45 CFR Parts 160 & 164 (CFR Annual Edition) - ment is the user’s definition of the re- quirements the system must meet. General Systems Design means a com- bination of narrative and graphic de- scription of the generic architecture of a system as opposed to the detailed ar- chitecture of the system. A general systems design would include a sys- tems diagram and narrative identifying overall logic flow and systems func- tions; a description of equipment need- ed (including processing data trans- mission and storage requirements); a description of other resource require- ments which will be necessary to oper- ate the system; a description of system performance requirements; and a de- scription of the physical and organiza- tional environment in which the sys- tem will operate including how the sys- tem will function within that environ- ment (e.g. how workers will interface with the system). Grantee means an organization re- ceiving financial assistance directly from an HHS awarding agency to carry out a project or program. Independent Verification and Valida- tion—(IV&V) means a well-defined standard process for examining the or- ganizational, management, and tech- nical aspects of a project to determine the effort’s adherenc ndent Verification and Valida- tion—(IV&V) means a well-defined standard process for examining the or- ganizational, management, and tech- nical aspects of a project to determine the effort’s adherence to industry standards and best practices, to iden- tify risks, and make recommendations for remediation, where appropriate. Implementation APD means a recorded plan of action to request Federal Fi- nancial Participation (FFP) in the costs of designing, developing, and im- plementing the system. Independent Verification and Valida- tion—(IV&V) means a well-defined standard process for examining the or- ganizational, management, and tech- nical aspects of a project to determine the effort’s adherence to industry standards and best practices, to iden- tify risks, and make recommendations for remediation, where appropriate. Installation means the integrated testing of programs and subsystems, system conversion, and turnover to op- eration status. This includes the use of hardware to the extent necessary for the installation phase. Medicaid Management Information Sys- tem (MMIS) is a commonly accepted term for Mechanized Claim Processing and Information Retrieval System as pro- vided by S nt necessary for the installation phase. Medicaid Management Information Sys- tem (MMIS) is a commonly accepted term for Mechanized Claim Processing and Information Retrieval System as pro- vided by Section 1903(a)(3) and 1903(r) of the Social Security Act and at 42 CFR 433.110 et seq. Noncompetitive means solicitation of a proposal from only one source, or after solicitation of a number of sources, ne- gotiation with selected sources based on a finding that competition is inad- equate. Operational APD—An operational APD is a record of no more than two pages to be submitted annually by State programs whose system is not in 625 § 95.605 45 CFR Subtitle A (10–1–24 Edition) development. The Operational APD provides a short summary of the activi- ties, method of acquisition, and annual budget for operations and software maintenance. Operation means the automated proc- essing of data used in the administra- tion of State plans for titles I, IV-A, IV-B, IV-D, IV-E, X, XIV, XVI(AABD), XIX, and XXI of the Social Security Act. Operation includes the use of sup- plies, software, hardware, and per- sonnel directly associated with the functioning of the mechanized system. See 45 CFR 205.38 and d XXI of the Social Security Act. Operation includes the use of sup- plies, software, hardware, and per- sonnel directly associated with the functioning of the mechanized system. See 45 CFR 205.38 and 307.10 for specific requirements for titles IV-A and IV-D, and 42 CFR 433.112 and 42 CFR 433.113 for specific requirements for title XIX. Project means a defined set of infor- mation technology related tasks, un- dertaken by the State to improve the efficiency, economy and effectiveness of administration and/or operation of one or more of its human services pro- grams. For example, a State may un- dertake a comprehensive, integrated initiative in support of its Child Sup- port, Child Welfare and Medicaid pro- gram’s intake, eligibility and case management functions. A project may also be a less comprehensive activity such as office automation, enhance- ments to an existing system or an up- grade of computer hardware. Regular matching rate means the nor- mal rate of FFP authorized by titles IV-A, IV-B, IV-D, IV-E, X, XIV, XVI(AABD), XIX, and XXI of the So- cial Security Act for State and local agency administration of programs au- thorized by those titles. Requirements Analysis means d s IV-A, IV-B, IV-D, IV-E, X, XIV, XVI(AABD), XIX, and XXI of the So- cial Security Act for State and local agency administration of programs au- thorized by those titles. Requirements Analysis means deter- mining and documenting the informa- tion needs and the functional and tech- nical requirements the proposed com- puterized system must meet. Service agreement means the docu- ment signed by the State or local agen- cy and the State or local Central Data Processing facility whenever the latter provides data processing services to the former and: (a) Identifies those ADP services the Central Data Processing facility will provide; (b) Includes, preferably as an amend- able attachment, a schedule of charges for each identified ADP service, and a certification that these charges apply equally to all users; (c) Includes a description of the method(s) of accounting for the serv- ices rendered under the agreement and computing services charges; (d) Includes assurances that services provided will be timely and satisfac- tory; preferably through a service level agreement; (e) Includes assurances that informa- tion in the computer system as well as access, use and disposal of ADP data will will be timely and satisfac- tory; preferably through a service level agreement; (e) Includes assurances that informa- tion in the computer system as well as access, use and disposal of ADP data will be safeguarded in accordance with provisions of all applicable federal statutes and regulations, including §§ 205.50 and 307.13; (f) Requires the provider to obtain prior approval pursuant to § 95.611(a) from the Department for ADP equip- ment and ADP services that are ac- quired from commercial sources pri- marily to support the titles covered by this subpart and requires the provider to comply with § 95.613 for procure- ments related to the service agree- ment. ADP equipment and services are considered to be primarily acquired to support the titles covered by this sub- part when the human service programs may reasonably be expected to either: be billed for more than 50 percent of the total charges made to all users of the ADP equipment and services during the time period covered by the service agreement, or directly charged for the total cost of the purchase or lease of ADP equipment or services; (g) Includes the beginning and ending dates of the period of time covered by the service ervice agreement, or directly charged for the total cost of the purchase or lease of ADP equipment or services; (g) Includes the beginning and ending dates of the period of time covered by the service agreement; and (h) Includes a schedule of expected total charges to the title covered by this subpart for the period of the serv- ice agreement. Service Oriented Architecture (SOA), also referred to as Service Component Based Architecture, describes a means of organizing and developing Information Technology capabilities as collabo- rating services that interact with each other based on open standards. Agency SOA artifacts may include models, ap- proach documents, inventories of serv- ices or other descriptive documents. Software means a set of computer programs, procedures, and associated documentation used to operate the hardware. 626 Dept. of Health and Human Services § 95.610 Software maintenance means routine support activities that normally in- clude corrective, adaptive, and perfec- tive changes, without introducing addi- tional functional capabilities. Correc- tive changes are tasks to correct minor errors or deficiencies in software. Adaptive changes are minor revisions to ex - tive changes, without introducing addi- tional functional capabilities. Correc- tive changes are tasks to correct minor errors or deficiencies in software. Adaptive changes are minor revisions to existing software to meet changing requirements. Perfective changes are minor improvements to application software so it will perform in a more efficient, economical, and/or effective manner. Software maintenance can in- clude activities such as revising/cre- ating new reports, making limited data element/data base changes, and making minor alterations to data input and display screen designs. State agency means the State agency administering or supervising the ad- ministration of the State plan under ti- tles I, IV, X, XIV, XVI(AABD), XIX or XXI of the Social Security Act. System specifications means informa- tion about the new ADP system—such as workload descriptions, input data, information to be maintained and proc- essed, data processing techniques, and output data—which is required to de- termine the ADP equipment and soft- ware necessary to implement the sys- tem design. System study means the examination of existing information flow and oper- ational procedures within an organiza de- termine the ADP equipment and soft- ware necessary to implement the sys- tem design. System study means the examination of existing information flow and oper- ational procedures within an organiza- tion. The study essentially consists of three basic phases: Data gathering in- vestigation of the present system and new information requirements; anal- ysis of the data gathered in the inves- tigation; and synthesis, or refitting of the parts and relationships uncovered through the analysis into an efficient system. Total Acquisition Cost means all an- ticipated expenditures (including State staff costs) for planning and implemen- tation for the project. For purposes of this regulation total acquisition cost and project cost are synonymous. [51 FR 45326, Dec. 18, 1986, as amended at 55 FR 4375, Feb. 7, 1990, 59 FR 30708, June 15, 1994; 65 FR 33633, May 24, 2000; 75 FR 66336, Oct. 28, 2010] SPECIFIC CONDITIONS FOR FFP § 95.610 Submission of advance plan- ning documents. Advance Planning Document (APD) refers to an Initial advance automated data processing planning document or Initial APD, providing a recorded plan of action to request funding approval for a project which will require Document (APD) refers to an Initial advance automated data processing planning document or Initial APD, providing a recorded plan of action to request funding approval for a project which will require the use of ADP services or equipment, includ- ing the use of shared or purchased serv- ices in lieu of State acquired stand- alone resources. Requirements are de- tailed in paragraph (a), (b) and (c) of this section. (a) Planning APD. (1) A separate plan- ning effort and Planning APD is op- tional, but highly recommended, and generally applies to large statewide system developments and/or major hardware acquisitions. States with large, independent counties requesting funding at the regular match rate for county systems are strongly encour- aged to engage in planning activities commensurate with the complexity of the projected ADP project and to sub- mit a Planning APD to allow for time and to provide funding for its planning activities. Therefore, States must con- sider the scope and complexity of a project to determine whether to submit a Planning APD as a separate docu- ment to HHS or whether to combine the two phases of planning and imple- mentation into one APD covering both the P lexity of a project to determine whether to submit a Planning APD as a separate docu- ment to HHS or whether to combine the two phases of planning and imple- mentation into one APD covering both the Planning APD and the Implemen- tation APD requirements. (2) The Planning APD is a relatively brief document, usually not more than 6–10 pages, which must contain: (i) A statement of the problem/need that the existing capabilities can not resolve, new or changed program re- quirements or opportunities for im- proved economies and efficiencies and effectiveness of program and adminis- tration and operations; (ii) A project management plan that addresses the planning project organi- zation, planning activities/deliverables, State and contractor resource needs, planning project procurement activi- ties and schedule; (iii) A specific budget for the plan- ning phase of the project; (iv) An estimated total project cost and a prospective State and Federal 627 § 95.610 45 CFR Subtitle A (10–1–24 Edition) cost allocation/distribution, including planning and implementation; (v) A commitment to conduct/prepare the problem(s) needs assessment, feasi- bility study, alternatives analysis, cost benefit tion) cost allocation/distribution, including planning and implementation; (v) A commitment to conduct/prepare the problem(s) needs assessment, feasi- bility study, alternatives analysis, cost benefit analysis, and to develop a Functional Requirements Specification and/or a General Systems Design (GSD); (vi) A commitment to define the State’s functional requirements, based on the State’s business needs which may be used for the purpose of evalu- ating the transfer of an existing sys- tem, including the transfer of another State’s General System Design that the State may adapt to meet State spe- cific requirements; (vii) Additional Planning APD con- tent requirements, for enhanced fund- ing projects as contained in § 307.15 and §§ 1355.50 through 1355.57; and (viii) An acquisition summary for the upcoming year or development phase that provides the following informa- tion on proposed acquisitions: (A) Type and scope of contract (B) Procurement strategy (C) Estimated cost or not to exceed amount (D) Timeframe of contract (E) A statement or certification that the proposed acquisition will comply with all State and Federal require- ments including the retention of soft- ware ownership d amount (D) Timeframe of contract (E) A statement or certification that the proposed acquisition will comply with all State and Federal require- ments including the retention of soft- ware ownership rights specified in § 95.617. (b) Implementation APD. The Imple- mentation APD shall include: (1) The results of the activities con- ducted under a Planning APD, if any; (2) A statement of problems/needs and outcomes/objectives; (3) A requirements analysis, feasi- bility study and a statement of alter- native considerations including, where appropriate, the use of service-ori- entated architecture and a transfer of an existing system and an explanation of why such a transfer is not feasible if another alternative is identified; (4) A cost benefit analysis; (5) A personnel resource statement indicating availability of qualified and adequate numbers of staff, including a project director to accomplish the project objectives; (6) A detailed description of the na- ture and scope of the activities to be undertaken and the methods to be used to accomplish the project; (7) The proposed activity schedule for the project; (8) A proposed budget (including an accounting of all possible Implementa ies to be undertaken and the methods to be used to accomplish the project; (7) The proposed activity schedule for the project; (8) A proposed budget (including an accounting of all possible Implementa- tion APD activity costs, e.g., system conversion, vendor and state personnel, computer capacity planning, supplies, training, hardware, software and mis- cellaneous ADP expenses) for the project; (9) A statement indicating the dura- tion the State expects to use the equip- ment and/or system; (10) An estimate of the prospective cost allocation/distribution to the var- ious State and Federal funding sources and the proposed procedures for dis- tributing costs; (11) A statement setting forth the se- curity and interface requirements to be employed and the system failure and disaster recovery/business continuity procedures available or to be imple- mented; and (12) Additional requirements, for ac- quisitions for which the State is re- questing enhanced funding, as con- tained at § 307.15 and 42 CFR subchapter C, part 433 or funding for title IV–E agencies as contained at § 1355.52(i) of this title. (c) Advance Planning Document Up- date (APDU). (1) The Annual APDU, which is due 60 days d 42 CFR subchapter C, part 433 or funding for title IV–E agencies as contained at § 1355.52(i) of this title. (c) Advance Planning Document Up- date (APDU). (1) The Annual APDU, which is due 60 days prior to the expi- ration of the FFP approval, includes: (i) A reference to the approved APD and all approved changes; (ii) A project activity report which includes the status of the past year’s major project tasks and milestones, ad- dressing the degree of completion and tasks/milestones remaining to be com- pleted, and discusses past and antici- pated problems or delays in meeting target dates in the approved APD and approved changes to it and provides a risk management plan that assesses project risk and identifies risk mitiga- tion strategies; (iii) A report of all project deliverables completed in the past year and degree of completion for unfinished products and tasks; (iv) An updated project activity schedule for the remainder of the project; 628 Dept. of Health and Human Services § 95.611 (v) A revised budget for the entirety of the project’s life-cycle, including operational and development cost cat- egories; (vi) A project expenditures report that consists of a detailed accou 95.611 (v) A revised budget for the entirety of the project’s life-cycle, including operational and development cost cat- egories; (vi) A project expenditures report that consists of a detailed accounting of all expenditures for project develop- ment over the past year and an expla- nation of the differences between pro- jected expenses in the approved APD and actual expenditures for the past year; (vii) A report of any approved or an- ticipated changes to the allocation basis in the APD’s approved cost allo- cation methodology; and (viii) An acquisition summary for the upcoming year or development phase that provides the following informa- tion on proposed acquisitions: (A) Type and scope of contract (B) Procurement strategy (C) Estimated cost or not to exceed amount (D) Timeframe of contract (E) A statement or certification that the proposed acquisition will comply with all State and Federal require- ments including the retention of soft- ware ownership rights specified in § 95.617. (2) The As-Needed APDU is a docu- ment that requests approval for addi- tional funding and/or authority for project continuation when significant changes are anticipated, when the project is being fu (2) The As-Needed APDU is a docu- ment that requests approval for addi- tional funding and/or authority for project continuation when significant changes are anticipated, when the project is being funded on a phased im- plementation basis, or to clarify project information requested as an ap- proval condition of the Planning APD, Annual APDU, or Implementation APD. The As-Needed APDU may be submitted any time as a stand-alone funding or project continuation re- quest, or may be submitted as part of the Annual APDU. The As-Needed APDU is submitted: (i) When the State anticipates incre- mental project expenditures (exceeding specified thresholds); (ii) When the State anticipates a schedule extension of more than 60 days for major milestones; (iii) When the State anticipates major changes in the scope of its project, e.g., a change in its procure- ment plan, procurement activities, sys- tem concept or development approach; (iv) When the State anticipates sig- nificant changes to its cost distribu- tion methodology or distribution of costs among Federal programs; and/or, (v) When the State anticipates sig- nificant changes to its cost benefit pro- jections. The As-Needed APDU shall pr distribu- tion methodology or distribution of costs among Federal programs; and/or, (v) When the State anticipates sig- nificant changes to its cost benefit pro- jections. The As-Needed APDU shall provide supporting documentation to justify the need for a change to the ap- proved budget. (vi) Changes to the acquisition sum- mary in the following areas: (A) Type and scope of contract (B) Procurement strategy (C) Estimated cost or not to exceed amount (D) Timeframe of contract (E) A statement or certification that the proposed acquisition will comply with all State and Federal require- ments including the retention of soft- ware ownership rights specified in § 95.617. (F) New acquisitions not summarized in the Annual APDU. (3) The Operational Advance Plan- ning Document Update (OAPDU) is an annual submission of no more than two pages, including: (i) Summary of activities; (ii) Acquisitions; and, (iii) Annual budget by project/system receiving funding through the pro- grams covered under this part. [75 FR 66337, Oct. 28, 2010, as amended at 81 FR 35479, June 2, 2016] § 95.611 Prior approval conditions. (a) General acquisition requirements. (1) A State shall obtain prior approval from this part. [75 FR 66337, Oct. 28, 2010, as amended at 81 FR 35479, June 2, 2016] § 95.611 Prior approval conditions. (a) General acquisition requirements. (1) A State shall obtain prior approval from the Department which is reflected in a record, as specified in paragraph (b) of this section, when the State plans to acquire ADP equipment or services with proposed FFP at the reg- ular matching rate that it anticipates will have total acquisition costs of $5,000,000 or more in Federal and State funds. States will be required to submit an Operational APDU only if they ex- ceed the threshold requiring Federal approval, and only upon the receipt of a submission request, which is re- flected in a record, from the Depart- ment. See definition of software main- tenance under § 95.605. (2) A State must obtain prior ap- proval from the Department which is reflected in a record, as specified in 629 § 95.611 45 CFR Subtitle A (10–1–24 Edition) paragraph (b) of this section, when the State plans to acquire ADP equipment or services with proposed FFP at the enhanced matching rate subject to one of the following: (i) If authorized by § 205.35 of this title and part 307 of this title, regard- les o acquire ADP equipment or services with proposed FFP at the enhanced matching rate subject to one of the following: (i) If authorized by § 205.35 of this title and part 307 of this title, regard- less of the acquisition cost. (ii) If authorized by 42 CFR part 433, subpart C, if the contract is antici- pated to or will exceed $500,000. (3) A State shall obtain prior ap- proval from the Department, which is reflected in a record, for a sole source/ non-competitive acquisition, of ADP equipment or services with a total State and Federal acquisition cost of $1,000,000 or more. (4) Except as provided for in para- graph (a)(5) of this section, the State shall submit multi-program requests for Department approval, signed by the appropriate State official, to the De- partment’s Secretary or his/her des- ignee. For each HHS agency that has federal funding participation in the project, an additional copy must be provided to the applicable Federal pro- gram office and respective Regional Of- fices. (5) States shall submit requests for approval which affect only one approv- ing component of HHS (CMS, OCSE, or Children’s Bureau), to the applicable Federal program office and Regional Administra es. (5) States shall submit requests for approval which affect only one approv- ing component of HHS (CMS, OCSE, or Children’s Bureau), to the applicable Federal program office and Regional Administrator. (6) The Department will not approve any Planning or Implementation APD that does not include all information required in § 95.610. (b) Specific prior approval requirements. The State agency shall obtain written approval of the Department prior to the initiation of project activity. (1) For regular FFP requests. (i) For the Planning APD subject to the dollar thresholds specified in para- graph (a) of this section. (ii) For the Implementation APD subject to the dollar thresholds speci- fied in paragraph (a) of this section. (iii) For acquisition documents, an exemption from prior Federal prior ap- proval shall be assumed in the approval of the Planning, Annual or As-Needed APDU provided that: (A) The acquisition summary pro- vides sufficient detail to base an ex- emption request; (B) The acquisition does not deviate from the terms of the exemption; and (C) The acquisition is not the initial acquisition for a high risk activity, such as software application develop- ment. Acquisition e acquisition does not deviate from the terms of the exemption; and (C) The acquisition is not the initial acquisition for a high risk activity, such as software application develop- ment. Acquisitions, whether exempted from prior Federal approval or not, must comply with the Federal provi- sions contained in § 95.610(c)(1)(viii) or (c)(2)(vi) or submit an Acquisition Checklist. (iv) For noncompetitive acquisitions, including contract amendments, when the resulting contract is anticipated to exceed $1,000,000, States will be re- quired to submit a sole source jus- tification in addition to the acquisition document. The sole source justification can be provided as part of the Plan- ning, Annual or As-Needed APDU. (v) If the State does not opt for an exemption or submittal of an Acquisi- tion Checklist for the contract, prior to the execution, the State will be re- quired to submit the contract when it is anticipated to exceed the following thresholds, unless specifically exempt- ed by the Department: (A) Software application develop- ment—$6,000,000 or more (competitive) and $1,000,000 or more (noncompeti- tive); (B) Hardware and Commercial Off- the-Shelf (COTS) software—$20,000,000 he Department: (A) Software application develop- ment—$6,000,000 or more (competitive) and $1,000,000 or more (noncompeti- tive); (B) Hardware and Commercial Off- the-Shelf (COTS) software—$20,000,000 or more (competitive) and $1,000,000 or more (noncompetitive); (C) Operations and Software Mainte- nance acquisitions combined with hardware, COTS or software applica- tion development—the thresholds stat- ed in § 95.611(b)(1)(v)(A) and (B) apply. (vi) For contract amendments within the scope of the base contract, unless specifically exempted by the Depart- ment, prior to execution of the con- tract amendment involving contract cost increases which cumulatively ex- ceed 20 percent of the base contract cost. (2) For enhanced FFP requests. (i) For the Planning APD. (ii) For the Implementation APD. (iii) For the acquisition solicitation documents and contract, unless specifi- cally exempted by the Department, prior to release of the acquisition solic- itation documents or prior to execu- tion of the contract when the contract is anticipated to or will exceed $500,000. 630 Dept. of Health and Human Services § 95.611 (iv) For contract amendments, unless specifically exempted by the Depart- n of the contract when the contract is anticipated to or will exceed $500,000. 630 Dept. of Health and Human Services § 95.611 (iv) For contract amendments, unless specifically exempted by the Depart- ment, prior to execution of the con- tract amendment, involving contract cost increases exceeding $500,000 or contract time extensions of more than 60 days. (3) Failure to submit any of the above to the satisfaction of the Depart- ment may result in disapproval or sus- pension of project funding. (c) Specific approval requirements. The State agency shall obtain written ap- proval from the Department: (1) For regular FFP requests. (i) For an annual APDU for projects with a total cost of more than $5,000,000, and projects with a total es- timated cost of less than $5,000,000 only if requested by the Department. (ii) For an ‘‘As Needed APDU’’ when changes cause any of the following: (A) A projected cost increase of $1,000,000 or more. (B) A schedule extension of more than 60 days for major milestones; (C) A significant change in procure- ment approach, and/or scope of pro- curement activities beyond that ap- proved in the APD; (D) A change in system concept, or a change to the scope of t ilestones; (C) A significant change in procure- ment approach, and/or scope of pro- curement activities beyond that ap- proved in the APD; (D) A change in system concept, or a change to the scope of the project; (E) A change to the approved cost al- location methodology. The State shall submit the ‘‘As Needed APDU’’ to the Department, no later than 60 days after the occurrence of the project changes to be reported in the ‘‘As Needed APDU’’. (2) For enhanced FFP requests. (i) For an Annual APDU. (ii) For an ‘‘As needed’’ APDU when changes cause any of the following: (A) A projected cost increase of $300,000 or 10 percent of the project cost, whichever is less; (B) A schedule extension of more than 60 days for major milestones. For Aid to Families with Dependent Chil- dren (AFDC) Family Assistance Man- agement Information System (FAMIS)- type projects, in accordance with sec- tion 402(e)(2)(C) of the Social Security Act, any schedule change which affects the State’s implementation date as specified in the approved APD requires that the Department recover 40 percent of the amount expended. The Secretary may extend the implementation date, if the implementation date is not met because s specified in the approved APD requires that the Department recover 40 percent of the amount expended. The Secretary may extend the implementation date, if the implementation date is not met because of circumstances beyond the State’s control. Examples of cir- cumstances beyond the State’s control are: (1) Equipment failure due to physical damage or destruction; or, (2) Change imposed by Federal judi- cial decisions, or by Federal legislation or regulations; (C) A significant change in procure- ment approach, and/or a scope of pro- curement activities beyond that ap- proved in the APD; (D) A change in system concept or scope of the project; (E) A change to the approved cost methodology; (F) A change of more than 10% of es- timated cost benefits. The State shall submit the ‘‘As Needed APDU’’ to the Department, no later than 60 days after the occurrence of the project changes to be reported in the ‘‘As Needed APDU’’. (3) Failure to submit any of the above to the satisfaction of the Depart- ment may result in disapproval or sus- pension of project funding. (d) Prompt action on requests for prior approval. The Department will prompt- ly send to the approving Federal pro- gram offices rt- ment may result in disapproval or sus- pension of project funding. (d) Prompt action on requests for prior approval. The Department will prompt- ly send to the approving Federal pro- gram offices the items specified in paragraph (b) of this section. If the De- partment has not provided approval, disapproval, or a request for informa- tion which is reflected in a record, within 60 days of the date of the De- partmental letter acknowledging re- ceipt of a State’s request, the Depart- ment will consider the request to have provisionally met the prior approval conditions of paragraph (b) of this sec- tion. (e) Acquisitions not subject to prior ap- proval. If the Department has not spe- cifically requested in a record, the sub- mittal of additional acquisition docu- mentation for those acquisitions sum- marized in the APD, the approval of the Planning, Annual or As-Needed APDU will constitute an exemption of the acquisition documents from prior Federal approval. States will be re- quired to submit acquisition docu- ments, contracts and contract amend- ments under the threshold amounts on 631 § 95.612 45 CFR Subtitle A (10–1–24 Edition) an exception basis if requested to do so in a r d to submit acquisition docu- ments, contracts and contract amend- ments under the threshold amounts on 631 § 95.612 45 CFR Subtitle A (10–1–24 Edition) an exception basis if requested to do so in a record by the Department. [51 FR 45326, Dec. 18, 1986, as amended at 55 FR 4377, Feb. 7, 1990; 56 FR 12356, Mar. 25, 1991; 59 FR 30708, June 15, 1994; 61 FR 39897, July 31, 1996; 75 FR 66338, Oct. 28, 2010; 80 FR 75843, Dec. 4, 2015] § 95.612 Disallowance of Federal Fi- nancial Participation (FFP). If the Department finds that any ADP acquisition approved or modified under the provisions of § 95.611 fails to comply with the criteria, require- ments, and other activities described in the approved APD to the detriment of the proper, efficient, economical and effective operation of the affected pro- gram, payment of FFP may be dis- allowed. In the case of a suspension of the approval of a Child Support APD for enhanced funding, see § 307.40(a). In the case of a suspension of the approval of an APD for a Comprehensive Child Welfare Information System (CCWIS) project and, if applicable the transi- tional project that preceded it, see § 1355.58 of this title. [75 FR 66339, Oct. 28, 2010, as a APD for a Comprehensive Child Welfare Information System (CCWIS) project and, if applicable the transi- tional project that preceded it, see § 1355.58 of this title. [75 FR 66339, Oct. 28, 2010, as amended at 81 FR 35479, June 2, 2016] § 95.613 Procurement standards. (a) General. Procurements of ADP equipment and services are subject to the procurement standards prescribed by part 75 regardless of any conditions for prior approval. The Department re- tains the authority to provide greater oversight including requiring a State to comply with § 75.328 if the Depart- ment determines that the State pro- curement process is an impediment to competition that could substantially impact project cost or risk of failure. (b) Those standards, as well as the re- quirement for prior approval, apply to ADP services and equipment acquired by a State or local agency, and the ADP services and equipment acquired by a State or local Central Data Proc- essing facility primarily to support the Social Security Act programs covered by this subpart. Service agreements are exempt from these procurement standards. § 95.615 Access to systems and records. The State agency must allow the De- partment access t rity Act programs covered by this subpart. Service agreements are exempt from these procurement standards. § 95.615 Access to systems and records. The State agency must allow the De- partment access to the system in all of its aspects, including pertinent state staff, design developments, operation, and cost records of contractors and subcontractors at such intervals as are deemed necessary by the Department to determine whether the conditions for approval are being met and to de- termine the efficiency, economy and effectiveness of the system. [75 FR 66340, Oct. 28, 2010] § 95.617 Software rights. and ownership (a) General. The State or local gov- ernment must include a clause in all procurement instruments that provides that the State or local government will have all ownership rights in software or modifications thereof and associated documentation designed, developed or installed with Federal financial par- ticipation under this subpart. (b) Federal license. The Department reserves a royalty-free, nonexclusive, and irrevocable license to reproduce, publish, or otherwise use and to au- thorize others to use for Federal Gov- ernment purposes, such software, modi- fications, and d a royalty-free, nonexclusive, and irrevocable license to reproduce, publish, or otherwise use and to au- thorize others to use for Federal Gov- ernment purposes, such software, modi- fications, and documentation. (c) Proprietary software. Proprietary software packages operating/vendor which are provided at established cata- log or market prices and sold or leased to the general public shall not be sub- ject to the ownership provisions in paragraphs (a) and (b) of this section. FFP is not available for proprietary applications software developed specifi- cally for the public assistance pro- grams covered under this subpart. [51 FR 45326, Dec. 18, 1986, as amended at 75 FR 66340, Oct. 28, 2010] § 95.619 Use of ADP systems. ADP systems designed, developed, or installed with FFP shall be used for a period of time specified in the advance planning document, unless the Depart- ment determines that a shorter period is justified. § 95.621 ADP reviews. [51 FR 45326, Dec. 18, 1986, as amended at 75 FR 66339, Oct. 28, 2010; 81 FR 3020, Jan. 20, 2016] The Department will conduct peri- odic onsite surveys and reviews of State and local agency ADP methods 632 Dept. of Health and Human Services t 75 FR 66339, Oct. 28, 2010; 81 FR 3020, Jan. 20, 2016] The Department will conduct peri- odic onsite surveys and reviews of State and local agency ADP methods 632 Dept. of Health and Human Services § 95.621 and practices to determine the ade- quacy of such methods and practices and to assure that ADP equipment and services are utilized for the purposes consistent with proper and efficient ad- ministration under the Act. Where practical, the Department will develop a mutually acceptable schedule be- tween the Department and State or local agencies prior to conducting such surveys or reviews, which may include but are not limited to: (a) Pre-installation readiness. A pre-in- stallation survey including an onsite evaluation of the physical site and the agency’s readiness to productively use the proposed ADP services, equipment or system when installed and oper- ational. (b) Post-installation. A review con- ducted after installation of ADP equip- ment or systems to assure that the ob- jectives for which FFP was approved are being accomplished. (c) Utilization. A continuing review of ADP facilities to determine whether or not the ADP equipment or services are being efficiently utilize ctives for which FFP was approved are being accomplished. (c) Utilization. A continuing review of ADP facilities to determine whether or not the ADP equipment or services are being efficiently utilized in support of approved programs or projects. (d) Acquisitions not subject to prior ap- proval. Reviews will be conducted on an audit basis to assure that system and equipment acquisitions costing less than $200,000 or acquisitions exempted from prior approval were made in ac- cordance with part 75 and the condi- tions of this subpart and to determine the efficiency, economy and effective- ness of the equipment or service. (e) State Agency Maintenance of Serv- ice Agreements. The State agency will maintain a copy of each service agree- ment in its files for Federal review. (f) ADP System Security Requirements and Review Process—(1) ADP System Se- curity Requirement. State agencies are responsible for the security of all ADP projects under development, and oper- ational systems involved in the admin- istration of HHS programs. State agen- cies shall determine the appropriate ADP security requirements based on recognized industry standards or stand- ards governing security of Federal AD the admin- istration of HHS programs. State agen- cies shall determine the appropriate ADP security requirements based on recognized industry standards or stand- ards governing security of Federal ADP systems and information processing. (2) ADP Security Program. State ADP Security requirements shall include the following components: (i) Determination and implementa- tion of appropriate security require- ments as specified in paragraph (f)(1) of this section. (ii) Establishment of a security plan and, as appropriate, policies and proce- dures to address the following area of ADP security: (A) Physical security of ADP re- sources; (B) Equipment security to protect equipment from theft and unauthorized use; (C) Software and data security; (D) Telecommunications security; (E) Personnel security; (F) Contingency plans to meet crit- ical processing needs in the event of short or long-term interruption of serv- ice; (G) Emergency preparedness; and, (H) Designation of an Agency ADP Security Manager. (iii) Periodic risk analyses. State agencies must establish and maintain a program for conducting periodic risk analyses to ensure that appropriate, cost effective safeguards are incor- porate anager. (iii) Periodic risk analyses. State agencies must establish and maintain a program for conducting periodic risk analyses to ensure that appropriate, cost effective safeguards are incor- porated into new and existing systems. State agencies must perform risk anal- system yses whenever changes occur. significant (3) ADP System Security Reviews. State agencies shall review the ADP system security of installations involved in the administration of HHS programs on a biennial basis. At a minimum, the reviews shall include an evaluation of physical and data security operating procedures, and personnel practices. (4) Costs incurred in complying with provisions of paragraphs (f)(1)–(3) of this section are considered regular ad- ministrative costs which are funded at the regular match rate. (5) The security requirements of this section apply to all ADP systems used by State and local governments to ad- minister programs covered under 45 CFR part 95, subpart F. (6) The State agency shall maintain reports of their biennial ADP system 633 § 95.623 45 CFR Subtitle A (10–1–24 Edition) security reviews, together with perti- nent supporting documentation, for HHS on-site review. [43 FR 4485 maintain reports of their biennial ADP system 633 § 95.623 45 CFR Subtitle A (10–1–24 Edition) security reviews, together with perti- nent supporting documentation, for HHS on-site review. [43 FR 44853, Sept. 29, 1978, as amended at 51 FR 45329, Dec. 18, 1986; 53 FR 27, Jan. 4, 1988; 55 FR 4378, Feb. 7, 1990; 61 FR 39898, July 31, 1996; 75 FR 66340, Oct. 28, 2010; 81 FR 3020, Jan. 20, 2016] § 95.623 Reconsideration of denied FFP for failure to obtain prior ap- proval. For ADP equipment and services ac- quired by a State without prior ap- proval, which is reflected in a record, the State may request reconsideration of the disallowance of FFP by written request to the head of the Federal pro- gram office within 30 days of the initial written disallowance determination. In such a reconsideration, the agency may take into account overall federal inter- ests. The Department may grant a re- quest for reconsideration if: (a) The State submitted to the De- partment all information required under § 95.611, satisfactorily responded to all concerns raised by the Depart- ment and received a final letter of ap- proval from the Department; or, (b) The State requests reconsider- ation of a denial er § 95.611, satisfactorily responded to all concerns raised by the Depart- ment and received a final letter of ap- proval from the Department; or, (b) The State requests reconsider- ation of a denial by submitting in a record information that addresses the following requirements: (1) The acquisition must be reason- able, useful and necessary; (2) The State’s failure to obtain prior approval, which is reflected in a record, must have been inadvertent (i.e., the State did not knowingly avoid the prior approval requirements); (3) The request was not previously denied by HHS; (4) The acquisition must otherwise meet all other applicable Federal and State requirements, and would have been approved under part 95, subpart F had the State requested in a record, prior approval; (5) The State must not have a record of recurrent failures, under any of the programs covered by the prior approval regulations, to comply with the re- quirement to obtain prior approval in a record, of its automatic data proc- essing acquisitions (i.e., submissions under these procedures, from States that have failed in the past to acquire prior approval which is reflected in a record, in accordance with part 95, su a proc- essing acquisitions (i.e., submissions under these procedures, from States that have failed in the past to acquire prior approval which is reflected in a record, in accordance with part 95, sub- part F, may be denied); [51 FR 3339, Jan. 27, 1986, as amended at 55 FR 4378, Feb. 7, 1990; 75 FR 66340, Oct. 28, 2010] § 95.624 Consideration for FFP in emergency situations. For ADP equipment and services ac- quired by a State after December 1, 1985 to meet emergency situations, which preclude the State from fol- lowing the requirements of § 95.611, the Department will consider providing FFP upon receipt of a request from the State which is reflected in a record. In order for the Department to consider providing FFP in emergency situa- tions, the following conditions must be met: (a) The State must submit a request to the Department, prior to the acqui- sition of any ADP equipment or serv- ices. The request must be reflected in a record, and include: (1) A brief description of the ADP equipment and/or services to be ac- quired and an estimate of their costs; (2) A brief description of the cir- cumstances which result in the State’s need to proceed prior to obtaining ap- proval fro equipment and/or services to be ac- quired and an estimate of their costs; (2) A brief description of the cir- cumstances which result in the State’s need to proceed prior to obtaining ap- proval from the Department; and (3) A description of the harm which will be caused if the State does not ac- quire immediately the ADP equipment and services. (b) Upon receipt of the information, the Department will within 14 days take one of the following actions: (1) Inform the State in writing that the request has been disapproved and the reason for disapproval; or (2) Inform the State in a communica- tion reflected in a record, that the De- partment recognizes that an emer- gency exists and that within 90 days from the date of the State’s initial re- quest, the State must submit a formal request for approval which includes the information specified at § 95.611 in order for the ADP equipment or serv- ices acquisition to be considered for the Department’s approval. (c) If the Department approves the request submitted under paragraph (b) of this section, FFP will be available 634 Dept. of Health and Human Services § 95.626 from the date the State acquires the ADP equipment and services. of fail he request submitted under paragraph (b) of this section, FFP will be available 634 Dept. of Health and Human Services § 95.626 from the date the State acquires the ADP equipment and services. of failing to pursue competition to the maximum extent feasible. [51 FR 3339, Jan. 27, 1986, as amended at 55 FR 4378, Feb. 7, 1990; 75 FR 66340, Oct. 28, 2010] § 95.625 Increased FFP ADP systems. for certain (a) General. FFP is available at en- hanced matching rates for the develop- ment of individual or integrated sys- tems and the associated computer equipment that support the adminis- tration of state plans for titles IV–D and/or XIX provided the systems meet the specifically applicable provisions referenced in paragraph (b) of the sec- tion. (b) Specific reference to other regula- tions. The applicable regulations for the Title IV-D program are contained in 45 CFR part 307. The applicable regu- lations for the Title IV-E program are contained in 45 CFR 1355.55. The appli- cable regulations for the title IV–D program are contained in 45 CFR part 307. The applicable regulations for the title XIX program are contained in 42 CFR part 433, subpart C. [59 FR 30708, June 15, 1994, as amended at or the title IV–D program are contained in 45 CFR part 307. The applicable regulations for the title XIX program are contained in 42 CFR part 433, subpart C. [59 FR 30708, June 15, 1994, as amended at 81 FR 35479, June 2, 2016] § 95.626 Independent Verification and Validation. (a) An assessment for independent verification and validation (IV&V) analysis of a State’s system develop- ment effort may be required in the case of APD projects that meet any of the following criteria: (1) Are at risk of missing statutory or regulatory deadlines for automation that is intended to meet program re- quirements; (2) Are at risk of failing to meet a critical milestone; (3) Indicate the need for a new project or total system redesign; (4) Are developing systems under waivers pursuant to sections 452(d)(3) or 627 of the Social Security Act; (5) Are at risk of failure, major delay, or cost overrun in their systems devel- opment efforts; (6) Fail to timely and completely submit APD updates or other required systems documentation. (7) State’s procurement policies put the project at risk, including a pattern (8) State’s failure to adequately in- volve the State program offices in the development and i ired systems documentation. (7) State’s procurement policies put the project at risk, including a pattern (8) State’s failure to adequately in- volve the State program offices in the development and implementation of the project. (b) Independent Verification and Val- idation efforts must be conducted by an entity that is independent from the State (unless the State receives an ex- ception from the Department) and the entity selected must: (1) Develop a project workplan. The plan must be provided directly to the Department at the same time it is given to the State. (2) Review and make recommenda- tions on both the management of the project, both State and vendor, and the technical aspects of the project. The IV&V provider must give the results of its analysis directly to the federal agencies that required the IV&V at the same time it reports to the State. (3) Consult with all stakeholders and assess the user involvement and buy-in regarding system functionality and the system’s ability to support program business needs. (4) Conduct an analysis of past project performance sufficient to iden- tify and make recommendations for improvement. (5) Provide risk management assess- ment and c to support program business needs. (4) Conduct an analysis of past project performance sufficient to iden- tify and make recommendations for improvement. (5) Provide risk management assess- ment and capacity planning services. (6) Develop performance metrics which allow tracking project comple- tion against milestones set by the State. (c) The acquisition document and contract for selecting the IV&V pro- vider (or similar documents if IV&V services are provided by other State agencies) must include requirements regarding the experience and skills of the key personnel proposed for the IV&V analysis. The contract (or simi- lar document if the IV&V services are provided by other State agencies) must specify by name the key personnel who actually will work on the project. The acquisition documents and contract for required IV&V services must be sub- mitted to the Department for prior written approval. [75 FR 66340, Oct. 28, 2010] 635 § 95.627 § 95.627 Waivers. (a) Application for a waiver. A State may apply for a waiver of any require- ment in subpart F by presenting an al- ternative approach. Waiver requests must be submitted and approved as part of the State’s APD or APD Up- date. (b A State may apply for a waiver of any require- ment in subpart F by presenting an al- ternative approach. Waiver requests must be submitted and approved as part of the State’s APD or APD Up- date. (b) Waiver approvals. The Secretary, or his or her designee, may grant a State a waiver if the State dem- onstrates that it has an alternative ap- proach to a requirement in this chapter that will safeguard the State and Fed- eral Governments’ interest and that enables the State to be in substantial compliance with the other require- ments of this chapter. (c) Contents of waiver request. The State’s request for approval of an alter- native approach or waiver of a require- ment in this chapter must demonstrate why meeting the condition is unneces- sary, diminishes the State’s ability to meet program requirements, or that the alternative approach leads to a more efficient, economical, and effec- tive administration of the programs for which federal financial participation is provided, benefiting both the State and Federal Governments. (d) Review of waiver requests. The Sec- retary, or his or her designee, will re- view waiver requests to assure that all necessary information is provided, t ng both the State and Federal Governments. (d) Review of waiver requests. The Sec- retary, or his or her designee, will re- view waiver requests to assure that all necessary information is provided, that all processes provide for effective eco- nomical and effective program oper- ation, and that the conditions for waiv- er in this section are met. (e) Agency’s response to a waiver re- quest. When a waiver is approved by an agency, it becomes part of the State’s approved APD and is applicable to the approving agency. A waiver is subject to the APD suspension provisions in § 95.611(c)(3). When a waiver is dis- approved, the entire APD will be dis- approved. The APD disapproval is a final administrative decision and is not subject to administrative appeal. [75 FR 66340, Oct. 28, 2010] 45 CFR Subtitle A (10–1–24 Edition) FEDERAL FINANCIAL PARTICIPATION IN COSTS OF ADP ACQUISITIONS § 95.631 Cost identification for purpose of FFP claims. The conditions of this subpart apply notwithstanding the existence of an ap- proved cost allocation plan. State agencies shall assign and claim the costs incurred under an approved APD in accordance with the following cri- teria: (a) Development costs. ( he existence of an ap- proved cost allocation plan. State agencies shall assign and claim the costs incurred under an approved APD in accordance with the following cri- teria: (a) Development costs. (1) Using its normal departmental accounting sys- tem, the State agency shall specifi- cally identify what items of costs con- stitute development costs, assign these costs to specific project cost centers, and distribute these costs to funding sources based on the specific identifica- tion, assignment and distribution out- lined in the approved APD; (2) the methods for distributing costs set forth in the APD should provide for assign- ing identifiable costs, to the extent practicable, directly to program/func- tions. The State agency shall amend the cost allocation plan required by subpart E of this part to include the approved APD methodology for the identification, assignment and dis- tribution of the development costs. (b) Operational costs. Costs incurred for the operation of an ADP system shall be identified and assigned by the State agency to funding sources in ac- cordance with the approved cost alloca- tion plan required by Subpart E of this part. (c) Service agreement costs. S stem shall be identified and assigned by the State agency to funding sources in ac- cordance with the approved cost alloca- tion plan required by Subpart E of this part. (c) Service agreement costs. States that operate a central data processing facil- ity shall use their approved central service cost allocation plan required by OMB Circular A–87 to identify and as- sign costs incurred under service agree- ments with the State agency. The State agency will then distribute these costs to funding sources in accordance with paragraphs (a) and (b) of this sec- tion. § 95.633 Nondiscrimination require- ments. State agencies that acquire ADP equipment and services are subject to the nondiscrimination requirements in parts 80, 84, and 90. [45 FR 10794, Feb. 19, 1980] 636 Dept. of Health and Human Services § 95.703 § 95.635 Disallowance of Federal finan- cial participation for automated systems that fail to comply substan- tially with requirements. (a) Federal financial participation at the applicable matching rate is avail- able for automated data processing sys- tem expenditures that meet the re- quirements specified under the ap- proved APD including the approved cost allocation plan. (b licable matching rate is avail- able for automated data processing sys- tem expenditures that meet the re- quirements specified under the ap- proved APD including the approved cost allocation plan. (b) All or part of any costs for system projects that have a major failure to comply with an APD approved under applicable regulation at § 95.611, or for the Title IV–D program contained in part 307, the applicable regulations for the Title IV–E and Title IV–B programs contained in Chapter 13, subchapter G, § 1355.55, or the applicable regulations for the Title XIX program contained in 42 CFR chapter 4 subchapter C, part 433, are subject to disallowance by the Department. [75 FR 66340, Oct. 28, 2010] EXEMPTIONS § 95.641 Applicability of for charging equipment in subpart G of this part. rules ADP equipment, as well as other equipment acquired under public as- sistance programs, is subject to sub- part G of this part. Among other things, subpart G provides that a State may charge only depreciation or use al- lowances for equipment with unit ac- quisition cost of over $25,000. However, for ADP equipment HHS will consider requests for waivers of that restriction. If the acquisition of the eq tion or use al- lowances for equipment with unit ac- quisition cost of over $25,000. However, for ADP equipment HHS will consider requests for waivers of that restriction. If the acquisition of the equipment is part of an APD that is subject to the prior approval requirements of subpart F, the State may submit the request for a waiver as part of the APD. Subpart G—Equipment Acquired Under Public Assistance Programs SOURCE: 47 FR 41576, Sept. 21, 1982, unless otherwise noted. § 95.701 Purpose and scope of subpart. (a) This subpart prescribes require- ments concerning the computation of claims for Federal financial participa- tion in the cost of equipment under public assistance programs. This sub- part also prescribes requirements for the management and disposition of equipment whose costs are claimed for Federal financial participation under these programs. (b) This subpart applies to equipment purchased by State agencies (as defined in § 95.703) and to equipment purchased under service agreements with other State agencies and under cost-type contracts. § 95.703 Definitions. As used in this subpart: Acquisition cost of an item of pur- chased equipment means the net in- voice price e agreements with other State agencies and under cost-type contracts. § 95.703 Definitions. As used in this subpart: Acquisition cost of an item of pur- chased equipment means the net in- voice price of the equipment, including the cost of modifications, attachments, accessories, or auxiliary apparatus nec- essary to make the equipment usable for the purpose for which it was ac- quired. Other charges such as the cost of installation, transportation, taxes, duty or protective intransit insurance shall be included in or excluded from the unit acquisition cost in accordance with the regular accounting practices of the organization purchasing the equipment. If the item is acquired by trading in another item and paying an additional amount, acquisition cost means the amount received for trade-in plus the additional outlay. Equipment means an article of tan- gible personal property that has a use- ful life of more than two years and an acquisition cost of $500 or more. Any recipient may use its own definition of equipment, if its definition would at least include all items of equipment as defined here. Public Assistance Programs means pro- grams authorized by titles I, IV-A, IV- B, IV-C, its own definition of equipment, if its definition would at least include all items of equipment as defined here. Public Assistance Programs means pro- grams authorized by titles I, IV-A, IV- B, IV-C, IV-D, IV-E, X, XIV, XVI (AABD), XIX and XXI of the Social Se- curity Act, and programs authorized by the Immigration and Nationality Act as amended by the Refugee Act of 1980 (Pub. L. 96–212). State means the 50 States, the Dis- trict of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, the Northern Mariana Islands and Guam. State Agency means the State agency administering a public assistance pro- gram(s). This term includes local gov- ernment public assistance agencies 637 § 95.705 45 CFR Subtitle A (10–1–24 Edition) which administer public assistance pro- grams under a State supervised system and the State agencies which supervise the local agencies. [47 FR 41576, Sept. 21, 1982, as amended at 65 FR 33633, May 24, 2000] § 95.705 Equipment costs—Federal fi- nancial participation. (a) General rule. In computing claims for Federal financial participation, equipment having a unit acquisition cost of $25,000 or less may be claimed in the period acquired or depreciated, at t ation. (a) General rule. In computing claims for Federal financial participation, equipment having a unit acquisition cost of $25,000 or less may be claimed in the period acquired or depreciated, at the option of the State agency. Equip- ment having a unit acquisition cost of more than $25,000 shall be depreciated. For purposes of this section, the term depreciate also includes use allowances computed in accordance with the cost principles prescribed in part 75. (b) Exceptions. (1) Equipment pur- chased under service agreements with other State agencies and under cost- type contracts shall be depreciated. However, equipment having a unit ac- quisition cost of $25,000 or less may be claimed in the period acquired if (a) the State agency approved the specific purchase and the claiming of the cost of the item, and (b) the contract or service agreement requires that the equipment or its residual value be transferred to the State agency when the equipment is no longer needed to carry out the work under the contract or service agreement. (2) Reimbursement for ADP equip- ment having an acquisition cost in ex- cess of $25,000 and subject to subpart F of this part must be depreciated over i e work under the contract or service agreement. (2) Reimbursement for ADP equip- ment having an acquisition cost in ex- cess of $25,000 and subject to subpart F of this part must be depreciated over its useful life unless otherwise specifi- cally provided for by the Department. ADP equipment not subject to subpart F is subject to the requirements of this subpart. [47 FR 41576, Sept. 21, 1982, as amended at 75 FR 66341, Oct. 28, 2010; 81 FR 3020, Jan. 20, 2016] § 95.707 Equipment management and disposition. (a) Once equipment, whose costs are claimed for Federal financial participa- tion (i.e., equipment that is capitalized and depreciated or is claimed in the pe- riod acquired), has reached the end of its useful life (as defined in an ap- proved APD), the equipment shall be subject to the property disposal rules in § 75.320. (b) The State agency is responsible for adequately managing the equip- ment, maintaining records on the equipment, and taking periodic phys- ical inventories. Physical inventories may be made on the basis of statistical sampling. The following requirements apply to the disposition of this equip- ment: (1) If the cost of the equipment was claimed in the period a ical inventories may be made on the basis of statistical sampling. The following requirements apply to the disposition of this equip- ment: (1) If the cost of the equipment was claimed in the period acquired and the equipment is later sold, the proceeds of the sale shall be credited to current ex- penditures in approximate proportion to the distribution of the equipment’s cost. (2) If the cost of the equipment was claimed in the period acquired and the equipment is later transferred to an ac- tivity which is not involved in the per- formance of programs currently or pre- viously funded by the Federal Govern- ment, an amount equal to the fair mar- ket value of the equipment on the date of the transfer shall be credited to cur- rent expenditures in approximate pro- portion to the distribution of the equipment’s costs. (3) If the cost of the equipment was claimed in the period acquired and the equipment is later traded in on other equipment claims for Federal financial participation in the costs of replace- ment equipment shall be limited to the additional outlay. (4) If the equipment was depreciated, any gain or loss on the disposition of the equipment shall be treated as a de- creas e costs of replace- ment equipment shall be limited to the additional outlay. (4) If the equipment was depreciated, any gain or loss on the disposition of the equipment shall be treated as a de- crease or an increase to the deprecia- tion expense of the period in which the disposition takes place. This provision does not apply to equipment whose costs were claimed for Federal finan- cial participation through use allow- ances. [47 FR 41576, Sept. 21, 1982, as amended at 75 FR 66341, Oct. 28, 2010; 81 FR 3020, Jan. 20, 2016] PART 96—BLOCK GRANTS Subpart A—Introduction Sec. 96.1 Scope. 96.2 Definitions. 96.3 Information collection approval num- bers. 638 Dept. of Health and Human Services Pt. 96 Subpart B—General Procedures 96.74 Annual reporting requirements. 96.10 Prerequisites to obtain block grant funds. 96.11 Basis of award to the States. 96.12 Grant payment. 96.13 Reallotments. 96.14 Time period for obligation and expend- Subpart H—Low-Income Home Energy Assistance Program 96.80 Scope. 96.81 Carryover and reallotment. 96.82 Required report on households as- iture of grant funds. sisted. 96.15 Waivers. 96.16 Applicability of title XVII of the Rec- onciliation Act (31 U.S.C. 7301 ope. 96.81 Carryover and reallotment. 96.82 Required report on households as- iture of grant funds. sisted. 96.15 Waivers. 96.16 Applicability of title XVII of the Rec- onciliation Act (31 U.S.C. 7301–7305). 96.17 Annual reporting requirements. 96.18 Participation by faith-based organiza- tions. Subpart C—Financial Management 96.30 Fiscal and administrative require- ments. 96.31 Audits. 96.32 Financial settlement. 96.33 Referral of cases to the Inspector Gen- eral. Subpart D—Direct Funding of Indian Tribes and Tribal Organizations 96.40 Scope. 96.41 General determination. 96.42 General procedures and requirements. 96.43 Procedures during FY 1982. 96.44 Community services. 96.45 Preventive health and health services. 96.46 Substance abuse prevention and treat- ment services. 96.47 Primary care. 96.48 Low-income home energy assistance. 96.49 Due date for receipt of all information required for completion of trival applica- tions for the low-income home energy as- sistance block grants. Subpart E—Enforcement 96.50 Complaints. 96.51 Hearings. 96.52 Appeals. 96.53 Length of withholding. Subpart F—Hearing Procedure Initiation of hearing. 96.60 Scope. 96.61 96.62 Presiding officer. 96.63 ubpart E—Enforcement 96.50 Complaints. 96.51 Hearings. 96.52 Appeals. 96.53 Length of withholding. Subpart F—Hearing Procedure Initiation of hearing. 96.60 Scope. 96.61 96.62 Presiding officer. 96.63 Communications to presiding officer. 96.64 96.65 Discovery. 96.66 Hearing procedure. 96.67 Right to counsel. 96.68 Administrative record of a hearing. Intervention. Subpart G—Social Services Block Grants 96.70 Scope. 96.71 Definitions. 96.72 Transferability of funds. 96.73 Sterilization. 96.83 Increase in maximum amount that may be used for weatherization and other energy-related home repair. 96.84 Miscellaneous. 96.85 Income eligibility. 96.86 Exemption from requirement for addi- tional outreach and intake services. 96.87 Leveraging incentive program. 96.88 Administrative costs. 96.89 Exemptions from standards for pro- viding energy crisis intervention assist- ance. Subpart I—Community Services Block Grants 96.90 Scope. 96.91 Audit requirement. 96.92 Termination of funding. Subpart J—Primary Care Block Grants 96.100 Scope. 96.101 Review of a State decision to dis- continue funding of a community health center. 96.102 Carryover of unobligated funds. Subpart K—Transition Provisions 96.1 ary Care Block Grants 96.100 Scope. 96.101 Review of a State decision to dis- continue funding of a community health center. 96.102 Carryover of unobligated funds. Subpart K—Transition Provisions 96.110 Scope. 96.111 Continuation of pre-existing regula- tions. 96.112 Community services block grant. Subpart L—Substance Abuse Prevention and Treatment Block Grant 96.120 Scope. 96.121 Definitions. 96.122 Application content and procedures. 96.123 Assurances. 96.124 Certain allocations. 96.125 Primary prevention. 96.126 Capacity of treatment for intra- venous substance abusers. 96.127 Requirements regarding tuberculosis. 96.128 Requirements regarding human im- munodeficiency virus. 96.129 Revolving funds for establishment of homes in which recovering substance abusers may reside. 96.130 State law regarding sale of tobacco products to individuals under age of 18. 96.131 Treatment services for pregnant women. 96.132 Additional agreements. 96.133 Submission to Secretary of Statewide assessment of needs. 639 § 96.1 45 CFR Subtitle A (10–1–24 Edition) 96.134 Maintenance of effort regarding State expenditures. Independent peer review. 96.135 Restrictions on expenditure of grant. 96.136 96.137 of needs. 639 § 96.1 45 CFR Subtitle A (10–1–24 Edition) 96.134 Maintenance of effort regarding State expenditures. Independent peer review. 96.135 Restrictions on expenditure of grant. 96.136 96.137 Payment schedule. APPENDIX A TO PART 96—UNIFORM DEFINI- TIONS OF SERVICES APPENDIX B TO PART 96—SSBG REPORTING FORM AND INSTRUCTIONS AUTHORITY: 31 U.S.C. 1243 note, 7501–7507; 42 U.S.C. 300w et seq., § 300x et seq., § 300y et seq., § 701 et seq., § 8621 et seq., § 9901 et seq., § 1397 et seq., 5 U.S.C. § 301. SOURCE: 47 FR 29486, July 6, 1982, unless otherwise noted. Subpart A—Introduction § 96.1 Scope. This part applies to the following block grant programs: (a) Community services (Pub. L. 97– 35, sections 671–683) (42 U.S.C. 9901– 9912). (b) Preventive health and health services (Pub. L. 97–35, section 901) (42 U.S.C. 300w–300w–8). (c) Community mental health serv- ices (Public Health Service Act, sec- tions 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 ). (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 serv- ices (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). (g) Low-income home energy assist- ance (Pub. L. 97–35, sections 2601–11) (42 U.S.C. 8621–8629). [47 FR 29486, July 6, 1982, as amended at 58 FR 60128, Nov. 15, 1993; 64 FR 55856, Oct. 15, 1999] § 96.2 Definitions. (a) Secretary means the Secretary of Health and Human Services or his des- ignee. (b) Department means the Department of Health and Human Services. (c) Reconciliation Act means the Om- nibus Budget Reconciliation Act of 1981 (Pub. L. 97–35). (d) State includes the fifty States, the District of Columbia, and as appro- priate 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 admin- istered by agencies of the Public monwealth 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 admin- istered by agencies of the Public Health Service, the Federated States of Micronesia, the Republic of the Mar- shall Islands, and the Republic of Palau. [47 FR 29486, July 6, 1982, as amended at 52 FR 37965, Oct. 13, 1987; 64 FR 55856, Oct. 15, 1999] § 96.3 Information collection approval numbers. Information collection requirements pertaining to the block grant programs have been approved by the Office of Management and Budget under the pro- visions of the Paperwork Reduction Act, Pub. L. 96–511 (44 U.S.C. Chapter 35) and have been assigned OMB num- bers: 0930–0080 Alcohol and Drug Abuse and Men- tal Health Services Block Grant Reporting Requirements 0920–0106 Preventive Health and Health Services Block Grant Reporting Require- ments 0915–0023 Primary Care Block Grant Report- ing Requirements 0915–0024 Maternal and Child Health Serv- ices Block Grant Reporting Requirements 0980–0125 Social Services Block Grant Re- porting Requirements 0980–0126 Community Services Block Grant Reporting Requirements 0960–0261 Low-Incom Health Serv- ices Block Grant Reporting Requirements 0980–0125 Social Services Block Grant Re- porting Requirements 0980–0126 Community Services Block Grant Reporting Requirements 0960–0261 Low-Income Home Energy Assist- ance Block Grant Reporting Requirements. [47 FR 29486, July 6, 1982; 47 FR 43062, Sept. 30, 1982] Subpart B—General Procedures § 96.10 Prerequisites to obtain block grant funds. (a) Except where prescribed else- where in this rule or in authorizing leg- islation, 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 640 Dept. of Health and Human Services § 96.14 the form specified by the Secretary, as provided by section 505(a) of the Social Security Act (42 U.S.C. 705(a)). (b) The certifications required by the community services, primary care, pre- ventive health and health services, al- cohol and drug abuse and mental health services, and low-income home energy assistance block grant statutes to be made by the State’s chief execu- tive officer must be made by that indi- vidual personally, or by an individual authorized to make such ce low-income home energy assistance block grant statutes to be made by the State’s chief execu- tive officer must be made by that indi- vidual personally, or by an individual authorized to make such certifications on behalf of the chief executive officer. (c) Effective beginning in fiscal year 2001, submission dates for applications under the social service and low-in- come home energy assistance block grant programs are: (pre-expenditure reports) (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 Depart- ment, must insure that their applica- tions 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 terri- tories which make requests for funding from the Department must insure that their applications for a fiscal year are submit te. (2) for the low-income home energy assistance program, States and terri- tories which make requests for funding from the Department must insure that their applications for a fiscal year are submitted by September 1 of the pre- ceding fiscal year unless the Depart- ment agrees to a later date. (d) Effective beginning in fiscal year 2001, for the low-income home energy assistance program, States and terri- tories which make requests for funding from the Department must insure that all information necessary to complete their applications is received by De- cember 15 of the fiscal year for which they are requesting funds unless the Department agrees to a later date. [47 FR 29486, July 6, 1982, as amended at 64 FR 55856, Oct. 15, 1999] § 96.11 Basis of award to the States. The Secretary will award the block grant funds allotted to the State in ac- cordance with the apportionment of funds from the Office of Management and Budget. Such awards will reflect amounts reserved for Indian Tribes and Tribal Organizations and, in FY 1982, any amounts awarded by the Depart- ment under transition authorities. The grant award constitutes the authority to carry out the program and to draw and exp s and Tribal Organizations and, in FY 1982, any amounts awarded by the Depart- ment under transition authorities. The grant award constitutes the authority to carry out the program and to draw and expend funds. [47 FR 29486, July 6, 1982; 47 FR 43062, Sept. 30, 1982] § 96.12 Grant payment. The Secretary will make payments at such times and in such amounts to each State from its awards in advance or by way of reimbursement in accord- ance with section 203 of the Intergov- ernmental Cooperation Act (42 U.S.C. 4213) and Treasury Circular No. 1075 (31 CFR part 205). When matching funds are involved, the Secretary shall take into account the ratio that such pay- ment bears to such State’s total ex- penditures under its awards. § 96.13 Reallotments. The Secretary will re-allot to eligible States those funds available as of Sep- tember 1 of each fiscal year under the reallotment provisions pertaining to the alcohol and drug abuse and mental health services, maternal and child health services, and preventive health and health services block grants. The reallotment procedure for the low-in- come home energy assistance block grant is specified in section 2607 of the Reconciliation Act (42 U. and preventive health and health services block grants. The reallotment procedure for the low-in- come home energy assistance block grant is specified in section 2607 of the Reconciliation Act (42 U.S.C. 8626) and § 96.81 of this part. § 96.14 Time period for obligation and expenditure of grant funds. (a) Obligations. Amounts unobligated by the State at the end of the fiscal year in which they were first allotted shall remain available for obligation during the succeeding fiscal year for all block grants except: (1) Primary care. Amounts are avail- able only if the Secretary determines that the State acted in accordance with section 1926(a)(1) of the Public Health Service Act (42 U.S.C. 300y– 5(a)(1)) and there is good cause for funds remaining unobligated. 641 § 96.15 45 CFR Subtitle A (10–1–24 Edition) (2) Low-income home energy assistance. Regular LIHEAP block grant funds au- thorized under section 2602(b) of Public Law 97–35 (42 U.S.C. 8621(b)) are avail- able only in accordance with section 2607(b)(2)(B) of Public Law 97–35 (42 U.S.C. 8626(b)(2)(B)), as follows. From allotments for fiscal year 1982 through fiscal year 1984, a maximum of 25 per- cent may be held available for ith section 2607(b)(2)(B) of Public Law 97–35 (42 U.S.C. 8626(b)(2)(B)), as follows. From allotments for fiscal year 1982 through fiscal year 1984, a maximum of 25 per- cent may be held available for the next fiscal year. From allotments for fiscal year 1985 through fiscal year 1990, a maximum of 15 percent of the amount payable to a grantee and not trans- ferred to another block grant according to section 2604(f) of Public Law 97–35 (42 U.S.C. 8623(f)) may be held available for the next fiscal year. From allotments for fiscal year 1991 through fiscal year 1993, a maximum of 10 percent of the amount payable to a grantee and not transferred to another block grant ac- cording to section 2604(f) of Public Law 97–35 (42 U.S.C. 8623(f)) may be held available for the next fiscal year. Be- ginning with allotments for fiscal year 1994, a maximum of 10 percent of the amount payable to a grantee may be held available for the next fiscal year. No funds may be obligated after the end of the fiscal year following the fis- cal year for which they were allotted. (b) Expenditure. No limitations exist on the time for expenditure of block grant funds, except those imposed by statute with respect to year following the fis- cal year for which they were allotted. (b) Expenditure. No limitations exist on the time for expenditure of block grant funds, except those imposed by statute with respect to the community services, maternal and child health services, and social services block grants. [47 FR 29486, July 6, 1982; 47 FR 43062, Sept. 30, 1982, as amended at 52 FR 37965, Oct. 13, 1987; 60 FR 21357, May 1, 1995] § 96.15 Waivers. Applications for waivers that are per- mitted by statute for the block grants should be submitted to the Director, Centers for Disease Control and Pre- vention in the case of the preventive health and health services block grant; to the Administrator, Substance Abuse and Mental Health Services Adminis- tration 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 en- ergy assistance program and the social services block grant. Beginning with fiscal y e Director, Office of Community Services in the case of the community services block grant, the low-income home en- ergy assistance program and the social services block grant. Beginning with fiscal year 1986, the Secretary’s author- ity to waive the provisions of section 2605(b) of Public Law 97–35 (42 U.S.C. 8624(b)) under the low-income home en- ergy assistance program is repealed. [64 FR 55856, Oct. 15, 1999] § 96.16 Applicability of title XVII of the Reconciliation Act (31 U.S.C. 7301– 7305). This section interprets the applica- bility of the general provisions gov- erning block grants set forth in title XVII of the Reconciliation Act (31 U.S.C. 7301–7305): (a) Except as otherwise provided in this section or unless inconsistent with provisions in the individual block grant statutes, 31 U.S.C. 7301–7305 apply to the community services, preventive health and health services, and alcohol and drug abuse and mental health serv- ices block grants. (b) The requirement in 31 U.S.C. 7303(b) relating to public hearings does not apply to any of the block grants governed by this part. Instead, the pro- visions in the individual block grant statutes apply. (c) The maternal and child health ) relating to public hearings does not apply to any of the block grants governed by this part. Instead, the pro- visions in the individual block grant statutes apply. (c) The maternal and child health services block grant is not subject to any requirements of 31 U.S.C. 7301–7305. (d) The social services and low-in- come home energy assistance programs are subject only to 31 U.S.C. 7304. (e) The audit provisions of 31 U.S.C. 7305 have, in most cases, been over- ridden by the Single Audit Act. Pub. L. 98–502, 31 U.S.C. 75, et seq., and do not apply to the block grants. Pursuant to § 96.31(b)(2), certain entities may, how- ever, elect to conduct audits under the block grant audit provisions. For enti- ties making this election, the provi- sions of 31 U.S.C. 7305 apply to the com- munity services block grant. (f) The applicability of 31 U.S.C. 7303(a) relating to the contents of a re- port on proposed uses of funds is speci- fied in § 96.10. [52 FR 37966, Oct. 13, 1987] 642 Dept. of Health and Human Services § 96.31 § 96.17 Annual reporting requirements. (a) Except for the low-income home energy assistance program activity re- ports, a state must make public and submit to the Departmen and Human Services § 96.31 § 96.17 Annual reporting requirements. (a) Except for the low-income home energy assistance program activity re- ports, a state must make public and submit to the Department each annual report required by statute: (1) Within six months of the end of the period covered by the report; or (2) At the time the state submits its application for funding for the federal or state fiscal year, as appropriate, which begins subsequent to the expira- tion of that six-month period. (b) These reports are required annu- ally for preventive health and health services (42 U.S.C. 300w–5(a)(1)), com- munity mental health services (42 U.S.C. 300x et. seq.), the prevention and treatment of substance abuse block grant (42 U.S.C. 300x–21 et. seq.), mater- nal and child health services (42 U.S.C. 706(a)(1)), and the social services block grant (42 U.S.C. 1397e(a)). See § 96.82 for requirements governing the submission of activity reports for the low-income home energy assistance program. [58 FR 60128, Nov. 15, 1993] § 96.18 Participation by faith-based or- ganizations. The funds provided under this part shall be administered in compliance with the standards set forth in part 87 gram. [58 FR 60128, Nov. 15, 1993] § 96.18 Participation by faith-based or- ganizations. The funds provided under this part shall be administered in compliance with the standards set forth in part 87 (Equal Treatment for Faith-based Or- ganizations) of this chapter. [69 FR 42592, July 16, 2004] Subpart C—Financial Management § 96.30 Fiscal and administrative re- quirements. (a) Fiscal control and accounting proce- dures. Except where otherwise required by Federal law or regulation, a State shall obligate and expend block grant funds in accordance with the laws and procedures applicable to the obligation and expenditure of its own funds. Fis- cal control and accounting procedures must be sufficient to (a) permit prepa- ration of reports required by the stat- ute authorizing the block grant and (b) permit the tracing of funds to a level of expenditure adequate to establish that such funds have not been used in viola- tion of the restrictions and prohibi- tions of the statute authorizing the block grant. (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 o the block grant. (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 statu- tory 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 Depart- ment: (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 Depart- ment: (i) Total funds expended by the grantee during the statutory period; and (ii) The date of the l tatutory period for the expenditure of block grant funds, each grantee shall report to the Depart- ment: (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 peri- ods. [47 FR 29486, July 6, 1982, as amended at 52 FR 37966, Oct. 13, 1987; 53 FR 11656, Apr. 8, 1988; 64 FR 55857, Oct. 15, 1999] § 96.31 Audits. (a) Basic rule. Grantees and sub- grantees are responsible for obtaining audits in accordance with the Single Audit Act Amendments of 1996 (31 U.S.C. 7501–7507) and revised OMB Cir- cular A–133, ‘‘Audits of State, Local Governments, and Non-Profit Organi- zations.’’ The audits shall be made by 643 § 96.32 45 CFR Subtitle A (10–1–24 Edition) an independent auditor in accordance with generally accepted Government auditing standards covering financial audits. (b) Subgrantees. State or local govern- ments, as those terms are 10–1–24 Edition) an independent auditor in accordance with generally accepted Government auditing standards covering financial audits. (b) Subgrantees. State or local govern- ments, as those terms are defined for purposes of the Single Audit Act Amendments of 1996, that provide Fed- eral awards to a subgrantee, expending $300,000 or more (or other amount as specified by OMB) in Federal awards in a fiscal year, shall: (1) Determine whether subgrantees have met the audit requirements of the Act. Commercial contractors (private for-profit and private and govern- mental organizations) providing goods and services to State and local govern- ments are not required to have a single audit performed. State and local gov- ernments should use their own proce- dures to ensure that the contractor has complied with laws and regulations af- fecting the expenditure of Federal funds; (2) Determine whether the sub- grantee spent Federal assistance funds provided in accordance with applicable laws and regulations. This may be ac- complished by reviewing an audit of the subgrantee made in accordance with the Act or through other means (e.g., program reviews) if the sub- grantee has not had such an aud gulations. This may be ac- complished by reviewing an audit of the subgrantee made in accordance with the Act or through other means (e.g., program reviews) if the sub- grantee has not had such an audit; (3) Ensure that appropriate correc- tive action is taken within six months after receipt of the audit report in in- stances of noncompliance with Federal laws and regulations; (4) Consider whether subgrantee au- dits necessitate adjustment of the grantee’s own records; and (5) Require each subgrantee to permit independent auditors to have access to the records and financial statements. [62 FR 45963, Aug. 29, 1997] § 96.32 Financial settlement. The State must repay to the Depart- ment amounts found after audit resolu- tion to have been expended improperly. In the event that repayment is not made voluntarily, the Department will undertake recovery. [52 FR 37966, Oct. 13, 1987] § 96.33 Referral of cases to the Inspec- tor General. State or tribal officials who have in- formation indicating the commission or potential commission of fraud or other offenses against the United States involving block grant funds should promptly provide the informa- tion to the appropriate Regional Office o g the commission or potential commission of fraud or other offenses against the United States involving block grant funds should promptly provide the informa- tion to the appropriate Regional Office of Investigations of the Department’s Office of the Inspector General. [52 FR 37966, Oct. 13, 1987] Subpart D—Direct Funding of In- dian Tribes and Tribal Organi- zations § 96.40 Scope. This subpart applies to the commu- nity services, alcohol and drug abuse and mental health services, preventive health and health services, primary care, and low-income home energy as- sistance block grants. § 96.41 General determination. (a) The Department has determined that, with the exception of the cir- cumstances 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 allot- ment of block grant funds than if the State were awarded its entire allot- ment. 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 pro- v t- ment. 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 pro- vided 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. (b) An Indian tribe or tribal organiza- tion may request direct funding under a block grant program included in this subpart regardless of whether the State in which it is located is receiving funds under the block grant program. (c) The Department has determined that Indian tribal members eligible for the funds or services provided through the block grants would be better served 644 Dept. of Health and Human Services § 96.42 by the State(s) in which the tribe is lo- cated rather than by the tribe, where: ganization except where otherwise pro- vided by statute or in this part. (1) The tribe has not used its block grant allotment substantially in ac- cordance with the provisions of the rel- evant statute(s); and (2) Following otherwise pro- vided by statute or in this part. (1) The tribe has not used its block grant allotment substantially in ac- cordance with the provisions of the rel- evant statute(s); and (2) Following the procedures of 45 CFR 96.51, the Department has with- held tribal funds because of those defi- ciencies; and (3) The tribe has not provided suffi- cient evidence that it has removed or corrected the reason(s) for withholding. In these cases, block grant funds re- served 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 pop- ulation of the tribe. Before awarding these funds to the State(s), the Depart- ment will allow as much time as it de- termines 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 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 take ate(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 correc- tive action by the first day of the fol- lowing fiscal year, all of the funds to serve the tribe’s service population for the following fiscal year will be award- ed to the State(s). The State(s) is re- sponsible for providing services to the service population of the tribe in these cases. This paragraph also applies when funds are withheld from a tribal orga- nization. this paragraph, [47 FR 29486, July 6, 1982, as amended at 64 FR 55857, Oct. 15, 1999] § 96.42 General procedures and re- quirements. (a) An Indian tribe or tribal organiza- tion applying for or receiving direct funding from the Secretary under a block grant program shall be subject to all statutory and regulatory require- ments applicable to a State applying for or receiving block grant funds to the extent that such requirements are relevant to an Indian tribe or tribal or- (b) A tribal organization representing more than one Indian tribe will be eli- gible to receive block grant funds on behalf o xtent that such requirements are relevant to an Indian tribe or tribal or- (b) A tribal organization representing more than one Indian tribe will be eli- gible to receive block grant funds on behalf of a particular tribe only if the tribe has by resolution authorized the organization’s action. (c) If an Indian tribe or tribal organi- zation whose service population resides in more than one State applies for block grant funds that, by statute, are apportioned on the basis of population, the allotment awarded to the tribe or organization shall be taken from the allotments of the various States in which the service population resides in proportion to the number of eligible members or households to be served in each State. If block grant funds are re- quired to be apportioned on the basis of grants during a base year, the allot- ment to the Indian tribe or tribal orga- nization shall be taken from the allot- ment of the State whose base year grants included the relevant grants to the tribe or organization. (d) The audit required under the block grant programs shall be con- ducted by an entity that is independent of the Indian tribe or tribal organiza- tion receiving grant funds from th or organization. (d) The audit required under the block grant programs shall be con- ducted by an entity that is independent of the Indian tribe or tribal organiza- tion receiving grant funds from the Secretary. (e) Beginning with fiscal year 1983, any request by an Indian tribe or tribal organization for direct funding by the Secretary must be submitted to the Secretary, together with the required application and related materials, by September 1 preceding the Federal fis- cal year for which funds are sought. A separate application is required for each block grant. After the September 1 deadline, tribal applications will be accepted only with the concurrence of the State (or States) in which the tribe or tribal organization is located. (f) A State receiving block grant funds is not required to use those funds to provide tangible benefits (e.g., cash or goods) to 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 Indians access to intan- gible services funded by block grant 645 § 96.43 45 CFR Subtitle A (1 he Department under the same block grant program for the same fiscal year. A State, however, may not deny Indians access to intan- gible services funded by block grant 645 § 96.43 45 CFR Subtitle A (10–1–24 Edition) programs (e.g., treatment at a commu- nity health center) even if the Indians are members of a tribe receiving direct funding for a similar service. A tribe receiving direct block grant funding is not required to use those funds to pro- vide 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. [47 FR 29486, July 6, 1982, as amended at 52 FR 37966, Oct. 13, 1987; 64 FR 55857, Oct. 15, 1999] § 96.43 Procedures during FY 1982. (a) This section applies to the fiscal year beginning October 1, 1981. (b) A request for direct funding must be received by the Secretary before the Secretary has awarded all of the allot- ment to the State involved. The appli- cation and related submission may be submitted later but must be submitted within 75 days after the beginning of the quarter in which the State quali- fied for block grant funds, (or by Au- gust 20, 19 ation and related submission may be submitted later but must be submitted within 75 days after the beginning of the quarter in which the State quali- fied for block grant funds, (or by Au- gust 20, 1982 in the case of an Indian tribe located in a State that has not qualified for block grant funds in FY 1982) except that the application and related submission for the low-income home energy assistance program must be submitted by December 15, 1981. A separate request and application are required for each block grant. [47 FR 29486, July 6, 1982; 47 FR 43062, Sept. 30, 1982] § 96.44 Community services. (a) This section applies to direct funding of Indian tribes and tribal or- ganizations under the community serv- ices block grant. (b) The terms Indian tribe and tribal organization as used in the Reconcili- ation Act have the same meaning given such terms in section 4(b) and 4(c) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b). The terms also include organized groups of Indians that the State in which they reside has determined are Indian tribes. An organized group of In- dians is eligible for direct funding based on State recognition if the State has expr groups of Indians that the State in which they reside has determined are Indian tribes. An organized group of In- dians is eligible for direct funding based on State recognition if the State has expressly determined that the group is an Indian tribe. In addition, the statement of the State’s chief exec- utive officer verifying that a tribe is recognized by that State will also be sufficient to verify State recognition for the purpose of direct funding. (c) For purposes of section 674(c)(2) of the Act (42 U.S.C. 9903(c)(2)) an eligible Indian means a member of an Indian tribe whose income is at or below the poverty line defined in section 673(2) of the Act (42 U.S.C. 9902(2)). An eligible in- dividual under section 674(c)(2) of the Reconciliation Act (42 U.S.C. 9903(c)(2)) means a resident of the State whose in- come is at or below the poverty line. (d) An Indian tribe or tribal organiza- tion will meet the requirements of sec- tion 675(c)(1) (42 U.S.C. 9904(c)(1)) if it certifies that it agrees to use the funds to provide at least one of the services or activities listed in that section. (e) An Indian tribe or tribal organiza- tion is not required to comply with sec- tion 675(b) ( it agrees to use the funds to provide at least one of the services or activities listed in that section. (e) An Indian tribe or tribal organiza- tion is not required to comply with sec- tion 675(b) (42 U.S.C. 9904(b)) or to pro- vide the certifications required by the following other provisions of the Rec- onciliation Act. (1) Section 675(c)(2)(A) (42 U.S.C. 9904(c)(2)(A)); (2) Section 9904(c)(3)); and (3) Section 9904(c)(4)). 675(c)(3) (42 U.S.C. 675(c)(4) (42 U.S.C. (4) Section 675(c)(11) (42 U.S.C. 9904(c)(11)). administrative (f) In each fiscal year, Indian tribes and tribal organizations may expend for expenses—com- parable to the administrative expenses incurred by State at the State level— an amount not to exceed the greater of the amounts determined by: (1) Multiplying their allotment under section 674 of the Reconciliation Act (42 U.S.C. 9903) by five percent; or (2) Multiplying the allotment by the percentage represented by the ratio of $55,000 to the smallest State allotment (excluding territorial allotments) for that fiscal year. [47 FR 29486, July 6, 1982, as amended at 52 FR 37967, Oct. 13, 1987] § 96.45 Preventive health and health services. (a) This section applies t (excluding territorial allotments) for that fiscal year. [47 FR 29486, July 6, 1982, as amended at 52 FR 37967, Oct. 13, 1987] § 96.45 Preventive health and health services. (a) This section applies to direct funding of Indian tribes and tribal or- ganizations under the preventive health and health services block grant. 646 Dept. of Health and Human Services § 96.48 (b) For the purposes of determining eligible applicants under section 1902(d) of the Public Health Service Act, a grantee that received a grant directly from the Secretary in FY 1981 under any of the programs replaced by the preventive health and health services block grant that was specifically tar- geted toward serving a particular In- dian tribe or tribal organization will be considered eligible if the grantee is an Indian tribe or tribal organization at the time it requests funds under this part. Grantees that received funds under formula or Statewide grants, and subgrantees that received funds from any program replaced by the preven- tive health and health services block grant, are not eligible. § 96.46 Substance abuse prevention and treatment services. (a) This section applies to direct funding of Indian tribes ed by the preven- tive health and health services block grant, are not eligible. § 96.46 Substance abuse prevention and treatment services. (a) This section applies to direct funding of Indian tribes and tribal or- ganizations under the substance abuse prevention and treatment Block Grant. (b) For the purpose of determining el- igible applicants under section 1933(d) of the Public Health Service Act (42 U.S.C. 300x–33(d)) an Indian tribe or tribal organization (as defined in sub- sections (b) and (c) of section 4 of the Indian Self-Determination and Edu- cation Assistance Act) that received a direct grant under subpart I of part B of title XIX of the PHS Act (as such ex- isted prior to October 1, 1992) in fiscal year 1991 will be considered eligible for a grant under subpart 2 of part B of title XIX of the PHS Act. (c) For purposes of the substance abuse prevention and treatment Block Grant, an Indian tribe or tribal organi- zation is not required to comply with the following statutory provisions of the Public Health Service Act: 1923 (42 U.S.C. 300x–23), 1925 (42 U.S.C. 300x–25), 1926 (42 U.S.C. 300x–26), 1928 (42 U.S.C. 300x–28), 1929 (42 U.S.C. 300x–29), and 1943(a)(1) (42 U.S.C provisions of the Public Health Service Act: 1923 (42 U.S.C. 300x–23), 1925 (42 U.S.C. 300x–25), 1926 (42 U.S.C. 300x–26), 1928 (42 U.S.C. 300x–28), 1929 (42 U.S.C. 300x–29), and 1943(a)(1) (42 U.S.C. 300x–53(a)(1)). An Indian tribe or tribal organization is to comply with all other statutes and reg- ulations applicable to the Substance Abuse Prevention and Treatment Block Grant. In each case in which an Indian Tribe receives a direct grant, the State is also responsible for pro- viding services to Native Americans under the State’s Block Grant pro- gram. [58 FR 17070, Mar. 31, 1993] § 96.47 Primary care. Applications for direct funding of In- dian tribes and tribal organizations under the primary care block grant must comply with 42 CFR part 51c (Grants for Community Health Serv- ices). § 96.48 Low-income home energy as- sistance. (a) This section applies to direct funding of Indian tribes under the low- income home energy assistance pro- gram. (b) The terms Indian tribe and tribal organization as used in the Reconcili- ation Act have the same meaning given such terms in section 4(b) and 4(c) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b) except th rganization as used in the Reconcili- ation Act have the same meaning given such terms in section 4(b) and 4(c) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b) except that the terms shall also include organized groups of Indians that the State in which they reside has expressly determined are Indian tribes or tribal organizations in accordance with State procedures for making such determinations. (c) For purposes of section 2604(d) of the Act (42 U.S.C. 8623(d)), an organized group of Indians is eligible for direct funding based on State recognition if the State has expressly determined that the group is an Indian tribe. A statement by the State’s chief execu- tive officer verifying that a tribe is recognized by that State will also be sufficient to verify State recognition for the purpose of direct funding. (d) The plan required by section 2604(d)(4) of the Reconciliation Act (42 U.S.C. 8623(d)(4)) shall contain the cer- tification and information required for States under section 2605 (b) and (c) of that Act (42 U.S.C. 8624 (b) and (c)). An Indian tribe or tribal organization is not required to comply with section 2605(a)(2) of (42 U.S.C. 8624(a)(2) ed for States under section 2605 (b) and (c) of that Act (42 U.S.C. 8624 (b) and (c)). An Indian tribe or tribal organization is not required to comply with section 2605(a)(2) of (42 U.S.C. 8624(a)(2)). the Act (e) Where a tribe requests that the Secretary fund another entity to pro- vide energy assistance for tribal mem- bers, as provided by section 2604(d)(3) of 647 § 96.49 45 CFR Subtitle A (10–1–24 Edition) the Act (42 U.S.C. 8623(d)(3)), the Sec- retary shall consider the following fac- tors in selecting the grantee: the abil- ity of the other entity to provide low- income home energy assistance, exist- ing tribal-State agreements as to the size and location of the service popu- lation, and the history of State serv- ices to the Indian people to be served by the other entity. § 96.49 Due date for receipt of all in- formation required for completion of tribal applications for the low-in- come home energy assistance block grants. Effective beginning in FY 2001, for the low-income home energy assistance program, Indian tribes and tribal orga- nizations that make requests for direct funding from the Department must in- sure that all information necessary to complete their applicat me energy assistance program, Indian tribes and tribal orga- nizations that make requests for direct funding from the Department must in- sure 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 respon- sible for providing low-income home energy assistance program services to the service population of the tribe. [64 FR 55857, Oct. 15, 1999] Subpart E—Enforcement § 96.50 Complaints. (a) This section applies to any com- plaint (other than a complaint alleging violation of the nondiscrimination pro- visions) that a State has failed to use its allotment under a block grant in accordance with the terms of the act establishing the block grant or the cer- tifications and assurances made by the State pursuant to that act. The Sec- retary is not required to consider a complaint unless it is submitted as re- quired by this section. (b) Complaints with respect to the he d assurances made by the State pursuant to that act. The Sec- retary is not required to consider a complaint unless it is submitted as re- quired by this section. (b) Complaints with respect to the health block grants must be submitted in writing to either the Assistant Sec- retary for Health or: For the preven- tive health and health services block grant, the Director, Centers for Disease Control; for the alcohol and drug abuse and mental health services block grant, the Administrator, Alcohol, Drug Abuse, and Mental Health Admin- istration; for the maternal and child health services block grant, the Ad- ministrator, Health Resources and Services Administration. Complaints with respect to the social services block grant must be submitted in writ- ing to the Assistant Secretary for Human Development Services. Com- plaints with respect to the low-income home energy assistance program and the community services block grant must be submitted in writing to the Di- rector, Office of Community Services. (The address for the Director, Center for Disease Control is 1600 Clifton Road, NE., Atlanta, Georgia 30333. For each of the other officials cited above the address is 200 Independence Av ty Services. (The address for the Director, Center for Disease Control is 1600 Clifton Road, NE., Atlanta, Georgia 30333. For each of the other officials cited above the address is 200 Independence Avenue SW., Washington, DC 20201.) The com- plaint must identify the provision of the act, assurance, or certification that was allegedly violated; must specify the basis for the violations it charges; and must include all relevant informa- tion known to the person submitting it. (c) The Department shall promptly furnish a copy of any complaint to the affected State. Any comments received from the State within 60 days (or such longer period as may be agreed upon between the State and the Department) shall be considered by the Department in responding to the complaint. The Department will conduct an investiga- tion of complaints where appropriate. (d) The Department will provide a written response to complaints within 180 days after receipt. If a final resolu- tion cannot be provided at that time, the response will state the reasons why additional time is necessary. Under the low-income home energy assistance program, within 60 days after receipt of complaints, the Department will pro- vi time, the response will state the reasons why additional time is necessary. Under the low-income home energy assistance program, within 60 days after receipt of complaints, the Department will pro- vide a written response to the com- plainant, stating the actions that it has taken to date and, if the complaint has not yet been fully resolved, the timetable for final resolution of the complaint. (e) The Department recognizes that under the block grant programs the States are primarily responsible for in- terpreting the governing statutory pro- visions. As a result, various States may reach different interpretations of 648 Dept. of Health and Human Services § 96.53 the same statutory provisions. This circumstance is consistent with the in- tent of and statutory authority for the block grant programs. In resolving any issue raised by a complaint or a Fed- eral audit the Department will defer to a State’s interpretation of its assur- ances and of the provisions of the block grant statutes unless the interpreta- tion is clearly erroneous. In any event, the Department will provide copies of complaints to the independent entity responsible for auditing the State’s ac- tivities under the b unless the interpreta- tion is clearly erroneous. In any event, the Department will provide copies of complaints to the independent entity responsible for auditing the State’s ac- tivities under the block grant program involved. Any determination by the Department that a State’s interpreta- tion is not clearly erroneous shall not preclude or otherwise prejudice the State auditors’ consideration of the question. [47 FR 29486, July 6, 1982; 47 FR 43062, Sept. 30, 1982, as amended at 52 FR 37967, Oct. 13, 1987; 57 FR 1977, Jan. 16, 1992; 60 FR 21358, May 1, 1995] § 96.51 Hearings. (a) The Department will order a State to repay amounts found not to have been expended in accordance with law of the certifications provided by the State only after the Department has provided the State notice of the order and an opportunity for a hearing. Opportunity for a hearing will not be provided, however, when the State, in resolving audit findings or at another time, has agreed that the amounts were not expended in accordance with law or the certifications. The hearing will be governed by subpart F of this part and will be held in the State if re- quired by statute. (b) If a State refuses to repay am expended in accordance with law or the certifications. The hearing will be governed by subpart F of this part and will be held in the State if re- quired by statute. (b) If a State refuses to repay amounts after a final decision that is not subject to further review in the De- partment, the amounts may be offset against payments to the State. If a statute requires an opportunity for a hearing before such an offset may be made, the hearing will be governed by subpart F of this part and will be held in the State if required by statute. (c) The Department will withhold funds from a State only if the Depart- ment has provided the State an oppor- tunity for a hearing. The hearing will be governed by subpart F of this part and will be held in the State if required by statute. [47 FR 29486, July 6, 1982, as amended at 52 FR 37967, Oct. 13, 1987] § 96.52 Appeals. (a) Decisions resulting from repay- ment hearings held pursuant to § 96.51(a) of this part may be appealed by either the State or the Department to the Grant Appeals Board. (b) Decisions resulting from offset hearings held pursuant to § 96.51(b) of this part may not be appealed. (c) Decisions resulting from with- holding hearings e Department to the Grant Appeals Board. (b) Decisions resulting from offset hearings held pursuant to § 96.51(b) of this part may not be appealed. (c) Decisions resulting from with- holding hearings held pursuant to § 96.51(c) of this part may be appealed to the Secretary by the State or the Department as follows: (1) An application for appeal must be received by the Secretary no later than 60 days after the appealing party re- ceives a copy of the presiding officer’s decision. The application shall clearly identify the questions for which review is sought and shall explain fully the party’s position with respect to those questions. A copy shall be furnished to the other party. (2) The Secretary may permit the fil- ing of opposing briefs, hold informal conferences, or take whatever other steps the Secretary finds appropriate to decide the appeal. (3) The Secretary may refer an appli- cation for appeal to the Grant Appeals Board. Notwithstanding part 16 of this title, in the event of such a referral, the Board shall issue a recommended decision that will not become final until affirmed, reversed, or modified by the Secretary. (d) Any appeal to the Grant Appeals Board under this sec uch a referral, the Board shall issue a recommended decision that will not become final until affirmed, reversed, or modified by the Secretary. (d) Any appeal to the Grant Appeals Board under this section shall be gov- erned by part 16 of this title except that the Board shall not hold a hear- ing. The Board shall accept any find- ings with respect to credibility of wit- nesses made by the presiding officer. The Board may otherwise review and supplement the record as provided for in part 16 of this title and decide the issues raised. § 96.53 Length of withholding. Under the low-income home energy assistance program and community services block grant, the Department 649 § 96.60 45 CFR Subtitle A (10–1–24 Edition) may withhold funds until the Depart- ment finds that the reason for the withholding has been removed. [64 FR 55857, Oct. 15, 1999] Subpart F—Hearing Procedure § 96.60 Scope. The procedures in this subpart apply when opportunity for a hearing is pro- vided for by § 96.51 of this part. § 96.61 Initiation of hearing. (a) A hearing is initiated by a notice of opportunity for hearing from the De- partment. The notice will: (1) Be sent by mail, telegram, telex, personal delivery, part. § 96.61 Initiation of hearing. (a) A hearing is initiated by a notice of opportunity for hearing from the De- partment. The notice will: (1) Be sent by mail, telegram, telex, personal delivery, or any other mode of written communication; (2) Specify the facts and the action that are the subject of the opportunity for a hearing; (3) State that the notice of oppor- tunity for hearing and the hearing are governed by these rules; and (4) State the time within which a hearing may be requested, and state the name, address, and telephone num- ber of the Department employee to whom any request for hearing is to be addressed. (b) A State offered an opportunity for a hearing has the amount of time spec- ified in the notice, which may not be less than 10 days after receipt of the notice, within which to request a hear- ing. The request may be filed by mail, telegram, telex, personal delivery, or any other mode of written communica- tion, addressed to the designated De- partment employee. If no response is filed within that time, the offer is deemed to have been refused and no hearing will be held. (c) If a hearing is requested, the De- partment will designate a presiding of- ficer, and f no response is filed within that time, the offer is deemed to have been refused and no hearing will be held. (c) If a hearing is requested, the De- partment will designate a presiding of- ficer, and (subject to § 96.51 of this part) the hearing will take place at a time and location agreed upon by the State requesting the hearing, the Depart- ment, and the presiding officer or, if agreement cannot be reached, at a rea- sonable time and location designated by the presiding officer. ity, or any other agency employee des- ignated by an employee to whom such authority is delegated, may serve as the presiding officer and conduct a hearing under this subpart. (b) The presiding officer is to be free from bias or prejudice and may not have participated in the investigation or action that is the subject of the hearing or be subordinate to a person, other than the Secretary, who has par- ticipated in such investigation or ac- tion. (c) The Secretary is not precluded by this section from prior participation in the investigation or action that is the subject of the hearing. (d) A different presiding officer may be substituted for the one originally designated under § 96.61 of this part witho participation in the investigation or action that is the subject of the hearing. (d) A different presiding officer may be substituted for the one originally designated under § 96.61 of this part without notice to the parties. § 96.63 Communications to presiding officer. (a) Those persons who are directly in- volved in the investigation or presen- tation of the position of the Depart- ment or any party at a hearing that is subject to this subpart should avoid any off-the-record communication on the matter to the presiding officer or his advisers if the communication is in- consistent with the requirement of § 96.68 of this part that the administra- tive record be the exclusive record for decision. If any communication of this type occurs, it is to be reduced to writ- ing and made part of the record, and the other party provided an oppor- tunity to respond. (b) A copy of any communications be- tween a participant in the hearing and the presiding officer, e.g., a response by the presiding officer to a request for a change in the time of the hearing is to be sent to all parties by the person ini- tiating the communication. § 96.64 Intervention. Participation as parties in the hear- ing officer to a request for a change in the time of the hearing is to be sent to all parties by the person ini- tiating the communication. § 96.64 Intervention. Participation as parties in the hear- ing by persons other than the State and the Department is not permitted. § 96.65 Discovery. § 96.62 Presiding officer. (a) A Department employee to whom the Secretary delegates such author- The use of interrogatories, deposi- tions, and other forms of discovery shall not be allowed. 650 Dept. of Health and Human Services § 96.68 § 96.66 Hearing procedure. (a) A hearing is public, except when the Secretary or the presiding officer determines that all or part of a hearing should be closed to prevent a clearly unwarranted invasion of personal pri- vacy (such as disclosure of information in medical records that would identify patients), to prevent the disclosure of a trade secret or confidential commer- cial or financial information, or to pro- tect investigatory records compiled for law enforcement purposes that are not available for public disclosure. (b) A hearing will be conducted by the presiding officer. Employees of the Department will first give a full and complete statement of the ac ent purposes that are not available for public disclosure. (b) A hearing will be conducted by the presiding officer. Employees of the Department will first give a full and complete statement of the action which is the subject of the hearing, to- gether with the information and rea- sons supporting it, and may present any oral or written information rel- evant to the hearing. The State may then present any oral or written infor- mation relevant to the hearing. Both parties may confront and conduct rea- sonable cross-examination of any per- son (except for the presiding officer and counsel for the parties) who makes any statement on the matter at the hearing. (c) The hearing is informal in nature, and the rules of evidence do not apply. No motions or objections relating to the admissibility of information and views will be made or considered, but either party may comment upon or rebut all such data, information, and views. (d) The presiding officer may order the hearing to be transcribed. The State may have the hearing tran- scribed, at the State’s expense, in which case a copy of the transcript is to be furnished to the Department at the Department’s expense. (e) The presiding offic . The State may have the hearing tran- scribed, at the State’s expense, in which case a copy of the transcript is to be furnished to the Department at the Department’s expense. (e) The presiding officer may, if ap- propriate, allow for the submission of post-hearing briefs. The presiding offi- cer shall prepare a written decision, which shall be based on a preponder- ance of the evidence, shall include a statement of reasons for the decision, and shall be final unless appealed pur- suant to § 96.52 of this part. If post- hearing briefs were not permitted, the parties to the hearing will be given the opportunity to review and comment on the presiding officer’s decision prior to its being issued. (f) The presiding officer shall include as part of the decision a finding on the credibility of witnesses (other than ex- pert witnesses) whenever credibility is a material issue. (g) The presiding officer shall furnish a copy of the decision to the parties. (h) The presiding officer has the power to take such actions and make such rulings as are necessary or appro- priate to maintain order and to con- duct a fair, expeditious, and impartial hearing, and to enforce the require- ments of this er to take such actions and make such rulings as are necessary or appro- priate to maintain order and to con- duct a fair, expeditious, and impartial hearing, and to enforce the require- ments of this subpart concerning the conduct of hearings. The presiding offi- cer may direct that the hearing be con- ducted in any suitable manner per- mitted by law and these regulations. (i) The Secretary or the presiding of- ficer has the power to suspend, modify, or waive any provision of this subpart. § 96.67 Right to counsel. Any party to a hearing under this part has the right at all times to be ad- vised and accompanied by counsel. § 96.68 Administrative record of a hearing. (a) The exclusive administrative record of the hearing consists of the following: (1) The notice of opportunity for hearing and the response. (2) All written information and views submitted to the presiding officer at the hearing or after if specifically per- mitted by the presiding officer. (3) Any transcript of the hearing. (4) The presiding officer’s decision and any briefs or comments on the de- cision under § 96.66(e) of this part. (5) All letters or communications be- tween participants and the presiding officer ng. (4) The presiding officer’s decision and any briefs or comments on the de- cision under § 96.66(e) of this part. (5) All letters or communications be- tween participants and the presiding officer or the Secretary referred to in § 96.63 of this part. (b) The record of the hearing is closed to the submission of information and views at the close of the hearing, un- less the presiding officer specifically permits additional time for a further submission. 651 § 96.70 45 CFR Subtitle A (10–1–24 Edition) Subpart G—Social Services Block Grants ergy assistance (or any combination of those activities). § 96.70 Scope. This subpart applies to the social services block grant. § 96.71 Definitions. (a) Section 2005 (a)(2) and (a)(5) (42 U.S.C. 1397d (a)(2) and (a)(5)) of the So- cial Security Act establishes prohibi- tions against the provision of room and board and medical care unless, among other reasons, they are an ‘‘integral but subordinate’’ part of a State-au- thorized social service. ‘‘Integral but subordinate’’ means that the room and board provided for a short term or med- ical care is a minor but essential ad- junct to the service of which it is a part and is necessary to achieve ntegral but subordinate’’ means that the room and board provided for a short term or med- ical care is a minor but essential ad- junct to the service of which it is a part and is necessary to achieve the ob- jective of that service. Room and board provided for a short term shall not be considered an integral but subordinate part of a social service when it is pro- vided to an individual in a foster fam- ily home or other facility the primary purpose of which is to provide food, shelter, and care or supervision, except for temporary emergency shelter pro- vided as a protective service. (b) As used in section 2005(a)(5) of the Social Security Act (42 U.S.C. 1397d (a)(5)) with respect to the limitations governing the provision of services by employees of certain institutions, em- ployees includes staff, contractors, or other individuals whose activities are under the professional direction or di- rect supervision of the institution. [47 FR 29486, July 6, 1982; 47 FR 43062, Sept. 30, 1982] § 96.72 Transferability of funds. Under section 2002(d) of the Social Security Act (42 U.S.C. 1397a(d)), funds may be transferred in accordance with the provisions of that section to the preventive h § 96.72 Transferability of funds. Under section 2002(d) of the Social Security Act (42 U.S.C. 1397a(d)), funds may be transferred in accordance with the provisions of that section to the preventive health and health services, alcohol and drug abuse and mental health services, primary care, maternal and child health services, and low-in- come home energy assistance block grants. In addition, funds may be transferred to other Federal block grants for support of health services, health promotion and disease preven- tion activities, or low-income home en- § 96.73 Sterilization. If a State authorizes sterilization as a family planning service, it must com- ply with the provisions of 42 CFR part 441, subpart F, except that the State plan requirement under 42 CFR 441.252 does not apply. [47 FR 33702, Aug. 4, 1982] § 96.74 Annual reporting requirements. (a) Annual report. In accordance with 42 U.S.C. 1397e, each state must submit an annual report to the Secretary by the due dates specified in § 96.17 of this part. The annual report must cover the most recently completed fiscal year and, except for the data in paragraphs (a) (1) through (4) of this section, may be submitted in the format o § 96.17 of this part. The annual report must cover the most recently completed fiscal year and, except for the data in paragraphs (a) (1) through (4) of this section, may be submitted in the format of the state’s choice. The annual report must address the requirements in section 2006(a) of the Act, include the specific data required by section 2006(c), and in- clude other information as follows: (1) The number of individuals who re- ceive services paid for in whole or in part with federal funds under the So- cial Services Block Grant, showing sep- arately the number of children and the number of adults who received such services (section 2006(c)(1)); (2) The amount of Social Services Block Grant funds spent in providing each service, showing separately for each service the average amount spent per child recipient and per adult recipi- ent (section 2006(c)(2)); (3) The total amount of federal, state and local funds spent in providing each service, including Social Services Block Grant funds; (4) The method(s) by which each serv- ice is provided, showing separately the services provided by public agencies, private agencies, or both (section 2006(c)(4)); and (5) The criteria applied funds; (4) The method(s) by which each serv- ice is provided, showing separately the services provided by public agencies, private agencies, or both (section 2006(c)(4)); and (5) The criteria applied in deter- mining eligibility for each service such as income eligibility guidelines, sliding fee scales, the effect of public assist- ance benefits, and any requirements for enrollment in school or training pro- grams (section 2006(c)(3)). (b) Reporting requirement. (1) Each state must use the uniform definitions of services in appendix A of this part, 652 Dept. of Health and Human Services § 96.81 categories 1–28, in submitting the data required in paragraph (a) of this sec- tion. Where a state cannot use the uni- form definitions, it should report the data under category 29, ‘‘Other Serv- ices.’’ The state’s definitions of each of the services listed in category 29 must be included in the annual report. (2) Each state must use the reporting form issued by the Department to re- port the data required in paragraphs (a) (1) through (4) of this section. (3) In reporting recipient and expend- iture data, each state must report ac- tual numbers of recipients and actual expenditures when th ata required in paragraphs (a) (1) through (4) of this section. (3) In reporting recipient and expend- iture data, each state must report ac- tual numbers of recipients and actual expenditures when this information is available. For purposes of this report, each state should, if possible, count only a single recipient for each service. States should also consider a service provided to a recipient for the length of the reporting period (one year) or any fraction thereof as a single service. Data based on sampling and/or esti- mates will be accepted when actual fig- ures are unavailable. Each state must indicate for each service whether the data are based on actual figures, sam- pling, or estimates and must describe the sampling and/or estimation proc- ess(es) it used to obtain these data in the annual report. Each state must also indicate, in reporting recipient data, whether the data reflects an unduplicated count of recipients. (4) Each state must use category 30, ‘‘Other Expenditures,’’ to report non- service expenditures. Only total dollar amounts in this category are required, i.e., they need not be reported by re- cipient count or cost per adult/child. This will include carry ,’’ to report non- service expenditures. Only total dollar amounts in this category are required, i.e., they need not be reported by re- cipient count or cost per adult/child. This will include carry over balances, carry forward balances, funds trans- ferred to or from the SSBG program, and administrative costs as defined by the state. (5) Each state must use its own defi- nition of the terms ‘‘child’’ and ‘‘adult’’ in reporting the data required in paragraphs (a) (1) through (5) of this section. (6) Each state’s definition of ‘‘child’’ and ‘‘adult’’ must be reported as a part of the eligibility criteria for each serv- ice required in paragraph (a)(5) of this section. The data on eligibility criteria may be submitted in whatever format the state chooses as a part of its an- nual report. (c) Transfer of computer data. In addi- tion to making the annual report avail- able to the public and to the Depart- ment, a state may submit the informa- tion specified in paragraphs (a) (1) through (4) of this section using elec- tronic equipment. A full description of procedures for electronic transmission of data, and of the availability of com- puter diskettes, is included in appendix B to thi 4) of this section using elec- tronic equipment. A full description of procedures for electronic transmission of data, and of the availability of com- puter diskettes, is included in appendix B to this part. [58 FR 60129, Nov. 15, 1993] Subpart H—Low-income Home Energy Assistance Program § 96.80 Scope. This subpart applies to the low-in- come home energy assistance program. § 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 relat- ing to carryover and reallotment of regular LIHEAP block grant funds au- thorized 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 re- port 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 com- plied 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 fun graph 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 as- sistance 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 653 § 96.82 45 CFR Subtitle A (10–1–24 Edition) $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. [64 FR 55858, Oct. 15, 1999] § 96.82 Required report on households assisted. (a) Each grantee which is a State or an insular area which receives an an- nual allotment of at least $200,000 shall submit to the Department, as part of its LIHEAP grant applica households assisted. (a) Each grantee which is a State or an insular area which receives an an- nual 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 Pub- lic Law 97–35 (42 U.S.C. 8624(c)(1)(G)) for the 12-month period corresponding to the Federal fiscal year (October 1–Sep- tember 30) preceding the fiscal year for which funds are requested. The data shall be for LIHEAP heating, cooling, crisis, and weatherization assistance. separately reported (b) Each grantee which is an insular area which receives an annual allot- ment 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 De- partment, as part of its LIHEAP grant application, data on the number of households receiving LIHEAP assist- ance during the 12-month period cor- responding to the Federal fiscal year (October 1–September 30) preceding the fiscal year for which funds are re- quested. The data shall be reported sep- arately for LIHEAP heating, cooling, crisis, and weatherization assistance. (c) Grantees will not receive their LIHEAP gra fiscal year for which funds are re- quested. The data shall be reported sep- arately 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. [64 FR 55858, Oct. 15, 1999] § 96.83 Increase in maximum amount that may be used for weatheriza- tion and other energy-related home repair. (a) Scope. This section concerns re- quests for waivers increasing from 15 percent to up to 25 percent of LIHEAP funds allotted or available to a grantee for a fiscal year, the maximum amount that grantees may use for low-cost res- idential weatherization and other en- ergy-related home repair for low-in- come households (hereafter referred to as ‘‘weatherization’’), pursuant to sec- tion 2605(k) of Public Law 97–35 (42 U.S.C. 8624(k)). (b) Public inspection and comment. Be- fore submitting waiver requests to the Department, grantees must make pro- posed waiver requests available for public inspection within their jurisdic- tions in a manner that will facilitate timely and meaningful review of, and comment upon, these r , grantees must make pro- posed waiver requests available for public inspection within their jurisdic- tions in a manner that will facilitate timely and meaningful review of, and comment upon, these requests. Written public comments on proposed waiver requests must be made available for public inspection upon their receipt by grantees, as must any summaries pre- pared of written comments, and tran- scripts and/or summaries of verbal comments made on proposed requests at public meetings or hearings. Pro- posed waiver requests, and any prelimi- nary waiver requests, must be made available for public inspection and comment until at least March 15 of the fiscal year for which the waiver is to be requested. Copies of actual waiver re- quests must be made available for pub- lic inspection upon submission of the requests to the Department. (c) Waiver request. After March 31 of each fiscal year, the chief executive of- ficer (or his or her designee) may re- quest a waiver of the weatherization obligation limit for this fiscal year, if the grantee meets criteria in para- graphs (c)(2)(i), (c)(2)(ii), and (c)(2)(iii) of this section, or can show ‘‘good cause’’ for obtaining a waiver despite obligation limit for this fiscal year, if the grantee meets criteria in para- graphs (c)(2)(i), (c)(2)(ii), and (c)(2)(iii) of this section, or can show ‘‘good cause’’ for obtaining a waiver despite a failure to meet one or more of these criteria. (If the request is made by the chief executive officer’s designee and the Department does not have on file written evidence of the designation, the request also must include evidence of the appropriate delegation of au- thority.) Waiver requests must be in writing and must include the informa- (c)(1) tion specified through (c)(6) of this section. The grantee may submit a preliminary waiver request for a fiscal year, be- tween February 1 and March 31 of the fiscal year for which the waiver is re- quested. If a grantee chooses to submit a preliminary waiver request, the pre- liminary request must include the in- formation specified in paragraphs (c)(1) through (c)(6) of this section; in addi- tion, after March 31 the chief executive officer (or his or her designee) must submit the information specified in in paragraphs 654 Dept. of Health and Human Services § 96.83 paragraphs (c)(7) through (c)(10) of this section, to complete the prelimin r his or her designee) must submit the information specified in in paragraphs 654 Dept. of Health and Human Services § 96.83 paragraphs (c)(7) through (c)(10) of this section, to complete the preliminary waiver request. (1) A statement of the total percent of its LIHEAP funds allotted or avail- able in the fiscal year for which the waiver is requested, that the grantee desires to use for weatherization. (2) A statement of whether the grant- ee has met each of the following three criteria: (i) In the fiscal year for which the waiver is requested, the combined total (aggregate) number of households in the grantee’s service population that will receive LIHEAP heating, cooling, and crisis assistance benefits that are provided from Federal LIHEAP allot- ments from regular and supplemental appropriations will not be fewer than the combined total (aggregate) number that received such benefits in the pre- ceding fiscal year; (ii) In the fiscal year for which the waiver is requested, the combined total (aggregate) amount, in dollars, of LIHEAP heating, cooling, and crisis as- sistance benefits received by the grant- ee’s service population that are pro- vided from Federal LIHEAP allotments ed total (aggregate) amount, in dollars, of LIHEAP heating, cooling, and crisis as- sistance benefits received by the grant- ee’s service population that are pro- vided from Federal LIHEAP allotments from regular and supplemental appro- priations will not be less than the com- bined total (aggregate) amount re- ceived in the preceding fiscal year; and (iii) All LIHEAP weatherization ac- tivities to be carried out by the grant- ee in the fiscal year for which the wavier is requested have been shown to produce measurable savings in energy expenditures. (3) With regard to criterion in para- graph (c)(2)(i) of this section, a state- ment of the grantee’s best estimate of the appropriate household totals for the fiscal year for which the wavier is requested and for the preceding fiscal year. (4) With regard to criterion in para- graph (c)(2)(ii) of this section, a state- ment of the grantee’s best estimate of the appropriate benefit totals, in dol- lars, for the fiscal year for which the waiver is requested and for the pre- ceding fiscal year. (5) With regard to criterion in para- graph (c)(2)(iii) of this section, a de- scription of the weatherization activi- ties to be carried out by iver is requested and for the pre- ceding fiscal year. (5) With regard to criterion in para- graph (c)(2)(iii) of this section, a de- scription of the weatherization activi- ties to be carried out by the grantee in the fiscal year for which the wavier is requested (with all LIHEAP funds pro- posed to be used for weatherization, not just with the amount over 15 per- cent), and an explanation of the spe- cific criteria under which the grantee has determined whether these activi- ties have been shown to produce meas- urable savings in energy expenditures. (6) A description of how and when the proposed wavier request was made available for timely and meaningful public review and comment, copies and/ or summaries of public comments re- ceived on the request (including tran- scripts and/or summaries of any com- ments made on the request at public meetings or hearings), a statement of the method for reviewing public com- ments, and a statement of the changes, if any, that were made in response to these comments. (7) To complete a preliminary waiver request: Official confirmation that the grantee wishes approval of the waiver request. (8) To complete a preliminary waiver request: A stateme e to these comments. (7) To complete a preliminary waiver request: Official confirmation that the grantee wishes approval of the waiver request. (8) To complete a preliminary waiver request: A statement of whether any public comments were received after preparation of the preliminary waiver request and, if so, copies and/or sum- maries of these comments (including transcripts and/or summaries of any comments made on the request at pub- lic meetings or hearings), and a state- ment of the changes, if any, that were made in response to these comments. (9) To complete a preliminary waiver request: A statement of whether any material/substantive changes of fact have occurred in information included in the preliminary waiver request since its submission, and, if so, a description of the change(s). (10) To complete a preliminary waiv- er request: A description of any other changes to the preliminary request. (d) ‘‘Standard’’ waiver. If the Depart- ment determines that a grantee has meet the three criteria in paragraph (c)(2) of this section, has provided all information required by paragraph (c) of this section, has shown adequate concern for timely and meaningful public review and commen hree criteria in paragraph (c)(2) of this section, has provided all information required by paragraph (c) of this section, has shown adequate concern for timely and meaningful public review and comment, and has proposed weatherization that meets all relevant requirements of title XXVI of Public Law 97–35 (42 U.S.C. 8621 et seq.) and 45 CFR part 96, the Department will approve a ‘‘standard’’ waiver. 655 § 96.84 45 CFR Subtitle A (10–1–24 Edition) (e) ‘‘Good cause’’ waiver. (1) If a grant- ee does not meet one or more of the three criteria in paragraph (c)(2) of this section, then the grantee may submit documentation that demonstrates good cause why a waiver should be granted despite the grantee’s failure to meet this criterion or these criteria. ‘‘Good cause’’ waiver requests must include the following information, in addition to the information specified in para- graph (c) of this section: (i) For each criterion under para- graph (c)(2) of this section that the grantee does not meet, an explanation of the specific reasons demonstrating good cause why the grantee does not meet the criterion and yet proposes to use additional funds for weatheriza- tion, citing measurable, quantified n explanation of the specific reasons demonstrating good cause why the grantee does not meet the criterion and yet proposes to use additional funds for weatheriza- tion, citing measurable, quantified data, and stating the source(s) of the data used; (ii) A statement of the grantee’s LIHEAP heating, cooling, and crisis as- sistance eligibility standards (eligi- bility criteria) and benefits levels for the fiscal year for which the waiver is requested and for the preceding fiscal year; and, if eligibility standards were less restrictive and/or benefit levels were higher in the preceding fiscal year for one or more of these program com- ponents, an explanation of the reasons demonstrating good cause why a waiv- er should be granted in spite of this fact; (iii) A statement of the grantee’s opening and closing dates for applica- tions for LIHEAP heating, cooling, and crisis assistance in the fiscal year for which the waiver is requested and in the preceding fiscal year, and a de- scription of the grantee’s outreach ef- forts for heating, cooling, and crisis as- sistance in the fiscal year for which the waiver is requested and in the pre- ceding fiscal year, and, if the grantee’s applica of the grantee’s outreach ef- forts for heating, cooling, and crisis as- sistance in the fiscal year for which the waiver is requested and in the pre- ceding fiscal year, and, if the grantee’s application period was longer and/or outreach efforts were greater in the preceding fiscal year for one or more of these program components, an expla- nation of the reasons demonstrating good cause why a waiver should be granted in spite of this fact; and (iv) If the grantee took, or will take, other actions that led, or will lead, to a reduction in the number of applica- tions for LIHEAP heating, cooling, and/or crisis assistance, from the pre- ceding fiscal year to the fiscal year for which the waiver is requested, a de- scription of these actions and an expla- nation demonstrating good cause why a waiver should be granted in spite of these actions. (2) If the Department determines that a grantee requesting a ‘‘good cause’’ waiver has demonstrated good cause why a waiver should be granted, has provided all information required by paragraphs (c) and (e)(1) of this sec- tion, has shown adequate concern for timely and meaningful public review and comment, and has proposed weath- erization that provided all information required by paragraphs (c) and (e)(1) of this sec- tion, has shown adequate concern for timely and meaningful public review and comment, and has proposed weath- erization that meets all relevant re- quirements of title XXVI of Public Law 97–35 (42 U.S.C. 8621 et seq.) and 45 CFR part 96, the Department will approve a ‘‘good cause’’ waiver. (f) Approvals and disapprovals. After receiving the grantee’s complete waiv- er request, the Department will re- spond in writing within 45 days, in- forming the grantee whether the re- quest is approved on either a ‘‘stand- ard’’ or ‘‘good cause’’ basis. The De- partment may request additional infor- mation and/or clarification from the grantee. If additional information and/ or clarification is requested, the 45-day period for the Department’s response will start when the additional informa- tion and/or clarification is received. No waiver will be granted for a previous fiscal year. (g) Effective period. Waivers will be ef- fective from the date of the Depart- ment’s written approval until the funds for which the waiver is granted are ob- ligated in accordance with title XXVI of Public Law 97–35 (42 U.S.C. 8621 et seq.) fective from the date of the Depart- ment’s written approval until the funds for which the waiver is granted are ob- ligated in accordance with title XXVI of Public Law 97–35 (42 U.S.C. 8621 et seq.) and 45 CFR part 96. Funds for which a weatherization waiver was granted that are carried over to the following fiscal year and used for weatherization shall not be considered ‘‘funds allotted’’ or ‘‘funds available’’ for the purposes of calculating the maximum amount that may be used for weatherization in the succeeding fiscal year. [60 FR 21358, May 1, 1995; 60 FR 33260, June 27, 1995] § 96.84 Miscellaneous. (a) Rights and responsibilities of terri- tories. Except as otherwise provided, a territory eligible for funds shall have 656 Dept. of Health and Human Services § 96.87 the same rights and responsibilities as a State. (b) Applicability of assurances. The as- surances in section 2605(b) of Public Law 97–35 (42 U.S.C. 8624(b)), as amend- ed, pertain to all forms of assistance provided by the grantee, with the ex- ception of assurance 15, which applies to heating, cooling, and energy crisis intervention assistance. (c) Prevention of waste, fraud, and abuse. Grantees must establish a by the grantee, with the ex- ception of assurance 15, which applies to heating, cooling, and energy crisis intervention assistance. (c) Prevention of waste, fraud, and abuse. Grantees must establish appro- priate systems and procedures to pre- vent, detect, and correct waste, fraud, and abuse in activities funded under the low-income home energy assistance program. The systems and procedures are to address possible waste, fraud, and abuse by clients, vendors, and ad- ministering agencies. (d) End of transfer authority. Begin- ning 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). [57 FR 1978, Jan. 16, 1992, as amended at 64 FR 55858, Oct. 15, 1999] § 96.85 Income eligibility. (a) Application of poverty income guide- lines 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)), grant- ees using the Federal government’s of- ficial poverty income guidelines and State median income estimates for ho lity standards in section 2605(b)(2) of Public Law 97–35 (42 U.S.C. 8624(b)(2)), grant- ees using the Federal government’s of- ficial poverty income guidelines and State median income estimates for households as a basis for determining eligibility for assistance shall, by Octo- ber 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 cri- teria to accord with the most recently published revision to the poverty in- come guidelines or State median in- come estimates for households at any time between the publication of the re- vision and the following October 1, or the beginning of the State fiscal year, whichever is later. (b) Adjustment of annual median in- come for household size. In order to de- termine the State median income for households that have other than four individuals, grantees shall adjust the State median income figures (published annually by the Secretary), by the fol- lowing percentages: (1) One-person household, 52 percent; (2) Two-person household, 68 p duals, grantees shall adjust the State median income figures (published annually by the Secretary), by the fol- lowing percentages: (1) One-person household, 52 percent; (2) Two-person household, 68 percent; (3) Three-person household, 84 per- cent; (4) Four-person household, 100 per- cent; (5) Five-person household, 116 per- cent; (6) Six-person household, 132 percent; and (7) For each additional household member above six persons, add three percentage points to the percentage ad- justment for a six-person household. [53 FR 6827, Mar. 3, 1988, as amended at 64 FR 55858, Oct. 15, 1999] § 96.86 Exemption from requirement for additional outreach and intake services. 97–35 The requirement in section 2605(b)(15) of Public Law (42 U.S.C. 8624(b)(15)), as amended by section 704(a)(4) of the Augustus F. Hawkins Human Services Reauthorization Act of 1990 (Pub. L. 101–501)—concerning ad- ditional outreach and intake services— does not apply to: (a) Indian tribes and tribal organiza- tions; and (b) Territories whose annual LIHEAP allotments under section 2602(b) of Public Law 97–35 (42 U.S.C. 8621(b)) are $200,000 or less. [57 FR 1978, Jan. 16, 1992] § 96.87 Leveraging incentive program. (a) (b) Territories whose annual LIHEAP allotments under section 2602(b) of Public Law 97–35 (42 U.S.C. 8621(b)) are $200,000 or less. [57 FR 1978, Jan. 16, 1992] § 96.87 Leveraging incentive program. (a) Scope and eligible grantees. (1) This section concerns the leveraging incen- tive program authorized by section 2607A of Public Law 97–35 (42 U.S.C. 8626a). (2)(i) The only entities eligible to re- ceive leveraging incentive funds from the Department are States (including the District of Columbia), Indian tribes, tribal organizations, and terri- tories that received direct Federal LIHEAP funding under section 2602(b) of Public Law 97–35 (42 U.S.C. 8621(b)) in both the base period for which lever- aged resources are reported, and the 657 § 96.87 45 CFR Subtitle A (10–1–24 Edition) award period for which leveraging in- centive funds are sought; and tribes and tribal organizations described in paragraphs (a)(2)(ii) and (a)(2)(iii) of this section. (ii) Indian tribes that received LIHEAP services under section 2602(b) of Public Law 97–35 (42 U.S.C. 8621(b)) through a directly-funded tribal orga- nization in the base period for which leveraged resources are reported, and receive direct Fed ices under section 2602(b) of Public Law 97–35 (42 U.S.C. 8621(b)) through a directly-funded tribal orga- nization in the base period for which leveraged resources are reported, and receive direct Federal LIHEAP funding under section 2602(b) in the award pe- riod, will receive leveraging incentive funds allocable to them if they submit leveraging reports meeting all applica- ble requirements. If the tribal organi- zation continues to receive direct fund- ing under section 2602(b) in the award period, the tribal organization also will receive incentive funds allocable to it if it submits a leveraging report meet- ing all applicable requirements. In such cases, incentive funds will be allo- cated among the involved entities that submit leveraging reports, as agreed by these entities. If they cannot agree, HHS will allocate funds based on the comparative role of each entity in obtaining and/or admin- istering the leveraged resources, and/or their relative number of LIHEAP-eligi- ble households. incentive (iii) If a tribe received direct Federal LIHEAP funding under section 2602(b) of Public Law 97–35 (42 U.S.C. 8621(b)) in the base period for which resources leveraged by the tribe are holds. incentive (iii) If a tribe received direct Federal LIHEAP funding under section 2602(b) of Public Law 97–35 (42 U.S.C. 8621(b)) in the base period for which resources leveraged by the tribe are reported, and the tribe receives LIHEAP services under section 2602(b) through a di- rectly-funded tribal organization in the award period, the tribal organization will receive leveraging incentive funds on behalf of the tribe for the resources if the tribal organization submits a leveraging report meeting all applica- ble requirements. (b) Definitions—(1) Award period means the fiscal year during which leveraging incentive funds are distrib- uted to grantees by the Department, based on the countable leveraging ac- tivities they reported to the Depart- ment for the preceding fiscal year (the base period). (2) Base period means the fiscal year for which a grantee’s leveraging activi- ties are reported to the Department; grantees’ countable leveraging activi- ties during the base period or base year are the basis for the distribution of leveraging incentive funds during the succeeding fiscal year (the award pe- riod or award year). Leveraged re- sources are counted in the base period du base year are the basis for the distribution of leveraging incentive funds during the succeeding fiscal year (the award pe- riod or award year). Leveraged re- sources are counted in the base period during which their benefits are pro- vided to low-income households. (3) Countable loan fund means revolv- ing loan funds and similar loan instru- ments in which: (i) The sources of both the loaned and the repaid funds meet the requirements of this section, including the prohibi- tions of paragraphs (f)(1), (f)(2), and (f)(3) of this section; (ii) Neither the loaned nor the repaid funds are Federal funds or payments from low-income households, and the loans are not made to low-income households; and (iii) The benefits provided by the loaned funds meet the requirements of this section for countable leveraged re- sources and benefits. (4) Countable petroleum violation es- crow funds means petroleum violation escrow (oil overcharge) funds that were distributed to a State or territory by the Department of Energy (DOE) after October 1, 1990, and interest earned in accordance with DOE policies on petro- leum violation escrow funds that were distributed to a State or territory by DOE after Octo artment of Energy (DOE) after October 1, 1990, and interest earned in accordance with DOE policies on petro- leum violation escrow funds that were distributed to a State or territory by DOE after October 1, 1990, that: (i) Were used to assist low-income households to meet the costs of home energy through (that is, within and as a part of) a State or territory’s LIHEAP program, another Federal pro- gram, or a non-Federal program, in ac- cordance with a submission for use of these petroleum violation escrow funds that was approved by DOE; (ii) Were not previously required to be allocated to low-income households; and (iii) Meet the requirements of para- graph (d)(1) of this section, and of para- graph (d)(2)(ii) or (d)(2)(iii) or this sec- tion. (5) Home energy means a source of heating or cooling in residential dwell- ings. (6) Low-income households means fed- erally eligible (federally qualified) households meeting the standards for LIHEAP income eligibility and/or LIHEAP categorical eligibility as set 658 Dept. of Health and Human Services § 96.87 by section 2605(b)(2) of Public Law 97–35 (42 U.S.C. 8624(b)(2)). section 2605(b)(2) of Public Law 97–35 (42 U.S.C. 8624(b)(2)). (7) We ligibility as set 658 Dept. of Health and Human Services § 96.87 by section 2605(b)(2) of Public Law 97–35 (42 U.S.C. 8624(b)(2)). section 2605(b)(2) of Public Law 97–35 (42 U.S.C. 8624(b)(2)). (7) Weatherization means low-cost res- idential weatherization and other en- ergy-related home repair for low-in- come households. Weatherization must be directly related to home energy. (c) LIHEAP funds used to identify, de- velop, and demonstrate leveraging pro- grams. (1) Each fiscal year, States (ex- cluding Indian tribes, tribal organiza- tions, and territories) may spend up to the greater of $35,000 or 0.08 percent of their net Federal LIHEAP allotments (funds payable) allocated under section 2602(b) of Public Law 97–35 (42 U.S.C. 8621(b)) specifically to identify, de- velop, and demonstrate leveraging pro- grams under section 2607A(c)(2) of Pub- lic Law 97–35 (42 U.S.C. 8626a(c)(2)). Each fiscal year, Indian tribes, tribal organizations, and territories may spend up to the greater of two (2.0) per- cent or $100 of their Federal LIHEAP allotments allocated under section 2602(b) of Public law 97–35 (42 U.S.C. 8621(b)) specifically to identify, de- velop, and demonstrate leveraging pro- (2.0) per- cent or $100 of their Federal LIHEAP allotments allocated under section 2602(b) of Public law 97–35 (42 U.S.C. 8621(b)) specifically to identify, de- velop, and demonstrate leveraging pro- grams under section 2607A(c)(2) of Pub- lic Law 97–35 (42 U.S.C. 8626a(c)(2)). For the purpose of this paragraph, Federal LIHEAP allotments include funds from regular and supplemental appropria- tions, with the exception of leveraging incentive funds provided under section 2602(d) of Public Law 97–35 (42 U.S.C. 8621(d)). develop, (2) LIHEAP funds used under section 2607A(c)(2) of Public Law 97–35 (42 U.S.C. 8626a(c)(2)) specifically to iden- tify, demonstrate leveraging programs are not subject to the limitation in section 2605(b)(9) of Public Law 97–35 (42 U.S.C. 8624(b)(9)) on the maximum percent of Federal funds that may be used for costs of planning and administration. and (d) Basic requirements for leveraged re- sources and benefits. (1) In order to be counted under the leveraging incentive program, leveraged resources and bene- fits must meet all of the following five criteria: (i) They are from non-Federal sources. (ii) They are provided to the grant- ee’s low-income home energy entive program, leveraged resources and bene- fits must meet all of the following five criteria: (i) They are from non-Federal sources. (ii) They are provided to the grant- ee’s low-income home energy assist- ance program, or to federally qualified low-income households as described in (iii) They are measurable and quan- tifiable in dollars. (iv) They represent a net addition to the total home energy resources avail- able to low-income households in ex- cess of the amount of such resources that could be acquired by these house- holds through the purchase of home en- ergy, or the purchase of items that help these households meet the cost of home energy, at commonly available household rates or costs, or that could be obtained with regular LIHEAP al- lotments provided under section 2602(b) of Public Law 97–35 (42 U.S.C. 8621(b)). (v) They meet the requirements for countable leveraged resources and ben- efits throughout this section and sec- tion 2607A of Public Law 97–35 (42 U.S.C. 8626a). (2) Also, in order to be counted under the leveraging incentive program, le- veraged resources and benefits must meet at least one of the following three criteria: (i) The grantee’s LIHEAP program ). (2) Also, in order to be counted under the leveraging incentive program, le- veraged resources and benefits must meet at least one of the following three criteria: (i) The grantee’s LIHEAP program had an active, substantive role in de- veloping and/or acquiring the resource/ benefits from home energy vendor(s) through negotiation, regulation, and/or competitive bid. The actions or efforts of one or more staff of the grantee’s LIHEAP program—at the central and/ or local level—and/or one or more staff of LIHEAP program subrecipient(s) acting in that capacity, were substan- tial and significant in obtaining the re- source/benefits from the vendor(s). (ii) The grantee appropriated or man- dated the resource/benefits for distribu- tion to low-income households through (that is, within and as a part of) its LIHEAP program. The resource/bene- fits are provided through the grantee’s LIHEAP program to low-income house- holds eligible under the grantee’s LIHEAP standards, in accordance with the LIHEAP statute and regulations and consistent with the grantee’s LIHEAP plan and program policies that were in effect during the base pe- riod, as if they were provided from the grantee’s Federal L he LIHEAP statute and regulations and consistent with the grantee’s LIHEAP plan and program policies that were in effect during the base pe- riod, as if they were provided from the grantee’s Federal LIHEAP allotment. (iii) The grantee appropriated or mandated the resource/benefits for dis- tribution to low-income households as described in its LIHEAP plan (referred 659 § 96.87 45 CFR Subtitle A (10–1–24 Edition) to in section 2605(c)(1)(A) of Public Law 97–35) (42 U.S.C. 8624(c)(1)(A)). The re- source/benefits are provided to low-in- come households as a supplement and/ or alternative to the grantee’s LIHEAP program, outside (that is, not through, within, or as a part of) the LIHEAP program. The resource/benefits are in- tegrated and coordinated with the grantee’s LIHEAP program. Before the end of the base period, the plan identi- fies and describes the resource/benefits, their source(s), and their integration/ coordination with the LIHEAP pro- gram. The Department will determine resources/benefits to be integrated and coordinated with the LIHEAP program if they meet at least one of the fol- lowing eight conditions. If a resource meets at least one of conditions A through F when th rces/benefits to be integrated and coordinated with the LIHEAP program if they meet at least one of the fol- lowing eight conditions. If a resource meets at least one of conditions A through F when the grantee’s LIHEAP program is operating (and meets all other applicable requirements), the re- source also is countable when the LIHEAP program is not operating. (A) For all households served by the resource, the assistance provided by the resource depends on and is deter- mined by the assistance provided to these households by the grantee’s LIHEAP program in the base period. The resource supplements LIHEAP as- sistance that was not sufficient to meet households’ home energy needs, and the type and amount of assistance provided by the resource is directly af- fected by the LIHEAP assistance re- ceived by the households. (B) Receipt of LIHEAP assistance in the base period is necessary to receive assistance from the resource. The re- source serves only households that re- ceived LIHEAP assistance in the base period. (C) Ineligibility for the grantee’s LIHEAP program, or denial of LIHEAP assistance in the base period because of unavailability of LIHEAP funds, is nec- essary to receive ass tance in the base period. (C) Ineligibility for the grantee’s LIHEAP program, or denial of LIHEAP assistance in the base period because of unavailability of LIHEAP funds, is nec- essary to receive assistance from the resource. (D) For discounts and waivers: eligi- bility for and/or receipt of assistance under the grantee’s LIHEAP program in the base period, and/or eligibility under the Federal standards set by sec- tion 2605(b)(2) of Public Law 97–35 (42 U.S.C. 8624(b)(2)), is necessary to re- ceive the discount or waiver. (E) During the period when the grantee’s LIHEAP program is oper- ating, staff of the grantee’s LIHEAP program and/or staff assigned to the LIHEAP program by a local LIHEAP administering agency or agencies, and staff assigned to the resource commu- nicate orally and/or in writing about how to meet the home energy needs of specific, individual households. For the duration of the LIHEAP program, this communication takes place before as- sistance is provided to each household to be served by the resource, unless the applicant for assistance from the re- source presents documentation of LIHEAP eligibility and/or the amount of LIHEAP assistance received or to be receiv ehold to be served by the resource, unless the applicant for assistance from the re- source presents documentation of LIHEAP eligibility and/or the amount of LIHEAP assistance received or to be received. (F) A written agreement between the grantee’s LIHEAP program or local LIHEAP administering agency, and the agency administering the resource, specifies the following about the re- source: eligibility criteria; benefit lev- els; period of operation; how the LIHEAP program and the resource are integrated/coordinated; and relation- ship between LIHEAP eligibility and/or benefit levels, and eligibility and/or benefit levels for the resource. The agreement provides for annual or more frequent reports to be provided to the LIHEAP program by the agency admin- istering the resource. (G) The resource accepts referrals from the grantee’s LIHEAP program, and as long as the resource has benefits available, it provides assistance to all households that are referred by the LIHEAP program and that meet the re- source’s requirements. Under this condition, only the benefits provided to households referred by the LIHEAP program are countable. eligibility (H) Before the grantee’s LIHEAP heating, cool et the re- source’s requirements. Under this condition, only the benefits provided to households referred by the LIHEAP program are countable. eligibility (H) Before the grantee’s LIHEAP heating, cooling, crisis, and/or weather- ization assistance component(s) open and/or after the grantee’s LIHEAP heating, cooling, crisis, and/or weather- ization assistance component(s) close for the season or for the fiscal year, or before the entire LIHEAP program opens and/or after the entire LIHEAP program closes for the season or for the fiscal year, the resource is made avail- able specifically to fill the gap caused by the absence of the LIHEAP compo- nent(s) or program. The resource is not 660 Dept. of Health and Human Services § 96.87 available while the LIHEAP compo- nent(s) or program is operating. (e) Countable leveraged resources and benefits. Resources and benefits that are countable under the leveraging in- centive program include but are not limited to the following, provided that they also meet all other applicable re- quirements: (1) Cash resources: State, tribal, ter- ritorial, and other public and private non-Federal funds, including countable loan funds and countable petroleum also meet all other applicable re- quirements: (1) Cash resources: State, tribal, ter- ritorial, and other public and private non-Federal funds, including countable loan funds and countable petroleum violation escrow funds as defined in paragraphs (b)(3) and (b)(4) of this sec- tion, that are used for: (i) Heating, cooling, and energy crisis assistance payments and cash benefits made in the base period to or on behalf of low-income households toward their home energy costs (including home en- ergy bills, taxes on home energy sales/ purchases and services, connection and reconnection fees, application fees, late payment charges, bulk fuel tank rental or purchase costs, and security depos- its that are retained for six months or longer); (ii) Purchase of fuels that are pro- vided to low-income households in the base period for home energy (such as fuel oil, liquefied petroleum gas, and wood); (iii) Purchase of weatherization ma- terials that are installed in recipients’ homes in the base period; (iv) Purchase of the following tan- gible items that are provided to low-in- come households and/or installed in re- cipients’ homes in the base period: blankets, space heating devices, equi e period; (iv) Purchase of the following tan- gible items that are provided to low-in- come households and/or installed in re- cipients’ homes in the base period: blankets, space heating devices, equip- ment, and systems; space cooling de- vices, equipment, and systems; and other tangible items that help low-in- come households meet the costs of home energy and are specifically ap- proved by the Department as countable leveraged resources; (v) Installation, replacement, and re- pair of the following in the base period: weatherization materials; space heat- ing devices, equipment, and systems; space cooling devices, equipment, and systems; and other tangible items that help low-income households meet the costs of home energy and are specifi- cally approved by the Department; (vi) The following services, when they are an integral part of weatheriza- tion to help low-income households meet the costs of home energy in the base period: installation, replacement, and repair of windows, exterior doors, roofs, exterior walls, and exterior floors; pre-weatherization home energy audits of homes that were weatherized as a result of these audits; and post- weatherization inspection of homes; a ior doors, roofs, exterior walls, and exterior floors; pre-weatherization home energy audits of homes that were weatherized as a result of these audits; and post- weatherization inspection of homes; and (vii) The following services, when they are provided (carried out) in the base period: installation, replacement, and repair of smoke/fire alarms that are an integral part, and necessary for safe operation, of a home heating or cooling system installed or repaired as a weatherization activity; and asbestos removal and that is an integral part of, and necessary to carry out, weatheriza- tion to help low-income households meet the costs of home energy. (2) Home energy discounts and waiv- ers that are provided in the base period to low-income households and pertain to generally applicable prices, rates, fees, charges, costs, and/or require- ments, in the amount of the discount, reduction, waiver, or forgiveness, or that apply to certain tangible fuel and non-fuel items and to certain services, that are provided in the base period to low-income households and help these households meet the costs of home en- ergy, in the amount of the discount or reduction: (i) Discounts or reductions in ces, that are provided in the base period to low-income households and help these households meet the costs of home en- ergy, in the amount of the discount or reduction: (i) Discounts or reductions in utility and bulk fuel prices, rates, or bills; (ii) Partial or full forgiveness of home energy bill arrearages; (iii) Partial or full waivers of utility and other home energy connection and reconnection fees, application fees, late payment charges, bulk fuel tank rental or purchase costs, and home energy se- curity deposits that are retained for six months or longer; (iv) Reductions in and partial or full waivers of non-Federal taxes on home energy sales/purchases and services, and reductions in and partial or full waivers of other non-Federal taxes pro- vided as tax ‘‘credits’’ to low-income households to offset their home energy costs, except when Federal funds or Federal tax ‘‘credits’’ provide payment or reimbursement for these reductions/ waivers; 661 § 96.87 45 CFR Subtitle A (10–1–24 Edition) (v) Discounts or reductions in the cost of the following tangible items that are provided to low-income house- holds and/or installed in recipients’ homes: weatherization materials; blan- 24 Edition) (v) Discounts or reductions in the cost of the following tangible items that are provided to low-income house- holds and/or installed in recipients’ homes: weatherization materials; blan- kets; space heating devices, equipment, and systems; space cooling devices, equipment, and systems; and other tan- gible items that are specifically ap- proved by the Department; (vi) Discounts or reductions in the cost of installation, replacement, and repair of the following: weatherization materials; space heating devices, equipment, and systems; space cooling devices, equipment, and systems; and other tangible items that help low-in- come households meet the costs of home energy and are specifically ap- proved by the Department; (vii) Discounts or reductions in the cost of the following services, when the services are an integral part of weath- erization to help low-income house- holds meet the costs of home energy: installation, replacement, and repair of windows, exterior doors, roofs, exterior walls, and exterior floors; pre-weather- ization home energy audits of homes that were weatherized as a result of these audits; and post-weatherization inspection of homes; and (viii) Disc s, exterior walls, and exterior floors; pre-weather- ization home energy audits of homes that were weatherized as a result of these audits; and post-weatherization inspection of homes; and (viii) Discounts or reductions in the cost of installation, replacement, and repair of smoke/fire alarms that are an integral part, and necessary for safe operation, of a home heating or cooling system installed or repaired as a weatherization activity; and discounts or reductions in the cost of asbestos re- moval that is an integral part of, and necessary to carry out, weatherization to help low-income households meet the costs of home energy. (3) Certain third-party in-kind con- tributions that are provided in the base period to low-income households: (i) Donated fuels used by recipient households for home energy (such as fuel oil, liquefied petroleum gas, and wood); (ii) Donated weatherization mate- rials that are installed in recipients’ homes; (iii) Donated blankets; donated space heating devices, equipment, and sys- tems; donated space cooling devices, equipment, and systems; and other do- nated tangible items that help low-in- come households meet the costs of home energy and are specifica s, equipment, and sys- tems; donated space cooling devices, equipment, and systems; and other do- nated tangible items that help low-in- come households meet the costs of home energy and are specifically ap- proved by the Department as countable leveraged resources; (iv) Unpaid volunteers’ services spe- cifically to install, replace, and repair the following: weatherization mate- rials; space heating devices, equip- ment, and systems; space cooling de- vices, equipment, and systems; and other low-income households meet the costs of home en- ergy and are specifically approved by the Department; items that help (v) Unpaid volunteers’ services spe- cifically to provide (carry out) the fol- lowing, when these services are an in- tegral part of weatherization to help low-income households meet the costs of home energy: installation, replace- ment, and repair of windows, exterior doors, roofs, exterior walls, and exte- rior floors; pre-weatherization home energy audits of homes that were weatherized as a result of these audits; and post-weatherization inspection of homes; (vi) Unpaid volunteers’ services spe- cifically to: install, replace, and repair smoke/fire alarms as an integral par therized as a result of these audits; and post-weatherization inspection of homes; (vi) Unpaid volunteers’ services spe- cifically to: install, replace, and repair smoke/fire alarms as an integral part, and necessary for safe operation, of a home heating or cooling system in- stalled or repaired as a weatherization activity; and remove asbestos as an in- tegral part of, and necessary to carry out, weatherization to help low-income households meet the costs of home en- ergy; (vii) Paid staff’s services that are do- nated by the employer specifically to install, replace, and repair the fol- lowing: weatherization materials; space heating devices, equipment, and systems; space cooling devices, equip- ment, and systems; and other items that help low-income households meet the costs of home energy and are spe- cifically approved by the Department; (viii) Paid staff’s services that are donated by the employer specifically to provide (carry out) the following, when these services are an integral part of weatherization to help low-income households meet the costs of home en- ergy: installation, replacement, and re- pair of windows, exterior doors, roofs, exterior walls, and exterior floors ral part of weatherization to help low-income households meet the costs of home en- ergy: installation, replacement, and re- pair of windows, exterior doors, roofs, exterior walls, and exterior floors; pre- weatherization home energy audits of 662 Dept. of Health and Human Services § 96.87 homes that were weatherized as a re- sult of these audits; and post-weather- ization inspection of homes; and (ix) Paid staff’s services that are do- nated by the employer specifically to: install, replace, and repair smoke/fire alarms as an integral part, and nec- essary for safe operation, of a home heating or cooling system installed or repaired as a weatherization activity; and remove asbestos as an integral part of, and necessary to carry out, weatherization to help low-income households meet the costs of home en- ergy. (f) Resources and benefits that cannot be counted. The following resources and benefits are not countable under the leveraging incentive program: (1) Resources (or portions of re- sources) obtained, arranged, provided, contributed, and/or paid for, by a low- income household for its own benefit, or which a low-income household is re- sponsible for obtaining or required to pro - sources) obtained, arranged, provided, contributed, and/or paid for, by a low- income household for its own benefit, or which a low-income household is re- sponsible for obtaining or required to provide for its own benefit or for the benefit of others, in order to receive a benefit of some type; (2) Resources (or portions of re- sources) provided, contributed, and/or paid for by building owners, building managers, and/or home energy vendors, if the cost of rent, home energy, or other charge(s) to the recipient were or will be increased, or if other charge(s) to the recipient were or will be im- posed, as a result; (3) Resources (or portions of re- sources) directly provided, contributed, and/or paid for by member(s) of the re- cipient household’s family (parents, grandparents, great-grandparents, sons, daughters, grandchildren, great- grandchildren, brothers, sisters, aunts, uncles, first cousins, nieces, and neph- ews, and their spouses), regardless of whether the family member(s) lived with the household, unless the family member(s) also provided the same re- source to other low-income households during the base period and did not limit the resource to members of their own fami ived with the household, unless the family member(s) also provided the same re- source to other low-income households during the base period and did not limit the resource to members of their own family; (4) Deferred home energy obligations; (5) Projected future savings from weatherization; (6) Delivery, and discounts in the cost of delivery, of fuel, weatherization materials, and all other items; (7) Purchase, rental, donation, and loan, and discounts in the cost of pur- chase and rental, of: supplies and equipment used to deliver fuel, weath- erization materials, and all other items; and supplies and equipment used to install and repair weatherization materials and all other items; (8) Petroleum violation escrow (oil overcharge) funds that do not meet the definition in paragraph (b)(4) of this section; (9) Interest earned/paid on petroleum violation escrow funds that were dis- tributed to a State or territory by the Department of Energy on or before Oc- tober 1, 1990; (10) Interest earned/paid on Federal funds; (11) Interest earned/paid on cus- tomers’ security deposits, utility de- posits, etc., except when forfeited by the customer and used to provide countable benefits; (12) B arned/paid on Federal funds; (11) Interest earned/paid on cus- tomers’ security deposits, utility de- posits, etc., except when forfeited by the customer and used to provide countable benefits; (12) Borrowed funds that do not meet the requirements in paragraph (b)(3) above (including loans made by and/or to low-income households), interest paid on borrowed funds, and reductions in interest paid on borrowed funds; (13) Resources (or portions of re- sources) for which Federal payment or reimbursement has been or will be pro- vided/received; (14) Tax deductions and tax credits received from any unit(s) of govern- ment by donors/contributors of re- sources for these donations, and by vendors for providing rate reductions, discounts, waivers, credits, and/or ar- rearage forgiveness to or for low-in- come households, etc.; (15) Funds and other resources that have been or will be used as matching or cost sharing for any Federal pro- gram; (16) Leveraged resources counted under any other Federal leveraging in- centive program; (17) Costs of planning and adminis- tration, space costs, and intake costs; (18) Outreach activities, budget coun- seling, case management, and energy conservation e al leveraging in- centive program; (17) Costs of planning and adminis- tration, space costs, and intake costs; (18) Outreach activities, budget coun- seling, case management, and energy conservation education; (19) Training; (20) Installation, replacement, and re- pair of lighting fixtures and light bulbs; 663 § 96.87 45 CFR Subtitle A (10–1–24 Edition) (21) Installation, replacement, and re- pair of smoke/fire alarms that are not an integral part, and necessary for safe operation, of a home heating or cooling system installed or repaired as a weatherization activity; (22) Asbestos removal that is not an integral part of, and necessary to carry out, weatherization to help low-income households meet the costs of home en- ergy; (23) Paid services where payment is not made from countable leveraged re- sources, unless these services are do- nated as a countable in-kind contribu- tion by the employer; (24) All in-kind contributions except those described in paragraph (e)(3) of this section; and (25) All other resources that do not meet the requirements of this section and of section 2607A of Public Law 97– 35 (42 U.S.C. 8626a). (g) Valuation and documentation of le- veraged resources an and (25) All other resources that do not meet the requirements of this section and of section 2607A of Public Law 97– 35 (42 U.S.C. 8626a). (g) Valuation and documentation of le- veraged resources and offsetting costs. (1) Leveraged cash resources will be val- ued at the fair market value of the ben- low-income efits they provided to households, as follows. Payments to or on behalf of low-income households for heating, cooling, and energy crisis as- sistance will be valued at their actual amount or value at the time they were provided. Purchased fuel, weatheriza- tion materials, and other countable tangible items will be valued at their fair market value (the commonly available household rate or cost in the local market area) at the time they were purchased. Installation, replace- ment, and repair of weatherization ma- terials, and other countable services, will be valued at rates consistent with those ordinarily paid for similar work, by persons of similar skill in this work, in the grantee’s or subrecipient’s orga- nization in the local area, at the time these services were provided. If the grantee or subrecipient does not have employees performing similar work, the rates will b grantee’s or subrecipient’s orga- nization in the local area, at the time these services were provided. If the grantee or subrecipient does not have employees performing similar work, the rates will be consistent with those ordinarily paid by other employers for similar work, by persons of similar skill in this work, in the same labor market, at the time these services were provided. Fringe benefits and overhead costs will not be counted. (2) Home energy discounts, waivers, and credits will be valued at their ac- tual amount or value. (3) Donated fuel, donated weatheriza- tion materials, and other countable do- nated tangible items will be valued at their fair market value (the commonly available household cost in the local market area) at the time of donation. (4) Donated unpaid services, and do- nated third-party paid services that are not in the employee’s normal line of work, will be valued at rates consistent with those ordinarily paid for similar work, by persons of similar skill in this work, in the grantee’s or subrecipient’s organization in the local area, at the time these services were provided. If the grantee or subrecipient does not have employees performing similar wo in this work, in the grantee’s or subrecipient’s organization in the local area, at the time these services were provided. If the grantee or subrecipient does not have employees performing similar work, the rates will be consistent with those ordinarily paid by other employ- ers for similar work, by persons of similar skill in this work, in the same labor market, at the time these serv- ices were provided. Fringe benefits and overhead costs will not be counted. Do- nated third-party paid services of em- ployees in their normal line of work will be valued at the employee’s reg- ular rate of pay, excluding fringe bene- fits and overhead costs. (5) Offsetting costs and charges will be valued at their actual amount or value. (i) Funds from grantees’ regular LIHEAP allotments that are used spe- cifically to identify, develop, and dem- onstrate leveraging programs under section 2607A(c)(2) of Public Law 97–35 (42 U.S.C. 8626a(c)(2)) will be deducted as offsetting costs in the base period in which these funds are obligated, wheth- er or not there are any resulting lever- aged benefits. Costs incurred from grantees’ own funds to identify, de- velop, and demonstrate leveraging pro- grams w which these funds are obligated, wheth- er or not there are any resulting lever- aged benefits. Costs incurred from grantees’ own funds to identify, de- velop, and demonstrate leveraging pro- grams will be deducted in the first base period in which resulting leveraged benefits are provided to low-income households. If there is no resulting le- veraged benefit from the expenditure of the grantee’s own funds, the grantee’s expenditure will not be counted or de- ducted. (ii) Any costs assessed or charged to low-income households on a continuing or on-going basis, year after year, spe- cifically to participate in a counted 664 Dept. of Health and Human Services § 96.87 leveraging program or to receive counted leveraged resources/benefits will be deducted in the base period these costs are paid. Any one-time costs or charges to low-income house- holds specifically to participate in a counted leveraging program or to re- ceive counted leveraged resources/bene- fits will be deducted in the first base period the leveraging program or re- source is counted. Such costs or charges will be subtracted from the gross value of a counted resource or benefit low-income households whose benefits ar irst base period the leveraging program or re- source is counted. Such costs or charges will be subtracted from the gross value of a counted resource or benefit low-income households whose benefits are counted, but not for any households whose benefits are not counted. for (6) Only the amount of the net addi- tion to recipient low-income house- holds’ home energy resources may be counted in the valuation of a leveraged resource. (7) Leveraged resources and benefits, and offsetting costs and charges, will be valued according to the best data available to the grantee. (8) Grantees must maintain, or have readily available, records sufficient to document leveraged resources and ben- efits, and offsetting costs and charges, and their valuation. These records must be retained for three years after the end of the base period whose lever- aged resources and benefits they docu- ment. (h) Leveraging report. (1) In order to qualify for leveraging incentive funds, each grantee desiring such funds must submit to the Department a report on the leveraged resources provided to low-income households during the pre- ceding base period. These reports must contain the following information in a format must submit to the Department a report on the leveraged resources provided to low-income households during the pre- ceding base period. These reports must contain the following information in a format established by the Department. (i) For each separate leveraged re- source, the report must: (A) Briefly describe the specific le- veraged resource and the specific ben- efit(s) provided to low-income house- holds by this resource, and state the source of the resource; (B) State whether the resource was acquired in cash, as a discount/waiver, or as an in-kind contribution; (C) Indicate the geographical area in which the benefit(s) were provided to recipients; (D) State the month(s) and year(s) when the benefit(s) were provided to re- cipients; (E) State the gross dollar value of the countable benefits provided by the re- source as determined in accordance with paragraph (g) of this section, indi- cate the source(s) of the data used, and describe how the grantee quantified the value and calculated the total amount; (F) State the number of low-income households to whom the benefit(s) were provided, and state the eligibility standard(s) for the low-income house- holds to whom the benefit( culated the total amount; (F) State the number of low-income households to whom the benefit(s) were provided, and state the eligibility standard(s) for the low-income house- holds to whom the benefit(s) were pro- vided; (G) Indicate the agency or agencies that administered the resource/ben- efit(s); and (H) Indicate the criterion or criteria for leveraged resources in paragraph (d)(2) of this section that the resource/ benefits meet, and for criteria in para- graphs (d)(2)(i) and (d)(2)(iii) of this section, explain how resources/benefits valued at $5,000 or more meet the cri- terion or criteria. (ii) State the total gross dollar value of the countable leveraged resources and benefits provided to low-income households during the base period (the sum of the amounts listed pursuant to paragraph (h)(1)(i)(E) of this section). (iii) State in dollars any costs in- curred by the grantee to leverage re- sources, and any costs and charges im- posed on low-income households to par- ticipate in a counted leveraging pro- gram or to receive counted leveraged benefits, as determined in accordance with paragraph (g)(5) of this section. Also state the amount of the grantee’s regular LIHEAP allotm a counted leveraging pro- gram or to receive counted leveraged benefits, as determined in accordance with paragraph (g)(5) of this section. Also state the amount of the grantee’s regular LIHEAP allotment that the grantee used during the base period specifically to identify, develop, and programs demonstrate under section 2607A(c)(2) of Public Law 97–35 (42 U.S.C. 8626a(c)(2)). leveraging (iv) State the net dollar value of the countable leveraged resources and ben- efits for the base period. (Subtract the amounts in paragraph (h)(1)(iii) of this section from the amount in paragraph (h)(1)(ii) of this section.) (2) Leveraging reports must be post- marked or hand-delivered not later than November 30 of the fiscal year for which leveraging incentive funds are requested. 665 § 96.87 45 CFR Subtitle A (10–1–24 Edition) (3) The Department may require sub- mission of additional documentation and/or clarification as it determines necessary to verify information in a grantee’s leveraging report, to deter- mine whether a leveraged resource is countable, and/or to determine the net valuation of a resource. In such cases, the Department will set a date by which it must receive information suf-