of the Act, the following actions may

Occur:

(1) If it appears to the Council that the State's program conforms to the requirements of section 303 of the Act, the State will continue to be eligible for a grant under title III.

(2) If, on the other hand, it appears that the program no longer complies with the requirements of section 303 in either design or administration, the Director shall ascertain all the relevant facts. The State agency designated to administer the program shall be given notice in writing, which notice shall state with particularity the apparent inadequacies of the program and shall cite specific requirements of section 303, this part, or supplemental instructions which apparently have not been met. The State shall be given timely opportunity to be heard through the filing of written statements and personal presentations in support of its position.

(3) If the Council shall determine, on the basis of all the facts and after reasonable notice and opportunity for a hearing, that the program does not meet the requirements of section 303, the State shall be notified that no further payments shall be made under the Act. A copy of such decision accompanied by a statement of the supporting facts will be furnished to the State.

(4) When the Council is satisfied that sufficient adjustments have been made in the design and operation of the program, payments to the State will be resumed. A copy of such decision shall be furnished to the State.

§ 703.8 Program costs and accounting.

(a) Program costs-(1) Time of incurrence. (i) Non-Federal matching funds must be obligated within the fiscal year of the budget set forth in an approved application to qualify as a basis for payment of Federal funds.

(ii) Once obligated to a State, Federal funds shall remain available to the State until expended, subject to the provisions of § 703.7(b): But the persistence of substantial annual balances will be considered in determining the relative need for planning, as the Council determines allotment to the State for subsequent years (see § 703.3(c)).

(2) Redistribution of funds. In the event that any State fails to make application for a grant for the current fiscal year, the grant allotment assigned to

that State for that year will be retained as a commitment until April 1, at which time the commitment to that State will be withdrawn by the Council and the allotment shall be added to the unobligated title III balances available to the Council.

as

(3) Rules on the incurrence of planning costs. The budgetary practices, rules, and policies of the State customarily applied, if in accord with generally accepted accounting practices, shall govern for costs incurred on an approved program unless the approved application stipulates a different method.

(4) Sources of State planning funds. The sources of a State's share of the cost of a program shall have no bearing on whether or not such costs can be matched by Federal funds, except that other Federal funds or property cannot be used for matching purposes.

(5) Use of title III grants for other matching. Federal or non-Federal funds allotted to a title III program shall not be used to meet a State's share of the cost of a Federal-State commission established under title II of this Act or to match Federal funds under any other federally aided program.

(6) Ceilings on allowable costs. The amount of each cost item that may be acceptable for Federal matching under this Act shall not exceed the actual cash outlay from non-Federal sources for that item, or the fair market value of the item, whichever is less.

(7) Expenditures that may qualify as a basis for payment of Federal funds. (i) Any funds used by a State for water and related land resources planning may be employed to match an allotment under title III of the Act, except that funds used for matching other Federal grantsin-aid or other federally aided programs or funds specifically prohibited by the Council, may not be used to match allotments under title III. Such expenditures must be reasonable and clearly allocable to the State comprehensive water and related land resources planning effort and may include but are not limited to expenditures for personal services; training of personnel; fringe benefits; consultant fees; equipment, supplies, and materials; travel of employees engaged in the program; contributed personal services; and payment for information services. Consultant services are eligible only to the extent that the development of trained State personnel for compre

hensive water and related land resources planning activities is not impaired.

(ii) Detailed standards, listings, and descriptions of allowable and unallowable costs are given in Bureau of the Budget Circular No. A-87, “Principles for Determining Costs Applicable to Grants and Contracts with State and Local Government," May 9, 1968.

(b) Accounting. Based on generally accepted standards and principles, accounting procedures shall conform to the requirements of Bureau of the Budget Circular No. A-87 unless exceptions are granted by the Council, and shall include:

supporting

(1) Itemization of all all records of program expenditures in sufficient detail to show the exact nature, amount, and reasonableness of each expenditure;

(2) Maintenance of adequate records, approved by the appropriate official, to show that all salaries and wages charged against the planning program were authorized;

(3) Maintenance of payroll vouchers for salaries and wages;

(4) Cross-referencing of each expenditure with the supporting purchase order, contract, voucher, or bill.

The supporting documents should be endorsed by an official authorized to approve such expenditures.

ments, grants, contracts, and other arrangements financed under the Act and also transactions financed with funds from other sources. In addition, they shall maintain files of all papers necessary to establish the validity of the transactions recorded and their allocability to the State comprehensive water and related land resources planning effort.

(b) Such records, with all supporting and related documents, shall be available at reasonable times, upon request, for inspection and audit by representatives of the Council and of the Comptroller General of the United States.

(c) Records relating to each allotment and each grant shall be retained and made available until the expiration of 3 years after the State agency's last disbursement of such funds.

§ 703.11 Reports and publications.

(a) The results of each completed segment of a comprehensive water and related land resources plan, and of the entire plan, shall be stated in a formal report, to be made available for public distribution. Where a central State planning or coordinating agency exists, such reports shall be referred to such agency for any appropriate review before publication.

(b) Appropriate acknowledgment shall be given in publications, news releases and other media of the Water Resources Council's participation in financing planning under the Water Resources Planning Act. § 703.12

Nondiscrimination in federally assisted programs.

In order to carry out the provision of title VI of the Civil Rights Act of 1964 (78 Stat. 252), no person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under any program or activity receiving Federal financial assistance under the Act.

§ 703.13 Supplemental instructions.

As deemed appropriate the Council may amplify the rules and regulations in this part by means of supplemental instructions.

PART 704-PLAN FORMULATION STANDARDS AND PROCEDURES

Subparts A-D [Reserved]

Subpart E-Standards for Plan
Formulation and Evaluation

§ 704.39 Discount rate.

(a) The interest rate to be used in plan formulation and evaluation for discounting future benefits and computing costs, or otherwise converting benefits and costs to a common time basis, shall be based upon the average yield during the preceding fiscal year on interest-bearing marketable securities of the United States which, at the time the computation is made, have terms of 15 years or more remaining to maturity: Provided, however, That in no event shall the rate be raised or lowered more than one-quarter of 1 percent for any year. The average yield shall be computed as the average during the fiscal year of the daily bid prices. Where the average rate so computed is not a multiple of oneeighth of 1 percent, the rate of interest shall be the multiple of one-eighth of 1 percent nearest to such average rate.

(b) The computation shall be made as of July 1 of each year, and the rate thus computed shall be used during the succeeding 12 months. The Executive Director shall annually request the Secretary of the Treasury to inform the Water Resources Council of the rate thus computed.

(c) Subject to the provisions of paragraphs (d) and (e) of this section, the provisions of paragraphs (a) and (b) of this section shall apply to all Federal and

federally assisted water and related land resources project evaluation reports submitted to the Congress, or approved administratively, after the close of the second session of the 90th Congress.

(d) Where construction of a project has been authorized prior to the close of the second session of the 90th Congress, and the appropriate State or local governmental agency or agencies have given prior to December 31, 1969, satisfactory assurances to pay the required non-Federal share of project costs, the discount rate to be used in the computation of benefits and costs for such project shall be the rate in effect immediately prior to the effective date of this section, and that rate shall continue to be used for such project until construction has been completed, unless the Congress otherwise decides.

(e) Notwithstanding the provisions of paragraphs (a) and (b) of this section, the discount rate to be used in plan formulation and evaluation during the remainder of the fiscal year 1969 shall be 45% percent except as provided by paragraph (d) of this section.

(f) Section V. G. 2 of the interagency agreement dated May 15, 1962, approved by the President on May 15, 1962, entitled "Policies, Standards, and Procedures in the Formulation, Evaluation, and Review of Plans for Use and Development of Water and Related Land Resources," and published on May 29, 1962, as Senate Document No. 97, 87th Congress, 2d Session, is superseded by the provisions of this section.

(Sec. 402, 79 Stat. 254; 42 U.S.C. 1962d-1) [33 F.R. 19170, Dec. 24, 1968]