006.23.85 Ark. Code R. § 001 - State Process for the Intergovernmental Review of Federal Programs

STATE CLEARINGHOUSE PROJECT NOTIFICATION AND REVIEW SYSTEM

Background: OMB Circular A-95

In 1969 the Federal Office of Management and Budget (OMB) issued Circular A-95 to implement in part Title IV of the Intergovernmental Cooperation Act of 1968. The Circular included a provision for the establishment of a Project Notification and Review System (PNRS) which dealt with the state and local review of applications for federal financial assistance. The review process provided persons and organizations an opportunity to assess program proposals in relationship to State, local and areawide plans, programs and policies. It was designed to afford an opportunity for governors, mayors, county officials and other persons and organizations to influence federal decisions on proposed plans and projects.

Executive Order 12372

The A-95 PNRS process was a federal requirement for applicant participation. In July of 1982, after a lengthy OMB evaluation, the President issued Executive Order 12372 (see appendix 'A'), which rescinded OMB Circular A-95 and permitted the establishment of a state-designed process, at the option of each state. For any state not desiring to maintain a review process, applicants within that state would not be subject to a third party review.

Transition

The State of Arkansas did make the option to continue a review process under the provisions of Executive Order 12372. A series of areawide meetings with local elected officials were held to present the State's proposal for the establishment of a state-designed process. Each of these meetings resulted in a favorable recommendation to the proposal, and there were no suggestions for programs to be excluded from the review process, in addition to exclusions the federal agencies had already proposed.¹ By letter of September 8, 1983, Governor Clinton advised OMB that the State was to have a State Review Process and designated the State Clearinghouse as the Single Point of Contact (SPOC) (see appendix 'B').

State-level organizations are required by Act 498 of 1983 to have all applications subject to the review process. Program coverage for any applicant other than a state-level entity is established by the participating federal agency. This program coverage may be subject to adjustment from time to time.

Other than program coverage, there are some differences between the A-95 and Executive Order processes. Primary among these is the role of the Single Point of Contact. Comments and/or positions regarding an application may be transmitted to the federal agency by anyone. However, the State Single Point of Contact has the option of making a "state process recommendation" regarding any application. By taking a position on an application through a state process recommendation, the SPOC requires the federal agency to (A) accept the recommendation, (B) reach a compromise on points of dispute, or (C) provide a written explanation of why it did not accommodate the recommendation or compromise.²

The following is a summary of the State Clearinghouse's Project Notification and Review System (PNRS). This system was developed in response to E.O.12372 and Act 498 of 1983. The discussion is presented in three parts. One is for state-level applicants, the second Is for all other applicants, such as local governments or non-profit corporations, and the third part is a discussion of some special requirements.

PART I: STATE AGENCIES, BOARDS, COMMISSIONS AND INSTITUTIONS OF HIGHER EDUCATION

Program Coverage

All applications for federal funding assistance are required by Act 498 of 1983 to be submitted to the State Clearinghouse prior to submission to the funding agency. Applications for funding assistance (including contracts) from endowments and private industry are to be submitted to the State Clearinghouse for review, in accordance with the Governor's memorandum dated January 22, 1985 (see appendix 'C'). State agencies applying for federal funds being sub-granted by another state agency should treat these as a direct application for federal funds.

In some instances a proposal will not be funded by the grantor agency. If this occurs and the application is to be submitted to a different grantor agency, it must be forwarded to the appropriate Clearinghouses for public review and comment A new State Application Identifier (SAI) number will be assigned to the application.

Application Information

Agencies which are not familiar with application procedures should contact the federal agency to which they plan to apply in order to receive the needed information regarding an application. Basic application information is available in the Catalog of Federal Domestic Assistance (CFDA). A current issue of the CFDA is available at the State Clearinghouse.

Clearinghouse Information Requirements

If it is necessary to submit a pre-application or notification of intent to apply, to the funding agency, the applicant must submit a copy |of the pre-application to the State Clearinghouse. A summary of the pre-application will be published in the PNRS Project Activity Report. The Project Activity Report is circulated statewide to interested parties on a weekly basis. Pre-application information requirements vary, depending on the guidelines of the designated funding agency. At a minimum, the pre-application information submitted to the Clearinghouse must include a completed Standard Form 424 (see appendix 'D'), and any descriptive information required by the funding agency as part of the pre-application package. If needed the Clearinghouse may request additional information. If the funding agency requires a subsequent full application, or if there is a change in the substance of the project proposal, a full application must be submitted to the Clearinghouse. If both the pre-application and full application are submitted, they will be given separate Application Identifier numbers (SAI).³

In the absence of a pre-application or notification of intent, the routine application information requirements to be submitted to the State Clearinghouse are:

(A) Three copies of the application

(B) Three copies of the Standard Form 424

(C) Three copies of the Supplementary Grant Information Form (see appendix 'F')

(D) Three copies of the State Clearinghouse Application Supplement (formerly A-95 Clearinghouse Application Supplement) (see appendix 'G')

These information requirements apply to all state-level project applications unless a written memorandum of understanding to the contrary is in force between the agency and the State Clearinghouse.

The SAI number is illustrated as follows:

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Review Procedures

Upon receipt of an application, and the assignment of an SAI number, a thirty day review period is in effect. Anyone who makes a request to review an application must have their comments returned to the State Clearinghouse within the thirty day period. Under certain circumstances the reviewer may request an extension of the review period, not to exceed thirty extra days. The State Clearinghouse will notify the applicant in the event such a request is made.

If a federal program is covered by the Executive Order, and during the course of review a strong objection is made to the proposed project, the Clearinghouse may call the applicant and the reviewer to come together to try to work out any differences. If the parties cannot work out their differences, and the Clearinghouse agrees that the objection is valid, it may transmit a 'State Process Recommendation", which requires the federal agency to (1) accept the recommendation, (2) reach a mutually agreeable solution, or (3) provide the SPOC with a written explanation for not accepting the recommendation or mutually agreeable solution. The final determination to fund or not fund an application remains with the federal agency.

In most cases, any comments received will be suggestive and/or constructive, for the benefit of the application. These comments and the State Clearinghouse "sign-off"letter (see appendix 'J') must be forwarded to the funding agency once the review process have been completed.

All state-level applications are reviewed by the Governor's Office through the Governor's Executive Review and Comment (GERC) process.

All state-level applications are also reviewed by the Advice and Review Subcommittee of the Arkansas Legislative Council, under the authority of Legislative Council Interim Resolution 81-57.

In either of these review phases the reviewer may register objections to the project and request a delay in the application until any differences are resolved or questions answered.

Funding Agency Responsibility

Each Federal Agency maintaining an assistance program covered by the Executive Order has prepared implementing regulations on how they will treat grant applications. Generally speaking, the federal agency will not act on a application which has not been submitted to the State Review Process. In some cases the federal agency will return the application with notice that it must be processed by the Clearinghouse. State Law (Act 498) requires all applications from a state level organization to be processed by the State Clearinghouse. For a program covered by the Executive Order, the federal agency is required to respond in writing (if requested) regarding its treatment of any application where unresolved conflict exists.

Grant Award Notification

State-level organizations are to transmit to the State Clearinghouse a notification of grant award when an application Is funded. Agencies should use the Grant Award Notification form (see appendix 'E'), which will have been forwarded to the applicant along with the sign-off letter.

The State Clearinghouse will routinely monitor any funding granted contrary to the Executive Order, and report such exceptions to the Federal Office of Management and Budget (OMB).

Sub-Granting

State Agencies who receive federal funds which are available for sub-granting to other state agencies are required by the Governor's memorandum dated January 22, 1985, to advise their applicants that a copy of the application, together with a Standard Form 424, must be submitted to the State Clearinghouse, before a 'sign-off" of the application may be granted. If the applicant is not a state agency, a copy of this same information must also be submitted to the appropriate areawide Clearinghouse.

This requirement must be followed unless the state agency has executed a memorandum of understanding with the State Clearinghouse, exempting specified programs from this requirement.

PART II. LOCAL GOVERNMENTS, NON-PROFIT ORGANIZATIONS, PRIVATE BUSINESS AND INDIVIDUALS

Program Coverage

All federal assistance programs which are eligible for inclusion in the state review process under Executive Order 12372 (see appendix 'A') are included in the Arkansas review process. Minor changes in program eligibility will occur from time to time. The federal funding agency can advise the applicant whether or not the program is subject to the state review process. In addition, the State Clearinghouse will endeavor to maintain an up-to-date list of all eligible programs.

When an applicant is applying to a state agency for a sub-grant of federal funds, the applicant is to forward a copy of the application and Standard Form 424 (see appendix *B') to the State Clearinghouse and appropriate Areawide Clearinghouse, unless advised otherwise by the State agency.

In some instances a proposal will not be funded by the grantor agency. If this occurs and the application is to be submitted to a different grantor agency, it must be forwarded to the appropriate Clearinghouses for public review and comment. A new State Application Identifier (SAI) number will be assigned to the application.

Application Information

Applicants who are not familiar with application procedures should contact the federal agency to which they plan to apply in order to receive the needed information regarding an application. An applicant's Areawide Clearinghouse can be very helpful in assisting with the preparation of an application. Basic application data is available in the Catalog of Federal Domestic Assistance (CFDA). Most Areawide Clearinghouses will have an up-to-date copy of the CFDA.

Clearinghouse Information Requirements

For any program covered by the Executive Order, the applicant must forward one copy of the application and one copy of a completed Standard Form 424 to both the State and appropriate Areawide Clearinghouses.

If the application or Standard Form 424 is deficient in any manner the State Clearinghouse will return the project proposal to the applicant, identifying what material is needed to begin the review process.

When a pre-application, or notification of intent, is required by the funding agency, the applicant must forward a copy of the application and Standard Form 424 to the State and appropriate Areawide Clearinghouses. A summary of the pre-application will be published in the PNRS Project Activity Report. The Project Activity Report is circulated statewide to interested parties on a weekly basis, Pre-application information requirements vary, depending on the guidelines of the designated funding agency. At a minimum, the pre-application information submitted to the Clearinghouse must be a completed Standard Form 424, and any descriptive information required by the funding agency as part of the pre-application package. If needed the Clearinghouse may request additional information. If the funding agency requires a subsequent full application, or if there is a change in the substance of the project proposal, a full application must be submitted to the State and Areawide Clearinghouses. If both the pre-application and full application are submitted they will be given separate State Application Identifier (SAI) numbers.⁴

The SAI number is illustrated as follows:

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Review Procedure

Upon receipt of an application by the State Clearinghouse, a thirty day review period is in effect. The State Clearinghouse wilt assign an SAI number to the application upon receipt. The project summary will be included in the PNRS Project Activity Report and circulated to all parties on the PNRS mailing list. Anyone who makes a request to review an application must have their comments returned to the State Clearinghouse within the specified time period. Under certain circumstances the reviewer may request an extension of time for their review and comment. This extension of time cannot exceed thirty days. The State Clearinghouse will notify the applicant if such a request is made.

A request to review may be originated for a variety of reasons, including (1) for information purposes only; (2) an opportunity to make constructive suggestions; (3) an opportunity to make adverse comments; or (4) an opportunity to object to the proposal. If during the course of the review adverse comments are made, the applicant should contact the reviewer to discuss the validity of the comments, or possibly adjust the application. In some cases, strong adverse comments which are not resolved could jeopardize the application when reviewed by the funding agency.

In the event of strong adverse comments or objections by a reviewer, the Clearinghouse may call the applicant and reviewer to conference and attempt to work out any differences. If these differences cannot be resolved, the State Clearinghouse, if it agrees that the adverse comments or objections are significant, may transmit a 'State Process Recommendation", which requires the federal agency to (1) accept the recommendation, (2) reach a mutually agreeable solution, or (3) provide the SPOC with a written explanation for not accepting the recommendation or mutually agreeable solution.

Any comments received in the review process, together with the Clearinghouse 'sign-off" (see appendix 'J') letter must be forwarded to the funding agency.

Federal Agency Responsibility

Each federal agency maintaining as assistance program covered by the Executive Order has prepared implementing regulations on how they will treat grant applications. Generally speaking, the federal agency will not act on an application which has not been through the state review process. In some cases the federal agency will return the application with notice that it must be processed through the Clearinghouse.

The State Clearinghouse will monitor funding agency adherence to these regulations and report any discrepancies to the Federal Office of Management and Budget.

Grant Award Notification

All grantees are requested to complete and return to the State Clearinghouse the Grant Award Notification form (see appendix 'E'), which will be attached to the applicant's sign-off letter. Transmittal of this completed form will enable the State Clearinghouse to prepare quarterly reports on grant receipts throughout the State.

Areawide Clearinghouses

Certain metropolitan, regional and areawide planning organizations were designated in 1969 as Areawide Clearinghouses. This designation continues under the state review process. A map and descriptive listing regarding the geographic coverage of Areawide Clearinghouses is included as appendix 'K'. In those cases where a Regional Planning Commission or Council of Governments is within the geographic boundary of a Planning or Economic Development District, responsibility for Clearinghouse review may be split. In those cases this description shows to which Clearinghouse an applicant in any particular county should submit its applications.

PART III : SPECIAL REQUIREMENTS

Corps of Engineers Permits

In some special instances reviews are required when a proposed activity (whether it involves federal funding or not) affects a waterway in or bordering the State of Arkansas. Such an activity could involve removal from or discharges into any stream, or construction on, under or over a navigable waterway. An application for a permit to perform such activity must be filed with the Army Corps of Engineers District having jurisdiction over the affected waterway. The Corps' District Office will forward notice of such applications to the State Clearinghouse for distribution to the State Technical Review Committee for its recommendation. This permit procedure is operated in accordance with Section 10 of the Rivers and Harbors Act of 1899 and Section 404 of the Clean Water Act of 1972.

Proposed activity by any government, business or individual is covered by these laws.

Environmental Policy

Applicants should be aware that the National Environmental Policy Act of 1969 may necessitate the preparation of an Environmental Assessment (EA) or an Environmental Impact Statement (EIS). In some cases, if an Environmental Assessment or an Environmental Impact Statement is not submitted along with the application, state and local environmental agencies may require that such be prepared in order to evaluate environmental concerns. In addition the federal agency to which the application is forwarded may require an EA of EIS, after its review of the proposal.

Federal Notices

Pursuant to Executive Order 12372, federal agencies which operate in Arkansas routinely notify the State Clearinghouse of proposed direct Federal activity in which citizens and agencies may be interested. Activities may include: land purchases, land exchange, facilities construction, sale of facilities, and/or surplus property, activity on federal property, and river work. Notice of these activities will be made available in the PNRS Project Activity Report.

appendix A

Executive Order 12372

EXECUTIVE ORDER 12372

INTERGOVERNMENTAL REVIEW OF FEDERAL PROGRAMS

By the authority vested in me as President by the Constitution and laws of the United States of America, including Section 401 (a) of the Intergovernmental Cooperation Act of 1968 ( 42 U.S.C. 4231(a) ) and Section 301 of Title 3 of the United States Code, and in order to foster an intergovernmental partnership and a strengthened federalism by relying on State and local processes for the State and local government coordination and review of proposed Federal financial assistance and direct Federal development, it is hereby ordered as follows:

Section 1. Federal agencies shall provide opportunities for consultation by elected officials of those State and local governments that would provide the non-Federal funds for, or that would be directly affected by, proposed Federal financial assistance or direct Federal development.

Sec. 2. To the extent the States, in consultation with local general purpose governments, and local special purpose governments they consider appropriate, develop their own processes or refine existing processes for State and local elected officials to review and coordinate proposed Federal financial assistance and direct Federal development, the Federal agencies shall, to the extent permitted by law:

(a) Utilize the State process to determine official views of State and local elected officials.

(b) Communicate with State and local elected officials as early in the program planning cycle as is reasonably feasible to explain specific plans and actions.

(c) Make efforts to accommodate State and local elected official's concerns with proposed Federal financial assistance and direct Federal development that are communicated through the designated State process. For those cases where the concerns cannot be accommodated, Federal officials shall explain the bases for their decision in a timely manner.

(d) Allow the States to simplify and consolidate existing Federally required State plan submissions. Where State planning and budgeting systems are sufficient and where permitted by law, the substitution of State plans for Federally required State plans shall be encouraged by the agencies.

(e) Seek the coordination of views of affected State and local elected officials in one State with those of another State when proposed Federal financial assistance or direct Federal development has an impact interstate metropolitan urban centers or other interstate areas. Existing interstate mechanisms that are redesignated as part of the State process may be used for this purpose.

(f) Support State and local governments by discouraging the reauthorization or creation of any planning organization which is Federally-funded, which has a Federally-prescribed membership which is established for a limited purpose, and which is not adequately representative of, or accountable to, State or local elected officials.

Sec. 3.

(a) The State process referred to in Section 2 shall include those where States delegate, in specific instances, to local elected officials the review, coordination, and communication with Federal agencies.

(b) At the discretion of the State and local elected officials, the State process may exclude certain Federal programs from review and comment.

Sec. 4. The Office of Management and Budget (OMB) shall maintain a list of official State entities designated by the States to review and coordinate proposed Federal financial assistance and direct Federal development. The Office of Management and Budget shall disseminate such lists to the Federal agencies.

Sec. 5.

(a) Agencies shall propose rules and regulations governing the formulation, evaluation, and review of proposed Federal financial assistance and direct Federal development pursuant to this Order, to be submitted to the Office of Management and Budget for approval.

(b) The rules and regulations which result from the process indicated in Section 5 (a) above shall replace any current rules and regulations and become effective April 30, 1983.

Sec. 6. The Director of the Office of Management and Budget is authorized to prescribe such rules and regulations, if any, as he deems appropriate for the effective implementation and administration of this Order and the Intergovernmental Cooperation Act of 1968. The Director is also authorized to exercise the authority vested in the President by Section 401 (a) of that Act ( 42 U.S.C. 4231(a) ), in a manner consistent with this Order.

Sec. 7. The Memorandum of November 8, 1968, is terminated (33 Fed. Reg. 16487, November 13, 1968). The Director of the Office of Management and Budget shall revoke OMB Circular A-95, which was issued pursuant to that Memorandum. However, Federal agencies shall continue to comply with the rules and regulations issued pursuant to that Memorandum, including those issued by the Office of Management and Budget, until new rules and regulations have been issued in accord with this Order.

Sec. 8. The Director of the Office of Management and Budget shall report to the President within two years on Federal agency compliance with this Order. The views of State and local elected officials on their experiences with these policies, along with any suggestions for improvement, will be included in the Director's report.

appendix B

Governor's Letter Confirming State Process and Designating Single Point of Contact

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appendix C

Governor's Memorandum on Sub Grant Review

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appendix D

Standard Form 424

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appendix E

Grant Award Notification Form

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appendix F

Supplementary Grant information Form

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appendix G

State Clearinghouse Application Supplement

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appendix H

Fiscal Review and Comment Form

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appendix I

Legislative Council Interim Resolution 31-57

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appendix j

State Clearinghouse 'Sign-off" Letter

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appendix K

Areawide Clearinghouses

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¹ Federal agencies were allowed to propose programs under their jurisdiction which would be excluded from the review process.

² Final Federal Agency Implementing Regulations, Published in the June 24, 1983, Federal Register.

³ The State Application Identifier (SAI) should be referenced (RE:) on ail correspondence between the Reviewer, and the State Clearinghouse. This 9 digit date sequential number may be obtained from the weekly PNRS Project Activity Report.

⁴ The State Application Identifier (SAI) should be referenced (RE:) on all correspondence between the Reviewer, and the State Clearinghouse. This 9 digit date sequential number may be obtained from the weekly PNRS Project Activity Report.

Notes

006.23.85 Ark. Code R. § 001

8/7/1985