United States Department of the Interior 
FISH AND WILDLIFE SERVICE Bishop Henry Whipple Federal Building 1 Federal Drive Fort Snelling. MN 55111-4056 
IN REPLY REFER TO: 
FWS/R3/MBSP-WSFRl045187 
AUG -6 2010 
Memorandum 
To: 	Director (A WSR) 
From: 	Regional Director, Region 3 
Subject: 	Review of proposed changes to the Code of Federal Regulations, 50 CFR Part 80, Financial Assistance: Wildlife Restoration, Sport Fish Restoration, Hunter Education and Safety 
Thank you for the opportunity to review this draft of 50 CFR 80. We have attached comments 
and a white paper entitled: Proposed Changes in the Definition of Real Property found in the 
June 2010 version of 50 CFR 80 (CFR). In summary, the proposed changes have new, far
reaching consequences on Program accountability, Program land, and the nature of the Service
agency partnership. The CFR sets rules and limits the scope of actions for both the Wildlife and 
Sport Fish Restoration Program (WSFR) and our grantees to execute the Acts. Our concerns 
consist of the following: 1.) The unintended consequence ofproviding new opportunities for 
entities other than the state fish and wildlife agency to divert funds or lands. 2.) We believe that 
the CFR should clearly state and describe the partnership relationship on which the Program is 
based. 3.) We are concerned about reducing the basic grant accountability, both fiscal and 
programmatic, that has made the Program such an enduring success. 
One of the large Service changes that occurred the last 25 years is the format and audience of the Service Manual. Manual sections once addressed both the Service and the grantees and referenced the CFR for authority. Now, the Manual addresses only the Service. The CFR must now be very complete and have sufficient detail for agencies to know all of our direction and expectations, answer grantee questions, and provide complete instructions for the grantees. The proposed CFR is crafted with great care and with attention to detail and we present comments about overarching issues rather than flow, format or detailed issues. Some of our unease is caused by seeing some of the most significant changes for the first time in the draft published in the Federal Register. We are concerned that these new changes have not been given the benefit of the regional WSFR Chiefs' collective insight on the effects of implementing the new CFR. 
We encourage a global analysis of the CFR in relation to Manual chapters, both in-progress and existing: 1) Are all of the necessary topics covered for both the agencies and the Service? Does the CFR provide all the needed links to the new chapters? 2) How would these new approaches be implemented and what would the result be? 3) Are any of these sections going to conflict with other CFR? 4) Is there sufficient detail in the CFR guidance to grantees to retain existing direction for the grants management machinery? 5) What is the maximum effect of abuse of these new sections, how easily could this happen and what recourse would the Service and agencies have? 
Attachments Acting Regional Director 
Proposed Changes in the Definition of Real Property found in the June, 2010 version of 50 CFR 80 
The currently proposed changes to 50 CFR 80 which would make "minerals extracted from the ground" into personal property and the proceeds from the "Sale of a product of mining and drilling ..." into program income [sections 80.20(b)(2) and 80.120(a)(6) in the proposed rule] are not consistent with or supported by the rational the FWS Director and Solicitors used several years ago to establish the "timber policy" which included defining timber harvest proceeds as program income. 
1. A key aspect of the June 6, 2002 memo from then Director Steve Williams (the "timber policy") and the underlying Solicitor's Opinion is that the timber is harvested from "Federal Aid lands" as part of a State's wildlife management program. This is stated three times in the Steve Williams memo, with bold added for emphasis in his written statements repeated below -
"The purpose of this memorandum is to issue policy guidance to be implemented uniformly throughout the Regions regarding the appropriate treatment of revenues generated by States from the sale of timber harvested on Federal Aid lands in accordance with a State's accepted wildlife management practices." First sentence, first paragraph of S. Williams memo 
" ... a recurring issue has been the means by which States account for revenues generated from the sale of timber on Federal Aid lands, harvested in a manner consistent with accepted wildlife management practices." First sentence, second paragraph of S. Wiliams memo 
" ... why the sale of timber harvested on Federal Aid lands incidental to accepted management practices is not the transfer of real property and that revenues from such sales should be treated as program income." Second sentence, third paragraph of S. Williams memo 
The December 5, 2000 Solicitor's Opinion memo is similarly based on the premise that the timber is being harvested as part of a State's wildlife management program. Again, bold has been added for emphasis in the quotes from the Solicitors Opinion repeated below. 
",.. the matter before us calls for an analysis of timber as it is harvested by states in pursuing the purposes for which the federal funds were originally granted ..." last sentence, second complete paragraph, second page of Solicitor's Opinion 
"We are asked to analyze timber harvesting in the context of a State carrying out its mandate to mange such lands for wildlife purposes. Timber management on these lands is essential to achieving the purposes for which the lands were originally acquired, and the sale of timber is incidental to the management purposes." first two sentences, last paragraph, second page of Solicitor's Opinion 
A key concept is that the timber is being harvested to accomplish a wildlife management or wildlife habitat management purpose consistent with the reason(s) the land was acquired and is being managed. Generation of income is ancillary. 
2. As pointed out in the second paragraph from the end of the Solicitors Opinion memo, this rational can apply to other sorts of activities which regularly take place on Federal Aid acquired lands. Again, bold is added for emphasis in the quote below. 
"We also point out that there are additional revenue-generating wildlife management activities 
on federal aid lands which are analogous to timber harvesting, such as grazing, which should be 
treated in the same manner as timber sales, provided that such revenue-generating activities 
are pursuant only to accepted wildlife conservation and management principles." firstfull 
paragraph, last page ofSolicitor's Opinion 
3. Based on the Solicitors Opinion, FWS Directors memo and with discussion and approval of the Joint Policy Task Force, the Service issued Directors Order 168 in March 2004 which was superseded by Service Manual chapter 522 FW 19 in December 2005. Both were titled "Program Income from Federal Assistance Grants." The Service Manual chapter includes an attachment (522 FW 19, Exhibit 1) which lists examples of income which should or should not be treated as program income. The following quote is an "example of income that should be treated as program income" from that Exhibit or attachment. 
IIlncome generated during the grant period from the harvest of assets that contribute to grant objectives on lands purchased or managed with Federal Assistance funds (e.g., timber revenue, hay field revenue, grazing revenue). Item 1.b in 522 FW 19, Exhibit 1 
As bolded in the quote above, the example stipulates that the income must result from an activity which 
"contribute(s) to grant objectives" which is consistent with the earlier Solicitor's Opinion and Director's 
memo. 
4. The current Service Manual chapter dealing with WSFR land acquisition grants (522 FW 6) was written before the Solicitors Opinion and Directors "timber policy" were issued. The guidance in 522 FW 6.5 D is repeated below with bold added for emphasis. 
"Minerals, oil, gas, timber, grazing rights, and other real property are normally considered a part of the land. These interests may be separated from the land by sale, lease, easement, or other method of transfer. However, the separation must be compatible with the purposes(s) for which the land was acquired. Revenue from the sale, lease, or easement may be considered program income." 522 FW 6.5 D 
5. The currently proposed revisions to 50 CFR 80 published as a proposed rule in the June 10, 2010 Federal Register included at least two areas which are not supported by the information summarized above. The pertinent sections of the proposed new 50 CFR 80 are identified below. 

80.20(b) provides examples of real property, personal property and intellectual property that may be included in license revenue. 
80.20(b}(2} ((Personal property, such as vehicles, equipment, tools, supplies, annual crops, minerals extracted from the land, harvested timber, animal products, cash, securities;" 
and 
80.120 "What is program income?" 
80.120(b) "Program income includes revenue from any of the fo"owing:" 
80.120(b}(6) ((Sale of a product of mining, drilling, forestry, or agriculture on real property acquired or directly managed with grant funds." 
6. CONCLUSION -It is not appropriate to include "minerals extracted from the land" and “mining, drilling" in the proposed rule as examples of personal property in 80.20(b)(2) and program income in 80.120(b )(6). 
Language requiring that the timber be harvested as part of the State's wildlife management activities which is a critical part of the Director's “timber policy" and the Solicitors Opinion upon which it was based, does not appear anywhere in the currently proposed 50 CFR 80 wording. 
Including “minerals extracted from the land" and “sale of a product of mining (or) drilling" with harvested timber and forestry products in the proposed revision of 50 CFR 80 is mixing apples and oranges because timber harvest (and production of certain animal or agricultural products, e.g. grazing) is an accepted wildlife habitat management technique which is included in some WSFR grants and can be consistent with the purpose for which lands were acquired. Mining, drilling and mineral extraction are not wildlife management techniques. Other than in a very few limited circumstances (e.g. drilling a water well on a Wildlife Area in the arid west where drinking water limits wildlife abundance), mining, drilling and mineral extraction are not activities funded through WSFR grants or with State license revenue. Generally, mining, drilling and mineral extraction are not permitted on WSFR acquired land where the mineral or subsurface rights were included in the acquisition. 
The "Updates to the Regulations" section ofthe Federal Register notice for the proposed changes to 50 CFR 80 contains some explanation or reasoning for the proposed changes quoted in Section 5 above. Both the December 5, 2000 Solicitors Opinion on federal aid timber sales and the Service Manual Chapter on program income (522 FW 19) are mentioned as supporting the proposed changes. This is a specious argument however when applied to mining, drilling and other methods of mineral extraction which are not wildlife management techniques. 
7. RECOMMENDATIONS
A. The phrase "minerals extracted from the land" should be removed from the list of examples of personal property at 80.20(b)(2) and placed in the list of examples of real property at 80.20(b)(1). 
B. Remove the words "mining" and "drilling" from the list of examples of program income at 80.120(b)(6). 
C. Add wording to 80.120(b)(6)to clarify that the forestry or agriculture activities listed there must be related to management of wildlife and wildlife habitat. 
After changes Band C abovel BO.120(b}(6) could read as follows-
Sale of a product of forestry or agriculture on real property acquired or directly managed with grant funds provided that such revenue-generating activities are pursuant only to accepted wildlife conservation and management principles. 
The bold language above was added to that in the current proposed rule. It is copied directly from the Solicitorls Opinion. 
B. WHY IS THIS IMPORTANT?
Selling or disposal of real property requires WSFR approval {43 CFR 12.71} both during and after the grant period. 
WSFR has some involvement when grantees sell personal property during the grant period {43 CFR 
12.65 and 50 CFR BO)I thus earning program income. After the grant has endedl grantees can sell personal property without WSFR approval and use the income according to one of the methods described in 80.125 in the proposed rule. 
If the proposed change had been in place at the timel when the then Director of one of our Statels DNR wanted to mine the coal under a FWA purchased with WSFR assistancel he could have directed the agency to operate the property using no federal funds {so there would be no open grants} and then proceeded with the mining. 
Calling the proceeds from mining coall oill gasl etc. from under lands acquired through long closed WSFR land grants personal property and allowing States to use that income as license revenue could provide a substantial amount of money to cash strapped State agencies. As discussed on the last conference call with the State FACsl a way already exists to allow States to get at this source of funds as in the Michigan O&M grant funded with program income from oil and gas wells on Federal Aid lands via the matching method. WSFR remains in the loop in the Michigan situation. 
Region 3 Midwest Region 
Comments on 
Proposed Changes To The Code Of Federal Regulations, 50 CFR Part 80, Financial Assistance: Wildlife Restoration, Sport Fish Restoration, Hunter Education And Safety 
The Midwest Region's comments cover definitions; roles and responsibilities; real property; topics covered in other CFR chapters; and other recommendations. 
§ 80.2 Proposed definitions: 
We recommend that the definitions of several terms be revised and propose a few additional definitions. Where definitions exist in current policy, or regulation, the Acts, or in the proposed Lands Chapter, we used them. 
Bargain Sale. The voluntary sale of an interest in real property for less than its market value. 
Bundle of Rights. An ownership concept describing all the legal rights that attach to the ownership of real property, including the right to sell, lease, encumber, use, enjoy, exclude, and devise by will. These rights also include the rights of use, occupancy, cultivation, and exploration, the right to license, devise, dedicate, give away, share, mortgage, and trade or exchange. When purchasing real estate, the buyer actually buys the rights previously held by the seller, except those that are reserved or limited in the sale. (Reilly, John W., The Ultimate Language of Real Estate, 2000). 
Conservation Easement. A restriction that limits the future use of a property to preservation, conservation, or wildlife habitat. (Appraisal Institute, Dictionary of Real Estate Appraisal, 2002). A legal agreement between a landowner and a qualified organization or agency that restricts future activities on the land to protect its conservation values. (The Conservation Easement Handbook, Land Trust Alliance 2005). A conservation easement takes the development rights of the real property. 
Diversion. The use of license fees or revenues paid by hunters and anglers and anything purchased with license fees or revenues identified in 50 CFR 80.20 for a purpose other than administration of the State fish and wildlife agency. (Note: It is our preference to not use the term "license revenue", but if it remains, we suggest using both in this definition.) 
Easement. Interests in land owned by another person, consisting of the right to use or control the land, or an area above or below it for a specific limited purpose such as to cross it for access to a road. The interest gives its holder a limited right to use the land, such as an access right-of-way, the right to flow or store water upon the property or to prevent uses by others. 
Encumbrance. Any claim, lien, charge, or liability attached to and binding on real property that may increase or lessen its value or impair its use, but not necessarily prevent transfer of title. Examples are judgments, restrictions, mortgages, and liens. An encumbrance may also be a right or interest held by someone who is not the legal owner of the property, such as an easement, timber or mineral rights held by someone other than the title holder. 
Fee Title or Fee Simple Interest. The maximum possible interest (ownership) one can possess in real property. A fee simple interest is the least limited interest and the most complete and absolute ownership in land. It is of indefinite duration, freely transferable, and inheritable. All other interest may be created from it, which means that all other ownerships must be something less than fee simple. (Rielly, John W., The Ultimate Language of Real Estate, 2000). 
Land Acquisition. The acquisition of real property or interest in real property by fee title, easement, lease or any other method consistent with State law or regulation. 
Law enforcement. Any effort intended to compel the observance of laws, regulations, or policies, and the development, publication, distribution, or advertisement of laws, regulations, or policies. 
Lease. An agreement transferring the right to exclusive possession and use of real estate for a definite period of time. To create a valid lease, the title holder (land owner) tTlust retain a reversionary right which allows them to obtain. A short-term lease is for a period of less than 10 years; a long-term lease is for 10 or more years. The words "lease," "let," "lessor," or "lessee" do not create a lease if the clear intention was to create a personal right or privilege to use land, as in a license. Characteristics of a lease include: use of the word "rent" or a payment that resembles rent; an arrangement that cannot be readily revoked; the occupier's obligations to carry out repairs; prohibitions against subletting or altering the premises; and a covenant for quiet enjoyment. The term "long-term lease" generally refers to those that will run at least 10 years. (Reilly, John W., The Language of Real Estate, 2000; Abbott, Damien, The Shorter Encyclopedia of Real Estate Terms, 2004). 
Market Value. The amount in cash, or on terms reasonably equivalent to cash, for which in all probability the property would have sold on the effective date of the appraisal, after a reasonable exposure time on the open competitive market, from a willing and reasonably knowledgeable seller to a willing and reasonably knowledgeable buyer, with neither acting under any compulsion to buy or sell, giving due consideration to all available economic uses of the property at the time of the appraisal. (Uniform Appraisal Standards for Federal Land Acquisitions, 2000). 
Mineral Assessment Report. A report prepared by a geologist or other similar professional evaluating the minerals present on or under the land and the potential for different types of, mining to develop those minerals. Such report may be required for both fee title and conservation easement acquisitions. 
Notice of Federal Participation. A publicly recorded statement in the conveyance deed, other conveyance document or in a separate recorded notice cross-referenced to the deed that the grantee or subgrantee acquired real property through a Federal grant or accepted it as a matching in kind contribution under the terms of that grant. Formerly known as Notice of Grant Award. See Chapter X-III for what must be included in the Notice of Federal Participation. 
Option. An agreement to keep open, for a set period, an offer to buy, sell or lease real property. An option must be supported by its-own consideration, separate and independent of the purchase price of the property. The owner does not sell, nor does the buyer purchase, the property when the option is signed. The owner must sell if the buyer gives notice, but the holder of the option does not have to buy. 
Personal Property. Identifiable, portable and tangible objects that are considered by the general public to be "personal", such as furnishings, artwork, antiques, gems, and jewelry, collectibles, machinery, and equipment; all property that is not classified as real estate. Personal property includes movable items that are not permanently affixed to, and part of, the real estate. (Appraisal Institute, The Dictionary of Real Estate Appraisal, 2002). Personal property includes any item that is movable without damage to itself or the underlying real estate. Annual crops and inte"ectual property, such as patents and copyrights, are also personal property. (International Association of Assay Offices). 
Program. Any of the grant programs authorized by the Pittman-Robertson Wildlife Restoration Act of September 2,1937, as amended (16 U.S.C. 669-669k), and the Dingell-Johnson Sport Fish Restoration Act of August 9,1950, as amended (16 U.S.C. 777-777n, except 777e-1 and g-1). 
Project. A stand-alone undertaking in a project-by-project grant that is necessary to fulfill a need, as defined by the state fish and wildlife agency. This is the level at which compliance requirements apply and WSFR determines substantiality of character and design. Per Section 6 of the Acts, when a state is implementing a comprehensive management system (CMS) grant, the term "project" may be used to describe the fishery or wildlife program covered by the CMS grant. 
Purchase Agreement. A contract to convey real property in the future for a certain price with both buyer and seller obligated to mutually perform. Common legal equivalents of a purchase agreement are: contract of sale, sales contract, deposit receipt, offer and acceptance, agreement of sale, offer to lease or purchase, sale agreement, and an exercised option. 
Subgrant. An award of financial assistance in the form of money, or property in lieu of money, made under a grant by a grantee to an eligible subgrantee. The term includes financial assistance when provided by contractual legal agreement, but does not include procurement purchases, nor does it include any form of assistance which is excluded from the definition of "grant" in this part. 
Subgrant Agreement. A contractual legal agreement between a grantee and an eligible subgrantee that identifies the terms under which an award of financial assistance in the form of money, or property in lieu of money, is made under a grant by the grantee to the subgrantee. The term includes financial assistance, but does not include procurement purchases, nor does it include any form of assistance which is excluded from the definition of "grant" in this part. 
Subgrantee. The government or other legal entity to which a subgrant is awarded and which is accountable to the grantee for the use of the funds provided. 
Subproject. Within a comprehensive management system (CMS) grant, a stand-alone undertaking that is necessary to fulfill a need, as defined by the state fish and wildlife agency. In comparison, within a project-by-project grant this same undertaking would be called a "project". This is the level at which compliance requirements apply and States determine substantiality of character and design. 
Real Property. All interests, benefits, and rights inherent in the ownership of an identified tract of land, including any inlprovements on the tract, and the rights to the air above the tract, the surface, and the subsurface. (Reilly, John W., The Language of Real Estate, 2000). 
Reservation. A provision of a deed or other conveyance document that identifies a specific use or right that the person conveying title to real property will continue to hold. A reservation does not exist as an identified use o~ right before the conveyance. A deed or conveyance document cannot reserve a use or interest for a third party. 
Statement of Just Compensation. A statement by an acquiring Agency Official which states the amount the Agency believes is just conlpensation for the real property. The amount may not be less than the approved appraisal of the market value taking into account the value of allowable damages or benefits to any remaining property. 
(Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (42 U.S.C. 4601 et seq.) and its implementing regulations at 49 CFR 24). See Exhibit X-II 1-1 (6). 
§ 80.20 To be consistent with the Acts, we recommend that the term "license revenues" be changed to "license fees" throughout the document. The Acts both exclusively refer to "License Fee", not "License Revenue". The Assent Legislation section in the Acts states, " .. include a prohibition against the diversion of license fees paid by .." fishermen and by hunters. The proposed change from the current 50 CFR 80.4(a) narrows and weakens the protection of these funds and their intended uses. For exarnple, we recommend the following wording for Sections 80.20(a) and (a)(1) be revised to: 
§ 80.20 What do hunting and fishing licenses fees include? 
(a) Hunting and fishing license fees includes: 
(1) Fees from the sale of State-issued general or special hunting or fishing licenses, permits, stamps, tags, access and use fees, or other State charges to hunt or fish for recreational purposes in the State; 

§ 80.22 What must a State do to resolve a declaration of diversion? 
The Acts do not refer to "Revenue". The Assent Legislation in the Acts," include a prohibition against the diversion of license fees paid by .." fishermen and by hunters. The proposed change from the current Rule narrows and weakens the protection of these funds, their intended uses and the land purchased with them. As noted in section 80.20, the term "license revenue" should be replaced with "license fee" throughout the document. 
§ 80.55 How does a proposed project qualify as substantial in character and design? 
A proposed project qualifies as substantial in character and design if it: 
(a) Describes a need within the purposes of the Acts; 
(b) Has objectives to meet the need and has methods suitable to meet the objectives; and 
(c) Demonstrates the use of accepted principles of fish and wildlife conservation and management, sound design, appropriate procedures, and the likelihood of benefits commensurate with project costs. 

We recommend removing "the likelihood of' from (c), as it could cause a problem in the reporting phase by removing the obligation of a state to explain situations where cost over runs occur or something went wrong to cause a lack of benefits at the end of a project. Likelihood is an imprecise term that removes accountability because it is tied to stochastics (probability) rather than good design. 
§ 80.64 How does an agency allocate costs in multipurpose projects and facilities? 
We recommend cross-referencing 80.63 and 80.64, OMB Circular A-87 Appendix 2 - Cost Principles for State, Local, and Indian Tribal Governments (2 CFR 225), and 43 CFR 12.62 "Allowable costs will be determined in accordance with the cost principles applicable to the organization incurring the costs." 
§ 80.68 What requirements apply to financing an activity from more than one annual apportionment? 
We support more-than-one-year-financing of any grant activity that WSFR has approved. Section (b) seems to indicate only construction grants. Section 80.82(b)(13) appears related to this section and only includes construction and acquisition of lands or interest in lands. The linkage needs to be more clear that 80.82(b)(13) does not imply a limitation to only construction or land acquisition. 
§ 80.81 What must an agency submit when applying for a comprehensivemanagement-system grant? 
We recommend including clear guidance to the agencies to provide a description of the State's process for addressing Federal grant compliance requirements in the requirements for a CMS grant submission. This is both critical for determining if the State's CMS is substantial in design, and for providing a basis for Service determinations for NEPA, EAS Section 7, and NHPA Section 106 compliance. For a CMS grant, this process has to be described at the level of "sub-project", just as is a "project" in a project-by-project grant. Therefore, we recommend the following wording for sections (h), (i), (j), and (k) to the list of elements that need to be described when submitting a CMS grant proposal: 
(h) A description of how subprojects to be funded via the proposed grant segment were analyzed to determine which ones to recommend to the Service for NEPA categorical exclusions, and which ones are being recommended for "no affect" for Section 7 and Section 106 compliance. 
(i) A list of the subprojects to be funded for the given year's grant, with a title, State identifier code, and cost estimate for the grant period.  

(j) A list of subprojects recommended for NEPA categorical exclusions, and for no affect recommendations for Section 7 and Section 106 compliance. 

(k) Sufficient documentation for the subprojects which can't be recommended for categorical exclusion, or for no-affect determinations, such that the Service staff may make NEPA, EAS Section 7, and NHPA Section 106 determinations. 

§ 80.82 In project-by-project grants, we recommend the following changes: 
§ 80.82 What must an agency submit when applying for a project-by-project grant? 
A State 'fish and wildlife agency must submit all of the documents required by this section to the Regional Director when applying for a project-by-project grant: 
(a) Agencies must submit annually the following standard application forms for ... 
As written, the section includes the word annually, which means we require a standard grant period which is not necessary. Most States submit many AFAs each year, but that should not be a requirement. A State could have all multiyear grants and be able to go one or more years without submitting an AFA. The word annually does appear in section (a)(2) where it correctly states that the assurances form(s) must be submitted each year. We recommend removing the word annual in (a), as shown. 
We recommend that in the section on project-by-project grant submittals, that the application include enough detail about the project(s) listed in the grant for the Service to compare the proposed work with the performance reports subrnitted at the end of the grant. Therefore we recommend that this section cross-reference Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments at 43 CFR 12.80(b )(2). Performance reports briefly contain 1) A comparison of actual accomplishments to the objectives established for the period. Where the output of the project can be quantified, a computation of the cost per unit of output may be required if that information will be useful; 2)The reasons for slippage if established objectives are not met; 3) additional pertinent information including, when appropriate, analysis and explanation of cost overruns or high unit costs. Our suggestion for wording is: 
(9) Costs by project and subaccount. Show how the project will yield benefits that address the need commensurate with estimated project costs. 
We recommend tying this subsection to the recommended definitions so that applicants understand that they are to submit the cost information at the same level that environmental compliance is documented. This will allow WSFR staff to determine that benefits are commensurate with estimated project costs. The costs for grant proposals and reports are directly linked and should follow the Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments at 43 CFR 12.80(b)(2). 
We suggest that 80.82(b)(7) have "survey" projects in addition to research projects. 
We suggest allowing states to use multi-year funding for any allowable, eligible and substantial project, whether grant-by-grant or CMS. 80.82(b)(13) Multiyear projects. Include a schedule of payments to finish the project if an agency proposes to use funds from two or more annual apportionments to fund construction or the acquisition of lands or interests in lands, including water rights. 
And lastly, for Section 80.82, we recommend a section (15): 
(15) Compliance documentation. Provide sufficient documentation for the Service to make NEPA, ESA Section 7, and NHPA Section 106 determinations for each project included in the grant. 
§ 80.85 What requirements apply to match? 
Much of this is a reiteration of what is the in Common Rule under 43 CFR 12.64 (Matching or Cost Sharing). It is confusing to have two Federal Regulations, 50 CFR BO.B5 and 43 CFR 12.64 both define requirements on match. 43 CFR 12 applies to all 001 Grants. 
The only topic that is not in 43 CFR 12.64 is 50 CFR 80.B5(c), which is would benefit the Program specifically and is now described in a Service Manual Chapter. This topic should remain in CFR to provide direction to the agencies on matching. 
The requirements that apply to match include: 
(a) Match may be in the form of cash or in-kind contributions. 
(b) Unless authorized by Federal law, the State fish and wildlife agency or any other entity must not: 
(1) Use Federal funds or the value of a third-party in-kind contribution acquired with Federal funds; or 
(2) Use the cost or value of an in-kind contribution to satisfy a match requirement if the cost or value has been or will be used to satisfy a match requirement of another Federal grant, cooperative agreement, or contract. 
(c) The agency must fulfill n1atch requirements at the: 
(1) Grant level if the grant has funds from a single subaccount; or 
(2) Subaccount level if the grant has funds from more than one subaccount. 

§ 80.90 What are the responsibilities of the Program cooperators? (note suggested title wording) 
After the existing section on state responsibilities, we recommend adding this paragraph: 
The Fish and Wildlife Service's Wildlife and Sport Fish Restoration Program, as the grantor, is responsible for assuring that State agency grant applications are complete, adequate, eligible and substantial in character and design, and that the responsibilities of the State Agency as described in Section 80.90, above, are fulfilled. These grantor roles are fulfilled by a combination of pre-approval grant proposal guidance and evaluation; post-award field monitoring of the projects and procedural and financial transactions; post-grant accountability audits of results and grant transactions; taking remedial measures where required by law, regulation or policy; and, to provide technical assistance. 
§ 80.94 May an agency incur costs before the effective date of the grant period? 
We support providing direction on pre-agreement costs in 80.94. We see a conflict between a CFR section that allows a grant can be completed before demonstrating environmental and procedural compliance and the laws and regulations that require these activities to have Federal compliance, procedures and approvals complete before starting. It completely circumvents the WSFR review process. 
Our experience is multiple instances in states that once had state-wide land acquisition grants. The land had been acquired and the money drawn down. Months later, WSFR was informed with an interim or final report. We had instances where a multi-million dollar acquisition had no appraisal, much less done to yellow book or reviewed; where multiple grants were tapped for one acquisition, yet the grants were closed, had fewer funds than requested, or were not open when the land was purchased; and where the purchase was not an eligible cost under the grant. These errors would have been prevented by coordinating with WSFR staff first. We now require all states to have separate grants or amendments for each acquisition to prevent these situations. If the wording goes through as proposed, we will be in a similar situation as a state-wide land acquisition grant. 
OMB's A-87.B.31 can only be reconciled with NEPA and ESA if NEPA and ESA determinations for the pre-agreement actions were made prior to implementation of the actions being covered by the pre-award provision of the grant. This item 5 in the proposed new Section 80.94 is contrary to Section 7 of the Acts, and has no authority anywhere else. This section could allow a state to complete an entire project before a state's allocation is even determined, a violation of the Anti-deficiency Act. We recommend striking (5). 
We recommend the following word changes to (a): 
(a) Conditionally, yes. Section 7 of both the Pittman-Robertson Wildlife Restoration Act and the Dingell-Johnson Sport Fish Restoration Act make it clear that our Program grants are designed to be prospective. Further, the National Environmental Policy Act (NEPA) and Section 7 of the Endangered Species Act (ESA) both require that Federal actions, which include awarding grants, must be evaluated for compliance with these Acts before the actions can be approved. If NEPA and ESA determinations were made for the pre-award actions proposed in a grant before the actions were implemented, OM8's Circular A-87 Attachment 8(31) provision for "pre-award" (pre-agreement) costs may be used. However, an agency has no assurance of reimbursement for preagreement costs until the Regional Director approves an award that incorporates a proposal demonstrating that the preagreement costs conform to all of the conditions in paragraph (b) of this section. The agency cannot receive reimbursement for these costs until after the effective date of the grant. 
§ 80.95 How does an agency receive Federal grant funds? 
(a) A State fish and wildlife agency may receive Federal grant funds through either: 
(1) A request for reimbursement; or 
(2) Per Section 7 of both Acts, advance funding is an option only for States with approved CMS grants. The Acts do not provide this option for project-by-project grants. 

We recommend that (2) read: 
(2) If an agency has an approved comprehensive management system grant under section 80.81 of this Rule, and the Service has approved use of advance funding, a request for an advance of funds may be allowed. For such advance funding, the agency must maintain, or demonstrates that it will maintain, procedures to minimize time between transfer of funds and disbursement by the agency or its subgrantee. 
§ 80.96 May an agency request funds in excess of the Federal share? 
We recommend clarifying (a) to read: 
(a) No, a State fish and wildlife agency must not request Federal grant funds if the requested funds would exceed the Federal share of total expenditures and requested advances from the beginning of the grant period through the current request. 
The answer to this question is "No," if "Federal share" means "Federal Share Amount" , yet Sections (a) and (b) seem to be contradictory. The Federal Government cannot pay the grantee more than it obligates in HHS PMS or ASAP. There is neither legal authority to allow this nor do we have the where-with-all to do this. If the intent of this question is about non-proportional drawdowns of Federal Funds we suggest that the question say "Mayan agency request funds in excess of the Federal share percentage when doing drawdowns of Federal Funds." 
Ultimately, however, this question doesn't nee9 to be addressedJn 50 CFR 80 because the Cash Management Improvement Act (31 CFR 205) addresses the applicability or non-applicability of proportional drawdowns of Federal Funds in relationship to the total grant amount for interim drawdowns. The answer depends on whether there is a StateTreasury Agreement. 
§ 80.97 May an agency barter goods or services to carry out a grant-funded project? 
Because barter can be a major part of a project's design and effectiveness we recommend adding (c). Consistent with Section 17 of the May 12, 2009, Interim Guidance for Financial and Performance Reporting, such transactions and effects need to be included in annual reports. 
(c) The agency must include in grant performance reports the location, scope, approximate value and project benefits derived from the barter carried out in the grant-funded project. 
§ 80.120 What is program income? 
We recommend that the definition of program income in 43 CFR 12.65 includes the criteria of "during the grant period." We suggest amending the definition in 50 CFR 80 to include this element, thus bringing it in-line with the Common Rule definition. 
It is debatable and confusing whether this section is needed when the Corrlmon Rule (43 CFR 12.65(b) already defines program income. Having two Federal Regulations defining program income is confusing. Suggest leaving the "interpretation" of what is program income under 43 CFR 12.65 in a Service Manual Chapter rather than trying to codify a Service Manual Chapter as regulation. We recommend a small addition: 
(a) Program income is gross income received by the grantee or subgrantee and earned only as a result of the grant. 
If the section is to be pursued, we have two recommendations on the following section: 
(6) Proceeds from the sale of an interest in real property such as fee title, easement, mineral rights, gas and oil rights, water rights, or a leasehold interest for a lease with a term 10 years or longer. 
We recommend that the last phrase, "with a term of 10 years or longer" be struck because there is no legal basis for differentiating between short-term and long-term leases. Several R3 States routinely issue such shorter leases and would lose significant program income. A reader may also interpret this section as indicating that these proceeds do not have to be reported for shorter leases. We also recommend that a section be added to provide agencies with directions on how this program income is credited and reported. (50CFR 80.14) We recommend that the section read: 
(6) Proceeds from the sale of an interest in real property such as fee title, easement, mineral rights, gas and oil rights, water rights, or a leasehold interest for a lease. 
§ 80.120 (b) We suggest income earned from hunter education course fees be added to these examples. Several states in this and other Regions have been doing this. 
§ 80.120 (c)(4) If cash received is the same as student fees for a hunter education course, we recommend that it say Ustudent fees and cash from other sources." 
In-several sections, proposed language redefines mineral rights and minerals removed as personal property for the purposes of program income, appraisals and including them by association as a wildlife management method. The redefining of real property, such as oil, gas and minerals as personal property, would have the effect of decreasing agency ability to maintain nlanagement control of Program land and decrease WSFR ability to assist when agencies request help in maintaining control of real property. Some of these sections conflict with other parts of CFR that pertain to government as a whole. Region 3 WSFR has prepared a white paper on this issue, which we have attached. Effectively, a rationale used to determine that extracting minerals and using resulting revenue as program income cannot appropriately use the rationale of the Director and Solicitor to determine that timber harvest was a wildlife management technique. Removing minerals is not a common or accepted wildlife management technique. We provided a definition for market value and recommend that where ever the term is used, to add the word current, so that the term would consistently be "current market value". We do not recommend attempting to define "current." 
We recommend that the phrase "minerals extracted from the land" be removed from the list of examples of personal property at 80.20(b)(2) and placed in the list of examples of real property at 80.20(b)(1). 
In the last two years, a coal company has approached one of our cash-strapped states and offered the equivalent of two years of P-R and D-J apportionments to purchase the right to remove coal from underneath a few thousand acres of program land. Because the mineral rights are real property, not personal property, the coal company would need to replace the appraised wildlife and recreational value for the years they would take to mine and then reclaim the land. They also made claims that their reclaimed area would have higher wildlife values and they promised sport fish habitat, in direct contradiction to peer-reviewed studies that indicate these reclaimed lands and waters provide visually appealing but biologically depauperate habitat. Both WSFR and the State Fish and Wildlife Agency concurred that these promises did not represent science-based wildlife management principles as much as economic-based appearances. Other State representatives were very interested in pursuing the mining. 
Under these new rules, WSFR would not be included in this decision. As noted in our white paper, the state could manage the management area without Program funds. Then, unilaterally choose to contract with a company to ren10ve the coal on their behalf access their "personal property". Then, § 80.122 Mayan agency deduct the costs of generating program income from gross income?, could allow the agency to subtract the cost of mining from the proceeds if the agency determined (unilaterally) that the mining was being used as a tool to increase habitat found on reclaimed mining land. If the product is not real property, WSFR would not participate in the decision process. There are many angles from which astute corporations could exploit the regulations defining minerals, oil and gas as personal property. 
B. Remove the words "mining" and "drilling" from the list of examples of program income at 80.120(b )(6). 
C. Add wording to 80.120(b )(6) to clarify that the forestry or agriculture activities listed there must be a side product of management of wildlife and wildlife habitat. 
After changes Band C above, 80.120(b )(6) could read as follows: Sale of a product of forestry or agriculture on real property acquired or directly managed with grant funds or license fees provided that such revenuegenerating activities are only incidental to accepted fish and wildlife conservation and management principles. 
The bold language above was added to that in the current proposed rule. It is copied directly from the Solicitor's Opinion. 
§ 80.123 How may an agency use program income? 
WSFR has a responsibility to say "no" to a proposed method of program income use when the State has shown that it is not capable of efficiently and effectively accounting for the program income via the method(s) proposed. We recommend adding (iv): 
(iv) The agency demonstrates that it has a financial management system that is capable of accounting for, and reporting on, the program income and its use via the method(s) proposed (OMB Circular A-102.20(b)). 
We recommend striking the following section because there is no provision in the Common Rule or A-87 for using unexpended program income from an expired grant in a new grant. Further, tracking this would be beyond the accounting capability of most, if not all, States: 
§ 80.124 How may an agency use unexpended program income? 
If a State fish and wildlife agency has unexpended program income on its final Federal financial report, the agency may use the income under a subsequent grant. This subsequent grant must have purposes consistent with the grant that generated the program income. 
§ 80.126 We recommend including definitions for subgrant and subgrant agreement (see above) to clarify, and using the following language: 
80.126 How must an agency treat income earned by a subgrantee after the grant period? 
(3) Treatment of income is subject only to the terms of the subgrant agreement and any subsequent contractual agreements between the agency and the subgrantee. 
§ 80.130 Does an agency have to hold title to real property acquired under a grant? 
We recommend removing (b) as it is instructional rather than regulatory. Easements could be referenced in the first paragraph as not considered an ownership interest and therefore not part of the answer to the question. 
§ 80.132 Does an agency have to control the land or water where it completes capital improvements? 
We recommend clarifying that habitat improvements must only be done on land or water under agency control. We suggest that this read: 
§ 80.132 Does an agency have to control the land or water where it completes capital improvements or habitat improvements? 
Yes. A State fish and wildlife agency must control the land or water or both on which it completes capital improvements and habitat improvements under a grant. 
§ 80.135 What if an agency allows a use of real property that interferes with the authorized purpose? 
Suggest adding in (a) last sentence to 80.135, Replacement property must be, at a minimum of equal value at current market prices and must also have, at a minimum, equal value of fish and wildlife, and public use benefits consistent with the purposes of the original grant.