[Federal Register Volume 68, Number 250 (Wednesday, December 31, 2003)]
[Notices]
[Pages 75492-75493]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-32137]


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DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration


Notice of Indirect Cost Rates for the National Marine Sanctuary 
Program

AGENCY: National Oceanic and Atmospheric Administration (NOAA), DOC.

ACTION:  Notice.

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SUMMARY: NOAA's National Marine Sanctuary Program (NMSP) is announcing 
the establishment of indirect cost rates and a policy on the recovery 
of indirect costs for its involvement in natural resource damage 
assessment and restoration activities. These rates and the NMSP policy 
will be applied to all damage assessment and restoration case costs as 
of October 1, 2001, for cases not settled prior to that date. More 
information on these rates and the NMSP policy can be obtained from the 
address provided below.

EFFECTIVE DATE: October 1, 2001.

FOR FURTHER INFORMATION CONTACT: Harriet Sopher, 301-713-3125, ext. 
109; (Fax: 301-713-0404; e-mail: [email protected].

SUPPLEMENTARY INFORMATION: The mission of the NMSP under the National 
Marine Sanctuaries Act (NMSA) (16 U.S.C. 1431 et seq.) is to manage and 
protect specifically designated areas of the nation's oceans and Great 
Lakes for their habitats, ecological value, threatened and endangered 
species, and historical archaeological, recreational and esthetic 
resources. The NOAA NMSP is part of the National Ocean Service, and 
consists of a system of individual sanctuary sites (13 at present) and 
a headquarters office.
    The NMSP has the mandate to restore sanctuary resources injured as 
the result of physical harm (section 312, NMSA), or caused by releases 
of hazardous substances or oil (Comprehensive Environmental Response, 
Compensation, and Liability Act (CERCLA), 42 U.S.C. 9601 et seq. and 
Oil Pollution Act of 1990 (OPA), 33 U.S.C. 2701 et seq.) The NMSP 
conducts Natural Resource Damage Assessments (NRDAs) as a basis for 
recovering damages from responsible parties and uses the funds 
recovered to restore injured sanctuary resources and to reimburse the 
NMSP for assessment costs incurred.
    NOAA has promulgated natural resource damage regulations under the 
Oil Pollution Act (OPA), 33 U.S.C. 2701 et seq. While oriented towards 
claims arising under OPA, the regulations provide guidance to NOAA in 
developing natural resource damage claims under a variety of statutes 
including the NMSA. The OPA regulations define the scope of the costs 
of the damage assessment and specifically allow for the inclusion of 
indirect costs provided, however, that those costs are developed 
according to generally acceptable accounting practices. Specifically, 
the regulations state that ``both direct and indirect costs contribute 
to the full cost of the assessment and restoration * * *'' and are 
defined to mean ``expenses that are jointly or commonly incurred to 
produce two or more products or services * * *. Indirect costs are not 
specifically identifiable with any of the products or services, but are 
necessary for the organization to function and produce the products or 
services. An indirect cost rate, developed in

[[Page 75493]]

accordance with generally accepted accounting principles, may be used 
to allocate indirect costs to specific assessment and restoration 
activities.'' 15 CFR 990.30.
    Accordingly, the NMSP includes both direct and indirect costs in 
damage assessment claims it presents to responsible parties. Direct 
costs are costs for activities that are clearly and readily 
attributable to a specific output. Outputs may be associated with on-
scene emergency response as well as the damage assessment. In contrast, 
indirect costs reflect the costs for activities that collectively 
support the NMSP's damage assessment, restoration, and emergency 
response capabilities. For example, indirect costs include general 
administrative support and traditional overheads. Although these costs 
may not be readily traced back to a specific direct activity, indirect 
costs may be allocated to direct activities using an indirect cost 
distribution rate.
    Consistent with Federal accounting requirements, the NMSP is 
required to account for and report the full costs of its programs and 
activities. Further, the NMSP is authorized by law to recover 
reasonable costs of damage assessment and restoration activities under 
the NMSA, CERCLA, and OPA. Within the constraints of these legal 
provisions and their regulatory applications, the NMSP has the 
discretion to develop indirect cost rates for its components and 
formulate policies on the recovery of indirect cost rates subject to 
its requirements.

The NMSP's Indirect Cost Effort

    In October 2002, the NMSP hired the public accounting firm of 
Cotton & Company (C&C) to: (1) Evaluate the cost accounting system and 
allocation practices; (2) recommend the appropriate indirect cost 
allocation methodology; and, (3) determine the indirect cost rates for 
the components of the NMSP. The NMSP requested an analysis of its 
indirect costs for fiscal year 2002. The goal was to develop the most 
appropriate indirect cost rate allocation methodology and rates for the 
NMSP components.
    C&C concluded that the cost accounting system and allocation 
practices of the NMSP are consistent with Federal accounting 
requirements. C&C also determined that the most appropriate indirect 
allocation method was the Direct Labor Cost Base for all NMSP 
components. The Direct Labor Cost Base is computed by allocating total 
indirect costs over the sum of direct labor dollars plus the 
application of NOAA's leave surcharge and benefits rates to direct 
labor. The indirect cost rates that C&C has computed for the NMSP were 
further assessed as being fair and equitable. A report on C&C's effort, 
their assessment of the NMSP's cost accounting system and practices, 
and their determination respecting the most appropriate indirect cost 
methodology and rates can be obtained from Michelle Chapman, 1305 East 
West Highway, Silver Spring, MD 20910, [email protected].

The NMSP's Indirect Cost Policy

    The NMSP will include the costs of program policy work and 
techniques and methods development in indirect cost pools of its 
component organizations, but will monitor these activities annually to 
control costs. The indirect cost pools also include the cost of general 
management and administrative support and preparedness for emergency 
response work.
    The NMSP will apply the rates recommended by C&C for fiscal year 
2002 for each of the NMSP components as provided below:

Headquarters and all sanctuary field sites except as specified: 
154.62%,
Florida Keys National Marine Sanctuary: 249.41%

    Different components of the NMSP have different rates because of 
their different roles and responsibilities with respect to damage 
assessment and restoration. The Headquarters staff serves a 
coordinating function, providing overall policy direction and 
administrative support. Individual sanctuary sites support policy 
development, but also conduct techniques development and perform the 
field operational role, providing on-the-water emergency response and 
biological assessment of the injuries and conducting or overseeing 
restoration efforts. A separate rate was calculated for the Florida 
Keys National Marine Sanctuary (FKNMS) because the vast majority of 
incidents occur at that site. The FKNMS maintains an entire team of 
emergency response, damage assessment and restoration personnel, 
equipped and trained for their field operational role.
    The rates identified in this policy will be applied to all damage 
assessment and restoration case costs as of October 1, 2001, using the 
Direct Labor Cost base allocation methodology. For cases that have 
settled and for cost claims paid prior to October 1, 2001, the NMSP 
will not reopen any resolved matters for the purpose of applying the 
rates in this policy. For cases not settled and cost claims not paid 
prior to October 1, 2001, costs will be recalculated using the rates in 
this policy. The NMSP will use the FY 2002 rates for future fiscal 
years until year-specific rates can be developed.

Alan Neuschatz,
Associate Assistant Administrator for Management, Ocean Services and 
Coastal Zone Management, National Oceanic and Atmospheric 
Administration.
[FR Doc. 03-32137 Filed 12-30-03; 8:45 am]
BILLING CODE 3510-NK-M