This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

33641

Vol. 61, No. 126

Friday, June 28, 1996

DEPARTMENT OF AGRICULTURE

Food and Consumer Service

7 CFR Parts 272 and 277

[Am. No. 368]

RIN 0584–AB92

Food Stamp Program: Automated Data

Processing Equipment and Services;

Reduction in Reporting Requirements

AGENCY: Food and Consumer Service,

USDA.

ACTION: Final rule.

SUMMARY: This rule: increases the cost

thresholds above which prior written

Federal approval is required for Federal

financial participation in State

automated data processing (ADP)

equipment and services acquisitions;

provides for State requests to be deemed

to have provisionally met the prior

approval requirement if the Food and

Consumer Service (FCS) does not

approve, disapprove, or request

additional information about the request

within 60 days of acknowledging

receipt; and eliminates the requirement

that State agencies submit a written

summary pertaining to the State

biennial system security reviews.

EFFECTIVE DATE: This rule is effective

July 29, 1996.

FOR FURTHER INFORMATION CONTACT: John

H. Knaus, Chief, Quality Control

Branch, Program Accountability

Division, Food Stamp Program, 3101

Park Center Drive, Room 904,

Alexandria, Virginia 22302, (703) 305–

2474.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rulemaking has been determined

to be significant and was reviewed by

the Office of Management and Budget

under Executive Order 12866.

Executive Order 12372

The Food Stamp Program (FSP) is

listed in the Catalog of Federal Domestic

Assistance under 10.551 and

information on State agency

administrative matching grants for the

FSP is listed under 10.561. For the

reasons set forth in the final rule and

related notice to 7 CFR part 3015,

subpart v (48 FR 29115), the FSP is

excluded from the scope of Executive

Order 12372 which requires

intergovernmental consultation with

State and local officials.

Executive Order 12778

This rule has been reviewed under

Executive Order 12778, Civil Justice

Reform. This rule is intended to have

preemptive effect with respect to any

State or local laws, regulations or

policies which conflict with its

provisions or which would otherwise

impede its full implementation. This

rule is not intended to have retroactive

effect unless so specified in the

‘‘Effective Date’’ section of this

preamble. Prior to any judicial challenge

to the provisions of this rule or the

application of its provisions, all

applicable administrative procedures

must be exhausted. In the FSP the

administrative procedures are as

follows: (1) For program benefit

recipients—State administrative

procedures issued pursuant to 7 U.S.C.

2020(e)(10) and 7 CFR 273.15; (2) for

State agencies—administrative

procedures issued pursuant to 7 U.S.C.

2023 set out at 7 CFR 276.7 (for rules

related to non-QC liabilities) or Part 283

(for rules related to QC Liabilities); and

(3) for program retailers and

wholesalers—administrative procedures

issued pursuant to 7 U.S.C. 2023 set out

at 7 CFR 278.8.

Regulatory Flexibility Act

This rulemaking has been reviewed

with regard to the requirements of the

Regulatory Flexibility Act of 1980 (Pub.

L. 96–354, 94 Stat. 1164, September 19,

1980, 5 U.S.C. 601–612). Ellen Haas,

Under Secretary for Food, Nutrition,

and Consumer Services, has certified

that this rule does not have a significant

economic impact on a substantial

number of small entities. This rule will

affect State agencies by reducing the

reporting requirements applicable to

them.

Paperwork Reduction Act

We anticipate this rule could reduce

the actual reporting burden by twenty

percent or more. In accordance with the

Paperwork Reduction Act of 1995 (44

U.S.C. 3507), FCS solicited comment

through an April 1, 1996 publication in

the Federal Register (61 FR 14288) of a

notice on the information collection

requirements relating to automated data

processing and information retrieval

systems. The comment period closed

May 31, 1996. There were no comments

on the portion of the reporting burden

that this rule concerns. The proposed

collection will be submitted to OMB for

review and at that time the Department

will publish a notice which will provide

an additional opportunity to comment.

Background

On July 31, 1995, the Department of

Agriculture (the Department) published

in the Federal Register a Notice of

Proposed Rulemaking which proposed

changes to the Advance Planning

Document (APD) process (60 FR 38,972

(1995)). There was a sixty-day comment

period, which ended September 29,

1995. The Department received six

comment letters on the proposed rule.

Commenters represented the States of

California, Louisiana, North Carolina,

Pennsylvania and Texas and the

National Association of State Human

Services Finance Officers. Commenters

expressed agreement with the proposed

rule’s objective to reduce reporting

requirements. Two commenters

supported the rule changes with no

additional comment. One commenter

was positive about the changes but had

technical questions about their

application. The three remaining

commenters, while positive about the

direction of the rule changes, felt FCS

should take further action to reduce the

reporting requirements.

Increased APD Prior Approval Cost

Thresholds - 7 CFR 277.18(c)

The Department proposed to increase

the cost thresholds for prior approval of

APDs from $500,000 to $5 million or

more in State and Federal costs for both

competitive and noncompetitive

acquisitions. Noncompetitive

acquisitions from a non-governmental

source that have total State and Federal

acquisition costs of more than $1

million but no more than $5 million

would need prior approval of the
33642 Federal Register / Vol. 61, No. 126 / Friday, June 28, 1996 / Rules and Regulations

justification for the sole source

purchase. The previous threshold for

such acquisitions was $100,000. Three

commenters thought the proposed

increases were too small to reduce the

reporting burden for their States. Two

recommended that thresholds be scaled

according to the total or client

populations of a State. One commenter

recommended that thresholds be raised

to $25 million for larger States; another

recommended an increase to $30

million. The theory behind these

comments was that relatively minor

projects in larger States, because of their

costs, would receive disproportionate

Federal attention and require continued

reporting.

The Department is attempting to

achieve a reasonable balance between

greater State flexibility and prudent

oversight of Federal investments. The

thresholds were increased ten-fold in

the proposed rule. While automation

projects costing from $5 million to $25

million or $30 million may not always

be critical projects in larger States, they

represent sizeable investments of

Federal money. Introduction of a sliding

scale for thresholds according to State

population or caseload introduces an

unnecessary complication to the APD

process. At this time the Department

believes a reasonable balance has been

proposed. However, the Department

will continue efforts to further

streamline the APD process. After some

experience with the new thresholds,

further increases in or changes to the

thresholds can be considered.

One commenter suggested that the

Department limit its review of State

ADP acquisitions to new development

and that standard upgrades of existing

equipment, replacement of obsolete or

depreciated equipment, and normal

growth (equipment for new staff) be

exempt from Federal review. This

commenter asserted there was rarely

doubt as to the eventual approval of

most of these requests and this action

would permit further Federal focus on

new automation initiatives. The

Department is responsible for

overseeing Federal investments and

ensuring Federal requirements are met.

At this time the Department believes

these acquisitions, when in excess of the

proposed thresholds, should receive

continued Federal oversight. However,

this suggestion will be part of

considerations in continuing efforts to

streamline the APD process and provide

reporting relief to State agencies.

One commenter proposed that

electronic benefit transfer (EBT) systems

be subject to the higher APD thresholds.

However, given the critical stage of

development of a large number of EBT

projects, the Department believes it is in

the mutual interest of States and the

Federal government to continue

reviewing EBT projects under standards

that are specific to them.

Finally, one commenter wanted to

know whether an APD would need to be

submitted for a project if it

unexpectedly exceeds the threshold at

some point during its development or

during its life cycle through

enhancements. The proposed rule did

not affect existing policy for

underestimated projects. When State

officials first realize that a project under

development is likely to exceed the

threshold, an APD should be submitted.

After system implementation is

complete, future enhancements during

the system life cycle would need prior

approval if their costs will exceed the

threshold.

Reviews of Requests for Proposals

(RFPs), Contracts and Contract

Amendments—7 CFR 277.18(c)(2)(ii)

The Department proposed to increase

thresholds for prior approval of RFPs

and Contracts to $5 million or more for

competitive procurements and to more

than $1 million for non-competitive

procurements. The proposed rule also

would increase the threshold for prior

Federal approval for contract

amendments to those involving cost

increases greater than $1 million or

contract time extensions of more than

120 days. FCS could review Requests for

Proposals (RFPs), contracts and contract

amendments under the threshold

amounts on an exception basis or if the

procurement was not adequately

described in the APD.

Two commenters recommended that

RFPs, contracts and contract

amendments no longer be subject to

review. According to one commenter,

Federal review of these documents

causes delays, duplicates State

processes and represents Federal micromanagement of State projects. The other

commenter recommended elimination

of these reviews since RFPs and

contracts would have been already

justified by an approved APD. While the

Department substantially increased the

thresholds for submitting these

documents, the approval of RFPs,

contracts and contract amendments was

not eliminated. The Department is

responsible for ensuring that Federal

requirements are met for ADP

acquisitions. Although an approved

APD may provide for the eventual

release of an RFP and signing of a

contract, these documents are not

necessarily identical in content and

legal significance. Prior approval for

these documents will be retained in the

final rule. However, the Department will

reexamine these recommendations in

upcoming efforts to further streamline

the APD process and reduce State

reporting requirements.

Two commenters believe the

proposed rule is unclear about when

RFPs, contracts and contract

amendments which fall under the

thresholds for submitting these

documents will need prior approval.

These commenters thought the rule

could require States to submit RFPs,

contracts or contract amendments when

the ADP equipment or services

acquisition did not need prior approval

of either an APD or the sole source

justification. The proposed rule did not

change FCS’ ongoing policy of

subjecting these documents to review

only if prior approval of the ADP

acquisition was required in accordance

with § 277.18(c)(1). As provided by

§ 277.18(c)(2)(ii), FCS will require prior

approval of RFPs, contracts and contract

amendments only if prior approval of an

APD or the justification for a sole source

procurement was required. Prior

approval for RFPs, contracts and

contract amendments under the

applicable thresholds would be

reviewed on an exception basis (such as

if innovative automation is used) or if

the procurement strategy was not

adequately described or justified in the

APD. If approval of these documents is

needed, and they are under the

thresholds, FCS will notify States to

submit them. No substantive changes

are made to the provisions at

§ 277.18(c)(2)(ii) (A), (B) or (C).

However, wording in the provisions will

be modified in the final rule to make the

language more similar to language in

DHHS’ rule. The word ‘‘justified’’ is

added to (A) and (B) and the word

‘‘described’’ is added to part (C).

Prompt Action on Requests for Prior

Approval—7 CFR 277.18(c)(5)

Two commenters asked about the

meaning of provisional approval,

whether this approval could be

withdrawn, and under what

circumstances. One commenter wanted

to know whether interest would be

charged if a project was denied funding

after it was begun. Provisional approval

permits States to go forward with their

automation projects after the Federal

time-limit expires without penalty for

not receiving prior Federal approval.

Under previous policy, a project could

be denied full funding if it was begun

before Federal approval was received.

However, provisional approval is

distinct from formal approval and does

not waive Federal requirements for

these acquisitions. FCS’ practice has
Federal Register / Vol. 61, No. 126 / Friday, June 28, 1996 / Rules and Regulations 33643

been not to establish claims if a State

has acted in good faith. In the event FCS

determines that the actions taken by the

State are not approvable, notification in

writing is provided, and funding

approval is suspended pending

corrective action. The State would be at

financial risk if the State continues to

draw funds for these charges after this

notification. A claim would be

established for funds drawn after the

suspension and the State would again

be notified in writing of the

disallowance for all funds improperly

drawn and any interest accrued on those

funds. These charges would not be

eligible for reimbursement by FCS. If

FCS determines that the planned project

does not meet the requirements for

approval, no further funding would be

approved and all approval action would

be terminated.

One commenter was concerned that

the date starting the count of the sixtyday Federal time-limit for responding to

State requests is the date of the

Department’s acknowledgement letter.

This commenter suggested the

Department could delay State projects

by delaying the mailing of the

acknowledgement letter. The

Department intends to acknowledge

State requests promptly. If State

agencies believe acknowledgement of

their requests have been purposely

delayed, a complaint should be filed

with the appropriate FCS Regional

Administrator.

APD Update (APDU)—7 CFR 277.18(e)

The Department proposed to raise the

reporting threshold for submitting an

annual APD Update (APDU) from $1

million to $5 million. The threshold for

submittal of an APDU as needed was

proposed for increases of $1 million or

more. The previous threshold was

$300,000 or 10 percent of the project

cost, whichever is less.

According to two commenters, the

threshold for annual APD updates is

still too low to give their States

reporting relief. These commenters

recommended increases to $25 million

and $30 million respectively. One

commenter thought this increase was

necessary since EBT projects will

increase the amount of annual APD

reporting required. In addition, one

commenter thought the threshold for as

needed APDUs should be raised from $1

million or more to $2.5 million or 10

percent, whichever is more. The

Department believes a reasonable

threshold increase for submittal of

annual APDUs and the as needed

APDUs is embodied in the proposed

regulation. Since the thresholds for

APDUs do not apply to EBT systems,

these provisions will not affect annual

reporting for EBT systems. The

thresholds for submitting APDUs will

become final as proposed. However,

APDU requirements will be reexamined

in upcoming streamlining efforts.

Biennial System Security Reviews—7

CFR 277.18(p)(3)

The proposed rule eliminated the

requirement that States submit summary

information about the biennial ADP

system security review to FCS. Instead,

States are to retain copies of these

reports and other pertinent supporting

documentation for Federal on-site

review. One commenter asked how long

the biennial security review report

should be kept by the State, who would

be conducting reviews of these materials

and how often they would be reviewed.

States should keep a copy of their latest

biennial security review report and

pertinent supporting documentation

(such as a summary of findings

regarding compliance with security

requirements and the corrective action

plan with dated milestones) on file for

Federal review. State record retention

requirements would apply to these

documents. FCS or agents acting on

FCS’ behalf will examine State security

review reports on a periodic basis, as

needed.

Miscellaneous

The Department is making a minor

technical change to the section heading

of § 277.18 by replacing the word

‘‘Automatic’’ with the word

‘‘Automated.’’ This change is being

made to make word usage in the section

heading consistent with word usage in

the rule’s text.

Implementation—272.1(g)

All provisions in this final rule

become effective July 29, 1996.

List of Subjects

7 CFR Part 272

Alaska, Civil rights, Food stamps,

Grant programs—social programs,

Reporting and recordkeeping

requirements.

7 CFR Part 277

Food stamps, Government procedure,

Grant programs—social programs,

Investigations, Records, Reporting and

recordkeeping requirements.

Accordingly, 7 CFR parts 272 and 277

are amended as follows:

1. The authority citation for parts 272

and 277 continues to read as follows:

Authority: 7 U.S.C. 2011–2032

PART 272—REQUIREMENTS FOR

PARTICIPATING STATE AGENCIES

2. In § 272.1, a new paragraph (g)(146)

is added to read as follows:

272.1 General terms and conditions.

* * * * *

(g) Implementation. * * *

(146) Amendment No. 368. The

provisions of Amendment No. 368 are

effective on July 29, 1996.

PART 277—PAYMENTS OF CERTAIN

ADMINISTRATIVE COSTS OF STATE

AGENCIES

3. In § 277.18,

a. The section heading is amended by

removing the word ‘‘Automatic’’ and

adding in its place the word

‘‘Automated’’;

b. Paragraph (c)(1) is revised;

c. The second sentence in paragraph

(c)(2)(ii)(A) is removed and two

sentences are added in its place;

d. The second sentence in paragraph

(c)(2)(ii)(B) is removed and two

sentences are added in its place;

e. The second sentence in paragraph

(c)(2)(ii)(C) is removed and two

sentences are added in its place;

f. Paragraph (c)(5) is added;

g. Paragraph (e)(1) is amended by

removing the words ‘‘$1 million’’ and

adding in their place the words ‘‘$5

million’’;

h. Paragraph (e)(3)(i) is amended by

removing the words ‘‘($300,000 or 10

percent, whichever is less)’’ and adding

in their place the words ‘‘($1 million or

more)’’;

i. The third and fourth sentences of

paragraph (p)(3) are removed and one

sentence is added in their place. The

revision and additions read as follows:

§ 277.18 Establishment of an Automated

Data Processing (ADP) and Information

Retrieval System.

* * * * *

(c) General acquisition

requirements.—(1) Requirement for

prior FCS approval. A State agency shall

obtain prior written approval from FCS

as specified in paragraph (c)(2) of this

section when it plans to acquire ADP

equipment or services with proposed

FFP that it anticipates will have total

acquisition costs of $5 million or more

in Federal and State funds. This applies

to both competitively bid and sole

source acquisitions. A State agency shall

also obtain prior written approval from

FCS of its justification for a sole source

acquisition when it plans to acquire

ADP equipment or services noncompetitively from a nongovernmental

source which has a total State and

Federal acquisition cost of more than $1
33644 Federal Register / Vol. 61, No. 126 / Friday, June 28, 1996 / Rules and Regulations

million but no more than $5 million.

The State agency shall request prior FCS

approval by submitting the Planning

APD, the Implementation APD or the

justification for the sole source

acquisition signed by the appropriate

State official to the FCS Regional Office.

However, a State agency shall obtain

prior written approval from FCS for the

acquisition of ADP equipment or

services to be utilized in an EBT system

regardless of the cost of the acquisition.

(2) Specific prior approval

requirements. * * *

(ii) * * *

(A) * * * However, RFPs costing up

to $5 million for competitive

procurements and up to $1 million for

noncompetitive acquisitions from nongovernmental sources and which are an

integral part of the approved APD need

not be submitted to FCS. States will be

required to submit RFPs under this

threshold amount on an exception basis

or if the procurement strategy is not

adequately described and justified in an

APD. * * *

(B) * * * However, contracts costing

up to $5 million for competitive

procurements and up to $1 million for

noncompetitive acquisitions from

nongovernmental sources, and which

are an integral part of the approved APD

need not be submitted to FCS. States

will be required to submit contracts

under this threshold amount on an

exception basis or if the procurement

strategy is not adequately described and

justified in an APD. * * *

(C) * * * However, contract

amendments involving cost increases of

up to $1 million or time extensions of

up to 120 days, and which are an

integral part of the approved APD need

not be submitted to FCS. States will be

required to submit contract amendments

under these threshold amounts on an

exception basis or if the contract

amendment is not adequately described

and justified in an APD. * * *

* * * * *

(5) Prompt action on requests for prior

approval. FCS will reply promptly to

State requests for prior approval. If FCS

has not provided written approval,

disapproval or a request for additional

information within 60 days of FCS’

letter acknowledging receipt of the

State’s request, the request will be

deemed to have provisionally met the

prior approval requirement in paragraph

(c) of this section. However, provisional

approval will not exempt a State from

having to meet all other Federal

requirements which pertain to the

acquisition of ADP equipment and

services. Such requirements remain

subject to Federal audit and review.

* * * * *

(p) * * *

(3) * * * State agencies shall

maintain reports of their biennial ADP

system security reviews, together with

pertinent supporting documentation, for

Federal on-site review.

* * * * *

Dated: June 24, 1996.

Ellen Haas,

Under Secretary, Food, Nutrition, and

Consumer Services.

[FR Doc. 96–16596 Filed 6–27–96; 8:45 am]

BILLING CODE 3410–30–P

Agricultural Marketing Service

7 CFR Part 1280

[Docket Number LS–96–004]

Sheep Promotion, Research, and

Information Program

AGENCY: Agricultural Marketing Service;

USDA.

ACTION: Final rule.

SUMMARY: This rule suspends

indefinitely provisions of the Order and

the Certification and Nomination

Regulations, and postpones indefinitely

the announced effective date of July 1,

1996, for assessment collection in the

Rules and Regulations, and the

assessment provisions of the Order. The

Department of Agriculture (Department)

conducted a review and evaluated the

conduct and results of the February 6,

1996, nationwide sheep referendum.

The Department discovered

inconsistencies in the application of the

referendum rules, and this action is the

result of the discovery of these

inconsistencies. A second nationwide

referendum will be conducted among

eligible sheep producers, sheep feeders,

and importers of sheep and sheep

products on a date to be announced by

the Department.

EFFECTIVE DATE: This document is

effective June 29, 1996.

The effective date of July 1, 1996 for

Subpart A, §§ 1280.224 through

1280.228 in Subpart A, and Subpart B,

§§ 1280.301 through 1280.318 is

postponed indefinitely.

Additionally, in Subpart A,

§§ 1280.101 through 1280.126,

§§ 1280.201 through 1280.223,

§§ 1280.229 through 1280.235 and

§§ 1280.240 through 1280.246, and

Subpart C, §§ 1280.400 though 1280.414

are suspended indefinitely.

FOR FURTHER INFORMATION CONTACT:

Ralph L. Tapp, Chief; Marketing

Programs Branch, Room 2606–S;

Livestock and Seed Division, AMS,

USDA; PO Box 96456, Washington, DC

20090–6456. Telephone number 202/

720–1115.

SUPPLEMENTARY INFORMATION: Prior

documents: Notice—Invitation to

submit proposals published January 4,

1995 (60 FR 381); Proposed Rule—

Sheep and Wool Promotion, Research,

Education, and Information Order

published June 2, 1995 (60 FR 28747);

Proposed Rule—Procedures for Conduct

of Referendum published August 8,

1995 (60 FR 40313); Notice—

Certification of Organizations for

Eligibility to Make Nominations to the

Proposed Board published August 8,

1995 (60 FR 40343); Proposed Rule—

Rules and Regulations published

October 3, 1995 (60 FR 51737);

Proposed Rule—Sheep and Wool

Promotion, Research, Education, and

Information Order published December

5, 1995 (60 FR 62298); Final Rule and

Referendum Order—Procedures for the

Conduct of Referendum published

December 15, 1995 (60 FR 64297); Final

Rule—Sheep and Wool Promotion,

Research, Education, and Information

Order published May 2, 1996 (61 FR

19514); Final Rule—Rules and

Regulations published May 9, 1996, (61

FR 21053); and Final Rule—

Certification and Nomination

Procedures published May 9, 1996 (61

FR 21049).

Executive Orders 12866 and 12778 and

the Regulatory Flexibility Act and the

Paperwork Reduction Act

This final rule has been determined to

be not significant for purposes of

Executive Order 12866 and therefore

has not been reviewed by the Office of

Management and Budget (OMB).

This final rule was reviewed under

Executive Order 12778, Civil Justice

Reform. It is not intended to have a

retroactive effect. This rule would not

preempt any State or local laws,

regulations, or policies unless they

present an irreconcilable conflict with

this rule.

The Sheep Promotion, Research, and

Information Act of 1994 (Act (7 U.S.C.

7101–7111)) provides that any person

subject to the Order may file with the

Secretary a petition stating that the

Order, any provision of the Order, or

any obligation imposed in connection

with the Order is not in accordance with

the law, and requesting a modification

of the Order or an exemption from

certain provisions or obligations of the

Order. The petitioner would have the

opportunity for a hearing on the

petition. Thereafter the Secretary would

issue a decision on the petition. The Act