to September 30, 1995. Subsequently, Title III of the Human Services

Amendments of 1994, Public Law 103-252, reauthorized LIHEAP and

provided that the program year shall begin on October 1 of the fiscal

year following the year in which the appropriation is made. Therefore,

the reauthorization law, Public Law 103-252, opted for funding a

program year that is on the same time frame as the Federal fiscal year,

but funded one year in advance. Consequently, the changes which related

to forward funding which were proposed in the NPRM dated November 16,

1993 (58 FR 60498) will not be implemented, since due dates for reports

and other actions do not need to be changed to be consistent with the

timetable for a new program year. Therefore, the information concerning

forward funding and the resultant technical changes contained in that

NPRM are deleted from Secs. 96.10, 96.42, 96.49, 96.80, 96.81, 96.85

and 96.87. Throughout this current regulation, the dates proposed in

the NPRM dated November 16, 1993 (58 FR 60498) for implementation

during forward funding are deleted and the dates included are based on

the Federal fiscal year.

Section-by-Section Analysis of Changes in the Regulations

Subpart A--Introduction

Section 96.1 Scope

Several changes have taken place in the block grants since these

regulations

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were first issued in 1981. We are amending this section, which

specifies which programs are subject to the regulations, to reflect the

current names and legal status of the block grants. Although these

amendments were not in either the July 17, 1992 or the November 16,

1993 NPRMs, we are including them in the final rule since the changes

are only technical in nature and reflect the statutory situation.

Specifically, we are revising paragraph (a) to show that the CSBG

program is now covered by sections 671-683 of Public Law 97-35, as

amended; deleting reference in paragraph (d) to the Primary Care Block

Grant, which was repealed; and amending paragraph (e) to reflect the

fact that the Maternal and Child Health Services Block Grant (MCH)

program is found at 42 U.S.C. 701-709. We are also deleting reference

in paragraph (c) to the Alcohol and Drug Abuse and Mental Health

Services Block Grant, which has been repealed and replaced by the

Community Mental Health Services Block Grant (CMHS) and the Substance

Abuse Prevention and Treatment Block Grant (SAPT). CMHS and SAPT are

now referenced in revised paragraphs (c) and (d).

Finally, we are revising paragraph (f) to clarify that these

regulations also apply to the Empowerment Zones and Enterprise

Communities programs enacted in 1993 as a part of the Social Services

Block Grant statute. A question had been raised by eligible entities as

to whether the block grant regulations or parts 74 and 92 of

Departmental regulations applied to the Empowerment Zones and

Enterprise Communities. This amendment will make clear that part 96,

the block grant regulations, are applicable. This is consistent with

guidance previously issued by the Department.

Section 96.2 Definitions

The Trust Territory of the Pacific Islands (TTPI) consisted of

Micronesia, the Marshall Islands, and Palau for the first five years of

the LIHEAP and CSBG programs. Two of the components of the TTPI, the

Marshall Islands and Micronesia, entered into Compacts of Free

Association with the United States in 1986, under which they were

declared independent nations that will be associated with the United

States for defense purposes during a 15-year transition period. Under

the terms of those Compacts, allocations to the new Federated States of

Micronesia and the Republic of the Marshall Islands under LIHEAP, CSBG,

and several other Federal assistance programs were phased out over a

three-year period, beginning in FY 1987. Beginning with FY 1990, they

were no longer eligible to receive any LIHEAP or CSBG funding. Palau

has also signed a Compact of Free Association, which went into effect

at noon on October 1, 1994. As a result, no remaining entity is

encompassed by the term, ``Trust Territory of the Pacific Islands''.

The LIHEAP and CSBG allocations for the new Republic of Palau were also

phased out over a three-year period, beginning in FY 1996. The

allocation for the Republic of Palau was no more than 75% of its FY

1995 amount in FY 1996, no more than 50% in FY 1997, and no more than

25% in FY 1998. Beginning in FY 1999, no LIHEAP or CSBG funds will be

allocated to the Republic of Palau. All three original components of

TTPI (the Federated States of Micronesia, the Republic of the Marshall

Islands, and the Republic of Palau) continue to receive funding under

the block grants administered by agencies of the PHS, since they were

exempt from the compacts' requirements to phase out funding.

To take account of changes in the Trust Territory, the NPRM dated

July 17, 1992 (57 FR 31682) proposed to modify the definition of

``State'' as used in the block grant rule. This final rule will further

modify that definition by deleting ``the Trust Territory of the Pacific

Islands comprised of Palau'' since Palau's Compact of Free Association

became effective after the publication of the July 1992 NPRM. We are

also adding a statement that, for block grants administered by agencies

of the PHS, ``States'' will include the Federated States of Micronesia,

the Republic of the Marshall Islands, and the Republic of Palau.

No comments were received in response to Sec. 96.2 of the NPRM.

Therefore, the final rule is revised as described above.

Subpart B--General Procedures

Section 96.10 Prerequisites To Obtain Block Grant Funds

Form of application. In general, the block grant regulations

provide States and other grantees with substantial discretion in

preparing applications and related forms. The current section reads:

``No particular form is required for a State's application or the

related submission required by statute.'' This language may be

misleading, however, inasmuch as some block grant statutes do, in fact,

require grantees to submit applications and other information in a

particular form in order to ensure that the information is useful for

statutorily intended purposes, e.g., Congressional oversight. Examples

are the application requirements for MCH, CMHS and SAPT. The NPRM dated

July 17, 1992 (57 FR 31682) proposed to modify subsection (a) to allow

the Department to specify the form of an application when this is

required or clearly contemplated by the authorizing statute.

Comments: Two comments were received in response to the proposal

concerning the form of an application. One commenter indicated that the

Department was proposing to specify the form of application to be

submitted for CSBG funding. The other commenter indicated the fact that

adding ``except where prescribed elsewhere in this rule'' to the

current language is not all inclusive, especially since the above

example omitted at least one other block grant statute, MCH, which

explicitly requires the Secretary to provide a specific ``standard

form'' for the States' applications. The commenter recommended that the

rule be amended either to add this example or to clarify that

exceptions include any program where the authorizing legislation

specifically requires a particular form.

Response: Although the CSBG statute requires the specific content

to be included in CSBG applications, no particular format is required.

The format by regulation is at the discretion of the grantee.

The Department agrees with the commenter that the above example

should include an additional statement that Title V of the MCH statute

requires the Secretary to provide a specific ``standard form'' for the

States' applications. Therefore, section 96.10(a) is amended to include

this specific requirement. Furthermore, we have added a clarification

to allow specific formats when authorizing legislation requires it.

In support of its commitment to Federalism, the Department will

continue to make every effort to develop its application requirements

and forms in close cooperation with the States, and where possible, the

communities. For example, when developing the MCH application and

annual report, the Maternal and Child Health Bureau developed new

guidance and an automated reporting system based on the emerging

concept of ``Performance Partnerships''. Not only did the Bureau meet

regularly with a Block Grant Guidance Work Group made up largely of

State and local MCH representatives, but the Bureau field tested the

guidance and information system with 9 states and held a number of

sessions at three separate national meetings with representatives of

all State MCH and Children with Special Health Care

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Needs Directors, as well as many local directors. The initial national

sessions focused on discussing and reviewing the proposed guidance and

performance partnership measures. Later sessions included hands on

training in using the guidance that was provided by the Bureau and the

nine test States.

Application Submission and Completion Dates for States and

Territories For Block Grants. Due dates for submission and completion

of State and territorial applications for LIHEAP, CSBG and SSBG were

proposed by the November 16, 1993 NPRM to be added to the block grant

regulations so that grant awards can be issued as close as possible to

the beginning of a grant period.

The Cash Management Improvement Act of 1990, (CMIA, Pub. L. 101-

453) imposes requirements for the timely transfer of funds between a

Federal agency and a State and for the exchange of interest where

transfers are not made in a timely fashion. The CMIA also requires

States to minimize the time between the receipt of Federal funds and

their disbursement by the State for program purposes. The CMIA applies

to States and territories, but it does not apply to Indian tribes or

tribal organizations.

The establishment of application due dates for States and

territories will allow the agency sufficient time to process

applications and issue awards in a timely manner, in order to minimize

interest charges associated with the CMIA. The NPRM issued by the

Department on July 17, 1992 (57 FR 31685) also proposed completion

dates for tribal applications for the CSBG and LIHEAP. See below under

Sec. 96.49 for further discussion of tribal applications.

Because significant changes to the CSBG Act have been enacted since

the publication of the NPRMs, we have deleted the provisions relating

to CSBG application submission and completion dates from this final

rule.

SSBG: The November 16, 1993 NPRM also proposed to establish the due

date for SSBG applications as one month prior to the beginning of the

SSBG State program year. State SSBG allocations are established by a

formula based on population. Each fall, individual State allocations

for the following Federal fiscal year, based on the projected

Congressional appropriation, are published in the Federal Register.

Unless the appropriation is enacted at a different level, the

allocations published in the Federal Register the previous fall are the

basis for determining the amount of the grant awards for the following

fiscal year. For example, FY 1999 allocations were published in the

Federal Register in the fall of 1998 for distribution to the States in

Federal fiscal year 1999, beginning October 1, 1998. This approach

gives the grantee plenty of time to plan its program activities.

For SSBG, accordingly, it was proposed that States and territories

which operate on a Federal fiscal year basis submit applications (pre-

expenditure reports) for funding by September 1 of the preceding fiscal

year. It was also proposed that States and territories which operate

their SSBG program on a July 1--June 30 basis submit their applications

for funding by June 1 of the preceding funding period. For example, for

States and territories which operate on the basis of the fiscal year

which begins on October 1, 2000, and ends on September 30, 2001, the

date of submission for applications would be September 1, 2000. For

SSBG programs with a funding period which begins on July 1, 2000, and

ends on June 30, 2001, the date of submission would be June 1, 2000. No

date was proposed for completion of SSBG applications.

No comments were received in response to the proposal for

submission dates for the SSBG program. Thus, the provision is adopted

as proposed, with two exceptions. We have added the authority to allow

the Department to agree to a later application submission date, in

order to allow for unusual circumstances that may make meeting these

deadlines difficult or impossible. In addition, we have changed the

term ``Secretary'' used in the NPRM to ``Department'', to better

reflect actual working relationships.

Therefore, the date for submission of SSBG applications is

September 1 of the preceding fiscal year for those States which operate

on a Federal fiscal year basis unless the Department agrees to a later

date. The date for submission of applications for those States which

operate on a July 1--June 30 basis is the preceding June 1 unless the

Department agrees to a later date. States requesting a later submission

date should provide proper documentation to the Department.

LIHEAP: For LIHEAP, it was proposed in the NPRM dated November 16,

1993 (58 FR 60498) that the submission date for applications be

established as one month before the beginning of the new ``program

year'' of July 1 to June 30. Thus, the due date for submission of the

applications would be June 1, if forward funding were implemented.

Also in the NPRM, for LIHEAP, the final date for completion of

applications from States and territories was proposed to be established

as December 31 of the program year for which they were requesting

funds, almost seven months after the due date for the submission of the

applications.

Comment: One comment was received in response to the proposed

LIHEAP submission dates and completion dates for States and

territories. The commenter was in favor of the proposed LIHEAP

submission date but did not think the completion date should be more

than 60 days after submittal. The commenter expressed the belief that

the Department was attempting to circumvent the requirements under the

Cash Management Improvement Act (CMIA) and that grantees should receive

a grant award notification before October 1 or December 31 of the

program year.

Response: The Department disagrees with the assertion that we are

trying to circumvent the requirements under the CMIA. If States submit

their applications earlier, the Department will review them as soon as

possible. Departmental review will be delayed only if the grantee fails

to submit all the information required. The December 31 completion date

requirement was proposed in order to give grantees the time to submit

the required information, not to give the Department more time to

review it.

It is the conclusion of the Department that since LIHEAP will

continue to be operated on a normal fiscal year basis of October 1 to

September 30, with funding scheduled to be appropriated one year in

advance, the due date for submission of funding applications from

States and territories will be established as September 1, one month

prior to the beginning of the fiscal year, unless the Department agrees

to a later date. We believe it is appropriate to require submission of

the funding application prior to the start of the funding period, since

the grantees will have been advised of the amount of their allocations

(they should know the level or amount) one year in advance and thus

will have had sufficient time for planning and to hold the required

public hearings. The submission date of September 1 is also consistent

with the submission date for applications for tribal grantees.

The Department agrees with the commenter that a period of almost

seven months is not needed for review of the applications. However,

based on past experience, since numerous applications from both States

and tribes will be received at the same time, sixty days may not be

sufficient time for the completion of reviews, notification of grantees

concerning deficiencies in applications, and receipt of the grantees'

responses. Therefore, as a compromise,

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the due date for the completion of all information required by States

and territories is being established as December 15 of the fiscal year

for which they are requesting funds, 3\1/2\ months after the due date

for the submission of the applications. For example, for fiscal year

2000, which begins on October 1, 1999 and ends on September 30, 2000,

applications must be submitted by September 1, 1999 and must be

completed by December 15, 1999, unless the Department agrees to a later

date after proper documentation from the State.

As with the SSBG program, we have added the authority to allow the

Department to agree to a later application submission or completion

date, in order to allow for unusual circumstances that may make meeting

these deadlines difficult or impossible, and we have changed the term

``Secretary'' to ``Department''.

Effective Date: Given the timing of publication of this final rule,

there will not be time for grantees to meet the new schedule for

submission and completion of FY 2000 SSBG and LIHEAP applications,

which will be due on September 1 (or June 1 for some SSBG applications)

of each year. Accordingly, Secs. 96.10(c) (1) and (2) and 96.10(d) of

this rule, relating to the submission deadlines for SSBG applications

and the submission and completion deadlines for LIHEAP applications,

will become effective on March 1, 2000, and will apply beginning with

FY 2001 plans for SSBG and LIHEAP. Under these provisions, for example,

SSBG applications for FY 2001 must be submitted by September 1, 2000

for States that operate their programs on a federal fiscal year basis,

and by June 1, 2000 for States that operate on a July 1-June 30 program

year basis. LIHEAP applications for FY 2001 must be submitted by

September 1, 2000 and must be completed by December 15, 2000.

Section 96.15 Waivers

The LIHEAP statute provides that grantees may request waivers of

the limit on the amount of funds that may be spent on weatherization

activities and other energy-related home repairs and of certain crisis

assistance performance standards.

The LIHEAP statute provides that, in general, not more than 15

percent of funds allotted to or available to a grantee for any fiscal

year may be used for weatherization activities and other energy-related

home repairs. Section 705 of Public Law 101-501 (42 U.S.C. 8624(k))

amended section 2605(k) of the LIHEAP statute to allow the Department,

under certain circumstances, to grant a waiver to increase the maximum

amount of LIHEAP funds a grantee may use for low cost weatherization or

other energy-related home repairs from 15 percent to up to 25 percent

of the funds allotted or available to the grantee.

Section 2604(c) of the LIHEAP statute provides that a ``reasonable

amount'' of LIHEAP funds (based on data from prior years) shall be

reserved until March 15 of each year by each grantee for energy crisis

intervention. This section describes performance standards for time

frames for the provision of assistance, in addition to performance

standards for geographical accessibility and obtaining applications

from individuals who are physically infirm. However, the statute

provides for a waiver of the performance standards for a program in a

geographical area affected by a natural disaster designated by the

Secretary or affected by a major disaster or emergency designated by

the President for as long as the designation remains in effect, when

the emergency makes compliance with the standards impracticable.

Detailed criteria for a waiver of the crisis assistance performance

standards are described in 45 CFR, part 96, Sec. 96.89.

Currently, no mention is made in Sec. 96.15 of the regulations to

indicate to whom applications for waivers that are permitted by statute

should be submitted for the LIHEAP program. Current regulation requires

that waivers under the CSBG program are to be submitted to the

Director, Office of Community Services. It was proposed in the NPRM

dated November 16, 1993 (58 FR 60498) that waiver applications for SSBG

(formerly submitted to the defunct Office of Human Development

Services) and for LIHEAP should also be submitted to the Director,

Office of Community Services. This section also currently specifies

that applications for waivers for block grants administered by agencies

of the PHS should be submitted to the Assistant Secretary of Health.

With the reorganization of the Office of the Assistant Secretary for

Health in 1995, this responsibility was delegated to the cognizant

Agencies of the PHS. Accordingly, this section has been revised to

specify that waiver requests should be submitted to the Director of the

Centers for Disease Control and Prevention for PHS, to the

Administrator of the Substance Abuse and Mental Health Services

Administration for CMHS and SAPT, and to the Director of the Maternal

and Child Health Bureau for MCH. The new titles of the CMHS and SAPT

block grants are also reflected in this section.

No comments were received in response to Sec. 96.15 of the NPRM.

Therefore, this rule is adopted as proposed, with the changes discussed

above for the titles and waiver approving authorities for the block

grants administered by agencies of the PHS.

Subpart C--Financial Management

Section 96.30 Fiscal and Administrative Requirements

The NPRM issued by the Department dated July 17, 1992 proposed to

add a new paragraph that would require block grant recipients to submit

information on the obligation and expenditure status of each block

grant allocation. For block grants whose statutory authorizations

include time limits on both obligation and expenditure of funds, this

information would include: (1) The dollar amount of the funds obligated

by the grantee and the date of the last obligation; and (2) the dollar

amount of the funds expended by the grantee and the date of the last

expenditure.

For block grant statutes which have time limits on the obligation

of funds but not on the expenditure of funds, this information would

include the dollar amount of the funds obligated during the period

funds were available for obligation and the date of the last

obligation.

For block grant statutes which have time limits only on the

expenditure of funds, this information would include the dollar amount

of the funds expended and the date of the last expenditure.

The information would be required for each block grant award

allocation after the close of the statutory period(s) for obligation of

funds and/or expenditure of funds.

As proposed in the NPRM, grantees would be required to answer an

inquiry issued to the grantee by the Department's Office of Payment

Management Systems. This letter would be sent at the end of the

statutory period for obligation or expenditure of funds. Grantees would

have 90 days after the end of the applicable statutory period (or 90

days after receipt of the letter, whichever is the later date) to

return the letter with the required information.

This information would allow HHS and the grantee to verify the

financial status of block grant funds and allow the Department to

determine aggregate obligations, expenditures, and available balances.

The reporting requirement would not affect a grantee's right to

subsequent reimbursement or to draw down funds for authorized

obligations or expenditures made within the allowable statutory

periods.

[[Page 55848]]

Comments: Three commenters wrote in response to this section of the

NPRM. One commenter indicated that, although submission of a letter to

the Department at the end of the year on the expenditure of CSBG funds

would not be a significant burden, it seemed to be a duplication of

information which the States provide in the expenditure reports

submitted at the end of the year. The commenter continued by stating

that it would have no adverse impact for this report to be submitted

concerning LIHEAP expenditures.

The second commenter wrote that the imposition of new reporting

requirements is contrary to the original intent of the block grant

legislation that sought to minimize Federal administrative requirements

by placing greater reliance on State government. The writer stated that

the current block grant reporting requirements are adequate and should

not be changed.

The final commenter asserted that the CSBG Act is administered

exclusively by subgrantees, and the proposed section does not make it

clear what requirements would be placed on subgrantees to report to a

State in order for the State to be able to file the information the new

section will require. The commenter stated the hope that any

requirements placed on subgrantees to provide information to the State

would conform to the system HHS now imposes on its direct grantees to

file various financial reports.

Response: Currently, the Department does not require obligation or

expenditure reports for the block grants (although some grantees submit

them voluntarily.) This has caused problems in the past because there

is no clear-cut information as to when a grantee has completely used

its grant funds, thus allowing the Department to close the grant

account. Public Law 101-510 (signed into law on November 5, 1990)

amended 31 U.S.C. Chapter 15 to provide that, by the end of the fifth

fiscal year after the fiscal year in which the Federal government

obligated the funds, the account will be canceled. If valid charges to

a canceled account are presented after cancellation, they may be

honored only by charging them to a current appropriation account, not

to exceed an amount equal to 1 percent of the total appropriations of

that account.

Because of our need to determine the status of grant accounts, we

have determined that it is appropriate to require an annual report on

obligations and/or expenditures from all grantees under the block grant

programs. We do not believe this requirement would be a significant

burden on block grant recipients, as they are already required to

maintain this information under current requirements of section 96.30.

This section of the block grant regulations currently states that

recipients are to maintain information sufficient to: ``* * * (b)

permit the tracing of funds to a level of expenditure adequate to

establish that such funds have not been used in violation of the

restrictions and prohibitions of the statute authorizing the block

grant.'' Furthermore, the Department now periodically sends grantees

letters indicating the status of their block grant funds and asks

grantees to confirm this information. However, since the publication of

the July 17, 1992 NPRM, the Department considered designating the use

of OMB Standard Form 269A, Financial Status Report (short form), to

collect this information because it would be less burdensome on the

grantees and the Department. The first comment reinforced this thought.

By using Form 269A, grantees would be submitting the information on a

familiar form and in a familiar format.

At least 90% of the CSBG funds are administered by subgrantees. It

continues to be the policy of the Department to defer to the State for

the type and frequency of reporting requirements a State mandates of

subgrantees, so long as the reporting requirements are reasonable and

provide the necessary information the State needs to comply with

Federal regulations.

The Amendments enacted in 1998 (section 678D of Pub. L. 105-285)

mandate that for CSBG grantees, ``a State shall ensure that cost and

accounting standards of the Office of Management and Budget (OMB) apply

to a recipient of funds under this subtitle.'' These standards are

reflected in OMB Circulars A-110 and A-122.

Therefore, Sec. 96.30 is adopted, with several changes from the

version proposed in the NPRM, in order to make the requirement more

consistent with other programs and thus reduce the burden on grantees.

Rather than have a letter of inquiry sent to grantees at the end of the

applicable statutory grant period, the final rule establishes a

requirement that grantees submit, within 90 days of the end of the

grant period, OMB Standard Form 269A, Financial Status Report (short

form). This will allow grantees to submit the required information

without a need to wait for a request from the Department, using a form

with which they are familiar because it is used for most other

Departmental grant programs. In addition, we have made modifications to

change the term ``recipient'' to ``grantee''. These are technical

changes to use a more accurate term, since ``recipients'' are often

considered to be individual beneficiaries.

Subpart D--Direct Funding of Indian Tribes and Tribal Organizations

Section 96.41 General Determination

Each of the block grant statutes provides direct funding for States

and territories. Statutes for four block grants--LIHEAP, CSBG, PHHS,

and SAPT--authorize the Secretary to fund certain Indian tribes and

tribal organizations directly if the Secretary determines that tribal

members would be better served by the tribe than by the State(s) in

which the tribe is located. In the case of SAPT, this authority is

limited by statute to tribes that were funded in FY 1991 under the

Alcohol and Drug Abuse and Mental Health Services Block Grant, the

predecessor to SAPT and CMHS. Under this statutory provision, only one

tribe qualifies for direct funding under SAPT. By law, Indian tribes

may not apply for direct funding under MCH, CMHS, or SSBG.

Section 96.41(a) provides that the Department will award block

grant funds directly to an eligible Indian tribe or tribal organization

upon receipt of a complete application for funds that meets the

statutory requirements. The preamble to the original block grant final

rule dated July 6, 1982 (47 FR 29480) states the Department's policy on

direct funding of Indian tribes as follows: ``By regulation, the

Secretary has determined that members of Indian tribes and tribal

organizations would be better served by direct Federal funding than by

funding through the States in every instance that the Indian tribe or

tribal organization requests direct funding.''

This language reflects our view that, as a general rule, tribal

rather than State priorities and program administration will result in

better service to tribal members. The final rule published in July 1982

established the primacy of the Indian tribe in determining the services

to be provided and how best to provide them. It avoided the need for a

Departmental assessment of the relative efficiency and effectiveness of

alternative services systems, lodged primary responsibility with the

tribe for administering the programs, and established the tribe's

accountability for providing appropriate services to its service

population.

The NPRM dated July 17, 1992 (57 FR 31682) proposed to add a

paragraph (c) to the existing rule to clarify that under limited

circumstances, the Secretary may use his or her discretionary authority

to determine that the members

[[Page 55849]]

of a particular Indian tribe eligible for block grant funds would be

better served by the State in which the tribe is located. The proposed

amendment included in the NPRM would clarify the block grant

regulations and apply only to the circumstances specified in paragraph

(c):

(1) The Department has determined that the tribe has not used its

block grant funds substantially in accordance with the block grant

statute; and

(2) The Department has withheld block grant funds from the tribe

based on that determination and in accordance with procedures

established by the block grant regulations; and

(3) The tribe has not provided sufficient evidence that it has

taken action to correct the problems leading to the withholding of

funds.

The Secretary's determination to award funds to the State rather

than directly to the tribe would be limited to the situation described

above. If a tribe is located in more than one State, funds that had

been set aside for a direct grant to the tribe would be awarded to

these States in the same proportion as they were offset from the

States' allotments for direct award to the tribe. When the Department

withholds block grant funds from a tribe, the Department would make the

determination to award funds to the State only after allowing as much

time as it determines to be reasonable for the tribe to correct the

conditions that led to withholding, consistent with provision of timely

and meaningful services to the tribe's service population during the

fiscal year. For example, if LIHEAP funds were withheld from a tribe

effective October 1, the first day of the Federal fiscal year, but

funds were not yet available to the Department for distribution to

grantees, the Department probably would allow additional time for the

tribe to correct these conditions. However, if LIHEAP funds were

withheld later in the fiscal year, for example, effective as late as

December 1, during the winter heating season, and funds were then

available to the Department for distribution to grantees, the

Department probably would make the determination to award funds to the

State at the same time that it took the official withholding action, in

order to ensure that tribal members received needed services during the

winter months.

To assure that well-planned, uninterrupted, and timely services are

provided to the service population of a tribe from which funds are

withheld, the proposed amendment provided that the State would receive

all remaining funds reserved for the tribe for that fiscal year and all

funds for subsequent fiscal years until the Secretary determines that

the tribe has corrected the problems which resulted in the withholding.

Where funds have been withheld and the tribe has not taken satisfactory

corrective action by the first day of the following fiscal year, all of

the funds to serve the tribe's service population for the following

fiscal year would be awarded to the State. The State would then be

responsible for serving the tribe's service population.

If the tribe takes satisfactory corrective action during the

following fiscal year, the tribe may receive direct funding for that

fiscal year with the concurrence of the State. This is consistent with

45 CFR 96.42(e), which provides for acceptance of a tribal application

submitted after September 1 only with the concurrence of the State(s)

in which the tribe is located. For example, if the State had provided

LIHEAP services for a fiscal year to the tribe's service population

before the tribe took corrective action, the State would be unlikely to

concur in the acceptance of an application from the tribe for that

fiscal year.

The July 17, 1992 NPRM (57 FR 31682) was intended to clarify the

responsibility for serving these tribal households and assure that

services would be provided in a timely manner. The NPRM was intended to

provide clear, published notice so that all parties concerned--

including the tribe or tribal organization, the tribe's service

population and the State--would understand the actions that the

Department would take and understand the State's responsibility to

serve the tribal service population while funds are withheld from the

tribe or tribal organization.

The preamble to the original block grant final rule affirms the

Department's commitment to continue the government-to-government

relationship between the United States and Indian tribes and affirms

the policy of self-determination for tribes. The Department continues

to be committed to these policies; it is neither the intent nor the

effect of the clarification in this final rule to change them.

The Department will withhold block grant funds from a grantee only

after determining, in accordance with the due process procedures

specified in the block grant statutes and regulations, that the grantee

is not using its block grant funds substantially in accordance with

statutory requirements to which the grantee has agreed. In such a case,

the grantee has violated its agreement to abide by the terms and

conditions of the grant, and the Department must act, in accordance

with the law, to assure accountability for public funds.

The NPRM dated July 17, 1992 (57 FR 31682) also proposed to amend

paragraph (a) to clarify that paragraph (c) constitutes a limited

exception to the principle of direct funding of Indian tribes and

tribal organizations. The proposed rule would apply when funds are

withheld from a tribal organization, as well as from a tribe. (A tribe

that was to be served by a separate tribal organization from which

funds are withheld may rescind its resolution authorizing that role for

the tribal organization and, consistent with statutory and regulatory

requirements including Sec. 96.42(e), may request direct funding for

itself--on its own--or through another tribal organization. Because the

tribal organization would be the grantee from which funds are withheld,

a tribe separate from the tribal organization would be eligible for its

own funding).

We anticipate there would be very few instances in which the

exception to the Department's policy on direct tribal funding would

apply. Over the past 15 or 16 years of HHS administration of the block

grants with direct tribal funding--with over 100 tribes and tribal

organizations receiving direct funding each year--there has been only

one instance in which the Department has withheld block grant funds

from a tribe. The NPRM was consistent with the actions previously taken

by the Department.

Comments: Two comments were received in response to Sec. 96.41 of

the NPRM. One commenter (a tribe) stated that the proposed rule would

impact tribal self-determination and begin to close the existing policy

that in most Federal programs, tribes are treated as equals with the

States.

Response: We believe that the rule would reaffirm HHS policy to

directly fund tribes whenever it is authorized by a block grant

statute, so long as the tribes submit the applications required by the

statute and administer the block grant funds substantially in

accordance with the statute. The Department's intent of the new

language is to provide a means of continuing services to tribal

populations if tribal management of block grant funds is found to be

substantially out of compliance with statutory requirements to which

the tribe agreed when it applied for and accepted Federal funds, and

the tribe does not take corrective action during the period of a grant.

In essence, we are seeking a way to continue services uninterrupted

when we have no viable tribal alternative available. This has happened

only once in the history of the

[[Page 55850]]

block grants, and we do not anticipate that this procedure would be

used in the future until all reasonable efforts at assisting a tribe or

tribal organization to come into compliance would be exhausted.

Comment: The second commenter (a State) objected to having the

State be the alternative for providing services when funds are withheld

from a tribe located within that State; the commenter mistakenly

believed that the State would not have access to the withheld funds.

The commenter proposed that HHS assume the responsibility to serve such

a tribe.

Response: HHS has neither the authority nor the capacity to provide

direct block grant services; the State does. Also, the proposed rule

and its preamble specified that the State would receive any funds

withheld from a tribe, if the tribe did not correct the problems that

led to withholding within a reasonable period, so that the State could

then serve the tribe's service population until the tribe corrected

these problems. The State would serve this tribe's service population

as it serves its other residents, including the service populations of

tribes within the State that do not apply for direct Federal funding.

There is no requirement that the State provide more specialized

treatment or accessibility to members of this tribe than it does to its

other residents.

Therefore, the rule is adopted as proposed, with a technical

modification to change the term ``Secretary'' to ``Department''.

Section 96.42 General Procedures and Requirements

Paragraph (f) of subpart D, Sec. 96.42 of the block grant

regulations, provides that a State receiving block grant funds is not

required to use those funds to provide tangible benefits (e.g., cash or

goods) to American Indians who are within the service population of an

Indian tribe or tribal organization that received direct funding from

the Department under the same block grant program for the same fiscal

year. A State, however, may not deny tribal members access to

intangible services funded by block grant programs (e.g., treatment at

a community health center) even if they are members of an organization

receiving direct funding for a similar service.

The original preamble to the regulations (July 6, 1982, 47 FR

29482) provides the following clarification of this provision:

``Thus, for example, States are not required to provide cash

payments or weatherization assistance to Indians included in the

service population of a tribe receiving funds under the low-income home

energy assistance program.''

The proposed amendment in the July 17, 1992 NPRM clarified that

tribes receiving direct block grant funding are not required to use

those funds to provide tangible benefits to non-Indians residing within

the tribe's service area, unless a written tribe-State agreement so

provides. In the case of tangible benefits such as those provided under

the LIHEAP block grant, where the service unit is the household, the

clarification would apply to non-Indian households.

The justification for this policy is clear. The LIHEAP statute

authorizes the direct funding of Indian tribes for the provision of

benefits to Indian households. The statute specifies that a tribe with

a reservation is eligible to receive LIHEAP funds based on the number

of Indian households eligible for the program and residing on the

tribe's reservation or adjacent trust land, as a proportion of the

eligible households in the State, or a larger amount based on an

agreement between the tribe and its State. The tribe's allotment is to

be offset from the allotment of the State. Unless a tribe-State

agreement provides otherwise, the tribe's LIHEAP allotment is not based

on the total eligible population of its reservation and nearby trust

land. The tribe does not receive LIHEAP funds to serve non-Indian

households residing in these areas. This is the responsibility of the

State. Similarly, the statute provides that a tribe without a

reservation is to receive LIHEAP funds based on the number of Indian

households eligible for the program in its service population area, as

determined by the Secretary in consultation with the tribe and its

State.

Thus, unless a tribe-State agreement provides otherwise, tribes

receive LIHEAP funds based only on the number of eligible Indian

households in their service areas.

This amendment, therefore, would clarify that States have the

responsibility to serve the non-Indian households residing in the

service area of a direct grant tribe, unless the tribe and the State

agree that the tribe will do so.

No comments were received in response to Sec. 96.42 (f) as proposed

in the NPRM. Therefore, the rule is adopted as proposed.

Section 96.49 Due Date for Receipt of All Information Required for

Completion of Tribal Applications for the Low-Income Home Energy

Assistance Block Grants

Section 96.49 was proposed to be added to the block grant

regulations by the NPRM issued by the Department on July 17, 1992 (57

FR 31685). It proposed to establish completion dates for tribal

applications for CSBG and for LIHEAP. Because significant changes to

the CSBG statute have been enacted since the publication of the NPRM,

we are dropping the provision establishing completion dates for tribal

applications for CSBG.

LIHEAP: Section 96.49 of the NPRM dated July 17, 1992 proposed that

once the LIHEAP tribal applications are received by the Department,

additional information needed to complete the applications must be

received no later than January 31 for a given fiscal year. The July 17,

1992 proposed rule also indicated that after January 31, funds would

revert to the State(s) in which the tribe is located. This provision

was also included in the November 16, 1993 NPRM (58 FR 60498) in an

amended version. The later NPRM included a due date for completion of

tribal applications of October 1, once forward funding went into

effect.

Comments: In response to this part of Sec. 96.49 of the July 17,

1992 NPRM, three comments were received. A commenter from a northern

State indicated that the deadline should provide States with sufficient

notice in case they need to provide LIHEAP assistance to the service

population of a tribe that has not completed its application for a

direct grant. Additionally, the commenter stated that the State's

extremely cold weather necessitates that winter heating assistance

begin by November 1. Thus, it felt that the January 31 deadline was too

late, and suggested October 15 instead.

One commenter indicated that the requirement that tribal

applications be completed by January 31 or the State becomes

responsible to serve the tribe would result in funds being allocated to

the State after February. The commenter was concerned that, in addition

to the financial impact on the State, the State would not have

sufficient lead time to plan, staff and implement its program to serve

the tribe.

Another commenter indicated that the current regulatory due date of

September 1 for submission of a tribal application for both CSBG and

LIHEAP is satisfactory. The commenter was uncertain whether the due

date for completion of the tribal applications is

[[Page 55851]]

necessary. The commenter also expressed the need to receive LIHEAP

funding as early in the fiscal year as possible.

No comments were received in response to the LIHEAP completion date

proposed in Sec. 96.49 of the November 16, 1993 NPRM related to forward

funding. As mentioned earlier, the proposed dates related to forward

funding are being deleted because forward funding will not be

implemented. However, that NPRM proposed a completion date five months

after the submission date.

Response: The Department concludes, upon further review, that such

a lengthy period for completion of the applications should not be

needed. Because most LIHEAP funds are spent for winter heating

assistance, it would be preferable that States know by early winter at

the latest whether they will be required to serve a tribe's service

population. It should be mentioned that most tribes submit all the

information necessary to complete their applications in a timely

manner. However, in a few cases, tribes take many months to complete

their applications, or never complete their applications, despite

repeated communication from HHS about missing items.

Under this final rule, the due date for receipt of all information

necessary to complete LIHEAP tribal applications is December 15 unless

the State(s) in which the tribe is located agrees to a later completion

date. This is the same date set for completion of applications from

States and territories. We believe it balances the need to give tribes

a reasonable amount of time to provide all necessary information to

complete their applications with the need of the States to know as

early as possible whether they will be responsible for serving tribal

members. We have also made explicit that when funds revert to the State

because a tribe's application is not completed by the deadline, the

State is responsible for serving that tribe's members.

Effective Date: Given the timing of publication of this final rule,

there will not be time for tribal grantees to meet the new schedule for

completion of FY 2000 applications for LIHEAP. Accordingly, Sec. 96.49

of this rule, which applies to LIHEAP applications, will become

effective on March 1, 2000 and will apply beginning with FY 2001 plans.

For example, for FY 2001, LIHEAP tribal applications must be submitted

by September 1, 2000 and must be completed by December 15, 2000.

Subpart E--Enforcement

Section 96.53 Length of Withholding

Six of the seven block grant statutes provide for withholding of

funds from grantees under certain circumstances. (SSBG has no provision

for withholding of funds.)

The statutes for PHHS, CMHS, and SAPT provide that the Secretary

shall, after adequate notice and an opportunity for a hearing conducted

within the affected State, withhold funds from any State which does not

use its allotment in accordance with the requirements of the statute or

the certification provided under the statute. The Secretary shall

withhold such funds until the Secretary finds that the reason for the

withholding has been removed and there is reasonable assurance that it

will not recur.

The statute for MCH provides that the Secretary may, after notice

and opportunity for a hearing, withhold payment of funds to any State

which is not using its allotment under this title in accordance with

this title. The Secretary may withhold such funds until the Secretary

finds that the reason for the withholding has been removed and there is

reasonable assurance that it will not recur.

The LIHEAP and CSBG statutes provide that the Secretary shall,

after adequate notice and an opportunity for a hearing conducted within

the affected State, withhold funds from any State which does not

utilize its allotment substantially in accordance with the provisions

of this statute and the assurances such State provided under the

statute.

Section 96.53 was proposed in the NPRM issued by the Department on

July 17, 1992 (57 FR 31685). It clarifies that under LIHEAP and CSBG,

the Secretary may withhold funds until the Secretary finds that the

reason for withholding has been removed, as is the case with the other

block grants which provide for the withholding of funds. It proposed

making explicit authority which is implicit in the LIHEAP and CSBG

statutes. The proposed new language is similar to that of the other

four statutes which provide for withholding of funds.

Comment: In response to Sec. 96.53 in the NPRM dated July 17, 1992,

one comment was received. The commenter indicated agreement with the

proposed language, both because it is very similar to language in

several other block grant statutes and because it provides a time frame

for when the funds would be released once they have been withheld.

Response: The Department concludes that for the sake of

thoroughness and consistency with the other block grants, the proposed

language is needed to clarify for grantees authority which is implicit

in the LIHEAP and CSBG statutes. Therefore, the language proposed for

Sec. 96.53 is included in this final rule.

Subpart H--Low-Income Home Energy Assistance Program (LIHEAP)

Section 96.81 Carryover and Reallotment

Section 2607(b)(2) of the LIHEAP statute provides that grantees may

hold available (carry forward or carry over) for use or obligation in

the following fiscal year up to 10 percent of the amount payable to

them in a fiscal year and not transferred to another HHS block grant.

Section 2607(b)(l) provides for reallotment among all grantees in the

following fiscal year of any amounts unused (unobligated) as of the end

of a fiscal year that exceed the amount that may be held available for

use in the following fiscal year. Section 2604(f)(2) of the LIHEAP

statute, as amended by Public Law 101-501, provides that, beginning in

FY 1994, grantees may no longer transfer LIHEAP funds to other HHS

block grants.

--Required Carryover and Reallotment Report

As part of the reallotment procedure established by section

2607(b), LIHEAP grantees must report information annually on funds they

plan to hold available for obligation in the following fiscal year and

on excess unobligated funds available for reallotment among all

grantees in the following fiscal year. Section 96.81 of the block grant

regulations lists the requirements for these reports.

The January 16, 1992 (57 FR 1960) interim final rule amended

Sec. 96.81 to reflect the change made by Public Law 101-501 reducing

the maximum amount of LIHEAP funds that grantees may carry forward for

obligation in the succeeding fiscal year, from 15 percent to 10 percent

of the funds payable to the grantee and not transferred, pursuant to

section 2604(f) of the LIHEAP statute (as in effect prior to 1998), to

another HHS block grant. The change was effective beginning with FY

1991 funds carried over to FY 1992. The amended Sec. 96.81 required

that, as part of their annual carryover and reallotment reports,

grantees indicate the amount of LIHEAP funds they want to hold

available for obligation in the next fiscal year, ``not to exceed 10

percent of the funds payable to the grantee and not transferred * * *''

The November 16, 1993 (58 FR 60498) NPRM proposed to specify in

Sec. 96.81

[[Page 55852]]

that, beginning with funds appropriated for FY 1994, grantees would not

be able to transfer any LIHEAP funds to another block grant, consistent

with changes to the LIHEAP statute made by Public Law 101-501. We

received no comments on this proposed amendment.

Because the transfer authority has now expired, this final rule

deletes reference to it in the list of requirements for grantees'

future carryover and reallotment reports in Sec. 96.81. It codifies the

requirements for these reports at Sec. 96.81(b).

Title III of the Human Services Amendments of 1994, Public Law 103-

252, reauthorized LIHEAP and provided that the Department may not

release block grant funds to a grantee until its carryover and

reallotment report, which is due by August 1 of each year, has been

submitted for the previous year. This requirement was effective

beginning with fiscal year 1995 and has been added to this section.

--Conditions for Reallotment

In addition, we are making final a change relating to reallotment

of LIHEAP funds that we proposed in the July 17, 1992 (57 FR 31682)

NPRM.

The preamble to the NPRM noted that when grantees have had excess

unobligated funds available for reallotment, these amounts have usually

been small. For example, in FY 1987, a total of $16,706 in unobligated

FY 1986 LIHEAP funds were available for reallotment; in FY 1988, $2,858

in unobligated FY 1987 funds were available for reallotment; and in FY

1994, a total of $23,591 in unobligated FY 1993 funds were available

for reallotment. If HHS had reallotted these funds, many grantees would

have received grant awards of less than $1, and many others would have

received awards of less than $25. We therefore determined that it would

not be cost effective for HHS to award these small amounts to grantees,

or for grantees to account for and use them. HHS then published notices

in the Federal Register announcing its decision that no LIHEAP funds

from FY 1986, FY 1987, or FY 1993 would be reallotted.

Because similar situations are likely to occur in the future, the

NPRM proposed to amend Sec. 96.81 of the block grant regulations to

state that HHS will not reallot LIHEAP funds if less than $25,000 is

available. If $25,000 or more is available, HHS would reallot these

funds. However, HHS would not award less than $25 in reallotted funds

to a grantee. If $25,000 were available for reallotment, all States

would receive at least $25.

The NPRM's preamble proposed that if a tribe's share of reallotted

funds would be less than $25, the tribe's share would be awarded to the

State(s) in which the tribe is located. If a territory's share of

reallotted funds would be less than $25, the territory's share would be

distributed proportionately among the other territorial grantees

receiving shares of $25 or more.

We received one comment supporting this proposed amendment and none

opposing it.

We are adopting this change at section 96.81(c), as proposed in the

July 17, 1992 NPRM. If a tribe, tribal organization, or territory's

share of reallotted funds would be less than $25, HHS will follow the

procedures for such circumstances that are described above.

--Technical Amendments

We also are clarifying that Sec. 96.81 applies to regular LIHEAP

block grant funds and not to LIHEAP leveraging incentive funds.

(Section 96.87(k) of the regulations as established by the final rule

of May 1, 1995, sets the period of obligation for leveraging incentive

funds. Leveraging incentive funds are not subject to reallotment; all

leveraging incentive funds not obligated during the appropriate period

allowed for obligation must be returned to the Federal government.)

Finally, in minor technical amendments, we are dividing Sec. 96.81

into paragraphs ``(a) Scope'', ``(b) Required carryover and reallotment

report'', and ``(c) Conditions for reallotment'', as proposed in the

July 1992 NPRM. Also, we are changing the heading of the section from

``Reallotment report'' to ``Carryover and reallotment'', and making

several other minor technical changes, to accurately reflect the

contents of the LIHEAP statute and this section.

Section 96.82 Required Report on Households Assisted

The title of Sec. 96.82 was proposed to be revised in the November

16, 1993 NPRM (58 FR 60498) from ``Required report'' to ``Required

report on households assisted'' to reflect the contents of the report.

In addition, the NPRM included provisions related to the implementation

of forward funding, and proposed changing the term ``handicapped'' to

``disabled''. No comments were received in response to this section of

the NPRM.

Subsequently, however, the Human Services Amendments of 1994 (Pub.

L. 103-252) amended section 2605(c)(1)(G) of the LIHEAP statute to

provide that, beginning with fiscal year 1995, additional data must be

reported by grantees concerning the households applying for assistance,

as well as those households receiving assistance under the LIHEAP

program. Pub. L. 103-252 also required that the data for the prior year

must be submitted as part of the application for grant funds.

Accordingly, grant awards for the current fiscal year may not be made

until the data for the prior year is received.

The Office of Management and Budget has approved the collection of

the new data requirements (LIHEAP Household Report--OMB Control No.

0970-0060, expiration date 6/30/2000), beginning with data for FY 1998,

which must be submitted as part of the application for FY 1999 LIHEAP

funds. As required by the statute and approved by OMB, the data that

must be reported for each type of LIHEAP assistance provided by the

grantee is (1) the number and income levels of those households

applying for assistance and of those households receiving assistance;

and (2) for those households receiving assistance, the number of

households that contain one or more members who are elderly, disabled,

or a young child. In addition, OMB approved the collection of data on a

voluntary basis on the breakout of young children into two age

categories, as recommended in the legislative history for the law. As

part of the OMB clearance, insular areas that receive regular LIHEAP

block grant allocations of less than $200,000 annually and Indian

tribes and tribal organizations that receive direct funding from HHS

need to submit only data on the number of households assisted for each

type of LIHEAP assistance provided by the grantee. The OMB approval

included a recommended format that grantees may (but are not required)

to use to report the data.

Consistent with the amendments to the LIHEAP statute, the OMB

information collection approval provides that a grant award will not be

made until the LIHEAP Household Report for the previous fiscal year is

received.

We are adopting this section of the regulation, with several

changes to reflect the change in statutory requirements and the OMB

information collection approval. We have revised this section to

require grantees to submit a report on data required by the LIHEAP

statute, as approved by OMB for information collection under the

Paperwork Reduction Act of 1995. Rather than specify the information

required, we have referenced the information required by the statute,

so that the regulations will not need to be changed if this part of the

statute is

[[Page 55853]]

amended again. We have also included the reduced amount of information

required from insular areas with annual block allotments of less than

$200,000 and from tribal grantees under the OMB approval. The proposed

date changes which were related to forward funding are being deleted

since forward funding will not be implemented. A technical change is

being made to change the word ``handicapped'' to the word ``disabled''

in this section. The title of the section is being changed to

``Required LIHEAP household report'', to more accurately reflect its

content under the current statutory requirements.

Because the provisions in Sec. 96.82 that are included in this

notice were not previously included in a notice of proposed rulemaking,

we are issuing this part of the regulation as an interim final rule,

with an opportunity for comment. This means that this portion of the

regulation is effective November 15, 1999, after publication of this

notice in the Federal Register, but that we are interested in receiving

comments on the interim final provisions. We will review any comments

which we receive by December 14, 1999. We will revise the rule, as

appropriate, based on the comments we receive and on our experience in

implementing the provisions.

Section 96.84 Miscellaneous

End of Transfer Authority. At the time of publication of the NPRM

dated November 16, 1993 (58 FR 60498), grantees were no longer allowed

to transfer up to 10 per cent of LIHEAP funds payable in a fiscal year

to other HHS block grant programs. The 1990 amendments to the statute

provided that, beginning in fiscal year 1994, no LIHEAP funds payable

to a grantee may be transferred to other block grant programs.

Accordingly, the NPRM proposed to amend the block grant regulations to

specify that after September 30, 1993, grantees no longer may transfer

any of their LIHEAP funds to the block grant programs specified in

section 2604(f) of the statute.

The FY 1993 HHS appropriations law (Pub. L. 102-394) provided

advance funding for LIHEAP for the first nine months of FY 1994, and

allowed $141,950,240 of those funds to be used by grantees to reimburse

themselves for expenses incurred in FY 1993. Because they were

appropriated as advance funding for FY 1994, any such funds used by

grantees to reimburse themselves for FY 1993 expenses could not be

considered funds payable to grantees in FY 1993 and thus could not have

been used to calculate the maximum amount that could have been

transferred in FY 1993.

The authority for territories to consolidate funding for several

programs under one or more HHS programs is not considered a transfer

and thus did not terminate in FY 1994. Likewise, LIHEAP funds earmarked

by grantees for use for LIHEAP weatherization assistance or other

energy-related home repair, even if administered by another grantee

agency, are not considered to be transferred, and this authority did

not terminate in FY 1994.

No comments were received in response to Sec. 96.84 of the NPRM.

Therefore, the rule is adopted as proposed.

Section 96.85 Income Eligibility

The statute sets maximum and minimum income eligibility standards

for participation in the LIHEAP program that are tied to poverty income

guidelines and to State median income estimates as determined by the

Bureau of Census. The date for adoption of the current poverty income

guidelines is any time between the date of their publication in the

Federal Register and the beginning of the next fiscal year. The date

for adoption of the State median income estimates has been the first

day of the fiscal year after their publication, but that date had not

been reflected in the block grant regulations. The NPRM dated November

16, 1993 (58 FR 60498) proposed that the block grant regulations be

amended to incorporate an adoption date for the State median income

estimates that is consistent with the adoption date for the poverty

income guidelines and to amend that adoption date to reflect the shift

to forward funding, although the law subsequently deleted the concept

of forward funding. The poverty income guidelines and the State median

income estimates are published annually in the Federal Register,

generally in the month of February or March. Therefore, with the

amendment of this section, grantees could adopt the annual poverty

income guidelines and the annual State median income estimates at any

time between the date of publication in the Federal Register and the

first day of the next fiscal year, October 1, or the beginning of the

State fiscal year, whichever is later. Grantees could also choose to

implement the changes during the period between the heating and cooling

seasons.

No comments were received in response to Sec. 96.85 of the NPRM.

Therefore, the rule is adopted as proposed, except for deleting

references to dates under forward funding.

Regulatory Procedures

Paperwork Reduction Act of 1995

Sections 96.10, 96.49, 96.81, and 96.82 contain information

collections. As required by the Paperwork Reduction Act of 1995 (44

U.S.C. 3507 (d)), the Department submitted a copy of these sections to

the Office of Management and Budget (OMB) for its review. The following

data collection forms have been approved by OMB:

Section 96.10(a) (Maternal and Child Health Services Block Grant

guidance and Forms for the Title V Application/Annual Report, OMB

clearance number 0915-0172, expiration date 11/99);

Section 96.10(c) (LIHEAP Model Plan, OMB Clearance Number 0970-

0075, expiration date 12/31/2001);

Sections 96.49, LIHEAP Model Plan, OMB Clearance Number 0970-0075,

expiration date 12/31/2001);

Section 96.81 (LIHEAP Carryover and Reallotment Report, OMB

Clearance Number 0970-0106, expiration date 09/30/2001).

Section 96.82 (LIHEAP Report on Applicant and Recipient Households

(OMB Control Number 0970-0060, expiration date 6/30/2000).

Title: Maternal and Child Health Services Block Grant guidance and

Forms for the Title V Application/Annual Report (OMB clearance number

0915-0172, expiration date 11/99).

Summary: The rule modifies Sec. 96.10(a) to allow the Department to

specify the form of a block application when this is required or

clearly contemplated by the authorizing statute. It also states that

the MCH application shall be in the format specified by the Secretary,

as required by the MCH authorizing law. Previously, the rule stated

that no particular form was required. This information will be used to

obtain descriptions of grantee programs and to make grant awards.

Respondents: State and territorial grantees under the MCH block

grant. The number of likely respondents is 59.

Burden information: The MCH application and annual report are

required annually of each grantee. The application, annual report, and

guidance are currently undergoing revision and renewal of the OMB

clearance. The public reporting burden for the revised application and

annual report is estimated to be approximately 495 hours for each State

grantee and 200 hours for the District of Columbia and territories, for

4 out of every 5 years, for a total burden of 26,550 hours. In the 5th

year, a needs assessment is also required. In that year, the estimated

burden is 675 hours for each State grantee and 360 hours for the

District of

[[Page 55854]]

Columbia and territories, for a total burden of 36,990 hours. The

average annual burden over the next three years is 30,030 hours. This

includes time for reviewing instructions, searching existing data

sources, gathering and maintaining the data needed, and completing and

reviewing the collection of information. The changes in this final rule

are consistent with the notice of the request for OMB renewal of the

information collection for the MCH application and annual report,

published at 62 FR 17198. Furthermore, in the support of its commitment

to new Federalism, the Department has made every effort to develop its

application requirements and forms in close cooperation with the

States, and where possible the communities. With respect to the MCH

application and annual report, the Maternal and Child Health Bureau

developed new guidance and an automated reporting system based on the

emerging concept of ``Performance Partnerships.'' Not only did the

Bureau meet regularly with a Block Grant Guidance Work Group made up

largely of State and local MCH representatives, but the Bureau field

tested the guidance and information system with 9 states and held a

number of sessions at three separate national meetings with

representatives of all State MCH and Children with Special Health Care

Needs Directors, as well as many local directors. The initial national

sessions focused on discussing and reviewing the proposed guidance and

performance partnership measures. Later sessions included hands on

training in using the guidance that was provided by the Bureau and the

nine test States.

Title: LIHEAP Model Plan (OMB Clearance Number 0970-0075,

expiration date 12/31/2001).

Summary: Section 96.10(c) establishes application submission and

completion deadlines for annual applications for LIHEAP funds from

States and territories. This will allow the Department to issue grant

awards as close as possible to the beginning of a grant period and thus

meet its obligations under the Cash Management improvement Act to

minimize interest charges associated with that Act. Other than

establishing due dates, this final rule does not affect the information

collection.

Respondents: State, territorial, and tribal grantees under the

LIHEAP block grant.

Burden information: The LIHEAP application is required annually of

each grantee. We estimate the number of likely respondents to be 180.

The public reporting burden is estimated to be 1 hour for each of the

60 grantees that submit a detailed plan (required of each grantee every

three years) and 20 minutes for each of the 120 grantees that submit an

abbreviated form, for an estimated total annual reporting and

recordkeeping burden of 103 hours. This includes time for reviewing

instructions, searching existing data sources, gathering and

maintaining the data needed, and completing and reviewing the

collection of information.

Title: LIHEAP Model Plan (OMB Clearance Number 0970-0075,

expiration date 12/31/2001).

Summary: Section 96.49 establishes application completion deadlines

for annual applications for LIHEAP funds from Indian tribes and tribal

organizations. The current rule establishes an application submission

deadline for tribal grantees. This change will allow the Department to

advise States early in the heating season whether they will be

responsible for serving members of a tribe's service population, or

whether the tribe will do so. Other than establishing a completion

date, this final rule does not affect the information collection.

Respondents: State, territorial, and tribal grantees under the

LIHEAP block grant.

Burden information: The LIHEAP application is required annually of

each grantee. We estimate the number of likely respondents to be 180.

The public reporting burden is estimated to be 1 hour for each of the

60 grantees that submit a detailed plan (required of each grantee every

three years) and 20 minutes for each of the 120 grantees that submit an

abbreviated form, for an estimated total annual reporting and

recordkeeping burden of 103 hours. This includes time for reviewing

instructions, searching existing data sources, gathering and

maintaining the data needed, and completing and reviewing the

collection of information.

Title: LIHEAP Carryover and Reallotment Report (OMB Clearance

Number 0970-0106, expiration date 09/30/2001).

Summary: Section 96.81 amends requirements relating to a required

report on the amount of funds grantees wish to carry forward from the

year in which they are appropriated to the following fiscal year

(limited to 10% of funds payable to the grantee). The changes reflect

amendments to the LIHEAP statute. The data are used to determine

whether excess carryover funds will be available for reallotment to

other grantees. Other than making the regulations consistent with

statutory requirements, the changes do not affect the information

collection.

Respondents: State, territorial, and tribal grantees under the

LIHEAP block grant.

Burden information: The LIHEAP carryover and reallotment report is

required annually of each grantee. We estimate the number of likely

respondents to be 177. The public reporting burden is estimated to be 3

hours for each of the 177 grantees, for an estimated total annual

reporting and recordkeeping burden of 531 hours. This includes time for

reviewing instructions, searching existing data sources, gathering and

maintaining the data needed, and completing and reviewing the

collection of information.

Title: LIHEAP Report on Applicant and Recipient Households (OMB

Control Number 0970-0060, expiration date 6/30/2000).

Summary: Section 96.82 amends requirements for a required report on

LIHEAP households applying for and receiving assistance in the prior

fiscal year, in order to make them consistent with statutory provisions

enacted in 1994 (Pub. L. 103-252). The collection of the statutorily

required data has been approved by OMB. Other than making the

regulatory language consistent with the statute and the OMB approval,

this final rule does not affect the information collection.

Respondents: State, territorial, and tribal grantees under the

LIHEAP block grant.

Burden information: The report on households applying for and

receiving LIHEAP assistance the previous fiscal year must be submitted

as part of a grantee's LIHEAP application each fiscal year. We estimate

the number of likely respondents to be 183. The public reporting burden

is estimated to be 38 hours for each of the 52 grantees that must

submit all required data (all States, the District of Columbia, and

Puerto Rico). The reporting burden is estimated to be 1 hour for each

of the 131 grantees that submit information only on the number of

households assisted under each type of assistance offered by the

grantee (applicable to Indian tribes and tribal organizations, and to

those insular areas with annual allotments of less than $200,000). The

estimated total annual reporting and recordkeeping burden is 2,107

hours. This includes time for reviewing instructions, searching

existing data sources, gathering and maintaining the data needed, and

completing and reviewing the collection of information.

Section 96.30 also contains information collection requirements. As

required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d), the

Department will submit a copy of this

[[Page 55855]]

section to the Office of Management and Budget (OMB) for its review.

Title: Financial Status Report, OMB Standard Form 269A.

Summary: Section 96.30 of this final rule establishes a new

requirement that grantees under block grants covered by these

regulations submit, within 90 days of the end of the grant period, OMB

Standard Form 269A, Financial Status Report (short form), reporting the

obligation and/or expenditure of block grant funds. Currently, the

Department does not require obligation or expenditure reports for the

block grants (although some grantees submit them voluntarily.) This has

caused problems in the past because there is no clear-cut information

as to when a grantee has completely used its grant funds, thus allowing

the Department to close the grant account. This information would allow

HHS and the grantee to verify the financial status of block grant funds

and allow the Department to determine aggregate obligations,

expenditures, and available balances.

Respondents: States, territories, and Indian tribes or tribal

organizations that receive funds under the block grants subject to

these regulations.

Burden Information: These obligation and expenditure reporting

requirements will be required annually for all State, territorial, and

tribal grantees under each of the block grant programs subject to these

regulations. We estimate the number of likely respondents to be 620,

based on the following number of grantees for each block grant: 180 for

LIHEAP, 130 for CSBG, 57 for SSBG, 75 for PHHS, 59 for MCH, 59 for

CMHS, and 60 for SAPT. The public reporting burden is estimated to be

less than an hour each for a grantee, including time for reviewing

instructions, searching existing data sources, gathering and

maintaining the data needed, and completing and reviewing the

collection of information, for an estimated total annual reporting and

recordkeeping burden of 620 hours.

The Department of Health and Human Services will consider comments

by the public on the proposed collection of information under

Sec. 96.30 in--

Evaluating whether the proposed collections are necessary

for the proper performance of the functions of the Department,

including whether the information will have practical utility;

Evaluating the accuracy of the Department's estimate of

the burden of the proposed collections of information, including the

validity of the methodology and assumptions used;

Enhancing the quality, usefulness, and clarity of the

information to be collected; and

Minimizing the burden of the collection of information on

those who are to respond, including through the use of appropriate

automated, electronic, mechanical, or other technology, e.g.,

permitting electronic submission of responses.

To ensure that public comments have maximum effect in developing

the final regulations, the Department urges that each comment clearly

identify the specific section or sections of the regulations that the

comment addresses and that comments be in the same order as the

regulations.

Under the Paperwork Reduction Act of 1995, we are required to

provide 60 day notice in the Federal Register and solicit public

comment before a collection of information requirement is submitted to

the Office of Management and budget (OMB) for review and approval. To

comment on this information collection and record keeping requirement,

please send comments to the following: Department of Health and Human

Services, Office of Planning and Evaluation, Room 447D, 200

Independence Ave., SW, Washington, DC 20201, Attn: Michael Herrell.

After receipt and full consideration of comments, the Department

will submit the information collection requirement to OMB for review

and approval. The requirement will take effect upon OMB approval.

Regulatory Impact Analysis

Executive Order 12866 requires preparation of a regulatory impact

analysis if the regulation will have an annual effect on the economy of

$100 million or more or adversely affect in a material way the economy,

a sector of the economy, productivity, competition, jobs, the

environment, public health or safety, or State, local or tribal

governments or communities. In this respect, the Department of Health

and Human Services believes that this final regulation will not have an

impact on the economy of $100 million or more or adversely affect in a

material way any of the sectors listed above, including State, local or

tribal governments.

Primarily this rule amends the regulation governing block grant

programs to clarify a number of administrative processes that include

submission and completion dates for applications, where to submit

waiver requests, direct funding of Indian tribes and other

organizations, and procedures for termination, reduction, suspension

and partial withholding of funding. In the case of application

submission and completion dates, we have provided substantial

flexibility in response to public comments to accommodate the varying

State cycles and believe setting these dates will have a positive

impact in allowing the Department to issue awards to States in a timely

manner. We also believe that our clarification of administrative

processes for waiver requests, direct funding and related items

provides only the minimum requirements and guidance needed and

therefore will not impose a burden, especially since it is expected

that these procedures will be needed only in rare circumstances.

The rule additionally codifies a number of statutory changes such

as program name changes, statutory citations and fund transfer

authorities. There is no burden associated with these changes.

Finally, the rule clarifies the authority of the Department to

specify block grant reporting requirements where authorized by

governing statutes and it requires some minimal financial reporting

requirements to allow the Department to comply with legal requirements

for fund management. Authority for establishing the content and format

of reports required under block grants continues to be governed by the

authorizing statutes and the clarification provided in this rule does

not set substantive requirements. The Department will continue to

solicit State input on the development of the format and content of

required reports as it has done under the MCH program.

With respect to the financial reporting requirement, the Department

believes the burden imposed is not significant. This information is

already collected by the States and periodically submitted to the

Department. This rule will provide a set process for submitting the

information in the future, giving States a predictable routine to

follow. The SF-269a is already used by States and is intended to

further reduce the report burden on grantees. We have adopted the short

form to acquire only the minimum information needed for our accounting

purposes.

In accordance with the provisions of Executive Order 12866, this

regulation was reviewed by the Office of Management and Budget.

Federalism

We have examined this rule under Executive Order 12612 on

Federalism and do not believe that the rule violates the principles or

policymaking criteria set forth by the Order. In several instances

under the rule, we are establishing standard administrative procedures

for actions such as application submission dates, direct funding of

Indian tribes and tribal

[[Page 55856]]

organizations, termination of funds, and financial reporting. In

establishing these procedures, the Department has tried to allow

maximum flexibility to States in the way they can meet these

requirements. For instance, the Department, in response to public

comment, has revised the regulations to allow the Department to

accommodate varying State and Tribal cycles in the submission of

applications. We also note that a number of States have commented in

support of various provisions of this rule. We will also continue to

consult with States and Tribes in the development and modification of

any standard reporting requirements and formats that are authorized by

the governing program statutes.

Regulatory Flexibility Act

The Regulatory Flexibility Act (Pub. L. 96-354) requires the

Federal government to anticipate and reduce the impact of regulations

and paperwork requirements on small entities. The primary impact of

this final rule is on State, tribal and territorial governments.

Therefore, the Department of Health and Human Services certifies that

these rules will not have a significant economic impact on a

substantial number of small entities because they affect payments to

States, tribes and territories. Thus, a regulatory flexibility analysis

is not required.

Catalog of Federal Domestic Assistance Program Numbers

The Catalog of Federal Domestic Assistance Program Numbers for

these programs are: 93.568 for the Low-Income Home Energy Assistance

Program (LIHEAP); 93.569 for the Community Services Block Grant (CSBG);

93.667 for the Social Services Block Grant (SSBG), 93.991 for the

Preventive Health and Health Services Block Grant (PHHS); 93.958 for

the Community Mental Health Services Block Grant (CMHS); 93.959 for the

Substance Abuse Prevention and Treatment Block Grant (SAPT); and 93.994

for the Maternal and Child Health Services Block Grant (MCH).

List of Subjects in 45 CFR Part 96

Child welfare, Community action program, Energy, Grant programs--

energy, Grant programs--Indians, Grant programs--social programs,

Health, Income assistance, Indians, Individuals with disabilities, Low

and moderate income housing, Maternal and child health, Mental health

programs, Public health, Reporting and record keeping requirements,

Substance Abuse, Transfers, Weatherization.

Dated: November 10, 1998.

Donna E. Shalala,

Secretary, Department of Health and Human Services.

Note: This document was received in the Office of the Federal

Register on October 8, 1999.

For the reasons set forth in the preamble, part 96 of title 45 of

the Code of Federal Regulations is amended as follows:

PART 96--BLOCK GRANTS

1. The authority citation for part 96 continues to read as follows:

Authority: 42 U.S.C. 300w et seq.; 42 U.S.C. 300x et seq.; 42

U.S.C. 300y et seq.; 42 U.S.C. 701 et seq.; 42 U.S.C. 8621 et seq.;

42 U.S.C. 9901 et seq.; 42 U.S.C. 1397 et seq.; 31 U.S.C. 1243 note.

Subpart A--Introduction

2. Section 96.1 is amended by revising paragraphs (a), (c), (d),

(e), and (f) to read as follows:

Sec. 96.1 Scope.

(a) Community services (Pub. L. 97-35, sections 671-683) (42 U.S.C.

9901-9912).

* * * * *

(c) Community mental health services (Public Health Service Act,

sections 1911-1920 and sections 1941-1954) (42 U.S.C. 300x-1-300x-9 and

300x-51-300x-64).

(d) Substance abuse prevention and treatment (Public Health Service

Act, sections 1921-1935 and sections 1941-1954) (42 U.S.C. 300x-21-

300x-35 and 300x-51-300x-64).

(e) Maternal and child health services (Social Security Act, Title

V) (42 U.S.C. 701-709).

(f) Social services, empowerment zones and enterprise communities

(Pub. L. 97-35, sections 2351-55; Pub. L. 103-66, section 1371) (42

U.S.C. 1397-1397f).

* * * * *

3. Section 96.2 is amended by revising paragraph (d) to read as

follows:

Sec. 96.2 Definitions.

* * * * *

(d) State includes the fifty States, the District of Columbia, and

as appropriate with respect to each block grant, the Commonwealth of

Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, the

Commonwealth of the Northern Mariana Islands, and for purposes of the

block grants administered by agencies of the Public Health Service, the

Federated States of Micronesia, the Republic of the Marshall Islands,

and the Republic of Palau.

Subpart B--General Procedures

3. Section 96.10 is amended by revising paragraph (a) and adding

paragraphs (c) and (d) to read as follows:

Sec. 96.10 Prerequisites to obtain block grant funds.

(a) Except where prescribed elsewhere in this rule or in

authorizing legislation, no particular form is required for a State's

application or the related submission required by the statute. For the

maternal and child health block grant, the application shall be in the

form specified by the Secretary, as provided by section 505(a) of the

Social Security Act (42 U.S.C. 705(a)).

(b) * * *

(c) Effective beginning in fiscal year 2001, submission dates for

applications under the social service and low-income home energy

assistance block grant programs are:

(1) for the social services block grant, States and territories

which operate on a Federal fiscal year basis, and make requests for

funding from the Department, must insure that their applications (pre-

expenditure reports) for funding are submitted by September 1 of the

preceding fiscal year unless the Department agrees to a later date.

States and territories which operate their social services block grant

on a July 1-June 30 basis, must insure that their applications are

submitted by June 1 of the preceding funding period unless the

Department agrees to a later date.

(2) for the low-income home energy assistance program, States and

territories which make requests for funding from the Department must

insure that their applications for a fiscal year are submitted by

September 1 of the preceding fiscal year unless the Department agrees

to a later date.

(d) Effective beginning in fiscal year 2001, for the low-income

home energy assistance program, States and territories which make

requests for funding from the Department must insure that all

information necessary to complete their applications is received by

December 15 of the fiscal year for which they are requesting funds

unless the Department agrees to a later date.

4. Section 96.15 is revised to read as follows:

Sec. 96.15 Waivers.

Applications for waivers that are permitted by statute for the

block grants should be submitted to the Director, Centers for Disease

Control and Prevention in the case of the preventive health and health

services block grant; to the Administrator, Substance Abuse and Mental

Health Services

[[Page 55857]]

Administration in the case of the community mental health services

block grant and the substance abuse prevention and treatment block

grant; to the Director, Maternal and Child Health Bureau in the case of

the maternal and child health services block grant; and to the

Director, Office of Community Services in the case of the community

services block grant, the low-income home energy assistance program and

the social services block grant. Beginning with fiscal year 1986, the

Secretary's authority to waive the provisions of section 2605(b) of

Public Law 97-35 (42 U.S.C. 8624(b)) under the low-income home energy

assistance program is repealed.

Subpart C--Financial Management

5. Section 96.30 is amended by designating text of the current

paragraph as paragraph (a), adding a heading to newly designated

paragraph (a), and adding a new paragraph (b) to read as follows:

Sec. 96.30 Fiscal and administrative requirements.

(a) Fiscal control and accounting procedures. * * *

(b) Financial summary of obligation and expenditure of block grant

funds.--(1) Block grants containing time limits on both the obligation

and the expenditure of funds. After the close of each statutory period

for the obligation of block grant funds and after the close of each

statutory period for the expenditure of block grant funds, each grantee

shall report to the Department:

(i) Total funds obligated and total funds expended by the grantee

during the applicable statutory periods; and

(ii) The date of the last obligation and the date of the last

expenditure.

(2) Block grants containing time limits only on obligation of

funds. After the close of each statutory period for the obligation of

block grant funds, each grantee shall report to the Department:

(i) Total funds obligated by the grantee during the applicable

statutory period; and

(ii) The date of the last obligation.

(3) Block grants containing time limits only on expenditure of

funds. After the close of each statutory period for the expenditure of

block grant funds, each grantee shall report to the Department:

(i) Total funds expended by the grantee during the statutory

period; and

(ii) The date of the last expenditure.

(4) Submission of information. Grantees shall submit the

information required by paragraph (b)(1), (2), and (3) of this section

on OMB Standard Form 269A, Financial Status Report (short form).

Grantees are to provide the requested information within 90 days of the

close of the applicable statutory grant periods.

Subpart D--Direct Funding of Indian Tribes and Tribal Organizations

6. Section 96.41 is amended by revising paragraph (a) and by adding

a new paragraph (c) to read as follows:

Sec. 96.41 General determination.

(a) The Department has determined that, with the exception of the

circumstances addressed in paragraph (c) of this section, Indian tribes

and tribal organizations would be better served by means of grants

provided directly by the Department to such tribes and organizations

out of their State's allotment of block grant funds than if the State

were awarded its entire allotment. Accordingly, with the exception of

situations described in paragraph (c) of this section, the Department

will, upon request of an eligible Indian tribe or tribal organization

and where provided for by statute, reserve a portion of the allotment

of the State(s) in which the tribe is located, and, upon receipt of a

complete application and related submission meeting statutory and

regulatory requirements, grant it directly to the tribe or

organization.

* * * * *

(c) The Department has determined that Indian tribal members

eligible for the funds or services provided through the block grants

would be better served by the State(s) in which the tribe is located

rather than by the tribe, where:

(1) The tribe has not used its block grant allotment substantially

in accordance with the provisions of the relevant statute(s); and

(2) Following the procedures of 45 CFR 96.51, the Department has

withheld tribal funds because of those deficiencies; and

(3) The tribe has not provided sufficient evidence that it has

removed or corrected the reason(s) for withholding. In these cases,

block grant funds reserved or set aside for a direct grant to the

Indian tribe will be awarded to the State(s), and the State(s) will

provide block grant services to the service population of the tribe.

Before awarding these funds to the State(s), the Department will allow

as much time as it determines to be reasonable for the tribe to correct

the conditions that led to withholding, consistent with provision of

timely and meaningful services to the tribe's service population during

the fiscal year. If a State(s) is awarded funds under this paragraph,

the State(s) will receive all remaining funds set aside for the tribe

for the Federal fiscal year for which the award is made. Where the

Department has withheld funds from a tribe and the tribe has not taken

satisfactory corrective action by the first day of the following fiscal

year, all of the funds to serve the tribe's service population for the

following fiscal year will be awarded to the State(s). The State(s) is

responsible for providing services to the service population of the

tribe in these cases. This paragraph also applies when funds are

withheld from a tribal organization.

7. Section 96.42 is amended by adding a new sentence to the end of

paragraph (f) to read as follows:

Sec. 96.42 General procedures and requirements.

* * * * *

(f) * * * A tribe receiving direct block grant funding is not

required to use those funds to provide tangible benefits to non-Indians

living within the tribe's service area unless the tribe and the

State(s) in which the tribe is located agree in writing that the tribe

will do so.

8. A new Sec. 96.49 is added to Subpart D to read as follows:

Sec. 96.49 Due date for receipt of all information required for

completion of tribal applications for the low-income home energy

assistance block grants.

Effective beginning in FY 2001, for the low-income home energy

assistance program, Indian tribes and tribal organizations that make

requests for direct funding from the Department must insure that all

information necessary to complete their application is received by

December 15 of the fiscal year for which funds are requested, unless

the State(s) in which the tribe is located agrees to a later date.

After December 15, funds will revert to the State(s) in which the tribe

is located, unless the State(s) agrees to a later date. If funds revert

to a State, the State is responsible for providing low-income home

energy assistance program services to the service population of the

tribe.

Subpart E--Enforcement

9. A new section 96.53 is added to subpart E to read as follows:

Sec. 96.53 Length of withholding.

Under the low-income home energy assistance program and community

services block grant, the Department may withhold funds until the

Department finds that the reason for the withholding has been removed.

[[Page 55858]]

Subpart H--Low-Income Home Energy Assistance Program

10. Section 96.81 is revised to read as follows:

Sec. 96.81 Carryover and reallotment.

(a) Scope. Pursuant to section 2607(b) of Public Law 97-35 (42

U.S.C. 8626(b)), this section concerns procedures relating to carryover

and reallotment of regular LIHEAP block grant funds authorized under

section 2602(b) of Public Law 97-35 (42 U.S.C. 8621(b)).

(b) Required carryover and reallotment report. Each grantee must

submit a report to the Department by August 1 of each year, containing

the information in paragraphs (b)(1) through (b)(4) of this section.

The Department shall make no payment to a grantee for a fiscal year

unless the grantee has complied with this paragraph with respect to the

prior fiscal year.

(1) The amount of funds that the grantee requests to hold available

for obligation in the next (following) fiscal year, not to exceed 10

percent of the funds payable to the grantee;

(2) A statement of the reasons that this amount to remain available

will not be used in the fiscal year for which it was allotted;

(3) A description of the types of assistance to be provided with

the amount held available; and

(4) The amount of funds, if any, to be subject to reallotment.

(c) Conditions for reallotment. If the total amount available for

reallotment for a fiscal year is less than $25,000, the Department will

not reallot such amount. If the total amount available for reallotment

for a fiscal year is $25,000 or more, the Department will reallot such

amount, except that the Department will not award less than $25 in

reallotted funds to a grantee.

11. Section 96.82 is revised to read as follows:

Sec. 96.82 Required report on households assisted.

(a) Each grantee which is a State or an insular area which receives

an annual allotment of at least $200,000 shall submit to the

Department, as part of its LIHEAP grant application, the data required

by section 2605(c)(1)(G) of Public Law 97-35 (42 U.S.C. 8624(c)(1)(G))

for the 12-month period corresponding to the Federal fiscal year

(October 1-September 30) preceding the fiscal year for which funds are

requested. The data shall be reported separately for LIHEAP heating,

cooling, crisis, and weatherization assistance.

(b) Each grantee which is an insular area which receives an annual

allotment of less than $200,000 or which is an Indian tribe or tribal

organization which receives direct funding from the Department shall

submit to the Department, as part of its LIHEAP grant application, data

on the number of households receiving LIHEAP assistance during the 12-

month period corresponding to the Federal fiscal year (October 1-

September 30) preceding the fiscal year for which funds are requested.

The data shall be reported separately for LIHEAP heating, cooling,

crisis, and weatherization assistance.

(c) Grantees will not receive their LIHEAP grant allotment for the

fiscal year until the Department has received the report required under

paragraph (a) or (b) of this section.

12. Section 96.84 is amended by adding paragraph (d) as follows:

Sec. 96.84 Miscellaneous.

* * * * *

(d) End of transfer authority. Beginning with funds appropriated

for FY 1994, grantees may not transfer any funds pursuant to section

2604(f) of Public Law 97-35 (42 U.S.C. 8623(f)) that are payable to

them under the LIHEAP program to the block grant programs specified in

section 2604(f).

13. Section 96.85 is amended by revising paragraph (a) to read as

follows:

Sec. 96.85 Income Eligibility.

(a) Application of poverty income guidelines and State median

income estimates. In implementing the income eligibility standards in

section 2605(b)(2) of Public Law 97-35 (42 U.S.C. 8624(b)(2)), grantees

using the Federal government's official poverty income guidelines and

State median income estimates for households as a basis for determining

eligibility for assistance shall, by October 1 of each year, or by the

beginning of the State fiscal year, whichever is later, adjust their

income eligibility criteria so that they are in accord with the most

recently published update of the guidelines or estimates. Grantees may

adjust their income eligibility criteria to accord with the most

recently published revision to the poverty income guidelines or State

median income estimates for households at any time between the

publication of the revision and the following October 1, or the

beginning of the State fiscal year, whichever is later.

* * * * *

[FR Doc. 99-26820 Filed 10-14-99; 8:45 am]

BILLING CODE 4150-04-U