[Title 45 CFR ]
[Code of Federal Regulations (annual edition) - October 1, 2002 Edition]
[From the U.S. Government Printing Office]



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                    45


          Part 1200 to End

                         Revised as of October 1, 2002

Public Welfare





          Containing a codification of documents of general 
          applicability and future effect
          As of October 1, 2002
          With Ancillaries
          Published by
          Office of the Federal Register
          National Archives and Records
          Administration

A Special Edition of the Federal Register



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                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2002



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                            Table of Contents



                                                                    Page
  Explanation.................................................      vi

  Title 45:
    Subtitle B--Regulations Relating to Public Welfare--
      Continued:
          Chapter XII--Corporation for National and Community 
          Service                                                    5
          Chapter XIII--Office of Human Development Services, 
          Department of Health and Human Services                  145
          Chapter XVI--Legal Services Corporation                  415
          Chapter XVII--National Commission on Libraries and 
          Information Science                                      509
          Chapter XVIII--Harry S. Truman Scholarship 
          Foundation                                               529
          Chapter XXI--Commission of Fine Arts                     547
          Chapter XXIII--Arctic Research Commission                567
          Chapter XXIV--James Madison Memorial Fellowship 
          Foundation                                               577
          Chapter XXV--Corporation for National and Community 
          Service                                                  597
  Finding Aids:
      Table of CFR Titles and Chapters........................     837
      Alphabetical List of Agencies Appearing in the CFR......     855
      List of CFR Sections Affected...........................     865



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                     ----------------------------

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  45 CFR 1201.1 
                       refers to title 45, part 
                       1201, section 1.

                     ----------------------------

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                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, October 1, 2002), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

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Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
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instances where the effective date is beyond the cut-off date for the 
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inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

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Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
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OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 2001, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, 1973-1985, or 1986-2000, published in 11 separate 
volumes. For the period beginning January 1, 2001, a ``List of CFR 
Sections Affected'' is published at the end of each CFR volume.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I). A list of CFR titles, chapters, 
and parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-741-6000 
or write to the Director, Office of the Federal Register, National 
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ELECTRONIC SERVICES

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CFR Sections Affected), The United States Government Manual, the Federal 
Register, Public Laws, Public Papers, Weekly Compilation of Presidential 
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free). E-mail, [email protected].

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    The Office of the Federal Register also offers a free service on the 
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site also contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

October 1, 2002.



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                               THIS TITLE

    Title 45--Public Welfare is composed of four volumes. The parts in 
these volumes are arranged in the following order: Parts 1-199, 200-499, 
500-1199, and 1200 to end. Volume one (parts 1-199) contains all current 
regulations issued under subtitle A--Department of Health and Human 
Services. Volume two (parts 200-499) contains all current regulations 
issued under subtitle B--Regulations Relating to Public Welfare, chapter 
II--Office of Family Assistance (Assistance Programs), Administration 
for Children and Families, Department of Health and Human Services, 
chapter III--Office of Child Support Enforcement (Child Support 
Enforcement Program), Administration for Children and Families, 
Department of Health and Human Services, and chapter IV--Office of 
Refugee Resettlement, Administration for Children and Families, 
Department of Health and Human Services. Volume three (parts 500-1199) 
contains all current regulations issued under chapter V--Foreign Claims 
Settlement Commission of the United States, Department of Justice, 
chapter VI--National Science Foundation, chapter VII--Commission on 
Civil Rights, chapter VIII--Office of Personnel Management, chapter X--
Office of Community Services, Administration for Children and Families, 
Department of Health and Human Services, and chapter XI--National 
Foundation on the Arts and the Humanities. Volume four (part 1200 to 
end) contains all current regulations issued under chapter XII--
Corporation for National and Community Service, chapter XIII--Office of 
Human Development Services, Department of Health and Human Services, 
chapter XVI--Legal Services Corporation, chapter XVII--National 
Commission on Libraries and Information Science, chapter XVIII--Harry S 
Truman Scholarship Foundation, chapter XXI--Commission of Fine Arts, 
chapter XXIII--Arctic Research Commission, chapter XXIV--James Madison 
Memorial Fellowship Foundation, and chapter XXV--Corporation for 
National and Community Service. The contents of these volumes represent 
all of the current regulations codified under this title of the CFR as 
of October 1, 2002.

    A subject index to 45 CFR parts 680-684 appears at the end of 
chapter VI in the volume containing parts 500-1199. Those amendments to 
part 801--Voting Rights Program, Appendixes A, B, and D, which apply to 
Texas also appear in Spanish following Appendix D.

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

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                        TITLE 45--PUBLIC WELFARE




                  (This book contains part 1200 to end)

  --------------------------------------------------------------------

     SUBTITLE B--Regulations Relating To Public Welfare-- Continued

                                                                    Part

chapter xii--Corporation for National and Community Service.        1201

chapter xiii--Office of Human Development Services, 
  Department of Health and Human Services...................        1301

chapter xvi--Legal Services Corporation.....................        1600

chapter xvii--National Commission on Libraries and 
  Information Science.......................................        1700

chapter xviii--Harry S. Truman Scholarship Foundation.......        1800

chapter xxi--Commission of Fine Arts........................        2101

chapter xxiii--Arctic Research Commission...................        2301

chapter xxiv--James Madison Memorial Fellowship Foundation..        2400

chapter xxv--Corporation for National and Community Service.        2500

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     Subtitle B--Regulations Relating to Public Welfare (Continued)

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       CHAPTER XII--CORPORATION FOR NATIONAL AND COMMUNITY SERVICE




  --------------------------------------------------------------------

Part                                                                Page
1201            Production or disclosure of official 
                    information in response to court orders, 
                    subpoenas, notices of depositions, 
                    requests for admissions, 
                    interrogatories, or in connection with 
                    Federal or State litigation.............           7
1203            Nondiscrimination in Federally assisted 
                    programs--effectuation of title VI of 
                    the Civil Rights Act of 1964............          11
1204            Official seal...............................          20
1206            Grants and contracts--suspension and 
                    termination and denial of application 
                    for refunding...........................          21
1210            VISTA trainee deselection and volunteer 
                    early termination procedures............          31
1211            Volunteer grievance procedures..............          38
1212

Volunteer agencies procedures for National grant volunteers [Reserved]

1213            ACTION cooperative volunteer program........          44
1214            Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by ACTION..........          51
1216            Nondisplacement of employed workers and 
                    nonimpairment of contracts for service..          56
1217            VISTA volunteer leader......................          58
1218            VISTA volunteers--hearing opportunity.......          59
1219            Competitive service eligibility.............          60
1220            Payment of volunteer legal expenses.........          61
1222            Participation of project beneficiaries......          63
1225            Volunteer discrimination complaint procedure          64
1226            Prohibitions on electoral and lobbying 
                    activities..............................          71
1229            Governmentwide debarment and suspension 
                    (nonprocurement) and governmentwide 
                    requirements for drug-free workplace 
                    (grants)................................          76
1230            New restrictions on lobbying................          94

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1232            Non-discrimination on basis of handicap in 
                    programs receiving federal financial 
                    assistance from ACTION..................         105
1233            Intergovernmental review of ACTION programs.         111
1234            Uniform administrative requirements for 
                    grants and cooperative agreements to 
                    State and local governments.............         114
1235            Locally generated contributions in Older 
                    American Volunteer Programs.............         141

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      PART 1201--PRODUCTION OR DISCLOSURE OF OFFICIAL INFORMATION IN RESPONSE TO COURT ORDERS, SUBPOENAS, NOTICES OF DEPOSITIONS, REQUESTS FOR ADMISSIONS, 
INTERROGATORIES, OR IN CONNECTION WITH FEDERAL OR STATE LITIGATION--Table of Contents




Sec.
1201.1  Definitions.
1201.2  Scope.
1201.3  Service of summonses and complaints.
1201.4  Service of subpoenas, court orders, and other demands or 
          requests for official information or action.
1201.5  Testimony and production of documents prohibited unless approved 
          by appropriate Corporation officials.
1201.6  Procedure when testimony or production of documents is sought.
1201.7  Procedure when response is required prior to receiving 
          instructions.
1201.8  Procedure in the event of an adverse ruling.
1201.9  Considerations in determining whether the Corporation will 
          comply with a demand or request.
1201.10  Prohibition on providing expert or opinion testimony.
1201.11  Authority.

    Authority: 42 U.S.C. 12501 et seq.

    Source: 63 FR 4598, Jan. 30, 1998, unless otherwise noted.



Sec. 1201.1  Definitions.

    (a) Corporation Employee means the Chief Executive Officer of the 
Corporation and all employees, former employees, National Civilian 
Community Corps Members (hereinafter sometimes known as ``Corps 
Members''), and VISTA Volunteers (hereinafter sometimes also known as 
``AmeriCorps*VISTA Members''), who are or were subject to the 
supervision, jurisdiction, or control of the Chief Executive Officer, 
except as the Corporation may otherwise determine in a particular case.
    (b) Litigation encompasses all pre-trial, trial, and post-trial 
stages of all judicial or administrative actions, hearings, 
investigations, or similar proceedings before courts, commissions, 
boards, or other judicial or quasi-judicial bodies or tribunals, whether 
criminal, civil, or administrative in nature.
    (c) Official Information means all information of any kind, however 
stored, that is in the custody and control of the Corporation, relates 
to information in the custody and control of the Corporation, or was 
acquired by individuals connected with the Corporation as part of their 
official status within the Corporation while such individuals are 
employed by, or serve on behalf of, the Corporation.



Sec. 1201.2  Scope.

    (a) This part states the procedures followed with respect to:
    (1) Service of summonses and complaints or other requests or demands 
directed to the Corporation or to any Corporation employee in connection 
with Federal or State litigation arising out of, or involving the 
performance of, official activities of the Corporation; and
    (2) Oral or written disclosure, in response to subpoenas, orders, or 
other requests or demands from Federal or by State judicial or quasi-
judicial authority, whether civil or criminal, or in response to 
requests for depositions, affidavits, admissions, responses to 
interrogatories, document production, or other litigation-related 
matters of:
    (i) Any material contained in the files of the Corporation; or
    (ii) Any information acquired:
    (A) When the subject of the request is currently a Corporation 
employee or was a Corporation employee; or
    (B) As part of the performance of the person's duties or by virtue 
of the person's position.
    (b) Sections 1201.3 through 1201.10 do not apply to:
    (1) Testimony or records provided in accordance with the Office of 
Personnel Management regulations implementing 5 U.S.C. 6322.
    (2) Requests for, and release of, records under the Freedom of 
Information Act, 5 U.S.C. 552, and the Privacy Act, 5 U.S.C. 552a.
    (3) Disclosures to the Office of Inspector General or requests by 
the Office of Inspector General for official information or records.
    (c) The procedures in this part apply to Corporation employees and 
official information within the Corporation Office of Inspector General. 
However, any

[[Page 8]]

determinations or other actions to be made by the General Counsel under 
this part, relating to employees or official information within the 
Office of Inspector General, shall be made by the Inspector General.

[63 FR 4598, Jan. 30, 1998, as amended at 63 FR 64199, Nov. 19, 1998]



Sec. 1201.3  Service of summonses and complaints.

    (a) Only the Corporation's General Counsel or his/her designee 
(hereinafter ``General Counsel''), is authorized to receive and accept 
summonses or complaints sought to be served upon the Corporation or its 
employees. All such documents should be delivered or addressed to 
General Counsel, Corporation for National and Community Service, 1201 
New York Avenue, NW., Suite 8200, Washington, DC 20525.
    (b) In the event any summons or complaint is delivered to a 
Corporation Employee other than in the manner specified in this part, 
such attempted service shall be ineffective, and the recipient thereof 
shall either decline to accept the proffered service or return such 
document under cover of a written communication that refers the person 
attempting to effect service to the procedures set forth in this part.
    (c) Except as otherwise provided in Sec. 1201.4(c), the Corporation 
is not an authorized agent for service of process with respect to civil 
litigation against Corporation Employees purely in their personal, non-
official capacity. Copies of summonses or complaints directed to 
Corporation Employees in connection with legal proceedings arising out 
of the performance of official duties may, however, be served upon the 
General Counsel.



Sec. 1201.4  Service of subpoenas, court orders, and other demands or requests for official information or action.

    (a) Except in cases in which the Corporation is represented by legal 
counsel who have entered an appearance or otherwise given notice of 
their representation, only the General Counsel is authorized to receive 
and accept subpoenas, or other demands or requests directed to any 
component of the Corporation or Corporation Employees, whether civil or 
criminal in nature, for:
    (1) Material, including documents, contained in the files of the 
Corporation;
    (2) Information, including testimony, affidavits, declarations, 
admissions, response to interrogatories, or informal statements, 
relating to material contained in the files of the Corporation or which 
any Corporation employee acquired in the course and scope of the 
performance of official duties;
    (3) Garnishment or attachment of compensation of Corporation 
Employees; or
    (4) The performance or non-performance of any official Corporation 
duty.
    (b) In the event that any subpoena, demand, or request is sought to 
be delivered to a Corporation Employee other than in the manner 
prescribed in paragraph (a) of this section, such attempted service 
shall be ineffective. Such Corporation Employee shall, after 
consultation with the General Counsel, decline to accept the subpoena, 
and demand or request the return of it under cover of a written 
communication referring to the procedures prescribed in this part.
    (c) Except as otherwise provided in this part, the Corporation is 
not an agent for service or otherwise authorized to accept on behalf of 
Corporation Employees any subpoenas, show-cause orders, or similar 
compulsory process of federal or state courts, or requests from private 
individuals or attorneys, which are not related to the employees' 
official duties except upon the express, written authorization of the 
individual Corporation Employee to whom such demand or request is 
directed.
    (d) Acceptance of such documents by the General Counsel does not 
constitute a waiver of any defenses that might otherwise exist with 
respect to service under the Federal Rules of Civil or Criminal 
Procedure at 28 U.S.C. Appendix, Rules 4-6 or 18 USC Appendix or other 
applicable rules.

[[Page 9]]



Sec. 1201.5  Testimony and production of documents prohibited unless approved by appropriate Corporation officials.

    (a) Unless authorized to do so by the General Counsel, no 
Corporation Employee shall, in response to a demand or request in 
connection with any litigation, whether criminal or civil, provide oral 
or written testimony by deposition, declaration, affidavit, or otherwise 
concerning any information acquired:
    (1) While such person was a Corporation Employee;
    (2) As part of the performance of that person's official duties; or
    (3) By virtue of that person's official status.
    (b) No Corporation Employee shall, in response to a demand or 
request in connection with any litigation, produce for use at such 
proceedings any document or any other material acquired as part of the 
performance of that individual's duties or by virtue of that 
individual's official status, unless authorized to do so by the General 
Counsel.



Sec. 1201.6  Procedure when testimony or production of documents is sought.

    (a) If Official Information is sought, either through testimony or 
otherwise, the party seeking such information must (except as otherwise 
required by federal law or authorized by the General Counsel) set forth 
in writing with as much specificity as possible, the nature and 
relevance of the Official Information sought. The party must identify 
the record or reasonably describe it in terms of date, format, subject 
matter, the offices originating or receiving the record, and the names 
of all persons to whom the record is known to relate. Corporation 
Employees may produce, disclose, release, comment upon, or testify 
concerning only those matters that were specified in writing and 
properly approved by the General Counsel. The General Counsel may waive 
this requirement in appropriate circumstances.
    (b) To the extent it deems necessary or appropriate, the Corporation 
may also require from the party seeking such testimony or documents a 
schedule of all reasonably foreseeable demands, including but not 
limited to the names of all current and former Corporation Employees 
from whom discovery will be sought, areas of inquiry, expected duration 
of proceedings requiring oral testimony, and identification of 
potentially relevant documents.
    (c) The General Counsel will notify the Corporation Employee and 
such other persons as circumstances may warrant of the decision 
regarding compliance with the request or demand.
    (d) The General Counsel will consult with the Department of Justice 
regarding legal representation for Corporation Employees in appropriate 
cases.



Sec. 1201.7  Procedure when response to demand is required prior to receiving instructions.

    (a) If a response to a demand or request for Official Information 
pursuant to litigation is required before the General Counsel renders a 
decision, the Corporation will request that either a Department of 
Justice attorney or a Corporation attorney designated for the purpose:
    (1) Appear, if feasible, with the employee upon whom the demand has 
been made;
    (2) Furnish the court or other authority with a copy of the 
regulations contained in this part;
    (3) Inform the court or other authority that the demand or request 
has been or is being, as the case may be, referred for the prompt 
consideration of the General Counsel; and
    (4) Respectfully request the court or authority to stay the demand 
or request pending receipt of the requested instructions.
    (b) In the event that an immediate demand or request for production 
or disclosure is made in circumstances that would preclude the proper 
designation or appearance of a Department of Justice or Corporation 
attorney on behalf of the Corporation employee, the Corporation Employee 
shall respectfully request the court or other authority for a reasonable 
stay of proceedings for the purpose of obtaining instructions from the 
Corporation.

[[Page 10]]



Sec. 1201.8  Procedure in the event of an adverse ruling.

    If the court or other authority declines to stay the effect of the 
demand or request in response to a request made pursuant to Sec. 1201.7, 
or if the court or other authority rules that the demand or request must 
be complied with irrespective of the Corporation's instructions not to 
produce the material or disclose the information sought, the Corporation 
Employee upon whom the demand or request has been made shall, if so 
directed by the General Counsel, respectfully decline to comply with the 
demand or request, citing United States ex rel. Touhy v. Ragen, 340 U.S. 
462 (1951), and the regulations in this part.



Sec. 1201.9  Considerations in determining whether the Corporation will comply with a demand or request.

    (a) In deciding whether to comply with a demand or request, 
Corporation officials and attorneys are encouraged to consider:
    (1) Whether such compliance would be unduly burdensome or otherwise 
inappropriate under the applicable rules of discovery or the rules of 
procedure governing the case or matter in which the demand arose;
    (2) Whether compliance is appropriate under the relevant substantive 
law concerning privilege or disclosure of information;
    (3) The public interest;
    (4) The need to conserve the time of Corporation Employees for the 
conduct of official business;
    (5) The need to avoid spending the time and money of the United 
States for private purposes;
    (6) The need to maintain impartiality between private litigants in 
cases where a government interest is not implicated;
    (7) Whether compliance would have an adverse effect on performance 
by the Corporation of its mission and duties; and
    (8) The need to avoid involving the Corporation in controversial 
issues not related to its mission.
    (b) Among those demands and requests in response to which compliance 
may not ordinarily be authorized are those when compliance would:
    (1) Violate a statute, a rule of procedure, a specific regulation, 
or an executive order;
    (2) Reveal information properly classified in the interest of 
national security;
    (3) Reveal confidential commercial or financial information or trade 
secrets without the owner's consent;
    (4) Reveal the internal deliberative processes of the Executive 
Branch; or
    (5) Potentially impede or prejudice an ongoing law enforcement 
investigation.



Sec. 1201.10  Prohibition on providing expert or opinion testimony.

    (a) Except as provided in this section, Corporation Employees shall 
not provide opinion or expert testimony based upon information that they 
acquired in the scope and performance of their official Corporation 
duties, except on behalf of the United States or a party represented by 
the Department of Justice.
    (b) Upon a showing by the requester of exceptional need or unique 
circumstances and that the anticipated testimony will not be adverse to 
the interests of the United States, the General Counsel, in the exercise 
of discretion, may grant special, written authorization for Corporation 
Employees to appear and testify as expert witnesses at no expense to the 
United States.
    (c) If, despite the final determination of the General Counsel, a 
court of competent jurisdiction or other appropriate authority orders 
the appearance and expert or opinion testimony of a Corporation Employee 
such individual shall immediately inform the General Counsel of such 
order. If the General Counsel determines that no further legal review of 
or challenge to the court's order will be made, the Corporation Employee 
shall comply with the order. If so directed by the General Counsel, 
however, the individual shall respectfully decline to testify.



Sec. 1201.11  Authority.

    The Corporation receives authority to change its governing 
regulations from the National and Community Service Act of 1990 as 
amended (42 U.S.C. 12501 et seq.).

[[Page 11]]



PART 1203--NONDISCRIMINATION IN FEDERALLY ASSISTED PROGRAMS--EFFECTUATION OF TITLE VI OF THE CIVIL RIGHTS ACT OF 1964--Table of Contents




Sec.
1203.1  Purpose.
1203.2  Application of this part.
1203.3  Definitions.
1203.4  Discrimination prohibited.
1203.5  Assurances required.
1203.6  Compliance information.
1203.7  Conduct of investigations.
1203.8  Procedure for effecting compliance.
1203.9  Hearings.
1203.10  Decisions and notices.
1203.11  Judicial review.
1203.12  Effect on other regulations, forms, and instructions.

Appendix A to Part 1203--Programs to Which This Part Applies
Appendix B to Part 1203--Programs to Which This Part Applies When a 
          Primary Objective of the Federal Financial Assistance is To 
          Provide Employment

    Authority: Sec. 602, 78 Stat. 252; 42 U.S.C. 2000d-1.

    Source: 39 FR 27322, July 26, 1974, unless otherwise noted.



Sec. 1203.1  Purpose.

    The purpose of this part is to effectuate the provisions of title VI 
of the Civil Rights Act of 1964 (hereafter referred to as title VI), to 
the end that a person in the United States shall not, 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 a program or activity receiving Federal financial assistance from 
ACTION.



Sec. 1203.2  Application of this part.

    (a) This part applies to each program for which Federal financial 
assistance is authorized under a law administered by ACTION, including 
the federally assisted programs listed in appendix A to this part. It 
also applies to money paid, property transferred, or other Federal 
financial assistance extended under a program after the effective date 
of this part pursuant to an application approved before that effective 
date. This part does not apply to:
    (1) Federal financial assistance by way of insurance or guaranty 
contracts;
    (2) Money paid, property transferred, or other assistance extended 
under a program before the effective date of this part, except when the 
assistance was subject to the title VI regulations of an agency whose 
responsibilities are now exercised by ACTION;
    (3) Assistance to any individual who is the ultimate beneficiary 
under a program; or
    (4) Employment practices, under a program, of an employer, 
employment agency, or labor organization, except to the extent described 
in Sec. 1203.4(c).

The fact that a program is not listed in Appendix A to this part does 
not mean, if title VI is otherwise applicable, that the program is not 
covered. Other programs under statutes now in force or hereinafter 
enacted may be added to Appendix A to this part.
    (b) In a program receiving Federal financial assistance in the form, 
or for the acquisition, of real property or an interest in real 
property, to the extent that rights to space on, over, or under that 
property are included as part of the program receiving that assistance, 
the nondiscrimination requirement of this part extends to a facility 
located wholly or in part in that space.



Sec. 1203.3  Definitions.

    Unless the context requires otherwise, in this part:
    (a) Applicant means a person who submits an application, request, or 
plan required to be approved by ACTION, or by a primary recipient, as a 
condition to eligibility for Federal financial assistance, and 
``application'' means that application, request, or plan.
    (b) Facility includes all or any part of structures, equipment, or 
other real or personal property or interests therein, and the provision 
of facilities includes the construction, expansion, renovation, 
remodeling, alteration, or acquisition of facilities.
    (c) Federal financial assistance includes:
    (1) Grants and loans of Federal funds;
    (2) The grant or donation of Federal property and interests in 
property;
    (3) The detail of Federal personnel;

[[Page 12]]

    (4) The sale and lease of, and the permission to use (on other than 
a casual or transient basis), Federal property or any interest in the 
property without consideration or at a nominal consideration, or at a 
consideration which is reduced for the purpose of assisting the 
recipient, or in recognition of the public interest to be served by the 
sale or lease to the recipient; and
    (5) A Federal agreement, arrangement, or other contract which has as 
one of its purposes the provision of assistance.
    (d) Primary recipient means a recipient that is authorized or 
required to extend Federal financial assistance to another recipient for 
the purpose of carrying out a program.
    (e) Program includes a program, project, or activity for the 
provision of services, financial aid, or other benefits to individuals 
(including education or training or other services whether provided 
through employees of the recipient of Federal financial assistance or 
provided by others through contracts or other arrangements with the 
recipient, and including work opportunities), or for the provision of 
facilities for furnishing services, financial aid, or other benefits to 
individuals. The services, financial aid, or other benefits provided 
under a program receiving Federal financial assistance are deemed to 
include a service, financial aid, or other benefits provided:
    (1) With the aid of Federal financial assistance,
    (2) With the aid of any non-Federal funds, property, or other 
resources required to be expended or made available for the program to 
meet the matching requirements or other conditions which must be met in 
order to receive the Federal financial assistance, or
    (3) In or through a facility provided with the aid of Federal 
financial assistance or such non-Federal resources.
    (f) Recipient may mean any State, the District of Columbia, the 
Commonwealth of Puerto Rico, a territory or possession of the United 
States, or any political subdivision thereof, or instrumentality 
thereof, any public or private agency, institution, or organization, or 
other entity, or any individual in any State, the District of Columbia, 
the Commonwealth of Puerto Rico, or territory or possession of the 
United States, to whom Federal financial assistance is extended, 
directly or through another recipient, for any program, including any 
successor, assignee, or transferee thereof, but the term does not 
include any ultimate beneficiary under a program.
    (g) Director means the Director of ACTION or any person to whom he 
has delegated his authority in the matter concerned.



Sec. 1203.4  Discrimination prohibited.

    (a) General. A person in the United States shall not, 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, a program to which this part applies.
    (b) Specific discriminatory actions prohibited. (1) A recipient 
under a program to which this part applies may not, directly or through 
contractual or other arrangements, on the ground of race, color, or 
national origin--
    (i) Deny a person a service, financial aid, or other benefit 
provided under the program;
    (ii) Provide a service, financial aid, or other benefit to a person 
which is different, or is provided in a different manner, from that 
provided to others under the program;
    (iii) Subject a person to segregation or separate treatment in any 
matter related to his receipt of a service, financial aid, or other 
benefit under the program;
    (iv) Restrict a person in any way in the enjoyment of an advantage 
or privilege enjoyed by others receiving a service, financial aid, or 
other benefit under the program;
    (v) Treat a person differently from others in determining whether he 
satisfies an admission, enrollment, quota, eligibility, membership, or 
other requirement or condition which persons must meet in order to be 
provided a service, financial aid, or other benefit provided under the 
program;
    (vi) Deny a person an opportunity to participate in the program 
through the provision of services or otherwise or afford him an 
opportunity to do so which

[[Page 13]]

is different from that afforded others under the program; or
    (vii) Deny a person the opportunity to participate as a member of a 
planning or advisory body which is an integral part of the program.
    (2) A recipient, in determining the types of services, financial 
aid, or other benefits, or facilities which will be provided under a 
program or the class of persons to whom, or the situations in which, the 
services, financial aid, other benefits, or facilities will be provided 
under a program, or the class of persons to be afforded an opportunity 
to participate in a program, may not, directly or through contractual or 
other arrangements, utilize criteria or methods of administration which 
have the effect of subjecting persons to discrimination because of their 
race, color, or national origin, or have the effect of defeating or 
substantially impairing accomplishment of the objectives of the program 
with respect to individuals of a particular race, color, or national 
origin.
    (3) The enumeration of specific forms of prohibited discrimination 
in this paragraph does not limit the generality of the prohibition in 
paragraph (a) of this section.
    (4)(i) In administering a program regarding which the recipient had 
previously discriminated against persons on the ground of race, color, 
or national origin, the recipient shall take affirmative action to 
overcome the effects of prior discrimination.
    (ii) Even in the absence of prior discrimination a recipient in 
administering a program may take affirmative action to overcome the 
effect of conditions which resulted in limiting participation by persons 
of a particular race, color, or national origin.
    (c) Employment practices. (1) When a primary objective of a program 
of Federal financial assistance to which this part applies is to provide 
employment, a recipient or other party subject to this part shall not, 
directly or through contractual or other arrangements, subject a person 
to discrimination on the ground of race, color, or national origin in 
its employment practices under the program (including recruitment or 
recruitment advertising, hiring, firing, upgrading, promotion, demotion, 
transfer, layoff, termination, rates of pay, or other forms of 
compensation or benefits, selection for training or apprenticeship, use 
of facilities, and treatment of employees). A recipient shall take 
affirmative action to insure that applicants are employed, and employees 
are treated during employment, without regard to race, color, or 
national origin. The requirements applicable to construction employment 
under a program are those specified in or pursuant to part III of 
Executive Order 11246 or any Executive order which supersedes it.
    (2) Federal financial assistance to programs under laws funded or 
administered by ACTION which have as a primary objective the providing 
of employment include those set forth in Appendix B to this part.
    (3) Where a primary objective of the Federal financial assistance is 
not to provide employment, but discrimination on the ground of race, 
color, or national origin in the employment practices of the recipient 
tends, on the ground of race, color, or national origin, to exclude 
persons from participation in, to deny them the benefits of, or to 
subject them to discrimination under any program to which this part 
applies, the provisions of paragraph (c)(1) of this section apply to the 
employment practices of the recipient to the extent necessary to assure 
equality of opportunity to and nondiscriminatory treatment of 
beneficiaries.
    (d) In determining the site or location of facilities, a recipient 
or applicant may not make selections with the purpose or effect of 
excluding individuals from, denying them the benefits of, or subjecting 
them to discrimination under, a program to which this part applies, on 
the ground of race, color, or national origin; or with the purpose or 
effect of defeating or substantially impairing the accomplishment of the 
objectives of title VI of this part.



Sec. 1203.5  Assurances required.

    (a) General. (1) An application for Federal financial assistance to 
carry out a program to which this part applies, except a program to 
which paragraph (d) of this section applies, and every application for 
Federal financial

[[Page 14]]

assistance to provide a facility shall, as a condition to its approval 
and the extension of Federal financial assistance pursuant to the 
application, contain or be accompanied by, assurances that the program 
will be conducted or the facility operated in compliance with the 
requirements imposed by or pursuant to this part. Every program of 
Federal financial assistance shall require the submission of these 
assurances. In the case where the Federal financial assistance is to 
provide or is in the form of personal property, or real property or 
interest therein or structures thereon, the assurances shall obligate 
the recipient, or, in the case of a subsequent transfer, the transferee, 
for the period during which the property is used for a purpose for which 
the Federal financial assistance is extended or for another purpose 
involving the provision of similar services or benefits, or for as long 
as the recipient retains ownership or possession of the property, 
whichever is longer. In other cases, the assurances obligate the 
recipient for the period during which the Federal financial assistance 
is extended to the program. In the case where the assistance is sought 
for the construction of a facility or part of a facility, the assurances 
shall extend to the entire facility and to the facilities operated in 
connection therewith. ACTION shall specify the form of the foregoing 
assurances for each program, and the extent to which like assurances 
will be required of subgrantees, contractors and subcontractors, 
transferees, successors in interest, and other participants in the 
program. The assurances shall include provisions which give the United 
States the right to seek judicial enforcement.
    (2) When Federal financial assistance is provided in the form of a 
transfer of real property, structures, or improvements thereon, or 
interest therein, from the Federal Government, the instrument effecting 
or recording the transfer shall contain a covenant running with the land 
assuring nondiscrimination for the period during which the real property 
is used for a purpose involving the provision of similar services or 
benefits. When no transfer of property of interest therein from the 
Federal Government is involved, but property is acquired or improved 
under a program of Federal financial assistance, the recipient shall 
agree to include a covenant in any subsequent transfer of the property. 
When the property is obtained from the Federal Government, the covenant 
may also include a condition coupled with a right to be reserved by 
ACTION to revert title to the property in the event of a breach of the 
covenant where, in the discretion of ACTION, such a condition and right 
of reverter is appropriate to the program under which the real property 
is obtained and to the nature of the grant and the grantee. In the event 
a transferee of real property proposes to mortgage or otherwise encumber 
the real property as security for financing construction of new, or 
improvement of existing, facilities on property for the purposes for 
which the property was transferred, ACTION may agree, on request of the 
transferee and if necessary to accomplish the financing, and on 
conditions as he deems appropriate, to subordinate a right of reversion 
to the lien of a mortgage or other encumbrance.
    (b) Assurances from Government agencies. In the case of an 
application from a department, agency, or office of a State or local 
government for Federal financial assistance for a specified purpose, the 
assurance required by this section shall extend to any other department, 
agency, or office of the same governmental unit if the policies of the 
other department, agency, or office will substantially affect the 
project for which Federal financial assistance is requested. That 
requirement may be waived by the responsible ACTION official if the 
applicant establishes, to the satisfaction of the responsible ACTION 
official, that the practices in other agencies or parts or programs of 
the governmental unit will in no way affect:
    (1) Its practices in the program for which Federal financial 
assistance is sought, or
    (2) The beneficiaries of or participants in or persons affected by 
the program, or
    (3) Full compliance with this part as respects the program.

[[Page 15]]

    (c) Assurance from academic and other institutions. (1) In the case 
of an application for Federal financial assistance by an academic 
institution, the assurance required by this section extends to admission 
practices and to all other practices relating to the treatment of 
students.
    (2) The assurance required by an academic institution, detention or 
correctional facility, or any other institution or facility, relating to 
the institution's practices with respect to admission or other treatment 
of individuals as students, patients, wards, inmates, persons subject to 
control, or clients of the institution or facility or to the opportunity 
to participate in the provision of services, disposition, treatment, or 
benefits to these individuals, is applicable to the entire institution 
or facility unless the applicant establishes, to the satisfaction of the 
responsible ACTION official, that the practices in designated parts or 
programs of the institution or facility will in no way affect its 
practices in the program of the institution or facility for which 
Federal financial assistance is sought, or the beneficiaries of or 
participants in the program. If the assistance sought is for the 
construction of a facility or part of a facility, the assurance shall 
extend to the entire facility and to facilities operated in connection 
therewith.
    (d) Continuing State programs. Every application by a State or a 
State agency to carry out a program involving continuing Federal 
financial assistance to which this part applies (including the programs 
listed in Appendix A to this part) shall as a condition to its approval 
and the extension of Federal financial assistance pursuant to the 
application:
    (1) Contain or be accompanied by a statement that the program is 
(or, in the case of a new program, will be) conducted in compliance with 
the requirements imposed by or pursuant to this part, and
    (2) Provide or be accompanied by provision for methods of 
administration for the program as are found by ACTION to give reasonable 
guarantee that the applicant and all recipients of Federal financial 
assistance under the program will comply with the requirements imposed 
by or pursuant to this part.

(Approved by the Office of Management and Budget under control number 
3001-0016, paragraph (a)(1))

[39 FR 27322, July 26, 1974, as amended at 47 FR 3553, Jan. 26, 1982]



Sec. 1203.6  Compliance information.

    (a) Cooperation and assistance. ACTION, to the fullest extent 
practicable, shall seek the cooperation of recipients in obtaining 
compliance with this part and shall provide assistance and guidance to 
recipients to help them comply voluntarily with this part.
    (b) Compliance reports. Each recipient shall keep records and submit 
to ACTION timely, complete, and accurate compliance reports at the 
times, and in the form and containing the information ACTION may 
determine necessary to enable it to ascertain whether the recipient has 
complied or is complying with this part. In the case of a program under 
which a primary recipient extends Federal financial assistance to other 
recipients, the other recipients shall also submit compliance reports to 
the primary recipient as may be necessary to enable the primary 
recipient to carry out its obligations under this part. In general, 
recipients should have available for ACTION racial and ethnic data 
showing the extent to which members of minority groups are beneficiaries 
of federally assisted programs.
    (c) Access to sources of information. Each recipient shall permit 
access by ACTION during normal business hours to its books, records, 
accounts, and other sources of information, and its facilities as may be 
pertinent to ascertain compliance with this part. When information 
required of a recipient is in the exclusive possession of an other 
agency, institution, or person and this agency, institution, or person 
fails or refuses to furnish this information, the recipient shall so 
certify in its report and shall set forth what efforts it has made to 
obtain the information.
    (d) Information to beneficiaries and participants. Each recipient 
shall make available to participants, beneficiaries, and other 
interested persons the information regarding the provisions of this

[[Page 16]]

part and its applicability to the program under which the recipient 
received Federal financial assistance, and make this information 
available to them in the manner, as ACTION finds necessary, to apprise 
the persons of the protections against discrimination assured them by 
title VI and this part.



Sec. 1203.7  Conduct of investigations.

    (a) Periodic compliance reviews. ACTION may from time to time review 
the practices of recipients to determine whether they are complying with 
this part.
    (b) Complaints. Any person who believes himself or any specific 
class of persons to be subjected to discrimination prohibited by this 
part may by himself or by a representative file with ACTION a written 
complaint. A complaint shall be filed not later than 180 days after the 
date of the alleged discrimination, unless the time for filing is 
extended by ACTION.
    (c) Investigations. ACTION will make a prompt investigation whenever 
a compliance review, report, complaint, or other information indicates a 
possible failure to comply with this part. The investigation will 
include, when appropriate, a review of the pertinent practices and 
policies of the recipient, the circumstances under which the possible 
noncompliance with this part occurred, and other factors relevant to a 
determination as to whether the recipient has failed to comply with this 
part.
    (d) Resolution of matters. (1) If an investigation pursuant to 
paragraph (c) of this section indicates a failure to comply with this 
part, ACTION will so inform the recipient and the matter will be 
resolved by voluntary means whenever possible. If it has been determined 
that the matter cannot be resolved by voluntary means, action will be 
taken as provided for in Sec. 1203.8.
    (2) If an investigation does not warrant action pursuant to 
paragraph (d)(1) of this section, ACTION will so inform, in writing, the 
recipient and the complainant, if any.
    (e) Intimidatory or retaliatory acts prohibited. A recipient or 
other person shall not intimidate, threaten, coerce, or discriminate 
against an individual for the purpose of interfering with a right or 
privilege secured by section 601 of title VI of this part, or because he 
has made a complaint, testified, assisted, or participated in any manner 
in an investigation, proceeding, or hearing under this part. The 
identity of complainants shall be kept confidential, except to the 
extent necessary to carry out the purposes of this part, including the 
conduct of an investigation, hearing, or judicial proceeding arising 
thereunder.



Sec. 1203.8  Procedure for effecting compliance.

    (a) General. (1) If there appears to be a failure or threatened 
failure to comply with this part, and if the noncompliance or threatened 
noncompliance cannot be corrected by informal means, compliance with 
this part may be effected by the suspension or termination of or refusal 
to grant or to continue Federal financial assistance or by other means 
authorized by law.
    (2) Other means may include, but are not limited to: (i) A reference 
to the Department of Justice with a recommendation that appropriate 
proceedings be brought to enforce the rights of the United States under 
a law of the United States (including other titles of the Civil Rights 
Act of 1964) or an assurance or other contractual undertaking, and
    (ii) An applicable proceeding under State or local law.
    (b) Noncompliance with Sec. 1203.5. If an applicant fails or refuses 
to furnish an assurance required under Sec. 1203.5 or otherwise fails or 
refuses to comply with a requirement imposed by or pursuant to that 
section, Federal financial assistance may be refused in accordance with 
the procedures of paragraph (c) of this section. ACTION shall not be 
required to provide assistance in that case during the pendency of the 
administrative proceedings under this paragraph. Subject, however, to 
Sec. 1203.12, ACTION shall continue assistance during the pendency of 
the proceedings where the assistance is due and payable pursuant to an 
application approved prior to the effective date of this part.
    (c) Termination of or refusal to grant or to continue Federal 
financial assistance. An order suspending, terminating, or

[[Page 17]]

refusing to grant or to continue Federal financial assistance shall not 
become effective until--
    (1) ACTION has advised the applicant or recipient of his failure to 
comply and has determined that compliance cannot be secured by informal 
voluntary means;
    (2) There has been an express finding on the record, after 
opportunity for hearing, of a failure by the applicant or recipient to 
comply with a requirement imposed by or pursuant to this part;
    (3) The action has been approved by the Director pursuant to 
Sec. 1203.10(e); and
    (4) The expiration of 30 days after the Director has filed with the 
committee of the House and the committee of the Senate having 
legislative jurisdiction over the program involved, a full written 
report of the circumstances and the grounds for the action.

An action to suspend or terminate or refuse to grant or to continue 
Federal financial assistance shall be limited to the particular 
political entity, or part thereof, or other applicant or recipient as to 
whom a finding has been made and shall be limited in its effect to the 
particular program, or part thereof, in which the noncompliance has been 
so found.
    (d) Other means authorized by law. An action to effect compliance 
with title VI by other means authorized by law shall not be taken by 
ACTION until--
    (1) ACTION has determined that compliance cannot be secured by 
voluntary means;
    (2) The recipient or other person has been notified of its failure 
to comply and of the action to be taken to effect compliance; and
    (3) The expiration of at least 10 days from the mailing of a notice 
to the recipient or person. During this period of at least 10 days, 
additional efforts shall be made to persuade the recipient or other 
person to comply with the regulation and to take corrective action as 
may be appropriate.



Sec. 1203.9  Hearings.

    (a) Opportunity for hearing. When an opportunity for a hearing is 
required by Sec. 1203.8(c), reasonable notice shall be given by 
registered or certified mail, return receipt requested, to the affected 
applicant or recipient. This notice shall advise the applicant or 
recipient of the action proposed to be taken, the specific provision 
under which the proposed action against it is to be taken, and the 
matters of fact or law asserted as the basis for this action, and 
either:
    (1) Fix a date not less than 20 days after the date of notice within 
which the applicant or recipient may request of ACTION that the matter 
be scheduled for hearing; or
    (2) Advise the applicant or recipient that the matter in question 
has been set down for hearing at a stated time and place. The time and 
place so fixed shall be reasonable and subject to change for cause. The 
complainant, if any, shall be advised of the time and place of the 
hearing. An applicant or recipient may waive a hearing and submit 
written information and argument for the record. The failure of an 
applicant or recipient to request a hearing under this paragraph or to 
appear at a hearing for which a date has been set is deemed to be a 
waiver of the right to a hearing under section 602 of title VI and 
Sec. 1203.8(c) and consent to the making of a decision on the basis of 
the information available.
    (b) Time and place of hearing. Hearings shall be held at the offices 
of ACTION in Washington, DC, at a time fixed by ACTION unless it 
determines that the convenience of the applicant or recipient or of 
ACTION requires that another place be selected. Hearings shall be held 
before the Director, or at his discretion, before a hearing examiner 
appointed in accordance with section 3105 of title 5, United States 
Code, or detailed under section 3344 of title 5, United States Code.
    (c) Right to counsel. In all proceedings under this section, the 
applicant or recipient and ACTION have the right to be represented by 
counsel.
    (d) Procedures, evidence, and record. (1) The hearing, decision, and 
an administrative review thereof shall be conducted in conformity with 
sections 554 through 557 of title 5, United States Code, and in 
accordance with the rules of procedure as are proper (and not 
inconsistent with this section) relating to the conduct of the hearing, 
giving of notices subsequent to those provided

[[Page 18]]

for in paragraph (a) of this section, taking of testimony, exhibits, 
arguments, and briefs, requests for findings, and other related matters. 
Both ACTION and the applicant or recipient are entitled to introduce 
relevant evidence on the issues as stated in the notice for hearing or 
as determined by the officer conducting the hearing at the outset of or 
during the hearing.
    (2) Technical rules of evidence do not apply to hearings conducted 
pursuant to this part, but rules or principles designed to assure 
production of the most credible evidence available and to subject 
testimony to test by cross-examination shall be applied where determined 
reasonably necessary by the officer conducting the hearing. The hearing 
officer may exclude irrelevant, immaterial, or unduly repetitious 
evidence. Documents and other evidence offered or taken for the record 
shall be open to examination by the parties and opportunity shall be 
given to refute facts and arguments advanced on either side of the 
issues. A transcript shall be made of the oral evidence except to the 
extent the substance thereof is stipulated for the record. Decisions 
shall be based on the hearing record and written findings shall be made.
    (e) Consolidated or joint hearings. In cases in which the same or 
related facts are asserted to constitute noncompliance with this part 
with respect to two or more programs to which this part applies, or 
noncompliance with this part and the regulations of one or more other 
Federal departments or agencies issued under title VI, ACTION may, by 
agreement with the other departments or agencies, when applicable, 
provide for the conduct of consolidated or joint hearings, and for the 
application to these hearings of rules or procedures not inconsistent 
with this part. Final decisions in these cases, insofar as this 
regulation is concerned, shall be made in accordance with Sec. 1203.10.



Sec. 1203.10  Decisions and notices.

    (a) Procedure on decisions by hearing examiner. If the hearing is 
held by a hearing examiner, the hearing examiner shall either make an 
initial decision, if so authorized, or certify the entire record 
including his recommended findings and proposed decision to the Director 
for a final decision, and a copy of the initial decision or 
certification shall be mailed to the applicant or recipient. When the 
initial decision is made by the hearing examiner, the applicant or 
recipient may, within 30 days after the mailing of a notice of initial 
decision, file with the Director his exceptions to the initial decision, 
with his reasons therefor. In the absence of exceptions, the Director 
may, on his own motion, within 45 days after the initial decision, serve 
on the applicant or recipient a notice that he will review the decision. 
On the filing of the exceptions or of notice of review, the Director 
shall review the initial decision and issue his own decision thereon 
including the reasons therefor. In the absence of either exceptions or a 
notice of review the initial decision, subject to paragraph (e) of this 
section, shall constitute the final decision of the Director.
    (b) Decisions on record or review by the Director. When a record is 
certified to the Director for decision or the Director reviews the 
decision of a hearing examiner pursuant to paragraph (a) of this 
section, or when the Director conducts the hearing, the applicant or 
recipient shall be given reasonable opportunity to file with it briefs 
or other written statements of the recipient's contentions, and a 
written copy of the final decision of the Director will be sent to the 
applicant or recipient and to the complainant, if any.
    (c) Decisions on record where a hearing is waived. When a hearing is 
waived pursuant to Sec. 1203.9, a decision shall be made by ACTION on 
the record and a written copy of the decision shall be sent to the 
applicant or recipient, and to the complainant, if any.
    (d) Rulings required. Each decision of a hearing examiner or the 
Director shall set forth a ruling on each finding, conclusion, or 
exception presented, and shall identify the requirement or requirements 
imposed by or pursuant to this part with which it is found that the 
applicant or recipient has failed to comply.
    (e) Approval by ACTION. A final decision by an official of ACTION 
other than by the Director, which provides

[[Page 19]]

for the suspension or termination of, or the refusal to grant or 
continue Federal financial assistance, or the imposition of any other 
sanction available under this part or title VI, shall promptly be 
transmitted to the Director, who may approve the decision, vacate it, or 
remit or mitigate a sanction imposed.
    (f) Content of orders. The final decision may provide for suspension 
or termination of, or refusal to grant or continue Federal financial 
assistance, in whole or in part, under the program involved, and may 
contain the terms, conditions, and other provisions as are consistent 
with and will effectuate the purposes of title VI and this part, 
including provisions designed to assure that Federal financial 
assistance will not thereafter be extended under the programs to the 
applicant or recipient determined by the decision to be in default in 
its performance of an assurance given by it under this part, or to have 
otherwise failed to comply with this part, unless and until it corrects 
its noncompliance and satisfies ACTION that it will fully comply with 
this part.
    (g) Post-termination proceedings. (1) An applicant or recipient 
adversely affected by an order issued under paragraph (f) of this 
section shall be restored to full eligibility to receive Federal 
financial assistance if it satisfies the terms and conditions of the 
order for eligibility, or if it brings itself into compliance with this 
part and provides reasonable assurance that it will fully comply with 
this part.
    (2) An applicant or recipient adversely affected by an order entered 
pursuant to paragraph (f) of this section may at any time request ACTION 
to restore fully its eligibility to receive Federal financial 
assistance. A request shall be supported by information showing that the 
applicant or recipient has met the requirements of paragraph (g)(1) of 
this section. If ACTION determines that those requirements have been 
satisfied, it shall restore the eligibility.
    (3) If ACTION denies a request, the applicant or recipient may 
submit a request for a hearing in writing, specifying why it believes 
ACTION is in error. The applicant or recipient shall be given an 
expeditious hearing, with a decision on the record in accordance with 
the rules or procedures issued by ACTION. The applicant or recipient 
shall be restored to eligibility if it proves at the hearing that it 
satisfied the requirements of paragraph (g)(1) of this section. While 
proceedings under this paragraph are pending, the sanctions imposed by 
the order issued under paragraph (f) of this section remain in effect.



Sec. 1203.11  Judicial review.

    Action taken pursuant to section 602 of title VI is subject to 
judicial review as provided in section 603 of title VI.



Sec. 1203.12  Effect on other regulations, forms, and instructions.

    (a) Effect on other regulations. Regulations, orders, or like 
directions issued before the effective date of this part by ACTION which 
impose requirements designed to prohibit discrimination against 
individuals on the ground of race, color, or national origin under a 
program to which this part applies, and which authorizes the suspension 
or termination of or refusal to grant or to continue Federal financial 
assistance to an applicant for or recipient of assistance under a 
program for failure to comply with the requirements, are superseded to 
the extent that discrimination is prohibited by this part, except that 
nothing in this part relieves a person of an obligation assumed or 
imposed under a superseded regulation, order, instruction, or like 
direction, before the effective date of this part. This part does not 
supersede any of the following (including future amendments thereof):
    (1) Executive Order 11246 (3 CFR, 1965 Supp.) and regulations issued 
there under or
    (2) Any other orders, regulations, or instructions, insofar as these 
orders, regulations, or instructions prohibit discrimination on the 
ground of race, color, or national origin in a program or situation to 
which this part is inapplicable, or prohibit discrimination on any other 
ground.
    (b) Forms and instructions. ACTION shall issue and promptly make 
available to all interested persons forms and detailed instructions and 
procedures

[[Page 20]]

for effectuating this part as applied to programs to which this part 
applies, and for which it is responsible.
    (c) Supervision and coordination. ACTION may from time to time 
assign to officials of ACTION, or to officials of other departments or 
agencies of the Government with the consent of the departments or 
agencies, responsibilities in connection with the effectuation of the 
purposes of title VI and this part (other than responsibilities for 
final decision as provided in Sec. 1203.10), including the achievement 
of effective coordination and maximum uniformity within ACTION and 
within the executive branch in the application of title VI and this part 
to similar programs and in similar situations. An action taken, 
determination made, or requirement imposed by an official of another 
department or agency acting pursuant to an assignment of responsibility 
under this paragraph shall have the same effect as though the action had 
been taken by ACTION.

      Appendix A to Part 1203--Programs to Which This Part Applies

    1. Grants for the development or operation of retired senior 
volunteer programs pursuant to section 601 of the Older Americans Act of 
1965, as amended (42 U.S.C. 3044).
    2. Grants for the development and operation of foster grandparents 
projects pursuant to section 611 of the Older Americans Act of 1965, as 
amended (42 U.S.C. 3044b).

  Appendix B to Part 1203--Programs to Which This Part Applies When a 
  Primary Objective of the Federal Financial Assistance Is To Provide 
                               Employment

    1. Grants for the development or operation of retired senior 
volunteer programs pursuant to section 601 of the Older Americans Act of 
1965, as amended (42 U.S.C. 3044).
    2. Grants for the development and operation of foster grandparents 
projects pursuant to section 611 of the Older Americans Act of 1965, as 
amended (42 U.S.C. 3044b).



PART 1204--OFFICIAL SEAL--Table of Contents




Sec.
1204.1  Authority.
1204.2  Description.
1204.3  Custody and authorization to affix.

    Authority: Sec. 402, Pub. L. 93-113, 87 Stat. 407 (42 U.S.C. 5042).

    Source: 38 FR 34118, Dec. 11, 1973, unless otherwise noted.



Sec. 1204.1  Authority.

    Pursuant to section 402(9) of Pub. L. 93-113, the ACTION official 
seal and design thereof which accompanies and is made part of this 
document, is hereby adopted and approved, and shall be judicially 
noticed.

[52 FR 20714, June 3, 1987]



Sec. 1204.2  Description.

    The official seal of ACTION is described as follows:
    (a) The words ``The Federal Domestic Volunteer Agency USA'' are in 
blue capital letters and form the outer circle of the seal.
    (b) Within the circle of letters, on a field of white, appears the 
logotype word ``ACTION'' in blue, capital letters and in Italic type.
    (c) The logotype word ``ACTION'' is split; ``ACT'' on a higher level 
and ``ION'' drops down to a slightly lower level.
    (d) Two red bars, also split on two levels, underline the logotype 
word ``ACTION.''
    The official seal of ACTION is modified when reproduced in black and 
white and when embossed, as it appears below.
[GRAPHIC] [TIFF OMITTED] TC03MR91.053


[52 FR 20714, June 3, 1987]

[[Page 21]]



Sec. 1204.3  Custody and authorization to affix.

    (a) The seal is the official emblem of ACTION and its use is 
therefore permitted only as provided in this part.
    (b) The seal shall be kept in the custody of the General Counsel, or 
any other person he authorizes, and should be affixed by him, the 
Director or the Deputy Director to all commissions of officials of 
ACTION, and used to authenticate records of ACTION and for other 
official purposes. The General Counsel may redelegate and authorize 
redelegations of, this authority.
    (c) The Director shall designate and prescribe by internal written 
delegations and policies the use of the seal for other publication and 
display purposes and those ACTION officials authorized to affix the seal 
for these purposes.
    (d) Use by any person or organization outside of the Agency may be 
made only with the Agency's prior written approval. Such request must be 
made in writing to the General Counsel.



PART 1206--GRANTS AND CONTRACTS--SUSPENSION AND TERMINATION AND DENIAL OF APPLICATION FOR REFUNDING--Table of Contents




           Subpart A--Suspension and Termination of Assistance

Sec.
1206.1-1  Purpose and scope.
1206.1-2  Application of this part.
1206.1-3  Definitions.
1206.1-4  Suspension.
1206.1-5  Termination.
1206.1-6  Time and place of termination hearings.
1206.1-7  Termination hearing procedures.
1206.1-8  Decisions and notices regarding termination.
1206.1-9  Right to counsel; travel expenses.
1206.1-10  Modification of procedures by consent.
1206.1-11  Other remedies.

             Subpart B--Denial of Application for Refunding

1206.2-1  Applicability of this subpart.
1206.2-2  Purpose.
1206.2-3  Definitions.
1206.2-4  Procedures.
1206.2-5  Right to counsel.

    Authority: 42 U.S.C. 4951 et R 1996, Jan. 16, 1974, unless otherwise 
noted.



           Subpart A--Suspension and Termination of Assistance



Sec. 1206.1-1  Purpose and scope.

    (a) This subpart establishes rules and review procedures for the 
suspension and termination of assistance provided by ACTION pursuant to 
various sections of titles I, II and III of the Domestic Volunteer 
Service Act of 1973, 87 Stat. 394, Pub. L. 93-113, (hereinafter the Act) 
because of a material failure of a recipient to comply with the terms 
and conditions of any grant or contract providing assistance under these 
sections of the Act, including applicable laws, regulations, issued 
program guidelines, instructions, grant conditions or approved work 
programs.
    (b) However, this subpart shall not apply to any administrative 
action of the ACTION Agency based upon any violation, or alleged 
violation, of title VI of the Civil Rights Act of 1964 and sections 417 
(a) and (b) of Pub. L. 93-113 relating to nondiscrimination. In the case 
of any such violation or alleged violation other provisions of this 
chapter shall apply.



Sec. 1206.1-2  Application of this part.

    This subpart applies to programs authorized under titles I, II, and 
III of the Act.



Sec. 1206.1-3  Definitions.

    As used in this subpart--
    (a) The terms ``ACTION'' or ``ACTION Agency'' include each Regional 
Office.
    (b) The term Director means the Director of the ACTION Agency.
    (c) The term responsible ACTION official means the Director and 
Deputy Director of ACTION, appropriate Regional Director and any ACTION 
headquarters or regional office official who is authorized to make the 
grant of assistance in question. In addition to the foregoing officials, 
in the case of the suspension proceedings described in Sec. 1206.1-4, 
the term ``responsible ACTION official'' shall also include a designee 
of an ACTION official who is authorized to make the grant of assistance 
in question.

[[Page 22]]

    (d) The term assistance means assistance under titles I, II and III 
of the Act in the form of grants or contracts involving Federal funds 
for the administration of which ACTION has primary responsibility.
    (e) The term recipient means a public or private agency, institution 
or organization or a State or other political jurisdiction which has 
received assistance under title I, II, or III of the Act, but does not 
include individuals who ultimately receive benefits under any program of 
assistance or volunteers participating in any program.
    (f) The term agency means a public or private agency, institution, 
or organization or a State or other political jurisdiction with which 
the recipient has entered into an arrangement, contract or agreement to 
assist in its carrying out of the development, conduct and 
administration of all or part of a project assisted under titles I, II 
and III.
    (g) The term party in the case of a termination hearing means 
ACTION, the recipient concerned, and any other agency or organization 
which has a right or which has been granted permission by the presiding 
officer to participate in a hearing concerning termination of assistance 
to the recipient pursuant to Sec. 1206.1-5(e).
    (h) The term termination means any action permanently terminating or 
curtailing assistance to all or any part of a program prior to the time 
that such assistance is concluded by the terms and conditions of the 
document in which such assistance is extended, but does not include the 
refusal to provide new or additional assistance.
    (i) The term suspension means any action temporarily suspending or 
curtailing assistance in whole or in part, to all or any part of a 
program, prior to the time that such assistance is concluded by the 
terms and conditions of the document in which such assistance is 
extended, but does not include the refusal to provide new or additional 
assistance.



Sec. 1206.1-4  Suspension.

    (a) General. The responsible ACTION official may suspend assistance 
to a recipient in whole or in part for a material failure or threatened 
material failure to comply with any requirement stated in Sec. 1206.1-1. 
Such suspension shall be pursuant to notice and opportunity to show 
cause why assistance should not be suspended as provided in paragraph 
(b) of this section. However, in emergency cases, where the responsible 
ACTION official determines summary action is appropriate, the 
alternative summary procedure of paragraph (c) of this section shall be 
followed.
    (b) Suspension on notice. (1) Except as provided in paragraph (c) of 
this section, the procedure for suspension shall be on notice of intent 
to suspend as hereinafter provided.
    (2) The responsible ACTION official shall notify the recipient by 
letter or by telegram that ACTION intends to suspend assistance in whole 
or in part unless good cause is shown why assistance should not be 
suspended. In such letter or telegram the responsible ACTION official 
shall specify the grounds for the proposed suspension and the proposed 
effective date of the suspension.
    (3) The responsible ACTION official shall also inform the recipient 
of its right to submit written material in opposition to the intended 
suspension and of its right to request an informal meeting at which the 
recipient may respond and attempt to show why such suspension should not 
occur. The period of time within which the recipient may submit such 
written material or request the informal meeting shall be established by 
the responsible ACTION official in the notice of intent to suspend. 
However, in no event shall the period of time within which the recipient 
must submit written material or request such a meeting be less than 5 
days after the notice of intent to suspend assistance has been sent. If 
the recipient requests a meeting, the responsible ACTION official shall 
fix a time and place for the meeting, which shall not be less than 5 
days after the recipient's request is received by ACTION.
    (4) In lieu of the provisions of paragraph (b)(3) of this section 
dealing with the right of the recipient to request an informal meeting, 
the responsible ACTION official may on his own initiative establish a 
time and place for such a meeting and notify the recipient in

[[Page 23]]

writing or by telegram. However, in no event shall such a meeting be 
scheduled less than seven days after the notice of intent to suspend 
assistance is sent to the recipient.
    (5) The responsible ACTION official may in his discretion extend the 
period of time or date referred to in the previous paragraphs of this 
section and shall notify the recipient in writing or by telegram of any 
such extension.
    (6) At the time the responsible ACTION official sends the 
notification referred to in paragraphs (b) (2), (3), and (4) of this 
section to the recipient, he shall also send a copy of it to any agency 
whose activities or failures to act have substantially contributed to 
the proposed suspension, and shall inform such agency that it is 
entitled to submit written material or to participate in the informal 
meeting referred to in paragraphs (b) (3) and (4) of this section. In 
addition the responsible ACTION official may in his discretion give such 
notice to any other agency.
    (7) Within 3 days of receipt of the notice referred to in paragraphs 
(b) (2), (3), and (4) of this section, the recipient shall send a copy 
of such notice and a copy of these regulations to all agencies which 
would be financially affected by the proposed suspension action. Any 
agency that wishes to submit written material may do so within the time 
stated in the notice. Any agency that wishes to participate in the 
informal meeting with the responsible ACTION official contemplated 
herein may request permission to do so from the responsible ACTION 
official, who may in his discretion grant or deny such permission. In 
acting upon any such request from an agency, the responsible ACTION 
official shall take into account the effect of the proposed suspension 
on the particular agency, the extent to which the meeting would become 
unduly complicated as a result of granting such permission, and the 
extent to which the interests of the agency requesting such permission 
appear to be adequately represented by other participants.
    (8) In the notice of intent to suspend assistance the responsible 
ACTION official shall invite voluntary action to adequately correct the 
deficiency which led to the initiation of the suspension proceeding.
    (9) The responsible ACTION official shall consider any timely 
material presented to him in writing, any material presented to him 
during the course of the informal meeting provided for in paragraphs (b) 
(3) and (4) of this section as well as any showing that the recipient 
has adequately corrected the deficiency which led to the initiation of 
suspension proceedings. If after considering the material presented to 
him the responsible ACTION official concludes the recipient has failed 
to show cause why assistance should not be suspended, he may suspend 
assistance in whole or in part and under such terms and conditions as he 
shall specify.
    (10) Notice of such suspension shall be promptly transmitted to the 
recipient and shall become effective upon delivery. Suspension shall not 
exceed 30 days unless during such period of time termination proceedings 
are initiated in accordance with Sec. 1206.1-5, or unless the 
responsible ACTION official and the recipient agree to a continuation of 
the suspension for an additional period of time. If termination 
proceedings are initiated, the suspension of assistance shall remain in 
full force and effect until such proceedings have been fully concluded.
    (11) During a period of suspension no new expenditures shall be made 
and no new obligations shall be incurred in connection with the 
suspended program except as specifically authorized in writing by the 
responsible ACTION official. Expenditures to fulfill legally enforceable 
commitments made prior to the notice of suspension, in good faith and in 
accordance with the recipient's approved work program, and not in 
anticipation of suspension or termination, shall not be considered new 
expenditures. However, funds shall not be recognized as committed solely 
because the recipient has obligated them by contract or otherwise to an 
agency.

    Note: Willful misapplication of funds may violate Federal criminal 
statutes.

    (12) The responsible ACTION official may in his discretion modify 
the terms, conditions and nature of the suspension or rescind the 
suspension

[[Page 24]]

action at any time on his own initiative or upon a showing satisfactory 
to him that the recipient had adequately corrected the deficiency which 
led to the suspension and that repetition is not threatened. Suspensions 
partly or fully rescinded may, in the discretion of the responsible 
ACTION official be reimposed with or without further proceedings: 
Provided however, That the total time of suspension may not exceed 30 
days unless termination proceedings are initiated in accordance with 
Sec. 1206.1-5 or unless the responsible ACTION official and the 
recipient agree to a continuation of the suspension for an additional 
period of time. If termination proceedings are initiated, the suspension 
of assistance shall remain in full force and effect until such 
proceedings have been fully concluded.
    (c) Summary suspension. (1) The responsible ACTION official may 
suspend assistance without the prior notice and opportunity to show 
cause provided in paragraph (b) of this section if he determines in his 
discretion that immediate suspension is necessary because of a serious 
risk of: (i) Substantial injury to or loss of project funds or property, 
or
    (ii) Violation of a Federal, State or local criminal statute, or
    (iii) Violation of section 403 of Pub. L. 93-113 or of ACTION rules, 
regulations, guidelines and instructions, published in accordance with 
section 420 of Pub. L. 93-113, implementing this section of the Act, and 
that such risk is sufficiently serious to outweigh the general policy in 
favor of advance notice and opportunity to show cause.
    (2) Notice of summary suspension shall be given to the recipient by 
letter or by telegram, shall become effective upon delivery to the 
recipient, and shall specifically advise the recipient of the effective 
date of the suspension and the extent, terms, and condition of any 
partial suspension. The notice shall also forbid the recipient to make 
any new expenditures or incur any new obligations in connection with the 
suspended portion of the program. Expenditures to fulfill legally 
enforceable commitments made prior to the notice of suspension, in good 
faith and in accordance with the recipient's approved work program, and 
not in anticipation of suspension or termination, shall not be 
considered new expenditures. However, funds shall not be recognized as 
committed by a recipient solely because the recipient obligated them by 
contract or otherwise to an agency. (See note under paragraph (b)(11) of 
this section.)
    (3) In the notice of summary suspension the responsible ACTION 
official shall advise the recipient that it may request ACTION to 
provide it with an opportunity to show cause why the summary suspension 
should be rescinded. If the recipient requests such an opportunity, the 
responsible ACTION official shall immediately inform the recipient in 
writing of the specific grounds for the suspension and shall within 7 
days after receiving such request from the recipient hold an informal 
meeting at which the recipient may show cause why the summary suspension 
should be rescinded. Notwithstanding the provisions of this paragraph, 
the responsible ACTION official may proceed to initiate termination 
proceedings at any time even though assistance to the recipient has been 
suspended in whole or in part. In the event that termination proceedings 
are initiated, the responsible ACTION official shall nevertheless afford 
the recipient, if it so requests, an opportunity to show cause why 
suspension should be rescinded pending the outcome of the termination 
proceedings.
    (4) Copies of the notice of summary suspension shall be furnished by 
the recipient to agencies in the same manner as notices of intent to 
suspend as set forth in paragraphs (b) (6), (7), and (8) of this 
section. Agencies may submit written material to the responsible ACTION 
official or to participate in the informal meeting as in the case of 
intended suspension proceedings set forth in paragraphs (b) (6) and (7) 
of this section.
    (5) The effective period of a summary suspension of assistance may 
not exceed 30 days unless termination proceedings are initiated in 
accordance with Sec. 1206.1-5, or unless the parties agree to a 
continuation of summary suspension for an additional period of time, or 
unless the recipient, in accordance with paragraph (c)(3) of this 
section, requests an opportunity to show

[[Page 25]]

cause why the summary suspension should be rescinded.
    (6) If the recipient requests an opportunity to show cause why a 
summary suspension action should be rescinded the suspension of 
assistance shall continue in effect until the recipient has been 
afforded such opportunity and a decision has been made. Such a decision 
shall be made within 5 days after the conclusion of the informal meeting 
referred to in paragraph (c)(3) of this section. If the responsible 
ACTION official concludes, after considering all material submitted to 
him, that the recipient has failed to show cause why the suspension 
should be rescinded, the responsible ACTION official may continue the 
suspension in effect for an additional 7 days: Provided however, That if 
termination proceedings are initiated, the summary suspension of 
assistance shall remain in full force and effect until all termination 
proceedings have been fully concluded.



Sec. 1206.1-5  Termination.

    (a) If the responsible ACTION official believes that an alleged 
failure to comply with any requirement stated in Sec. 1206.1-1 may be 
sufficiently serious to warrant termination of assistance, whether or 
not assistance has been suspended, he shall so notify the recipient by 
letter or telegram. The notice shall state that there appear to be 
grounds which warrant terminating the assistance and shall set forth the 
specific reasons therefor. If the reasons result in whole or substantial 
part from the activities of an agency other than the grantee, the notice 
shall identify that agency. The notice shall also advise the recipient 
that the matter has been set down for hearing at a stated time and 
place, in accordance with Sec. 1206.1-6. In the alternative the notice 
shall advise the recipient of its right to request a hearing and shall 
fix a period of time which shall not be less than 10 days in which the 
recipient may request such a hearing.
    (b) Termination hearings shall be conducted in accordance with the 
provision of Secs. 1206.1-7 and 1206.1-8. They shall be scheduled for 
the earliest practicable date, but not later than 30 days after a 
recipient has requested such a hearing in writing or by telegram. 
Consideration shall be given to a request by a recipient to advance or 
postpone the date of a hearing scheduled by ACTION. Any such hearing 
shall afford the recipient a full and fair opportunity to demonstrate 
that it is in compliance with requirements specified in Sec. 1206.1-1. 
In any termination hearing, ACTION shall have the burden of justifying 
the proposed termination action. However, if the basis of the proposed 
termination is the failure of a recipient to take action required by 
law, regulation, or other requirement specified in Sec. 1206.1-1, the 
recipient shall have the burden of proving that such action was timely 
taken.
    (c) If a recipient requests ACTION to hold a hearing in accordance 
with paragraph (a) of this section, it shall send a copy of its request 
for such a hearing to all agencies which would be financially affected 
by the termination of assistance and to each agency identified in the 
notice pursuant to paragraph (a) of this section. This material shall be 
sent to these agencies at the same time the recipient's request is made 
to ACTION. The recipient shall promptly send ACTION a list of the 
agencies to which it has sent such material and the date on which it was 
sent.
    (d) If the responsible ACTION official pursuant to paragraph (a) of 
this section informs a recipient that a proposed termination action has 
been set for hearing, the recipient shall within 5 days of its receipt 
of this notice send a copy of it to all agencies which would be 
financially affected by the termination and to each agency identified in 
the notice pursuant to paragraph (a) of this section. The recipient 
shall send the responsible ACTION official a list of all agencies 
notified and the date of notification.
    (e) If the responsible ACTION official has initiated termination 
proceedings because of the activities of an agency, that agency may 
participate in the hearing as a matter of right. Any other agency, 
person, or organization that wishes to participate in the hearing may, 
in accordance with Sec. 1206.1-7(d), request permission to do so from 
the presiding officer of the hearing. Such participation shall not, 
without the consent of ACTION and the recipient,

[[Page 26]]

alter the time limitations for the delivery of papers or other 
procedures set forth in this section.
    (f) The results of the proceeding and any measure taken thereafter 
by ACTION pursuant to this part shall be fully binding upon the 
recipient and all agencies whether or not they actually participated in 
the hearing.
    (g) A recipient may waive a hearing by notice to the responsible 
ACTION official in writing and submit written information and argument 
for the record. Such material shall be submitted to the responsible 
ACTION official within a reasonable period of time to be fixed by him 
upon the request of the recipient. The failure of a recipient to request 
a hearing, or to appear at a hearing for which a date has been set, 
unless excused for good cause, shall be deemed a waiver of the right to 
a hearing and consent to the making of a decision on the basis of such 
information as is then in the possession of ACTION.
    (h) The responsible ACTION official may attempt, either personally 
or through a representative, to resolve the issues in dispute by 
informal means prior to the date of any applicable hearing.



Sec. 1206.1-6  Time and place of termination hearings.

    The termination hearing shall be held in Washington, DC, or in the 
appropriate Regional Office, at a time and place fixed by the 
responsible ACTION official unless he determines that the convenience of 
ACTION, or of the parties or their representatives, requires that 
another place be selected.



Sec. 1206.1-7  Termination hearing procedures.

    (a) General. The termination hearing, decision, and any review 
thereof shall be conducted in accordance with the rules of procedure set 
forth in this section and Secs. 1206.1-8 and 1206.1-9.
    (b) Presiding officer. (1) The presiding officer at the hearing 
shall be the responsible ACTION official or, at the discretion of the 
responsible ACTION official, an independent hearing examiner designated 
as promptly as possible in accordance with section 3105 of title 5 of 
the United States Code. The presiding officer shall conduct a full and 
fair hearing, avoid delay, maintain order, and make a sufficient record 
for a full and true disclosure of the facts and issues. To accomplish 
these ends, the presiding officer shall have all powers authorized by 
law, and he may make all procedural and evidentiary rulings necessary 
for the conduct of the hearing. The hearing shall be open to the public 
unless the presiding officer for good cause shown shall otherwise 
determine.
    (2) After the notice described in paragraph (f) of this section is 
filed with the presiding officer, he shall not consult any person or 
party on a fact in issue unless on written notice and opportunity for 
all parties to participate. However, in performing his functions under 
this part the presiding officer may use the assistance and advice of an 
attorney designated by the General Counsel of ACTION or the appropriate 
Regional Counsel: Provided, That the attorney designated to assist him 
has not represented ACTION or any other party or otherwise participated 
in a proceeding, recommendation, or decision in the particular matter.
    (c) Presentation of evidence. Both ACTION and the recipient are 
entitled to present their case by oral or documentary evidence, to 
submit rebuttal evidence and to conduct such examination and cross-
examination as may be required for a full and true disclosure of all 
facts bearing on the issues. The issues shall be those stated in the 
notice required to be filed by paragraph (f) of this section, those 
stipulated in a prehearing conference or those agreed to by the parties.
    (d) Participation. (1) In addition to ACTION, the recipient, and any 
agency which has a right to appear, the presiding officer in his 
discretion may permit the participation in the proceedings of such 
persons or organizations as he deems necessary for a proper 
determination of the issues involved. Such participation may be limited 
to those issues or activities which the presiding officer believes will 
meet the needs of the proceeding, and may be limited to the filing of 
written material.
    (2) Any person or organization that wishes to participate in a 
proceeding may apply for permission to do so from

[[Page 27]]

the presiding officer. This application, which shall be made as soon as 
possible after the notice of suspension or proposed termination has been 
received by the recipient, shall state the applicant's interest in the 
proceeding, the evidence or arguments the applicant intends to 
contribute, and the necessity for the introduction of such evidence or 
arguments.
    (3) The presiding officer shall permit or deny such participation 
and shall give notice of his decision to the applicant, the recipient, 
and ACTION, and, in the case of denial, a brief statement of the reasons 
therefor: Provided however, That the presiding officer may subsequently 
permit such participation if, in his opinion, it is warranted by 
subsequent circumstances. If participation is granted, the presiding 
officer shall notify all parties of that fact and may, in appropriate 
cases, include in the notification a brief statement of the issues as to 
which participation is permitted.
    (4) Permission to participate to any extent is not a recognition 
that the participant has any interest which may be adversely affected or 
that the participant may be aggrieved by any decision, but is allowed 
solely for the aid and information of the presiding officer.
    (e) Filing. All papers and documents which are required to be filed 
shall be filed with the presiding officer. Prior to filing, copies shall 
be sent to the other parties.
    (f) Notice. The responsible ACTION official shall send the recipient 
and any other party a written notice which states the time, place, 
nature of the hearing, the legal authority and jurisdiction under which 
the hearing is to be held. The notice shall also identify with 
reasonable specificity the facts relied on as justifying termination and 
the ACTION requirements which it is contended the recipient has 
violated. The notice shall be filed and served not later than 10 days 
prior to the hearing and a copy thereof shall be filed with the 
presiding officer.
    (g) Notice of intention to appear. The recipient and any other party 
which has a right or has been granted permission to participate in the 
hearing shall give written confirmation to ACTION of its intention to 
appear at the hearing 3 days before it is scheduled to occur. Failing to 
do so may, at the discretion of the presiding officer, be deemed a 
waiver of the right to a hearing.
    (h) Form and date of service. All papers and documents filed or sent 
to party shall be signed in ink by the appropriate party or his 
authorized representative. The date on which papers are filed shall be 
the day on which the papers or documents are deposited, postage prepaid 
in the U.S. mail, or are delivered in person: Provided however, That the 
effective date of the notice that there appear to be grounds which 
warrant terminating assistance shall be the date of its delivery or 
attempted delivery at the recipient's last known address as reflected in 
the records of ACTION.
    (i) Prehearing conferences. Prior to the commencement of a hearing 
the presiding officer may, subject to the provisions of paragraph (b)(2) 
of this section, require the parties to meet with him or correspond with 
him concerning the settlement of any matter which will expedite a quick 
and fair conclusion of the hearing.
    (j) Evidence. Technical rules of evidence shall not apply to 
hearings conducted pursuant to this subpart, but the presiding officer 
shall apply rules or principles designed to assure production of 
relevant evidence and to subject testimony to such examination and 
crossexamination as may be required for a full and true disclosure of 
the facts. The presiding officer may exclude irrelevant, immaterial, or 
unduly repetitious evidence. A transcription shall be made of the oral 
evidence and shall be made available to any participant upon payment of 
the prescribed costs. All documents and other evidence submitted shall 
be open to examination by the parties and opportunity shall be given to 
refute facts and arguments advanced on either side of the issues.
    (k) Depositions. If the presiding officer determines that the 
interests of justice would be served, he may authorize the taking of 
depositions provided that all parties are afforded an opportunity to 
participate in the taking of the depositions. The party who

[[Page 28]]

requested the deposition shall arrange for a transcript to be made of 
the proceedings and shall upon request, and at his expense, furnish all 
other parties with copies of the transcript.
    (l) Official notice. Official notice may be taken of a public 
document, or part thereof, such as a statute, official report, decision, 
opinion or published scientific date issued by any agency of the Federal 
Government or a State or local government and such document or data may 
be entered on the record without further proof of authenticity. Official 
notice may also be taken of such matters as may be judicially noticed in 
the courts of the United States, or any other matter of established fact 
within the general knowledge of ACTION. If the decision of the presiding 
officer rests on official notice of a material fact not appearing in 
evidence, a party shall on timely request be afforded an opportunity to 
show the contrary.
    (m) Proposed findings and conclusions. After the hearing has 
concluded, but before the presiding officer makes his decision, he shall 
afford each participant a reasonable opportunity to submit proposed 
findings of fact and conclusions. After considering each proposed 
finding or conclusion the presiding officer shall state in his decision 
whether he has accepted or rejected them in accordance with the 
provisions of Sec. 1206.1-8(a).



Sec. 1206.1-8  Decisions and notices regarding termination.

    (a) Each decision of a presiding officer shall set forth his 
findings of fact, and conclusions, and shall state whether he has 
accepted or rejected each proposed finding of fact and conclusion 
submitted by the parties, pursuant to Sec. 1206.1-7(m). Findings of fact 
shall be based only upon evidence submitted to the presiding officer and 
matters of which official notice has been taken. The decision shall also 
specify the requirement or requirements with which it is found that the 
recipient has failed to comply.
    (b) The decision of the presiding officer may provide for continued 
suspension or termination of assistance to the recipient in whole or in 
part, and may contain such terms, conditions, and other provisions as 
are consistent with and will effectuate the purposes of the Act.
    (c) If the hearing is held by an independent hearing examiner rather 
than by the responsible ACTION official, he shall make an initial 
decision, and a copy of this initial decision shall be mailed to all 
parties. Any party may, within 20 days of the mailing of such initial 
decision, or such longer period of time as the presiding officer 
specifies, file with the responsible ACTION official his written 
exceptions to the initial decision and any supporting brief or 
statement. Upon the filing of such exceptions, the responsible ACTION 
official shall, within 20 days of the mailing of the exceptions, review 
the initial decision and issue his own written decision thereof, 
including the reasons therefore. The decision of the responsible ACTION 
official may increase, modify, approve, vacate, remit, or mitigate any 
sanction imposed in the initial decision or may remand the matter to the 
presiding officer for further hearing or consideration.
    (d) Whenever a hearing is waived, a decision shall be made by the 
responsible ACTION official and a written copy of the final decision of 
the responsible ACTION official shall be given to the recipient.
    (e) The recipient may request the Director to review a final 
decision by the responsible ACTION official which provides for the 
termination of assistance. Such a request must be made in writing within 
15 days after the recipient has been notified of the decision in 
question and must state in detail the reasons for seeking the review. In 
the event the recipient requests such a review, the Director or his 
designee shall consider the reasons stated by the recipient for seeking 
the review and shall approve, modify, vacate or mitigate any sanction 
imposed by the responsible ACTION official or remand the matter to the 
responsible ACTION official for further hearing or consideration. The 
decision of the responsible ACTION official will be given great weight 
by the Director or his designee during the review. During the course of 
his review the Director or his designee may, but is not required to, 
hold a hearing or allow the filing of briefs and arguments. Pending the 
decision of the

[[Page 29]]

Direct or his designee assistance shall remain suspended under the terms 
and conditions specified by the responsible ACTION official, unless the 
responsible ACTION official or the Director or his designee otherwise 
determines. Every reasonable effort shall be made to complete the review 
by the Director or his designee within 30 days of receipt by the 
Director of the recipient's request. The Director or his designee may 
however extend this period of time if he determines that additional time 
is necessary for an adequate review.



Sec. 1206.1-9  Right to counsel; travel expenses.

    In all proceedings under this subpart, whether formal or informal, 
the recipient and ACTION shall have the right to be represented by 
counsel or other authorized representatives. If the recipient and any 
agency which has a right to participate in an informal meeting pursuant 
to Sec. 1206.1-4 or a termination hearing pursuant to Sec. 1206.1-7 do 
not have an attorney acting in that capacity as a regular member of the 
staff of the organization or a retainer arrangement with an attorney, 
the Boards of Directors of such recipient and agency will be authorized 
to designate an attorney to represent their organizations at any such 
show cause proceeding or termination hearing and to transfer sufficient 
funds from the Federal grant monies they have received for the project 
to pay the fees, travel, and per diem expenses of such attorney. The 
fees for such attorney shall be the reasonable and customary fees for an 
attorney practicing in the locality of the attorney. However, such fees 
shall not exceed $100 per day without the prior express written approval 
of ACTION. Travel and per diem expenses may be paid to such attorney 
only in accordance with the policies set forth in the Standard 
Government Travel Regulations and in Secs. 1206.3-1 and 1206.3-6 of this 
chapter. The Boards of Directors of the recipient or any agency which 
has a right to participate in an informal meeting pursuant to 
Sec. 1206.1-4 or a termination hearing pursuant to Sec. 1206.1-7 will 
also be authorized to designate two persons in addition to an attorney 
whose travel and per diem expenses to attend the meeting or hearing may 
be paid from Federal grant or contract monies. Such travel and per diem 
expenses shall conform to the policies set forth in the Standard 
Government Travel Regulations and in Secs. 1206.3-1 and 1206.3-6 of this 
chapter.



Sec. 1206.1-10  Modification of procedures by consent.

    The responsible ACTION official or the presiding officer of a 
termination hearing may alter, eliminate or modify any of the provisions 
of this subpart with the consent of the recipient and, in the case of a 
termination hearing, with the consent of all agencies that have a right 
to participate in the hearing pursuant to Sec. 1206.1-5(e). Such consent 
must be in writing or be recorded in the hearing transcript.



Sec. 1206.1-11  Other remedies.

    The procedures established by this subpart shall not preclude ACTION 
from pursuing any other remedies authorized by law.



             Subpart B--Denial of Application for Refunding

    Source: 47 FR 5719, Feb. 8, 1982, unless otherwise noted.



Sec. 1206.2-1  Applicability of this subpart.

    This subpart applies to grantees and contractors receiving financial 
assistance and to sponsors who receive volunteers under the Domestic 
Volunteer Service Act of 1973, as amended, 42 U.S.C. 4951 et seq. The 
procedures in this subpart do not apply to review of applications for 
the following:
    (a) University Year for ACTION projects which have received federal 
funds for five years;
    (b) Mini-grants;
    (c) Other projects for which specific time limits with respect to 
federal assistance are established in the original notice of grant award 
or other document providing assistance, where the specified time limit 
has been reached; and
    (d) VISTA project extensions of less than six months.

[[Page 30]]



Sec. 1206.2-2  Purpose.

    This subpart establishes rules and review procedures for the denial 
of a current recipient's application for refunding.



Sec. 1206.2-3  Definitions.

    As used in this subpart--``ACTION,'' ``Director,'' and ``recipient'' 
shall be defined in accordance with Sec. 1206.1-3.
    Financial assistance and assistance include the services of 
volunteers supported in whole or in part with ACTION funds.
    Program account means assistance provided by ACTION to support a 
particular program activity; for example, VISTA, Foster Grandparent 
Program, Senior Companion Program and Retired Senior Volunteer Program.
    Refunding includes renewal of an application for the assignment of 
volunteers.



Sec. 1206.2-4  Procedures.

    (a) The procedures set forth in paragraphs (b) through (g) of this 
section shall apply only where an application for refunding submitted by 
a current recipient is rejected or is reduced to 80 percent or less of 
the applied-for level of funding or the recipient's current level of 
operations, whichever is less. It is further a condition for application 
of these procedures that the rejection or reduction be based on 
circumstances related to the particular grant or contract. These 
procedures do not apply to reductions based on legislative requirements, 
or on general policy or in instances where, regardless of a recipient's 
current level of operations, its application for refunding is not 
reduced by 20 percent or more. The fact that the basis for rejecting an 
application may also be a basis for termination under subpart A of this 
part shall not prevent the use of this subpart to the exclusion of the 
procedures in subpart A.
    (b) Before rejecting an application of a recipient for refunding 
ACTION shall notify the recipient of its intention, in writing, at least 
75 days before the end of the recipient's current program year or grant 
budget period. The notice shall inform the recipient that a tentative 
decision has been made to reject or reduce an application for refunding. 
The notice shall state the reasons for the tentative decision to which 
the recipient shall address itself if it wishes to make a presentation 
as described in paragraphs (c) and (d) of this section.
    (c) If the notice of tentative decision is based on any reasons, 
other than those described in paragraph (d) of this section, including, 
but not limited to, situations in which the recipient has ineffectively 
managed Agency resources or substantially failed to comply with agency 
policy and overall objectives under a contract or grant agreement with 
the Agency, the recipient shall be informed in the notice, of the 
opportunity to submit written material and to meet informally with an 
ACTION official to show cause why its application for refunding should 
not be rejected or reduced. If the recipient requests an informal 
meeting, such meeting shall be held on a date specified by ACTION. 
However, the meeting may not, without the consent of the recipient, be 
scheduled sooner than 14 days, nor more than 30 days, after ACTION has 
mailed the notice to the recipient. If the recipient requests an 
informal meeting, the meeting shall be scheduled by ACTION as soon as 
possible after receipt of the request. The official who shall conduct 
this meeting shall be an ACTION official who is authorized to finally 
approve or make the grant of assistance in question, or his designee.
    (d) If the notice of tentative decision is based upon a specific 
charge of failure to comply with the terms and conditions of the grant 
or contract, alleging wrongdoing on the part of the recipient, the 
notice shall offer the recipient an opportunity for an informal hearing 
before a mutually agreed-upon impartial hearing officer. The authority 
of such hearing officer shall be limited to conducting the hearing and 
offering recommendations. ACTION will retain all authority to make the 
final determination as to whether the application should be finally 
rejected or reduced. If the recipient requests an informal hearing, such 
hearing shall be held at a date specified by ACTION. However, such 
hearing may not, without the consent of the recipient, be scheduled 
sooner than 14 days nor more

[[Page 31]]

than 30 days after ACTION has mailed the notice to the recipient.
    (e) In the selection of a hearing official and the location of 
either an informal meeting or hearing, the Agency, while mindful of 
considerations of the recipient, will take care to insure that costs are 
kept to a minimum. The informal meeting or hearing shall be held in the 
city or county in which the recipient is located, in the appropriate 
Regional Office, or another appropriate location. Within the limits 
stated in the preceding sentence, the decision as to where the meeting 
shall be held will be made by ACTION, after weighing the convenience 
factors of the recipient. For the convenience of the recipient, ACTION 
will pay the reasonable travel expenses for up to two representatives of 
the recipient, if requested.
    (f) The recipient shall be informed of the final Agency decision on 
refunding and the basis for the decision by the deciding official.
    (g) If the recipient's budget period expires prior to the final 
decision by the deciding official, the recipient's authority to continue 
program operations shall be extended until such decision is made and 
communicated to the recipient. If a volunteer's term of service expires 
after receipt by a sponsor of a tentative decision not to refund a 
project, the period of service of the volunteer may be similarly 
extended. No volunteers may be reenrolled for a full 12-month term, or 
new volunteers enrolled for a period of service while a tentative 
decision not to refund is pending. If program operations are so 
extended, ACTION and the recipient shall provide, subject to the 
availability of funds, operating funds at the same levels as in the 
previous budget period to continue program operations.

[50 FR 42025, Oct. 17, 1985]



Sec. 1206.2-5  Right to counsel.

    In all proceedings under this subpart, whether formal or informal, 
the recipient and ACTION shall have the right to be represented by 
counsel or other authorized representatives, at their own expense.



PART 1210--VISTA TRAINEE DESELECTION AND VOLUNTEER EARLY TERMINATION PROCEDURES--Table of Contents




                           Subpart A--General

Sec.
1210.1-1  Purpose.
1210.1-2  Scope.
1210.1-3  Definitions.

                  Subpart B--VISTA Trainee Deselection

1210.2-1  Grounds for deselection.
1210.2-2  Procedure for deselection.

              Subpart C--VISTA Volunteer Early Termination

1210.3-1  Grounds for termination.
1210.3-2  Removal from project.
1210.3-3  Suspension.
1210.3-4  Initiation of termination.
1210.3-5  Preparation for appeal.
1210.3-6  Appeal of termination.
1210.3-7  Inquiry by Hearing Examiner.
1210.3-8  Termination file and Examiner's report.
1210.3-9  Decision by Director of VISTA.
1210.3-10  Reinstatement of Volunteer.
1210.3-11  Disposition of termination and appeal files.

            Subpart D--National Grant Trainees and Volunteers

1210.4  Early termination procedures for National Grant Trainees and 
          Volunteers.

Appendix A to Part 1210--Standard for Examiners

    Authority: Secs. 103(c), 402(14), Pub. L. 93-113, 87 Stat. 397 and 
407.

    Source: 46 FR 35512, July 9, 1981, unless otherwise noted.



                           Subpart A--General



Sec. 1210.1-1  Purpose.

    This part establishes procedures under which certain Trainees and 
Volunteers serving in ACTION programs under Pub. L. 93-113 will be 
deselected from training or termininated from service and how they may 
appeal their deselection or termination.



Sec. 1210.1-2  Scope.

    (a) This part applies to all Trainees and Volunteers enrolled under 
part A of Title I of the Domestic Volunteer Service Act of 1973, Pub. L. 
93-113, as

[[Page 32]]

amended, (42 U.S.C. 4951 et seq.,) (hereinafter the ``Act'') and full-
time Volunteers serving under part C of title I of the Act.
    (b) This part does not apply to the medical separation of any 
Trainee or Volunteer. Separate procedures, as detailed in the VISTA 
Handbook, are applicable for such separations.



Sec. 1210.1-3  Definitions.

    (a) Trainee means a person enrolled in a program under part A of 
Title I of the Act or for full-time volunteer service under part C of 
Title I of the Act who has reported to training but has not yet 
completed training and been assigned to a project.
    (b) Volunteer means a person enrolled and currently assigned to a 
project as a full-time Volunteer under part A of title I of the Act, or 
under part C of title I of the Act.
    (c) Sponsor means a public or private nonprofit agency to which 
ACTION has assigned Volunteers.
    (d) Hearing Examiner or Examiner means a person having the 
qualifications described in Appendix A who has been appointed to conduct 
an inquiry with respect to a termination.
    (e) National Grant Program means a program operated under part A, 
title I of the Act in which ACTION has awarded a grant to provide the 
direct costs of supporting VISTA Volunteers on a national or multi-
regional basis. VISTA Volunteers may be assigned to local offices or 
project affiliates. The national grantee provides overall training, 
technical assistance and management support for project operations.
    (f) Local component means a local office or project affiliate of a 
national grantee to which VISTA Volunteers are assigned under the VISTA 
National Grants Program.
    (g) Termination means the removal of a Volunteer from VISTA service 
by ACTION, and does not refer to removal of a Volunteer from a 
particular project which has been requested by a sponsor or Governor 
under Sec. 1210.3-2.
    (h) Deselection means the removal of a Trainee from VISTA service by 
ACTION.



                  Subpart B--VISTA Trainee Deselection



Sec. 1210.2-1  Grounds for deselection.

    ACTION may deselect a Trainee out of a training program for any of 
the following reasons:
    (a) Failure to meet training selection standards which includes, but 
is not limited to, the following conduct:
    (1) Inability or refusal to perform training assignments;
    (2) Disruptive conduct during training sessions;
    (b) Conviction of any criminal offense under Federal, State or local 
statute or ordinance;
    (c) Violation of any provision of the Domestic Volunteer Service Act 
of 1973, as amended, or any ACTION policy, regulation, or instruction;
    (d) Intentional false statement, omission, fraud, or deception in 
obtaining selection as a Volunteer; or
    (e) Refusal to accept Volunteer Placement.



Sec. 1210.2-2  Procedure for deselection.

    (a) The Regional Director or designee shall notify the Trainee in 
writing that ACTION intends to deselect the Trainee. The notice must 
contain the reasons for the deselection and indicate that the Trainee 
has 5 days to appeal.
    (b) The Trainee is placed on Administrative Hold at the time of the 
notice of deselection.
    (c) The Trainee has 5 days after receipt of the notice to appeal in 
writing to the Regional Director, or designee specified in the notice, 
furnishing any supportive documentation. In the appeal letter, the 
Trainee may request an opportunity to present his or her case in person.
    (d) If the Trainee does not respond to the notice, deselection 
becomes effective at the expiration of the Trainee's time to appeal.
    (e) Within 5 days after receiving the Trainee's appeal, if no 
personal presentation is requested, the Regional Director or designee 
must issue a decision. If a personal presentation is requested, the 
Regional Director or designee must schedule it within 5 days, and must 
issue a decision 5 days after such presentation. In either case, the 
decision of

[[Page 33]]

the Regional Director or designee is final.



              Subpart C--VISTA Volunteer Early Termination



Sec. 1210.3-1  Grounds for termination.

    ACTION may terminate or suspend a Volunteer based on the Volunteer's 
conduct for the following reasons:
    (a) Conviction of any criminal offense under Federal, State, or 
local statute or ordinance;
    (b) Violation of any provision of the Domestic Volunteer Service Act 
of 1973, as amended, or any ACTION policy, regulation, or instruction;
    (c) Failure refusal or inability to perform prescribed project 
duties as outlined in the Project Narrative and/or volunteer assignment 
description and as directed by the sponsoring organization to which the 
Volunteer is assigned;
    (d) Involvement in activities which substantially interfere with the 
Volunteer's performance of project duties;
    (e) Intentional false statement, omission, fraud, or deception in 
obtaining selection as a Volunteer;
    (f) Any conduct on the part of the Volunteer which substantially 
diminishes his or her effectiveness as a VISTA Volunteer; or
    (g) Unsatisfactory performance of Volunteer assignment.



Sec. 1210.3-2  Removal from project.

    (a) Removal of a Volunteer from the project assignment may be 
requested and obtained by a written request supported by a statement of 
reason by:
    (1) The Governor or chief executive officer of the State or similar 
jurisdiction in which the Volunteer is assigned or,
    (2) The sponsoring organization. The sole responsibility for 
terminating or transferring a Volunteer rests with the ACTION Agency.
    (b) A request for removal of a Volunteer must be submitted to the 
ACTION State Director, who will in turn notify the Volunteer of the 
request. The State Director, after discussions with the Volunteer and in 
consultation with the Regional Director, if necessary, has 15 days to 
attempt to resolve the situation with the sponsor or the Governor's 
office. If the situation is not resolved at the end of the 15 day 
period, the Volunteer will be removed from the project and placed on 
Administrative Hold, pending a decision as set forth in paragraph (c) of 
this section.
    (c) The State office will take one of the following actions 
concerning a Volunteer who has been removed from a project assignment:
    (1) Accept the Volunteer's resignation;
    (2) If removal was requested for reasons other than those listed in 
Sec. 1210.3-1, ACTION will attempt to place the Volunteer on another 
project. If reassignment is not possible, the Volunteer will be 
terminated for lack of suitable assignment, and he or she will be given 
special consideration for reinstatement; or
    (3) If removal from the project is approved based on any of the 
grounds for early termination as set forth in Sec. 1210.3-1, the 
Volunteer may appeal the termination grounds as detailed in subpart C of 
this part to establish whether such termination is supported by 
sufficient evidence. If ACTION determines that the removal based on 
grounds detailed in Sec. 1210.3-1 is not established by adequate 
evidence, then the procedures outlined in Sec. 1210.3-2(c)(2) will be 
followed.
    (d) A Volunteer's removal during a term of service may also occur as 
a result of either the termination of, or refusal to renew, the 
Memorandum of Agreement between ACTION and the sponsoring organization, 
or the termination or completion of the initial Volunteer assignment. In 
such cases, the Volunteer will be placed in Administrative Hold status 
while the Regional Office attempts to reassign the Volunteer to another 
project. If no appropriate reassignment within the Region is found 
within the Administrative Hold period, the Volunteer will be terminated 
but will receive special consideration for reinstatement as soon as an 
appropriate assignment becomes available. If appropriate reassignment is 
offered the Volunteer and declined, ACTION has no obligation to offer 
additional or alternative assignments.

[[Page 34]]



Sec. 1210.3-3  Suspension.

    (a) The ACTION State Director may suspend a Volunteer for up to 30 
days in order to determine whether sufficient evidence exists to start 
termination proceedings against the Volunteer. Suspension is not 
warranted if the State Director determines that sufficient grounds 
already exist for the initiation of termination. In that event, the 
termination procedures contained in Sec. 1210.3-4 will be followed.
    (b) Notice of suspension may be written or verbal and is effective 
upon delivery to the Volunteer. Within 3 days after initiation of the 
suspension, the Volunteer will receive a written notice of suspension 
setting forth in specific detail the reason for the suspension. During 
the suspension period the Volunteer may not engage in project 
activities, but will continue to receive all allowances, including 
stipend.
    (c) At the end of the suspension period, the Volunteer must either 
be reassigned to a project, or termination proceedings must be 
initiated.



Sec. 1210.3-4  Initiation of termination.

    (a) Opportunity for Resignation. In instances where ACTION has 
reason to believe that a Volunteer is subject to termination for any of 
the grounds cited in Sec. 1210.3-1, an ACTION staff member will discuss 
the matter with the Volunteer. If, after the discussion, the staff 
member believes that grounds for termination exist, the Volunteer will 
be given an opportunity to resign. If the Volunteer chooses not to 
resign, the administrative procedures outlined below will be followed.
    (b) Notification of Proposed Termination. The Volunteer will be 
notified, in writing by certified mail, of ACTION's intent to terminate 
him or her by the ACTION State Director at least 15 days in advance of 
the proposed termination date. The letter must give the reasons for 
termination, and notify the Volunteer that he or she has 10 days within 
which to answer in writing and to furnish any affidavits or written 
material. This answer must be submitted to the ACTION State Director or 
a designee identified in the notice of proposed termination.
    (c) Review and Notice of Decision. (1) Within 5 working days after 
the date of receipt of the Volunteer's answer, the State Director or 
designee will send a written Notice of Decision to the Volunteer by 
certified mail. (If no answer is received from the Volunteer within the 
time specified, the State Director or designee will send such notice 
within 5 days after the expiration of the Volunteer's time to answer.)
    (2) If the decision is to terminate the Volunteer, the Notice will 
set forth the reasons for the decision, the effective date of 
termination (which, if the Volunteer has filed an answer, may not be 
earlier than 10 days after the date of the Notice of Decision), and the 
fact that the Volunteer has 10 days in which to submit a written appeal 
to the Regional Director.
    (3) A Volunteer who has not filed an answer pursuant to the 
procedures outlined above is not entitled to appeal the decision or 
request a hearing and may be terminated on the date of the Notice.
    (d) Allowances and Project Activities. (1) A Volunteer who files an 
answer within the 10 days allowed by Sec. 1210.3-4(b) with the State 
Director or designee following receipt of the notice of proposed 
termination, will be placed in Administrative Hold status, and may 
continue to receive regular allowances, but no stipend, in accordance 
with ACTION policy, until the appeal is finally decided. The Volunteer 
may not engage in any project related activities during this time.
    (2) If the proposed termination is reversed, the Volunteer's stipend 
and any other allowances lost during the period of review will be 
reinstated retroactively.



Sec. 1210.3-5  Preparation for appeal.

    (a) Entitlement to Representation. A Volunteer may be accompanied, 
represented and advised by a representative of the Volunteer's own 
choice at any stage of the appeal. A person chosen by the Volunteer must 
be willing to act as representative and not be disqualified because of 
conflict of position.
    (b) Time for Preparation and Presentation. (1) A Volunteer's 
representative, if a Volunteer or an employee of ACTION, must be given a 
reasonable

[[Page 35]]

amount of time off from assignment to present the appeal.
    (2) ACTION will not pay travel expenses or per diem travel 
allowances for either a Volunteer or the Volunteer's representative in 
connection with the preparation of the appeal, except to attend the 
hearing as provided in Sec. 1210.3-7(c)(5).
    (c) Access to Agency Records. (1) A Volunteer is entitled to review 
any material in his or her official Volunteer folder and any relevant 
Agency documents to the extent permitted by the Privacy Act and the 
Freedom of Information Act, (5 U.S.C. 552a; 5 U.S.C. 552). Examples of 
documents which may be withheld from Volunteers include references 
obtained under a pledge of confidentiality, official Volunteer folders 
of other Volunteers and privileged intra-Agency memoranda.
    (2) A Volunteer may review relevant documents in the possession of a 
sponsor to the same extent ACTION would be entitled to review them.



Sec. 1210.3-6  Appeal of termination.

    (a) Appeal to Regional Director. A Volunteer has 10 days from the 
Notice of Decision issued by the State Director or designee in which to 
appeal to the Regional Director. The appeal must be in writing and 
specify the reasons for the Volunteer's disagreement with the decision. 
The Regional Director has 10 days in which to render a written decision 
on the Volunteer's appeal, indicating the reason for the decision. In 
notifying the Volunteer of the decision, the Regional Director must also 
inform the Volunteer of his or her opportunity to request the 
appointment of a Hearing Examiner and the procedure to be followed.
    (b) Referral to Hearing Examiner. If the Volunteer is dissatisfied 
with the decision of the Regional Director, the Volunteer has 5 days in 
which to request the appointment of a Hearing Examiner. The Regional 
Director must act on that request within 5 days. The Hearing Examiner 
must possess the qualifications specified in Appendix A to this part, 
and may not be an employee of ACTION unless his or her principal duties 
are those of Hearing Examiner.



Sec. 1210.3-7  Inquiry by Hearing Examiner.

    (a) Scope of Inquiry. (1) The Examiner shall conduct an inquiry of a 
nature and scope appropriate to the issues involved in the termination. 
If the Examiner determines that the termination involves relevant 
disputed issues of fact, the Examiner must hold a hearing unless it is 
waived by the Volunteer. If the Examiner determines that the termination 
does not involve relevant disputed issues of facts, the Examiner need 
not hold a hearing, but must provide the parties an opportunity for oral 
presentation of their respective positions. At the Examiner's 
discretion, the inquiry may include:
    (i) The securing of documentary evidence;
    (ii) Personal interviews, including telephone interviews;
    (iii) Group meetings; or
    (iv) Affidavits, written interrogatories or depositions.
    (2) The Examiner's inquiry shall commence within 7 days after 
referral by the Regional Director. The Examiner shall issue a report as 
soon as possible, but within 30 days after referral, except when a 
hearing is held. If hearing is held, the Examiner shall issue a report 
within 45 days after the referral.
    (b) Conduct of Hearing. If a hearing is held, the conduct of the 
hearing and production of witnesses shall conform with the following 
requirements:
    (1) The hearing shall be held at a time and place determined by the 
Examiner who shall consider the convenience of parties and witnesses and 
expense to the Government in making the decision.
    (2) Ordinarily, attendance at the hearing will be limited to persons 
determined by the Examiner to have a direct connection with it. If 
requested by the Volunteer, the Examiner must open the hearing to the 
public.
    (3) The hearing shall be conducted so as to bring out pertinent 
facts, including the production of pertinent records.
    (4) Rules of evidence shall not be applied strictly, but the 
Examiner may exclude irrelevant or unduly repetitious testimony or 
evidence.
    (5) Decisions on the admissibility of evidence or testimony shall be 
made by the Examiner.

[[Page 36]]

    (6) Testimony shall be under oath or affirmation, administered by 
the Examiner.
    (7) The Examiner shall give the parties an opportunity to present 
oral and written testimony that is relevant and material, and to cross-
examine witnesses who appear to testify.
    (8) The Examiner may exclude any person from the hearing for conduct 
that obstructs the hearing.
    (c) Witnesses. (1) All parties are entitled to produce witnesses.
    (2) Volunteers, employees of a sponsor, and employees of ACTION 
shall be made available as witnesses when requested by the Examiner. The 
Examiner may request witnesses on his or her own initiative. Parties 
shall furnish to the Examiner and to opposing parties a list of proposed 
witnesses, and an explanation of what the testimony of each is expected 
to show, at least 10 days before the date of the hearing. The Examiner 
may waive the time limit in appropriate circumstances.
    (3) Employees of ACTION shall remain in a duty status during the 
time they are made available as witnesses.
    (4) Volunteers, employees and any other persons who serve as 
witnesses shall be free from coercion, discrimination, or reprisal for 
presenting their testimony.
    (5) The Examiner must authorize payment of travel expense and per 
diem at standard Government rates for the Volunteer and a representative 
to attend the hearing.
    (6) The Examiner may authorize payment of travel expense and per 
diem at standard Government rates for other necessary witnesses to 
attend the hearing if he or she determines that the required testimony 
cannot be satisfactorily obtained by affidavit, written interrogatories 
or deposition at less cost.
    (d) Report of Hearing. (1) The Examiner shall determine how any 
hearing shall be reported and shall have either a verbatim transcript or 
written summary of the hearing prepared, which shall include all 
pertinent documents and exhibits submitted and accepted. If the hearing 
is reported verbatim, the Examiner shall make the transcript a part of 
the record of the proceedings.
    (2) If the hearing is not reported verbatim, a suitable summary of 
pertinent portions of the testimony shall be made part of the record of 
proceedings. When agreed to in writing, the summary constitutes the 
report of the hearing. If the Examiner and the parties fail to agree on 
the hearing summary, the parties are entitled to submit written 
exceptions to any part of the summary, and these written exceptions and 
the summary will constitute the report of the hearing and shall be made 
part of the record of proceedings.
    (3) The Volunteer may make a recording of the hearing at the 
Volunteer's own expense if no verbatim transcript is made.



Sec. 1210.3-8  Termination file and Examiner's report.

    (a) Preparation and Content. The Examiner shall establish a 
termination file containing documents related to the termination, 
including statements of witnesses, records or copies thereof, and the 
report of the hearing when a hearing was held. The Examiner shall also 
prepare a report of findings and recommendations which shall be made 
part of the termination file.
    (b) Review by Volunteer. On completion of the termination file, the 
Examiner shall make it available to the Volunteer and representative for 
review and comment before submission to the Director of VISTA. Any 
comments by the Volunteer or representative should be submitted to the 
Hearing Examiner for inclusion in the termination file not later than 5 
days after the file is made available to them. The comments should 
identify those parts of the Examiner's report which support the appeal.
    (c) Submission of termination file. Immediately upon receiving the 
comments from the Volunteer the Hearing Examiner shall submit the 
termination file to the Director of VISTA.



Sec. 1210.3-9  Decision by Director of VISTA.

    The Director of VISTA shall issue a written decision, including a 
statement of the basis for the decision, within 10 days after receipt of 
the termination file. The decision of the Director of VISTA is the final 
Agency decision.

[[Page 37]]



Sec. 1210.3-10  Reinstatement of Volunteer.

    (a) If the Regional Director or Director of VISTA reinstates the 
Volunteer, the Regional Director may at his or her discretion reassign 
the Volunteer to the Volunteer's previous project or to another project. 
The Regional Director, in making such a decision, must request the 
Volunteer's views, but has the final decision on the Volunteer's 
placement.
    (b) If the Volunteer's termination is reversed, stipend and other 
allowances lost during the appeal period will be paid retroactively.



Sec. 1210.3-11  Disposition of termination and appeal files.

    All termination and appeal files shall be forwarded to the Director 
of VISTA after a final decision has been made and are subject to the 
provisions of the Privacy Act and Freedom of Information Act. No part of 
any successful termination appeal may be made part of, or included in, a 
Volunteer's official folder.



            Subpart D--National Grant Trainees and Volunteers



Sec. 1210.4  Early termination procedures for National Grant Trainees and Volunteers.

    Trainees and Volunteers serving in the National Grant Program as 
defined in Sec. 1210.1-3(e) will be subject to the same termination 
procedure as standard VISTA Trainees and Volunteers with the following 
exceptions:
    (a) For Trainees, the deselection procedure, [See Sec. 1210.2-2] 
will be handled by the Project Manager in ACTION/Headquarters.
    (b) The Initiation of termination, [See Sec. 1210.3-4 (a) and (b)] 
will be handled by the VISTA Project Manager in ACTION/Headquarters, 
with the concurrence of the appropriate State Director. The Review and 
Notice of Decision, [See Sec. 1210.3-4(c)] will be handled by the VISTA 
Project Manager in ACTION/Headquarters.
    (c) The Appeal of termination, [See Sec. 1210.3-6(a)] will be 
handled by the Chief of VISTA Branch and not the Regional Director.
    (d) The final decision on a Volunteer appeal will be made by the 
Director of VISTA as provided in Sec. 1210.3.

             Appendix A to Part 1210--Standard for Examiners

    (a) An Examiner must meet the requirements specified in either 
paragraph (1), (2), (3), or (4) of this appendix:
    (1)(a) Current employment in Grades GS-12 or equivalent, or above;
    (b) Satisfactory completion of a specialized course of training 
prescribed by the Office of Personnel Management for Examiners;
    (c) At least four years of progressively responsible experience in 
administrative, managerial, professional, investigative, or technical 
work which has demonstrated the possession of:
    (i) The personal attributes essential to the effective performance 
of the duties of an Examiner, including integrity, discretion, 
reliability, objectivity, impartiality, resourcefulness, and emotional 
stability.
    (ii) A high degree of ability to:
    --Identify and select appropriate sources of information; collect, 
organize, analyze and evaluate information; and arrive at sound 
conclusions on the basis of that information;
    --Analyze situations; make an objective and logical determination of 
the pertinent facts; evaluate the facts; and develop practical 
recommendations or decisions on the basis of facts;
    --Recognize the causes of complex problems and apply mature judgment 
in assessing the practical implications of alternative solutions to 
those problems;
    --Interpret and apply regulations and other complex written 
material;
    --Communicate effectively orally and in writing, including the 
ability to prepare clear and concise written reports; and
    --Deal effectively with individuals and groups, including the 
ability to gain the cooperation and confidence of others.
    (iii) A good working knowledge of:
    --The relationship between Volunteer administration and overall 
management concerns; and
    --The principles, systems, methods and administrative machinery for 
accomplishing the work of an organization.
    (2) Designation as an arbitrator on a panel of arbitrators 
maintained by either the Federal Mediation and Conciliation Service or 
the American Arbitration Association.
    (3) Current or former employment as, or current eligibility on the 
Office of Personnel Management's register for Hearing Examiner, GS-935-
0.
    (4) Membership in good standing in the National Academy of 
Arbitrators.
    (b) A former Federal employee who, at the time of leaving the 
Federal service, was in Grade GS-12 or equivalent, or above, and

[[Page 38]]

who meets all the requirements specified for an Examiner except 
completion of the prescribed training course, may be used as an Examiner 
upon satisfactory completion of the training course.



PART 1211--VOLUNTEER GRIEVANCE PROCEDURES--Table of Contents




Sec.
1211.1-1  Purpose.
1211.1-2  Applicability.
1211.1-3  Definitions.
1211.1-4  Policy.
1211.1-5  Matters not covered.
1211.1-6  Freedom to initiate grievances.
1211.1-7  Entitlement to representation.
1211.1-8  Time for preparation and presentation.
1211.1-9  Access to agency records.
1211.1-10  Informal grievance procedure.
1211.1-11  Initiation of formal grievance procedure.
1211.1-12  Investigation by Grievance Examiner.
1211.1-13  Grievance file and examiner's report.
1211.1-14  Final determination by Director of VISTA.
1211.1-15  Disposition of grievance appeal files.
1211.1-16  Grievance procedure for National VISTA Grant Volunteers.

Appendix A to Part 1211--Standards for Examiners

    Authority: Secs. 104(d), 402(14), 420, Pub. L. 93-113, 87 Stat. 398, 
407, and 414.

    Source: 45 FR 39271, June 10, 1980, unless otherwise noted.



Sec. 1211.1-1  Purpose.

    This part establishes procedures under which certain volunteers 
enrolled under Pub. L. 93-113 may present and obtain resolution of 
grievances.



Sec. 1211.1-2  Applicability.

    This part applies to all volunteers enrolled under part A of title I 
of the Domestic Volunteer Service Act of 1973, as amended, Pub. L. 93-
113, (42 U.S.C. 4951 et seq.).



Sec. 1211.1-3  Definitions.

    (a) Volunteer means a person enrolled and currently serving as a 
full-time volunteer under part A of title I of the Domestic Volunteer 
Service Act of 1973. For the purpose of this part, a volunteer whose 
service has terminated shall be deemed to be a volunteer for a period of 
90 days thereafter.
    (b) Grievance means a matter arising out of, and directly affecting, 
the volunteer's work situation, or a violation of those regulations 
governing the terms and conditions of service resulting in the denial or 
infringement of a right or benefit to the grieving volunteer. Terms and 
conditions of service refer to those rights and privileges accorded the 
volunteer either through statute, Agency regulation, or Agency policy.
    (1) The relief requested must be directed toward the correction of 
the matter involving the affected individual volunteer or the affected 
group of volunteers and may request the revision of existing policies 
and procedures to ensure against similar occurrences in the future. 
Requests for relief by more than one volunteer arising from a common 
cause within one region may be treated as a single grievance. The 
following are examples of grievable matters:
    (i) A volunteer is assigned to an area of harsh climate where 
special clothing is necessary and not already possessed by the 
volunteer. A request for a special allowance for such clothing is 
arbitrarily refused.
    (ii) A volunteer submits a request for reimbursement for 
transportation costs incurred while on authorized emergency leave which 
is denied.
    (iii) The project sponsor fails to provide adequate support to the 
volunteer necessary for that volunteer to perform the assigned work, 
such as the sponsor's failure to provide materials to the volunteer 
which is necessary for the performance of the volunteer's work.
    (c) State Program Officer means that ACTION official who is directly 
responsible at the first level for the project in which the volunteer is 
serving.
    (d) Sponsor means a public or private nonprofit agency to which 
ACTION has assigned volunteers.
    (e) Grievance Examiner or Examiner means a person having the 
qualifications described in Appendix A who is appointed to conduct an 
inquiry or hearing with respect to a grievance.
    (f) National VISTA Grants Program means a program operated under 
part A, title I of the Domestic Volunteer

[[Page 39]]

Service Act in which ACTION awards a grant to a national grantee to 
operate a VISTA Volunteer program on a national or multi-regional basis.
    (g) Local component means a local office or project affiliate of a 
national grantee which has VISTA Volunteers assigned to it under the 
National VISTA Grants Program.
    (h) The Act means the Domestic Volunteer Service Act of 1973, Pub. 
L. 93-113, (42 U.S.C. 4951 et seq.), as amended.



Sec. 1211.1-4  Policy.

    It is ACTION's policy to provide volunteers the widest latitude to 
present their grievances and concerns to appropriate officials of ACTION 
and of sponsoring organizations. This regulation is designed to assure 
that the rights of individual volunteers are recognized and to provide 
formal ways for them to seek redress with confidence that they will 
obtain just treatment.



Sec. 1211.1-5  Matters not covered.

    Matters not within the definition of a grievance as defined in 
Sec. 1211.1-3(b) are not eligible for processing under this procedure. 
The following are specific examples of excluded areas and are not 
intended as a complete listing of the matters excluded by this part:
    (a) The establishment of a volunteer project, its continuance or 
discontinuance, the number of volunteers assigned to it, increases or 
decreases in the level of support provided to a project, suspension or 
termination of a project, or selection and retention of project staff.
    (b) Matters for which a separate administrative procedure is 
provided.
    (c) The content of any law, published rule, regulation, policy or 
procedure.
    (d) Matters which are, by law, subject to final administrative 
review outside ACTION.
    (e) Actions taken in compliance with the terms of a contract, grant, 
or other agreement.
    (f) The internal management of the ACTION Agency unless such 
management is specifically shown to individually and directly affect the 
volunteer's work situation or the terms and conditions of service as 
defined in Sec. 1211.1-3(b).



Sec. 1211.1-6  Freedom to initiate grievances.

    The initiation of a grievance shall not be construed as reflecting 
on a volunteer's standing, performance or desirability as a volunteer. 
ACTION intends that each supervisor and sponsor, as well as ACTION and 
its employees, maintain a healthy atmosphere in which a volunteer can 
speak freely and have frank discussions of problems. A volunteer who 
initiates a grievance shall not as a result of such an action be 
subjected to restraint, interference, coercion, discrimination or 
reprisal.



Sec. 1211.1-7  Entitlement to representation.

    A volunteer may be accompanied, represented, and advised by a 
representative of the volunteer's own choice at any stage of the 
proceeding. The volunteer shall designate his or her representative in 
writing. A person chosen by the volunteer must be willing to act as 
representative and have no conflict between his or her position and the 
subject matter of the grievance.



Sec. 1211.1-8  Time for preparation and presentation.

    (a) Both a volunteer and a volunteer's representative, if another 
volunteer or an employee of ACTION, must be given a reasonable amount of 
administrative leave from their assignments to present a grievance or 
appeal.
    (b) ACTION will not pay travel expense or per diem travel allowances 
for either a volunteer or his or her representative in connection with 
the preparation of a grievance or appeal, except in connection with a 
hearing and the examination of the grievant file as provided in 
Sec. 1211.1-12(c).



Sec. 1211.1-9  Access to agency records.

    (a) A volunteer is entitled to review any material in his or her 
official volunteer folder and any relevant Agency documents to the 
extent permitted by the Freedom of Information Act and the Privacy Act, 
as amended, 5 U.S.C. 552, U.S.C. 552a. Examples of documents which may 
be withheld from volunteers include references obtained

[[Page 40]]

under a pledge of confidentiality, official volunteer folders of other 
volunteers, and privileged intra-agency documents.
    (b) A volunteer may review relevant documents in the possession of a 
sponsor to the extent such documents are disclosable under the Freedom 
of Information Act and Privacy Act.



Sec. 1211.1-10  Informal grievance procedure.

    (a) Initiation of grievance. A volunteer may initiate a grievance 
within 15 calendar days after the event giving rise to the grievance 
occurs, or within 15 calendar days after becoming aware of the event. A 
grievance arising out of a continuing condition or practice that 
individually affects the volunteer may be brought at any time. A 
volunteer initiates a grievance by presenting it in writing to the chief 
executive officer of the sponsor, or the representative designated to 
receive grievances from volunteers. The designated representative may 
not be the immediate supervisor of volunteers assigned to the sponsor. 
The chief executive officer of the sponsor or the designated 
representative shall respond in writing to the grievance within five (5) 
working days after receipt. The chief executive officer or designee may 
not refuse to respond to a complaint on the basis that it is not a 
grievance as defined in Sec. 1211.1-3(b), or that it is excluded from 
coverage under Sec. 1211.1-5, but may, in the written response, refuse 
to grant the relief requested on either of these grounds.
    If the grievance involves a matter over which the sponsor has no 
control, or if the chief executive officer is the immediate supervisor 
of the volunteer, the procedures described in this section may be 
omitted, and the volunteer may present the grievance in writing directly 
to the State Director or designee as described in paragraph (b) of this 
section within the time limits specified in this paragraph (a).
    (b) Consideration by ACTION State Director or designee. If the 
matter is not resolved to the volunteer's satisfaction by the sponsor's 
chief executive officer, the volunteer may submit the grievance in 
writing to the ACTION State Director or designee within five (5) working 
days after receipt of the decision of the sponsor's chief executive 
officer. The State Director or designee may not refuse to receive a 
complaint, even if he or she believes it does not constitute a 
grievance, and shall respond to it in writing within five (5) working 
days after receipt. The response may indicate that the matter is not 
grievable. If the State Director or designee fails to meet the time 
limit for response, the volunteer may initiate a formal grievance.
    (c) Discussion. All parties to the informal grievance procedure must 
be prepared to participate in full discussion of the grievance, and to 
permit the participation of others who may have knowledge of the 
circumstances of the grievance in the discussion. State Program Officers 
and other ACTION employees may participate in discussions and provide 
guidance with respect to ACTION policies and procedures, at the request 
of any party, even prior to submission of a grievance to them.
    (d) Sponsor grievance procedure. A sponsor may substitute its own 
grievance procedure for the procedure described in paragraph (a) of this 
section. Any such procedure must provide the volunteer with an 
opportunity to present a grievance at least as comprehensive as that 
contained in this section, must meet the time limits of this section, 
and must be provided in writing to all volunteers. In order to utilize 
its own grievance procedures, the sponsor must obtain approval of the 
procedure from the ACTION State Director and file a copy of this 
approved procedure with the State Office.



Sec. 1211.1-11  Initiation of formal grievance procedure.

    (a) Submission of grievance to Regional Director. If a volunteer is 
dissatisfied with the response of the State Director or designee 
required by Sec. 1211.1-10(b), he or she may present the grievance in 
writing to the Regional Director. To be eligible for the formal 
grievance procedure, the volunteer must have completed action under the 
informal procedure contained in Sec. 1211.1-10 or have alleged that the 
State Director or designee exceeded the time specified for response.

[[Page 41]]

    (b) Contents of grievance. The volunteer's grievance must be in 
writing, contain sufficient detail to identify the subject matter of the 
grievance, specify the relief requested, and be signed by the volunteer 
or a person designated in writing by the volunteer to be the 
representative for the purpose of the grievance.
    (c) Time limit. The volunteer must submit the grievance to the 
Regional Director or designee no later than 15 calendar days after 
receipt of the informal response by the State Director or designee. If 
no response is received by the volunteer 15 calendar days after the 
grievance is received by the State Director or designee, the volunteer 
may submit the grievance directly to the Regional Director or designee 
for consideration.
    (d) Within ten (10) working days of the receipt of the grievance, 
the Regional Director or designee shall, in whole or in part, either 
decide it on its merits or reject the grievance. A grievance may be 
rejected, in whole or in part, for the following reasons:
    (1) It was not filed within the time limit specified in paragraph 
(c) of this section, or
    (2) The grievance consists of matters not contained within the 
definition of a grievance.
    (e) Rejection of a grievance by the Regional Director or designee 
may be appealed by the volunteer within ten (10) days of receipt of the 
notice to the Office of General Counsel. The Office shall immediately 
request the grievance file from the Regional Director and, within five 
(5) working days of receipt of it, determine the appropriateness of the 
rejection. If the grievance was properly rejected by the Regional 
Director, the Office shall so notify the volunteer of its opinion and 
the reasons supporting it, and that such rejection is the final Agency 
decision in the matter. If the Office determines that the grievance was 
improperly rejected, it shall return the grievance to the Regional 
Director for a determination on its merits by the Regional Director. 
Within ten (10) working days of such notification and receipt of the 
grievance file, the Regional Director or designee shall notify the 
volunteer in writing of the decision on the merits and specify the 
grounds for the decision and of the volunteer's right to appeal.
    (f) Time Limit. If a volunteer is dissatisfied with the decision of 
the Regional Director or designee on the merits of the grievance, he or 
she shall notify the Regional Director within five (5) calendar days 
from receipt of the decision and request the appointment of an Examiner. 
If the volunteer receives no response from the Regional Director or 
Office of General Counsel as required by paragraphs (d) and (e) of this 
section within five (5) calendar days after the prescribed time limits, 
the volunteer may request in writing that the Regional Director appoint 
a Grievance Examiner. Upon receipt of this request, the Regional 
Director or designee shall appoint within five (5) calendar days an 
Examiner who shall possess the qualifications specified in Appendix A to 
this part.



Sec. 1211.1-12  Investigation by Grievance Examiner.

    (a) Scope of investigation. The Examiner shall conduct an 
investigation of a nature and scope appropriate to the issues involved 
in the grievance.
    Unless waived by the volunteer, a hearing must be held if the 
Examiner finds that the grievance involves disputed questions of fact 
that go to the heart of the agency determination. Only those facts found 
necessary by the Examiner on which to base his or her findings go to the 
heart of the Agency determination.
    If the grievance does not involve such disputed questions of fact, 
or if the volunteer waives a hearing, the Examiner need not hold a 
hearing but must provide the parties an opportunity for presentation of 
their respective positions. At the Examiner's discretion, the 
investigation may include:
    (1) The securing of documentary evidence,
    (2) Personal interviews, including telephone interviews,
    (3) Group meetings,
    (4) Affidavits, written interrogatories or depositions.
    (b) Conduct of Hearing. If a hearing is held, the conduct of the 
hearing and production of witnesses shall conform with the following 
requirements:

[[Page 42]]

    (1) The hearing shall be held at a time and place determined by the 
Examiner who shall consider the convenience of parties and witnesses and 
expense to the Government in making his or her decision.
    (2) Attendance at the hearing will be limited to persons determined 
by the Examiner to have a direct connection with the grievance. If 
requested by the volunteer, the Examiner must open the hearing to the 
public.
    (3) The hearing shall be conducted so as to bring out pertinent 
facts, including the production of pertinent records.
    (4) Formal rules of evidence shall not be applied strictly, but the 
Examiner may exclude irrelevant or unduly repetitious testimony or 
evidence.
    (5) Decisions on the admissibility of evidence or testimony shall be 
made by the Examiner.
    (6) Testimony shall be under oath or affirmation, administered by 
the Examiner.
    (7) The Examiner shall give the parties an opportunity to present 
oral and written testimony that is relevant and material, and to cross-
examine witnesses who testify.
    (8) The Examiner may exclude any person from the hearing for conduct 
that obstructs the hearing.
    (c) Witnesses. (1) All parties are entitled to produce witnesses.
    (2) Volunteers, employees of a sponsor, and employees of ACTION 
shall be made available as witnesses when requested by the Examiner. The 
Examiner may request witnesses on his or her initiative. Parties shall 
furnish to the Examiner and to opposing parties a list of proposed 
witnesses, and an explanation of what the testimony of each is expected 
to show, at least ten (10) calendar days before the date of the hearing. 
The Examiner may waive the time limit in appropriate circumstances.
    (3) Employees of ACTION shall remain in a duty status during the 
time they are made available as witnesses.
    (4) Volunteers, employees and any other persons who serve as 
witnesses shall be free from coercion, discrimination or reprisal for 
presenting their testimony.
    (5) The Examiner must authorize payment of travel expenses and per 
diem at standard Government rates for the volunteer and the 
representative to attend the hearing. Payment of travel expenses and per 
diem at standard Government rates for other witnesses to attend the 
hearing are authorized only after the Examiner determines that the 
required testimony cannot be satisfactorily obtained by affidavit, 
written interrogatories, or deposition, at a lesser cost.
    (d) Recording of Hearing. A grievant may make a recording of the 
hearing at his or her own expense if no verbatim transcript is made. 
Such a recording is in no way to be treated as the official transcript 
of the hearing.
    (e) Report of Hearing. The Examiner shall normally prepare a written 
summary of the hearing which shall include all documents and exhibits 
submitted to and accepted by the Examiner during the course of the 
grievance. An Examiner may require a verbatim transcript if he or she 
determines that the grievance is so complex as to require such a 
transcript. If the hearing is reported verbatim, the Examiner shall make 
the transcript a part of the record of the proceedings. If the hearing 
is not reported verbatim, a suitable summary of pertinent portions of 
the testimony shall be made part of the record of proceedings. In such 
cases, the summary together with exhibits shall constitute the report of 
the hearing. The parties are entitled to submit written exceptions to 
any part of the summary, and these written exceptions shall be made part 
of the record of proceedings.



Sec. 1211.1-13  Grievance file and examiner's report.

    (a) Preparation and content. The Examiner shall establish a 
grievance file containing all documents related to the grievance, 
including statements of witnesses, records or copies thereof, and the 
report of the hearing when a hearing was held. The file shall also 
contain the Examiner's report of findings and recommendations.
    (b) Review by volunteer. On completion of the inquiry, the Examiner 
shall make the grievance file available to the volunteer and the 
representative, if any, for review and comment. Their coments, if any, 
shall be submitted to

[[Page 43]]

the Examiner within five (5) calendar days after the file is made 
available and shall be included in the file.
    (c) Examiner's report. After the volunteer has been given an 
opportunity to review the grievance file, the Examiner shall submit the 
complete grievance file to the Director of VISTA.



Sec. 1211.1-14  Final determination by Director of VISTA.

    The Director of VISTA or designee shall issue a written decision on 
the appeal to the volunteer within ten (10) working days after receipt 
of the appeal file. The decision shall include a statement of the basis 
for the determination, and shall be the final Agency decision.



Sec. 1211.1-15  Disposition of grievance appeal files.

    All grievance appeal files shall be retained by the Director of 
VISTA after the grievance has been settled, or a final decision has been 
made and implemented. No part of a grievance or appeal file may be made 
part of, or included in, a volunteer's official folder.



Sec. 1211.1-16  Grievance procedure for National VISTA Grant Volunteers.

    The grievance procedure for National VISTA Grant Volunteers shall be 
the same as that provided in this part with the following substitutions 
of officials:
    (a) Informal grievance procedure:
    (1) The initiation of an informal grievance for a National Grant 
VISTA, see Sec. 1211.1-10, shall normally be to the sponsor of the local 
component. If the grievance involves a matter solely within the control 
of the ACTION State Office, the volunteer may present the grievance to 
the State Director or designee in lieu of the local component sponsor.
    (2) If the volunteer is not satisfied with the response of the 
appropriate official (sponsor of local component, or State Director or 
designee), the volunteer may submit the grievance to the chief executive 
of the national grantee.
    (b) Formal grievance procedure:
    The Chief, VISTA Program Development Branch or designee shall 
replace the Regional Director as the official in Sec. 1211.1-11.

            Appendix A to Part 1211--Standards for Examiners

    An examiner must meet the requirements specified in either paragraph 
(1), (2), (3), or (4) of this appendix:
    (1) Current or former federal employees now or formerly in grade GS-
12 or equivalent, or above who have:
    (a) At least four (4) years of progressively responsible experience 
in administrative, managerial, professional, investigative, or technical 
work which has demonstrated the possession of:
    (i) The personal attributes essential to the effective performance 
of the duties of an Examiner, including integrity, discretion, 
reliability, objectivity, impartiality, resourcefulness, and emotional 
stability.
    (ii) A high degree of ability to:
    Identify and select appropriate sources of information; collect, 
organize, analyze, and evaluate information; and arrive at sound 
conclusions on the basis of that information;
    Analyze situations; make an objective and logical determinationn of 
the pertinent facts; evaluate the facts; and develop practicable 
recommendations or decisions on the basis of facts;
    Recognize the causes of complex problems and apply mature judgment 
in assessing the practical implications of alternative solutions to 
those problems;
    Interpret and apply regulations and other complex written material;
    Communicate effectively, orally and in writing, including the 
ability to prepare clear and concise written reports; and
    Deal effectively with individuals and groups, including the ability 
to gain the cooperation and confidence of others.
    (iii) A good working knowledge of:
    The relationship between volunteer administration and overall 
management concerns; and
    The principles, systems, methods, and administrative machinery for 
accomplishing the work of an organization.
    (2) Designation as an arbitrator on a panel of arbitrators 
maintained by either the Federal Mediation and Conciliation Service or 
the American Arbitration Association.
    (3) Current or former employment as, or current eligibility on the 
Office of Personnel Management register for Examiners
GS-935-0.
    (4) Membership in good standing in the National Academy of 
Arbitrators.



PART 1212--VOLUNTEER AGENCIES PROCEDURES FOR NATIONAL GRANT VOLUNTEERS [RESERVED]--Table of Contents




[[Page 44]]



PART 1213--ACTION COOPERATIVE VOLUNTEER PROGRAM--Table of Contents




                           Subpart A--General

Sec.
1213.1-1  Introduction.

               Subpart B--Description of Volunteer Service

1213.2-1  Enrollment and duration of service.
1213.2-2  Provisional volunteers.
1213.2-3  Extension of service and reenrollment.
1213.2-4  Living conditions.
1213.2-5  Role of the volunteer.

              Subpart C--ACTION Provided Volunteer Support

1213.3-1  Financial support.
1213.3-2  Transportation.
1213.3-3  Health support.
1213.3-4  Legal support.
1213.3-5  Insurance.
1213.3-6  Leave.
1213.3-7  Federal service.
1213.3-8  Lost property.

              Subpart D--Sponsor Provided Volunteer Support

1213.4-1  Training.
1213.4-2  Supervision.
1213.4-3  Job-related transportation.
1213.4-4  Supplies and equipment and office facilities.
1213.4-5  Emergencies.

   Subpart E--Administrative Hold--Grievances, Removal, Resignation, 
                       Suspension, and Termination

1213.5-1  Administrative hold.
1213.5-2  Volunteer grievances.
1213.5-3  Resignation.
1213.5-4  Sponsor request for removal of volunteer.
1213.5-5  Suspension and termination.

        Subpart F--Special Conditions Affecting Volunteer Service

1213.6-1  Sponsor's employment of volunteer.
1213.6-2  Nondisplacement of employees and impairment of contracts of 
          service.
1213.6-3  Nonappropriate assignments.
1213.6-4  Political activities and limitation of unlawful activities.
1213.6-5  Nondiscrimination.
1213.6-6  Religious activities.
1213.6-7  Evaluation.
1213.6-8  Limitation on labor and anti-labor activities.
1213.6-9  Loans and debts.

                        Subpart G--Miscellaneous

1213.7-1  Student loan deferrals.
1213.7-2  Death benefits.
1213.7-3  Firearms.

    Authority: Secs. 121, 122, 402 (12) and (14) and 420 of Pub. L. 93-
113, 87 Stat. 395, 400, 401, 407 and 414.

    Source: 40 FR 10670, Mar. 7, 1975, unless otherwise noted.



                           Subpart A--General



Sec. 1213.1-1  Introduction.

    (a) Section 122(a), part C, of the Domestic Volunteer Service Act of 
1973 (the Act), Pub. L. 93-113, 87 Stat. 401, authorizes the Director of 
ACTION to conduct and to make contracts for special volunteer programs 
to encourage wider volunteer participation on a full-time basis to 
strengthen and supplement efforts to meet a broad range of human, 
social, and environmental needs, particularly those related to poverty. 
The ACTION Cooperative Volunteer Program (ACV) is one of these special 
volunteer programs. It provides full-time volunteer service 
opportunities for individuals in assignments with nonprofit and public 
agency sponsors involving a broad range of human, social, and 
environmental needs, particularly those related to poverty. 
Organizations wishing to become sponsors enter into an agreement with 
ACTION to share expenses associated with ACV volunteer assignments. The 
sponsor's share consists of reimbursing ACTION for the direct costs of 
volunteer support, i.e. allowances, stipend and other direct benefits.
    (b) Section 122(b) requires that the assignment of ACV volunteers be 
on such terms and conditions as the Director shall determine.
    (c) Section 122(c) provides that the Director may provide to persons 
serving as full-time volunteers in a program of at least one year's 
duration such allowances and stipends as he determines are necessary. 
The kinds and amount of such allowances and stipends may not exceed 
those authorized to be provided to VISTA volunteers (part A, title I, 
Pub. L. 93-113).

[[Page 45]]



               Subpart B--Description of Volunteer Service



Sec. 1213.2-1  Enrollment and duration of service.

    ACTION enrolls an individual in ACV during the preservice processing 
it provides. Such enrollment is for a period comprising the time of such 
processing, ACTION preservice orientation, and a one-year assignment to 
a project.



Sec. 1213.2-2  Provisional volunteers.

    Individuals are considered to be provisional volunteers during the 
period of pre-service processing and ACTION preservice orientation. They 
have all the rights and benefits and are subject to all the duties of 
volunteers, except as expressly provided in these regulations or where 
it would appear from the language of a section of the regulations to be 
inappropriate.



Sec. 1213.2-3  Extension of service and reenrollment.

    In certain situations, a volunteer may have his period of volunteer 
service extended for not more than one year, at the request of a sponsor 
and the concurrence of the appropriate ACTION Regional Director.
    A volunteer may only be reenrolled for a period of at least one 
year. A sponsor must request the reenrollment and it must be approved by 
the appropriate ACTION Regional Director. No volunteer may serve for 
more than a total of five years in full-time volunteer programs under 
Title I of Pub. L. 93-113.
    Such extensions and reenrollments may be for the same or different 
projects and may include interregional and intraregional transfers.



Sec. 1213.2-4  Living conditions.

    To the extent practicable volunteers are expected to make a personal 
commitment to live among and at the economic level of the people served 
by the project in which the volunteer works. The sponsor will insure 
that this commitment is observed.



Sec. 1213.2-5  Role of the volunteer.

    The volunteer's assignments are carried out under the auspices of 
the sponsor. The volunteer assumes a ``live-in'' obligation carrying his 
work into all facets of community life and social activity. He is 
available for service without regard to regular working hours seven days 
a week, except for periods of approved leave.



              Subpart C--ACTION Provided Volunteer Support



Sec. 1213.3-1  Financial support.

    (a) Food and lodging. Each ACV volunteer receives from ACTION a food 
and lodging allowance approximately commensurate with the actual 
standard of living of the residents of the community to which he is 
assigned. The amount of this allowance is determined by the Regional 
Office after consultation with the sponsor.
    (b) Personal living allowance. ACTION also provides each volunteer a 
personal living allowance of $75 per month. It is intended to cover 
incidental expenses and local travel.
    (c) Adjustment allowance. At the beginning of service, a volunteer 
may receive from ACTION an adjustment allowance when necessary to cover 
the initial cost of securing and setting up living quarters. Such an 
allowance is usually provided only to volunteers who serve outside their 
home area. It is not usually available to volunteers recruited locally 
for an assignment in their home or nearby communities.
    (d) Stipend. At the conclusion of the term of service, each 
volunteer receives a stipend of $50 for each month of service on an ACV 
project. Volunteers may be authorized to make bi-weekly allotments from 
the stipend, not in excess of $12.50, in extraordinary circumstances. 
These may include allotments for obligations incurred prior to service 
for family support, insurance or loan payments and income taxes.
    (e) Provisional volunteers. Provisional volunteers do not receive 
any allowances nor do they accrue stipends. During the period they are 
provisional volunteers their food and lodging is provided by ACTION and 
they receive a nominal amount of money for living expenses.
    (f) Emergencies. In case of emergencies, ACTION may provide the 
volunteer with assistance and support to

[[Page 46]]

prevent injury or hardship to him, including a $500 advance against 
allowances and stipends due the volunteer or to be paid subsequently to 
him during his volunteer service.
    (g) No dependent support. ACTION assumes no financial responsibility 
for a non-volunteer spouse, a volunteer's children or other dependents.



Sec. 1213.3-2  Transportation.

    ACTION will be responsible for providing the volunteer with needed 
transportation for the following purposes:
    (a) To, and when appropriate, from volunteer/sponsor staging;
    (b) To the pre-service processing site, whether it is the ACTION 
Regional Office or any other designated facility;
    (c) To the project site following completion of pre-service 
processing, and at the beginning of the volunteer's terms of service;
    (d) For the return trip from the projects site to the volunteer's 
home of record following completion of service;
    (e) Whenever necessary to enable the volunteer to travel outside the 
geographic area to which he has been assigned when he does so at the 
request of the Government;
    (f) When approved in cases of emergency.
    For the purpose of paragraph (d) of this section, the term ``home of 
record'' shall be either:
    (1) The legal residence of the volunteer's parent or legal guardian 
if the volunteer had been residing with the parent or legal guardian 
immediately prior to entering ACTION service, or if the volunteer was a 
full-time student whose permanent residency was with the parent or legal 
guardian.
    (2) The residence established by the volunteer while attending 
college immediately prior to entering ACTION.
    (3) The residence established by the volunteer while employed 
immediately prior to entering ACTION.
    (4) The legal residence established by the volunteer for purposes of 
voting and/or payment of state tax.
    Each volunteer must specify a home of record at the time he is 
enrolled. Subsequent modification of the home of record may be 
authorized in certain circumstances at the discretion of the Regional 
Director.



Sec. 1213.3-3  Health support.

    ACTION provides ACV volunteers with a health benefits program at no 
cost to the volunteers.
    Coverage includes most medical and surgical costs, hospitalization, 
prescription drugs, and emergency dental care. ACTION reserves the right 
to alter the extent, or the method of providing health care for 
volunteers. In nonemergency situations, the Regional Office must clear 
hospitalization or other serious (in excess of $150) treatments.



Sec. 1213.3-4  Legal support.

    ACTION will pay certain legal expenses where volunteers are involved 
in criminal or civil judicial or administrative proceedings to the 
extent provided in part 1220.



Sec. 1213.3-5  Insurance.

    (a) ACV volunteers are covered by the Federal Employees Compensation 
Act. This provides a broad-based workmen's compensation-type coverage 
for volunteer job-related accidents and occupational sickness.
    (b) ACV volunteers are also Federal employees for the purpose of the 
Federal Tort Claims Act. Any third-party claims for injury or damage to 
property arising out of the volunteer's job-related activities will be 
treated as claims against the United States.



Sec. 1213.3-6  Leave.

    (a) Vacation leave. Once on the job for four months, an ACV 
volunteer earns one day of leave for each full month of service up to a 
maximum of seven days, including one weekend. No leave is to be granted 
during the last month of service, except for emergencies. During leave, 
the volunteer's regular support allowances are continued. No leave may 
be taken without the approval of the sponsor.
    (b) Emergency leave. Should a member of a volunteer's immediate 
family--spouse, mother, father, sister, brother, child or guardian--
become critically ill or die, emergency leave may be granted by the 
sponsor for a period of up to one week. Any additional time requires the 
approval of the ACTION Regional

[[Page 47]]

Office. It does not count against vacation leave. The volunteer will be 
paid for transportation by the fastest scheduled carrier to and from the 
emergency site and for actual travel expenses incurred, but not in 
excess of those authorized in standard government travel regulations.



Sec. 1213.3-7  Federal service.

    Section 415(c) of the Act provides that should an ACV volunteer 
subsequently enter Federal service, his period of volunteer service 
counts as a like period of Federal service for certain purposes, 
including job security and retirement benefits.



Sec. 1213.3-8  Lost property.

    (a) The Regional Director may at his discretion reimburse volunteers 
or trainees for or replace lost, damaged, or stolen property; cash 
representing certain allowances; and equipment and supplies if:
    (1) Reimbursement is essential to the volunteer's capacity to serve 
effectively in his particular assignment for the duration of his 
service, and
    (2) The loss, damage, or theft did not result from the volunteer's 
negligence.
    (b) Lost or stolen cash may be reimbursed only if it represents the 
volunteer's food and lodging or living allowance or other payments 
essential to the volunteer's service. Lost or stolen cash representing 
payment of stipend or vacation allowances will not be reimbursed.
    (c) No reimbursement will be made for luxury items, such as 
photographic or phonographic equipment or jewelry.



              Subpart D--Sponsor Provided Volunteer Support



Sec. 1213.4-1  Training.

    (a) The sponsor is fully responsible for designing and implementing 
a program of in-service training which will completely equip the 
volunteer to perform the tasks to which he has been assigned.
    (b) In-service training will be conducted by the sponsor in 
accordance with plans agreed upon during the program development 
process, and submitted to ACTION as part of the agreement. Those plans 
must be tailored to the volunteer's needs for additional skills and 
information in the performance of assigned tasks.



Sec. 1213.4-2  Supervision.

    The sponsor has the sole responsibility for providing appropriate 
supervision, leadership, and direction to the volunteers in conformance 
with the plan prepared in cooperation with ACTION and submitted with the 
project proposal. The plan is to be executed in such a manner that the 
volunteers can attain project goals within the proposed time frame.



Sec. 1213.4-3  Job-related transportation.

    The sponsor is responsible for determining the job-related 
transportation needs of the volunteer. The volunteers are expected to 
use public transportation in connection with their work whenever it is 
available and adequate. When it is not, the sponsor shall provide 
suitable private transportation, including obtaining and maintaining 
motor vehicles for the job-related use of the volunteers as appropriate. 
Whether the sponsor purchases vehicles or obtains them through a leasing 
arrangement, he is responsible for monitoring the use of those vehicles 
and restricting the use of transportation provided to volunteers to work 
on the project. The volunteer and the sponsor are jointly responsible 
for compliance with all state and local laws concerning vehicle 
registration, operator licensing, and financial responsibility on any 
private vehicles used by the volunteer, either as part of his work 
assignment or for personal convenience.



Sec. 1213.4-4  Supplies and equipment and office facilities.

    The sponsor is responsible for providing most job-related support 
involving facilities, equipment, and consumable supplies needed by the 
volunteer, including telephone and secretarial support.



Sec. 1213.4-5  Emergencies.

    In case of emergencies in which it is not possible for ACTION to 
provide a volunteer with the necessary assistance and support in time to 
prevent injury or hardship to him, the sponsor

[[Page 48]]

may furnish the needed assistance, including an advance of up to $500 
from its own funds to the volunteer. Such advances, however, should be 
cleared in advance by telephone with the ACTION Regional Director or 
designee.



   Subpart E--Administrative Hold--Grievances, Removal, Resignation, 
                       Suspension and Termination



Sec. 1213.5-1  Administrative hold.

    (a) Volunteers will be placed in Administrative Hold Status under 
the following circumstances:
    (1) No placement after training.
    (2) Pending transfer to a new project.
    (3) Leave taken for personal reasons in excess of the seven days for 
vacation leave, seven days for emergency leave, seven days for extension 
beyond three months, and fourteen days for reenrollment.
    (4) Absence from project site without authority of the sponsoring 
organization.
    (5) During termination action.
    (6) Arrest and placement in jail without bail, depending on nature 
of charges.
    (7) Removal from site at request of sponsoring organization, pending 
decision on transfer to new assignment.
    (b) Exceptions to these guidelines must be authorized by the 
Regional Director. Volunteers may be placed in Administrative Hold 
status for up to 30 days. In exceptional circumstances, the Regional 
Director may extend this period of time as appropriate. The Regional 
Director may modify any and all allowances, including stipend, when a 
volunteer is placed in Administrative Hold status.



Sec. 1213.5-2  Volunteer grievances.

    (a) At times, a volunteer will consider that he has been adversely 
affected in some matter arising out of his work situation or the terms 
and conditions of his service. The Volunteer Grievance Procedure, part 
1211, furnished to each volunteer, applies to certain of these matters. 
This procedure is applicable to situations in which the volunteer 
believes there has been a deviation from, misinterpretation or 
misapplication of laws, regulations, policies or procedures governing 
his service.
    (b) The Grievance Procedure establishes a formal and informal 
mechanism to resolve such problems. The informal mechanism aims to 
resolve disputes at the level of the sponsor and the state program 
officer. The formal part of the Grievance Procedure provides a hearing 
in certain cases and includes appeals to ACTION's national office in 
Washington.
    (c) The procedure that the sponsor employs at the informal stage of 
the ACTION Grievance Procedure will also be used for any disputes 
between the sponsor and a volunteer not involving a law or regulation or 
an ACTION policy and procedure.



Sec. 1213.5-3  Resignation.

    A volunteer may resign at any time, by notifying the sponsoring 
organization and the Regional Office. When practicable, thirty days 
advance notice should be given to insure that the departure will be only 
minimally disruptive to the project. In case of resignation, all 
outstanding advances, including unearned vacation allowances, are 
deducted from the volunteer's stipend. The volunteer receives his final 
stipend check three to five weeks after regional submission of the 
termination papers to ACTION/Washington.



Sec. 1213.5-4  Sponsor request for removal of volunteer.

    The sponsoring organization may request ACTION to remove a volunteer 
whose performance in its view is unsatisfactory at any time. Before 
resorting to a formal request for removal the sponsor should contact the 
appropriate ACTION state official to seek help in trying to resolve any 
problem with a volunteer. The sponsor may then prepare a written request 
for removal and submit it to the Regional Office. ACTION may, depending 
on the circumstances, follow one of three courses of action: (a) Suspend 
the volunteer, (b) terminate him, or (c) transfer him to another 
project.

[[Page 49]]



Sec. 1213.5-5  Suspension and termination.

    (a) Causes. ACTION may suspend or terminate a volunteer for any of 
the following reasons:
    (1) Conviction of any criminal offense under Federal, state, or 
local statute or ordinance;
    (2) Violation of any provision of the Domestic Volunteer Service Act 
of 1973, or any ACTION policy, regulation or instruction;
    (3) Failure, refusal or inability to perform prescribed project 
duties as outlined in the project proposal and directed by the 
sponsoring organization to which the volunteer is assigned;
    (4) Involvement in activities which substantially interfere with the 
volunteer's performance of his/her duties on the project;
    (5) Intentional false statement, omission, fraud, or deception in 
obtaining selection as a volunteer;
    (6) Any conduct on the part of the volunteer which substantially 
diminishes his/her effectiveness as a volunteer;
    (7) Inability to perform the project duties because of serious 
illness, medical disability, or pregnancy, as determined by the 
attending physician, in accordance with ACTION policy;
    (8) Lack of a viable job for which the volunteer is qualified if the 
initial job assignment ends or is terminated prior to completion of a 
period of service;
    (9) Unsatisfactory job performance. Procedures for the suspension 
and termination of volunteers are contained in part 1210.
    (b) Suspension. Volunteers may be suspended for up to 30 days to 
enable ACTION to determine whether termination proceedings should be 
started against the volunteer. Suspension is not warranted if sufficient 
evidence exists to start termination proceedings.
    (c) Termination of or refusal to renew ACTION/sponsoring 
organization agreement. If the Memorandum of Agreement between ACTION 
and a sponsoring organization is terminated or not renewed, a volunteer 
who is removed from the project and whose removal was not caused by 
conduct which would otherwise be grounds for termination is entitled to 
the following administrative considerations:
    (1) Reassignment to another project where possible.
    (2) If reassignment is not possible at the time of project close-
out, and if the volunteer wishes to resume service (provided that his/
her job performance has been satisfactory), he/she may, at the 
discretion of the Regional Director, receive special consideration for 
reinstatement as soon as an appropriate slot is open.

If a volunteer wishes, he/she may terminate without prejudice in the 
event that a Memorandum of Agreement between ACTION and the sponsor is 
terminated.
    (d) Deselection of a provisional volunteer. The Regional Director 
may deselect a provisional volunteer on the grounds listed in paragraph 
(a) of this section or for a failure to meet training or selection 
standards during pre-service orientation. Procedures for such 
deselection are contained in part 1210.

[40 FR 10670, Mar. 7, 1975; 46 FR 6951, Jan. 22, 1981]



        Subpart F--Special Conditions Affecting Volunteer Service



Sec. 1213.6-1  Sponsor's employment of volunteer.

    ACV volunteers make a commitment to one full year of ACTION service. 
Similarly, ACTION asks that the sponsor on his part must honor the 
spirit of that commitment and refrain from offering fully paid 
employment to volunteers during their first year of service. Volunteers 
may not perform services or duties or engage in activities for which the 
sponsor receives or requests any compensation. Volunteers may not 
receive any other compensation, directly or indirectly, from a sponsor 
while serving as a volunteer.



Sec. 1213.6-2  Nondisplacement of employees and impairment of contracts of service.

    An ACV volunteer's assignment is limited to activities that would 
not otherwise be performed by employed workers and which will not 
supplant the hiring of or result in the displacement of employed 
workers, or impair existing contracts for service. (part 1216 implements 
this provision.)

[[Page 50]]



Sec. 1213.6-3  Nonappropriate assignments.

    (a) An assignment is not appropriate for a volunteer if:
    (1) The service, duty, or activity is principally administrative or 
clerical, or
    (2) The volunteer is not directly in contact with groups or 
individuals who are to be served by the project or is not performing 
services, duties, or engaged in activities which are authorized under 
section 122(a) of the Act.



Sec. 1213.6-4  Political activities and limitation of unlawful activities.

    (a) ACV volunteers are covered by the Hatch Act to the same extent 
as Federal employees. This Act prohibits volunteers from engaging in 
partisan political activities of any sort at any and all times during 
their terms of service, including periods of official leave.
    (b) Section 403 of Pub. L. 93-113 requires that a sponsor's project 
be operated in such a manner as to avoid involvement of ACV volunteers 
in any partisan or nonpartisan political activity in an election for 
public or party office, voter transportation during elections, and voter 
registration drives.
    (c) While engaged in carrying out their duties volunteers may, as a 
part of the project, participate in lawful and nonpolitical 
demonstrations and protest activities which are approved by the sponsor 
as a part of its project activity and which are not in violation of any 
ACTION policies.



Sec. 1213.6-5  Nondiscrimination.

    Part 1203 provides regulations concerning nondiscrimination in 
ACTION programs and activities.
    (a) No person with responsibilities in the operation of an ACV 
project shall discriminate with respect to such program because of race, 
creed, belief, color, national origin, sex, age, or political 
affiliation.



Sec. 1213.6-6  Religious activities.

    Volunteers will not give religious instruction, conduct worship 
services, or engage in any other religious activity as part of their 
duties. Volunteers who serve in an institution that gives religious 
instruction or engages in other religious activities will not be used as 
replacements for regular personnel of the institution. For example, 
volunteers assigned to serve in a program conducted under the auspices 
of a church-related school may not be used as substitutes for regular 
teachers in the school. They may, however, work in new programs which 
are carried on in addition to the school's regular programs and which 
are conducted in conformance with the above restrictions.



Sec. 1213.6-7  Evaluation.

    (a) On a quarterly basis and two months prior to the termination of 
a volunteer's year of service, and at any other time which circumstances 
may dictate, ACTION may inspect that portion of a project with which the 
volunteer is involved. The purpose of the inspection will be to 
independently observe and judge the extent to which the volunteer's work 
has contributed to the objectives of the program described in the 
project proposal.
    (b) The sponsor is expected to cooperate fully with ACTION 
representatives, and ACTION will in turn review results of the 
evaluation with the sponsor.



Sec. 1213.6-8  Limitation on labor and anti-labor activities.

    Volunteers may not engage in any activities, services, or duties 
which assist any labor or anti-labor organizing activity, or related 
activity.



Sec. 1213.6-9  Loans and debts.

    (a) ACVs have the same legal and financial responsibilities as do 
all other persons. Volunteers are encouraged to pay all legal debts 
promptly to avoid creating a situation which would impair the 
volunteer's ability to function. In cases of continued financial 
irresponsibility by a volunteer to the extent of embarrassment or 
adverse reflection upon the sponsor organization's project or ACTION, 
administrative or disciplinary action may be taken by the Regional 
Office, up to and including termination, where appropriate.
    (b) Volunteers are not authorized to obtain extension of credit by 
representing themselves as a Federal Government employee.

[[Page 51]]



                        Subpart G--Miscellaneous



Sec. 1213.7-1  Student loan deferrals.

    (a) The Higher Education Act of 1965, as amended, exempts full-time 
domestic volunteers from repayment of National Defense Education Act 
loans for a period of service not to exceed three years. Volunteers 
wishing to defer repayment of NDEA loans must obtain the necessary forms 
from their universities. Regional Offices are authorized to certify 
these forms, but if the university or volunteer should submit the form 
to Headquarters for certification, it will be sent to the appropriate 
Regional Office for completion.
    (b) If the volunteer is still in service at the time of ACTION's 
certification, his anticipated termination date will be furnished to the 
lender.
    (c) Repayment of other college loans may also be deferred. These 
repayments, however, are deferred at the discretion of the lender. If 
the lender is willing to defer payment, volunteers must obtain the 
necessary forms from the lender and forward them to the Regional Office 
for certification. If forms are not available from the lender, a letter 
to the university or lender may be prepared certifying the dates of the 
volunteer's service.



Sec. 1213.7-2  Death benefits.

    In case of the death of a volunteer away from his home of record, 
certain costs associated with transportation of the body are 
reimbursable either under the Federal Employees Compensation Act or 
ACTION policy. Volunteers whose death results from personal injury or 
illness sustained in the performance of his project duties are eligible 
for reimbursement of certain funeral expenses. Monthly benefits for 
eligible dependents of deceased volunteers may be available under the 
Federal Employees Compensation Act. In certain other unusual 
circumstances, payment of certain funeral expenses for volunteers not 
meeting the above requirements may be authorized.



Sec. 1213.7-3  Firearms.

    ACTION volunteers may not normally possess, use, or carry firearms. 
If a volunteer wishes to keep firearms for hunting, approval must be 
obtained from the sponsor, State Program Director and the ACTION 
Regional Director in the region where the volunteer is assigned. The 
volunteer must request approval for possession or use of firearms from 
his sponsor and his State Program Director. If he receives their 
approval, his request may then be considered by his ACTION Regional 
Director. If approval is granted by the ACTION Regional Director, the 
volunteer must adhere to all state and local regulations relating to the 
possession and use of firearms.



PART 1214--ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF HANDICAP IN PROGRAMS OR ACTIVITIES CONDUCTED BY ACTION--Table of Contents




Sec.
1214.101  Purpose.
1214.102  Application.
1214.103  Definitions.
1214.104-1214.109  [Reserved]
1214.110  Self-evaluation.
1214.111  Notice.
1214.112-1214.129  [Reserved]
1214.130  General prohibitions against discrimination.
1214.131-1214.139  [Reserved]
1214.140  Employment.
1214.141-1214.148  [Reserved]
1214.149  Program accessibility: Discrimination prohibited.
1214.150  Program accessibility: Existing facilities.
1214.151  Program accessibility: New construction and alterations.
1214.152-1214.159  [Reserved]
1214.160  Communications.
1214.161-1214.169  [Reserved]
1214.170  Compliance procedures.

    Authority: 29 U.S.C. 794; 42 U.S.C. 5057.

    Source: 55 FR 47761, Nov. 15, 1990, unless otherwise noted.



Sec. 1214.101  Purpose.

    The purpose of this part is to effectuate section 119 of the 
Rehabilitation, Comprehensive Services, and Developmental Disabilities 
Amendments of 1978, which amended section 504 of the Rehabilitation Act 
of 1973 to prohibit discrimination on the basis of handicap in programs 
or activities conducted by Executive agencies or the United States 
Postal Service.

[[Page 52]]



Sec. 1214.102  Application.

    This part applies to all programs or activities conducted by the 
agency, except for programs or activities conducted outside the United 
States that do not involve individuals with handicaps in the United 
States.



Sec. 1214.103  Definitions.

    For purposes of this part, the term--
    Agency means ACTION.
    Assistant Attorney General means the Assistant Attorney General, 
Civil Rights Division, United States Department of Justice.
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and enjoy the benefits of, programs or 
activities conducted by the agency. For example, auxiliary aids useful 
for persons with impaired vision include readers, Brailled materials, 
audio recordings, and other similar services and devices. Auxiliary aids 
useful for persons with impaired hearing include telephone handset 
amplifiers, telephones compatible with hearing aids, telecommunication 
devices for deaf persons (TDD's), interpreters, notetakers, written 
materials, and other similar services and devices.
    Complete complaint means a written statement that contains the 
complainant's name and address and describes the agency's alleged 
discriminatory action in sufficient detail to inform the agency of the 
nature and date of the alleged violation of section 504 of the Act. It 
shall be signed by the complainant or by someone authorized to do so on 
his or her behalf. Complaints filed on behalf of classes or third 
parties shall describe or identify (by name, if possible) the alleged 
victims of discrimination.
    Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, rolling stock or other 
conveyances, or other real or personal property.
    Individuals with handicaps means any person who has a physical or 
mental impairment that substantially limits one or more major life 
activities, has a record of such an impairment, or is regarded as having 
such an impairment. As used in this definition, the phrase:
    (1) Physical or mental impairment includes--
    (i) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genitourinary; hemic and lymphatic; skin; and endocrine; or
    (ii) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term ``physical or mental 
impairment'' includes, but is not limited to, such diseases and 
conditions as orthopedic, visual, speech, and hearing impairments, 
cerebral palsy, epilepsy, muscular dystrophy, multiple sclerosis, 
cancer, heart disease, diabetes, mental retardation, emotional illness, 
and drug addiction and alcoholism.
    (2) Major life activities includes functions such as caring for 
one's self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (3) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (4) Is regarded as having an impairment means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the agency as constituting 
such a limitation;
    (ii) Has a physical or mental impairment that substantially limit 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) Has none of the impairments defined in paragraph (1) of this 
definition but is treated by the agency as having such an impairment.
    Qualified individual with handicaps means--
    (1) With respect to preschool, elementary, or secondary education 
services provided by the agency, an individual with handicaps who is a 
member of a class of persons otherwise entitled by

[[Page 53]]

statute, regulation, or agency policy to receive educational services 
from the agency;
    (2) With respect to any other agency program or activity under which 
a person is required to perform services or to achieve a level of 
accomplishment, an individual with handicaps who meets the essential 
eligibility requirements and who can achieve the purpose of the program 
or activity without modifications in the program or activity that the 
agency can demonstrate would result in a fundamental alteration in its 
nature;
    (3) With respect to any other program or activity, an individual 
with handicaps who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or activity; 
and
    (4) Qualified handicapped person as that term is defined for 
purposes of employment in 29 CFR 1613.702(f), which is made applicable 
to this part by Sec. 1214.140.
    Section 504 of the Act means section 504 of the Rehabilitation Act 
of 1973 (Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended by 
the Rehabilitation Act Amendments of 1974 (Pub. L. 93-516, 88 Stat. 
1617); the Rehabilitation, Comprehensive Services, and Developmental 
Disabilities Amendments of 1978 (Pub. L. 95-602, 92 Stat. 2955); the 
Rehabilitation Act Amendments of 1986 (Pub. L. 99-506, 100 Stat. 1810), 
and the Civil Rights Restoration Act of 1987 (Pub. L. 100-259, 102 Stat. 
28). As used in this part, section 504 of the Act applies only to 
programs or activities conducted by Executive agencies and not to 
federally assisted programs.



Secs. 1214.104--1214.109  [Reserved]



Sec. 1214.110  Self-evaluation.

    (a) The agency shall, within one year of the effective date of this 
part, evaluate its current policies and practices, and the effects 
thereof, that do not or may not meet the requirements of this part and, 
to the extent modification of any such policies and practices is 
required, the agency shall proceed to make the necessary modifications.
    (b) The agency shall provide an opportunity to interested persons, 
including individuals with handicaps or organizations representing 
individuals with handicaps, to participate in the self-evaluation 
process by submitting comments (both oral and written).
    (c) The agency shall, for at least three years following completion 
of the self-evaluation, required under paragraph (a) of this section, 
maintain on file and make available for public inspection--
    (1) A description of areas examined and any problems identified; and
    (2) A description of any modifications made.



Sec. 1214.111  Notice.

    The agency shall make available to employees, applicants, 
participants, beneficiaries, and other interested persons such 
information regarding the provisions of this part and its applicability 
to the programs or activities conducted by the agency, and make such 
information available to them in such manner as the head of the agency 
finds necessary to apprise such persons of the protections against 
discrimination assured them by section 504 of the Act and this part.



Secs. 1214.112-1214.129  [Reserved]



Sec. 1214.130  General prohibitions against discrimination.

    (a) No qualified individual with handicaps shall, on the basis of 
handicap, be excluded from participation in, be denied the benefits of, 
or otherwise be subjected to discrimination under any program or 
activity conducted by the agency.
    (b)(1) The agency, in providing any aid, benefit, or service, may 
not, directly or through contractual, licensing, or other arrangements, 
on the basis of handicap--
    (i) Deny a qualified individual with handicaps the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualified individual with handicaps an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified individual with handicaps with aid, 
benefit, or service that is not as effective in affording equal 
opportunity to obtain the

[[Page 54]]

same result, to gain the same benefit, or to reach the same level of 
achievement as that provided to others;
    (iv) Provide different or separate aid, benefits, or services to 
individuals with handicaps or to any class of individuals with handicaps 
than is provided to others unless such action is necessary to provide 
qualified individuals with handicaps with aid, benefits, or services 
that are as effective as those provided to others;
    (v) Deny a qualified individual with handicaps the opportunity to 
participate as a member of planning or advisory boards; or
    (vi) Otherwise limit a qualified individual with handicaps in the 
enjoyment of any right, privilege, advantage, or opportunity enjoyed by 
others receiving the aid, benefit, or service.
    (2) The agency may not deny a qualified individual with handicaps 
the opportunity to participate in programs or activities that are not 
separate or different, despite the existence of permissibly separate or 
different programs or activities.
    (3) The agency may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration the purpose 
or effect of which would be to--
    (i) Subject qualified individuals with handicaps to discrimination 
on the basis of handicap; or
    (ii) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to individuals with handicaps.
    (4) The agency may not, in determining the site or location of a 
facility, make selections the purpose or effect of which would--
    (i) Exclude individuals with handicaps from, deny them the benefits 
of, or otherwise subject them to discrimination under any program or 
activity conducted by the agency; or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program or activity with respect to individuals with 
handicaps.
    (5) The agency, in the selection of procurement contractors, may not 
use criteria that subject qualified individuals with handicaps to 
discrimination on the basis of handicap.
    (c) The exclusion of nonhandicapped persons from the benefits of a 
program limited by Federal statute or Executive order to individuals 
with handicaps or the exclusion of a specific class of individuals with 
handicaps from a program limited by Federal statute or Executive order 
to a different class of individuals with handicaps is not prohibited by 
this part.
    (d) The agency shall administer programs and activities in the most 
integrated setting appropriate to the needs of qualified individuals 
with handicaps.



Secs. 1214.131-1214.139  [Reserved]



Sec. 1214.140  Employment.

    No qualified individual with handicaps shall, on the basis of 
handicap, be subjected to discrimination in employment under any program 
or activity conducted by the agency. The definitions, requirements, and 
procedures of section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 
791), as established by the Equal Employment Opportunity Commission in 
29 CFR part 1613, shall apply to employment in federally conducted 
programs or activities.



Secs. 1214.141-1214.148  [Reserved]



Sec. 1214.149  Program accessibility: Discrimination prohibited.

    Except as otherwise provided in Sec. 1214.150, no qualified 
individual with handicaps shall, because the agency's facilities are 
inaccessible to or unusable by individuals with handicaps, be denied the 
benefits of, be excluded from participation in, or otherwise be 
subjected to discrimination under any program or activity conducted by 
the agency.



Sec. 1214.150  Program accessibility: Existing facilities.

    (a) General. The agency shall operate each program or activity so 
that the program or activity, when viewed in its entirety, is readily 
accessible to and usable by individuals with handicaps. This paragraph 
does not--
    (1) Necessarily require the agency to make each of its existing 
facilities accessible to and usable by individuals with handicaps; or
    (2) Require the agency to take any action that it can demonstrate 
would

[[Page 55]]

result in a fundamental alteration in the nature of a program or 
activity or in undue financial and administrative burdens. In those 
circumstances where agency personnel believe that the proposed action 
would fundamentally alter the program or activity or would result in 
undue financial and administrative burdens, the agency has the burden of 
proving that compliance with Sec. 1214.150(a) would result in such 
alteration or burdens. The decision that compliance would result in such 
alteration or burdens must be made by the agency head or his or her 
designee after considering all agency resources available for use in the 
funding and operation of the conducted program or activity and must be 
accompanied by a written statement of the reasons for that conclusion. 
If an action would result in such an alteration or such burdens, the 
agency shall take any other action that would not result in such an 
alteration or such burdens but would nevertheless ensure that 
individuals with handicaps receive the benefits and services of the 
program or activity.
    (b) Methods. The agency may comply with the requirements of this 
section through such means as redesign of equipment, reassignment of 
services to accessible buildings, assignment of aides to beneficiaries, 
home visits, delivery of services at alternate accessible sites, 
alteration of existing facilities and construction of new facilities, 
use of accessible rolling stock, or any other methods that result in 
making its programs or activities readily accessible to and usable by 
individuals with handicaps. The agency is not required to make 
structural changes in existing facilities where other methods are 
effective in achieving compliance with this section. The agency, in 
making alterations to existing buildings, shall meet accessibility 
requirements to the extent compelled by the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151-4157), and any regulations 
implementing it. In choosing among available methods for meeting the 
requirements of this section, the agency shall give priority to those 
methods that offer programs and activities to qualified individuals with 
handicaps in the most integrated setting appropriate.
    (c) Time period for compliance. The agency shall comply with the 
obligations established under this section within sixty days of the 
effective date of this part except that where structural changes in 
facilities are undertaken, such changes shall be made within three years 
of the effective date of this part, but in any event as expeditiously as 
possible.
    (d) Transition plan. In the event that structural changes to 
facilities will be undertaken to achieve program accessibility, the 
agency shall develop, within six months of the effective date of this 
part, a transition plan setting forth the steps necessary to complete 
such changes. The agency shall provide an opportunity to interested 
persons, including individuals with handicaps or organizations 
representing individuals with handicaps, to participate in the 
development of the transition plan by submitting comments (both oral and 
written). A copy of the transition plan shall be made available for 
public inspection. The plan shall, at a minimum--
    (1) Identify physical obstacles in the agency's facilities that 
limit the accessibility of its programs or activities to individuals 
with handicaps;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period; and
    (4) Indicate the agency official responsible for implementation of 
the plan.



Sec. 1214.151  Program accessibility: New construction and alterations.

    Each building or part of a building that is constructed or altered 
by, on behalf of, or for the use of the agency shall be designed, 
constructed, or altered so as to be readily accessible to and usable by 
individuals with handicaps. The definitions, requirements, and standards 
of the Architectural Barriers Act (42 U.S.C. 4151-4157), as established 
in 41 CFR 101-19.600 to 101-19.607,

[[Page 56]]

apply to buildings covered by this section.



Secs. 1214.152-1214.159  [Reserved]



Sec. 1214.160  Communications.

    (a) The agency shall take appropriate steps to ensure effective 
communication with applicants, participants, personnel of other Federal 
entities, and members of the public.
    (1) The agency shall furnish appropriate auxiliary aids where 
necessary to afford an individual with handicaps an equal opportunity to 
participate in, and enjoy the benefits of, a program or activity 
conducted by the agency.
    (i) In determining what type of auxiliary aid will be provided, the 
agency shall give primary consideration to the requests of the 
individual with handicaps.
    (ii) The agency need not provide individually prescribed devices, 
readers for personal use or study, or other devices of a personal 
nature.
    (2) Where the agency communicates with applicants and beneficiaries 
by telephone, telecommunication devices for deaf persons (TDD's) or 
equally effective telecommunication systems shall be used to communicate 
with persons with impaired hearing.
    (b) The agency shall ensure that interested persons, including 
persons with impaired vision or hearing, can obtain information as to 
the existence and location of accessible services, activities, and 
facilities.
    (c) The agency shall provide a sign at a primary entrance to each of 
its inaccessible facilities, directing users to a location at which they 
can obtain information about accessible facilities. The international 
symbol for accessibility shall be displayed at each primary entrance to 
each accessible facility.
    (d) This section does not require the agency to take any action that 
it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity or in undue financial and administrative 
burdens. In those circumstances where agency personnel believe that the 
proposed action would fundamentally alter the program or activity or 
would result in undue financial and administrative burdens, the agency 
has the burden of proving that compliance with Sec. 1214.160 would 
result in such alteration or burdens. The decision that compliance would 
result in such alteration or burdens must be made by the agency head or 
his or her designee after considering all agency resources available for 
use in the funding and operation of the conducted program or activity 
and must be accompanied by a written statement of the reasons for 
reaching that conclusion. If an action required to comply with this 
section would result in such alteration or such burdens, the agency 
shall take any other action that would not result in such an alteration 
or such burdens but would nevertheless ensure that, to the maximum 
extent possible, individuals with handicaps receive the benefits and 
services of the program or activity.



Secs. 1214.161-1214.169  [Reserved]



Sec. 1214.170  Compliance procedures.

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
handicap in programs and activities conducted by the agency.
    (b) The agency shall process complaints alleging violations of 
section 504 with respect to employment according to the procedures 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613 pursuant to section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791).
    (c) Responsibility for implementation and operation of this section 
shall be vested in the Director, Equal Opportunity Staff.



PART 1216--NONDISPLACEMENT OF EMPLOYED WORKERS AND NONIMPAIRMENT OF CONTRACTS FOR SERVICE--Table of Contents




Sec.
1216.1-1  Purpose.
1216.1-2  Applicability of this part.
1216.1-3  Policy.
1216.1-4  Exceptions.

    Authority: Secs. 402(12), 404(a), 420 of Pub. L. 93-113, 87 Stat. 
394, 408, 414.

    Source: 40 FR 16209, Apr. 10, 1975, unless otherwise noted.

[[Page 57]]



Sec. 1216.1-1  Purpose.

    This part establishes rules to assure that the services of 
volunteers are limited to activities which would not otherwise be 
performed by employed workers and which will not supplant the hiring of, 
or result in the displacement of, employed workers or impair existing 
contracts for service. It implements section 404(a) of the Domestic 
Volunteer Service Act of 1973, Pub. L. 93-113 (the ``Act'').



Sec. 1216.1-2  Applicability of this part.

    (a) All full-time and part-time volunteers assigned, referred or 
serving pursuant to grants, contracts, or agreements made pursuant to 
the Act.
    (b) All agencies and organizations to which the volunteers in 
paragraph (a) of this section are assigned, referred or provide 
services.



Sec. 1216.1-3  Policy.

    (a) Volunteers enrolled or participating in programs referred to in 
paragraphs (a) and (b) of Sec. 1216.1-2 may not perform any services or 
duties or engage in activities which would otherwise be performed by an 
employed worker as part of his assigned duties as an employee.
    (b) Volunteer referred to in paragraph (a) of this section may not 
perform any services or duties or engage in activities which will 
supplant the hiring of employed workers. This prohibition is violated 
if, prior to engaging a volunteer, an agency or organization referred to 
in Sec. 1216.1-2(c) had intended to hire a person to undertake all or a 
substantial part of the services, duties, or other activities to be 
provided by the volunteer.
    (c) Volunteers referred to in paragraph (a) of this section may not 
perform any services or duties or engage in activities which result in 
the displacement of employed workers. Such volunteers may not perform 
services or duties which have been performed by or were assigned to, any 
of the following:
    (1) Presently employed workers,
    (2) Employees who recently resigned or were discharged,
    (3) Employees who are on leave (terminal, temporary, vacation, 
emergency, or sick), or
    (4) Employees who are on strike or who are being locked out.
    (d) Volunteers referred to in paragraph (a) of this section may not 
perform any services or duties or engage in activities which impair 
existing contracts for service. This prohibition is violated if a 
contract for services is modified or cancelled because an agency or 
organization referred to in Sec. 1216.1-2(b) engages a volunteer to 
provide or perform all or a substantial part of any services, duties, or 
other activities set forth in such contract. The term ``contract for 
services'' includes but is not limited to contracts, understandings and 
arrangements, either written or oral, to provide professional, 
managerial, technical, or administrative services.
    (e) Agencies and organizations referred to in Sec. 1216.1-2(b) are 
prohibited from assigning or permitting volunteers referred to in 
Sec. 1216.1-2(a) to perform any services or duties or engage in any 
activities prohibited by paragraphs (a) through (d) of this section.



Sec. 1216.1-4  Exceptions.

    (a) The requirements of Sec. 1216.1-3 are not applicable to the 
following, or similar, situations:
    (1) Funds are unavailable for the employment of sufficient staff to 
accomplish a program authorized or of a character eligible for 
assistance under the Act and the activity, service, or duty is otherwise 
appropriate for the assignment of a volunteer.
    (2) Volunteer services are required in order to avoid or relieve 
suffering threatened by or resulting from major natural disasters or 
civil disturbances.
    (3) Reasonable efforts to obtain employed workers have been 
unsuccessful due to the unavailability of persons within the community 
who are able, willing, and qualified to perform the needed activities.
    (4) The assignment of volunteers will significantly expand services 
to a target community over those which could be performed by existing 
paid staff, and the activity, service or duty is otherwise appropriate 
for the assignment of a volunteer and no actual displacement of paid 
staff will occur as a result of the assignment.

[[Page 58]]

    (b) For the purposes of paragraphs (a)(1) and (4) of this section, 
the assignment is not appropriate for the assignment of a volunteer if:
    (1) The service, duty, or activity is principally a routine 
administrative or clerical task. This definition applies only to any 
service, duty, or activity performed by a volunteer receiving financial 
support apart from reimbursement for expenses.
    (2) The volunteer is not directly in contact with groups or 
individuals whom the Act is designed to serve or is not performing 
services, duties, or engaged in activities authorized or of a character 
eligible for assistance under the Act.



PART 1217--VISTA VOLUNTEER LEADER--Table of Contents




Sec.
1217.1  Introduction.
1217.2  Establishment of position.
1217.3  Qualifications.
1217.4  Selection procedure.
1217.5  Allowances and benefits.
1217.6  Roles of volunteers.

    Authority: Secs. 104(b) and 420 of Pub. L. 93-113, 87 Stat. 398 and 
414.

    Source: 39 FR 44203, Dec. 23, 1974, unless otherwise noted.



Sec. 1217.1  Introduction.

    Section 105(a)(1), Part A, of the Domestic Volunteer Service Act of 
1973, Pub. L. 93-113, 87 Stat. 398, authorizes the Director of ACTION to 
pay VISTA volunteers a stipend not to exceed $50 per month and a stipend 
not to exceed $75 a month in the case of VISTA volunteers who have 
served for at least a year and have been designated volunteer leaders. 
Section 105(a)(1) further provides that the selection of volunteer 
leaders shall be pursuant to standards, established in regulations which 
the Director shall prescribe, which shall be based upon the experience 
and special skills and the demonstrated leadership of such persons among 
volunteers.



Sec. 1217.2  Establishment of position.

    A request for the proposed establishment of VISTA volunteer leader 
position for a specific project shall be submitted by a sponsor in 
writing in advance to the appropriate ACTION Regional Director. Specific 
tasks, responsibilities, qualifications, and the proposed supervisory 
structure are to be detailed in the request.



Sec. 1217.3  Qualifications.

    A volunteer recommended for a VISTA volunteer leader position must 
have:
    (a) Completed a one-year term as a VISTA volunteer.
    (b) Demonstrated ability to work constructively and communicate with 
volunteers, supervisor/sponsor, and the target population.
    (c) Demonstrated ability to work well with and gain acceptance of 
other volunteers.
    (d) Demonstrated ability to provide self-motivation and self-
direction, and maturity to accept supervision and direction from 
supervisor/sponsor.
    (e) Sensitivity to the needs and attitudes of others, and exhibit a 
sincere commitment to the mission of VISTA.



Sec. 1217.4  Selection procedure.

    (a) Nomination. Candidates may be nominated in writing to the 
Regional Director by the Program Officer or the State Program Director 
in whose area the volunteer serves. The nomination shall include a copy 
of the completed ACTION Form V-95a, for the Regional Director's review.
    (b) Selection. VISTA volunteer leaders will be selected by the 
Regional Director (or his designee). The criteria for selection shall 
include:
    (1) The recommendation of the volunteer by the State Program 
Director or Program Officer.
    (2) An overall rating by the supervisor/sponsor of above average on 
the ACTION Form V-95a.
    (3) A description of specific tasks, responsibilities, 
qualifications, and the proposed supervisory structure, which justifies 
the establishment of the VISTA volunteer leader position. A selection 
decision is final.
    (c) Reenrollment. VISTA volunteer leaders may be reenrolled in 
accordance with the VISTA reenrollment and extension policy.



Sec. 1217.5  Allowances and benefits.

    The VISTA volunteer leader shall be entitled to all allowances and 
benefits

[[Page 59]]

of a VISTA volunteer at the level which is consistent with the level for 
all volunteers on his/her project, except that:
    (a) The stipend will be increased from $50 to $75 per month 
effective on the date of selection of the VISTA volunteer leader.
    (b) Support for on-the-job transportation may be increased, 
consistent with ACTION policy.



Sec. 1217.6  Roles of volunteers.

    VISTA volunteer leaders may have the following roles:
    (a) Primary contact with VISTA volunteers on personal and 
administrative matters.
    (b) Aid in communication of VISTA policies to VISTA volunteers.
    (c) Encourage and develop VISTA volunteer leadership and initiative 
on projects.
    (d) Aid as a resource in development and conduct of training 
programs.
    (e) Assist sponsor in preparation for arrival of VISTA volunteers, 
and assist new volunteers in settling-in, housing, orientation, etc.
    (f) Aid in the development of meaningful relationship and 
understanding of individual program concepts with VISTA volunteers and 
supervisor/sponsor.
    (g) Advise supervisor on potential problem areas, and needs of VISTA 
volunteers.
    (h) Aid supervisor/sponsor in the redevelopment of projects to best 
meet goals and objectives addressing the community's problem(s).



PART 1218--VISTA VOLUNTEERS--HEARING OPPORTUNITY--Table of Contents




Sec.
1218.1  Introduction.
1218.2  Applicability.
1218.3  Policy.
1218.4  Standards for regional plan.
1218.5  Procedures for approval of plan.
1218.6  Freedom to present views.

    Authority: Secs. 104(d), 402(14) and 420 of Pub. L. 93-113, 87 Stat. 
398, 407 and 414.

    Source: 39 FR 43725, Dec. 18, 1974, unless otherwise noted.



Sec. 1218.1  Introduction.

    Section 104(d) of the Domestic Volunteer Service Act of 1973, Pub. 
L. 93-113, 87 Stat. 398 requires that the Director of ACTION establish a 
procedure, including notice and an opportunity to be heard, for VISTA 
volunteers to present views in connection with the terms and conditions 
of their service.



Sec. 1218.2  Applicability.

    This part applies to all volunteers enrolled under part A of title I 
of the Domestic Volunteer Service Act of 1973, Pub. L. 93-113, 87 Stat. 
396.



Sec. 1218.3  Policy.

    It is ACTION's policy to encourage the free exchange of views 
between volunteers and staff members with respect to the terms and 
conditions of the volunteers' service. Ordinarily these exchanges occur 
in the day-to-day contact between volunteers and staff. However, there 
are occasions when it is desirable to provide volunteers with an 
opportunity to present their views with respect to the terms and 
conditions of their service in a more formal way. The differences 
between ACTION regions require that the means selected in each region to 
accomplish this result be appropriate to its particular needs. This 
regulation provides standards within which regions must establish a 
procedure to enable volunteers to present their views to be heard with 
respect to the terms and conditions of their service on a regular basis 
by appropriate ACTION officials and receive a timely response to their 
concerns.



Sec. 1218.4  Standards for regional plan.

    Each ACTION Domestic Regional Director shall recommend, after 
consultation with representative volunteers, sponsors, and other 
interested persons, the specific procedures to be established for VISTA 
volunteers to present their views concerning the terms and conditions of 
their service. Each proposed plan must incorporate the following 
features:
    (a) A free and open opportunity for volunteers to communicate their 
views to appropriate ACTION regional office officials.

[[Page 60]]

    (b) An opportunity for all volunteers to be heard with respect to 
their views in connection with the terms and conditions of their service 
by a responsible ACTION regional office official, either personally, or 
through democratically selected representatives, on a regular basis. The 
plan must provide such an opportunity to the volunteer at least twice in 
each year, and provide for notice to volunteers of the time and place of 
the meeting at which they may be heard.
    (c) Appropriate provisions with respect to volunteers' or 
volunteers' representatives travel expense and per diem which enable the 
volunteers or their representatives to attend and present their views to 
the regional office officials at scheduled meetings.
    (d) Response to volunteer's views by appropriate ACTION officials in 
a prescribed period of time.
    (e) Summary reports by each Regional Director to the Deputy 
Associate Director for VISTA and ACTION Education Programs of problems 
and concerns expressed by volunteers concerning terms and conditions of 
their service and action taken in response to such problems and 
concerns.
    (f) An opportunity for any volunteer who feels that his/her concerns 
have not been properly addressed to communicate the same to the Regional 
Director. Such communication shall be included in the Regional 
Director's report to the Deputy Associate Director and shall be reviewed 
by him.



Sec. 1218.5  Procedures for approval of plan.

    Each Regional Director shall submit the plan for his region to the 
Deputy Associate Director, VISTA and ACTION Education Programs for 
approval.
    Approval by the Deputy Associate Director for VISTA and ACTION 
Education Programs of the proposed regional plan shall be based upon:
    (a) The adequacy of the procedures to provide for systematic and 
open communication of volunteers' views regarding terms and conditions 
of their service; and
    (b) The adequacy of the procedures to provide for effective and 
efficient resolution of volunteers' problems or concerns regarding terms 
and conditions of their service.



Sec. 1218.6  Freedom to present views.

    The expression by a volunteer of his views with respect to the terms 
and conditions of his service shall not be construed as reflecting on a 
volunteer's standing, performance or desirability as a volunteer. ACTION 
intends that its programs be conducted in an atmosphere in which 
volunteers can speak freely, and frankly discuss problems. Nor shall a 
volunteer who represents such views be subjected to restraint, 
interference, coercion, discrimination or reprisal because of 
presentation of his views.



PART 1219--COMPETITIVE SERVICE ELIGIBILITY--Table of Contents




Sec.
1219.1  Introduction.
1219.2  Policy.
1219.3  Procedure.

    Authority: Secs. 415(d) and 420 of Pub. L. 93-113, 87 Stat. 412 and 
414.

    Source: 39 FR 42915, Dec. 9, 1974, unless otherwise noted.



Sec. 1219.1  Introduction.

    Section 415(d), Title IV, of the Domestic Volunteer Service Act of 
1973, Pub. L. 93-113, 87 Stat. 412, provides that VISTA Volunteers who 
have successfully completed their period of service shall be eligible 
for appointment in the Federal competitive service in the same manner as 
Peace Corps Volunteers as prescribed in Executive Order No. 11103 (April 
10, 1963). This section further provides that the Director of ACTION 
shall determine who has successfully completed his period of service in 
accordance with regulations he shall prescribe.



Sec. 1219.2  Policy.

    Certificates of satisfactory service for the purpose of this order 
shall be issued only to persons who have completed at least one full 
year of service as a full-time Volunteer under part A of title I of the 
Domestic Volunteer Service Act of 1973 (or title VIII of the Economic 
Opportunity Act of 1964, as

[[Page 61]]

amended, 42 U.S.C. 2991-2994d), and who have not been terminated for 
cause.



Sec. 1219.3  Procedure.

    (a) The Deputy Associate Director for VISTA and Anti-Poverty 
Programs will ensure that each eligible VISTA Volunteer is promptly 
notified of his eligibility for competitive service, prior to the 
completion of his service.
    (b) The Deputy Associate Director for VISTA and Anti-Poverty 
Programs (or his designee) shall, upon the request of a duly recognized 
representative of any agency in the Executive Branch, certify the VISTA 
Volunteer's service on ACTION Form A-507.



PART 1220--PAYMENT OF VOLUNTEER LEGAL EXPENSES--Table of Contents




                           Subpart A--General

Sec.
1220.1-1  Introduction.

                     Subpart B--Criminal Proceedings

1220.2-1  Full-time volunteers.
1220.2-2  Part-time volunteers.
1220.2-3  Procedure.

             Subpart C--Civil and Administrative Proceedings

1220.3-1  Full-time volunteers.
1220.3-2  Part-time volunteers.
1220.3-3  Procedure.

    Authority: Secs. 419 and 420 of Pub. L. 93-113, 87 Stat. 413 and 
414.

    Source: 40 FR 28800, July 9, 1975, unless otherwise noted.



                           Subpart A--General



Sec. 1220.1-1  Introduction.

    Section 419 of the Domestic Volunteer Service Act of 1973 (the Act), 
Pub. L. 93-113, 87 Stat. 413, authorizes the Director of ACTION to pay 
expenses incurred in judicial and administrative proceedings for the 
defense of full-time or part-time volunteers serving under the Act. 
These include counsel fees, court costs, bail or other expenses 
incidental to the volunteer's defense. For part-time volunteers, section 
419 provides that the proceeding must arise directly out of the 
performance of activities pursuant to the Act.



                     Subpart B--Criminal Proceedings



Sec. 1220.2-1  Full-time volunteers.

    (a)(1) ACTION will pay all reasonable expenses for defense of full-
time volunteers up to and including arraignment in Federal, state, and 
local criminal proceedings, except in cases where it is clear that the 
charged offense results from conduct which is not related to his service 
as a volunteer.
    (2) Situations where conduct is clearly unrelated to a volunteer's 
service are those that arise either:
    (i) In a period prior to volunteer service,
    (ii) Under circumstances where the volunteer is not at his assigned 
volunteer project location, such as during periods of administrative, 
vacation, or emergency leave, or
    (iii) When he is at his volunteer station, but the activity or 
action giving rise to the charged offense is clearly not part of, or 
required by, such assignment.
    (b) Reasonable expenses in criminal proceedings beyond arraignment 
may be paid in cases where:
    (1) The charge against the volunteer relates to his assignment or 
status as a volunteer, and not his personal status or personal matters. 
A charge relating to a volunteer's assignment arises out of any activity 
or action which is a part of, or required by, such assignment. A charge 
relating to a volunteer's status is motivated exclusively by the fact 
that a defendant is a volunteer.
    (2) The volunteer has not admitted a willful or knowing violation of 
law, and
    (3) The charge(s) is not a minor misdemeanor, such as a minor 
vehicle violation for which a fine or bail forfeiture will not exceed 
$100.
    (c) Notwithstanding the foregoing, there may be situations in which 
the criminal proceeding results from a situation which could give rise 
to a civil claim under the Federal Tort Claims Act. In such situations, 
the Justice Department may agree to defend the volunteer. In those 
cases, unless there is a conflict between the volunteer's interest and 
that of the government, ACTION will not pay for additional private 
representation for the volunteer.

[[Page 62]]



Sec. 1220.2-2  Part-time volunteers.

    (a) With respect to a part-time volunteer, ACTION will reimburse a 
sponsor for the reasonable expenses it incurs for the defense of the 
volunteer in Federal, state and local criminal proceedings, including 
arraignment, only under the following circumstances:
    (1) The proceeding arises directly out of the volunteer's 
performance of activities pursuant to the Act;
    (2) The volunteer receives, or is eligible to receive, compensation, 
including allowances, stipend, or reimbursement for out-of-pocket 
expenses, under an ACTION grant project; and
    (3) The conditions specified in paragraphs (b) (2) and (3) in 
Sec. 1220.2-1 are met.
    (b) In certain circumstances volunteers who are ineligible for 
reimbursement of legal expenses by ACTION may be eligible for 
representation under the Criminal Justice Act (18 U.S.C. 3006A).



Sec. 1220.2-3  Procedure.

    (a) Immediately upon the arrest of any volunteer under circumstances 
in which the payment of bail to prevent incarceration or other serious 
consequences to the volunteer or the retention of an attorney prior to 
arraignment is necessary and is covered under Sec. 1220.2-1 or 
Sec. 1220.2-2, sponsors shall immediately notify the appropriate ACTION 
state office or if the state office cannot be reached, the appropriate 
regional office. The regional office shall provide each sponsor with a 
24-hour telephone number.
    (b) Immediately after notification of the appropriate office, and 
with the approval thereof, the sponsor shall advance up to $500 for the 
payment of bail or such other legal expenses as are necessary prior to 
arraignment to prevent the volunteer from being incarcerated. In the 
event it is subsequently determined that ACTION or a sponsor is not 
responsible under this policy for the volunteer's defense, any such 
advance may be recovered directly from the volunteer or from allowances, 
stipends, or out-of-pocket expenses which are payable or become payable 
to the volunteer. In the case of a grassroots sponsor of full-time 
volunteers which is not able to provide the $500 the ACTION state or 
regional office shall immediately make such sum available to the 
sponsor.
    (c) Immediately upon receipt of notification from the sponsor, the 
state or regional office shall notify the General Counsel, giving all 
facts and circumstances at that time known to such office. Thereafter 
the office shall cooperate with the General Counsel in making an 
investigation of all surrounding facts and circumstances and shall 
provide such information immediately to the General Counsel.
    (d) The General Counsel shall, upon notification by the state or 
regional office, determine the extent to which ACTION will provide funds 
for the volunteer's defense or reimburse a sponsor for funds it spends 
on the volunteer's behalf. Included in this responsibility shall be the 
negotiation of fees and approval of other costs and expenses. State and 
regional offices are not authorized to commit ACTION to the payment of 
volunteers' legal expenses or to reimburse a sponsor except as provided 
above, without the express consent of the General Counsel. Additionally, 
the General Counsel shall, in cases arising directly out of the 
performance of authorized project activities, ascertain whether the 
services of the United States Attorney can be made available to the 
volunteer.
    (e) The sponsor and the state and regional office shall have a 
continuing responsibility for cooperation and coordination with the 
Office of General Counsel during the pendency of any such litigation, 
and of notifying the General Counsel of any facts and circumstances 
which come to the attention of such office or the sponsor which affects 
such litigation.



             Subpart C--Civil and Administrative Proceedings



Sec. 1220.3-1  Full-time volunteers.

    ACTION will pay reasonable expenses incurred in the defense of full-
time volunteers in Federal, state, and local civil judicial and 
administrative proceedings where:
    (a) The complaint or charge against the volunteer is directly 
related to his volunteer service and not to his personal activities or 
obligations.

[[Page 63]]

    (b) The volunteer has not admitted willfully or knowingly pursuing a 
course of conduct which would result in the plaintiff or complainant 
initiating such a proceeding, and
    (c) If the judgment sought involves a monetary award, the amount 
sought exceeds $100.



Sec. 1220.3-2  Part-time volunteers.

    ACTION will reimburse sponsors for the reasonable expenses 
incidental to the defense of part-time volunteers in Federal, state and 
local civil judicial and administrative proceedings where:
    (a) The proceeding arises directly out of the volunteer's 
performance of activities pursuant to the Act;
    (b) The volunteer receives or is eligible to receive compensation, 
including allowances, stipend, or reimbursement for out-of-pocket 
expenses under an ACTION grant; and
    (c) The conditions specified in paragraphs (b) and (c) in 
Sec. 1220.3-1 are met.



Sec. 1220.3-3  Procedure.

    Immediately upon the receipt by a volunteer of any court papers or 
administrative orders making him a part to any proceeding covered under 
Sec. 1220.3-1 or Sec. 1220.3-2, the volunteer shall immediately notify 
his sponsor who in turn shall notify the appropriate ACTION state 
office. The procedures referred to in Sec. 1220.2-3, paragraphs (c) 
through (e), shall thereafter be followed as appropriate.



PART 1222--PARTICIPATION OF PROJECT BENEFICIARIES--Table of Contents




Sec.
1222.1  Purpose.
1222.2  Applicability.
1222.3  Policy.
1222.4  Advisory group responsibilities.
1222.5  Advisory group expenses.
1222.6  Sponsor's responsibilities.

    Authority: Secs. 106 and 420 of Pub. L. 93-113, 87 Stat. 398 and 
414.

    Source: 40 FR 57217, Dec. 8, 1975, unless otherwise noted.



Sec. 1222.1  Purpose.

    The purpose of these regulations is to prescribe requirements for 
the establishment of a continuing mechanism for the meaningful 
participation of project beneficiaries in the planning, development, and 
implementation of project activities utilizing full-time volunteers 
authorized under Title I of the Domestic Volunteer Service Act of 1973, 
Pub. L. 93-113. This policy specifically implements Section 106, Title 
I, Pub. L. 93-113.



Sec. 1222.2  Applicability.

    These regulations apply to all full-time volunteer programs and 
projects under title I, Pub. L. 93-113, including grant programs. 
Included in these programs are VISTA (part A), University Year for 
ACTION (UYA) (part B), ACTION Cooperative Volunteers (ACV) and Program 
for Local Services (PLS) (part C).



Sec. 1222.3  Policy.

    (a) Each potential project sponsor shall establish an advisory group 
for the project, to include substantial membership of potential project 
beneficiaries or, to the extent feasible, their democratically chosen 
representatives, prior to the submission of an application to ACTION for 
volunteers.
    (b) The term ``substantial'' means, in this case, a sufficient 
number of appropriate persons to assure that the concerns and points of 
view of the potential project beneficiaries are adequately presented and 
considered in the deliberations of the group. The phrase ``project 
beneficiaries'' means, in this case, recipients of benefits accruing 
directly from project activities as conducted by ACTION Volunteers.
    (c) Potential sponsoring organizations that have an established 
governing, policy, or advisory group whose membership is composed of at 
least 50% of members of the beneficiary population are not required to 
establish a separate project advisory group for the purposes of these 
regulations.



Sec. 1222.4  Advisory group responsibilities.

    The advisory group shall have the following responsibilities for the 
intent and purposes of these requirements:
    (a) To the extent practical, assist the sponsor in the initial 
planning of a new project proposal and in the planning of a continuation 
project application.

[[Page 64]]

    (b) To review and provide written comments concerning any project 
application prior to the submission of the application to ACTION. A copy 
of such comments shall accompany each application to ACTION.
    (c) To meet with the sponsoring organization's staff at periodic 
intervals, but no less than twice per project year, for the purpose of 
reviewing and commenting on the development and implementation of the 
project. Such project review and commentary should be directed toward 
the adequacy of the project to meet the identified needs of the project 
beneficiaries.
    (d) To submit, if it so chooses, written reports and/or copies of 
minutes of its meetings to the sponsor to accompany the Sponsor's 
Quarterly Program Report (A-568) submitted to the appropriate ACTION 
regional office.



Sec. 1222.5  Advisory group expenses.

    As permitted by law, ACTION regional staff may pay for certain 
incidental out-of-pocket expenses incurred by the advisory group in 
connection with its responsibilities under Sec. 1222.4.



Sec. 1222.6  Sponsor's responsibilities.

    The sponsor or potential sponsor shall furnish the following 
evidence of the advisory group's participation in the planning, 
development, and implementation of the project:
    (a) Each new application to ACTION for volunteers shall contain a 
statement describing how the advisory group has participated in the 
planning of the project proposal. This statement shall be signed by an 
authorized representative of the Advisory group (see Sec. 1222.4-2). For 
continuation project applications, a written statement shall be included 
which specifies how the advisory group complied with its 
responsibilities under Sec. 1222.4 of these regulations. This statement 
shall be signed by an authorized representative of the advisory group 
(see Sec. 1222.4-2 and 3).
    (b) In each Sponsor's Quarterly Program Report (A-568), the sponsor 
shall include a brief statement describing the extent to which the 
advisory group was involved in the continuing development and 
implementation of the project.



PART 1225--VOLUNTEER DISCRIMINATION COMPLAINT PROCEDURE--Table of Contents




                      Subpart A--General Provisions

Sec.
1225.1  Purpose.
1225.2  Policy.
1225.3  Definitions.
1225.4  Coverage.
1225.5  Representation.
1225.6  Freedom from reprisal.
1225.7  Review of allegations of reprisal.

      Subpart B--Processing Individual Complaints of Discrimination

1225.8  Precomplaint procedure.
1225.9  Complaint procedure.
1225.10  Corrective action.
1225.11  Amount of attorney fees.

        Subpart C--Processing Class Complaints of Discrimination

1225.12  Precomplaint procedure.
1225.13  Acceptance, rejection, or cancellation of complaint.
1225.14  Consolidation of complaints.
1225.15  Notification and opting out.
1225.16  Investigation and adjustment of complaint.
1225.17  Agency decision.
1225.18  Notification of class members of decision.
1225.19  Corrective action.
1225.20  Claim appeals.
1225.21  Statutory rights.

    Authority: Secs. 417, 402(14), 420, Pub. L. 93-113, 87 Stat. 398, 
407, and 414; Sec. 5(a), Pub. L. 87-293, 75 Stat. 613; Executive Order 
12137, issued May 16, 1979.

    Source: 46 FR 1609, Jan. 6, 1981, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 1225.1  Purpose.

    The purpose of this part is to establish a procedure for the filing, 
investigation, and administrative determination of allegations of 
discrimination based on race, color, national origin, religion, age, 
sex, handicap or political affiliation, which arise in connection with 
the recruitment, selection, placement, service, or termination of Peace 
Corps and ACTION applicants, trainees, and Volunteers for full-time 
service.

[[Page 65]]



Sec. 1225.2  Policy.

    It is the policy of Peace Corps and ACTION to provide equal 
opportunity in all its programs for all persons and to prohibit 
discrimination based on race, color, national origin, religion, age, 
sex, handicap or political affiliation, in the recruitment, selection, 
placement, service, and termination of Peace Corps and ACTION 
Volunteers. It is the policy of Peace Corps and ACTION upon determining 
that such prohibited discrimination has occurred, to take all necessary 
corrective action to remedy the discrimination, and to prevent its 
recurrence.



Sec. 1225.3  Definitions.

    Unless the context requires otherwise, in this Part:
    (a) Director means the Director of Peace Corps for all Peace Corps 
applicant, trainee, or Volunteer complaints processed under this part, 
or the Director of ACTION for all domestic applicant, trainee, or 
Volunteer complaints processed under this part. The term shall also 
refer to any designee of the respective Director.
    (b) EO Director means the Director of the Equal Opportunity Division 
of the Office of Compliance, ACTION. The term shall also refer to any 
designee of the EO Director.
    (c) Illegal discrimination means discrimination on the basis of 
race, color, national origin, religion, age, sex, handicap or political 
affiliation as defined in section 5(a) of the Peace Corps Act (22 U.S.C. 
2504); section 717 of the Civil Rights Act of 1964 (42 U.S.C. 2000-16); 
Title V of the Rehabilitation Act of 1973 (29 U.S.C. 791, et seq.); and 
the Age Discrimination Act of 1975 (42 U.S.C. 6101, et seq.). Further 
clarification of the scope of matters covered by this definition may be 
obtained by referring to the following regulations: Sex Discrimination: 
29 CFR part 1604; Religious Discrimination: 29 CFR part 1605; National 
Origin Discrimination: 29 CFR part 1606; Age Discrimination: 45 CFR part 
90; Handicap Discrimination: 29 CFR 1613.701 through 1613.707.
    (d) Applicant means a person who has submitted to the appropriate 
agency personnel a completed application required for consideration of 
eligibility for Peace Corps or ACTION volunteer service. ``Applicant'' 
may also mean a person who alleges that the actions of agency personnel 
precluded him or her from submitting such an application or any other 
information reasonably required by the appropriate personnel as 
necessary for a determination of the individual's eligibility for 
volunteer service.
    (e) Trainee means a person who has accepted an invitation issued by 
Peace Corps or ACTION and has registered for Peace Corps or ACTION 
training.
    (f) Volunteer means a person who has completed successfully all 
necessary training; met all clearance standards; has taken, if required, 
the oath prescribed in either section 5(j) of the Peace Corps Act (22 
U.S.C. 2504), or section 104(c) of the Volunteer Service Act of 1973, as 
amended (42 U.S.C. 104(c)) and has been enrolled as a full-time 
Volunteer by the appropriate agency.
    (g) Complaint means a written statement signed by the complainant 
and submitted to the EO Director. A complaint shall set forth 
specifically and in detail:
    (1) A description of the Peace Corps or ACTION management policy or 
practice, if any, giving rise to the complaint;
    (2) A detailed description including names and dates, if possible, 
of the actions of the Peace Corps or ACTION officials which resulted in 
the alleged illegal discrimination;
    (3) The manner in which the Peace Corps or ACTION action directly 
affected the complainant; and
    (4) The relief sought.

A complaint shall be deemed filed on the date it is received by the 
appropriate agency official. When a complaint does not conform with the 
above definition, it shall nevertheless be accepted. The complainant 
shall be notified of the steps necessary to correct the deficiencies of 
the complaint. The complainant shall have 30 days from his or her 
receipt of notification of the complaint defects to resubmit an amended 
complaint.
    (h) Counselor means an official designated by the EO Director to 
perform the functions of conciliation as detailed in this part.
    (i) Agent means a class member who acts for the class during the 
processing

[[Page 66]]

of a class complaint. In order to be accepted as the agent for a class 
complaint, in addition to those requirements of a complaint found in 
Sec. 1225.3(g) of this part, the complaint must meet the requirements 
for a class complaint as found in subpart C of these regulations.



Sec. 1225.4  Coverage.

    (a) These procedures apply to all Peace Corps or ACTION applicants, 
trainees, and Volunteers throughout their term of service with the Peace 
Corps or ACTION. When an applicant, trainee, or Volunteer makes a 
complaint which contains an allegation of illegal discrimination in 
connection with an action that would otherwise be processed under a 
grievance, early termination, or other administrative system of the 
agency, the allegation of illegal discrimination shall be processed 
under this part. At the discretion of the appropriate Director, any 
other issues raised may be consolidated with the discrimination 
complaint for processing under these regulations. Any issues which are 
not so consolidated shall continue to be processed under those 
procedures in which they were originally raised.
    (b) The submission of class complaints alleging illegal 
discrimination as defined above will be handled in accordance with the 
procedure outlined in subpart C.



Sec. 1225.5  Representation.

    Any aggrieved party may be represented and assisted in all stages of 
these procedures by an attorney or representative of his or her own 
choosing. An aggrieved party must immediately inform the agency if 
counsel is retained. Attorney fees or other appropriate relief may be 
awarded in the following circumstances:
    (a) Informal adjustment of a complaint. An informal adjustment of a 
complaint may include an award of attorney fees or other relief deemed 
appropriate by the EO Director. Where the parties agree on an adjustment 
of the complaint, but cannot agree on whether attorney fees or costs 
should be awarded, or on their amount, this issue may be appealed to the 
appropriate Director to be determined in the manner detailed in 
Sec. 1225.11 of this part.
    (b) Final Agency Decision. When discrimination is found, the 
appropriate Director shall advise the complainant that any request for 
attorney fees or costs must be documented and submitted for review 
within 20 calendar days after his or her receipt of the final agency 
decision. The amount of such awards shall be determined under 
Sec. 1225.11. In the unusual situation in which it is determined not to 
award attorney fees or other costs to a prevailing complainant, the 
appropriate Director in his or her final decision shall set forth the 
specific reasons thereof.



Sec. 1225.6  Freedom from reprisal.

    Aggrieved parties, their representatives, and witnesses will be free 
from restraint, interference, coercion, discrimination, or reprisal at 
any stage in the presentation and processing of a complaint, including 
the counseling stage described in Sec. 1225.8 of this part, or any time 
thereafter.



Sec. 1225.7  Review of allegations of reprisal.

    An aggrieved party, his or her representative, or a witness who 
alleges restraint, interference, coercion, discrimination, or reprisal 
in connection with the presentation of a complaint under this part, may, 
if covered by this part, request in writing that the allegation be 
reviewed as an individual complaint of discrimination subject to the 
procedures described in Subpart B or that the allegation be considered 
as an issue in the complaint at hand.



      Subpart B--Processing Individual Complaints of Discrimination



Sec. 1225.8  Precomplaint procedure.

    (a) An aggrieved person who believes that he or she has been subject 
to illegal dicrimination shall bring such allegations to the attention 
of the appropriate Counselor within 30 days of the alleged 
discrimination to attempt to resolve them. The process for notifying the 
appropriate Counselor is the following:
    (1) Aggrieved applicants, trainees or Volunteers who have not 
departed for

[[Page 67]]

overseas assignments, or who have returned to Washington for any 
administrative reason shall direct their allegations to the EO Director 
for assignment to an appropriate Counselor.
    (2) Aggrieved trainees or Volunteers overseas shall direct their 
allegations to the designated Counselor for that post.
    (3) Aggrieved applicants, trainees, and Volunteers applying for, or 
enrolled in ACTION domestic programs shall direct their allegations to 
the designated Counselor for that Region.
    (b) Upon receipt of the allegation, the Counselor or designee shall 
make whatever inquiry is deemed necessary into the facts alleged by the 
aggrieved party and shall counsel the aggrieved party for the purpose of 
attempting an informal resolution agreeable to all parties. The 
Counselor will keep a written record of his or her activities which will 
be submitted to the EO Director if a formal complaint concerning the 
matter is filed.
    (c) If after such inquiry and counseling an informal resolution to 
the allegation is not reached, the Counselor shall notify the aggrieved 
party in writing of the right to file a complaint of discrimination with 
the EO Director within 15 calendar days of the aggrieved party's receipt 
of the notice.
    (d) The Counselor shall not reveal the identity of the aggrieved 
party who has come to him or her for consultation, except when 
authorized to do so by the aggrieved party. However, the identity of the 
aggrieved party may be revealed once the agency has accepted a complaint 
of discrimination from the aggrieved party.



Sec. 1225.9  Complaint procedure.

    (a) EO Director. (1) The EO Director must accept a complaint if the 
process set forth above has followed, and the complaint states a charge 
of illegal discrimination. The agency will extend the time limits set 
herein (a) when the complainant shows that he or she was not notified of 
the time limits and was not otherwise aware of them, or (b) the 
complainant shows that he or she was prevented by circumstances beyond 
his or her control from submitting the matter in a timely fashion, or 
(c) for other reasons considered sufficiently by the agency. At any time 
during the complaint procedure, the EO Director may cancel a complaint 
because of failure of the aggrieved party to prosecute the complaint. If 
the complaint is rejected for failure to meet one or more of the 
requirements set out in the procedure outlined in Sec. 1225.8 or is 
cancelled, the EO Director shall inform the aggrieved party in writing 
of this Final Agency Decision; that the Peace Corps or ACTION will take 
no further action; and of the right, to file a civil action as described 
in Sec. 1225.21 of this part.
    (2) Upon acceptance of the complaint and receipt of the Counselor's 
report, the EO Director shall provide for the prompt investigation of 
the complaint. Whenever possible, the person assigned to investigate the 
complaint shall occupy a position in the agency which is not, directly 
or indirectly, under the jurisdiction of the head of that part of the 
agency in which the complaint arose. The investigation shall include a 
thorough review of the circumstances under which the alleged 
discrimination occurred, and any other circumstances which may 
constitute, or appear to constitute discrimination against the 
complainant. The investigator shall compile an investigative file, which 
includes a summary of the investigation, recommended findings of fact 
and a recommended resolution of the complaint. The investigator shall 
forward the investigative file to the EO Director and shall provide the 
complainant with a copy.
    (3) The EO Director shall review the complaint file including any 
additional statements provided by the complainant, make findings of 
fact, and shall offer an adjustment of the complaint if the facts 
support the complaint. If the proposed adjustment is agreeable to all 
parties, the terms of the adjustment shall be reduced to writing, signed 
by both parties, and made part of the complaint file. A copy of the 
terms of the adjustment shall be provided the complainant. If the 
proposed adjustment of the complaint is not acceptable to the 
complainant, or the EO Director determines that such an offer is 
inappropriate, the EO Director shall forward the complaint file with a 
written notification of the findings of facts, and his

[[Page 68]]

or her recommendation of the proposed disposition of the complaint to 
the appropriate Director. The aggrieved party shall receive a copy of 
the notification and recommendation and shall be advised of the right to 
appeal the recommended disposition to the appropriate Director. Within 
ten (10) calendar days of receipt of such notice, the complainant may 
submit his or her appeal of the recommended disposition to the 
appropriate Director.
    (b) Appeal to Director. If no timely notice of appeal is received 
from the aggrieved party, the appropriate Director or designee may adopt 
the proposed disposition as the Final Agency Decision. If the aggrieved 
party appeals, the appropriate Director or designee, after review of the 
total complaint file, shall issue a decision to the aggrieved party. The 
decision of the appropriate Director shall be in writing, state the 
reasons underlying the decision, shall be the Final Agency Decision, 
shall inform the aggrieved party of the right to file a civil action as 
described in Sec. 1225.21 of this part, and, if appropriate, designate 
the procedure to be followed for the award of attorney fees or costs.



Sec. 1225.10  Corrective action.

    When it has been determined by Final Agency Decision that the 
aggrieved party has been subjected to illegal discrimination, the 
following corrective actions may be taken:
    (a) Selection as a Trainee for aggrieved parties found to have been 
denied selection based on prohibited discrimination.
    (b) Reappointment to Volunteer service for aggrieved parties found 
to have been early-terminated as a result of prohibited discrimination. 
To the extent possible, a Volunteer will be placed in the same position 
previously held. However, reassignment to the specific country of prior 
service, or to the specific position previously held, is contingent on 
several programmatic considerations such as the continued availability 
of the position, or program in that country, and acceptance by the host 
country of such placement. If the same position is deemed to be no 
longer available, the aggrieved party will be offered a reassignment to 
a position in as similar circumstances to the position previously held, 
or to resign from service for reasons beyond his or her control. Such a 
reassignment may require both additional training and an additional two 
year commitment to volunteer service.
    (c) Provision for reasonable attorney fees and other costs incurred 
by the aggrieved party.
    (d) Such other relief as may be deemed appropriate by the Director 
of Peace Corps or ACTION.



Sec. 1225.11  Amount of attorney fees.

    (a) When a decision of the agency provides for an award of 
attorney's fees or costs, the complainant's attorney shall submit a 
verified statement of costs and attorney's fees as appropriate, to the 
agency within 20 days of receipt of the decision. A statement of 
attorney's fees shall be accompanied by an affidavit executed by the 
attorney of record itemizing the attorney's charges for legal services. 
Both the verified statement and the accompanying affidavit shall be made 
a part of the complaint file. The amount of attorney's fees or costs to 
be awarded the complainant shall be determined by agreement between the 
complainant, the complainant's representative and the appropriate 
Director. Such agreement shall immediately be reduced to writing. If the 
complainant, the representative and the agency cannot reach an agreement 
on the amount of attorney's fees or costs within 20 calendar days of 
receipt of the verified statement and accompanying affidavit, the 
appropriate Director shall issue a decision determining the amount of 
attorney fees or costs within 30 calendar days of receipt of the 
statement and affidavit. Such decision shall include the specific 
reasons for determining the amount of the award.
    (b) The amount of attorney's fees shall be made in accordance with 
the following standards: The time and labor required, the novelty and 
difficulty of the questions, the skills requisite to perform the legal 
service properly, the preclusion of other employment by the attorney due 
to acceptance of the case, the customary fee, whether the fee is fixed 
or contingent, time limitation imposed by the

[[Page 69]]

client or the circumstances, the amount involved and the results 
obtained, the experience, reputation, and ability of the attorney, the 
undesirability of the case, the nature and length of the professional 
relationship with the client, and the awards in similar cases.



        Subpart C--Processing Class Complaints of Discrimination



Sec. 1225.12  Precomplaint procedure.

    An applicant, trainee or Volunteer who believes that he or she is 
among a group of present or former Peace Corps or ACTION Volunteers, 
trainees, or applicants for volunteer service who have been illegally 
discriminated against and who wants to be an agent for the class shall 
follow those precomplaint procedures outlined in Sec. 1225.8 of this 
part.



Sec. 1225.13  Acceptance, rejection or cancellation of complaint.

    (a) Upon receipt of a class complaint, the Counselor's report, and 
any other information pertaining to timeliness or other relevant 
circumstances related to the complaint, the EO Director shall review the 
file to determine whether to accept or reject the complaint, or a 
portion thereof, for any of the following reasons:
    (1) It was not timely filed;
    (2) It consists of an allegation which is identical to an allegation 
contained in a previous complaint filed on behalf of the same class 
which is pending in the agency or which has been resolved or decided by 
the agency;
    (3) It is not within the purview of this subpart;
    (4) The agent failed to consult a Counselor in a timely manner;
    (5) It lacks specificity and detail;
    (6) It was not submitted in writing or was not signed by the agent;
    (7) It does not meet the following prerequisites.
    (i) The class is so numerous that a consolidated complaint of the 
members of the class is impractical;
    (ii) There are questions of fact common to the class;
    (iii) The claims of the agent of the class are representative of the 
claims of the class;
    (iv) The agent of the class, or his or her representative will 
fairly and adequately protect the interest of the class.
    (b) If an allegation is not included in the Counselor's report, the 
EO Director shall afford the agent 15 calendar days to explain whether 
the matter was discussed and if not, why he or she did not discuss the 
allegation with the Counselor. If the explanation is not satisfactory, 
the EO Director may decide to reject the allegation. If the explanation 
is satisfactory, the EO Director may require further counseling of the 
agent.
    (c) If an allegation lacks specificity and detail, or if it was not 
submitted in writing or not signed by the agent, the EO Director shall 
afford the agent 30 days from his or her receipt of notification of the 
complaint defects to resubmit an amended complaint. The EO Director may 
decide that the agency reject the complaint if the agent fails to 
provide such information within the specified time period. If the 
information provided contains new allegations outside the scope of the 
complaint, the EO Director must advise the agent how to proceed on an 
individual or class basis concerning these allegations.
    (d) The EO Director may extend the time limits for filing a 
complaint and for consulting with a Counselor when the agent, or his or 
her representative, shows that he or she was not notified of the 
prescribed time limits and was not otherwise aware of them or that he or 
she was prevented by circumstances beyond his or her control from acting 
within the time limit.
    (e) When appropriate, the EO Director may determine that a class be 
divided into subclasses and that each subclass be treated as a class, 
and the provisions of this section then shall be construed and applied 
accordingly.
    (f) The EO Director may cancel a complaint after it has been 
accepted because of failure of the agent to prosecute the complaint. 
This action may be taken only after:
    (1) The EO Director has provided the agent a written request, 
including notice of proposed cancellation, that he or she provide 
certain information or otherwise proceed with the complaint; and

[[Page 70]]

    (2) Within 30 days of his or her receipt of the request.
    (g) An agent must be informed by the EO Director in a request under 
paragraph (b) or (c) of this section that his or her complaint may be 
rejected if the information is not provided.



Sec. 1225.14  Consolidation of complaints.

    The EO Director may consolidate the complaint if it involves the 
same or sufficiently similar allegations as those contained in a 
previous complaint filed on behalf of the same class which is pending in 
the agency or which has been resolved or decided by the agency.



Sec. 1225.15  Notification and opting out.

    (a) Upon acceptance of a class complaint, the agency, within 30 
calendar days, shall use reasonable means, such as delivery, mailing, 
distribution, or posting, to notify all class members of the existence 
of the class complaint.
    (b) A notice shall contain:
    (1) The name of the agency or organizational segment thereof, its 
location and the date of acceptance of the complaint;
    (2) A description of the issues accepted as part of the class 
complaint;
    (3) An explanation that class members may remove themselves from the 
class by notifying the agency within 30 calendar days after issuance of 
the notice; and
    (4) An explanation of the binding nature of the final decision or 
resolution of the complaint.



Sec. 1225.16  Investigation and adjustment of complaint.

    The complaint shall be processed promptly after it has been 
accepted. Once a class complaint has been accepted, the procedure 
outlined in Sec. 1225.9 of this part shall apply.



Sec. 1225.17  Agency decision.

    (a) If an adjustment of the complaint cannot be made the procedures 
outlined in Sec. 1225.9 shall be followed by the EO Director except that 
any notice required to be sent to the aggrieved party shall be sent to 
the agent of the class or his or her representative.
    (b) The Final Agency Decision on a class complaint shall be binding 
on all members of the class.



Sec. 1225.18  Notification of class members of decision.

    Class members shall be notified by the agency of the final agency 
decision and corrective action, if any, using at the minimum, the same 
media employed to give notice of the existence of the class complaint. 
The notice, where appropriate, shall include information concerning the 
rights of class members to seek individual relief and of the procedures 
to be followed. Notice shall be given by the agency within ten (10) 
calendar days of the transmittal of its decision to the agent.



Sec. 1225.19  Corrective action.

    (a) When discrimination is found, Peace Corps or ACTION must take 
appropriate action to eliminate or modify the policy or practice out of 
which such discrimination arose, and provide individual corrective 
action to the agent and other class members in accordance with 
Sec. 1225.10 of this part.
    (b) When discrimination is found and a class member believes that 
but for that discrimination he or she would have been accepted as a 
Volunteer or received some other volunteer service benefit, the class 
member may file a written claim with the EO Director within thirty (30) 
calendar days of notification by the agency of its decision.
    (c) The claim must include a specific, detailed statement showing 
that the claimant is a class member who was affected by an action or 
matter resulting from the discriminatory policy or practice which arose 
not more than 30 days preceding the filing of the class complaint.
    (d) The agency shall attempt to resolve the claim within sixty (60) 
calendar days after the date the claim was postmarked, or, in the 
absence of a postmark, within sixty (60) calendar days after the date it 
was received by the EO Director.



Sec. 1225.20  Claim appeals.

    (a) If the EO Director and claimant do not agree that the claimant 
is a member of the class, or upon the relief to which the claimant is 
entitled, the

[[Page 71]]

EO Director shall refer the claim, with recommendations concerning it to 
the appropriate Director for Final Agency Decision and shall so notify 
the claimant. The class member may submit written evidence to the 
appropriate Director concerning his or her status as a member of the 
class. Such evidence must be submitted no later than ten (10) calendar 
days after receipt of referral.
    (b) The appropriate Director shall decide the issue within thirty 
(30) days of the date of referral by the EO Director. The claimant shall 
be informed in writing of the decision and its basis and that it will be 
the Final Agency Decision on the issue.



Sec. 1225.21  Statutory rights.

    (a) A Volunteer, trainee, or applicant is authorized to file a civil 
action in an appropriate U.S. District Court:
    (1) Within thirty (30) calendar days of his or her receipt of notice 
of final action taken by the agency.
    (2) After one hundred eighty (180) calendar days from the date of 
filing a complaint with the agency if there has been no final agency 
action.
    (b) For those complaints alleging discrimination that occur outside 
the United States, the U.S. District Court for the District of Columbia 
shall be deemed the appropriate forum.



PART 1226--PROHIBITIONS ON ELECTORAL AND LOBBYING ACTIVITIES--Table of Contents




                      Subpart A--General Provisions

Sec.
1226.1  Purpose.
1226.2  Scope.
1226.3  Definitions.

                   Subpart B--Sponsoring Organization

1226.4  General.
1226.5  Electoral, voter registration, and other activities.

                     Subpart C--Volunteer Activities

1226.6  General.
1226.7  Scope.
1226.8  Prohibited activities.
1226.9  Exceptions.
1226.10  Hatch Act restrictions.
1226.11  Part time volunteers.

                 Subpart D--Sponsor Employee Activities

1226.12  Sponsor employees.
1226.13  Obligation of sponsors.

    Authority: Secs. 403, 415(b), Pub. L. 93-113, 87 Stat. 408, 411-412.

    Source: 46 FR 8522, Jan. 27, 1981, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 1226.1  Purpose.

    This part implements provisions of the Domestic Volunteer Service 
Act, 1973, 87 Stat. 394, Pub. L. 93-113, as amended, hereinafter 
referred to as the Act, pertaining to the prohibited use of Federal 
funds or the involvement of agency programs and volunteers in electoral 
and lobbying activities. These regulations are designed to define and 
clarify the nature and scope of prohibited activities to ensure that 
programs under the Act and volunteer activities are conducted within the 
statutory bounds established by the Act. The penalties for violation of 
the regulations are also prescribed. The statutory source of the 
prohibitions upon electoral and lobbying activities is section 403 (a) 
and (b) of the Act. Rules applying to the Hatch Act (Title III of 
chapter 73, title 5, United States Code) to full time and certain part 
time volunteers, as required by section 415(b) of the Act, are also set 
forth herein.



Sec. 1226.2  Scope.

    This part applies, except where otherwise noted, to all full time 
and part time volunteers serving in a program authorized by the Act, 
including VISTA, Service Learning and the Older American Volunteer 
Programs. It also applies to employees of sponsoring organizations, 
whose salaries, or other compensation, are paid, in whole or in part, 
with agency funds.



Sec. 1226.3  Definitions.

    (a) The Act means the Domestic Volunteer Service Act of 1973, as 
amended, Pub. L. 93-113 (42 U.S.C. 4951 et seq.).
    (b) Assistance means funds, volunteers or volunteer training, which 
is paid for from funds appropriated for the purpose of supporting 
activities under the Act, and includes locally provided funds required 
by law, regulation or

[[Page 72]]

policy as a local contribution to activities authorized by the Act.
    (c) Full time when used in the context of volunteer service, means 
service of not less than 35 hours per week.
    (d) Part time when used in the context of volunteer service, means 
service that is less than full time.
    (e) Recipient or sponsor organization means any organization that 
receives assistance under the Act.
    (f) Volunteer means an individual enrolled for service in a program 
or project that is authorized by or which receives assistance under the 
Act.
    (g) Legislative body includes the United States Congress, State and 
Territorial Legislatures and locally elected or appointed bodies with 
the authority to enact laws.
    (h) Public office includes any Federal, State, local elective, or 
party office.
    (i) Party office means an elective position in a national, state or 
local organization or committees or convention of such organization, 
which has, as a principal purpose, support or opposition to candidates 
for public office.
    (j) Legislation means bills, resolutions, amendments, nominations 
and other matters pending or proposed in a legislative body and includes 
any other matter which may be the subject of action by the legislative 
body.



                   Subpart B--Sponsoring Organization



Sec. 1226.4  General.

    Under section 403 of the Act, volunteer programs may not be 
conducted in a manner which supports or results in the identification of 
such programs with prohibited activities. This section prescribes the 
nature and extent of involvement in such activity by an organization 
which would preclude the assignment of volunteers to the organization.



Sec. 1226.5  Electoral, voter registration, and other activities.

    Volunteers or other assistance, in any program under the Act shall 
not be assigned or provided to an organization if a principal purpose or 
activity of the organization includes any of the following activities:
    (a) Electoral Activities. Any activity designed to influence the 
outcome of elections to any public office, such as:
    (1) Actively campaigning for or against or supporting candidates for 
public office;
    (2) Raising, soliciting or collecting funds for candidates for 
public office;
    (3) Preparing, distributing or providing funds for campaign 
literature for candidates, including leaflets pamphlets, and material 
designed for the print or electronic media;
    (b) Voter Registration Activities. Any voter registration activity, 
such as
    (1) Providing transportation of individuals to voter registration 
sites;
    (2) Providing assistance to individuals in the process of 
registering to vote, including determinations of eligibility;
    (3) Disseminating official voter registration material.
    (c) Transportation to the Polls. Providing voters or prospective 
voters with transportation to the polls or raising, soliciting or 
collecting funds for such activity.
    (d) Any program sponsor which, subsequent to the receipt of any 
federal assistance under the Act, makes as one of its principal purposes 
or activities any of the activities described in Sec. 1226.5 hereof 
shall be subject to the suspension or termination of such assistance, as 
provided in 45 CFR part 1206.



                     Subpart C--Volunteer Activities



Sec. 1226.6  General.

    (a) All volunteers, full and part time, are subject to the 
prohibitions on expenditure of federal funds for partisan and 
nonpartisan electoral activities, voter registration activities and 
transportation of voters to the polls, and efforts to influence the 
passage or defeat of legislation, as contained in section 403 of the 
Act.
    (b) Full time volunteers, and certain part time volunteers as 
specified herein, are also subject to the restrictions in subchapter 
III, chapter 73 of title 5, United States Code, commonly referred to as 
the Hatch Act, as provided in section 415(b) of the Act.

[[Page 73]]



Sec. 1226.7  Scope.

    The provisions in this subpart are applicable to full time 
volunteers as defined in Sec. 1226.3(c), and to such part time 
volunteers as may be otherwise specified herein. Full time volunteers 
are deemed to be acting in their capacity as volunteers:
    (a) When they are actually engaged in their volunteer assignments. 
VISTA volunteers and other full time volunteers who are required to 
serve without regard to regular working hours are presumed to be 
actually engaged in their volunteer assignments at all times, except 
during periods of authorized leave; or
    (b) Whenever they represent themselves, or may reasonably be 
perceived by others, to be performing as a volunteer.



Sec. 1226.8  Prohibited activities.

    (a) Electoral Activity. Volunteers shall not engage in any activity 
which may, directly or indirectly, affect or influence the outcome of 
any election to public office. Volunteers are prohibited from engaging 
in activities such as:
    (1) Any activity in support of, or in opposition to a candidate for 
election to public office in a partisan or nonpartisan election;
    (2) Participating in the circulation of petitions, or the gathering 
of signatures on nominating petitions or similar documents for 
candidates for public office.
    (3) Raising, soliciting, or collecting funds for a candidate for 
public office;
    (4) Preparing, distributing or providing funds for campaign material 
for candidates, including leaflets, pamphlets, brochures and material 
designed for the print or electronic media;
    (5) Organizing political meetings or forums;
    (6) Canvassing voters on behalf of a candidate for public office;
    (7) Raising, soliciting or collecting funds for groups that engage 
in any of the activities described in paragraphs (a) (1) through (6) of 
this section.
    (b) Voter Registration. Volunteers shall not engage in any voter 
registration activity, including:
    (1) Providing transportation of individuals to voter registration 
sites;
    (2) Providing assistance to individuals in the process of 
registering to vote, including determinations of eligibility;
    (3) The dissemination of official voter registration materials; or
    (4) Raising, soliciting or collecting funds to support activities 
described in paragraphs (b) (1) through (3) of this section.
    (c) Transportation to the Polls. Volunteers shall not engage in any 
activity to provide voters or prospective voters with transportation to 
the polls, nor shall they collect, raise, or solicit funds to support 
such activity, including securing vehicles for such activity.
    (d) Efforts to Influence Legislation. Except as provided in 
Sec. 1226.9, volunteers shall not engage in any activity for the purpose 
of influencing the passage or defeat of legislation or any measures on 
the ballot at a general or special election. For example, volunteers 
shall not:
    (1) Testify or appear before legislative bodies in regard to 
proposed or pending legislation;
    (2) Make telephone calls, write letters, or otherwise contact 
legislators or legislative staff, concerning proposed or pending 
legislation for the purpose of influencing the passage or defeat of such 
legislation;
    (3) Draft legislation;
    (4) Prepare legislative testimony;
    (5) Prepare letters to be mailed by third parties to members of 
legislative bodies concerning proposed or pending legislation;
    (6) Prepare or distribute any form of material, including pamphlets, 
newspaper columns, and material designed for either the print or 
electronic media, which urges recipients to contact their legislator or 
otherwise seek passage or defeat of legislation;
    (7) Raise, collect or solicit funds to support efforts to affect the 
passage or defeat of legislation;
    (8) Engage in any of the activities set forth in paragraphs (d) (1) 
through (7) of this section for the purpose of influencing executive 
action in approving or vetoing legislation.
    (9) Circulate petitions, gather signatures on petitions, or urge or 
organize others to do so, which seek to have

[[Page 74]]

measures placed on the ballot at a general or special election.
    (10) Engage in any of the activities enumerated in paragraphs (d) 
(1) through (9) of this section in regard to the passage or defeat of 
any measure on the ballot in a general or special election.



Sec. 1226.9  Exceptions.

    (a) A volunteer may draft, review, testify or make representations 
to a legislative body regarding a legislative measure upon request of 
the legislative body, a committee, or a member thereof, provided that:
    (1) The request to draft, review, testify or make representations is 
in writing, addressed to the volunteer or the organization to which the 
volunteer is assigned or placed, and signed by a member or members of 
the legislative body.
    (2) The request states the type of representation or assistance 
requested and the issue to be addressed.
    (3) The volunteer or the program sponsor provides a copy of such 
request to the State Director.
    (b) The volunteer may draft, review, testify, or make a written 
representation to a legislative body regarding an authorization or 
appropriation measure directly affecting the operation of the project or 
program to which he or she is assigned: Provided:
    (1) The sponsor organization provides notification to the State 
Director on a quarterly basis of all activity occurring pursuant to this 
exception.
    (2) The legislative measure relates to the funding of the project or 
program or affects the existence or basic structure of the project or 
program.
    (c) Notwithstanding the foregoing exceptions, any activity by a 
volunteer pursuant to paragraph (b) (1) or (2) of this section shall be 
incidental to his or her regular work assignment.



Sec. 1226.10  Hatch Act restrictions.

    (a) In addition to the prohibitions described above, full time 
volunteers are subject to the Hatch Act, subchapter III, of chapter 73, 
title 5, United States Code. Full time volunteers shall not, directly or 
indirectly, actively participate in political management or in political 
campaigns. All volunteers retain the right to vote as they choose and to 
express their personal opinions on political issues or candidates. 
Examples of prohibited activities, include, but are not limited to,
    (1) Candidacy for or service as a delegate or alternate to any 
political convention or service as an officer or employee thereof.
    (2) Acting as an officer of a primary meeting or caucus, addressing, 
making motions, preparing or presenting resolutions, representing 
others, or otherwise taking part in such meetings or caucuses.
    (3) Organizing or conducting a political meeting or rally on any 
political matter.
    (4) Holding office as a precinct or ward leader or representative, 
or service on any committee of a political party. It is not necessary 
that the service of the volunteer itself be political in nature to fall 
within the prohibition.
    (5) Organizing a political club, being an officer of such a club, 
being a member of any of its committees, or representing the members of 
a political club in meetings or conventions.
    (6) Soliciting, collecting, receiving, disbursing or otherwise 
handling contributions made for political purposes.
    (7) Selling or soliciting pledges for dinner tickets or other 
activities of political organizations or candidates, or for their 
benefit.
    (8) Distributing campaign literature, badges, buttons, 
bumperstickers or posters.
    (9) Publishing or being editorially connected with a newspaper or 
other publication generally known as partisan from a political 
standpoint.
    (10) Writing for publication or publishing any letter or article, 
signed or unsigned, soliciting votes in favor of or in opposition to any 
political party, candidate or faction.
    (11) Soliciting votes, helping get out the vote, acting as a 
checker, watcher or challenger for any party or faction, transporting 
voters to or from the polls, or transporting candidates on canvassing or 
speaking tours.
    (12) Participation in or organizing a political parade.
    (13) Initiating nominating petitions or acting as a canvasser or 
witness on such petitions.

[[Page 75]]

    (14) Being a candidate for nomination or election to a National, 
State, or local office.
    (b) Hatch Act restrictions apply to full time volunteers at all 
times during their service, including off-duty hours, leave, holidays 
and vacations.



Sec. 1226.11  Part time volunteers.

    (a) The provisions in this section are applicable to part time 
volunteers, as defined in Sec. 1226.3(d). There are two categories of 
part time volunteers:
    (1) Those enrolled for periods of service of at least twenty (20) 
hours per week for not less than twenty-six (26) consecutive weeks, as 
authorized under title I, part C of the Act, and
    (2) All other part time volunteers, including Senior Companions, 
Foster Grandparents and Retired Senior Volunteers.
    (b) All part time volunteers are subject to the restrictions 
described in Sec. 1226.8 (a), (b), (c) and (d) and the exceptions in 
Sec. 1226.9:
    (1) When they are engaged in their volunteer assignments, in 
training activities, or other related activities supported by ACTION 
funds, or
    (2) Whenever they represent themselves as ACTION volunteers, or may 
reasonably be perceived by others to be performing as volunteers.
    (c) The restrictions described in Sec. 1226.10, pertaining to the 
Hatch Act, are applicable to volunteers enrolled for periods of service 
of at least 20 hours per week for not less than 26 consecutive weeks, as 
authorized under title I, part C of the Act:
    (1) At all times in any day on which they serve as volunteers, or 
when engaged in activities related to their volunteer assignments, such 
as training; or
    (2) Whenever they represent themselves as volunteers or may 
reasonably be perceived by others to be performing as volunteers.



                 Subpart D--Sponsor Employee Activities



Sec. 1226.12  Sponsor employees.

    Sponsor employees whose salaries or other compensation are paid, in 
whole or in part, with agency funds are subject to the restrictions 
described in Sec. 1226.8 (a), (b), (c) and (d) and the exceptions in 
Sec. 1226.9:
    (a) Whenever they are engaged in an activity which is supported by 
ACTION funds; or
    (b) Whenever they identify themselves as acting in their capacity as 
an official of a project which receives ACTION funds, or could 
reasonably be perceived by others as acting in such capacity.



Sec. 1226.13  Obligations of sponsors.

    (a) It shall be the obligation of program sponsors to ensure that 
they:
    (1) Fully understand the restrictions on volunteer activity set 
forth herein;
    (2) Provide training to volunteers on the restrictions and ensure 
that all other training materials used in training volunteers are fully 
consistent with these restrictions;
    (3) Monitor on a continuing basis the activity of volunteers for 
compliance with this provision;
    (4) Report all violations, or questionable situations, immediately 
to the State Director.
    (b) Failure of a sponsor to meet the requirements set forth in 
paragraph (a) of this section, or a violation of the rules contained 
herein by either the sponsor, the sponsor's employees subject to 
Sec. 1226.12 or the volunteers assigned to the sponsor, at any time 
during the course of the grant may be deemed to be a material failure to 
comply with the terms and conditions of the grant as that term is used 
in 45 CFR 1206.1 regarding suspension and termination of assistance or a 
violation of the Project Memorandum of Agreement, as applicable. The 
sponsor

[[Page 76]]

shall be subject to the procedures and penalties contained in 45 CFR 
1206.1.
    (c) Violation by a volunteer of any of the rules and regulations set 
forth herein may be cause for suspension or termination as set forth in 
45 CFR 1213.5-5(2) or other disciplinary action.



PART 1229--GOVERNMENTWIDE DEBARMENT AND SUSPENSION (NONPROCUREMENT) AND GOVERNMENTWIDE REQUIREMENTS FOR DRUG-FREE WORKPLACE (GRANTS)--Table of Contents




                           Subpart A--General

Sec.
1229.100  Purpose.
1229.105  Definitions.
1229.110  Coverage.
1229.115  Policy.

                       Subpart B--Effect of Action

1229.200  Debarment or suspension.
1229.205  Ineligible persons.
1229.210  Voluntary exclusion.
1229.215  Exception provision.
1229.220  Continuation of covered transactions.
1229.225  Failure to adhere to restrictions.

                          Subpart C--Debarment

1229.300  General.
1229.305  Causes for debarment.
1229.310  Procedures.
1229.311  Investigation and referral.
1229.312  Notice of proposed debarment.
1229.313  Opportunity to contest proposed debarment.
1229.314  Debarring official's decision.
1229.315  Settlement and voluntary exclusion.
1229.320  Period of debarment.
1229.325  Scope of debarment.

                          Subpart D--Suspension

1229.400  General.
1229.405  Causes for suspension.
1229.410  Procedures.
1229.411  Notice of suspension.
1229.412  Opportunity to contest suspension.
1229.413  Suspending official's decision.
1229.415  Period of suspension.
1229.420  Scope of suspension.

       Subpart E--Responsibilities of GSA, Agency and Participants

1229.500  GSA responsibilities.
1229.505  ACTION responsibilities.
1229.510  Participants' responsibilities.

          Subpart F--Drug-Free Workplace Requirements (Grants)

1229.600  Purpose.
1229.605  Definitions.
1229.610  Coverage.
1229.615  Grounds for suspension of payments, suspension or termination 
          of grants, or suspension or debarment.
1229.620  Effect of violation.
1229.625  Exception provision.
1229.630  Certification requirements and procedures.
1229.635  Reporting of and employee sanctions for convictions of 
          criminal drug offenses.

Appendix A to Part 1229--Certification Regarding Debarment, Suspension, 
          and Other Responsibility Matters--Primary Covered Transactions
Appendix B to Part 1229--Certification Regarding Debarment, Suspension, 
          Ineligibility and Voluntary Exclusion--Lower Tier Covered 
          Transactions
Appendix C to Part 1229--Certification Regarding Drug-Free Workplace 
          Requirements

    Authority: E.O. 12549: Sec. 5151-5160 of the Drug-Free Workplace Act 
of 1988 (Pub. L. 100-690, Title V, Subtitle D; 41 U.S.C. 701 et seq); 
Pub. L. 93-113; 42 U.S.C. 4951, et seq; 42 U.S.C. 5060.

    Source: 53 FR 19202 and 19204, May 26, 1988, unless otherwise noted.

    Cross Reference: See also Office of Management and Budget notice 
published at 55 FR 21679, May 25, 1990.



                           Subpart A--General



Sec. 1229.100  Purpose.

    (a) Executive Order 12549 provides that, to the extent permitted by 
law, Executive departments and agencies shall participate in a 
governmentwide system for nonprocurement debarment and suspension. A 
person who is debarred or suspended shall be excluded from Federal 
financial and nonfinancial assistance and benefits under Federal 
programs and activities. Debarment or suspension of a participant in a 
program by one agency shall have governmentwide effect.
    (b) These regulations implement section 3 of Executive Order 12549 
and the guidelines promulgated by the Office of Management and Budget 
under section 6 of the Executive Order by:
    (1) Prescribing the programs and activities that are covered by the 
governmentwide system;

[[Page 77]]

    (2) Prescribing the governmentwide criteria and governmentwide 
minimum due process procedures that each agency shall use;
    (3) Providing for the listing of debarred and suspended 
participants, participants declared ineligible (see definition of 
``ineligible'' in Sec. 1229.105(i)), and participants who have 
voluntarily excluded themselves from participation in covered 
transactions
    (4) Setting forth the consequences of a debarment, suspension, 
determination of ineligibility, or voluntary exclusion; and
    (5) Offering such other guidance as necessary for the effective 
implementation and administration of the governmentwide system.
    (c) Although these regulations cover the listing of ineligible 
participants and the effect of such listing, they do not prescribe 
policies and procedures governing declarations of ineligibility.



Sec. 1229.105  Definitions.

    (a) Adequate evidence. Information sufficient to support the 
reasonable belief that a particular act or omission has occurred.
    (b) Affiliate. Persons are affiliates of each another if, directly 
or indirectly, either one controls or has the power to control the 
other, or, a third person controls or has the power to control both. 
Indicia of control include, but are not limited to: Interlocking 
management or ownership, identity of interests among family members, 
shared facilities and equipment, common use of employees, or a business 
entity organized following the suspension or debarment of a person which 
has the same or similar management, ownership, or principal employees as 
the suspended, debarred, ineligible, or voluntarily excluded person.
    (c) Agency. Any executive department, military department or defense 
agency or other agency of the executive branch, excluding the 
independent regulatory agencies.
    (d) Civil judgment. The disposition of a civil action by any court 
of competent jurisdiction, whether entered by verdict, decision, 
settlement, stipulation, or otherwise creating a civil liability for the 
wrongful acts complained of; or a final determination of liability under 
the Program Fraud Civil Remedies Act of 1988 (31 U.S.C. 3801-12).
    (e) Conviction. A judgment of conviction of a criminal offense by 
any court of competent jurisdiction, whether entered upon a verdict or a 
plea, including a plea of nolo contendere.
    (f) Debarment. An action taken by a debarring official in accordance 
with these regulations to exclude a person from participating in covered 
transactions. A person so excluded is ``debarred.''
    (g) Debarring official. An official authorized to impose debarment. 
The debarring official is either:
    (1) The agency head, or
    (2) An official designated by the agency head.
    (h) Indictment. Indictment for a criminal offense. An information or 
other filing by competent authority charging a criminal offense shall be 
given the same effect as an indictment.
    (i) Ineligible. Excluded from participation in Federal 
nonprocurement programs pursuant to a determination of ineligibility 
under statutory, executive order, or regulatory authority, other than 
Executive Order 12549 and its agency implementing regulations; for 
exemple, excluded pursuant to the Davis-Bacon Act and its implementing 
regulations, the equal employment opportunity acts and executive orders, 
or the environmental protection acts and executive orders. A person is 
ineligible where the determination of ineligibility affects such 
person's eligibility to participate in more than one covered 
transaction.
    (j) Legal proceedings. Any criminal proceeding or any civil judicial 
proceeding to which the Federal Government or a State of local 
government or quasi-governmental authority is a party. The term includes 
appeals from such proceedings.
    (k) Nonprocurement list. The portion of the List of Parties Excluded 
from Federal Procurement or Nonprocurement Programs complied, maintained 
and distributed by the General Services Administration (GSA) containing 
the names and other information about persons who have been debarred, 
suspended, or voluntarily excluded under

[[Page 78]]

Executive Order 12549 and these regulations, and those who have been 
determined to be ineligible.
    (l) Notice. A written communication served in person or sent by 
certified mail, return receipt requested, or its equivalent, to the last 
known address of a party, its identified counsel, its agent for service 
of process, or any partner, officer, director, owner, or joint venturer 
of the party. Notice, if undeliverable, shall be considered to have been 
received by the addressee five days after being properly sent to the 
last address known by the agency.
    (m) Participant. Any person who submits a proposal for, enters into, 
or reasonably may be expected to enter into a covered transaction. This 
term also includes any person who acts on behalf of or is authorized to 
commit a participant in a covered transaction as an agent or 
representative of another participant.
    (n) Person. Any individual, corporation, partnership, association, 
unit of government or legal entity, however organized, except: Foreign 
governments or foreign governmental entities, public international 
organizations, foreign government owned (in whole or in part) or 
controlled entities, and entities consisting wholly or partially of 
foreign governments or foreign governmental entities.
    (o) Preponderance of the evidence. Proof by information that, 
compared with that opposing it, leads to the conclusion that the fact at 
issue is more probably true than not.
    (p) Principal. Officer, director, owner, partner, key employee, or 
other person within a participant with primary management or supervisory 
responsibilities; or a person who has a critical influence on or 
substantive control over a covered transaction, whether or not employed 
by the participant. Persons who have a critical influence on or 
substantive control over a covered transaction are:
    (1) Principal investigators.
    (q) Proposal. A solicited or unsolicited bid, application, request, 
invitation to consider or similar communication by or on behalf of a 
person seeking to participate or to receive a benefit, directly or 
indirectly, in or under a covered transaction.
    (r) Respondent. A person against whom a debarment or suspension 
action has been initiated.
    (s) State. Any of the States of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, any territory or possession 
of the United States, or any agency of a State, exclusive of 
institutions of higher education, hospitals, and units of local 
government. A State instrumentality will be considered part of the State 
government if it has a written determination from a State government 
that such State considers that instrumentality to be an agency of the 
State government.
    (t) Suspending official. An official authorized to impose 
suspension. The suspending official is either:
    (1) The agency head, or
    (2) An official designated by the agency head.
    (u) Suspension. An action taken by a suspending official in 
accordance with these regulations that immediately excludes a person 
from participating in covered transactions for a temporary period, 
pending completion of an investigation and such legal, debarment, or 
Program Fraud Civil Remedies Act proceedings as may ensue. A person so 
excluded is ``suspended.''
    (v) Voluntary exclusion or voluntarily excluded. A status of 
nonparticipation or limited participation in covered transactions 
assumed by a person pursuant to the terms of a settlement.



Sec. 1229.110  Coverage.

    (a) These regulations apply to all persons who have participated, 
are currently participating or may reasonably be expected to participate 
in transactions under Federal nonprocurement programs. For purposes of 
these regulations such transactions will be referred to as ``covered 
transactions.''
    (1) Covered transaction. For purposes of these regulations, a 
covered transaction is a primary covered transaction or a lower tier 
covered transaction. Covered transactions at any tier need not involve 
the transfer of Federal funds.
    (i) Primary covered transaction. Except as noted in paragraph (a)(2) 
of this section, a primary covered transaction is

[[Page 79]]

any nonprocurement transaction between an agency and a person, 
regardless of type, including: Grants, cooperative agreements, 
scholarships, fellowships, contracts of assistance, loans, loan 
guarantees, subsidies, insurance, payments for specified use, donation 
agreements and any other nonprocurement transactions between a Federal 
agency and a person. Primary covered transactions also include those 
transactions specially designated by the U.S. Department of Housing and 
Urban Development in such agency's regulations governing debarment and 
suspension.
    (ii) Lower tier covered transaction. A lower tier covered 
transaction is:
    (A) Any transaction between a participant and a person other than a 
procurement contract for goods or services, regardless of type, under a 
primary covered transaction.
    (B) Any procurement contract for goods or services between a 
participant and a person, regardless of type, expected to equal or 
exceed the Federal procurement small purchase threshold fixed at 10 
U.S.C. 2304(g) and 41 U.S.C. 253(g) (currently $25,000) under a primary 
covered transaction.
    (C) Any procurement contract for goods or services between a 
participant and a person under a covered transaction, regardless of 
amount, under which that person will have a critical influence on or 
substantive control over that covered transaction. Such persons are:
    (1) Principal investigators.
    (2) Providers of federally-required audit services.
    (2) Exceptions. The following transactions are not covered:
    (i) Statutory entitlements or mandatory awards (but not subtier 
awards thereunder which are not themselves mandatory), including 
deposited funds insured by the Federal Government;
    (ii) Direct awards to foreign governments or public international 
organizations, or transactions with foreign governments or foreign 
governmental entities, public international organizations, foreign 
government owned (in whole or in part) or controlled entities, entities 
consisting wholly or partially of foreign governments or foreign 
governmental entities;
    (iii) Benefits to an individual as a personal entitlement without 
regard to the individual's present responsibility (but benefits received 
in an individual's business capacity are not excepted);
    (iv) Federal employment;
    (v) Transactions pursuant to national or agency-recognized 
emergencies or disasters;
    (vi) Incidental benefits derived from ordinary governmental 
operations; and
    (vii) Other transactions where the application of these regulations 
would be prohibited by law.
    (b) Relationship to other sections. This section describes the types 
of transactions to which a debarment or suspension under the regulations 
will apply. Subpart B, ``Effect of Action,'' Sec. 1229.200, ``Debarment 
or suspension,'' sets forth the consequences of a debarment or 
suspension. Those consequences would obtain only with respect to 
participants and principals in the covered transactions and activities 
described in Sec. 1229.110(a). Sections 1229.325, ``Scope of 
debarment,'' and 1229.420, ``Scope of suspension,'' govern the extent to 
which a specific participant or organizational elements of a participant 
would be automatically included within a debarment or suspension action, 
and the conditions under which affiliates or persons associated with a 
participant may also be brought within the scope of the action.
    (c) Relationship to Federal procurement activities. Debarment and 
suspension of Federal procurement contractors and subcontractors under 
Federal procurement contracts are covered by the Federal Acquisition 
Regulation (FAR), 48 CFR subpart 9.4.



Sec. 1229.115  Policy.

    (a) In order to protect the public interest, it is the policy of the 
Federal Government to conduct business only with responsible persons. 
Debarment and suspension are discretionary actions that, taken in 
accordance with Executive Order 12549 and these regulations, are 
appropriate means to implement this policy.
    (b) Debarment and suspension are serious actions which shall be used 
only in the public interest and for the Federal Government's protection 
and not for purposes of punishment. Agencies

[[Page 80]]

may impose debarment or suspension for the causes and in accordance with 
the procedures set forth in these regulations.
    (c) When more than one agency has an interest in the proposed 
debarment or suspension of a person, consideration shall be given to 
designating one agency as the lead agency for making the decision. 
Agencies are encouraged to establish methods and procedures for 
coordinating their debarment or suspension actions.



                       Subpart B--Effect of Action



Sec. 1229.200  Debarment or suspension.

    (a) Primary covered transactions. Except to the extent prohibited by 
law, persons who are debarred or suspended shall be excluded from 
primary covered transactions as either participants or principals 
throughout the executive branch of the Federal Government for the period 
of their debarment or suspension. Accordingly, no agency shall enter 
into primary covered transactions with such debarred or suspended 
persons during such period, except as permitted pursuant to 
Sec. 1229.215.
    (b) Loser tier covered transactions. Except to the extent prohibited 
by law, persons who have been debarred or suspended shall be excluded 
from participating as either participants or principals in all lower 
tier covered transactions (see Sec. 1229.110(a)(1)(ii)) for the period 
of their debarment or suspension.
    (c) Exceptions. Debarment or suspension does not affect a person's 
eligibility for:
    (1) Statutory entitlements or mandatory awards (but not subtier 
awards thereunder which are not themselves mandatory), including 
deposited funds insured by the Federal Government;
    (2) Direct awards to foreign governments or public international 
organizations, or transactions with foreign governments or foreign 
governmental entities, public international organizations, foreign 
government owned (in whole or in part) or controlled entities, and 
entities consisting wholly or partially of foreign governments or 
foreign governmental entities;
    (3) Benefits to an individual as a personal entitlement without 
regard to the individual's present responsibility (but benefits received 
in an individual's business capacity are not excepted);
    (4) Federal employment;
    (5) Transactions pursuant to national or agency-recognized 
emergencies or disasters;
    (6) Incidental benefits derived from ordinary governmental 
operations; and
    (7) Other transactions where the application of these regulations 
would be prohibited by law.



Sec. 1229.205  Ineligible persons.

    Persons who are ineligible, as defined in Sec. 1229.105(i), are 
excluded in accordance with the applicable statutory, executive order, 
or regulatory authority.



Sec. 1229.210  Voluntary exclusion.

    Persons who accept voluntary exclusions under Sec. 1229.315 are 
excluded in accordance with the terms of their settlements. ACTION 
shall, and participants may, contact the original action agency to 
ascertain the extent of the exclusion.



Sec. 1229.215  Exception provision.

    ACTION may grant an exception permitting a debarred, suspended, or 
voluntarily excluded person to participate in a particular covered 
transaction upon a written determination by the agency head or an 
authorized designee stating the reason(s) for deviating from the 
Presidential policy established by Executive Order 12549 and 
Sec. 1229.200 of this rule. However, in accordance with the President's 
stated intention in the Executive Order, exceptions shall be granted 
only infrequently. Exceptions shall be reported in accordance with 
Sec. 1229.505(a).



Sec. 1229.220  Continuation of covered transactions.

    (a) Notwithstanding the debarment, suspension, determination of 
ineligibility, or voluntary exclusion of any person by an agency, 
agencies and participants may continue covered transactions in existence 
at the time the person was debarred, suspended, declared ineligible, or 
voluntarily excluded. A decision as to the type of termination action, 
if any, to be taken

[[Page 81]]

should be made only after thorough review to ensure the propriety of the 
proposed action.
    (b) Agencies and participants shall not renew or extend covered 
transactions (other than no-cost time extensions) with any person who is 
debarred, suspended, ineligible, or voluntarily excluded, except as 
provided in Sec. 1229.215.



Sec. 1229.225  Failure to adhere to restrictions.

    Except as permitted under Sec. 1229.215 or Sec. 1229.220 of these 
regulations, a participant shall not knowingly do business under a 
covered transaction with a person who is debarred or suspended, or with 
a person who is ineligible for or voluntarily excluded from that covered 
transaction. Violation of this restriction may result in disallowance of 
costs, annulment or termination of award, issuance of a stop work order, 
debarment or suspension, or other remedies, as appropriate. A 
participant may rely upon the certification of a prospective participant 
in a lower tier covered transaction that it and its principals are not 
debarred, suspended, ineligible, or voluntarily excluded from the 
covered transaction (see Appendix B), unless it knows that the 
certification is erroneous. An agency has the burden of proof that such 
participant did knowingly do business with such a person.



                          Subpart C--Debarment



Sec. 1229.300  General.

    The debarring official may debar a person for any of the causes in 
Sec. 1229.305, using procedures established in Secs. 1229.310 through 
1229.314. The existence of a cause for debarment, however, does not 
necessarily require that the person be debarred; the seriousness of the 
person's acts or omissions and any mitigating factors shall be 
considered in making any debarment decision.



Sec. 1229.305  Causes for debarment.

    Debarment may be imposed in accordance with the provisions of 
Secs. 1229.300 through 1229.314 for:
    (a) Conviction of or civil judgment for:
    (1) Commission of fraud or a criminal offense in connection with 
obtaining, attempting to obtain, or performing a public or private 
agreement or transaction;
    (2) Violation of Federal or State antitrust statutes, including 
those proscribing price fixing between competitors, allocation of 
customers between competitors, and bid rigging;
    (3) Commission of embezzlement, theft, forgery, bribery, 
falsification or destruction of records, making false statements, 
receiving stolen property, making false claims, or obstruction of 
justice; or
    (4) Commission of any other offense indicating a lack of business 
integrity or business honesty that seriously and directly affects the 
present responsibility of a person.
    (b) Violation of the terms of a public agreement or transaction so 
serious as to affect the integrity of an agency program, such as:
    (1) A willful failure to perform in accordance with the terms of one 
or more public agreements or transactions;
    (2) A history of failure to perform or of unsatisfactory performance 
of one or more public agreements or transactions; or
    (3) A willful violation of a statutory or regulatory provision or 
requirement applicable to a public agreement or transaction.
    (c) Any of the following causes:
    (1) A nonprocurement debarment by any Federal agency taken before 
October 1, 1988, the effective date of these regulations, or a 
procurement debarment by any Federal agency taken pursuant to 48 CFR 
subpart 9.4;
    (2) Knowingly doing business with a debarred, suspended, ineligible, 
or voluntarily excluded person, in connection with a covered 
transaction, except as permitted in Sec. 1229.215 or Sec. 1229.220;
    (3) Failure to pay a single substantial debt, or a number of 
outstanding debts (including disallowed costs and overpayments, but not 
including sums owed the Federal Government under the Internal Revenue 
Code) owed to any Federal agency or instrumentality, provided the debt 
is uncontested by the debtor or, if contested, provided that the 
debtor's legal and administrative remedies have been exhausted;

[[Page 82]]

    (4) Violation of a material provision of a voluntary exclusion 
agreement entered into under Sec. 1229.315 or of any settlement of a 
debarment or suspension action; or
    (5) Violation of any requirement of subpart F of this part, relating 
to providing a drug-free workplace, as set forth in Sec. 1229.615 of 
this part.
    (d) Any other cause of so serious or compelling a nature that it 
affects the present responsibility of a person.

[53 FR 19202 and 19204, May 26, 1988, as amended at 54 FR 4950 and 4965, 
Jan. 31, 1989; 55 FR 21704, May 25, 1990]



Sec. 1229.310  Procedures.

    ACTION shall process debarment actions as informally as practicable, 
consistent with the principles of fundamental fairness, using the 
procedures in Secs. 1229.311 through 1229.314.



Sec. 1229.311  Investigation and referral.

    Information concerning the existence of a cause for debarment from 
any source shall be promptly reported, investigated, and referred, when 
appropriate, to the debarring official for consideration. After 
consideration, the debarring official may issue a notice of proposed 
debarment.



Sec. 1229.312  Notice of proposed debarment.

    A debarment proceeding shall be initiated by notice to the 
respondent advising:
    (a) That debarment is being considered;
    (b) Of the reasons for the proposed debarment in terms sufficient to 
put the respondent on notice of the conduct or transaction(s) upon which 
it is based;
    (c) Of the cause(s) relied upon under Sec. 1229.305 for proposing 
debarment;
    (d) Of the provisions of Sec. 1229.311 through Sec. 1229.314, and 
any other ACTION procedures, if applicable, governing debarment 
decisionmaking; and
    (e) Of the potential effect of a debarment.



Sec. 1229.313  Opportunity to contest proposed debarment.

    (a) Submission in opposition. Within 30 days after receipt of the 
notice of proposed debarment, the respondent may submit, in person, in 
writing, or through a representative, information and argument in 
opposition to the proposed debarment.
    (b) Additional proceedings as to disputed material facts. (1) In 
actions not based upon a conviction or civil judgment, if the debarring 
official finds that the respondent's submission in opposition raises a 
genuine dispute over facts material to the proposed debarment, 
respondent(s) shall be afforded an opportunity to appear with a 
representative, submit documentary evidence, present witnesses, and 
confront any witness the agency presents.
    (2) A transcribed record of any additional proceedings shall be made 
available at cost to the respondent, upon request, unless the respondent 
and the agency, by mutual agreement, waive the requirement for a 
transcript.



Sec. 1229.314  Debarring official's decision.

    (a) No additional proceedings necessary. In actions based upon a 
conviction or civil judgment, or in which there is no genuine dispute 
over material facts, the debarring official shall make a decision on the 
basis of all the information in the administrative record, including any 
submission made by the respondent. The decision shall be made within 45 
days after receipt of any information and argument submitted by the 
respondent, unless the debarring official extends this period for good 
cause.
    (b) Additional proceedings necessary. (1) In actions in which 
additional proceedings are necessary to determine disputed material 
facts, written findings of fact shall be prepared. The debarring 
official shall base the decision on the facts as found, together with 
any information and argument submitted by the respondent and any other 
information in the administrative record.
    (2) The debarring official may refer disputed material facts to 
another official for findings of fact. The debarring official may reject 
any such findings, in whole or in part, only after specifically 
determining them to be arbitrary and capricious or clearly erroneous.
    (3) The debarring official's decision shall be made after the 
conclusion of

[[Page 83]]

the proceedings with respect to disputed facts.
    (c) (1) Standard of proof. In any debarment action, the cause for 
debarment must be established by a preponderance of the evidence. Where 
the proposed debarment is based upon a conviction or civil judgment, the 
standard shall be deemed to have been met.
    (2) Burden of proof. The burden of proof is on the agency proposing 
debarment.
    (d) Notice of debarring official's decision. (1) If the debarring 
official decides to impose debarment, the respondent shall be given 
prompt notice:
    (i) Referring to the notice of proposed debarment;
    (ii) Specifying the reasons for debarment;
    (iii) Stating the period of debarment, including effective dates; 
and
    (iv) Advising that the debarment is effective for covered 
transactions throughout the executive branch of the Federal Government 
unless an agency head or an authorized designee makes the determination 
referred to in Sec. 1229.215.
    (2) If the debarring official decides not to impose debarment, the 
respondent shall be given prompt notice of that decision. A decision not 
to impose debarment shall be without prejudice to a subsequent 
imposition of debarment by any other agency.



Sec. 1229.315  Settlement and voluntary exclusion.

    (a) When in the best interest of the Government, ACTION may, at any 
time, settle a debarment or suspension action.
    (b) If a participant and the agency agree to a voluntary exclusion 
of the participant, such voluntary exclusion shall be entered on the 
Nonprocurement List (see subpart E).



Sec. 1229.320  Period of debarment.

    (a) Debarment shall be for a period commensurate with the 
seriousness of the cause(s). If a suspension precedes a debarment, the 
suspension period shall be considered in determining the debarment 
period.
    (1) Debarment for causes other than those related to a violation of 
the requirements of subpart F of this part generally should not exceed 
three years. Where circumstances warrant, a longer period of debarment 
may be imposed.
    (2) In the case of a debarment for a violation of the requirements 
of subpart F of this part (see 1229.305(c)(5)), the period of debarment 
shall not exceed five years.
    (b) The debarring official may extend an existing debarment for an 
additional period, if that official determines that an extension is 
necessary to protect the public interest. However, a debarment may not 
be extended solely on the basis of the facts and circumstances upon 
which the initial debarment action was based. If debarment for an 
additional period is determined to be necessary, the procedures of 
Secs. 1229.311 through 1229.314 shall be followed to extend the 
debarment.
    (c) The respondent may request the debarring official to reverse the 
debarment decision or to reduce the period or scope of debarment. Such a 
request shall be in writing and supported by documentation. The 
debarring official may grant such a request for reasons including, but 
not limited to:
    (1) Newly discovered material evidence;
    (2) Reversal of the conviction or civil judgment upon which the 
debarment was based;
    (3) Bona fide change in ownership or management;
    (4) Elimination of other causes for which the debarment was imposed; 
or
    (5) Other reasons the debarring official deems appropriate.

[53 FR 19202 and 19204, May 26, 1988, as amended at 54 FR 4950 and 4965, 
Jan. 31, 1989; 55 FR 21704, May 25, 1990]



Sec. 1229.325  Scope of debarment.

    (a) Scope in general. (1) Debarment of a person under these 
regulations constitutes debarment of all its divisions and other 
organizational elements from all covered transactions, unless the 
debarment decision is limited by its terms to one or more specifically 
identified individuals, divisions or other organizational elements or to 
specific types of transactions.
    (2) The debarment action may include any affiliate of the 
participant that is specifically named and given

[[Page 84]]

notice of the proposed debarment and an opportunity to respond (see 
Secs. 1229.311 through 1229.314).
    (b) Imputing conduct. For purposes of determining the scope of 
debarment, conduct may be imputed as follows:
    (1) Conduct imputed to participant. The fraudulent, criminal or 
other seriously improper conduct of any officer, director, shareholder, 
partner, employee, or other individual associated with a participant may 
be imputed to the participant when the conduct occurred in connection 
with the individual's performance of duties for or on behalf of the 
participant, or with the participant's knowledge, approval, or 
acquiescence. The participant's acceptance of the benefits derived from 
the conduct shall be evidence of such knowledge, approval, or 
acquiescence.
    (2) Conduct imputed to individuals associated with participant. The 
fraudulent, criminal, or other seriously improper conduct of a 
participant may be imputed to any officer, director, shareholder, 
partner, employee, or other individual associated with the participant 
who participated in, knew of, or had reason to know of the participant's 
conduct.
    (3) Conduct of one participant imputed to other participants in a 
joint venture. The fraudulent, criminal, or other seriously improper 
conduct of one participant in a joint venture, grant pursuant to a joint 
application, or similar arrangement may be imputed to other participants 
if the conduct occurred for or on behalf of the joint venture, grant 
pursuant to a joint application, or similar arrangement may be imputed 
to other participants if the conduct occurred for or on behalf of the 
joint venture, grant pursuant to a joint application, or similar 
arrangement or with the knowledge, approval, or acquiescence of these 
participants. Acceptance of the benefits derived from the conduct shall 
be evidence of such knowledge, approval, or acquiescence.



                          Subpart D--Suspension



Sec. 1229.400  General.

    (a) The suspending official may suspend a person for any of the 
causes in Sec. 1229.405 using procedures established in Secs. 1229.410 
through 1229.413.
    (b) Suspension is a serious action to be imposed only when:
    (1) There exists adequate evidence of one or more of the causes set 
out in Sec. 1229.405, and
    (2) Immediate action is necessary to protect the public interest.
    (c) In assessing the adequacy of the evidence, the agency should 
consider how much information is available, how credible it is given the 
circumstances, whether or not important allegations are corroborated, 
and what inferences can reasonably be drawn as a result. This assessment 
should include an examination of basic documents such as grants, 
cooperative agreements, loan authorizations, and contracts.



Sec. 1229.405  Causes for suspension.

    (a) Suspension may be imposed in accordance with the provisions of 
Secs. 1229.400 through 1229.413 upon adequate evidence:
    (1) To suspect the commission of an offense listed in 
Sec. 1229.305(a); or
    (2) That a cause for debarment under Sec. 1229.305 may exist.
    (b) Indictment shall constitute adequate evidence for purposes of 
suspension actions.



Sec. 1229.410  Procedures.

    (a) Investigation and referral. Information concerning the existence 
of a cause for suspension from any source shall be promptly reported, 
investigated, and referred, when appropriate, to the suspending official 
for consideration. After consideration, the suspending official may 
issue a notice of suspension.
    (b) Decisionmaking process. ACTION shall process suspension actions 
as informally as practicable, consistent with principles of fundamental 
fairness, using the procedures in Sec. 1229.411 through Sec. 1229.413.  



Sec. 1229.411  Notice of suspension.

    When a respondent is suspended, notice shall immediately be given:
    (a) That suspension has been imposed;
    (b) That the suspension is based on an indictment, conviction, or 
other adequate evidence that the respondent has committed irregularities 
seriously

[[Page 85]]

reflecting on the propriety of further Federal Government dealings with 
the respondent;
    (c) Describing any such irregularities in terms sufficient to put 
the respondent on notice without disclosing the Federal Government's 
evidence;
    (d) Of the cause(s) relied upon under Sec. 1229.405 for imposing 
suspension;
    (e) That the suspension is for a temporary period pending the 
completion of an investigation or ensuing legal, debarment, or Program 
Fraud Civil Remedies Act proceedings;
    (f) Of the provisions of Sec. 1229.411 through Sec. 1229.413 and any 
other ACTION procedures, if applicable, governing suspension 
decisionmaking; and
    (g) Of the effect of the suspension.



Sec. 1229.412  Opportunity to contest suspension.

    (a) Submission in opposition. Within 30 days after receipt of the 
notice of suspension, the respondent may submit, in person, in writing, 
or through a representative, information and argument in opposition to 
the suspension.
    (b) Additional proceedings as to disputed material facts. (1) If the 
suspending official finds that the respondent's submission in opposition 
raises a genuine dispute over facts material to the suspension, 
respondent(s) shall be afforded an opportunity to appear with a 
representative, submit documentary evidence, present witnesses, and 
confront any witness the agency presents, unless:
    (i) The action is based on an indictment, conviction or civil 
judgment, or
    (ii) A determination is made, on the basis of Department of Justice 
advice, that the substantial interests of the Federal Government in 
pending or contemplated legal proceedings based on the same facts as the 
suspension would be prejudiced.
    (2) A transcribed record of any additional proceedings shall be 
prepared and made available at cost to the respondent, upon request, 
unless the respondent and the agency, by mutual agreement, waive the 
requirement for a transcript.



Sec. 1229.413  Suspending official's decision.

    The suspending official may modify or terminate the suspension (for 
example, see Sec. 1229.320(c) for reasons for reducing the period or 
scope of debarment) or may leave it in force. However, a decision to 
modify or terminate the suspension shall be without prejudice to the 
subsequent imposition of suspension by any other agency or debarment by 
any agency. The decision shall be rendered in accordance with the 
following provisions:
    (a) No additional proceedings necessary. In actions: Based on an 
indictment, conviction, or civil judgment; in which there is no genuine 
dispute over material facts; or in which additional proceedings to 
determine disputed material facts have been denied on the basis of 
Department of Justice advice, the suspending official shall make a 
decision on the basis of all the information in the administrative 
record, including any submission made by the respondent. The decision 
shall be made within 45 days after receipt of any information and 
argument submitted by the respondent, unless the suspending official 
extends this period for good cause.
    (b) Additional proceedings necessary. (1) In actions in which 
additional proceedings are necessary to determine disputed material 
facts, written findings of fact shall be prepared. The suspending 
official shall base the decision on the facts as found, together with 
any information and argument submitted by the respondent and any other 
information in the administrative record.
    (2) The suspending official may refer matters involving disputed 
material facts to another official for findings of fact. The suspending 
official may reject any such findings, in whole or in part, only after 
specifically determining them to be arbitrary or capricious or clearly 
erroneous.
    (c) Notice of suspending official's decision. Prompt written notice 
of the suspending official's decision shall be sent to the respondent.



Sec. 1229.415  Period of suspension.

    (a) Suspension shall be for a temporary period pending the 
completion

[[Page 86]]

of an investigation or ensuing legal, debarment, or Program Fraud Civil 
Remedies Act proceedings, unless terminated sooner by the suspending 
official or as provided in paragraph (b) of this section.
    (b) If legal or administrative proceedings are not initiated within 
12 months after the date of the suspension notice, the suspension shall 
be terminated unless an Assistant Attorney General or United States 
Attorney requests its extension in writing, in which case it may be 
extended for an additional six months. In no event may a suspension 
extend beyond 18 months, unless such proceedings have been initiated 
within that period.
    (c) The suspending official shall notify the Department of Justice 
of an impending termination of a suspension, at least 30 days before the 
12-month period expires, to give that Department an opportunity to 
request an extension.



Sec. 1229.420  Scope of suspension.

    The scope of a suspension is the same as the scope of a debarment 
(see Sec. 1229.325), except that the procedures of Secs. 1229.410 
through 1229.413 shall be used in imposing a suspension.



       Subpart E--Responsibilities of GSA, Agency and Participants



Sec. 1229.500  GSA responsibilities.

    (a) In accordance with the OMB guidelines, GSA shall compile, 
maintain, and distribute a list of all persons who have been debarred, 
suspended, or voluntarily excluded by agencies under Executive Order 
12549 and these regulations, and those who have been determined to be 
ineligible.
    (b) At a minimum, this list shall indicate:
    (1) The names and addresses of all debarred, suspended, ineligible, 
and voluntarily excluded persons, in alphabetical order, with cross-
references when more than one name is involved in a single action;
    (2) The type of action;
    (3) The cause for the action;
    (4) The scope of the action;
    (5) Any termination date for each listing; and
    (6) The agency and name and telephone number of the agency point of 
contact for the action.



Sec. 1229.505  ACTION responsibilities.

    (a) The agency shall provide GSA with current information concerning 
debarments, suspension, determinations of ineligibility, and voluntary 
exclusions it has taken. Until February 18, 1989, the agency shall also 
provide GSA and OMB with information concerning all transactions in 
which ACTION has granted exceptions under Sec. 1229.215 permitting 
participation by debarred, suspended, or voluntarily excluded persons.
    (b) Unless an alternative schedule is agreed to by GSA, the agency 
shall advise GSA of the information set forth in Sec. 1229.500(b) and of 
the exceptions granted under Sec. 1229.215 within five working days 
after taking such actions.
    (c) The agency shall direct inquiries concerning listed persons to 
the agency that took the action.
    (d) Agency officials shall check the Nonprocurement List before 
entering covered transactions to determine whether a participant in a 
primary transaction is debarred, suspended, ineligible, or voluntarily 
excluded (Tel. ).
    (e) Agency officials shall check the Nonprocurement List before 
approving principals or lower tier participants where agency approval of 
the principal or lower tier participant is required under the terms of 
the transaction, to determine whether such principals or participants 
are debarred, suspended, ineligible, or voluntarily excluded.



Sec. 1229.510  Participants' responsibilities.

    (a) Certification by participants in primary covered transactions. 
Each participant shall submit the certification in Appendix A to this 
part for it and its principals at the time the participant submits its 
proposal in connection with a primary covered transaction, except that 
States need only complete such certification as to their principals. 
Participants may decide the method and frequency by which they determine 
the eligibility of their principals. In addition, each participant may, 
but is

[[Page 87]]

not required to, check the Nonprocurement List for its principals (Tel. 
). Adverse information on the certification will not 
necessarily result in denial of participation. However, the 
certification, and any additional information pertaining to the 
certification submitted by the participant, shall be considered in the 
administration of covered transactions.
    (b) Certification by participants in lower tier covered 
transactions. (1) Each participant shall require participants in lower 
tier covered transactions to include the certification in Appendix B to 
this part for it and its principals in any proposal submitted in 
connection with such lower tier covered transactions.
    (2) A participant may rely upon the certification of a prospective 
participant in a lower tier covered transaction that it and its 
principals are not debarred, suspended, ineligible, or voluntarily 
excluded from the covered transaction by any Federal agency, unless it 
knows that the certification is erroneous. Participants may decide the 
method and frequency by which they determine the eligiblity of their 
principals. In addition, a participant may, but is not required to, 
check the Nonprocurement List for its principals and for participants 
(Tel. ).
    (c) Changed circumstances regarding certification. A participant 
shall provide immediate written notice to ACTION if at any time the 
participant learns that its certification was erroneous when submitted 
or has become erroneous by reason of changed circumstances. Participants 
in lower tier covered transactions shall provide the same updated notice 
to the participant to which it submitted its proposals.



          Subpart F--Drug-Free Workplace Requirements (Grants)

    Source: 55 FR 21688, 21704, May 25, 1990, unless otherwise noted.



Sec. 1229.600  Purpose.

    (a) The purpose of this subpart is to carry out the Drug-Free 
Workplace Act of 1988 by requiring that--
    (1) A grantee, other than an individual, shall certify to the agency 
that it will provide a drug-free workplace;
    (2) A grantee who is an individual shall certify to the agency that, 
as a condition of the grant, he or she will not engage in the unlawful 
manufacture, distribution, dispensing, possession or use of a controlled 
substance in conducting any activity with the grant.
    (b) Requirements implementing the Drug-Free Workplace Act of 1988 
for contractors with the agency are found at 48 CFR subparts 9.4, 23.5, 
and 52.2.



Sec. 1229.605  Definitions.

    (a) Except as amended in this section, the definitions of 
Sec. 1229.105 apply to this subpart.
    (b) For purposes of this subpart--
    (1) Controlled substance means a controlled substance in schedules I 
through V of the Controlled Substances Act (21 U.S.C. 812), and as 
further defined by regulation at 21 CFR 1308.11 through 1308.15;
    (2) Conviction means a finding of guilt (including a plea of nolo 
contendere) or imposition of sentence, or both, by any judicial body 
charged with the responsibility to determine violations of the Federal 
or State criminal drug statutes;
    (3) Criminal drug statute means a Federal or non-Federal criminal 
statute involving the manufacture, distribution, dispensing, use, or 
possession of any controlled substance;
    (4) Drug-free workplace means a site for the performance of work 
done in connection with a specific grant at which employees of the 
grantee are prohibited from engaging in the unlawful manufacture, 
distribution, dispensing, possession, or use of a controlled substance;
    (5) Employee means the employee of a grantee directly engaged in the 
performance of work under the grant, including:
    (i) All direct charge employees;
    (ii) All indirect charge employees, unless their impact or 
involvement is insignificant to the performance of the grant; and,
    (iii) Temporary personnel and consultants who are directly engaged 
in the performance of work under the grant and who are on the grantee's 
payroll.

[[Page 88]]


This definition does not include workers not on the payroll of the 
grantee (e.g., volunteers, even if used to meet a matching requirement; 
consultants or independent contractors not on the payroll; or employees 
of subrecipients or subcontractors in covered workplaces);
    (6) Federal agency or agency means any United States executive 
department, military department, government corporation, government 
controlled corporation, any other establishment in the executive branch 
(including the Executive Office of the President), or any independent 
regulatory agency;
    (7) Grant means an award of financial assistance, including a 
cooperative agreement, in the form of money, or property in lieu of 
money, by a Federal agency directly to a grantee. The term grant 
includes block grant and entitlement grant programs, whether or not 
exempted from coverage under the grants management government-wide 
common rule on uniform administrative requirements for grants and 
cooperative agreements. The term does not include technical assistance 
that provides services instead of money, or other assistance in the form 
of loans, loan guarantees, interest subsidies, insurance, or direct 
appropriations; or any veterans' benefits to individuals, i.e., any 
benefit to veterans, their families, or survivors by virtue of the 
service of a veteran in the Armed Forces of the United States;
    (8) Grantee means a person who applies for or receives a grant 
directly from a Federal agency (except another Federal agency);
    (9) Individual means a natural person;
    (10) State means any of the States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, any territory or 
possession of the United States, or any agency of a State, exclusive of 
institutions of higher education, hospitals, and units of local 
government. A State instrumentality will be considered part of the State 
government if it has a written determination from a State government 
that such State considers the instrumentality to be an agency of the 
State government.



Sec. 1229.610  Coverage.

    (a) This subpart applies to any grantee of the agency.
    (b) This subpart applies to any grant, except where application of 
this subpart would be inconsistent with the international obligations of 
the United States or the laws or regulations of a foreign government. A 
determination of such inconsistency may be made only by the agency head 
or his/her designee.
    (c) The provisions of subparts A, B, C, D and E of this part apply 
to matters covered by this subpart, except where specifically modified 
by this subpart. In the event of any conflict between provisions of this 
subpart and other provisions of this part, the provisions of this 
subpart are deemed to control with respect to the implementation of 
drug-free workplace requirements concerning grants.



Sec. 1229.615  Grounds for suspension of payments, suspension or termination of grants, or suspension or debarment.

    A grantee shall be deemed in violation of the requirements of this 
subpart if the agency head or his or her official designee determines, 
in writing, that--
    (a) The grantee has made a false certification under Sec. 1229.630;
    (b) With respect to a grantee other than an individual--
    (1) The grantee has violated the certification by failing to carry 
out the requirements of paragraphs (A)(a)-(g) and/or (B) of the 
certification (Alternate I to Appendix C) or
    (2) Such a number of employees of the grantee have been convicted of 
violations of criminal drug statutes for violations occurring in the 
workplace as to indicate that the grantee has failed to make a good 
faith effort to provide a drug-free workplace.
    (c) With respect to a grantee who is an individual--
    (1) The grantee has violated the certification by failing to carry 
out its requirements (Alternate II to Appendix C); or
    (2) The grantee is convicted of a criminal drug offense resulting 
from a violation occurring during the conduct of any grant activity.

[[Page 89]]



Sec. 1229.620  Effect of violation.

    (a) In the event of a violation of this subpart as provided in 
Sec. 1229.615, and in accordance with applicable law, the grantee shall 
be subject to one or more of the following actions:
    (1) Suspension of payments under the grant;
    (2) Suspension or termination of the grant; and
    (3) Suspension or debarment of the grantee under the provisions of 
this part.
    (b) Upon issuance of any final decision under this part requiring 
debarment of a grantee, the debarred grantee shall be ineligible for 
award of any grant from any Federal agency for a period specified in the 
decision, not to exceed five years (see Sec. 1229.320(a)(2) of this 
part).



Sec. 1229.625  Exception provision.

    The agency head may waive with respect to a particular grant, in 
writing, a suspension of payments under a grant, suspension or 
termination of a grant, or suspension or debarment of a grantee if the 
agency head determines that such a waiver would be in the public 
interest. This exception authority cannot be delegated to any other 
official.



Sec. 1229.630  Certification requirements and procedures.

    (a)(1) As a prior condition of being awarded a grant, each grantee 
shall make the appropriate certification to the Federal agency providing 
the grant, as provided in Appendix C to this part.
    (2) Grantees are not required to make a certification in order to 
continue receiving funds under a grant awarded before March 18, 1989, or 
under a no-cost time extension of such a grant. However, the grantee 
shall make a one-time drug-free workplace certification for a non-
automatic continuation of such a grant made on or after March 18, 1989.
    (b) Except as provided in this section, all grantees shall make the 
required certification for each grant. For mandatory formula grants and 
entitlements that have no application process, grantees shall submit a 
one-time certification in order to continue receiving awards.
    (c) A grantee that is a State may elect to make one certification in 
each Federal fiscal year. States that previously submitted an annual 
certification are not required to make a certification for Fiscal Year 
1990 until June 30, 1990. Except as provided in paragraph (d) of this 
section, this certification shall cover all grants to all State agencies 
from any Federal agency. The State shall retain the original of this 
statewide certification in its Governor's office and, prior to grant 
award, shall ensure that a copy is submitted individually with respect 
to each grant, unless the Federal agency has designated a central 
location for submission.
    (d)(1) The Governor of a State may exclude certain State agencies 
from the statewide certification and authorize these agencies to submit 
their own certifications to Federal agencies. The statewide 
certification shall name any State agencies so excluded.
    (2) A State agency to which the statewide certification does not 
apply, or a State agency in a State that does not have a statewide 
certification, may elect to make one certification in each Federal 
fiscal year. State agencies that previously submitted a State agency 
certification are not required to make a certification for Fiscal Year 
1990 until June 30, 1990. The State agency shall retain the original of 
this State agency-wide certification in its central office and, prior to 
grant award, shall ensure that a copy is submitted individually with 
respect to each grant, unless the Federal agency designates a central 
location for submission.
    (3) When the work of a grant is done by more than one State agency, 
the certification of the State agency directly receiving the grant shall 
be deemed to certify compliance for all workplaces, including those 
located in other State agencies.
    (e)(1) For a grant of less than 30 days performance duration, 
grantees shall have this policy statement and program in place as soon 
as possible, but in any case by a date prior to the date on which 
performance is expected to be completed.

[[Page 90]]

    (2) For a grant of 30 days or more performance duration, grantees 
shall have this policy statement and program in place within 30 days 
after award.
    (3) Where extraordinary circumstances warrant for a specific grant, 
the grant officer may determine a different date on which the policy 
statement and program shall be in place.



Sec. 1229.635  Reporting of and employee sanctions for convictions of criminal drug offenses.

    (a) When a grantee other than an individual is notified that an 
employee has been convicted for a violation of a criminal drug statute 
occurring in the workplace, it shall take the following actions:
    (1) Within 10 calendar days of receiving notice of the conviction, 
the grantee shall provide written notice, including the convicted 
employee's position title, to every grant officer, or other designee on 
whose grant activity the convicted employee was working, unless a 
Federal agency has designated a central point for the receipt of such 
notifications. Notification shall include the identification number(s) 
for each of the Federal agency's affected grants.
    (2) Within 30 calendar days of receiving notice of the conviction, 
the grantee shall do the following with respect to the employee who was 
convicted.
    (i) Take appropriate personnel action against the employee, up to 
and including termination, consistent with requirements of the 
Rehabilitation Act of 1973, as amended; or
    (ii) Require the employee to participate satisfactorily in a drug 
abuse assistance or rehabilitation program approved for such purposes by 
a Federal, State, or local health, law enforcement, or other appropriate 
agency.
    (b) A grantee who is an individual who is convicted for a violation 
of a criminal drug statute occurring during the conduct of any grant 
activity shall report the conviction, in writing, within 10 calendar 
days, to his or her Federal agency grant officer, or other designee, 
unless the Federal agency has designated a central point for the receipt 
of such notices. Notification shall include the identification number(s) 
for each of the Federal agency's affected grants.

(Approved by the Office of Management and Budget under control number 
0991-0002)

Appendix A to Part 1229--Certification Regarding Debarment, Suspension, 
     and Other Responsibility Matters--Primary Covered Transactions

                     Instructions for Certification

    1. By signing and submitting this proposal, the prospective primary 
participant is providing the certification set out below.
    2. The inability of a person to provide the certification required 
below will not necessarily result in denial of participation in this 
covered transaction. The prospective participant shall submit an 
explanation of why it cannot provide the certification set out below. 
The certification or explanation will be considered in connection with 
the department or agency's determination whether to enter into this 
transaction. However, failure of the prospective primary participant to 
furnish a certification or an explanation shall disqualify such person 
from participation in this transaction.
    3. The certification in this clause is a material representation of 
fact upon which reliance was placed when the department or agency 
determined to enter into this transaction. If it is later determined 
that the prospective primary participant knowingly rendered an erroneous 
certification, in addition to other remedies available to the Federal 
Government, the department or agency may terminate this transaction for 
cause or default.
    4. The prospective primary participant shall provide immediate 
written notice to the department or agency to whom this proposal is 
submitted if at any time the prospective primary participant learns that 
its certification was erroneous when submitted or has become erroneous 
by reason of changed circumstances.
    5. The terms ``covered transaction,'' ``debarred,'' ``suspended,'' 
``ineligible,'' ``lower tier covered transaction,'' ``participant,'' 
``person,'' ``primary covered transaction,'' ``principal,'' 
``proposal,'' and ``voluntarily excluded,'' as used in this clause, have 
the meanings set out in the Definitions and Coverage sections of the 
rules implemeting Executive Order 12549. You may contact the department 
or agency to which this proposal is being submitted for assistance in 
obtaining a copy of those regulations.
    6. The prospective primary participant agrees by submitting this 
proposal that, should the proposed covered transaction be entered into, 
it shall not knowingly enter

[[Page 91]]

into any lower tier covered transaction with a person who is debarred, 
suspended, declared ineligible, or voluntarily excluded from 
participation in this covered transaction, unless authorized by the 
department or agency entering into this transaction.
    7. The prospective primary participant further agrees by submitting 
this proposal that it will include the clause titled ``Certification 
Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion--
Lower Tier Covered Transaction,'' provided by the department or agency 
entering into this covered transaction, without modification, in all 
lower tier covered transactions and in all solicitations for lower tier 
covered transactions.
    8. A participant in a covered transaction may rely upon a 
certification of a prospective participant in a lower tier covered 
transaction that it is not debarred, suspended, ineligible, or 
voluntarily excluded from the covered transaction, unless it knows that 
the certification is erroneous. A participant may decide the method and 
frequency by which it determines the eligibility of its principals. Each 
participant may, but is not required to, check the Nonprocurement List 
(Tel. ).
    9. Nothing contained in the foregoing shall be construed to require 
establishment of a system of records in order to render in good faith 
the certification required by this clause. The knowledge and information 
of a participant is not required to exceed that which is normally 
possessed by a prudent person in the ordinary course of business 
dealings.
    10. Except for transactions authorized under paragraph 6 of these 
instructions, if a participant in a covered transaction knowingly enters 
into a lower tier covered transaction with a person who is suspended, 
debarred, ineligible, or voluntarily excluded from participation in this 
transaction, in addition to other remedies available to the Federal 
Government, the department or agency may terminate this transaction for 
cause or default.

Certification Regarding Debarment, Suspension, and Other Responsibility 
                  Matters--Primary Covered Transactions

    (1) The prospective primary participant certifies to the best of its 
knowledge and belief, that it and its principals:
    (a) Are not presently debarred, suspended, proposed for debarment, 
declared ineligible, or voluntarily excluded from covered transactions 
by any Federal department or agency;
    (b) Have not within a three-year period preceding this proposal been 
convicted of or had a civil judgment rendered against them for 
commission of fraud or a criminal offense in connection with obtaining, 
attempting to obtain, or performing a public (Federal, State or local) 
transaction or contract under a public transaction; violation of Federal 
or State antitrust statutes or commission of embezzlement, theft, 
forgery, bribery, falsification or destruction of records, making false 
statements, or receiving stolen property;
    (c) Are not presently indicted for or otherwise criminally or 
civilly charged by a governmental entity (Federal, State or local) with 
commission of any of the offenses enumerated in paragraph (1)(b) of this 
certification; and
    (d) Have not within a three-year period preceding this application/ 
proposal has one or more public transactions (Federal, State or local) 
terminated for cause or default.
    (2) Where the prospective primary participant is unable to certify 
to any of the statements in this certification, such prospective 
participant shall attach an explanation to this proposal.

Appendix B to Part 1229--Certification Regarding Debarment, Suspension, 
 Ineligibility and Voluntary Exclusion--Lower Tier Covered Transactions

                     Instructions for Certification

    1. By signing and submitting this proposal, the prospective lower 
tier participant is providing the certification set out below.
    2. The certification in this clause is a material representation of 
fact upon which reliance was placed when this transaction was entered 
into. If it is later determined that the prospective lower tier 
participant knowingly rendered an erroneous certification, in addition 
to other remedies available to the Federal Government, the department or 
agency with which this transaction originated may pursue available 
remedies, including suspension and/or debarment.
    3. The prospective lower tier participant shall provide immediate 
written notice to the person to which this proposal is submitted if at 
any time the prospective lower tier participant learns that its 
certification was erroneous when submitted or has become erroneous by 
reason of changed circumstances.
    4. The terms ``covered transaction,'' ``debarred,'' ``suspended,'' 
``ineligible,'' ``lower tier covered transaction,'' ``participant,'' 
``person,'' ``primary covered transaction,'' ``principal,'' 
``proposal,'' and ``voluntarily excluded,'' as used in this clause, have 
the meanings set out in the Definitions and Coverage sections of rules 
implementing Executive Order 12549. You may contact the person to which 
this proposal is submitted for assistance in obtaining a copy of those 
regulations.
    5. The prospective lower tier participant agrees by submitting this 
proposal that,

[[Page 92]]

should the proposed covered transaction be entered into, it shall not 
knowingly enter into any lower tier covered transaction with a person 
who is debarred, suspended, declared ineligible, or voluntarily excluded 
from participation in this covered transaction, unless authorized by the 
department or agency with which this transaction originated.
    6. The prospective lower tier participant further agrees by 
submitting this proposal that it will include this clause titled 
``Certification Regarding Debarment, Suspension, Ineligibility and 
Voluntary Exclusion--Lower Tier Covered Transaction,'' without 
modification, in all lower tier covered transactions and in all 
solicitations for lower tier covered transactions.
    7. A participant in a covered transaction may rely upon a 
certification of a prospective participant in a lower tier covered 
transaction that it is not debarred, suspended, ineligible, or 
voluntarily excluded from the covered transaction, unless it knows that 
the certification is erroneous. A participant may decide the method and 
frequency by which it determines the eligibility of its principals. Each 
participant may, but is not required to, check the Nonprocurement List 
(Tel. ).
    8. Nothing contained in the foregoing shall be construed to require 
establishment of a system of records in order to render in good faith 
the certification required by this clause. The knowledge and information 
of a participant is not required to exceed that which is normally 
possessed by a prudent person in the ordinary course of business 
dealings.
    9. Except for transactions authorized under paragraph 5 of these 
instructions, if a participant in a covered transaction knowingly enters 
into a lower tier covered transaction with a person who is suspended, 
debarred, ineligible, or voluntarily excluded from participation in this 
transaction, in addition to other remedies available to the Federal 
Government, the department of agency with which this transaction 
originated may pursue available remedies, including suspension and/or 
debarment.

    Certification Regarding Debarment, Suspension, Ineligibility and 
          Voluntary Exclusion--Lower Tier Covered Transactions

    (1) The prospective lower tier participant certifies, by submission 
of this proposal, that neither it nor its principals is presently 
debarred, suspended, proposed for debarment, declared ineligible, or 
voluntarily excluded from participation in this transaction by any 
Federal department of agency.
    (2) Where the prospective lower tier participant is unable to 
certify to any of the statements in this certification, such prospective 
participant shall attach an explanation to this proposal.

  Appendix C to Part 1229--Certification Regarding Drug-Free Workplace 
                              Requirements

                     Instructions for Certification

    1. By signing and/or submitting this application or grant agreement, 
the grantee is providing the certification set out below.
    2. The certification set out below is a material representation of 
fact upon which reliance is placed when the agency awards the grant. If 
it is later determined that the grantee knowingly rendered a false 
certification, or otherwise violates the requirements of the Drug-Free 
Workplace Act, the agency, in addition to any other remedies available 
to the Federal Government, may take action authorized under the Drug-
Free Workplace Act.
    3. For grantees other than individuals, Alternate I applies.
    4. For grantees who are individuals, Alternate II applies.
    5. Workplaces under grants, for grantees other than individuals, 
need not be identified on the certification. If known, they may be 
identified in the grant application. If the grantee does not identify 
the workplaces at the time of application, or upon award, if there is no 
application, the grantee must keep the identity of the workplace(s) on 
file in its office and make the information available for Federal 
inspection. Failure to identify all known workplaces constitutes a 
violation of the grantee's drug-free workplace requirements.
    6. Workplace identifications must include the actual address of 
buildings (or parts of buildings) or other sites where work under the 
grant takes place. Categorical descriptions may be used (e.g., all 
vehicles of a mass transit authority or State highway department while 
in operation, State employees in each local unemployment office, 
performers in concert halls or radio studios).
    7. If the workplace identified to the agency changes during the 
performance of the grant, the grantee shall inform the agency of the 
change(s), if it previously identified the workplaces in question (see 
paragraph five).
    8. Definitions of terms in the Nonprocurement Suspension and 
Debarment common rule and Drug-Free Workplace common rule apply to this 
certification. Grantees' attention is called, in particular, to the 
following definitions from these rules:
    Controlled substance means a controlled substance in Schedules I 
through V of the Controlled Substances Act (21 U.S.C. 812) and as 
further defined by regulation (21 CFR 1308.11 through 1308.15);
    Conviction means a finding of guilt (includ- ing a plea of nolo 
contendere) or imposition of sentence, or both, by any judicial body 
charged with the responsibility to determine

[[Page 93]]

violations of the Federal or State criminal drug statutes;
    Criminal drug statute means a Federal or non-Federal criminal 
statute involving the manufacture, distribution, dispensing, use, or 
possession of any controlled substance;
    Employee means the employee of a grantee directly engaged in the 
performance of work under a grant, including: (i) All direct charge 
employees; (ii) All indirect charge employees unless their impact or 
involvement is insignificant to the performance of the grant; and, (iii) 
Temporary personnel and consultants who are directly engaged in the 
performance of work under the grant and who are on the grantee's 
payroll. This definition does not include workers not on the payroll of 
the grantee (e.g., volunteers, even if used to meet a matching 
requirement; consultants or independent contractors not on the grantee's 
payroll; or employees of subrecipients or subcontractors in covered 
workplaces).

        Certification Regarding Drug-Free Workplace Requirements

             Alternate I. (Grantees Other Than Individuals)

    A. The grantee certifies that it will or will continue to provide a 
drug-free workplace by:
    (a) Publishing a statement notifying employees that the unlawful 
manufacture, distribution, dispensing, possession, or use of a 
controlled substance is prohibited in the grantee's workplace and 
specifying the actions that will be taken against employees for 
violation of such prohibition;
    (b) Establishing an ongoing drug-free awareness program to inform 
employees about--
    (1) The dangers of drug abuse in the workplace;
    (2) The grantee's policy of maintaining a drug-free workplace;
    (3) Any available drug counseling, rehabilitation, and employee 
assistance programs; and
    (4) The penalties that may be imposed upon employees for drug abuse 
violations occurring in the workplace;
    (c) Making it a requirement that each employee to be engaged in the 
performance of the grant be given a copy of the statement required by 
paragraph (a);
    (d) Notifying the employee in the statement required by paragraph 
(a) that, as a condition of employment under the grant, the employee 
will--
    (1) Abide by the terms of the statement; and
    (2) Notify the employer in writing of his or her conviction for a 
violation of a criminal drug statute occurring in the workplace no later 
than five calendar days after such conviction;
    (e) Notifying the agency in writing, within ten calendar days after 
receiving notice under paragraph (d)(2) from an employee or otherwise 
receiving actual notice of such conviction. Employers of convicted 
employees must provide notice, including position title, to every grant 
officer or other designee on whose grant activity the convicted employee 
was working, unless the Federal agency has designated a central point 
for the receipt of such notices. Notice shall include the identification 
number(s) of each affected grant;
    (f) Taking one of the following actions, within 30 calendar days of 
receiving notice under paragraph (d)(2), with respect to any employee 
who is so convicted--
    (1) Taking appropriate personnel action against such an employee, up 
to and including termination, consistent with the requirements of the 
Rehabilitation Act of 1973, as amended; or
    (2) Requiring such employee to participate satisfactorily in a drug 
abuse assistance or rehabilitation program approved for such purposes by 
a Federal, State, or local health, law enforcement, or other appropriate 
agency;
    (g) Making a good faith effort to continue to maintain a drug-free 
workplace through implementation of paragraphs (a), (b), (c), (d), (e) 
and (f).
    B. The grantee may insert in the space provided below the site(s) 
for the performance of work done in connection with the specific grant:

Place of Performance (Street address, city, county, state, zip code)

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

Check [squ] if there are workplaces on file that are not identified 
here.

              Alternate II. (Grantees Who Are Individuals)

    (a) The grantee certifies that, as a condition of the grant, he or 
she will not engage in the unlawful manufacture, distribution, 
dispensing, possession, or use of a controlled substance in conducting 
any activity with the grant;
    (b) If convicted of a criminal drug offense resulting from a 
violation occurring during the conduct of any grant activity, he or she 
will report the conviction, in writing, within 10 calendar days of the 
conviction, to every grant officer or other designee, unless the Federal 
agency designates a central point for the receipt of such notices. When 
notice is made to such a central point, it shall include the 
identification number(s) of each affected grant.

[55 FR 21690, 21704, May 25, 1990]

[[Page 94]]



PART 1230--NEW RESTRICTIONS ON LOBBYING--Table of Contents




                           Subpart A--General

Sec.
1230.100  Conditions on use of funds.
1230.105  Definitions.
1230.110  Certification and disclosure.

                 Subpart B--Activities by Own Employees

1230.200  Agency and legislative liaison.
1230.205  Professional and technical services.
1230.210  Reporting.

            Subpart C--Activities by Other Than Own Employees

1230.300  Professional and technical services.

                  Subpart D--Penalties and Enforcement

1230.400  Penalties.
1230.405  Penalty procedures.
1230.410  Enforcement.

                          Subpart E--Exemptions

1230.500  Secretary of Defense.

                        Subpart F--Agency Reports

1230.600  Semi-annual compilation.
1230.605  Inspector General report.

Appendix A to Part 1230--Certification Regarding Lobbying
Appendix B to Part 1230--Disclosure Form To Report Lobbying

    Authority: Section 319, Pub. L. 101-121 (31 U.S.C. 1352); Pub. L. 
93-113; 42 U.S.C. 4951, et seq; 42 U.S.C. 5060.

    Source: 55 FR 6737, 6755, Feb. 26, 1990, unless otherwise noted.

    Cross reference: See also Office of Management and Budget notice 
published at 54 FR 52306, December 20, 1989.



                           Subpart A--General



Sec. 1230.100  Conditions on use of funds.

    (a) No appropriated funds may be expended by the recipient of a 
Federal contract, grant, loan, or cooperative ageement to pay any person 
for influencing or attempting to influence an officer or employee of any 
agency, a Member of Congress, an officer or employee of Congress, or an 
employee of a Member of Congress in connection with any of the following 
covered Federal actions: the awarding of any Federal contract, the 
making of any Federal grant, the making of any Federal loan, the 
entering into of any cooperative agreement, and the extension, 
continuation, renewal, amendment, or modification of any Federal 
contract, grant, loan, or cooperative agreement.
    (b) Each person who requests or receives from an agency a Federal 
contract, grant, loan, or cooperative agreement shall file with that 
agency a certification, set forth in Appendix A, that the person has not 
made, and will not make, any payment prohibited by paragraph (a) of this 
section.
    (c) Each person who requests or receives from an agency a Federal 
contract, grant, loan, or a cooperative agreement shall file with that 
agency a disclosure form, set forth in Appendix B, if such person has 
made or has agreed to make any payment using nonappropriated funds (to 
include profits from any covered Federal action), which would be 
prohibited under paragraph (a) of this section if paid for with 
appropriated funds.
    (d) Each person who requests or receives from an agency a commitment 
providing for the United States to insure or guarantee a loan shall file 
with that agency a statement, set forth in Appendix A, whether that 
person has made or has agreed to make any payment to influence or 
attempt to influence an officer or employee of any agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with that loan insurance or guarantee.
    (e) Each person who requests or receives from an agency a commitment 
providing for the United States to insure or guarantee a loan shall file 
with that agency a disclosure form, set forth in Appendix B, if that 
person has made or has agreed to make any payment to influence or 
attempt to influence an officer or employee of any agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with that loan insurance or guarantee.



Sec. 1230.105  Definitions.

    For purposes of this part:

[[Page 95]]

    (a) Agency, as defined in 5 U.S.C. 552(f), includes Federal 
executive departments and agencies as well as independent regulatory 
commissions and Government corporations, as defined in 31 U.S.C. 
9101(1).
    (b) Covered Federal action means any of the following Federal 
actions:
    (1) The awarding of any Federal contract;
    (2) The making of any Federal grant;
    (3) The making of any Federal loan;
    (4) The entering into of any cooperative agreement; and,
    (5) The extension, continuation, renewal, amendment, or modification 
of any Federal contract, grant, loan, or cooperative agreement.

Covered Federal action does not include receiving from an agency a 
commitment providing for the United States to insure or guarantee a 
loan. Loan guarantees and loan insurance are addressed independently 
within this part.
    (c) Federal contract means an acquisition contract awarded by an 
agency, including those subject to the Federal Acquisition Regulation 
(FAR), and any other acquisition contract for real or personal property 
or services not subject to the FAR.
    (d) Federal cooperative agreement means a cooperative agreement 
entered into by an agency.
    (e) Federal grant means an award of financial assistance in the form 
of money, or property in lieu of money, by the Federal Government or a 
direct appropriation made by law to any person. The term does not 
include technical assistance which provides services instead of money, 
or other assistance in the form of revenue sharing, loans, loan 
guarantees, loan insurance, interest subsidies, insurance, or direct 
United States cash assistance to an individual.
    (f) Federal loan means a loan made by an agency. The term does not 
include loan guarantee or loan insurance.
    (g) Indian tribe and tribal organization have the meaning provided 
in section 4 of the Indian Self-Determination and Education Assistance 
Act (25 U.S.C. 450B). Alaskan Natives are included under the definitions 
of Indian tribes in that Act.
    (h) Influencing or attempting to influence means making, with the 
intent to influence, any communication to or appearance before an 
officer or employee or any agency, a Member of Congress, an officer or 
employee of Congress, or an employee of a Member of Congress in 
connection with any covered Federal action.
    (i) Loan guarantee and loan insurance means an agency's guarantee or 
insurance of a loan made by a person.
    (j) Local government means a unit of government in a State and, if 
chartered, established, or otherwise recognized by a State for the 
performance of a governmental duty, including a local public authority, 
a special district, an intrastate district, a council of governments, a 
sponsor group representative organization, and any other instrumentality 
of a local government.
    (k) Officer or employee of an agency includes the following 
individuals who are employed by an agency:
    (1) An individual who is appointed to a position in the Government 
under title 5, U.S. Code, including a position under a temporary 
appointment;
    (2) A member of the uniformed services as defined in section 101(3), 
title 37, U.S. Code;
    (3) A special Government employee as defined in section 202, title 
18, U.S. Code; and,
    (4) An individual who is a member of a Federal advisory committee, 
as defined by the Federal Advisory Committee Act, title 5, U.S. Code 
appendix 2.
    (l) Person means an individual, corporation, company, association, 
authority, firm, partnership, society, State, and local government, 
regardless of whether such entity is operated for profit or not for 
profit. This term excludes an Indian tribe, tribal organization, or any 
other Indian organization with respect to expenditures specifically 
permitted by other Federal law.
    (m) Reasonable compensation means, with respect to a regularly 
employed officer or employee of any person, compensation that is 
consistent with the normal compensation for such officer

[[Page 96]]

or employee for work that is not furnished to, not funded by, or not 
furnished in cooperation with the Federal Government.
    (n) Reasonable payment means, with respect to perfessional and other 
technical services, a payment in an amount that is consistent with the 
amount normally paid for such services in the private sector.
    (o) Recipient includes all contractors, subcontractors at any tier, 
and subgrantees at any tier of the recipient of funds received in 
connection with a Federal contract, grant, loan, or cooperative 
agreement. The term excludes an Indian tribe, tribal organization, or 
any other Indian organization with respect to expenditures specifically 
permitted by other Federal law.
    (p) Regularly employed means, with respect to an officer or employee 
of a person requesting or receiving a Federal contract, grant, loan, or 
cooperative agreement or a commitment providing for the United States to 
insure or guarantee a loan, an officer or employee who is employed by 
such person for at least 130 working days within one year immediately 
preceding the date of the submission that initiates agency consideration 
of such person for receipt of such contract, grant, loan, cooperative 
agreement, loan insurance commitment, or loan guarantee commitment. An 
officer or employee who is employed by such person for less than 130 
working days within one year immediately preceding the date of the 
submission that initiates agency consideration of such person shall be 
considered to be regularly employed as soon as he or she is employed by 
such person for 130 working days.
    (q) State means a State of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, a territory or possession of 
the United States, an agency or instrumentality of a State, and a multi-
State, regional, or interstate entity having governmental duties and 
powers.



Sec. 1230.110  Certification and disclosure.

    (a) Each person shall file a certification, and a disclosure form, 
if required, with each submission that initiates agency consideration of 
such person for:
    (1) Award of a Federal contract, grant, or cooperative agreement 
exceeding $100,000; or
    (2) An award of a Federal loan or a commitment providing for the 
United States to insure or guarantee a loan exceeding $150,000.
    (b) Each person shall file a certification, and a disclosure form, 
if required, upon receipt by such person of:
    (1) A Federal contract, grant, or cooperative agreement exceeding 
$100,000; or
    (2) A Federal loan or a commitment providing for the United States 
to insure or guarantee a loan exceeding $150,000,

unless such person previously filed a certification, and a disclosure 
form, if required, under paragraph (a) of this section.
    (c) Each person shall file a disclosure form at the end of each 
calendar quarter in which there occurs any event that requires 
disclosure or that materially affects the accuracy of the information 
contained in any disclosure form previously filed by such person under 
paragraphs (a) or (b) of this section. An event that materially affects 
the accuracy of the information reported includes:
    (1) A cumulative increase of $25,000 or more in the amount paid or 
expected to be paid for influencing or attempting to influence a covered 
Federal action; or
    (2) A change in the person(s) or individual(s) influencing or 
attempting to influence a covered Federal action; or,
    (3) A change in the officer(s), employee(s), or Member(s) contacted 
to influence or attempt to influence a covered Federal action.
    (d) Any person who requests or receives from a person referred to in 
paragraph (a) or (b) of this section:
    (1) A subcontract exceeding $100,000 at any tier under a Federal 
contract;
    (2) A subgrant, contract, or subcontract exceeding $100,000 at any 
tier under a Federal grant;
    (3) A contract or subcontract exceeding $100,000 at any tier under a 
Federal loan exceeding $150,000; or,
    (4) A contract or subcontract exceeding $100,000 at any tier under a 
Federal cooperative agreement,

[[Page 97]]


shall file a certification, and a disclosure form, if required, to the 
next tier above.
    (e) All disclosure forms, but not certifications, shall be forwarded 
from tier to tier until received by the person referred to in paragraph 
(a) or (b) of this section. That person shall forward all disclosure 
forms to the agency.
    (f) Any certification or disclosure form filed under paragraph (e) 
of this section shall be treated as a material representation of fact 
upon which all receiving tiers shall rely. All liability arising from an 
erroneous representation shall be borne solely by the tier filing that 
representation and shall not be shared by any tier to which the 
erroneous representation is forwarded. Submitting an erroneous 
certification or disclosure constitutes a failure to file the required 
certification or disclosure, respectively. If a person fails to file a 
required certification or disclosure, the United States may pursue all 
available remedies, including those authorized by section 1352, title 
31, U.S. Code.
    (g) For awards and commitments in process prior to December 23, 
1989, but not made before that date, certifications shall be required at 
award or commitment, covering activities occurring between December 23, 
1989, and the date of award or commitment. However, for awards and 
commitments in process prior to the December 23, 1989 effective date of 
these provisions, but not made before December 23, 1989, disclosure 
forms shall not be required at time of award or commitment but shall be 
filed within 30 days.
    (h) No reporting is required for an activity paid for with 
appropriated funds if that activity is allowable under either subpart B 
or C.



                 Subpart B--Activities by Own Employees



Sec. 1230.200  Agency and legislative liaison.

    (a) The prohibition on the use of appropriated funds, in 
Sec. 1230.100 (a), does not apply in the case of a payment of reasonable 
compensation made to an officer or employee of a person requesting or 
receiving a Federal contract, grant, loan, or cooperative agreement if 
the payment is for agency and legislative liaison activities not 
directly related to a covered Federal action.
    (b) For purposes of paragraph (a) of this section, providing any 
information specifically requested by an agency or Congress is allowable 
at any time.
    (c) For purposes of paragraph (a) of this section, the following 
agency and legislative liaison activities are allowable at any time only 
where they are not related to a specific solicitation for any covered 
Federal action:
    (1) Discussing with an agency (including individual demonstrations) 
the qualities and characteristics of the person's products or services, 
conditions or terms of sale, and service capabilities; and,
    (2) Technical discussions and other activities regarding the 
application or adaptation of the person's products or services for an 
agency's use.
    (d) For purposes of paragraph (a) of this section, the following 
agencies and legislative liaison activities are allowable only where 
they are prior to formal solicitation of any covered Federal action:
    (1) Providing any information not specifically requested but 
necessary for an agency to make an informed decision about initiation of 
a covered Federal action;
    (2) Technical discussions regarding the preparation of an 
unsolicited proposal prior to its official submission; and,
    (3) Capability presentations by persons seeking awards from an 
agency pursuant to the provisions of the Small Business Act, as amended 
by Pub. L. 95-507 and other subsequent amendments.
    (e) Only those activities expressly authorized by this section are 
allowable under this section.



Sec. 1230.205  Professional and technical services.

    (a) The prohibition on the use of appropriated funds, in 
Sec. 1230.100 (a), does not apply in the case of a payment of reasonable 
compensation made to an officer or employee of a person requesting or 
receiving a Federal contract, grant, loan, or cooperative agreement or 
an extension, continuation, renewal,

[[Page 98]]

amendment, or modification of a Federal contract, grant, loan, or 
cooperative agreement if payment is for professional or technical 
services rendered directly in the preparation, submission, or 
negotiation of any bid, proposal, or application for that Federal 
contract, grant, loan, or cooperative agreement or for meeting 
requirements imposed by or pursuant to law as a condition for receiving 
that Federal contract, grant, loan, or cooperative agreement.
    (b) For purposes of paragraph (a) of this section, ``professional 
and technical services'' shall be limited to advice and analysis 
directly applying any professional or technical discipline. For example, 
drafting of a legal document accompanying a bid or proposal by a lawyer 
is allowable. Similarly, technical advice provided by an engineer on the 
performance or operational capability of a piece of equipment rendered 
directly in the negotiation of a contract is allowable. However, 
communications with the intent to influence made by a professional (such 
as a licensed lawyer) or a technical person (such as a licensed 
accountant) are not allowable under this section unless they provide 
advice and analysis directly applying their professional or technical 
expertise and unless the advice or analysis is rendered directly and 
solely in the preparation, submission or negotiation of a covered 
Federal action. Thus, for example, communications with the intent to 
influence made by a lawyer that do not provide legal advice or analysis 
directly and solely related to the legal aspects of his or her client's 
proposal, but generally advocate one proposal over another are not 
allowable under this section because the lawyer is not providing 
professional legal services. Similarly, communications with the intent 
to influence made by an engineer providing an engineering analysis prior 
to the preparation or submission of a bid or proposal are not allowable 
under this section since the engineer is providing technical services 
but not directly in the preparation, submission or negotiation of a 
covered Federal action.
    (c) Requirements imposed by or pursuant to law as a condition for 
receiving a covered Federal award include those required by law or 
regulation, or reasonably expected to be required by law or regulation, 
and any other requirements in the actual award documents.
    (d) Only those services expressly authorized by this section are 
allowable under this section.



Sec. 1230.210  Reporting.

    No reporting is required with respect to payments of reasonable 
compensation made to regularly employed officers or employees of a 
person.



            Subpart C--Activities by Other Than Own Employees



Sec. 1230.300  Professional and technical services.

    (a) The prohibition on the use of appropriated funds, in 
Sec. 1230.100 (a), does not apply in the case of any reasonable payment 
to a person, other than an officer or employee of a person requesting or 
receiving a covered Federal action, if the payment is for professional 
or technical services rendered directly in the preparation, submission, 
or negotiation of any bid, proposal, or application for that Federal 
contract, grant, loan, or cooperative agreement or for meeting 
requirements imposed by or pursuant to law as a condition for receiving 
that Federal contract, grant, loan, or cooperative agreement.
    (b) The reporting requirements in Sec. 1230.110 (a) and (b) 
regarding filing a disclosure form by each person, if required, shall 
not apply with respect to professional or technical services rendered 
directly in the preparation, submission, or negotiation of any 
commitment providing for the United States to insure or guarantee a 
loan.
    (c) For purposes of paragraph (a) of this section, ``professional 
and technical services'' shall be limited to advice and analysis 
directly applying any professional or technical discipline. For example, 
drafting or a legal document accompanying a bid or proposal by a lawyer 
is allowable. Similarly, technical advice provided by an engineer on the 
performance or operational capability of a piece of equipment rendered 
directly in the negotiation of a

[[Page 99]]

contract is allowable. However, communications with the intent to 
influence made by a professional (such as a licensed lawyer) or a 
technical person (such as a licensed accountant) are not allowable under 
this section unless they provide advice and analysis directly applying 
their professional or technical expertise and unless the advice or 
analysis is rendered directly and solely in the preparation, submission 
or negotiation of a covered Federal action. Thus, for example, 
communications with the intent to influence made by a lawyer that do not 
provide legal advice or analysis directly and solely related to the 
legal aspects of his or her client's proposal, but generally advocate 
one proposal over another are not allowable under this section because 
the lawyer is not providing professional legal services. Similarly, 
communications with the intent to influence made by an engineer 
providing an engineering analysis prior to the preparation or submission 
of a bid or proposal are not allowable under this section since the 
engineer is providing technical services but not directly in the 
preparation, submission or negotiation of a covered Federal action.
    (d) Requirements imposed by or pursuant to law as a condition for 
receiving a covered Federal award include those required by law or 
regulation, or reasonably expected to be required by law or regulation, 
and any other requirements in the actual award documents.
    (e) Persons other than officers or employees of a person requesting 
or receiving a covered Federal action include consultants and trade 
associations.
    (f) Only those services expressly authorized by this section are 
allowable under this section.



                  Subpart D--Penalties and Enforcement



Sec. 1230.400  Penalties.

    (a) Any person who makes an expenditure prohibited herein shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each such expenditure.
    (b) Any person who fails to file or amend the disclosure form (see 
Appendix B) to be filed or amended if required herein, shall be subject 
to a civil penalty of not less than $10,000 and not more than $100,000 
for each such failure.
    (c) A filing or amended filing on or after the date on which an 
administrative action for the imposition of a civil penalty is commenced 
does not prevent the imposition of such civil penalty for a failure 
occurring before that date. An administrative action is commenced with 
respect to a failure when an investigating official determines in 
writing to commence an investigation of an allegation of such failure.
    (d) In determining whether to impose a civil penalty, and the amount 
of any such penalty, by reason of a violation by any person, the agency 
shall consider the nature, circumstances, extent, and gravity of the 
violation, the effect on the ability of such person to continue in 
business, any prior violations by such person, the degree of culpability 
of such person, the ability of the person to pay the penalty, and such 
other matters as may be appropriate.
    (e) First offenders under paragraph (a) or (b) of this section shall 
be subject to a civil penalty of $10,000, absent aggravating 
circumstances. Second and subsequent offenses by persons shall be 
subject to an appropriate civil penalty between $10,000 and $100,000, as 
determined by the agency head or his or her designee.
    (f) An imposition of a civil penalty under this section does not 
prevent the United States from seeking any other remedy that may apply 
to the same conduct that is the basis for the imposition of such civil 
penalty.



Sec. 1230.405  Penalty procedures.

    Agencies shall impose and collect civil penalties pursuant to the 
provisions of the Program Fraud and Civil Remedies Act, 31 U.S.C. 
sections 3803 (except subsection (c)), 3804, 3805, 3806, 3807, 3808, and 
3812, insofar as these provisions are not inconsistent with the 
requirements herein.



Sec. 1230.410  Enforcement.

    The head of each agency shall take such actions as are necessary to 
ensure

[[Page 100]]

that the provisions herein are vigorously implemented and enforced in 
that agency.



                          Subpart E--Exemptions



Sec. 1230.500  Secretary of Defense.

    (a) The Secretary of Defense may exempt, on a case-by-case basis, a 
covered Federal action from the prohibition whenever the Secretary 
determines, in writing, that such an exemption is in the national 
interest. The Secretary shall transmit a copy of each such written 
exemption to Congress immediately after making such a determination.
    (b) The Department of Defense may issue supplemental regulations to 
implement paragraph (a) of this section.



                        Subpart F--Agency Reports



Sec. 1230.600  Semi-annual compilation.

    (a) The head of each agency shall collect and compile the disclosure 
reports (see Appendix B) and, on May 31 and November 30 of each year, 
submit to the Secretary of the Senate and the Clerk of the House of 
Representatives a report containing a compilation of the information 
contained in the disclosure reports received during the six-month period 
ending on March 31 or September 30, respectively, of that year.
    (b) The report, including the compilation, shall be available for 
public inspection 30 days after receipt of the report by the Secretary 
and the Clerk.
    (c) Information that involves intelligence matters shall be reported 
only to the Select Committee on Intelligence of the Senate, the 
Permanent Select Committee on Intelligence of the House of 
Representatives, and the Committees on Appropriations of the Senate and 
the House of Representatives in accordance with procedures agreed to by 
such committees. Such information shall not be available for public 
inspection.
    (d) Information that is classified under Executive Order 12356 or 
any successor order shall be reported only to the Committee on Foreign 
Relations of the Senate and the Committee on Foreign Affairs of the 
House of Representatives or the Committees on Armed Services of the 
Senate and the House of Representatives (whichever such committees have 
jurisdiction of matters involving such information) and to the 
Committees on Appropriations of the Senate and the House of 
Representatives in accordance with procedures agreed to by such 
committees. Such information shall not be available for public 
inspection.
    (e) The first semi-annual compilation shall be submitted on May 31, 
1990, and shall contain a compilation of the disclosure reports received 
from December 23, 1989 to March 31, 1990.
    (f) Major agencies, designated by the Office of Management and 
Budget (OMB), are required to provide machine-readable compilations to 
the Secretary of the Senate and the Clerk of the House of 
Representatives no later than with the compilations due on May 31, 1991. 
OMB shall provide detailed specifications in a memorandum to these 
agencies.
    (g) Non-major agencies are requested to provide machine-readable 
compilations to the Secretary of the Senate and the Clerk of the House 
of Representatives.
    (h) Agencies shall keep the originals of all disclosure reports in 
the official files of the agency.



Sec. 1230.605  Inspector General report.

    (a) The Inspector General, or other official as specified in 
paragraph (b) of this section, of each agency shall prepare and submit 
to Congress each year, commencing with submission of the President's 
Budget in 1991, an evaluation of the compliance of that agency with, and 
the effectiveness of, the requirements herein. The evaluation may 
include any recommended changes that may be necessary to strengthen or 
improve the requirements.
    (b) In the case of an agency that does not have an Inspector 
General, the agency official comparable to an Inspector General shall 
prepare and submit the annual report, or, if there is no such comparable 
official, the head of the agency shall prepare and submit the annual 
report.
    (c) The annual report shall be submitted at the same time the agency 
submits its annual budget justifications to Congress.

[[Page 101]]

    (d) The annual report shall include the following: All alleged 
violations relating to the agency's covered Federal actions during the 
year covered by the report, the actions taken by the head of the agency 
in the year covered by the report with respect to those alleged 
violations and alleged violations in previous years, and the amounts of 
civil penalties imposed by the agency in the year covered by the report.

        Appendix A to Part 1230--Certification Regarding Lobbying

 Certification for Contracts, Grants, Loans, and Cooperative Agreements

    The undersigned certifies, to the best of his or her knowledge and 
belief, that:
    (1) No Federal appropriated funds have been paid or will be paid, by 
or on behalf of the undersigned, to any person for influencing or 
attempting to influence an officer or employee of an agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with the awarding of any Federal contract, the 
making of any Federal grant, the making of any Federal loan, the 
entering into of any cooperative agreement, and the extension, 
continuation, renewal, amendment, or modification of any Federal 
contract, grant, loan, or cooperative agreement.
    (2) If any funds other than Federal appropriated funds have been 
paid or will be paid to any person for influencing or attempting to 
influence an officer or employee of any agency, a Member of Congress, an 
officer or employee of Congress, or an employee of a Member of Congress 
in connection with this Federal contract, grant, loan, or cooperative 
agreement, the undersigned shall complete and submit Standard Form-LLL, 
``Disclosure Form to Report Lobbying,'' in accordance with its 
instructions.
    (3) The undersigned shall require that the language of this 
certification be included in the award documents for all subawards at 
all tiers (including subcontracts, subgrants, and contracts under 
grants, loans, and cooperative agreements) and that all subrecipients 
shall certify and disclose accordingly.

    This certification is a material representation of fact upon which 
reliance was placed when this transaction was made or entered into. 
Submission of this certification is a prerequisite for making or 
entering into this transaction imposed by section 1352, title 31, U.S. 
Code. Any person who fails to file the required certification shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each such failure.

            Statement for Loan Guarantees and Loan Insurance

    The undersigned states, to the best of his or her knowledge and 
belief, that:
    If any funds have been paid or will be paid to any person for 
influencing or attempting to influence an officer or employee of any 
agency, a Member of Congress, an officer or employee of Congress, or an 
employee of a Member of Congress in connection with this commitment 
providing for the United States to insure or guarantee a loan, the 
undersigned shall complete and submit Standard Form-LLL, ``Disclosure 
Form to Report Lobbying,'' in accordance with its instructions.
    Submission of this statement is a prerequisite for making or 
entering into this transaction imposed by section 1352, title 31, U.S. 
Code. Any person who fails to file the required statement shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each such failure.

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PART 1232--NON-DISCRIMINATION ON BASIS OF HANDICAP IN PROGRAMS RECEIVING FEDERAL FINANCIAL ASSISTANCE FROM ACTION--Table of Contents




                      Subpart A--General Provisions

Sec.
1232.1  Purpose.
1232.2  Application.
1232.3  Definitions.
1232.4  General prohibitions against discrimination.
1232.5  Assurances required.
1232.6  Notice.
1232.7  Remedial action, voluntary action and self-evaluation.
1232.8  Effect of state or local law.

          Subpart B--Employment and Volunteer Service Practices

1232.9  General prohibitions against employment and volunteer service 
          discrimination.
1232.10  Reasonable accommodation.
1232.11  Employment and volunteer selection criteria.
1232.12  Preemployment or pre-selection inquiries.

                    Subpart C--Program Accessibility

1232.13  General requirement concerning program accessibility.
1232.14  Existing facilities.
1232.15  New construction.

                          Subpart D--Procedures

1232.16  Procedures.

    Authority: 29 U.S.C. 794.

    Source: 44 FR 31018, May 30, 1979, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 1232.1  Purpose.

    The purpose of this part is to effectuate section 504 of the 
Rehabilitation Act of 1973, which is designed to eliminate 
discrimination on the basis of handicap in any program or activity 
receiving Federal financial assistance.



Sec. 1232.2  Application.

    This part applies to each recipient of Federal financial assistance 
from ACTION and to each program or activity that receives or benefits 
from such assistance, including volunteer programs such as VISTA, 
University Year for ACTION (UYA), Senior Companion Program (SCP), Foster 
Grandparent Program (FGP) and Retired Senior Volunteer Program (RSVP). 
This part does not apply to recipients outside the United States which 
receive financial assistance under the Peace Corps Act, 22 U.S.C. 2501, 
Pub. L. 87-293, as amended.



Sec. 1232.3  Definitions.

    As used in this part the term:
    (a) The Act means the Rehabilitation Act of 1973. Pub. L. 93-112, as 
amended by the Rehabilitation Act Amendments of 1974, Pub. L. 93-516, 
and the Rehabilitation Act Amendments of 1978, Pub. L. 95-602.
    (b) Section 504 means section 504 of the Act.
    (c) Director means the Director of ACTION.
    (d) Recipient means any state or its political subdivision, any 
instrumentality of a state or its political subdivision, any public or 
private agency, institution, organization, or other entity, or any 
person to which Federal financial assistance is extended directly or 
through another recipient, including any successor, assignee, or 
transferee of a recipient, but excluding the ultimate beneficiary of the 
assistance.
    (e) Applicant for assistance means one who submits an application, 
request, or plan required to be approved by an ACTION official or by a 
recipient as a condition to becoming a recipient.
    (f) Federal financial assistance means any grant, loan, contract 
(other than a procurement contract or a contract of insurance or 
guaranty), or any other arrangement which provides or otherwise makes 
available assistance in the form of:
    (1) Funds;
    (2) Services of Federal personnel;
    (3) Real and personal property or any interest in or use of such 
property, including:
    (i) Transfers or leases of such property for less than fair market 
value or for reduced consideration; and
    (ii) Proceeds from a subsequent transfer or lease of such property 
if the Federal share of its fair market value is not returned to the 
Federal Government.

[[Page 106]]

    (4) A Federal agreement, arrangement or other contract which has as 
one of its purposes the provision of assistance, including the provision 
of volunteers under the Domestic Volunteer Service Act of 1973, 42 
U.S.C. 4951, Pub. L. 93-113, as amended.
    (g) Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, or other real or personal 
property or interest in such property.
    (h) Handicapped person.
    (1) Handicapped person means any person who has a physical or mental 
impairment that substantially limits one or more major life activities, 
has a record of such an impairment, or is regarded as having such an 
impairment, except that as it relates to employment or volunteer service 
the term ``handicapped person'' does not include any individual who is 
an alcoholic or drug abuser whose current use of alcohol or drugs 
prevents such individual from performing the duties of the job in 
question or whose employment or volunteer service, by reason of such 
current alcohol or drug abuse, would constitute a direct threat to 
property or the safety of others.
    (2) As used in paragraph (h)(1) of this section, the phrase:
    (i) Physical or mental impairment means (A) any physiological 
disorder or condition, cosmetic disfigurement, or anatomical loss 
affecting one or more of the following body systems: Neurological; 
musculoskeletal; special sense organs; respiratory, including speech 
organs; cardiovascular; reproductive; digestive; genitourinary; hemic 
and lymphatic; skin; and endocrine; or (B) any mental or psychological 
disorder, such as mental retardation, organic brain syndrome, emotional 
or mental illness, and specific learning disabilities. The term 
``physical or mental impairment'' includes, but is not limited to, such 
diseases and conditions as orthopedic, visual, speech, and hearing 
impairments, cerebral palsy, epilepsy, muscular dystrophy, multiple 
sclerosis, cancer, heart disease, diabetes, mental retardation, 
emotional illness, drug addiction and alcoholism.
    (ii) Major life activities means functions such as caring for one's 
self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (iii) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (iv) Is regarded as having an impairment means (A) has a physical or 
mental impairment that does not substantially limit major life 
activities but is treated by a recipient as constituting such a 
limitation; (B) has a physical or mental impairment that substantially 
limits major life activities only as a result of the attitudes of others 
toward such impairment; or (C) has none of the impairments defined in 
paragraph (h)(2)(i) of this section but is treated by a recipient as 
having such an impairment.
    (i) Qualified handicapped person means (1) with respect to 
employment or volunteer service, a handicapped person who, with 
reasonable accommodation, can perform the essential functions of the job 
or assignment in question; and (2) with respect to services, a 
handicapped person who meets the essential eligibility requirements for 
the receipt of such services.
    (j) Handicap means any condition or characteristic that renders a 
person a handicapped person as defined in paragraph (h) of this section.
    (k) Volunteer and ``Volunteer service'' refers to any person serving 
as a full time or part-time volunteer under any programs authorized 
under the Domestic Volunteer Service Act of 1973, Pub. L. 93-113, as 
amended.
    (l) Work station means any public or private agency, institution, 
organization or other entity to which volunteers are assigned by a 
recipient.

(Sec. 504, Rehabilitation Act of 1973, Pub. L. 93-112, 87 Stat. 394 (29 
U.S.C. 794), sec. 111(a), Rehabilitation Act Amendments of 1974, Pub. L. 
93-516, 88 Stat. 1619 (29 U.S.C. 706); Rehabilitation Act Amendments of 
1978, Pub. L. 95-602, 92 Stat. 2955; Sec. 402(14), Pub. L. 93-113, 87 
Stat. 398)

[44 FR 31018, May 30, 1979; 46 FR 6951, Jan. 22, 1981]

[[Page 107]]



Sec. 1232.4  General prohibitions against discrimination.

    (a) No qualified handicapped person, shall, on the basis of 
handicap, be excluded from participation in, be denied the benefits of, 
or otherwise be subjected to discrimination under any program or 
activity to which this part applies.
    (b)(1) A recipient, in providing any aid, benefit, or service, may 
not, directly or through contractual, licensing, or other arrangements, 
on the basis of handicap:
    (i) Deny a qualified handicapped person the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualified handicapped person an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified handicapped person with an aid, benefit, 
or service that is not as effective in affording equal opportunity to 
obtain the same result, to gain the same benefit, or to reach the same 
level of achievement as that provided to others;
    (iv) Provide different or separate aid, benefits, or services to 
handicapped persons or to any class of handicapped persons than is 
provided to others unless such action is necessary to provide qualified 
handicapped persons with aid, benefits, or services that are as 
effective as those provided to others;
    (v) Aid or perpetuate discrimination against a qualified handicapped 
person by providing significant assistance to an agency, organization, 
or person that discriminates on the basis of handicap in providing any 
aid, benefit, or service to beneficiaries of the recipient's program;
    (vi) Deny a qualified handicapped person the opportunity to 
participate as a member of planning or advisory boards; or
    (vii) Otherwise limit a qualified handicapped person in the 
enjoyment of any right, privilege, advantage, or opportunity enjoyed by 
others receiving the aid, benefit, or service.
    (2) A recipient may not deny a qualified handicapped person the 
opportunity to participate in programs or activities that are not 
separate or different, despite the existence of permissibly separate or 
different programs or activities.
    (3) A recipient may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration:
    (i) That have the effect of subjecting qualified handicapped persons 
to discrimination on the basis of handicap,
    (ii) That have the purpose or effect of defeating or substantially 
impairing accomplishment of the objectives of the recipient's program 
with respect to handicapped persons, or
    (iii) That perpetuate the discrimination of another recipient if 
both recipients are subject to common administrative control or are 
agencies of the same state.
    (4) A recipient may not, in determining the site or location of a 
facility, make selections:
    (i) That have the effect of excluding handicapped persons from, 
denying them the benefits of, or otherwise subjecting them to 
discrimination under any program or activity that receives or benefits 
from federal financial assistance or
    (ii) That have the purpose or effect of defeating or substantially 
impairing the accomplishment of the objectives of the program or 
activity with respect to handicapped persons.
    (c) The exclusion of nonhandicapped persons from the benefits of a 
program limited by federal statute or executive order to handicapped 
persons or the exclusion of a specific class of handicapped persons from 
a program limited by federal statute or executive order to a different 
class of handicapped persons is not prohibited by this part.
    (d) Recipients shall administer programs and activities in the most 
integrated setting appropriate to the needs of qualified handicapped 
persons.
    (e) Recipients shall take appropriate steps to ensure that 
communications with their applicants, employees, volunteers and 
beneficiaries are available to persons with impaired vision and hearing.
    (f) Recipients shall take appropriate steps to insure that no 
handicapped individual is denied the benefits of, excluded from 
participation in, or otherwise subjected to discrimination in any

[[Page 108]]

program receiving or benefiting from Federal financial assistance from 
ACTION because of the absence of auxiliary aids for individuals with 
impaired sensory, manual, or speaking skills.



Sec. 1232.5  Assurances required.

    (a) An applicant for Federal financial assistance for a program or 
activity to which this part applies shall submit an assurance, on a form 
specified by the Director, that the program will be operated in 
compliance with this part. An applicant may incorporate these assurances 
by reference in subsequent applications to ACTION. The assurance will 
obligate the recipient for the period during which Federal financial 
assistance is extended.
    (b) In the case of Federal financial assistance extended to provide 
personal property, the assurance will obligate the recipient for the 
period during which it retains ownership or possession of the property.
    (c) A recipient operating a volunteer program under which volunteers 
are assigned to a number of work stations shall obtain an assurance from 
each work station that neither volunteers nor the beneficiaries they 
serve will be discriminated against on the basis of handicap.



Sec. 1232.6  Notice.

    Recipients shall take appropriate initial and continuing steps to 
notify participants, beneficiaries, applicants, volunteers and 
employees, including those with impaired vision or hearing, that it does 
not discriminate on the basis of handicap in violation of section 504 
and this part.



Sec. 1232.7  Remedial action, voluntary action and self-evaluation.

    (a) Remedial action. (1) If the Director finds that a recipient has 
discriminated against persons on the basis of handicap in violation of 
section 504 or this part, the recipient shall take such remedial action 
as the Director deems necessary to overcome the effects of the 
discrimination.
    (2) Where a recipient is found to have discriminated against persons 
on the basis of handicap in violation of section 504 or this part and 
where another recipient exercises control over the recipient that has 
discriminated, the Director, where appropriate, may require either or 
both recipients to take remedial action.
    (3) The Director may, where necessary to overcome the effects of 
discrimination in violation of section 504 or this part, require a 
recipient to take remedial action:
    (i) With respect to handicapped persons who are no longer 
participants in the recipient's program but who were participants in the 
program when such discrimination occurred or
    (ii) With respect to handicapped persons who would have been 
participants in the program had the discrimination not occurred, or
    (iii) With respect to handicapped persons presently in the program, 
but not receiving full benefits or equal and integrated treatment within 
the program.
    (b) Voluntary action. Recipient may take steps, in addition to any 
action that is required by this part, to overcome the effects of 
conditions that resulted in limited participation in the recipient's 
program or activity by qualified handicapped persons.
    (c) Self-evaluation. (1) Each recipient shall, within one year of 
the effective date of this part, conduct a self-evaluation of its 
compliance with Section 504, with the assistance of interested persons, 
including handicapped persons or organizations representing handicapped 
persons. Each recipient shall with the assistance of and consultation 
with interested persons, including handicapped persons, evaluate its 
current policies, practices and effects thereof; modify any that do not 
meet the requirements of this part; and take appropriate remedial steps 
to eliminate the effects of any discrimination that resulted from 
adherence to these policies and practices.
    (2) A recipient that employs fifteen or more persons shall, for at 
least three years following completion of the evaluation required under 
paragraph (c)(1) of this section, maintain on file, make available for 
public inspection, and provide to the Director upon request: (i) A list 
of the interested persons consulted,
    (ii) A description of areas examined and any problems identified, 
and

[[Page 109]]

    (iii) A description of any modifications made and of any remedial 
steps taken.



Sec. 1232.8  Effect of state or local law.

    The obligation to comply with this part is not obviated or 
alleviated by the existence of any state or local law or other 
requirement that, on the basis of handicap, imposes prohibitions or 
limits upon the eligibility of qualified handicapped persons to receive 
services or to practice any occupation or profession.



          Subpart B--Employment and Volunteer Service Practices



Sec. 1232.9  General prohibitions against employment and volunteer service discrimination.

    (a) No qualified handicapped person shall, on the basis of handicap, 
be subjected to discrimination in employment or volunteer service under 
any program or activity that receives or benefits from federal financial 
assistance.
    (b) A recipient shall make all decisions concerning employment or 
volunteer service under any program or activity to which this part 
applies in a manner which ensures that discrimination on the basis of 
handicap does not occur and may not limit, segregate, or classify 
applicants or employees or volunteers in any way that adversely affects 
their opportunities or status because of handicap.
    (c) The prohibition against discrimination in employment and 
volunteer service applies to the following activities:
    (1) Recruitment, advertising, and the processing of applications for 
employment or volunteer service;
    (2) Hiring, upgrading, promotion, award of tenure, demotion, 
transfer, layoff, termination, right of return from layoff, and 
rehiring;
    (3) Rates of pay or any other form of compensation and changes in 
compensation;
    (4) Job assignments, job classifications, organizational structures, 
position descriptions, lines of progression, and seniority lists;
    (5) Leaves of absence, sick leave, or any other leave;
    (6) Fringe benefits available by virtue of employment or volunteer 
service, whether or not administered by the recipient;
    (7) Selection and financial support for training, including 
apprenticeship, professional meetings, conferences, and other related 
activities, and selection for leaves of absence to pursue training;
    (8) Employer sponsored activities, including social or recreational 
programs; and
    (9) Any other term, condition, or privilege of employment or 
volunteer service.
    (d) A recipient may not participate in a contractural or other 
relationship that has the effect of subjecting qualified handicapped 
applicants, volunteers or employees, to discrimination prohibited by 
this subpart. The relationships referred to in this paragraph include 
relationships with employment and referral agencies, with labor unions, 
with organizations providing or administering fringe benefits to 
employees of the recipient, and with organizations providing training 
and apprenticeship programs.
    (e) A recipient's obligation to comply with this subpart is not 
affected by any inconsistent term of any collective bargaining agreement 
to which it is a party.
    (f) Recipients operating a volunteer program under which volunteers 
are assigned to work in a number of work stations will assure that a 
representative sample of work stations are accessible to handicapped 
persons.



Sec. 1232.10  Reasonable accommodation.

    (a) A recipient shall make reasonable accommodation to the known 
physical or mental limitations of an otherwise qualified handicapped 
applicant, employee or volunteer unless the recipient can demonstrate 
that the accommodation would impose an undue hardship on the operation 
of its program.
    (b) Reasonable accommodation may include: (1) Making facilities used 
by employees or volunteers readily accessible to and usable by 
handicapped persons, and
    (2) Job restructuring, part-time or modified work schedules, 
acquisition

[[Page 110]]

or modification of equipment or devices, the provision of readers or 
interpreters, and other similar actions.
    (c) In determining pursuant to paragraph (a) of this section whether 
an accommodation would impose an undue hardship on the operation of a 
recipient's program, factors to be considered include:
    (1) The overall size of the recipient's program with respect to 
number of employees or volunteers, number and type of facilities, and 
size of budget;
    (2) The type of the recipient's operation, including the composition 
and structure of the recipient's workforce or volunteer force, and
    (3) The nature and cost of the accommodation needed.



Sec. 1232.11  Employment and volunteer selection criteria.

    A recipient may not use employment tests or criteria that 
discriminate against handicapped persons and shall ensure that 
employment tests are adapted for use by persons who have handicaps that 
impair sensory, manual, or speaking skills.



Sec. 1232.12  Preemployment or pre-selection inquiries.

    (a) Except as provided in paragraphs (b) and (c) of this section, a 
recipient may not conduct a preemployment medical examination or not 
make pre-employment inquiry of an applicant as to whether the applicant 
is a handicapped person or as to the nature of severity of a handicap. A 
recipient may, however, make preemployment inquiry into an applicant's 
ability to perform job-related functions. For the purpose of this 
paragraph, ``pre-employment'' as applied to applicants for volunteer 
positions means prior to selection as a volunteer.
    (b) When a recipient is taking remedial action to correct the 
effects of past discrimination pursuant to Sec. 1232.8(a), when a 
recipient is taking voluntary action to overcome the effects of 
conditions that resulted in limited participation in its federally 
assisted program or activity pursuant to Sec. 1232.8(b) or when a 
recipient is taking affirmative action pursuant to section 503 of the 
Act, the recipient may invite applicants for employment or volunteer 
service to indicate whether and to what extent they are handicapped: 
Provided, That:
    (1) The recipient states clearly on any written questionnaire used 
for this purpose or makes clear orally if no written questionnaire is 
used that the information requested is intended for use solely in 
connection with its remedial action obligations or its voluntary or 
affirmative action efforts; and
    (2) The recipient states clearly that the information is being 
requested on a voluntary basis, that it will be kept confidential as 
provided in paragraph (d) of this section, that refusal to provide it 
will not subject the applicant or employee to any adverse treatment, and 
that it will be used only in accordance with this part.
    (c) Nothing in this section shall prohibit a recipient from 
conditioning an offer of employment or volunteer service on the results 
of a medical examination conducted prior to the volunteer or employee's 
entrance on duty. Provided, That:
    (1) All entering volunteers or employees are subjected to such an 
examination regardless of handicap, and
    (2) The results of such an examination are used only in accordance 
with the requirements of this part.
    (d) Information obtained in accordance with this section as to the 
medical condition or history of the applicant shall be collected and 
maintained on separate forms that shall be accorded confidentiality as 
medical records, except that:
    (1) Supervisors and managers may be informed regarding restrictions 
on the work or duties of handicapped persons and regarding necessary 
accommodations;
    (2) First aid and safety personnel may be informed, where 
appropriate, if the condition might require emergency treatment; and
    (3) Government officers investigating compliance with the Act shall 
be provided relevant information upon request.

[[Page 111]]



                    Subpart C--Program Accessibility



Sec. 1232.13  General requirement concerning program accessibility.

    No qualified handicapped person shall, because a recipient's 
facilities are inaccessible to or unusable by handicapped persons, be 
denied the benefits of, be excluded from participation in, or otherwise 
be subjected to discrimination under any program or activity that 
receives or benefits from federal financial assistance.



Sec. 1232.14  Existing facilities.

    (a) A recipient shall operate each program or activity to which this 
part applies so that the program or activity, when viewed in its 
entirety, is readily accessible and usable by handicapped persons. This 
paragraph does not require a recipient to make each of its existing 
facilities or every part of a facility accessible to and usable by 
handicapped persons.
    (b) A recipient is not required to make structural changes in 
existing facilities where other methods are effective in achieving 
compliance with this section. Where structural changes are necessary to 
make programs or activities in existing facilities accessible, such 
changes shall be made as soon as practicable, but in no event later than 
three years after the effective date of the regulation.
    (c) In the event that structural changes to facilities are necessary 
to meet the requirement of paragraph (a) of this section, a recipient 
shall develop, within six months of the effective date of this part, a 
transition plan which sets forth in detail the steps necessary to 
complete the changes, and a schedule for taking those steps. The plan 
shall be developed with the assistance of interested persons, including 
handicapped persons or organizations representing handicapped persons. A 
copy of the plan shall be made available for public inspection.



Sec. 1232.15  New construction.

    (a) Design, construction, and alteration. New facilities shall be 
designed and constructed to be readily accessible to and usable by 
handicapped persons. construction shall be considered new if ground 
breaking takes place after the effective date of the regulation. 
Alterations to existing facilities shall, to the maximum extent 
feasible, be designed and constructed to be readily accessible to and 
usable by handicapped persons.
    (b) Conformance with Uniform Federal Accessibility Standards. (1) 
Effective as of January 18, 1991, design, construction, or alteration of 
buildings in conformance with sections 3-8 of the Uniform Federal 
Accessibility Standards (USAF) (appendix A to 41 CFR subpart 101-19.6) 
shall be deemed to comply with the requirements of this section with 
respect to those buildings. Departures from particular technical and 
scoping requirements of UFAS by the use of other methods are permitted 
where substantially equivalent or greater access to and usability of the 
building is provided.
    (2) For purposes of this section, section 4.1.6(1)(g) of UFAS shall 
be interpreted to exempt from the requirements of UFAS only mechanical 
rooms and other spaces that, because of their intended use, will not 
require accessibility to the public or beneficiaries or result in the 
employment or residence therein of persons with physical handicaps.
    (3) This section does not require recipients to make building 
alterations that have little likelihood of being accomplished without 
removing or altering a load-bearing structural member.

[44 FR 31018, May 30, 1979, as amended at 55 FR 52138, 52142, Dec. 19, 
1990]



                          Subpart D--Procedures



Sec. 1232.16  Procedures.

    The procedural provisions applicable to title VI of the Civil Rights 
Act of 1964 apply to this part. These procedures are found in 
Secs. 1203.6 through 1203.11 of this title.



PART 1233--INTERGOVERNMENTAL REVIEW OF ACTION PROGRAMS--Table of Contents




Sec.
1233.1  What is the purpose of these regulations?
1233.2  What definitions apply to these regulations?
1233.3  What programs of the Agency are subject to these regulations?

[[Page 112]]

1233.4  [Reserved]
1233.5  What is the Director's obligation with respect to federal 
          interagency coordination?
1233.6  What procedures apply to the selection of programs under these 
          regulations?
1233.7  How does the Director communicate with state and local officials 
          concerning the Agency's programs?
1233.8  How does the Director provide states an opportunity to comment 
          on proposed federal financial assistance?
1233.9  How does the Director receive and respond to comments?
1233.10  How does the Director make efforts to accommodate 
          intergovernmental concerns?
1233.11-1233.12  [Reserved]
1233.13  May the Director waive any provision of these regulations?

    Authority: E.O. 12372, July 14, 1982 (47 FR 30959), as amended April 
8, 1983 (48 FR 15887); sec. 401 of the Intergovernmental Cooperation Act 
of 1968, as amended (31 U.S.C. 6505).

    Source: 48 FR 29284, June 24, 1983, unless otherwise noted.



Sec. 1233.1  What is the purpose of these regulations?

    (a) The regulations in this part implement Executive Order 12372, 
``Intergovernmental Review of Federal Programs,'' issued July 14, 1982, 
and amended on April 8, 1983. These regulations also implement 
applicable provisions of section 401 of the Intergovernmental 
Cooperation Act of 1968.
    (b) These regulations are intended to foster an intergovernmental 
partnership and a strengthened Federalism by relying on state processes 
and on state, areawide, regional and local coordination for review of 
proposed federal financial assistance.
    (c) These regulations are intended to aid the internal management of 
the Agency, and are not intended to create any right or benefit 
enforceable at law by a party against the Agency or its officers.



Sec. 1233.2  What definitions apply to these regulations?

    Agency means ACTION, the National Volunteer Agency.
    Order means Executive Order 12372, issued July 14, 1982, and amended 
April 8, 1983 and titled ``Intergovernmental Review of Federal 
Programs.''
    Director means the Director of ACTION, or an official or employee of 
the Agency acting for the Director under a delegation of authority.
    State means any of the 50 states, the District of Columbia, the 
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana 
Islands, Guam, American Samoa, the U.S. Virgin Islands, or the Trust 
Territory of the Pacific Islands.



Sec. 1233.3  What programs of the Agency are subject to these regulations?

    The Director publishes in the Federal Register a list of the 
Agency's programs that are subject to these regulations.



Sec. 1233.4  [Reserved]



Sec. 1233.5  What is the Director's obligation with respect to federal interagency coordination?

    The Director, to the extent practicable, consults with and seeks 
advice from all other substantially affected federal departments and 
agencies in an effort to assure full coordination between such agencies 
and ACTION regarding programs covered under these regulations.



Sec. 1233.6  What procedures apply to the selection of programs under these regulations?

    (a) A state may select any ACTION program published in the Federal 
Register in accordance with Sec. 1233.3 of this part for 
intergovernmental review under these regulations. Each state, before 
selecting programs and activities, shall consult with local elected 
officials.
    (b) Each state that adopts a process shall notify the Director of 
the Agency's programs selected for that process.
    (c) A state may notify the Director of changes in its selections at 
any time. For each change, the state shall submit to the Director an 
assurance that the state has consulted with local elected officials 
regarding the change. The Agency may establish deadlines by which states 
are required to inform the Director of changes in their program 
selections.

[[Page 113]]

    (d) The Director uses a state's process as soon as feasible, 
depending on individual programs, after the Director is notified of its 
selections.



Sec. 1233.7  How does the Director communicate with state and local officials concerning the Agency's programs?

    (a) The Director provides opportunities for consultation by elected 
officials of those state and local governments that would provide the 
nonfederal funds for, or that would be directly affected by, proposed 
federal financial assistance from the Agency. For those programs covered 
by a state process under Sec. 1233.6, the Director, to the extent 
permitted by law:
    (1) Uses the official state process to determine views of state and 
local elected officials; and,
    (2) Communicates with state and local elected officials, through the 
official state process, as early in a program planning cycle as is 
reasonably feasible to explain specific plans and actions.
    (b) The Director provides notice to directly affected state, 
areawide, regional, and local entities in a state of proposed federal 
financial assistance if:
    (1) The state has not adopted a process under the Order; or
    (2) The assistance involves a program not selected for the state 
process.

This notice may be made by publication in the Federal Register, or other 
appropriate means, which the Agency in its discretion deems appropriate.



Sec. 1233.8  How does the Director provide states an opportunity to comment on proposed federal financial assistance?

    (a) Except in unusual circumstances, the Director gives state 
processes or directly affected state, areawide, regional and local 
officials and entities:
    (1) At least 30 days from the date established by the Director to 
comment on proposed federal financial assistance in the form of 
noncompeting continuation awards; and
    (2) At least 60 days from the date established by the Director to 
comment on proposed federal financial assistance other than noncompeting 
continuation awards.
    (b) This section also applies to comments in cases in which the 
review, coordination, and communication with the Agency have been 
delegated.



Sec. 1233.9  How does the Director receive and respond to comments?

    (a) The Director follows the procedures in Sec. 1233.10 if:
    (1) A state office or official is designated to act as a single 
point of contact between a state process and all federal agencies, and
    (2) That office or official transmits a state process recommendation 
for a program selected under Sec. 1233.6.
    (b)(1) The single point of contact is not obligated to transmit 
comments from state, areawide, regional or local officials and entities 
where there is no state process recommendation.
    (2) If a state process recommendation is transmitted by a single 
point of contact, all comments from state, areawide, regional, and local 
officials and entities that differ from it must also be transmitted.
    (c) If a state has not established a process, or is unable to submit 
a state process recommendation, state, areawide, regional and local 
officials and entities may submit comments either to the applicant or to 
the Agency, or both.
    (d) If a program is not selected for a state process, state, 
areawide, regional and local officials and entities may submit comments 
either to the applicant or to the Agency, or both. In addition, if a 
state process recommendation for a nonselected program is transmitted to 
the Agency by the single point of contact, the Director follows the 
prodecures of Sec. 1233.10 of this part.
    (e) The Director considers comments which do not constitute a state 
process recommendation submitted under these regulations and for which 
the Director is not required to apply the procedures of Sec. 1233.10 of 
this part, when such comments are provided by a single point of contact, 
by the applicant, or directly to the Agency by a commenting party.

[[Page 114]]



Sec. 1233.10  How does the Director make efforts to accommodate intergovernmental concerns?

    (a) If a state process provides a state process recommendation to 
the Agency through its single point of contact, the Director either:
    (1) Accepts the recommendation;
    (2) Reaches a mutually agreeable solution with the state process; or
    (3) Provides the single point of contact with a written explanation 
of the Agency's decision, in such form as the Director in his or her 
discretion deems appropriate. The Director may also supplement the 
written explanation by providing the explanation to the single point of 
contact by telephone, other telecommunication, or other means.
    (b) In any explanation under paragraph (a)(3) of this section, the 
Director informs the single point of contact that:
    (1) The Agency will not implement its decision for at least ten days 
after the single point of contact receives the explanation; or
    (2) The Director has reviewed the decision and determined that, 
because of unusual circumstances, the waiting period of at least ten 
days is not feasible.
    (c) For purpose of computing the waiting period under paragraph 
(b)(1) of this section, a single point of contact is presumed to have 
received written notification 5 days after the date of mailing of such 
notification.



Secs. 1233.11-1233.12  [Reserved]



Sec. 1233.13  May the Director waive any provision of these regulations?

    In an emergency, the Director may waive any provision of these 
regulations.



PART 1234--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE AGREEMENTS TO STATE AND LOCAL GOVERNMENTS--Table of Contents




                           Subpart A--General

Sec.
1234.1  Purpose and scope of this part.
1234.2  Scope of subpart.
1234.3  Definitions.
1234.4  Applicability.
1234.5  Effect on other issuances.
1234.6  Additions and exceptions.

                    Subpart B--Pre-Award Requirements

1234.10  Forms for applying for grants.
1234.11  State plans.
1234.12  Special grant or subgrant conditions for ``high-risk'' 
          grantees.

                   Subpart C--Post-Award Requirements

                        Financial Administration

1234.20  Standards for financial management systems.
1234.21  Payment.
1234.22  Allowable costs.
1234.23  Period of availability of funds.
1234.24  Matching or cost sharing.
1234.25  Program income.
1234.26  Non-Federal audit.

                    Changes, Property, and Subawards

1234.30  Changes.
1234.31  Real property.
1234.32  Equipment.
1234.33  Supplies.
1234.34  Copyrights.
1234.35  Subawards to debarred and suspended parties.
1234.36  Procurement.
1234.37  Subgrants.

              Reports, Records, Retention, and Enforcement

1234.40  Monitoring and reporting program performance.
1234.41  Financial reporting.
1234.42  Retention and access requirements for records.
1234.43  Enforcement.
1234.44  Termination for convenience.

                 Subpart D--After-the-Grant Requirements

1234.50  Closeout.
1234.51  Later disallowances and adjustments.
1234.52  Collection of amounts due.

Subpart E--Entitlements [Reserved]

    Authority: Pub. L. 93-113; 42 U.S.C. 4951, et seq; 42 U.S.C. 5060.

    Source: 53 FR 8084 and 8087, Mar. 11, 1988, unless otherwise noted.



                           Subpart A--General



Sec. 1234.1  Purpose and scope of this part.

    This part establishes uniform administrative rules for Federal 
grants and cooperative agreements and subawards to State, local and 
Indian tribal governments.

[[Page 115]]



Sec. 1234.2  Scope of subpart.

    This subpart contains general rules pertaining to this part and 
procedures for control of exceptions from this part.



Sec. 1234.3  Definitions.

    As used in this part:
    Accrued expenditures mean the charges incurred by the grantee during 
a given period requiring the provision of funds for: (1) Goods and other 
tangible property received; (2) services performed by employees, 
contractors, subgrantees, subcontractors, and other payees; and (3) 
other amounts becoming owed under programs for which no current services 
or performance is required, such as annuities, insurance claims, and 
other benefit payments.
    Accrued income means the sum of: (1) Earnings during a given period 
from services performed by the grantee and goods and other tangible 
property delivered to purchasers, and (2) amounts becoming owed to the 
grantee for which no current services or performance is required by the 
grantee.
    Acquisition cost of an item of purchased equipment means the net 
invoice unit price of the property including the cost of modifications, 
attachments, accessories, or auxiliary apparatus necessary to make the 
property usable for the purpose for which it was acquired. Other charges 
such as the cost of installation, transportation, taxes, duty or 
protective in-transit insurance, shall be included or excluded from the 
unit acquisition cost in accordance with the grantee's regular 
accounting practices.
    Administrative requirements mean those matters common to grants in 
general, such as financial management, kinds and frequency of reports, 
and retention of records. These are distinguished from ``programmatic'' 
requirements, which concern matters that can be treated only on a 
program-by-program or grant-by-grant basis, such as kinds of activities 
that can be supported by grants under a particular program.
    Awarding agency means (1) with respect to a grant, the Federal 
agency, and (2) with respect to a subgrant, the party that awarded the 
subgrant.
    Cash contributions means the grantee's cash outlay, including the 
outlay of money contributed to the grantee or subgrantee by other public 
agencies and institutions, and private organizations and individuals. 
When authorized by Federal legislation, Federal funds received from 
other assistance agreements may be considered as grantee or subgrantee 
cash contributions.
    Contract means (except as used in the definitions for ``grant'' and 
``subgrant'' in this section and except where qualified by ``Federal'') 
a procurement contract under a grant or subgrant, and means a 
procurement subcontract under a contract.
    Cost sharing or matching means the value of the third party in-kind 
contributions and the portion of the costs of a federally assisted 
project or program not borne by the Federal Government.
    Cost-type contract means a contract or subcontract under a grant in 
which the contractor or subcontractor is paid on the basis of the costs 
it incurs, with or without a fee.
    Equipment means tangible, nonexpendable, personal property having a 
useful life of more than one year and an acquisition cost of $5,000 or 
more per unit. A grantee may use its own definition of equipment 
provided that such definition would at least include all equipment 
defined above.
    Expenditure report means: (1) For nonconstruction grants, the SF-269 
``Financial Status Report'' (or other equivalent report); (2) for 
construction grants, the SF-271 ``Outlay Report and Request for 
Reimbursement'' (or other equivalent report).
    Federally recognized Indian tribal government means the governing 
body or a governmental agency of any Indian tribe, band, nation, or 
other organized group or community (including any Native village as 
defined in section 3 of the Alaska Native Claims Settlement Act, 85 Stat 
688) certified by the Secretary of the Interior as eligible for the 
special programs and services provided by him through the Bureau of 
Indian Affairs.
    Government means a State or local government or a federally 
recognized Indian tribal government.

[[Page 116]]

    Grant means an award of financial assistance, including cooperative 
agreements, in the form of money, or property in lieu of money, by the 
Federal Government to an eligible grantee. The term does not include 
technical assistance which provides services instead of money, or other 
assistance in the form of revenue sharing, loans, loan guarantees, 
interest subsidies, insurance, or direct appropriations. Also, the term 
does not include assistance, such as a fellowship or other lump sum 
award, which the grantee is not required to account for.
    Grantee means the government to which a grant is awarded and which 
is accountable for the use of the funds provided. The grantee is the 
entire legal entity even if only a particular component of the entity is 
designated in the grant award document.
    Local government means a county, municipality, city, town, township, 
local public authority (including any public and Indian housing agency 
under the United States Housing Act of 1937) school district, special 
district, intrastate district, council of governments (whether or not 
incorporated as a nonprofit corporation under state law), any other 
regional or interstate government entity, or any agency or 
instrumentality of a local government.
    Obligations means the amounts of orders placed, contracts and 
subgrants awarded, goods and services received, and similar transactions 
during a given period that will require payment by the grantee during 
the same or a future period.
    OMB means the United States Office of Management and Budget.
    Outlays (expenditures) mean charges made to the project or program. 
They may be reported on a cash or accrual basis. For reports prepared on 
a cash basis, outlays are the sum of actual cash disbursement for direct 
charges for goods and services, the amount of indirect expense incurred, 
the value of in-kind contributions applied, and the amount of cash 
advances and payments made to contractors and subgrantees. For reports 
prepared on an accrued expenditure basis, outlays are the sum of actual 
cash disbursements, the amount of indirect expense incurred, the value 
of inkind contributions applied, and the new increase (or decrease) in 
the amounts owed by the grantee for goods and other property received, 
for services performed by employees, contractors, subgrantees, 
subcontractors, and other payees, and other amounts becoming owed under 
programs for which no current services or performance are required, such 
as annuities, insurance claims, and other benefit payments.
    Percentage of completion method refers to a system under which 
payments are made for construction work according to the percentage of 
completion of the work, rather than to the grantee's cost incurred.
    Prior approval means documentation evidencing consent prior to 
incurring specific cost.
    Real property means land, including land improvements, structures 
and appurtenances thereto, excluding movable machinery and equipment.
    Share, when referring to the awarding agency's portion of real 
property, equipment or supplies, means the same percentage as the 
awarding agency's portion of the acquiring party's total costs under the 
grant to which the acquisition costs under the grant to which the 
acquisition cost of the property was charged. Only costs are to be 
counted--not the value of third-party in-kind contributions.
    State means any of the several States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, any territory or 
possession of the United States, or any agency or instrumentality of a 
State exclusive of local governments. The term does not include any 
public and Indian housing agency under United States Housing Act of 
1937.
    Subgrant means 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.
    Subgrantee means the government or other legal entity to which a 
subgrant is awarded and which is accountable to

[[Page 117]]

the grantee for the use of the funds provided.
    Supplies means all tangible personal property other than 
``equipment'' as defined in this part.
    Suspension means depending on the context, either (1) temporary 
withdrawal of the authority to obligate grant funds pending corrective 
action by the grantee or subgrantee or a decision to terminate the 
grant, or (2) an action taken by a suspending official in accordance 
with agency regulations implementing E.O. 12549 to immediately exclude a 
person from participating in grant transactions for a period, pending 
completion of an investigation and such legal or debarment proceedings 
as may ensue.
    Termination means permanent withdrawal of the authority to obligate 
previously-awarded grant funds before that authority would otherwise 
expire. It also means the voluntary relinquishment of that authority by 
the grantee or subgrantee. ``Termination'' does not include: (1) 
Withdrawal of funds awarded on the basis of the grantee's underestimate 
of the unobligated balance in a prior period; (2) Withdrawal of the 
unobligated balance as of the expiration of a grant; (3) Refusal to 
extend a grant or award additional funds, to make a competing or 
noncompeting continuation, renewal, extension, or supplemental award; or 
(4) voiding of a grant upon determination that the award was obtained 
fraudulently, or was otherwise illegal or invalid from inception.
    Terms of a grant or subgrant mean all requirements of the grant or 
subgrant, whether in statute, regulations, or the award document.
    Third party in-kind contributions mean property or services which 
benefit a federally assisted project or program and which are 
contributed by non-Federal third parties without charge to the grantee, 
or a cost-type contractor under the grant agreement.
    Unliquidated obligations for reports prepared on a cash basis mean 
the amount of obligations incurred by the grantee that has not been 
paid. For reports prepared on an accrued expenditure basis, they 
represent the amount of obligations incurred by the grantee for which an 
outlay has not been recorded.
    Unobligated balance means the portion of the funds authorized by the 
Federal agency that has not been obligated by the grantee and is 
determined by deducting the cumulative obligations from the cumulative 
funds authorized.



Sec. 1234.4  Applicability.

    (a) General. Subparts A through D of this part apply to all grants 
and subgrants to governments, except where inconsistent with Federal 
statutes or with regulations authorized in accordance with the exception 
provision of Sec. 1234.6, or:
    (1) Grants and subgrants to State and local institutions of higher 
education or State and local hospitals.
    (2) The block grants authorized by the Omnibus Budget Reconciliation 
Act of 1981 (Community Services; Preventive Health and Health Services; 
Alcohol, Drug Abuse, and Mental Health Services; Maternal and Child 
Health Services; Social Services; Low-Income Home Energy Assistance; 
States' Program of Community Development Block Grants for Small Cities; 
and Elementary and Secondary Education other than programs administered 
by the Secretary of Education under title V, subtitle D, chapter 2, 
section 583--the Secretary's discretionary grant program) and titles I-
III of the Job Training Partnership Act of 1982 and under the Public 
Health Services Act (section 1921), Alcohol and Drug Abuse Treatment and 
Rehabilitation Block Grant and part C of title V, Mental Health Service 
for the Homeless Block Grant).
    (3) Entitlement grants to carry out the following programs of the 
Social Security Act:
    (i) Aid to Needy Families with Dependent Children (title IV-A of the 
Act, not including the Work Incentive Program (WIN) authorized by 
section 402(a)19(G); HHS grants for WIN are subject to this part);
    (ii) Child Support Enforcement and Establishment of Paternity (title 
IV-D of the Act);
    (iii) Foster Care and Adoption Assistance (title IV-E of the Act);

[[Page 118]]

    (iv) Aid to the Aged, Blind, and Disabled (titles I, X, XIV, and 
XVI-AABD of the Act); and
    (v) Medical Assistance (Medicaid) (title XIX of the Act) not 
including the State Medicaid Fraud Control program authorized by section 
1903(a)(6)(B).
    (4) Entitlement grants under the following programs of The National 
School Lunch Act:
    (i) School Lunch (section 4 of the Act),
    (ii) Commodity Assistance (section 6 of the Act),
    (iii) Special Meal Assistance (section 11 of the Act),
    (iv) Summer Food Service for Children (section 13 of the Act), and
    (v) Child Care Food Program (section 17 of the Act).
    (5) Entitlement grants under the following programs of The Child 
Nutrition Act of 1966:
    (i) Special Milk (section 3 of the Act), and
    (ii) School Breakfast (section 4 of the Act).
    (6) Entitlement grants for State Administrative expenses under The 
Food Stamp Act of 1977 (section 16 of the Act).
    (7) A grant for an experimental, pilot, or demonstration project 
that is also supported by a grant listed in paragraph (a)(3) of this 
section;
    (8) Grant funds awarded under subsection 412(e) of the Immigration 
and Nationality Act (8 U.S.C. 1522(e)) and subsection 501(a) of the 
Refugee Education Assistance Act of 1980 (Pub. L. 96-422, 94 Stat. 
1809), for cash assistance, medical assistance, and supplemental 
security income benefits to refugees and entrants and the administrative 
costs of providing the assistance and benefits;
    (9) Grants to local education agencies under 20 U.S.C. 236 through 
241-1(a), and 242 through 244 (portions of the Impact Aid program), 
except for 20 U.S.C. 238(d)(2)(c) and 240(f) (Entitlement Increase for 
Handicapped Children); and
    (10) Payments under the Veterans Administration's State Home Per 
Diem Program (38 U.S.C. 641(a)).
    (b) Entitlement programs. Entitlement programs enumerated above in 
Sec. 1234.4(a) (3) through (8) are subject to Subpart E.



Sec. 1234.5  Effect on other issuances.

    All other grants administration provisions of codified program 
regulations, program manuals, handbooks and other nonregulatory 
materials which are inconsistent with this part are superseded, except 
to the extent they are required by statute, or authorized in accordance 
with the exception provision in Sec. 1234.6.



Sec. 1234.6  Additions and exceptions.

    (a) For classes of grants and grantees subject to this part, Federal 
agencies may not impose additional administrative requirements except in 
codified regulations published in the Federal Register.
    (b) Exceptions for classes of grants or grantees may be authorized 
only by OMB.
    (c) Exceptions on a case-by-case basis and for subgrantees may be 
authorized by the affected Federal agencies.



                    Subpart B--Pre-Award Requirements



Sec. 1234.10  Forms for applying for grants.

    (a) Scope. (1) This section prescribes forms and instructions to be 
used by governmental organizations (except hospitals and institutions of 
higher education operated by a government) in applying for grants. This 
section is not applicable, however, to formula grant programs which do 
not require applicants to apply for funds on a project basis.
    (2) This section applies only to applications to Federal agencies 
for grants, and is not required to be applied by grantees in dealing 
with applicants for subgrants. However, grantees are encouraged to avoid 
more detailed or burdensome application requirements for subgrants.
    (b) Authorized forms and instructions for governmental 
organizations. (1) In applying for grants, applicants shall only use 
standard application forms or those prescribed by the granting agency 
with the approval of OMB under the Paperwork Reduction Act of 1980.
    (2) Applicants are not required to submit more than the original and 
two

[[Page 119]]

copies of preapplications or applications.
    (3) Applicants must follow all applicable instructions that bear OMB 
clearance numbers. Federal agencies may specify and describe the 
programs, functions, or activities that will be used to plan, budget, 
and evaluate the work under a grant. Other supplementary instructions 
may be issued only with the approval of OMB to the extent required under 
the Paperwork Reduction Act of 1980. For any standard form, except the 
SF-424 facesheet, Federal agencies may shade out or instruct the 
applicant to disregard any line item that is not needed.
    (4) When a grantee applies for additional funding (such as a 
continuation or supplemental award) or amends a previously submitted 
application, only the affected pages need be submitted. Previously 
submitted pages with information that is still current need not be 
resubmitted.



Sec. 1234.11  State plans.

    (a) Scope. The statutes for some programs require States to submit 
plans before receiving grants. Under regulations implementing Executive 
Order 12372, ``Intergovernmental Review of Federal Programs,'' States 
are allowed to simplify, consolidate and substitute plans. This section 
contains additional provisions for plans that are subject to regulations 
implementing the Executive order.
    (b) Requirements. A State need meet only Federal administrative or 
programmatic requirements for a plan that are in statutes or codified 
regulations.
    (c) Assurances. In each plan the State will include an assurance 
that the State shall comply with all applicable Federal statutes and 
regulations in effect with respect to the periods for which it receives 
grant funding. For this assurance and other assurances required in the 
plan, the State may:
    (1) Cite by number the statutory or regulatory provisions requiring 
the assurances and affirm that it gives the assurances required by those 
provisions,
    (2) Repeat the assurance language in the statutes or regulations, or
    (3) Develop its own language to the extent permitted by law.
    (d) Amendments. A State will amend a plan whenever necessary to 
reflect: (1) New or revised Federal statutes or regulations or (2) a 
material change in any State law, organization, policy, or State agency 
operation. The State will obtain approval for the amendment and its 
effective date but need submit for approval only the amended portions of 
the plan.



Sec. 1234.12  Special grant or subgrant conditions for ``high-risk'' grantees.

    (a) A grantee or subgrantee may be considered ``high risk'' if an 
awarding agency determines that a grantee or subgrantee:
    (1) Has a history of unsatisfactory performance, or
    (2) Is not financially stable, or
    (3) Has a management system which does not meet the management 
standards set forth in this part, or
    (4) Has not conformed to terms and conditions of previous awards, or
    (5) Is otherwise not responsible; and if the awarding agency 
determines that an award will be made, special conditions and/or 
restrictions shall correspond to the high risk condition and shall be 
included in the award.
    (b) Special conditions or restrictions may include:
    (1) Payment on a reimbursement basis;
    (2) Withholding authority to proceed to the next phase until receipt 
of evidence of acceptable performance within a given funding period;
    (3) Requiring additional, more detailed financial reports;
    (4) Additional project monitoring;
    (5) Requiring the grante or subgrantee to obtain technical or 
management assistance; or
    (6) Establishing additional prior approvals.
    (c) If an awarding agency decides to impose such conditions, the 
awarding official will notify the grantee or subgrantee as early as 
possible, in writing, of:
    (1) The nature of the special conditions/restrictions;
    (2) The reason(s) for imposing them;
    (3) The corrective actions which must be taken before they will be 
removed

[[Page 120]]

and the time allowed for completing the corrective actions and
    (4) The method of requesting reconsideration of the conditions/
restrictions imposed.



                   Subpart C--Post-Award Requirements

                        Financial Administration



Sec. 1234.20  Standards for financial management systems.

    (a) A State must expand and account for grant funds in accordance 
with State laws and procedures for expending and accounting for its own 
funds. Fiscal control and accounting procedures of the State, as well as 
its subgrantees and cost-type contractors, must be sufficient to--
    (1) Permit preparation of reports required by this part and the 
statutes authorizing the grant, and
    (2) Permit the tracing of funds to a level of expenditures adequate 
to establish that such funds have not been used in violation of the 
restrictions and prohibitions of applicable statutes.
    (b) The financial management systems of other grantees and 
subgrantees must meet the following standards:
    (1) Financial reporting. Accurate, current, and complete disclosure 
of the financial results of financially assisted activities must be made 
in accordance with the financial reporting requirements of the grant or 
subgrant.
    (2) Accounting records. Grantees and subgrantees must maintain 
records which adequately identify the source and application of funds 
provided for financially-assisted activities. These records must contain 
information pertaining to grant or subgrant awards and authorizations, 
obligations, unobligated balances, assets, liabilities, outlays or 
expenditures, and income.
    (3) Internal control. Effective control and accountability must be 
maintained for all grant and subgrant cash, real and personal property, 
and other assets. Grantees and subgrantees must adequately safeguard all 
such property and must assure that it is used solely for authorized 
purposes.
    (4) Budget control. Actual expenditures or outlays must be compared 
with budgeted amounts for each grant or subgrant. Financial information 
must be related to performance or productivity data, including the 
development of unit cost information whenever appropriate or 
specifically required in the grant or subgrant agreement. If unit cost 
data are required, estimates based on available documentation will be 
accepted whenever possible.
    (5) Allowable cost. Applicable OMB cost principles, agency program 
regulations, and the terms of grant and subgrant agreements will be 
followed in determining the reasonableness, allowability, and 
allocability of costs.
    (6) Source documentation. Accounting records must be supported by 
such source documentation as cancelled checks, paid bills, payrolls, 
time and attendance records, contract and subgrant award documents, etc.
    (7) Cash management. Procedures for minimizing the time elapsing 
between the transfer of funds from the U.S. Treasury and disbursement by 
grantees and subgrantees must be followed whenever advance payment 
procedures are used. Grantees must establish reasonable procedures to 
ensure the receipt of reports on subgrantees' cash balances and cash 
disbursements in sufficient time to enable them to prepare complete and 
accurate cash transactions reports to the awarding agency. When advances 
are made by letter-of-credit or electronic transfer of funds methods, 
the grantee must make drawdowns as close as possible to the time of 
making disbursements. Grantees must monitor cash drawdowns by their 
subgrantees to assure that they conform substantially to the same 
standards of timing and amount as apply to advances to the grantees.
    (c) An awarding agency may review the adequacy of the financial 
management system of any applicant for financial assistance as part of a 
preaward review or at any time subsequent to award.



Sec. 1234.21  Payment.

    (a) Scope. This section prescribes the basic standard and the 
methods under which a Federal agency will make payments to grantees, and 
grantees will make payments to subgrantees and contractors.

[[Page 121]]

    (b) Basic standard. Methods and procedures for payment shall 
minimize the time elapsing between the transfer of funds and 
disbursement by the grantee or subgrantee, in accordance with Treasury 
regulations at 31 CFR Part 205.
    (c) Advances. Grantees and subgrantees shall be paid in advance, 
provided they maintain or demonstrate the willingness and ability to 
maintain procedures to minimize the time elapsing between the transfer 
of the funds and their disbursement by the grantee or subgrantee.
    (d) Reimbursement. Reimbursement shall be the preferred method when 
the requirements in paragraph (c) of this section are not met. Grantees 
and subgrantees may also be paid by reimbursement for any construction 
grant. Except as otherwise specified in regulation, Federal agencies 
shall not use the percentage of completion method to pay construction 
grants. The grantee or subgrantee may use that method to pay its 
construction contractor, and if it does, the awarding agency's payments 
to the grantee or subgrantee will be based on the grantee's or 
subgrantee's actual rate of disbursement.
    (e) Working capital advances. If a grantee cannot meet the criteria 
for advance payments described in paragraph (c) of this section, and the 
Federal agency has determined that reimbursement is not feasible because 
the grantee lacks sufficient working capital, the awarding agency may 
provide cash or a working capital advance basis. Under this procedure 
the awarding agency shall advance cash to the grantee to cover its 
estimated disbursement needs for an initial period generally geared to 
the grantee's disbursing cycle. Thereafter, the awarding agency shall 
reimburse the grantee for its actual cash disbursements. The working 
capital advance method of payment shall not be used by grantees or 
subgrantees if the reason for using such method is the unwillingness or 
inability of the grantee to provide timely advances to the subgrantee to 
meet the subgrantee's actual cash disbursements.
    (f) Effect of program income, refunds, and audit recoveries on 
payment. (1) Grantees and subgrantees shall disburse repayments to and 
interest earned on a revolving fund before requesting additional cash 
payments for the same activity.
    (2) Except as provided in paragraph (f)(1) of this section, grantees 
and subgrantees shall disburse program income, rebates, refunds, 
contract settlements, audit recoveries and interest earned on such funds 
before requesting additional cash payments.
    (g) Withholding payments. (1) Unless otherwise required by Federal 
statute, awarding agencies shall not withhold payments for proper 
charges incurred by grantees or subgrantees unless--
    (i) The grantee or subgrantee has failed to comply with grant award 
conditions or
    (ii) The grantee or subgrantee is indebted to the United States.
    (2) Cash withheld for failure to comply with grant award condition, 
but without suspension of the grant, shall be released to the grantee 
upon subsequent compliance. When a grant is suspended, payment 
adjustments will be made in accordance with Sec. 1234.43(c).
    (3) A Federal agency shall not make payment to grantees for amounts 
that are withheld by grantees or subgrantees from payment to contractors 
to assure satisfactory completion of work. Payments shall be made by the 
Federal agency when the grantees or subgrantees actually disburse the 
withheld funds to the contractors or to escrow accounts established to 
assure satisfactory completion of work.
    (h) Cash depositories. (1) Consistent with the national goal of 
expanding the opportunities for minority business enterprises, grantees 
and subgrantees are encouraged to use minority banks (a bank which is 
owned at least 50 percent by minority group members). A list of minority 
owned banks can be obtained from the Minority Business Development 
Agency, Department of Commerce, Washington, DC 20230.
    (2) A grantee or subgrantee shall maintain a separate bank account 
only when required by Federal-State agreement.
    (i) Interest earned on advances. Except for interest earned on 
advances of funds exempt under the Intergovernmental Cooperation Act (31 
U.S.C. 6501

[[Page 122]]

et seq.) and the Indian Self-Determination Act (23 U.S.C. 450), grantees 
and subgrantees shall promptly, but at least quarterly, remit interest 
earned on advances to the Federal agency. The grantee or subgrantee may 
keep interest amounts up to $100 per year for administrative expenses.



Sec. 1234.22  Allowable costs.

    (a) Limitation on use of funds. Grant funds may be used only for:
    (1) The allowable costs of the grantees, subgrantees and cost-type 
contractors, including allowable costs in the form of payments to fixed-
price contractors; and
    (2) Reasonable fees or profit to cost-type contractors but not any 
fee or profit (or other increment above allowable costs) to the grantee 
or subgrantee.
    (b) Applicable cost principles. For each kind of organization, there 
is a set of Federal principles for determining allowable costs. 
Allowable costs will be determined in accordance with the cost 
principles applicable to the organization incurring the costs. The 
following chart lists the kinds of organizations and the applicable cost 
principles.

------------------------------------------------------------------------
           For the costs of a--                Use the principles in--
------------------------------------------------------------------------
State, local or Indian tribal government..  OMB Circular A-87.
Private nonprofit organization other than   OMB Circular A-122.
 an (1) institution of higher education,
 (2) hospital, or (3) organization named
 in OMB Circular A-122 as not subject to
 that circular.
Educational institutions..................  OMB Circular A-21.
For-profit organization other than a        48 CFR Part 31. Contract
 hospital and an organization named in OBM   Cost Principles and
 Circular A-122 as not subject to that       Procedures, or uniform cost
 circular.                                   accounting standards that
                                             comply with cost principles
                                             acceptable to the Federal
                                             agency.
------------------------------------------------------------------------



Sec. 1234.23  Period of availability of funds.

    (a) General. Where a funding period is specified, a grantee may 
charge to the award only costs resulting from obligations of the funding 
period unless carryover of unobligated balances is permitted, in which 
case the carryover balances may be charged for costs resulting from 
obligations of the subsequent funding period.
    (b) Liquidation of obligations. A grantee must liquidate all 
obligations incurred under the award not later than 90 days after the 
end of the funding period (or as specified in a program regulation) to 
coincide with the submission of the annual Financial Status Report (SF-
269). The Federal agency may extend this deadline at the request of the 
grantee.



Sec. 1234.24  Matching or cost sharing.

    (a) Basic rule: Costs and contributions acceptable. With the 
qualifications and exceptions listed in paragraph (b) of this section, a 
matching or cost sharing requirement may be satisfied by either or both 
of the following:
    (1) Allowable costs incurred by the grantee, subgrantee or a cost-
type contractor under the assistance agreement. This includes allowable 
costs borne by non-Federal grants or by others cash donations from non-
Federal third parties.
    (2) The value of third party in-kind contributions applicable to the 
period to which the cost sharing or matching requirements applies.
    (b) Qualifications and exceptions--(1) Costs borne by other Federal 
grant agreements. Except as provided by Federal statute, a cost sharing 
or matching requirement may not be met by costs borne by another Federal 
grant. This prohibition does not apply to income earned by a grantee or 
subgrantee from a contract awarded under another Federal grant.
    (2) General revenue sharing. For the purpose of this section, 
general revenue sharing funds distributed under 31 U.S.C. 6702 are not 
considered Federal grant funds.
    (3) Cost or contributions counted towards other Federal costs-
sharing requirements. Neither costs nor the values of third party in-
kind contributions may count towards satisfying a cost sharing or 
matching requirement of a grant agreement if they have been or will be 
counted towards satisfying a cost sharing or matching requirement of 
another Federal grant agreement, a Federal procurement contract, or any 
other award of Federal funds.
    (4) Costs financed by program income. Costs financed by program 
income, as

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defined in Sec. 1234.25, shall not count towards satisfying a cost 
sharing or matching requirement unless they are expressly permitted in 
the terms of the assistance agreement. (This use of general program 
income is described in Sec. 1234.25(g).)
    (5) Services or property financed by income earned by contractors. 
Contractors under a grant may earn income from the activities carried 
out under the contract in addition to the amounts earned from the party 
awarding the contract. No costs of services or property supported by 
this income may count toward satisfying a cost sharing or matching 
requirement unless other provisions of the grant agreement expressly 
permit this kind of income to be used to meet the requirement.
    (6) Records. Costs and third party in-kind contributions counting 
towards satisfying a cost sharing or matching requirement must be 
verifiable from the records of grantees and subgrantee or cost-type 
contractors. These records must show how the value placed on third party 
in-kind contributions was derived. To the extent feasible, volunteer 
services will be supported by the same methods that the organization 
uses to support the allocability of regular personnel costs.
    (7) Special standards for third party in-kind contributions. (i) 
Third party in-kind contributions count towards satisfying a cost 
sharing or matching requirement only where, if the party receiving the 
contributions were to pay for them, the payments would be allowable 
costs.
    (ii) Some third party in-kind contributions are goods and services 
that, if the grantee, subgrantee, or contractor receiving the 
contribution had to pay for them, the payments would have been an 
indirect costs. Costs sharing or matching credit for such contributions 
shall be given only if the grantee, subgrantee, or contractor has 
established, along with its regular indirect cost rate, a special rate 
for allocating to individual projects or programs the value of the 
contributions.
    (iii) A third party in-kind contribution to a fixed-price contract 
may count towards satisfying a cost sharing or matching requirement only 
if it results in:
    (A) An increase in the services or property provided under the 
contract (without additional cost to the grantee or subgrantee) or
    (B) A cost savings to the grantee or subgrantee.
    (iv) The values placed on third party in-kind contributions for cost 
sharing or matching purposes will conform to the rules in the succeeding 
sections of this part. If a third party in-kind contribution is a type 
not treated in those sections, the value placed upon it shall be fair 
and reasonable.
    (c) Valuation of donated services--(1) Volunteer services. Unpaid 
services provided to a grantee or subgrantee by individuals will be 
valued at rates consistent with those ordinarily paid for similar work 
in the grantee's or subgrantee's organization. If the grantee or 
subgrantee does not have employees performing similar work, the rates 
will be consistent with those ordinarily paid by other employers for 
similar work in the same labor market. In either case, a reasonable 
amount for fringe benefits may be included in the valuation.
    (2) Employees of other organizations. When an employer other than a 
grantee, subgrantee, or cost-type contractor furnishes free of charge 
the services of an employee in the employee's normal line of work, the 
services will be valued at the employee's regular rate of pay exclusive 
of the employee's fringe benefits and overhead costs. If the services 
are in a different line of work, paragraph (c)(1) of this section 
applies.
    (d) Valuation of third party donated supplies and loaned equipment 
or space. (1) If a third party donates supplies, the contribution will 
be valued at the market value of the supplies at the time of donation.
    (2) If a third party donates the use of equipment or space in a 
building but retains title, the contribution will be valued at the fair 
rental rate of the equipment or space.
    (e) Valuation of third party donated equipment, buildings, and land. 
If a third party donates equipment, buildings, or land, and title passes 
to a grantee or subgrantee, the treatment of the donated property will 
depend upon the purpose of the grant or subgrant, as follows:

[[Page 124]]

    (1) Awards for capital expenditures. If the purpose of the grant or 
subgrant is to assist the grantee or subgrantee in the acquisition of 
property, the market value of that property at the time of donation may 
be counted as cost sharing or matching,
    (2) Other awards. If assisting in the acquisition of property is not 
the purpose of the grant or subgrant, paragraphs (e)(2) (i) and (ii) of 
this section apply:
    (i) If approval is obtained from the awarding agency, the market 
value at the time of donation of the donated equipment or buildings and 
the fair rental rate of the donated land may be counted as cost sharing 
or matching. In the case of a subgrant, the terms of the grant agreement 
may require that the approval be obtained from the Federal agency as 
well as the grantee. In all cases, the approval may be given only if a 
purchase of the equipment or rental of the land would be approved as an 
allowable direct cost. If any part of the donated property was acquired 
with Federal funds, only the non-federal share of the property may be 
counted as cost-sharing or matching.
    (ii) If approval is not obtained under paragraph (e)(2)(i) of this 
section, no amount may be counted for donated land, and only 
depreciation or use allowances may be counted for donated equipment and 
buildings. The depreciation or use allowances for this property are not 
treated as third party in-kind contributions. Instead, they are treated 
as costs incurred by the grantee or subgrantee. They are computed and 
allocated (usually as indirect costs) in accordance with the cost 
principles specified in Sec. 1234.22, in the same way as depreciation or 
use allowances for purchased equipment and buildings. The amount of 
depreciation or use allowances for donated equipment and buildings is 
based on the property's market value at the time it was donated.
    (f) Valuation of grantee or subgrantee donated real property for 
construction/acquisition. If a grantee or subgrantee donates real 
property for a construction or facilities acquisition project, the 
current market value of that property may be counted as cost sharing or 
matching. If any part of the donated property was acquired with Federal 
funds, only the non-federal share of the property may be counted as cost 
sharing or matching.
    (g) Appraisal of real property. In some cases under paragraphs (d), 
(e) and (f) of this section, it will be necessary to establish the 
market value of land or a building or the fair rental rate of land or of 
space in a building. In these cases, the Federal agency may require the 
market value or fair rental value be set by an independent appraiser, 
and that the value or rate be certified by the grantee. This requirement 
will also be imposed by the grantee on subgrantees.



Sec. 1234.25  Program income.

    (a) General. Grantees are encouraged to earn income to defray 
program costs. Program income includes income from fees for services 
performed, from the use or rental of real or personal property acquired 
with grant funds, from the sale of commodities or items fabricated under 
a grant agreement, and from payments of principal and interest on loans 
made with grant funds. Except as otherwise provided in regulations of 
the Federal agency, program income does not include interest on grant 
funds, rebates, credits, discounts, refunds, etc. and interest earned on 
any of them.
    (b) Definition of program income. Program income means gross income 
received by the grantee or subgrantee directly generated by a grant 
supported activity, or earned only as a result of the grant agreement 
during the grant period. ``During the grant period'' is the time between 
the effective date of the award and the ending date of the award 
reflected in the final financial report.
    (c) Cost of generating program income. If authorized by Federal 
regulations or the grant agreement, costs incident to the generation of 
program income may be deducted from gross income to determine program 
income.
    (d) Governmental revenues. Taxes, special assessments, levies, 
fines, and other such revenues raised by a grantee or subgrantee are not 
program income unless the revenues are specifically identified in the 
grant agreement or Federal agency regulations as program income.

[[Page 125]]

    (e) Royalties. Income from royalties and license fees for 
copyrighted material, patents, and inventions developed by a grantee or 
subgrantee is program income only if the revenues are specifically 
identified in the grant agreement or Federal agency regulations as 
program income. (See Sec. 1234.34.)
    (f) Property. Proceeds from the sale of real property or equipment 
will be handled in accordance with the requirements of Secs. 1234.31 and 
1234.32.
    (g) Use of program income. Program income shall be deducted from 
outlays which may be both Federal and non-Federal as described below, 
unless the Federal agency regulations or the grant agreement specify 
another alternative (or a combination of the alternatives). In 
specifying alternatives, the Federal agency may distinguish between 
income earned by the grantee and income earned by subgrantees and 
between the sources, kinds, or amounts of income. When Federal agencies 
authorize the alternatives in paragraphs (g) (2) and (3) of this 
section, program income in excess of any limits stipulated shall also be 
deducted from outlays.
    (1) Deduction. Ordinarily program income shall be deducted from 
total allowable costs to determine the net allowable costs. Program 
income shall be used for current costs unless the Federal agency 
authorizes otherwise. Program income which the grantee did not 
anticipate at the time of the award shall be used to reduce the Federal 
agency and grantee contributions rather than to increase the funds 
committed to the project.
    (2) Addition. When authorized, program income may be added to the 
funds committed to the grant agreement by the Federal agency and the 
grantee. The program income shall be used for the purposes and under the 
conditions of the grant agreement.
    (3) Cost sharing or matching. When authorized, program income may be 
used to meet the cost sharing or matching requirement of the grant 
agreement. The amount of the Federal grant award remains the same.
    (h) Income after the award period. There are no Federal requirements 
governing the disposition of program income earned after the end of the 
award period (i.e., until the ending date of the final financial report, 
see paragraph (a) of this section), unless the terms of the agreement or 
the Federal agency regulations provide otherwise.



Sec. 1234.26  Non-Federal audit.

    (a) Basic rule. Grantees and subgrantees are responsible for 
obtaining audits in accordance with the Single Audit Act of 1984 (31 
U.S.C. 7501-7) and Federal agency implementing regulations. The audits 
shall be made by an independent auditor in accordance with generally 
accepted government auditing standards covering financial and compliance 
audits.
    (b) Subgrantees. State or local governments, as those terms are 
defined for purposes of the Single Audit Act, that receive Federal 
financial assistance and provide $25,000 or more of it in a fiscal year 
to a subgrantee shall:
    (1) Determine whether State or local subgrantees have met the audit 
requirements of the Act and whether subgrantees covered by OMB Circular 
A-110, ``Uniform Requirements for Grants and Other Agreements with 
Institutions of Higher Education, Hospitals and Other Nonprofit 
Organizations'' have met the audit requirement. Commercial contractors 
(private forprofit and private and governmental organizations) providing 
goods and services to State and local governments are not required to 
have a single audit performed. State and local govenments should use 
their own procedures to ensure that the contractor has complied with 
laws and regulations affecting the expenditure of Federal funds;
    (2) Determine whether the subgrantee spent Federal assistance funds 
provided in accordance with applicable laws and regulations. This may be 
accomplished by reviewing an audit of the subgrantee made in accordance 
with the Act, Circular A-110, or through other means (e.g., program 
reviews) if the subgrantee has not had such an audit;
    (3) Ensure that appropriate corrective action is taken within six 
months after receipt of the audit report in instance of noncompliance 
with Federal laws and regulations;

[[Page 126]]

    (4) Consider whether subgrantee audits necessitate adjustment of the 
grantee's own records; and
    (5) Require each subgrantee to permit independent auditors to have 
access to the records and financial statements.
    (c) Auditor selection. In arranging for audit services, Sec. 1234.36 
shall be followed.

                    Changes, Property, and Subawards



Sec. 1234.30  Changes.

    (a) General. Grantees and subgrantees are permitted to rebudget 
within the approved direct cost budget to meet unanticipated 
requirements and may make limited program changes to the approved 
project. However, unless waived by the awarding agency, certain types of 
post-award changes in budgets and projects shall require the prior 
written approval of the awarding agency.
    (b) Relation to cost principles. The applicable cost principles (see 
Sec. 1234.22) contain requirements for prior approval of certain types 
of costs. Except where waived, those requirements apply to all grants 
and subgrants even if paragraphs (c) through (f) of this section do not.
    (c) Budget changes--(1) Nonconstruction projects. Except as stated 
in other regulations or an award document, grantees or subgrantees shall 
obtain the prior approval of the awarding agency whenever any of the 
following changes is anticipated under a nonconstruction award:
    (i) Any revision which would result in the need for additional 
funding.
    (ii) Unless waived by the awarding agency, cumulative transfers 
among direct cost categories, or, if applicable, among separately 
budgeted programs, projects, functions, or activities which exceed or 
are expected to exceed ten percent of the current total approved budget, 
whenever the awarding agency's share exceeds $100,000.
    (iii) Transfer of funds allotted for training allowances (i.e., from 
direct payments to trainees to other expense categories).
    (2) Construction projects. Grantees and subgrantees shall obtain 
prior written approval for any budget revision which would result in the 
need for additional funds.
    (3) Combined construction and nonconstruction projects. When a grant 
or subgrant provides funding for both construction and nonconstruction 
activities, the grantee or subgrantee must obtain prior written approval 
from the awarding agency before making any fund or budget transfer from 
nonconstruction to construction or vice versa.
    (d) Programmatic changes. Grantees or subgrantees must obtain the 
prior approval of the awarding agency whenever any of the following 
actions is anticipated:
    (1) Any revision of the scope or objectives of the project 
(regardless of whether there is an associated budget revision requiring 
prior approval).
    (2) Need to extend the period of availability of funds.
    (3) Changes in key persons in cases where specified in an 
application or a grant award. In research projects, a change in the 
project director or principal investigator shall always require approval 
unless waived by the awarding agency.
    (4) Under nonconstruction projects, contracting out, subgranting (if 
authorized by law) or otherwise obtaining the services of a third party 
to perform activities which are central to the purposes of the award. 
This approval requirement is in addition to the approval requirements of 
Sec. 1234.36 but does not apply to the procurement of equipment, 
supplies, and general support services.
    (e) Additional prior approval requirements. The awarding agency may 
not require prior approval for any budget revision which is not 
described in paragraph (c) of this section.
    (f) Requesting prior approval. (1) A request for prior approval of 
any budget revision will be in the same budget formal the grantee used 
in its application and shall be accompanied by a narrative justification 
for the proposed revision.
    (2) A request for a prior approval under the applicable Federal cost 
principles (see Sec. 1234.22) may be made by letter.
    (3) A request by a subgrantee for prior approval will be addressed 
in

[[Page 127]]

writing to the grantee. The grantee will promptly review such request 
and shall approve or disapprove the request in writing. A grantee will 
not approve any budget or project revision which is inconsistent with 
the purpose or terms and conditions of the Federal grant to the grantee. 
If the revision, requested by the subgrantee would result in a change to 
the grantee's approved project which requires Federal prior approval, 
the grantee will obtain the Federal agency's approval before approving 
the subgrantee's request.



Sec. 1234.31  Real property.

    (a) Title. Subject to the obligations and conditions set forth in 
this section, title to real property acquired under a grant or subgrant 
will vest upon acquisition in the grantee or subgrantee respectively.
    (b) Use. Except as otherwise provided by Federal statutes, real 
property will be used for the originally authorized purposes as long as 
needed for that purposes, and the grantee or subgrantee shall not 
dispose of or encumber its title or other interests.
    (c) Disposition. When real property is no longer needed for the 
originally authorized purpose, the grantee or subgrantee will request 
disposition instructions from the awarding agency. The instructions will 
provide for one of the following alternatives:
    (1) Retention of title. Retain title after compensating the awarding 
agency. The amount paid to the awarding agency will be computed by 
applying the awarding agency's percentage of participation in the cost 
of the original purchase to the fair market value of the property. 
However, in those situations where a grantee or subgrantee is disposing 
of real property acquired with grant funds and acquiring replacement 
real property under the same program, the net proceeds from the 
disposition may be used as an offset to the cost of the replacement 
property.
    (2) Sale of property. Sell the property and compensate the awarding 
agency. The amount due to the awarding agency will be calculated by 
applying the awarding agency's percentage of participation in the cost 
of the original purchase to the proceeds of the sale after deduction of 
any actual and reasonable selling and fixing-up expenses. If the grant 
is still active, the net proceeds from sale may be offset against the 
original cost of the property. When a grantee or subgrantee is directed 
to sell property, sales procedures shall be followed that provide for 
competition to the extent practicable and result in the highest possible 
return.
    (3) Transfer of title. Transfer title to the awarding agency or to a 
third-party designated/approved by the awarding agency. The grantee or 
subgrantee shall be paid an amount calculated by applying the grantee or 
subgrantee's percentage of participation in the purchase of the real 
property to the current fair market value of the property.



Sec. 1234.32  Equipment.

    (a) Title. Subject to the obligations and conditions set forth in 
this section, title to equipment acquired under a grant or subgrant will 
vest upon acquisition in the grantee or subgrantee respectively.
    (b) States. A State will use, manage, and dispose of equipment 
acquired under a grant by the State in accordance with State laws and 
procedures. Other grantees and subgrantees will follow paragraphs (c) 
through (e) of this section.
    (c) Use. (1) Equipment shall be used by the grantee or subgrantee in 
the program or project for which it was acquired as long as needed, 
whether or not the project or program continues to be supported by 
Federal funds. When no longer needed for the original program or 
project, the equipment may be used in other activities currently or 
previously supported by a Federal agency.
    (2) The grantee or subgrantee shall also make equipment available 
for use on other projects or programs currently or previously supported 
by the Federal Government, providing such use will not interfere with 
the work on the projects or program for which it was originally 
acquired. First preference for other use shall be given to other 
programs or projects supported by the awarding agency. User fees should 
be considered if appropriate.

[[Page 128]]

    (3) Notwithstanding the encouragement in Sec. 1234.25(a) to earn 
program income, the grantee or subgrantee must not use equipment 
acquired with grant funds to provide services for a fee to compete 
unfairly with private companies that provide equivalent services, unless 
specifically permitted or contemplated by Federal statute.
    (4) When acquiring replacement equipment, the grantee or subgrantee 
may use the equipment to be replaced as a trade-in or sell the property 
and use the proceeds to offset the cost of the replacement property, 
subject to the approval of the awarding agency.
    (d) Management requirements. Procedures for managing equipment 
(including replacement equipment), whether acquired in whole or in part 
with grant funds, until disposition takes place will, as a minimum, meet 
the following requirements:
    (1) Property records must be maintained that include a description 
of the property, a serial number or other identification number, the 
source of property, who holds title, the acquisition date, and cost of 
the property, percentage of Federal participation in the cost of the 
property, the location, use and condition of the property, and any 
ultimate disposition data including the date of disposal and sale price 
of the property.
    (2) A physical inventory of the property must be taken and the 
results reconciled with the property records at least once every two 
years.
    (3) A control system must be developed to ensure adequate safeguards 
to prevent loss, damage, or theft of the property. Any loss, damage, or 
theft shall be investigated.
    (4) Adequate maintenance procedures must be developed to keep the 
property in good condition.
    (5) If the grantee or subgrantee is authorized or required to sell 
the property, proper sales procedures must be established to ensure the 
highest possible return.
    (e) Disposition. When original or replacement equipment acquired 
under a grant or subgrant is no longer needed for the original project 
or program or for other activities currently or previously supported by 
a Federal agency, disposition of the equipment will be made as follows:
    (1) Items of equipment with a current per-unit fair market value of 
less than $5,000 may be retained, sold or otherwise disposed of with no 
further obligation to the awarding agency.
    (2) Items of equipment with a current per unit fair market value in 
excess of $5,000 may be retained or sold and the awarding agency shall 
have a right to an amount calculated by multiplying the current market 
value or proceeds from sale by the awarding agency's share of the 
equipment.
    (3) In cases where a grantee or subgrantee fails to take appropriate 
disposition actions, the awarding agency may direct the grantee or 
subgrantee to take excess and disposition actions.
    (f) Federal equipment. In the event a grantee or subgrantee is 
provided federally-owned equipment:
    (1) Title will remain vested in the Federal Government.
    (2) Grantees or subgrantees will manage the equipment in accordance 
with Federal agency rules and procedures, and submit an annual inventory 
listing.
    (3) When the equipment is no longer needed, the grantee or 
subgrantee will request disposition instructions from the Federal 
agency.
    (g) Right to transfer title. The Federal awarding agency may reserve 
the right to transfer title to the Federal Government or a third part 
named by the awarding agency when such a third party is otherwise 
eligible under existing statutes. Such transfers shall be subject to the 
following standards:
    (1) The property shall be identified in the grant or otherwise made 
known to the grantee in writing.
    (2) The Federal awarding agency shall issue disposition instruction 
within 120 calendar days after the end of the Federal support of the 
project for which it was acquired. If the Federal awarding agency fails 
to issue disposition instructions within the 120 calendar-day period the 
grantee shall follow Sec. 1234.32(e).
    (3) When title to equipment is transferred, the grantee shall be 
paid an

[[Page 129]]

amount calculated by applying the percentage of participation in the 
purchase to the current fair market value of the property.



Sec. 1234.33  Supplies.

    (a) Title. Title to supplies acquired under a grant or subgrant will 
vest, upon acquisition, in the grantee or subgrantee respectively.
    (b) Disposition. If there is a residual inventory of unused supplies 
exceeding $5,000 in total aggregate fair market value upon termination 
or completion of the award, and if the supplies are not needed for any 
other federally sponsored programs or projects, the grantee or 
subgrantee shall compensate the awarding agency for its share.



Sec. 1234.34  Copyrights.

    The Federal awarding agency reserves a royalty-free, nonexclusive, 
and irrevocable license to reproduce, publish or otherwise use, and to 
authorize others to use, for Federal Government purposes:
    (a) The copyright in any work developed under a grant, subgrant, or 
contract under a grant or subgrant; and
    (b) Any rights of copyright to which a grantee, subgrantee or a 
contractor purchases ownership with grant support.



Sec. 1234.35  Subawards to debarred and suspended parties.

    Grantees and subgrantees must not make any award or permit any award 
(subgrant or contract) at any tier to any party which is debarred or 
suspended or is otherwise excluded from or ineligible for participation 
in Federal assistance programs under Executive Order 12549, ``Debarment 
and Suspension.''



Sec. 1234.36  Procurement.

    (a) States. When procuring property and services under a grant, a 
State will follow the same policies and procedures it uses for 
procurements from its non-Federal funds. The State will ensure that 
every purchase order or other contract includes any clauses required by 
Federal statutes and executive orders and their implementing 
regulations. Other grantees and subgrantees will follow paragraphs (b) 
through (i) in this section.
    (b) Procurement standards. (1) Grantees and subgrantees will use 
their own procurement procedures which reflect applicable State and 
local laws and regulations, provided that the procurements conform to 
applicable Federal law and the standards identified in this section.
    (2) Grantees and subgrantees will maintain a contract administration 
system which ensures that contractors perform in accordance with the 
terms, conditions, and specifications of their contracts or purchase 
orders.
    (3) Grantees and subgrantees will maintain a written code of 
standards of conduct governing the performance of their employees 
engaged in the award and administration of contracts. No employee, 
officer or agent of the grantee or subgrantee shall participate in 
selection, or in the award or administration of a contract supported by 
Federal funds if a conflict of interest, real or apparent, would be 
involved. Such a conflict would arise when:
    (i) The employee, officer or agent,
    (ii) Any member of his immediate family,
    (iii) His or her partner, or
    (iv) An organization which employs, or is about to employ, any of 
the above, has a financial or other interest in the firm selected for 
award. The grantee's or subgrantee's officers, employees or agents will 
neither solicit nor accept gratuities, favors or anything of monetary 
value from contractors, potential contractors, or parties to 
subagreements. Grantee and subgrantees may set minimum rules where the 
financial interest is not substantial or the gift is an unsolicited item 
of nominal intrinsic value. To the extent permitted by State or local 
law or regulations, such standards or conduct will provide for 
penalties, sanctions, or other disciplinary actions for violations of 
such standards by the grantee's and subgrantee's officers, employees, or 
agents, or by contractors or their agents. The awarding agency may in 
regulation provide additional prohibitions relative to real, apparent, 
or potential conflicts of interest.

[[Page 130]]

    (4) Grantee and subgrantee procedures will provide for a review of 
proposed procurements to avoid purchase of unnecessary or duplicative 
items. Consideration should be given to consolidating or breaking out 
procurements to obtain a more economical purchase. Where appropriate, an 
analysis will be made of lease versus purchase alternatives, and any 
other appropriate analysis to determine the most economical approach.
    (5) To foster greater economy and efficiency, grantees and 
subgrantees are encouraged to enter into State and local 
intergovernmental agreements for procurement or use of common goods and 
services.
    (6) Grantees and subgrantees are encouraged to use Federal excess 
and surplus property in lieu of purchasing new equipment and property 
whenever such use is feasible and reduces project costs.
    (7) Grantees and subgrantees are encouraged to use value engineering 
clauses in contracts for construction projects of sufficient size to 
offer reasonable opportunities for cost reductions. Value engineering is 
a systematic and creative anaylsis of each contract item or task to 
ensure that its essential function is provided at the overall lower 
cost.
    (8) Grantees and subgrantees will make awards only to responsible 
contractors possessing the ability to perform successfully under the 
terms and conditions of a proposed procurement. Consideration will be 
given to such matters as contractor integrity, compliance with public 
policy, record of past performance, and financial and technical 
resources.
    (9) Grantees and subgrantees will maintain records sufficient to 
detail the significant history of a procurement. These records will 
include, but are not necessarily limited to the following: Rationale for 
the method of procurement, selection of contract type, contractor 
selection or rejection, and the basis for the contract price.
    (10) Grantees and subgrantees will use time and material type 
contracts only--
    (i) After a determination that no other contract is suitable, and
    (ii) If the contract includes a ceiling price that the contractor 
exceeds at its own risk.
    (11) Grantees and subgrantees alone will be responsible, in 
accordance with good administrative practice and sound business 
judgment, for the settlement of all contractual and administrative 
issues arising out of procurements. These issues include, but are not 
limited to source evaluation, protests, disputes, and claims. These 
standards do not relieve the grantee or subgrantee of any contractual 
responsibilities under its contracts. Federal agencies will not 
substitute their judgment for that of the grantee or subgrantee unless 
the matter is primarily a Federal concern. Violations of law will be 
referred to the local, State, or Federal authority having proper 
jurisdiction.
    (12) Grantees and subgrantees will have protest procedures to handle 
and resolve disputes relating to their procurements and shall in all 
instances disclose information regarding the protest to the awarding 
agency. A protestor must exhaust all administrative remedies with the 
grantee and subgrantee before pursuing a protest with the Federal 
agency. Reviews of protests by the Federal agency will be limited to:
    (i) Violations of Federal law or regulations and the standards of 
this section (violations of State or local law will be under the 
jurisdiction of State or local authorities) and
    (ii) Violations of the grantee's or subgrantee's protest procedures 
for failure to review a complaint or protest. Protests received by the 
Federal agency other than those specified above will be referred to the 
grantee or subgrantee.
    (c) Competition. (1) All procurement transactions will be conducted 
in a manner providing full and open competition consistent with the 
standards of Sec. 1234.36. Some of the situations considered to be 
restrictive of competition include but are not limited to:
    (i) Placing unreasonable requirements on firms in order for them to 
qualify to do business,
    (ii) Requiring unnecessary experience and excessive bonding,
    (iii) Noncompetitive pricing practices between firms or between 
affiliated companies,

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    (iv) Noncompetitive awards to consultants that are on retainer 
contracts,
    (v) Organizational conflicts of interest,
    (vi) Specifying only a ``brand name'' product instead of allowing 
``an equal'' product to be offered and describing the performance of 
other relevant requirements of the procurement, and
    (vii) Any arbitrary action in the procurement process.
    (2) Grantees and subgrantees will conduct procurements in a manner 
that prohibits the use of statutorily or administratively imposed in-
State or local geographical preferences in the evaluation of bids or 
proposals, except in those cases where applicable Federal statutes 
expressly mandate or encourage geographic preference. Nothing in this 
section preempts State licensing laws. When contracting for 
architectural and engineering (A/E) services, geographic location may be 
a selection criteria provided its application leaves an appropriate 
number of qualified firms, given the nature and size of the project, to 
compete for the contract.
    (3) Grantees will have written selection procedures for procurement 
transactions. These procedures will ensure that all solicitations:
    (i) Incorporate a clear and accurate description of the technical 
requirements for the material, product, or service to be procured. Such 
description shall not, in competitive procurements, contain features 
which unduly restrict competition. The description may include a 
statement of the qualitative nature of the material, product or service 
to be procured, and when necessary, shall set forth those minimum 
essential characteristics and standards to which it must conform if it 
is to satisfy its intended use. Detailed product specifications should 
be avoided if at all possible. When it is impractical or uneconomical to 
make a clear and accurate description of the technical requirements, a 
``brand name or equal'' description may be used as a means to define the 
performance or other salient requirements of a procurement. The specific 
features of the named brand which must be met by offerors shall be 
clearly stated; and
    (ii) Identify all requirements which the offerors must fulfill and 
all other factors to be used in evaluating bids or proposals.
    (4) Grantees and subgrantees will ensure that all prequalified lists 
of persons, firms, or products which are used in acquiring goods and 
services are current and include enough qualified sources to ensure 
maximum open and free competition. Also, grantees and subgrantees will 
not preclude potential bidders from qualifying during the solicitation 
period.
    (d) Methods of procurement to be followed--(1) Procurement by small 
purchase procedures. Small purchase procedures are those relatively 
simple and informal procurement methods for securing services, supplies, 
or other property that do not cost more than $25,000 in the aggregate. 
If small purchase procurements are used, price or rate quotations will 
be obtained from an adequate number of qualified sources.
    (2) Procurement by sealed bids (formal advertising). Bids are 
publicly solicited and a firm-fixed-price contract (lump sum or unit 
price) is awarded to the responsible bidder whose bid, conforming with 
all the material terms and conditions of the invitation for bids, is the 
lowest in price. The sealed bid method is the preferred method for 
procuring construction, if the conditions in Sec. 1234.36(d)(2)(i) 
apply.
    (i) In order for sealed bidding to be feasible, the following 
conditions should be present:
    (A) A complete, adequate, and realistic specification or purchase 
description is available;
    (B) Two or more responsible bidders are willing and able to compete 
effectively for the business; and
    (C) The procurement lends itself to a firm fixed price contract and 
the selection of the successful bidder can be made principally on the 
basis of price.
    (ii) If sealed bids are used, the following requirements apply:
    (A) The invitation for bids will be publicly advertised and bids 
shall be solicited from an adequate number of known suppliers, providing 
them sufficient time prior to the date set for opening the bids;
    (B) The invitation for bids, which will include any specifications 
and pertinent attachments, shall define the

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items or services in order for the bidder to properly respond;
    (C) All bids will be publicly opened at the time and place 
prescribed in the invitation for bids;
    (D) A firm fixed-price contract award will be made in writing to the 
lowest responsive and responsible bidder. Where specified in bidding 
documents, factors such as discounts, transportation cost, and life 
cycle costs shall be considered in determining which bid is lowest. 
Payment discounts will only be used to determine the low bid when prior 
experience indicates that such discounts are usually taken advantage of; 
and
    (E) Any or all bids may be rejected if there is a sound documented 
reason.
    (3) Procurement by competitive proposals. The technique of 
competitive proposals is normally conducted with more than one source 
submitting an offer, and either a fixed-price or cost-reimbursement type 
contract is awarded. It is generally used when conditions are not 
appropriate for the use of sealed bids. If this method is used, the 
following requirements apply:
    (i) Requests for proposals will be publicized and identify all 
evaluation factors and their relative importance. Any response to 
publicized requests for proposals shall be honored to the maximum extent 
practical;
    (ii) Proposals will be solicited from an adequate number of 
qualified sources;
    (iii) Grantees and subgrantees will have a method for conducting 
technical evaluations of the proposals received and for selecting 
awardees;
    (iv) Awards will be made to the responsible firm whose proposal is 
most advantageous to the program, with price and other factors 
considered; and
    (v) Grantees and subgrantees may use competitive proposal procedures 
for qualifications-based procurement of architectural/engineering (A/E) 
professional services whereby competitors' qualifications are evaluated 
and the most qualified competitor is selected, subject to negotiation of 
fair and reasonable compensation. The method, where price is not used as 
a selection factor, can only be used in procurement of A/E professional 
services. It cannot be used to purchase other types of services though 
A/E firms are a potential source to perform the proposed effort.
    (4) Procurement by noncompetitive proposals is procurement through 
solicitation of a proposal from only one source, or after solicitation 
of a number of sources, competition is determined inadequate.
    (i) Procurement by noncompetitive proposals may be used only when 
the award of a contract is infeasible under small purchase procedures, 
sealed bids or competitive proposals and one of the following 
circumstances applies:
    (A) The item is available only from a single source;
    (B) The public exigency or emergency for the requirement will not 
permit a delay resulting from competitive solicitation.
    (C) The awarding agency authorizes noncompetitive proposals; or
    (D) After solicitation of a number of sources, competition is 
determined inadequate.
    (ii) Cost analysis, i.e., verifying the proposed cost data, the 
projections of the data, and the evaluation of the specific elements of 
costs and profit, is required.
    (iii) Grantees and subgrantees may be required to submit the 
proposed procurement to the awarding agency for pre-award review in 
accordance with paragraph (g) of this section.
    (e) Contracting with small and minority firms, women's business 
enterprise and labor surplus area firms. (1) The grantee and subgrantee 
will take all necessary affirmative steps to assure that minority firms, 
women's business enterprises, and labor surplus area firms are used when 
possible.
    (2) Affirmative steps shall include:
    (i) Placing qualified small and minority businesses and women's 
business enterprises on solicitation lists;
    (ii) Assuring that small and minority businesses, and women's 
business enterprises are solicited whenever they are potential sources;
    (iii) Dividing total requirements, when economically feasible, into 
smaller tasks or quantities to permit maximum participation by small and 
minority business, and women's business enterprises;

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    (iv) Establishing delivery schedules, where the requirement permits, 
which encourage participation by small and minority business, and 
women's business enterprises;
    (v) Using the services and assistance of the Small Business 
Administration, and the Minority Business Development Agency of the 
Department of Commerce; and
    (vi) Requiring the prime contractor, if subcontracts are to be let, 
to take the affirmative steps listed in paragraphs (e)(2) (i) through 
(v) of this section.
    (f) Contract cost and price. (1) Grantees and subgrantees must 
perform a cost or price analysis in connection with every procurement 
action including contract modifications. The method and degree of 
analysis is dependent on the facts surrounding the particular 
procurement situation, but as a starting point, grantees must make 
independent estimates before receiving bids or proposals. A cost 
analysis must be performed when the offeror is required to submit the 
elements of his estimated cost, e.g., under professional, consulting, 
and architectural engineering services contracts. A cost analysis will 
be necessary when adequate price competition is lacking, and for sole 
source procurements, including contract modifications or change orders, 
unless price resonableness can be established on the basis of a catalog 
or market price of a commercial product sold in substantial quantities 
to the general public or based on prices set by law or regulation. A 
price analysis will be used in all other instances to determine the 
reasonableness of the proposed contract price.
    (2) Grantees and subgrantees will negotiate profit as a separate 
element of the price for each contract in which there is no price 
competition and in all cases where cost analysis is performed. To 
establish a fair and reasonable profit, consideration will be given to 
the complexity of the work to be performed, the risk borne by the 
contractor, the contractor's investment, the amount of subcontracting, 
the quality of its record of past performance, and industry profit rates 
in the surrounding geographical area for similar work.
    (3) Costs or prices based on estimated costs for contracts under 
grants will be allowable only to the extent that costs incurred or cost 
estimates included in negotiated prices are consistent with Federal cost 
principles (see Sec. 1234.22). Grantees may reference their own cost 
principles that comply with the applicable Federal cost principles.
    (4) The cost plus a percentage of cost and percentage of 
construction cost methods of contracting shall not be used.
    (g) Awarding agency review. (1) Grantees and subgrantees must make 
available, upon request of the awarding agency, technical specifications 
on proposed procurements where the awarding agency believes such review 
is needed to ensure that the item and/or service specified is the one 
being proposed for purchase. This review generally will take place prior 
to the time the specification is incorporated into a solicitation 
document. However, if the grantee or subgrantee desires to have the 
review accomplished after a solication has been developed, the awarding 
agency may still review the specifications, with such review usually 
limited to the technical aspects of the proposed purchase.
    (2) Grantees and subgrantees must on request make available for 
awarding agency pre-award review procurement documents, such as requests 
for proposals or invitations for bids, independent cost estimates, etc., 
when:
    (i) A grantee's or subgrantee's procurement procedures or operation 
fails to comply with the procurement standards in this seciton; or
    (ii) The procurement is expected to exceed $25,000 and is to be 
awarded without competition or only one bid or offer is received in 
response to a solicitation; or
    (iii) The procurement, which is expected to exceed $25,000, 
specifies a ``brand name'' product; or
    (iv) The proposed award over $25,000 is to be awarded to other than 
the apparent low bidder under a sealed bid procurement; or
    (v) A proposed contract modification changes the scope of a contract 
or increases the contract amount by more than $25,000.

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    (3) A grantee or subgrantee will be exempt from the pre-award review 
in paragraph (g)(2) of this section if the awarding agency determines 
that its procurement systems comply with the standards of this section.
    (i) A grantee or subgrantee may request that its procurement system 
be reviewed by the awarding agency to determine whether its system meets 
these standards in order for its system to be certified. Generally, 
these reviews shall occur where there is a continuous high-dollar 
funding, and third-party contracts are awarded on a regular basis;
    (ii) A grantee or subgrantee may self-certify its procurement 
system. Such self-certification shall not limit the awarding agency's 
right to survey the system. Under a self-certification procedure, 
awarding agencies may wish to rely on written assurances from the 
grantee or subgrantee that it is complying with these standards. A 
grantee or subgrantee will cite specific procedures, regulations, 
standards, etc., as being in compliance with these requirements and have 
its system available for review.
    (h) Bonding requirements. For construction or facility improvement 
contracts or subconstracts exceeding $100,000, the awarding agency may 
accept the bonding policy and requirements of the grantee or subgrantee 
provided the awarding agency has made a determination that the awarding 
agency's interest is adequately protected. If such a determination has 
not been made, the minimum requirements shall be as follows:
    (1) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The ``bid guarantee'' shall consist of a firm commitment 
such as a bid bond, certified check, or other negotiable instrument 
accompanying a bid as assurance that the bidder will, upon acceptance of 
his bid, execute such contractual documents as may be required within 
the time specified.
    (2) A performance bond on the part of the contractor for 100 percent 
of the contract price. A ``performance bond'' is one executed in 
connection with a contract to secure fulfillment of all the contractor's 
obligations under such contract.
    (3) A payment bond on the part of the contractor for 100 percent of 
the contract price. A ``payment bond'' is one executed in connection 
with a contract to assure payment as required by law of all persons 
supplying labor and material in the execution of the work provided for 
in the contract.
    (i) Contract provisions. A grantee's and subgrantee's contracts must 
contain provisions in paragraph (i) of this section. Federal agencies 
are permitted to require changes, remedies, changed conditions, access 
and records retention, suspension of work, and other clauses approved by 
the Office of Procurement Policy.
    (1) Administrative, contractual, or legal remedies in instances 
where contractors violate or breach contract terms, and provide for such 
sanctions and penalties as may be appropriate (Contracts other than 
small purchases).
    (2) Termination for cause and for convenience by the grantee or 
subgrantee including the manner by which it will be effected and the 
basis for settlement (All contracts in excess of $10,000).
    (3) Compliance with Executive Order 11246 of September 24, 1965 
entitled ``Equal Employment Opportunity,'' as amended by Executive Order 
11375 of October 13, 1967 and as supplemented in Department of Labor 
regulations (41 CFR chapter 60) (All construction contracts awarded in 
excess of $10,000 by grantees and their contractors or subgrantees).
    (4) Compliance with the Copeland ``Anti-Kickback'' Act (18 U.S.C. 
874) as supplemented in Department of Labor regulations (29 CFR part 3) 
(All contracts and subgrants for construction or repair).
    (5) Compliance with the Davis-Bacon Act (40 U.S.C. 276a to a-7) as 
supplemented by Department of Labor regulations (29 CFR part 5) 
(Construction contracts in excess of $2,000 awarded by grantees and 
subgrantees when required by Federal grant program legislation).
    (6) Compliance with sections 103 and 107 of the Contract Work Hours 
and Safety Standards Act (40 U.S.C. 327-330) as supplemented by 
Department of Labor regulations (29 CFR part 5).

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(Construction contracts awarded by grantees and subgrantees in excess of 
$2,000, and in excess of $2,500 for other contracts which involve the 
employment of mechanics or laborers)
    (7) Notice of awarding agency requirements and regulations 
pertaining to reporting.
    (8) Notice of awarding agency requirements and regulations 
pertaining to patent rights with respect to any discovery or invention 
which arises or is developed in the course of or under such contract.
    (9) Awarding agency requirements and regulations pertaining to 
copyrights and rights in data.
    (10) Access by the grantee, the subgrantee, the Federal grantor 
agency, the Comptroller General of the United States, or any of their 
duly authorized representatives to any books, documents, papers, and 
records of the contractor which are directly pertinent to that specific 
contract for the purpose of making audit, examination, excerpts, and 
transcriptions.
    (11) Retention of all required records for three years after 
grantees or subgrantees make final payments and all other pending 
matters are closed.
    (12) Compliance with all applicable standards, orders, or 
requirements issued under section 306 of the Clear Air Act (42 U.S.C. 
1857(h)), section 508 of the Clean Water Act (33 U.S.C. 1368), Executive 
Order 11738, and Environmental Protection Agency regulations (40 CFR 
part 15) (Contracts, subcontracts, and subgrants of amounts in excess of 
$100,000).
    (13) Mandatory standards and policies relating to energy efficiency 
which are contained in the state energy conservation plan issued in 
compliance with the Energy Policy and Conservation Act (Pub. L. 94-163).



Sec. 1234.37  Subgrants.

    (a) States. States shall follow state law and procedures when 
awarding and administering subgrants (whether on a cost reimbursement or 
fixed amount basis) of financial assistance to local and Indian tribal 
governments. States shall:
    (1) Ensure that every subgrant includes any clauses required by 
Federal statute and executive orders and their implementing regulations;
    (2) Ensure that subgrantees are aware of requirements imposed upon 
them by Federal statute and regulation;
    (3) Ensure that a provision for compliance with Sec. 1234.42 is 
placed in every cost reimbursement subgrant; and
    (4) Conform any advances of grant funds to subgrantees substantially 
to the same standards of timing and amount that apply to cash advances 
by Federal agencies.
    (b) All other grantees. All other grantees shall follow the 
provisions of this part which are applicable to awarding agencies when 
awarding and administering subgrants (whether on a cost reimbursement or 
fixed amount basis) of financial assistance to local and Indian tribal 
governments. Grantees shall:
    (1) Ensure that every subgrant includes a provision for compliance 
with this part;
    (2) Ensure that every subgrant includes any clauses required by 
Federal statute and executive orders and their implementing regulations; 
and
    (3) Ensure that subgrantees are aware of requirements imposed upon 
them by Federal statutes and regulations.
    (c) Exceptions. By their own terms, certain provisions of this part 
do not apply to the award and administration of subgrants:
    (1) Section 1234.10;
    (2) Section 1234.11;
    (3) The letter-of-credit procedures specified in Treasury 
Regulations at 31 CFR part 205, cited in Sec. 1234.21; and
    (4) Section 1234.50.

              Reports, Records, Retention, and Enforcement



Sec. 1234.40  Monitoring and reporting program performance.

    (a) Monitoring by grantees. Grantees are responsible for managing 
the day-to-day operations of grant and subgrant supported activities. 
Grantees must monitor grant and subgrant supported activities to assure 
compliance with applicable Federal requirements and that performance 
goals are being achieved. Grantee monitoring must

[[Page 136]]

cover each program, function or activity.
    (b) Nonconstruction performance reports. The Federal agency may, if 
it decides that performance information available from subsequent 
applications contains sufficient information to meet its programmatic 
needs, require the grantee to submit a performance report only upon 
expiration or termination of grant support. Unless waived by the Federal 
agency this report will be due on the same date as the final Financial 
Status Report.
    (1) Grantees shall submit annual performance reports unless the 
awarding agency requires quarterly or semi-annual reports. However, 
performance reports will not be required more frequently than quarterly. 
Annual reports shall be due 90 days after the grant year, quarterly or 
semi-annual reports shall be due 30 days after the reporting period. The 
final performance report will be due 90 days after the expiration or 
termination of grant support. If a justified request is submitted by a 
grantee, the Federal agency may extend the due date for any performance 
report. Additionally, requirements for unnecessary performance reports 
may be waived by the Federal agency.
    (2) Performance reports will contain, for each grant, brief 
information on the following:
    (i) 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.
    (ii) The reasons for slippage if established objectives were not 
met.
    (iii) Additional pertinent information including, when appropriate, 
analysis and explanation of cost overruns or high unit costs.
    (3) Grantees will not be required to submit more than the original 
and two copies of performance reports.
    (4) Grantees will adhere to the standards in this section in 
prescribing performance reporting requirements for subgrantees.
    (c) Construction performance reports. For the most part, on-site 
technical inspections and certified percentage-of-completion data are 
relied on heavily by Federal agencies to monitor progress under 
construction grants and subgrants. The Federal agency will require 
additional formal performance reports only when considered necessary, 
and never more frequently than quarterly.
    (d) Significant developments. Events may occur between the scheduled 
performance reporting dates which have significant impact upon the grant 
or subgrant supported activity. In such cases, the grantee must inform 
the Federal agency as soon as the following types of conditions become 
known:
    (1) Problems, delays, or adverse conditions which will materially 
impair the ability to meet the objective of the award. This disclosure 
must include a statement of the action taken, or contemplated, and any 
assistance needed to resolve the situation.
    (2) Favorable developments which enable meeting time schedules and 
objectives sooner or at less cost than anticipated or producing more 
beneficial results than originally planned.
    (e) Federal agencies may make site visits as warranted by program 
needs.
    (f) Waivers, extensions. (1) Federal agencies may waive any 
performance report required by this part if not needed.
    (2) The grantee may waive any performance report from a subgrantee 
when not needed. The grantee may extend the due date for any performance 
report from a subgrantee if the grantee will still be able to meet its 
performance reporting obligations to the Federal agency.



Sec. 1234.41  Financial reporting.

    (a) General. (1) Except as provided in paragraphs (a) (2) and (5) of 
this section, grantees will use only the forms specified in paragraphs 
(a) through (e) of this section, and such supplementary or other forms 
as may from time to time be authorized by OMB, for:
    (i) Submitting financial reports to Federal agencies, or
    (ii) Requesting advances or reimbursements when letters of credit 
are not used.
    (2) Grantees need not apply the forms prescribed in this section in 
dealing with their subgrantees. However,

[[Page 137]]

grantees shall not impose more burdensome requirements on subgrantees.
    (3) Grantees shall follow all applicable standard and supplemental 
Federal agency instructions approved by OMB to the extend required under 
the Paperwork Reduction Act of 1980 for use in connection with forms 
specified in paragraphs (b) through (e) of this section. Federal 
agencies may issue substantive supplementary instructions only with the 
approval of OMB. Federal agencies may shade out or instruct the grantee 
to disregard any line item that the Federal agency finds unnecessary for 
its decisionmaking purposes.
    (4) Grantees will not be required to submit more than the original 
and two copies of forms required under this part.
    (5) Federal agencies may provide computer outputs to grantees to 
expedite or contribute to the accuracy of reporting. Federal agencies 
may accept the required information from grantees in machine usable 
format or computer printouts instead of prescribed forms.
    (6) Federal agencies may waive any report required by this section 
if not needed.
    (7) Federal agencies may extend the due date of any financial report 
upon receiving a justified request from a grantee.
    (b) Financial Status Report--(1) Form. Grantees will use Standard 
Form 269 or 269A, Financial Status Report, to report the status of funds 
for all nonconstruction grants and for construction grants when required 
in accordance with Sec. 1234.41(e)(2)(iii).
    (2) Accounting basis. Each grantee will report program outlays and 
program income on a cash or accrual basis as prescribed by the awarding 
agency. If the Federal agency requires accrual information and the 
grantee's accounting records are not normally kept on the accural basis, 
the grantee shall not be required to convert its accounting system but 
shall develop such accrual information through and analysis of the 
documentation on hand.
    (3) Frequency. The Federal agency may prescribe the frequency of the 
report for each project or program. However, the report will not be 
required more frequently than quarterly. If the Federal agency does not 
specify the frequency of the report, it will be submitted annually. A 
final report will be required upon expiration or termination of grant 
support.
    (4) Due date. When reports are required on a quarterly or semiannual 
basis, they will be due 30 days after the reporting period. When 
required on an annual basis, they will be due 90 days after the grant 
year. Final reports will be due 90 days after the expiration or 
termination of grant support.
    (c) Federal Cash Transactions Report--(1) Form. (i) For grants paid 
by letter or credit, Treasury check advances or electronic transfer of 
funds, the grantee will submit the Standard Form 272, Federal Cash 
Transactions Report, and when necessary, its continuation sheet, 
Standard Form 272a, unless the terms of the award exempt the grantee 
from this requirement.
    (ii) These reports will be used by the Federal agency to monitor 
cash advanced to grantees and to obtain disbursement or outlay 
information for each grant from grantees. The format of the report may 
be adapted as appropriate when reporting is to be accomplished with the 
assistance of automatic data processing equipment provided that the 
information to be submitted is not changed in substance.
    (2) Forecasts of Federal cash requirements. Forecasts of Federal 
cash requirements may be required in the ``Remarks'' section of the 
report.
    (3) Cash in hands of subgrantees. When considered necessary and 
feasible by the Federal agency, grantees may be required to report the 
amount of cash advances in excess of three days' needs in the hands of 
their subgrantees or contractors and to provide short narrative 
explanations of actions taken by the grantee to reduce the excess 
balances.
    (4) Frequency and due date. Grantees must submit the report no later 
than 15 working days following the end of each quarter. However, where 
an advance either by letter of credit or electronic transfer of funds is 
authorized at an annualized rate of one million dollars or more, the 
Federal agency may require the report to be submitted within 15 working 
days following the end of each month.

[[Page 138]]

    (d) Request for advance or reimbursement--(1) Advance payments. 
Requests for Treasury check advance payments will be submitted on 
Standard Form 270, Request for Advance or Reimbursement. (This form will 
not be used for drawdowns under a letter of credit, electronic funds 
transfer or when Treasury check advance payments are made to the grantee 
automatically on a predetermined basis.)
    (2) Reimbursements. Requests for reimbursement under nonconstruction 
grants will also be submitted on Standard Form 270. (For reimbursement 
requests under construction grants, see paragraph (e)(1) of this 
section.)
    (3) The frequency for submitting payment requests is treated in 
Sec. 1234.41(b)(3).
    (e) Outlay report and request for reimbursement for construction 
programs. (1) Grants that support construction activities paid by 
reimbursement method. (i) Requests for reimbursement under construction 
grants will be submitted on Standard Form 271, Outlay Report and Request 
for Reimbursement for Construction Programs. Federal agencies may, 
however, prescribe the Request for Advance or Reimbursement form, 
specified in Sec. 1234.41(d), instead of this form.
    (ii) The frequency for submitting reimbursement requests is treated 
in Sec. 1234.41(b)(3).
    (2) Grants that support construction activities paid by letter of 
credit, electronic funds transfer or Treasury check advance. (i) When a 
construction grant is paid by letter of credit, electronic funds 
transfer or Treasury check advances, the grantee will report its outlays 
to the Federal agency using Standard Form 271, Outlay Report and Request 
for Reimbursement for Construction Programs. The Federal agency will 
provide any necessary special instruction. However, frequency and due 
date shall be governed by Sec. 1234.41(b) (3) and (4).
    (ii) When a construction grant is paid by Treasury check advances 
based on periodic requests from the grantee, the advances will be 
requested on the form specified in Sec. 1234.41(d).
    (iii) The Federal agency may substitute the Financial Status Report 
specified in Sec. 1234.41(b) for the Outlay Report and Request for 
Reimbursement for Construction Programs.
    (3) Accounting basis. The accounting basis for the Outlay Report and 
Request for Reimbursement for Construction Programs shall be governed by 
Sec. 1234.41(b)(2).



Sec. 1234.42  Retention and access requirements for records.

    (a) Applicability. (1) This section applies to all financial and 
programmatic records, supporting documents, statistical records, and 
other records of grantees or subgrantees which are:
    (i) Required to be maintained by the terms of this part, program 
regulations or the grant agreement, or
    (ii) Otherwise reasonably considered as pertinent to program 
regulations or the grant agreement.
    (2) This section does not apply to records maintained by contractors 
or subcontractors. For a requirement to place a provision concerning 
records in certain kinds of contracts, see Sec. 1234.36(i)(10).
    (b) Length of retention period. (1) Except as otherwise provided, 
records must be retained for three years from the starting date 
specified in paragraph (c) of this section.
    (2) If any litigation, claim, negotiation, audit or other action 
involving the records has been started before the expiration of the 3-
year period, the records must be retained until completion of the action 
and resolution of all issues which arise from it, or until the end of 
the regular 3-year period, whichever is later.
    (3) To avoid duplicate recordkeeping, awarding agencies may make 
special arrangements with grantees and subgrantees to retain any records 
which are continuously needed for joint use. The awarding agency will 
request transfer of records to its custody when it determines that the 
records possess long-term retention value. When the records are 
transferred to or maintained by the Federal agency, the 3-year retention 
requirement is not applicable to the grantee or subgrantee.
    (c) Starting date of retention period--(1) General. When grant 
support is continued or renewed at annual or other intervals, the 
retention period for the records of each funding period starts on

[[Page 139]]

the day the grantee or subgrantee submits to the awarding agency its 
single or last expenditure report for that period. However, if grant 
support is continued or renewed quarterly, the retention period for each 
year's records starts on the day the grantee submits its expenditure 
report for the last quarter of the Federal fiscal year. In all other 
cases, the retention period starts on the day the grantee submits its 
final expenditure report. If an expenditure report has been waived, the 
retention period starts on the day the report would have been due.
    (2) Real property and equipment records. The retention period for 
real property and equipment records starts from the date of the 
disposition or replacement or transfer at the direction of the awarding 
agency.
    (3) Records for income transactions after grant or subgrant support. 
In some cases grantees must report income after the period of grant 
support. Where there is such a requirement, the retention period for the 
records pertaining to the earning of the income starts from the end of 
the grantee's fiscal year in which the income is earned.
    (4) Indirect cost rate proposals, cost allocations plans, etc. This 
paragraph applies to the following types of documents, and their 
supporting records: indirect cost rate computations or proposals, cost 
allocation plans, and any similar accounting computations of the rate at 
which a particular group of costs is chargeable (such as computer usage 
chargeback rates or composite fringe benefit rates).
    (i) If submitted for negotiation. If the proposal, plan, or other 
computation is required to be submitted to the Federal Government (or to 
the grantee) to form the basis for negotiation of the rate, then the 3-
year retention period for its supporting records starts from the date of 
such submission.
    (ii) If not submitted for negotiation. If the proposal, plan, or 
other computation is not required to be submitted to the Federal 
Government (or to the grantee) for negotiation purposes, then the 3-year 
retention period for the proposal plan, or computation and its 
supporting records starts from end of the fiscal year (or other 
accounting period) covered by the proposal, plan, or other computation.
    (d) Substitution of microfilm. Copies made by microfilming, 
photocopying, or similar methods may be substituted for the original 
records.
    (e) Access to records--(1) Records of grantees and subgrantees. The 
awarding agency and the Comptroller General of the United States, or any 
of their authorized representatives, shall have the right of access to 
any pertinent books, documents, papers, or other records of grantees and 
subgrantees which are pertinent to the grant, in order to make audits, 
examinations, excerpts, and transcripts.
    (2) Expiration of right of access. The rights of access in this 
section must not be limited to the required retention period but shall 
last as long as the records are retained.
    (f) Restrictions on public access. The Federal Freedom of 
Information Act (5 U.S.C. 552) does not apply to records Unless required 
by Federal, State, or local law, grantees and subgrantees are not 
required to permit public access to their records.



Sec. 1234.43  Enforcement.

    (a) Remedies for noncompliance. If a grantee or subgrantee 
materially fails to comply with any term of an award, whether stated in 
a Federal statute or regulation, an assurance, in a State plan or 
application, a notice of award, or elsewhere, the awarding agency may 
take one or more of the following actions, as appropriate in the 
circumstances:
    (1) Temporarily withhold cash payments pending correction of the 
deficiency by the grantee or subgrantee or more severe enforcement 
action by the awarding agency,
    (2) Disallow (that is, deny both use of funds and matching credit 
for) all or part of the cost of the activity or action not in 
compliance,
    (3) Wholly or partly suspend or terminate the current award for the 
grantee's or subgrantee's program,
    (4) Withhold further awards for the program, or
    (5) Take other remedies that may be legally available.
    (b) Hearings, appeals. In taking an enforcement action, the awarding 
agency

[[Page 140]]

will provide the grantee or subgrantee an opportunity for such hearing, 
appeal, or other administrative proceeding to which the grantee or 
subgrantee is entitled under any statute or regulation applicable to the 
action involved.
    (c) Effects of suspension and termination. Costs of grantee or 
subgrantee resulting from obligations incurred by the grantee or 
subgrantee during a suspension or after termination of an award are not 
allowable unless the awarding agency expressly authorizes them in the 
notice of suspension or termination or subsequently. Other grantee or 
subgrantee costs during suspension or after termination which are 
necessary and not reasonably avoidable are allowable if:
    (1) The costs result from obligations which were properly incurred 
by the grantee or subgrantee before the effective date of suspension or 
termination, are not in anticipation of it, and, in the case of a 
termination, are noncancellable, and,
    (2) The costs would be allowable if the award were not suspended or 
expired normally at the end of the funding period in which the 
termination takes effect.
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude grantee or subgrantee from being subject to 
``Debarment and Suspension'' under E.O. 12549 (see Sec. 1234.35).



Sec. 1234.44  Termination for convenience.

    Except as provided in Sec. 1234.43 awards may be terminated in whole 
or in part only as follows:
    (a) By the awarding agency with the consent of the grantee or 
subgrantee in which case the two parties shall agree upon the 
termination conditions, including the effective date and in the case of 
partial termination, the portion to be terminated, or
    (b) By the grantee or subgrantee upon written notification to the 
awarding agency, setting forth the reasons for such termination, the 
effective date, and in the case of partial termination, the portion to 
be terminated. However, if, in the case of a partial termination, the 
awarding agency determines that the remaining portion of the award will 
not accomplish the purposes for which the award was made, the awarding 
agency may terminate the award in its entirety under either Sec. 1234.43 
or paragraph (a) of this section.



                 Subpart D--After-The-Grant Requirements



Sec. 1234.50  Closeout.

    (a) General. The Federal agency will close out the award when it 
determines that all applicable administrative actions and all required 
work of the grant has been completed.
    (b) Reports. Within 90 days after the expiration or termination of 
the grant, the grantee must submit all financial, performance, and other 
reports required as a condition of the grant. Upon request by the 
grantee, Federal agencies may extend this timeframe. These may include 
but are not limited to:
    (1) Final performance or progress report.
    (2) Financial Status Report (SF 269) or Outlay Report and Request 
for Reimbursement for Construction Programs (SF-271) (as applicable).
    (3) Final request for payment (SF-270) (if applicable).
    (4) Invention disclosure (if applicable).
    (5) Federally-owned property report:

In accordance with Sec. 1234.32(f), a grantee must submit an inventory 
of all federally owned property (as distinct from property acquired with 
grant funds) for which it is accountable and request disposition 
instructions from the Federal agency of property no longer needed.
    (c) Cost adjustment. The Federal agency will, within 90 days after 
receipt of reports in paragraph (b) of this section, make upward or 
downward adjustments to the allowable costs.
    (d) Cash adjustments. (1) The Federal agency will make prompt 
payment to the grantee for allowable reimbursable costs.
    (2) The grantee must immediately refund to the Federal agency any 
balance of unobligated (unencumbered) cash advanced that is not 
authorized to be retained for use on other grants.

[[Page 141]]



Sec. 1234.51  Later disallowances and adjustments.

    The closeout of a grant does not affect:
    (a) The Federal agency's right to disallow costs and recover funds 
on the basis of a later audit or other review;
    (b) The grantee's obligation to return any funds due as a result of 
later refunds, corrections, or other transactions;
    (c) Records retention as required in Sec. 1234.42;
    (d) Property management requirements in Secs. 1234.31 and 1234.32; 
and
    (e) Audit requirements in Sec. 1234.26.



Sec. 1234.52  Collection of amounts due.

    (a) Any funds paid to a grantee in excess of the amount to which the 
grantee is finally determined to be entitled under the terms of the 
award constitute a debt to the Federal Government. If not paid within a 
reasonable period after demand, the Federal agency may reduce the debt 
by:
    (1) Making an adminstrative offset against other requests for 
reimbursements,
    (2) Withholding advance payments otherwise due to the grantee, or
    (3) Other action permitted by law.
    (b) Except where otherwise provided by statutes or regulations, the 
Federal agency will charge interest on an overdue debt in accordance 
with the Federal Claims Collection Standards (4 CFR Ch. II). The date 
from which interest is computed is not extended by litigation or the 
filing of any form of appeal.

Subpart E--Entitlement [Reserved]



PART 1235--LOCALLY GENERATED CONTRIBUTIONS IN OLDER AMERICAN VOLUNTEER PROGRAMS--Table of Contents




Sec.
1235.1  Definitions.
1235.2  Implementation guidance.
1235.3  Statement of policy.

Appendix to Part 1235--Procedures To Resolve Questioned Costs

    Authority: 42 U.S.C. 5024; 42 U.S.C. 5060.

    Source: 56 FR 4732, Feb. 6, 1991, unless otherwise noted.



Sec. 1235.1  Definitions.

    As used in this part and in section 224 of the Domestic Volunteer 
Service Act of 1973, as amended, the following definitions shall apply:
    (a) Director means the Director of ACTION.
    (b) Locally Generated Contributions means all contributions 
generated by the grantee in support of the grant, including non-ACTION 
Federal, State, local government and privately raised contributions.
    (c) Amount Required by the Director means the proportion of the non-
Federal contribution (including in-kind contributions) for a grant or 
contract made under the Domestic Volunteer Service Act of 1973, as 
amended, required by the Director in order to receive ACTION funds. This 
proportion is generally 10% for the Foster Grandparent Program/Senior 
Companion Program (FGP/SCP) and generally 10%, 20% and 30% for the 
Retired Senior Volunteer Program (RSVP) in the first, second, and 
subsequent years respectively. The ``amount required by the Director'' 
is also called the ``local match.''
    (d) In Excess of the Amount Required by the Director means of the 
total locally generated contributions, the amount over and above the 
percentage match (generally 10% for FGP/SCP and 10%, 20% and 30% for 
RSVP in the first, second, and subsequent years respectively) required 
by the Director of ACTION to be raised from non-ACTION sources to 
support the grant.
    (e) Inconsistent with the Provisions of This Act means expenditures 
not in support of ACTION programs, as defined by the Domestic Volunteer 
Service Act of 1973, as amended. For example:
    (1) Inconsistency with the age threshold for volunteers for all 
Older American Volunteer Programs (OAVP);
    (2) Inconsistency with the low income test for the FGP and SCP 
programs;
    (3) Variations from the approved stipend levels for the FGP and SCP 
programs;
    (4) Inconsistency with the prohibition against political activity 
under all the OAVP programs; and/or
    (5) Unreasonable cost for a low-cost volunteer program.

[[Page 142]]



Sec. 1235.2  Implementation guidance.

    ACTION's implementation of section 224 of the DVSA is based on 
fundamental principles regarding the Congressional intent of the Section 
as well as the Executive Branch's policy on Federal financial assistance 
to grantees. These principles include:
    (a) That ACTION may not restrict grantees' use of excess 
contributions as long as those expenditures are ``not inconsistent'' 
with the Domestic Volunteer Service Act of 1973, as amended;
    (b) That grantees are to fully account for and document expenditures 
of non-Federal contributions, regardless of whether they are used to 
meet ACTION's local match requirement or are in excess of the 
requirement; and
    (c) That all expenditures in support of a Federal grant can be 
audited by the responsible Federal Agency or by independent auditors 
performing audits pursuant to OMB Circulars A-128 and A-133. Copies of 
OMB Circulars A-128 and A-133 are available at ACTION, 1100 Vermont 
Avenue, NW., Room 9200, Washington, DC 20525.



Sec. 1235.3  Statement of policy.

    (a) Expenditures of locally generated non-Federal contributions 
required by the Director as matching funds must meet the requirements 
specified in ACTION's Grant Management and Program Operations Handbook, 
ACTION Order 2650.2, as amended, and the Domestic Volunteer Service Act 
of 1973, as amended. Copies of ACTION's Grants Management and Program 
Operations Handbook, ACTION Order 2650.2, as amended, are available at 
ACTION, 1100 Vermont Avenue, NW., Room 9200, Washington, DC 20525.
    (b) All expenditures by the grantee of Federal and non-Federal funds 
(including expenditures from excess locally generated contributions) in 
support of the grant are subject to ACTION authorized audits.
    (c) ACTION will not restrict the manner in which locally generated 
contributions in excess of the required match are expended if these 
expenditures are not inconsistent with the Domestic Volunteer Service 
Act of 1973, as amended.

      Appendix to Part 1235--Procedures To Resolve Questioned Costs

    I. Because implementation of section 224 may impact on how 
questioned costs are treated when raised in the context of an audit or 
program monitoring exercise, this appendix explains how questioned costs 
will be resolved. This part does not create any new auditing 
requirements.
    II. All expenditures in support of a federal grant may be reviewed 
by an authorized audit or program monitoring review. Adequate financial 
records and supporting documentation must be maintained for both cash 
and in-kind contributions. (See ACTION's Grants Management Handbook for 
Grantees, ACTION Order 2650.2)
    III. Three definitions are important to understand in relation to 
resolution of questioned costs:
    (a) The term ``questioned cost'', pursuant to the Inspector General 
Act of 1978, as amended, 5 U.S.C. Appendix 3, means an expenditure of 
grant funds that is questioned because of:
    (1) An alleged violation of a provision of the Domestic Volunteer 
Service Act of 1973, as amended, or other law, regulation, or grant 
governing the expenditure of funds by the grantee;
    (2) A finding that at the time of an audit or program review the 
cost is not supported by adequate documentation; or
    (3) A finding that the expenditure of funds for the intended purpose 
is unnecessary or unreasonable.
    (b) The term ``disallowed cost'' means a questioned cost related to 
federal or local match expenditures that ACTION management, in a 
management decision, has sustained or agreed should not be charged to 
the Government.
    (c) The term ``program finding'' means a questioned cost identified 
as from the grantee's excess locally generated contributions which is 
referred to ACTION program management for consideration.
    IV. When costs are questioned from locally generated contributions, 
a distinction will be made between costs as part of the local match and 
costs as part of the excess contribution.
    V. Normally, when expenditures of Federal or non-Federal local match 
funds are questioned, a management decision is made to either allow or 
disallow the costs. When an expenditure of excess locally generated 
funds is questioned, however, it will not be treated as a potential 
disallowed cost but identified as a program finding and referred to 
ACTION program management for resolution.
    VI. Program findings may include, but are not limited to:
    (a) Inadequate records to document the expenditures and provide 
assurance of the grantee's internal controls over the use of its cash 
and in-kind contributions; and

[[Page 143]]

    (b) Evidence that expenditures were made that are inconsistent with 
the Domestic Volunteer Service Act of 1973, as amended.
    VII. Once program findings are determined by ACTION program 
management, decisions may be made to take corrective steps, including 
but not limited to:
    (a) Requiring the grantee to adhere to stated program goals and 
objectives as a condition for future funding;
    (b) Requiring the grantee to adopt a stronger financial management 
and control system.

Based on past experience, it is expected that corrective steps will be 
needed only in rare instances.
    VIII. If the grantee has raised locally generated contributions in 
excess of the matching requirement and those expenditures are not 
questioned, and are consistent with the DVSA of 1973, as amended, for 
local match expenditures, they may be substituted for any disallowed 
portion of local match costs in order for the grantee to meet its 
matching requirement.

[[Page 145]]



CHAPTER XIII--OFFICE OF HUMAN DEVELOPMENT SERVICES, DEPARTMENT OF HEALTH 
                           AND HUMAN SERVICES




  --------------------------------------------------------------------

 SUBCHAPTER A--OFFICE OF HUMAN DEVELOPMENT SERVICES, GENERAL PROVISIONS 
                               [RESERVED]
SUBCHAPTER B--THE ADMINISTRATION FOR CHILDREN, YOUTH AND FAMILIES, HEAD 
                              START PROGRAM
Part                                                                Page
1301            Head Start grants administration............         147
1302            Policies and procedures for selection, 
                    initial funding, and refunding of Head 
                    Start grantees, and for selection of 
                    replacement grantees....................         152
1303            Appeal procedures for Head Start grantees 
                    and current or prospective delegate 
                    agencies................................         158
1304            Program performance standards for the 
                    operation of Head Start programs by 
                    grantee and delegate agencies...........         173
1305            Eligibility, recruitment, selection, 
                    enrollment and attendance in Head Start.         199
1306            Head Start staffing requirements and program 
                    options.................................         205
1308            Head Start program performance standards on 
                    services for children with disabilities.         211
1309            Head Start facilities purchase..............         240
1310            Head Start transportation...................         247
1311            Head Start Fellows Program..................         254
   SUBCHAPTER C--THE ADMINISTRATION ON AGING, OLDER AMERICANS PROGRAMS
1321            Grants to State and community programs on 
                    aging...................................         256
1326            Grants to Indian tribes for support and 
                    nutrition services......................         271

[[Page 146]]

1328            Grants for supportive and nutritional 
                    services to older Hawaiian natives......         275
 SUBCHAPTER D--THE ADMINISTRATION FOR NATIVE AMERICANS, NATIVE AMERICAN 
                                PROGRAMS
1336            Native American Programs....................         280
SUBCHAPTER E--THE ADMINISTRATION FOR CHILDREN, YOUTH AND FAMILIES, CHILD 
           ABUSE AND NEGLECT PREVENTION AND TREATMENT PROGRAM
1340            Child abuse and neglect prevention and 
                    treatment...............................         294
   SUBCHAPTER F--THE ADMINISTRATION FOR CHILDREN, YOUTH AND FAMILIES, 
                    FAMILY AND YOUTH SERVICES BUREAU
1351            Runaway and Homeless Youth Program..........         308
SUBCHAPTER G--THE ADMINISTRATION ON CHILDREN, YOUTH AND FAMILIES, FOSTER 
  CARE MAINTENANCE PAYMENTS, ADOPTION ASSISTANCE, AND CHILD AND FAMILY 
                                SERVICES
1355            General.....................................         313
1356            Requirements applicable to Title IV-E.......         356
1357            Requirements applicable to Title IV-B.......         370
     SUBCHAPTER H--FAMILY VIOLENCE PREVENTION AND SERVICES PROGRAMS
1370            Family violence prevention and services 
                    programs................................         385
    SUBCHAPTER I--THE ADMINISTRATION ON DEVELOPMENTAL DISABILITIES, 
                   DEVELOPMENTAL DISABILITIES PROGRAM
1385            Requirements applicable to the developmental 
                    disabilities program....................         386
1386            Formula Grant Programs......................         389
1387            Projects of national significance...........         407
1388            The University affiliated programs..........         408
                       SUBCHAPTERS J-K [RESERVED]

[[Page 147]]



 SUBCHAPTER A--OFFICE OF HUMAN DEVELOPMENT SERVICES, GENERAL PROVISIONS 
                               [RESERVED]





SUBCHAPTER B--THE ADMINISTRATION FOR CHILDREN, YOUTH AND FAMILIES, HEAD 
                              START PROGRAM





PART 1301--HEAD START GRANTS ADMINISTRATION--Table of Contents




                           Subpart A--General

Sec.
1301.1  Purpose and scope.
1301.2  Definitions.

                     Subpart B--General Requirements

1301.10  General.
1301.11  Insurance and bonding.
1301.12  Annual audit of Head Start programs.
1301.13  Accounting system certification.

                 Subpart C--Federal Financial Assistance

1301.20  Matching requirements.
1301.21  Criteria for increase in Federal financial assistance.

             Subpart D--Personnel and General Administration

1301.30  General requirements.
1301.31  Personnel policies.
1301.32  Limitations on costs of development and administration of a 
          Head Start program.
1301.33  Delegation of program operations.
1301.34  Grantee appeals.

    Authority: 42 U.S.C. 9801 et seq.

    Source: 44 FR 24061, Apr. 24, 1979, unless otherwise noted.



                           Subpart A--General



Sec. 1301.1  Purpose and scope.

    This part establishes regulations applicable to program 
administration and grants management for all grants under the Act, 
including grants for technical assistance and training and grants for 
research, demonstration, and pilot projects.



Sec. 1301.2  Definitions.

    For the purposes of this part, unless the context requires 
otherwise:
    Act means title V of the Economic Opportunity Act of 1964, as 
amended.
    Budget period means the interval of time, into which a multi-year 
period of assistance (project period) is divided for budgetary and 
funding purposes.
    Community means a city, county, a multi-city or multi-county unit 
within a state, an Indian reservation, or any neighborhood or other 
geographic area (irrespective of boundaries or political subdivisions) 
which provides a suitable organizational base and possesses the 
commonality of interest needed to operate a Head Start program.
    Delegate agency means a public or private non-profit organization or 
agency to which a grantee has delegated all or part of its 
responsibility for operating a Head Start program.
    Development and administrative costs mean costs incurred in 
accordance with an approved Head Start budget which do not directly 
relate to the provision of program component services, including 
services to children with disabilities, as set forth and described in 
the Head Start program performance standards (45 CFR part 1304).
    Dual benefit costs mean costs incurred in accordance with an 
approved Head Start budget which directly relate to both development and 
administrative functions and to the program component services, 
including services to children with disabilities, as set forth and 
described in the Head Start program performance standards (45 CFR part 
1304).
    Head Start Agency or ``grantee'' means a local public or private 
non-profit agency designated to operate a Head Start program by the 
responsible HHS official, in accordance with part 1302 of this chapter.
    Head Start program means a program, funded under the Act and carried 
out by a Head Start agency or a delegate agency, that provides ongoing 
comprehensive child development services.
    Independent auditor means an individual accountant or an accounting 
firm, public or private agency, association, corporation, or 
partnership, that is sufficiently independent of the agency being 
audited to render objective

[[Page 148]]

and unbiased opinions, conclusions, and judgments.
    Indirect costs mean those costs of a Head Start agency, as approved 
by the cognizant agency, the agency which has authority to set the 
grantee's indirect cost rate, which are not readily identifiable with a 
particular project or program but nevertheless are necessary to the 
general operation of the agency and the conduct of its activities.
    Major disaster means any natural disaster or catastrophe which is of 
such severity and magnitude as to directly affect the capability of the 
Head Start agency of agencies providing Head Start programs to the 
damaged community to continue the programs without an increase in the 
Federal share above 80 percent.
    Program costs mean costs incurred in accordance with an approved 
Head Start budget which directly relate to the provision of program 
component services, including services to children with disabilities, as 
set forth and described in the Head Start Program Performance Standards 
(45 CFR part 1304).
    Responsible HHS official means the official of the Department of 
Health and Human Services who has authority to make grants under the 
Act.
    Total approved costs mean the sum of all costs of the Head Start 
program approved for a given budget period by the Administration on 
Children, Youth and Families, as indicated on the Financial Assistance 
Award. Total approved costs consist of the Federal share plus any 
approved non-Federal share, including non-Federal share above the 
statutory minimum.

[44 FR 24061, Apr. 24, 1979, as amended at 57 FR 41884, Sept. 14, 1992]



                     Subpart B--General Requirements



Sec. 1301.10  General.

    (a) Except as specified in paragraph (b) of this section, the 
following HHS regulations shall apply to all grants made under the Act:

45 CFR part 16 Department grant appeals process (except as provided in 
Sec. 1301.34)
45 CFR part 46 Protection of Human Subjects
45 CFR part 74 Administration of grants
45 CFR part 75 Informal grant appeals procedures (Indirect cost rates 
and other cost allocations)
45 CFR part 80 Nondiscrimination under programs receiving Federal 
assistance through the Department of Health and Human Services--
Effectuation of title VI of the Civil Rights Act of 1964
45 CFR part 81 Practice and procedure for hearings under part 80
45 CFR part 84 Nondiscrimination on the basis of handicap in Federally 
assisted programs.

    (b) 45 CFR part 74 is superseded as follows:
    (1) Section 1301.11 of this subpart supersedes Sec. 74.15 of part 74 
with respect to insurance and bonding of private, non-profit Head Start 
agencies; and
    (2) Section 1301.12 of this subpart supersedes Sec. 74.61 of part 74 
with respect to audit requirements for all Head Start agencies.



Sec. 1301.11  Insurance and bonding.

    (a) Private nonprofit Head Start agencies and their delegate 
agencies shall carry reasonable amounts of student accident insurance, 
liability insurance for accidents of their premises, and transportation 
liability insurance.
    (b) Private nonprofit Head Start and delegate agencies shall make 
arrangements for bonding officials and employees authorized to disburse 
program funds.



Sec. 1301.12  Annual audit of Head Start programs.

    (a) An audit of the Head Start program covering the prior budget 
period of each Head Start agency and its delegate agencies, if any, 
shall be made by an independent auditor to determine:
    (1) Whether the agency's financial statements are accurate;
    (2) Whether the agency is complying with the terms and conditions of 
the grant; and
    (3) Whether appropriate financial and administrative procedures and 
controls have been installed and are operating effectively. Head Start 
agencies shall either include delegate agency audits as a part of their 
own audits or provide for separate independent audits of their delegate 
agencies.
    (b) Upon a written request showing necessity, the responsible HHS 
official may approve a period other than the

[[Page 149]]

prior budget period to be covered by the annual audit.
    (c) Unless otherwise approved by the responsible HHS official, the 
report of the audit shall be submitted to the responsible HHS official, 
in the manner and form prescribed by him or her, within 4 months after 
the prior budget period.



Sec. 1301.13  Accounting system certification.

    (a) Upon request by the responsible HHS official, each Head Start 
agency or its delegate agency shall submit an accounting system 
certification, prepared by an independent auditor, stating that the 
accounting system or systems established by the Head Start agency, or 
its delegate, has appropriate internal controls for safeguarding assets, 
checking the accuracy and reliability of accounting data, and promoting 
operating efficiency.
    (b) A Head Start agency shall not delegate any of its Head Start 
program responsibilities to a delegate agency prior to receiving a 
certification that the delegate agency's accounting system meets the 
requirements specified in paragraph (a) of this section.



                 Subpart C--Federal Financial Assistance



Sec. 1301.20  Matching requirements.

    (a) Federal financial assistance granted under the act for a Head 
Start program shall not exceed 80 percent of the total costs of the 
program, unless:
    (1) An amount in excess of that percentage is approved under section 
1301.21; or
    (2) The Head Start agency received Federal financial assistance in 
excess of 80 percent for any budget period falling within fiscal year 
1973 or fiscal year 1974. Under the circumstances described in clause
    (3) Of the preceding sentence, the agency is entitled to receive the 
same percentage of Federal financial assistance that it received during 
such budget periods.
    (b) The non-Federal share will not be required to exceed 20 percent 
of the total costs of the program.
    (c) Federal financial assistance awarded to Head Start grantees for 
training and technical assistance activities shall be included in the 
Federal share in determining the total approved costs of the program. 
Such financial assistance is, therefore, subject to the 20 percent non-
Federal matching requirement of this subpart.

[44 FR 24061, Apr. 24, 1979, as amended at 57 FR 41884, Sept. 14, 1992]



Sec. 1301.21  Criteria for increase in Federal financial assistance.

    The responsible HHS official, on the basis of a written application 
and any supporting evidence he or she may require, will approve 
financial assistance in excess of 80 percent if he or she concludes that 
the Head Start agency has made a reasonable effort to meet its required 
non-Federal share but is unable to do so; and the Head Start agency is 
located in a county:
    (a) That has a personal per capita income of less that $3,000 per 
year; or
    (b) That has been involved in a major disaster.



             Subpart D--Personnel and General Administration



Sec. 1301.30  General requirements.

    Head Start agencies and delegate agencies shall conduct the Head 
Start program in an effective and efficient manner, free of political 
bias or family favoritism. Each agency shall also provide reasonable 
public access to information and to the agency's records pertaining to 
the Head Start program.



Sec. 1301.31  Personnel policies.

    (a) Written policies. Grantee and delegate agencies must establish 
and implement written personnel policies for staff, that are approved by 
the Policy Council or Policy Committee and that are made available to 
all grantee and delegate agency staff. At a minimum, such policies must 
include:
    (1) Descriptions of each staff position, addressing, as appropriate, 
roles and responsibilities, relevant qualifications, salary range, and 
employee benefits (see 45 CFR 1304.52(c) and (d));
    (2) A description of the procedures for recruitment, selection and 
termination (see paragraph (b) of this Section, Staff recruitment and 
selection procedures);

[[Page 150]]

    (3) Standards of conduct (see 45 CFR 1304.52(h));
    (4) Descriptions of methods for providing staff and volunteers with 
opportunities for training, development, and advancement (see 45 CFR 
1304.52(k), Training and development);
    (5) A description of the procedures for conducting staff performance 
appraisals (see 45 CFR 1304.52(i), Staff performance appraisals);
    (6) Assurances that the program is an equal opportunity employer and 
does not discriminate on the basis of gender, race, ethnicity, religion 
or disability; and
    (7) A description of employee-management relation procedures, 
including those for managing employee grievances and adverse actions.
    (b) Staff recruitment and selection procedures. (1) Before an 
employee is hired, grantee or delegate agencies must conduct:
    (i) An interview with the applicant;
    (ii) A verification of personal and employment references; and
    (iii) A State or national criminal record check, as required by 
State law or administrative requirement. If it is not feasible to obtain 
a criminal record check prior to hiring, an employee must not be 
considered permanent until such a check has been completed.
    (2) Grantee and delegate agencies must require that all current and 
prospective employees sign a declaration prior to employment that lists:
    (i) All pending and prior criminal arrests and charges related to 
child sexual abuse and their disposition;
    (ii) Convictions related to other forms of child abuse and neglect; 
and
    (iii) All convictions of violent felonies.
    (3) Grantee and delegate agencies must review each application for 
employment individually in order to assess the relevancy of an arrest, a 
pending criminal charge, or a conviction.
    (c) Declaration exclusions. The declaration required by paragraph 
(b)(2) of this section may exclude:
    (1) Traffic fines of $200.00 or less;
    (2) Any offense, other than any offense related to child abuse and/
or child sexual abuse or violent felonies, committed before the 
prospective employee's 18th birthday which was finally adjudicated in a 
juvenile court or under a youth offender law;
    (3) Any conviction the record of which has been expunged under 
Federal or State law; and
    (4) Any conviction set aside under the Federal Youth Corrections Act 
or similar State authority.
    (d) Probationary period. The policies governing the recruitment and 
selection of staff must provide for a probationary period for all new 
employees that allows time to monitor employee performance and to 
examine and act on the results of the criminal record checks discussed 
in paragraph (b) (1) of this Section.
    (e) Reporting child abuse or sexual abuse. Grantee and delegate 
agencies must develop a plan for responding to suspected or known child 
abuse or sexual abuse as defined in 45 CFR 1340.2(d) whether it occurs 
inside or outside of the program.

(The information collection requirements are approved by the Office of 
Management and Budget (OMB) under OMB Control Number 0970-0148 for 
paragraph (b).)

[61 FR 57225, Nov. 5, 1996, as amended at 63 FR 2313, Jan. 15, 1998]



Sec. 1301.32  Limitations on costs of development and administration of a Head Start program.

    (a) General provisions. (1) Allowable costs for developing and 
administering a Head Start program may not exceed 15 percent of the 
total approved costs of the program, unless the responsible HHS official 
grants a waiver approving a higher percentage for a specific period of 
time not to exceed twelve months.
    (2) The limit of 15 percent for development and administrative costs 
is a maximum. In cases where the costs for development and 
administration are at or below 15 percent, but are judged by the 
responsible HHS official to be excessive, the grantee must eliminate 
excessive development and administrative costs.
    (b) Development and administrative costs. (1) Costs classified as 
development and administrative costs are those costs related to the 
overall management of the program. These costs can be in both the 
personnel and non-personnel categories.

[[Page 151]]

    (2) Grantees must charge the costs of organization-wide management 
functions as development and administrative costs. These functions 
include planning, coordination and direction; budgeting, accounting, and 
auditing; and management of purchasing, property, payroll and personnel.
    (3) Development and administrative costs include, but are not 
limited to, the salaries of the executive director, personnel officer, 
fiscal officer/bookkeeper, purchasing officer, payroll/insurance/
property clerk, janitor for administrative office space, and costs 
associated with volunteers carrying out administrative functions.
    (4) Other development and administrative costs include expenses 
related to administrative staff functions such as the costs allocated to 
fringe benefits, travel, per diem, transportation and training.
    (5) Development and administrative costs include expenses related to 
bookkeeping and payroll services, audits, and bonding; and, to the 
extent they support development and administrative functions and 
activities, the costs of insurance, supplies, copy machines, postage, 
and utilities, and occupying, operating and maintaining space.
    (c) Program costs. Program costs include, but are not limited to:
    (1) Personnel and non-personnel costs directly related to the 
provision of program component services and component training and 
transportation for staff, parents and volunteers;
    (2) Costs of functions directly associated with the delivery of 
program component services through the direction, coordination or 
implementation of a specific component;
    (3) Costs of the salaries of program component coordinators and 
component staff, janitorial and transportation staff involved in program 
component efforts, and the costs associated with parent involvement and 
component volunteer services; and
    (4) Expenses related to program staff functions, such as the 
allocable costs of fringe benefits, travel, per diem and transportation, 
training, food, center/classroom supplies and equipment, parent 
activities funds, insurance, and the occupation, operation and 
maintenance of program component space, including utilities.
    (d) Dual benefit costs. (1) Some costs benefit both the program 
components as well as development and administrative functions within 
the Head Start program. In such cases, grantees must identify and 
allocate appropriately the portion of the costs that are for development 
and administration.
    (2) Dual benefit costs include, but are not limited to, salaries, 
benefits and other costs (such as travel, per diem, and training costs) 
of staff who perform both program and development and administrative 
functions. Grantees must determine and allocate appropriately the part 
of these costs dedicated to development and administration.
    (3) Space costs, and costs related to space, such as utilities, are 
frequently dual benefit costs. The grantee must determine and allocate 
appropriately the amount or percentage of space dedicated to development 
and administration.
    (e) Relationship between development and administrative costs and 
indirect costs. (1) Grantees must categorize costs in a Head Start 
program as development and administrative or program costs. These 
categorizations are separate from the decision to charge such costs 
directly or indirectly.
    (2) Grantees must charge all costs, whether program or development 
and administrative, either directly to the project or as part of an 
indirect cost pool.
    (f) Requirements for compliance. (1) Head Start grantees must 
calculate the percentage of their total approved costs allocated to 
development and administration as a part of their budget submission for 
initial funding, refunding or for a request for supplemental assistance 
in connection with a Head Start program. These costs may be a part of 
the direct or the indirect cost pool.
    (2) The Head Start grant applicant shall delineate all development 
and administrative costs in its application.
    (3) Indirect costs which are categorized as program costs must be 
fully explained in the application.
    (g) Waiver. (1) The responsible HHS official may grant a waiver of 
the 15

[[Page 152]]

percent limitation on development and administrative costs and approve a 
higher percentage for a specific period of time not to exceed twelve 
months. The conditions under which a waiver will be considered are 
listed below and encompass those situations under which development and 
administrative costs are being incurred, but the provision of actual 
services has not begun or has been suspended. A waiver may be granted 
when:
    (i) A new Head Start grantee or delegate agency is being established 
or services are being expanded by an existing Head Start grantee or 
delegate agency, and the delivery of component services to children and 
families is delayed until all program development and planning is well 
underway or completed; or
    (ii) Component services are disrupted in an existing Head Start 
program due to circumstances not under the control of the grantee.
    (2) A Head Start grantee that estimates that the cost of development 
and administration will exceed 15 percent of total approved costs must 
submit a request for a waiver that explains the reasons for exceeding 
the limitation. This must be done as soon as the grantee determines that 
it cannot comply with the 15 percent limit, regardless of where the 
grantee is within the grant funding cycle.
    (3) The request for the waiver must include the period of time for 
which the waiver is requested. It must also describe the action the 
grantee will take to reduce its development and administrative costs so 
that the grantee will be able to assure that these costs will not exceed 
15 percent of the total approved costs of the program after the 
completion of the waiver period.
    (4) If granted, the waiver and the period of time for which it will 
be granted will be indicated on the Financial Assistance Award.
    (5) If a waiver requested as a part of a grant application for 
funding or refunding is not approved, no Financial Assistance Award will 
be awarded to the Head Start program until the grantee resubmits a 
revised budget that complies with the 15 percent limitation.

(Information collection requirements contained in paragraphs (f) (2) and 
(3) of this section were approved on January 26, 1993, by the Office of 
Management and Budget under Control Number 0980-1043).

[57 FR 41885, Sept. 14, 1992, as amended at 58 FR 26918, May 6, 1993]



Sec. 1301.33  Delegation of program operations.

    Federal financial assistance is not available for program operations 
where such operations have been delegated to a delegate agency by a Head 
Start agency unless the delegation of program operations is made by a 
written agreement and has been approved by the responsible HHS official 
before the delegation is made.



Sec. 1301.34  Grantee appeals.

    An agency receiving a grant under the Act for technical assistance 
and training, or for a research, demonstration, or pilot project may 
appeal adverse decisions in accordance with part 16 of this title. Head 
Start agencies are also subject to the appeal procedures in part 16 
except appeals by those agencies for suspension, termination and denial 
of refunding are subject to part 1303 of this title.



PART 1302--POLICIES AND PROCEDURES FOR SELECTION, INITIAL FUNDING, AND REFUNDING OF HEAD START GRANTEES, AND FOR SELECTION OF REPLACEMENT GRANTEES--Table of Contents




                           Subpart A--General

Sec.
1302.1  Purpose and scope.
1302.2  Definitions.
1302.3  Consultation with public officials and consumers.
1302.4  Transfer of unexpended balances.
1302.5  Notice for show cause and hearing.

               Subpart B--Basis for Selection of Grantees

1302.10  Selection among applicants.

[[Page 153]]

1302.11  Selection among applicants to replace grantee.

Subpart C--Change in Grantee Requiring Amendment of Approved Application 
                  or Replacement of Head Start Program

1302.20  Grantee to show both legal status and financial viability.
1302.21  Grantee shows legal status but not financial viability.
1302.22  Suspension or termination of grantee which shows financial 
          viability but not legal status.
1302.23  Suspension or termination of grantee which shows legal status 
          but not financial viability.
1302.24  Denial of refunding of grantee.
1302.25  Control of funds of grantee scheduled for change.

            Subpart D--Replacement of Indian Tribal Grantees

1302.30  Procedure for identification of alternative agency.
1302.31  Requirements of alternative agency.
1302.32  Alternative agency--prohibition.

    Authority: 42 U.S.C. 9801 et seq.

    Source: 44 FR 24062, Apr. 24, 1979, unless otherwise noted.



                           Subpart A--General



Sec. 1302.1  Purpose and scope.

    The purpose of this part is to set forth policies and procedures for 
the selection, initial funding and refunding of Head Start grantees and 
for the selection of replacement grantees in the event of the voluntary 
or involuntary termination, or denial of refunding, of Head Start 
programs. It particularly provides for consideration of the need for 
selection of a replacement grantee where the continuing eligibility 
(legal status) and fiscal capability (financial viability) of a grantee 
to operate a Head Start program is cast in doubt by the cessation of 
funding under section 519 of the Act or by the occurrence of some other 
major change. It is intended that Head Start programs be administered 
effectively and responsibly; that applicants to administer programs 
receive fair and equitable consideration; and that the legal rights of 
current Head Start grantees be fully protected.



Sec. 1302.2  Definitions.

    As used in this part--
    Act means Title V of The Economic Opportunity Act of 1964, as 
amended.
    Approvable application means an application for a Head Start 
program, either as an initial application or as an application to amend 
an approved application governing an on-going Head Start program, which, 
in addition to showing that the applicant has legal status and financial 
viability, provides for comprehensive services for children and families 
and for effective and responsible administration which are in conformity 
with the Act and applicable regulations, the Head Start Manual and Head 
Start policies.
    Community action agency means a public or private nonprofit agency 
or organization designated as a community action agency by the Director 
of the Community Services Administration pursuant to section 210(a) or 
section 210(d) of the Act.
    Community action program means a program operated by a community 
action agency.
    Financial viability means the capability of an applicant or the 
continuing capability of a grantee to furnish the non-Federal share of 
the cost of operating an approvable or approved Head Start program.
    Head Start grantee or grantee means a public or private nonprofit 
agency or organization whose application to operate a Head Start program 
pursuant to section 514 of the Act has been approved by the responsible 
HHS official.
    Indian tribe means any tribe, band, nation, pueblo, or other 
organized group or community of Indians, including any Native village 
described in section 3(c) of the Alaska Native Claims Settlement Act (43 
U.S.C. 1602 (c)) or established pursuant to such Act (43 U.S.C. 1601 et 
seq.) that is recognized as eligible for special programs and services 
provided by the United States to Indians because of their status as 
Indians.
    Legal status means the existence of an applicant or grantee as a 
public agency or organization under the law of the State in which it is 
located, or existence as a private nonprofit agency or organization as a 
legal entity recognized under the law of the State in

[[Page 154]]

which it is located. Existence as a private non-profit agency or 
organization may be established under applicable State or Federal law.
    Responsible HHS official means the official of the Department of 
Health and Human Services who has authority to make grants under the 
Act.

[44 FR 24062, Apr. 24, 1979, as amended at 63 FR 34329, June 24, 1998]



Sec. 1302.3  Consultation with public officials and consumers.

    Responsible HHS officials will consult with Governors, or their 
representatives, appropriate local general purpose government officials, 
and Head Start Policy Council and other appropriate representatives of 
communities to be served on the proposed replacement of Head Start 
grantees.



Sec. 1302.4  Transfer of unexpended balances.

    When replacing a grantee, unexpended balances of funds in the 
possession of such grantee in the fiscal year following the fiscal year 
for which the funds were appropriated may be transferred to the 
replacement grantee if the approved application of the replacement 
grantee provides for the continuation of the Head Start services without 
significant change to the same enrollees and their parents and 
undertakes to offer employment to the staff of the terminating grantee. 
A letter of concurrence in the change should be obtained from the 
terminating grantee whenever possible.



Sec. 1302.5  Notice for show cause and hearing.

    (a) Except in emergency situations, the responsible HHS official 
will not suspend financial assistance under the Act unless the grantee 
has been given an opportunity, in accordance with part 1303, subpart D, 
of this chapter, to show cause why such action should not be taken.
    (b) The responsible HHS official will not terminate a grant, suspend 
a grant for longer than 30 days, or deny refunding to a grantee, unless 
the grantee has been given an opportunity for a hearing in accordance 
with part 1303 of this chapter.



               Subpart B--Bases for Selection of Grantees



Sec. 1302.10  Selection among applicants.

    (a) The basis for selection of applicants proposing to operate a 
Head Start program will be the extent to which the applicants 
demonstrate in their application the most effective Head Start program.
    (b) In addition to the applicable criteria at section 641(d) of the 
Head Start Act, the criteria for selection will include:
    (1) The cost effectiveness of the proposed program;
    (2) The qualifications and experience of the applicant and the 
applicant's staff in planning, organizing and providing comprehensive 
child development services at the community level, including the 
administrative and fiscal capability of the applicant to administer all 
Head Start programs carried out in the designated service area;
    (3) The quality of the proposed program as indicated by adherence to 
or evidence of the intent and capability to adhere to Head Start 
Performance Standards (in 45 CFR part 1304) and program policies, 
including the opportunities provided for employment of target area 
residents and career development for paraprofessional and other staff 
and provisions made for the direct participation of parents in the 
planning, conduct and administration of the program;
    (4) The proposed program design and option including the suitability 
of facilities and equipment proposed to be used in carrying out the 
program, as it relates to community needs and as the applicant proposes 
to implement the program in accordance with program policies and 
regulations; and
    (5) The need for Head Start services in the community served by the 
applicant.

[57 FR 41887, Sept. 14, 1992]



Sec. 1302.11  Selection among applicants to replace grantee.

    The bases for making a selection among applicants which submit 
approvable applications to replace a grantee, in addition to the basis 
in Sec. 1302.10 of this part, shall be:

[[Page 155]]

    (a) The extent to which provision is made for a continuation of 
services to the eligible children who have been participating as 
enrollees in the program;
    (b) The extent to which provision is made for continuation of 
services to the target area or areas served by the program; and
    (c) The extent to which provision is made for continued employment 
by the applicant of the qualified personnel of the existing program.



Subpart C--Change in Grantee Requiring Amendment of Approved Application 
                  or Replacement of Head Start Program



Sec. 1302.20  Grantee to show both legal status and financial viability.

    (a) Upon the occurrence of a change in the legal condition of a 
grantee or of a substantial diminution of the financial resources of a 
grantee, or both, for example, such as might result from cessation of 
grants to the grantee under section 514 of the Act, the grantee is 
required within 30 days after the effective date of the regulations in 
this Part or the date the grantee has notice or knowledge of the change, 
whichever is later, to show in writing to the satisfaction of the 
responsible HHS official that it has and will continue to have legal 
status and financial viability. Failure to make this showing may result 
in suspension, termination or denial of refunding.
    (b) The responsible HHS official will notify the grantee in writing 
of the decision as to the grantee's legal status and financial viability 
within 30 days after receiving the grantee's written submittal.
    (c) When it is consistent with proper and efficient administration, 
the responsible HHS official may extend a grantee's program year to end 
on the date when a change in its legal condition or a substantial 
diminution of financial resources, or both, is scheduled to take place.



Sec. 1302.21  Grantee shows legal status but not financial viability.

    (a) If a grantee shows legal status but impaired financial viability 
the responsible HHS official will entertain a timely request for 
amendment of the grantee's approved application which restores the 
grantee's financial viability either by a reduction in the program which 
produces minimum disruption to services and functions, or by an 
amendment which incorporates essential functions and services not 
previously funded as part of the total cost of the Head Start program, 
and, therefore, requires an increase in the amount of the Head Start 
grant but which will not result in a Federal share of the total cost of 
the Head Start program in excess of the percentage authorized by the Act 
or applicable regulations. In considering such a request which includes 
an increase in the Head Start grant the responsible HHS official will 
take into account the funds available to him for obligation and whether 
the proposed increase is consistent with that distribution of Head Start 
funds which:
    (1) Maximizes the number of childen served within his area of 
responsibility, or in the case of experimental or demonstration 
programs, the experimental or demonstration benefits to be achieved, and
    (2) Maintains approximately the same distribution of Head Start 
program funds to States as exist during the fiscal year in which his 
decision is made.
    (b) A request for amendment will be considered to be timely if it is 
included with the written submittal required by Sec. 1302.20(a) of this 
part, submitted within 30 days after receiving the notice required by 
Sec. 1302.20(b) of this part, or submitted as a part of a timely 
application for refunding.
    (c) The grantee will be notified in writing by the responsible HHS 
official within 30 days after submission of the requested amendment of 
the decision to approve or disapprove the requested amendment. If the 
requested amendment is disapproved the notice will contain a statement 
of the reasons for disapproval.



Sec. 1302.22  Suspension or termination of grantee which shows financial viability but not legal status.

    If a grantee fails to show that it will continue to have legal 
status after the

[[Page 156]]

date of change even though it may show financial viability, the grant 
shall be suspended or terminated or refunding shall be denied as of the 
date of change. If it appears reasonable to the responsible HHS official 
that the deficiency in legal status will be corrected within 30 days he 
may suspend the grant for not to exceed 30 days after the date of change 
or the date of submission of a timely request for amendment. If such 
correction has not been made within the 30 day period the grant shall be 
terminated.



Sec. 1302.23  Suspension or termination of grantee which shows legal status but not financial viability.

    (a) If the date of change of financial viability precedes or will 
precede the end of the grantee's program year the grant will be 
suspended or terminated on that date, or, if a request for amendment has 
been submitted under Sec. 1302.21 of this part, upon written notice of 
disapproval of the requested amendment, whichever is later. If it 
appears reasonable to the responsible HHS official that the deficiency 
in financial viability will be corrected within 30 days he may suspend 
the grant for not to exceed 30 days after the date of change or notice 
of disapproval. If such correction has not been made within the 30 day 
period the grant will be terminated.



Sec. 1302.24  Denial of refunding of grantee.

    (a) If the date of change will coincide with or will come after the 
end of the program year and the grantee has notice or knowledge of such 
change prior to the end of the program year any action taken to approve 
the grantee's application for refunding for the following program year 
shall be subject to rescission or ratification depending upon the 
decision of the responsible HHS official on the grantee's legal status 
and financial viability and on any requested amendment submitted by the 
grantee. If the requested amendment is disapproved the responsible HHS 
official may extend the program year in accordance with Sec. 1302.20(c) 
of this part.
    (b) If the date of change coincides with the end of the program year 
and the grantee does not have notice or knowledge of the change prior 
thereto and the grantee's application for refunding for the following 
program year has been approved, such approval shall be subject to 
rescission or ratification depending upon the decision of the 
responsible HHS official on the grantee's legal status and viability and 
on any requested financial amendment submitted by the grantee.
    (c) If the date of change will coincide with or will come after the 
end of the program year and if the responsible HHS official has prior 
notice thereof from the grantee or other official source such as the 
Community Services Administration action to approve any application for 
refunding submitted by the grantee shall be deferred pending decision by 
the responsible HHS official on the grantee's legal status and financial 
viability and any requested amendment submitted by the grantee.
    (d) When the responsible HHS official determines to approve a 
requested amendment for refunding he will approve it for the full term 
of the proposed program period, if that period as approved is no longer 
than a program year.



Sec. 1302.25  Control of funds of grantee scheduled for change.

    Responsible HHS officials will place strict controls on the release 
of grant funds to grantees which are scheduled for change by cessation 
of their grants under section 519 of the Act. Specifically, the 
following controls will be established:
    (a) Funds will be released on a monthly basis regardless of the form 
of grant payment.
    (b) Funds released each month will be limited to the amount required 
to cover actual disbursements during that period for activities 
authorized under the approved Head Start program.
    (c) The amount of funds released must be approved each month by the 
responsible HHS official.



            Subpart D--Replacement of Indian Tribal Grantees

    Source: 63 FR 34329, June 24, 1998, unless otherwise noted.

[[Page 157]]



Sec. 1302.30  Procedure for identification of alternative agency.

    (a) An Indian tribe whose Head Start grant has been terminated, or 
which has been denied refunding as a Head Start grantee, may identify an 
agency and request the responsible HHS official to designate such agency 
as an alternative agency to provide Head Start services to the tribe if:
    (1) The tribe was the only agency that was receiving federal 
financial assistance to provide Head Start services to members of the 
tribe; and
    (2) The tribe would be otherwise precluded from providing such 
services to its members because of the termination or denial of 
refunding.
    (b)(1) The responsible HHS official, when notifying a tribal grantee 
of the intent to terminate financial assistance or deny its application 
for refunding, must notify the grantee that it may identify an agency 
and request that the agency serve as the alternative agency in the event 
that the grant is terminated or refunding denied.
    (2) The tribe must identify the alternate agency to the responsible 
HHS official, in writing, within the time for filing an appeal under 45 
CFR Part 1303.
    (3) The responsible HHS official will notify the tribe, in writing, 
whether the alternative agency proposed by the tribe is found to be 
eligible for Head Start funding and capable of operating a Head Start 
program. If the alternative agency identified by the tribe is not an 
eligible agency capable of operating a Head Start program, the tribe 
will have 15 days from the date of the sending of the notification to 
that effect from the responsible HHS official to identify another agency 
and request that the agency be designated. The responsible HHS official 
will notify the tribe in writing whether the second proposed alternate 
agency is found to be an eligible agency capable of operating the Head 
Start program.
    (4) If the tribe does not identify a suitable alternative agency, a 
replacement grantee will be designated under these regulations.
    (c) If the tribe appeals a termination of financial assistance or a 
denial of refunding, it will, consistent with the terms of 45 CFR Part 
1303, continue to be funded pending resolution of the appeal. However, 
the responsible HHS official and the grantee will proceed with the steps 
outlined in this regulation during the appeal process.
    (d) If the tribe does not identify an agency and request that the 
agency be appointed as the alternative agency, the responsible HHS 
official will seek a permanent replacement grantee under these 
regulations.



Sec. 1302.31  Requirements of alternative agency.

    The agency identified by the Indian tribe must establish that it 
meets all requirements established by the Head Start Act and these 
requirements for designation as a Head Start grantee and that it is 
capable of conducting a Head Start program. The responsible HHS 
official, in deciding whether to designate the proposed agency, will 
analyze the capacity and experience of the agency according to the 
criteria found in section 641(d) of the Head Start Act and Secs. 1302.10 
(b)(1) through (5) and 1302.11 of this part.



Sec. 1302.32  Alternative agency--prohibition.

    (a) No agency will be designated as the alternative agency pursuant 
to this subpart if the agency includes an employee who:
    (1) Served on the administrative or program staff of the Indian 
tribal grantee, and
    (2) Was responsible for a deficiency that:
    (i) Relates to the performance standards or financial management 
standards described in the Head Start Act; and
    (ii) Was the basis for the termination or denial of refunding 
described in Sec. 1302.30 of this part.
    (b) The responsible HHS official shall determine whether an employee 
was responsible for a deficiency within the meaning and context of this 
section.

[[Page 158]]



PART 1303--APPEAL PROCEDURES FOR HEAD START GRANTEES AND CURRENT OR PROSPECTIVE DELEGATE AGENCIES--Table of Contents




                           Subpart A--General

Sec.
1303.1  Purpose and application.
1303.2  Definitions.
1303.3  Right to attorney, attorney fees, and travel costs.
1303.4  Remedies.
1303.5  Service of process.
1303.6  Successor agencies and officials.
1303.7  Effect of failure to file or serve documents in a timely manner.
1303.8  Waiver of requirements.

                     Subpart B--Appeals by Grantees

1303.10  Purpose.
1303.11  Suspension on notice and opportunity to show cause.
1303.12  Summary suspension and opportunity to show cause.
1303.13  Appeal by a grantee of a suspension continuing for more than 30 
          days.
1303.14  Appeal by a grantee from a termination of financial assistance.
1303.15  Appeal by a grantee from a denial of refunding.
1303.16  Conduct of hearing.
1303.17  Time for hearing and decision.

     Subpart C--Appeals by Current or Prospective Delegate Agencies

1303.20  Appeals to grantees by current or prospective delegate agencies 
          of rejection of an application, failure to act on an 
          application, or termination of a grant or contract.
1303.21  Procedures for appeal by current or prospective delegate 
          agencies to the responsible HHS official from denials by 
          grantees of an application or failure to act on an 
          application.
1303.22  Decision on appeal in favor of grantee.
1303.23  Decision on appeal in favor of the current or prospective 
          delegate agency.
1303.24  OMB control number.

    Authority: 42 U.S.C. 9801 et seq.

    Source: 57 FR 59264, Dec. 14, 1992, unless otherwise noted.



                           Subpart A--General



Sec. 1303.1  Purpose and application.

    This part prescribes regulations based on section 646 of the Head 
Start Act, 42 U.S.C. 9841, as it applies to grantees and current or 
prospective delegate agencies engaged in or wanting to engage in the 
operation of Head Start programs under the Act. It prescribes the 
procedures for appeals by current and prospective delegate agencies from 
specified actions or inaction by grantees. It also provides procedures 
for reasonable notice and opportunity to show cause in cases of 
suspension of financial assistance by the responsible HHS official and 
for an appeal to the Departmental Appeals Board by grantees in cases of 
denial of refunding, termination of financial assistance, and suspension 
of financial assistance.



Sec. 1303.2  Definitions.

    As used in this part:
    Act means the Head Start Act, 42 U.S.C. section 9831, et seq.
    ACYF means the Administration on Children, Youth and Families in the 
Department of Health and Human Services, and includes Regional staff.
    Agreement means either a grant or a contract between a grantee and a 
delegate agency for the conduct of all or part of the grantee's Head 
Start program.
    Day means the 24 hour period beginning at 12 a.m. local time and 
continuing for the next 24 hour period. It includes all calendar days 
unless otherwise expressly noted.
    Delegate Agency means a public or private non-profit organization or 
agency to which a grantee has delegated by written agreement the 
carrying out of all or part of its Head Start program.
    Denial of Refunding means the refusal of a funding agency to fund an 
application for a continuation of a Head Start program for a subsequent 
program year when the decision is based on a determination that the 
grantee has improperly conducted its program, or is incapable of doing 
so properly in the future, or otherwise is in violation of applicable 
law, regulations, or other policies.
    Funding Agency means the agency that provides funds directly to 
either a grantee or a delegate agency. ACYF is the funding agency for a 
grantee, and a grantee is the funding agency for a delegate agency.
    Grantee means the local public or private non-profit agency which 
has been

[[Page 159]]

designated as a Head Start agency under 42 U.S.C. 9836 and which has 
been granted financial assistance by the responsible HHS official to 
operate a Head Start program.
    Interim Grantee means an agency which has been appointed to operate 
a Head Start program for a period of time not to exceed one year while 
an appeal of a denial of refunding, termination or suspension action is 
pending.
    Prospective Delegate Agency means a public or private non-profit 
agency or organization which has applied to a grantee to serve as a 
delegate agency.
    Responsible HHS Official means the official who is authorized to 
make the grant of financial assistance to operate a Head Start program 
or his or her designee.
    Submittal means the date of actual receipt or the date the material 
was served in accordance with Sec. 1303.5 of this part for providing 
documents or notices of appeals, and similar matters, to either 
grantees, delegate agencies, prospective delegate agencies, or ACYF.
    Substantial Rejection means that a funding agency requires that the 
funding of a current delegate agency be reduced to 80 percent or less of 
the current level of operations for any reason other than a 
determination that the delegate agency does not need the funds to serve 
all the eligible persons it proposes to serve.
    Suspension of a grant means temporary withdrawal of the grantee's 
authority to obligate grant funds pending corrective action by the 
grantee.
    Termination of a grant or delegate agency agreement means permanent 
withdrawal of the grantee's or delegate agency's authority to obligate 
previously awarded grant funds before that authority would otherwise 
expire. It also means the voluntary relinquishment of that authority by 
the grantee or delegate agency. Termination does not include:
    (1) Withdrawal of funds awarded on the basis of the grantee's or 
delegate agency's underestimate of the unobligated balance in a prior 
period;
    (2) Refusal by the funding agency to extend a grant or award 
additional funds (such as refusal to make a competing or noncompeting 
continuation renewal, extension or supplemental award);
    (3) Withdrawal of the unobligated balance as of the expiration of a 
grant;
    (4) Annulment, i.e., voiding of a grant upon determination that the 
award was obtained fraudulently or was otherwise illegal or invalid from 
its inception.
    Work day means any 24 hour period beginning at 12 a.m. local time 
and continuing for 24 hours. It excludes Saturdays, Sundays, and legal 
holidays. Any time ending on one of the excluded days shall extend to 5 
p.m. of the next full work day.



Sec. 1303.3  Right to attorney, attorney fees, and travel costs.

    (a) All parties to proceedings under this part, including informal 
proceedings, have the right to be represented by an attorney.
    (1) Attorney fees may be charged to the program grant in an amount 
equal to the usual and customary fees charged in the locality. However, 
such fees may not exceed $250.00 per day, adjusted annually to reflect 
the percentage change in the Consumer Price Index for All Urban 
Consumers (issued by the Bureau of Labor Statistics) beginning one year 
after the effective date of these regulations. The grantee or delegate 
agency may use current operating funds to pay these costs. The fees of 
only one attorney may be charged to the program grant with respect to a 
particular dispute. Such fees may not be charged if the grantee or 
delegate agency has an attorney on its staff, or if it has a retainer 
agreement with an attorney which fully covers fees connected with 
litigation. The grantee or delegate agency shall have the burden of 
establishing the usual and customary fees and shall furnish 
documentation to support that determination that is satisfactory to the 
responsible HHS official.
    (2) A grantee or delegate agency may designate up to two persons to 
attend and participate in proceedings held under this Part. Travel and 
per diem costs of such persons, and of an attorney representing the 
grantee or delegate agency, shall not exceed those allowable under 
Standard Governmental Travel Regulations in effect at the time of the 
travel.

[[Page 160]]

    (b) In the event that use of program funds under this section would 
result in curtailment of program operations or inability to liquidate 
prior obligations, the party so affected may apply to the responsible 
HHS official for payment of these expenses.
    (c) The responsible HHS official, upon being satisfied that these 
expenditures would result in curtailment of program operations or 
inability to liquidate prior obligations, must make payment therefor to 
the affected party by way of reimbursement from currently available 
funds.



Sec. 1303.4  Remedies.

    The procedures established by subparts B and C of this Part shall 
not be construed as precluding ACYF from pursuing any other remedies 
authorized by law.



Sec. 1303.5  Service of process.

    Whenever documents are required to be filed or served under this 
part, or notice provided under this part, certified mail shall be used 
with a return receipt requested. Alternatively, any other system may be 
used that provides proof of the date of receipt of the documents by the 
addressee. If this regulation is not complied with, and if a party 
alleges that it failed to receive documents allegedly sent to it, there 
will be a rebuttable presumption that the documents or notices were not 
sent as required by this part, or as alleged by the party that failed to 
use the required mode of service. The presumption may be rebutted only 
by a showing supported by a preponderance of evidence that the material 
was in fact submitted in a timely manner.



Sec. 1303.6  Successor agencies and officials.

    Wherever reference is made to a particular Federal agency, office, 
or official it shall be deemed to apply to any other agency, office, or 
official which subsequently becomes responsible for administration of 
the program or any portion of it.



Sec. 1303.7  Effect of failure to file or serve documents in a timely manner.

    (a) Whenever an appeal is not filed within the time specified in 
these or related regulations, the potential appellant shall be deemed to 
have consented to the proposed action and to have waived all rights of 
appeal.
    (b) Whenever a party has failed to file a response or other 
submission within the time required in these regulations, or by order of 
an appropriate HHS responsible official, the party shall be deemed to 
have waived the right to file such response or submission.
    (c) A party fails to comply with the requisite deadlines or time 
frames if it exceeds them by any amount.
    (d) The time to file an appeal, response, or other submission may be 
waived in accordance with Sec. 1303.8 of this part.



Sec. 1303.8  Waiver of requirements.

    (a) Any procedural requirements required by these regulations may be 
waived by the responsible HHS official or such waiver requests may be 
granted by the Departmental Appeals Board in those cases where the Board 
has jurisdiction. Requests for waivers must be in writing and based on 
good cause.
    (b) Approvals of waivers must be in writing and signed by the 
responsible HHS official or by the Departmental Appeals Board when it 
has jurisdiction.
    (c) ``Good cause'' consists of the following:
    (1) Litigation dates cannot be changed;
    (2) Personal emergencies pertaining to the health of a person 
involved in and essential to the proceeding or to a member of that 
person's immediate family, spouse, parents, or siblings;
    (3) The complexity of the case is such that preparation of the 
necessary documents cannot reasonably be expected to be completed within 
the standard time frames;
    (4) Other matters beyond the control of the party requesting the 
waiver, such as strikes and natural disasters.
    (d) Under no circumstances may ``good cause'' consist of a failure 
to

[[Page 161]]

meet a deadline due to the oversight of either a party or its 
representative.
    (e) Waivers of timely filing or service shall be granted only when 
necessary in the interest of fairness to all parties, including the 
Federal agency. They will be granted sparingly as prompt resolution of 
disputes is a major goal of these regulations. The responsible HHS 
official or the Departmental Appeals Board shall have the right, on own 
motion or on motion of a party, to require such documentation as deemed 
necessary in support of a request for a waiver.
    (f) A request for an informal meeting by a delegate agency, 
including a prospective delegate agency, may be denied by the 
responsible HHS official, on motion of the grantee or on his or her own 
motion, if the official concludes that the written appeal fails to state 
plausible grounds for reversing the grantee's decision or the grantee's 
failure to act on an application.
    (g) The requirements of this section may not be waived.



                     Subpart B--Appeals by Grantees



Sec. 1303.10  Purpose.

    (a) This subpart establishes rules and procedures for the suspension 
of a grantee, denial of a grantee's application for refunding, or 
termination of assistance under the Act for circumstances related to the 
particular grant, such as ineffective or improper use of Federal funds 
or for failure to comply with applicable laws, regulations, policies, 
instructions, assurances, terms and conditions or, in accordance with 
part 1302 of this chapter, upon loss by the grantee of legal status or 
financial viability.
    (b) This subpart does not apply to any administrative action based 
upon any violation, or alleged violation, of title VI of the Civil 
Rights Act of 1964.



Sec. 1303.11  Suspension on notice and opportunity to show cause.

    (a) After receiving concurrence from the Commissioner, ACYF, the 
responsible HHS official may suspend financial assistance to a grantee 
in whole or in part for breach or threatened breach of any requirement 
stated in Sec. 1303.10 pursuant to notice and opportunity to show cause 
why assistance should not be suspended.
    (b) The responsible HHS official will notify the grantee as required 
by Sec. 1303.5 or by telegram that ACYF intends to suspend financial 
assistance, in whole or in part, unless good cause is shown why such 
action should not be taken. The notice will include:
    (1) The grounds for the proposed suspension;
    (2) The effective date of the proposed suspension;
    (3) Information that the grantee has the opportunity to submit 
written material in opposition to the intended suspension and to meet 
informally with the responsible HHS official regarding the intended 
suspension;
    (4) Information that the written material must be submitted to the 
responsible HHS official at least seven days prior to the effective date 
of the proposed suspension and that a request for an informal meeting 
must be made in writing to the responsible HHS official no later than 
seven days after the day the notice of intention to suspend was mailed 
to the grantee;
    (5) Invitation to correct the deficiency by voluntary action; and
    (6) A copy of this subpart.
    (c) If the grantee requests an informal meeting, the responsible HHS 
official will fix a time and place for the meeting. In no event will 
such meeting be scheduled less than seven days after the notice of 
intention to suspend was sent to the grantee.
    (d) The responsible HHS official may at his or her discretion extend 
the period of time or date for making requests or submitting material by 
the grantee and will notify the grantee of any such extension.
    (e) At the time the responsible HHS official sends the notice of 
intention to suspend financial assistance to the grantee, the official 
will send a copy of it to any delegate agency whose activities or 
failures to act are a substantial cause of the proposed suspension, and 
will inform such delegate agency that it is entitled to submit written 
material in opposition and to participate in the informal meeting with 
the responsible HHS official if one is held. In addition, the 
responsible HHS official may give such notice to any other

[[Page 162]]

Head Start delegate agency of the grantee.
    (f) Within three days of receipt of the notice of intention to 
suspend financial assistance, the grantee shall send a copy of such 
notice and a copy of this subpart to all delegate agencies which would 
be financially affected by the proposed suspension action. Any delegate 
agency that wishes to submit written material may do so within the time 
stated in the notice. Any delegate agency that wishes to participate in 
the informal meeting regarding the intended suspension, if not otherwise 
afforded a right to participate, may request permission to do so from 
the responsible HHS official, who may grant or deny such permission. In 
acting upon any such request from a delegate agency, the responsible HHS 
official will take into account the effect of the proposed suspension on 
the particular delegate agency, the extent to which the meeting would 
become unduly complicated as a result of granting such permission, and 
the extent to which the interests of the delegate agency requesting such 
permission appear to be adequately represented by other participants.
    (g) The responsible HHS official will consider any timely material 
presented in writing, any material presented during the course of the 
informal meeting as well as any showing that the grantee has adequately 
corrected the deficiency which led to the suspension proceedings. The 
decision of the responsible HHS official will be made within five days 
after the conclusion of the informal meeting, or, if no informal meeting 
is held, within five days of receipt by the responsible HHS official of 
written material from all concerned parties. If the responsible HHS 
official concludes that the grantee has failed to show cause why 
financial assistance should not be suspended, the official may suspend 
financial assistance in whole or in part and under such terms and 
conditions as he or she specifies.
    (h) Notice of such suspension will be promptly transmitted to the 
grantee as required in Sec. 1303.5 of this part or by some other means 
showing the date of receipt, and shall become effective upon delivery or 
on the date delivery is refused or the material is returned. Suspension 
shall not exceed 30 days unless the responsible HHS official and the 
grantee agree to a continuation of the suspension for an additional 
period of time. If termination proceedings are initiated in accordance 
with Sec. 1303.14, the suspension of financial assistance will be 
rescinded.
    (i) New obligations incurred by the grantee during the suspension 
period will be not be allowed unless the granting agency expressly 
authorizes them in the notice of suspension or an amendment to it. 
Necessary and otherwise allowable costs which the grantee could not 
reasonably avoid during the suspension period will be allowed if they 
result from obligations properly incurred by the grantee before the 
effective date of the suspension and not in anticipation of suspension 
or termination. At the discretion of the granting agency, third-party 
in-kind contributions applicable to the suspension period may be allowed 
in satisfaction of cost sharing or matching requirements.
    (j) The responsible HHS official may appoint an agency to serve as 
an interim grantee to operate the program until the grantee's suspension 
is lifted.
    (k) The responsible HHS official may modify the terms, conditions 
and nature of the suspension or rescind the suspension action at any 
time on his or her own initiative or upon a satisfactory showing that 
the grantee has adequately corrected the deficiency which led to the 
suspension and that repetition is not threatened. Suspension partly or 
fully rescinded may, at the discretion of the responsible HHS official, 
be reimposed with or without further proceedings, except that the total 
time of suspension may not exceed 30 days unless termination proceedings 
are initiated in accordance with Sec. 1303.14 or unless the responsible 
HHS official and the grantee agree to continuation of the suspension for 
an additional period of time. If termination proceedings are initiated, 
the suspension of financial assistance will be rescinded.

[[Page 163]]



Sec. 1303.12  Summary suspension and opportunity to show cause.

    (a) After receiving concurrence from the Commissioner, ACYF, the 
responsible HHS official may suspend financial assistance in whole or in 
part without prior notice and an opportunity to show cause if it is 
determined that immediate suspension is necessary because of a serious 
risk of:
    (1) Substantial injury to property or loss of project funds; or
    (2) Violation of a Federal, State, or local criminal statute; or
    (3) If staff or participants' health and safety are at risk.
    (b) The notice of summary suspension will be given to the grantee as 
required by Sec. 1303.5 of this part, or by some other means showing the 
date of receipt, and shall become effective on delivery or on the date 
delivery is refused or the material is returned unclaimed.
    (c) The notice must include the following items:
    (1) The effective date of the suspension;
    (2) The grounds for the suspension;
    (3) The extent of the terms and conditions of any full or partial 
suspension;
    (4) A statement prohibiting the grantee from making any new 
expenditures or incurring any new obligations in connection with the 
suspended portion of the program; and
    (5) A statement advising the grantee that it has an opportunity to 
show cause at an informal meeting why the suspension should be 
rescinded. The request for an informal meeting must be made by the 
grantee in writing to the responsible HHS official no later than five 
workdays after the effective date of the notice of summary suspension as 
described in paragraph (b) of this section.
    (d) If the grantee requests in writing the opportunity to show cause 
why the suspension should be rescinded, the responsible HHS official 
will fix a time and place for an informal meeting for this purpose. This 
meeting will be held within five workdays after the grantee's request is 
received by the responsible HHS official. Notwithstanding the provisions 
of this paragraph, the responsible HHS official may proceed to deny 
refunding or initiate termination proceedings at any time even though 
financial assistance of the grantee has been suspended in whole or in 
part.
    (e) Notice of summary suspension must also be furnished by the 
grantee to its delegate agencies within two workdays of its receipt of 
the notice from ACYF by certified mail, return receipt requested, or by 
any other means showing dates of transmittal and receipt or return as 
undeliverable or unclaimed. Delegate agencies affected by the summary 
suspension have the right to participate in the informal meeting as set 
forth in paragraph (d) of this section.
    (f) The effective period of a summary suspension of financial 
assistance may not exceed 30 days unless:
    (1) The conditions creating the summary suspension have not been 
corrected; or
    (2) The parties agree to a continuation of the summary suspension 
for an additional period of time; or
    (3) The grantee, in accordance with paragraph (d) of this section, 
requests an opportunity to show cause why the summary suspension should 
be rescinded, in which case it may remain in effect in accordance with 
paragraph (h) of this section; or
    (4) Termination or denial of refunding proceedings are initiated in 
accordance with Sec. 1303.14 or Sec. 1303.15.
    (g) Any summary suspension that remains in effect for more than 30 
days is subject to the requirements of Sec. 1303.13 of this part. The 
only exceptions are where there is an agreement under paragraph (f)(2) 
of this section, or the circumstances described in paragraph (f)(4) or 
(h)(1) of this section exist.
    (h)(1) If the grantee requests an opportunity to show cause why a 
summary suspension should be rescinded, the suspension of financial 
assistance will continue in effect until the grantee has been afforded 
such opportunity and a decision has been made by the responsible HHS 
official.
    (2) If the suspension continues for more than 30 days, the 
suspension remains in effect even if it is appealed to the Departmental 
Appeals Board.
    (3) Notwithstanding any other provisions of these or other 
regulations, if a denial of refunding occurs or a termination action is 
instituted while the

[[Page 164]]

summary suspension is in effect, the suspension shall merge into the 
later action and funding shall not be available until the action is 
rescinded or a decision favorable to the grantee is rendered.
    (i) The responsible HHS official must consider any timely material 
presented in writing, any material presented during the course of the 
informal meeting, as well as any other evidence that the grantee has 
adequately corrected the deficiency which led to the summary suspension.
    (j) A decision must be made within five work days after the 
conclusion of the informal meeting with the responsible HHS official. If 
the responsible HHS official concludes, after considering the 
information provided at the informal meeting, that the grantee has 
failed to show cause why the suspension should be rescinded, the 
responsible HHS official may continue the suspension, in whole or in 
part and under the terms and conditions specified in the notice of 
suspension.
    (k) New obligations incurred by the grantee during the suspension 
period will not be allowed unless the granting agency expressly 
authorizes them in the notice of suspension or by an amendment to the 
notice. Necessary and otherwise allowable costs which the grantee could 
not reasonably avoid during the suspension period will be allowed if 
they result from obligations properly incurred by the grantee before the 
effective date of the suspension and not in anticipation of suspension, 
denial of refunding or termination.
    (l) The responsible HHS official may appoint an agency to serve as 
an interim grantee to operate the program until either the grantee's 
summary suspension is lifted or a new grantee is selected in accordance 
with subpart B of this part.
    (m) At the discretion of the funding agency, third-party in-kind 
contributions applicable to the suspension period may be allowed in 
satisfaction of cost sharing or matching requirements.
    (n) The responsible HHS official may modify the terms, conditions 
and nature of the summary suspension or rescind the suspension action at 
any time upon receiving satisfactory evidence that the grantee has 
adequately corrected the deficiency which led to the suspension and that 
the deficiency will not occur again. Suspension partly or fully 
rescinded may, at the discretion of the responsible HHS official, be 
reimposed with or without further proceedings.



Sec. 1303.13  Appeal by a grantee of a suspension continuing for more than 30 days.

    (a) This section applies to summary suspensions that are initially 
issued for more than 30 days and summary suspensions continued for more 
than 30 days except those identified in paragraph Sec. 1303.12(g) of 
this part.
    (b) After receiving concurrence from the Commissioner, ACYF, the 
responsible HHS official may suspend a grant for more than 30 days. A 
suspension may, among other bases, be imposed for the same reasons that 
justify termination of financial assistance or which justify a denial of 
refunding of a grant.
    (c) A notice of a suspension under this section shall set forth:
    (1) The reasons for the action;
    (2) The duration of the suspension, which may be indefinite;
    (3) The fact that the action may be appealed to the Departmental 
Appeals Board and the time within which it must be appealed.
    (d) During the period of suspension a grantee may not incur any 
valid obligations against Federal Head Start grant funds, nor may any 
grantee expenditure or provision of in-kind services or items of value 
made during the period be counted as applying toward any required 
matching contribution required of a grantee, except as otherwise 
provided in this part.
    (e) The responsible HHS official may appoint an agency to serve as 
an interim grantee to operate the program until either the grantee's 
suspension is lifted or a new grantee is selected in accordance with 
subparts B and C of 45 CFR part 1302.
    (f) Any appeal to the Departmental Appeals Board must be made within 
five days of the grantee's receipt of notice of suspension or return of 
the notice as undeliverable, refused, or unclaimed. Such an appeal must 
be in writing and it must fully set forth the

[[Page 165]]

grounds for the appeal and be accompanied by all documentation that the 
grantee believes is relevant and supportive of its position.
    All such appeals shall be addressed to the Departmental Appeals 
Board, and the appellant will send a copy of the appeal to the 
Commissioner, ACYF, and the responsible HHS official. Appeals will be 
governed by the Departmental Appeals Board's regulations at 45 CFR part 
16, except as otherwise provided in the Head Start appeals regulations. 
Any grantee requesting a hearing as part of its appeal shall be afforded 
one by the Departmental Appeals Board.
    (g) If a grantee is successful on its appeal any costs incurred 
during the period of suspension that are otherwise allowable may be paid 
with Federal grant funds. Moreover, any cash or in-kind contributions of 
the grantee during the suspension period that are otherwise allowable 
may be counted toward meeting the grantee's non-Federal share 
requirement.
    (h) If a grantee's appeal is denied by the Departmental Appeals 
Board, but the grantee is subsequently restored to the program because 
it has corrected those conditions which warranted the suspension, its 
activities during the period of the suspension remain outside the scope 
of the program.
    Federal funds may not be used to offset any costs during the period, 
nor may any cash or in-kind contributions received during the period be 
used to meet non-Federal share requirements.
    (i) If the Federal agency institutes termination proceedings during 
a suspension, or denies refunding, the two actions shall merge and the 
grantee need not file a new appeal. Rather, the Departmental Appeals 
Board will be notified by the Federal agency and will automatically be 
vested with jurisdiction over the termination action or the denial of 
refunding and will, pursuant to its rules and procedures, permit the 
grantee to respond to the notice of termination. In a situation where a 
suspension action is merged into a termination action in accordance with 
this section, the suspension continues until there is an administrative 
decision by the Departmental Appeals Board on the grantee's appeal.



Sec. 1303.14  Appeal by a grantee from a termination of financial assistance.

    (a) After receiving concurrence from the Commissioner, ACYF, the 
responsible HHS official may terminate financial assistance to a 
grantee. Financial assistance may be terminated in whole or in part.
    (b) Financial assistance may be terminated for any or all of the 
following reasons:
    (1) The grantee is no longer financially viable;
    (2) The grantee has lost the requisite legal status or permits;
    (3) The grantee has failed to comply with the required fiscal or 
program reporting requirements applicable to grantees in the Head Start 
program;
    (4) The grantee has failed to timely correct one or more 
deficiencies as defined in 45 CFR Part 1304;
    (5) The grantee has failed to comply with the eligibility 
requirements and limitations on enrollment in the Head Start program, or 
both;
    (6) The grantee has failed to comply with the Head Start grants 
administration requirements set forth in 45 CFR part 1301;
    (7) The grantee has failed to comply with the requirements of the 
Head Start Act;
    (8) The grantee is debarred from receiving Federal grants or 
contracts;
    (9) The grantee fails to abide by any other terms and conditions of 
its award of financial assistance, or any other applicable laws, 
regulations, or other applicable Federal or State requirements or 
policies.
    (c) A notice of termination shall set forth:
    (1) The legal basis for the termination under paragraph (b) of this 
section, the factual findings on which the termination is based or 
reference to specific findings in another document that form the basis 
for the termination (such as reference to item numbers in an on-site 
review report or instrument), and citation to any statutory provisions, 
regulations, or policy issuances on which ACF is relying for its 
determination.
    (2) The fact that the termination may be appealed within 30 days to 
the Departmental Appeals Board (with a

[[Page 166]]

copy of the appeal sent to the responsible HHS official and the 
Commissioner, ACYF) and that such appeal shall be governed by 45 CFR 
part 16, except as otherwise provided in the Head Start appeals 
regulations, and that any grantee that requests a hearing shall be 
afforded one, as mandated by 42. U.S.C. 9841.
    (3) That the appeal may be made only by the Board of Directors of 
the grantee or an official acting on behalf of such Board.
    (4) That, if the activities of a delegate agency are the basis, in 
whole or in part, for the proposed termination, the identity of the 
delegate agency.
    (5) That the grantee's appeal must meet the requirements set forth 
in paragraph (d) of this section.
    (6) That a failure by the responsible HHS official to meet the 
requirements of this paragraph may result in the dismissal of the 
termination action without prejudice, or the remand of that action for 
the purpose of reissuing it with the necessary corrections.
    (d) A grantee's appeal must:
    (1) Be in writing;
    (2) Specifically identify what factual findings are disputed;
    (3) Identify any legal issues raised, including relevant citations;
    (4) Include an original and two copies of each document the grantee 
believes is relevant and supportive of its position (unless the grantee 
has obtained permission from the Departmental Appeals Board to submit 
fewer copies);
    (5) Include any request for specifically identified documents the 
grantee wishes to obtain from ACF and a statement of the relevance of 
the requested documents, and a statement that the grantee has attempted 
informally to obtain the documents from ACF and was unable to do so;
    (6) Grantees may submit additional documents within 14 days of 
receipt of the documentation submitted by ACF in response to the 
grantee's appeal and initial submittals. The ACF response to the appeal 
and initial submittals of the grantee shall be filed no later than 30 
days after ACF's receipt of the material. In response to such a 
submittal, ACF may submit additional documents should it have any, or 
request discovery in connection with the new documents, or both, but 
must do so within 10 days of receipt of the additional filings;
    (7) Include a statement on whether the grantee is requesting a 
hearing; and
    (8) Be filed with the Departmental Appeals Board and be served on 
the responsible HHS official who issued the termination notice and on 
the Commissioner of ACYF. The grantee must also serve a copy of the 
appeal on any delegate agency that would be financially affected at the 
time the grantee files its appeal.
    (e) The Departmental Appeals Board sanctions with respect to a 
grantee's failure to comply with the provisions of paragraph (d) of this 
section are as follows:
    (1) If in the judgment of the Departmental Appeals Board a grantee 
has failed to substantially comply with the provisions of the preceding 
paragraphs of this section, its appeal must be dismissed with prejudice.
    (2) If the Departmental Appeals Board concludes that the grantee's 
failures are not substantial, but are confined to one or a few specific 
instances, it shall bar the submittal of an omitted document, or 
preclude the raising of an argument or objection not timely raised in 
the appeal, or deny a request for a document or other ``discovery'' 
request not timely made.
    (3) The sanctions set forth in paragraphs (e)(1) and (2) of this 
section shall not apply if the Departmental Appeals Board determines 
that the grantee has shown good cause for its failure to comply with the 
relevant requirements. Delays in obtaining representation shall not 
constitute good cause. Matters within the control of its agents and 
attorneys shall be deemed to be within the control of the grantee.
    (f) (1) During a grantee's appeal of a termination decision, funding 
will continue until an adverse decision is rendered or until expiration 
of the then current budget period. At the end of the current budget 
period, if a decision has not been rendered, the responsible HHS 
official shall award an interim grant to the grantee until a decision is 
made.

[[Page 167]]

    (2) If a grantee's funding has been suspended, no funding shall be 
available during the termination proceedings, or at any other time, 
unless the action is rescinded or the grantee's appeal is successful. An 
interim grantee will be appointed during the appeal period.
    (3) If a grantee does not appeal an administrative decision to court 
within 30 days of its receipt of the decision, a replacement grantee 
will be immediately sought. An interim grantee may be named, if needed, 
pending the selection of a replacement grantee.
    (4) An interim grantee may be sought even though the grantee has 
appealed an administrative decision to court within 30 days, if the 
responsible HHS official determines it necessary to do so. Examples of 
circumstances that warrant an interim grantee are to protect children 
and families from harm and Federal funds from misuse or dissipation or 
both.
    (g) If the Departmental Appeals Board informs a grantee that a 
proposed termination action has been set down for hearing, the grantee 
shall, within five days of its receipt of this notice, send a copy of it 
to all delegate agencies which would be financially affected by the 
termination and to each delegate agency identified in the notice. The 
grantee shall send the Departmental Appeals Board and the responsible 
HHS official a list of all delegate agencies notified and the dates of 
notification.
    (h) If the responsible HHS official initiated termination 
proceedings because of the activities of a delegate agency, that 
delegate agency may participate in the hearing as a matter of right. Any 
other delegate agency, person, agency or organization that wishes to 
participate in the hearing may request permission to do so from the 
Departmental Appeals Board. Any request for participation, including a 
request by a delegate agency, must be filed within 30 days of the 
grantee's appeal.
    (i) The results of the proceeding and any measure taken thereafter 
by ACYF pursuant to this part shall be fully binding upon the grantee 
and all its delegate agencies, whether or not they actually participated 
in the hearing.
    (j) A grantee may waive a hearing and submit written information and 
argument for the record. Such material shall be submitted within a 
reasonable period of time to be fixed by the Departmental Appeals Board 
upon the request of the grantee. The failure of a grantee to request a 
hearing, or to appear at a hearing for which a date had been set, unless 
excused for good cause, shall be deemed a waiver of the right to a 
hearing and consent to the making of a decision on the basis of written 
information and argument submitted by the parties to the Departmental 
Appeals Board.
    (k) The responsible HHS official may attempt, either personally or 
through a representative, to resolve the issues in dispute by informal 
means prior to the hearing.

[57 FR 59264, Dec. 14, 1992, as amended at 61 FR 57226, Nov. 5, 1996; 65 
FR 4768, Feb. 1, 2000]



Sec. 1303.15  Appeal by a grantee from a denial of refunding.

    (a) After receiving concurrence from the Commissioner, ACYF, a 
grantee's application for refunding may be denied by the responsible HHS 
official for circumstances described in paragraph (c) of this section.
    (b) When an intention to deny a grantee's application for refunding 
is arrived at on a basis to which this subpart applies, the responsible 
HHS official will provide the grantee as much advance notice thereof as 
is reasonably possible, in no event later than 30 days after the receipt 
by ACYF of the application. The notice will inform the grantee that it 
has the opportunity for a full and fair hearing on whether refunding 
should be denied.
    (1) Such appeals shall be governed by 45 CFR part 16, except as 
otherwise provided in the Head Start appeals regulations. Any grantee 
which requests a hearing shall be afforded one, as mandated by 42 U.S.C. 
9841.
    (2) Any such appeals must be filed within 30 days after the grantee 
receives notice of the decision to deny refunding.
    (c) Refunding of a grant may be denied for any or all of the reasons 
for which a grant may be terminated, as set forth in Sec. 1303.14(b) of 
this part.

[[Page 168]]

    (d) Decisions to deny refunding shall be in writing, signed by the 
responsible HHS official, dated, and sent in compliance with Sec. 1303.5 
of this part or by telegram, or by any other mode establishing the date 
sent and received by the addressee, or the date it was determined 
delivery could not be made, or the date delivery was refused. A Notice 
of Decision shall contain:
    (1) The legal basis for the denial of refunding under paragraph (c) 
of this section, the factual findings on which the denial of refunding 
is based or references to specific findings in another document that 
form the basis for the denial of refunding (such as reference to item 
numbers in an on-site review report or instrument), and citation to any 
statutory provisions, regulations or policy issuances on which ACF is 
relying for its determination.
    (2) The identity of the delegate agency, if the activities of that 
delegate agency are the basis, in whole or in part, for the proposed 
denial of refunding; and
    (3) If the responsible HHS official has initiated denial of 
refunding proceedings because of the activities of a delegate agency, 
the delegate agency may participate in the hearing as a matter of right. 
Any other delegate agency, person, agency or organization that wishes to 
participate in the hearing may request permission to do so from the 
Departmental Appeals Board. Any request for participation, including a 
request by a delegate agency, must be filed within 30 days of the 
grantee's appeal.
    (4) A statement that failure of the notice of denial of refunding to 
meet the requirements of this paragraph may result in the dismissal of 
the denial of refunding action without prejudice, or the remand of that 
action for the purpose of reissuing it with the necessary corrections.
    (e) The appeal may be made only by the Board of Directors of the 
grantee or by an official acting on behalf of such Board.
    (f) If the responsible HHS official has initiated denial of 
refunding proceedings because of the activities of a delegate agency, 
that delegate agency may participate in the hearing as a matter of 
right. Any other delegate agency, person, agency or organization that 
wishes to participate in the hearing may request permission to do so 
from the Departmental Appeals Board. Any request for participation, 
including a request by a delegate agency, must be filed within 30 days 
of the grantee's appeal.
    (g) Paragraphs (i), (j), and (k) of 45 CFR 1303.14 shall apply to 
appeals of denials of refunding.
    (h) The Departmental Appeals Board sanctions with respect to a 
grantee's appeal of denial of refunding are as follows:
    (1) If in the judgment of the Departmental Appeals Board a grantee 
has failed to substantially comply with the provisions of the preceding 
paragraphs of this section, its appeal must be dismissed with prejudice.
    (2) If the Departmental Appeals Board concludes that the grantee's 
failure to comply is not substantial, but is confined to one or a few 
specific instances, it shall bar the submittal of an omitted document, 
or preclude the raising of an argument or objection not timely raised in 
the appeal, or deny a request for a document or other ``discovery'' 
request not timely made.
    (3) The sanctions set forth in paragraphs (h)(1) and (2) of this 
section shall not apply if the Departmental Appeals Board determines 
that a grantee has shown good cause for its failure to comply with the 
relevant requirements. Delays in obtaining representation shall not 
constitute good cause. Matters within the control of its agents and 
attorneys shall be deemed to be within the control of the grantee.

[57 FR 59264, Dec. 14, 1992, as amended at 65 FR 4769, Feb. 1, 2000]



Sec. 1303.16  Conduct of hearing.

    (a) The presiding officer shall conduct a full and fair hearing, 
avoid delay, maintain order, and make a sufficient record of the facts 
and issues. To accomplish these ends, the presiding officer shall have 
all powers authorized by law, and may make all procedural and 
evidentiary rulings necessary for the conduct of the hearing. The 
hearing shall be open to the public unless the presiding officer for 
good cause shown otherwise determines.

[[Page 169]]

    (b) Communications outside the record are prohibited as provided by 
45 CFR 16.17.
    (c) Both ACYF and the grantee are entitled to present their case by 
oral or documentary evidence, to submit rebuttal evidence and to conduct 
such examination and cross-examination as may be required for a full and 
true disclosure of all facts bearing on the issues. The issues shall be 
those stated in the notice required to be filed by paragraph (g) of this 
section, those stipulated in a prehearing conference or those agreed to 
by the parties.
    (d) Prepared written direct testimony will be used in appeals under 
this part in lieu of oral direct testimony. When the parties submit 
prepared written direct testimony, witnesses must be available at the 
hearing for cross-examination and redirect examination. If a party can 
show substantial hardship in using prepared written direct testimony, 
the Departmental Appeals Board may exempt it from the requirement. 
However, such hardship must be more than difficulty in doing so, and it 
must be shown with respect to each witness.
    (e) In addition to ACYF, the grantee, and any delegate agencies 
which have a right to appear, the presiding officer may permit the 
participation in the proceedings of such persons or organizations as 
deemed necessary for a proper determination of the issues involved. Such 
participation may be limited to those issues or activities which the 
presiding officer believes will meet the needs of the proceeding, and 
may be limited to the filing of written material.
    (f) Any person or organization that wishes to participate in a 
proceeding may apply for permission to do so from the Departmental 
Appeals Board. This application must be made within 30 days of the 
grantee's appeal in the case of the appeal of termination or denial of 
refunding, and as soon as possible after the notice of suspension has 
been received by the grantee. It must state the applicant's interest in 
the proceeding, the evidence or arguments the applicant intends to 
contribute, and the necessity for the introduction of such evidence or 
arguments.
    (g) The presiding officer shall permit or deny such participation 
and shall give notice of his or her decision to the applicant, the 
grantee, and ACYF, and, in the case of denial, a brief statement of the 
reasons therefor. Even if previously denied, the presiding officer may 
subsequently permit such participation if, in his or her opinion, it is 
warranted by subsequent circumstances. If participation is granted, the 
presiding officer shall notify all parties of that fact and may, in 
appropriate cases, include in the notification a brief statement of the 
issues as to which participation is permitted.
    (h) The Departmental Appeals Board will send the responsible HHS 
official, the grantee and any other party a notice which states the 
time, place, nature of the hearing, and the legal authority and 
jurisdiction under which the hearing is to be held. The notice will also 
identify with reasonable specificity and ACYF requirements which the 
grantee is alleged to have violated. The notice will be served and filed 
not later than ten work days prior to the hearing.

[57 FR 59264, Dec. 14, 1992, as amended at 65 FR 4769, Feb. 1, 2000]



Sec. 1303.17  Time for hearing and decision.

    (a) Any hearing on an appeal by a grantee from a notice of 
suspension, termination, or denial of refunding must be commenced no 
later than 120 days from the date the grantee's appeal is received by 
the Departmental Appeals Board. The final decision in an appeal whether 
or not there is a hearing must be rendered not later than 60 days after 
the closing of the record, i.e., 60 days after the Board receives the 
final authorized submission in the case.
    (b) All hearings will be conducted expeditiously and without undue 
delay or postponement.
    (c) The time periods established in paragraph(a) of this section may 
be extended if:
    (1) The parties jointly request a stay to engage in settlement 
negotiations,
    (2) Either party requests summary disposition; or
    (3) The Departmental Appeals Board determines that the Board is 
unable to hold a hearing or render its decision within the specified 
time period for

[[Page 170]]

reasons beyond the control of either party or the Board.

[65 FR 4770, Feb. 1, 2000]



     Subpart C--Appeals by Current or Prospective Delegate Agencies



Sec. 1303.20  Appeals to grantees by current or prospective delegate agencies of rejection of an application, failure to act on an application or termination of 
          a grant or contract.

    (a) A grantee must give prompt, fair and adequate consideration to 
applications submitted by current or prospective delegate agencies to 
operate Head Start programs. The failure of the grantee to act within 30 
days after receiving the application is deemed to be a rejection of the 
application.
    (b) A grantee must notify an applicant in writing within 30 days 
after receiving the application of its decision to either accept or to 
wholly or substantially reject it. If the decision is to wholly or 
substantially reject the application, the notice shall contain a 
statement of the reasons for the decision and a statement that the 
applicant has a right to appeal the decision within ten work days after 
receipt of the notice. If a grantee fails to act on the application by 
the end of the 30 day period which grantees have to review applications, 
the current or prospective delegate agency may appeal to the grantee, in 
writing, within 15 work days of the end of the 30 day grantee review 
period.
    (c) A grantee must notify a delegate agency in writing of its 
decision to terminate its agreement with the delegate agency, explaining 
the reasons for its decision and that the delegate agency has the right 
to appeal the decision to the grantee within ten work days after receipt 
of the notice.
    (d) The grantee has 20 days to review the written appeal and issue 
its decision. If the grantee sustains its earlier termination of an 
award or its rejection of an application, the current or prospective 
delegate agency then may appeal, in writing, to the responsible HHS 
official. The appeal must be submitted to the responsible HHS official 
within ten work days after the receipt of the grantee's final decision. 
The appeal must fully set forth the grounds for the appeal.
    (e) A grantee may not reject the application or terminate the 
operations of a delegate agency on the basis of defects or deficiencies 
in the application or in the operation of the program without first:
    (1) Notifying the delegate agency of the defects and deficiencies;
    (2) Providing, or providing for, technical assistance so that 
defects and deficiencies can be corrected by the delegate agency; and
    (3) Giving the delegate agency the opportunity to make appropriate 
corrections.
    (f) An appeal filed pursuant to a grantee failing to act on a 
current or prospective delegate agency's application within a 30 day 
period need only contain a copy of the application, the date filed, and 
any proof of the date the grantee received the application. The grantee 
shall have five days in which to respond to the appeal.
    (g) Failure to appeal to the grantee regarding its decision to 
reject an application, terminate an agreement, or failure to act on an 
application shall bar any appeal to the responsible HHS official.



Sec. 1303.21  Procedures for appeal by current or prospective delegate agencies to the responsible HHS official from denials by grantees of an application or 
          failure to act on an application.

    (a) Any current or prospective delegate agency that is dissatisfied 
with the decision of a grantee rendered under Sec. 1303.20 may appeal to 
the responsible HHS official whose decision is final and not appealable 
to the Commissioner, ACYF. Such an appeal must be in writing and it must 
fully set forth the grounds for the appeal and be accompanied by all 
documentation that the current or prospective delegate agency believes 
is relevant and supportive of this position, including all written 
material or documentation submitted to the grantee under the procedures 
set forth in Sec. 1303.20, as well as a copy of any decision rendered by 
the grantee. A copy of the appeal and all material filed with the 
responsible HHS official must be simultaneously served on the grantee.

[[Page 171]]

    (b) In providing the information required by paragraph (a) of this 
section, delegate agencies must set forth:
    (1) Whether, when and how the grantee advised the delegate agency of 
alleged defects and deficiencies in the delegate agency's application or 
in the operation of its program prior to the grantee's rejection or 
termination notice;
    (2) Whether the grantee provided the delegate agency reasonable 
opportunity to correct the defects and deficiencies, the details of the 
opportunity that was given and whether or not the grantee provided or 
provided for technical advice, consultation, or assistance to the 
current delegate agency concerning the correction of the defects and 
deficiencies;
    (3) What steps or measures, if any, were undertaken by the delegate 
agency to correct any defects or deficiencies;
    (4) When and how the grantee notified the delegate agency of its 
decision;
    (5) Whether the grantee told the delegate agency the reasons for its 
decision and, if so, how such reasons were communicated to the delegate 
agency and what they were;
    (6) If it is the delegate agency's position that the grantee acted 
arbitrarily or capriciously, the reasons why the delegate agency takes 
this position; and
    (7) Any other facts and circumstances which the delegate agency 
believes supports its appeal.
    (c) The grantee may submit a written response to the appeal of a 
prospective delegate agency. It may also submit additional information 
which it believes is relevant and supportive of its position.
    (d) In the case of an appeal by a delegate agency, the grantee must 
submit a written statement to the responsible HHS official responding to 
the items specified in paragraph (b) of this section. The grantee must 
include information that explains why it acted properly in arriving at 
its decision or in failing to act, and any other facts and circumstances 
which the grantee believes supports its position.
    (e)(1) The responsible HHS official may meet informally with the 
current or prospective delegate agency if such official determines that 
such a meeting would be beneficial to the proper resolution of the 
appeal. Such meetings may be conducted by conference call.
    (2) An informal meeting must be requested by the current or 
prospective delegate agency at the time of the appeal. In addition, the 
grantee may request an informal meeting with the responsible HHS 
official. If none of the parties requests an informal meeting, the 
responsible HHS official may hold such a meeting if he or she believes 
it would be beneficial for a proper resolution of the dispute. Both the 
grantee and the current or prospective delegate agency may attend any 
informal meeting concerning the appeal. If a party wishes to oppose a 
request for a meeting it must serve its opposition on the responsible 
HHS official and any other party within five work days of its receipt of 
the request.
    (f) A grantee's response to appeals by current or prospective 
delegate agencies must be submitted to the responsible HHS official 
within ten work days of receipt of the materials served on it by the 
current or prospective delegate agency in accordance with paragraph (a) 
of this section. The grantee must serve a copy of its response on the 
current or prospective delegate agency.
    (g) The responsible HHS official shall notify the current or 
prospective delegate agency and the grantee whether or not an informal 
meeting will be held. If an informal meeting is held, it must be held 
within ten work days after the notice by the responsible HHS official is 
mailed. The responsible HHS official must designate either the Regional 
Office or the place where the current or prospective delegate agency or 
grantee is located for holding the informal meeting.
    (h) If an informal meeting is not held, each party shall have an 
opportunity to reply in writing to the written statement submitted by 
the other party. The written reply must be submitted to the responsible 
HHS official within five work days after the notification required by 
paragraph (g) of this section. If a meeting is not to be held, notice of 
that fact shall be served on the parties within five work days of the 
receipt of a timely response to such a request or the expiration of the 
time

[[Page 172]]

for submitting a response to such a request.
    (i) In deciding an appeal under this section, the responsible HHS 
official will arrive at his or her decision by considering:
    (1) The material submitted in writing and the information presented 
at any informal meeting;
    (2) The application of the current or prospective delegate agency;
    (3) His or her knowledge of the grantee's program as well as any 
evaluations of his or her staff about the grantee's program and current 
or prospective delegate agency's application and prior performance; and
    (4) Any other evidence deemed relevant by the responsible HHS 
official.



Sec. 1303.22  Decision on appeal in favor of grantee.

    (a) If the responsible HHS official finds in favor of the grantee, 
the appeal will be dismissed unless there is cause to remand the matter 
back to the grantee.
    (b) The grantee's decision will be sustained unless it is determined 
by the responsible HHS official that the grantee acted arbitrarily, 
capriciously, or otherwise contrary to law, regulation, or other 
applicable requirements.
    (c) The decision will be made within ten workdays after the informal 
meeting. The decision, including a statement of the reasons therefor, 
will be in writing, and will be served on the parties within five 
workdays from the date of the decision by the responsible HHS official.
    (d) If the decision is made on the basis of written materials only, 
the decision will be made within five workdays of the receipt of the 
materials. The decision will be served on the parties no more than five 
days after it is made.



Sec. 1303.23  Decision on appeal in favor of the current or prospective delegate agency.

    (a) The responsible HHS official will remand the rejection of an 
application or termination of an agreement to the grantee for prompt 
reconsideration and decision if the responsible HHS official's decision 
does not sustain the grantee's decision, and if there are issues which 
require further development before a final decision can be made. The 
grantee's reconsideration and decision must be made in accordance with 
all applicable requirements of this part as well as other relevant 
regulations, statutory provisions, and program issuances. The grantee 
must issue its decision on remand in writing to both the current or 
prospective delegate agency and the responsible HHS official within 15 
workdays after the date of receipt of the remand.
    (b) If the current or prospective delegate agency is dissatisfied 
with the grantee's decision on remand, it may appeal to the responsible 
HHS official within five workdays of its receipt of that decision. Any 
such appeal must comply with the requirements of Sec. 1303.21 of this 
part.
    (c) If the responsible HHS official finds that the grantee's 
decision on remand is incorrect or if the grantee fails to issue its 
decision within 15 work days, the responsible HHS official will 
entertain an application by the current or prospective delegate agency 
for a direct grant.
    (1) If such an application is approved, there will be a commensurate 
reduction in the level of funding of the grantee and whatever other 
action is deemed appropriate in the circumstances. Such reduction in 
funding shall not be considered a termination or denial of refunding and 
may not be appealed under this part.
    (2) If such an application is not approved, the responsible HHS 
official will take whatever action he or she deems appropriate under the 
circumstances.
    (d) If, without fault on the part of a delegate agency, its 
operating funds are exhausted before its appeal has been decided, the 
grantee will furnish sufficient funds for the maintenance of the 
delegate agency's current level of operations until a final 
administrative decision has been reached.
    (e) If the responsible HHS official sustains the decision of the 
grantee following remand, he or she shall notify the parties of the fact 
within 15 work days of the receipt of final submittal of documents, or 
of the conclusion of any meeting between the official and the parties, 
whichever is later.

[[Page 173]]



Sec. 1303.24  OMB control number.

    The collection of information requirements in sections 1303.10 
through 1303.23 of this part were approved on January 22, 1993, by the 
Office of Management and Budget and assigned OMB control number 0980-
0242.

[58 FR 13019, Mar. 9, 1993]



PART 1304--PROGRAM PERFORMANCE STANDARDS FOR THE OPERATION OF HEAD START PROGRAMS BY GRANTEE AND DELEGATE AGENCIES--Table of Contents




                           Subpart A--General

Sec.
1304.1  Purpose and scope.
1304.2  Effective date.
1304.3  Definitions.

       Subpart B--Early Childhood Development and Health Services

1304.20  Child health and developmental services.
1304.21  Education and early childhood development.
1304.22  Child health and safety.
1304.23  Child nutrition.
1304.24  Child mental health.

              Subpart C--Family and Community Partnerships

1304.40  Family partnerships.
1304.41  Community partnerships.

                Subpart D--Program Design and Management

1304.50  Program governance.
1304.51  Management systems and procedures.
1304.52  Human resources management.
1304.53  Facilities, materials, and equipment.

                Subpart E--Implementation and Enforcement

1304.60  Deficiencies and quality improvement plans.
1304.61  Noncompliance.

    Authority: 42 U.S.C. 9801 et seq.

    Source: 61 FR 57210, Nov. 5, 1996, unless otherwise noted.



                           Subpart A--General



Sec. 1304.1  Purpose and scope.

    This part describes regulations implementing sections 641A, 644(a) 
and (c), and 645A(h) of the Head Start Act, as amended (42 U.S.C. 9801 
et seq.). Section 641A, paragraph (a)(3)(C) directs the Secretary of 
Health and Human Services to review and revise, as necessary, the Head 
Start Program Performance Standards in effect under prior law. This 
paragraph further provides that any revisions should not result in an 
elimination or reduction of requirements regarding the scope or types of 
Head Start services to a level below that of the requirements in effect 
on November 2, 1978. Section 641A(a) directs the Secretary to issue 
regulations establishing performance standards and minimum requirements 
with respect to health, education, parent involvement, nutrition, 
social, transition, and other Head Start services as well as 
administrative and financial management, facilities, and other 
appropriate program areas. Sections 644(a) and (c) require the issuance 
of regulations setting standards for the organization, management, and 
administration of Head Start programs. Section 645A(h) requires that the 
Secretary develop and publish performance standards for the newly 
authorized program for low-income pregnant women and families with 
infants and toddlers, entitled ``Early Head Start.'' The following 
regulations respond to these provisions in the Head Start Act, as 
amended, for new or revised Head Start Program Performance Standards. 
These new regulations define standards and minimum requirements for the 
entire range of Early Head Start and Head Start services, including 
those specified in the authorizing legislation. They are applicable to 
both Head Start and Early Head Start programs, with the exceptions 
noted, and are to be used in conjunction with the regulations at 45 CFR 
parts 1301, 1302, 1303, 1305, 1306, and 1308.



Sec. 1304.2  Effective date.

    Early Head Start and Head Start grantee and delegate agencies must 
comply with these requirements on January 1, 1998. Nothing in this part

[[Page 174]]

prohibits grantee or delegate agencies from voluntarily complying with 
these regulations prior to the effective date.



Sec. 1304.3  Definitions.

    (a) As used in this part:
    (1) Assessment means the ongoing procedures used by appropriate 
qualified personnel throughout the period of a child's eligibility to 
identify:
    (i) The child's unique strengths and needs and the services 
appropriate to meet those needs; and
    (ii) The resources, priorities, and concerns of the family and the 
supports and services necessary to enhance the family's capacity to meet 
the developmental needs of their child.
    (2) Children with disabilities means, for children ages 3 to 5, 
those with mental retardation, hearing impairments including deafness, 
speech or language impairments, visual impairments including blindness, 
serious emotional disturbance, orthopedic impairments, autism, traumatic 
brain injury, other health impairments, specific learning disabilities, 
deaf-blindness, or multiple disabilities, and who, by reason thereof, 
need special education and related services. The term ``children with 
disabilities'' for children aged 3 to 5, inclusive, may, at a State's 
discretion, include children experiencing developmental delays, as 
defined by the State and as measured by appropriate diagnostic 
instruments and procedures, in one or more of the following areas: 
Physical development, cognitive development, communication development, 
social or emotional development, or adaptive development; and who, by 
reason thereof, need special education and related services. Infants and 
toddlers with disabilities are those from birth to three years, as 
identified under the Part H Program (Individuals with Disabilities 
Education Act) in their State.
    (3) Collaboration and collaborative relationships:
    (i) With other agencies, means planning and working with them in 
order to improve, share and augment services, staff, information and 
funds; and
    (ii) With parents, means working in partnership with them.
    (4) Contagious means capable of being transmitted from one person to 
another.
    (5) Curriculum means a written plan that includes:
    (i) The goals for children's development and learning;
    (ii) The experiences through which they will achieve these goals;
    (iii) What staff and parents do to help children achieve these 
goals; and
    (iv) The materials needed to support the implementation of the 
curriculum. The curriculum is consistent with the Head Start Program 
Performance Standards and is based on sound child development principles 
about how children grow and learn.
    (6) Deficiency means:
    (i) An area or areas of performance in which an Early Head Start or 
Head Start grantee agency is not in compliance with State or Federal 
requirements, including but not limited to, the Head Start Act or one or 
more of the regulations under parts 1301, 1304, 1305, 1306 or 1308 of 
this title and which involves:
    (A) A threat to the health, safety, or civil rights of children or 
staff;
    (B) A denial to parents of the exercise of their full roles and 
responsibilities related to program governance;
    (C) A failure to perform substantially the requirements related to 
Early Childhood Development and Health Services, Family and Community 
Partnerships, or Program Design and Management; or
    (D) The misuse of Head Start grant funds.
    (ii) The loss of legal status or financial viability, as defined in 
part 1302 of this title, loss of permits, debarment from receiving 
Federal grants or contracts or the improper use of Federal funds; or
    (iii) Any other violation of Federal or State requirements 
including, but not limited to, the Head Start Act or one or more of the 
regulations under parts 1301, 1304, 1305, 1306 or 1308 of this title, 
and which the grantee has shown an unwillingness or inability to correct 
within the period specified by the responsible HHS official, of which 
the responsible HHS official has given the grantee written notice of 
pursuant to section 1304.61.

[[Page 175]]

    (7) Developmentally appropriate means any behavior or experience 
that is appropriate for the age span of the children and is implemented 
with attention to the different needs, interests, and developmental 
levels and cultural backgrounds of individual children.
    (8) Early Head Start program means a program that provides low-
income pregnant women and families with children from birth to age 3 
with family-centered services that facilitate child development, support 
parental roles, and promote self-sufficiency.
    (9) Family means for the purposes of the regulations in this part 
all persons:
    (i) Living in the same household who are:
    (A) Supported by the income of the parent(s) or guardian(s) of the 
child enrolling or participating in the program; or
    (B) Related to the child by blood, marriage, or adoption; or
    (ii) Related to the child enrolling or participating in the program 
as parents or siblings, by blood, marriage, or adoption.
    (10) Guardian means a person legally responsible for a child.
    (11) Health means medical, dental, and mental well-being.
    (12) Home visitor means the staff member in the home-based program 
option assigned to work with parents to provide comprehensive services 
to children and their families through home visits and group 
socialization activities.
    (13) Individualized Family Service Plan (IFSP) means a written plan 
for providing early intervention services to a child eligible under Part 
H of the Individuals with Disabilities Education Act (IDEA). (See 34 CFR 
303.340-303.346 for regulations concerning IFSPs.)
    (14) Minimum requirements means that each Early Head Start and Head 
Start grantee must demonstrate a level of compliance with Federal and 
State requirements such that no deficiency, as defined in this part, 
exists in its program.
    (15) Policy group means the formal group of parents and community 
representatives required to be established by the agency to assist in 
decisions about the planning and operation of the program.
    (16) Program attendance means the actual presence and participation 
in the program of a child enrolled in an Early Head Start or Head Start 
program.
    (17) Referral means directing an Early Head Start or Head Start 
child or family member(s) to an appropriate source or resource for help, 
treatment or information.
    (18) Staff means paid adults who have responsibilities related to 
children and their families who are enrolled in Early Head Start or Head 
Start programs.
    (19) Teacher means an adult who has direct responsibility for the 
care and development of children from birth to 5 years of age in a 
center-based setting.
    (20) Volunteer means an unpaid person who is trained to assist in 
implementing ongoing program activities on a regular basis under the 
supervision of a staff person in areas such as health, education, 
transportation, nutrition, and management.
    (b) In addition to the definitions in this section, the definitions 
as set forth in 45 CFR 1301.2, 1302.2, 1303.2, 1305.2, 1306.3, and 
1308.3 also apply, as used in this part.



       Subpart B--Early Childhood Development and Health Services



Sec. 1304.20  Child health and developmental services.

    (a) Determining child health status. (1) In collaboration with the 
parents and as quickly as possible, but no later than 90 calendar days 
(with the exception noted in paragraph (a)(2) of this section) from the 
child's entry into the program (for the purposes of 45 CFR 
1304.20(a)(1), 45 CFR 1304.20(a)(2), and 45 CFR 1304.20(b)(1), ``entry'' 
means the first day that Early Head Start or Head Start services are 
provided to the child), grantee and delegate agencies must:
    (i) Make a determination as to whether or not each child has an 
ongoing source of continuous, accessible health care. If a child does 
not have a source of ongoing health care, grantee and delegate agencies 
must assist the parents in accessing a source of care;
    (ii) Obtain from a health care professional a determination as to 
whether the child is up-to-date on a schedule of

[[Page 176]]

age appropriate preventive and primary health care which includes 
medical, dental and mental health. Such a schedule must incorporate the 
requirements for a schedule of well child care utilized by the Early and 
Periodic Screening, Diagnosis, and Treatment (EPSDT) program of the 
Medicaid agency of the State in which they operate, and the latest 
immunization recommendations issued by the Centers for Disease Control 
and Prevention, as well as any additional recommendations from the local 
Health Services Advisory Committee that are based on prevalent community 
health problems:
    (A) For children who are not up-to-date on an age-appropriate 
schedule of well child care, grantee and delegate agencies must assist 
parents in making the necessary arrangements to bring the child up-to-
date;
    (B) For children who are up-to-date on an age-appropriate schedule 
of well child care, grantee and delegate agencies must ensure that they 
continue to follow the recommended schedule of well child care; and
    (C) Grantee and delegate agencies must establish procedures to track 
the provision of health care services.
    (iii) Obtain or arrange further diagnostic testing, examination, and 
treatment by an appropriate licensed or certified professional for each 
child with an observable, known or suspected health or developmental 
problem; and
    (iv) Develop and implement a follow-up plan for any condition 
identified in 45 CFR 1304.20(a)(1)(ii) and (iii) so that any needed 
treatment has begun.
    (2) Grantee and delegate agencies operating programs of shorter 
durations (90 days or less) must complete the above processes and those 
in 45 CFR 1304.20(b)(1) within 30 calendar days from the child's entry 
into the program.
    (b) Screening for developmental, sensory, and behavioral concerns. 
(1) In collaboration with each child's parent, and within 45 calendar 
days of the child's entry into the program, grantee and delegate 
agencies must perform or obtain linguistically and age appropriate 
screening procedures to identify concerns regarding a child's 
developmental, sensory (visual and auditory), behavioral, motor, 
language, social, cognitive, perceptual, and emotional skills (see 45 
CFR 1308.6(b)(3) for additional information). To the greatest extent 
possible, these screening procedures must be sensitive to the child's 
cultural background.
    (2) Grantee and delegate agencies must obtain direct guidance from a 
mental health or child development professional on how to use the 
findings to address identified needs.
    (3) Grantee and delegate agencies must utilize multiple sources of 
information on all aspects of each child's development and behavior, 
including input from family members, teachers, and other relevant staff 
who are familiar with the child's typical behavior.
    (c) Extended follow-up and treatment. (1) Grantee and delegate 
agencies must establish a system of ongoing communication with the 
parents of children with identified health needs to facilitate the 
implementation of the follow-up plan.
    (2) Grantee and delegate agencies must provide assistance to the 
parents, as needed, to enable them to learn how to obtain any prescribed 
medications, aids or equipment for medical and dental conditions.
    (3) Dental follow-up and treatment must include:
    (i) Fluoride supplements and topical fluoride treatments as 
recommended by dental professionals in communities where a lack of 
adequate fluoride levels has been determined or for every child with 
moderate to severe tooth decay; and
    (ii) Other necessary preventive measures and further dental 
treatment as recommended by the dental professional.
    (4) Grantee and delegate agencies must assist with the provision of 
related services addressing health concerns in accordance with the 
Individualized Education Program (IEP) and the Individualized Family 
Service Plan (IFSP).
    (5) Early Head Start and Head Start funds may be used for 
professional medical and dental services when no other source of funding 
is available. When Early Head Start or Head Start funds are used for 
such services, grantee and delegate agencies must have written 
documentation of their efforts

[[Page 177]]

to access other available sources of funding.
    (d) Ongoing care. In addition to assuring children's participation 
in a schedule of well child care, as described in Sec. 1304.20(a) of 
this part, grantee and delegate agencies must implement ongoing 
procedures by which Early Head Start and Head Start staff can identify 
any new or recurring medical, dental, or developmental concerns so that 
they may quickly make appropriate referrals. These procedures must 
include: periodic observations and recordings, as appropriate, of 
individual children's developmental progress, changes in physical 
appearance (e.g., signs of injury or illness) and emotional and 
behavioral patterns. In addition, these procedures must include 
observations from parents and staff.
    (e) Involving parents. In conducting the process, as described in 
Secs. 1304.20 (a), (b), and (c), and in making all possible efforts to 
ensure that each child is enrolled in and receiving appropriate health 
care services, grantee and delegate agencies must:
    (1) Consult with parents immediately when child health or 
developmental problems are suspected or identified;
    (2) Familiarize parents with the use of and rationale for all health 
and developmental procedures administered through the program or by 
contract or agreement, and obtain advance parent or guardian 
authorization for such procedures. Grantee and delegate agencies also 
must ensure that the results of diagnostic and treatment procedures and 
ongoing care are shared with and understood by the parents;
    (3) Talk with parents about how to familiarize their children in a 
developmentally appropriate way and in advance about all of the 
procedures they will receive while enrolled in the program;
    (4) Assist parents in accordance with 45 CFR 1304.40(f)(2) (i) and 
(ii) to enroll and participate in a system of ongoing family health care 
and encourage parents to be active partners in their children's health 
care process; and
    (5) If a parent or other legally responsible adult refuses to give 
authorization for health services, grantee and delegate agencies must 
maintain written documentation of the refusal.
    (f) Individualization of the program. (1) Grantee and delegate 
agencies must use the information from the screening for developmental, 
sensory, and behavioral concerns, the ongoing observations, medical and 
dental evaluations and treatments, and insights from the child's parents 
to help staff and parents determine how the program can best respond to 
each child's individual characteristics, strengths and needs.
    (2) To support individualization for children with disabilities in 
their programs, grantee and delegate agencies must assure that:
    (i) Services for infants and toddlers with disabilities and their 
families support the attainment of the expected outcomes contained in 
the Individualized Family Service Plan (IFSP) for children identified 
under the infants and toddlers with disabilities program (Part H) of the 
Individuals with Disabilities Education Act, as implemented by their 
State or Tribal government;
    (ii) Enrolled families with infants and toddlers suspected of having 
a disability are promptly referred to the local early intervention 
agency designated by the State Part H plan to coordinate any needed 
evaluations, determine eligibility for Part H services, and coordinate 
the development of an IFSP for children determined to be eligible under 
the guidelines of that State's program. Grantee and delegate agencies 
must support parent participation in the evaluation and IFSP development 
process for infants and toddlers enrolled in their program;
    (iii) They participate in and support efforts for a smooth and 
effective transition for children who, at age three, will need to be 
considered for services for preschool age children with disabilities; 
and
    (iv) They participate in the development and implementation of the 
Individualized Education Program (IEP)

[[Page 178]]

for preschool age children with disabilities, consistent with the 
requirements of 45 CFR 1308.19.

(The information and collection requirements are approved by the Office 
of Management and Budget (OMB) under OMB Control Number 0970-0148 for 
paragraphs (a), (c) and (d).)

[61 FR 57210, Nov. 5, 1996, as amended at 63 FR 2313, Jan. 15, 1998]



Sec. 1304.21  Education and early childhood development.

    (a) Child development and education approach for all children. (1) 
In order to help children gain the skills and confidence necessary to be 
prepared to succeed in their present environment and with later 
responsibilities in school and life, grantee and delegate agencies' 
approach to child development and education must:
    (i) Be developmentally and linguistically appropriate, recognizing 
that children have individual rates of development as well as individual 
interests, temperaments, languages, cultural backgrounds, and learning 
styles;
    (ii) Be inclusive of children with disabilities, consistent with 
their Individualized Family Service Plan (IFSP) or Individualized 
Education Program (IEP) (see 45 CFR 1308.19);
    (iii) Provide an environment of acceptance that supports and 
respects gender, culture, language, ethnicity and family composition;
    (iv) Provide a balanced daily program of child-initiated and adult-
directed activities, including individual and small group activities; 
and
    (v) Allow and enable children to independently use toilet facilities 
when it is developmentally appropriate and when efforts to encourage 
toilet training are supported by the parents.
    (2) Parents must be:
    (i) Invited to become integrally involved in the development of the 
program's curriculum and approach to child development and education;
    (ii) Provided opportunities to increase their child observation 
skills and to share assessments with staff that will help plan the 
learning experiences; and
    (iii) Encouraged to participate in staff-parent conferences and home 
visits to discuss their child's development and education (see 45 CFR 
1304.40(e)(4) and 45 CFR 1304.40(i)(2)).
    (3) Grantee and delegate agencies must support social and emotional 
development by:
    (i) Encouraging development which enhances each child's strengths 
by:
    (A) Building trust;
    (B) Fostering independence;
    (C) Encouraging self-control by setting clear, consistent limits, 
and having realistic expectations;
    (D) Encouraging respect for the feelings and rights of others; and
    (E) Supporting and respecting the home language, culture, and family 
composition of each child in ways that support the child's health and 
well-being; and
    (ii) Planning for routines and transitions so that they occur in a 
timely, predictable and unrushed manner according to each child's needs.
    (4) Grantee and delegate agencies must provide for the development 
of each child's cognitive and language skills by:
    (i) Supporting each child's learning, using various strategies 
including experimentation, inquiry, observation, play and exploration;
    (ii) Ensuring opportunities for creative self-expression through 
activities such as art, music, movement, and dialogue;
    (iii) Promoting interaction and language use among children and 
between children and adults; and
    (iv) Supporting emerging literacy and numeracy development through 
materials and activities according to the developmental level of each 
child.
    (5) In center-based settings, grantee and delegate agencies must 
promote each child's physical development by:
    (i) Providing sufficient time, indoor and outdoor space, equipment, 
materials and adult guidance for active play and movement that support 
the development of gross motor skills;
    (ii) Providing appropriate time, space, equipment, materials and 
adult guidance for the development of fine motor skills according to 
each child's developmental level; and
    (iii) Providing an appropriate environment and adult guidance for 
the participation of children with special needs.

[[Page 179]]

    (6) In home-based settings, grantee and delegate agencies must 
encourage parents to appreciate the importance of physical development, 
provide opportunities for children's outdoor and indoor active play, and 
guide children in the safe use of equipment and materials.
    (b) Child development and education approach for infants and 
toddlers. (1) Grantee and delegate agencies' program of services for 
infants and toddlers must encourage (see 45 CFR 1304.3(a)(5) for a 
definition of curriculum):
    (i) The development of secure relationships in out-of-home care 
settings for infants and toddlers by having a limited number of 
consistent teachers over an extended period of time. Teachers must 
demonstrate an understanding of the child's family culture and, whenever 
possible, speak the child's language (see 45 CFR 1304.52(g)(2));
    (ii) Trust and emotional security so that each child can explore the 
environment according to his or her developmental level; and
    (iii) Opportunities for each child to explore a variety of sensory 
and motor experiences with support and stimulation from teachers and 
family members.
    (2) Grantee and delegate agencies must support the social and 
emotional development of infants and toddlers by promoting an 
environment that:
    (i) Encourages the development of self-awareness, autonomy, and 
self-expression; and
    (ii) Supports the emerging communication skills of infants and 
toddlers by providing daily opportunities for each child to interact 
with others and to express himself or herself freely.
    (3) Grantee and delegate agencies must promote the physical 
development of infants and toddlers by:
    (i) Supporting the development of the physical skills of infants and 
toddlers including gross motor skills, such as grasping, pulling, 
pushing, crawling, walking, and climbing; and
    (ii) Creating opportunities for fine motor development that 
encourage the control and coordination of small, specialized motions, 
using the eyes, mouth, hands, and feet.
    (c) Child development and education approach for preschoolers. (1) 
Grantee and delegate agencies, in collaboration with the parents, must 
implement a curriculum (see 45 CFR 1304.3(a)(5)) that:
    (i) Supports each child's individual pattern of development and 
learning;
    (ii) Provides for the development of cognitive skills by encouraging 
each child to organize his or her experiences, to understand concepts, 
and to develop age appropriate literacy, numeracy, reasoning, problem 
solving and decision-making skills which form a foundation for school 
readiness and later school success;
    (iii) Integrates all educational aspects of the health, nutrition, 
and mental health services into program activities;
    (iv) Ensures that the program environment helps children develop 
emotional security and facility in social relationships;
    (v) Enhances each child's understanding of self as an individual and 
as a member of a group;
    (vi) Provides each child with opportunities for success to help 
develop feelings of competence, self-esteem, and positive attitudes 
toward learning; and
    (vii) Provides individual and small group experiences both indoors 
and outdoors.
    (2) Staff must use a variety of strategies to promote and support 
children's learning and developmental progress based on the observations 
and ongoing assessment of each child (see 45 CFR 1304.20(b), 1304.20(d), 
and 1304.20(e)).

[61 FR 57210, Nov. 5, 1996, as amended at 63 FR 2313, Jan. 15, 1998]



Sec. 1304.22  Child health and safety.

    (a) Health emergency procedures. Grantee and delegate agencies 
operating center-based programs must establish and implement policies 
and procedures to respond to medical and dental health emergencies with 
which all staff are familiar and trained. At a minimum, these policies 
and procedures must include:
    (1) Posted policies and plans of action for emergencies that require 
rapid response on the part of staff (e.g., a child choking) or immediate 
medical or dental attention;

[[Page 180]]

    (2) Posted locations and telephone numbers of emergency response 
systems. Up-to-date family contact information and authorization for 
emergency care for each child must be readily available;
    (3) Posted emergency evacuation routes and other safety procedures 
for emergencies (e.g., fire or weather-related) which are practiced 
regularly (see 45 CFR 1304.53 for additional information);
    (4) Methods of notifying parents in the event of an emergency 
involving their child; and
    (5) Established methods for handling cases of suspected or known 
child abuse and neglect that are in compliance with applicable Federal, 
State, or Tribal laws.
    (b) Conditions of short-term exclusion and admittance. (1) Grantee 
and delegate agencies must temporarily exclude a child with a short-term 
injury or an acute or short-term contagious illness, that cannot be 
readily accommodated, from program participation in center-based 
activities or group experiences, but only for that generally short-term 
period when keeping the child in care poses a significant risk to the 
health or safety of the child or anyone in contact with the child.
    (2) Grantee and delegate agencies must not deny program admission to 
any child, nor exclude any enrolled child from program participation for 
a long-term period, solely on the basis of his or her health care needs 
or medication requirements unless keeping the child in care poses a 
significant risk to the health or safety of the child or anyone in 
contact with the child and the risk cannot be eliminated or reduced to 
an acceptable level through reasonable modifications in the grantee or 
delegate agency's policies, practices or procedures or by providing 
appropriate auxiliary aids which would enable the child to participate 
without fundamentally altering the nature of the program.
    (3) Grantee and delegate agencies must request that parents inform 
them of any health or safety needs of the child that the program may be 
required to address. Programs must share information, as necessary, with 
appropriate staff regarding accommodations needed in accordance with the 
program's confidentiality policy.
    (c) Medication administration. Grantee and delegate agencies must 
establish and maintain written procedures regarding the administration, 
handling, and storage of medication for every child. Grantee and 
delegate agencies may modify these procedures as necessary to satisfy 
State or Tribal laws, but only where such laws are consistent with 
Federal laws. The procedures must include:
    (1) Labeling and storing, under lock and key, and refrigerating, if 
necessary, all medications, including those required for staff and 
volunteers;
    (2) Designating a trained staff member(s) or school nurse to 
administer, handle and store child medications;
    (3) Obtaining physicians' instructions and written parent or 
guardian authorizations for all medications administered by staff;
    (4) Maintaining an individual record of all medications dispensed, 
and reviewing the record regularly with the child's parents;
    (5) Recording changes in a child's behavior that have implications 
for drug dosage or type, and assisting parents in communicating with 
their physician regarding the effect of the medication on the child; and
    (6) Ensuring that appropriate staff members can demonstrate proper 
techniques for administering, handling, and storing medication, 
including the use of any necessary equipment to administer medication.
    (d) Injury prevention. Grantee and delegate agencies must:
    (1) Ensure that staff and volunteers can demonstrate safety 
practices; and
    (2) Foster safety awareness among children and parents by 
incorporating it into child and parent activities.
    (e) Hygiene. (1) Staff, volunteers, and children must wash their 
hands with soap and running water at least at the following times:
    (i) After diapering or toilet use;
    (ii) Before food preparation, handling, consumption, or any other 
food-related activity (e.g., setting the table);
    (iii) Whenever hands are contaminated with blood or other bodily 
fluids; and

[[Page 181]]

    (iv) After handling pets or other animals.
    (2) Staff and volunteers must also wash their hands with soap and 
running water:
    (i) Before and after giving medications;
    (ii) Before and after treating or bandaging a wound (nonporous 
gloves should be worn if there is contact with blood or blood-containing 
body fluids); and
    (iii) After assisting a child with toilet use.
    (3) Nonporous (e.g., latex) gloves must be worn by staff when they 
are in contact with spills of blood or other visibly bloody bodily 
fluids.
    (4) Spills of bodily fluids (e.g., urine, feces, blood, saliva, 
nasal discharge, eye discharge or any fluid discharge) must be cleaned 
and disinfected immediately in keeping with professionally established 
guidelines (e.g., standards of the Occupational Safety Health 
Administration, U.S. Department of Labor). Any tools and equipment used 
to clean spills of bodily fluids must be cleaned and disinfected 
immediately. Other blood-contaminated materials must be disposed of in a 
plastic bag with a secure tie.
    (5) Grantee and delegate agencies must adopt sanitation and hygiene 
procedures for diapering that adequately protect the health and safety 
of children served by the program and staff. Grantee and delegate 
agencies must ensure that staff properly conduct these procedures.
    (6) Potties that are utilized in a center-based program must be 
emptied into the toilet and cleaned and disinfected after each use in a 
utility sink used for this purpose.
    (7) Grantee and delegate agencies operating programs for infants and 
toddlers must space cribs and cots at least three feet apart to avoid 
spreading contagious illness and to allow for easy access to each child.
    (f) First aid kits. (1) Readily available, well-supplied first aid 
kits appropriate for the ages served and the program size must be 
maintained at each facility and available on outings away from the site. 
Each kit must be accessible to staff members at all times, but must be 
kept out of the reach of children.
    (2) First aid kits must be restocked after use, and an inventory 
must be conducted at regular intervals.

(The information collection requirements are approved by the Office of 
Management and Budget (OMB) under OMB Control Number 0970-0148 for 
paragraph (c).)

[61 FR 57210, Nov. 5, 1996, as amended at 63 FR 2313, Jan. 15, 1998]



Sec. 1304.23  Child nutrition.

    (a) Identification of nutritional needs. Staff and families must 
work together to identify each child's nutritional needs, taking into 
account staff and family discussions concerning:
    (1) Any relevant nutrition-related assessment data (height, weight, 
hemoglobin/hematocrit) obtained under 45 CFR 1304.20(a);
    (2) Information about family eating patterns, including cultural 
preferences, special dietary requirements for each child with nutrition-
related health problems, and the feeding requirements of infants and 
toddlers and each child with disabilities (see 45 CFR 1308.20);
    (3) For infants and toddlers, current feeding schedules and amounts 
and types of food provided, including whether breast milk or formula and 
baby food is used; meal patterns; new foods introduced; food 
intolerances and preferences; voiding patterns; and observations related 
to developmental changes in feeding and nutrition. This information must 
be shared with parents and updated regularly; and
    (4) Information about major community nutritional issues, as 
identified through the Community Assessment or by the Health Services 
Advisory Committee or the local health department.
    (b) Nutritional services. (1) Grantee and delegate agencies must 
design and implement a nutrition program that meets the nutritional 
needs and feeding requirements of each child, including those with 
special dietary needs and children with disabilities. Also, the 
nutrition program must serve a variety of foods which consider cultural 
and ethnic preferences and which broaden the child's food experience.
    (i) All Early Head Start and Head Start grantee and delegate 
agencies must use funds from USDA Food and Consumer Services Child 
Nutrition

[[Page 182]]

Programs as the primary source of payment for meal services. Early Head 
Start and Head Start funds may be used to cover those allowable costs 
not covered by the USDA.
    (ii) Each child in a part-day center-based setting must receive 
meals and snacks that provide at least \1/3\ of the child's daily 
nutritional needs. Each child in a center-based full-day program must 
receive meals and snacks that provide \1/2\ to \2/3\ of the child's 
daily nutritional needs, depending upon the length of the program day.
    (iii) All children in morning center-based settings who have not 
received breakfast at the time they arrive at the Early Head Start or 
Head Start program must be served a nourishing breakfast.
    (iv) Each infant and toddler in center-based settings must receive 
food appropriate to his or her nutritional needs, developmental 
readiness, and feeding skills, as recommended in the USDA meal pattern 
or nutrient standard menu planning requirements outlined in 7 CFR parts 
210, 220, and 226.
    (v) For 3- to 5-year-olds in center-based settings, the quantities 
and kinds of food served must conform to recommended serving sizes and 
minimum standards for meal patterns recommended in the USDA meal pattern 
or nutrient standard menu planning requirements outlined in 7 CFR parts 
210, 220, and 226.
    (vi) For 3- to 5-year-olds in center-based settings or other Head 
Start group experiences, foods served must be high in nutrients and low 
in fat, sugar, and salt.
    (vii) Meal and snack periods in center-based settings must be 
appropriately scheduled and adjusted, where necessary, to ensure that 
individual needs are met. Infants and young toddlers who need it must be 
fed ``on demand'' to the extent possible or at appropriate intervals.
    (2) Grantee and delegate agencies operating home-based program 
options must provide appropriate snacks and meals to each child during 
group socialization activities (see 45 CFR 1306.33 for information 
regarding home-based group socialization).
    (3) Staff must promote effective dental hygiene among children in 
conjunction with meals.
    (4) Parents and appropriate community agencies must be involved in 
planning, implementing, and evaluating the agencies' nutritional 
services.
    (c) Meal service. Grantee and delegate agencies must ensure that 
nutritional services in center-based settings contribute to the 
development and socialization of enrolled children by providing that:
    (1) A variety of food is served which broadens each child's food 
experiences;
    (2) Food is not used as punishment or reward, and that each child is 
encouraged, but not forced, to eat or taste his or her food;
    (3) Sufficient time is allowed for each child to eat;
    (4) All toddlers and preschool children and assigned classroom 
staff, including volunteers, eat together family style and share the 
same menu to the extent possible;
    (5) Infants are held while being fed and are not laid down to sleep 
with a bottle;
    (6) Medically-based diets or other dietary requirements are 
accommodated; and
    (7) As developmentally appropriate, opportunity is provided for the 
involvement of children in food-related activities.
    (d) Family assistance with nutrition. Parent education activities 
must include opportunities to assist individual families with food 
preparation and nutritional skills.
    (e) Food safety and sanitation. (1) Grantee and delegate agencies 
must post evidence of compliance with all applicable Federal, State, 
Tribal, and local food safety and sanitation laws, including those 
related to the storage, preparation and service of food and the health 
of food handlers. In addition, agencies must contract only with food 
service vendors that are licensed in accordance with State, Tribal or 
local laws.
    (2) For programs serving infants and toddlers, facilities must be 
available

[[Page 183]]

for the proper storage and handling of breast milk and formula.

(The information collection requirements are approved by the Office of 
Management and Budget (OMB) under OMB Control Number 0970-0148 for 
paragraph (a).)

[61 FR 57210, Nov. 5, 1996, as amended at 63 FR 2313, Jan. 15, 1998]



Sec. 1304.24  Child mental health.

    (a) Mental health services. (1) Grantee and delegate agencies must 
work collaboratively with parents (see 45 CFR 1304.40(f) for issues 
related to parent education) by:
    (i) Soliciting parental information, observations, and concerns 
about their child's mental health;
    (ii) Sharing staff observations of their child and discussing and 
anticipating with parents their child's behavior and development, 
including separation and attachment issues;
    (iii) Discussing and identifying with parents appropriate responses 
to their child's behaviors;
    (iv) Discussing how to strengthen nurturing, supportive environments 
and relationships in the home and at the program;
    (v) Helping parents to better understand mental health issues; and
    (vi) Supporting parents' participation in any needed mental health 
interventions.
    (2) Grantee and delegate agencies must secure the services of mental 
health professionals on a schedule of sufficient frequency to enable the 
timely and effective identification of and intervention in family and 
staff concerns about a child's mental health; and
    (3) Mental health program services must include a regular schedule 
of on-site mental health consultation involving the mental health 
professional, program staff, and parents on how to:
    (i) Design and implement program practices responsive to the 
identified behavioral and mental health concerns of an individual child 
or group of children;
    (ii) Promote children's mental wellness by providing group and 
individual staff and parent education on mental health issues;
    (iii) Assist in providing special help for children with atypical 
behavior or development; and
    (iv) Utilize other community mental health resources, as needed.



              Subpart C--Family and Community Partnerships



Sec. 1304.40  Family partnerships.

    (a) Family goal setting. (1) Grantee and delegate agencies must 
engage in a process of collaborative partnership-building with parents 
to establish mutual trust and to identify family goals, strengths, and 
necessary services and other supports. This process must be initiated as 
early after enrollment as possible and it must take into consideration 
each family's readiness and willingness to participate in the process.
    (2) As part of this ongoing partnership, grantee and delegate 
agencies must offer parents opportunities to develop and implement 
individualized family partnership agreements that describe family goals, 
responsibilities, timetables and strategies for achieving these goals as 
well as progress in achieving them. In home-based program options, this 
agreement must include the above information as well as the specific 
roles of parents in home visits and group socialization activities (see 
45 CFR 1306.33(b)).
    (3) To avoid duplication of effort, or conflict with, any 
preexisting family plans developed between other programs and the Early 
Head Start or Head Start family, the family partnership agreement must 
take into account, and build upon as appropriate, information obtained 
from the family and other community agencies concerning preexisting 
family plans. Grantee and delegate agencies must coordinate, to the 
extent possible, with families and other agencies to support the 
accomplishment of goals in the preexisting plans.
    (4) A variety of opportunities must be created by grantee and 
delegate agencies for interaction with parents throughout the year.
    (5) Meetings and interactions with families must be respectful of 
each family's diversity and cultural and ethnic background.

[[Page 184]]

    (b) Accessing community services and resources. (1) Grantee and 
delegate agencies must work collaboratively with all participating 
parents to identify and continually access, either directly or through 
referrals, services and resources that are responsive to each family's 
interests and goals, including:
    (i) Emergency or crisis assistance in areas such as food, housing, 
clothing, and transportation;
    (ii) Education and other appropriate interventions, including 
opportunities for parents to participate in counseling programs or to 
receive information on mental health issues that place families at risk, 
such as substance abuse, child abuse and neglect, and domestic violence; 
and
    (iii) Opportunities for continuing education and employment training 
and other employment services through formal and informal networks in 
the community.
    (2) Grantee and delegate agencies must follow-up with each family to 
determine whether the kind, quality, and timeliness of the services 
received through referrals met the families' expectations and 
circumstances.
    (c) Services to pregnant women who are enrolled in programs serving 
pregnant women, infants, and toddlers. (1) Early Head Start grantee and 
delegate agencies must assist pregnant women to access comprehensive 
prenatal and postpartum care, through referrals, immediately after 
enrollment in the program. This care must include:
    (i) Early and continuing risk assessments, which include an 
assessment of nutritional status as well as nutrition counseling and 
food assistance, if necessary;
    (ii) Health promotion and treatment, including medical and dental 
examinations on a schedule deemed appropriate by the attending health 
care providers as early in the pregnancy as possible; and
    (iii) Mental health interventions and follow-up, including substance 
abuse prevention and treatment services, as needed.
    (2) Grantee and delegate agencies must provide pregnant women and 
other family members, as appropriate, with prenatal education on fetal 
development (including risks from smoking and alcohol), labor and 
delivery, and postpartum recovery (including maternal depression).
    (3) Grantee and delegate agencies must provide information on the 
benefits of breast feeding to all pregnant and nursing mothers. For 
those who choose to breast feed in center-based programs, arrangements 
must be provided as necessary.
    (d) Parent involvement--general. (1) In addition to involving 
parents in program policy-making and operations (see 45 CFR 1304.50), 
grantee and delegate agencies must provide parent involvement and 
education activities that are responsive to the ongoing and expressed 
needs of the parents, both as individuals and as members of a group. 
Other community agencies should be encouraged to assist in the planning 
and implementation of such programs.
    (2) Early Head Start and Head Start settings must be open to parents 
during all program hours. Parents must be welcomed as visitors and 
encouraged to observe children as often as possible and to participate 
with children in group activities. The participation of parents in any 
program activity must be voluntary, and must not be required as a 
condition of the child's enrollment.
    (3) Grantee and delegate agencies must provide parents with 
opportunities to participate in the program as employees or volunteers 
(see 45 CFR 1304.52(b)(3) for additional requirements about hiring 
parents).
    (e) Parent involvement in child development and education. (1) 
Grantee and delegate agencies must provide opportunities to include 
parents in the development of the program's curriculum and approach to 
child development and education (see 45 CFR 1304.3(a)(5) for a 
definition of curriculum).
    (2) Grantees and delegate agencies operating home-based program 
options must build upon the principles of adult learning to assist, 
encourage, and support parents as they foster the growth and development 
of their children.
    (3) Grantee and delegate agencies must provide opportunities for 
parents to enhance their parenting skills, knowledge, and understanding 
of the educational and developmental needs

[[Page 185]]

and activities of their children and to share concerns about their 
children with program staff (see 45 CFR 1304.21 for additional 
requirements related to parent involvement).
    (4) Grantee and delegate agencies must provide, either directly or 
through referrals to other local agencies, opportunities for children 
and families to participate in family literacy services by:
    (i) Increasing family access to materials, services, and activities 
essential to family literacy development; and
    (ii) Assisting parents as adult learners to recognize and address 
their own literacy goals.
    (5) In addition to the two home visits, teachers in center-based 
programs must conduct staff-parent conferences, as needed, but no less 
than two per program year, to enhance the knowledge and understanding of 
both staff and parents of the educational and developmental progress and 
activities of children in the program (see 45 CFR 1304.21(a)(2)(iii) and 
45 CFR 1304.40(i) for additional requirements about staff-parent 
conferences and home visits).
    (f) Parent involvement in health, nutrition, and mental health 
education. (1) Grantee and delegate agencies must provide medical, 
dental, nutrition, and mental health education programs for program 
staff, parents, and families.
    (2) Grantee and delegate agencies must ensure that, at a minimum, 
the medical and dental health education program:
    (i) Assists parents in understanding how to enroll and participate 
in a system of ongoing family health care.
    (ii) Encourages parents to become active partners in their 
children's medical and dental health care process and to accompany their 
child to medical and dental examinations and appointments; and
    (iii) Provides parents with the opportunity to learn the principles 
of preventive medical and dental health, emergency first-aid, 
occupational and environmental hazards, and safety practices for use in 
the classroom and in the home. In addition to information on general 
topics (e.g., maternal and child health and the prevention of Sudden 
Infant Death Syndrome), information specific to the health needs of 
individual children must also be made available to the extent possible.
    (3) Grantee and delegate agencies must ensure that the nutrition 
education program includes, at a minimum:
    (i) Nutrition education in the selection and preparation of foods to 
meet family needs and in the management of food budgets; and
    (ii) Parent discussions with program staff about the nutritional 
status of their child.
    (4) Grantee and delegate agencies must ensure that the mental health 
education program provides, at a minimum (see 45 CFR 1304.24 for issues 
related to mental health education):
    (i) A variety of group opportunities for parents and program staff 
to identify and discuss issues related to child mental health;
    (ii) Individual opportunities for parents to discuss mental health 
issues related to their child and family with program staff; and
    (iii) The active involvement of parents in planning and implementing 
any mental health interventions for their children.
    (g) Parent involvement in community advocacy. (1) Grantee and 
delegate agencies must:
    (i) Support and encourage parents to influence the character and 
goals of community services in order to make them more responsive to 
their interests and needs; and
    (ii) Establish procedures to provide families with comprehensive 
information about community resources (see 45 CFR 1304.41(a)(2) for 
additional requirements).
    (2) Parents must be provided regular opportunities to work together, 
and with other community members, on activities that they have helped 
develop and in which they have expressed an interest.
    (h) Parent involvement in transition activities. (1) Grantee and 
delegate agencies must assist parents in becoming their children's 
advocate as they transition both into Early Head Start or Head Start 
from the home or other child care setting, and from Head Start to 
elementary school, a Title I of the Elementary and Secondary Education

[[Page 186]]

Act preschool program, or a child care setting.
    (2) Staff must work to prepare parents to become their children's 
advocate through transition periods by providing that, at a minimum, a 
staff-parent meeting is held toward the end of the child's participation 
in the program to enable parents to understand the child's progress 
while enrolled in Early Head Start or Head Start.
    (3) To promote the continued involvement of Head Start parents in 
the education and development of their children upon transition to 
school, grantee and delegate agencies must:
    (i) Provide education and training to parents to prepare them to 
exercise their rights and responsibilities concerning the education of 
their children in the school setting; and
    (ii) Assist parents to communicate with teachers and other school 
personnel so that parents can participate in decisions related to their 
children's education.
    (4) See 45 CFR 1304.41(c) for additional standards related to 
children's transition to and from Early Head Start or Head Start.
    (i) Parent involvement in home visits. (1) Grantee and delegate 
agencies must not require that parents permit home visits as a condition 
of the child's participation in Early Head Start or Head Start center-
based program options. Every effort must be made to explain the 
advantages of home visits to the parents.
    (2) The child's teacher in center-based programs must make no less 
than two home visits per program year to the home of each enrolled 
child, unless the parents expressly forbid such visits, in accordance 
with the requirements of 45 CFR 1306.32(b)(8). Other staff working with 
the family must make or join home visits, as appropriate.
    (3) Grantee and delegate agencies must schedule home visits at times 
that are mutually convenient for the parents or primary caregivers and 
staff.
    (4) In cases where parents whose children are enrolled in the 
center-based program option ask that the home visits be conducted 
outside the home, or in cases where a visit to the home presents 
significant safety hazards for staff, the home visit may take place at 
an Early Head Start or Head Start site or at another safe location that 
affords privacy. Home visits in home-based program options must be 
conducted in the family's home. (See 45 CFR 1306.33 regarding the home-
based program option.)
    (5) In addition, grantee and delegate agencies operating home-based 
program options must meet the requirements of 45 CFR 1306.33(a)(1) 
regarding home visits.
    (6) Grantee and delegate agencies serving infants and toddlers must 
arrange for health staff to visit each newborn within two weeks after 
the infant's birth to ensure the well-being of both the mother and the 
child.

(The information and collection requirements are approved by the Office 
of Management and Budget (OMB) under OMB Control Number 0970-0148 for 
paragraph (a).

[61 FR 57210, Nov. 5, 1996, as amended at 63 FR 2313, 2314, Jan. 15, 
1998]



Sec. 1304.41  Community partnerships.

    (a) Partnerships. (1) Grantee and delegate agencies must take an 
active role in community planning to encourage strong communication, 
cooperation, and the sharing of information among agencies and their 
community partners and to improve the delivery of community services to 
children and families in accordance with the agency's confidentiality 
policies. Documentation must be maintained to reflect the level of 
effort undertaken to establish community partnerships (see 45 CFR 
1304.51 for additional planning requirements).
    (2) Grantee and delegate agencies must take affirmative steps to 
establish ongoing collaborative relationships with community 
organizations to promote the access of children and families to 
community services that are responsive to their needs, and to ensure 
that Early Head Start and Head Start programs respond to community 
needs, including:
    (i) Health care providers, such as clinics, physicians, dentists, 
and other health professionals;
    (ii) Mental health providers;
    (iii) Nutritional service providers;

[[Page 187]]

    (iv) Individuals and agencies that provide services to children with 
disabilities and their families (see 45 CFR 1308.4 for specific service 
requirements);
    (v) Family preservation and support services;
    (vi) Child protective services and any other agency to which child 
abuse must be reported under State or Tribal law;
    (vii) Local elementary schools and other educational and cultural 
institutions, such as libraries and museums, for both children and 
families;
    (viii) Providers of child care services; and
    (ix) Any other organizations or businesses that may provide support 
and resources to families.
    (3) Grantee and delegate agencies must perform outreach to encourage 
volunteers from the community to participate in Early Head Start and 
Head Start programs.
    (4) To enable the effective participation of children with 
disabilities and their families, grantee and delegate agencies must make 
specific efforts to develop interagency agreements with local education 
agencies (LEAs) and other agencies within the grantee and delegate 
agency's service area (see 45 CFR 1308.4(h) for specific requirements 
concerning interagency agreements).
    (b) Advisory committees. Each grantee directly operating an Early 
Head Start or Head Start program, and each delegate agency, must 
establish and maintain a Health Services Advisory Committee which 
includes Head Start parents, professionals, and other volunteers from 
the community. Grantee and delegate agencies also must establish and 
maintain such other service advisory committees as they deem appropriate 
to address program service issues such as community partnerships and to 
help agencies respond to community needs.
    (c) Transition services. (1) Grantee and delegate agencies must 
establish and maintain procedures to support successful transitions for 
enrolled children and families from previous child care programs into 
Early Head Start or Head Start and from Head Start into elementary 
school, a Title I of the Elementary and Secondary Education Act 
preschool program, or other child care settings. These procedures must 
include:
    (i) Coordinating with the schools or other agencies to ensure that 
individual Early Head Start or Head Start children's relevant records 
are transferred to the school or next placement in which a child ill 
enroll or from earlier placements to Early Head Start or Head Start;
    (ii) Outreach to encourage communication between Early Head Start or 
Head Start staff and their counterparts in the schools and other child 
care settings including principals, teachers, social workers and health 
staff to facilitate continuity of programming;
    (iii) Initiating meetings involving Head Start teachers and parents 
and kindergarten or elementary school teachers to discuss the 
developmental progress and abilities of individual children; and
    (iv) Initiating joint transition-related training for Early Head 
Start or Head Start staff and school or other child development staff.
    (2) To ensure the most appropriate placement and services following 
participation in Early Head Start, transition planning must be 
undertaken for each child and family at least six months prior to the 
child's third birthday. The process must take into account: The child's 
health status and developmental level, progress made by the child and 
family while in Early Head Start, current and changing family 
circumstances, and the availability of Head Start and other child 
development or child care services in the community. As appropriate, a 
child may remain in Early Head Start, following his or her third 
birthday, for additional months until he or she can transition into Head 
Start or another program.
    (3) See 45 CFR 1304.40(h) for additional requirements related to 
parental participation in their child's transition to and from Early 
Head Start or Head Start.

(The information collection requirements are approved by the Office of 
Management and Budget (OMB) under OMB Control Number 0970-0148 for 
paragraph (a).)

[61 FR 57210, Nov. 5, 1996, as amended at 63 FR 2314, Jan. 15, 1998]

[[Page 188]]



                Subpart D--Program Design and Management



Sec. 1304.50  Program governance.

    (a) Policy Council, Policy Committee, and Parent Committee 
structure. (1) Grantee and delegate agencies must establish and maintain 
a formal structure of shared governance through which parents can 
participate in policy making or in other decisions about the program. 
This structure must consist of the following groups, as required:
    (i) Policy Council. This Council must be established at the grantee 
level.
    (ii) Policy Committee. This Committee must be established at the 
delegate agency level when the program is administered in whole or in 
part by such agencies (see 45 CFR 1301.2 for a definition of a delegate 
agency).
    (iii) Parent Committee. For center-based programs, this Committee 
must be established at the center level. For other program options, an 
equivalent Committee must be established at the local program level. 
When programs operate more than one option from the same site, the 
Parent Committee membership is combined unless parents choose to have a 
separate Committee for each option.
    (2) Parent Committees must be comprised exclusively of the parents 
of children currently enrolled at the center level for center-based 
programs or at the equivalent level for other program options (see 45 
CFR 1306.3(h) for a definition of a Head Start parent).
    (3) All Policy Councils, Policy Committees, and Parent Committees 
must be established as early in the program year as possible. Grantee 
Policy Councils and delegate Policy Committees may not be dissolved 
until successor Councils or Committees are elected and seated.
    (4) When a grantee has delegated the entire Head Start program to 
one delegate agency, it is not necessary to have a Policy Committee in 
addition to a grantee agency Policy Council.
    (5) The governing body (the group with legal and fiscal 
responsibility for administering the Early Head Start or Head Start 
program) and the Policy Council or Policy Committee must not have 
identical memberships and functions.
    (b) Policy group composition and formation. (1) Each grantee and 
delegate agency governing body operating an Early Head Start or Head 
Start program must (except where such authority is ceded to the Policy 
Council or Policy Committee) propose, within the framework of these 
regulations, the total size of their respective policy groups (based on 
the number of centers, classrooms or other program option units, and the 
number of children served by their Early Head Start or Head Start 
program), the procedures for the election of parent members, and the 
procedure for the selection of community representatives. These 
proposals must be approved by the Policy Council or Policy Committee.
    (2) Policy Councils and Policy Committees must be comprised of two 
types of representatives: parents of currently enrolled children and 
community representatives. At least 51 percent of the members of these 
policy groups must be the parents of currently enrolled children (see 45 
CFR 1306.3(h) for a definition of a Head Start parent).
    (3) Community representatives must be drawn from the local 
community: businesses; public or private community, civic, and 
professional organizations; and others who are familiar with resources 
and services for low-income children and families, including for example 
the parents of formerly enrolled children.
    (4) All parent members of Policy Councils or Policy Committees must 
stand for election or re-election annually. All community 
representatives also must be selected annually.
    (5) Policy Councils and Policy Committees must limit the number of 
one-year terms any individual may serve on either body to a combined 
total of three terms.
    (6) No grantee or delegate agency staff (or members of their 
immediate families) may serve on Policy Councils or Policy Committees 
except parents who occasionally substitute for regular Early Head Start 
or Head Start staff. In the case of Tribal grantees, this exclusion 
applies only to Tribal staff who work in areas directly related to or 
which directly impact upon any Early

[[Page 189]]

Head Start or Head Start administrative, fiscal or programmatic issues.
    (7) Parents of children currently enrolled in all program options 
must be proportionately represented on established policy groups.
    (c) Policy group responsibilities--general. At a minimum policy 
groups must be charged with the responsibilities described in paragraphs 
(d), (f), (g), and (h) of this section and repeated in appendix A of 
this section.
    (d) The Policy Council or Policy Committee. (1) Policy Councils and 
Policy Committees must work in partnership with key management staff and 
the governing body to develop, review, and approve or disapprove the 
following policies and procedures:
    (i) All funding applications and amendments to funding applications 
for Early Head Start and Head Start, including administrative services, 
prior to the submission of such applications to the grantee (in the case 
of Policy Committees) or to HHS (in the case of Policy Councils);
    (ii) Procedures describing how the governing body and the 
appropriate policy group will implement shared decision-making;
    (iii) Procedures for program planning in accordance with this part 
and the requirements of 45 CFR 1305.3;
    (iv) The program's philosophy and long- and short-range program 
goals and objectives (see 45 CFR 1304.51(a) and 45 CFR 1305.3 for 
additional requirements regarding program planning);
    (v) The selection of delegate agencies and their service areas (this 
regulation is binding on Policy Councils exclusively) (see 45 CFR 
1301.33 and 45 CFR 1305.3(a) for additional requirements about delegate 
agency and service area selection, respectively);
    (vi) The composition of the Policy Council or the Policy Committee 
and the procedures by which policy group members are chosen;
    (vii) Criteria for defining recruitment, selection, and enrollment 
priorities, in accordance with the requirements of 45 CFR part 1305;
    (viii) The annual self-assessment of the grantee or delegate 
agency's progress in carrying out the programmatic and fiscal intent of 
its grant application, including planning or other actions that may 
result from the review of the annual audit and findings from the Federal 
monitoring review (see 45 CFR 1304.51(i)(1) for additional requirements 
about the annual self-assessment);
    (ix) Program personnel policies and subsequent changes to those 
policies, in accordance with 45 CFR 1301.31, including standards of 
conduct for program staff, consultants, and volunteers;
    (x) Decisions to hire or terminate the Early Head Start or Head 
Start director of the grantee or delegate agency; and
    (xi) Decisions to hire or terminate any person who works primarily 
for the Early Head Start or Head Start program of the grantee or 
delegate agency.
    (2) In addition, Policy Councils and Policy Committees must perform 
the following functions directly:
    (i) Serve as a link to the Parent Committees, grantee and delegate 
agency governing bodies, public and private organizations, and the 
communities they serve;
    (ii) Assist Parent Committees in communicating with parents enrolled 
in all program options to ensure that they understand their rights, 
responsibilities, and opportunities in Early Head Start and Head Start 
and to encourage their participation in the program;
    (iii) Assist Parent Committees in planning, coordinating, and 
organizing program activities for parents with the assistance of staff, 
and ensuring that funds set aside from program budgets are used to 
support parent activities;
    (iv) Assist in recruiting volunteer services from parents, community 
residents, and community organizations, and assist in the mobilization 
of community resources to meet identified needs; and
    (v) Establish and maintain procedures for working with the grantee 
or delegate agency to resolve community complaints about the program.
    (e) Parent Committee. The Parent Committee must carry out at least 
the following minimum responsibilities:

[[Page 190]]

    (1) Advise staff in developing and implementing local program 
policies, activities, and services;
    (2) Plan, conduct, and participate in informal as well as formal 
programs and activities for parents and staff; and
    (3) Within the guidelines established by the governing body, Policy 
Council, or Policy Committee, participate in the recruitment and 
screening of Early Head Start and Head Start employees.
    (f) Policy Council, Policy Committee, and Parent Committee 
reimbursement. Grantee and delegate agencies must enable low-income 
members to participate fully in their group responsibilities by 
providing, if necessary, reimbursements for reasonable expenses incurred 
by the members.
    (g) Governing body responsibilities. (1) Grantee and delegate 
agencies must have written policies that define the roles and 
responsibilities of the governing body members and that inform them of 
the management procedures and functions necessary to implement a high 
quality program.
    (2) Grantee and delegate agencies must ensure that appropriate 
internal controls are established and implemented to safeguard Federal 
funds in accordance with 45 CFR 1301.13.
    (h) Internal dispute resolution. Each grantee and delegate agency 
and Policy Council or Policy Committee jointly must establish written 
procedures for resolving internal disputes, including impasse 
procedures, between the governing body and policy group.

[[Page 191]]

   Appendix A to Part 1304--Governance and Management Responsibilities

                       [A=General responsibility; B=Operating responsibility; C=Must approve or disapprove; D=Determined locally]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Grantee Agency                          Delegate Agency              Grantee or Delegate Management Staff
                                 -----------------------------------------------------------------------------------------------------------------------
            Function                                                                                                  HS* Program
                                    Governing Body      Policy Council      Governing Body       Policy Cmte.           Director        Agency Director
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       I. Planning
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
 
(a) 1304.50(d)(1)(iii)                   A & C                 C                   C                   C                   B                   D
 Procedures for program planning
 in accordance with this Part
 and the requirements of 45 CFR
 1305.3.
(b) 1304.50(d)(1)(iv) The                A & C                 C                   C                   C                   B                   D
 program's philosophy and long-
 and short-range program goals
 and objectives (see 45 CFR
 1304.51(a) and 45 CFR 1305.3
 for additional requirements
 regarding program planning).
(c) 1304.50(d)(1)(v) The                 A & C                 C                  --                  --                   B                   D
 selection of delegate agencies                                                                                   (Grantee only)       (Grantee only)
 and their service areas (this
 regulation is binding on Policy
 Councils exclusively) (see 45
 CFR 1301.33 and 45 CFR
 1305.3(a) for additional
 requirements about delegate
 agency and service area
 selection, respectively).
(d) 1304.50(d)(1)(vii) Criteria            A                   C                   A                   C                   B                   D
 for defining recruitment,
 selection, and enrollment
 priorities, in accordance with
 the requirements of 45 CFR Part
 1305.
(e) 1304.50(d)(1)(i) All funding         A & C                 C                 A & C                 C                   B                   D
 applications and amendments to
 funding applications for Early
 Head Start and Head Start,
 including administrative
 services, prior to the
 submission of such applications
 to the grantee (in the case of
 Policy Committees) or to HHS
 (in the case of Policy
 Councils).
(f) 1304.50(f) Policy Council,             A                   C                   A                   C                   B                   D
 Policy Committee, and Parent
 Committee reimbursement.
 Grantee and delegate agencies
 must enable low-income members
 to participate fully in their
 group responsibilities by
 providing, if necessary,
 reimbursements for reasonable
 expenses incurred by the
 members.
(g) 1304.50(d)(1)(viii) The                A                   C                   A                   C                   B                   D
 annual self-assessment of the
 grantee or delegate agency's
 progress in carrying out the
 programmatic and fiscal intent
 of its grant application,
 including planning or other
 actions that may result from
 the review of the annual audit
 and findings from the Federal
 monitoring review (see 45 CFR
 1304.51(i)(1) for additional
 requirements about the annual
 self-assessment).
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
 
                                                                 II. General Procedures
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
 
(a) 1304.50(d)(1)(vi) The                A & C                 C                 A & C                 C                   B                   D
 composition of the Policy
 Council or the Policy Committee
 and the procedures by which
 policy group members are chosen.
(b) 1304.50(g)(1) Grantee and            A & C                --                 A & C                --                   --                  D
 delegate agencies must have
 written policies that define
 the roles and responsibilities
 of the governing body members
 and that inform them of the
 management procedures and
 functions necessary to
 implement a high quality
 program.
(c) 1304.50(d)(1)(ii) Procedures         A & C                 C                 A & C                 C                   D                   D
 describing how the governing
 body and the appropriate policy
 group will implement shared
 decision-making.

[[Page 192]]

 
(d) 1304.50(h) Internal dispute          A & C                 C                 A & C                 C                   D                   D
 resolution. Each grantee and
 delegate agency and Policy
 Council or Policy Committee
 jointly must establish written
 procedures for resolving
 internal disputes, including
 impasse procedures, between the
 governing body and policy group.
(e) 1304.50(d)(2)(v) Establish             B                   B                   B                   B                   D                   D
 and maintain procedures for
 hearing and working with the
 grantee or delegate agency to
 resolve community complaints
 about the program.
(f) 1304.50(g)(2) Grantee and              A                  --                   A                  --                   D                   D
 delegate agencies must ensure
 that appropriate internal
 controls are established and
 implemented to safeguard
 Federal funds in accordance
 with 45 CFR 1301.13.
(g) The annual independent audit           A                  --                   A                  --                   D                   D
 that must be conducted in
 accordance with 45 CFR 1301.12.
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
 
                                                             III. Human Resources Management
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
 
(a) 1304.50(d)(1)(ix) Program            A & C                 C                 A & C                 C                   D                   D
 personnel policies and
 subsequent changes to those
 policies, in accordance with 45
 CFR 1301.31, including
 standards of conduct for
 program staff, consultants, and
 volunteers.
(b) 1304.50(d)(1)(x) Decisions           A & C                 C                  --                  --                   --                  D
 to hire or terminate the Early
 Head Start or Head Start
 director of the grantee agency.
(c) 1304.50(d)(1)(xi) Decisions            A                   C                  --                  --                   B                   D
 to hire or terminate any person                                                                                  (Grantee only)
 who works primarily for the
 Early Head Start or Head Start
 program of the grantee agency.
(d) 1304.50(d)(1)(x) Decisions            --                  --                 A & C                 C                   --                  D
 to hire or terminate the Early
 Head Start or Head Start
 director of the delegate agency.
(e) 1304.50(d)(1)(xi) Decisions           --                  --                   A                   C                   B                   D
 to hire or terminate any person                                                                                  (Delegate only)
 who works primarily for the
 Early Head Start or Head Start
 program of the delegate agency.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                              KEY AND DEFINITIONS AS USED IN CHART
 
* When a grantee or delegate agency operates an Early Head Start program only and not an Early Head Start and a Head Start program, these
  responsibilities apply to the Early Head Start Director.
 A. General Responsibility. The group with legal and fiscal responsibility that guides and oversees the carrying out of the functions described through
  the individual or group given operating responsibility.
 B. Operating Responsibility. The individual or group that is directly responsible for carrying out or performing the functions consistent with the
  general guidance and oversight from the group holding general responsibility.
 C. Must Approve or Disapprove. The group that must be involved in the decision-making process prior to the point of seeking approval. If it does not
  approve, a proposal cannot be adopted, or the proposed action taken, until agreement is reached between the disagreeing groups.
 D. Determined locally. Management staff functions as determined by the local governing body and in accordance with all Head Start regulations.


[[Page 193]]


(The information and collection requirements are approved by the Office 
of Management and Budget (OMB) under OMB Control Number 0970-0148 for 
paragraphs (f), (g), and (h).)

[61 FR 57210, Nov. 5, 1996, as amended at 63 FR 2314, Jan. 15, 1998]



Sec. 1304.51   Management systems and procedures.

    (a) Program planning. (1) Grantee and delegate agencies must develop 
and implement a systematic, ongoing process of program planning that 
includes consultation with the program's governing body, policy groups, 
and program staff, and with other community organizations that serve 
Early Head Start and Head Start or other low-income families with young 
children. Program planning must include:
    (i) An assessment of community strengths, needs and resources 
through completion of the Community Assessment, in accordance with the 
requirements of 45 CFR 1305.3;
    (ii) The formulation of both multi-year (long-range) program goals 
and short-term program and financial objectives that address the 
findings of the Community Assessment, are consistent with the philosophy 
of Early Head Start and Head Start, and reflect the findings of the 
program's annual self- assessment; and
    (iii) The development of written plan(s) for implementing services 
in each of the program areas covered by this part (e.g., Early Childhood 
Development and Health Services, Family and Community Partnerships, and 
Program Design and Management). See the requirements of 45 CFR parts 
1305, 1306, and 1308.
    (2) All written plans for implementing services, and the progress in 
meeting them, must be reviewed by the grantee or delegate agency staff 
and reviewed and approved by the Policy Council or Policy Committee at 
least annually, and must be revised and updated as needed.
    (b) Communications--general. Grantee and delegate agencies must 
establish and implement systems to ensure that timely and accurate 
information is provided to parents, policy groups, staff, and the 
general community.
    (c) Communication with families. (1) Grantee and delegate agencies 
must ensure that effective two-way comprehensive communications between 
staff and parents are carried out on a regular basis throughout the 
program year.
    (2) Communication with parents must be carried out in the parents' 
primary or preferred language or through an interpreter, to the extent 
feasible.
    (d) Communication with governing bodies and policy groups. Grantee 
and delegate agencies must ensure that the following information is 
provided regularly to their grantee and delegate governing bodies and to 
members of their policy groups:
    (1) Procedures and timetables for program planning;
    (2) Policies, guidelines, and other communications from HHS;
    (3) Program and financial reports; and
    (4) Program plans, policies, procedures, and Early Head Start and 
Head Start grant applications.
    (e) Communication among staff. Grantee and delegate agencies must 
have mechanisms for regular communication among all program staff to 
facilitate quality outcomes for children and families.
    (f) Communication with delegate agencies. Grantees must have a 
procedure for ensuring that delegate agency governing bodies, Policy 
Committees, and all staff receive all regulations, policies, and other 
pertinent communications in a timely manner.
    (g) Record-keeping systems. Grantee and delegate agencies must 
establish and maintain efficient and effective record-keeping systems to 
provide accurate and timely information regarding children, families, 
and staff and must ensure appropriate confidentiality of this 
information.
    (h) Reporting systems. Grantee and delegate agencies must establish 
and maintain efficient and effective reporting systems that:
    (1) Generate periodic reports of financial status and program 
operations in order to control program quality, maintain program 
accountability, and advise governing bodies, policy groups, and staff of 
program progress; and
    (2) Generate official reports for Federal, State, and local 
authorities, as required by applicable law.

[[Page 194]]

    (i) Program self-assessment and monitoring. (1) At least once each 
program year, with the consultation and participation of the policy 
groups and, as appropriate, other community members, grantee and 
delegate agencies must conduct a self-assessment of their effectiveness 
and progress in meeting program goals and objectives and in implementing 
Federal regulations.
    (2) Grantees must establish and implement procedures for the ongoing 
monitoring of their own Early Head Start and Head Start operations, as 
well as those of each of their delegate agencies, to ensure that these 
operations effectively implement Federal regulations.
    (3) Grantees must inform delegate agency governing bodies of any 
deficiencies in delegate agency operations identified in the monitoring 
review and must help them develop plans, including timetables, for 
addressing identified problems.

(The information and collection requirements are approved by the Office 
of Management and Budget (OMB) under OMB Control Number 0970-0148 for 
paragraphs (a) and (i).)

[61 FR 57210, Nov. 5, 1996, as amended at 63 FR 2314, Jan. 15, 1998]



Sec. 1304.52   Human resources management.

    (a) Organizational structure. (1) Grantee and delegate agencies must 
establish and maintain an organizational structure that supports the 
accomplishment of program objectives. This structure must address the 
major functions and responsibilities assigned to each staff position and 
must provide evidence of adequate mechanisms for staff supervision and 
support.
    (2) At a minimum, grantee and delegate agencies must ensure that the 
following program management functions are formally assigned to and 
adopted by staff within the program:
    (i) Program management (the Early Head Start or Head Start 
director);
    (ii) Management of early childhood development and health services, 
including child development and education; child medical, dental, and 
mental health; child nutrition; and, services for children with 
disabilities; and
    (iii) Management of family and community partnerships, including 
parent activities.
    (b) Staff qualifications--general. (1) Grantee and delegate agencies 
must ensure that staff and consultants have the knowledge, skills, and 
experience they need to perform their assigned functions responsibly.
    (2) In addition, grantee and delegate agencies must ensure that only 
candidates with the qualifications specified in this part and in 45 CFR 
1306.21 are hired.
    (3) Current and former Early Head Start and Head Start parents must 
receive preference for employment vacancies for which they are 
qualified.
    (4) Staff and program consultants must be familiar with the ethnic 
background and heritage of families in the program and must be able to 
serve and effectively communicate, to the extent feasible, with children 
and families with no or limited English proficiency.
    (c) Early Head Start or Head Start director qualifications. The 
Early Head Start or Head Start director must have demonstrated skills 
and abilities in a management capacity relevant to human services 
program management.
    (d) Qualifications of content area experts. Grantee and delegate 
agencies must hire staff or consultants who meet the qualifications 
listed below to provide content area expertise and oversight on an 
ongoing or regularly scheduled basis. Agencies must determine the 
appropriate staffing pattern necessary to provide these functions.
    (1) Education and child development services must be supported by 
staff or consultants with training and experience in areas that include: 
The theories and principles of child growth and development, early 
childhood education, and family support. In addition, staff or 
consultants must meet the qualifications for classroom teachers, as 
specified in section 648A of the Head Start Act and any subsequent 
amendments regarding the qualifications of teachers.
    (2) Health services must be supported by staff or consultants with 
training and experience in public health, nursing, health education, 
maternal and child health, or health administration. In addition, when a 
health procedure

[[Page 195]]

must be performed only by a licensed/certified health professional, the 
agency must assure that the requirement is followed.
    (3) Nutrition services must be supported by staff or consultants who 
are registered dietitians or nutritionists.
    (4) Mental health services must be supported by staff or consultants 
who are licensed or certified mental health professionals with 
experience and expertise in serving young children and their families.
    (5) Family and community partnership services must be supported by 
staff or consultants with training and experience in field(s) related to 
social, human, or family services.
    (6) Parent involvement services must be supported by staff or 
consultants with training, experience, and skills in assisting the 
parents of young children in advocating and decision-making for their 
families.
    (7) Disabilities services must be supported by staff or consultants 
with training and experience in securing and individualizing needed 
services for children with disabilities.
    (8) Grantee and delegate agencies must secure the regularly 
scheduled or ongoing services of a qualified fiscal officer.
    (e) Home visitor qualifications. Home visitors must have knowledge 
and experience in child development and early childhood education; the 
principles of child health, safety, and nutrition; adult learning 
principles; and family dynamics. They must be skilled in communicating 
with and motivating people. In addition, they must have knowledge of 
community resources and the skills to link families with appropriate 
agencies and services.
    (f) Infant and toddler staff qualifications. Early Head Start and 
Head Start staff working as teachers with infants and toddlers must 
obtain a Child Development Associate (CDA) credential for Infant and 
Toddler Caregivers or an equivalent credential that addresses comparable 
competencies within one year of the effective date of the final rule or, 
thereafter, within one year of hire as a teacher of infants and 
toddlers. In addition, infants and toddler teachers must have the 
training and experience necessary to develop consistent, stable, and 
supportive relationships with very young children. The training must 
develop knowledge of infant and toddler development, safety issues in 
infant and toddler care (e.g., reducing the risk of Sudden Infant Death 
Syndrome), and methods for communicating effectively with infants and 
toddlers, their parents, and other staff members.
    (g) Classroom staffing and home visitors. (1) Grantee and delegate 
agencies must meet the requirements of 45 CFR 1306.20 regarding 
classroom staffing.
    (2) When a majority of children speak the same language, at least 
one classroom staff member or home visitor interacting regularly with 
the children must speak their language.
    (3) For center-based programs, the class size requirements specified 
in 45 CFR 1306.32 must be maintained through the provision of 
substitutes when regular classroom staff are absent.
    (4) Grantee and delegate agencies must ensure that each teacher 
working exclusively with infants and toddlers has responsibility for no 
more than four infants and toddlers and that no more than eight infants 
and toddlers are placed in any one group. However, if State, Tribal or 
local regulations specify staff:child ratios and group sizes more 
stringent than this requirement, the State, Tribal or local regulations 
must apply.
    (5) Staff must supervise the outdoor and indoor play areas in such a 
way that children's safety can be easily monitored and ensured.
    (h) Standards of conduct. (1) Grantee and delegate agencies must 
ensure that all staff, consultants, and volunteers abide by the 
program's standards of conduct. These standards must specify that:
    (i) They will respect and promote the unique identity of each child 
and family and refrain from stereotyping on the basis of gender, race, 
ethnicity, culture, religion, or disability;
    (ii) They will follow program confidentiality policies concerning 
information about children, families, and other staff members;
    (iii) No child will be left alone or unsupervised while under their 
care; and

[[Page 196]]

    (iv) They will use positive methods of child guidance and will not 
engage in corporal punishment, emotional or physical abuse, or 
humiliation. In addition, they will not employ methods of discipline 
that involve isolation, the use of food as punishment or reward, or the 
denial of basic needs.
    (2) Grantee and delegate agencies must ensure that all employees 
engaged in the award and administration of contracts or other financial 
awards sign statements that they will not solicit or accept personal 
gratuities, favors, or anything of significant monetary value from 
contractors or potential contractors.
    (3) Personnel policies and procedures must include provision for 
appropriate penalties for violating the standards of conduct.
    (i) Staff performance appraisals. Grantee and delegate agencies 
must, at a minimum, perform annual performance reviews of each Early 
Head Start and Head Start staff member and use the results of these 
reviews to identify staff training and professional development needs, 
modify staff performance agreements, as necessary, and assist each staff 
member in improving his or her skills and professional competencies.
    (j) Staff and volunteer health. (1) Grantee and delegate agencies 
must assure that each staff member has an initial health examination 
(that includes screening for tuberculosis) and a periodic re-examination 
(as recommended by their health care provider or as mandated by State, 
Tribal, or local laws) so as to assure that they do not, because of 
communicable diseases, pose a significant risk to the health or safety 
of others in the Early Head Start or Head Start program that cannot be 
eliminated or reduced by reasonable accommodation. This requirement must 
be implemented consistent with the requirements of the Americans with 
Disabilities Act and section 504 of the Rehabilitation Act.
    (2) Regular volunteers must be screened for tuberculosis in 
accordance with State, Tribal or local laws. In the absence of State, 
Tribal or local law, the Health Services Advisory Committee must be 
consulted regarding the need for such screenings (see 45 CFR 1304.3(20) 
for a definition of volunteer).
    (3) Grantee and delegate agencies must make mental health and 
wellness information available to staff with concerns that may affect 
their job performance.
    (k) Training and development. (1) Grantee and delegate agencies must 
provide an orientation to all new staff, consultants, and volunteers 
that includes, at a minimum, the goals and underlying philosophy of 
Early Head Start and/or Head Start and the ways in which they are 
implemented by the program.
    (2) Grantee and delegate agencies must establish and implement a 
structured approach to staff training and development, attaching 
academic credit whenever possible. This system should be designed to 
help build relationships among staff and to assist staff in acquiring or 
increasing the knowledge and skills needed to fulfill their job 
responsibilities, in accordance with the requirements of 45 CFR 1306.23.
    (3) At a minimum, this system must include ongoing opportunities for 
staff to acquire the knowledge and skills necessary to implement the 
content of the Head Start Program Performance Standards. This program 
must also include:
    (i) Methods for identifying and reporting child abuse and neglect 
that comply with applicable State and local laws using, so far as 
possible, a helpful rather than a punitive attitude toward abusing or 
neglecting parents and other caretakers; and
    (ii) Methods for planning for successful child and family 
transitions to and from the Early Head Start or Head Start program.
    (4) Grantee and delegate agencies must provide training or 
orientation to Early Head Start and Head Start governing body members. 
Agencies must also provide orientation and ongoing training to Early 
Head Start and Head Start Policy Council and Policy Committee members to 
enable them to

[[Page 197]]

carry out their program governance responsibilities effectively.

(Approved by the Office of Management and Budget under control number 
0970-0148 for paragraph (j).)

[61 FR 57210, Nov. 5, 1996, as amended at 63 FR 2314, Jan. 15, 1998]



Sec. 1304.53   Facilities, materials, and equipment.

    (a) Head Start physical environment and facilities. (1) Grantee and 
delegate agencies must provide a physical environment and facilities 
conducive to learning and reflective of the different stages of 
development of each child.
    (2) Grantee and delegate agencies must provide appropriate space for 
the conduct of all program activities (see 45 CFR 1308.4 for specific 
access requirements for children with disabilities).
    (3) The center space provided by grantee and delegate agencies must 
be organized into functional areas that can be recognized by the 
children and that allow for individual activities and social 
interactions.
    (4) The indoor and outdoor space in Early Head Start or Head Start 
centers in use by mobile infants and toddlers must be separated from 
general walkways and from areas in use by preschoolers.
    (5) Centers must have at least 35 square feet of usable indoor space 
per child available for the care and use of children (i.e., exclusive of 
bathrooms, halls, kitchen, staff rooms, and storage places) and at least 
75 square feet of usable outdoor play space per child.
    (6) Facilities owned or operated by Early Head Start and Head Start 
grantee or delegate agencies must meet the licensing requirements of 45 
CFR 1306.30.
    (7) Grantee and delegate agencies must provide for the maintenance, 
repair, safety, and security of all Early Head Start and Head Start 
facilities, materials and equipment.
    (8) Grantee and delegate agencies must provide a center-based 
environment free of toxins, such as cigarette smoke, lead, pesticides, 
herbicides, and other air pollutants as well as soil and water 
contaminants. Agencies must ensure that no child is present during the 
spraying of pesticides or herbicides. Children must not return to the 
affected area until it is safe to do so.
    (9) Outdoor play areas at center-based programs must be arranged so 
as to prevent any child from leaving the premises and getting into 
unsafe and unsupervised areas. Enroute to play areas, children must not 
be exposed to vehicular traffic without supervision.
    (10) Grantee and delegate agencies must conduct a safety inspection, 
at least annually, to ensure that each facility's space, light, 
ventilation, heat, and other physical arrangements are consistent with 
the health, safety and developmental needs of children. At a minimum, 
agencies must ensure that:
    (i) In climates where such systems are necessary, there is a safe 
and effective heating and cooling system that is insulated to protect 
children and staff from potential burns;
    (ii) No highly flammable furnishings, decorations, or materials that 
emit highly toxic fumes when burned are used;
    (iii) Flammable and other dangerous materials and potential poisons 
are stored in locked cabinets or storage facilities separate from stored 
medications and food and are accessible only to authorized persons. All 
medications, including those required for staff and volunteers, are 
labeled, stored under lock and key, refrigerated if necessary, and kept 
out of the reach of children;
    (iv) Rooms are well lit and provide emergency lighting in the case 
of power failure;
    (v) Approved, working fire extinguishers are readily available;
    (vi) An appropriate number of smoke detectors are installed and 
tested regularly;
    (vii) Exits are clearly visible and evacuation routes are clearly 
marked and posted so that the path to safety outside is unmistakable 
(see 45 CFR 1304.22 for additional emergency procedures);
    (viii) Indoor and outdoor premises are cleaned daily and kept free 
of undesirable and hazardous materials and conditions;
    (ix) Paint coatings on both interior and exterior premises used for 
the care of children do not contain hazardous quantities of lead;

[[Page 198]]

    (x) The selection, layout, and maintenance of playground equipment 
and surfaces minimize the possibility of injury to children;
    (xi) Electrical outlets accessible to children prevent shock through 
the use of child-resistant covers, the installation of child-protection 
outlets, or the use of safety plugs;
    (xii) Windows and glass doors are constructed, adapted, or adjusted 
to prevent injury to children;
    (xiii) Only sources of water approved by the local or State health 
authority are used;
    (xiv) Toilets and handwashing facilities are adequate, clean, in 
good repair, and easily reached by children. Toileting and diapering 
areas must be separated from areas used for cooking, eating, or 
children's activities;
    (xv) Toilet training equipment is provided for children being toilet 
trained;
    (xvi) All sewage and liquid waste is disposed of through a locally 
approved sewer system, and garbage and trash are stored in a safe and 
sanitary manner; and
    (xvii) Adequate provisions are made for children with disabilities 
to ensure their safety, comfort, and participation.
    (b) Head Start equipment, toys, materials, and furniture.
    (1) Grantee and delegate agencies must provide and arrange 
sufficient equipment, toys, materials, and furniture to meet the needs 
and facilitate the participation of children and adults. Equipment, 
toys, materials, and furniture owned or operated by the grantee or 
delegate agency must be:
    (i) Supportive of the specific educational objectives of the local 
program;
    (ii) Supportive of the cultural and ethnic backgrounds of the 
children;
    (iii) Age-appropriate, safe, and supportive of the abilities and 
developmental level of each child served, with adaptations, if 
necessary, for children with disabilities;
    (iv) Accessible, attractive, and inviting to children;
    (v) Designed to provide a variety of learning experiences and to 
encourage each child to experiment and explore;
    (vi) Safe, durable, and kept in good condition; and
    (vii) Stored in a safe and orderly fashion when not in use.
    (2) Infant and toddler toys must be made of non-toxic materials and 
must be sanitized regularly.
    (3) To reduce the risk of Sudden Infant Death Syndrome (SIDS), all 
sleeping arrangements for infants must use firm mattresses and avoid 
soft bedding materials such as comforters, pillows, fluffy blankets or 
stuffed toys.



                Subpart E--Implementation and Enforcement



Sec. 1304.60   Deficiencies and quality improvement plans.

    (a) Early Head Start and Head Start grantee and delegate agencies 
must comply with the requirements of this part in accordance with the 
effective date set forth in 45 CFR 1304.2.
    (b) If the responsible HHS official, as a result of information 
obtained from a review of an Early Head Start or a Head Start grantee, 
determines that the grantee has one or more deficiencies, as defined in 
Sec. 1304.3(a)(6) of this part, and therefore also is in violation of 
the minimum requirements as defined in Sec. 1304.3(a)(14) of this part, 
he or she will notify the grantee promptly, in writing, of the finding, 
identifying the deficiencies to be corrected and, with respect to each 
identified deficiency, will inform the grantee that it must correct the 
deficiency either immediately or pursuant to a Quality Improvement Plan.
    (c) An Early Head Start or Head Start grantee with one or more 
deficiencies to be corrected under a Quality Improvement Plan must 
submit to the responsible HHS official a Quality Improvement Plan 
specifying, for each identified deficiency, the actions that the grantee 
will take to correct the deficiency and the timeframe within which it 
will be corrected. In no case can the timeframes proposed in the Quality 
Improvement Plan exceed one year from the date that the grantee received 
official notification of the deficiencies to be corrected.
    (d) Within 30 days of the receipt of the Quality Improvement Plan, 
the responsible HHS official will notify the Early Head Start or Head 
Start grantee, in writing, of the Plan's approval or

[[Page 199]]

specify the reasons why the Plan is disapproved.
    (e) If the Quality Improvement Plan is disapproved, the Early Head 
Start or Head Start grantee must submit a revised Quality Improvement 
Plan, making the changes necessary to address the reasons that the 
initial Plan was disapproved.
    (f) If an Early Head Start or Head Start grantee fails to correct a 
deficiency, either immediately, or within the timeframe specified in the 
approved Quality Improvement Plan, the responsible HHS official will 
issue a letter of termination or denial of refunding. Head Start 
grantees may appeal terminations and denials of refunding under 45 CFR 
part 1303, while Early Head Start grantees may appeal terminations and 
denials of refunding only under 45 CFR part 74 or part 92. A deficiency 
that is not timely corrected shall be a material failure of a grantee to 
comply with the terms and conditions of an award within the meaning of 
45 CFR 74.61(a)(1), 45 CFR 74.62 and 45 CFR 92.43(a).

(The information and collection requirements are approved by the Office 
of Management and Budget (OMB) under OMB Control Number 0970-0148 for 
paragraphs (b) and (c).)

[61 FR 57210, Nov. 5, 1996, as amended at 63 FR 2314, Jan. 15, 1998]



Sec. 1304.61  Noncompliance.

    (a) If the responsible HHS official, as a result of information 
obtained from a review of an Early Head Start or Head Start grantee, 
determines that the grantee is not in compliance with Federal or State 
requirements (including, but not limited to, the Head Start Act or one 
or more of the regulations under parts 1301, 1304, 1305, 1306 or 1308 of 
this title) in ways that do not constitute a deficiency, he or she will 
notify the grantee promptly, in writing, of the finding, identifying the 
area or areas of noncompliance to be corrected and specifying the period 
in which they must corrected.
    (b) Early Head Start or Head Start grantees which have received 
written notification of an area of noncompliance to be corrected must 
correct the area of noncompliance within the time period specified by 
the responsible HHS official. A grantee which is unable or unwilling to 
correct the specified areas of noncompliance within the prescribed time 
period will be judged to have a deficiency which must be corrected, 
either immediately or pursuant to a Quality Improvement Plan (see 45 CFR 
1304.3(a)(6)(iii) and 45 CFR 1304.60).



PART 1305--ELIGIBILITY, RECRUITMENT, SELECTION, ENROLLMENT AND ATTENDANCE IN HEAD START--Table of Contents




Sec.
1305.1  Purpose and scope.
1305.2  Definitions.
1305.3  Determining community strengths and needs.
1305.4  Age of children and family income eligibility.
1305.5  Recruitment of children.
1305.6  Selection process.
1305.7  Enrollment and re-enrollment.
1305.8  Attendance.
1305.9  Policy on fees.
1305.10  Compliance.

    Authority: 42 U.S.C. 9801 et seq.

    Source: 57 FR 46725, Oct. 9, 1992, unless otherwise noted.



Sec. 1305.1  Purpose and scope.

    This part prescribes requirements for determining community needs 
and recruitment areas. It contains requirements and procedures for the 
eligibility determination, recruitment, selection, enrollment and 
attendance of children in Head Start programs and explains the policy 
concerning the charging of fees by Head Start programs. These 
requirements are to be used in conjunction with the Head Start Program 
Performance Standards at 45 CFR part 1304, as applicable.

[57 FR 46725, Oct. 9, 1992, as amended at 61 FR 57226, Nov. 5, 1996]



Sec. 1305.2  Definitions.

    (a) Children with disabilities means children with mental 
retardation, hearing impairments including deafness, speech or language 
impairments, visual impairments including blindness, serious emotional 
disturbance, orthopedic impairments, autism, traumatic brain injury, 
other health impairments or specific learning disabilities who, by 
reason thereof need special education

[[Page 200]]

and related services. The term ``children with disabilities'' for 
children aged 3 to 5, inclusive, may, at a State's discretion, include 
children experiencing developmental delays, as defined by the State and 
as measured by appropriate diagnostic instruments and procedures, in one 
or more of the following areas: physical development, cognitive 
development, communication development, social or emotional development, 
or adaptive development; and who, by reason thereof, need special 
education and related services.
    (b) Enrollment means the official acceptance of a family by a Head 
Start program and the completion of all procedures necessary for a child 
and family to begin receiving services.
    (c) Enrollment opportunities mean vacancies that exist at the 
beginning of the enrollment year, or during the year because of children 
who leave the program, that must be filled for a program to achieve and 
maintain its funded enrollment.
    (d) Enrollment year means the period of time, not to exceed twelve 
months, during which a Head Start program provides center or home-based 
services to a group of children and their families.
    (e) Family means all persons living in the same household who are:
    (1) Supported by the income of the parent(s) or guardian(s) of the 
child enrolling or participating in the program, and (2) related to the 
parent(s) or guardian(s) by blood, marriage, or adoption.
    (f) Funded enrollment means the number of children which the Head 
Start grantee is to serve, as indicated on the grant award.
    (g) Head Start eligible means a child that meets the requirements 
for age and family income as established in this regulation or, if 
applicable, as established by grantees that meet the requirements of 
section 645(a)(2) of the Head Start Act. Up to ten percent of the 
children enrolled may be from families that exceed the low-income 
guidelines. Indian Tribes meeting the conditions specified in 45 CFR 
1305.4(b)(3) are excepted from this limitation.
    (h) Head Start program means a Head Start grantee or its delegate 
agency(ies).
    (i) Income means gross cash income and includes earned income, 
military income (including pay and allowances), veterans benefits, 
Social Security benefits, unemployment compensation, and public 
assistance benefits. Additional examples of gross cash income are listed 
in the definition of ``income'' which appears in U.S. Bureau of the 
Census, Current Population Reports, Series P-60-185.
    (j) Income guidelines means the official poverty line specified in 
section 652 of the Head Start Act.
    (k) Indian Tribe means any Tribe, band, nation, pueblo, or other 
organized group or community of Indians, including any Native village 
described in section 3(c) of the Alaska Native Claims Settlement Act (43 
U.S.C. 1602(c)) or established pursuant to such Act (43 U.S.C. 1601 et 
seq.), that is recognized as eligible for special programs and services 
provided by the United States to Indians because of their status as 
Indians.
    (l) Low-income family means a family whose total annual income 
before taxes is equal to, or less than, the income guidelines. For the 
purpose of eligibility, a child from a family that is receiving public 
assistance or a child in foster care is eligible even if the family 
income exceeds the income guidelines.
    (m) Migrant family means, for purposes of Head Start eligibility, a 
family with children under the age of compulsory school attendance who 
changed their residence by moving from one geographic location to 
another, either intrastate or interstate, within the preceding two years 
for the purpose of engaging in agricultural work that involves the 
production and harvesting of tree and field crops and whose family 
income comes primarily from this activity.
    (n) Recruitment means the systematic ways in which a Head Start 
program identifies families whose children are eligible for Head Start 
services, informs them of the services available, and encourages them to 
apply for enrollment in the program.
    (o) Recruitment area means that geographic locality within which a 
Head Start program seeks to enroll Head Start children and families. The 
recruitment area can be the same as the

[[Page 201]]

service area or it can be a smaller area or areas within the service 
area.
    (p) Responsible HHS official means the official of the U.S. 
Department of Health and Human Services having authority to make Head 
Start grant awards, or his or her designee.
    (q) Selection means the systematic process used to review all 
applications for Head Start services and to identify those children and 
families that are to be enrolled in the program.
    (r) Service area means the geographic area identified in an approved 
grant application within which a grantee may provide Head Start 
services.
    (s) Vacancy means an unfilled enrollment opportunity for a child and 
family in the Head Start program.

[57 FR 46725, Oct. 9, 1992, as amended at 58 FR 5518, Jan. 21, 1993; 63 
FR 12657, Mar. 16, 1998]



Sec. 1305.3  Determining community strengths and needs.

    (a) Each Early Head Start grantee and Head Start grantee must 
identify its proposed service area in its Head Start grant application 
and define it by county or sub-county area, such as a municipality, town 
or census tract or a federally-recognized Indian reservation. With 
regard to Indian Tribes, the service area may include areas designated 
as near-reservation by the Bureau of Indian Affairs (BIA) or, in the 
absence of such a designation, a Tribe may propose to define its service 
area to include nearby areas where Indian children and families native 
to the reservation reside, provided that the service area is approved by 
the Tribe's governing council. Where the service area of a Tribe 
includes a non-reservation area, and that area is also served by another 
Head Start grantee, the Tribe will be authorized to serve children from 
families native to the reservation residing in the non-reservation area 
as well as children from families residing on the reservation.
    (b) The grantee's service area must be approved, in writing, by the 
responsible HHS official in order to assure that the service area is of 
reasonable size and, except in situations where a near-reservation 
designation or other expanded service area has been approved for a 
Tribe, does not overlap with that of other Head Start grantees.
    (c) Each Early Head Start and Head Start grantee must conduct a 
Community Assessment within its service area once every three years. The 
Community Assessment must include the collection and analysis of the 
following information about the grantee's Early Head Start or Head Start 
area:
    (1) The demographic make-up of Head Start eligible children and 
families, including their estimated number, geographic location, and 
racial and ethnic composition;
    (2) Other child development and child care programs that are serving 
Head Start eligible children, including publicly funded State and local 
preschool programs, and the approximate number of Head Start eligible 
children served by each;
    (3) The estimated number of children with disabilities four years 
old or younger, including types of disabilities and relevant services 
and resources provided to these children by community agencies;
    (4) Data regarding the education, health, nutrition and social 
service needs of Head Start eligible children and their families;
    (5) The education, health, nutrition and social service needs of 
Head Start eligible children and their families as defined by families 
of Head Start eligible children and by institutions in the community 
that serve young children;
    (6) Resources in the community that could be used to address the 
needs of Head Start eligible children and their families, including 
assessments of their availability and accessibility.
    (d) The Early Head Start and Head Start grantee and delegate agency 
must use information from the Community Assessment to:
    (1) Help determine the grantee's philosophy, and its long-range and 
short-range program objectives;
    (2) Determine the type of component services that are most needed 
and the program option or options that will be implemented;
    (3) Determine the recruitment area that will be served by the 
grantee, if limitations in the amount of resources make it impossible to 
serve the entire service area.
    (4) If there are delegate agencies, determine the recruitment area 
that will

[[Page 202]]

be served by the grantee and the recruitment area that will be served by 
each delegate agency.
    (5) Determine appropriate locations for centers and the areas to be 
served by home-based programs; and
    (6) Set criteria that define the types of children and families who 
will be given priority for recruitment and selection.
    (e) In each of the two years following completion of the Community 
Assessment the grantee must conduct a review to determine whether there 
have been significant changes in the information described in paragraph 
(b) of this section. If so, the Community Assessment must be updated and 
the decisions described in paragraph (c) of this section must be 
reconsidered.
    (f) The recruitment area must include the entire service area, 
unless the resources available to the Head Start grantee are inadequate 
to serve the entire service area.
    (g) In determining the recruitment area when it does not include the 
entire service area, the grantee must:
    (1) Select an area or areas that are among those having the greatest 
need for Early Head Start or Head Start services as determined by the 
Community Assessment; and
    (2) Include as many Head Start eligible children as possible within 
the recruitment area, so that:
    (i) The greatest number of Head Start eligible children can be 
recruited and have an opportunity to be considered for selection and 
enrollment in the Head Start program, and
    (ii), the Head Start program can enroll the children and families 
with the greatest need for its services.

(The information collection requirements are approved by the Office of 
Management and Budget (OMB) under OMB Control Number 0970-0124 for 
paragraphs (b) and (d).)

[57 FR 46725, Oct. 9, 1992, as amended at 61 FR 57226, Nov. 5, 1996; 63 
FR 2314, Jan. 15, 1998; 63 FR 12657, Mar. 16, 1998]



Sec. 1305.4  Age of children and family income eligibility.

    (a) To be eligible for Head Start services, a child must be at least 
three years old by the date used to determine eligibility for public 
school in the community in which the Head Start program is located, 
except in cases where the Head Start program's approved grant provides 
specific authority to serve younger children. Examples of such 
exceptions are programs serving children of migrant families and Early 
Head Start programs.
    (b)(1) At least 90 percent of the children who are enrolled in each 
Head Start program must be from low-income families.
    (2) Except as provided in paragraph (b)(3) of this section, up to 
ten percent of the children who are enrolled may be children from 
families that exceed the low-income guidelines but who meet the criteria 
that the program has established for selecting such children and who 
would benefit from Head Start services.
    (3) A Head Start program operated by an Indian Tribe may enroll more 
than ten percent of its children from families whose incomes exceed the 
low-income guidelines when the following conditions are met:
    (i) All children from Indian and non-Indian families living on the 
reservation that meet the low-income guidelines who wish to be enrolled 
in Head Start are served by the program;
    (ii) All children from income-eligible Indian families native to the 
reservation living in non-reservation areas, approved as part of the 
Tribe's service area, who wish to be enrolled in Head Start are served 
by the program. In those instances in which the non-reservation area is 
not served by another Head Start program, the Tribe must serve all of 
the income-eligible Indian and non-Indian children whose families wish 
to enroll them in Head Start prior to serving over-income children.
    (iii) The Tribe has the resources within its Head Start grant or 
from other non-Federal sources to enroll children from families whose 
incomes exceed the low-income guidelines without using additional funds 
from HHS intended to expand Head Start services; and
    (iv) At least 51 percent of the children to be served by the program 
are from families that meet the income-eligibility guidelines.
    (4) Programs which meet the conditions of paragraph (b)(3) of this 
section

[[Page 203]]

must annually set criteria that are approved by the Policy Council and 
the Tribal Council for selecting over-income children who would benefit 
from such a program.
    (c) The family income must be verified by the Head Start program 
before determining that a child is eligible to participate in the 
program.
    (d) Verification must include examination of any of the following: 
Individual Income Tax Form 1040, W-2 forms, pay stubs, pay envelopes, 
written statements from employers, or documentation showing current 
status as recipients of public assistance.
    (e) A signed statement by an employee of the Head Start program, 
identifying which of these documents was examined and stating that the 
child is eligible to participate in the program, must be maintained to 
indicate that income verification has been made.

[57 FR 46725, Oct. 9, 1992, as amended at 63 FR 12658, Mar. 16, 1998]



Sec. 1305.5  Recruitment of children.

    (a) In order to reach those most in need of Head Start services, 
each Head Start grantee and delegate agency must develop and implement a 
recruitment process that is designed to actively inform all families 
with Head Start eligible children within the recruitment area of the 
availability of services and encourage them to apply for admission to 
the program. This process may include canvassing the local community, 
use of news releases and advertising, and use of family referrals and 
referrals from other public and private agencies.
    (b) During the recruitment process that occurs prior to the 
beginning of the enrollment year, a Head Start program must solicit 
applications from as many Head Start eligible families within the 
recruitment area as possible. If necessary, the program must assist 
families in filling out the application form in order to assure that all 
information needed for selection is completed.
    (c) Each program, except migrant programs, must obtain a number of 
applications during the recruitment process that occurs prior to the 
beginning of the enrollment year that is greater than the enrollment 
opportunities that are anticipated to be available over the course of 
the next enrollment year in order to select those with the greatest need 
for Head Start services.



Sec. 1305.6  Selection process.

    (a) Each Head Start program must have a formal process for 
establishing selection criteria and for selecting children and families 
that considers all eligible applicants for Head Start services. The 
selection criteria must be based on those contained in paragraphs (b) 
and (c) of this section.
    (b) In selecting the children and families to be served, the Head 
Start program must consider the income of eligible families, the age of 
the child, the availability of kindergarten or first grade to the child, 
and the extent to which a child or family meets the criteria that each 
program is required to establish in Sec. 1305.3(c)(6). Migrant programs 
must also give priority to children from families whose pursuit of 
agricultural work required them to relocate most frequently within the 
previous two-year period.
    (c) At least 10 percent of the total number of enrollment 
opportunities in each grantee and each delegate agency during an 
enrollment year must be made available to children with disabilities who 
meet the definition for children with disabilities in Sec. 1305.2(a). An 
exception to this requirement will be granted only if the responsible 
HHS official determines, based on such supporting evidence he or she may 
require, that the grantee made a reasonable effort to comply with this 
requirement but was unable to do so because there was an insufficient 
number of children with disabilities in the recruitment area who wished 
to attend the program and for whom the program was an appropriate 
placement based on their Individual Education Plans (IEP) or 
Individualized Family Service Plans (IFSP), with services provided 
directly by Head Start or Early Head Start in conjunction with other 
providers.
    (d) Each Head Start program must develop at the beginning of each 
enrollment year and maintain during the year a waiting list that ranks 
children according to the program's selection

[[Page 204]]

criteria to assure that eligible children enter the program as vacancies 
occur.

[57 FR 46725, Oct. 9, 1992, as amended at 63 FR 12658, Mar. 16, 1998]



Sec. 1305.7  Enrollment and re-enrollment.

    (a) Each child enrolled in a Head Start program, except those 
enrolled in a migrant program, must be allowed to remain in Head Start 
until kindergarten or first grade is available for the child in the 
child's community, except that the Head Start program may choose not to 
enroll a child when there are compelling reasons for the child not to 
remain in Head Start, such as when there is a change in the child's 
family income and there is a child with a greater need for Head Start 
services.
    (b) A Head Start grantee must maintain its funded enrollment level. 
When a program determines that a vacancy exists, no more than 30 
calendar days may elapse before the vacancy is filled. A program may 
elect not to fill a vacancy when 60 calendar days or less remain in the 
program's enrollment year.
    (c) If a child has been found income eligible and is participating 
in a Head Start program, he or she remains income eligible through that 
enrollment year and the immediately succeeding enrollment year. Children 
who are enrolled in a program receiving funds under the authority of 
section 645A of the Head Start Act (programs for families with infants 
and toddlers, or Early Head Start) remain income eligible while they are 
participating in the program. When a child moves from a program serving 
infants and toddlers to a Head Start program serving children age three 
and older, the family income must be reverified. If one agency operates 
both an Early Head Start and a Head Start program, and the parents wish 
to enroll their child who has been enrolled in the agency's Early Head 
Start program, the agency must ensure, whenever possible, that the child 
receives Head Start services until enrolled in school.

[57 FR 46725, Oct. 9, 1992, as amended at 63 FR 12658, Mar. 16, 1998]



Sec. 1305.8  Attendance.

    (a) When the monthly average daily attendance rate in a center-based 
program falls below 85 percent, a Head Start program must analyze the 
causes of absenteeism. The analysis must include a study of the pattern 
of absences for each child, including the reasons for absences as well 
as the number of absences that occur on consecutive days.
    (b) If the absences are a result of illness or if they are well 
documented absences for other reasons, no special action is required. 
If, however, the absences result from other factors, including temporary 
family problems that affect a child's regular attendance, the program 
must initiate appropriate family support procedures for all children 
with four or more consecutive unexcused absences. These procedures must 
include home visits or other direct contact with the child's parents. 
Contacts with the family must emphasize the benefits of regular 
attendance, while at the same time remaining sensitive to any special 
family circumstances influencing attendance patterns. All contacts with 
the child's family as well as special family support service activities 
provided by program staff must be documented.
    (c) In circumstances where chronic absenteeism persists and it does 
not seem feasible to include the child in either the same or a different 
program option, the child's slot must be considered an enrollment 
vacancy.



Sec. 1305.9  Policy on fees.

    A Head Start program must not prescribe any fee schedule or 
otherwise provide for the charging of any fees for participation in the 
program. If the family of a child determined to be eligible for 
participation by a Head Start program volunteers to pay part or all of 
the costs of the child's participation, the Head Start program may 
accept the voluntary payments and record the payments as program income.
    Under no circumstances shall a Head Start program solicit, 
encourage, or in any other way condition a child's enrollment or 
participation in the program upon the payment of a fee.

[[Page 205]]



Sec. 1305.10  Compliance.

    A grantee's failure to comply with the requirements of this Part may 
result in a denial of refunding or termination in accordance with 45 CFR 
part 1303.



PART 1306--HEAD START STAFFING REQUIREMENTS AND PROGRAM OPTIONS--Table of Contents




                           Subpart A--General

Sec.
1306.1  Purpose and scope.
1306.2  Effective dates.
1306.3  Definitions.

           Subpart B--Head Start Program Staffing Requirements

1306.20  Program staffing patterns.
1306.21  Staff qualification requirements.
1306.22  Volunteers.
1306.23  Training.

                  Subpart C--Head Start Program Options

1306.30  Provision of comprehensive child development services.
1306.31  Choosing a Head Start program option.
1306.32  Center-based program option.
1306.33  Home-based program option.
1306.34  Combination program option.
1306.35  Additional Head Start program option variations.
1306.36  Compliance waiver.

    Authority: 42 U.S.C. 9801 et seq.

    Source: 57 FR 58092, Dec. 8, 1992, unless otherwise noted.



                           Subpart A--General



Sec. 1306.1  Purpose and scope.

    This Part sets forth requirements for Early Head Start and Head 
Start program staffing and program options that all Early Head Start and 
Head Start grantee and delegate agencies, with the exception of Parent 
Child Center programs, must meet. The exception for Parent Child Centers 
is for fiscal years 1995, 1996, and 1997 as consistent with section 
645A(e)(2) of the Head Start Act, as amended. These requirements, 
including those pertaining to staffing patterns, the choice of the 
program options to be implemented and the acceptable ranges in the 
implementation of those options, have been developed to help maintain 
and improve the quality of Early Head Start and Head Start and to help 
promote lasting benefits to the children and families being served. 
These requirements are to be used in conjunction with the Head Start 
Program Performance Standards at 45 CFR Part 1304, as applicable.

[61 FR 57226, Nov. 5, 1996]



Sec. 1306.2  Effective dates.

    (a) Except as provided in paragraph (b) of this section, Head Start 
grantees funded or refunded after June 7, 1993, must comply with these 
requirements by such times in their grant cycles as new groups of 
children begin receiving services. This does not preclude grantees from 
voluntarily coming into compliance with these regulations prior to the 
effective date.
    (b) With respect to the requirements of Sec. 1306.32(b)(2), grantees 
that are currently operating classes in double session center-based 
options for less than three and a half hours per day, but for at least 
three hours per day, may continue to do so until September 1, 1995, at 
which time they must comply with the three and one-half hour minimum 
class time requirement.



Sec. 1306.3  Definitions.

    (a) Center-based program option means Head Start services provided 
to children primarily in classroom settings.
    (b) Combination program option means Head Start services provided to 
children in both a center setting and through intensive work with the 
child's parents and family at home.
    (c) Days of operation means the planned days during which children 
will be receiving direct Head Start component services in a classroom, 
on a field trip or on trips for health-related activities, in group 
socialization or when parents are receiving a home visit.
    (d) Double session variation means a variation of the center-based 
program option that operates with one teacher who works with one group 
of children in a morning session and a different group of children in an 
afternoon session.

[[Page 206]]

    (e) Full-day variation means a variation of the center-based program 
option in which program operations continue for longer than six hours 
per day.
    (f) Group socialization activities means the sessions in which 
children and parents enrolled in the home-based or combination program 
option interact with other home-based or combination children and 
parents in a Head Start classroom, community facility, home, or on a 
field trip.
    (g) Head Start class means a group of children supervised and taught 
by two paid staff members (a teacher and a teacher aide or two teachers) 
and, where possible, a volunteer.
    (h) Head Start parent means a Head Start child's mother or father, 
other family member who is a primary caregiver, foster parent, guardian 
or the person with whom the child has been placed for purposes of 
adoption pending a final adoption decree.
    (i) Head Start program is one operated by a Head Start grantee or 
delegate agency.
    (j) Home-based program option means Head Start services provided to 
children, primarily in the child's home, through intensive work with the 
child's parents and family as the primary factor in the growth and 
development of the child.
    (k) Home visits means the visits made to a child's home by the class 
teacher in a center-based program option, or home visitors in a home-
based program option, for the purpose of assisting parents in fostering 
the growth and development of their child.
    (l) Hours of operation means the planned hours per day during which 
children and families will be receiving direct Head Start component 
services in a classroom, on a field trip, while receiving medical or 
dental services, or during a home visit or group socialization activity. 
Hours of operation do not include travel time to and from the center at 
the beginning and end of a session.
    (m) Parent-teacher conference means the meeting held at the Head 
Start center between the child's teacher and the child's parents during 
which the child's progress and accomplishments are discussed.



           Subpart B--Head Start Program Staffing Requirements



Sec. 1306.20  Program staffing patterns.

    (a) Grantees must meet the requirements of 45 CFR 1304.52(g), 
Classroom staffing and home visitors, in addition to the requirements of 
this Section.
    (b) Grantees must provide adequate supervision of their staff.
    (c) Grantees operating center-based program options must employ two 
paid staff persons (a teacher and a teacher aide or two teachers) for 
each class. Whenever possible, there should be a third person in the 
classroom who is a volunteer.
    (d) Grantees operating home-based program options must employ home 
visitors responsible for home visits and group socialization activities.
    (e) Grantees operating a combination program option must employ, for 
their classroom operations, two paid staff persons, a teacher and a 
teacher aide or two teachers, for each class. Whenever possible, there 
should be a third person in the classroom who is a volunteer. They must 
employ staff for home visits who meet the qualifications the grantee 
requires for home visitors.
    (f) Classroom staff and home visitors must be able to communicate 
with the families they serve either directly or through a translator. 
They should also be familiar with the ethnic background of these 
families.

[57 FR 58092, Dec. 8, 1992, as amended at 61 FR 57226, Nov. 5, 1996]



Sec. 1306.21  Staff qualification requirements.

    Head Start programs must comply with section 648A of the Head Start 
Act and any subsequent amendments regarding the qualifications of 
classroom teachers.

[61 FR 57226, Nov. 5, 1996]



Sec. 1306.22  Volunteers.

    (a) Head Start programs must use volunteers to the fullest extent 
possible. Head Start grantees must develop and implement a system to 
actively recruit, train and utilize volunteers in the program.

[[Page 207]]

    (b) Special efforts must be made to have volunteer participation, 
especially parents, in the classroom and during group socialization 
activities.



Sec. 1306.23  Training.

    (a) Head Start grantees must provide pre-service training and in-
service training opportunities to program staff and volunteers to assist 
them in acquiring or increasing the knowledge and skills they need to 
fulfill their job responsibilities. This training must be directed 
toward improving the ability of staff and volunteers to deliver services 
required by Head Start regulations and policies.
    (b) Head Start grantees must provide staff with information and 
training about the underlying philosophy and goals of Head Start and the 
program options being implemented.



                  Subpart C--Head Start Program Options



Sec. 1306.30  Provisions of comprehensive child development services.

    (a) All Head Start grantees must provide comprehensive child 
development services, as defined in the Head Start Performance 
Standards.
    (b) All Head Start grantees must provide classroom or group 
socialization activities for the child as well as home visits to the 
parents. The major purpose of the classroom or socialization activities 
is to help meet the child's development needs and to foster the child's 
social competence. The major purpose of the home visits is to enhance 
the parental role in the growth and development of the child.
    (c) The facilities used by Early Head Start and Head Start grantee 
and delegate agencies for regularly scheduled center-based and 
combination program option classroom activities or home-based group 
socialization activities must comply with State and local requirements 
concerning licensing. In cases where these licensing standards are less 
comprehensive or less stringent than the Head Start regulations, or 
where no State or local licensing standards are applicable, grantee and 
delegate agencies are required to assure that their facilities are in 
compliance with the Head Start Program Performance Standards related to 
health and safety as found in 45 CFR 1304.53(a), Physical environment 
and facilities.
    (d) All grantees must identify, secure and use community resources 
in the provision of services to Head Start children and their families 
prior to using Head Start funds for these services.

[57 FR 58092, Dec. 8, 1992, as amended at 61 FR 57226, Nov. 5, 1996; 63 
FR 2314, Jan. 15, 1998]



Sec. 1306.31  Choosing a Head Start program option.

    (a) Grantees may choose to implement one or more than one of three 
program options: a center-based option, a home-based program option or a 
combination program option.
    (b) The program option chosen must meet the needs of the children 
and families as indicated by the community needs assessment conducted by 
the grantee.
    (c) When assigning children to a particular program option, Head 
Start grantees that operate more than one program option must consider 
such factors as the child's age, developmental level, disabilities, 
health or learning problems, previous preschool experiences and family 
situation. Grantees must also consider parents' concerns and wishes 
prior to making final assignments.



Sec. 1306.32  Center-based program option.

    (a) Class size. (1) Head Start classes must be staffed by a teacher 
and an aide or two teachers and, whenever possible, a volunteer.
    (2) Grantees must determine their class size based on the 
predominant age of the children who will participate in the class and 
whether or not a center-based double session variation is being 
implemented.
    (3) For classes serving predominantly four or five-year-old 
children, the average class size of that group of classes must be 
between 17 and 20 children, with no more than 20 children enrolled in 
any one class.
    (4) When double session classes serve predominantly four or five-
year-old-children, the average class size of that group of classes must 
be between 15

[[Page 208]]

and 17 children. A double session class for four or five-year old 
children may have no more than 17 children enrolled. (See paragraph (c) 
of this section for other requirements regarding the double session 
variation.)
    (5) For classes serving predominantly three-year-old children, the 
average class size of that group of classes must be between 15 and 17 
children, with no more than 17 children enrolled in any one class.
    (6) When double session classes serve predominantly three-year-old 
children, the average class size of that group of classes must be 
between 13 and 15 children. A double session class for three-year-old 
children may have no more than 15 children enrolled. (See paragraph (c) 
of this section for other requirements regarding the double session 
variation.)
    (7) It is recommended that at least 13 children be enrolled in each 
center-based option class where feasible.
    (8) A class is considered to serve predominantly four- or five-year-
old children if more than half of the children in the class will be four 
or five years old by whatever date is used by the State or local 
jurisdiction in which the Head Start program is located to determine 
eligibility for public school.
    (9) A class is considered to serve predominantly three-year-old 
children if more than half of the children in the class will be three 
years old by whatever date is used by the State or local jurisdiction in 
which Head Start is located to determine eligibility for public school.
    (10) Head Start grantees must determine the predominant age of 
children in the class at the start of the year. There is no need to 
change that determination during the year.
    (11) In some cases, State or local licensing requirements may be 
more stringent than these class requirements, preventing the required 
minimum numbers of children from being enrolled in the facility used by 
Head Start. Where this is the case, Head Start grantees must try to find 
alternative facilities that satisfy licensing requirements for the 
numbers of children cited above. If no alternative facilities are 
available, the responsible HHS official has the discretion to approve 
enrollment of fewer children than required above.
    (12) The chart below may be used for easy reference:

------------------------------------------------------------------------
                                              Funded class size [Funded
 Predominant age of children in the class            enrollment]
------------------------------------------------------------------------
4 and 5 year olds.........................  Program average of 17-20
                                             children enrolled per class
                                             in these classes. No more
                                             than 20 children enrolled
                                             in any class.
4 and 5 year olds in double session         Program average of 15-17
 classes.                                    children enrolled per class
                                             in these classes. No more
                                             than 17 children enrolled
                                             in any class.
3 year olds...............................  Program average of 15-17
                                             children enrolled per class
                                             in these classes. No more
                                             than 17 children enrolled
                                             in any class.
3 year olds in double session classes.....  Program average of 13-15
                                             children enrolled per class
                                             in these classes. No more
                                             than 15 children enrolled
                                             in any class.
------------------------------------------------------------------------

    (b) Center-based program option requirements. (1) Classes must 
operate for four or five days per week or some combination of four and 
five days per week.
    (2) Classes must operate for a minimum of three and one-half to a 
maximum of six hours per day with four hours being optimal.
    (3) The annual number of required days of planned class operations 
(days when children are scheduled to attend) is determined by the number 
of days per week each program operates. Programs that operate for four 
days per week must provide at least 128 days per year of planned class 
operations. Programs that operate for five days per week must provide at 
least 160 days per year of planned class operations. Grantees 
implementing a combination of four and five days per week must plan to 
operate between 128 and 160 days per year. The minimum number of planned 
days of service per year can be determined by computing the relative 
number of four and five day weeks that the program is in operation. All 
center-based program options must provide a minimum of 32 weeks of 
scheduled days of class operations over an eight or nine month period. 
Every effort should be made to schedule makeup classes using existing 
resources if planned class days fall below the number required per year.

[[Page 209]]

    (4) Programs must make a reasonable estimate of the number of days 
during a year that classes may be closed due to problems such as 
inclement weather or illness, based on their experience in previous 
years. Grantees must make provisions in their budgets and program plans 
to operate makeup classes and provide these classes, when needed, to 
prevent the number of days of service available to the children from 
falling below 128 days per year.
    (5) Each individual child is not required to receive the minimum 
days of service, although this is to be encouraged in accordance with 
Head Start policies regarding attendance. The minimum number of days 
also does not apply to children with disabilities whose individualized 
education plan may require fewer planned days of service in the Head 
Start program.
    (6) Head Start grantees operating migrant programs are not subject 
to the requirement for a minimum number of planned days, but must make 
every effort to provide as many days of service as possible to each 
migrant child and family.
    (7) Staff must be employed for sufficient time to allow them to 
participate in pre-service training, to plan and set up the program at 
the start of the year, to close the program at the end of the year, to 
conduct home visits, to conduct health examinations, screening and 
immunization activities, to maintain records, and to keep service 
component plans and activities current and relevant. These activities 
should take place outside of the time scheduled for classes in center-
based programs or home visits in home-based programs.
    (8) Head Start grantees must develop and implement a system that 
actively encourages parents to participate in two home visits annually 
for each child enrolled in a center-based program option. These visits 
must be initiated and carried out by the child's teacher. The child may 
not be dropped from the program if the parents will not participate in 
the visits.
    (9) Head Start grantees operating migrant programs are required to 
plan for a minimum of two parent-teacher conferences for each child 
during the time they serve that child. Should time and circumstance 
allow, migrant programs must make every effort to conduct home visits.
    (c) Double session variation. (1) A center-based option with a 
double session variation employs a single teacher to work with one group 
of children in the morning and a different group of children in the 
afternoon. Because of the larger number of children and families to whom 
the teacher must provide services, double session program options must 
comply with the requirements regarding class size explained in paragraph 
(a) of this section and with all other center-based requirements in 
paragraph (b) of this section with the exceptions and additions noted in 
paragraphs (c) (2) and (3) of this section.
    (2) Each program must operate classes for four days per week.
    (3) Each double session classroom staff member must be provided 
adequate break time during the course of the day. In addition, teachers, 
aides and volunteers must have appropriate time to prepare for each 
session together, to set up the classroom environment and to give 
individual attention to children entering and leaving the center.
    (d) Full day variation. (1) A Head Start grantee implementing a 
center-based program option may operate a full day variation and provide 
more than six hours of class operations per day using Head Start funds. 
These programs must comply with all the requirements regarding the 
center-based program option found in paragraphs (a) and (b) of this 
section with the exception of paragraph (b)(2) regarding the hours of 
service per day.
    (2) Programs are encouraged to meet the needs of Head Start families 
for full day services by securing funds from other agencies. Before 
implementing a full day variation of a center-based option, a Head Start 
grantee should demonstrate that alternative enrollment opportunities or 
funding from non-Head Start sources are not available for Head Start 
families needing full-day child care services.
    (3) Head Start grantees may provide full day services only to those 
children and families with special needs that justify full day services 
or to those children whose parents are employed or in job training with 
no caregiver

[[Page 210]]

present in the home. The records of each child receiving services for 
more than six hours per day must show how each child meets the criteria 
stated above.
    (e) Non-Head Start services. Grantees may charge for services which 
are provided outside the hours of the Head Start program.



Sec. 1306.33  Home-based program option.

    (a) Grantees implementing a home-based program option must:
    (1) Provide one home visit per week per family (a minimum of 32 home 
visits per year) lasting for a minimum of 1 and \1/2\ hours each.
    (2) Provide, at a minimum, two group socialization activities per 
month for each child (a minimum of 16 group socialization activities 
each year).
    (3) Make up planned home visits or scheduled group socialization 
activities that were canceled by the grantee or by program staff when 
this is necessary to meet the minimums stated above. Medical or social 
service appointments may not replace home visits or scheduled group 
socialization activities.
    (4) Allow staff sufficient employed time to participate in pre-
service training, to plan and set up the program at the start of the 
year, to close the program at the end of the year, to maintain records, 
and to keep component and activities plans current and relevant. These 
activities should take place when no home visits or group socialization 
activities are planned.
    (5) Maintain an average caseload of 10 to 12 families per home 
visitor with a maximum of 12 families for any individual home visitor.
    (b) Home visits must be conducted by trained home visitors with the 
content of the visit jointly planned by the home visitor and the 
parents. Home visitors must conduct the home visit with the 
participation of parents. Home visits may not be conducted by the home 
visitor with only babysitters or other temporary caregivers in 
attendance.
    (1) The purpose of the home visit is to help parents improve their 
parenting skills and to assist them in the use of the home as the 
child's primary learning environment. The home visitor must work with 
parents to help them provide learning opportunities that enhance their 
child's growth and development.
    (2) Home visits must, over the course of a month, contain elements 
of all Head Start program components. The home visitor is the person 
responsible for introducing, arranging and/or providing Head Start 
services.
    (c) Group socialization activities must be focused on both the 
children and parents. They may not be conducted by the home visitor with 
babysitters or other temporary caregivers.
    (1) The purpose of these socialization activities for the children 
is to emphasize peer group interaction through age appropriate 
activities in a Head Start classroom, community facility, home, or on a 
field trip. The children are to be supervised by the home visitor with 
parents observing at times and actively participating at other times.
    (2) These activities must be designed so that parents are expected 
to accompany their children to the group socialization activities at 
least twice each month to observe, to participate as volunteers or to 
engage in activities designed specifically for the parents.
    (3) Grantees must follow the nutrition requirements specified in 45 
CFR 1304.23(b)(2) and provide appropriate snacks and meals to the 
children during group socialization activities.

[57 FR 58092, Dec. 8, 1992, as amended at 61 FR 57227, Nov. 5, 1996]



Sec. 1306.34  Combination program option.

    (a) Combination program option requirements: (1) Grantees 
implementing a combination program option must provide class sessions 
and home visits that result in an amount of contact with children and 
families that is, at a minimum, equivalent to the services provided 
through the center-based program option or the home-based program 
option.
    (2) Acceptable combinations of minimum number of class sessions and 
corresponding number of home visits are shown below. Combination 
programs must provide these services over a period of 8 to 12 months.

------------------------------------------------------------------------
                                                              Number of
                 Number of class sessions                    home visits
------------------------------------------------------------------------
96........................................................             8

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92-95.....................................................             9
88-91.....................................................            10
84-87.....................................................            11
80-83.....................................................            12
76-79.....................................................            13
72-75.....................................................            14
68-71.....................................................            15
64-67.....................................................            16
60-63.....................................................            17
56-59.....................................................            18
52-55.....................................................            19
48-51.....................................................            20
44-47.....................................................            21
40-43.....................................................            22
36-39.....................................................            23
32-35.....................................................            24
------------------------------------------------------------------------

    (3) The following are examples of various configurations that are 
possible for a program that operates for 32 weeks:

     A program operating classes three days a week and providing 
one home visit a month (96 classes and 8 home visits a year);
     A program operating classes two days a week and providing 
two home visits a month (64 classes and 16 home visits a year);
     A program operating classes one day a week and providing 
three home visits a month (32 classes and 24 home visits a year).

    (4) Grantees operating the combination program option must make a 
reasonable estimate of the number of days during a year that centers may 
be closed due to problems such as inclement weather or illness, based on 
their experience in previous years. Grantees must make provisions in 
their budgets and program plans to operate make-up classes up to the 
estimated number, and provide these classes, when necessary, to prevent 
the number of days of classes from falling below the number required by 
paragraph (a)(2) of this section. Grantees must make up planned home 
visits that were canceled by the program or by the program staff if this 
is necessary to meet the minimums required by paragraph (a)(2) of this 
section. Medical or social service appointments may not replace home 
visits.
    (b) Requirements for class sessions: (1) Grantees implementing the 
combination program option must comply with the class size requirements 
contained in Sec. 1306.32(a).
    (2) The provisions of the following sections apply to grantees 
operating the combination program option: Sec. 1306.32(b) (2), (5), (6), 
(7) and (9).
    (3) If a grantee operates a double session or a full day variation, 
it must meet the provisions concerning double-sessions contained in 
Sec. 1306.32(c)(1) and (3) and the provisions for the center-based 
program option's full day variation found in Sec. 1306.32(d).
    (c) Requirements for home visits: (1) Home visits must last for a 
minimum of 1 and \1/2\ hours each.
    (2) The provisions of the following section, concerning the home-
based program option, must be adhered to by grantees implementing the 
combination program option: Sec. 1306.33(a) (4) and (5); and 
Sec. 1306.33(b).



Sec. 1306.35  Additional Head Start program option variations.

    In addition to the center-based, home-based and combination program 
options defined above, the Commissioner of the Administration on 
Children, Youth and Families retains the right to fund alternative 
program variations to meet the unique needs of communities or to 
demonstrate or test alternative approaches for providing Head Start 
services.



Sec. 1306.36  Compliance waiver.

    An exception to one or more of the requirements contained in 
Secs. 1306.32 through 1306.34 of subpart C will be granted only if the 
Commissioner of the Administration on Children, Youth and Families 
determines, on the basis of supporting evidence, that the grantee made a 
reasonable effort to comply with the requirement but was unable to do so 
because of limitations or circumstances with a specific community or 
communities served by the grantee.



PART 1308--HEAD START PROGRAM PERFORMANCE STANDARDS ON SERVICES FOR CHILDREN WITH DISABILITIES--Table of Contents




                           Subpart A--General

Sec.
1308.1  Purpose.
1308.2  Scope.
1308.3  Definitions.

                  Subpart B--Disabilities Service Plan

1308.4  Purpose and scope of disabilities service plan.

[[Page 212]]

            Subpart C--Social Services Performance Standards

1308.5  Recruitment and enrollment of children with disabilities.

            Subpart D--Health Services Performance Standards

1308.6  Assessment of children.
1308.7  Eligibility criteria: Health impairment.
1308.8  Eligibility criteria: Emotional/behavioral disorders.
1308.9  Eligibility criteria: Speech or language impairments.
1308.10  Eligibility criteria: Mental retardation.
1308.11  Eligibility criteria: Hearing impairment including deafness.
1308.12  Eligibility criteria: Orthopedic impairment.
1308.13  Eligibility criteria: Visual impairment including blindness.
1308.14  Eligibility criteria: Learning disabilities.
1308.15  Eligibility criteria: Autism.
1308.16  Eligibility criteria: Traumatic brain injury.
1308.17  Eligibility criteria: Other impairments.
1308.18  Disabilities/health services coordination.

           Subpart E--Education Services Performance Standards

1308.19  Developing individualized education programs (IEPs).

               Subpart F--Nutrition Performance Standards

1308.20  Nutrition services.

           Subpart G--Parent Involvement Performance Standards

1308.21  Parent participation and transition of children into Head Start 
          and from Head Start to public school.

Appendix to Part 1308--Head Start Program Performance Standards on 
          Services to Children With Disabilities

    Authority: 42 U.S.C. 9801 et seq.

    Source: 58 FR 5501, Jan. 21, 1993, unless otherwise noted.



                           Subpart A--General



Sec. 1308.1  Purpose.

    This rule sets forth the requirements for providing special services 
for 3- through 5-year-old children with disabilities enrolled in Head 
Start programs. These requirements are to be used in conjunction with 
the Head Start Program Performance Standards at 45 CFR part 1304. The 
purpose of this part is to ensure that children with disabilities 
enrolled in Head Start programs receive all the services to which they 
are entitled under the Head Start Program Performance Standards at 45 
CFR part 1304, as amended.



Sec. 1308.2  Scope.

    This rule applies to all Head Start grantees and delegate agencies.



Sec. 1308.3  Definitions.

    As used in this part:
    (a) The term ACYF means the Administration on Children, Youth and 
Families, Administration for Children and Families, U.S. Department of 
Health and Human Services, and includes appropriate Regional Office 
staff.
    (b) The term children with disabilities means children with mental 
retardation, hearing impairments including deafness, speech or language 
impairments, visual impairments including blindness, serious emotional 
disturbance, orthopedic impairments, autism, traumatic brain injury, 
other health impairments or specific learning disabilities; and who, by 
reason thereof, need special education and related services. The term 
children with disabilities for children aged 3 to 5, inclusive, may, at 
a State's discretion, include children experiencing developmental 
delays, as defined by the State and as measured by appropriate 
diagnostic instruments and procedures, in one or more of the following 
areas: physical development, cognitive development, communication 
development, social or emotional development, or adaptive development; 
and who, by reason thereof, need special education and related services.
    (c) The term Commissioner means the Commissioner of the 
Administration on Children, Youth and Families.
    (d) The term day means a calendar day.
    (e) The term delegate agency means a public or private non-profit 
agency to which a grantee has delegated the responsibility for operating 
all or part of its Head Start program.

[[Page 213]]

    (f) The term disabilities coordinator means the person on the Head 
Start staff designated to manage on a full or part-time basis the 
services for children with disabilities described in part 1308.
    (g) The term eligibility criteria means the criteria for determining 
that a child enrolled in Head Start requires special education and 
related services because of a disability.
    (h) The term grantee means the public or private non-profit agency 
which has been granted financial assistance by ACYF to administer a Head 
Start program.
    (i) The term individualized education program (IEP) means a written 
statement for a child with disabilities, developed by the public agency 
responsible for providing free appropriate public education to a child, 
and contains the special education and related services to be provided 
to an individual child.
    (j) The term least restrictive environment means an environment in 
which services to children with disabilities are provided:
    (1) to the maximum extent appropriate, with children who are not 
disabled and in which;
    (2) special classes or other removal of children with disabilities 
from the regular educational environment occurs only when the nature or 
severity of the disability is such that education in regular classes 
with the use of supplementary aids and services cannot be achieved 
satisfactorily.
    (k) The term Performance Standards means the Head Start program 
functions, activities and facilities required and necessary to meet the 
objectives and goals of the Head Start program as they relate directly 
to children and their families.
    (l) The term related services means transportation and such 
developmental, corrective, and other supportive services as are required 
to assist a child with a disability to benefit from special education, 
and includes speech pathology and audiology, psychological services, 
physical and occupational therapy, recreation, including therapeutic 
recreation, early identification and assessment of disabilities in 
children, counseling services, including rehabilitation counseling, and 
medical services for diagnostic or evaluation purposes. The term also 
includes school health services, social work services, and parent 
counseling and training. It includes other developmental, corrective or 
supportive services if they are required to assist a child with a 
disability to benefit from special education, including assistive 
technology services and devices.
    (1) The term assistive technology device means any item, piece of 
equipment, or product system, whether acquired commercially off the 
shelf, modified, or customized, that is used to increase, maintain, or 
improve functional capabilities of individuals with disabilities.
    (2) The term assistive technology service means any service that 
directly assists an individual with a disability in the selection, 
acquisition, or use of an assistive technology device. The term 
includes: The evaluation of the needs of an individual with a 
disability; purchasing, leasing, or otherwise providing for the 
acquisition of assistive technology devices by individuals with 
disabilities; selecting, designing, fitting, customizing, adapting, 
applying, maintaining, repairing, or replacing of assistive technology 
devices; coordinating and using other therapies, interventions, or 
services with assistive technology devices, such as those associated 
with existing education and rehabilitation plans and programs; training 
or technical assistance for an individual with disabilities, or, where 
appropriate, the family of an individual with disabilities; and training 
or technical assistance to professionals who employ or provide services 
involved in the major life functions of individuals with disabilities.
    (m) The term responsible HHS official means the official who is 
authorized to make the grant of assistance in question or his or her 
designee.
    (n) The term special education means specially designed instruction, 
at no cost to parents or guardians, to meet the unique needs of a child 
with a disability. These services include classroom or home-based 
instruction, instruction in hospitals and institutions, and specially 
designed physical education if necessary.

[[Page 214]]



                  Subpart B--Disabilities Service Plan



Sec. 1308.4  Purpose and scope of disabilities service plan.

    (a) A Head Start grantee, or delegate agency, if appropriate, must 
develop a disabilities service plan providing strategies for meeting the 
special needs of children with disabilities and their parents. The 
purposes of this plan are to assure:
    (1) That all components of Head Start are appropriately involved in 
the integration of children with disabilities and their parents; and
    (2) That resources are used efficiently.
    (b) The plan must be updated annually.
    (c) The plan must include provisions for children with disabilities 
to be included in the full range of activities and services normally 
provided to all Head Start children and provisions for any modifications 
necessary to meet the special needs of the children with disabilities.
    (d) The Head Start grantee and delegate agency must use the 
disabilities service plan as a working document which guides all aspects 
of the agency's effort to serve children with disabilities. This plan 
must take into account the needs of the children for small group 
activities, for modifications of large group activities and for any 
individual special help.
    (e) The grantee or delegate agency must designate a coordinator of 
services for children with disabilities (disabilities coordinator) and 
arrange for preparation of the disabilities service plan and of the 
grantee application budget line items for services for children with 
disabilities. The grantee or delegate must ensure that all relevant 
coordinators, other staff and parents are consulted.
    (f) The disability service plan must contain:
    (1) Procedures for timely screening;
    (2) Procedures for making referrals to the LEA for evaluation to 
determine whether there is a need for special education and related 
services for a child, as early as the child's third birthday;
    (3) Assurances of accessibility of facilities; and
    (4) Plans to provide appropriate special furniture, equipment and 
materials if needed.
    (g) The plan, when appropriate, must address strategies for the 
transition of children into Head Start from infant/toddler programs (0-3 
years), as well as the transition from Head Start into the next 
placement. The plan must include preparation of staff and parents for 
the entry of children with severe disabilities into the Head Start 
program.
    (h) The grantee or delegate agency must arrange or provide special 
education and related services necessary to foster the maximum 
development of each child's potential and to facilitate participation in 
the regular Head Start program unless the services are being provided by 
the LEA or other agency. The plan must specify the services to be 
provided directly by Head Start and those provided by other agencies. 
The grantee or delegate agency must arrange for, provide, or procure 
services which may include, but are not limited to special education and 
these related services:
    (1) Audiology services, including identification of children with 
hearing loss and referral for medical or other professional attention; 
provision of needed rehabilitative services such as speech and language 
therapy and auditory training to make best use of remaining hearing; 
speech conservation; lip reading; determination of need for hearing aids 
and fitting of appropriate aids; and programs for prevention of hearing 
loss;
    (2) Physical therapy to facilitate gross motor development in 
activities such as walking prevent or slow orthopedic problems and 
improve posture and conditioning;
    (3) Occupational therapy to improve, develop or restore fine motor 
functions in activities such as using a fork or knife;
    (4) Speech or language services including therapy and use of 
assistive devices necessary for a child to develop or improve receptive 
or expressive means of communication;
    (5) Psychological services such as evaluation of each child's 
functioning and interpreting the results to staff

[[Page 215]]

and parents; and counseling and guidance services for staff and parents 
regarding disabilities;
    (6) Transportation for children with disabilities to and from the 
program and to special clinics or other service providers when the 
services cannot be provided on-site. Transportation includes adapted 
buses equipped to accommodate wheelchairs or other such devices if 
required; and
    (7) Assistive technology services or devices necessary to enable a 
child to improve functions such as vision, mobility or communication to 
meet the objectives in the IEP.
    (i) The disabilities service plan must include options to meet the 
needs and take into consideration the strengths of each child based upon 
the IEP so that a continuum of services available from various agencies 
is considered.
    (j) The options may include:
    (1) Joint placement of children with other agencies;
    (2) Shared provision of services with other agencies;
    (3) Shared personnel to supervise special education services, when 
necessary to meet State requirements on qualifications;
    (4) Administrative accommodations such as having two children share 
one enrollment slot when each child's IEP calls for part-time service 
because of their individual needs; and
    (5) Any other strategies to be used to insure that special needs are 
met. These may include:
    (i) Increased staff;
    (ii) Use of volunteers; and
    (iii) Use of supervised students in such fields as child 
development, special education, child psychology, various therapies and 
family services to assist the staff.
    (k) The grantee must ensure that the disabilities service plan 
addresses grantee efforts to meet State standards for personnel serving 
children with disabilities by the 1994-95 program year. Special 
education and related services must be provided by or under the 
supervision of personnel meeting State qualifications by the 1994-95 
program year.
    (l) The disabilities service plan must include commitment to 
specific efforts to develop interagency agreements with the LEAs and 
other agencies within the grantee's service area. If no agreement can be 
reached, the grantee must document its efforts and inform the Regional 
Office. The agreements must address:
    (1) Head Start participation in the public agency's Child Find plan 
under Part B of IDEA;
    (2) Joint training of staff and parents;
    (3) Procedures for referral for evaluations, IEP meetings and 
placement decisions;
    (4) Transition;
    (5) Resource sharing;
    (6) Head Start commitment to provide the number of children 
receiving services under IEPs to the LEA for the LEA Child Count report 
by December 1 annually; and
    (7) Any other items agreed to by both parties. Grantees must make 
efforts to update the agreements annually.
    (m) The disabilities coordinator must work with the director in 
planning and budgeting of grantee funds to assure that the special needs 
identified in the IEP are fully met; that children most in need of an 
integrated placement and of special assistance are served; and that the 
grantee maintains the level of fiscal support to children with 
disabilities consistent with the Congressional mandate to meet their 
special needs.
    (n) The grant application budget form and supplement submitted with 
applications for funding must reflect requests for adequate resources to 
implement the objectives and activities in the disability services plan 
and fulfill the requirements of these Performance Standards.
    (o) The budget request included with the application for funding 
must address the implementation of the disabilities service plan. 
Allowable expenditures include:
    (1) Salaries. Allowable expenditures include salaries of a full or 
part-time coordinator of services for children with disabilities 
(disabilities coordinator), who is essential to assure that programs 
have the core capability to recruit, enroll, arrange for the evaluation 
of children, provide or arrange for services to children with 
disabilities and work with Head Start coordinators and staff of other 
agencies which are

[[Page 216]]

working cooperatively with the grantee. Salaries of special education 
resource teachers who can augment the work of the regular teacher are an 
allowable expenditure.
    (2) Evaluation of children. When warranted by screening or 
rescreening results, teacher observation or parent request, arrangements 
must be made for evaluation of the child's development and functioning. 
If, after referral for evaluation to the LEA, evaluations are not 
provided by the LEA, they are an allowable expenditure.
    (3) Services. Program funds may be used to pay for services which 
include special education, related services, and summer services deemed 
necessary on an individual basis and to prepare for serving children 
with disabilities in advance of the program year.
    (4) Making services accessible. Allowable costs include elimination 
of architectural barriers which affect the participation of children 
with disabilities, in conformance with 45 CFR part 84, Nondiscrimination 
on the Basis of Handicap in Program and Activities Receiving or 
Benefiting from Federal Financial Assistance and with the Americans with 
Disabilities Act of 1990 (42 U.S.C. 12101). The Americans with 
Disabilities Act requires that public accommodations including private 
schools and day care centers may not discriminate on the basis of 
disability. Physical barriers in existing facilities must be removed if 
removal is readily achievable (i.e., easily accomplishable and able to 
be carried out without much difficulty or expense). If not, alternative 
methods of providing the services must be offered, if those methods are 
readily achievable. Alterations must be accessible. When alterations to 
primary function areas are made, an accessible path of travel to the 
altered areas (and the bathrooms, telephones and drinking fountains 
serving that area) must be provided to the extent that the added 
accessibility costs are not disproportionate to the overall cost of the 
alterations. Program funds may be used for ramps, remodeling or 
modifications such as grab bars or railings. Grantees must meet new 
statutory and regulatory requirements that are enacted.
    (5) Transportation. Transportation is a related service to be 
provided to children with disabilities. When transportation to the 
program site and to special services can be accessed from other 
agencies, it should be used. When it is not available, program funds are 
to be used to provide it. Special buses or use of taxis are allowable 
expenses if there are no alternatives available and they are necessary 
to enable a child to be served.
    (6) Special Equipment and Materials. Purchase or lease of special 
equipment and materials for use in the program and home is an allowable 
program expense. Grantees must make available assistive devices 
necessary to make it possible for a child to move, communicate, improve 
functioning or address objectives which are listed in the child's IEP.
    (7) Training and Technical Assistance. Increasing the abilities of 
staff to meet the special needs of children with disabilities is an 
allowable expense. Appropriate expenditures may include but are not 
limited to:
    (i) Travel and per diem expenses for disabilities coordinators, 
teachers and parents to attend training and technical assistance events 
related to special services for children with disabilities;
    (ii) The provision of substitute teaching staff to enable staff to 
attend training and technical assistance events;
    (iii) Fees for courses specifically related to the requirements of 
the disabilities service plan, a child's IEP or State certification to 
serve children with disabilities; and
    (iv) Fees and expenses for training/technical assistance consultants 
if such help is not available from another provider at no cost.



            Subpart C--Social Services Performance Standards



Sec. 1308.5  Recruitment and enrollment of children with disabilities.

    (a) The grantee or delegate agency outreach and recruitment 
activities must incorporate specific actions to actively locate and 
recruit children with disabilities.
    (b) A grantee must insure that staff engaged in recruitment and 
enrollment

[[Page 217]]

of children are knowledgable about the provisions of 45 CFR part 84, 
Nondiscrimination on the Basis of Handicap in Programs and Activities 
Receiving or Benefiting from Federal Financial Assistance, and of the 
Americans with Disabilities Act of 1990, (42 U.S.C. 12101).
    (c) A grantee must not deny placement on the basis of a disability 
or its severity to any child when:
    (1) The parents wish to enroll the child,
    (2) The child meets the Head Start age and income eligibility 
criteria,
    (3) Head Start is an appropriate placement according to the child's 
IEP, and
    (4) The program has space to enroll more children, even though the 
program has made ten percent of its enrollment opportunities available 
to children with disabilities. In that case children who have a 
disability and non-disabled children would compete for the available 
enrollment opportunities.
    (d) The grantee must access resources and plan for placement 
options, such as dual placement, use of resource staff and training so 
that a child with a disability for whom Head Start is an appropriate 
placement according to the IEP is not denied enrollment because of:
    (1) Staff attitudes and/or apprehensions;
    (2) Inaccessibility of facilities;
    (3) Need to access additional resources to serve a specific child;
    (4) Unfamiliarity with a disabling condition or special equipment, 
such as a prosthesis; and
    (5) Need for personalized special services such as feeding, 
suctioning, and assistance with toileting, including catheterization, 
diapering, and toilet training.
    (e) The same policies governing Head Start program eligibility for 
other children, such as priority for those most in need of the services, 
apply to children with disabilities. Grantees also must take the 
following factors into account when planning enrollment procedures:
    (1) The number of children with disabilities in the Head Start 
service area including types of disabilities and their severity;
    (2) The services and resources provided by other agencies; and
    (3) State laws regarding immunization of preschool children. 
Grantees must observe applicable State laws which usually require that 
children entering State preschool programs complete immunizations prior 
to or within thirty days after entering to reduce the spread of 
communicable diseases.
    (f) The recruitment effort of a Head Start grantee must include 
recruiting children who have severe disabilities, including children who 
have been previously identified as having disabilities.



            Subpart D--Health Services Performance Standards



Sec. 1308.6  Assessment of children.

    (a) The disabilities coordinator must be involved with other program 
staff throughout the full process of assessment of children, which has 
three steps:
    (1) All children enrolled in Head Start are screened as the first 
step in the assessment process;
    (2) Staff also carry out on-going developmental assessment for all 
enrolled children throughout the year to determine progress and to plan 
program activities;
    (3) Only those children who need further specialized assessment to 
determine whether they have a disability and may require special 
education and related services proceed to the next step, evaluation. The 
disabilities coordinator has primary responsibility for this third step, 
evaluation, only.
    (b) Screening, the first step in the assessment process, consists of 
standardized health screening and developmental screening which includes 
speech, hearing and vision. It is a brief process, which can be 
repeated, and is never used to determine that a child has a disability. 
It only indicates that a child may need further evaluation to determine 
whether the child has a disability. Rescreening must be provided as 
needed.
    (1) Grantees must provide for developmental, hearing and vision 
screenings of all Early Head Start and Head Start children within 45 
days of the child's entry into the program.

[[Page 218]]

This does not preclude starting screening in the spring, before program 
services begin in the fall.
    (2) Grantees must make concerted efforts to reach and include the 
most in need and hardest to reach in the screening effort, providing 
assistance but urging parents to complete screening before the start of 
the program year.
    (3) Developmental screening is a brief check to identify children 
who need further evaluation to determine whether they may have 
disabilities. It provides information in three major developmental 
areas: visual/motor, language and cognition, and gross motor/body 
awareness for use along with observation data, parent reports and home 
visit information. When appropriate standardized developmental screening 
instruments exist, they must be used. The disabilities coordinator must 
coordinate with the health coordinator and staff who have the 
responsibility for implementing health screening and with the education 
staff who have the responsibility for implementing developmental 
screening.
    (c) Staff must inform parents of the types and purposes of the 
screening well in advance of the screening, the results of these 
screenings and the purposes and results of any subsequent evaluations.
    (d) Developmental assessment, the second step, is the collection of 
information on each child's functioning in these areas: gross and fine 
motor skills, perceptual discrimination, cognition, attention skills, 
self-help, social and receptive skills and expressive language. The 
disabilities coordinator must coordinate with the education coordinator 
in the on-going assessment of each Head Start child's functioning in all 
developmental areas by including this developmental information in later 
diagnostic and program planning activities for children with 
disabilities.
    (e) The disabilities coordinator must arrange for further, formal, 
evaluation of a child who has been identified as possibly having a 
disability, the third step. (1) The disabilities coordinator must refer 
a child to the LEA for evaluation as soon as the need is evident, 
starting as early as the child's third birthday.
    (2) If the LEA does not evaluate the child, Head Start is 
responsible for arranging or providing for an evaluation, using its own 
resources and accessing others. In this case, the evaluation must meet 
the following requirements:
    (i) Testing and evaluation procedures must be selected and 
administered so as not to be racially or culturally discriminatory, 
administered in the child's native language or mode of communication, 
unless it clearly is not feasible to do so.
    (ii) Testing and evaluation procedures must be administered by 
trained (State certified or licensed) personnel.
    (iii) No single procedure may be the sole criterion for determining 
an appropriate educational program for a child.
    (iv) The evaluation must be made by a multidisciplinary team or 
group of persons including at least one teacher or specialist with 
knowledge in the area of suspected disability.
    (v) Evaluators must use only assessment materials which have been 
validated for the specific purpose for which they are used.
    (vi) Tests used with children with impaired sensory, manual or 
communication skills must be administered so that they reflect the 
children's aptitudes and achievement levels and not just the 
disabilities.
    (vii) Tests and materials must assess all areas related to the 
suspected disability.
    (viii) In the case of a child whose primary disability appears to be 
a speech or language impairment, the team must assure that enough tests 
are used to determine that the impairment is not a symptom of another 
disability and a speech or language pathologist should be involved in 
the evaluation.
    (3) Parental consent in writing must be obtained before a child can 
have an initial evaluation to determine whether the child has a 
disability.
    (4) Confidentiality must be maintained in accordance with grantee 
and State requirements. Parents must be given the opportunity to review 
their child's records in a timely manner and they must be notified and 
give permission if additional evaluations are proposed. Grantees must 
explain the purpose and results of the evaluation and

[[Page 219]]

make concerted efforts to help the parents understand them.
    (5) The multidisciplinary team provides the results of the 
evaluation, and its professional opinion that the child does or does not 
need special education and related services, to the disabilities 
coordinator. If it is their professional opinion that a child has a 
disability, the team is to state which of the eligibility criteria 
applies and provide recommendations for programming, along with their 
findings. Only children whom the evaluation team determines need special 
education and related services may be counted as children with 
disabilities.

[58 FR 5501, Jan. 21, 1993, as amended at 61 FR 57227, Nov. 5, 1996]



Sec. 1308.7  Eligibility criteria: Health impairment.

    (a) A child is classified as health impaired who has limited 
strength, vitality or alertness due to a chronic or acute health problem 
which adversely affects learning.
    (b) The health impairment classification may include, but is not 
limited to, cancer, some neurological disorders, rheumatic fever, severe 
asthma, uncontrolled seizure disorders, heart conditions, lead 
poisoning, diabetes, AIDS, blood disorders, including hemophilia, sickle 
cell anemia, cystic fibrosis, heart disease and attention deficit 
disorder.
    (c) This category includes medically fragile children such as 
ventilator dependent children who are in need of special education and 
related services.
    (d) A child may be classified as having an attention deficit 
disorder under this category who has chronic and pervasive 
developmentally inappropriate inattention, hyperactivity, or 
impulsivity. To be considered a disorder, this behavior must affect the 
child's functioning severely. To avoid overuse of this category, 
grantees are cautioned to assure that only the enrolled children who 
most severely manifest this behavior must be classified in this 
category.
    (1) The condition must severely affect the performance of a child 
who is trying to carry out a developmentally appropriate activity that 
requires orienting, focusing, or maintaining attention during classroom 
instructions and activities, planning and completing activities, 
following simple directions, organizing materials for play or other 
activities, or participating in group activities. It also may be 
manifested in overactivity or impulsive acts which appear to be or are 
interpreted as physical aggression. The disorder must manifest itself in 
at least two different settings, one of which must be the Head Start 
program site.
    (2) Children must not be classified as having attention deficit 
disorders based on:
    (i) Temporary problems in attention due to events such as a divorce, 
death of a family member or post-traumatic stress reactions to events 
such as sexual abuse or violence in the neighborhood;
    (ii) Problems in attention which occur suddenly and acutely with 
psychiatric disorders such as depression, anxiety and schizophrenia;
    (iii) Behaviors which may be caused by frustration stemming from 
inappropriate programming beyond the child's ability level or by 
developmentally inappropriate demands for long periods of inactive, 
passive activity;
    (iv) Intentional noncompliance or opposition to reasonable requests 
that are typical of good preschool programs; or
    (v) Inattention due to cultural or language differences.
    (3) An attention deficit disorder must have had its onset in early 
childhood and have persisted through the course of child development 
when children normally mature and become able to operate in a socialized 
preschool environment. Because many children younger than four have 
difficulty orienting, maintaining and focussing attention and are highly 
active, when Head Start is responsible for the evaluation, attention 
deficit disorder applies to four and five year old children in Head 
Start but not to three year olds.
    (4) Assessment procedures must include teacher reports which 
document the frequency and nature of indications of possible attention 
deficit disorders and describe the specific situations and events 
occurring just before the problems manifested themselves. Reports

[[Page 220]]

must indicate how the child's functioning was impaired and must be 
confirmed by independent information from a second observer.



Sec. 1308.8  Eligibility criteria: Emotional/behavioral disorders.

    (a) An emotional/behavioral disorder is a condition in which a 
child's behavioral or emotional responses are so different from those of 
the generally accepted, age-appropriate norms of children with the same 
ethnic or cultural background as to result in significant impairment in 
social relationships, self-care, educational progress or classroom 
behavior. A child is classified as having an emotional/behavioral 
disorder who exhibits one or more of the following characteristics with 
such frequency, intensity, or duration as to require intervention:
    (1) Seriously delayed social development including an inability to 
build or maintain satisfactory (age appropriate) interpersonal 
relationships with peers or adults (e.g., avoids playing with peers);
    (2) Inappropriate behavior (e.g., dangerously aggressive towards 
others, self-destructive, severely withdrawn, non-communicative);
    (3) A general pervasive mood of unhappiness or depression, or 
evidence of excessive anxiety or fears (e.g., frequent crying episodes, 
constant need for reassurance); or
    (4) Has a professional diagnosis of serious emotional disturbance.
    (b) The eligibility decision must be based on multiple sources of 
data, including assessment of the child's behavior or emotional 
functioning in multiple settings.
    (c) The evaluation process must include a review of the child's 
regular Head Start physical examination to eliminate the possibility of 
misdiagnosis due to an underlying physical condition.



Sec. 1308.9  Eligibility criteria: Speech or language impairments.

    (a) A speech or language impairment means a communication disorder 
such as stuttering, impaired articulation, a language impairment, or a 
voice impairment, which adversely affects a child's learning.
    (b) A child is classified as having a speech or language impairment 
whose speech is unintelligible much of the time, or who has been 
professionally diagnosed as having speech impairments which require 
intervention or who is professionally diagnosed as having a delay in 
development in his or her primary language which requires intervention.
    (c) A language disorder may be receptive or expressive. A language 
disorder may be characterized by difficulty in understanding and 
producing language, including word meanings (semantics), the components 
of words (morphology), the components of sentences (syntax), or the 
conventions of conversation (pragmatics).
    (d) A speech disorder occurs in the production of speech sounds 
(articulation), the loudness, pitch or quality of voice (voicing), or 
the rhythm of speech (fluency).
    (e) A child should not be classified as having a speech or language 
impairment whose speech or language differences may be attributed to:
    (1) Cultural, ethnic, bilingual, or dialectical differences or being 
non-English speaking; or
    (2) Disorders of a temporary nature due to conditions such as a 
dental problem; or
    (3) Delays in developing the ability to articulate only the most 
difficult consonants or blends of sounds within the broad general range 
for the child's age.



Sec. 1308.10  Eligibility criteria: Mental retardation.

    (a) A child is classified as mentally retarded who exhibits 
significantly sub-average intellectual functioning and exhibits deficits 
in adaptive behavior which adversely affect learning. Adaptive behavior 
refers to age-appropriate coping with the demands of the environment 
through independent skills in self-care, communication and play.
    (b) Measurement of adaptive behavior must reflect objective 
documentation through the use of an established scale and appropriate 
behavioral/anecdotal records. An assessment of the child's functioning 
must also be made in settings outside the classroom.

[[Page 221]]

    (c) Valid and reliable instruments appropriate to the age range must 
be used. If they do not exist for the language and cultural group to 
which the child belongs, observation and professional judgement are to 
be used instead.
    (d) Determination that a child is mentally retarded is never to be 
made on the basis of any one test alone.



Sec. 1308.11  Eligibility criteria: Hearing impairment including deafness.

    (a) A child is classified as deaf if a hearing impairment exists 
which is so severe that the child is impaired in processing linguistic 
information through hearing, with or without amplification, and learning 
is affected. A child is classified as hard of hearing who has a 
permanent or fluctuating hearing impairment which adversely affects 
learning; or
    (b) Meets the legal criteria for being hard of hearing established 
by the State of residence; or
    (c) Experiences recurrent temporary or fluctuating hearing loss 
caused by otitis media, allergies, or eardrum perforations and other 
outer or middle ear anomalies over a period of three months or more. 
Problems associated with temporary or fluctuating hearing loss can 
include impaired listening skills, delayed language development, and 
articulation problems. Children meeting these criteria must be referred 
for medical care, have their hearing checked frequently, and receive 
speech, language or hearing services as indicated by the IEPs. As soon 
as special services are no longer needed, these children must no longer 
be classified as having a disability.



Sec. 1308.12  Eligibility criteria: Orthopedic impairment.

    (a) A child is classified as having an orthopedic impairment if the 
condition is severe enough to adversely affect a child's learning. An 
orthopedic impairment involves muscles, bones, or joints and is 
characterized by impaired ability to maneuver in educational or non-
educational settings, to perform fine or gross motor activities, or to 
perform self-help skills and by adversely affected educational 
performance.
    (b) An orthopedic impairment includes, but is not limited to, spina 
bifida, cerebral palsy, loss of or deformed limbs, contractures caused 
by burns, arthritis, or muscular dystrophy.



Sec. 1308.13  Eligibility criteria: Visual impairment including blindness.

    (a) A child is classified as visually impaired when visual 
impairment, with correction, adversely affects a child's learning. The 
term includes both blind and partially seeing children. A child is 
visually impaired if:
    (1) The vision loss meets the definition of legal blindness in the 
State of residence; or
    (2) Central acuity does not exceed 20/200 in the better eye with 
corrective lenses, or visual acuity is greater than 20/200, but is 
accompanied by a limitation in the field of vision such that the widest 
diameter of the visual field subtends an angle no greater than 20 
degrees.
    (b) A child is classified as having a visual impairment if central 
acuity with corrective lenses is between 20/70 and 20/200 in either eye, 
or if visual acuity is undetermined, but there is demonstrated loss of 
visual function that adversely affects the learning process, including 
faulty muscular action, limited field of vision, cataracts, etc.



Sec. 1308.14  Eligibility criteria: Learning disabilities.

    (a) A child is classified as having a learning disability who has a 
disorder in one or more of the basic psychological processes involved in 
understanding or in using language, spoken or written, which may 
manifest itself in imperfect ability to listen, think, speak or, for 
preschool age children, acquire the precursor skills for reading, 
writing, spelling or doing mathematical calculations. The term includes 
such conditions as perceptual disabilities, brain injury, and aphasia.
    (b) An evaluation team may recommend that a child be classified as 
having a learning disability if:
    (1) The child does not achieve commensurate with his or her age and 
ability levels in one or more of the areas listed in (a) above when 
provided with

[[Page 222]]

appropriate learning experiences for the age and ability; or
    (2) The child has a severe discrepancy between achievement of 
developmental milestones and intellectual ability in one or more of 
these areas: oral expression, listening comprehension, pre-reading, pre-
writing and pre-mathematics; or
    (3) The child shows deficits in such abilities as memory, perceptual 
and perceptual-motor skills, thinking, language and non-verbal 
activities which are not due to visual, motor, hearing or emotional 
disabilities, mental retardation, cultural or language factors, or lack 
of experiences which would help develop these skills.
    (c) This definition for learning disabilities applies to four and 
five year old children in Head Start. It may be used at a program's 
discretion for children younger than four or when a three year old child 
is referred with a professional diagnosis of learning disability. But 
because of the difficulty of diagnosing learning disabilities for three 
year olds, when Head Start is responsible for the evaluation it is not a 
requirement to use this category for three year olds.



Sec. 1308.15  Eligibility criteria: Autism.

    A child is classified as having autism when the child has a 
developmental disability that significantly affects verbal and non-
verbal communication and social interaction, that is generally evident 
before age three and that adversely affects educational performance.



Sec. 1308.16  Eligibility criteria: Traumatic brain injury.

    A child is classified as having traumatic brain injury whose brain 
injuries are caused by an external physical force, or by an internal 
occurrence such as stroke or aneurysm, with resulting impairments that 
adversely affect educational performance. The term includes children 
with open or closed head injuries, but does not include children with 
brain injuries that are congenital or degenerative or caused by birth 
trauma.



Sec. 1308.17  Eligibility criteria: Other impairments.

    (a) The purposes of this classification, ``Other impairments,'' are:
    (1) To further coordination with LEAs and reduce problems of 
recordkeeping;
    (2) To assist parents in making the transition from Head Start to 
other placements; and
    (3) To assure that no child enrolled in Head Start is denied 
services which would be available to other preschool children who are 
considered to have disabilities in their State.
    (b) If the State Education Agency eligibility criteria for preschool 
children include an additional category which is appropriate for a Head 
Start child, children meeting the criteria for that category must 
receive services as children with disabilities in Head Start programs. 
Examples are ``preschool disabled,'' ``in need of special education,'' 
``educationally handicapped,'' and ``non-categorically handicapped.''
    (c) Children ages three to five, inclusive, who are experiencing 
developmental delays, as defined by their State and as measured by 
appropriate diagnostic instruments and procedures, in one or more of the 
following areas: physical development, cognitive development, 
communication development, social or emotional development, or adaptive 
development, and who by reason thereof need special education and 
related services may receive services as children with disabilities in 
Head Start programs.
    (d) Children who are classified as deaf-blind, whose concomitant 
hearing and visual impairments cause such severe communication and other 
developmental problems that they cannot be accommodated in special 
education programs solely for deaf or blind children are eligible for 
services under this category.
    (e) Children classified as having multiple disabilities whose 
concomitant impairments (such as mental retardation and blindness), in 
combination, cause such severe educational problems that they cannot be 
accommodated in special education programs solely for one of the 
impairments are eligible for services under this category. The term

[[Page 223]]

does not include deaf-blind children, for recordkeeping purposes.



Sec. 1308.18  Disabilities/health services coordination.

    (a) The grantee must ensure that the disabilities coordinator and 
the health coordinator work closely together in the assessment process 
and follow up to assure that the special needs of each child with 
disabilities are met.
    (b) The grantee must ensure coordination between the disabilities 
coordinator and the staff person responsible for the mental health 
component to help teachers identify children who show signs of problems 
such as possible serious depression, withdrawal, anxiety or abuse.
    (c) Each Head Start director or designee must supervise the 
administration of all medications, including prescription and over-the-
counter drugs, to children with disabilities in accordance with State 
requirements.
    (d) The health coordinator under the supervision of the Head Start 
director or designee must:
    (1) Obtain the doctor's instructions and parental consent before any 
medication is administered.
    (2) Maintain an individual record of all medications dispensed and 
review the record regularly with the child's parents.
    (3) Record changes in a child's behavior which have implications for 
drug dosage or type and share this information with the staff, parents 
and the physician.
    (4) Assure that all medications, including those required by staff 
and volunteers, are adequately labeled, stored under lock and key and 
out of reach of children, and refrigerated, if necessary.



           Subpart E--Education Services Performance Standards



Sec. 1308.19  Developing individualized education programs (IEPs)

    (a) When Head Start provides for the evaluation, the 
multidisciplinary evaluation team makes the determination whether the 
child meets the Head Start eligibility criteria. The multidisciplinary 
evaluation team must assure that the evaluation findings and 
recommendations, as well as information from developmental assessment, 
observations and parent reports, are considered in making the 
determination whether the child meets Head Start eligibility criteria.
    (b) Every child receiving services in Head Start who has been 
evaluated and found to have a disability and in need of special 
education must have an IEP before special education and related services 
are provided to ensure that comprehensive information is used to develop 
the child's program.
    (c) When the LEA develops the IEP, a representative from Head Start 
must attempt to participate in the IEP meeting and placement decision 
for any child meeting Head Start eligibility requirements.
    (d) If Head Start develops the IEP, the IEP must take into account 
the child's unique needs, strengths, developmental potential and the 
family strengths and circumstances as well as the child's disabilities.
    (e) The IEP must include:
    (1) A statement of the child's present level of functioning in the 
social-emotional, motor, communication, self-help, and cognitive areas 
of development, and the identification of needs in those areas requiring 
specific programming.
    (2) A statement of annual goals, including short term objectives for 
meeting these goals.
    (3) A statement of services to be provided by each Head Start 
component that are in addition to those services provided for all Head 
Start children, including transition services.
    (4) A statement of the specific special education services to be 
provided to the child and those related services necessary for the child 
to participate in a Head Start program. This includes services provided 
by Head Start and services provided by other agencies and non-Head Start 
professionals.
    (5) The identification of the personnel responsible for the planning 
and supervision of services and for the delivery of services.
    (6) The projected dates for initiation of services and the 
anticipated duration of services.
    (7) A statement of objective criteria and evaluation procedures for 
determining at least annually whether the

[[Page 224]]

short-term objectives are being achieved or need to be revised.
    (8) Family goals and objectives related to the child's disabilities 
when they are essential to the child's progress.
    (f) When Head Start develops the IEP, the team must include:
    (1) The Head Start disabilities coordinator or a representative who 
is qualified to provide or supervise the provision of special education 
services;
    (2) The child's teacher or home visitor;
    (3) One or both of the child's parents or guardians; and
    (4) At least one of the professional members of the 
multidisciplinary team which evaluated the child.
    (g) An LEA representative must be invited in writing if Head Start 
is initiating the request for a meeting.
    (h) The grantee may also invite other individuals at the request of 
the parents and other individuals at the discretion of the Head Start 
program, including those component staff particularly involved due to 
the nature of the child's disability.
    (i) A meeting must be held at a time convenient for the parents and 
staff to develop the IEP within 30 calendar days of a determination that 
the child needs special education and related services. Services must 
begin as soon as possible after the development of the IEP.
    (j) Grantees and their delegates must make vigorous efforts to 
involve parents in the IEP process. The grantee must:
    (1) Notify parents in writing and, if necessary, also verbally or by 
other appropriate means of the purpose, attendees, time and location of 
the IEP meeting far enough in advance so that there is opportunity for 
them to participate;
    (2) Make every effort to assure that the parents understand the 
purpose and proceedings and that they are encouraged to provide 
information about their child and their desires for the child's program;
    (3) Provide interpreters, if needed, and offer the parents a copy of 
the IEP in the parents' language of understanding after it has been 
signed;
    (4) Hold the meeting without the parents only if neither parent can 
attend, after repeated attempts to establish a date or facilitate their 
participation. In that case, document its efforts to secure the parents' 
participation, through records of phone calls, letters in the parents' 
native language or visits to parents' homes or places of work, along 
with any responses or results; and arrange an opportunity to meet with 
the parents to review the results of the meeting and secure their input 
and signature.
    (k) Grantees must initiate the implementation of the IEP as soon as 
possible after the IEP meeting by modifying the child's program in 
accordance with the IEP and arranging for the provision of related 
services. If a child enters Head Start with an IEP completed within two 
months prior to entry, services must begin within the first two weeks of 
program attendance.



               Subpart F--Nutrition Performance Standards



Sec. 1308.20  Nutrition services.

    (a) The disabilities coordinator must work with staff to ensure that 
provisions to meet special needs are incorporated into the nutrition 
program.
    (b) Appropriate professionals, such as physical therapists, speech 
therapists, occupational therapists, nutritionists or dietitians must be 
consulted on ways to assist Head Start staff and parents of children 
with severe disabilities with problems of chewing, swallowing and 
feeding themselves.
    (c) The plan for services for children with disabilities must 
include activities to help children with disabilities participate in 
meal and snack times with classmates.
    (d) The plan for services for children with disabilities must 
address prevention of disabilities with a nutrition basis.

[[Page 225]]



           Subpart G--Parent Involvement Performance Standards



Sec. 1308.21  Parent participation and transition of children into Head Start and from Head Start to public school.

    (a) In addition to the many references to working with parents 
throughout these standards, the staff must carry out the following 
tasks:
    (1) Support parents of children with disabilities entering from 
infant/toddler programs.
    (2) Provide information to parents on how to foster the development 
of their child with disabilities.
    (3) Provide opportunities for parents to observe large group, small 
group and individual activities describe in their child's IEP.
    (4) Provide follow-up assistance and activities to reinforce program 
activities at home.
    (5) Refer parents to groups of parents of children with similar 
disabilities who can provide helpful peer support.
    (6) Inform parents of their rights under IDEA.
    (7) Inform parents of resources which may be available to them from 
the Supplemental Security Income (SSI) Program, the Early and Periodic 
Screening, Diagnosis and Treatment (EPSDT) Program and other sources and 
assist them with initial efforts to access such resources.
    (8) Identify needs (caused by the disability) of siblings and other 
family members.
    (9) Provide information in order to prevent disabilities among 
younger siblings.
    (10) build parent confidence, skill and knowledge in accessing 
resources and advocating to meet the special needs of their children.
    (b) Grantees must plan to assist parents in the transition of 
children from Head Start to public school or other placement, beginning 
early in the program year.
    (c) Head Start grantees, in cooperation with the child's parents, 
must notify the school of the child's planned enrollment prior to the 
date of enrollment.

   Appendix to Part 1308--Head Start Program Performance Standards on 
                 Services to Children With Disabilities

    This appendix sets forth guidance for the implementation of the 
requirements in part 1308. This guidance provides explanatory material 
and includes recommendations and suggestions for meeting the 
requirements. This guidance is not binding on Head Start grantees or 
delegate agencies. It provides assistance and possible strategies which 
a grantee may wish to consider. In instances where a permissible course 
of action is provided, the grantee or delegate agency may rely upon this 
guidance or may take another course of action that meets the applicable 
requirement. This programmatic guidance is included as an aid to 
grantees because of the complexity of providing special services to meet 
the needs of children with various disabilities.

      Section 1308.4 Purpose and scope of disabilities service plan

                       Guidance for Paragraph (a)

    In order to develop an effective disabilities service plan the 
responsible staff members need to understand the context in which a 
grantee operates. The Head Start program has operated under a 
Congressional mandate, since 1972, to make available, at a minimum, ten 
percent of its enrollment opportunities to children with disabilities. 
Head Start has exceeded this mandate and serves children in integrated, 
developmentally appropriate programs. The passage of the Individuals 
With Disabilities Education Act, formerly the Education of the 
Handicapped Act, and its amendments, affects Head Start, causing a shift 
in the nature of Head Start's responsibilities for providing services 
for children with disabilities relative to the responsibilities of State 
Education Agencies (SEA) and Local Education Agencies (LEA).
    Grantees need to be aware that under the IDEA the State Education 
Agency has the responsibility for assuring the availability of a free 
appropriate public education for all children with disabilities within 
the legally required age range in the State. This responsibility 
includes general supervision of educational programs in all agencies, 
including monitoring and evaluating the special education and related 
services to insure that they meet State standards, developing a 
comprehensive State plan for services for children with disabilities 
(including a description of interagency coordination among these 
agencies), and providing a Comprehensive System for Personnel 
Development related to training needs of all special education and 
related service personnel involved in the education of children with 
disabilities

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served by these agencies, including Head Start programs.
    Each State has in effect under IDEA a policy assuring all children 
with disabilities beginning at least at age three, including those in 
public or private institutions or other care facilities, the right to a 
free appropriate education and to an evaluation meeting established 
procedures. Head Start is either:
     The agency through which the Local Education Agency can 
meet its obligation to make a free appropriate public education 
available through a contract, State or local collaborative agreement, or 
other arrangement; or
     The agency in which the family chooses to have the child 
served rather than using LEA services.
    Regardless of how a child is placed in Head Start, the LEA is 
responsible for the identification, evaluation and provision of a free 
appropriate public education for a child found to be in need of special 
education and related services which are mandated in the State. The LEA 
is responsible for ensuring that these services are provided, but not 
for providing them all. IDEA stresses the role of multiple agencies and 
requires their maintenance of effort.
    The Head Start responsibility is to make available directly or in 
cooperation with other agencies services in the least restrictive 
environment in accordance with an individualized education program (IEP) 
for at least ten percent of enrolled children who meet the disabilities 
eligibility criteria. In addition, Head Start continues to provide or 
arrange for the full range of health, dental, nutritional, 
developmental, parent involvement and social services provided to all 
enrolled children. Head Start has a mandate to recruit and enroll 
income-eligible children and children with disabilities who are most in 
need of services and to coordinate with the LEA and other groups to 
benefit children with disabilities and their families. Serving children 
with disabilities has strengthened Head Start's ability to individualize 
for all children. Head Start is fully committed to the maintenance of 
effort as required for all agencies by the IDEA and by the Head Start 
Act (Section 640(a)(2)(A)). Head Start is committed to fiscal support to 
assure that the services which children with disabilities need to meet 
their special needs will be provided in full, either directly or by a 
combination of Head Start funds and other resources.
    These Head Start regulations facilitate coordination with the IDEA 
by utilizing identical terms for eligibility criteria for the most part. 
However, Head Start has elected to use the term ``emotional/behavioral 
disorder'' in lieu of ``serious emotional disturbance,'' which is used 
in the IDEA, in response to comments and concerns of parents and 
professionals. Children who meet State-developed criteria under IDEA 
will be eligible for services from Head Start in that State.
    In order to organize activities and resources to help children with 
disabilities overcome or lessen their disabilities and develop their 
potential, it is essential to involve the education, health, social 
services, parent involvement, mental health and nutrition components of 
Head Start. Parents, staff and policy group members should discuss the 
various strategies for ensuring that the disabilities service plan 
integrates needs and activities which cut across the Head Start 
component areas before the plan is completed.
    Advance planning and scheduling of arrangements with other agencies 
is a key factor in assuring timely, efficient services. Local level 
interagency agreements can greatly facilitate the difficult tasks of 
locating related service providers, for example, and joint community 
screening programs can reduce delays and costs to each of the 
participating agencies.

                       Guidance for Paragraph (b)

    The plan and the annual updates need to be specific, but not 
lengthy. As changes occur in the community, the plan needs to reflect 
the changes which affect services.

                       Guidance for Paragraph (c)

    Grantees should ensure that the practices they use to provide 
special services do not result in undue attention to a child with a 
disability. For example, providing names and schedules of special 
services for children with disabilities in the classroom is useful for 
staff or volunteers coming into that classroom but posting them would 
publicize the disability of the individual children.

                       Guidance for Paragraph (d)

    Staff should work for the children's greater independence by 
encouraging them to try new things and to meet appropriate goals by 
small steps. Grantees should help children with disabilities develop 
initiative by including them in opportunities to explore, to create, and 
to ask rather than to answer questions. The children need opportunities 
to use a wide variety of materials including science tools, art media 
and costumes in order to develop skills, imagination and originality. 
They should be included on field trips, as their experience may have 
been limited, for example, by an orthopedic impairment.
    Just as a program makes available pictures and books showing 
children and adults from representative cultural, ethnic and 
occupational groups, it should provide pictures and books which show 
children and adults with disabilities, including those in active roles.
    Staff should plan to answer questions children and adults may have 
about disabilities.

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This promotes acceptance of a child with disabilities for him or herself 
and leads to treating the child more normally. Effective curricula are 
available at low cost for helping children and adults understand 
disabilities and for improving attitudes and increasing knowledge about 
disabilities. Information on these and other materials can be obtained 
from resource access projects contractors, which offer training and 
technical assistance to Head Start programs.
    There are a number of useful guides for including children with 
disabilities in regular group activities while providing successful 
experiences for children who differ widely in developmental levels and 
skills. Some of these describe activities around a unit theme with 
suggestions for activities suitable for children with different skill 
levels. Staff need to help some children with disabilities move into 
developmentally appropriate play with other children.
    Research has shown the effectiveness of work in small groups for 
appropriately selected children with disabilities. This plan allows for 
coordinating efforts to meet the needs of individual children as listed 
in their IEPs and can help focus resources efficiently.
    If a deaf child who uses or needs sign language or another 
communication mode is enrolled, a parent, volunteer or aide who can use 
that mode of communication should be provided to help the child benefit 
from the program.
    In order to build the language and speech capabilities of many 
children with disabilities who have communication problems, it has been 
found helpful to enlist aides, volunteers, cooks, bus drivers and 
parents, showing them how to provide extra repetition and model 
gradually more advanced language as children improve in their ability to 
understand and use language. Small group activities for children with 
similar language development needs should be provided regularly as well 
as large group language and listening games and individual help. Helping 
children with intellectual delays or emotional problems or those whose 
experiences have been limited by other disabilities to express their own 
ideas and to communicate during play and throughout the daily activities 
is motivating and can contribute greatly to their progress.

                       Guidance for Paragraph (e)

    The Disabilities Service Coordinator should possess a basic 
understanding of the scope of the Head Start effort and skills adequate 
to manage the agency to serve children with disabilities including 
coordination with other program components and community agencies and 
work with parents.

                       Guidance for Paragraph (f)

    For non-verbal children, communication boards, computers and other 
assistive technology devices may be helpful. Technical assistance 
providers have information on the Technology Related Assistance for 
Individuals with Disabilities Act of 1988, 29 U.S.C. 2201 et seq. States 
are funded through this legislation to plan Statewide assistive 
technology services, which should include services for young children. 
Parents should be helped to understand the necessity of including 
assistive technology services and devices in their child's IEP in order 
to obtain them.
    The plan should include any renovation of space and facilities which 
may be necessary to ensure the safety of the children or promote 
learning. For example, rugs or other sound-absorbing surfaces make it 
easier for some children to hear stories or conversation. Different 
surfaces on floors and play areas affect some children's mobility.
    45 CFR Part 84, Nondiscrimination on the Basis of Handicap in 
Programs and Activities Receiving or Benefiting from Federal Financial 
Assistance which implements the Rehabilitation Act of 1973 and the 
Americans with Disabilities Act require that all Federally assisted 
programs, including Head Start, be accessible to persons with 
disabilities including staff, parents and children. This does not mean 
that every building or part of a building must be physically accessible, 
but the program services as a whole must be accessible. Structural 
changes to make the program services available are required if 
alternatives such as reassignment of classes or moving to different 
rooms are not possible. Information on the accessibility standards is 
available from RAPs or the U.S. Department of Justice, Civil Rights 
Division, Coordination and Review Section, P.O. Box 66118, Washington, 
DC 20035-6115.
    Staff should ensure that children with physical disabilities have 
chairs and other pieces of furniture of the correct size and type for 
their individual needs as they grow. Agencies such as United Cerebral 
Palsy, Easter Seal Societies or SEAs can provide consultation on 
adapting or purchasing the appropriate furniture. The correct 
positioning of certain children is essential and requires expert advice. 
As the children grow, the furniture and equipment should be checked by 
an expert, such as a physical therapist, because the wrong fit can be 
harmful. Efforts should be made to use furniture sized and shaped to 
place children at the same level as their classmates whenever possible.

                       Guidance for Paragraph (h)

    The plan should specify:
     Overall goals of the disability effort.
     Specific objectives and activities of the disability 
effort.

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     How and when specific activities will be carried out and 
goals attained.
     Who will be responsible for the conduct of each element of 
the plan.
     How individual activities will be evaluated.
    The plan should address:
     Enrollment information, including numbers of children and 
types of disabilities, known and estimated.
     Identification and recruitment of children with 
disabilities. Participation in Child Find and list of major specialized 
agencies approached.
     Screening.
     Developmental Assessment.
     Evaluation.
     The multidisciplinary team and its work.
     The process for developing IEPs.
     The provision of program services and related services.
     Program accessibility.
     Recordkeeping and reporting.
     Confidentiality of information.
     Any special safety needs.
     Medications.
     Transportation.
     The process for identifying and meeting training and 
technical assistance needs.
     Special parent involvement needs.
     Planned actions to increase the ability of staff to serve 
children with more severe disabilities and the number of children with 
more severe disabilities served.
     Transitioning of children in and out to the next program.
    Particular attention should be given to addressing ways to:
     Involve parents throughout the disability effort, and
     Work with other agencies in serving children with 
disabilities. It should be possible for a reader to visualize how and by 
whom services will be delivered. Coordination with other agencies should 
be described, as well as the process for developing local agreements 
with other agencies. The RAPs can provide samples and models for the 
process of developing agreements with LEAs.

                       Guidance for Paragraph (j)

    Children may spend part of the program hours in Head Start for a 
mainstreaming experience and part in a specialized program such as an 
Easter Seal Society or a local mental health center. The amount of time 
spent in either program should be flexible, according to the needs of 
the individual child. All services to be provided, including those 
provided by collaborating agencies, should be described in the IEP. 
Staff of both programs should observe each other's work with the child 
who is enrolled and maintain good communication.
    Individual services such as occupational, physical or speech 
therapy, staff training, transportation, services to families or 
counseling may be shared by Head Start and other agencies. For example, 
Head Start might provide equipment and transportation while a 
development center might provide a facility and physical therapy for a 
Head Start child. Some LEAs provide resource teachers while Head Start 
provides a developmentally appropriate program in an integrated setting.
    Hiring additional staff may be necessary to meet the needs of 
children with severe disabilities. Hiring an aide may be necessary on a 
full-time, part-time, temporary or as needed basis to assist with the 
increased demands of a child with a severe disability. However, aides 
should not be assigned the major responsibility for providing direct 
services. Aides and volunteers should be guided and supervised by the 
disabilities service coordinator or someone with special training. It is 
desirable to have the services of a nurse, physical therapist or 
licensed practical nurse available for children with severe health or 
physical disabilities.
    Volunteers trained by professionals to work specifically with 
children with disabilities can provide valuable individualized support. 
For example, a volunteer might be trained by a physical therapist to 
carry out specific follow-up activities with individual children.

                       Guidance for Paragraph (k)

    State standards for qualifications of staff to provide special 
education and related services affect Head Start's acceptance as a 
placement site for children who have been evaluated by an LEA. Head 
Start grantees, like LEAs, are affected by shortages of staff meeting 
State qualifications and are to work toward the goal of meeting the 
highest State standards for personnel by developing plans to train 
current staff and to hire new staff so that eventually the staff will 
meet the qualifications. Grantees should discuss their needs for pre-
service and in-service training with SEAs during annual updates of 
interagency agreements for use in the planning of joint State level 
conferences and for use in preparation of Comprehensive State Personnel 
Development plans. They should also discuss these needs with LEAs which 
provide in-service training.
    The program should provide training for the regular teachers on how 
to modify large group, small group or individual activities to meet the 
needs of children with disabilities. Specific training for staff should 
be provided when Head Start enrolls a child whose disability or 
condition requires a special skill or knowledge of special techniques or 
equipment. Examples are structuring a language activity, performing 
intermittent nonsterile catheterization, changing collection bags, 
suctioning, or operating leg braces. Joint training with other agencies 
is recommended to stretch resources and exchange expertise.

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    Staff should have access to regular ongoing training events which 
keep them abreast of new materials, equipment and practices related to 
serving children with disabilities and to preventing disabilities. 
Ongoing training and technical assistance in support of the disabilities 
effort should be planned to complement other training available to meet 
staff needs. Each grantee has the responsibility to identify or arrange 
the necessary support to carry out training for parents and staff.
    The best use of training funds has resulted when programs carry out 
a staff training needs assessment and relate current year training plans 
to previous staff training with the goal of building core capability. 
Staff who receive special training should share new knowledge with the 
rest of the staff.
    The core capability of the program is enhanced when speech, language 
and other therapy is provided in the regular site whenever possible. 
This allows for the specialist to demonstrate to regular staff and plan 
for their follow through. It also reduces costs and time spent 
transporting children to clinics and other settings. When university 
graduate students are utilized to provide special services as part of 
their training, it is helpful to arrange for their supervisors to 
monitor their work. Grantees arranging for such assistance are providing 
a valuable internship site and it is to the university's advantage to 
have their students become familiar with programs on-site. Grantees 
should negotiate when developing interagency agreements to have services 
provided on-site to the greatest extent possible.
    The Head Start Act, Section 648 (42 U.S.C. 9843) (a)(2), calls for 
training and technical assistance to be offered to all Head Start 
programs with respect to services for children with disabilities without 
cost through resource access projects which serve each region of the 
country. The technical assistance contractors contact each grantee for a 
needs assessment and offer training. While their staffs are small and 
their budgets limited, they are experienced and committed to meeting as 
many needs as they can and welcome inquiries. A brochure with names and 
addresses of the technical assistance providers is available from ACYF/
HS, P.O. Box 1182, Washington, DC 20013.
    The SEA is responsible for developing a Comprehensive System of 
Personnel Development. It is important that Head Start training needs be 
conveyed to this group for planning purposes so that all available 
resources can be brought to bear for staff training in Head Start. 
Grantees should take advantage of free or low-cost training provided by 
SEAs, LEAs, community colleges and other agencies to augment staff 
training.
    Many agencies offer free training for staff and parents. An example 
is the Epilepsy Foundation of America with trained volunteers throughout 
the country. The Lighthouse of New York City has developed a training 
program on early childhood and vision which was field-tested in Head 
Start and is suitable for community agencies. Head Start and the 
American Optometric Association have signed a memorandum of 
understanding under which member optometrists offer eye health education 
and screening. State-funded adult education and training programs or 
community colleges make available parenting, child development and other 
courses at low or no cost. Grantees should consider the need for 
training in working with parents, in developing working collaborative 
relationships and in networking when planning training.
    The disabilities coordinator needs to work closely with the 
education and health coordinators to provide or arrange training for 
staff and parents early in each program year on the prevention of 
disabilities. This should include the importance of observing signs that 
some children may have mild or fluctuating hearing losses due to middle 
ear infections. Such losses are often undetected and can cause problems 
in learning speech and language. Many children with hearing losses 
benefit from amplification and auditory training in how to use their 
remaining hearing most efficiently.
    The disabilities coordinator should also work with the education 
coordinator to provide timely staff training on recognizing signs that 
some children may be at high risk for later learning problems as well as 
emotional problems resulting from failure and frustration. This training 
should address ways to help children develop the skills necessary for 
later academic learning, such as following directions calling for more 
than one action, sequencing, sustaining attention, and making auditory 
and visual discriminations.

                       Guidance for Paragraph (l)

    The RAPS can provide information on agreements which have been 
developed between Head Start and SEAs and between Head Start and LEAs 
and other agencies. Such agreements offer possibilities to share 
training, equipment and other resources, smoothing the transition from 
Head Start to public or private school for children and their parents. 
Some of these agreements specify cost- and resource-sharing practices. 
Tribal Government Head Start programs should maximize use of Bureau of 
Indian Affairs, LEA and Head Start funds through cooperative agreements. 
Indian grantees should contact ACYF for referral to technical assistance 
in this regard. Grantees should bear in mind that migrant children

[[Page 230]]

are served in the majority of States and include consideration of their 
special needs, including the necessity for rapid provision of special 
education and related services, in agreements with LEAs and other 
agencies.

                       Guidance for Paragraph (m)

    In developing the plan and the budget which is a part of the grant 
application process, it is important to budget adequately for the number 
of children with disabilities to be served and the types and severity of 
their disabilities. The budget should reflect resources available from 
other agencies as well as the special costs to be paid for from Head 
Start funds. The Head Start legislation requires Head Start to access 
resources to meet the needs of all the children enrolled, including 
those with disabilities.
    An effective plan calls for the careful use of funds. The 
Disabilities Services Coordinator needs to keep current with the 
provisions of Part B of the IDEA and the services which may be available 
for three through five year-old children under this Act. Coordinators 
also need to utilize the expanded services under the Early and Periodic 
Screening, Diagnosis and Treatment (EPSDT) program and Supplemental 
Security Income program.
    To assist in the development of the plan, it may be helpful to 
establish an advisory committee for the disability effort or to expand 
the scope of the health advisory committee.

                       Guidance for Paragraph (o)

    Examples of evaluation costs which can be covered include 
professional assessment by the multidisciplinary evaluation team, 
instruments, professional observation and professional consultation. If 
consultation fees for multidisciplinary evaluation team members to 
participate in IEP meetings are not available from another source, they 
are allowable expenditures and need to be provided to meet the 
performance standards.
    Many children with disabilities enrolled in Head Start already 
receive services from other agencies, and grantees should encourage 
these agencies to continue to provide services. Grantees should use 
other community agencies and resources to supplement services for 
children with disabilities and their families.
    By planning ahead, grantees can pool resources to schedule the 
periodic use of experts and consultants. Grantees can time-share, 
reducing travel charges and assuring the availability of scarce 
expertise. Some LEAs and other agencies have enabling legislation and 
funds to contract for education, health, and developmental services of 
the type Head Start can provide. Grantees can also help increase the 
amount of preschool funding available to their State under the 
Individuals With Disabilities Education Act. The amount of the 
allocation to each SEA and to the public schools is affected by the 
number of three through five year old children with IEPs in place by 
December 1 of each year. By establishing good working relationships with 
State Public Health personnel and including them on advisory committees, 
health resources can be more easily utilized.
    It may be helpful to explore the possibility of a cooperative 
agreement with the public school system to provide transportation. If 
the lack of transportation would prevent a child with disabilities from 
participating in Head Start, program funds are to be used to provide 
this related service before a delay occurs which would have a negative 
effect on the child's progress. The major emphasis is on providing the 
needed special help so that the child can develop to the maximum during 
the brief time in Head Start.
    The Americans with Disabilities Act of 1990 (42 U.S.C. 12101) 
requires that new buses (ordered after August 26, 1990) by public bus 
systems must be accessible to individuals with disabilities. New over-
the-road buses ordered by privately operated bus and van companies (on 
or after July 26, 1996 or July 26, 1997 for small companies) must be 
accessible. Other new vehicles, such as vans, must be accessible, unless 
the transportation company provides service to individuals with 
disabilities that is equivalent to that operated for the general public. 
The Justice Department enforces these requirements.
    Efforts should be made to obtain expensive items such as wheelchairs 
or audiometers through resources such as Title V (formerly Crippled 
Children's Services). Cooperative arrangements can be made with LEAs and 
other agencies to share equipment such as tympanometers. Special 
equipment such as hearing aids may be obtained through EPSDT or from SSI 
funds for those children who have been found eligible. Some States have 
established libraries of assistive technology devices and rosters of 
expert consultants.

Section 1308.5  Recruitment and Enrollment of Children With Disabilities

                       Guidance for Paragraph (a)

    Head Start can play an important role in Child Find by helping to 
locate children in need and hardest to reach, such as immigrants and 
non-English speakers. In cooperation with other community groups and 
agencies serving children with disabilities, Head Start programs should 
incorporate in their outreach and recruitment procedures efforts to 
identify and enroll children with disabilities who meet eligibility 
requirements and whose parents desire the child's participation.
    Integrating children with severe disabilities for whom Head Start is 
an appropriate placement is a goal of ACYF. Grantees

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should bear in mind that 45 CFR part 84, Nondiscrimination on the Basis 
of Handicap in Programs and Activities Receiving or Benefiting from 
Federal Financial Assistance or the Rehabilitation Act of 1973 (20 
U.S.C. 794) states that any program receiving Federal funds may not deny 
admission to a child solely on the basis of the nature or extent of a 
disabling condition and shall take into account the needs of the child 
in determining the aid, benefits, or services to be provided. Many 
children who appear to have serious impairments are nevertheless able to 
make greater gains in an integrated setting than in a segregated 
classroom for children with disabilities.
    The key factor in selecting an appropriate placement is the IEP. The 
need of the individual child and the ability of the child to benefit are 
determining factors. Likewise, the amount of time per day or week to be 
spent in the regular setting and/or in other settings is determined by 
the IEP. The IEP of a child with a severe emotional/behavioral disorder, 
for example, might realistically call for less than full day attendance 
or for dual placement. Another factor to consider is that according to 
the PIR, the majority of children with severe impairments are provided 
special services by both Head State staff and staff of other agencies, 
sharing the responsibility. Many grantees have successfully served 
children with moderate and severe disabilities.
    The disabilities coordinator's responsibility includes providing 
current names of appropriate specialized agencies serving young children 
with disabilities and the names of LEA Child Find contact persons to the 
director to facilitate joint identification of children with 
disabilities. It also includes learning what resources other agencies 
have available and the eligibility criteria for support from State 
agencies, Supplemental Security Income (SSI), Title V, Maternal and 
Child Health Block Grants, Title XIX (EPSDT/Medicaid), Migrant Health 
Centers, Developmental Disabilities programs, Bureau of Indian Affairs, 
third party payers such as insurance companies and other sources.
    Grantees need to develop lists of appropriate referral sources. 
These include hospital child life programs, SSI, early intervention 
programs funded by Part H of the IDEA or other sources, EPSDT providers, 
infant stimulation programs, Easter Seal and United Cerebral Palsy 
agencies, mental health agencies, Association for Retarded Citizens 
chapters, Developmental Disabilities Planning Councils, Protection and 
Advocacy Systems, University Affiliated Programs, the LEA Child Find, 
and the medical community.
    Head Start programs are encouraged to increase the visibility of the 
Head Start mainstreaming effort within the community by:
     Including community child service providers on policy 
council health and disability advisory boards and in other relevant Head 
Start activities.
     Making presentations on Head Start mainstreaming 
experiences at local, State and Regional meetings and conferences, such 
as the National Association for the Education of Young Children, Council 
for Exceptional Children, and the Association for the Care of Children's 
Health.
     Participating in interagency planning activities for 
preschool infant and toddler programs such as the State Interagency 
Coordinating Councils supported under the IDEA.

                       Guidance for Paragraph (b)

    Grantees should maintain records of outreach, recruitment, and 
service activities for children with disabilities and their families.
    Each grantee should develop a policy on what types of information 
are to be included in a comprehensive file for each disabled child. The 
policy should outline the locations where a copy of each record will be 
sent. For example, while a comprehensive file will be maintained at the 
Head Start program central office (where the disability services 
coordinator and component coordinators may be based), a teacher must 
have access to a child's IEP and progress notes in order to plan 
effectively. Confidentiality needs to be maintained in a manner which 
allows for access to information by appropriate staff while meeting 
applicable Head Start and State requirements.

                       Guidance for Paragraph (d)

    Staff should assist families who need help in obtaining 
immunizations before the program year begins, bearing in mind that a 
goal of parent involvement and social service activities is to encourage 
independence and develop skills in meeting timelines when seeking 
services for children. Care should be taken that children are not denied 
enrollment, but that their families receive the necessary assistance to 
meet entrance requirements. ``Healthy Young Children: A Manual for 
Programs,'' (a cooperative effort of the Administration for Children, 
Youth and Families, the American Academy of Pediatrics; the Division of 
Maternal and Child Health, U.S. Department of Health and Human Services; 
Georgetown University Child Development Center; Massachusetts Department 
of Public Health, and the National Association for the Education of 
Young Children, 1988, copyright, NAEYC) contains best practice guidance.

[[Page 232]]

                  Section 1308.6 Assessment of Children

                       Guidance for Paragraph (b)

    Early screening is essential because of the time required for the 
steps necessary before special services can begin. It has been very 
difficult for some grantees to complete health screenings in a timely 
manner for several reasons including the lack of resources, especially 
in rural areas; the need to rely on donated services from agencies whose 
schedules have been especially overloaded during September and October 
after the start of the Head Start program year; lack of summer staff in 
most programs; and the difficulty in reaching some families. Lack of 
coordination among agencies with legislative responsibility for 
identifying children with disabilities has resulted in duplication and 
unacceptable delays in providing required services for many grantees. 
Other grantees, however, have demonstrated the ability to complete 
screenings early in the program year without difficulty. Many programs 
already complete screening by 45 days after the first day of program 
operation. Some participate in spring or summer screening programs in 
their areas before the fall opening. Grantees are encouraged to schedule 
well in advance with clinics and with such providers as EPSDT and the 
Indian Health Service for timely screening and any subsequent 
evaluations that may be needed.
    Recently, a number of legislative and legal requirements have 
increased the resources available for the screening and evaluation of 
children. Title XIX, EPDST/Medicaid, has new requirements for screening 
and evaluation, as well as treatment; the Social Security Administration 
has modified eligibility requirements for children with disabilities so 
that more services will be available; and all States have assured that 
services will be provided from at least age three under IDEA so that 
LEAs in more States will be engaged in identifying and evaluating 
children from birth to age six.
    In response to these changes, the Department of Health and Human 
Services and the Department of Education, through the Federal 
Interagency Coordinating Council, have developed a cooperative agreement 
for coordinated screening. Head Start is one of the participating 
agencies which will work together to plan and implement community 
screenings, assisting the LEAs which have the major responsibility for 
identifying every child with a disability under the IDEA. In addition, 
programs may elect to make some summer staff available for activities to 
close out program work in the spring and prepare for the fall.
    These developments make timely screening feasible. They also make it 
possible to expedite immunizations. State-of-the-art coordinated 
screening programs make immunizations available.
    This coordination can focus staff energy on assisting families to 
have their children immunized during the screening phase rather than 
making repeated follow-up efforts after the program for children has 
begun. Coordinated screening also provides an excellent parent education 
opportunity. Information on child development, realistic expectations 
for preschoolers and such services as WIC can be provided during the 
screening. Some communities have combined screening with well-received 
health fairs.
    The staff should be involved in the planning of screening to assure 
that screening requirements are selected or adapted with the specific 
Head Start population and goals of the screening process in mind. 
Instruments with age-appropriate norms should be used. Children should 
be screened in their native language. Universities, civic organizations 
or organizations to aid recent immigrants may be able to locate native 
speakers to assist. The RAPs can provide information on the 
characteristics of screening instruments.
    Current best practice indicates that individual pure tone audiometry 
be used as the first part of a screening program with children as young 
as three. The purpose is to identify children with hearing impairments 
that interfere with, or have the potential to interfere with 
communication. The recommended procedure is audiometric screening at 20 
dB HL (re ANSI-1969) at the frequencies of 1000, 2000, and 4000 Hz, (and 
at 500 Hz unless acoustic immittance audiometry is included as the 
second part of the screening program and if the noise level in the room 
permits testing at that frequency.) Acoustic immittance audiometry (or 
impedance audiometry) is recommended as the second part of the program 
to identify children who have middle-ear disorders.
    The audiometric screening program should be conducted or supervised 
by an audiologist. Nonprofessional support staff have successfully 
carried out audiometric screening with appropriate training and 
supervision.
    When a child fails the initial screening, an audiometric rescreening 
should be administered the same day or no later than within 2 weeks. A 
child who fails the rescreening should be referred for an evaluation by 
an audiologist.
    Current best practice calls for annual hearing tests. Frequent 
rescreening is needed for children with recurrent ear infections. 
Grantees who contract or arrange for hearing testing should check to 
assure that the testing covers the three specified frequencies and that 
other quality features are present. Speech, hearing and language 
problems are the most widespread disabilities in preschool programs and 
quality testing is vital for early detection and remediation.

[[Page 233]]

    Playing listening games prior to testing and getting use to 
earphones can help children learn to respond to a tone and improve the 
quality of the testing.
    Some grantees have found it strengthens the skills of their staff to 
have all members learn to do developmental screening. This can be a 
valuable in-service activity especially for teachers. State requirements 
for qualifications should be checked and non-professional screeners 
should be trained.
    Some programs have involved trained students from schools of 
nursing, child development or special education graduate students, or 
medical students who must carry out screening work as part of their 
required experience.

                       Guidance for Paragraph (d)

    Parents should be provided assistance if necessary, so that they can 
participate in the developmental assessment.
    Grantees should offer parents assistance in understanding the 
implications of developmental assessments as well as medical, dental or 
other conditions which can affect their child's development and 
learning.
    Development assessment is an ongoing process and information from 
observations in the Head Start center and at home should be recorded 
periodically and updated in each developmental area in order to document 
progress and plan activities.
    Disabilities coordinators, as well as education staff, need to be 
thoroughly familiar with developmental assessment activities such as 
objective observation, time sampling and obtaining parent information 
and the use of formal assessment instruments. Knowledge of normal child 
development and understanding of the culture of the child are also 
important.

                       Guidance for Paragraph (e)

    While the LEA is responsible for assuring that each child who is 
referred is evaluated in accordance with the provisions of IDEA and 
usually provides the evaluation, grantees may sometimes provide for the 
evaluation. In that event, grantees need to assure that evaluation 
specialists in appropriate areas such as psychology, special education, 
speech pathology and physical therapy coordinate their activities so 
that the child's total functioning is considered and the team's findings 
and recommendations are integrated.
    Grantees should select members of the multidisciplinary evaluation 
team who are familiar with the specific Head Start population, taking 
into account the age of the children and their cultural and ethnic 
background as they relate to the overall diagnostic process and the use 
of specific tests.
    Grantees should be certain that team members understand that Head 
Start programs are funded to provide preschool developmental experiences 
for all eligible children, some of whom also need special education and 
related services. The intent of the evaluation procedures is to provide 
information to identify children who have disabling conditions so they 
can receive appropriate assistance. It is also the intent to avoid 
mislabeling children for whom basic Head Start programming is designed 
and who may show developmental delays which can be overcome by a regular 
comprehensive program meeting the Head Start Performance Standards.
    When a grantee provides for the evaluation of a child, it is 
important that the Head Start eligibility criteria be explained to the 
evaluation team members and that they be informed as to how the results 
will be used.
    Grantees should require specific findings in writing from the 
evaluation team, and recommendations for intervention when the team 
believes the child has a disability. The findings will be used in 
developing the child's IEP to ensure that parents, teachers and others 
can best work with the child. Some grantees have obtained useful 
functional information by asking team members to complete a brief form 
describing the child's strengths and weaknesses and the effects of the 
disability along with suggestions for special equipment, treatment or 
services. The evaluators should be asked in advance to provide their 
findings promptly in easily understood terms. They should provide 
separate findings and, when they agree, consensus professional opinions. 
When planning in advance for evaluation services from other agencies, 
grantees should try to obtain agreements on prompt timing for delivery 
of reports which are necessary to plan services.
    To assist the evaluation team, Head Start should provide the child's 
screening results, pertinent observations, and the results of any 
developmental assessment information which may be available.
    It is important that programs ensure that no individual child or 
family is labeled, mislabeled, or stigmatized with reference to a 
disabling condition. Head Start must exercise care to ensure that no 
child is misidentified because of economic circumstances, ethnic or 
cultural factors or developmental lags not caused by a disability, 
bilingual or dialectical differences, or because of being non-English 
speaking.
    If Head Start is arranging for the evaluation, it is important to 
understand that a child whose problem has been corrected (e.g., a child 
wearing glasses whose vision is corrected and who does not need special 
education and related services) does not qualify as a child with a 
disability. A short-term medical problem such as post-operative recovery 
or a problem requiring only medical care and health monitoring when the 
evaluation specialists have not stated that special

[[Page 234]]

education and related services are needed does not qualify as a 
disability.
    The evaluation team should include consideration of the way the 
disability affects the child's ability to function as well as the cause 
of the condition.
    Some children may have a recent evaluation from a clinic, hospital 
or other agency (other than the LEAs) prior to enrolling in Head Start. 
If that evaluation did not include needed functional information or a 
professional opinion as to whether the child meets one of the Head Start 
eligibility criteria, the grantee should contact the agency to try to 
obtain that information.
    Some children, prior to enrolling in Head Start, already have been 
diagnosed as having severe disabilities and a serious need for services. 
Some of these children already may be receiving some special assistance 
from other agencies for their disabilities but lack developmental 
services in a setting with other children. Head Start programs may best 
meet their needs by serving them jointly, i.e., providing developmental 
services while disability services are provided from another source. It 
is important in such situations that regular communication take place 
between the two sites.
    Beginning in 1990, State EPSDT/Medicaid programs must, by law, 
evaluate and provide services for young children whose families meet 
eligibility criteria at 133 percent of the poverty levels. This is a 
resource for Head Start and it is important to become aware of EPSDT 
provisions.

     Section 1308.7 Eligibility Criteria: Health Impairment Guidance

                       Guidance for Paragraph (c)

    Many health impairments manifest themselves in other disabling 
conditions. Because of this, particular care should be taken when 
classifying a health impaired child.

                       Guidance for Paragraph (b)

    Because AIDS is a health impairment, grantees will continue to 
enroll children with AIDS on an individual basis. Staff need to be 
familiar with the Head Start Information Memorandum on Enrollment in 
Head Start Programs of Infants and Young Children with Human 
Immunodeficiency Virus (HIV), AIDS Related Complex (ARC), or Acquired 
Immunodeficiency Syndrome (AIDS) dated June 22, 1988. This guidance 
includes material from the Centers for Disease Control which stresses 
the need for a team, including a physician, to make informed decisions 
on enrollment on an individual basis. It provides guidance in the event 
that a child with disabilities presents a problem involving biting or 
bodily fluids. The guidance also discusses methods for control of all 
infectious diseases through stringent cleanliness standards and includes 
lists of Federal, State and national agencies and organizations that can 
provide additional information as more is learned. Staff should be aware 
that there is a high incidence of visual impairment among children with 
HIV and AIDS.

                       Guidance for Paragraph (c)

    Teachers or others in the program setting are in the best position 
to note the following kinds of indications that a child may need to be 
evaluated to determine whether an attention deficit disorder exists:
    (1) Inability of a child who is trying to participate in classroom 
activities to be able to orient attention, for example to choose an 
activity for free time or to attend to simple instructions;
    (2) Inability to maintain attention, as in trying to complete a 
selected activity, to carry out simple requests or attend to telling of 
an interesting story; or
    (3) Inability to focus attention on recent activities, for example 
on telling the teacher about a selected activity, inability to tell 
about simple requests after carrying them out, or inability to tell 
about a story after hearing it.
    These indicators should only be used after the children have had 
sufficient time to become familiar with preschool procedures and after 
most of the children are able easily to carry out typical preschool 
activities.
    Culturally competent staff recognize and appreciate cultural 
differences, and this awareness needs to include understanding that some 
cultural groups may promote behavior that may be misinterpreted as 
inattention. Care must be taken that any deviations in attention 
behavior which are within the cultural norms of the child's group are 
not used as indicators of possible attention deficit disorder.
    A period of careful observation over three months can assure that 
adequate documentation is available for the difficult task of 
evaluation. It also provides opportunity to provide extra assistance to 
the child, perhaps through an aide or special education student under 
the teacher's direction, which might improve the child's functioning and 
eliminate the behavior taken as evidence of possible attention deficit 
disorder.
    Attention deficit disorders are not the result of learning 
disabilities, emotional/behavioral disabilities, autism or mental 
retardation. A comprehensive psychological evaluation may be carried out 
in some cases to rule out learning disability or mental retardation. It 
is possible, however, in some instances for this disability to coexist 
with another disability. Children who meet the criteria for multiple 
disabilities (e.g., attention deficient disorder and learning 
disability, or emotional/behavioral disorder, or mental retardation) 
would be eligible for services as children with multiple disabilities or 
under their primary disability.

[[Page 235]]

    Teacher and parent reports have been found to provide the most 
useful information for assessment of children suspected of having 
attention deficit disorder. They are also useful in planning and 
providing special education intervention. The most successful approach 
may be a positive behavior modification program in the classroom, 
combined with a carryover program in the home. Prompt and clear response 
should be provided consistently. Positive reinforcement for appropriate 
behavior, based on rewards such as stickers or small items desired by 
the child has been found effective for children with this disorder, 
along with occasional withholding of rewards or postponing of desired 
activities in the face of inappropriate behavior. Effective programs 
suggest that positive interactions with the child after appropriate 
behavior are needed at least three times as often as any negative 
response interactions after inappropriate behavior. Consultants familiar 
with behavior modification should be used to assist teachers in planning 
and carrying out intervention which can maintain this positive to 
negative ratio while shaping behaviors. These behavior interventions can 
be provided in mainstream placements with sufficient personnel.
    Suggested Primary Members of A Head Start Evaluation Team for Health 
Impaired Children:
    Physician.
    Pediatrician.
    Psychologist.
    Other specialists related to specific disabilities.
    Possible Related Services:
    (Related services are determined by individual need. These 
``possible related services'' are merely examples and are not intended 
to be limiting.)
    Family counseling.
    Genetic counseling.
    Nutrition counseling.
    Recreational therapy.
    Supervision of physical activities.
    Transportation.
    Assistive technology devices or services

  Section 1308.8  Eligibility Criteria: Emotional/Behavioral Disorders

                       Guidance for Paragraph (a)

    Staff should insure that behavior which may be typical of some 
cultures or ethnic groups, such as not making eye contact with teachers 
or other adults or not volunteering comments or initiating conversations 
are not misinterpreted.
    The disability, social service and parent involvement coordinators 
should consider providing extra attention to children at-risk for 
emotional/behavioral disorders and their parents to help prevent a 
disability. Members of the Council of One Hundred, Kiwanis, Urban 
League, Jaycees, Rotary, Foster Grandparents, etc. may be able to 
provide mentoring and individual attention.
    Suggested Primary Members of a Head Start Evaluation Team for 
Emotional/behavioral Disorders:
    Psychologist, psychiatrist or other clinically trained and State 
qualified mental health professionals.
    Pediatrician.
    Possible Related Services:
    (Related services are determined by individual need. These 
``possible related services'' are merely examples and are not intended 
to be limiting.)
    Behavior management.
    Environmental adjustments.
    Family counseling.
    Psychotherapy.
    Transportation.
    Assistive technology.

   Section 1308.9  Eligibility Criteria: Speech or Language Impairment

                       Guidance for Paragraph (a)

    Staff familiar with the child should consider whether shyness, lack 
of familiarity with vocabulary which might be used by testers, 
unfamiliar settings, or linguistic or cultural factors are negatively 
influencing screening and assessment results. Whenever possible, 
consultants trained in assessing the speech and language skills of young 
children should be selected. The child's ability to communicate at home, 
on the playground and in the neighborhood should be determined for an 
accurate assessment. Review of the developmentally appropriate age 
ranges for the production of difficult speech sounds can also help 
reduce over-referral for evaluation.
    Suggested Primary Members of a Head Start Evaluation Team for Speech 
or Language Impairment:
    Speech Pathologist.
    Language Pathologist.
    Audiologist.
    Otolaryngologist.
    Psychologist.
    Possible Related Services:
    (Related services are determined by individual need. These 
``possible related services'' are merely examples and are not intended 
to be limiting.)
    Environmental adjustments.
    Family counseling.
    Language therapy.
    Speech therapy.
    Transportation.
    Assistive technology devices or services.

[[Page 236]]

        Section 1308.10  Eligibility Criteria: Mental Retardation

                       Guidance for Paragraph (a)

    Evaluation instruments with age-appropriate norms should be used. 
These should be administered and interpreted by professionals sensitive 
to racial, ethnic and linguistic differences. The diagnosticians must be 
aware of sensory or perceptual impairments that the child may have 
(e.g., a child who is visually impaired should not be tested with 
instruments that rely heavily on visual information as this could 
produce a depressed score from which erroneous diagnostic conclusions 
might be drawn).
    Suggested primary members of a Head Start evaluation team for mental 
retardation:
    Psychologist.
    Pediatrician.
    Possible related services:
    (Related services are determined by individual need. These 
``possible related services'' are merely examples and are not intended 
to be limiting.)
    Environmental adjustments.
    Family counseling.
    Genetic counseling.
    Language therapy.
    Recreational therapy.
    Speech therapy.
    Transportation.
    Nutrition counseling.

  Section 1308.11  Eligibility Criteria: Hearing Impairment Including 
                                Deafness

                       Guidance for Paragraph (a)

    An audiologist should evaluate a child who has failed rescreening or 
who does not respond to more than one effort to test the child's 
hearing. If the evaluation team determines that the child has a 
disability, the team should make recommendations to meet the child's 
needs for education and medical care or habilitation, including auditory 
training to learn to use hearing more effectively.
    Suggested Primary Members of a Head Start Evaluation Team for 
Hearing Impairment:
    Audiologist.
    Otolaryngologist.
    Possible Related Services:
    (Related services are determined by individual need. These 
``possible related services'' are merely examples and are not intended 
to be limiting.)
    Auditory training.
    Aural habilitation.
    Environmental adjustments.
    Family counseling.
    Genetic counseling.
    Language therapy.
    Medical treatment.
    Speech therapy.
    Total communication, speechreading or manual communication.
    Transportation.
    Use of amplification.
    Assistive technology devices or services.

      Section 1308.12  Eligibility Criteria: Orthopedic Impairment

                       Guidance for Paragraph (a)

    Suggested Primary Members of a Head Start Evaluation Team for 
Orthopedic Impairment:
    Pediatrician.
    Orthopedist.
    Neurologist.
    Occupational Therapist.
    Physical Therapist.
    Rehabilitation professional.
    Possible Related Services:
    (Related services are determined by individual need. These 
``possible related services'' are merely examples and are not intended 
to be limiting.)
    Environmental adjustments.
    Family counseling.
    Language therapy.
    Medical treatment.
    Occupational therapy.
    Physical therapy.
    Assistive technology.
    Recreational therapy.
    Speech therapy.
    Transportation.
    Nutrition counseling.

   Section 1308.13  Eligibility Criteria: Visual Impairment Including 
                                Blindness

                       Guidance for Paragraph (a)

    Primary Members of an Evaluation Team for Visual Impairment 
including Blindness:
    Ophthalmologist.
    Optometrist.
    Possible Related Services:
    (Related services are determined by individual need. These 
``possible related services'' are merely examples and are not intended 
to be limiting.)
    Environmental adjustments.
    Family counseling.
    Occupational therapy.
    Orientation and mobility training.
    Pre-Braille training.
    Recreational therapy.
    Sensory training.
    Transportation.
    Functional vision assessment and therapy.

                  Section 1308.14 Learning Disabilities

                       Guidance for Paragraph (a)

    When a four or five-year-old child shows signs of possible learning 
disabilities, thorough documentation should be gathered. For example, 
specific anecdotal information and

[[Page 237]]

samples of the child's drawings, if appropriate, should be included in 
the material given to the evaluation team.
    A Master's degree level professional with a background in learning 
disabilities should be a member of the evaluation team.
    Possible Related Services:
    (Related services are determined by individual need. These 
``possible related services'' are merely examples and are not intended 
to be limiting.)
    Vision evaluation.
    Neurology.
    Psychology.
    Motor development.
    Hearing evaluation.
    Child psychiatry.
    Pediatric evaluation.

                         Section 1308.15 Autism

    A child who manifests characteristics of the condition after age 
three can still be diagnosed as having autism. Autism does not include 
children with characteristics of serious emotional disturbance.
    Suggested possible members of a Head Start evaluation team:
    Psychologist.
    Pediatrician.
    Audiologist.
    Psychiatrist.
    Language pathologist.
    Possible related services:
    (Related services are determined by individual need. These 
``possible related services'' are merely examples and are not intended 
to be limiting.)
    Family support services.
    Language therapy.
    Transportation.

                 Section 1308.16 Traumatic Brain Injury

    Traumatic brain injury does not include congenital brain injury.
    Suggested possible members of an evaluation team included:
    Psychologist.
    Physical therapist.
    Speech or language pathologist.
    Possible related services:
    (Related services are determined by individual need. These 
``possible related services'' are merely examples and are not intended 
to be limiting.)
    Rehabilitation professional.
    Occupational therapy.
    Speech or language therapy.
    Assistive technology.

                    Section 1308.17 Other Impairments

    This category was included to ensure that any Head Start child who 
meets the State eligibility criteria as developmentally delayed or 
State-specific criteria for services to preschool children with 
disabilities is eligible for needed special services either within Head 
Start or the State program.
    Suggested primary members of an evaluation team for other 
impairments meeting State eligibility criteria for services to preschool 
children with disabilities.
    Pediatrician.
    Psychologist.
    Other specialists with expertise in the appropriate area(s).
    Possible Related Services:
    (Related services are determined by individual need. These 
``possible related services'' are merely examples and are not intended 
to be limiting.)
    Occupational therapy.
    Speech or language therapy.
    Family Counseling.
    Transportation.

                             Deaf-blindness

    Information on assistance or joint services for deaf-blind children 
can be obtained through SEAs.

                          Multiple Disabilities

    A child who is deaf and has speech and language impairments would 
not be considered to have multiple disabilities, as it could be expected 
that these impairments were caused by the hearing loss.
    Suggested primary members of a Head Start evaluation team:
    Audiologists.
    Special educators.
    Speech, language or physical therapists.
    Psychologists or psychiatrists.
    Rehabilitation professional.
    Possible related services:
    (Related services are determined by individual need. These 
``possible related services'' are merely examples and are not intended 
to be limiting.)
    Speech, language, occupational or physical therapists as needed.
    Assistive technology devices or services.
    Mental health services.
    Transportation.

       Section 1308.18  Disabilities/Health Services Coordination

                       Guidance for Paragraph (a)

    It is important for staff to maintain close communication concerning 
children with health impairments. Health and disability services 
coordinators need to schedule frequent re-tests of children with 
recurrent middle ear infections and to ensure that they receive ongoing 
medical treatment to prevent speech and language delay. They should 
ensure that audiometers are calibrated annually for accurate testing of 
hearing. Speech and hearing centers, the manufacturer, or public school 
education services districts should be able to perform this service. In 
addition, a daily check when an audiometer is

[[Page 238]]

in use and a check of the acoustics in the testing site are needed for 
accurate testing.
    Approximately 17 percent of Down Syndrome children have a condition 
of the spine (atlanto-axial instability) and should not engage in 
somersaults, trampoline exercises, or other activities which could lead 
to spinal injury without first having a cervical spine x-ray.

                       Guidance for Paragraph (b)

    The disabilities services coordinator needs to assure that best use 
is made of mental health consultants when a child appears to have a 
problem which may be symptomatic of a disability in the social/emotional 
area. Teachers, aides and volunteers should keep anecdotal records of 
the child's activities, tantrums, the events which appear to precipitate 
the tantrums, language use, etc. These can provide valuable information 
to a mental health consultant, who should be used primarily to make 
specific recommendations and assist the staff rather than to document 
the problem.
    The mental health coordinator can cooperate in setting up group 
meetings for parents of children with disabilities which provide needed 
support and a forum for talking over mutual concerns. Parents needing 
community mental health services may need direct assistance in accessing 
services, especially at first.
    The disability services coordinator needs to work closely with staff 
across components to help parents of children who do not have 
disabilities become more understanding and knowledgeable about 
disabilities and ways to lessen their effects. This can help reduce the 
isolation which some families with children with disabilities 
experience.

                   Guidance for Paragraphs (c) and (d)

    Arrangements should be made with the family and the physician to 
schedule the administration of medication during times when the child is 
most likely to be under parental supervision.
    Awareness of possible side effects is of particular importance when 
treatment for a disability requires administration of potentially 
harmful drugs (e.g., anti-convulsants, amphetamines).

     Section 1308.19 Developing Individual Education Programs (IEPs)

                       Guidance for Paragraph (a)

    The IEP determines the type of placement and the specific 
programming which are appropriate for a child. The least restrictive 
environment must be provided and staff need to understand that this 
means the most appropriate placement in a regular program to the maximum 
extent possible based on the IEP. Because it is individually determined, 
the least restrictive environment varies for different children. 
Likewise, the least restrictive environment for a given child can vary 
over time as the disability is remediated or worsens. A mainstreamed 
placement, in a regular program with services delivered by regular or 
special staff, is one type of integrated placement on the continuum of 
possible options. It represents the least restrictive environment for 
many children.
    Following screening, evaluation and the determination that a child 
meets the eligibility criteria and has a disability, a plan to meet the 
child's individual needs for special education and related services is 
developed. In order to facilitate communication with other agencies 
which may cooperate in providing services and especially with LEAs or 
private schools which the children will eventually enter, it is 
recommended that programs become familiar with the format of the IEP 
used by the LEAs and use that format to foster coordination. However, 
the format of the IEP to be developed for children in Head Start can 
vary according to local option. It should be developed to serve as a 
working document for teachers and others providing services for a child.
    It is recommended that the staff review the IEP of each child with a 
disability more frequently than the minimum once a year to keep the 
objectives and activities current.
    It is ideal if a child can be mainstreamed in the full program with 
modifications of some of the small group, large group or individual 
program activities to meet his or her special needs and this should be 
the first option considered. However, this is not possible or realistic 
in some cases on a full-time basis. The IEP team needs to consider the 
findings and recommendations of the multi-disciplinary evaluation team, 
observation and developmental assessment information from the Head Start 
staff and parents, parental information and desires, and the IEP to plan 
for the best situation for each child. Periodic reviews can change the 
degree to which a child can be mainstreamed during the program year. For 
example, a child with autism whose IEP called for part-time services in 
Head Start in the fall might improve so that by spring the hours could 
be extended.
    If Head Start is not an appropriate placement to meet the child's 
needs according to the IEP, referral should be made to another agency.
    Helpful specific information based on experience in Head Start is 
provided in manuals and resource materials on serving children with 
disabilities developed by ACYF and by technical assistance providers. 
They cover such aspects of developing and implementing the IEP as:
     Gathering data needed to develop the IEP;

[[Page 239]]

     Preparing parents for the IEP conference;
     Writing IEPs useful to teachers; and
     Developing appropriate curriculum activities and home 
follow-up activities.

                       Guidance for Paragraph (j)

    Programs are encouraged to offer parents assistance in noting how 
their child functions at home and in the neighborhood. Parents should be 
encouraged to contribute this valuable information to the staff for use 
in ongoing planning. Care should be taken to put parents at ease and to 
eliminate or explain specialized terminology. Comfortable settings, 
familiar meeting rooms and ample preparation can help lessen anxiety. 
The main purpose is to involve parents actively, not just to obtain 
their signature on the IEP.
    It is important to involve the parents of children with disabilities 
in activities related to their child's unique needs, including the 
procurement and coordination of specialized services and follow-through 
on the child's treatment plan, to the extent possible. It is especially 
helpful for Head Start to assist parents in developing confidence, 
strategies and techniques to become effective advocates for their 
children and to negotiate complicated systems. Under IDEA, a federally-
funded Parent Training and Information Program exists whereby parent 
training centers in each State provide information, support and 
assistance to parents enabling them to advocate for their child. 
Information regarding these centers should be given to parents of a 
child determined to have a disability. Because some parents will need to 
advocate for their children over a number of years, they need to gain 
the confidence and skills to access resources and negotiate systems with 
increasing independence.
    Some parents of children with disabilities are also disabled. Staff 
may need to adjust procedures for assisting parents who have 
disabilities to participate in their children's programs. Materials to 
assist in this effort are available from technical assistance providers.

                   Section 1308.20  Nutrition Services

                       Guidance for Paragraph (a)

    Vocabulary and concept building, counting, learning place settings, 
social skills such as conversation and acceptable manners can be 
naturally developed at meal or snack time, thus enhancing children's 
skills. Children with disabilities often need planned attention to these 
areas.
    The staff person who is responsible for nutrition and the 
disabilities services coordinator should work with the social services 
coordinator to help families access nutrition resources and services for 
children who are not able to learn or develop normally because of 
malnutrition.
    The staff person who is responsible for nutrition and the 
disabilities services coordinator should alert staff to watch for 
practices leading to baby bottle caries. This is severe tooth decay 
caused by putting a baby or toddler to bed with a nursing bottle 
containing milk, juice or sugar water or letting the child carry around 
a bottle for long periods of time. The serious dental and speech 
problems this can cause are completely preventable.
    In cases of severe allergies, staff should work closely with the 
child's physician or a medical consultant.

 Section 1308.21  Parent Participation and Transition of Children From 
                       Head Start to Public School

                       Guidance for Paragraph (a)

    Grantees should help parents understand the value of special early 
assistance for a child with a disability and reassure those parents who 
may fear that if their child receives special education services the 
child may always need them. This is not the experience in Head Start and 
most other preschool programs where the majority of children no longer 
receive special education after the preschool years. The disabilities 
coordinator needs to help parents understand that their active 
participation is of great importance in helping their children overcome 
or lessen the effects of disabilities and develop to their full 
potential.
    The disabilities coordinator should help program staff deal 
realistically with parents of children who have unfamiliar disabilities 
by providing the needed information, training and contact with 
consultants or specialized agencies. The coordinator should ensure that 
staff carrying out family needs assessment or home visits do not 
overlook possible disabilities among younger siblings who should be 
referred for early evaluation and preventive actions.

                   Guidance for Paragraphs (b) and (c)

    As most Head Start children will move into the public school system, 
disabilities coordinators need to work with the Head Start staff for 
early and ongoing activities designed to minimize discontinuity and 
stress for children and families as they move into a different system. 
As the ongoing advocates, parents will need to be informed and confident 
in communicating with school personnel and staff of social service and 
medical agencies. Disabilities coordinators need to ensure that the Head 
Start program:
     Provides information on services available for LEAs and 
other sources of services parents will have to access on their own, such 
as dental treatment;

[[Page 240]]

     Informs parents of the differences between the two systems 
in role, staffing patterns, schedules, and focus;
     Provides opportunities for mutual visits by staff to one 
another's facilities to help plan appropriate placement;
     Familiarizes parents and staff of the receiving program's 
characteristics and expections;
     Provides early and mutually planned transfer of records 
with parent consent at times convenient for both systems;
     Provides information on services available under the 
Individuals With Disabilities Education Act, the federally-funded parent 
training centers and provisions for parent involvement and due process; 
and
     Provides opportunities for parents to confer with staff to 
express their ideas and needs so they have experience in participating 
in IEP and other conferences in an active, confident manner. Role 
playing has been found helpful.
    It is strongly recommended that programs develop activities for 
smooth transition into Head Start from Part H infant/toddler programs 
funded under IDEA and from Head Start to kindergarten or other 
placement. In order to be effective, such plans must be developed 
jointly. They are advantageous for the children, parents, Part H 
programs, Head Start and LEAs. ACYF has developed materials useful for 
transition. American Indian programs whose children move into several 
systems, such as Bureau of Indian Affairs schools and public schools, 
need to prepare children and families in advance for the new situation. 
Plans should be used as working documents and reviewed for annual 
update, so that the foundation laid in Head Start is maintained and 
strengthened.



PART 1309--HEAD START FACILITIES PURCHASE--Table of Contents




                           Subpart A--General

Sec.
1309.1  Purpose and application.
1309.2  Approval of previously purchased facilities.
1309.3  Definitions.

                    Subpart B--Application Procedures

1309.10  Application.
1309.11  Cost comparison.
1309.12  Timely decisions.

                Subpart C--Protection of Federal Interest

1309.20  Title.
1309.21  Recording of Federal interest and other protection of Federal 
          interest.
1309.22  Rights and responsibilities in the event of grantee's default 
          on mortgage, or withdrawal or termination.
1309.23  Insurance, bonding, and maintenance.

                        Subpart D--Modular Units

1309.30  General.
1309.31  Site description.
1309.32  Statement of procurement procedure for modular units.
1309.33  Inspection.
1309.34  Costs of installation of modular unit.

               Subpart E--Other Administrative Provisions

1309.40  Copies of documents.
1309.41  Record retention.
1309.42  Audit of mortgage.
1309.43  Use of grant funds to pay fees.
1309.44  Independent analysis.

    Authority: 42 U.S.C. 9801 et seq.

    Source: 64 FR 5945, Feb. 8, 1999, unless otherwise noted.



                           Subpart A--General



Sec. 1309.1  Purpose and application.

    This part prescribes regulations implementing sections 644(c) and 
644(f) of the Head Start Act, 42 U.S.C. 9801 et seq., as it applies to 
grantees operating Head Start programs under the Act. It describes the 
procedures for applying for Head Start grant funds to purchase 
facilities in which to operate Head Start programs, and the conditions 
under which grant funds may be awarded to purchase facilities. It also 
specifies the measures which must be taken to protect the Federal 
interest in facilities purchased with Head Start grant funds.



Sec. 1309.2  Approval of previously purchased facilities.

    Head Start grantees which purchased facilities after December 31, 
1986, and before October 7, 1992, may request retroactive approval of 
the purchase by submitting an application which conforms to the 
requirements of this Part and the Act. Grant funds may be used to pay 
facility purchase costs incurred only after the responsible HHS official 
approves an application for a previously purchased facility.



Sec. 1309.3  Definitions.

    As used in this part,

[[Page 241]]

    ACF means the Administration for Children and Families in the 
Department of Health and Human Services, and includes the Regional 
Offices.
    Acquire means to purchase in whole or in part with Head Start grant 
funds through payments made in satisfaction of a mortgage agreement 
(both principal and interest), as a down payment, for professional fees, 
for closing costs, and for any other costs associated with the purchase 
of the property that are usual and customary for the locality.
    Act means the Head Start Act, 42 U.S.C. section 9801, et seq.
    ACYF means the Administration on Children, Youth and Families, a 
component of the Administration for Children and Families in the 
Department of Health and Human Services.
    Facility means a structure such as a building or modular unit 
appropriate for use by a Head Start grantee to carry out a Head Start 
program.
    Grant funds means Federal financial assistance received by a grantee 
from ACF to administer a Head Start program pursuant to the Head Start 
Act.
    Grantee means the local public, private non-profit or for-profit 
agency designated to operate a program pursuant to 42 U.S.C. 9836 or 42 
U.S.C. 9840a.
    Head Start center or a direct support facility for a Head Start 
program means a facility used primarily to provide Head Start services 
to children and their families, or for administrative or other 
activities necessary to the conduct of the Head Start program.
    Modular unit means a portable prefabricated structure made at 
another location and moved to a site for use by a Head Start grantee to 
carry out a Head Start program.
    Purchase means to buy an existing facility, either outright or 
through a mortgage. Purchase also refers to an approved purchase of a 
facility, commenced between December 31, 1986 and October 7, 1992, as 
permitted by the Head Start Act, and by Sec. 1309.2 of this part.
    Real property means land, including land improvements, structures 
and appurtenances thereto, excluding movable machinery and equipment.
    Responsible HHS official means the official who is authorized to 
make the grant of financial assistance to operate a Head Start program, 
or such official's designee.



                    Subpart B--Application Procedures



Sec. 1309.10  Application.

    A grantee which proposes to use grant funds to purchase a facility 
must submit a written application to the responsible HHS official. The 
application must include the following information:
    (a) A legal description of the site of the facility, and an 
explanation of the appropriateness of the location to the grantee's 
service area, including a statement of the effect that purchase of the 
facility has had or will have on the transportation of children to the 
program, on the grantee's ability to collaborate with other child care, 
social services and health providers, and on all other program 
activities and services.
    (b) Plans and specifications of the facility, including information 
on the size and type of structure, the number and a description of the 
rooms and the lot on which the building is located (including the space 
available for a playground and for parking).
    (c) The cost comparison described in Sec. 1309.11 of this part.
    (d) If minor renovations are necessary to make the facility suitable 
to carry out the Head Start program, a description of the renovations, 
and the plans and specifications required by paragraph (b) of this 
section for the facility as it will be after renovations are complete.
    (e) The intended uses of the facility, including information 
demonstrating that the facility will be used principally as a Head Start 
center or a direct support facility for a Head Start program. If the 
facility is to be used for purposes in addition to the operation of the 
Head Start program, the grantee must state what portion of the facility 
is to be used for such other purposes.
    (f) Assurance that the facility complies (or will comply after 
completion of the renovations described in paragraph (d) of this 
section) with local licensing and code requirements, the access 
requirements of the Americans

[[Page 242]]

with Disabilities Act (ADA), if applicable, and section 504 of the 
Rehabilitation Act of 1973. The grantee also will assure that it has met 
the requirements of the Flood Disaster Protection Act of 1973, if 
applicable.
    (g) If the grantee is claiming that the lack of alternative 
facilities will prevent or would have prevented operation of the 
program, a statement of how it was determined that there is or was a 
lack of alternative facilities. This statement must be supported, 
whenever possible, by a written statement from a licensed real estate 
professional in the grantee's service area. If a grantee requesting 
approval of the previous purchase of a facility is unable to provide 
such statements based on circumstances which existed at the time of the 
purchase, the grantee and the licensed real estate professional may use 
present conditions as a basis for making the determination.
    (h) The terms of any proposed or existing loan(s) related to the 
purchase of the facility and the repayment plans (detailing balloon 
payments or other unconventional terms, if any) and information on all 
other sources of funding of the purchase, including any restrictions or 
conditions imposed by other funding sources.
    (i) A statement of the effect that the purchase of the facility 
would have on the grantee's meeting of the non-Federal share requirement 
of section 640(b) of the Head Start Act, including whether the grantee 
is seeking a waiver of its non-Federal share obligation under that 
section of the Act.
    (j) Certification by a licensed engineer or architect that the 
building is structurally sound and safe for use as a Head Start 
facility. If minor renovations are necessary to make the facility 
suitable for use to carry out a Head Start program, the application must 
include a certification by a licensed engineer or architect as to the 
cost and technical appropriateness of the proposed renovations.
    (k) A statement of the effect that the purchase of a facility would 
have on the grantee's ability to meet the limitation on development and 
administrative costs in section 644(b) of the Head Start Act. One-time 
fees and expenses necessary to the purchase, such as the down payment, 
the cost of necessary minor renovations, loan fees and related expenses, 
and fees paid to attorneys, engineers, and appraisers, are not 
considered to be administrative costs.
    (l) A proposed schedule for acquisition, renovation and occupancy of 
the facility.
    (m) Reasonable assurances that the applicant will obtain, or in the 
case of a previously purchased facility, has obtained a fee simple or 
such other estate or interest in the site sufficient to assure 
undisturbed use and possession for the purpose of operating the Head 
Start program. If the grantee proposes to purchase a facility without 
also purchasing the land on which the facility is situated, the 
application must describe the easement, right of way or land rental it 
will obtain or has obtained to allow it sufficient access to the 
facility.
    (n) An assessment of the impact of the proposed acquisition on the 
human environment if it involves significant renovation or a significant 
change in land use, including substantial increases in traffic in the 
surrounding area due to the provision of Head Start transportation 
services, pursuant to section 102(2)(C) of the National Environmental 
Policy Act of 1969 (42 U.S.C. 4332(2)(C)) and its implementing 
regulations (40 CFR parts 1500-1508), and a report showing the results 
of tests for environmental hazards present in the facility, ground 
water, and soil (or justification why such testing is not necessary). In 
addition, such information as may be necessary to comply with the 
National Historic Preservation Act of 1966 (16 U.S.C. 470f) must be 
included.
    (o) Assurance that the grantee will comply with the requirements of 
the Uniform Relocation Assistance and Real Property Acquisition Policies 
Act of 1970, as amended (42 U.S.C. 4601 et seq. and 49 CFR part 24), and 
information about the costs that may be incurred due to compliance with 
this Act.
    (p) A statement of the share of the cost of purchase that will be 
paid with grant funds.
    (q) For a grantee seeking approval of a previous purchase, a 
statement of the extent to which it has attempted to comply and will be 
able to comply with

[[Page 243]]

the provisions of Sec. 1309.22(a) of this part.
    (r) Such additional information as the responsible HHS official may 
require.

    Effective Date Note: At 64 FR 5946, Feb 8, 1999, Sec. 1309.10 was 
added. This section contains information collection requirements and 
will not become effective until approval has been given by the Office of 
Management and Budget.



Sec. 1309.11  Cost comparison.

    (a) A grantee proposing to purchase a facility with grant funds must 
submit a detailed estimate of the cost of the proposed purchase, 
including the cost of any necessary minor renovations, and must compare 
the cost of purchasing the proposed facility to the cost of renting an 
alternative facility.
    (b) All costs of purchase and ownership must be identified, 
including, but not limited to, professional fees, minor renovation 
costs, moving expenses, additional transportation costs, maintenance, 
taxes, insurance, and easements, rights of way or land rentals. An 
independent appraisal of the current value of the facility proposed to 
be purchased or previously purchased, made by a professional appraiser, 
must be included.
    (c) The comparison described in paragraph (a) of this section must 
compare the cost of the proposed facility to the cost of the facility 
currently used by the grantee, unless the grantee has no current 
facility, will lose the use of its current facility, intends to continue 
to use its current facility after it purchases the new facility, or has 
shown to the satisfaction of the responsible HHS official that its 
existing facility is inadequate. Where the grantee's current facility is 
not used as the alternate facility, the grantee must use for comparison 
a facility (or facilities) available for lease in the grantee's service 
area and which are usable as a Head Start facility (meaning a facility 
large enough to meet the foreseeable needs of the Head Start grantee, 
and which complies with local licensing and code requirements and the 
access requirements of the Americans With Disabilities Act, if 
applicable, and section 504 of the Rehabilitation Act of 1973) or which 
can be made useable through minor renovation, the cost of which shall be 
included in the cost comparison. In the case of an application for 
approval of the previous purchase of a facility, the cost of the present 
facility must be compared to the cost of the facility used by the 
grantee before purchase of its current facility. If the facility used by 
the grantee before the purchase of its present facility was deemed 
inadequate by the responsible HHS official, the grantee had no previous 
facility, or if the grantee continued to use its previous facility after 
the current facility was purchased the alternative facility shall be an 
available, appropriate facility (or facilities) of comparable size that 
was available for rent in the grantee's service area at the time of its 
purchase of the current facility.
    (d) The grantee must separately delineate the following expenses in 
the application:
    (1) One-time costs, including, but not limited to, the down payment, 
professional fees, moving expenses, the cost of site preparation and 
installation of a modular unit, and the costs of necessary minor 
renovations; and
    (2) Ongoing costs, including, but not limited to, mortgage payments, 
insurance premiums, maintenance costs, and property taxes. If the 
grantee is exempt from the payment of property taxes, this fact must be 
stated.
    (e) The period of comparison is twenty years, except that for the 
purchase of a modular unit the period of comparison is ten years. For a 
proposed purchase the period of comparison begins on the date on which 
the proposal is made. For approvals of previous purchases, the period of 
comparison begins on the date the purchase of the facility took place.
    (f) If the facility is to be used for purposes in addition to the 
operation of the Head Start program, the cost of use of that part of the 
facility used for such other purposes must be allocated in accordance 
with applicable Office of Management and Budget cost principles.

[[Page 244]]



Sec. 1309.12  Timely decisions.

    The responsible HHS official shall promptly review and make final 
decisions regarding completed applications under this part.



                Subpart C--Protection of Federal Interest



Sec. 1309.20  Title.

    Title to facilities acquired with grant funds vests with the grantee 
upon acquisition, subject to the provisions of this part.



Sec. 1309.21  Recording of Federal interest and other protection of Federal interest.

    (a) The Federal Government has an interest in all real property and 
equipment purchased with grant funds for use as a Head Start facility. 
The responsible HHS official may agree to subordinate the Federal 
interest in such property to that of a lender which finances the 
purchase of the property subject to the conditions set forth in 
paragraph (f) of this section.
    (b) Facilities acquired with grant funds may not be mortgaged or 
used as collateral, or sold or otherwise transferred to another party, 
without the written permission of the responsible HHS official.
    (c) Use of the facility for other than the purpose for which the 
facility was funded, without the express written approval of the 
responsible HHS official, is prohibited.
    (d) Immediately upon purchasing a facility with grant funds, or 
receiving permission to use funds for a previously purchased facility, 
the grantee shall record a Notice of Federal Interest in the appropriate 
official records for the jurisdiction in which the facility is located. 
The Notice shall include the following information:
    (1) The date of the award of grant funds for the purchase of the 
property to be used as a Head Start facility, and the address and legal 
description of the property to be purchased;
    (2) That the grant incorporated conditions which include restriction 
on the use of the property and provide for a Federal interest in the 
property;
    (3) That the property may not be used for any purpose inconsistent 
with that authorized by the Head Start Act and applicable regulations;
    (4) That the property may not be mortgaged or used as collateral, 
sold or otherwise transferred to another party, without the written 
permission of the responsible HHS official;
    (5) That these grant conditions and requirements cannot be altered 
or nullified through a transfer of ownership; and
    (6) The name (including signature) and title of the person who 
completed the Notice for the grantee agency, and the date of the Notice.
    (e) Grantees must meet all of the requirements in 45 CFR parts 74 or 
92 pertaining to the purchase and disposition of real property, or the 
use and disposal of equipment, as appropriate.
    (f) In subordinating its interest in a facility purchased with grant 
funds, the responsible HHS official does not waive application of 
paragraph (d) of this section and Sec. 1309.22. A written agreement by 
the responsible HHS official to subordinate the Federal interest must 
provide:
    (1)(i) The lender shall notify the Office of the Regional 
Administrator, Administration for Children and Families, the Office of 
the Commissioner, Administration on Children, Youth and Families, 
Washington, D.C., and the Office of the General Counsel, Department of 
Health and Human Services, Washington, DC, or their successor agencies, 
immediately, both telephonically and in writing of any default by the 
Head Start grantee;
    (ii) Written notice of default must be sent by registered mail 
return receipt requested; and,
    (iii) The lender will not foreclose on the property until at least 
60 days after the required notice by the lender has been sent.
    (2) Such notice will include:
    (i) The full names, addresses, and telephone numbers of the lender 
and the Head Start grantee;
    (ii) The following statement prominently displayed at the top of the 
first page of the notice: ``The Federal Interest in certain real 
property or equipment used for the Head Start Program may be at risk. 
Immediately give this

[[Page 245]]

notice to the appropriate government official'';
    (iii) The date and nature of the default and the manner in which the 
default may be cured; and
    (iv) In the event that the lender will be exercising its remedy of 
foreclosure or other remedies, the date or expected date of the 
foreclosure or other remedies.
    (3) Head Start grantees which purchase facilities with respect to 
which the responsible HHS official has subordinated the Federal Interest 
to that of the lender must keep the lender informed of the current 
addresses and telephone numbers of the agencies to which the lender is 
obligated under paragraph (b) of this section to give notice in the 
event of a default.



Sec. 1309.22  Rights and responsibilities in the event of grantee's default on mortgage, or withdrawal or termination.

    (a) The mortgage agreement, or security agreement in the case of a 
modular unit which is proposed to be purchased under a chattel mortgage, 
shall provide in the case of default by the grantee or the withdrawal or 
termination of the grantee from the Head Start program that ACF may 
intervene. In the case of a default, the mortgage agreement or security 
agreement must provide that ACF may intervene to ensure that the default 
is cured by the grantee or another agency designated by ACF and that the 
lender shall accept the payment of money or performance of any other 
obligation by ACF's designee, for the grantee, as if such payment of 
money or performance had been made by the grantee. The agreement shall 
also provide that ACF will have a period of 60 days after notification 
by the grantee of default in which to intervene to attempt to cure the 
default. The agreement shall further provide that in the event of a 
default, or the withdrawal or termination of the grantee the mortgage 
may be assumed by an organization designated by ACF. The mortgagee or 
creditor will have the right to approve the organization designated to 
assume the mortgage, but such approval will not be withheld except for 
good reason. The provisions required for inclusion in mortgages must be 
included in the mortgages of previously purchased facilities unless a 
convincing justification for not doing so is shown by the Head Start 
grantee.
    (b) The grantee must immediately provide the responsible HHS 
official with both telephonic and written notification of a default of 
any description on the part of the grantee under a real property or 
chattel mortgage.
    (c) In the event that a default is not cured and foreclosure takes 
place, the mortgagee or creditor shall pay ACF that percentage of the 
proceeds from the foreclosure sale of the property attributable to the 
Federal share as defined in 45 CFR 74.2, or, if part 92 is applicable, 
to ACF's share as defined in 45 CFR 92.3. If ACF and the mortgagee or 
creditor have agreed that ACF's Federal interest will be subordinated to 
the mortgagee's or creditor's interest in the property, that agreement 
must be set forth in a written subordination agreement that is signed by 
the responsible HHS official and that complies with Sec. 1309.21 and any 
other applicable Federal law.



Sec. 1309.23  Insurance, bonding and maintenance.

    (a) At the time of acquiring a facility or receiving approval for 
the previous purchase of a facility, the grantee shall obtain insurance 
coverage for the facility which is of the same type as the coverage it 
has obtained for other real property it owns, which includes student 
liability insurance and which at least meets the requirements of the 
coverage specified in paragraphs (a)(1) and (2) of this section as 
follows:
    (1) A title insurance policy which insures the fee interest in the 
facility for an amount not less than the full appraised value as 
approved by ACF, or the amount of the purchase price, whichever is 
greater, and which contains an endorsement identifying ACF as a loss 
payee to be reimbursed if the title fails. If no endorsement naming ACF 
as loss payee is made, the grantee is required to pay ACF the title 
insurance proceeds it receives in the event of title failure; and
    (2) A physical destruction insurance policy, including flood 
insurance where

[[Page 246]]

appropriate, which insures the full replacement value of the facility 
from risk of partial and total physical destruction. The insurance 
policy is to be maintained for the period of time the facility is owned 
by the grantee.
    (b) The grantee shall submit copies of such insurance policies to 
ACF within five days of acquiring the facility or receiving approval for 
the previous purchase of a facility. If the grantee has not received the 
policies in time to submit copies within this period, it shall submit 
evidence that it has obtained the appropriate insurance policies within 
five days of acquiring the facility or receiving approval for the 
previous purchase of a facility, and it shall submit copies of the 
policies within five days of its receipt of them.
    (c) The grantee must maintain facilities acquired with grant funds 
in a manner consistent with the purposes for which the funds were 
provided and in compliance with State and local government property 
standards and building codes.



                        Subpart D--Modular Units



Sec. 1309.30  General.

    In addition to the special requirements of Secs. 1309.31-1309.34 of 
this part, the proposed purchase or request for approval of a previous 
purchase of a modular unit is subject to all of the requirements of this 
part with the following exceptions:
    (a) Section 1309.10(j) of this part, which requires a certification 
by a licensed engineer or architect of the structural soundness of a 
facility prior to approval of an application for grant funds, is 
replaced by Sec. 1309.33; and
    (b) Section 1309.21(d) of this part does not apply to the proposed 
purchase of modular units if the land on which the unit is installed is 
not owned by the grantee.



Sec. 1309.31  Site description.

    (a) An application for the purchase or approval of a previous 
purchase of a modular unit must state specifically where the modular 
unit will be installed, and whether the land on which the modular unit 
will be installed will be purchased by the grantee. If the grantee does 
not propose to purchase land on which to install the modular unit or if 
the previously purchased modular unit is located on land not owned by 
the grantee, the application must state who owns the land on which the 
modular unit is or will be situated and describe the easement, right-of-
way or land rental it will obtain or has obtained to allow it sufficient 
access to the modular unit.
    (b) Modular units which are purchased with grant funds and which are 
not permanently affixed to land, or which are affixed to land which is 
not owned by the grantee, must have posted in a conspicuous place the 
following notice: ``On (date), the Department of Health and Human 
Services (DHHS) awarded (grant number) to (Name of grantee). The grant 
provided Federal funds for conduct of a Head Start program, including 
purchase of this modular unit. The grant incorporated conditions which 
included restrictions on the use and disposition of this property, and 
provided for a continuing Federal interest in the property. 
Specifically, the property may not be used for any purpose other than 
the purpose for which the facility was funded, without the express 
written approval of the responsible DHHS official, or sold or 
transferred to another party without the written permission of the 
responsible DHHS official. These conditions are in accordance with the 
statutory provisions set forth in 42 U.S.C. 9839; the regulatory 
provisions set forth in 45 CFR part 1309, 45 CFR part 74 and 45 CFR part 
92; and Administration for Children and Families' grants policy.''
    (c) A modular unit which has been approved for purchase and 
installation in one location may not be moved to another location 
without the written permission of the responsible HHS official.



Sec. 1309.32  Statement of procurement procedure for modular units.

    (a) An application for the purchase of a modular unit must include a 
statement describing the procedures which will be used by the grantee to 
purchase the modular unit.
    (b) This statement must include a copy of the specifications for the 
unit which is proposed to be purchased and assurance that the grantee 
will comply

[[Page 247]]

with procurement procedures in 45 CFR parts 74 and 92, including 
assurance that all transactions will be conducted in a manner to 
provide, to the maximum extent practical, open and free competition. A 
grantee requesting approval of a previous purchase of a modular unit 
also must include a copy of the specifications for its unit.



Sec. 1309.33  Inspection.

    A grantee which purchases a modular unit with grant funds or 
receives approval of a previous purchase must have the modular unit 
inspected by a licensed engineer or architect within 15 calendar days of 
its installation or approval of a previous purchase, and must submit to 
the responsible HHS official the engineer's or architect's inspection 
report within 30 calendar days of the inspection.



Sec. 1309.34  Costs of installation of modular unit.

    Consistent with the cost principles referred to in 45 CFR part 74 
and 45 CFR part 92, all reasonable costs necessary to the installation 
of a modular unit the purchase of which has been approved by the 
responsible HHS official are payable with grant funds. Such costs 
include, but are not limited to, payments for public utility hook-ups, 
site surveys and soil investigations.



               Subpart E--Other Administrative Provisions



Sec. 1309.40  Copies of documents.

    Certified copies of the deed, loan instrument, mortgage, and any 
other legal documents related to the purchase of the facility or to the 
discharge of any debt secured by the facility must be submitted to the 
responsible HHS official within ten days of their execution.

    Effective Date Note: At 64 FR 5949, Feb. 8, 1999, Sec. 1309.40 was 
added. This section contains information collection requirements and 
will not become effective until approval has been given by the Office of 
Management and Budget.



Sec. 1309.41  Record retention.

    All records pertinent to the purchase of a facility must be retained 
by the grantee for a period equal to the period of the grantee's 
ownership of the facility plus three years.

    Effective Date Note: At 64 FR 5949, Feb. 8, 1999, Sec. 1309.41 was 
added. This section contains information collection requirements and 
will not be effective until approval has been given by the Office of 
Management and Budget.



Sec. 1309.42  Audit of mortgage.

    Any audit of a grantee which has purchased a facility with grant 
funds shall include an audit of any mortgage or encumbrance on the 
facility. Reasonable and necessary fees for this audit are payable with 
grant funds.



Sec. 1309.43  Use of grant funds to pay fees.

    Consistent with the cost principles referred to in 45 CFR part 74 
and 45 CFR part 92, reasonable fees and costs associated with and 
necessary to the purchase of a facility (including reasonable and 
necessary fees and costs incurred prior to the submission of an 
application under Sec. 1309.10 of this part or prior to the purchase of 
the facility) are payable with grant funds, but require prior, written 
approval of the responsible HHS official.



Sec. 1309.44  Independent analysis.

    (a) The responsible HHS official may direct the grantee applying for 
funds to purchase a facility to obtain an independent analysis of the 
cost comparison submitted by the grantee pursuant to Sec. 1309.11 of 
this part, or the statement under Sec. 1309.10(g) of this part, or both, 
if, in the judgment of the official, such an analysis is necessary to 
adequately review a proposal submitted under this part.
    (b) The analysis shall be in writing and shall be made by a 
qualified, disinterested real estate professional in the community in 
which the property proposed to be purchased is situated.
    (c) Section 1309.43 of this part applies to payment of the cost of 
the analysis.



PART 1310--HEAD START TRANSPORTATION--Table of Contents




                           Subpart A--General

Sec.
1310.1  Purpose.

[[Page 248]]

1310.2  Applicability.
1310.3  Definitions.

                 Subpart B--Transportation Requirements

1310.10  General.
1310.11  Child Restraint Systems.
1310.12  Required use of School Buses or Allowable Alternate Vehicles.
1310.13  Maintenance of vehicles.
1310.14  Inspection of new vehicles at time of delivery.
1310.15  Operation of vehicles.
1310.16  Driver qualifications.
1310.17  Driver and bus monitor training.

                     Subpart C--Special Requirements

1310.20  Trip routing.
1310.21  Safety education.
1310.22  Children with disabilities.
1310.23  Coordinated transportation.

    Authority: 42 U.S.C. 9801 et seq.

    Source: 66 FR 5311, Jan. 18, 2001, unless otherwise noted.

    Effective Date Note: At 66 FR 5311, Jan. 18, 2001, part 1310 was 
added, effective Jan. 18, 2002, with the following exceptions:
    45 CFR 1310.11 and 1310.15(c) are effective January 20, 2004. 45 CFR 
1310.12(a) and 1310.22(a) are effective January 18, 2006. 45 CFR 
1310.2(c) and 1310.12(b) are effective Feb. 20, 2001.



                           Subpart A--General



Sec. 1310.1  Purpose.

    Under the authority of sections 640(i) and 645A(b)(9) of the Head 
Start Act (42 U.S.C. 9801 et seq.), this part prescribes regulations on 
safety features and the safe operation of vehicles used to transport 
children participating in Head Start and Early Head Start programs. 
Under the authority of sections 644(a) and (c) and 645A(b)(9) of the 
Head Start Act, this part also requires Head Start, Early Head Start, 
and delegate agencies to provide training in pedestrian safety and to 
make reasonable efforts to coordinate transportation resources to 
control costs and to improve the quality and the availability of 
transportation services.



Sec. 1310.2  Applicability.

    (a) This rule applies to all Head Start and Early Head Start 
agencies, and their delegate agencies (hereafter, agency or agencies), 
including those that provide transportation services, with the 
exceptions provided in this section, regardless of whether such 
transportation is provided directly on agency owned or leased vehicles 
or through arrangement with a private or public transportation provider. 
Transportation services to children served under the home-based Option 
for Head Start and Early Head Start services are excluded from the 
requirements of 45 CFR 1310.12, 1310.15(c), and 1310.16. Except when 
there is an applicable State or local requirement that sets a higher 
standard on a matter covered by this part, agencies must comply with 
requirements of this part.
    (b) Sections 1310.12(a) and 1310.22(a) of this part are effective 
January 18, 2006. Sections 1310.11 and 1310.15(c) of this part are 
effective January 20, 2004. Paragraph (c) of this section and 
Sec. 1310.12(b) of this part are effective February 20, 2001. All other 
provisions of this part are effective January 18, 2002.
    (c) Effective February 20, 2001 an agency may request a waiver of 
specific requirements of this part, except for the requirements of this 
paragraph. Requests for waivers must be made in writing to the 
responsible Health and Human Services (HHS) official, as part of an 
agency's annual application for financial assistance or amendment 
thereto, based on good cause. ``Good cause'' for a waiver will exist 
when adherence to a requirement of this part would itself create a 
safety hazard in the circumstances faced by the agency. Under no 
circumstance will the cost of complying with one or more of the specific 
requirements of this part constitute good cause. The responsible HHS 
official is not authorized to waive any requirements of the Federal 
Motor Vehicle Safety Standards (FMVSS) made applicable to any class of 
vehicle under 49 CFR part 571. The responsible HHS official shall have 
the right to require such documentation as the official deems necessary 
in support of a request for a waiver. Approvals of waiver requests must 
be in writing, be signed by the responsible HHS official, and be based 
on good cause.



Sec. 1310.3  Definitions.

    Agency as used in this regulation means a Head Start or Early Head

[[Page 249]]

Start or delegate agency unless otherwise designated.
    Agency Providing Transportation Services means an agency providing 
transportation services, either directly or through another arrangement 
with a private or public transportation provider, to children enrolled 
in its Head Start or Early Head Start program.
    Allowable Alternate Vehicle means a vehicle designed for carrying 
eleven or more people, including the driver, that meets all the Federal 
Motor Vehicle Safety Standards applicable to school buses, except 49 CFR 
571.108 and 571.131.
    Bus monitor means a person with specific responsibilities for 
assisting the driver in ensuring the safety of the children while they 
ride, board, or exit the vehicle and for assisting the driver during 
emergencies.
    Child Restraint System means any device designed to restrain, seat, 
or position children who weigh 50 pounds or less which meets the 
requirements of Federal Motor Vehicle Safety Standard No. 213, Child 
Restraint Systems, 49 CFR 571.213.
    Commercial Driver's License (CDL) means a license issued by a State 
or other jurisdiction, in accordance with the standards contained in 49 
CFR part 383, to an individual which authorizes the individual to 
operate a class of commercial motor vehicles.
    Delegate Agency means a local public or private not-profit or for-
profit agency to which a Head Start or Early Head Start agency has 
delegated all or part of its responsibility for operation of a Head 
Start program.
    Early Head Start Agency means a public or private non-profit or for-
profit agency or delegate agency designated to operate an Early Head 
Start program pursuant to Section 645A of the Head Start Act.
    Early Head Start Program means a program of services provided by an 
Early Head Start Agency funded under the Head Start Act.
    Federal Motor Vehicle Safety Standards (FMVSS) means the National 
Highway and Traffic Safety Administration's standards for motor vehicles 
and motor vehicle equipment (49 CFR part 571) established under section 
30111 of Title 49, United States Code.
    Fixed route means the established routes to be traveled on a regular 
basis by vehicles that transport children to and from Head Start or 
Early Head Start program activities, and which include specifically 
designated stops where children board or exit the vehicle.
    Head Start Agency, means a local public or private non-profit or 
for-profit agency designated to operate a Head Start program pursuant to 
Section 641 of the Head Start Act.
    Head Start Program means a program of services provided by a Head 
Start agency or delegate agency and funded under the Head Start Act.
    National Driver Register means the National Highway Traffic Safety 
Administration's automated system for assisting State driver license 
officials in obtaining information regarding the driving records of 
individuals who have been denied licenses for cause; had their licenses 
denied for cause, had their licenses canceled, revoked, or suspended for 
cause, or have been convicted of certain serious driving offenses.
    National Standards for School Buses and School Bus Operations means 
the recommendations resulting from the Eleventh National Conference on 
School Transportation, May 1990, published by the National Safety 
Council, Chicago, Illinois.
    Reverse beeper means a device which automatically sounds an 
intermittent alarm whenever the vehicle is engaged in reverse.
    School Bus means a motor vehicle designed for carrying 11 or more 
persons (including the driver) and which complies with the Federal Motor 
Vehicle Safety Standards applicable to school buses.
    Seat Belt Cutter means a special device that may be used in an 
emergency to rapidly cut through the seat belts used on vehicles in 
conjunction with child restraint systems.
    State means any of the several States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, any territory or 
possession of the United States, or any agency or instrumentality of a 
State exclusive of local governments.

[[Page 250]]

    Transportation Services means the planned transporting of children 
to and from sites where an agency provides services funded under the 
Head Start Act. Transportation services can involve the pick-up and 
discharge of children at regularly scheduled times and pre-arranged 
sites, including trips between children's homes and program settings. 
The term includes services provided directly by the Head Start and Early 
Head Start grantee or delegate agency and services which such agencies 
arrange to be provided by another organization or an individual. 
Incidental trips, such as transporting a sick child home before the end 
of the day, or such as might be required to transport small groups of 
children to and from necessary services, are not included under the 
term.
    Trip routing means the determination of the fixed routes to be 
traveled on a regular basis for the purpose of transporting children to 
and from the Head Start or Early Head Start program or activities.



                 Subpart B--Transportation Requirements



Sec. 1310.10  General.

    (a) Each agency must assist as many families as possible who need 
transportation in order for their children to attend the program in 
obtaining that transportation.
    (b) When an agency has decided not to provide transportation 
services, either for all or a portion of the children, it must provide 
reasonable assistance to the families of such children to arrange 
transportation to and from its activities. The specific types of 
assistance being offered must be made clear to all prospective families 
in the program's recruitment announcements.
    (c) Each agency providing transportation services is responsible for 
compliance with the applicable requirements of this Part. When an agency 
provides transportation through another organization or an individual, 
the agency must ensure the compliance of the transportation provider 
with the requirements of this part.
    (d) Each agency providing transportation services, must ensure that 
each vehicle used in providing such services is equipped with:
    (1) a communication system to call for assistance in case of an 
emergency:
    (2) safety equipment for use in an emergency, including a charged 
fire extinguisher that is properly mounted near the driver's seat and a 
sign indicating its location;
    (3) a first aid kit and a sign indicating the location of such 
equipment; and
    (4) a seat belt cutter for use in an emergency evacuation and a sign 
indicating its location.
    (e) Each agency providing transportation services must ensure that 
any auxiliary seating, such as temporary or folding jump seats, used in 
vehicles of any type providing such services are built into the vehicle 
by the manufacturer as part of its standard design, are maintained in 
proper working order, and are inspected as part of the annual inspection 
required under Sec. 1310.13(a) of this subpart.
    (f) Each agency providing transportation services must ensure that 
all accidents involving vehicles that transport children receiving such 
services are reported in accordance with applicable State requirements.
    (g) Each agency must ensure that children are only released to a 
parent or legal guardian, or other individual identified in writing by 
the parent or legal guardian. This regulation applies when children are 
not transported and are picked up from the classroom, as well as when 
they are dropped off by a vehicle Agencies must maintain lists of the 
persons, including alternates in case of emergency, and up-to-date child 
rosters must be maintained at all times to ensure that no child is left 
behind, either at the classroom or on the vehicle at the end of the 
route.



Sec. 1310.11  Child Restraint Systems.

    Effective January 20, 2004, each agency providing transportation 
services must ensure that each vehicle used to transport children 
receiving such services is equipped for use of height- and weight-
appropriate child safety restraint systems.

    Effective Date Note: At 66 FR 5311, Jan. 18, 2001, Sec. 1310.11 was 
added, effective January 20, 2004.

[[Page 251]]



Sec. 1310.12  Required use of School Buses or Allowable Alternate Vehicles.

    (a) Effective January 18, 2006, each agency providing transportation 
services must ensure that children enrolled in its program are 
transported in school buses or allowable alternate vehicles that are 
equipped for use of height- and weight-appropriate child restraint 
systems, and that have reverse beepers. As provided in 45 CFR 1310.2(a), 
this paragraph does not apply to transportation services to children 
served under the home-based option for Head Start and Early Head Start.
    (b) Effective February 20, 2001, each Head Start and Early Head 
Start agency receiving permission from the responsible HHS official to 
purchase a vehicle with grant funds for use in providing transportation 
services to children in its program or a delegate agency's program must 
ensure that the funds are used to purchase a vehicle that is either a 
school bus or an allowable alternate vehicle and is equipped
    (1) for use of height- and weight-appropriate child restraint 
systems; and
    (2) with a reverse beeper.
    (c) As provided in 45 CFR 1310.2(a), paragraph (b) of this section 
does not apply to vehicles purchased for use in transporting children 
served under the home-based option for Head Start and Early Head Start.

    Effective Date Note: At 66 FR 5311, Jan. 18, 2001, Sec. 1310.12 
paragraph (a) was added, effective January 18, 2006.



Sec. 1310.13  Maintenance of vehicles.

    Each agency providing transportation services must ensure that 
vehicles used to provide such services are maintained in safe operating 
condition at all times. The organization operating the vehicle must 
establish and implement procedures for:
    (a) a thorough safety inspection of each vehicle on at least an 
annual basis through an inspection program licensed or operated by the 
State;
    (b) systematic preventive maintenance on such vehicles; and
    (c) daily pre-trip inspection of the vehicles by the driver.



Sec. 1310.14  Inspection of new vehicles at the time of delivery.

    Each agency providing transportation services must ensure that bid 
announcements for school buses and allowable alternate vehicles for use 
in transporting children in its program include the correct 
specifications and a clear statement of the vehicle's intended use. Such 
agencies must ensure that there is a prescribed procedure for examining 
such vehicles at the time of delivery to ensure that they are equipped 
in accordance with the bid specifications and that the manufacturer's 
certification of compliance with the applicable FMVSS is included with 
the vehicle.



Sec. 1310.15  Operation of vehicles.

    Each agency providing transportation services, either directly or 
through an arrangement with another organization or an individual, to 
children enrolled in its program must ensure that:
    (a) On a vehicle equipped for use of such devices, any child 
weighing 50 pounds or less is seated in a child restraint system 
appropriate to the height and weight of the child while the vehicle is 
in motion.
    (b) Baggage and other items transported in the passenger compartment 
are properly stored and secured and the aisles remain clear and the 
doors and emergency exits remain unobstructed at all times.
    (c) Effective January 20, 2004, there is at least one bus monitor on 
board at all times, with additional bus monitors provided as necessary, 
such as when needed to accommodate the needs of children with 
disabilities. As provided in 45 CFR 1310.2(a), this paragraph does not 
apply to transportation services to children served under the home-based 
option for Head Start and Early Head Start.
    (d) Except for bus monitors who are assisting children, all vehicle 
occupants must be seated and wearing height- and weight- appropriate 
safety restraints while the vehicle is in motion.

    Effective Date Note: At 66 FR 5311, Jan. 18, 2001, Sec. 1310.15 
paragraph (c) was added, effective January 20, 2004.

[[Page 252]]



Sec. 1310.16  Driver qualifications.

    (a) Each agency providing transportation services must ensure that 
persons who drive vehicles used to provide such services, at a minimum:
    (1) in States where such licenses are granted, have a valid 
Commercial Driver's License (CDL) for vehicles in the same class as the 
vehicle the driver will operating; and
    (2) meet any physical, mental, and other requirements established 
under applicable law or regulations as necessary to perform job-related 
functions with any necessary reasonable accommodations.
    (b) Each agency providing transportation services must ensure that 
there is an applicant review process for use in hiring drivers, that 
applicants for driver positions must be advised of the specific 
background checks required at the time application is made, and that 
there are criteria for the rejection of unacceptable applicants. The 
applicant review procedure must include, at minimum:
    (1) all elements specified in 45 CFR 1304.52(b), with additional 
disclosure by the applicant of all moving traffic violations, regardless 
of penalty;
    (2) a check of the applicant's driving record through the 
appropriate State agency, including a check of the applicant's record 
through the National Driver Register, if available in the State; and
    (3) after a conditional offer of employment to the applicant and 
before the applicant begins work as a driver, a medical examination, 
performed by a licensed doctor of medicine or osteopathy, establishing 
that the individual possesses the physical ability to perform any job-
related functions with any necessary accommodations.
    (c) As provided in 45 CFR 1310.2(a), this section does not apply to 
transportation services to children served under the home-based option 
for Head Start and Early Head Start.



Sec. 1310.17  Driver and bus monitor training.

    (a) Each agency providing transportation services must ensure that 
persons employed to drive vehicles used in providing such services will 
have received the training required under paragraphs (b) and (c) of this 
section no later than 90 days after the effective date of this section 
as established by Sec. 1310.2 of this part. The agency must ensure that 
drivers who are hired to drive vehicles used in providing transportation 
services after the close of the 90 day period must receive the training 
required under paragraphs (b) and (c) prior to transporting any child 
enrolled in the agency's program. The agency must further ensure that at 
least annually after receiving the training required under paragraphs 
(b) and (c), all drivers who drive vehicles used to provide such 
services receive the training required under paragraph (d) of this 
section.
    (b) Drivers must receive a combination of classroom instruction and 
behind-the-wheel instruction sufficient to enable each driver to:
    (1) operate the vehicle in a safe and efficient manner;
    (2) safely run a fixed route, including loading and unloading 
children, stopping at railroad crossings and performing other 
specialized driving maneuvers;
    (3) administer basic first aid in case of injury;
    (4) handle emergency situations, including vehicle evacuation 
procedures;
    (5) operate any special equipment, such as wheelchair lifts, 
assistance devices or special occupant restraints;
    (6) conduct routine maintenance and safety checks of the vehicle; 
and
    (7) maintain accurate records as necessary.
    (c) Drivers must also receive instruction on the topics listed in 45 
CFR 1304.52(k)(1), (2) and (3)(i) and the provisions of the Head Start 
Program Performance Standards for Children with Disabilities (45 CFR 
1308) relating to transportation services for children with 
disabilities.
    (d) Drivers must receive refresher training courses including the 
topics listed in paragraphs (b) and (c) of this section and any 
additional necessary training to meet the requirements applicable in the 
State where the agency operates.
    (e) Each agency providing transportation services must ensure that 
drivers who transport children receiving

[[Page 253]]

the services qualify under the applicable driver training requirements 
in its State.
    (f) Each agency providing transportation services must ensure that:
    (1) the annual evaluation of each driver of a vehicle used to 
provide such services includes an on-board observation of road 
performance; and
    (2) before bus monitors assigned to vehicles used to provide such 
services begin their duties, they are trained on child boarding and 
exiting procedure, use of child restraint systems, any required 
paperwork, responses to emergencies, emergency evacuation procedures, 
use of special equipment, child pick-up and release procedures and pre- 
and post-trip vehicle check.



                     Subpart C--Special Requirements



Sec. 1310.20  Trip routing.

    (a) Each agency providing transportation services must ensure that 
in planning fixed routes the safety of the children being transported is 
the primary consideration.
    (b) The agency must also ensure that the following basic principles 
of trip routing are adhered to:
    (1) The time a child is in transit to and from the Head Start or 
Early Head Start program must not exceed one hour unless there is no 
shorter route available or any alternative shorter route is either 
unsafe or impractical.
    (2) Vehicles must not be loaded beyond the maximum passenger 
capacity at any time.
    (3) Vehicles must not be required to back up or make ``U'' turns, 
except when necessary for reasons of safety or because of physical 
barriers.
    (4) Stops must be located to minimize traffic disruptions and to 
afford the driver a good field of view in front of and behind the 
vehicle.
    (5) When possible, stops must be located to eliminate the need for 
children to cross the street or highway to board or leave the vehicle.
    (6) If children must cross the street before boarding or after 
leaving the vehicle because curbside drop off or pick up is impossible, 
they must be escorted across the street by the bus monitor or another 
adult.
    (7) Specific procedures must be established for use of alternate 
routes in the case of hazardous conditions that could affect the safety 
of the children who are being transported, such as ice or water build 
up, natural gas line breaks, or emergency road closing. In selecting 
among alternatives, transportation providers must choose routes that 
comply as much as possible with the requirements of this section.



Sec. 1310.21  Safety education.

    (a) Each agency must provide training for parents and children in 
pedestrian safety. The training provided to children must be 
developmentally appropriate and an integral part of program experiences. 
The need for an adult to accompany a preschool child while crossing the 
street must be emphasized in the training provided to parents and 
children. The required transportation and pedestrian safety education of 
children and parents, except for the bus evacuation drills required by 
paragraph (d) of this section, must be provided within the first thirty 
days of the program year.
    (b) Each agency providing transportation services, directly or 
through another organization or an individual, must ensure that children 
who receive such services are taught:
    (1) safe riding practices;
    (2) safety procedures for boarding and leaving the vehicle;
    (3) safety procedures in crossing the street to and from the vehicle 
at stops;
    (4) recognition of the danger zones around the vehicle; and
    (5) emergency evacuation procedures, including participating in an 
emergency evacuation drill conducted on the vehicle the child will be 
riding.
    (c) Each agency providing transportation services must provide 
training for parents that:
    (1) emphasizes the importance of escorting their children to the 
vehicle stop and the importance of reinforcing the training provided to 
children regarding vehicle safety; and
    (2) complements the training provided to their children so that 
safety practices can be reinforced both in Head Start and at home by the 
parent.
    (d) Each agency providing transportation services must ensure that 
at

[[Page 254]]

least two bus evacuation drills in addition to the one required under 
paragraph (b)(5) of this section are conducted during the program year.
    (e) Each agency providing transportation services must develop 
activities to remind children of the safety procedures. These activities 
must be developmentally appropriate, individualized and be an integral 
part of the Head Start or Early Head Start program activities.



Sec. 1310.22  Children with disabilities.

    (a) Effective January 18, 2006 each agency must ensure that there 
are school buses or allowable alternate vehicles adapted or designed for 
transportation of children with disabilities available as necessary to 
transport such children enrolled in the program. This requirement does 
not apply to the transportation of children receiving home-based 
services unless school buses or allowable alternate vehicles are used to 
transport the other children served under the home-based option by the 
grantee. Whenever possible, children with disabilities must be 
transported in the same vehicles used to transport other children 
enrolled in the Head Start or Early Head Start program.
    (b) Each Head Start, Early Head Start and delegate agency must 
ensure compliance with the Americans with Disabilities Act (42 U.S.C. 
12101 et seq.), the HHS regulations at 45 CFR part 84, implementing 
Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), and the 
Head Start Program Performance Standards on Services for Children with 
Disabilities (45 CFR part 1308) as they apply to transportation 
services.
    (c) Each agency must specify any special transportation requirements 
for a child with a disability when preparing the child's Individual 
Education Plan (IEP) or Individual Family Service Plan (IFSP), and 
ensure that in all cases special transportation requirements in a 
child's IEP or IFSP are followed, including:
    (1) special pick-up and drop-off requirements;
    (2) special seating requirements;
    (3) special equipment needs;
    (4) any special assistance that may be required; and
    (5) any special training for bus drivers and monitors.

    Effective Date Note: At 66 FR 5311, Jan. 18, 2001, Sec. 1310.22 
paragraph (a) was added, effective January 18, 2006.



Sec. 1310.23  Coordinated transportation.

    (a) Each agency providing transportation services must make 
reasonable efforts to coordinate transportation resources with other 
human services agencies in its community in order to control costs and 
to improve the quality and the availability of transportation services.
    (b) At a minimum, the agency must:
    (1) identify the true costs of providing transportation in order to 
knowledgeably compare the costs of providing transportation directly 
versus contracting for the service;
    (2) explore the option of participating in any coordinated public or 
private transportation systems existing in the community; and
    (3) where no coordinated public or private non-profit transportation 
system exists in the community, make every effort to identify other 
human services agencies also providing transportation services and, 
where reasonable, to participate in the establishment of a local 
transportation coordinating council.



PART 1311--HEAD START FELLOWS PROGRAM--Table of Contents




Sec.
1311.1  Head Start Fellows Program purpose.
1311.2  Definitions.
1311.3  Application process.
1311.4  Qualifications, selection, and placement.
1311.5  Duration of Fellowships and status of Head Start Fellows.

    Authority: 42 U.S.C. 9801 et seq.

    Source: 62 FR 1400, Jan. 10, 1997, unless otherwise noted.



Sec. 1311.1  Head Start Fellows Program Purpose.

    (a) This part establishes regulations implementing section 648A(d) 
of the Head Start Act, as amended, 42 U.S.C.

[[Page 255]]

9801 et seq., applicable to the administration of the Head Start Fellows 
Program, including selection, placement, duration and status of the Head 
Start Fellows.
    (b) As provided in section 648A(d) of the Act, the Head Start 
Fellows Program is designed to enhance the ability of Head Start Fellows 
to make significant contributions to Head Start and to other child 
development and family services programs.



Sec. 1311.2  Definitions.

    As used in this part:
    Act means the Head Start Act, as amended, 42 U.S.C. 9801 et seq.
    Associate Commissioner means the Associate Commissioner of the Head 
Start Bureau in the Administration on Children, Youth and Families.
    Head Start Fellows means individuals who participate in the Head 
Start Fellows Program, who may be staff in local Head Start programs or 
other individuals working in the field of child development and family 
services.



Sec. 1311.3  Application process.

    An individual who wishes to obtain a Fellowship must submit an 
application to the Associate Commissioner. The Administration for 
Children and Families will publish an annual announcement of the 
availability and number of Fellowships in the Federal Register. Federal 
employees are not eligible to apply. (The information collection 
requirement contained in this section is approved under OMB Control 
Number 0970-0140.)



Sec. 1311.4  Qualifications, selection, and placement.

    (a) The Act specifies that an applicant must be working on the date 
of application in a local Head Start program or otherwise working in the 
field of child development and family services. The qualifications of 
the applicants for Head Start Fellowship positions will be competitively 
reviewed. The Associate Commissioner will make the final selection of 
the Head Start Fellows.
    (b) Head Start Fellows may be placed in:
    (1) The Head Start national and regional offices;
    (2) Local Head Start agencies and programs;
    (3) Institutions of higher education;
    (4) Public or private entities and organizations concerned with 
services to children and families; and
    (5) Other appropriate settings.
    (c) A Head Start Fellow who is not an employee of a local Head Start 
agency or program may only be placed in the national or regional offices 
within the Department of Health and Human Services that administer Head 
Start or local Head Start agencies.
    (d) Head Start Fellows shall not be placed in any agency whose 
primary purpose, or one of whose major purposes is to influence Federal, 
State or local legislation.



Sec. 1311.5  Duration of Fellowships and status of Head Start Fellows.

    (a) Head Start Fellowships will be for terms of one year, and may be 
renewed for a term of one additional year.
    (b) For the purposes of compensation for injuries under chapter 81 
of title 5, United States Code, Head Start Fellows shall be considered 
to be employees, or otherwise in the service or employment, of the 
Federal Government.
    (c) Head Start Fellows assigned to the national or regional offices 
within the Department of Health and Human Services shall be considered 
employees in the Executive Branch of the Federal Government for the 
purposes of chapter 11 of title 18, United States Code, and for the 
purposes of any administrative standards of conduct applicable to the 
employees of the agency to which they are assigned.

[[Page 256]]



   SUBCHAPTER C--THE ADMINISTRATION ON AGING, OLDER AMERICANS PROGRAMS





PART 1321--GRANTS TO STATE AND COMMUNITY PROGRAMS ON AGING--Table of Contents




                         Subpart A--Introduction

Sec.
1321.1  Basis and purpose of this part.
1321.3  Definitions.
1321.5  Applicability of other regulations.

                Subpart B--State Agency Responsibilities

1321.7  Mission of the State agency.
1321.9  Organization and staffing of the State agency.
1321.11  State agency policies.
1321.13  Advocacy responsibilities.
1321.15  Duration, format and effective date of the State plan.
1321.17  Content of State plan.
1321.19  Amendments to the State plan.
1321.21  Submission of the State plan or plan amendment to the 
          Commissioner for approval.
1321.23  Notification of State plan or State plan amendment approval.
1321.25  Restriction of delegation of authority to other agencies.
1321.27  Public participation.
1321.29  Designation of planning and service areas.
1321.31  Appeal to Commissioner.
1321.33  Designation of area agencies.
1321.35  Withdrawal of area agency designation.
1321.37  Intrastate funding formula.
1321.41  Single State planning and service area.
1321.43  Interstate planning and service area.
1321.45  Transfer between congregate and home-delivered nutrition 
          service allotments.
1321.47  Statewide non-Federal share requirements.
1321.49  State agency maintenance of effort.
1321.51  Confidentiality and disclosure of information.
1321.52  Evaluation of unmet need.

                 Subpart C--Area Agency Responsibilities

1321.53  Mission of the area agency.
1321.55  Organization and staffing of the area agency.
1321.57  Area agency advisory council.
1321.59  Submission of an area plan and plan amendments to the State for 
          approval.
1321.61  Advocacy responsibilities of the area agency.

                     Subpart D--Service Requirements

1321.63  Purpose of services allotments under Title III.
1321.65  Responsibilities of service providers under area plans.
1321.67  Service contributions.
1321.69  Service priority for frail, homebound or isolated elderly.
1321.71  Legal assistance.
1321.73  Grant related income under Title III-C.
1321.75  Licenses and safety.

            Subpart E--Hearing Procedures for State Agencies

1321.77  Scope.
1321.79  When a decision is effective.
1321.81  How the State may appeal.
1321.83  How the Commissioner may reallot the State's withheld payments.

    Authority: 42 U.S.C. 3001 et seq.; title III of the Older Americans 
Act, as amended.

    Source: 53 FR 33766, Aug. 31, 1988, unless otherwise noted.



                         Subpart A--Introduction



Sec. 1321.1  Basis and purpose of this part.

    (a) This part prescribes requirements State agencies shall meet to 
receive grants to develop comprehensive and coordinated systems for the 
delivery of supportive and nutrition services under title III of the 
Older Americans Act, as amended (Act). These requirements include:
    (1) Designation and responsibilities of State agencies;
    (2) State plans and amendments;
    (3) Services delivery; and
    (4) Hearing procedures for applicants for planning and services area 
designation.
    (b) The requirements of this part are based on title III of the Act. 
Title III provides for formula grants to State agencies on aging, under 
approved State plans, to stimulate the development or enhancement of 
comprehensive and coordinated community-based systems resulting in a 
continuum of services to older persons with special emphasis on older 
individuals with the greatest economic or social need, with

[[Page 257]]

particular attention to low-income minority individuals. A responsive 
community-based system of services shall include collaboration in 
planning, resource allocation and delivery of a comprehensive array of 
services and opportunities for all older Americans in the community. The 
intent is to use title III funds as a catalyst in bringing together 
public and private resources in the community to assure the provision of 
a full range of efficient, well coordinated and accessible services for 
older persons.
    (c) Each State agency designates planning and service areas in the 
State, and makes a subgrant or contract under an approved area plan to 
one area agency in each planning and service area for the purpose of 
building comprehensive systems for older people throughout the State. 
Area agencies in turn make subgrants or contracts to service providers 
to perform certain specified functions.



Sec. 1321.3  Definitions.

    Act means the Older Americans Act of 1965 as amended.
    Altering or renovating, as used in section 307(a)(14) of the Act 
with respect to multipurpose senior centers, means making modifications 
to or in connection with an existing facility which are necessary for 
its effective use as a center. These may include renovation, repair, or 
expansion which is not in excess of double the square footage of the 
original facility and all physical improvements.
    Constructing, as used in section 307(a)(14) of the Act with respect 
to multipurpose senior centers, means building a new facility, including 
the costs of land acquisition and architectural and engineering fees, or 
making modifications to or in connection with an existing facility which 
are in excess of double the square footage of the original facility and 
all physical improvements.
    Department means the Department of Health and Human Services.
    Direct services, as used in this part, means any activity performed 
to provide services directly to an individual older person by the staff 
of a service provider, an area agency, or a State agency in a single 
planning and service area State.
    Fiscal year, as used in this part, means the Federal Fiscal Year.
    Frail, as used in this part, means having a physical or mental 
disability, including having Alzheimer's disease or a related disorder 
with neurological or organic brain dysfunction, that restricts the 
ability of an individual to perform normal daily tasks or which 
threatens the capacity of an individual to live independently.
    Human services, as used in Sec. 1321.41(a)(1) of this part, with 
respect to criteria for designation of a statewide planning and service 
area, means social, health, or welfare services.
    In-home service, as used in this part, includes: (a) Homemaker and 
home health aides; (b) visiting and telephone reassurance; (c) chore 
maintenance; (d) in-home respite care for families, including adult day 
care as a respite service for families; and (e) minor modification of 
homes that is necessary to facilitate the ability of older individuals 
to remain at home, and that is not available under other programs, 
except that not more than $150 per client may be expended under this 
part for such modification.
    Means test, as used in the provison of services, means the use of an 
older person's income or resource to deny or limit that person's receipt 
of services under this part.
    Official duties, as used in section 307(a)(12)(J) of the Act with 
respect to representatives of the Long-Term Care Ombudsman Program, 
means work pursuant to the Long-Term Care Ombudsman Program authorized 
by the Act or State law and carried out under the auspices and general 
direction of the State Long-Term Care Ombudsman.
    Periodic, as used in sections 306(a)(6) and 307(a)(8) of the Act 
with respect to evaluations of, and public hearings on, activities 
carried out under State and area plans, means, at a minimum, once each 
fiscal year.
    Reservation, as used in section 305(b)(4) of the Act with respect to 
the designation of planning and service areas, means any federally or 
State recognized Indian tribe's reservation, pueblo, or colony, 
including former reservations in Oklahoma, Alaskan Native

[[Page 258]]

regions established pursuant to the Alaska Native Claims Settlement Act 
(85 Stat. 688), and Indian allotments.
    Service provider, as used in section 306(a)(1) of the Act with 
respect to the provison of supportive and nutrition services, means an 
entity that is awarded a subgrant or contract from an area agency to 
provide services under the area plan.
    Severe disability, as used to carry out the provisions of the Act, 
means a severe chronic disability attributable to mental and/or physical 
impairment of an individual that:
    (a) Is likely to continue indefinitely; and
    (b) Results in substantial functional limitation in 3 or more of the 
following major life activities:
    (1) Self-care,
    (2) Receptive and expressive language,
    (3) Learning,
    (4) Mobility,
    (5) Self-direction,
    (6) Capacity for independent living, and
    (7) Economic self-sufficiency.



Sec. 1321.5  Applicability of other regulations.

    Several other regulations apply to all activities under this part. 
These include but are not limited to:
    (a) 45 CFR part 16--Procedures of the Departmental Grant Appeals 
Board;
    (b) 45 CFR part 74--Administration of Grants, except subpart N;
    (c) 45 CFR part 80--Nondiscrimination under Programs Receiving 
Federal Assistance through the Department of Health and Human Services: 
Effectuation of title VI of the Civil Rights Act of 1964;
    (d) 45 CFR part 81--Practice and Procedures for Hearings Under Part 
80 of this title;
    (e) 45 CFR part 84--Nondiscrimination on the Basis of Handicap in 
Programs and Activities Receiving or Benefiting from Federal Financial 
Participation;
    (f) 45 CFR part 91--Nondiscrimination on the Basis of Age in HHS 
Programs or Activities Receiving Federal Financial Assistance;
    (g) 45 CFR part 92--Uniform Administrative Requirements for Grants 
and Cooperative Agreements to State and Local Governments;
    (h) 45 CFR part 100--Intergovernmental Review of Department of 
Health and Human Services Programs and Activities; and
    (i) 5 CFR part 900, subpart F, Standards for a Merit System of 
Personnel Administration.



                Subpart B--State Agency Responsibilities



Sec. 1321.7  Mission of the State agency.

    (a) The Older Americans Act intends that the State agency on aging 
shall be the leader relative to all aging issues on behalf of all older 
persons in the State. This means that the State agency shall proactively 
carry out a wide range of functions related to advocacy, planning, 
coordination, interagency linkages, information sharing, brokering, 
monitoring and evaluation, designed to lead to the development or 
enhancement of comprehensive and coordinated community based systems in, 
or serving, communities throughout the State. These systems shall be 
designed to assist older persons in leading independent, meaningful and 
dignified lives in their own homes and communities as long as possible.
    (b) The State agency shall designate area agencies on aging for the 
purpose of carrying out the mission described above for the State agency 
at the sub-State level. The State agency shall designate as its area 
agencies on aging only those sub-state agencies having the capacity and 
making the commitment to fully carry out the mission described for area 
agencies in Sec. 1321.53 below.
    (c) The State agency shall assure that the resources made available 
to area agencies on aging under the Older Americans Act are used to 
carry out the mission described for area agencies in Sec. 1321.53 below.



Sec. 1321.9  Organization and staffing of the State agency.

    (a) The State shall designate a sole State agency to develop and 
administer the State plan required under this part and serve as the 
effective visible advocate for the elderly within the State.

[[Page 259]]

    (b) The State agency shall have an adequate number of qualified 
staff to carry out the functions prescribed in this part.
    (c) The State agency shall have within the State agency, or shall 
contract or otherwise arrange with another agency or organization, as 
permitted by section 307(a)(12)(A), an Office of the State Long-Term 
Care Ombudsman, with a full-time State ombudsman and such other staff as 
are appropriate.
    (d) If a State statute establishes a State ombudsman program which 
will perform the functions of section 307(a)(12) of the Act, the State 
agency continues to be responsible to assure that all of the 
requirements of the Act for this program are met regardless of the State 
legislation or source of funds. In such cases, the Governor shall 
confirm this through an assurance in the State plan.



1321.11  State agency policies.

    (a) The State agency on aging shall develop policies governing all 
aspects of programs operated under this part, including the ombudsman 
program whether operated directly by the State agency or under contract. 
These policies shall be developed in consultation with other appropriate 
parties in the State. The State agency is responsible for enforcement of 
these policies.
    (b) The policies developed by the State agency shall address the 
manner in which the State agency will monitor the performance of all 
programs and activities initiated under this part for quality and 
effectiveness. In monitoring the ombudsman program, access to files, 
minus the identity of any complainant or resident of a long-term care 
facility, shall be available only to the director of the State agency on 
aging and one other senior manager of the State agency designated by the 
State director for this purpose. In the conduct of the monitoring of the 
ombudsman program, the confidentiality protections concerning any 
complainant or resident of a long term care facility as prescribed in 
section 307(a)(12) of the Act shall be strictly adhered to.



Sec. 1321.13  Advocacy responsibilities.

    (a) The State agency shall:
    (1) Review, monitor, evaluate and comment on Federal, State and 
local plans, budgets, regulations, programs, laws, levies, hearings, 
policies, and actions which affect or may affect older individuals and 
recommend any changes in these which the State agency considers to be 
appropriate;
    (2) Provide technical assistance to agencies, organizations, 
associations, or individuals representing older persons; and
    (3) Review and comment, upon request, on applications to State and 
Federal agencies for assistance relating to meeting the needs of older 
persons.
    (b) No requirement in this section shall be deemed to supersede a 
prohibition contained in a Federal appropriation on the use of Federal 
funds to lobby the Congress.



Sec. 1321.15  Duration, format and effective date of the State plan.

    (a) A State may use its own judgment as to the format to use for the 
plan, how to collect information for the plan, and whether the plan will 
remain in effect for two, three or four years.
    (b) An approved State plan or amendment, as indentified in 
Sec. 1321.17, becomes effective on the date designated by the 
Commissioner.
    (c) A State agency may not make expenditures under a new plan or 
amendment requiring approval, as identified in Sec. 1321.17 and 
Sec. 1321.19, until it is approved.



Sec. 1321.17  Content of State plan.

    To receive a grant under this part, a State shall have an approved 
State plan as prescribed in section 307 of the Act. In addition to 
meeting the requirements of section 307, a State plan shall include:
    (a) Identification by the State of the sole State agency that has 
been designated to develop and administer the plan.
    (b) Statewide program objectives to implement the requirements under 
Title III of the Act and any objectives established by the Commissioner 
through the rulemaking process.
    (c) A resource allocation plan indicating the proposed use of all 
title III

[[Page 260]]

funds administered by a State agency, and the distribution of title III 
funds to each planning and service area.
    (d) Identification of the geographic boundaries of each planning and 
service area and of area agencies on aging designated for each planning 
and service area, if appropriate.
    (e) Provision of prior Federal fiscal year information related to 
low income minority and rural older individuals as required by sections 
307(a) (23) and (29) of the Act.
    (f) Each of the assurances and provisions required in sections 305 
and 307 of the Act, and provisions that the State meets each of the 
requirements under Secs. 1321.5 through 1321.75 of this part, and the 
following assurances as prescribed by the Commissioner:
    (1) Each area agency engages only in activities which are consistent 
with its statutory mission as prescribed in the Act and as specified in 
State policies under Sec. 1321.11;
    (2) Preference is given to older persons in greatest social or 
economic need in the provision of services under the plan;
    (3) Procedures exist to ensure that all services under this part are 
provided without use of any means tests;
    (4) All services provided under title III meet any existing State 
and local licensing, health and safety requirements for the provision of 
those services;
    (5) Older persons are provided opportunities to voluntarily 
contribute to the cost of services;
    (6) Area plans shall specify as submitted, or be amended annually to 
include, details of the amount of funds expended for each priority 
service during the past fiscal year;
    (7) The State agency on aging shall develop policies governing all 
aspects of programs operated under this part, including the manner in 
which the ombudsman program operates at the State level and the relation 
of the ombudsman program to area agencies where area agencies have been 
designated;
    (8) The State agency will require area agencies on aging to arrange 
for outreach at the community level that identifies individuals eligible 
for assistance under this Act and other programs, both public and 
private, and informs them of the availability of assistance. The 
outreach efforts shall place special emphasis on reaching older 
individuals with the greatest economic or social needs with particular 
attention to low income minority individuals, including outreach to 
identify older Indians in the planning and service area and inform such 
older Indians of the availability of assistance under the Act.
    (9) The State agency shall have and employ appropriate procedures 
for data collection from area agencies on aging to permit the State to 
compile and transmit to the Commissioner accurate and timely statewide 
data requested by the Commissioner in such form as the Commissioner 
directs; and
    (10) If the State agency proposes to use funds received under 
section 303(f) of the Act for services other than those for preventive 
health specified in section 361, the State plan shall demonstrate the 
unmet need for the services and explain how the services are appropriate 
to improve the quality of life of older individuals, particularly those 
with the greatest economic or social need, with special attention to 
low-income minorities.
    (11) Area agencies shall compile available information, with 
necessary supplementation, on courses of post-secondary education 
offered to older individuals with little or no tuition. The assurance 
shall include a commitment by the area agencies to make a summary of the 
information available to older individuals at multipurpose senior 
centers, congregate nutrition sites, and in other appropriate places.
    (12) Individuals with disabilities who reside in a non-institutional 
household with and accompany a person eligible for congregate meals 
under this part shall be provided a meal on the same basis that meals 
are provided to volunteers pursuant to section 307(a)(13)(I) of the Act.
    (13) The services provided under this part will be coordinated, 
where appropriate, with the services provided under title VI of the Act.
    (14)(i) The State agency will not fund program development and 
coordinated activities as a cost of supportive services for the 
administration of area

[[Page 261]]

plans until it has first spent 10 percent of the total of its combined 
allotments under Title III on the administration of area plans;
    (ii) State and area agencies on aging will, consistent with 
budgeting cycles (annually, biannually, or otherwise), submit the 
details of proposals to pay for program development and coordination as 
a cost of supportive services, to the general public for review and 
comment; and
    (iii) The State agency certifies that any such expenditure by an 
area agency will have a direct and positive impact on the enhancement of 
services for older persons in the planning and service area.
    (15) The State agency will assure that where there is a significant 
population of older Indians in any planning and service area that the 
area agency will provide for outreach as required by section 
306(a)(6)(N) of the Act.



Sec. 1321.19  Amendments to the State plan.

    (a) A State shall amend the State plan whenever necessary to 
reflect:
    (1) New or revised Federal statutes or regulations,
    (2) A material change in any law, organization, policy or State 
agency operation, or
    (3) Information required annually by sections 307(a) (23) and (29) 
of the Act.
    (b) Information required by paragraph (a)(3) of this section shall 
be submitted according to guidelines prescribed by the Commissioner.
    (c) If a State intends to amend provisions of its plan required 
under Secs. 1321.17 (a) or (f), it shall submit its proposed amendment 
to the Commissioner for approval. If the State changes any of the 
provisions of its plan required under Sec. 1321.17 (b) through (d), it 
shall amend the plan and notify the Commissioner. A State need only 
submit the amended portions of the plan.



Sec. 1321.21  Submission of the State plan or plan amendment to the Commissioner for approval.

    Each State plan, or plan amendment which requires approval of the 
Commissioner, shall be signed by the Governor or the Governor's designee 
and submitted to the Commissioner to be considered for approval at least 
45 calendar days before the proposed effective date of the plan or plan 
amendment.



Sec. 1321.23  Notification of State plan or State plan amendment approval.

    (a) The Commissioner approves a State plan or State plan amendment 
by notifying the Governor or the Governor's designee in writing.
    (b) When the Commissioner proposes to disapprove a State plan or 
amendment, the Commissioner notifies the Governor in writing, giving the 
reasons for the proposed disapproval, and informs the State agency that 
it has 60 days to request a hearing on the proposed disapproval 
following the procedures specified in subpart E of this part.



Sec. 1321.25  Restriction of delegation of authority to other agencies.

    A State or area agency may not delegate to another agency the 
authority to award or administer funds under this part.



Sec. 1321.27  Public participation.

    The State agency shall have a mechanism to obtain and shall consider 
the views of older persons and the public in developing and 
administering the State plan.



Sec. 1321.29  Designation of planning and service areas.

    (a) Any unit of general purpose local government, region within a 
State recognized for area wide planning, metropolitan area, or Indian 
reservation may make application to the State agency to be designated as 
a planning and service area, in accordance with State agency procedures.
    (b) A State agency shall approve or disapprove any application 
submitted under paragraph (a) of this section.
    (c) Any applicant under paragraph (a) of this section whose 
application for designation as a planning and service area is denied by 
a State agency may appeal the denial to the State agency, under 
procedures specified by the State agency.

[[Page 262]]

    (d) If the State denies an applicant for designation as a planning 
and service area under paragraph (a) of this section, the State shall 
provide a hearing on the denial of the application, if requested by the 
applicant, as well as issue a written decision.



Sec. 1321.31  Appeal to Commissioner.

    This section sets forth the procedures the Commissioner follows for 
providing hearings to applicants for designation as a planning and 
service area, under Sec. 1321.29(a), whose application is denied by the 
State agency.
    (a) Any applicant for designation as a planning and service area 
under Sec. 1321.29(a) whose application is denied, and who has been 
provided a hearing and a written decision by the State agency, may 
appeal the denial to the Commissioner in writing within 30 days 
following receipt of a State's hearing decision.
    (b) The Commissioner, or the Commissioner's designee, holds a 
hearing, and issues a written decision, within 60 days following receipt 
of an applicant's written request to appeal the State agency hearing 
decision to deny the applicant's request under Sec. 1321.29(a).
    (c) When the Commissioner receives an appeal, the Commissioner 
requests the State Agency to submit:
    (1) A copy of the applicant's application for designation as a 
planning and service area;
    (2) A copy of the written decision of the State; and
    (3) Any other relevant information the Commissioner may require.
    (d) The procedures for the appeal consist of:
    (1) Prior written notice to the applicant and the State agency of 
the date, time and location of the hearing;
    (2) The required attendance of the head of the State agency or 
designated representatives;
    (3) An opportunity for the applicant to be represented by counsel or 
other representative; and
    (4) An opportunity for the applicant to be heard in person and to 
present documentary evidence.
    (e) The Commissioner may:
    (1) Deny the appeal and uphold the decision of a State agency;
    (2) Uphold the appeal and require a State agency to designate the 
applicant as a planning and service area; or
    (3) Take other appropriate action, including negotiating between the 
parties or remanding the appeal to the State agency after initial 
findings.
    (f) The Commissioner will uphold the decision of the State agency if 
it followed the procedures specified in Sec. 1321.29, and the hearing 
decision is not manifestly inconsistent with the purpose of this part.
    (g) The Commissioner's decision to uphold the decision of a State 
agency does not extend beyond the period of the approved State plan.



Sec. 1321.33  Designation of area agencies.

    An area agency may be any of the types of agencies under section 
305(c) of the Act. A State may not designate any regional or local 
office of the State as an area agency. However, when a new area agency 
on aging is designated, the State shall give right of first refusal to a 
unit of general purpose local government as required in section 
305(b)(5)(B) of the Act. If the unit of general purpose local government 
chooses not to exercise this right, the State shall then give preference 
to an established office on aging as required in section 305(c)(5) of 
the Act.



Sec. 1321.35  Withdrawal of area agency designation.

    (a) In carrying out section 305 of the Act, the State agency shall 
withdraw the area agency designation whenever it, after reasonable 
notice and opportunity for a hearing, finds that:
    (1) An area agency does not meet the requirements of this part;
    (2) An area plan or plan amendment is not approved;
    (3) There is substantial failure in the provisions or administration 
of an approved area plan to comply with any provision of the Act or of 
this part or policies and procedures established and published by the 
State agency on aging; or
    (4) Activities of the area agency are inconsistent with the 
statutory mission prescribed in the Act or in conflict with the 
requirement of the Act that it function only as an area agency on aging.

[[Page 263]]

    (b) If a State agency withdraws an area agency's designation under 
paragraph (a) of this section it shall:
    (1) Provide a plan for the continuity of area agency functions and 
services in the affected planning and service area; and
    (2) Designate a new area agency in the planning and service area in 
a timely manner.
    (c) If necessary to ensure continuity of services in a planning and 
service area, the State agency may, for a period of up to 180 days after 
its final decision to withdraw designation of an area agency:
    (1) Perform the responsibilities of the area agency; or
    (2) Assign the responsibilities of the area agency to another agency 
in the planning and service area.
    (d) The Commissioner may extend the 180-day period if a State 
agency:
    (1) Notifies the Commissioner in writing of its action under 
paragraph (c) of this section;
    (2) Requests an extension; and
    (3) Demonstrates to the satisfaction of the Commissioner a need for 
the extension.



Sec. 1321.37  Intrastate funding formula.

    (a) The State agency, after consultation with all area agencies in 
the State, shall develop and use an intrastate funding formula for the 
allocation of funds to area agencies under this part. The State agency 
shall publish the formula for review and comment by older persons, other 
appropriate agencies and organizations and the general public. The 
formula shall reflect the proportion among the planning and service 
areas of persons age 60 and over in greatest economic or social need 
with particular attention to low-income minority individuals. The State 
agency shall review and update its formula as often as a new State plan 
is submitted for approval.
    (b) The intrastate funding formula shall provide for a separate 
allocation of funds received under section 303(f) for preventive health 
services. In the award of such funds to selected planning and service 
areas, the State agency shall give priority to areas of the State:
    (1) Which are medically underserved; and
    (2) In which there are large numbers of individuals who have the 
greatest economic and social need for such services.
    (c) The State agency shall submit its intrastate formula to the 
Commissioner for review and comment. The intrastate formula shall be 
submitted separately from the State plan.



Sec. 1321.41  Single State planning and service area.

    (a) The Commissioner will approve the application of a State which 
was, on or before October 1, 1980, a single planning and service area, 
to continue as a single planning and service area if the State agency 
demonstrates that:
    (1) The State is not already divided for purposes of planning and 
administering human services; or
    (2) The State is so small or rural that the purposes of this part 
would be impeded if the State were divided into planning and services 
areas; and
    (3) The State agency has the capacity to carry out the 
responsibilities of an area agency, as specified in the Act.
    (b) Prior to the Commissioner's approval for a State to continue as 
a single planning and service area, all the requirements and procedures 
in Sec. 1321.29 shall be met.
    (c) If the Commissioner approves a State's application under 
paragraph (a) this section:
    (1) The Commissioner notifies the State agency to develop a single 
State planning and service area plan which meets the requirements of 
section 306 and 307 of the Act.
    (2) A State agency shall meet all the State and area agency function 
requirements specified in the Act.
    (d) If the Commissioner denies the application because a State fails 
to meet the criteria or requirements set forth in paragraphs (a) or (b) 
of this section, the Commissioner notifies the State that it shall 
follow procedures in section 305(A)(1)(E) of the Act to divide the State 
into planning and service areas.

[[Page 264]]



Sec. 1321.43  Interstate planning and service area.

    (a) Before requesting permission of the Commissioner to designate an 
interstate planning and service area, the Governor of each State shall 
execute a written agreement that specifies the State agency proposed to 
have lead responsibility for administering the programs within the 
interstate planning and service area and lists the conditions, agreed 
upon by each State, governing the administration of the interstate 
planning and service area.
    (b) The lead State shall request permission of the Commissioner to 
designate an interstate planning and service area.
    (c) The lead State shall submit the request together with a copy of 
the agreement as part of its State plan or as an amendment to its State 
plan.
    (d) Prior to the Commissioner's approval for States to designate an 
interstate planning and service area, the Commissioner shall determine 
that all applicable requirements and procedures in Sec. 1321.29 and 
Sec. 1321.33 of this part, shall be met.
    (e) If the request is approved, the Commissioner, based on the 
agreement between the States, increases the allotment of the State with 
lead responsibility for administering the programs within the interstate 
area and reduces the allotment(s) of the State(s) without lead 
responsibility by one of these methods:
    (1) Reallotment of funds in proportion to the number of individuals 
age 60 and over for that portion of the interstate planning and service 
area located in the State without lead responsibility; or
    (2) Reallotment of funds based on the intrastate funding formula of 
the State(s) without lead responsibility.



Sec. 1321.45  Transfer between congregate and home-delivered nutrition service allotments.

    (a) A State agency, without the approval of the Commissioner, may 
transfer between allotments up to 30 percent of a State's separate 
allotments for congregate and home-delivered nutrition services.
    (b) A State agency may apply to the Commissioner to transfer from 
one allotment to the other a portion exceeding 30 percent of a State's 
separate allotments for congregate and home-delivered nutrition 
services. A State agency desiring such a transfer of allotment shall:
    (1) Specify the percent which it proposes to transfer from one 
allotment to the other;
    (2) Specify whether the proposed transfer is for the entire period 
of a State plan or a protion of a plan period; and
    (3) Specify the purpose of the proposed transfer.



Sec. 1321.47  Statewide non-Federal share requirements.

    The statewide non-Federal share for State or area plan 
administration shall not be less than 25 percent of the funds usesd 
under this part. All services statewide, including ombudsman services 
and services funded under Title III-B, C, D, E and F, shall be funded on 
a statewide basis with a non-Federal share of not less than 15 percent. 
Matching requirements for individual area agencies are determined by the 
State agency.



Sec. 1321.49  State agency maintenance of effort.

    In order to avoid a penalty, each fiscal year the State agency, to 
meet the required non-federal share applicable to its allotments under 
this part, shall spend under the State plan for both services and 
administration at least the average amount of State funds it spent under 
the plan for the three previous fiscal years. If the State agency spends 
less than this amount, the Commissioner reduces the State's allotments 
for supportive and nutrition services under this part by a percentage 
equal to the percentage by which the State reduced its expenditures.



Sec. 1321.51  Confidentiality and disclosure of information.

    (a) A State agency shall have procedures to protect the 
confidentiality of information about older persons collected in the 
conduct of its responsibilities. The procedures shall ensure that no 
information about an order person, or obtained from an older person by a 
service provider or the State or area

[[Page 265]]

agencies, is disclosed by the provider or agency in a form that 
identifies the person without the informed consent of the person or of 
his or her legal representative, unless the disclosure is required by 
court order, or for program monitoring by authorized Federal, State, or 
local monitoring agencies.
    (b) A State agency is not required to disclose those types of 
information or documents that are exempt from disclosure by a Federal 
agency under the Federal Freedom of Information Act, 5 U.S.C. 552.
    (c) A State or area agency on aging may not require a provider of 
legal assistance under this part to reveal any information that is 
protected by attorney client privilege.



Sec. 1321.52  Evaluation of unmet need.

    Each State shall submit objectively collected and statistically 
valid data with evaluative conclusions concerning the unmet need for 
supportive services, nutrition services, and multipurpose senior centers 
gathered pursuant to section 307(a)(3)(A) of the Act to the 
Commissioner. The evaluations for each State shall consider all services 
in these categories regardless of the source of funding for the 
services. This information shall be submitted not later than June 30, 
1989 and shall conform to guidance issued by the Commissioner.



                 Subpart C--Area Agency Responsibilities



Sec. 1321.53  Mission of the area agency.

    (a) The Older Americans Act intends that the area agency on aging 
shall be the leader relative to all aging issues on behalf of all older 
persons in the planning and service area. This means that the area 
agency shall proactively carry out, under the leadership and direction 
of the State agency, a wide range of functions related to advocacy, 
planning, coordination, inter-agency linkages, information sharing, 
brokering, monitoring and evaluation, designed to lead to the 
development or enhancement of comprehensive and coordinated community 
based systems in, or serving, each community in the planning and service 
area. These systems shall be designed to assist older persons in leading 
independent, meaningful and dignified lives in their own homes and 
communities as long as possible.
    (b) A comprehensive and coordinated community based system described 
in paragraph (a) of this section shall:
    (1) Have a visible focal point of contact where anyone can go or 
call for help, information or referral on any aging issue;
    (2) Provide a range of options:
    (3) Assure that these options are readily accessible to all older 
persons: The independent, semi-dependent and totally dependent, no 
matter what their income;
    (4) Include a commitment of public, private, voluntary and personal 
resources committed to supporting the system;
    (5) Involve collaborative decision-making among public, private, 
voluntary, religious and fraternal organizations and older people in the 
community;
    (6) Offer special help or targetted resources for the most 
vulnerable older persons, those in danger of losing their independence;
    (7) Provide effective referral from agency to agency to assure that 
information or assistance is received, no matter how or where contact is 
made in the community;
    (8) Evidence sufficient flexibility to respond with appropriate 
individualized assistance, especially for the vulnerable older person;
    (9) Have a unique character which is tailored to the specific nature 
of the community;
    (10) Be directed by leaders in the community who have the respect, 
capacity and authority necessary to convene all interested persons, 
assess needs, design solutions, track overall success, stimulate change 
and plan community responses for the present and for the future.
    (c) The resources made available to the area agency on aging under 
the Older Americans Act are to be used to finance those activities 
necessary to achieve elements of a community based system set forth in 
paragraph (b) of this section. For the purpose of assuring access to 
information and services for older persons, the area agency

[[Page 266]]

shall work with elected community officials in the planning and service 
area to designate one or more focal points on aging in each community, 
as appropriate. The area agency shall list designated focal points in 
the area plan. It shall be the responsibility of the area agency, with 
the approval of the State agency, to define ``community'' for the 
purposes of this section. Since the Older Americans Act defines focal 
point as a ``facility'' established to encourage the maximum collocation 
and coordination of services for older individuals, special 
consideration shall be given to developing and/or designating multi-
purpose senior centers as community focal points on aging. The area 
agency on aging shall assure that services financed under the Older 
Americans Act in, or on behalf of, the community will be either based 
at, linked to or coordinated with the focal points designated. The area 
agency on aging shall assure access from the designated focal points to 
services financed under the Older Americans Act. The area agency on 
aging shall work with, or work to assure that community leadership works 
with, other applicable agencies and institutions in the community to 
achieve maximum collocation at, coordination with or access to other 
services and opportunities for the elderly from the designated community 
focal points. The area agency may not engage in any activity which is 
inconsistent with its statutory mission prescribed in the Act or 
policies prescribed by the State under Sec. 1321.11.



Sec. 1321.55  Organization and staffing of the area agency.

    (a) An area agency may be either:
    (1) An agency whose single purpose is to administer programs for 
older persons; or
    (2) A separate organizational unit within a multi-purpose agency 
which functions only for purposes of serving as the area agency on 
aging. Where the State agency on aging designates, as an area agency on 
aging, a separate organizational unit of a multipurpose agency which has 
been serving as an area agency, the State agency action shall not be 
subject to section 305(b)(5)(B) of the Act.
    (b) The area agency, once designated, is responsible for providing 
for adequate and qualified staff to perform all of the functions 
prescribed in this part.
    (c) The designated area agency continues to function in that 
capacity until either:
    (1) The area agency informs the State agency that it no longer 
wishes to carry out the responsibilities of an area agency; or
    (2) The State agency withdraws the designation of the area agency as 
provided in Sec. 1321.35.



Sec. 1321.57  Area agency advisory council.

    (a) Functions of council. The area agency shall establish an 
advisory council. The council shall carry out advisory functions which 
further the area agency's mission of developing and coordinating 
community-based systems of services for all older persons in the 
planning and service area. The council shall advise the agency relative 
to:
    (1) Developing and administering the area plan;
    (2) Conducting public hearings;
    (3) Representing the interest of older persons; and
    (4) Reviewing and commenting on all community policies, programs and 
actions which affect older persons with the intent of assuring maximum 
coordination and responsiveness to older persons.
    (b) Composition of council. The council shall include individuals 
and representatives of community organizations who will help to enhance 
the leadership role of the area agency in developing community-based 
systems of services. The advisory council shall be made up of:
    (1) More than 50 percent older persons, including minority 
individuals who are participants or who are eligible to participate in 
programs under this part;
    (2) Representatives of older persons;
    (3) Representatives of health care provider organizations, including 
providers of veterans' health care (if appropriate);
    (4) Representatives of supportive services providers organizations;
    (5) Persons with leadership experience in the private and voluntary 
sectors;

[[Page 267]]

    (6) Local elected officials; and
    (7) The general public.
    (c) Review by advisory council. The area agency shall submit the 
area plan and amendments for review and comment to the advisory council 
before it is transmitted to the State agency for approval.



Sec. 1321.59  Submission of an area plan and plan amendments to the State for approval.

    The area agency shall submit the area plan and amendments to the 
State agency for approval following procedures specified by the State 
agency in the State policies prescribed by Sec. 1321.11.



Sec. 1321.61  Advocacy responsibilities of the area agency.

    (a) The area agency shall serve as the public advocate for the 
development or enhancement of comprehensive and coordinated community-
based systems of services in each community throughout the planning and 
service area.
    (b) In carrying out this responsibility, the area agency shall:
    (1) Monitor, evaluate, and, where appropriate, comment on all 
policies, programs, hearings, levies, and community actions which affect 
older persons;
    (2) Solicit comments from the public on the needs of older persons;
    (3) Represent the interests of older persons to local level and 
executive branch officials, public and private agencies or 
organizations;
    (4) Consult with and support the State's long-term care ombudsman 
program; and
    (5) Undertake on a regular basis activities designed to facilitate 
the coordination of plans and activities with all other public and 
private organizations, including units of general purpose local 
government, with responsibilities affecting older persons in the 
planning and service area to promote new or expanded benefits and 
opportunities for older persons; and
    (c) Each area agency on aging shall undertake a leadership role in 
assisting communities throughout the planning and service area to target 
resources from all appropriate sources to meet the needs of older 
persons with greatest economic or social need, with particular attention 
to low income minority individuals. Such activities may include location 
of services and specialization in the types of services must needed by 
these groups to meet this requirement. However, the area agency may not 
permit a grantee or contractor under this part to employ a means test 
for services funded under this part.
    (d) No requirement in this section shall be deemed to supersede a 
prohibition contained in the Federal appropriation on the use of Federal 
funds to lobby the Congress; or the lobbying provision applicable to 
private nonprofit agencies and organizations contained in OMB Circular 
A-122.



                     Subpart D--Service Requirements



Sec. 1321.63  Purpose of services allotments under Title III.

    (a) Title III of the Older Americans Act authorizes the distribution 
of Federal funds to the State agency on aging by formula for the 
following categories of services:
    (1) Supportive services;
    (2) Congregate meals services;
    (3) Home delivered meals services;
    (4) In-home services;
    (5) Ombudsman services;
    (6) Special needs services;
    (7) Elder abuse services;
    (8) Preventive health services; and
    (9) Outreach services.

Funds authorized under these categories are for the purpose of assisting 
the State and its area agencies to develop or enhance for older persons 
comprehensive and coordinated community based systems as described in 
Sec. 1321.53(b) throughout the State.
    (b) Except for ombudsman services, State agencies on aging will 
award the funds made available under paragraph (a) of this section to 
designated area agencies on aging according to the formula determined by 
the State agency. Except where a waiver is granted by the State agency, 
area agencies shall award these funds by grant or contract to community 
services provider agencies and organizations. All funds awarded to area 
agencies under this part are for the purpose of assisting area agencies 
to develop or enhance

[[Page 268]]

comprehensive and coordinated community based systems for older persons 
in, or serving, communities throughout the planning and service area.



Sec. 1321.65  Responsibilities of service providers under area plans.

    As a condition for receipt of funds under this part, each area 
agency on aging shall assure that providers of services shall:
    (a) Provide the area agency, in a timely manner, with statistical 
and other information which the area agency requires in order to meet 
its planning, coordination, evaluation and reporting requirements 
established by the State under Sec. 1321.13;
    (b) Specify how the provider intends to satisfy the service needs of 
low-income minority individuals in the area served, including attempting 
to provide services to low-income minority individuals at least in 
proportion to the number of low-income minority older persons in the 
population serviced by the provider;
    (c) Provide recipients with an opportunity to contribute to the cost 
of the service as provided in Sec. 1321.67;
    (d) With the consent of the older person, or his or her 
representative, bring to the attention of appropriate officials for 
follow-up, conditions or circumstances which place the older person, or 
the household of the older person, in imminent danger;
    (e) Where feasible and appropriate, make arrangements for the 
availability of services to older persons in weather related 
emergencies;
    (f) Assist participants in taking advantage of benefits under other 
programs; and
    (g) Assure that all services funded under this part are coordinated 
with other appropriate services in the community, and that these 
services do not constitute an unnecessary duplication of services 
provided by other sources.



Sec. 1321.67  Service contributions.

    (a) For services rendered with funding under the Older Americans 
Act, the area agency on aging shall assure that each service provider 
shall:
    (1) Provide each older person with an opportunity to voluntarily 
contribute to the cost of the service;
    (2) Protect the privacy of each older person with respect to his or 
her contributions; and
    (3) Establish appropriate procedures to safeguard and account for 
all contributions.
    (b) Each service provider shall use supportive services and 
nutrition services contributions to expand supportive services and 
nutrition services respectively. To that end, the State agency shall:
    (1) Permit service providers to follow either the addition 
alternative or the cost sharing alternatives as stated in 45 CFR 
92.25(g) (2) and (3); or
    (2) A combination of the two alternatives.
    (c) Each service provider under the Older Americans Act may develop 
a suggested contribution schedule for services provided under this part. 
In developing a contribution schedule, the provider shall consider the 
income ranges of older persons in the community and the provider's other 
sources of income. However, means tests may not be used for any service 
supported with funds under this part. State agencies, in developing 
State eligibility criteria for in-home services under section 343 of the 
Act, may not include a means test as an eligibility criterion.
    (d) A service provider that receives funds under this part may not 
deny any older person a service because the older person will not or 
cannot contribute to the cost of the service.



Sec. 1321.69  Service priority for frail, homebound or isolated elderly.

    (a) Persons age 60 or over who are frail, homebound by reason of 
illness or incapacitating disability, or otherwise isolated, shall be 
given priority in the delivery of services under this part.
    (b) The spouse of the older person, regardless of age or condition, 
may receive a home-delivered meal if, according to criteria determined 
by the area agency, receipt of the meal is in the best interest of the 
homebound older person.

[[Page 269]]



Sec. 1321.71  Legal assistance.

    (a) The provisions and restrictions in this section apply only to 
legal assistance providers and only if they are providing legal 
assistance under section 307(a)(15) of the Act.
    (b) Nothing in this section is intended to prohibit any attorney 
from providing any form of legal assistance to an eligible client, or to 
interfere with the fulfillment of any attorney's professional 
responsibilities to a client.
    (c) The area agency shall award funds to the legal assistance 
provider(s) that most fully meet the standards in this subsection. The 
legal assistance provider(s) shall:
    (1) Have staff with expertise in specific areas of law affecting 
older persons in economic or social need, for example, public benefits, 
institutionalization and alternatives to institutionalization;
    (2) Demonstrate the capacity to provide effective administrative and 
judicial representation in the areas of law affecting older persons with 
economic or social need;
    (3) Demonstrate the capacity to provide support to other advocacy 
efforts, for example, the long-term care ombudsman program;
    (4) Demonstrate the capacity to provide legal services to 
institutionalized, isolated, and homebound older individuals 
effectively; and
    (5) Demonstrate the capacity to provide legal assistance in the 
principal language spoken by clients in areas where a significant number 
of clients do not speak English as their principal language.
    (d) A legal assistance provider may not require an older person to 
disclose information about income or resources as a condition for 
providing legal assistance under this part.
    (e) A legal assistance provider may ask about the person's financial 
circumstances as a part of the process of providing legal advice, 
counseling and representation, or for the purpose of identifying 
additional resources and benefits for which an older person may be 
eligible.
    (f) A legal assistance provider and its attorneys may engage in 
other legal activities to the extent that there is no conflict of 
interest nor other interference with their professional responsibilities 
under this Act.
    (g) No provider shall use funds received under the Act to provide 
legal assistance in a fee generating case unless other adequate 
representation is unavailable or there is an emergency requiring 
immediate legal action. All providers shall establish procedures for the 
referral of fee generating cases.
    (1) ``Fee generating case'' means any case or matter which, if 
undertaken on behalf of an eligible client by an attorney in private 
practice, reasonably may be expected to result in a fee for legal 
services from an award to a client, from public funds, or from the 
opposing party.
    (2) Other adequate representation is deemed to be unavailable when:
    (i) Recovery of damages is not the principal object of the client; 
or
    (ii) A court appoints a provider or an employee of a provider 
pursuant to a statute or a court rule or practice of equal applicability 
to all attorneys in the jurisdiction; or
    (iii) An eligible client is seeking benefits under title II of the 
Social Security Act, 42 U.S.C. 401, et seq., Federal Old Age, Survivors, 
and Disability Insurance Benefits; or title XVI of the Social Security 
Act, 42 U.S.C. 1381, et seq., Supplemental Security Income for Aged, 
Blind, and Disabled.
    (3) A provider may seek and accept a fee awarded or approved by a 
court or administrative body, or included in a settlement.
    (4) When a case or matter accepted in accordance with this section 
results in a recovery of damages, other than statutory benefits, a 
provider may accept reimbursement for out-of-pocket costs and expenses 
incurred in connection with the case or matter.
    (h) A provider, employee of the provider, or staff attorney shall 
not engage in the following prohibited political activities:
    (1) No provider or its employees shall contribute or make available 
Older Americans Act funds, personnel or equipment to any political party 
or association or to the campaign of any candidate for public or party 
office; or for use in advocating or opposing any ballot measure, 
initiative, or referendum;

[[Page 270]]

    (2) No provider or its employees shall intentionally identify the 
title III program or provider with any partisan or nonpartisan political 
activity, or with the campaign of any candidate for public or party 
office;
    (3) While engaged in legal assistance activities supported under the 
Act, no attorney shall engage in any political activity;
    (i) No funds made available under the Act shall be used for lobbying 
activities, including but not limited to any activities intended to 
influence any decision or activity by any nonjudicial Federal, State or 
local individual or body. Nothing in this section is intended to 
prohibit an employee from:
    (1) Communicating with a governmental agency for the purpose of 
obtaining information, clarification, or interpretation of the agency's 
rules, regulations, practices, or policies;
    (2) Informing a client about a new or proposed statute, executive 
order, or administrative regulation;
    (3) Responding to an individual client's request for advice only 
with respect to the client's own communications to officials unless 
otherwise prohibited by the Older Americans Act, title III regulations 
or other applicable law. This provision does not authorize publication 
of lobbying materials or training of clients on lobbying techniques or 
the composition of a communication for the client's use; or
    (4) Making direct contact with the area agency for any purpose;
    (5) Providing a client with administrative representation in 
adjudicatory or rulemaking proceedings or negotiations, directly 
affecting that client's legal rights in a particular case, claim or 
application;
    (6) Communicating with an elected official for the sole purpose of 
bringing a client's legal problem to the attention of that official; or
    (7) Responding to the request of a public official or body for 
testimony, legal advice or other statements on legislation or other 
issues related to aging; provided that no such action will be taken 
without first obtaining the written approval of the responsible area 
agency.
    (j) While carrying out legal assistance activities and while using 
resources provided under the Act, no provider or its employees shall:
    (1) Participate in any public demonstration, picketing, boycott, or 
strike, except as permitted by law in connection with the employee's own 
employment situation;
    (2) Encourage, direct, or coerce others to engage in such 
activities; or
    (3) At any time engage in or encourage others to engage in:
    (i) Any illegal activity; or
    (ii) Any intentional identification of programs funded under the Act 
or recipient with any political activity.
    (k) None of the funds made available under the Act may be used to 
pay dues exceeding $100 per recipient per annum to any organization 
(other than a bar association), a purpose or function of which is to 
engage in activities prohibited under these regulations unless such dues 
are not used to engage in activities for which Older Americans Act funds 
cannot be used directly.



Sec. 1321.73  Grant related income under Title III-C.

    States and sub-grantees must require that their subgrantees' grant 
related income be used in either the matching or cost sharing 
alternative in 45 CFR 92.25(g)(2) or the additive alternative in 
Sec. 92.25(g)(3) or a combination of the two. The deductive alternative 
described in Sec. 92.25(g)(1) is not permitted.



Sec. 1321.75  Licenses and safety.

    The State shall ensure:
    (a) That, in making awards for multipurpose senior center 
activities, the area agency will ensure that the facility complies with 
all applicable State and local health, fire, safety, building, zoning 
and sanitation laws, ordinances or codes; and
    (b) The technical adequacy of any proposed alteration or renovation 
of a multipurpose senior center assisted under this part, by requiring 
that any alteration or renovation of a multipurpose senior center that 
affects the load bearing members of the facility is structurally sound 
and complies with all applicable local or State ordinances, laws, or 
building codes.

[[Page 271]]



            Subpart E--Hearing Procedures for State Agencies



Sec. 1321.77  Scope.

    (a) Hearing procedures for State plan disapproval, as provided for 
in section 307(c) and section 307(d) of the Act are subject to the 
previsions of 45 CFR part 213 with the following exceptions:
    (1) Section 213.1(a); Sec. 213.32(d); and Sec. 213.33 do not apply.
    (2) Reference to SRS Hearing Clerk shall be read to mean HHS Hearing 
Clerk.
    (3) References to Administrator shall be read to mean Commissioner 
on Aging.
    (b) Instead of the scope described in Sec. 213.1(a), this subpart 
governs the procedures and opportunity for a hearing on:
    (1) Disapproval of a State plan or amendment:
    (2) Determination that a State agency does not meet the requirements 
of this part:
    (3) Determination that there is a failure in the provisions or the 
administration of an approved plan to comply substantially with Federal 
requirements, including failure to comply with any assurance required 
under the Act or under this part.



Sec. 1321.79  When a decision is effective.

    (a) The Commissioner's decision specifies the effective date for 
AoA's reduction and withholding of the State's grant. This effective 
date may not be earlier than the date of the Commissioner's decision or 
later than the first day of the next calendar quarter.
    (b) The decision remains in effect unless reversed or stayed on 
judicial appeal, or until the agency or the plan is changed to meet all 
Federal requirements, except that the Commissioner may modify or set 
aside his or her decision before the record of the proceedings under 
this subpart is filed in court.



Sec. 1321.81  How the State may appeal.

    A State may appeal the final decision of the Commissioner 
disapproving the State plan or plan amendment, finding of noncompliance, 
or finding that a State agency does not meet the requirements of this 
part to the U.S. Court of Appeals for the circuit in which the State is 
located. The State shall file the appeal within 30 days of the 
Commissioner's final decision.



Sec. 1321.83  How the Commissioner may reallot the State's withheld payments.

    The Commissioner disburses funds withheld from the State directly to 
any public or nonprofit private organization or agency, or political 
subdivision of the State that has the authority and capacity to carry 
out the functions of the State agency and submits a State plan which 
meets the requirements of this part and which contains an agreement to 
meet the non-federal share requirements.



PART 1326--GRANTS TO INDIAN TRIBES FOR SUPPORT AND NUTRITION SERVICES--Table of Contents




Sec.
1326.1  Basis and purpose of this part.
1326.3  Definitions.
1326.5  Applicability of other regulations.
1326.7  Confidentiality and disclosure of information.
1326.9  Contributions.
1326.11  Prohibition against supplantation.
1326.13  Supportive services.
1326.15  Nutrition services.
1326.17  Access to information.
1326.19  Application requirements.
1326.21  Application approval.
1326.23  Hearing procedures.

    Authority: 42 U.S.C. 3001; Title VI, Part A of the Older Americans 
Act.

    Source: 53 FR 33774, Aug. 31, 1988, unless otherwise noted.



Sec. 1326.1  Basis and purpose of this part.

    This program was established to meet the unique needs and 
circumstances of American Indian elders on Indian reservations. This 
part implements title VI (part A) of the Older Americans Act, as 
amended, by establishing the requirements that an Indian tribal 
organization shall meet in order to receive a grant to promote the 
delivery of services for older Indians that are comparable to services 
provided under Title III. This part also prescribes application and 
hearing requirements and procedures for these grants.

[[Page 272]]



Sec. 1326.3  Definitions.

    Acquiring, as used in section 307(a)(14) of the Act, means obtaining 
ownership of an existing facility in fee simple or by lease for 10 years 
or more for use as a multipurpose senior center.
    Altering or renovating, as used in section 307(a)(14) of the Act 
with respect to multipurpose senior centers, means making modifications 
to or in connection with an existing facility which are necessary for 
its effective use as a center. These may include renovation, repair, or 
expansion which is not in excess of double the square footage of the 
original facility and all physical improvements.
    Budgeting period, as used in Sec. 1326.19 of this part, means the 
intervals of time into which a period of assistance (project period) is 
divided for budgetary and funding purposes.
    Constructing, as used in section 307(a)(14) of the Act with respect 
to multipurpose senior centers, means building a new facility, including 
the costs of land acquisition and architectural and engineering fees, or 
making modifications to or in connection with an existing facility which 
are in excess of double the square footage of the original facility and 
all physical improvements.
    Department, means the Department of Health and Human Services.
    Indian reservation, means the reservation of any Federally 
recognized Indian tribe, including any band, nation, pueblo, or 
rancheria, any former reservation in Oklahoma, any community on non-
trust land under the jurisdiction of an Indian tribe, including a band, 
nation, pueblo, or rancheria, with allotted lands, or lands subject to a 
restriction against alienation imposed by the United States, and Alaskan 
Native regions established, pursuant to the Alaska Native Claims 
Settlement Act (84 Stat. 688).
    Indian tribe, means any Indian tribe, band, nation, or organized 
group or community, including any Alaska Native Village, regional or 
village corporation as defined in or established pursuant to the Alaska 
Native Claims Settlement Act (85 Stat. 688) which is recognized as 
eligible for the special programs and services provided by the United 
States to Indians because of their status as Indians (25 U.S.C. 450b).
    Means test, as used in the provision of services, means the use of 
an older Indian's income or resources to deny or limit that person's 
receipt of services under this part.
    Older Indians, means those individuals who have attained the minimum 
age determined by the tribe for services.
    Project period, as used in Sec. 1326.19 of this part, means the 
total time for which a project is approved for support, including any 
extensions.
    Service area, as used in Sec. 1326.9(b) and elsewhere in this part, 
means that geographic area approved by the Commissioner in which the 
tribal organization provides supportive and nutritional services to 
older Indians residing there. A service area may include all or part of 
the reservation or any portion of a county or counties which has a 
common boundary with the reservation. A service area may also include a 
non-contiguous area if the designation of such an area will further the 
purpose of the Act and will provide for more effective administration of 
the program by the tribal organization.
    Service provider, means any entity that is awarded a subgrant or 
contract from a tribal organization to provide services under this part.
    Tribal organization, as used in Sec. 1326.7 and elsewhere in this 
part, means the recognized governing body of any Indian tribe, or any 
legally established organization of Indians which is controlled, 
sanctioned or chartered by such governing body or which is 
democratically elected by the adult members of the Indian community to 
be served by such organization and which includes the maximum 
participation of Indians in all phases of its activities. Provided that 
in any case where a contract is let or grant made to an organization to 
perform services benefiting more than one Indian tribe, the approval of 
each Indian tribe shall be a prerequisite to the letting or making of 
the contract or grant (25 U.S.C. 450b).

[[Page 273]]



Sec. 1326.5  Applicability of other regulations.

    The following regulations in title 45 of the Code of Federal 
Regulations apply to all activities under this part:
    (a) Part 16--Procedures of the Departmental Grant Appeals Board;
    (b) Part 74--Administration of Grants;
    (c) Part 75--Informal Grant Appeals Procedures;
    (d) Part 80--Nondiscrimination Under Programs Receiving Federal 
Assistance through the Department of Health and Human Services: 
Effectuation of title VI of the Civil Rights Act of 1964;
    (e) Part 81--Practice and Procedure for Hearings under part 80 of 
this Title;
    (f) Part 84--Nondiscrimination on the Basis of Handicap in Programs 
and Activities Receiving Benefits from Federal Financial Participation; 
and
    (g) Part 91--Nondiscrimination on the Basis of Age in Programs or 
Activities Receiving Federal Financial Assistance from HHS.



Sec. 1326.7  Confidentiality and disclosure of information.

    A tribal organization shall have confidentiality and disclosure 
procedures as follows:
    (a) A tribal organization shall have procedures to ensure that no 
information about an older Indian or obtained from an older Indian by 
any provider of services is disclosed by the provider of such services 
in a form that identifies the person without the informed consent of the 
person or of his or her legal representative, unless the disclosure is 
required by court order, or for program monitoring by authorized Federal 
or tribal monitoring agencies.
    (b) A tribal organization is not required to disclose those types of 
information or documents that are exempt from disclosure by a Federal 
agency under the Federal Freedom of Information Act, 5 U.S.C. 552.



Sec. 1326.9  Contributions.

    (a) Each tribal organization shall:
    (1) Provide each older Indian with a free and voluntary opportunity 
to contribute to the cost of the service;
    (2) Protect the privacy of each older Indian with respect to his or 
her contribution;
    (3) Establish appropriate procedures to safeguard and account for 
all contributions;
    (4) Use all services contributions to expand comprehensive and 
coordinated services systems supported under this part, while using 
nutrition services contributions only to expand services as provided 
under section 307(a)(13)(c)(ii) of the Act.
    (b) Each tribal organization may develop a suggested contribution 
schedule for services provided under this part. In developing a 
contribution schedule, the tribal organization shall consider the income 
ranges of older Indians in the service area and the tribal 
organization's other sources of income. However, means tests may not be 
used.
    (c) A tribal organization that receives funds under this part may 
not deny any older Indian a service because the older Indian will not or 
cannot contribute to the cost of the service.



Sec. 1326.11  Prohibition against supplantation.

    A tribal organization shall ensure that the activities provided 
under a grant under this part will be in addition to, and not in 
substitution for, comparable activities provided without Federal 
assistance.



Sec. 1326.13  Supportive services.

    (a) A tribal organization may provide any of the supportive services 
mentioned under title III of the Older Americans Act, and any other 
supportive services that are necessary for the general welfare of older 
Indians.
    (b) If an applicant elects to provide multipurpose senior center 
activities or uses any of the funds under this part for acquiring, 
altering or renovating a multipurpose senior center facility, it shall 
comply with the following requirements:
    (1) The tribal organization shall comply with all applicable local 
health, fire, safety, building, zoning and sanitation laws, ordinances 
or codes.
    (2) The tribal organization shall assure the technical adequacy of 
any proposed alteration or renovation of a multipurpose senior centers 
assisted

[[Page 274]]

under this part. The tribal organization assures technical adequacy by 
requiring that any alteration or renovation of a multipurpose senior 
center that affects the load bearing members of the facility is 
structurally sound and complies with all applicable local or State 
ordinances, laws, or building codes.
    (c) If an applicant elects to provide legal services, it shall 
substantially comply with the requirements in Sec. 1321.71 and legal 
services providers shall comply fully with the requirements in 
Secs. 1321.71(c) through 1321.71(p).



Sec. 1326.15  Nutrition services.

    (a) In addition to providing nutrition services to older Indians, a 
tribal organization may:
    (1) Provide nutrition services to the spouses of older Indians;
    (2) Provide nutrition services to non-elderly handicapped or 
disabled Indians who reside in housing facilities occupied primarily by 
the elderly, at which congregate nutrition services are provided;
    (3) Offer a meal, on the same basis as meals are provided to older 
Indians, to individuals providing volunteer services during meal hours; 
and
    (4) Provide a meal to individuals with disabilities who reside in a 
non-institutional household with and accompany a person eligible for 
congregate meals under that part.
    (b) Each tribal organization may receive cash payments in lieu of 
donated foods for all or any portion of its funding available under 
section 311(a)(4) of the Act. To receive cash or commodities, the tribal 
organization shall have an agreement with the U.S. Department of 
Agriculture's Food and Nutrition Service (FNS) to be a distributing 
agency.
    (c) Where applicable, the tribal organization shall work with 
agencies responsible for administering other programs to facilitate 
participation of older Indians.



Sec. 1326.17  Access to information.

    A tribal organization shall:
    (a) Establish or have a list of all services that are available to 
older Indians in the service area,
    (b) Maintain a list of services needed or requested by the older 
Indians; and
    (c) Provide assistance to older Indians to help them take advantage 
of available services.



Sec. 1326.19  Application requirements.

    A tribal organization shall have an approved application. The 
application shall be submitted as prescribed in section 604 of the Act 
and in accordance with the Commissioner's instructions for the specified 
project and budget periods. The application shall provide for:
    (a) Program objectives, as set forth in section 604(a)(5) of the 
Act, and any objectives established by the Commissioner.
    (b) A description of the geographic boundaries of the service area 
proposed by the tribal organization:
    (c) Documentation of the ability of the tribal organization to 
deliver supportive and nutrition services to older Indians, or 
documentation that the tribal organization has effectively administered 
supportive and nutrition services within the last 3 years;
    (d) Assurances as prescribed by the Commissioner that:
    (1) A tribal organization represents at least 50 individuals who 
have attained 60 years of age or older;
    (2) A tribal organization shall comply with all applicable State and 
local license and safety requirements for the provision of those 
services;
    (3) If a substantial number of the older Indians residing in the 
service area are of limited English-speaking ability, the tribal 
organization shall utilize the services of workers who are fluent in the 
language spoken by a predominant number of older Indians;
    (4) Procedures to ensure that all services under this part are 
provided without use of any means tests;
    (5) A tribal organization shall comply with all requirements set 
forth in Sec. 1326.7 through 1326.17; and
    (6) The services provided under this part will be coordinated, where 
applicable, with services provided under title III of the Act.
    (e) A tribal resolution(s) authorizing the tribal organization to 
apply for a grant under this part; and
    (f) Signature by the principal official of the tribe.

[[Page 275]]



Sec. 1326.21  Application approval.

    (a) Approval of any application under section 604(e) of the Act, 
shall not commit the Commissioner in any way to make additional, 
supplemental, continuaton, or other awards with respect to any approved 
application or portion thereof.
    (b) The Commissioner may give first priority in awarding grants to 
grantees which have effectively administered such grants in the prior 
year.



Sec. 1326.23  Hearing procedures.

    In meeting the requirements of section 604(d)(3) of the Act, if the 
Commissioner disapproves an application from an eligible tribal 
organization, the tribal organization may file a written request for a 
hearing with the Commissioner.
    (a) The request shall be postmarked or delivered in person within 30 
days of the date of the disapproval notice. If it requests a hearing, 
the tribal organization shall submit to the Commissioner, as part of the 
request, a full written response to each objection specified in the 
notice of disapproval, including the pertinent facts and reasons in 
support of its response, and any and all documentation to support its 
position. Service of the request shall also be made on the individual(s) 
designated by the Commissioner to represent him or her.
    (b) The Administration on Aging shall have the opportunity to 
respond with 30 days to the merits of the tribal organization's request.
    (c) The Commissioner notifies the tribal organization in writing of 
the date, time and place for the hearing.
    (d) The hearing procedures include the right of the tribal 
organization to:
    (1) A hearing before the Commissioner or an official designated by 
the Commissioner;
    (2) Be heard in person or to be represented by counsel, at no 
expense to the Administration on Aging;
    (3) Present written evidence prior to and at the hearing, and 
present oral evidence at the hearing if the Commissioner or designated 
official decides that oral evidence is necessary for the proper 
resolution of the issues involved, and
    (4) Have the staff directly responsible for reviewing the 
application either present at the hearing, or have a deposition from the 
staff, whichever the Commissioner or designated official decides.
    (e) The Commissioner or designated official conducts a fair and 
impartial hearing, takes all necessary action to avoid delay and to 
maintain order and has all powers necessary to these ends.
    (f) Formal rules of evidence do not apply to the hearings.
    (g) The official hearing transcript together with all papers, 
documents, exhibits, and requests filed in the proceedings, including 
rulings, constitutes the record for decision.
    (h) After consideration of the record, the Commissoner or designated 
official issues a written decision, based on the record, which sets 
forth the reasons for the decision and the evidence on which it was 
based. The decision is issued within 60 days of the date of the hearing, 
constitutes the final administrative action on the matter and is 
promptly mailed to the tribal organization.
    (i) Either the tribal organization or the staff of the 
Administration on Aging may request for good cause an extension of any 
of the time limits specified in this section.



PART 1328--GRANTS FOR SUPPORTIVE AND NUTRITIONAL SERVICES TO OLDER HAWAIIAN NATIVES--Table of Contents




Sec.
1328.1  Basis and purpose of this part.
1328.3  Definitions.
1328.5  Applicability of other regulations.
1328.7  Confidentiality and disclosure of information.
1328.9  Contributions.
1328.11  Prohibition against supplantation.
1328.13  Supportive services.
1328.15  Nutrition services.
1328.17  Access to information.
1328.19  Application requirements.
1328.21  Application approval.
1328.23  Hearing procedures.

    Authority: 42 U.S.C. 3001; Title VI Part B of the Older Americans 
Act.

    Source: 53 FR 33777, Aug. 31, 1988, unless otherwise noted.

[[Page 276]]



Sec. 1328.1  Basis and purpose of this part.

    This program was established to meet the unique needs and 
circumstances of Older Hawaiian Natives. This part implements title VI 
(part B) of the Older Americans Act, as amended, by establishing the 
requirements that a public or nonprofit private organization shall meet 
in order to receive a grant to promote the delivery of services for 
older Hawaiian Natives that are comparable to services provided under 
title III. This part also prescribes application and hearing 
requirements and procedures for these agrants.



Sec. 1328.3  Definitions.

    Acquiring, as used in section 307(a)(14) of the Act, means obtaining 
ownership of an existing facility in fee simple or by lease of 10 years 
or more for use as a multipurpose senior center.
    Act, means the Older Americans Act of 1965, as amended.
    Altering or renovating, as used in section 307(a)(14) of the Act 
with respect to multipurpose senior centers, means making modifications 
to or in connection with an existing facility which are necessary for 
its effective use as a center. These may include renovation, repair, or 
expansion which is not in excess of double the square footage of the 
original facility and all physical improvements.
    Budgeting period, as used in Sec. 1328.19 of this part, means the 
intervals of time into which a period of assistance (project period) is 
divided for budgetary and funding purposes.
    Constructing, as used in section 307(a)(14) of the Act with respect 
to multipurpose senior centers, means building a new facility, including 
the costs of land acquisition and architectural and engineering fees, or 
making modificaitons to or in connection with an existing facility which 
are in excess of double the square footage of the original facility and 
all physical improvements.
    Department, means the Department of Health and Human Services.
    Eligible organization, means a public or nonprofit private 
organization having the capacity to provide services under this part for 
older Hawaiian Natives.
    Grantee, as used in this part, means an eligible organization that 
has received funds to provide services to older Hawaiians.
    Hawaiian Native, as used in this part, means any individual any of 
whose ancestors were native of the area which consists of the Hawaiian 
Islands prior to 1778.
    Means test, as used in the provision of services, means the use of 
an older Hawaiian Native's income or resources to deny or limit that 
person receipt of services under this part.
    Older Hawaiian, means any individual, age 60 or over, who is an 
Hawaiian Native.
    Project period, as used in Sec. 1328.19 of this part, means the 
total time for which a project is approved for support, including any 
extensions.
    Service area, as used in Sec. 1328.9(b) and elsewhere in this part, 
means that geographic area approved by the Commissioner in which the 
grantee provides supportive and nutritional services to older Hawaiian 
Natives residing there.



Sec. 1328.5  Applicability of other regulations.

    The following regulations in title 45 of the Code of Federal 
Regulations apply to all activities under this part:
    (a) Part 16-Procedures of the Departmental Grant Appeals Board;
    (b) Part 74-Administration of Grants;
    (c) Part 75-Informal Grant Appeals Procedures;
    (d) Part 80-Nondiscrimination Under Programs Receiving Federal 
Assistance through the Department of Health and Human Services: 
Effectuation of title VI of the Civil Rights Act of 1964;
    (e) Part 81-Practice and procedures for hearings under part 80;
    (f) Part 84-Nondiscrimination on the Basis of Handicap in Programs 
and Activities Receiving Benefits from Federal Financing Participation; 
and
    (g) Part 91-Nondiscrimination on the Basis of Age in Programs or 
Activities Receiving Federal Financial Assistance from HHS.



Sec. 1328.7  Confidentiality and disclosure of information.

    A grantee shall have confidentiality and disclosure procedures as 
follows:

[[Page 277]]

    (a) The grantee shall have procedures to ensure that no information 
about an older Hawaiian Native or obtained from an older Hawaiian Native 
is disclosed in a form that identifies the person without the informed 
consent of the person or of his or her legal representative, unless the 
disclosure is required by court order, or for program monitoring by 
authorized Federal monitoring agencies.
    (b) A grantee is not required to disclose those types of information 
or documents that are exempt from disclosure by a Federal agency under 
the Federal Freedom of Information Act, 5 U.S.C. 552.



Sec. 1328.9  Contributions.

    (a) Each grantee shall:
    (1) Provide each older Hawaiian Native with a free and voluntary 
opportunity to contribute to the cost of the service;
    (2) Protect the privacy of each older Hawaiian Native with respect 
to his or her contribution;
    (3) Establish appropriate procedures to safeguard and account for 
all contributions;
    (4) Use all supportive services contributions to expand the services 
provided under this part; and
    (5) Use all nutrition services contributions only to expand services 
as provided under section 307(a)(13)(c)(ii) of the Act.
    (b) Each grantee may develop a suggested contribution schedule for 
services provided under this part. In developing a contribution 
schedule, the grantee shall consider the income ranges of older Hawaiian 
Natives in the service area and the grantee's other sources of income. 
However, means tests may not be used.
    (c) A grantee may not deny any older Hawaiian a service because the 
older Hawaiian will not or cannot contribute to the cost of the service.



Sec. 1328.11  Prohibition against supplantation.

    A grantee shall ensure that the activities provided under a grant 
under this part will be in addition to, and not in substitution for, 
comparable activities provided without Federal assistance.



Sec. 1328.13  Supportive services.

    (a) A grantee may provide any of the supportive services specified 
under title III of the Older Americans Act and any other supportive 
services, approved in the grantee's application, that are necessary for 
the general welfare of older Hawaiian Natives.
    (b) If a grantee elects to provide multipurpose senior center 
activities or uses any of the funds under this part for acquiring, 
altering or renovating a multipurpose senior center facility, it shall 
comply with the following requirements:
    (1) The grantee shall comply with all applicable local health, fire, 
safety, building, zoning and sanitation laws, ordinances or codes.
    (2) The grantee shall assure the technical adequacy of any proposed 
alteration or renovation of a multipurpose senior center assisted under 
this part. The grantee shall assure technical adequacy by requiring that 
any alteration or renovation of a multipurpose senior center that 
affects the load bearing members of the facility is structurally sound 
and complies with all applicable local or State ordinances, laws, or 
building codes.
    (c) If a grantee elects to provide legal services, it shall 
substantially comply with the requirements in Sec. 1321.71 and legal 
services providers shall comply fully with the requirements in 
Secs. 1321.71(c) through 1321.71(p).



Sec. 1328.15  Nutrition services.

    (a) In addition to providing nutrition services to older Hawaiian 
Natives, a grantee may:
    (1) Provide nutrition services to the spouses of older Hawaiian 
Natives;
    (2) Provide nutrition services to non-elderly handicapped or 
disabled Hawaiian Natives who reside in housing facilities occupied 
primarily by the elderly, at which congregate nutrition services are 
provided;
    (3) Offer a meal, on the same basis as meals are provided to older 
Hawaiian Natives, to individuals providing volunteer services during 
meal hours; and
    (4) Provide a meal to individuals with disabilities who reside in a 
non-institutional household with and accompany a person eligible for 
congregate meals under that part.

[[Page 278]]

    (b) Each grantee may receive cash payments in lieu of donated foods 
for all or any portion of its funding available under section 311(a)(4) 
of the Act. To receive cash or commodities, the grantee shall have an 
agreement with the U.S. Department of Agriculture's Food and Nutrition 
Service (FNS) to be a distributing agency.
    (c) Where applicable, the grantee shall work with agencies 
responsible for administering other programs to facilitate participation 
of older Hawaiian Natives.



Sec. 1328.17  Access to information.

    A grantee shall:
    (a) Establish or have a list of all services that are available to 
older Hawaiian Natives in the service area;
    (b) Maintain a list of services needed or requested by the older 
Hawaiians; and
    (c) Provide assistance to older Hawaiian Natives to help them take 
advantage of available services.



Sec. 1328.19  Application requirements.

    To receive funds under this part, an eligible organization shall 
submit an application as prescribed in section 623 of the Act and in 
accordance with the Commissioner's instructions for the specified 
project and budget periods. The application shall provide for:
    (a) Program objectives, as set forth in section 623(a)(6) of the 
Act, and any objectives established by the Commissioner;
    (b) A description of the geographic boundaries of the service area 
proposed by the eligible organization;
    (c) Documentation of the organization's ability to serve older 
Hawaiian Natives;
    (d) Assurances as prescribed by the Commissioner that:
    (1) The eligible organization represents at least 50 older Hawaiian 
Natives who have attained 60 years of age or older;
    (2) The eligible organization shall conduct all activities on behalf 
of older Hawaiian natives in close coordination with the State agency 
and Area Agency on Aging:
    (3) The eligible organization shall comply with all applicable State 
and local license and safety requirements for the provision of those 
services;
    (4) The eligible organization shall ensure that all services under 
this part are provided without use of any means tests;
    (5) The eligible organization shall comply with all requirements set 
forth in Secs. 1328.7 through 1328.17; and
    (6) The services provided under this part will be coordinated, where 
applicable, with services provided under title III of the Act.
    (e) Signature by the principal official of the eligible 
organization.



Sec. 1328.21  Application approval.

    (a) Approval of any application under section 623(d) of the Act, 
shall not commit the Commissioner in any way to make additional, 
supplemental, continuation, or other awards with respect to any approved 
application or portion thereof.
    (b) The Commissioner may give first priority in awarding grants to 
eligible applicant organizations that have prior experience in serving 
Hawaiian Natives, particularly older Hawaiian Natives.



Sec. 1328.23  Hearing procedures.

    In accordance with section 623(c)(3) of the Act, if the Commissioner 
disapproves an application from an eligible organization, the 
organization may file a written request for a hearing with the 
Commissioner.
    (a) The request shall be postmarked or delivered in person within 30 
days of the date of the disapproval notice. If it requests a hearing, 
the organization shall submit to the Commissioner, as part of the 
request, a full written response to each objection specified in the 
notice of disapproval, including the pertinent facts and reasons in 
support of its response, and any and all documentation to support its 
position. Service of the request shall also be made on the individual(s) 
designated by the Commissioner to represent him or her.
    (b) The Administration on Aging shall have the opportunity to 
respond within 30 days to the merits of the organization's request.

[[Page 279]]

    (c) The Commissioner notifies the organization in writing of the 
date, time and place for the hearing.
    (d) The hearing procedures include the right of the organization to:
    (1) A hearing before the Commissioner or an official designated by 
the Commissioner;
    (2) Be heard in person or to be represented by counsel, at no 
expense to the Administration on Aging;
    (3) Present written evidence prior to and at the hearing, and 
present oral evidence at the hearing if the Commissioner or the 
Commissioner's designee decides that oral evidence is necessary for the 
proper resolution of the issues involved, and
    (4) Have the staff directly responsible for reviewing the 
application either present at the hearing, or have a deposition from the 
staff, whichever the Commissioner or the Commissioner's designee 
decides.
    (e) The Commissioner or the Commissioner's designee conducts a fair 
and impartial hearing, takes all necessary action to avoid delay and to 
maintain order and has all powers necessary to these ends.
    (f) Formal rules of evidence do not apply to the hearings.
    (g) The official hearing transcript together with all papers 
documents, exhibits, and requests filed in the proceedings, including 
rulings, constitutes the record for decision.
    (h) After consideration of the record, the Commissioner or the 
Commissioner's designee issues a written decision, based on the record, 
which sets forth the reasons for the decision and the evidence on which 
it was based. The decision is issued within 60 days of the date of the 
hearing, constitutes the final administrative action on the matter and 
is promptly mailed to the organization.
    (i) Either the organization or the staff of the Administration on 
Aging may request, for good cause, an extension of any of the time 
limits specified in this section.

[[Page 280]]



 SUBCHAPTER D--THE ADMINISTRATION FOR NATIVE AMERICANS, NATIVE AMERICAN 
                                PROGRAMS





PART 1336--NATIVE AMERICAN PROGRAMS--Table of Contents




                         Subpart A--Definitions

Sec.
1336.10  Definitions.

           Subpart B--Purpose of the Native American Programs

1336.20  Program purpose.

                   Subpart C--Native American Projects

1336.30  Eligibility under sections 804 and 805 of the Native American 
          Programs Act of 1974.
1336.31  Project approval procedures.
1336.32  Grants.
1336.33  Eligible applicants and proposed activities which are 
          ineligible.
1336.34  Notice of ineligibility.
1336.35  Appeal of ineligibility.

                          Subpart D--Evaluation

1336.40  General.

               Subpart E--Financial Assistance Provisions

1336.50  Financial and administrative requirements.
1336.51  Project period.
1336.52  Appeals.

  Subpart F--Native Hawaiian Revolving Loan Fund Demonstration Project

1336.60  Purpose of this subpart.
1336.61  Purpose of the Revolving Loan Fund.
1336.62  Definitions.
1336.63  General responsibilities of the Loan Administrator.
1336.64  Development of goals and strategies: Responsibilities of the 
          Loan Administrator.
1336.65  Staffing and organization of the Revolving Loan Fund: 
          Responsibilities of the Loan Administrator.
1336.66  Procedures and criteria for administration of the Revolving 
          Loan Fund: Responsibilities of the Loan Administrator.
1336.67  Security and collateral: Responsibilities of the Loan 
          Administrator.
1336.68  Defaults, uncollectible loans, liquidations: Responsibilities 
          of the Loan Administrator.
1336.69  Reporting requirements: Responsibilities of the Loan 
          Administrator.
1336.70  Technical assistance: Responsibilities of the Loan 
          Administrator.
1336.71  Administrative costs.
1336.72  Fiscal requirements.
1336.73  Eligible borrowers.
1336.74  Time limits and interest on loans.
1336.75  Allowable loan activities.
1336.76  Unallowable loan activities.
1336.77  Recovery of funds.

    Authority: 42 U.S.C. 2991 et seq.

    Source: 48 FR 55821, Dec. 15, 1983, unless otherwise noted.



                         Subpart A--Definitions



Sec. 1336.10  Definitions.

    For the purposes of this part, unless the context otherwise 
requires:
    Act means the Native American Programs Act of 1974, as amended (42 
U.S.C. 2991 et seq.).
    Alaskan Native means a person who is an Alaskan Indian, Eskimo, or 
Aleut, or any combination thereof. The term also includes any person who 
is regarded as an Alaskan Native by the Alaskan Native Village or group 
of which he or she claims to be a member and whose father or mother is 
(or, if deceased, was) regarded as an Alaskan Native by an Alaskan 
Native Village or group. The term includes any Alaskan Native as so 
defined, either or both of whose adoptive parents are not Alaskan 
Natives.
    American Indian or Indian means any individual who is a member or a 
descendant of a member of a North American tribe, band, Pueblo or other 
organized group of native people who are indigenous to the Continental 
United States, or who otherwise have a special relationship with the 
United States or a State through treaty, agreement, or some other form 
of recognition. This includes any individual who claims to be an Indian 
and who is regarded as such by the Indian tribe, group, band, or 
community of which he or she claims to be a member.
    ANA means the Administration for Native Americans within the Office 
of Human Development Services.
    Applicant means an organization which has applied for financial 
assistance from ANA.

[[Page 281]]

    Budget period means the interval of time into which a project period 
is divided for budgetary and funding purposes, and for which a grant is 
made. A budget period usually lasts one year in a multi-year project 
period.
    Economic and social self-sufficiency means the ability of Native 
Americans to define and achieve their own economic and social goals.
    Indian tribe means a distinct political community of Indians which 
exercises powers of self-government.
    Native American means American Indian, Indian, Native Hawaiian, and 
Alaskan Native, as defined in the Act, or in this section.
    Project period means, for discretionary grants and cooperative 
agreements, the total time for which the recipient's project or program 
is approved for support, including any extension, subject to the 
availability of funds, satisfactory progress, and a determination by HHS 
that continued funding is in the best interest of the Government.
    Recipient means an organization which has applied for financial 
assistance, and to which financial assistance is awarded under this Act. 
The term includes grantees and recipients of cooperative agreements.



           Subpart B--Purpose of the Native American Programs



Sec. 1336.20  Program purpose.

    The purpose of the Native American Programs authorized by the Native 
American Programs Act of 1974 is to promote the goal of economic and 
social self-sufficiency for Native Americans.



                   Subpart C--Native American Projects



Sec. 1336.30  Eligibility under sections 804 and 805 of the Native American Programs Act of 1974.

    Financial assistance under sections 804 and 805 may be made to 
public or private agencies including ``for-profit'' organizations.

[48 FR 55821, Dec. 15, 1983, as amended at 53 FR 23968, June 24, 1988; 
53 FR 28223, July 27, 1988; 54 FR 3452, Jan. 24, 1989; 61 FR 42820, Aug. 
19, 1996]



Sec. 1336.31  Project approval procedures.

    (a) Each applicant for financial assistance under section 803 of the 
Act must submit a work plan that falls within the statutory requirements 
of the Act and meets the criteria of program announcements published by 
ANA in the Federal Register. If the proposed project extends beyond one 
year, a work plan must be submitted for the period of time specified by 
the Commissioner in the Program Announcement. ANA will determine whether 
to approve all, part, or none of the requested work plan. Proposed 
changes to the approved work plan must receive the written approval of 
ANA prior to implementation by the recipient.
    (b) ANA will negotiate the approved project goals, objectives, work 
plan, and the funding level for each budget period with each recipient.
    (c) The evaluation for the purpose of making an approval decision on 
each proposed work plan will take into account the proposal's 
conformance with ANA program purposes and the recipient's past 
performance and accomplishments.
    (d) Financial assistance awarded under section 803 may be renewed by 
ANA to grantees based on acceptable work plans and past performance.

(Approved by the Office of Management and Budget under control number 
0980-0016)



Sec. 1336.32  Grants.

    Generally, financial assistance will be made available for a one-
year budget period and subsequent non-competing continuation awards with 
the same project period will also be for one year. A recipient must 
submit a separate application to have financial assistance continued for 
each subsequent year, with the same project period, but the continuation 
application need only

[[Page 282]]

contain budget and a summary progress report.



Sec. 1336.33  Eligible applicants and proposed activities which are ineligible.

    (a) Eligibility for the listed programs is restricted to the 
following specified categories of organizations. In addition, 
applications from tribal components which are tribally-authorized 
divisions of a larger tribe must be approved by the governing body of 
the Tribe. If the applicant, other than a tribe or an Alaska Native 
Village government, is proposing a project benefiting Native Americans 
or Native Alaskans, or both, it must provide assurance that its duly 
elected or appointed board of directors is representative of the 
community to be served.
    (1) Social and Economic Development Strategies (SEDS) and 
Preservation and Enhancement of Native American Languages:
    (i) Federally recognized Indian Tribes;
    (ii) Consortia of Indian Tribes;
    (iii) Incorporated non-Federally recognized Tribes;
    (iv) Incorporated nonprofit multi-purpose community-based Indian 
organizations;
    (v) Urban Indian Centers;
    (vi) National and regional incorporated nonprofit Native American 
organizations with Native American community-specific objectives;
    (vii) Alaska Native villages as defined in the Alaska Native Claims 
Settlement Act (ANSCA) and/or nonprofit village consortia;
    (viii) Incorporated nonprofit Alaska Native multi-purpose community-
based organizations;
    (ix) Nonprofit Alaska Native Regional Corporations/Associations in 
Alaska with village specific projects;
    (x) Nonprofit Native organizations in Alaska with village specific 
projects;
    (xi) Public and nonprofit private agencies serving Native Hawaiians;
    (xii) Public and nonprofit private agencies serving native peoples 
from Guam, American Samoa, Palau, or the Commonwealth of the Northern 
Mariana Islands. (The populations served may be located on these islands 
or in the United States);
    (xiii) Tribally Controlled Community Colleges Tribally Controlled 
Post-Secondary Vocational Institutions, and colleges and universities 
located in Hawaii, Guam, American Samoa, Palau, or the Commonwealth of 
the Northern Mariana Islands which serve Native American Pacific 
Islanders; and
    (xiv) Nonprofit Alaska Native community entities or tribal governing 
bodies (Indian Reorganization Act or traditional councils) as recognized 
by the Bureau of Indian Affairs.


(Statutory authority: Sections 803(a) and 803C of the Native American 
Programs Act of 1974, as amended, 42 U.S.C. 2991 b(a) and 42 U.S.C. 
2991b-3)

    (2) Alaska-Specific Social and Economic Development Strategies 
(SEDS) Projects:
    (i) Federally recognized Indian Tribes in Alaska;
    (ii) Alaska Native villages as defined in the Alaska Native Claims 
Settlement Act (ANCSA) and/or nonprofit village consortia;
    (iii) Incorporated nonprofit Alaska Native multi-purpose community-
based organizations;
    (iv) Nonprofit Alaska Native Regional Corporations/Associations in 
Alaska with village specific projects; and
    (v) Nonprofit Native organizations in Alaska with village specific 
projects.
    (3) Mitigation of Environmental Impacts to Indian Lands Due to 
Department of Defense Activities:
    (i) Federally recognized Indian Tribes;
    (ii) Incorporated non-Federally and State recognized Tribes;
    (iii) Nonprofit Alaska Native community entities or tribal governing 
bodies (Indian Reorganization Act (IRA) or traditional councils) as 
recognized by the Bureau of Indian Affairs.
    (iv) Nonprofit Alaska Native Regional Associations and/or 
Corporations with village specific projects; and
    (v) Other tribal or village organizations or consortia of Indian 
Tribes. (Statutory authority: Sec. 8094A of the Department of Defense 
Appropriations Act, 1994 (Public Law 103-139), Sec. 8094A of the Native 
Americans Programs Act of 1974, as amended, 42 U.S.C. 2991h(b)).

[[Page 283]]

    (4) Improvement of the capability of tribal governing bodies to 
regulate environmental quality:
    (i) Federally recognized Indian Tribes;
    (ii) Incorporated non-Federally and State recognized Indian tribes;
    (iii) Alaska Native villages as defined in the Alaska Native Claims 
Settlement Act (ANSCA) and/or nonprofit village consortia;
    (iv) Nonprofit Alaska Native Regional Corporations/Associations with 
village-specific projects;
    (v) Other tribal or village organizations or consortia of Indian 
tribes: and
    (vi) Tribal governing bodies (IRA or traditional councils) as 
recognized by the Bureau of Indian Affairs. (Statutory authority: 
Sections 803(d) of the Native Americans Programs Act of 1974, as amended 
42 U.S.C. 2991b(d).)
    (b) The following is a nonexclusive list of activities that are 
ineligible for funding under programs authorized by the Native American 
Programs Act of 1974:
    (1) Projects in which a grantee would provide training and/or 
technical assistance (T/TA) to other tribes or Native American 
organizations (``third party T/TA''). However, the purchase of T/TA by a 
grantee for its own use or for its members' use (as in the case of a 
consortium), where T/TA is necessary to carry out project objectives, is 
acceptable;
    (2) Projects that request funds for feasibility studies, business 
plans, marketing plans or written materials, such as manuals, that are 
not an essential part of the applicant's SEDS long-range development 
plan;
    (3) The support of on-going social service delivery programs or the 
expansion, or continuation, of existing social service delivery 
programs;
    (4) Core administration functions, or other activities, that 
essentially support only the applicant's on-going administrative 
functions; however, for Competitive Area 2, Alaska-Specific SEDS 
Projects, ANA will consider funding core administrative capacity 
building projects at the village government level if the village does 
not have governing systems in place;
    (5) The conduct of activities which are not responsive to one or 
more of the three interrelated ANA goals (Governance Development, 
Economic Development, and Social Development);
    (6) Proposals from consortia of tribes that are not specific with 
regard to support from, and roles of member tribes. An application from 
a consortium must have goals and objectives that will create positive 
impacts and outcomes in the communities of its members. ANA will not 
fund activities by a consortium of tribes which duplicates activities 
for which member tribes also receive funding from ANA; and
    (7) The purchase of real estate. (Statutory authority: Sections 803B 
of the Native American Programs Act of 1974, as amended, 42 U.S.C. 
2991b-2)

[61 FR 42820, Aug. 19, 1996]



Sec. 1336.34  Notice of ineligibility.

    (a) Upon a finding by the Commissioner that an organization which 
has applied for funding is ineligible or that the activities proposed by 
an organization are ineligible, the Commissioner shall inform the 
applicant by certified letter of the decision.
    (b) The letter must include the following:
    (1) The legal and factual grounds for the Commissioner's finding 
concerning eligibility;
    (2) A copy of the regulations in this part; and
    (3) The following statement: This is the final decision of the 
Commissioner, Administration for Native Americans. It shall be the final 
decision of the Department unless, within 30 days after receiving this 
decision as provided in Sec. 810(b) of the Native Americans Programs Act 
of 1974, as amended, and 45 CFR part 1336, you deliver or mail (you 
should use registered or certified mail to establish the date) a written 
notice of appeal to the HHS Departmental Appeals Board, 200 Independence 
Avenue, S.W., Washington, D.C. 20201. You shall attach to the notice a 
copy of this decision and note that you intend an appeal. The appeal 
must clearly identify the issue(s) in dispute and contain a statement of 
the applicant's position on such issue(s) along with pertinent facts and 
reasons in support of the position. We are enclosing a copy of 45

[[Page 284]]

CFR part 1336 which governs the conduct of appeals under Sec. 810(b). 
For additional information on the appeals process see 45 CFR 1336.35. 
(Statutory authority: Sections 810(b) of the Native American Programs 
Act of 1974, as amended, 42 U.S.C. 2991h(b).)

[61 FR 42821, Aug. 19, 1996]



Sec. 1336.35  Appeal of ineligibility.

    The following steps apply when seeking an appeal on a finding of 
ineligibility for funding:
    (a) An applicant, which has had its application rejected either 
because it has been found ineligible or because the activities it 
proposes are ineligible for funding by the Commissioner of ANA, may 
appeal the Commissioner's ruling to the HHS Departmental Appeals Board, 
in writing, within 30 days following receipt of ineligibility 
notification.
    (b) The appeal must clearly identify the issue(s) in dispute and 
contain a statement of the applicant's position on such issue(s) along 
with pertinent facts and reasons in support of the position.
    (c) Upon receipt of appeal for reconsideration of a rejected 
application or activities proposed by an applicant, the Departmental 
Appeals Board will notify the applicant by certified mail that the 
appeal has been received.
    (d) The applicant's request for reconsideration will be reviewed by 
the Departmental Appeals Board in accordance with 45 CFR part 16, except 
as otherwise provided in this part.
    (e) The Commissioner shall have 45 days to respond to the 
applicant's submission under paragraph (a) of this section.
    (f) The applicant shall have 20 days to respond to the 
Commissioner's submission and the parties may be requested to submit 
additional information within a specified time period before closing the 
record in the appeal.
    (g) The Departmental Appeals Board will review the record in the 
appeal and provide a final written decision within 30 days following the 
closing of the record, unless the Board determines for good reason that 
a decision cannot be issued within this time period and so notifies the 
parties.
    (h) If the Departmental Appeals Board determines that the applicant 
is eligible or that the activities proposed by the applicant are 
eligible for funding, such eligibility shall not be effective until the 
next cycle of grant proposals are considered by the Administration for 
Native Americans. (Statutory authority: Sections 810(b) of the Native 
American Programs Act of 1974, as amended, 42 U.S.C. 2991h(b).)

[61 FR 42822, Aug. 19, 1996]



                          Subpart D--Evaluation



Sec. 1336.40  General.

    Progress reports and continuation applications must contain 
sufficient information for ANA to determine the extent to which the 
recipient meets ANA project evaluation standards. Sufficient information 
means information adequate to enable ANA to compare the recipient's 
accomplishments with the goals and activities of the approved work plan 
and with ANA project evaluation criteria.

(Approved by the Office of Management and Budget under control numbers 
0980-0155 and 0980-0144)



               Subpart E--Financial Assistance Provisions



Sec. 1336.50  Financial and administrative requirements.

    (a) General. The following HHS regulations apply to all grants 
awarded under this part:
    45 CFR Part 16  Department grant appeals process.
    45 CFR Part 46  Protection of human subjects.
    45 CFR Part 74  Administration of grants.
    45 CFR Part 75  Informal grant appeals procedures (indirect cost 
rates and other cost allocations).
    45 CFR Part 80  Nondiscrimination under programs receiving Federal 
assistance through the Department of Health and Human Services--
Effectuation of title VI of the Civil Rights Act of 1964.
    45 CFR Part 81  Practice and procedure for hearing under part 80.

[[Page 285]]

    45 CFR Part 84  Nondiscrimination on the basis of handicap in 
federally assisted programs.
    45 CFR Part 86  Nondiscrimination on the basis of sex in education 
programs and activities receiving or benefiting from Federal financial 
assistance.
    45 CFR Part 91  Nondiscrimination on the basis of age in programs or 
activities receiving Federal financial assistance from HHS.
    (b) Cost sharing or matching--(1) Policy. Recipients of financial 
assistance under sections 803, 804, and 805 of the Act are required to 
provide a matching share of 20 percent of the approved cost of the 
assisted project.

This requirement may be waived in accordance with the criteria in 
Sec. 1336.50(b)(3). The matching share requirement may be met using 
either cash or in-kind contributions.
    (2) Application. If an applicant wishes to request a waiver of the 
requirement for a 20 percent non-Federal matching share, it must include 
with is application for funding a written justification that clearly 
explains why the applicant cannot provide the matching share and how it 
meets the criteria.
    (3) Criteria. Both of the following criterial must be met for an 
applicant to be eligible for a waiver of the non-Federal matching 
requirement:
    (i) Applicant lacks the available resources to meet part or all of 
the non-Federal matching requirement. This must be documented by an 
institutional audit if available, or a full disclosure of applicant's 
total assets and liabilities.
    (ii) Applicant can document that reasonable efforts to obtain cash 
or inkind contributions for the purposes of the project from third 
parties have been unsuccessful. Evidence of such efforts can include 
letters from possible sources of funding indicating that the requested 
resources are not available for that project. The requests must be 
appropriate to the source in terms of project purpose, applicant 
eligibility, and reasonableness of the request.
    (4) Approval. For a waiver to be approved, ANA must determine that 
it will not prevent the award of other grants at levels it believes are 
desirable for the purposes of the program. Waiver of all or part of the 
non-Federal share shall apply only to the budget period for which 
application was made.
    (c) Maintenance of effort. (1) Applications for financial assistance 
under this Part must include either a statement of compliance with the 
maintenance of effort requirement contained in section 803(c) of the 
Act, or a request for a waiver, in accordance with criteria established 
in this paragraph.
    (2) To be eligible for a waiver of the maintenance of effort 
requirement, the applicant must demonstrate to ANA that the organization 
whose funds previously supported the project discontinued its support:
    (i) As a result of funding limitations; and
    (ii) Not as a result of an adverse evaluation of the project's 
purpose or the manner in which it was conducted; and
    (iii) Not because it was anticipated that Federal funds would 
replace the original source of project funding.
    (3) In addition, the applicant must demonstrate in the request for a 
waiver that the maintenance of effort requirement would result in 
insurmountable hardship for the recipient or would otherwise be 
inconsistent with the purposes of this part.
    (d) Delegation of project operations. (1) Each subgrant awarded to a 
delegate agency must have specific prior approval by ANA. Such 
delegation must be formalized by written agreement.
    (2) The agreement must specify the activities to be performed by the 
delegate agency, the time schedule, the policies and procedures to be 
followed, the dollar limitations, and the costs allowed. The applicant 
must submit a budget for each delegate agency as part of its 
application.
    (e) Unallowable costs. ANA funds may not be used by recipients to 
purchase real property.
    (f) Office of the Chief Executive. The costs of salaries and 
expenses of the Office of Chief Executive of a federally recognized 
Indian tribal government (as defined in Sec. 74.3 of this title) are 
allowable, provided that such costs exclude any portion of salaries and 
expenses of the Office of Chief Executive that are a cost of general 
government and provided they are related to a project assisted under 
this part.

[[Page 286]]



Sec. 1336.51  Project period.

    The Notice of Financial Assistance Awarded will specify the period 
for which support is intended, although the Department makes funding 
commitments only for one budget period at a time. Financial assistance 
under section 803 of the Act may be ongoing, subject to policy decisions 
and funding limitations.



Sec. 1336.52  Appeals.

    (a) Right to appeal. Recipients whose financial assistance has been 
suspended or terminated, or whose non-competing continuation 
applications for refunding have been denied, may appeal such decisions 
using the procedures described in this section. Denial of an application 
for refunding means the refusal to fund a non-competing continuation 
application for a budget period within a previously approved project 
period.
    (b) Suspension, termination, and denial of funding. Procedures for 
and definitions of suspension and termination of financial assistance 
are published in 45 CFR 74.110-74.116. Appeals from a denial of 
refunding will be treated the same procedurally as appeals to 
termination of financial assistance. The term ``denial of refunding'' 
does not include policy decisions to eliminate one or more activities of 
an approved project. A decision not to fund an application at the end of 
the recipients's project period is not a ``denial of refunding'' and is 
not subject to appeal.
    (c) Hearings. (1) A recipient shall be given an initial written 
notice at least thirty (30) days prior to the suspension or termination 
of financial assistance except in emergency situations, which occur when 
Federal property is in imminent danger of dissipation, or when life, 
health, or safety is endangered. During this period of time, the 
recipient has the opportunity to show cause to ANA why such action 
should not be taken.
    (2) A recipient who has received final written notice of termination 
or denial of refunding, or whose financial assistance will be suspended 
for more than 30 days, or who has other appealable disputes with ANA as 
provided by 45 CFR part 16 may request review by the Departmental Grant 
Appeals Board under the provisions of 45 CFR part 16.
    (3) If a recipient appeals a suspension of more than 30 days which 
subsequently results in termination of financial assistance, both 
actions may be considered simultaneously by the Departmental Grant 
Appeals Board.



  Subpart F--Native Hawaiian Revolving Loan Fund Demonstration Project

    Authority: 88 Stat. 2324, 101 Stat. 976 (42 U.S.C. 2991, et seq.).

    Source: 53 FR 23969, June 24, 1988 (interim) and 53 FR 28223, July 
27, 1988; 54 FR 3452, Jan. 24, 1989 (final), unless otherwise noted.



Sec. 1336.60  Purpose of this subpart.

    (a) The Administration for Native Americans will award a five-year 
demonstration grant to one agency of the State of Hawaii or to one 
community-based Native Hawaiian organization whose purpose is the 
economic and social self-sufficiency of Native Hawaiians to develop 
procedures for and to manage a revolving loan fund for Native Hawaiian 
individuals and organizations in the State of Hawaii. (section 
830A(a)(1))
    (b) This subpart sets forth the requirements that the organization 
or agency selected to administer the revolving loan fund must meet and 
the terms and conditions applicable to loans made to borrowers from the 
loan fund.



Sec. 1336.61  Purpose of the Revolving Loan Fund.

    The purpose of the Native Hawaiian Revolving Loan Fund is to provide 
funding not available from other sources on reasonable terms and 
conditions to:
    (a) Promote economic activities which result in expanded 
opportunities for Native Hawaiians to increase their ownership of, 
employment in, or income from local economic enterprise;
    (b) Assist Native Hawaiians to overcome specific gaps in local 
capital markets and to encourage greater private-sector participation in 
local economic development activities; and
    (c) Increase capital formation and private-sector jobs for Native 
Hawaiians. (section 803A(a)(1)(A))

[[Page 287]]



Sec. 1336.62  Definitions.

    Applicant means an applicant for a loan from the Native Hawaiian 
Revolving Loan Fund. An applicant must be an individual Native Hawaiian 
or a Native Hawaiian organization. If the applicant is a group of people 
organized for economic development purposes, the applicant ownership 
must be 100% Native Hawaiian.
    Commissioner means the Commissioner of the Administration for Native 
Americans.
    Cooperative association means an association of individuals 
organized pursuant to State or Federal law, for the purpose of owning 
and operating an economic enterprise for profit, with profits 
distributed or allocated to patrons who are members of the organization.
    Corporation means an entity organized pursuant to State or Federal 
law, as a corporation, with or without stock, for the purpose of owning 
and operating an economic enterprise.
    Default means failure of a borrower to make scheduled payments on a 
loan, failure to obtain the lender's approval for disposal of assets 
mortgaged as security for a loan, or failure to comply with the 
convenants, obligations or other provisions of a loan agreement.
    Economic enterprise means any Native Hawaiian-owned, commercial, 
industrial, agricultural or other business activity established or 
organized for the purpose of profit.
    Financing statement means the document filed or recorded in country 
or State offices pursuant to the provisions of the Uniform Commercial 
Code as enacted by Hawaii notifying third parties that a lender has a 
lien on the chattel and/or crops of a borrower.
    Loan Administrator means either the agency of the State of Hawaii or 
the community-based Native Hawaiian organization whose purpose is the 
economic and social self-sufficiency of Native Hawaiians selected to 
administer the revolving loan fund.
    Mortgages mean mortgages and deeds of trust evidencing an 
encumbrance of trust or restricted land, mortgages and security 
agreements executed as evidence of liens against crops and chattels, and 
mortgages and deeds of trust evidencing a lien on leasehold interests.
    Native Hawaiian means an individual any of whose ancestors were 
natives of the area which consists of the Hawaiian Islands prior to 
1778.
    Partnership means two or more persons engaged in the same business, 
sharing its profits and risks, and organized pursuant to state or 
Federal law.
    Profits mean the net income earned after deducting operating 
expenses from operating revenues.
    Revolving Loan Fund (RLF) means all funds that are now or are 
hereafter a part of the Native Hawaiian Revolving Loan Fund authorized 
by the Native American Programs Act of 1974, as amended in 1987, and 
supplemented by sums collected in repayment of loans made, including 
interest or other charges on loans and any funds appropriated pursuant 
to section 803A of the Native American Programs Act of 1974, as amended.



Sec. 1336.63  General responsibilities of the Loan Administrator.

    (a) The Loan Administrator will make loans to Native Hawaiian 
organizations and to individual Native Hawaiians for the purpose or 
promoting economic development among Native Hawaiians in the State of 
Hawaii. (Section 803(a)(1)(A).)
    (b) Prior to any loan being made from the RLF, the Loan 
Administrator will develop and obtain the Commissioner's approval of the 
following organizational and administrative materials necessary to 
implement the RLF:
    (1) Goals and strategies;
    (2) Staffing and organizational responsibilities;
    (3) Preapplication and loan screening processes;
    (4) Loan procedures including application forms;
    (5) Criteria and procedures for loan review, evaluation and 
decision-making;
    (6) Loan closing procedures; and
    (7) Procedures for loan servicing, monitoring and provision of 
technical assistance.
    (c) The Loan Administrator will set up fiscal management procedures 
to satisfy the requirements of section

[[Page 288]]

803A of the Native American Programs Act and this subpart.
    (d) The Loan Administrator must set up a separate account for the 
RLF into which all payments, interest, charges, and other amounts 
collected from loans made from the RLF will be deposited.



Sec. 1336.64  Development of goals and strategies: Responsibilities of the Loan Administrator.

    (a) Prior to the approval of any direct loan under the RLF, the Loan 
Administrator will develop and obtain the Commissioner's approval for a 
clear and comprehensive set of goals and strategies for the RLF. The 
goals will specify the results the Loan Administrator expects to 
accomplish from the Revolving Loan Fund, define the RLF's role and 
responsibilities for potential users, and serve as the basis for the 
development of an organizational strategy and operating plan. The RLF 
strategies will provide the Loan Administrator with a sound 
understanding of the economic and market conditions within the Native 
Hawaiian community.
    (b) The following factors shall be considered by the Loan 
Administrator in developing the RLF's goals:
    (1) Employment needs of the local population;
    (2) Characteristics of the local economic base;
    (3) Characteristics of the local capital base and the gaps in the 
local availability of business capital;
    (4) Local resources for economic development and their availability; 
and
    (5) Goals and strategies of other local organizations involved in 
economic development.
    (c) The loan fund strategies developed by the Revolving Loan Fund 
must include the following:
    (1) Business Targeting Strategy: to determine which types of 
businesses are to be targeted by the loan fund. The Loan Administrator 
will develop procedures to ensure that the loans made are directed to 
Native Hawaiians.
    (2) Financing Strategy: to determine the types of financing the loan 
fund will provide;
    (3) Business Assistance Strategy: to identify the possible or 
potential management problems of a borrower and develop a workable plan 
for providing borrowers with the needed management assistance;
    (4) Marketing Strategy: to generate applications from potential 
borrowers and to generate the support and participation of local 
financial institutions;
    (5) Capital Base Management Strategy: to develop and allocate the 
financial resources of the fund in the most effective possible way to 
meet the need or demand for financing; and
    (6) Accountability Strategy: to develop policies and mechanisms to 
hold borrowers accountable for providing the public benefits promised 
(e.g. jobs) in return for financing; to ensure that, until expenditure, 
loan proceeds are held by the borrower in secured, liquid financial 
instruments; to hold borrowers accountable for upholding the commitments 
made prior to the loan; and to develop the methods used by the RLF to 
enforce these commitments.



Sec. 1336.65  Staffing and organization of the Revolving Loan Fund: Responsibilities of the Loan Administrator.

    Prior to the approval of any direct loan under the RLF, the Loan 
Administrator must develop and obtain the Commissioner's approval for 
the RLF's organization table, including:
    (a) The structure and composition of the Board of Directors of the 
RLF;
    (b) The staffing requirements for the RLF, with position 
descriptions and necessary personnel qualifications;
    (c) The appointments to the advisory loan review committee; and
    (d) The roles and responsibilities of the Board, staff and loan 
review committee.



Sec. 1336.66  Procedures and criteria for administration of the Revolving Loan Fund: Responsibilities of the Loan Administrator.

    Prior to the approval of any direct loan under the RLF, the Loan 
Administrator must develop and obtain the Commissioner's approval for 
the following procedures:
    (a) Preapplication and loan screening procedures. Some factors to be 
considered in the loan screening process are:
    (1) General eligibility criteria;

[[Page 289]]

    (2) Potential economic development criteria;
    (3) Indication of business viability;
    (4) The need for RLF financing; and
    (5) The ability to properly utilize financing.
    (b) Application process. The application package includes forms, 
instructions, and policies and procedures for the loan application. The 
package must also include instructions for the development of a business 
and marketing plan and a financing proposal from the applicant.
    (c) Loan evaluation criteria and procedures. The loan evaluation 
must include the following topics:
    (1) General and specific business trends;
    (2) Potential market for the product or service;
    (3) Marketing strategy;
    (4) Management skills of the borrower;
    (5) Operational plan of the borrower;
    (6) Financial controls and accounting systems;
    (7) Financial projections; and
    (8) Structure of investment and financing package.
    (d) Loan decision-making process. Decision-making on a loan 
application includes the recommendations of the staff, the review by the 
loan review committee and the decision by the Board.
    (e) Loan closing process. The guidelines for the loan closing 
process include the finalization of loan terms; conditions and 
covenants; the exercise of reasonable and proper care to ensure 
adherence of the proposed loan and borrower's operations to legal 
requirements; and the assurance that any requirement for outside 
financing or other actions on which disbursement is contingent are met 
by the borrower.
    (f) Loan closing documents. Documents used in the loan closing 
process include:
    (1) Term Sheet: an outline of items to be included in the loan 
agreement. It should cover the following elements:
    (i) Loan terms;
    (ii) Security interest;
    (iii) Conditions for closing the loan;
    (iv) Covenants, including reporting requirements;
    (v) Representations and warranties;
    (vi) Defaults and remedies; and
    (vii) Other provisions as necessary.
    (2) Closing Agenda: an outline of the loan documents, the background 
documents, and the legal and other supporting documents required in 
connection with the loan.
    (g) Loan servicing and monitoring. The servicing of a loan will 
include collections, monitoring, and maintenance of an up-to-date 
information system on loan status.
    (1) Collections: To include a repayment schedule, invoice for each 
loan payment, late notices, provisions for late charges.
    (2) Loan Monitoring: To include regular reporting requirements, 
periodic analysis of corporate and industry information, scheduled 
telephone contact and site visits, regular loan review committee 
oversight of loan status, and systematic internal reports and files.



Sec. 1336.67  Security and collateral: Responsibilities of the Loan Administrator.

    The Loan Administrator may require any applicant for a loan from the 
RLF to provide such collateral as the Loan Administrator determines to 
be necessary to secure the loan. (Section 803A(b)(3))
    (a) As a Credit Factor. The availability of collateral security 
normally is considered an important factor in making loans. The types 
and amount of collateral security required should be governed by the 
relative strengths and weaknesses of other credit factors. The taking of 
collateral as security should be considered with respect to each loan. 
Collateral security should be sufficient to provide the lender 
reasonable protection from loss in the case of adversity, but such 
security or lack thereof should not be used as the primary basis for 
deciding whether to extend credit.
    (b) Security Interests. Security interests which may be taken by the 
lender include, but are not limited to, liens on real or personal 
property, including leasehold interests; assignments of income and 
accounts receivable; and liens on inventory or proceeds of inventory 
sales as well as marketable securities and cash collateral accounts.

[[Page 290]]

    (1) Motor vehicles. Liens ordinarily should be taken on licensed 
motor vehicles, boats or aircraft purchased hereunder in order to be 
able to transfer title easily should the lender need to declare a 
default or repossess the property.
    (2) Insurance on property secured. Hazard insurance up to the amount 
of the loan or the replacement value of the property secured (whichever 
is less) must be taken naming the lender as beneficiary. Such insurance 
includes fire and extended coverage, public liability, property damage, 
and other appropriate types of hazard insurance.
    (3) Appraisals. Real property serving as collateral security must be 
appraised by a qualified appraiser. For all other types of property, a 
valuation shall be made using any recognized, standard technique 
(including standard reference manuals), and this valuation shall be 
described in the loan file.
    (c) Additional security. The lender may require collateral security 
or additional security at any time during the term of the loan if after 
review and monitoring an assessment indicates the need for such 
security.



Sec. 1336.68  Defaults, uncollectible loans, liquidations: Responsibilities of the Loan Administrator.

    (a) Prior to making loans from the RLF, the Loan Administrator will 
develop and obtain the Commissioner's approval for written procedures 
and definitions pertaining to defaults and collections of payments. 
(section 803A(b)(4))
    (b) The Loan Administrator will provide a copy of such procedures 
and definitions to each applicant for a loan at the time the application 
is made. (section 803A(b)(4))
    (c) The Loan Administrator will report to the Commissioner whenever 
a loan recipient is 90 days in arrears in the repayment of principal or 
interest or has failed to comply with the terms of the loan agreement. 
After making reasonable efforts to collect amounts payable, as specified 
in the written procedures, the Loan Administrator shall notify the 
Commissioner whenever a loan is uncollectible at reasonable cost. The 
notice shall include recommendations for future action to be taken by 
the Loan Administrator. (section 803A(c) (1) and (2))
    (d) Upon receiving such notices, the Commissioner will, as 
appropriate, instruct the Loan Administrator:
    (1) To demand the immediate and full repayment of the loan;
    (2) To continue with its collection activities;
    (3) To cancel, adjust, compromise, or reduce the amount of such 
loan;
    (4) To modify any term or condition of such loan, including any term 
or condition relating to the rate of interest or the time of payment of 
any installment of principal or interest, or portion thereof, that is 
payable under such loan;
    (5) To discontinue any further advance of funds contemplated by the 
loan agreement;
    (6) To take possession of any or all collateral given as security 
and in the case of individuals, corporations, partnerships or 
cooperative associations, the property purchased with the borrowed 
funds;
    (7) To prosecute legal action against the borrower or against the 
officers of the borrowing organization;
    (8) To prevent further disbursement of credit funds under the 
control of the borrower;
    (9) To assign or sell at a public or private sale, or otherwise 
dispose of for cash or credit any evidence of debt, contract, claim, 
personal or real property or security assigned to or held by the Loan 
Administrator; or
    (10) To liquidate or arrange for the operation of economic 
enterprises financed with the revolving loan until the indebtedness is 
paid or until the Loan Administrator has received acceptable assurance 
of its repayment and compliance with the terms of the loan agreement. 
(Section 803A(c)(2)(B))



Sec. 1336.69  Reporting requirements: Responsibilities of the Loan Administrator.

    (a) The Loan Administrator will maintain the following internal 
information and records:
    (1) For each borrower: The loan repayment schedule, log of telephone 
calls and site visits made with the date

[[Page 291]]

and the items discussed, correspondence with the borrower, progress 
reports and analyses.
    (2) Monthly status of all outstanding loans, noting all overdue 
payments.
    (3) Monthly status of the investments of the revolving loan fund 
monies not currently used for loans.
    (4) Monthly records on the revenue generated by the loan fund from 
interest charges and late charges.
    (5) Monthly administrative costs of the management of the loan fund 
and the sources of the monies to support the administrative costs.
    (b) The Loan Administrator must submit a quarterly report to the 
Commissioner. The report may be in a format of the choice of the Loan 
Administrator as long as it includes at a minimum the following topics:
    (1) For each borrower:
    (i) Name of the borrower;
    (ii) Economic development purpose(s) of the loan;
    (iii) Financing of the loan by source;
    (iv) Loan status (current/delinquent/paid);
    (v) Principal and interest outstanding; and
    (vi) Amount delinquent/defaulted, if any.
    (2) Financial status of the RLF:
    (i) Administrative cost expenditures;
    (ii) Level of base capital;
    (iii) Level of current capital;
    (iv) Amount of ANA funding;
    (v) Matching share;
    (vi) Other direct funding of the RLF;
    (vii) Program income, including interest on loans, earnings from 
investments, fee charges;
    (viii) Loans made;
    (ix) Losses on loans;
    (x) Principal and interest outstanding;
    (xi) Loans repaid;
    (xii) Delinquent loans; and
    (xiii) Collateral position of the RLF (the value of collateral as a 
percent of the outstanding balance on direct loans).
    (c) The Loan Administrator must submit a semi-annual report to the 
Commissioner containing an analysis of the RLF progress to date.
    (d) The Loan Administrator must submit to the Department a quarterly 
SF-269, Financial Status Report, or any equivalent report required by 
the Department.



Sec. 1336.70  Technical assistance: Responsibilities of the Loan Administrator.

    The Loan Administrator will assure that competent management and 
technical assistance is available to the borrower consistent with the 
borrower's knowledge and experience and the nature and complexity of the 
economic enterprise being financed by the RLF. Consultants, RLF staff, 
and members of the loan review committee and Board may be used to assist 
borrowers. (section 803A(d)(1)(B))



Sec. 1336.71  Administrative costs.

    Reasonable administrative costs of the RLF may be paid out of the 
loan fund. The grant award agreement between the Loan Administrator and 
ANA will set forth the allowable administrative costs of the loan fund 
during the five-year demonstration period. (sections 803A(a)(2) and 
803A(d)(1)(A))



Sec. 1336.72  Fiscal requirements.

    (a) Any portion of the revolving loan fund that is not required for 
expenditure must be invested in obligations of the United States or in 
obligations guaranteed or insured by the United States.
    (b) Loans made under the RLF will be for a term that does not exceed 
five years.
    (c) No loan may be made by the RLF after November 29, 1992, the 
close of the five-year period of the demonstration project. (section 
803A(b)(6))
    (d) All monies that are in the revolving loan fund on November 29, 
1992 and that are not otherwise needed (as determined by the 
Commissioner) to carry out the provisions of this subpart must be 
deposited in the Treasury of the United States as miscellaneous 
receipts. The Commissioner will make this determination based on 
reports, audits and other appropriate documents as determined by the 
Commissioner. The Commissioner will take into consideration the costs 
necessary to collect loans outstanding beyond November 29, 1992, which 
costs may be paid from interest and loan charges collected by the Fund 
and in the Fund as of November 29, 1992. To use monies

[[Page 292]]

in the Fund for the costs of collection after November 29, 1992, the 
Commissioner must give prior approval for such use.
    (e) All monies deposited in the revolving loan fund after November 
29, 1992 must be deposited in the Treasury of the United States as 
miscellaneous receipts.
    (f) After November 29, 1992, the Loan Administrator will assume 
responsibility for the collection of all outstanding loans without 
additional financial assistance from ANA.



Sec. 1336.73  Eligible borrowers.

    (a) Loans may be made to eligible applicants only if the Loan 
Administrator determines that the applicant is unable to obtain 
financing on reasonable terms and conditions from other sources such as 
banks, Small Business Administration, Production Credit Associations, 
Federal Land Banks; and
    (b) Only if there is a reasonable prospect that the borrower will 
repay the loan. (section 803A(b)(1) (A) and (B))
    (c) The Loan Administrator will determine an applicant's inability 
to obtain financing elsewhere on reasonable terms and conditions from 
documentation provided by the applicant.
    (d) Those eligible to receive loans from the revolving loan fund 
are:
    (1) Native Hawaiian individuals.
    (2) Native Hawaiian non-profit organizations.
    (3) Native Hawaiian businesses.
    (4) Native Hawaiian cooperative associations.
    (5) Native Hawaiian partnerships.
    (6) Native Hawaiian associations.
    (7) Native Hawaiian corporations.



Sec. 1336.74  Time limits and interest on loans.

    (a) Loans made under the RLF will be for a term that does not exceed 
5 years.
    (b) Loans will be made to approved borrowers at a rate of interest 
that is 2 percentage points below the average market yield on the most 
recent public offering of United States Treasury bills occurring before 
the date on which the loan is made. (section 803A(b)(2) (A) and (B))



Sec. 1336.75  Allowable loan activities.

    The following are among those activities for which a loan may be 
made from the RLF:
    (a) The establishment or expansion of businesses engaged in 
commercial, industrial or agricultural activities, such as farming, 
manufacturing, construction, sales, service;
    (b) The establishment or expansion of cooperatives engaged in the 
production and marketing of farm products, equipment, or supplies; the 
manufacture and sale of industrial, commercial or consumer products; or 
the provision of various commercial services;
    (c) Business or job retention;
    (d) Small business development;
    (e) Private sector job creation; and
    (f) Promotion of economic diversification, e.g. targeting firms in 
growth industries that have not previously been part of a community's 
economic base.



Sec. 1336.76  Unallowable loan activities.

    The following activities are among those activities not eligible for 
support under the revolving loan fund:
    (a) Loans to the Loan Administrator or any representative or 
delegate of the Loan Administrator (section 803A(b)(5));
    (b) Loans which would create a potential conflict-of-interest for 
any officer or employee of the Loan Administrator; loan activities which 
directly benefit these individuals, or persons related to them by 
marriage, or law.
    (c) Eligible activities which are moved from the State of Hawaii;
    (d) Investing in high interest account, certificates of deposit or 
other investments;
    (e) Relending of the loan amount by the borrower;
    (f) The purchase of land or buildings;
    (g) The construction of buildings; and
    (h) Purchasing or financing equity in private businesses.



Sec. 1336.77  Recovery of funds.

    (a) Funds provided under this Subpart may be recovered by the 
Commissioner for both costs of administration of the Loan Fund and 
losses incurred by the Fund (hereafter jointly referred to as ``costs'') 
under the following circumstances:

[[Page 293]]

    (1) Whenever claimed costs are unallowable under the Native 
Americans Programs Act of 1974, as amended, or under 45 CFR part 74, or 
both;
    (2) For costs for loans made to ineligible persons or entities as 
defined in Sec. 1336.73;
    (3) For costs connected with the default of a borrower when the Loan 
Administrator has failed to perfect any security interest or when the 
Loan Administrator has failed to obtain collateral when provision of 
collateral is a condition of a loan.
    (4) For costs connected with any default when the Loan Administrator 
has failed to perform a proper check of an applicant's credit;
    (5) For costs whenever the Loan Administrator has failed to notify 
the Commission of loans at risk as required by Sec. 1336.68 of these 
regulations, and as may be required by the procedures approved pursuant 
to that regulation;
    (6) For costs whenever the Loan Administrator has failed to follow 
properly instructions provided to it by the Commissioner pursuant to 
Sec. 1336.68(d) of these regulations;
    (7) For costs which are incurred due to faulty record keeping, 
reporting, or both; or
    (8) For costs which are in connection with any activity or action 
which violates any Federal or State law or regulation not specifically 
identified in these regulations.
    (b) Whenever the Commissioner determines that funds have been 
improperly utilized or accounted for, he will issue a disallowance 
pursuant to the Act and to 45 CFR part 74 and will notify the Loan 
Administrator of its appeal rights, which appeal must be taken pursuant 
to 45 CFR part 16.
    (c) If a disallowance is taken and not appealed, or if it is 
appealed and the disallowance is upheld by the Departmental Grant 
Appeals Board, the Loan Administrator must repay the disallowed amount 
to the Loan Fund within 30 days, such repayment to be made with non-
Federal funds.

[[Page 294]]



SUBCHAPTER E--THE ADMINISTRATION FOR CHILDREN, YOUTH AND FAMILIES, CHILD 
           ABUSE AND NEGLECT PREVENTION AND TREATMENT PROGRAM





PART 1340--CHILD ABUSE AND NEGLECT PREVENTION AND TREATMENT--Table of Contents




                      Subpart A--General Provisions

Sec.
1340.1  Purpose and scope.
1340.2  Definitions.
1340.3  Applicability of Department-wide regulations.
1340.4  Coordination requirements.

                       Subpart B--Grants to States

1340.10  Purpose of this subpart.
1340.11  Allocation of funds available.
1340.12  Application process.
1340.13  Approval of applications.
1340.14  Eligibility requirements.
1340.15  Services and treatment for disabled infants.

              Subpart C--Discretionary Grants and Contracts

1340.20  Confidentiality.

Appendix to Part 1340--Interpretative Guidelines Regarding 45 CFR 
          1340.15--Services and Treatment for Disabled Infants.

    Authority: 42 U.S.C. 5101 et seq.

    Source: 48 FR 3702, Jan. 26, 1983, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 1340.1  Purpose and scope.

    (a) This part implements the Child Abuse Prevention and Treatment 
Act (``Act''). As authorized by the Act, the National Center on Child 
Abuse and Neglect seeks to assist agencies and organizations at the 
national, State and community levels in their efforts to improve and 
expand child abuse and neglect prevention and treatment activities.
    (b) The National Center on Child Abuse and Neglect seeks to meet 
these goals through:
    (1) Conducting activities directly (by the Center);
    (2) Making grants to States to improve and expand their child abuse 
and neglect prevention and treatment programs;
    (3) Making grants to and entering into contracts for: Research, 
demonstration and service improvement programs and projects, and 
training, technical assistance and informational activities; and
    (4) Coordinating Federal activities related to child abuse and 
neglect. This part establishes the standards and procedures for 
conducting the grant funded activities and contract and coordination 
activities.
    (c) Requirements related to child abuse and neglect applicable to 
programs assisted under title IV-B of the Social Security Act are 
implemented by regulation at 45 CFR parts 1355 and 1357.
    (d) Federal financial assistance is not available under the Act for 
the construction of facilities.

[48 FR 3702, Jan. 26, 1983, as amended at 52 FR 3994, Feb. 6, 1987; 55 
FR 27639, July 5, 1990]



Sec. 1340.2  Definitions.

    For the purposes of this part:
    (a) A properly constituted authority is an agency with the legal 
power and responsibility to perform an investigation and take necessary 
steps to prevent and treat child abuse and neglect. A properly 
constituted authority may include a legally mandated, public or private 
child protective agency, or the police, the juvenile court or any agency 
thereof.
    (b) Act means the Child Abuse Prevention and Treatment Act, 42 
U.S.C. 5101, et seq.
    (c) Center means the National Center on Child Abuse and Neglect 
established by the Secretary under the Act to administer this program.
    (d) Child abuse and neglect means the physical or mental injury, 
sexual abuse or exploitation, negligent treatment, or maltreatment of a 
child under the age of eighteen, or the age specified by the child 
protection law of the State, by a person including any employee of

[[Page 295]]

a residential facility or any staff person providing out of home care 
who is responsible for the child's welfare under circumstances 
indicating harm or threatened harm to the child's health or welfare. The 
term encompasses both acts and omissions on the part of a responsible 
person.
    (1) The term sexual abuse includes the following activities under 
circumstances which indicate that the child's health or welfare is 
harmed or threatened with harm: The employment, use, persuasion, 
inducement, enticement, or coercion of any child to engage in, or having 
a child assist any other person to engage in, any sexually explicit 
conduct (or any simulation of such conduct) for the purpose of producing 
any visual depiction of such conduct; or the rape, molestation, 
prostitution, or other form of sexual exploitation of children, or 
incest with children. With respect to the definition of sexual abuse, 
the term ``child'' or ``children'' means any individual who has not 
attained the age of eighteen.
    (2)(i) ``Negligent treatment or maltreatment'' includes failure to 
provide adequate food, clothing, shelter, or medical care.
    (ii) Nothing in this part should be construed as requiring or 
prohibiting a finding of negligent treatment or maltreatment when a 
parent practicing his or her religious beliefs does not, for that reason 
alone, provide medical treatment for a child; provided, however, that if 
such a finding is prohibited, the prohibition shall not limit the 
administrative or judicial authority of the State to ensure that medical 
services are provided to the child when his health requires it.
    (3) Threatened harm to a child's health or welfare means a 
substantial risk of harm to the child's health or welfare.
    (4) A person responsible for a child's welfare includes the child's 
parent, guardian, foster parent, an employee of a public or private 
residential home or facility or other person legally responsible under 
State law for the child's welfare in a residential setting, or any staff 
person providing out of home care. For purposes of this definition, out-
of-home care means child day care, i.e., family day care, group day 
care, and center-based day care; and, at State option, any other 
settings in which children are provided care.
    (e) Commissioner means the Commissioner of the Administration for 
Children, Youth and Families of the Department of Health and Human 
Services.
    (f) Grants includes grants and cooperative agreements.
    (g) Secretary means the Secretary of Health and Human Services, or 
other HHS official or employee to whom the Secretary has delegated the 
authority specified in this part.
    (h) State means each of the several States, the District of 
Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, 
American Samoa, the Commonwealth of the Northern Mariana Islands, and 
the Trust Territory of the Pacific Islands.

[48 FR 3702, Jan. 26, 1983, as amended at 52 FR 3994, Feb. 6, 1987; 55 
FR 27639, July 5, 1990]



Sec. 1340.3  Applicability of Department-wide regulations.

    (a) The following HHS regulations are applicable to all grants made 
under this part:

45 CFR Part 16--Procedures of the Departmental Grant Appeals Board.
45 CFR Part 46--Protection of human subjects
45 CFR Part 74--Administration of grants
45 CFR Part 75--Informal grant appeals procedures
45 CFR Part 80--Nondiscrimination under programs receiving Federal 
assistance through the Department of Health and Human Services--
effectuation of title VI of the Civil Rights Act of 1964
45 CFR Part 81--Practice and procedure for hearings under part 80
45 CFR Part 84--Nondiscrimination on the basis of handicap in programs 
and activities receiving or benefiting from Federal financial 
assistance.

    (b) The following regulations are applicable to all contracts 
awarded under this part:

48 CFR Chapter 1--Federal Acquisition Regulations.
48 CFR Chapter 3--Federal Acquisition Regulations--Department of Health 
    and Human Services.

[48 FR 3702, Jan. 26, 1983, as amended at 52 FR 3995, Feb. 6, 1987]

[[Page 296]]



Sec. 1340.4  Coordination requirements.

    All Federal agencies responsible for programs related to child abuse 
and neglect shall provide information as required by the Commissioner to 
insure effective coordination of efforts.



                       Subpart B--Grants to States



Sec. 1340.10  Purpose of this subpart.

    This subpart sets forth the requirements and procedures States must 
meet in order to receive grants to develop, strengthen, and carry out 
State child abuse and neglect prevention and treatment programs under 
section 107 of the Act.

[55 FR 27639, July 5, 1990]



Sec. 1340.11  Allocation of funds available.

    (a) The Commissioner shall allocate the funds available for grants 
to States for each fiscal year among the States on the basis of the 
following formula:
    (1) An amount of $25,000 or such other amount as the Commissioner 
may determine; plus
    (2) An additional amount bearing the same ratio to the total amount 
made available for this purpose (reduced by the minimum amounts 
allocated to the States under paragraph (a)(1) of this section) as the 
number of children under the age of eighteen in each State bears to the 
total number of children under eighteen in all the States. Annual 
estimates of the number of children under the age of eighteen, provided 
by the Bureau of the Census of the Department of Commerce, are used in 
making this determination.
    (b) If a State has not qualified for assistance under the Act and 
this subpart prior to a date designated by the Commissioner in each 
fiscal year, the amount previously allocated to the State shall be 
allocated among the eligible States.



Sec. 1340.12  Application process.

    (a) The Governor of the State may submit an application or designate 
the State office, agency, or organization which may apply for assistance 
under this subpart. The State office, agency, or organization need not 
be limited in its mandate or activities to child abuse and neglect.
    (b) Grant applications must include a description of the activities 
presently conducted by the State and its political subdivisions in 
preventing and treating child abuse and neglect, the activities to be 
assisted under the grant, a statement of how the proposed activities are 
expected to improve or expand child abuse prevention and treatment 
programs in the State, and other information required by the 
Commissioner in compliance with the paperwork reduction requirements of 
44 U.S.C. chapter 35 and any applicable directives issued by the Office 
of Management and Budget.
    (c) States shall provide with the grant application a statement 
signed by the Governor that the State meets the requirements of the Act 
and of this subpart. This statement shall be in the form and include the 
documentation required by the Commissioner.



Sec. 1340.13  Approval of applications.

    (a) The Commissioner shall approve an application for an award for 
funds under this subpart if he or she finds that:
    (1) The State is qualified and has met all requirements of the Act 
and Sec. 1340.14 of this part, except for the definitional requirement 
of Sec. 1340.14(a) with regard to the definition of ``sexual abuse'' 
(see Sec. 1340.2(d)(1)) and the definitional requirement of negligent 
treatment as it relates to the failure to provide adequate medical care 
(see Sec. 1340.2(d)(2)). The State must include these two definitional 
requirements in its definition of child abuse and neglect either by 
statute or regulation having the force and effect of law no later than 
the close of the second general legislative session of the State 
legislature following February 25, 1983;
    (2) Either by statute or regulation having the force and effect of 
law, the State modifies its definition of ``child abuse and neglect'' to 
provide that the phrase ``person responsible for a child's welfare'' 
includes an employee of a residential facility or a staff person 
providing out-of-home care no later than the close of the first general 
legislative session of the State legislature which convenes following 
February 6, 1987;

[[Page 297]]

    (3) The funds are to be used to improve and expand child abuse or 
neglect prevention or treatment programs; and
    (4) The State is otherwise in compliance with these regulations.
    (b) At the time of an award under this subpart, the amount of funds 
not obligated from an award made eighteen or more months previously 
shall be subtracted from the amount of funds under the award, unless the 
Secretary determines that extraordinary reasons justify the failure to 
so obligate.

[48 FR 3702, Jan. 26, 1983, as amended at 52 FR 3995, Feb. 6, 1987; 55 
FR 27639, July 5, 1990]



Sec. 1340.14  Eligibility requirements.

    In order for a State to qualify for an award under this subpart, the 
State must meet the requirements of Sec. 1340.15 and satisfy each of the 
following requirements:
    (a) State must satisfy each of the requirements in section 107(b) of 
the Act.
    (b) Definition of Child Abuse and Neglect. Wherever the requirements 
below use the term ``Child Abuse and Neglect'' the State must define 
that term in accordance with Sec. 1340.2. However, it is not necessary 
to adopt language identical to that used in Sec. 1340.2, as long as the 
definition used in the State is the same in substance.
    (c) Reporting. The State must provide by statute that specified 
persons must report and by statute or administrative procedure that all 
other persons are permitted to report known and suspected instances of 
child abuse and neglect to a child protective agency or other properly 
constituted authority.
    (d) Investigations. The State must provide for the prompt initiation 
of an appropriate investigation by a child protective agency or other 
properly constituted authority to substantiate the accuracy of all 
reports of known or suspected child abuse or neglect. This investigation 
may include the use of reporting hotlines, contact with central 
registers, field investigations and interviews, home visits, 
consultation with other agencies, medical examinations, psychological 
and social evaluations, and reviews by multidisciplinary teams.
    (e) Institutional child abuse and neglect. The State must have a 
statute or administrative procedure requiring that when a report of 
known or suspected child abuse or neglect involves the acts or omissions 
of the agency, institution, or facility to which the report would 
ordinarily be made, a different properly constituted authority must 
receive and investigate the report and take appropriate protective and 
corrective action.
    (f) Emergency services. If an investigation of a report reveals that 
the reported child or any other child under the same care is in need of 
immediate protection, the State must provide emergency services to 
protect the child's health and welfare. These services may include 
emergency caretaker or homemaker services; emergency shelter care or 
medical services; review by a multidisciplinary team; and, if 
appropriate, criminal or civil court action to protect the child, to 
help the parents or guardians in their responsibilities and, if 
necessary, to remove the child from a dangerous situation.
    (g) Guardian ad litem. In every case involving an abused or 
neglected child which results in a judicial proceeding, the State must 
insure the appointment of a guardian ad litem or other individual whom 
the State recognizes as fulfilling the same functions as a guardian ad 
litem, to represent and protect the rights and best interests of the 
child. This requirement may be satisfied: (1) By a statute mandating the 
appointments; (2) by a statute permitting the appointments, accompanied 
by a statement from the Governor that the appointments are made in every 
case; (3) in the absence of a specific statute, by a formal opinion of 
the Attorney General that the appointments are permitted, accompanied by 
a Governor's statement that the appointments are made in every case; or 
(4) by the State's Uniform Court Rule mandating appointments in every 
case. However, the guardian ad litem shall not be the attorney 
responsible for presenting the evidence alleging child abuse or neglect.
    (h) Prevention and treatment services. The State must demonstrate 
that it has throughout the State procedures and services deal with child 
abuse and neglect cases. These procedures and services include the 
determination of

[[Page 298]]

social service and medical needs and the provision of needed social and 
medical services.
    (i) Confidentiality. (1) The State must provide by statute that all 
records concerning reports and reports of child abuse and neglect are 
confidential and that their unauthorized disclosure is a criminal 
offense.
    (2) If a State chooses to, it may authorize by statute disclosure to 
any or all of the following persons and agencies, under limitations and 
procedures the State determines:
    (i) The agency (agencies) or organizations (including its designated 
multidisciplinary case consultation team) legally mandated by any 
Federal or State law to receive and investigate reports of known and 
suspected child abuse and neglect;
    (ii) A court, under terms identified in State statute;
    (iii) A grand jury;
    (iv) A properly constituted authority (including its designated 
multidisciplinary case consultation team) investigating a report of 
known or suspected child abuse or neglect or providing services to a 
child or family which is the subject of a report;
    (v) A physician who has before him or her a child whom the physician 
reasonably suspects may be abused or neglected;
    (vi) A person legally authorized to place a child in protective 
custody when the person has before him or her a child whom he or she 
reasonably suspects may be abused or neglected and the person requires 
the information in the report or record in order to determine whether to 
place the child in protective custody;
    (vii) An agency authorized by a properly constituted authority to 
diagnose, care for, treat, or supervise a child who is the subject of a 
report or record of child abuse or neglect;
    (viii) A person about whom a report has been made, with protection 
for the identity of any person reporting known or suspected child abuse 
or neglect and any other person where the person or agency making the 
information available finds that disclosure of the information would be 
likely to endanger the life or safety of such person;
    (ix) A child named in the report or record alleged to have been 
abused or neglected or (as his/her representative) his/her guardian or 
guardian ad litem;
    (x) An appropriate State or local official responsible for 
administration of the child protective service or for oversight of the 
enabling or appropriating legislation, carrying out his or her official 
functions; and
    (xi) A person, agency, or organization engaged in a bonafide 
research or evaluation project, but without information identifying 
individuals named in a report or record, unless having that information 
open for review is essential to the research or evaluation, the 
appropriate State official gives prior written approval, and the child, 
through his/her representative as cited in paragraph (i) of this 
section, gives permission to release the information.
    (3) If a State chooses, it may authorize by statute disclosure to 
additional persons and agencies, as determined by the State, for the 
purpose of carrying out background and/or employment-related screening 
of individuals who are or may be engaged in specified categories of 
child related activities or employment. Any information disclosed for 
this purpose is subject to the confidentiality requirements in paragraph 
(i)(1) and may be subject to additional safeguards as determined by the 
State.
    (4) Nothing in this section shall be interpreted to prevent the 
properly constituted authority from summarizing the outcome of an 
investigation to the person or official who reported the known or 
suspected instances of child abuse or neglect or to affect a State's 
laws or procedures concerning the confidentiality of its criminal court 
or its criminal justice system.
    (5) HHS and the Comptroller General of the United States or any of 
their representatives shall have access to records, as required under 45 
CFR 74.24.

[48 FR 3702, Jan. 26, 1983, as amended at 50 FR 14887, April 15, 1985; 
52 FR 3995, Feb. 6, 1987; 55 FR 27639, July 5, 1990]



Sec. 1340.15  Services and treatment for disabled infants.

    (a) Purpose. The regulations in this section implement certain 
provisions of the Act, including section 107(b)(10)

[[Page 299]]

governing the protection and care of disabled infants with life-
threatening conditions.
    (b) Definitions. (1) The term ``medical neglect'' means the failure 
to provide adequate medical care in the context of the definitions of 
``child abuse and neglect'' in section 113 of the Act and Sec. 1340.2(d) 
of this part. The term ``medical neglect'' includes, but is not limited 
to, the withholding of medically indicated treatment from a disabled 
infant with a life-threatening condition.
    (2) The term ``withholding of medically indicated treatment'' means 
the failure to respond to the infant's life-threatening conditions by 
providing treatment (including appropriate nutrition, hydration, and 
medication) which, in the treating physician's (or physicians') 
reasonable medical judgment, will be most likely to be effective in 
ameliorating or correcting all such conditions, except that the term 
does not include the failure to provide treatment (other than 
appropriate nutrition, hydration, or medication) to an infant when, in 
the treating physician's (or physicians') reasonable medical judgment 
any of the following circumstances apply:
    (i) The infant is chronically and irreversibly comatose:
    (ii) The provision of such treatment would merely prolong dying, not 
be effective in ameliorating or correcting all of the infant's life-
threatening conditions, or otherwise be futile in terms of the survival 
of the infant; or
    (iii) The provision of such treatment would be virtually futile in 
terms of the survival of the infant and the treatment itself under such 
circumstances would be inhumane.
    (3) Following are definitions of terms used in paragraph (b)(2) of 
this section:
    (i) The term ``infant'' means an infant less than one year of age. 
The reference to less than one year of age shall not be construed to 
imply that treatment should be changed or discontinued when an infant 
reaches one year of age, or to affect or limit any existing protections 
available under State laws regarding medical neglect of children over 
one year of age. In addition to their applicability to infants less than 
one year of age, the standards set forth in paragraph (b)(2) of this 
section should be consulted thoroughly in the evaluation of any issue of 
medical neglect involving an infant older than one year of age who has 
been continuously hospitalized since birth, who was born extremely 
prematurely, or who has a long-term disability.
    (ii) The term ``reasonable medical judgment'' means a medical 
judgment that would be made by a reasonably prudent physician, 
knowledgeable about the case and the treatment possibilities with 
respect to the medical conditions involved.
    (c) Eligibility requirements. (1) In addition to the other 
eligibility requirements set forth in this part, to qualify for a basic 
State grant under section 107(b) of the Act, a State must have programs, 
procedures, or both, in place within the State's child protective 
service system for the purpose of responding to the reporting of medical 
neglect, including instances of withholding of medically indicated 
treatment from disabled infants with life-threatening conditions.
    (2) These programs and/or procedures must provide for:
    (i) Coordination and consultation with individuals designated by and 
within appropriate health care facilities;
    (ii) Prompt notification by individuals designated by and within 
appropriate health care facilities of cases of suspected medical neglect 
(including instances of the withholding of medically indicated treatment 
from disabled infants with life-threatening conditions); and
    (iii) The authority, under State law, for the State child protective 
service system to pursue any legal remedies, including the authority to 
initiate legal proceedings in a court of competent jurisdiction, as may 
be necessary to prevent the withholding of medically indicated treatment 
from disabled infants with life-threatening conditions.
    (3) The programs and/or procedures must specify that the child 
protective services system will prompty contact each health care 
facility to obtain the name, title, and telephone number of

[[Page 300]]

the individual(s) designated by such facility for the purpose of the 
coordination, consultation, and notification activities identified in 
paragraph (c)(2) of this section, and will at least annually recontact 
each health care facility to obtain any changes in the designations.
    (4) These programs and/or procedures must be in writing and must 
conform with the requirements of section 107(b) of the Act and 
Sec. 1340.14 of this part. In connection with the requirement of 
conformity with the requirements of section 107(b) of the Act and 
Sec. 1340.14 of this part, the programs and/or procedures must specify 
the procedures the child protective services system will follow to 
obtain, in a manner consistent with State law:
    (i) Access to medical records and/or other pertinent information 
when such access is necessary to assure an appropriate investigation of 
a report of medical neglect (including instances of withholding of 
medically indicated treatment from disabled infants with life 
threatening conditions); and
    (ii) A court order for an independent medical examination of the 
infant, or otherwise effect such an examination in accordance with 
processes established under State law, when necessary to assure an 
appropriate resolution of a report of medical neglect (including 
instances of withholding of medically indicated treatment from disabled 
infants with life threatening conditions).
    (5) The eligibility requirements contained in this section shall be 
effective October 9, 1985.
    (d) Documenting eligibility. (1) In addition to the information and 
documentation required by and pursuant to Sec. 1340.12 (b) and (c), each 
State must submit with its application for a basic State grant 
sufficient information and documentation to permit the Commissioner to 
find that the State is in compliance with the eligibility requirements 
set forth in paragraph (c) of this section.
    (2) This information and documentation shall include:
    (i) A copy of the written programs and/or procedures established by, 
and followed within, the State for the purpose of responding to the 
reporting of medical neglect, including instances of withholding of 
medically indicated treatment from disabled infants with life-
threatening conditions:
    (ii) Documentation that the State has authority, under State law, 
for the State child protective service system to pursue any legal 
remedies, including the authority to inititate legal proceedings in a 
court of competent jurisdiction, as may be necessary to prevent the 
withholding of medically indicated treatment from disabled infants with 
life-threatening conditions. This documentation shall consist of:
    (A) A copy of the applicable provisions of State statute(s); or
    (B) A copy of the applicable provisions of State rules or 
regulations, along with a copy of the State statutory provisions that 
provide the authority for such rules or regulations; or
    (C) A copy of an official, numbered opinion of the Attorney General 
of the State that so provides, along with a copy of the applicable 
provisions of the State statute that provides a basis for the opinion, 
and a certification that the official opinion has been distributed to 
interested parties within the State, at least including all hospitals; 
and
    (iii) Such other information and documentation as the Commissioner 
may require.
    (e) Regulatory construction. (1) No provision of this section or 
part shall be construed to affect any right, protection, procedures, or 
requirement under 45 CFR Part 84, Nondiscrimination in the Basis of 
Handicap in Programs and Activities Receiving or Benefiting from Federal 
Financial Assistance.
    (2) No provision of this section or part may be so construed as to 
authorize the Secretary or any other governmental entity to establish 
standards prescribing specific medical treatments for specific 
conditions, except to the extent that such standards are authorized by 
other laws or regulations.

(Approved by the Office of Management and Budget under control number 
0980-0165)

[50 FR 14887, April 15, 1985, as amended at 52 FR 3995, Feb. 6, 1987; 55 
FR 27639, July 5, 1990]

[[Page 301]]



              Subpart C--Discretionary Grants and Contracts



Sec. 1340.20  Confidentiality.

    All projects and programs supported under the Act must hold all 
information related to personal facts or circumstances about individuals 
involved in those projects or programs confidential and shall not 
disclose any of the information in other than summary, statistical, or 
other form which does not identify specific individuals, except in 
accordance with Sec. 1340.14(i).

   Appendix to Part 1340--Interpretative Guidelines Regarding 45 CFR 
          1340.15--Services and Treatment for Disabled Infants

    Explanatory Note: The interpretative guidelines which follow were 
based on the proposed rule (49 FR 48160, December 10, 1984) and were 
published with the final rule on April 15, 1985 (50 FR 14878). 
References to the ``proposed rule'' and ``final rule'' in these 
guidelines refer to these actions.
    Since that time, the Child Abuse Prevention and Treatment Act was 
revised, reorganized, and reauthorized by Public Law 100-294 (April 25, 
1988) and renumbered by Pub. L. 101-126 (October 25, 1989). Accordingly, 
the definitions formerly in section 3 of the Act are now found in 
section 113; the State eligibility requirements formerly in section 4 of 
the Act are now found in section 107; and references to the ``final 
rule'' mean references to Sec. 1340.15 of this part.
    This appendix sets forth the Department's interpretative guidelines 
regarding several terms that appear in the definition of the term 
``withholding of medically indicated treatment'' in section 3(3) of the 
Child Abuse Prevention and Treatment Act, as amended by section 121(3) 
of the Child Abuse Amendments of 1984. This statutory definition is 
repeated in Sec. 1340.15(b)(2) of the final rule.
    The Department's proposed rule to implement those provisions of the 
Child Abuse Amendments of 1984 relating to services and treatment for 
disabled infants included a number of proposed clarifying definitions of 
several terms used in the statutory definition. The preamble to the 
proposed rule explained these proposed clarifying definitions, and in 
some cases used examples of specific diagnoses to elaborate on meaning.
    During the comment period on the proposed rule, many commenters 
urged deletion of these clarifying definitions and avoidance of examples 
of specific diagnoses. Many commenters also objected to the specific 
wording of some of the proposed clarifying definitions, particularly in 
connection with the proposed use of the word ``imminent'' to describe 
the proximity in time at which death is anticipated regardless of 
treatment in relation to circumstances under which treatment (other than 
appropriate nutrition, hydration and medication) need not be provided. A 
letter from the six principal sponsors of the ``compromise amendment'' 
which became the pertinent provisions of the Child Abuse Amendments of 
1984 urged deletion of ``imminent'' and careful consideration of the 
other concerns expressed.
    After consideration of these recommendations, the Department decided 
not to adopt these several proposed clarifying definitions as part of 
the final rule. It was also decided that effective implementation of the 
program established by the Child Abuse Amendments would be advanced by 
the Department stating its interpretations of several key terms in the 
statutory definition. This is the purpose of this appendix.
    The interpretative guidelines that follow have carefully considered 
comments submitted during the comment period on the proposed rule. These 
guidelines are set forth and explained without the use of specific 
diagnostic exmples to elaborate on meaning.
    Finally, by way of introduction, the Department does not seek to 
establish these interpretative guidelines as binding rules of law, nor 
to prejudge the exercise of reasonable medical judgment in responding to 
specific circumstances. Rather, this guidance is intended to assist in 
interpreting the statutory definition so that it may be rationally and 
thoughtfully applied in specific contexts in a manner fully consistent 
with the legislative intent.
    1. In general: The statutory definition of ``withholding of 
medically indicated treatment.''
    Section 1340.15(b)(2) of the final rule defines the term 
``withholding of medically indicated treatment'' with a definition 
identical to that which appears in section 3(3) of the Act (as amended 
by section 121(3) of the Child Abuse Amendments of 1984).
    This definition has several main features. First, it establishes the 
basic principle that all disabled infants with life-threatening 
conditions must be given medically indicated treatment, defined in terms 
of action to respond to the infant's life-threatening conditions by 
providing treatment (including appropriate nutrition, hydration or 
medication) which, in the treating physician's (or physicians') 
reasonable medical judgment, will be most likely to be effective in 
ameliorating or correcting all such conditions.
    Second, the statutory definition spells out three circumstances 
under which treatment is not considered ``medically indicated.'' These 
are when, in the treating physician's (or physicians') reasonable 
medical judgment:


[[Page 302]]


--The infant is chronically and irreversibly comatose:
--The provision of such treatment would merely prolong dying, not be 
effective in ameliorating or correcting all of the infant's life-
threatening conditions, or otherwise be futile in terms of survival of 
the infant; or
--The provision of such treatment would be virtually futile in terms of 
survival of the infant and the treatment itself under such circumstances 
would be inhumane.

    The third key feature of the statutory definition is that even when 
one of these three circumstances is present, and thus the failure to 
provide treatment is not a ``withholding of medically indicated 
treatment,'' the infant must nonetheless be provided with appropriate 
nutrition, hydration, and medication.
    Fourth, the definition's focus on the potential effectiveness of 
treatment in ameliorating or correcting life-threatening conditions 
makes clear that it does not sanction decisions based on subjective 
opinions about the future ``quality of life'' of a retarded or disabled 
person.
    The fifth main feature of the statutory definition is that its 
operation turns substantially on the ``reasonable medical judgment'' of 
the treating physician or physicians. The term ``reasonable medical 
judgment'' is defined in Sec. 1340.15(b)(3)(ii) of the final rule, as it 
was in the Conference Committee Report on the Act, as a medical judgment 
that would be made by a reasonably prudent physician, knowledgeable 
about the case and the treatment possibilities with respect to the 
medical conditions involved.
    The Department's interpretations of key terms in the statutory 
definition are fully consistent with these basic principles reflected in 
the definition. The discussion that follows is organized under headings 
that generally correspond to the proposed clarifying definitions that 
appeared in the proposed rule but were not adopted in the final rule. 
The discussion also attempts to analyze and respond to significant 
comments received by the Department.
    2. The term ``life-threatening condition''.
    Clause (b)(3)(ii) of the proposed rule proposed a definition of the 
term ``life-threatening condition.'' This term is used in the statutory 
definition in the following context:
    [T]he term ``withholding of medically indicated treatment'' means 
the failure to respond to the infant's life-threatening conditions by 
providing treatment (including appropriate nutrition, hydration, and 
medication) which, in the treating physician's or physicians' reasonable 
medical judgment, will be most likely to be effective in ameliorating or 
correcting all such conditions [, except that] * * *. [Emphasis 
supplied].
    It appears to the Department that the applicability of the statutory 
definition might be uncertain to some people in cases where a condition 
may not, strictly speaking, by itself be life-threatening, but where the 
condition significantly increases the risk of the onset of complications 
that may threaten the life of the infant. If medically indicated 
treatment is available for such a condition, the failure to provide it 
may result in the onset of complications that, by the time the condition 
becomes life-threatening in the strictest sense, will eliminate or 
reduce the potential effectiveness of any treatment. Such a result 
cannot, in the Department's view, be squared with the Congressional 
intent.
    Thus, the Department interprets the term ``life-threatening 
condition'' to include a condition that, in the treating physician's or 
physicians' reasonable medical judgment, significantly increases the 
risk of the onset of complications that may threaten the life of the 
infant.
    In response to comments that the proposed rule's definition was 
potentially overinclusive by covering any condition that one could argue 
``may'' become life-threatening, the Department notes that the statutory 
standard of ``the treating physician's or physicians' reasonable medical 
judgment'' is incorporated in the Department's interpretation, and is 
fully applicable.
    Other commenters suggested that this interpretation would bring 
under the scope of the definition many irreversible conditions for which 
no corrective treatment is available. This is certainly not the intent. 
The Department's interpretation implies nothing about whether, or what, 
treatment should be provided. It simply makes clear that the criteria 
set forth in the statutory definition for evaluating whether, or what, 
treatment should be provided are applicable. That is just the start, not 
the end, of the analysis. The analysis then takes fully into account the 
reasonable medical judgment regarding potential effectiveness of 
possible treatments, and the like.
    Other comments were that it is unnecessary to state any 
interpretation because reasonable medical judgment commonly deems the 
conditions described as life-threatening and responds accordingly. HHS 
agrees that this is common practice followed under reasonable medical 
judgment, just as all the standards incorporated in the statutory 
definition reflect common practice followed under reasonable medical 
judgment. For the reasons stated above, however, the Department believes 
it is useful to say so in these interpretative guidelines.
    3. The term ``treatment'' in the context of adequate evaluation.
    Clause (b)(3)(ii) of the proposed rule proposed a definition of the 
term ``treatment.'' Two separate concepts were dealt with in

[[Page 303]]

clause (A) and (B), respectively, of the proposed rule. Both of these 
clauses were designed to ensure that the Congressional intent regarding 
the issues to be considered under the analysis set forth in the 
statutory definition is fully effectuated. Like the guidance regarding 
``life-threatening condition,'' discussed above, the Department's 
interpretations go to the applicability of the statutory analysis, not 
its result.
    The Department believes that Congress intended that the standard of 
following reasonable medical judgment regarding the potential 
effectiveness of possible courses of action should apply to issues 
regarding adequate medical evaluation, just as it does to issues 
regarding adequate medical intervention. This is apparent Congressional 
intent because Congress adopted, in the Conference Report's definition 
of ``reasonable medical judgment,'' the standard of adequate knowledge 
about the case and the treatment possibilities with respect to the 
medical condition involved.
    Having adequate knowledge about the case and the treatment 
possibilities involved is, in effect, step one of the process, because 
that is the basis on which ``reasonable medical judgment'' will operate 
to make recommendations regarding medical intervention. Thus, part of 
the process to determine what treatment, if any, ``will be most likely 
to be effective in ameliorating or correcting'' all life-threatening 
conditions is for the treating physician or physicians to make sure they 
have adequate information about the condition and adequate knowledge 
about treatment possibilities with respect to the condition involved. 
The standard for determining the adequacy of the information and 
knowledge is the same as the basic standard of the statutory definition: 
reasonable medical judgment. A reasonably prudent physician faced with a 
particular condition about which he or she needs additional information 
and knowledge of treatment possibilities would take steps to gain more 
information and knowledge by, quite simply, seeking further evaluation 
by, or consultation with, a physician or physicians whose expertise is 
appropriate to the condition(s) involved or further evaluation at a 
facility with specialized capabilities regarding the conditions(s) 
involved.
    Thus, the Department interprets the term ``treatment'' to include 
(but not be limited to) any further evaluation by, or consultation with, 
a physician or physicians whose expertise is appropriate to the 
condition(s) involved or further evaluation at a facility with 
specialized capabilities regarding the condition(s) involved that, in 
the treating physician's or physicians' reasonable medical judgment, is 
needed to assure that decisions regarding medical intervention are based 
on adequate knowledge about the case and the treatment possibilities 
with respect to the medical conditions involved.
    This reflects the Department's interpretation that failure to 
respond to an infant's life-threatening conditions by obtaining any 
further evaluations or consultations that, in the treating physician's 
reasonable medical judgment, are necessary to assure that decisions 
regarding medical intervention are based on adequate knowledge about the 
case and the treatment possibilities involved constitutes a 
``withholding of medically indicated treatment.'' Thus, if parents 
refuse to consent to such a recommendation that is based on the treating 
physician's reasonable medical judgment that, for example, further 
evaluation by a specialist is necessary to permit reasonable medical 
judgments to be made regarding medical intervention, this would be a 
matter for appropriate action by the child protective services system.
    In response to comments regarding the related provision in the 
proposed rule, this interpretative guideline makes quite clear that this 
interpretation does not deviate from the basic principle of reliance on 
reasonable medical judgment to determine the extent of the evaluations 
necessary in the particular case. Commenters expressed concerns that the 
provision in the proposed rule would intimidate physicians to seek 
transfer of seriously ill infants to tertiary level facilities much more 
often than necessary, potentially resulting in diversion of the limited 
capacities of these facilities away from those with real needs for the 
specialized care, unnecessary separation of infants from their parents 
when equally beneficial treatment could have been provided at the 
community or regional hospital, inappropriate deferral of therapy while 
time-consuming arrangements can be affected, and other counterproductive 
ramifications. The Department intended no intimidation, prescription or 
similar influence on reasonable medical judgment, but rather, intended 
only to affirm that it is the Department's interpretation that the 
reasonable medical judgment standard applies to issues of medical 
evaluation, as well as issues of medical intervention.
    4. The term ``treatment'' in the context of multiple treatments.
    Clause (b)(3)(iii)(B) of the proposed rule was designed to clarify 
that, in evaluating the potential effectiveness of a particular medical 
treatment or surgical procedure that can only be reasonably evaluated in 
the context of a complete potential treatment plan, the ``treatment'' to 
be evaluated under the standards of the statutory definition includes 
the multiple medical treatments and/or surgical procedures over a period 
of time that are designed to ameliorate or correct a life-threatening 
condition or conditions. Some commenters stated that it could be 
construed to require the carrying out of a

[[Page 304]]

long process of medical treatments or surgical procedures regardless of 
the lack of success of those done first. No such meaning is intended.
    The intent is simply to characterize that which must be evaluated 
under the standards of the statutory definition, not to imply anything 
about the results of the evaluation. If parents refuse consent for a 
particular medical treatment or surgical procedure that by itself may 
not correct or ameliorate all life-threatening conditions, but is 
recommended as part of a total plan that involves multiple medical 
treatments and/or surgical procedures over a period of time that, in the 
treating physician's reasonable medical judgment, will be most likely to 
be effective in ameliorating or correcting all such conditions, that 
would be a matter for appropriate action by the child protective 
services system.
    On the other hand, if, in the treating physician's reasonable 
medical judgment, the total plan will, for example, be virtually futile 
and inhumane, within the meaning of the statutory term, then there is no 
``withholding of medically indicated treatment.'' Similarly, if a 
treatment plan is commenced on the basis of a reasonable medical 
judgment that there is a good chance that it will be effective, but due 
to a lack of success, unfavorable complications, or other factors, it 
becomes the treating physician's reasonable medical judgment that 
further treatment in accord with the prospective treatment plan, or 
alternative treatment, would be futile, then the failure to provide that 
treatment would not constitute a ``withholding of medically indicated 
treatment.'' This analysis does not divert from the reasonable medical 
judgment standard of the statutory definition; it simply makes clear the 
Department's interpretation that the failure to evaluate the potential 
effectiveness of a treatment plan as a whole would be inconsistent with 
the legislative intent.
    Thus, the Department interprets the term ``treatment'' to include 
(but not be limited to) multiple medical treatments and/or surgical 
procedures over a period of time that are designed to ameliorate or 
correct a life-threatening condition or conditions.
    5. The term ``merely prolong dying.''
    Clause (b)(3)(v) of the proposed rule proposed a definition of the 
term ``merely prolong dying,'' which appears in the statutory 
definition. The proposed rule's provision stated that this term ``refers 
to situations where death is imminent and treatment will do no more than 
postpone the act of dying.''
    Many commenters argued that the incorporation of the word 
``imminent,'' and its connotation of immediacy, appeared to deviate from 
the Congressional intent, as developed in the course of the lengthy 
legislative negotiations, that reasonable medical judgments can and do 
result in nontreatment decisions regarding some conditions for which 
treatment will do no more than temporarily postpone a death that will 
occur in the near future, but not necessarily within days. The six 
principal sponsors of the compromise amendment also strongly urged 
deletion of the word ``imminent.''
    The Department's use of the term ``imminent'' in the proposed rule 
was not intended to convey a meaning not fully consonant with the 
statute. Rather, the Department intended that the word ``imminent'' 
would be applied in the context of the condition involved, and in such a 
context, it would not be understood to specify a particular number of 
days. As noted in the preamble to the proposed rule, this clarification 
was proposed to make clear that the ``merely prolong dying'' clause of 
the statutory definition would not be applicable to situations where 
treatment will not totally correct a medical condition but will give a 
patient many years of life. The Department continues to hold to this 
view.
    To eliminate the type of misunderstanding evidenced in the comments, 
and to assure consistency with the statutory definition, the word 
``imminent'' is not being adopted for purposes of these interpretative 
guidelines.
    The Department interprets the term ``merely prolong dying'' as 
referring to situations where the prognosis is for death and, in the 
treating physician's (or physicians') reasonable medical judgment, 
further or alternative treatment would not alter the prognosis in an 
extension of time that would not render the treatment futile.
    Thus, the Department continues to interpret Congressional intent as 
not permitting the ``merely prolong dying'' provision to apply where 
many years of life will result from the provision of treatment, or where 
the prognosis is not for death in the near future, but rather the more 
distant future. The Department also wants to make clear it does not 
intend the connotations many commenters associated with the word 
``imminent.'' In addition, contrary to the impression some commenters 
appeared to have regarding the proposed rule, the Department's 
interpretation is that reasonable medical judgments will be formed on 
the basis of knowledge about the condition(s) involved, the degree of 
inevitability of death, the probable effect of any potential treatments, 
the projected time period within which death will probably occur, and 
other pertinent factors.
    6. The term ``not be effective in ameliorating or correcting all of 
the infant's life threatening conditions'' in the context of a future 
life-threatening condition.
    Clause (b)(3)(vi) of the proposed rule proposed a definition of the 
term ``not be effective in ameliorating or correcting all the infant's 
life-threatening conditions'' used in

[[Page 305]]

the statutory definition of ``withholding of medically indicated 
treatment.''
    The basic point made by the use of this term in the statutory 
definition was explained in the Conference Committee Report:
    Under the definition, if a disabled infant suffers more than one 
life-threatening condition and, in the treating physician's or 
physicians' reasonable medical judgment, there is no effective treatment 
for one of those conditions, then the infant is not covered by the terms 
of the amendment (except with respect to appropriate nutrition, 
hydration, and medication) concerning the withholding of medically 
indicated treatment.

H. Conf. Rep. No. 1038, 98th Cong., 2d Sess. 41 (1984).
    This clause of the proposed rule dealt with the application of this 
concept in two contexts: First, when the nontreatable condition will not 
become life-threatening in the near future, and second, when humaneness 
makes palliative treatment medically indicated.
    With respect to the context of a future life-threatening condition, 
it is the Department's interpretation that the term ``not be effective 
in ameliorating or correcting all of the infant's life-threatening 
conditions'' does not permit the withholding of treatment on the grounds 
that one or more of the infant's life-threatening conditions, although 
not life-threatening in the near future, will become life-threatening in 
the more distant future.
    This clarification can be restated in the terms of the Conference 
Committee Report excerpt, quoted just above, with the italicized words 
indicating the clarification, as follows: Under the definition, if a 
disabled infant suffers from more than one life-threatening condition 
and, in the treating physician's or physicians' reasonable medical 
judgment, there is no effective treatment for one of these conditions 
that threatens the life of the infant in the near future, then the 
infant is not covered by the terms of the amendment (except with respect 
to appropriate nutrition, hyrdation, and medication) concerning the 
withholding of medically indicated treatment; but if the nontreatable 
condition will not become life-threatening until the more distant 
future, the infant is covered by the terms of the amendment.
    Thus, this interpretative guideline is simply a corollary to the 
Department's interpretation of ``merely prolong dying,'' stated above, 
and is based on the same understanding of Congressional intent, 
indicated above, that if a condition will not become life-threatening 
until the more distant future, it should not be the basis for 
withholding treatment.
    Also for the same reasons explained above, the word ``imminent'' 
that appeared in the proposed definition is not adopted for purposes of 
this interpretative guideline. The Department makes no effort to draw an 
exact line to separate ``near future'' from ``more distant future.'' As 
noted above in connection with the term ``merely prolong dying,'' the 
statutory definition provides that it is for reasonable medical 
judgment, applied to the specific condition and circumstances involved, 
to determine whether the prognosis of death, because of its nearness in 
time, is such that treatment would not be medically indicated.
    7. The term ``not be effective in ameliorating or correcting all 
life-threatening conditions'' in the context of palliative treatment.
    Clause (b)(3)(iv)(B) of the proposed rule proposed to define the 
term ``not be effective in ameliorating or correcting all life-
threatening conditions'' in the context where the issue is not life-
saving treatment, but rather palliative treatment to make a condition 
more tolerable. An example of this situation is where an infant has more 
than one life-threatening condition, at least one of which is not 
treatable and will cause death in the near future. Palliative treatment 
is available, however, that will, in the treating physician's reasonable 
medical judgment, relieve severe pain associated with one of the 
conditions. If it is the treating physician's reasonable medical 
judgment that this palliative treatment will ameliorate the infant's 
overall condition, taking all individual conditions into account, even 
though it would not ameliorate or correct each condition, then this 
palliative treatment is medically indicated. Simply put, in the context 
of ameliorative treatment that will make a condition more tolerable, the 
term ``not be effective in ameliorating or correcting all life-
threatening conditions'' should not be construed as meaning each and 
every condition, but rather as referring to the infant's overall 
condition.
    HHS believes Congress did not intend to exclude humane treatment of 
this kind from the scope of ``medically indicated treatment.'' The 
Conference Committee Report specifically recognized that ``it is 
appropriate for a physician, in the exercise of reasonable medical 
judgment, to consider that factor [humaneness] in selecting among 
effective treatments.'' H. Conf. Rep. No. 1038, 98th Cong., 2d Sess. 41 
(1984). In addition, the articulation in the statutory definition of 
circumstances in which treatment need not be provided specifically 
states that ``appropriate nutrition, hydration, and medication'' must 
nonetheless be provided. The inclusion in this proviso of medication, 
one (but not the only) potential palliative treatment to relieve severe 
pain, corroborates the Department's interpretation that such palliative 
treatment that will ameliorate the infant's overall condition, and that 
in the exercise of reasonable medical judgment is humane and medically 
indicated, was not intended by Congress to be outside the scope of the 
statutory definition.

[[Page 306]]

    Thus, it is the Department's interpretation that the term ``not be 
effective in ameliorating or correcting all of the infant's life-
threatening conditions'' does not permit the withholding of ameliorative 
treatment that, in the treating physician's or physicians' reasonable 
medical judgment, will make a condition more tolerable, such as 
providing palliative treatment to relieve severe pain, even if the 
overall prognosis, taking all conditions into account, is that the 
infant will not survive.
    A number of commenters expressed concerns about some of the examples 
contained in the preamble of the proposed rule that discussed the 
proposed definition relating to this point, and stated that, depending 
on medical complications, exact prognosis, relationships to other 
conditions, and other factors, the treatment suggested in the examples 
might not necessarily be the treatment that reasonable medical judgment 
would decide would be most likely to be effective. In response to these 
comments, specific diagnostic examples have not been included in this 
discussion, and this interpretative guideline makes clear that the 
``reasonable medical judgment'' standard applies on this point as well.
    Other commenters argued that an interpretative guideline on this 
point is unnecessary because reasonable medical judgment would commonly 
provide ameliorative or palliative treatment in the circumstances 
described. The Department agrees that such treatment is common in the 
exercise of resaonable medical judgment, but believes it useful, for the 
reasons stated, to provide this interpretative guidance.
    8. The term ``virtually futile''.
    Clause (b)(3)(vii) of the proposed rule proposed a definition of the 
term ``virtually futile'' contained in the statutory definition. The 
context of this term in the statutory definition is:
    [T]he term ``withholding of medically indicated treatment'' *  *  * 
does not include the failure to provide treatment (other than 
appropriate nutrition, hydration, or medication) to an infant when, in 
the treating physician's or physicians' reasonable medical judgment, *  
*  * the provision of such treatment would be virtually futile in terms 
of the survival of the infant and the treatment itself under such 
circumstances would be inhumane. Section 3(3)(C) of the Act [emphasis 
supplied].
    The Department interprets the term ``virtually futile'' to mean that 
the treatment is highly unlikely to prevent death in the near future.
    This interpretation is similar to those offered in connection with 
``merely prolong dying'' and ``not be effective in ameliorating or 
correcting all life-threatening conditions'' in the context of a future 
life-threatening condition, with the addition of a characterization of 
likelihood that corresponds to the statutory word ``virtually.'' For the 
reasons explained in the discussion of ``merely prolong dying,'' the 
word ``imminent'' that was used in the proposed rule has not been 
adopted for purposes of this interpretative guideline.
    Some commenters expressed concern regarding the words ``highly 
unlikely,'' on the grounds that such certitude is often medically 
impossible. Other commenters urged that a distinction should be made 
between generally utilized treatments and experimental treatments. The 
Department does not believe any special clarifications are needed to 
respond to these comments. The basic standard of reasonable medical 
judgment applies to the term ``virtually futile.'' The Department's 
interpretation does not suggest an impossible or unrealistic standard of 
certitude for any medical judgment. Rather, the standard adopted in the 
law is that there be a ``reasonable medical judgment.'' Similarly, 
reasonable medical judgment is the standard for evaluating potential 
treatment possibilities on the basis of the actual circumstances of the 
case. HHS does not believe it would be helpful to try to establish 
distinctions based on characterizations of the degree of general usage, 
extent of validated efficacy data, or other similar factors. The factors 
considered in the exercise of reasonable medical judgment, including any 
factors relating to human subjects experimentation standards, are not 
disturbed.
    9. The term ``the treatment itself under such circumstances would be 
inhumane.''
    Clause (b)(3)(viii) of the proposed rule proposed a definition of 
the term ``the treatment itself under such circumstances would be 
inhumane,'' that appears in the statutory definition. The context of 
this term in the statutory definition is that it is not a ``withholding 
of medically indicated treatment'' to withhold treatment (other than 
appropriate nutrition, hydration, or medication) when, in the treating 
physician's reasonable medical judgment, ``the provision of such 
treatment would be virtually futile in terms of the survival of the 
infant and the treatment itself under such circumstances would be 
inhumane.'' Sec. 3(3)(C) of the Act.
    The Department interprets the term ``the treatment itself under such 
circumstances would be inhumane'' to mean the treatment itself involves 
significant medical contraindications and/or significant pain and 
suffering for the infant that clearly outweigh the very slight potential 
benefit of the treatment for an infant highly unlikely to survive. (The 
Department further notes that the use of the term ``inhumane'' in this 
context is not intended to suggest that consideration of the humaneness 
of a particular treatment is not legitimate in any other context; 
rather, it is recognized that it is appropriate for a physician, in the 
exercise of reasonable

[[Page 307]]

medical judgment, to consider that factor in selecting among effective 
treatments.)
    Other clauses of the statutory definition focus on the expected 
result of the possible treatment. This provision of the statutory 
definition adds a consideration relating to the process of possible 
treatment. It recognizes that in the exercise of reasonable medical 
judgment, there are situations where, although there is some slight 
chance that the treatment will be beneficial to the patient (the 
potential treatment is considered virtually futile, rather than futile), 
the potential benefit is so outweighed by negative factors relating to 
the process of the treatment itself that, under the circumstances, it 
would be inhumane to subject the patient to the treatment.
    The Department's interpretation is designed to suggest the factors 
that should be taken into account in this difficult balance. A number of 
commenters argued that the interpretation should permit, as part of the 
evaluation of whether treatment would be inhumane, consideration of the 
infant's future ``quality of life.''
    The Department strongly believes such an interpretation would be 
inconsistent with the statute. The statute specifies that the provision 
applies only where the treatment would be ``virtually futile in terms of 
the survival of the infant,'' and the ``treatment itself under such 
circumstances would be inhumane.'' (Emphasis supplied.) The balance is 
clearly to be between the very slight chance that treatment will allow 
the infant to survive and the negative factors relating to the process 
of the treatment. These are the circumstances under which reasonable 
medical judgment could decide that the treatment itself would be 
inhumane.
    Some commenters expressed concern about the use of terms such as 
``clearly outweight'' in the description of this balance on the grounds 
that such precision is impractical. Other commenters argued that this 
interpretation could be construed to mandate useless and painful 
treatment. The Department believes there is no basis for these worries 
because ``reasonable medical judgment'' is the governing standard. The 
interpretative guideline suggests nothing other than application of this 
standard. What the guideline does is set forth the Department's 
interpretation that the statute directs the reasonable medical judgment 
to considerations relating to the slight chance of survival and the 
negative factors regarding the process of treatment and to the balance 
between them that would support a conclusion that the treatment itself 
would be inhumane.
    Other commenters suggested adoption of a statement contained in the 
Conference Committee Report that makes clear that the use of the term 
``inhumane'' in the statute was not intended to suggest that 
consideration of the humaneness of a particular treatment is not 
legitimate in any other context. The Department has adopted this 
statement as part of its interpretative guideline.
    10. Other terms.
    Some comments suggested that the Department clarify other terms used 
in the statutory definition of ``withholding of medically-`indicated 
treatment,'' such as the term ``appropriate nutrition, hydration or 
medication'' in the context of treatment that may not be withheld, 
notwithstanding the existence of one of the circumstances under which 
the failure to provide treatment is not a ``withholding of medically 
indicated treatment.'' Some commenters stated, for example, that very 
potent pharmacologic agents, like other methods of medical intervention, 
can produce results accurately described as accomplishing no more than 
to merely prolong dying, or be futile in terms of the survival of the 
infant, or the like, and that, therefore, the Department should clarify 
that the proviso regarding ``appropriate nutrition, hydration or 
medication'' should not be construed entirely independently of the 
circumstances under which other treatment need not be provided.
    The Department has not adopted an interpretative guideline on this 
point because it appears none is necessary. As noted above in the 
discussion of palliative treatment, the Department recognizes that there 
is no absolutely clear line between medication and treatment other than 
medication that would justify excluding the latter from the scope of 
palliative treatment that reasonable medical judgment would find 
medically indicated, notwithstanding a very poor prognosis.
    Similarly, the Department recognizes that in some circumstances, 
certain pharmacologic agents, not medically indicated for palliative 
purposes, might, in the exercise of reasonable medical judgment, also 
not be indicated for the purpose of correcting or ameliorating any 
particular condition because they will, for example, merely prolong 
dying. However, the Department believes the word ``appropriate'' in this 
proviso of the statutory definition is adequate to permit the exercise 
of reasonable medical judgment in the scenario referred to by these 
commenters.
    At the same time, it should be clearly recognized that the statute 
is completely unequivocal in requiring that all infants receive 
``appropriate nutrition, hydration, and medication,'' regardless of 
their condition or prognosis.

[50 FR 14889, Apr. 15, 1985, as amended at 55 FR 27640, July 5, 1990]

[[Page 308]]



   SUBCHAPTER F--THE ADMINISTRATION FOR CHILDREN, YOUTH AND FAMILIES, 
                    FAMILY AND YOUTH SERVICES BUREAU





PART 1351--RUNAWAY AND HOMELESS YOUTH PROGRAM--Table of Contents




                     Subpart A--Definition of Terms

Sec.
1351.1  Significant terms.

           Subpart B--Runaway and Homeless Youth Program Grant

1351.10  What is the purpose of the Runaway and Homeless Youth Program 
          grant?
1351.11  Who is eligible to apply for a Runaway and Homeless Youth 
          Program grant?
1351.12  Who gets priority for the award of a Runaway and Homeless Youth 
          Program grant?
1351.13  What are the Federal and non-Federal match requirements under a 
          Runaway and Homeless Youth Program grant?
1351.14  What is the period for which a grant will be awarded?
1351.15  What costs are supportable under a Runaway and Homeless Youth 
          Program grant?
1351.16  What costs are not allowable under a Runaway and Homeless Youth 
          Program grant?
1351.17  How is application made for a Runaway and Homeless Youth 
          Program grant?
1351.18  What criteria has HHS established for deciding which Runaway 
          and Homeless Youth Program grant applications to fund?
1351.19  What additional information should an applicant or grantee have 
          about a Runaway and Homeless Youth Program grant?

                   Subpart C--Additional Requirements

1351.20  What are the additional requirements under a Runaway and 
          Homeless Youth Program grant?

    Authority: 42 U.S.C. 5701.

    Source: 43 FR 55635, Nov. 28, 1978, unless otherwise noted.



                     Subpart A--Definition of Terms



Sec. 1351.1  Significant terms.

    For the purposes of this part:
    (a) Aftercare services means the provision of services to runaway or 
otherwise homeless youth and their families, following the youth's 
return home or placement in alternative living arrangements which assist 
in alleviating the problems that contributed to his or her running away 
or being homeless.
    (b) Area means a specific neighborhood or section of the locality in 
which the runaway and homeless youth project is or will be located.
    (c) Coordinated networks of agencies means an association of two or 
more private agencies, whose purpose is to develop or strengthen 
services to runaway or otherwise homeless youth and their families.
    (d) Counseling services means the provision of guidance, support and 
advice to runaway or otherwise homeless youth and their families 
designed to alleviate the problems which contributed to the youth's 
running away or being homeless, resolve intrafamily problems, to reunite 
such youth with their families, whenever appropriate, and to help them 
decide upon a future course of action.
    (e) Demonstrably frequented by or reachable means located in an area 
in which runaway or otherwise homeless youth congregate or an area 
accessible to such youth by public transportation or by the provision of 
transportation by the runaway and homeless youth project itself.
    (f) Homeless youth means a person under 18 years of age who is in 
need of services and without a place of shelter where he or she receives 
supervision and care.
    (g) Juvenile justice system means agencies such as, but not limited 
to juvenile courts, law enforcement, probation, parole, correctional 
institutions, training schools, and detention facilities.
    (h) Law enforcement structure means any police activity or agency 
with legal responsibility for enforcing a criminal code including, 
police departments and sheriffs offices.
    (i) A locality is a unit of general government--for example, a city, 
county, township, town, parish, village, or a

[[Page 309]]

combination of such units. Federally recognized Indian tribes are 
eligible to apply for grants as local units of government.
    (j) Runaway and homeless youth project means a locally controlled 
human service program facility outside the law enforcement structure and 
the juvenile justice system providing temporary shelter, either directly 
or through other facilities, counseling and aftercare services to 
runaway or otherwise homeless youth.
    (k) Runaway youth means a person under 18 years of age who absents 
himself or herself from home or place of legal residence without the 
permission of his or her family.
    (l) Short-term training means the provision of local, State, or 
regionally based instruction to runaway or otherwise homeless youth 
service providers in skill areas that will directly strengthen service 
delivery.
    (m) A State includes any State of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, the Trust Territory of the 
Pacific Islands, and any territory or possession of the United States.
    (n) Technical assistance means the provision of expertise or support 
for the purpose of strengthening the capabilities of grantee 
organizations to deliver services.
    (o) Temporary shelter means the provision of short-term (maximum of 
15 days) room and board and core crisis intervention services, on a 24-
hour basis, by a runaway and homeless youth project.

[43 FR 55635, Nov. 28, 1978, as amended at 54 FR 20854, May 15, 1989; 55 
FR 5601, Feb. 16, 1990]



           Subpart B--Runaway and Homeless Youth Program Grant



Sec. 1351.10  What is the purpose of the Runaway and Homeless Youth Program grant?

    The purpose of the Runaway and Homeless Youth Program grant is to 
establish or strengthen existing or proposed community-based runaway and 
homeless youth projects to provide temporary shelter and care to runaway 
or otherwise homeless youth who are in need of temporary shelter, 
counseling and aftercare services. The Department is concerned about the 
increasing numbers of youth who leave, and stay away from, their homes 
without permission of their families. There is also national concern 
about runaway and homeless youth who have no resources, who live on the 
street, and who represent law enforcement problems in the communities to 
which they run. The problems of runaway or otherwise homeless youth 
should not be the responsibility of already overburdened police 
departments and juvenile justice authorities. Rather, Congress intends 
that the responsibility for locating, assisting, and returning such 
youth should be placed with low-cost, community-based human service 
programs.



Sec. 1351.11  Who is eligible to apply for a Runaway and Homeless Youth Program grant?

    States localities, private entities, and coordinated networks of 
such entities are eligible to apply for a Runaway and Homeless Youth 
Program grant unless they are part of the law enforcement structure or 
the juvenile justice system.

[54 FR 20855, May 15, 1989; 55 FR 5601, Feb. 16, 1990]



Sec. 1351.12  Who gets priority for the award of a Runaway and Homeless Youth Program grant?

    In making Runaway and Homeless Youth Program grants, HHS gives 
priority to those private agencies which have had past experience in 
dealing with runaway or otherwise homeless youth. HHS also gives 
priority to applicants whose total grant requests for services to 
runaway or otherwise homeless youth are less than $100,000 and whose 
project budgets, considering all funding sources, are smaller than 
$150,000. Past experience means that a major activity of the agency has 
been the provision of temporary shelter, counseling, and referral 
services to runaway or otherwise homeless youth and their families, 
either directly or through linkages established with other community 
agencies.

[[Page 310]]



Sec. 1351.13  What are the Federal and non-Federal match requirements under a Runaway and Homeless Youth grant?

    HHS requires a non-Federal share which is equal to at least 10 
percent of the Federal funds that will be received under this grant 
program for any fiscal year.

[54 FR 20855, May 15, 1989; 55 FR 5601, Feb. 16, 1990]



Sec. 1351.14  What is the period for which a grant will be awarded?

    (a) The initial notice of grant award specifies how long HHS intends 
to support the project without requiring the project to recompete for 
funds. This period, called the project period, will not exceed five 
years.
    (b) Generally the grant will initially be for one year. A grantee 
must submit a separate application to have the support continued for 
each subsequent year. Continuation awards within the project period will 
be made provided the grantee has made satisfactory progress, funds are 
available, and HHS determines that continued funding is in the best 
interest of the Government.

[43 FR 55635, Nov. 28, 1978, as amended at 65 FR 50141, Aug. 17, 2000]



Sec. 1351.15  What costs are supportable under a Runaway and Homeless Youth Program grant?

    Costs which can be supported include, but are not limited to, 
temporary shelter, referral services, counseling services, aftercare 
services, and staff training. Costs for acquisition and renovation of 
existing structures may not normally exceed 15 percent of the grant 
award. HHS may waive this limitation upon written request under special 
circumstances based on demonstrated need.



Sec. 1351.16  What costs are not allowable under a Runaway and Homeless Youth Program grant?

    A Runaway and Homeless Youth Progam grant does not cover the cost of 
constructing new facilities.



Sec. 1351.17  How is application made for a Runaway and Homeless Youth Program grant?

    HHS publishes annually in the Federal Register a program 
announcement of grant funds available under the Runaway and Homeless 
Youth Program Act. The program announcement states the amount of funds 
available, program priorities for funding, and criteria for evaluating 
applications in awarding grants. The announcement also describes 
specific procedures for receipt and review of applications. An applicant 
should:
    (a) Obtain a program announcement from the Federal Register or from 
one of HHS's 10 Regional Offices in Boston, New York, Philadelphia, 
Atlanta, Chicago, Dallas, Kansas City, Denver, San Francisco, and 
Seattle;
    (b) Obtain an application package from one of HHS's Regional 
Offices; and
    (c) Submit a completed application to the Grants Management Office 
at the appropriate Regional Office.

[43 FR 55635, Nov. 28, 1978, as amended at 48 FR 29202, June 24, 1983]



Sec. 1351.18  What criteria has HHS established for deciding which Runaway and Homeless Youth Program grant applications to fund?

    In reviewing applications for a Runaway and Homeless Youth Program 
grant, HHS takes into consideration a number of factors, including:
    (a) Whether the application meets one or more of the program's 
funding priorities; (see Sec. 1351.12)
    (b) The need for Federal support based on the number of runaway or 
otherwise homeless youth in the area in which the runaway and homeless 
youth project is or will be located;
    (c) The availability of services to runaway or otherwise homeless 
youth in the area in which the runaway and homeless youth project is 
located;
    (d) Whether there is a minimum residential capacity of four and a 
maximum residential capacity not to exceed 20 youth with a ratio of 
staff to youth sufficient to assure adequate supervision and treatment;

[[Page 311]]

    (e) Plans for meeting the best interests of the youth involving, 
when possible, both the youth and the family. These must include 
contacts with the families. This contact should be made within 24 hours, 
but must be made no more than 72 hours following the time of the youth's 
admission into the runaway and homeless youth project. The plans must 
also include assuring the youth's safe return home or to local 
government officials or law enforcement officials and indicate efforts 
to provide appropriate alternative living arrangements.
    (f) Plans for the delivery of aftercare or counseling services to 
runaway or otherwise homeless youth and their families;
    (g) Whether the estimated cost to the Department for the runaway and 
homeless youth project is reasonable considering the anticipated 
results;
    (h) Whether the proposed personnel are well qualified and the 
applicant agency has adequate facilities and resources;
    (i) Whether the proposed project design, if well executed, is 
capable of attaining program objectives;
    (j) The consistency of the grant application with the provisions of 
the Act and these regulations.



Sec. 1351.19  What additional information should an applicant or grantee have about a Runaway and Homeless Youth Program grant?

    (a) Several other HHS rules and regulations apply to applicants for 
or recipients of Runaway and Homeless Youth Program grants. These 
include:
    (1) The provisions of 45 CFR part 74 pertaining to the 
Administration of Grants;
    (2) The provisions of 45 CFR part 16, Departmental Grants Appeal 
Process, and the provisions of Informal Grant Appeal Procedures 
(Indirect Costs) in volume 45 CFR part 75;
    (3) The provisions of 45 CFR part 80 and 45 CFR part 81 pertaining 
to nondiscrimination under programs receiving Federal assistance, and 
hearing procedures;
    (4) The provisions of 45 CFR part 84 pertaining to discrimination on 
the basis of handicap;
    (5) The provisions of 45 CFR part 46 pertaining to protection of 
human subjects.
    (b) Several program policies regarding confidentiality of 
information, treatment, conflict of interest and State protection apply 
to recipients of Runaway and Homeless Youth Program grants. These 
include:
    (1) Confidential information. All information including lists of 
names, addresses, photographs, and records of evaluation of individuals 
served by a runaway and homeless youth project shall be confidential and 
shall not be disclosed or transferred to any individual or to any public 
or private agency without written consent of the youth and family. Youth 
served by a runaway and homeless youth project shall have the right to 
review their records; to correct a record or file a statement of 
disagreement; and to be apprised of the individuals who have reviewed 
their records. Procedures shall be established for the training of 
project staff in the protection of these rights and for the secure 
storage of records.
    (2) Medical, psychiatric or psychological treatment. No youth shall 
be subject to medical, psychiatric or psychological treatment without 
the consent of the youth and family unless otherwise permitted by State 
law.
    (3) Conflict of interest. Employees or individuals participating in 
a program or project under the Act shall not use their positions for a 
purpose that is, or gives the appearance of being, motivated by a desire 
for private gain for themselves or others, particularly those with whom 
they have family, business or other ties.
    (4) State law protection. HHS policies regarding confidential 
information and experimentation and treatment shall not apply if HHS 
finds that State law is more protective of the rights of runaway or 
otherwise homeless youth.
    (c) Nothing in the Runaway and Homeless Youth Act or these 
regulations gives the Federal Government control over the staffing and 
personnel decisions regarding individuals hired by a runaway and 
homeless youth project receiving Federal funds.

[[Page 312]]



                   Subpart C--Additional Requirements



Sec. 1351.20  What are the additional requirements under a Runaway and Homeless Youth Program grant?

    (a) To improve the administration of the Runaway and Homeless Youth 
Program by increasing the capability of the runaway and homeless youth 
service providers to deliver services, HHS will require grantees to 
accept technical assistance and short-term training as a condition of 
funding for each budget period.
    (1) Technical assistance may be provided in, but not limited to, 
such areas as:
     Program Management,
     Fiscal Management,
     Development of coordinated networks of private nonprofit 
agencies to provide services, and
     Low cost community alternatives for runaway or otherwise 
homeless youth.
    (2) Short-term training may be provided in, but not limited to, such 
areas as:
     Shelter facility staff development,
     Aftercare services or counseling,
     Fund raising techniques,
     Youth and Family counseling, and
     Crisis intervention techniques.
    (b) Grantees will be required to coordinate their activities with 
the 24-hour National toll-free communication system which links runaway 
and homeless youth projects and other service providers with runaway or 
otherwise homeless youth.
    (c) Grantees will also be required to submit statistical reports 
profiling the clients served. The statistical reporting requirements are 
mandated by the Act which states that ``runaway and homeless youth 
projects shall keep adequate statistical records profiling the children 
and families which it serves . . .''

[[Page 313]]



SUBCHAPTER G--THE ADMINISTRATION ON CHILDREN, YOUTH AND FAMILIES, FOSTER 
  CARE MAINTENANCE PAYMENTS, ADOPTION ASSISTANCE, AND CHILD AND FAMILY 
                                SERVICES





PART 1355--GENERAL--Table of Contents




Sec.
1355.10  Scope.
1355.20  Definitions.
1355.21  State plan requirements for titles IV-E and IV-B.
1355.25  Principles of child and family services.
1355.30  Other applicable regulations.
1355.31  Elements of the child and family services review system.
1355.32  Timetable for the reviews.
1355.33  Procedures for the review.
1355.34  Criteria for determining substantial conformity.
1355.35  Program improvement plans.
1355.36  Withholding Federal funds due to failure to achieve substantial 
          conformity or failure to successfully complete a program 
          improvement plan.
1355.37  Opportunity for Public Inspection of Review Reports and 
          Materials.
1355.38  Enforcement of section 471(a)(18) of the Act regarding the 
          removal of barriers to interethnic adoption.
1355.39  Administrative and judicial review.
1355.40  Foster care and adoption data collection.
1355.50  Purpose of this part.
1355.52  Funding authority for statewide automated child welfare 
          information systems (SACWIS).
1355.53  Conditions for approval of funding.
1355.54  Submittal of advance planning documents.
1355.55  Review and assessment of the system developed with enhanced 
          funds.
1355.56  Failure to meet the conditions of the approved APD.
1355.57  Cost allocation.

Appendix A to Part 1355--Foster Care Data Elements.
Appendix B to Part 1355--Adoption Data Elements.
Appendix C to Part 1355--Electronic Data Transmission Format.
Appendix D to Part 1355--Foster Care and Adoption Record Layouts.
Appendix E to Part 1355--Data Standards.
Appendix F to Part 1355--Allotment of Funds With 427 Incentive Funds 
          Title IV-B Child Welfare Services Fiscal Year 1993.

    Authority: 42 U.S.C. 620 et seq., 42 U.S.C. 670 et seq.; 42 U.S.C. 
1302.



Sec. 1355.10  Scope.

    Unless otherwise specified, part 1355 applies to States and Indian 
Tribes and contains general requirements for Federal financial 
participation under titles IV-B and IV-E of the Social Security Act.

[61 FR 58653, Nov. 18, 1996]



Sec. 1355.20  Definitions.

    (a) Unless otherwise specified, the following terms as they appear 
in 45 CFR parts 1355, 1356 and 1357 of this title are defined as 
follows--
    Act means the Social Security Act, as amended.
    ACYF means the Administration on Children, Youth and Families, 
Administration for Children and Families (ACF), U. S. Department of 
Health and Human Services.
    Adoption means the method provided by State law which establishes 
the legal relationship of parent and child between persons who are not 
so related by birth, with the same mutual rights and obligations that 
exist between children and their birth parents. This relationship can 
only be termed ``adoption'' after the legal process is complete.
    Child abuse and neglect means the definition contained in 42 U.S.C. 
5106(g)(2).
    Child care institution means a private child care institution, or a 
public child care institution which accommodates no more than twenty-
five children, and is licensed by the State in which it is situated or 
has been approved by the agency of such State or tribal licensing 
authority (with respect to child care institutions on or near Indian 
Reservations) responsible for licensing or approval of institutions of 
this type as meeting the standards established for such licensing. This 
definition must not include detention facilities, forestry camps, 
training schools, or any other facility operated primarily for the 
detention of children who are determined to be delinquent.

[[Page 314]]

    Commissioner means the Commissioner on Children, Youth and Families, 
Administration for Children and Families, U.S. Department of Health and 
Human Services.
    Date a child is considered to have entered foster care means the 
earlier of: The date of the first judicial finding that the child has 
been subjected to child abuse or neglect; or, the date that is 60 
calendar days after the date on which the child is removed from the home 
pursuant to Sec. 1356.21(k). A State may use a date earlier than that 
required in this paragraph, such as the date the child is physically 
removed from the home. This definition determines the date used in 
calculating all time period requirements for the periodic reviews, 
permanency hearings, and termination of parental rights provision in 
section 475(5) of the Act and for providing time-limited reunification 
services described at section 431(a)(7) of the Act. The definition has 
no relationship to establishing initial title IV-E eligibility.
    Department means the United States Department of Health and Human 
Services.
    Detention facility in the context of the definition of child care 
institution in section 472(c)(2) of the Act means a physically 
restricting facility for the care of children who require secure custody 
pending court adjudication, court disposition, execution of a court 
order or after commitment.
    Entity, as used in Sec. 1355.38, means any organization or agency 
(e.g., a private child placing agency) that is separate and independent 
of the State agency; performs title IV-E functions pursuant to a 
contract or subcontract with the State agency; and, receives title IV-E 
funds. A State court is not an ``entity'' for the purposes of 
Sec. 1355.38 except if an administrative arm of the State court carries 
out title IV-E administrative functions pursuant to a contract with the 
State agency.
    Foster care means 24-hour substitute care for children placed away 
from their parents or guardians and for whom the State agency has 
placement and care responsibility. This includes, but is not limited to, 
placements in foster family homes, foster homes of relatives, group 
homes, emergency shelters, residential facilities, child care 
institutions, and preadoptive homes. A child is in foster care in 
accordance with this definition regardless of whether the foster care 
facility is licensed and payments are made by the State or local agency 
for the care of the child, whether adoption subsidy payments are being 
made prior to the finalization of an adoption, or whether there is 
Federal matching of any payments that are made.
    Foster care maintenance payments are payments made on behalf of a 
child eligible for title IV-E foster care to cover the cost of (and the 
cost of providing) food, clothing, shelter, daily supervision, school 
supplies, a child's personal incidentals, liability insurance with 
respect to a child, and reasonable travel for a child's visitation with 
family, or other caretakers. Local travel associated with providing the 
items listed above is also an allowable expense. In the case of child 
care institutions, such term must include the reasonable costs of 
administration and operation of such institutions as are necessarily 
required to provide the items described in the preceding sentences. 
``Daily supervision'' for which foster care maintenance payments may be 
made includes:
    (1) Foster family care--licensed child care, when work 
responsibilities preclude foster parents from being at home when the 
child for whom they have care and responsibility in foster care is not 
in school, licensed child care when the foster parent is required to 
participate, without the child, in activities associated with parenting 
a child in foster care that are beyond the scope of ordinary parental 
duties, such as attendance at administrative or judicial reviews, case 
conferences, or foster parent training. Payments to cover these costs 
may be: included in the basic foster care maintenance payment; a 
separate payment to the foster parent, or a separate payment to the 
child care provider; and
    (2) Child care institutions--routine day-to-day direction and 
arrangements to ensure the well-being and safety of the child.
    Foster family home means, for the purpose of title IV-E eligibility, 
the home of an individual or family licensed or

[[Page 315]]

approved as meeting the standards established by the State licensing or 
approval authority(ies) (or with respect to foster family homes on or 
near Indian reservations, by the tribal licensing or approval 
authority(ies)), that provides 24-hour out-of-home care for children. 
The term may include group homes, agency-operated boarding homes or 
other facilities licensed or approved for the purpose of providing 
foster care by the State agency responsible for approval or licensing of 
such facilities. Foster family homes that are approved must be held to 
the same standards as foster family homes that are licensed. Anything 
less than full licensure or approval is insufficient for meeting title 
IV-E eligibility requirements. States may, however, claim title IV-E 
reimbursement during the period of time between the date a prospective 
foster family home satisfies all requirements for licensure or approval 
and the date the actual license is issued, not to exceed 60 days.
    Full review means the joint Federal and State review of all 
federally-assisted child and family services programs in the States, 
including family preservation and support services, child protective 
services, foster care, adoption, and independent living services, for 
the purpose of determining the State's substantial conformity with the 
State plan requirements of titles IV-B and IV-E as listed in 
Sec. 1355.34 of this part. A full review consists of two phases, the 
statewide assessment and a subsequent on-site review, as described in 
Sec. 1355.33 of this part.
    Legal guardianship means a judicially-created relationship between 
child and caretaker which is intended to be permanent and self-
sustaining as evidenced by the transfer to the caretaker of the 
following parental rights with respect to the child: protection, 
education, care and control of the person, custody of the person, and 
decision-making. The term legal guardian means the caretaker in such a 
relationship.
    National Child Abuse and Neglect Data System (NCANDS) means the 
voluntary national data collection and analysis system established by 
the Administration for Children and Families in response to a 
requirement in the Child Abuse Prevention and Treatment Act (Pub. L. 93-
247), as amended.
    Partial review means:
    (1) For the purpose of the child and family services review, the 
joint Federal and State review of one or more federally-assisted child 
and family services program(s) in the States, including family 
preservation and support services, child protective services, foster 
care, adoption, and independent living services. A partial review may 
consist of any of the components of the full review, as mutually agreed 
upon by the State and the Administration for Children and Families as 
being sufficient to determine substantial conformity of the reviewed 
components with the State plan requirements of titles IV-B and IV-E as 
listed in Sec. 1355.34 of this part; and
    (2) For the purpose of title IV-B and title IV-E State plan 
compliance issues that are outside the prescribed child and family 
services review format, e.g., compliance with AFCARS requirements, a 
review of State laws, policies, regulations, or other information 
appropriate to the nature of the concern, to determine State plan 
compliance.
    Permanency hearing means:
    (1) The hearing required by section 475(5)(C) of the Act to 
determine the permanency plan for a child in foster care. Within this 
context, the court (including a Tribal court) or administrative body 
determines whether and, if applicable, when the child will be:
    (i) Returned to the parent;
    (ii) Placed for adoption, with the State filing a petition for 
termination of parental rights;
    (iii) Referred for legal guardianship;
    (iv) Placed permanently with a fit and willing relative; or
    (v) Placed in another planned permanent living arrangement, but only 
in cases where the State agency has documented to the State court a 
compelling reason for determining that it would not be in the best 
interests of the child to follow one of the four specified options 
above.
    (2) The permanency hearing must be held no later than 12 months 
after the date the child is considered to have entered foster care in 
accordance with the definition at Sec. 1355.20 of this part or

[[Page 316]]

within 30 days of a judicial determination that reasonable efforts to 
reunify the child and family are not required. After the initial 
permanency hearing, subsequent permanency hearings must be held not less 
frequently than every 12 months during the continuation of foster care. 
The permanency hearing must be conducted by a family or juvenile court 
or another court of competent jurisdiction or by an administrative body 
appointed or approved by the court which is not a part of or under the 
supervision or direction of the State agency. Paper reviews, ex parte 
hearings, agreed orders, or other actions or hearings which are not open 
to the participation of the parents of the child, the child (if of 
appropriate age), and foster parents or preadoptive parents (if any) are 
not permanency hearings.
    State means, for title IV-B, the 50 States, the District of 
Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, the 
Commonwealth of the Northern Mariana Islands, and American Samoa. For 
title IV-E the term ``State'' means the 50 States, the District of 
Columbia, the Commonwealth of Puerto Rico, the United States Virgin 
Islands, Guam, and American Samoa.
    State agency means the State agency administering or supervising the 
administration of the title IV-B and title IV-E State plans and the 
title XX social services block grant program. An exception to this 
requirement is permitted by section 103(d) of the Adoption Assistance 
and Child Welfare Act of 1980 (Pub. L. 96-272). Section 103(d) provides 
that, if on December 1, 1974, the title IV-B program (in a State or 
local agency) and the social services program under section 402(a)(3) of 
the Act (the predecessor program to title XX) were administered by 
separate agencies, that separate administration of the programs could 
continue at State option.
    Statewide assessment means the initial phase of a full review of all 
federally-assisted child and family services programs in the States, 
including family preservation and support services, child protective 
services, foster care, adoption, and independent living services as 
described in Sec. 1355.33(b) of this part, for the purpose of 
determining the State's substantial conformity with the State plan 
requirements of titles IV-B and IV-E as listed in Sec. 1355.34 of this 
part.
    (b) Unless otherwise specified, the definitions contained in section 
475 of the Act apply to all programs under titles IV-E and IV-B of the 
Act.

[48 FR 23114, May 23, 1983, as amended at 57 FR 30429, July 9, 1992; 58 
FR 67924, Dec. 22, 1993; 61 FR 58653, Nov. 18, 1996; 65 FR 4076, Jan. 
25, 2000; 66 FR 58675, Nov. 23, 2001]



Sec. 1355.21  State plan requirements for titles IV-E and IV-B.

    (a) The State plans for titles IV-E and IV-B must provide for 
safeguards on the use and disclosure of information which meet the 
requirements contained in section 471(a)(8) of the Act.
    (b) The State plans for titles IV-E and IV-B must provide for 
compliance with the Department's regulations listed in 45 CFR 1355.30.
    (c) The State agency and the Indian Tribe must make available for 
public review and inspection the Child and Family Services Plan (CFSP) 
and the Annual Progress and Services Reports. (See 45 CFR 1357.15 and 
1357.16.) The State agency also must make available for public review 
and inspection the title IV-E State Plan.

[48 FR 23114, May 23, 1983, as amended at 61 FR 58654, Nov. 18, 1996]



Sec. 1355.25  Principles of child and family services.

    The following principles, most often identified by practitioners and 
others as helping to assure effective services for children, youth, and 
families, should guide the States and Indian Tribes in developing, 
operating, and improving the continuum of child and family services.
    (a) The safety and well-being of children and of all family members 
is paramount. When safety can be assured, strengthening and preserving 
families is seen as the best way to promote the healthy development of 
children. One important way to keep children safe is to stop violence in 
the family including violence against their mothers.
    (b) Services are focused on the family as a whole; service providers 
work with families as partners in identifying and

[[Page 317]]

meeting individual and family needs; family strengths are identified, 
enhanced, respected, and mobilized to help families solve the problems 
which compromise their functioning and well-being.
    (c) Services promote the healthy development of children and youth, 
promote permanency for all children and help prepare youth emancipating 
from the foster care system for self-sufficiency and independent living.
    (d) Services may focus on prevention, protection, or other short or 
long-term interventions to meet the needs of the family and the best 
interests and need of the individual(s) who may be placed in out-of-home 
care.
    (e) Services are timely, flexible, coordinated, and accessible to 
families and individuals, principally delivered in the home or the 
community, and are delivered in a manner that is respectful of and 
builds on the strengths of the community and cultural groups.
    (f) Services are organized as a continuum, designed to achieve 
measurable outcomes, and are linked to a wide variety of supports and 
services which can be crucial to meeting families' and children's needs, 
for example, housing, substance abuse treatment, mental health, health, 
education, job training, child care, and informal support networks.
    (g) Most child and family services are community-based, involve 
community organizations, parents and residents in their design and 
delivery, and are accountable to the community and the client's needs.
    (h) Services are intensive enough and of sufficient duration to keep 
children safe and meet family needs. The actual level of intensity and 
length of time needed to ensure safety and assist the family may vary 
greatly between preventive (family support) and crisis intervention 
services (family preservation), based on the changing needs of children 
and families at various times in their lives. A family or an individual 
does not need to be in crisis in order to receive services.

[61 FR 58654, Nov. 18, 1996]



Sec. 1355.30  Other applicable regulations.

    Except as specified, the following regulations are applicable to all 
programs funded under titles IV-B and IV-E of the Act.
    (a) 45 CFR Part 16--Procedures of the Departmental Grant Appeals 
Board.
    (b) 45 CFR Part 30--Claims Collection.
    (c) 45 CFR Part 74--Administration of Grants (Applicable only to 
title IV-E foster care and adoption assistance, except that: (1) Section 
74.23 Cost Sharing or Matching, and (2) section 74.52 Financial 
Reporting Requirements, will not apply.)
    (d) 45 CFR Part 76--Governmentwide Debarment and Suspension 
(Nonprocurement) and Governmentwide Requirements for Drug-Free Workplace 
(Grants).
    (e) 45 CFR Part 80--Nondiscrimination Under Programs Receiving 
Federal Assistance Through the Department of Health and Human Services 
Effectuation of Title VI of the Civil Rights Act of 1964.
    (f) 45 CFR Part 81--Practice and Procedure for Hearings Under Part 
80 of This Title.
    (g) 45 CFR Part 84--Nondiscrimination on the Basis of Handicap in 
Programs and Activities Receiving Federal Financial Assistance.
    (h) 45 CFR Part 91--Nondiscrimination on the Basis of Age in HHS 
Programs or Activities Receiving Federal Financial Assistance.
    (i) 45 CFR Part 92--Uniform Administrative Requirements for Grants 
and Cooperative Agreements to State and Local Governments (Applicable 
only to the title IV-B programs and the Independent Living Program under 
Section 477 of the Act).
    (j) 45 CFR Part 93--New Restrictions on Lobbying.
    (k) 45 CFR Part 95--General Administration--Grant Programs (Public 
Assistance and Medical Assistance). (Applicable to title IV-B and title 
IV-E except that, notwithstanding 45 CFR 95.1(a), Subpart A, Time Limits 
for States to File Claims, does not apply to title IV-B (subparts 1 and 
2) and the Independent Living Program.)
    (l) 45 CFR Part 97--Consolidation of Grants to the Insular Areas. 
(Applicable only to the title IV-B programs).
    (m) 45 CFR Part 100--Intergovernmental Review of Department of 
Health and Human Services Programs

[[Page 318]]

and Activities. (Only one section is applicable: 45 CFR 100.12, How may 
a State simplify, consolidate, or substitute federally required State 
plans?).
    (n) 45 CFR Part 201--Grants to States for Public Assistance 
Programs. Only the following sections are applicable:
    (1) Sec. 201.5--Grants. (Applicable to title IV-E foster care and 
adoption assistance only.)
    (2) Sec. 201.6--Withholding of payment; reduction of Federal 
financial participation in the costs of social services and training. 
(Applicable only to an unapprovable change in an approved State plan, or 
the failure of the State to change its approved plan to conform to a new 
Federal requirement for approval of State plans.)
    (3) Sec. 201.15--Deferral of claims for Federal financial 
participation. (Applicable only to title IV-E foster care and adoption 
assistance.)
    (4) Sec. 201.66--Repayment of Federal funds by installments. 
(Applicable only to title IV-E foster care and adoption assistance.)
    (o) 45 CFR Part 204.1--Submittal of State Plans for Governor's 
Review.
    (p) 45 CFR Part 205--General Administration--Public Assistance 
Programs. Only the following sections are applicable:
    (1) Sec. 205.5--Plan amendments.
    (2) Sec. 205.10--Hearings.
    (3) Sec. 205.50--Safeguarding information for the financial 
assistance programs.
    (4) Sec. 205.100--Single State agency.

[61 FR 58654, Nov. 18, 1996, as amended at 66 FR 58675, Nov. 23, 2001]



Sec. 1355.31  Elements of the child and family services review system.

    Scope. Sections 1355.32 through 1355.37 of this part apply to 
reviews of child and family services programs administered by States 
under subparts 1 and 2 of title IV-B of the Act, and reviews of foster 
care and adoption assistance programs administered by States under title 
IV-E of the Act.

[65 FR 4076, Jan. 25, 2000]



Sec. 1355.32  Timetable for the reviews.

    (a) Initial reviews. Each State must complete an initial full review 
as described in Sec. 1355.33 of this part during the four-year period 
after the final rule becomes effective.
    (b) Reviews following the initial review. (1) A State found to be 
operating in substantial conformity during an initial or subsequent 
review, as defined in Sec. 1355.34 of this part, must:
    (i) Complete a full review every five years; and
    (ii) Submit a completed statewide assessment to ACF three years 
after the on-site review. The statewide assessment will be reviewed 
jointly by the State and the Administration for Children and Families to 
determine the State's continuing substantial conformity with the State 
plan requirements subject to review. No formal approval of this interim 
statewide assessment by ACF is required.
    (2) A State program found not to be operating in substantial 
conformity during an initial or subsequent review will:
    (i) Be required to develop and implement a program improvement plan, 
as defined in Sec. 1355.35 of this part; and
    (ii) Begin a full review two years after approval of the program 
improvement plan.
    (c) Reinstatement of reviews based on information that a State is 
not in substantial conformity. (1) ACF may require a full or a partial 
review at any time, based on any information, regardless of the source, 
that indicates the State may no longer be operating in substantial 
conformity.
    (2) Prior to reinstating a full or partial review, ACF will conduct 
an inquiry and require the State to submit additional data whenever ACF 
receives information that the State may not be in substantial 
conformity.
    (3) If the additional information and inquiry indicates to ACF's 
satisfaction that the State is operating in substantial conformity, ACF 
will not proceed with any further review of the issue addressed by the 
inquiry. This inquiry will not substitute for the full reviews conducted 
by ACF under Sec. 1355.32(b).
    (4) ACF may proceed with a full or partial review if the State does 
not provide the additional information as requested, or the additional 
information confirms that the State may not be operating in substantial 
conformity.

[[Page 319]]

    (d) Partial reviews based on noncompliance with State plan 
requirements that are outside the scope of a child and family services 
review. When ACF becomes aware of a title IV-B or title IV-E compliance 
issue that is outside the scope of the child and family services review 
process, we will:
    (1) Conduct an inquiry and require the State to submit additional 
data.
    (2) If the additional information and inquiry indicates to ACF's 
satisfaction that the State is in compliance, we will not proceed with 
any further review of the issue addressed by the inquiry.
    (3) ACF will institute a partial review, appropriate to the nature 
of the concern, if the State does not provide the additional information 
as requested, or the additional information confirms that the State may 
not be in compliance.
    (4) If the partial review determines that the State is not in 
compliance with the applicable State plan requirement, the State must 
enter into a program improvement plan designed to bring the State into 
compliance, if the provisions for such a plan are applicable. The terms, 
action steps and time-frames of the program improvement plan will be 
developed on a case-by-case basis by ACF and the State. The program 
improvement plan must take into consideration the extent of 
noncompliance and the impact of the noncompliance on the safety, 
permanency or well-being of children and families served through the 
State's title IV-B or IV-E allocation. If the State remains out of 
compliance, the State will be subject to a penalty related to the extent 
of the noncompliance.
    (5) Review of AFCARS compliance will take place in accordance with 
45 CFR 1355.40.

[65 FR 4076, Jan. 25, 2000, as amended at 66 FR 58675, Nov. 23, 2001]



Sec. 1355.33  Procedures for the review.

    (a) The full child and family services reviews will:
    (1) Consist of a two-phase process that includes a statewide 
assessment and an on-site review; and
    (2) Be conducted by a team of Federal and State reviewers that 
includes:
    (i) Staff of the State child and family services agency, including 
the State and local offices that represent the service areas that are 
the focus of any particular review;
    (ii) Representatives selected by the State, in collaboration with 
the ACF Regional Office, from those with whom the State was required to 
consult in developing its CFSP, as described and required in 45 CFR part 
1357.15(l);
    (iii) Federal staff of HHS; and
    (iv) Other individuals, as deemed appropriate and agreed upon by the 
State and ACF.
    (b) Statewide assessment. The first phase of the full review will be 
a statewide assessment conducted by the internal and external State 
members of the review team. The statewide assessment must:
    (1) Address each systemic factor under review, including the 
statewide information system; case review system; quality assurance 
system; staff training; service array; agency responsiveness to the 
community; and foster and adoptive parent licensing, recruitment and 
retention;
    (2) Assess the outcome areas of safety, permanence, and well-being 
of children and families served by the State agency using data from 
AFCARS and NCANDS. For the initial review, ACF may approve another data 
source to substitute for AFCARS, and in all reviews, ACF may approve 
another data source to substitute for NCANDS. The State must also 
analyze and explain its performance in meeting the national standards 
for the statewide data indicators;
    (3) Assess the characteristics of the State agency that have the 
most significant impact on the agency's capacity to deliver services to 
children and families that will lead to improved outcomes;
    (4) Assess the strengths and areas of the State's child and family 
services programs that require further examination through an on-site 
review;
    (5) Include a listing of all the persons external to the State 
agency who participated in the preparation of the statewide assessment 
pursuant to Secs. 1355.33(a)(2)(ii) and (iv); and
    (6) Be completed and submitted to ACF within 4 months of the date 
that ACF transmits the information for the statewide assessment to the 
State.

[[Page 320]]

    (c) On-site review. The second phase of the full review will be an 
on-site review.
    (1) The on-site review will cover the State's programs under titles 
IV-B and IV-E of the Act, including in-home services and foster care. It 
will be jointly planned by the State and ACF, and guided by information 
in the completed statewide assessment that identifies areas in need of 
improvement or further review.
    (2) The on-site review may be concentrated in several specific 
political subdivisions of the State, as agreed upon by the ACF and the 
State; however, the State's largest metropolitan subdivision must be one 
of the locations selected.
    (3) ACF has final approval of the selection of specific areas of the 
State's child and family services continuum described in paragraph 
(c)(1) of this section and selection of the political subdivisions 
referenced in paragraph (c)(2) of this section.
    (4) Sources of information collected during the on-site review to 
determine substantial conformity must include, but are not limited to:
    (i) Case records on children and families served by the agency;
    (ii) Interviews with children and families whose case records have 
been reviewed and who are, or have been, recipients of services of the 
agency;
    (iii) Interviews with caseworkers, foster parents, and service 
providers for the cases selected for the on-site review; and
    (iv) Interviews with key stakeholders, both internal and external to 
the agency, which, at a minimum, must include those individuals who 
participated in the development of the State's CFSP required at 45 CFR 
1357.15(1), courts, administrative review bodies, children's guardians 
ad litem and other individuals or bodies assigned responsibility for 
representing the best interests of the child.
    (5) The sample will range from 30-50 cases. Foster care cases must 
be drawn randomly from AFCARS, or, for the initial review, from another 
source approved by ACF and include children who entered foster care 
during the year under review. In-home cases must be drawn randomly from 
NCANDS or from another source approved by ACF. To ensure that all 
program areas are adequately represented, the sample size may be 
increased.
    (6) The sample of 30-50 cases reviewed on-site will be selected from 
a randomly drawn oversample of no more than 150 foster care and 150 in-
home services cases. The oversample must be statistically significant at 
a 90 percent compliance rate (95 percent in subsequent reviews), with a 
tolerable sampling error of 5 percent and a confidence coefficient of 95 
percent. The additional cases in the oversample not selected for the on-
site review will form the sample of cases to be reviewed, if needed, in 
order to resolve discrepancies between the statewide assessment and the 
on-site reviews in accordance with paragraph (d)(2) of this section.
    (d) Resolution of discrepancies between the statewide assessment and 
the findings of the on-site portion of the review. Discrepancies between 
the statewide assessment and the findings of the on-site portion of the 
review will be resolved by either of the following means, at the State's 
option:
    (1) The submission of additional information by the State; or
    (2) ACF and the State will review additional cases using only those 
indicators in which the discrepancy occurred. ACF and the State will 
determine jointly the number of additional cases to be reviewed, not to 
exceed 150 foster care cases or 150 in-home services cases to be 
selected as specified in paragraph (c)(6) of this section.
    (e) Partial review. A partial child and family services review, when 
required, will be planned and conducted jointly by ACF and the State 
agency based on the nature of the concern. A partial review does not 
substitute for the full reviews as required under Sec. 1355.32(b).
    (f) Notification. Within 30 calendar days following either a partial 
child and family services review, full child and family services review, 
or the resolution of a discrepancy between the statewide assessment and 
the findings of the on-site portion of the review, ACF will notify the 
State agency in writing of whether the State is, or is

[[Page 321]]

not, operating in substantial conformity.

[65 FR 4077, Jan. 25, 2000, as amended at 66 FR 58675, Nov. 23, 2001]



Sec. 1355.34  Criteria for determining substantial conformity.

    (a) Criteria to be satisfied. ACF will determine a State's 
substantial conformity with title IV-B and title IV-E State plan 
requirements based on the following:
    (1) Its ability to meet national standards, set by the Secretary, 
for statewide data indicators associated with specific outcomes for 
children and families;
    (2) Its ability to meet criteria related to outcomes for children 
and families; and
    (3) Its ability to meet criteria related to the State agency's 
capacity to deliver services leading to improved outcomes.
    (b) Criteria related to outcomes.
    (1) A State's substantial conformity will be determined by its 
ability to substantially achieve the following child and family service 
outcomes:
    (i) In the area of child safety:
    (A) Children are, first and foremost, protected from abuse and 
neglect; and,
    (B) Children are safely maintained in their own homes whenever 
possible and appropriate;
    (ii) In the area of permanency for children:
    (A) Children have permanency and stability in their living 
situations; and
    (B) The continuity of family relationships and connections is 
preserved for children; and
    (iii) In the area of child and family well-being:
    (A) Families have enhanced capacity to provide for their children's 
needs;
    (B) Children receive appropriate services to meet their educational 
needs; and
    (C) Children receive adequate services to meet their physical and 
mental health needs.
    (2) A State's level of achievement with regard to each outcome 
reflects the extent to which a State has:
    (i) Met the national standard(s) for the statewide data indicator(s) 
associated with that outcome, if applicable; and,
    (ii) Implemented the following CFSP requirements or assurances:
    (A) The requirements in 45 CFR 1357.15(p) regarding services 
designed to assure the safety and protection of children and the 
preservation and support of families;
    (B) The requirements in 45 CFR 1357.15(q) regarding the permanency 
provisions for children and families in sections 422 and 471 of the Act;
    (C) The requirements in section 422(b)(9) of the Act regarding 
recruitment of potential foster and adoptive families;
    (D) The assurances by the State as required by section 
422(b)(10)(C)(i) and (ii) of the Act regarding policies and procedures 
for abandoned children;
    (E) The requirements in section 422(b)(11) of the Act regarding the 
State's compliance with the Indian Child Welfare Act;
    (F) The requirements in section 422(b)(12) of the Act regarding a 
State's plan for effective use of cross-jurisdictional resources to 
facilitate timely adoptive or permanent placements; and,
    (G) The requirements in section 471(a)(15) of the Act regarding 
reasonable efforts to prevent removals of children from their homes, to 
make it possible for children in foster care to safely return to their 
homes, or, when the child is not able to return home, to place the child 
in accordance with the permanency plan and complete the steps necessary 
to finalize the permanent placement.
    (3) A State will be determined to be in substantial conformity if 
its performance on:
    (i) Each statewide data indicator developed pursuant to paragraph 
(b)(4) of this section meets the national standard described in 
paragraph (b)(5) of this section; and,
    (ii) Each outcome listed in paragraph (b)(1) of this section is 
rated as ``substantially achieved'' in 95 percent of the cases examined 
during the on-site review (90 percent of the cases for a State's initial 
review). Information from various sources (case records, interviews) 
will be examined for each outcome and a determination made as to the 
degree to which each outcome

[[Page 322]]

has been achieved for each case reviewed.
    (4) The Secretary may, using AFCARS and NCANDS, develop statewide 
data indicators for each of the specific outcomes described in paragraph 
(b)(1) of this section for use in determining substantial conformity. 
The Secretary may add, amend, or suspend any such statewide data 
indicator(s) when appropriate. To the extent practical and feasible, the 
statewide data indicators will be consistent with those developed in 
accordance with section 203 of the Adoption and Safe Families Act of 
1997 (Pub. L. 105-89).
    (5) The initial national standards for the statewide data indicators 
described in paragraph (b)(4) of this section will be based on the 75th 
percentile of all State performance for that indicator, as reported in 
AFCARS or NCANDS. The Secretary may adjust these national standards if 
appropriate. The initial national standard will be set using the 
following data sources:
    (i) The 1997 and 1998 submissions to NCANDS (or the most recent and 
complete 2 years available), for those statewide data indicators 
associated with the safety outcomes; and,
    (ii) The 1998b, 1999c, and 2000a submissions to AFCARS (or the most 
recent and complete report periods available), for those statewide data 
indicators associated with the permanency outcomes.
    (c) Criteria related to State agency capacity to deliver services 
leading to improved outcomes for children and families. In addition to 
the criteria related to outcomes contained in paragraph (b) of this 
section, the State agency must also satisfy criteria related to the 
delivery of services. Based on information from the statewide assessment 
and onsite review, the State must meet the following criteria for each 
systemic factor in paragraphs (c)(2) through (c)(7) of this section to 
be considered in substantial conformity: All of the State plan 
requirements associated with the systemic factor must be in place, and 
no more than one of the state plan requirements fails to function as 
described in paragraphs (c)(2) through (c)(7) of this section. The 
systemic factor in paragraph (c)(1) of this section, is rated on the 
basis of only one State plan requirement. To be considered in 
substantial conformity, the State plan requirement associated with 
statewide information system capacity must be both in place and 
functioning as described in the requirement. ACF will use a rating scale 
to make the determinations of substantial conformity. The systemic 
factors under review are:
    (1) Statewide information system: The State is operating a statewide 
information system that, at a minimum, can readily identify the status, 
demographic characteristics, location, and goals for the placement of 
every child who is (or within the immediately preceding 12 months, has 
been) in foster care (section 422(b)(10)(B)(i) of the Act);
    (2) Case review system: The State has procedures in place that:
    (i) Provide, for each child, a written case plan to be developed 
jointly with the child's parent(s) that includes provisions: for placing 
the child in the least restrictive, most family-like placement 
appropriate to his/her needs, and in close proximity to the parent' home 
where such placement is in the child's best interests; for visits with a 
child placed out of State at least every 12 months by a caseworker of 
the agency or of the agency in the State where the child is placed; and 
for documentation of the steps taken to make and finalize an adoptive or 
other permanent placement when the child cannot return home (sections 
422(b)(10)(B)(ii), 471(a)(16) and 475(5)(A) of the Act);
    (ii) Provide for periodic review of the status of each child no less 
frequently than once every six months by either a court or by 
administrative review (sections 422(b)(10)(B)(ii), 471(a)(16) and 
475(5)(B) of the Act);
    (iii) Assure that each child in foster care under the supervision of 
the State has a permanency hearing in a family or juvenile court or 
another court of competent jurisdiction (including a Tribal court), or 
by an administrative body appointed or approved by the court, which is 
not a part of or under the supervision or direction of the State agency, 
no later than 12 months from the date the child entered foster care (and 
not less frequently than every 12 months thereafter during the

[[Page 323]]

continuation of foster care) (sections 422(b)(10)(B)(ii), 471(a)(16) and 
475(5)(C) of the Act);
    (iv) Provide a process for termination of parental rights 
proceedings in accordance with sections 422(b)(10(B)(ii), 475(5)(E) and 
(F) of the Act; and,
    (v) Provide foster parents, preadoptive parents, and relative 
caregivers of children in foster care with notice of and an opportunity 
to be heard in permanency hearings and six-month periodic reviews held 
with respect to the child (sections 422(b)(10)(B)(ii), 475(5)(G) of the 
Act, and 45 CFR 1356.21(o)).
    (3) Quality assurance system: The State has developed and 
implemented standards to ensure that children in foster care placements 
are provided quality services that protect the safety and health of the 
children (section 471(a)(22)) and is operating an identifiable quality 
assurance system (45 CFR 1357.15(u)) as described in the CFSP that:
    (i) Is in place in the jurisdictions within the State where services 
included in the CFSP are provided;
    (ii) Is able to evaluate the adequacy and quality of services 
provided under the CFSP;
    (iii) Is able to identify the strengths and needs of the service 
delivery system it evaluates;
    (iv) Provides reports to agency administrators on the quality of 
services evaluated and needs for improvement; and
    (v) Evaluates measures implemented to address identified problems.
    (4) Staff training: The State is operating a staff development and 
training program (45 CFR 1357.15(t)) that:
    (i) Supports the goals and objectives in the State's CFSP;
    (ii) Addresses services provided under both subparts of title IV-B 
and the training plan under title IV-E of the Act;
    (iii) Provides training for all staff who provide family 
preservation and support services, child protective services, foster 
care services, adoption services and independent living services soon 
after they are employed and that includes the basic skills and knowledge 
required for their positions;
    (iv) Provides ongoing training for staff that addresses the skills 
and knowledge base needed to carry out their duties with regard to the 
services included in the State's CFSP; and,
    (v) Provides training for current or prospective foster parents, 
adoptive parents, and the staff of State-licensed or State-approved 
child care institutions providing care to foster and adopted children 
receiving assistance under title IV-E that addresses the skills and 
knowledge base needed to carry out their duties with regard to caring 
for foster and adopted children.
    (5) Service array: Information from the Statewide assessment and on-
site review determines that the State has in place an array of services 
(45 CFR 1357.15(n) and section 422(b)(10)(B)(iii) and (iv) of the Act) 
that includes, at a minimum:
    (i) Services that assess the strengths and needs of children and 
families assisted by the agency and are used to determine other service 
needs;
    (ii) Services that address the needs of the family, as well as the 
individual child, in order to create a safe home environment;
    (iii) Services designed to enable children at risk of foster care 
placement to remain with their families when their safety and well-being 
can be reasonably assured;
    (iv) Services designed to help children achieve permanency by 
returning to families from which they have been removed, where 
appropriate, be placed for adoption or with a legal guardian or in some 
other planned, permanent living arrangement, and through post-legal 
adoption services;
    (v) Services that are accessible to families and children in all 
political subdivisions covered in the State's CFSP; and,
    (vi) Services that can be individualized to meet the unique needs of 
children and families served by the agency.
    (6) Agency responsiveness to the community:
    (i) The State, in implementing the provisions of the CFSP, engages 
in ongoing consultation with a broad array of individuals and 
organizations representing the State and county agencies responsible for 
implementing the CFSP and other major stakeholders in

[[Page 324]]

the services delivery system including, at a minimum, tribal 
representatives, consumers, service providers, foster care providers, 
the juvenile court, and other public and private child and family 
serving agencies (45 CFR 1357.15(l)(4));
    (ii) The agency develops, in consultation with these or similar 
representatives, annual reports of progress and services delivered 
pursuant to the CFSP (45 CFR 1357.16(a));
    (iii) There is evidence that the agency's goals and objectives 
included in the CFSP reflect consideration of the major concerns of 
stakeholders consulted in developing the plan and on an ongoing basis 
(45 CFR 1357.15(m)); and
    (iv) There is evidence that the State's services under the plan are 
coordinated with services or benefits under other Federal or federally-
assisted programs serving the same populations to achieve the goals and 
objectives in the plan (45 CFR 1357.15(m)).
    (7) Foster and adoptive parent licensing, recruitment and retention:
    (i) The State has established and maintains standards for foster 
family homes and child care institutions which are reasonably in accord 
with recommended standards of national organizations concerned with 
standards for such institutions or homes (section 471(a)(10) of the 
Act);
    (ii) The standards so established are applied by the State to every 
licensed or approved foster family home or child care institution 
receiving funds under title IV-E or IV-B of the Act (section 471(a)(10) 
of the Act);
    (iii) The State complies with the safety requirements for foster 
care and adoptive placements in accordance with sections 471(a)(16), 
471(a)(20) and 475(1) of the Act and 45 CFR 1356.30;
    (iv) The State has in place an identifiable process for assuring the 
diligent recruitment of potential foster and adoptive families that 
reflect the ethnic and racial diversity of children in the State for 
whom foster and adoptive homes are needed (section 422(b)(9) of the 
Act); and,
    (v) The State has developed and implemented plans for the effective 
use of cross-jurisdictional resources to facilitate timely adoptive or 
permanent placements for waiting children (section 422(b)(12) of the 
Act).
    (d) Availability of review instruments. ACF will make available to 
the States copies of the review instruments, which will contain the 
specific standards to be used to determine substantial conformity, on an 
ongoing basis, whenever significant revisions to the instruments are 
made.

[65 FR 4078, Jan. 25, 2000, as amended at 66 FR 58675, Nov. 23, 2001]



Sec. 1355.35  Program improvement plans.

    (a) Mandatory program improvement plan.
    (1) States found not to be operating in substantial conformity shall 
develop a program improvement plan. The program improvement plan must:
    (i) Be developed jointly by State and Federal staff in consultation 
with the review team;
    (ii) Identify the areas in which the State's program is not in 
substantial conformity;
    (iii)Set forth the goals, the action steps required to correct each 
identified weakness or deficiency, and dates by which each action step 
is to be completed in order to improve the specific areas;
    (iv) Set forth the amount of progress the statewide data will make 
toward meeting the national standards;
    (v) Establish benchmarks that will be used to measure the State's 
progress in implementing the program improvement plan and describe the 
methods that will be used to evaluate progress;
    (vi) Identify how the action steps in the plan build on and make 
progress over prior program improvement plans;
    (vii) Identify the technical assistance needs and sources of 
technical assistance, both Federal and non-Federal, which will be used 
to make the necessary improvements identified in the program improvement 
plan.
    (2) In the event that ACF and the State cannot reach consensus 
regarding the content of a program improvement plan or the degree of 
program or data improvement to be achieved, ACF retains the final 
authority to assign the contents of the plan and/or the degree of 
improvement required for successful completion of the plan. Under such 
circumstances, ACF will render a

[[Page 325]]

written rationale for assigning such content or degree of improvement.
    (b) Voluntary program improvement plan. States found to be operating 
in substantial conformity may voluntarily develop and implement a 
program improvement plan in collaboration with the ACF Regional Office, 
under the following circumstances:
    (1) The State and Regional Office agree that there are areas of the 
State's child and family services programs in need of improvement which 
can be addressed through the development and implementation of a 
voluntary program improvement plan;
    (2) ACF approval of the voluntary program improvement plan will not 
be required; and
    (3) No penalty will be assessed for the State's failure to achieve 
the goals described in the voluntary program improvement plan.
    (c) Approval of program improvement plans.
    (1) A State determined not to be in substantial conformity must 
submit a program improvement plan to ACF for approval within 90 calendar 
days from the date the State receives the written notification from ACF 
that it is not operating in substantial conformity.
    (2) Any program improvement plan will be approved by ACF if it meets 
the provisions of paragraph (a) of this section.
    (3) If the program improvement plan does not meet the provisions of 
paragraph (a) of this section, the State will have 30 calendar days from 
the date it receives notice from ACF that the plan has not been approved 
to revise and resubmit the plan for approval.
    (4) If the State does not submit a revised program improvement plan 
according to the provisions of paragraph (c)(3) of this section or if 
the plan does not meet the provisions of paragraph (a) of this section, 
withholding of funds pursuant to the provisions of Sec. 1355.36 of this 
part will begin.
    (d) Duration of program improvement plans.
    (1) ACF retains the authority to establish time frames for the 
program improvement plan consistent with the seriousness and complexity 
of the remedies required for any areas determined not in substantial 
conformity, not to exceed two years.
    (2) Particularly egregious areas of nonconformity impacting child 
safety must receive priority in both the content and time frames of the 
program improvement plans and must be addressed in less than two years.
    (3) The Secretary may approve extensions of deadlines in a program 
improvement plan not to exceed one year. The circumstances under which 
requests for extensions will be approved are expected to be rare. The 
State must provide compelling documentation of the need for such an 
extension. Requests for extensions must be received by ACF at least 60 
days prior to the affected completion date.
    (4) States must provide quarterly status reports (unless ACF and the 
State agree upon less frequent reports) to ACF. Such reports must inform 
ACF of progress in implementing the measures of the plan.
    (e) Evaluating program improvement plans. Program improvement plans 
will be evaluated jointly by the State agency and ACF, in collaboration 
with other members of the review team, as described in the State's 
program improvement plan and in accordance with the following criteria:
    (1) The methods and information used to measure progress must be 
sufficient to determine when and whether the State is operating in 
substantial conformity or has reached the negotiated standard with 
respect to statewide data indicators that failed to meet the national 
standard for that indicator;
    (2) The frequency of evaluating progress will be determined jointly 
by the State and Federal team members, but no less than annually. 
Evaluation of progress will be performed in conjunction with the annual 
updates of the State's CFSP, as described in paragraph (f) of this 
section;
    (3) Action steps may be jointly determined by the State and ACF to 
be achieved prior to projected completion dates, and will not require 
any further evaluation at a later date; and
    (4) The State and ACF may jointly renegotiate the terms and 
conditions of the program improvement plan as needed, provided that:

[[Page 326]]

    (i) The renegotiated plan is designed to correct the areas of the 
State's program determined not to be in substantial conformity and/or 
achieve a standard for the statewide data indicators that is acceptable 
to ACF;
    (ii) The amount of time needed to implement the provisions of the 
plan does not extend beyond three years from the date the original 
program improvement plan was approved;
    (iii) The terms of the renegotiated plan are approved by ACF; and
    (iv) The Secretary approves any extensions beyond the two-year 
limit.
    (f) Integration of program improvement plans with CFSP planning. The 
elements of the program improvement plan must be incorporated into the 
goals and objectives of the State's CFSP. Progress in implementing the 
program improvement plan must be included in the annual reviews and 
progress reports related to the CFSP required in 45 CFR 1357.16.

[65 FR 4080, Jan. 25, 2000, as amended at 66 FR 58675, Nov. 23, 2001]



Sec. 1355.36  Withholding Federal funds due to failure to achieve substantial conformity or failure to successfully complete a program improvement plan.

    (a) For the purposes of this section:
    (1) The term ``title IV-B funds'' refers to the State's combined 
allocation of title IV-B subpart 1 and subpart 2 funds; and
    (2) The term ``title IV-E funds'' refers to the State's 
reimbursement for administrative costs for the foster care program under 
title IV-E.
    (b) Determination of the amount of Federal funds to be withheld. ACF 
will determine the amount of the State title IV-B and IV-E funds to be 
withheld due to a finding that the State is not operating in substantial 
conformity, as follows:
    (1) A State will have the opportunity to develop and complete a 
program improvement plan prior to any withholding of funds.
    (2) Title IV-B and IV-E funds will not be withheld from a State if 
the determination of nonconformity was caused by the State's correct use 
of formal written statements of Federal law or policy provided the State 
by DHHS.
    (3) A portion of the State's title IV-B and IV-E funds will be 
withheld by ACF for the year under review and for each succeeding year 
until the State either successfully completes a program improvement plan 
or is found to be operating in substantial conformity.
    (4) The amount of title IV-B and title IV-E funds subject to 
withholding due to a determination that a State is not operating in 
substantial conformity is based on a pool of funds defined as follows:
    (i) The State's allotment of title IV-B funds for each of the years 
to which the withholding applies; and
    (ii) An amount equivalent to 10 percent of the State's Federal 
claims for title IV-E foster care administrative costs for each of the 
years to which withholding applies;
    (5) The amount of funds to be withheld from the pool in paragraph 
(b)(4) of this section will be computed as follows:
    (i) Except as provided for in paragraphs (b)(7) and (b)(8) of this 
section, an amount equivalent to one percent of the funds described in 
paragraph (b)(4) of this section for each of the years to which 
withholding applies will be withheld for each of the seven outcomes 
listed in Sec. 1355.34(b)(1) of this part that is determined not to be 
in substantial conformity; and
    (ii) Except as provided for in paragraphs (b)(7) and (b)(8) of this 
section, an amount equivalent to one percent of the funds described in 
paragraph (b)(4) of this section for each of the years to which 
withholding applies will be withheld for each of the seven systemic 
factors listed in Sec. 1355.34(c) of this part that is determined not to 
be in substantial conformity.
    (6) Except as provided for in paragraphs (b)(7), (b)(8), and (e)(4) 
of this section, in the event the State is determined to be in 
nonconformity on each of the seven outcomes and each of the seven 
systemic factors subject to review, the maximum amount of title IV-B and 
title IV-E funds to be withheld due to the State's failure to comply is 
14 percent per year of the funds described in paragraph (b)(4) of this 
section for each year.

[[Page 327]]

    (7) States determined not to be in substantial conformity that fail 
to correct the areas of nonconformity through the successful completion 
of a program improvement plan, and are determined to be in nonconformity 
on the second full review following the first full review in which a 
determination of nonconformity was made will be subject to increased 
withholding as follows:
    (i) The amount of funds described in paragraph (b)(5) of this 
section will increase to two percent for each of the seven outcomes and 
each of the seven systemic factors that continues in nonconformity since 
the immediately preceding child and family services review;
    (ii) The increased withholding of funds for areas of continuous 
nonconformity is subject to the provisions of paragraphs (c), (d), and 
(e) of this section;
    (iii) The maximum amount of title IV-B and title IV-E funds to be 
withheld due to the State's failure to comply on the second full review 
following the first full review in which the determination of 
nonconformity was made is 28 percent of the funds described in paragraph 
(b)(4) of this section for each year to which the withholding of funds 
applies.
    (8) States determined not to be in substantial conformity that fail 
to correct the areas of nonconformity through the successful completion 
of a program improvement plan, and are determined to be in nonconformity 
on the third and any subsequent full reviews following the first full 
review in which a determination of nonconformity was made will be 
subject to increased withholding as follows:
    (i) The amount of funds described in paragraph (b)(5) of this 
section will increase to three percent for each of the seven outcomes 
and each of the seven systemic factors that continues in nonconformity 
since the immediately preceding child and family services review;
    (ii) The increased withholding of funds for areas of continuous 
nonconformity is subject to the provisions of paragraphs (c), (d), and 
(e) of this section;
    (iii) The maximum amount of title IV-B and title IV-E funds to be 
withheld due to the State's failure to comply on the third and any 
subsequent full reviews following the first full review in which the 
determination of nonconformity was made is 42 percent of the funds 
described in paragraph (b)(4) of this section for each year to which the 
withholding of funds applies.
    (c) Suspension of withholding.
    (1) For States determined not to be operating in substantial 
conformity, ACF will suspend the withholding of the State title IV-B and 
title IV-E funds during the time that a program improvement plan is in 
effect, provided that:
    (i) The program improvement plan conforms to the provisions of 
Sec. 1355.35 of this part; and
    (ii) The State is actively implementing the provisions of the 
program improvement plan.
    (2) Suspension of the withholding of funds is limited to three years 
following each review, or the amount of time approved for implementation 
of the program improvement plan, whichever is less.
    (d) Terminating the withholding of funds. For States determined not 
to be in substantial conformity, ACF will terminate the withholding of 
the State's title IV-B and title IV-E funds related to the nonconformity 
upon determination by the State and ACF that the State has achieved 
substantial conformity or has successfully completed a program 
improvement plan. ACF will rescind the withholding of the portion of 
title IV-B and title IV-E funds related to specific goals or action 
steps as of the date at the end of the quarter in which they were 
determined to have been achieved.
    (e) Withholding of funds.
    (1) States determined not to be in substantial conformity that fail 
to successfully complete a program improvement plan will be notified by 
ACF of this final determination of nonconformity in writing within 10 
business days after the relevant completion date specified in the plan, 
and advised of the amount of title IV-B and title IV-E funds which are 
to be withheld.
    (2) Title IV-B and title IV-E funds will be withheld based on the 
following:

[[Page 328]]

    (i) If the State fails to submit status reports in accordance with 
Sec. 1355.35(d)(4), or if such reports indicate that the State is not 
making satisfactory progress toward achieving goals or actions steps, 
funds will be withheld at that time for a period beginning October 1 of 
the fiscal year for which the determination of nonconformity was made 
and ending on the specified completion date for the affected goal or 
action step.
    (ii) Funds related to goals and action steps that have not been 
achieved by the specified completion date will be withheld at that time 
for a period beginning October 1 of the fiscal year for which the 
determination of nonconformity was made and ending on the completion 
date of the affected goal or action step; and
    (iii) The withholding of funds commensurate with the level of 
nonconformity at the end of the program improvement plan will begin at 
the latest completion date specified in the program improvement plan and 
will continue until a subsequent full review determines the State to be 
in substantial conformity or the State successfully completes a program 
improvement plan developed as a result of that subsequent full review.
    (3) When the date the State is determined to be in substantial 
conformity or to have successfully completed a program improvement plan 
falls within a specific quarter, the amount of funds to be withheld will 
be computed to the end of that quarter.
    (4) A State agency that refuses to participate in the development or 
implementation of a program improvement plan, as required by ACF, will 
be subject to the maximum increased withholding of 42 percent of its 
title IV-B and title IV-E funds, as described in paragraph (b)(8) of 
this section, for each year or portion thereof to which the withholding 
of funds applies.
    (5) The State agency will be liable for interest on the amount of 
funds withheld by the Department, in accordance with the provisions of 
45 CFR 30.13.

[65 FR 4081, Jan. 25, 2000, as amended at 66 FR 58675, Nov. 23, 2001]



Sec. 1355.37  Opportunity for Public Inspection of Review Reports and Materials.

    The State agency must make available for public review and 
inspection all statewide assessments (Sec. 1355.33(b)), report of 
findings (Sec. 1355.33(e)), and program improvement plans 
(Sec. 1355.35(a)) developed as a result of a full or partial child and 
family services review.

[65 FR 4082, Jan. 25, 2000]



Sec. 1355.38  Enforcement of section 471(a)(18) of the Act regarding the removal of barriers to interethnic adoption.

    (a) Determination that a violation has occurred in the absence of a 
court finding.
    (1) If ACF becomes aware of a possible section 471(a)(18) violation, 
whether in the course of a child and family services review, the filing 
of a complaint, or through some other mechanism, it will refer such a 
case to the Department's Office for Civil Rights (OCR) for 
investigation.
    (2) Based on the findings of the OCR investigation, ACF will 
determine if a violation of section 471(a)(18) has occurred. A section 
471(a)(18) violation occurs if a State or an entity in the State:
    (i) Has denied to any person the opportunity to become an adoptive 
or foster parent on the basis of the race, color, or national origin of 
the person, or of the child, involved;
    (ii) Has delayed or denied the placement of a child for adoption or 
into foster care on the basis of the race, color, or national origin of 
the adoptive or foster parent, or the child involved; or,
    (iii) With respect to a State, maintains any statute, regulation, 
policy, procedure, or practice that on its face, is a violation as 
defined in paragraphs (a)(2)(i) and (2)(ii) of this section.
    (3) ACF will provide the State or entity with written notification 
of its determination.
    (4) If there has been no violation, there will be no further action. 
If ACF determines that there has been a violation of section 471(a)(18), 
it will take enforcement action as described in this section.
    (5) Compliance with the Indian Child Welfare Act of 1978 (Pub. L. 
95-608) does

[[Page 329]]

not constitute a violation of section 471(a)(18).
    Corrective action and penalties for violations with respect to a 
person or based on a court finding.
    (1) A State or entity found to be in violation of section 471(a)(18) 
of the Act with respect to a person, as described in paragraphs 
(a)(2)(i) and (a)(2)(ii) of this section, will be penalized in 
accordance with paragraph (g)(2) of this section. A State or entity 
determined to be in violation of section 471(a)(18) of the Act as a 
result of a court finding will be penalized in accordance with paragraph 
(g)(4) of this section. The State may develop, obtain approval of, and 
implement a plan of corrective action any time after it receives written 
notification from ACF that it is in violation of section 471(a)(18) of 
the Act.
    (2) Corrective action plans are subject to ACF approval.
    (3) If the corrective action plan does not meet the provisions of 
paragraph (d) of this section, the State must revise and resubmit the 
plan for approval until it has an approved plan.
    (4) A State or entity found to be in violation of section 471(a)(18) 
of the Act by a court must notify ACF within 30 days from the date of 
entry of the final judgement once all appeals have been exhausted, 
declined, or the appeal period has expired.
    (c) Corrective action for violations resulting from a State's 
statute, regulation, policy, procedure, or practice.
    (1) A State found to have committed a violation of the type 
described in paragraph (a)(2)(iii) of this section must develop and 
submit a corrective action plan within 30 days of receiving written 
notification from ACF that it is in violation of section 471(a)(18). 
Once the plan is approved the State will have to complete the corrective 
action and come into compliance. If the State fails to complete the 
corrective action plan within six months and come into compliance, a 
penalty will be imposed in accordance with paragraph (g)(3) of this 
section.
    (2) Corrective action plans are subject to ACF approval.
    (3) If the corrective action plan does not meet the provisions of 
paragraph (d) of this section, the State must revise and resubmit the 
plan within 30 days from the date it receives a written notice from ACF 
that the plan has not been approved. If the State does not submit a 
revised corrective action plan according to the provisions of paragraph 
(d) of this section, withholding of funds pursuant to the provisions of 
paragraph (g) of this section will apply.
    (d) Contents of a corrective action plan. A corrective action plan 
must:
    (1) Identify the issues to be addressed;
    (2) Set forth the steps for taking corrective action;
    (3) Identify any technical assistance needs and Federal and non-
Federal sources of technical assistance which will be used to complete 
the action steps; and,
    (4) Specify the completion date. This date will be no later than 6 
months from the date ACF approves the corrective action plan.
    (e) Evaluation of corrective action plans. ACF will evaluate 
corrective action plans and notify the State (in writing) of its success 
or failure to complete the plan within 30 calendar days. If the State 
has failed to complete the corrective action plan, ACF will calculate 
the amount of reduction in the State's title IV-E payment and include 
this information in the written notification of failure to complete the 
plan.
    (f) Funds to be withheld. The term ``title IV-E funds'' refers to 
the amount of Federal funds advanced or paid to the State for allowable 
costs incurred by a State for: foster care maintenance payments, 
adoption assistance payments, administrative costs, and training costs 
under title IV-E and includes the State's allotment for the Chafee 
Foster Care Independence Program under section 477 of the Act.
    (g) Reduction of title IV-E funds.
    (1) Title IV-E funds shall be reduced in specified amounts in 
accordance with paragraph (h) of this section under the following 
circumstances:
    (i) A determination that a State or entity is in violation of 
section 471(a)(18) of the Act with respect to a person as described in 
paragraphs (a)(2)(i) and (a)(2)(ii) of this section, or:
    (ii) After a State's failure to implement and complete a corrective 
action

[[Page 330]]

plan and come into compliance as described in paragraph (c) of this 
section.
    (2) Once ACF notifies a State (in writing) that it has committed a 
section 471(a)(18) violation with respect to a person, the State's title 
IV-E funds will be reduced for the fiscal quarter in which the State 
received written notification and for each succeeding quarter within 
that fiscal year or until the State completes a corrective action plan 
and comes into compliance, whichever is earlier. Once ACF notifies an 
entity (in writing) that it has committed a section 471(a)(18) violation 
with respect to a person, the entity must remit to the Secretary all 
title IV-E funds paid to it by the State during the quarter in which the 
entity is notified of the violation.
    (3) For States that fail to complete a corrective action plan within 
6 months, title IV-E funds will be reduced by ACF for the fiscal quarter 
in which the State received notification of its violation. The reduction 
will continue for each succeeding quarter within that fiscal year or 
until the State completes the corrective action plan and comes into 
compliance, whichever is earlier.
    (4) If, as a result of a court finding, a State or entity is 
determined to be in violation of section 471(a)(18) of the Act, ACF will 
assess a penalty without further investigation. Once the State is 
notified (in writing) of the violation, its title IV-E funds will be 
reduced for the fiscal quarter in which the court finding was made and 
for each succeeding quarter within that fiscal year or until the State 
completes a corrective action plan and comes into compliance, whichever 
is sooner. Once an entity is notified (in writing) of the violation, the 
entity must remit to the Secretary all title IV-E funds paid to it by 
the State during the quarter in which the court finding was made.
    (5) The maximum number of quarters that a State will have its title 
IV-E funds reduced due to a finding of a State's failure to conform to 
section 471(a)(18) of the Act is limited to the number of quarters 
within the fiscal year in which a determination of nonconformity was 
made. However, an uncorrected violation may result in a subsequent 
review, another finding, and additional penalties.
    (6) No penalty will be imposed for a court finding of a violation of 
section 471(a)(18) until the judgement is final and all appeals have 
been exhausted, declined, or the appeal period has expired.
    (h) Determination of the amount of reduction of Federal funds. ACF 
will determine the reduction in title IV-E funds due to a section 
471(a)(18) violation in accordance with section 474(d)(1) and (2) of the 
Act.
    (1) State agencies that violate section 471(a)(18) with respect to a 
person or fail to implement or complete a corrective action plan as 
described in paragraph (c) of this section will be subject to a penalty. 
The penalty structure will follow section 474(d)(1) of the Act. 
Penalties will be levied for the quarter of the fiscal year in which the 
State is notified of its section 471(a)(18) violation, and for each 
succeeding quarter within that fiscal year until the State comes into 
compliance with section 471(a)(18). The reduction in title IV-E funds 
will be computed as follows:
    (i) 2 percent of the State's title IV-E funds for the fiscal year 
quarter, as defined in paragraph (f) of this section, for the first 
finding of noncompliance in that fiscal year;
    (ii) 3 percent of the State's title IV-E funds for the fiscal year 
quarter, as defined in paragraph (f) of this section, for the second 
finding of noncompliance in that fiscal year;
    (iii) 5 percent of the State's title IV-E funds for the fiscal year 
quarter, as defined in paragraph (f) of this section, for the third or 
subsequent finding of noncompliance in that fiscal year.
    (2) Any entity (other than the State agency) which violates section 
471(a)(18) of the Act during a fiscal quarter must remit to the 
Secretary all title IV-E funds paid to it by the State in accordance 
with the procedures in paragraphs (g)(2) or (g)(4) of this section.
    (3) No fiscal year payment to a State will be reduced by more than 5 
percent of its title IV-E funds, as defined in paragraph (f) of this 
section, where the State has been determined to be out of compliance 
with section 471(a)(18) of the Act.
    (4) The State agency or entity, as applicable, will be liable for 
interest on

[[Page 331]]

the amount of funds reduced by the Department, in accordance with the 
provisions of 45 CFR 30.13.

[65 FR 4082, Jan. 25, 2000, as amended at 66 FR 58676, Nov. 23, 2001]



Sec. 1355.39  Administrative and judicial review.

    States determined not to be in substantial conformity with titles 
IV-B and IV-E State plan requirements, or a State or entity in violation 
of section 471(a)(18) of the Act:
    (a) May appeal, pursuant to 45 CFR part 16, the final determination 
and any subsequent withholding of, or reduction in, funds to the HHS 
Departmental Appeals Board within 60 days after receipt of a notice of 
nonconformity described in Sec. 1355.36(e)(1) of this part, or receipt 
of a notice of noncompliance by ACF as described in Sec. 1355.38(a)(3) 
of this part; and
    (b) Will have the opportunity to obtain judicial review of an 
adverse decision of the Departmental Appeals Board within 60 days after 
the State or entity receives notice of the decision by the Board. 
Appeals of adverse Department Appeals Board decisions must be made to 
the district court of the United States for the judicial district in 
which the principal or headquarters office of the agency responsible for 
administering the program is located.
    (c) The procedure described in paragraphs (a) and (b) of this 
section will not apply to a finding that a State or entity has been 
determined to be in violation of section 471(a)(18) which is based on a 
judicial decision.

[65 FR 4083, Jan. 25, 2000]



Sec. 1355.40  Foster care and adoption data collection.

    (a) Scope of the data collection system. (1) Each State which 
administers or supervises the administration of titles IV-B and IV-E 
must implement a system that begins to collect data on October 1, 1994. 
The first transmission must be received in ACF no later than May 15, 
1995. The data reporting system must meet the requirements of 
Sec. 1355.40(b) and electronically report certain data regarding 
children in foster care and adoption. The foster care data elements are 
listed and defined in Appendix A to this part and the adoption data 
elements are listed and defined in Appendix B to this part.
    (2) For the purposes of foster care reporting, each State's data 
transmission must include all children in foster care for whom the State 
title IV-B/IV-E agency has responsibility for placement, care, or 
supervision. This includes American Indian children covered under the 
assurances in section 422(b)(10) of the Act on the same basis as any 
other child. For children in care less than 30 days, only a core set of 
information will be required, as noted in appendix A to this part. For 
children who enter foster care prior to October 1, 1995 and who are 
still in the system, core data elements will be required; in addition, 
States will also be required to report on the most recent case plan goal 
affecting those children. For children in out-of-State placement, the 
State placing the child and making the foster care payment submits and 
continually updates the data.
    (3) For the purposes of adoption reporting, data are required to be 
transmitted by the State on all adopted children who were placed by the 
State title IV-B/IV-E agency, and on all adopted children for whom the 
State agency is providing adoption assistance (either ongoing or for 
nonrecurring expenses), care or services directly or by contract or 
agreement with other private or public agencies. Full adoption data as 
specified in appendix B to this part are required only for children 
adopted after the implementation date of October 1, 1994. For children 
adopted prior to October 1, 1994, who are continuing to receive title 
IV-E subsidies, aggregate data are to be reported. For a child adopted 
out-of-State, the State which placed the child submits the data.
    (b) Foster care and adoption reporting requirements. (1) The State 
agency shall transmit semi-annually, within 45 days of the end of the 
reporting period (i.e., by May 15 and November 14), information on each 
child in foster care and each child adopted during the reporting period. 
The information to be reported consists of the data elements found in 
appendices A and B to this part. The data must be extracted from the 
data

[[Page 332]]

system as of the last day of the reporting period and must be submitted 
in electronic form as described in appendix C to this part and in record 
layouts as delineated in appendix D to this part.
    (2) For foster care information, the child-specific data to be 
transmitted must reflect the data in the information system when the 
data are extracted. Dates of removal from the home and discharge from 
foster care must be entered in accordance with paragraph (d)(1) of this 
section. The date of the most recent periodic review (either 
administrative or court) must be entered for children who have been in 
foster care for more than nine months. Entry of this date constitutes 
State certification that the data on the child have been reviewed and 
are current.
    (3) Adoption data are to be reported during the reporting period in 
which the adoption is legalized or, at the State's option, in the 
following reporting period if the adoption is legalized within the last 
60 days of the reporting period. For a semi-annual period in which no 
adoptions have been legalized, States must report such an occurrence.
    (4) A summary file of the semi-annual data transmission must be 
submitted and will be used to verify the completeness of the State's 
detailed submission for the reporting period.
    (5) A variety of internal data consistency checks will be used to 
judge the internal consistency of the semi-annual detailed data 
submission. These are specified in Appendix E to this part.
    (c) Missing data standards. (1) The term ``missing data'' refers to 
instances where no data have been entered, if applicable, for a 
particular data element. In addition, all data elements which fail a 
consistency check for a particular case will be converted to missing 
data. All data which are ``out of range'' (i.e., the response is beyond 
the parameters allowed for that particular data element) will also be 
converted to missing data. Details of the circumstances under which data 
will be converted to missing data are specified in appendix E to this 
part. Data elements with responses of ``cannot be determined'' or ``not 
yet determined'' are not considered as having missing data.
    (2) For missing data in excess of 10 percent for any one data 
element, the penalty will be applied.
    (3) The penalties for missing data are specified in paragraph (e) of 
this section.
    (d) Timeliness of foster care data reports. (1) For each child, a 
computer generated transaction date must reflect the actual date of data 
entry and must accompany the date of latest removal from the home and 
the date of exit from foster care. Ninety percent of the subject 
transactions must have been entered into the system within 60 days of 
the event (removal from home or discharge from foster care).
    (2) Penalties shall be invoked as provided in paragraph (e) of this 
section.
    (e) Penalties. (1) Failure by a State to meet any of the standards 
described in paragraphs (a) through (d) of this section is considered a 
substantial failure to meet the requirements of the title IV-E State 
plan. Penalties for substantial noncompliance will be assessed semi-
annually against a State's title IV-E administrative cost reimbursement 
in an amount that is equal to no more than 10 percent of the State's 
annual share of title IV-B funds above the base appropriation of $141 
million. The amount of incentive funds, section 427 of the Act, against 
which a penalty can be assessed will remain the same as the amount 
promulgated as being available to the States as of June 30, 1993, the 
date of issuance of the amount of section 427 funds for fiscal year 1993 
(see Appendix F to this part). The penalties will be calculated and 
applied regardless of any determination of compliance with the 
requirements of section 427, and regardless of whether any State has 
withdrawn its certification with respect to section 427. Years One 
through three (October 1, 1994 through September 30, 1997) will be three 
penalty-free years of operation. Year Four (October 1, 1997 through 
September 30, 1998) will be at half penalty and Year Five (October 1, 
1998 through September 30, 1999) and thereafter will be at full penalty. 
The maximum annual penalty is 20 percent.

[[Page 333]]

    (2) Penalties will be assessed semi-annually against a State's title 
IV-E administrative cost reimbursement for the period in which the 
noncompliance occurred and any subsequent period of noncompliance. 
Following a decision sustaining ACYF's proposed action, funds will be 
recovered until the State demonstrates, by submitting an acceptable 
report, that it will no longer fail to comply.
    (3) Half of the maximum allowable assessed penalty for a given 
reporting period is applicable to foster care reporting and half to 
adoption reporting.
    (4) The penalty for foster care reporting will be applied for any 
semi-annual period when a State fails to meet one or more of the 
following criteria:
    (i) Fails to submit the report within 45 days of the end of the 
reporting period as specified in paragraphs (b)(1) and (b)(2) of this 
section; or
    (ii) There is one or more element which exceeds the level of 
tolerance for missing data as specified in paragraphs (c)(1) and (c)(2) 
of this section; or
    (iii) Fails to meet the timeliness standards as specified in 
paragraph (d)(1) of this section.
    (5) The penalty for adoption reporting will be applied for any semi-
annual period when a State fails to meet one or more of the following 
criteria:
    (i) Fails to submit the report within 45 days of the end of the 
reporting period as specified in paragraphs (b)(1) and (b)(3) of this 
section; or
    (ii) There is one or more element which exceeds the level of 
tolerance for missing data as specified in paragraphs (c)(1) and (c)(2) 
of this section.

(This requirement has been approved by the Office of Management and 
Budget under OMB Control Number 0980-0267. In accordance with the 
Paperwork Reduction Act of 1995, an agency may not conduct or sponsor, 
and a person is not required to respond to, a collection of information 
unless it displays a currently valid OMB control number.)

[58 FR 67924, Dec. 22, 1993, as amended at 60 FR 40507, Aug. 9, 1995; 65 
FR 4084, Jan. 25, 2000; 66 FR 58676, Nov. 23, 2001]



Sec. 1355.50  Purpose of this part.

    This part sets forth the requirements and procedures States must 
meet in order to receive Federal financial participation for the 
planning, design, development, installation and operation of statewide 
automated child welfare information systems authorized under section 
474(a)(3)(c) of the Act.

[58 FR 67945, Dec. 22, 1993]



Sec. 1355.52  Funding authority for statewide automated child welfare information systems (SACWIS).

    (a) States may receive Federal reimbursement at the 75 percent match 
rate for FY 1994, FY 1995 and FY 1996, and at the 50 percent level 
thereafter for expenditures related to the planning, design, development 
and installation of a statewide automated child welfare information 
system, to the extent such system:
    (1) Provides for the State to collect and electronically report 
certain data required by section 479(b) of the Act and Sec. 1355.40 of 
this part;
    (2) To the extent practicable, provides for an interface with the 
State data collection system for child abuse and neglect;
    (3) To the extent practicable, provides for an interface with and 
retrieval of information from the State automated information system 
that collects information relating to the eligibility of individuals 
under title IV-A of the Act; and
    (4) Provides for more efficient, economical and effective 
administration of the programs carried out under a State plan approved 
under title IV-B and title IV-E.
    (b) States may also be reimbursed for the full amount of 
expenditures for the hardware components for such systems at the rates 
provided under paragraph (a) of this section.
    (c) Expenditures for the operation of the automated information 
system described in paragraph (a) of this section are eligible for FFP 
at the 50 percent matching rate.

[58 FR 67945, Dec. 22, 1993]



Sec. 1355.53  Conditions for approval of funding.

    (a) As a condition of funding, the SACWIS must be designed, 
developed (or an existing system enhanced), and installed in accordance 
with an approved advance planning document

[[Page 334]]

(APD). The APD must provide for a design which, when implemented, will 
produce a comprehensive system, which is effective and efficient, to 
improve the program management and administration of the State plans for 
titles IV-B and IV-E as provided under this section.
    (b) At a minimum, the system must provide for effective management, 
tracking and reporting by providing automated procedures and processes 
to:
    (1) Meet the Adoption and Foster Care reporting requirements through 
the collection, maintenance, integrity checking and electronic 
transmission of the data elements specified by the Adoption and Foster 
Care Analysis and Reporting System (AFCARS) requirements mandated under 
section 479(b) of the Act and Sec. 1355.40 of this part;
    (2) Provide, for electronic exchanges and referrals, as appropriate, 
with the following systems within the State, unless the State 
demonstrates that such interface or integration would not be practicable 
because of systems limitations or cost constraints:
    (i) Systems operated under title IV-A,
    (ii) National Child Abuse and Neglect Data Systems (NCANDS),
    (iii) Systems operated under title XIX, and
    (iv) Systems operated under title IV-D;
    (3) Support the provisions of section 422(a) by providing for the 
automated collection, maintenance, management and reporting of 
information on all children in foster care under the responsibility of 
the State, including statewide data from which the demographic 
characteristics, location, and goals for foster care children can be 
determined;
    (4) Collect and manage information necessary to facilitate the 
delivery of client services, the acceptance and referral of clients, 
client registration, and the evaluation of the need for services, 
including child welfare services under title IV-B Subparts 1 and 2, 
family preservation and family support services, family reunificication 
and permanent placement;
    (5) Collect and manage information necessary to determine 
eligibility for:
    (i) The foster care program,
    (ii) The adoption assistance program, and
    (iii) The independent living program;
    (6) Support necessary case assessment activities;
    (7) Monitor case plan development, payment authorization and 
issuance, review and management, including eligibility determinations 
and redeterminations; and
    (8) Ensure the confidentiality and security of the information and 
the system.
    (c) A system established under paragraph (a) of this section may 
also provide support in meeting the following program functions:
    (1) Resource management, including automated procedures to assist in 
managing service providers, facilities, contracts and recruitment 
activities associated with foster care and adoptive families;
    (2) Tracking and maintenance of legal and court information, and 
preparation of appropriate notifications to relevant parties;
    (3) Administration and management of staff and workloads;
    (4) Licensing verification; and
    (5) Risk analysis.
    (d) The system may also provide for interface with other automated 
information systems, including, but not limited to, accounting and 
licensing systems, court and juvenile justice systems, vital statistics 
and education, as appropriate.
    (e) If the cost benefit analysis submitted as part of the APD 
indicates that adherence to paragraphs (c) and (d) of this section would 
not be cost beneficial, final approval of the APD may be withheld until 
resolution is reached on the level of automation appropriate to meet the 
State's needs.
    (f) A Statewide automated child welfare information system may be 
designed, developed and installed on a phased basis, in order to allow 
States to implement AFCARS requirements expeditiously, in accordance 
with section 479(b) of the Act, as long as the approved APD includes the 
State's plan for full implementation of a comprehensive system which 
meets all functional and data requirements as specified in paragraphs 
(a) and (b) of this section, and a system design which

[[Page 335]]

will support these enhancements on a phased basis.
    (g) The system must perform Quality Assurance functions to provide 
for the review of case files for accuracy, completeness and compliance 
with Federal requirements and State standards.

[58 FR 67945, Dec. 22, 1993, as amended at 60 FR 26839, Mar. 19, 1995]



Sec. 1355.54  Submittal of advance planning documents.

    The State title IV-E agency must submit an APD for a statewide 
automated child welfare information system, signed by the appropriate 
State official, in accordance with procedures specified by 45 CFR part 
95, subpart F.

[58 FR 67946, Dec. 22, 1993]



Sec. 1355.55  Review and assessment of the system developed with enhanced funds.

    (a) ACF will, on a continuing basis, review, assess and inspect the 
planning, design, development, installation and operation of the SACWIS 
to determine the extent to which such systems:
    (1) Meet Sec. 1355.53 of this chapter,
    (2) Meet the goals and objectives stated in the approved APD,
    (3) Meet the schedule, budget, and other conditions of the approved 
APD, and
    (4) Comply with the automated data processing services and 
acquisitions procedures and requirements of 45 CFR part 95, subpart F.
    (b) [Reserved]

[58 FR 67946, Dec. 22, 1993]



Sec. 1355.56  Failure to meet the conditions of the approved APD.

    (a) If ACF finds that the State fails to meet any of the conditions 
cited in Sec. 1355.53, or to substantially comply with the criteria, 
requirements and other undertakings prescribed by the approved APD, 
approval of the APD may be suspended.
    (b) If the approval of an APD is suspended during the planning, 
design, development, installation, or operation of the system:
    (1) The State will be given written notice of the suspension. This 
notice shall state:
    (i) The reason for the suspension,
    (ii) The date of the suspension,
    (iii) Whether the suspended system complies with criteria for 50 
percent FFP, and
    (iv) The actions required by the State for future enhanced funding.
    (2) The suspension will be effective as of the date the State failed 
to comply with the approved APD;
    (3) The suspension shall remain in effect until ACF determines that 
such system complies with prescribed criteria, requirements, and other 
undertakings for future Federal funding.
    (4) Should a State cease development of an approved system, either 
by voluntary withdrawal or as a result of Federal suspension, all 
Federal incentive funds invested to date that exceed the normal 
administrative FFP rate (50 percent) will be subject to recoupment.

[58 FR 67946, Dec. 22, 1993]



Sec. 1355.57  Cost allocation.

    (a) All expenditures of a State to plan, design, develop, install, 
and operate the data collection and information retrieval system 
described in Sec. 1355.53 of this part shall be treated as necessary for 
the proper and efficient administration of the State plan under title 
IV-E, without regard to whether the system may be used with respect to 
foster or adoptive children other than those on behalf of whom foster 
care maintenance payments or adoption assistance payments may be made 
under the State plan.
    (b) Cost allocation and distribution for the planning, design, 
development, installation and operation must be in accordance with 
Sec. 95.631 of this title and section 474(e) of the Act, if the SACWIS 
includes functions, processing, information collection and management, 
equipment or services that are not directly related to the 
administration of the programs carried out under the State plan approved 
under title IV-B or IV-E.

[58 FR 67946, Dec. 22, 1993]

           Appendix A to Part 1355--Foster Care Data Elements

                  Section I--Foster Care Data Elements

    Data elements preceded by ``**'' are the only data elements required 
for children who

[[Page 336]]

have been in care less than 30 days. For children who entered care prior 
to October 1, 1995, data elements preceded by either ``**'' and ``***'' 
are the only data elements required. This means that, for these two 
categories of children, these are the only data elements to which the 
missing data standard will be applied.
I. General Information
  **A. State____________________________________________________________
    **B. Report date---- (mo.) ---- (yr.)
  **C. Local Agency (County or Equivalent Jurisdiction)_________________
  **D. Record Number____________________________________________________
    E. Date of Most Recent Periodic Review (If Applicable)---- (mo.) --
-- (day) ---- (yr.)
II. Child's Demographic Information
    **A. Date of Birth ---- (mo.) ---- (day) ---- (yr.)
    **B. Sex --------
    Male: 1
    Female: 2
    C. Race/Ethnicity
    1. Race
    a. American Indian or Alaska Native
    b. Asian
    c. Black or African American
    d. Native Hawaiian or Other Pacific Islander
    e. White
    f. Unable to Determine
    2. Hispanic or Latino Ethnicity------
    Yes: 1
    No: 2
    Unable to Determine: 3
    D. Has this child been clinically diagnosed as having a 
disability(ies)? --------
    Yes: 1
    No: 2
    Not Yet Determined: 3
    1. If yes, indicate each type of disability found with a ``1''
    Mental Retardation ------
    Visually or Hearing Impaired ------
    Physically Disabled ------
    Emotionally Disturbed (DSM III)
    Other Medically Diagnosed Condition Requiring Special Care ------
    E. 1. Has this child ever been adopted? --------
    Yes: 1
    No: 2
    Unable to Determine: 3
    2. If yes, how old was the child when the adoption was legalized? --
------
    Less than 2 years old: 1
    2 to 5 years old: 2
    6 to 12 years old: 3
    13 years old or older: 4
    Unable to Determine: 5
III. Removal/Placement Setting Indicators
    A. Removal Episodes
    Date of First Removal From Home ---- (mo.) ---- (day) ---- (yr.)
    Total Number of Removals From Home to Date --------
    Date Child was Discharged From Last Foster Care Episode (If 
Applicable) ---- (mo.) ---- (day) ---- (yr.)
    **Date of Latest Removal From Home ---- (mo.) ---- (day) ---- (yr.)
    ** Transaction Date ---- (mo.) ---- (day) ---- (yr.)
    B. Placement Settings
    Date of Placement in Current Foster Care Setting ---- (mo.) ---- 
(day) ------ (yr.)
    Number of Previous Placement Settings During This Removal Episode --
------
IV. Circumstances of Removal
    A. Manner of Removal From Home for Current Placement Episode ------
--
    Voluntary: 1
    Court Ordered: 2
    Not Yet Determined: 3
    B. Actions or Conditions Associated With Child's Removal: (Indicate 
all that apply with a ``1'')
  Physical Abuse (Alleged/Reported)_____________________________________
  Sexual Abuse (Alleged/Reported)_______________________________________
  Neglect (Alleged/Reported)____________________________________________
  Alcohol Abuse (Parent)________________________________________________
  Drug Abuse (Parent)___________________________________________________
  Alcohol Abuse (Child)_________________________________________________
  Drug Abuse (Child)____________________________________________________
  Child's Disability____________________________________________________
  Child's Behavior Problem______________________________________________
  Death of Parent(s)____________________________________________________
  Incarceration of Parent(s)____________________________________________
  Caretaker's Inability to Cope Due to Illness or Other Reasons_________
  Abandonment___________________________________________________________
  Relinquishment________________________________________________________
  Inadequate Housing____________________________________________________
**V. Current Placement Setting__________________________________________
    **A. Pre-Adoptive Home: 1
    Foster Family Home (Relative): 2
    Foster Family Home (Non-Relative): 3
    Group Home: 4
    Institution: 5
    Supervised Independent Living: 6
    Runaway: 7
    Trial Home Visit: 8
  **B. Is Current Placement Out-of-State?_______________________________
    Yes (Out-of-State Placement): 1
    No (In State Placement): 2
***VI. Most Recent Case Plan Goal_______________________________________
    Reunify With Parent(s) or Principal Caretaker(s): 1
    Live With Other Relative(s): 2
    Adoption: 3
    Long Term Foster Care: 4
    Emancipation: 5
    Guardianship: 6
    Case Plan Goal Not Yet Established: 7
VII. Principal Caretaker(s) Information
  A. Caretaker Family Structure_________________________________________
    Married Couple: 1
    Unmarried Couple: 2
    Single Female: 3
    Single Male: 4
    Unable to Determine: 5
    B. Year of Birth
  1st Principal Caretaker_______________________________________________

[[Page 337]]

  2nd Principal Caretaker (If Applicable)_______________________________
VIII. Parental Rights Termination (If Applicable)
    A. Mother ---- (mo.) ---- (day) ---- (yr.)
    B. Legal or Putative Father ---- (mo.) ---- (day) ---- (yr.)
IX. Foster Family Home--Parent(s) Data (To be answered only if Section 
          V., Part A. CURRENT PLACEMENT SETTING is 1, 2 or 3)
  A. Foster Family Structure____________________________________________
    Married Couple: 1
    Unmarried Couple: 2
    Single Female: 3
    Single Male: 4
    B. Year of Birth
  1st Foster Caretaker__________________________________________________
  2nd Foster Caretaker (If Applicable)__________________________________
    C. Race/Ethnicity
    1. Race of 1st Foster Caretaker
    a. American Indian or Alaska Native
    b. Asian
    c. Black or African American
    d. Native Hawaiian or Other Pacific Islander
    e. White
    f. Unable to Determine
    2. Hispanic or Latino Ethnicity of 1st Foster Caretaker------
    Yes: 1
    No: 2
    Unable to Determine: 3
    3. Race of 2nd Foster Caretaker (If Applicable)
    a. American Indian or Alaska Native
    b. Asian
    c. Black or African American
    d. Native Hawaiian or Other Pacific Islander
    e. White
    f. Unable to Determine
4. Hispanic or Latino Ethnicity of 2nd Foster Caretaker (If 
applicable)------_______________________________________________________
    Yes: 1
    No: 2
    Unable to Determine: 3
X. Outcome Information
    **A. Date of Discharge From Foster Care ---- (mo.) ---- (day) ---- 
(yr.)
    **Transaction Date ---- (mo.) ---- (day) ---- (yr.)
  **B. Reason for Discharge_____________________________________________
    Reunification With Parents or Primary Caretakers: 1
    Living With Other Relative(s): 2
    Adoption: 3
    Emancipation: 4
    Guardianship: 5
    Transfer to Another Agency: 6
    Runaway: 7
    Death of Child: 8
XI. Source(s) of Federal Financial Support/Assistance for Child 
          (Indicate all that apply with a ``1'')
  Title IV-E (Foster Care)______________________________________________
  Title IV-E (Adoption Assistance)______________________________________
  Title IV-A (Aid to Families with Dependent Children)__________________
  Title IV-D (Child Support)____________________________________________
  Title XIX (Medicaid)__________________________________________________
  SSI or Other Social Security Act Benefits_____________________________
  None of the Above_____________________________________________________
XII. Amount of the monthly foster care payment (regardless of sources). 
          ----------------.

    Section II--Definitions of and Instructions for Foster Care Data 
                                Elements

    Reporting population. The population to be included in this 
reporting system includes all children in foster care under the 
responsibility of the State agency administering or supervising the 
administration of the title IV-B Child and Family Services State plan 
and the title IV-E State plan; that is, all children who are required to 
be provided the assurances of section 422(b)(10) of the Social Security 
Act.
    This population includes all children supervised by or under the 
responsibility of another public agency with which the title IV-B/IV-E 
State agency has an agreement under title IV-E and on whose behalf the 
State makes title IV-E foster care maintenance payments.
    Foster care is defined as 24 hour substitute care for children 
outside their own homes. The reporting system includes all children who 
have or had been in foster care at least 24 hours. The foster care 
settings include, but are not limited to:

--Family foster homes
--Relative foster homes (whether payments are being made or not)
--Group homes
--Emergency shelters
--Residential facilities
--Child care institutions
--Pre-adoptive homes

    Foster care does not include children who are in their own homes 
under the responsibility of the State agency. However, children who are 
at home on a trial basis may be included even though they are not 
considered to be in foster care. If they are included, element number V. 
CURRENT PLACEMENT SETTING must be given the value of ``8''.

                         I. General Information

    A. State**--U.S. Postal Service two letter abbreviation for the 
State submitting the report.
    B. Report Date**--The last month and the year for the reporting 
period.
    C. Local Agency**--Identity of the county or equivalent unit which 
has responsibility for the case. The 5 digit Federal Information 
Processing Standard (FIPS) must be used.
    D. Record Number**--The sequential number which the State uses to 
transmit data to

[[Page 338]]

the Department of Health and Human Services (DHHS) or a unique number 
which follows the child as long as he or she is in foster care. The 
record number cannot be linked to the child's case I.D. number except at 
the State or local level.
    E. Date of Most Recent Periodic Review (If applicable)--For children 
who have been in care seven months or longer, enter the month, day and 
year of the most recent administrative or court review, including 
dispositional hearing. For children who have been in care less than 
seven months, leave the field blank. An entry in this field certifies 
that the child's computer record is current up to this date.

                   II. Child's Demographic Information

    A. Date of Birth**--Month, day and year of the child's birth. If the 
child is abandoned or the date of birth is otherwise unknown, enter an 
approximate date of birth. Use the 15th as the day of birth.
    B. Sex**--Indicate as appropriate.
    C. Race/Ethnicity**
    1. Race--In general, a person's race is determined by how they 
define themselves or by how others define them. In the case of young 
children, parents determine the race of the child. Indicate all races (a 
through e) that apply with a ``1.'' For those that do not apply, 
indicate a ``0.'' Indicate ``f. Unable to Determine'' with a ``1'' if it 
applies and a ``0'' if it does not.
    American Indian or Alaska Native--A person having origins in any of 
the original peoples of North or South America (including Central 
America), and who maintains tribal affiliation or community attachment.
    Asian--A person having origins in any of the original peoples of the 
Far East, Southeast Asia, or the Indian subcontinent including, for 
example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the 
Philippine Islands, Thailand, and Vietnam.
    Black or African American--A person having origins in any of the 
black racial groups of Africa.
    Native Hawaiian or Other Pacific Islander--A person having origins 
in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific 
Islands.
    White--A person having origins in any of the original peoples of 
Europe, the Middle East, or North Africa.
    Unable to Determine--The specific race category is ``unable to 
determine'' because the child is very young or is severely disabled and 
no person is available to identify the child's race. ``Unable to 
determine'' is also used if the parent, relative or guardian is 
unwilling to identify the child's race.
    2. Hispanic or Latino Ethnicity--Answer ``yes'' if the child is of 
Mexican, Puerto Rican, Cuban, Central or South American origin, or a 
person of other Spanish cultural origin regardless of race. Whether or 
not a person is Hispanic or Latino is determined by how they define 
themselves or by how others define them. In the case of young children, 
parents determine the ethnicity of the child. ``Unable to Determine'' is 
used because the child is very young or is severely disabled and no 
person is available to determine whether or not the child is Hispanic or 
Latino. ``Unable to determine'' is also used if the parent, relative or 
guardian is unwilling to identify the child's ethnicity.
    D. Has the child been clinically diagnosed as having a 
disability(ies)? ``Yes'' indicates that a qualified professional has 
clinically diagnosed the child as having at least one of the 
disabilities listed below. ``No'' indicates that a qualified 
professional has conducted a clinical assessment of the child and has 
determined that the child has no disabilities. ``Not Yet Determined'' 
indicates that a clinical assessment of the child by a qualified 
professional has not been conducted.
    1. Indicate Each Type of Disability With a ``1''
    Mental Retardation--Significantly subaverage general cognitive and 
motor functioning existing concurrently with deficits in adaptive 
behavior manifested during the developmental period that adversely 
affect a child's/youth's socialization and learning.
    Visually or Hearing Impaired--Having a visual impairment that may 
significantly affect educational performance or development; or a 
hearing impairment, whether permanent or fluctuating, that adversely 
affects educational performance.
    Physically Disabled--A physical condition that adversely affects the 
child's day-to-day motor functioning, such as cerebral palsy, spina 
bifida, multiple sclerosis, orthopedic impairments, and other physical 
disabilities.
    Emotionally Disturbed (DSM III)--A condition exhibiting one or more 
of the following characteristics over a long period of time and to a 
marked degree: An inability to build or maintain satisfactory 
interpersonal relationships; inappropriate types of behavior or feelings 
under normal circumstances; a general pervasive mood of unhappiness or 
depression; or a tendency to develop physical symptoms or fears 
associated with personal problems. The term includes persons who are 
schizophrenic or autistic. The term does not include persons who are 
socially maladjusted, unless it is determined that they are also 
seriously emotionally disturbed. The diagnosis is based on the 
Diagnostic and Statistical Manual of Mental Disorders (Third Edition) 
(DSM III) or the most recent edition.
    Other Medically Diagnosed Conditions Requiring Special Care--
Conditions other than those noted above which require special medical 
care such as chronic illnesses. Included are children diagnosed as HIV 
positive or with AIDS.

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    E. 1. Has this child ever been adopted? If this child has ever been 
legally adopted, enter ``yes.'' If the child has never been legally 
adopted, enter ``no''. Enter ``Unable to Determine'' if the child has 
been abandoned or the child's parent(s) are otherwise not available to 
provide the information.
    2. If yes, how old was the child when the adoption was legalized? 
Enter the number which represents the appropriate age range. If 
uncertain, use an estimate. If no one is available to provide the 
information, enter ``Unable to Determine.''

                III. Removal/Placement Setting Indicators

    A. Removal Episodes--The removal of the child from his/her normal 
place of residence resulting in his/her placement in a foster care 
setting.
    Date of First Removal From Home--Month, day and year the child was 
removed from home for the first time for purpose of placement in a 
foster care setting. If the current \1\ removal is the first removal, 
enter the date of the current removal.
---------------------------------------------------------------------------

    \1\ For children who have exited foster care, ``current'' refers to 
the most recent removal episode and the most recent placement setting.
---------------------------------------------------------------------------

    Total Number of Removals from Home to Date--The number of times the 
child was removed from home, including the current removal.
    Date Child was Discharged From Last Foster Care Episode (If 
Applicable)--For children with prior removals, enter the month, day and 
year they were discharged from care for the episode immediately prior to 
the current episode. For children with no prior removals, leave blank.
    Date of Latest Removal From Home**--Month, day and year the child 
was last removed from his/her home for the purpose of being placed in 
foster care. This would be the date for the current episode or, if the 
child has exited foster care, the date of removal for the most recent 
removal.
    Transaction Date**--A computer generated date which accurately 
indicates the month, day and year the response to ``Date of Latest 
Removal From Home'' was entered into the information system.
    B. Placement Settings.
    Date of Placement in Current Foster Care Setting--Month, day and 
year the child moved into the current foster home, facility, residence, 
shelter, institution, etc. for purposes of continued foster care.
    Number of Previous Placement Settings During This Removal Episode--
Enter the number of places the child has lived, including the current 
setting, during the current removal episode. Do not include trial home 
visits as a placement setting.

                      IV. Circumstances of Removal

    A. Manner of Removal From Home for Current Placement Episode.
    Voluntary Placement Agreement--An official voluntary placement 
agreement has been executed between the caretaker and the agency. The 
placement remains voluntary even if a subsequent court order is issued 
to continue the child in foster care.
    Court Ordered--The court has issued an order which is the basis of 
the child's removal.
    Not Yet Determined--A voluntary placement agreement has not been 
signed or a court order has not been issued. This will mostly occur in 
very short-term cases. When either a voluntary placement agreement is 
signed or a court order issued, the record should be updated to reflect 
the manner of removal at that time.
    B. Actions or Conditions Associated With Child's Removal (Indicate 
all that apply with a ``1''.)
    Physical Abuse--Alleged or substantiated physical abuse, injury or 
maltreatment of the child by a person responsible for the child's 
welfare.
    Sexual Abuse--Alleged or substantiated sexual abuse or exploitation 
of a child by a person who is responsible for the child's welfare.
    Neglect--Alleged or substantiated negligent treatment or 
maltreatment, including failure to provide adequate food, clothing, 
shelter or care.
    Alcohol Abuse (Parent)--Principal caretaker's compulsive use of 
alcohol that is not of a temporary nature.
    Drug Abuse (Parent)--Principal caretaker's compulsive use of drugs 
that is not of a temporary nature.
    Alcohol Abuse (Child)--Child's compulsive use of or need for 
alcohol. This element should include infants addicted at birth.
    Drug Abuse (Child)--Child's compulsive use of or need for narcotics. 
This element should include infants addicted at birth.
    Child's Disability--Clinical diagnosis by a qualified professional 
of one or more of the following: Mental retardation; emotional 
disturbance; specific learning disability; hearing, speech or sight 
impairment; physical disability; or other clinically diagnosed handicap. 
Include only if the disability(ies) was at least one of the factors 
which led to the child's removal.
    Child's Behavior Problem--Behavior in the school and/or community 
that adversely affects socialization, learning, growth, and moral 
development. These may include adjudicated or nonadjudicated child 
behavior problems. This would include the child's running away from home 
or other placement.
    Death of Parent(s)--Family stress or inability to care for child due 
to death of a parent or caretaker.

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    Incarceration of Parent(s)--Temporary or permanent placement of a 
parent or caretaker in jail that adversely affects care for the child.
    Caretaker's Inability to Cope Due to Illness or Other Reasons--
Physical or emotional illness or disabling condition adversely affecting 
the caretaker's ability to care for the child.
    Abandonment--Child left alone or with others; caretaker did not 
return or make whereabouts known.
    Relinquishment--Parent(s), in writing, assigned the physical and 
legal custody of the child to the agency for the purpose of having the 
child adopted.
    Inadequate Housing--Housing facilities were substandard, 
overcrowded, unsafe or otherwise inadequate resulting in their not being 
appropriate for the parents and child to reside together. Also includes 
homelessness.

                     V. Current Placement Setting**

    A. Identify the type of setting in which the child currently lives.
    Pre-Adoptive Home--A home in which the family intends to adopt the 
child. The family may or may not be receiving a foster care payment or 
an adoption subsidy on behalf of the child.
    Foster Family Home (Relative)--A licensed or unlicensed home of the 
child's relatives regarded by the State as a foster care living 
arrangement for the child.
    Foster Family Home (Non-Relative)--A licensed foster family home 
regarded by the State as a foster care living arrangement.
    Group Home--A licensed or approved home providing 24-hour care for 
children in a small group setting that generally has from seven to 
twelve children.
    Institution--A child care facility operated by a public or private 
agency and providing 24-hour care and/or treatment for children who 
require separation from their own homes and group living experience. 
These facilities may include: Child care institutions; residential 
treatment facilities; maternity homes; etc.
    Supervised Independent Living--An alternative transitional living 
arrangement where the child is under the supervision of the agency but 
without 24 hour adult supervision, is receiving financial support from 
the child welfare agency, and is in a setting which provides the 
opportunity for increased responsibility for self care.
    Runaway--The child has run away from the foster care setting.
    Trial Home Visit--The child has been in a foster care placement, 
but, under State agency supervision, has been returned to the principal 
caretaker for a limited and specified period of time.
    B. Is current placement setting out of State?
    ``Yes'' indicates that the current placement setting is located 
outside of the state making the report.
    ``No'' indicates that the child continues to reside within the state 
making the report.

    Note: Only the state with placement and care responsibility for the 
child should include the child in this reporting system.

                    VI. Most Recent Case Plan Goal***

    Indicate the most recent case plan goal for the child based on the 
latest review of the child's case plan--whether a court review or an 
administrative review. If the child has been in care less than six 
months, enter the goal in the case record as determined by the 
caseworker.
    Reunify With Parents or Principal Caretaker(s)--The goal is to keep 
the child in foster care for a limited time to enable the agency to work 
with the family with whom the child had been living prior to entering 
foster care in order to reestablish a stable family environment.
    Live With Other Relatives--The goal is to have the child live 
permanently with a relative or relatives other than the ones from whom 
the child was removed. This could include guardianship by a relative(s).
    Adoption--The goal is to facilitate the child's adoption by 
relatives, foster parents or other unrelated individuals.
    Long Term Foster Care--Because of specific factors or conditions, it 
is not appropriate or possible to return the child home or place her or 
him for adoption, and the goal is to maintain the child in a long term 
foster care placement.
    Emancipation--Because of specific factors or conditions, it is not 
appropriate or possible to return the child home, have a child live 
permanently with a relative or have the child be adopted; therefore, the 
goal is to maintain the child in a foster care setting until the child 
reaches the age of majority.
    Guardianship--The goal is to facilitate the child's placement with 
an agency or unrelated caretaker, with whom he or she was not living 
prior to entering foster care, and whom a court of competent 
jurisdiction has designated as legal guardian.
    Case Plan Goal Not Yet Established--No case plan goal has yet been 
established other then the care and protection of the child.

                 VII. Principal Caretaker(s) Information

    A. Caretaker Family Structure--Select from the four alternatives--
married couple, unmarried couple, single female, single male--the 
category which best describes the type of adult caretaker(s) from whom 
the child was removed for the current foster care episode. Enter 
``Unable to Determine'' if the child has been abandoned or the child's 
caretakers are otherwise unknown.

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    B. Year of Birth--Enter the year of birth for up to two caretakers. 
If the response to data element VII. A--Caretaker Family Structure, was 
1 or 2, enter data for two caretakers. If the response was 3 or 4, enter 
data only for the first caretaker. If the exact year of birth is 
unknown, enter an estimated year of birth.

                    VIII. Parental Rights Termination

    Enter the month, day and year that the court terminated the parental 
rights. If the parents are known to be deceased, enter the date of 
death.

                 IX. Family Foster Home--Parent(s) Data

    Provide information only if data element in Section V., Part A. 
CURRENT PLACEMENT SETTING is 1, 2, or 3.
    A. Foster Family Structure--Select from the four alternatives--
married couple, unmarried couple, single female, single male--the 
category which best describes the nature of the foster parents with whom 
the child is living in the current foster care episode.
    B. Year of Birth--Enter the year of birth for up to two foster 
parents. If the response to data element IX. A.--Foster Family 
Structure, was 1 or 2, enter data for two caretakers. If the response 
was 3 or 4, enter data only for the first caretaker. If the exact year 
of birth is unknown, enter an estimated year of birth.
    C. Race--Indicate the race for each of the foster parent(s). See 
instructions and definitions for the race categories under data element 
II.C.1. Use ``f. Unable to Determine'' only when a parent is unwilling 
to identify his or her race. Hispanic or Latino Ethnicity--Indicate the 
ethnicity for each of the foster parent(s). See instructions and 
definitions under data element II.C.2. Use ``f. Unable to Determine'' 
only when a parent is unwilling to identify his or her ethnicity.

                         X. Outcome Information

    Enter data only for children who have exited foster care during the 
reporting period.
    A. Date of Discharge From Foster Care**--Enter the month, day and 
year the child was discharged from foster care. If the child has not 
been discharged from care, leave blank.
    Transaction Date**--A computer generated date which accurately 
indicates the month, day and year the response to ``Date of Discharge 
from Foster Care'' was entered into the information system.
    B. Reason for Discharge**.
    Reunification With Parents or Primary Caretakers--The child was 
returned to his or her principal caretaker(s)' home.
    Living With Other Relatives--The child went to live with a relative 
other than the one from whose home he or she was removed.
    Adoption--The child was legally adopted.
    Emancipation--The child reached majority according to State law by 
virtue of age, marriage, etc.
    Guardianship--Permanent custody of the child was awarded to an 
individual.
    Transfer to Another Agency--Responsibility for the care of the child 
was awarded to another agency--either in or outside of the State.
    Runaway--The child ran away from the foster care placement.
    Death of Child--The child died while in foster care.

XI. Source(s) of Federal Support/Assistance for Child (Indicate all That 
                           Apply ith a ``1''.)

    Title IV-E (Foster Care)--Title IV-E foster care maintenance 
payments are being paid on behalf of the child.
    Title IV-E (Adoption Subsidy)--Title IV-E adoption subsidy is being 
paid on behalf of the child who is in an adoptive home, but the adoption 
has not been legalized.
    Title IV-A (Aid to Families With Dependent Children)--Child is 
living with relative(s) whose source of support is an AFDC payment for 
the child.
    Title IV-D (Child Support)--Child support funds are being paid to 
the State agency on behalf of the child by assignment from the receiving 
parent.
    Title XIX (Medicaid)--Child is eligible for and may be receiving 
assistance under title XIX.
    SSI or Other Social Security Act Benefits--Child is receiving 
support under title XVI or other Social Security Act titles not included 
in this section.
    None of the Above--Child is receiving support only from the State or 
from some other source (Federal or non-Federal) which is not indicated 
above.

XII. Amount of the monthly foster care payment (regardless of sources)--
  Enter the monthly payment paid on behalf of the child regardless of 
source (i.e., Federal, State, county, municipality, tribal, and private 
   payments). If title IV-E is paid on behalf of the child the amount 
indicated should be the total computable amount. If the payment made on 
 behalf of the child is not the same each month, indicate the amount of 
 the last full monthly payment made during the reporting period. If no 
    monthly payment has been made during the period, enter all zeros.

[58 FR 67926, Dec. 22, 1993; 59 FR 13535, Mar. 22, 1994; 59 FR 42520, 
Aug. 18, 1994; 60 FR 40507, Aug. 9, 1995; 60 FR 46887, Sept. 8, 1995; 65 
FR 4084, Jan. 25, 2000]

[[Page 342]]

             Appendix B to Part 1355--Adoption Data Elements

                    Section I--Adoption Data Elements

I. General Information
  A. State______________________________________________________________
    B. Report Date ----(mo.) ----(day) ----(yr.)
  C. Record Number______________________________________________________
    D. Did the State Agency Have any Involvement in This Adoption? ----
----
    Yes: 1
    No: 2
II. Child's Demographic Information
    A. Date of Birth ----(mo) ----(day) ----(yr.)
    B. Sex ----
    Male: 1
    Female: 2
    C. Race/Ethnicity
    1. Race
    a. American Indian or Alaska Native
    b. Asian
    c. Black or African American
    d. Native Hawaiian or Other Pacific Islander
    e. White
    f. Unable to Determine
    2. Hispanic or Latino Ethnicity------
    Yes: 1
    No: 2
    Unable to determine: 3
III. Special Needs Status
    A. Has the State child welfare agency determined that this child has 
special needs? --------
    Yes: 1
    No: 2
    B. If yes, indicate the primary basis for determining that this 
child has special needs --------
    Racial/Original Background: 1
    Age: 2
    Membership in a Sibling Group to be Placed for Adoption Together: 3
    Medical Conditions or Mental, Physical or Emotional Disabilities: 4
    Other: 5
    1. If III. B was ``4,'' indicate with a ``1'' the type(s) of 
disability(ies)
    Mental Retardation --------
    Visually or Hearing Impaired --------
    Physically Disabled --------
    Emotionally Disturbed (DSM III) --------
    Other Medically Diagnosed Condition Requiring Special Care --------
IV. Birth Parents
    A. Year of Birth --------
    Mother, If known --------
    Father (Putative or Legal), if known --------
    B. Was the mother married at the time of the child's birth? --------
    Yes: 1
    No: 2
    Unable to Determine: 3
V. Court Actions
    A. Dates of Termination of Parental Rights
    Mother ----(mo.) ----(day) ----(yr.)
    Father ----(mo.) ----(day) ----(yr.)
    B. Date Adoption Legalized ----(mo.) ----(day) ----(yr.)
VI. Adoptive Parents
    A. Family Structure --------
    Married Couple: 1
    Unmarried Couple: 2
    Single Female: 3
    Single Male: 4
    B. Year of Birth
    Mother (if Applicable) --------
    Father (if Applicable) --------
    C. Race/Ethnicity
    1. Adoptive Mother's Race (If Applicable)
    a. American Indian or Alaska Native
    b. Asian
    c. Black or African American
    d. Native Hawaiian or Other Pacific Islander
    e. White
    f. Unable to Determine
    2. Hispanic or Latino Ethnicity of Mother (If Applicable)------
    Yes: 1
    No: 2
    Unable to Determine: 3
    3. Adoptive Father's Race (If Applicable)
    a. American Indian or Alaska Native
    b. Asian
    c. Black or African American
    d. Native Hawaiian or Other Pacific Islander
    e. White
    f. Unable to Determine
    4. Hispanic or Latino Ethnicity of Father (If Applicable)------
    Yes: 1
    No: 2
    Unable to Determine: 3
    D. Relationship of Adoptive Parent(s) to the Child (Indicate with a 
``1'' all that apply)
    Stepparent
    Other Relative of Child by Birth or Marriage --------
    Foster Parent of Child --------
    Non-Relative --------
VII. Placement Information
    A. Child Was Placed From --------
    Within State: 1
    Another State: 2
    Another Country: 3
    B. Child Was Placed by --------
    Public Agency: 1
    Private Agency: 2
    Tribal Agency: 3
    Independent Person: 4
    Birth Parent: 5
VIII. Federal/State Financial Adoption Support
    A. Is a monthly financial subsidy being paid for this child? ------
--
    Yes: 1
    No: 2
    B. If yes, the monthly amount --------

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    C. If VIII. A is yes, is the subsidy paid under Title IV-E adoption 
assistance? --------
    Yes: 1
    No: 2

   Section II--Definitions of Instructions for Adoption Data Elements

                          Reporting population

    The State must report on all children who are adopted in the State 
during the reporting period and in whose adoption the State title IV-B/
IV-E agency has had any involvement. All adoptions which occurred on or 
after October 1, 1994 and which meet the criteria set forth in this 
regulation must be reported. Failure to report on these adoptions will 
result in penalties being assessed. Reports on all other adoptions are 
encouraged but are voluntary. Therefore, reports on the following are 
mandated:
    (a) All children adopted who had been in foster care under the 
responsibility and care of the State child welfare agency and who were 
subsequently adopted whether special needs or not and whether subsidies 
are provided or not;
    (b) All special needs children who were adopted in the State, 
whether or not they were in the public foster care system prior to their 
adoption and for whom non-recurring expenses were reimbursed; and
    (c) All children adopted for whom an adoption assistance payment or 
service is being provided based on arrangements made by or through the 
State agency.
    These children must be identified by answering ``yes'' to data 
element I.D. Children who are reported by the State, but for whom there 
has not been any State involvement, and whose reporting, therefore, has 
not been mandated, are identified by answering ``no'' to element I.D.

                         I. General Information

    A. State--U.S. Postal Service two letter abbreviation for the State 
submitting the report.
    B. Report Date--The last month and the year for the reporting 
period.
    C. Record Number--The sequential number which the State uses to 
transmit data to the Department of Health and Human Services (DHHS). The 
record number cannot be linked to the child except at the State or local 
level.
    D. Did the State Agency Have Any Involvement in This Adoption?
    Indicate whether the State Title IV-B/IV-E agency had any 
involvement in this adoption, that is, whether the adopted child belongs 
to one of the following categories:
     A child who had been in foster care under the 
responsibility and care of the State child welfare agency and who was 
subsequently adopted whether special needs or not and whether a subsidy 
was provided or not;
     A special needs child who was adopted in the State, whether 
or not he/she was in the public foster care system prior to his/her 
adoption and for whom non-recurring expenses were reimbursed; or
     A child for whom an adoption assistance payment or service 
is being provided based on arrangements made by or through the State 
agency.

                   II. Child's Demographic Information

    A. Date of Birth--Month and year of the child's birth. If the child 
was abandoned or the date of birth is otherwise unknown, enter an 
approximate date of birth.
    B. Sex--Indicate as appropriate.
    C. Race/Ethnicity
    1. Race--In general, a person's race is determined by how they 
define themselves or by how others define them. In the case of young 
children, parents determine the race of the child. Indicate all races 
(a-e) that apply with a ``1.'' For those that do not apply, indicate a 
``0.'' Indicate ``f. Unable to Determine'' with a 1'' if it applies and 
a ``0'' if it does not.
    American Indian or Alaska Native--A person having origins in any of 
the original peoples of North or South America (including Central 
America), and who maintains tribal affiliation or community attachment.
    Asian--A person having origins in any of the original peoples of the 
Far East, Southeast Asia, or the Indian subcontinent including, for 
example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the 
Philippine Islands, Thailand, and Vietnam.
    Black or African American--A person having origins in any of the 
black racial groups of Africa.
    Native Hawaiian or Other Pacific Islander--A person having origins 
in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific 
Islands.
    White--A person having origins in any of the original peoples of 
Europe, the Middle East, or North Africa.
    Unable to Determine--The specific race category is ``unable to 
determine'' because the child is very young or is severely disabled and 
no person is available to identify the child's race. ``Unable to 
determine'' is also used if the parent, relative or guardian is 
unwilling to identify the child's race.
    2. Hispanic or Latino Ethnicity--Answer ``yes'' if the child is of 
Mexican, Puerto Rican, Cuban, Central or South American origin, or a 
person of other Spanish cultural origin regardless of race. Whether or 
not a person is Hispanic or Latino is determined by how they define 
themselves or by how others define them. In the case of young children, 
parents determine the ethnicity of the child. ``Unable to Determine'' is 
used because

[[Page 344]]

the child is very young or is severely disabled and no other person is 
available to determine whether or not the child is Hispanic or Latino. 
``Unable to determine'' is also used if the parent, relative or guardian 
is unwilling to identify the child's ethnicity.

                        III. Special Needs Status

    A. Has the State Agency Determined That the Child has Special Needs?
    Use the State definition of special needs as it pertains to a child 
eligible for an adoption subsidy under title IV-E.
    B. Primary Factor or Condition for Special Needs--Indicate only the 
primary factor or condition for categorization as special needs and only 
as it is defined by the State.
    Racial/Original Background--Primary condition or factor for special 
needs is racial/original background as defined by the State.
    Age--Primary factor or condition for special needs is age of the 
child as defined by the State.
    Membership in a Sibling Group to be Placed for Adoption Together--
Primary factor or condition for special needs is membership in a sibling 
group as defined by the State.
    Medical Conditions of Mental, Physical, or Emotional Disabilities--
Primary factor or condition for special needs is the child's medical 
condition as defined by the State, but clinically diagnosed by a 
qualified professional.
    When this is the response to question B, then item 1 below must be 
answered.
    1. Types of Disabilities--Data are only to be entered if response to 
III.B was ``4.'' Indicate with a ``1'' the types of disabilities.
    Mental Retardation--Significantly subaverage general cognitive and 
motor functioning existing concurrently with deficits in adaptive 
behavior manifested during the developmental period that adversely 
affect a child's/youth's socialization and learning.
    Visually or Hearing Impaired--Having a visual impairment that may 
significantly affect educational performance or development; or a 
hearing impairment, whether permanent or fluctuating, that adversely 
affects educational performance.
    Physically Disabled--A physical condition that adversely affects the 
child's day-to-day motor functioning, such as cerebral palsy, spina 
bifida, multiple sclerosis, orthopedic impairments, and other physical 
disabilities.
    Emotionally Disturbed (DSM III)--A condition exhibiting one or more 
of the following characteristics over a long period of time and to a 
marked degree: An inability to build or maintain satisfactory 
interpersonal relationships; inappropriate types of behavior or feelings 
under normal circumstances; a general pervasive mood of unhappiness or 
depression; or a tendency to develop physical symptoms or fears 
associated with personal problems. The term includes persons who are 
schizophrenic or autistic. The term does not include persons who are 
socially maladjusted, unless it is determined that they are also 
seriously emotionally disturbed. Diagnosis is based on the Diagnostic 
and Statistical Manual of Mental Disorders (Third Edition) (DSM III) or 
the most recent edition.
    Other Medically Diagnosed Conditions Requiring Special Care--
Conditions other than those noted above which require special medical 
care such as chronic illnesses. Included are children diagnosed as HIV 
positive or with AIDS.

                            IV. Birth Parents

    A. Year of Birth--Enter the year of birth for both parents, if 
known. If the child was abandoned and no information was available on 
either one or both parents, leave blank for the parent(s) for which no 
information was available.
    B. Was the Mother Married at the Time of the Child's Birth?
    Indicate whether the mother was married at time of the child's 
birth; include common law marriage if legal in the State. If the child 
was abandoned and no information was available on the mother, enter 
``Unable to Determine.''

                            V. Court Actions

    A. Dates of Termination of Parental Rights--Enter the month, day and 
year that the court terminated parental rights. If the parents are known 
to be deceased, enter the date of death.
    B. Date Adoption Legalized--Enter the date the court issued the 
final adoption decree.

                          VI. Adoptive Parents

    A. Family Structure--Select from the four alternatives--married 
couple, unmarried couple, single female, single male--the category which 
best describes the nature of the adoptive parent(s) family structure.
    B. Year of Birth--Enter the year of birth for up to two adoptive 
parents. If the response to data element IV.A--Family Structure, was 1 
or 2, enter data for two parents. If the response was 3 or 4, enter data 
only for the appropriate parent. If the exact year of birth is unknown, 
enter an estimated year of birth.
    C. Race/Ethnicity--Indicate the race/ethnicity for each of the 
adoptive parent(s). See instructions and definitions for the race/
ethnicity categories under data element II.C. Use ``f. Unable to 
Determine'' only when a parent is unwilling to identify his or her race 
or ethnicity.
    D. Relationship to Adoptive Parent(s)--Indicate the prior 
relationship(s) the child had with the adoptive parent(s).
    Stepparent--Spouse of the child's birth mother or birth father.

[[Page 345]]

    Other Relative of Child by Birth or Marriage--A relative through the 
birth parents by blood or marriage.
    Foster Parent of Child--Child was placed in a non-relative foster 
family home with a family which later adopted him or her. The initial 
placement could have been for the purpose of adoption or for the purpose 
of foster care.
    Non-Relative--Adoptive parent fits into none of the categories 
above.

                       VII. Placement Information

    A. Child Was Placed From: Indicate the location of the individual or 
agency that had custody or responsibility for the child at the time of 
initiation of adoption proceedings.
    Within State--Responsibility for the child resided with an 
individual or agency within the State filing the report.
    Another State--Responsibility for the child resided with an 
individual or agency in another State or territory of the United States.
    Another Country--Immediately prior to the adoptive placement, the 
child was residing in another country and was not a citizen of the 
United States.
    B. Child Was Placed By: Indicate the individual or agency which 
placed the child for adoption.
    Public Agency--A unit of State or local government.
    Private Agency--A for-profit or non-profit agency or institution.
    Tribal Agency--A unit within one of the Federally recognized Indian 
Tribes or Indian Tribal Organizations.
    Independent Person--A doctor, a lawyer or some other individual.
    Birth Parent--The parent(s) placed the child directly with the 
Adoptive parent(s).

                  VIII. State/Federal Adoption Support

    A. Is The Child Receiving a Monthly Subsidy?
    Enter ``yes'' if this child was adopted with an adoption assistance 
agreement under which regular subsidies (Federal or State) are paid.
    B. Monthly Amount--Indicate the monthly amount of the subsidy. The 
amount of the subsidy should be rounded to the nearest dollar. Indicate 
``0'' if the subsidy includes only benefits under titles XIX or XX of 
the Social Security Act.
    C. If VIII.A is ``Yes,'' is Child Receiving Title IV-E Adoption 
Subsidy?
    If VIII.A is ``yes,'' indicate whether the subsidy is claimed by the 
State for reimbursement under title IV-E. Do not include title IV-E non-
recurring costs in this item.

[58 FR 67929, Dec. 22, 1993; 59 FR 42520, Aug. 18, 1994; 65 FR 4084, 
Jan. 25, 2000]

      Appendix C to Part 1355--Electronic Data Transmission Format

    All AFCARS data to be sent from State agencies/Indian Tribes to the 
Department are to be in electronic form. In order to meet this general 
specification, the Department will offer as much flexibility as 
possible. Technical assistance will be provided to negotiate a method of 
transmission best suited to the States' environment.
    There will be four semi-annual electronic data transmissions from 
the States to the Administration for Children and Families (ACF). The 
Summary Submission File, one each for Foster Care and Adoption, and the 
Detail Submission File, one each for Foster Care and Adoption. The 
Summary File must be transmitted first, followed immediately by the 
Detail File. See appendix D for Foster Care and Adoption Detail and 
Summary record layout formats.
    There are four methods for electronic data exchange currently 
operating for other Departmental programs of a similar nature. These 
methods are: (1) MITRON tape-to-tape transfer, (2) mainframe-to-
mainframe data transfer, (3) personal computer (PC) to mainframe data 
transmission using a data transfer protocol, and (4) a personal computer 
to personal computer protocol. A general description of these methods is 
provided below:

                1. MITRON, Tape-to-Tape Data Transmission

    In order to use the MITRON system, both the sender and receiver must 
have MITRON equipment (tape drive and main unit) and software. The 
MITRON system is capable of handling a large volume of data but is 
limited to one reel of tape per transmission session. (If the data 
quantity exceeds one tape, a header/trailer record must be placed on 
each physical tape reel.) These are standard 2400 foot tapes, using 
standard labels. The tape density is limited to the 1600 bits per inch 
(bpi) specification.

                        2. Mainframe-to-Mainframe

    The ACF has installed a mainframe-to-mainframe data exchange system 
using the Sterling Software data transfer package called ``SUPERTRACS.'' 
This package will allow data exchange between most computer platforms 
(both mini and mainframe) and the Department's mainframe in a dial-up 
mode. No additional software is needed by the remote computer site 
beyond what the Department will supply. This method has proven effective 
for small to moderate amounts (100 to 5,000 records) of data.

          3. Electronic File Transfer Between PC and Mainframe

    This method uses the SIMPC software package on the personal computer 
and the

[[Page 346]]

host mainframe. The software will be provided by the Department. This 
method is best suited for small to moderate (100 to 5,000) records 
transmissions. The advantages of Electronic File Transfer are the 
elimination of tapes and associated problems and the advantage of 
automatic record checking during the transmission session. If a State is 
currently maintaining the AFCARS data on a personal computer and is 
unable to download and upload to its mainframe, Electronic File Transfer 
is an appropriate transmission mechanism.

                4. Personal Computer to Personal Computer

    This method uses the SIMPC software package on the sending personal 
computer and the receiving personal computer. The software will be 
provided by the Department. This method is best suited for small to 
moderate (100 to 5,000) records transmissions. The advantages of 
Electronic File Transfer are the elimination of tapes and associated 
problems and the advantage of automatic record checking during the 
transmission session. If a State is currently maintaining the AFCARS 
data on a personal computer, the personal computer to personal computer 
transfer is an appropriate transmission mechanism.
    In conjunction with Departmental staff, State agencies and Indian 
Tribes should review their resources and select the system that will 
best suit their data transmission needs. Over time, State agencies and 
Indian Tribes can change their transmission methods, provided that 
proper notification is provided.
    Regardless of the electronic data transmission methodology selected, 
certain criteria must be met by the State agencies and Indian Tribes:
    (1) Records must be written using ASCII standard character format.
    (2) All elements must be comprised of integer (numeric) value(s). 
Element character length specifications refer to the maximum number of 
numeric values permitted for that element. See appendix D.
    (3) All records must be a fixed length. The Foster Care Detailed 
Data Elements Record is 150 characters long and the Adoption Detailed 
Data Elements Record is 72 characters long. The Foster Care Summary Data 
Elements Record and the Adoption Summary Data Elements Record are each 
172 characters long.
    (4) All States and Indian Tribes must inform the Department, in 
writing, of the method of transfer they intend to use.

[58 FR 67931, Dec. 22, 1993; 59 FR 42520, Aug. 18, 1994, as amended at 
60 FR 40507, Aug. 9, 1995]

    Appendix D to Part 1355--Foster Care and Adoption Record Layouts

                             A. Foster Care

        1. Foster Care Semi-Annual Detailed Data Elements Record

             a. The record will consist of 66 data elements.

    b. Data must be supplied for each of the elements in accordance with 
these instructions:
    (1) All data must be numeric. Enter the appropriate value for each 
element.
    (2) Enter date values in year, month and day order (YYYYMMDD), e.g., 
19991030 for October 30, 1999, or year and month order (YYYYMM), e.g., 
199910 for October 1999. Leave the element value blank if dates are not 
applicable.
    (3) For elements 8, 11-15, 26-40, 52, 54 and 59-65, which are 
``select all that apply'' elements, enter a ``1'' for each element that 
applies, enter a zero for non-applicable elements.
    (4) Transaction Date--is a computer generated date indicating when 
the datum (Elements 21 or 55) is entered into the State's automated 
information system.
    (5) Report the status of all children in foster care as of the last 
day of the reporting period. Also, provide data for all children who 
were discharged from foster care at any time during the reporting 
period, or in the previous reporting period, if not previously reported.
    c. Foster Care Semi-Annual Detailed Data Elements Record Layout 
follows:

----------------------------------------------------------------------------------------------------------------
                                                                                                        No. of
         Element No.                Appendix A data element            Data element description        numeric
                                                                                                      characters
----------------------------------------------------------------------------------------------------------------
01..........................  I.A................................  State...........................            2
02..........................  I.B................................  Report period ending date.......            6
03..........................  I.C................................  Local Agency FIPS code (county              5
                                                                    or equivalent jurisdiction).
04..........................  I.D................................  Record number...................           12
05..........................  I.E................................  Date of most recent periodic                8
                                                                    review.
06..........................  II.A...............................  Child's date of birth...........            8
07..........................  II.B...............................  Sex.............................            1
08..........................  II.C.1.............................  Race............................
08a.........................  ...................................  American Indian or Alaska native            1
08b.........................  ...................................  Asian...........................            1
08c.........................  ...................................  Black or African American.......            1
08d.........................  ...................................  Native Hawaiian or Other Pacific            1
                                                                    Islander.

[[Page 347]]

 
08e.........................  ...................................  White...........................            1
08f.........................  ...................................  Unable to Determine.............            1
09..........................  II.C.2.............................  Hispanic or Latino Ethnicity....            1
10..........................  II.D...............................  Has this child been clinically              1
                                                                    diagnosed as having a
                                                                    disability(ies).
                                                                   Indicate each type of disability
                                                                    of the child with a ``1'' for
                                                                    elements 11-15 and a zero for
                                                                    disabilities that do not apply.
11..........................  II.D.1.a...........................  Mental retardation..............            1
12..........................  II.D.1.b...........................  Visually or hearing impaired....            1
13..........................  II.D.1.c...........................  Physically disabled.............            1
14..........................  II.D.1.d...........................  Emotionally disturbed (DSM III).            1
15..........................  II.D.1.e...........................  Other medically diagnosed                   1
                                                                    condition requiring special
                                                                    care.
16..........................  II.E.1.............................  Has this child ever been adopted            1
17..........................  II.E.2.............................  If yes, how old was the child               1
                                                                    when the adoption was
                                                                    legalized?.
18..........................  III.A.1............................  Date of first removal from home.            8
19..........................  III.A.2............................  Total number of removals from               2
                                                                    home to date.
20..........................  III.A.3............................  Date child was discharged from              8
                                                                    last foster care episode.
21..........................  III.A.4............................  Date of latest removal from home            8
22..........................  III.A.5............................  Removal transaction date........            8
23..........................  III.B.1............................  Date of placement in current                8
                                                                    foster care setting.
24..........................  III.B.2............................  Number of previous placement                2
                                                                    settings during this removal
                                                                    episode.
25..........................  IV.A...............................  Manner of removal from home for             1
                                                                    current placement episode.
                                                                   Actions or conditions associated
                                                                    with child's removal: Indicate
                                                                    with a ``1'' for elements 26-40
                                                                    and a zero for conditions that
                                                                    do not apply.
26..........................  IV.B.1.............................  Physical abuse (alleged/                    1
                                                                    reported).
27..........................  IV.B.2.............................  Sexual abuse (alleged/reported).            1
28..........................  IV.B.3.............................  Neglect (alleged/reported)......            1
29..........................  IV.B.4.............................  Alcohol abuse (parent)..........            1
30..........................  IV.B.5.............................  Drug abuse (parent).............            1
31..........................  IV.B.6.............................  Alcohol abuse (child)...........            1
32..........................  IV.B.7.............................  Drug abuse (child)..............            1
33..........................  IV.B.8.............................  Child's disability..............            1
34..........................  IV.B.9.............................  Child's behavior problem........            1
35..........................  IV.B.10............................  Death of parent(s)..............            1
36..........................  IV.B.11............................  Incarceration of parent(s)......            1
37..........................  IV.B.12............................  Caretaker's inability to cope               1
                                                                    due to illness or other reasons.
38..........................  IV.B.13............................  Abandonment.....................            1
39..........................  IV.B.14............................  Relinquishment..................            1
40..........................  IV.B.15............................  Inadequate housing..............            1
41..........................  V.A................................  Current placement setting.......            1
42..........................  V.B................................  Out of State placement..........            1
43..........................  VI.................................  Most recent case plan goal......            1
44..........................  VII.A..............................  Caretaker family structure......            1
45..........................  VII.B.1............................  Year of birth (1st principal                4
                                                                    caretaker).
46..........................  VII.B.2............................  Year of birth (2nd principal                4
                                                                    caretaker).
47..........................  VIII.A.............................  Date of mother's parental rights            8
                                                                    termination.
48..........................  VIII.B.............................  Date of legal or putative                   8
                                                                    father's parental rights.
49..........................  IX.A...............................  Foster family structure.........            1
50..........................  IX.B.1.............................  Year of birth (1st foster                   4
                                                                    caretaker).
51..........................  IX.B.2.............................  Year of birth (2nd foster                   4
                                                                    caretaker).
52..........................  IX.C.1.............................  Race of 1st foster caretaker....
52a.........................  ...................................  American Indian or Alaska Native            1
52b.........................  ...................................  Asian...........................            1
52c.........................  ...................................  Black or Asian American.........            1
52d.........................  ...................................  Native Hawaiian or Other Pacific            1
                                                                    Islander.
52e.........................  ...................................  White...........................            1
52f.........................  ...................................  Unable to Determine.............            1
53..........................  IX.C.2.............................  Hispanic or Latino ethnicity of             1
                                                                    1st foster caretaker.
54..........................  IX.C.3.............................  Race of 2nd foster caretaker....
54a.........................  ...................................  American Indian or Alaska Native            1
54b.........................  ...................................  Asian...........................            1
54c.........................  ...................................  Black or African American.......            1
54d.........................  ...................................  Native Hawaiian or Other pacific            1
                                                                    islander.
54e.........................  ...................................  White...........................            1
54f.........................  ...................................  Unable to Determine.............            1
55..........................  IX.C.4.............................  Hispanic or Latino ethnicity of             1
                                                                    2nd foster caretaker.
56..........................  X.A.1..............................  Date of discharge from foster               8
                                                                    care.
57..........................  X.A.2..............................  Foster care discharge                       8
                                                                    transaction date.
58..........................  X.B................................  Reason for discharge............            1
                                                                   Sources of Federal support/
                                                                    assistance for child; indicate
                                                                    with a ``1'' for elements 58-64
                                                                    and a zero for sources that do
                                                                    not apply.

[[Page 348]]

 
59..........................  XI.A...............................  Title IV-E (Foster Care)........            1
60..........................  XI.B...............................  Title IV-E (Adoption Assistance)            1
61..........................  XI.C...............................  Title IV-A (Aid to Families With            1
                                                                    Dependent Children).
62..........................  XI.D...............................  Title IV-D (Child Support)......            1
63..........................  XI.E...............................  Title XIX (Medicaid)............            1
64..........................  XI.F...............................  SSI or other Social Security Act            1
                                                                    benefits.
65..........................  XI.G...............................  None of the above...............            1
66..........................  XII................................  Amount of monthly foster care               5
                                                                    payment (regardless of source).
                                                                                                    ------------
                                                                         Total characters..........          197
----------------------------------------------------------------------------------------------------------------

         2. Foster Care Semi-Annual Summary Data Elements Record

    a. The record will consist of 22 data elements.
    The values for these data elements are generated by processing all 
records in the semi-annual detailed data transmission and computing the 
summary values for Elements 1 and 3-22. Element 2 is the semi-annual 
report period ending date. In calculating the age range for the child, 
the last day of the reporting period is to be used.
    b. Data must be supplied for each of the elements in accordance with 
these instructions:
    (1) Enter the appropriate value for each element.
    (2) For all elements where the total is zero, enter a numeric zero.
    (3) Enter date values in year, month order (YYYYMM), e.g.,199912 for 
December 1999.
    c. Foster Care Semi-Annual Summary Data Elements Record Layout 
follows:

------------------------------------------------------------------------
                                                              No. of
        Element No.               Summary data file         characters
------------------------------------------------------------------------
01.........................  Number of records.........                8
02.........................  Report period ending date                 6
                              (YYYYMM).
03.........................  Children in care under 1                  8
                              year.
04.........................  Children in care 1 year                   8
                              old.
05.........................  Children in care 2 years                  8
                              old.
06.........................  Children in care 3 years                  8
                              old.
07.........................  Children in care 4 years                  8
                              old.
08.........................  Children in care 5 years                  8
                              old.
09.........................  Children in care 6 years                  8
                              old.
10.........................  Children in care 7 years                  8
                              old.
11.........................  Children in care 8 years                  8
                              old.
12.........................  Children in care 9 years                  8
                              old.
13.........................  Children in care 10 years                 8
                              old.
14.........................  Children in care 11 years                 8
                              old.
15.........................  Children in care 12 years                 8
                              old.
16.........................  Children in care 13 years                 8
                              old.
17.........................  Children in care 14 years                 8
                              old.
18.........................  Children in care 15 years                 8
                              old.
19.........................  Children in care 16 years                 8
                              old.
20.........................  Children in care 17 years                 8
                              old.
21.........................  Children in care 18 years                 8
                              old.
22.........................  Children in care over 18                  8
                              years old.
                                                        ----------------
                                   Record Length.......              174
------------------------------------------------------------------------

                               B. Adoption

          1. Adoption Semi-Annual Detailed Data Elements Record

a. The record will consist of 37 data elements.
b. Data must be supplied for each of the elements in accordance with 
these instructions:
(1) Enter the appropriate value for each element.
(2) Enter date values in year, month and day order (YYYYMMDD), e.g., 
19991030 for October 30, 1999, or year and month (YYYYMM), e.g., 199910 
for October 1999. Leave the element value blank if dates are not 
applicable.

[[Page 349]]

(3) For elements 7, 11-15, 25, 27 and 29-32 which are ``select all that 
apply'' elements, enter a ``1'' for each element that applies; enter a 
zero for non-applicable elements.
c. Adoption Semi-Annual Detailed Data Elements Record Layout follows:

----------------------------------------------------------------------------------------------------------------
                                                                                                        No. of
         Element No.                Appendix B data element            Data element description        numeric
                                                                                                      characters
----------------------------------------------------------------------------------------------------------------
01..........................  I.A................................  State...........................            2
02..........................  I.B................................  Report period ending date.......            6
03..........................  I.C................................  Record number...................            6
04..........................  I.D................................  State Agency involvement........            1
05..........................  II.A...............................  Date of birth...................            6
06..........................  II.B...............................  Sex.............................            1
07..........................  II.C.1.............................  Race............................
07a.........................  ...................................  American Indian or Alaska Native            1
07b.........................  ...................................  Asian...........................            1
07c.........................  ...................................  Black or African American.......            1
07d.........................  ...................................  Native Hawaiian or Other Pacific            1
                                                                    Islander.
07e.........................  ...................................  White...........................            1
07f.........................  ...................................  Unable to Determine.............            1
08..........................  II.C.2.............................  Hispanic or Latino ethnicity....            1
09..........................  III.A..............................  Has the State Agency determined             1
                                                                    that this child has special
                                                                    needs.
10..........................  III.B..............................  Primary basis for special needs.            1
                                                                   Indicate a primary basis of
                                                                    special needs with a ``1'' for
                                                                    elements 11-15. Enter a zero
                                                                    for special needs that do not
                                                                    apply.
11..........................  III.B.1.a..........................  Mental retardation..............            1
12..........................  III.B.1.b..........................  Visually or hearing impaired....            1
13..........................  III.B.1.c..........................  Physically disabled.............            1
14..........................  III.B.1.d..........................  Emotionally disturbed (DSM III).            1
15..........................  III.B.1.e..........................  Other medically diagnosed                   1
                                                                    condition requiring special
                                                                    care.
16..........................  IV.A.1.............................  Mother's year of birth..........            4
17..........................  IV.A.2.............................  Father's (Putative or legal)                4
                                                                    year of birth.
18..........................  IV.B...............................  Was the mother married at time              1
                                                                    of child's birth.
19..........................  V.A.1..............................  Date of mother's termination of             8
                                                                    parental rights.
20..........................  V.A.2..............................  Date of father's termination of             8
                                                                    parental rights.
21..........................  V.B................................  Date adoption legalized.........            8
22..........................  VI.A...............................  Adoptive parents family                     1
                                                                    structure.
23..........................  VI.B.1.............................  Mother's year of birth (if                  4
                                                                    applicable).
24..........................  VI.B.2.............................  Father's year of birth (if                  4
                                                                    applicable).
25..........................  VI.C.1.............................  Adoptive mother's race..........
25a.........................  ...................................  American Indian or Alaska Native            1
25b.........................  ...................................  Asian...........................            1
25c.........................  ...................................  Black or African American.......            1
25d.........................  ...................................  Native Hawaiian or Other Pacific            1
                                                                    Islander.
25e.........................  ...................................  White...........................            1
25f.........................  ...................................  Unable to Determine.............            1
26..........................  VI.C.2.............................  Hispanic or Latino Ethnicity....            1
27..........................  VI.C.3.............................  Adoptive father's race..........
27a.........................  ...................................  American Indian or Alaska Native            1
27b.........................  ...................................  Asian...........................            1
27c.........................  ...................................  Black or African American.......            1
27d.........................  ...................................  Native Hawaiian or Other Pacific            1
                                                                    Islander.
27e.........................  ...................................  White...........................            1
27f.........................  ...................................  Unable to Determine.............            1
28..........................  VI.C.4.............................  Hispanic or Latino Ethnicity....            1
                                                                   Indicate each type of
                                                                    relationship of adoptive
                                                                    parent(s) to the child with a
                                                                    ``1'' for elements 29-32. Enter
                                                                    a zero for relationships that
                                                                    do not apply below.
29..........................  VI.D.1.............................  Stepparent......................            1
30..........................  VI.D.2.............................  Other relative of child by birth            1
                                                                    or marriage.
31..........................  VI.D.3.............................  Foster parent of child..........            1
32..........................  VI.D.4.............................  Other non-relative..............            1
33..........................  VII.A..............................  Child was placed from...........            1
34..........................  VII.B..............................  Child was placed by.............            1
35..........................  VIII.A.............................  Is this child receiving a                   1
                                                                    monthly subsidy.
36..........................  VIII.B.............................  If VIII.B is ``yes.'' What is               5
                                                                    the monthly amount.
37..........................  VIII.C.............................  If VII.B is ``yes.'' Is the                 1
                                                                    child receiving title IV-E
                                                                    adoption assistance?.
                                .................................        Total Characters..........          111
----------------------------------------------------------------------------------------------------------------

          2. Adoption Semi-Annual Summary Data Elements Record

a. The record will consist of 22 data elements.

[[Page 350]]

The values for these data elements are generated by processing all 
records in the semi-annual detailed data transmission and computing the 
summary values for Elements 1 and 3-22. Element 2 is the semi-annual 
report period ending date. In calculating the age range for the child, 
the last day of the reporting period is to be used.
b. Data must be supplied for each of the elements in accordance with 
these instructions:
(1) Enter the appropriate value for each element.
(2) For all elements where the total is zero, enter a numeric zero.
(3) Enter data values in year, month order (YYYYMM), e.g., 199912 for 
December 1999.
c. Adoption Semi-Annual Summary Data Element Record Layout follows:

------------------------------------------------------------------------
                                                              No. of
        Element No.               Summary data file         characters
------------------------------------------------------------------------
01.........................  Number of records.........                8
02.........................  Report period ending date                 6
                              (YYYYMM).
03.........................  Children adopted Under 1                  8
                              year old.
04.........................  Children adopted 1 year                   8
                              old.
05.........................  Children adopted 2 years                  8
                              old.
06.........................  Children adopted 3 years                  8
                              old.
07.........................  Children adopted 4 years                  8
                              old.
08.........................  Children adopted 5 years                  8
                              old.
09.........................  Children adopted 6 years                  8
                              old.
10.........................  Children adopted 7 years                  8
                              old.
11.........................  Children adopted 8 years                  8
                              old.
12.........................  Children adopted 9 years                  8
                              old.
13.........................  Children adopted 10 years                 8
                              old.
14.........................  Children adopted 11 years                 8
                              old.
15.........................  Children adopted 12 years                 8
                              old.
16.........................  Children adopted 13 years                 8
                              old.
17.........................  Children adopted 14 years                 8
                              old.
18.........................  Children adopted 15 years                 8
                              old.
19.........................  Children adopted 16 years                 8
                              old.
20.........................  Children adopted 17 years                 8
                              old.
21.........................  Children adopted 18 years                 8
                              old.
22.........................  Children adopted over 18                  8
                              years old.
                                                        ----------------
                                   Record Length.......              174
------------------------------------------------------------------------

[58 FR 67931, Dec. 22, 1993; 59 FR 13535, Mar. 22, 1994; 59 FR 42520, 
Aug. 18, 1994, as amended at 60 FR 40507, Aug. 9, 1995; 65 FR 4085, Jan. 
25, 2000]

                 Appendix E to Part 1355--Data Standards

    All data submissions will be evaluated to determine the completeness 
and internal consistency of the data. Four types of assessments will be 
conducted on both the foster care and adoption data submissions. The 
results of these assessments will determine the applicability of the 
penalty provisions. (See Sec. 1355.40(e) for penalty provision 
description.) The four types of assessments are:
     Comparisons of the detailed data to summary data;
     Internal consistency checks of the detailed data;
     An assessment of the status of missing data; and
     Timeliness, an assessment of how current the submitted data 
are.

                             A. Foster Care

              1. Summary Data Elements Submission Standards

    A summary file must accompany the Detailed Data Elements submission. 
Both transmissions must be sent through electronic means (see appendix C 
for details). This summary will be used to verify basic counts of 
records on the detailed data received.
    a. The summary file must be a discrete file separate from the semi-
annual reporting period detailed data file. The record layout for the 
summary file is included in appendix D. section A.2.c. All data must be 
included. If the value for a numeric field is zero, zero must be 
entered.
    b. The Department will develop a second summary file by computing 
the values from the detailed data file received from the

[[Page 351]]

State. The two summary files (the one submitted by the State and the one 
created during Federal processing) will be compared, field by field. If 
the two files match, further validation of the detailed data elements 
will commence. (See Section A.2 below.) If the two summary files do not 
match, we will assume that there has been an error in transmission and 
will request a retransmission from the State within 24 hours of the time 
the State has been notified. In addition, a log of these occurrences 
will be kept as a means of cataloging problems and offering suggestions 
on improved procedures.

               2. Detailed Data File Submission Standards

    a. Internal Consistency Validations.
    Internal consistency validations involve evaluating the logical 
relationships between data elements in a detailed record. For example, a 
child cannot be discharged from foster care before he or she has been 
removed from his or her home. Thus, the Date of Latest Removal From Home 
data element must be a date prior to the Date of Discharge. If this is 
not case, an internal inconsistency will be detected and an ``error'' 
indicated in the detailed data file.
    A number of data elements have ``if applicable'' contingency 
relationships with other data elements in the detailed record. For 
example, if the Foster Family Structure has only a single parent, then 
the appropriate sex of the Single Female/Male element in the ``Year of 
Birth'' and ``Race/Origin'' elements must be completed and the ``non-
applicable'' fields for these elements are to be filled with zero's or, 
for dates, left blank.
    The internal consistency validations that will be performed on the 
foster care detailed data are as follows:
    (1) The Local Agency must be the county or a county equivalent unit 
which has responsibility for the case. The 5 digit Federal Information 
Processing Standard (FIPS) code must be used.
    (2) If Date of Latest Removal From Home (Element 21) is less than 
nine months prior to the Report Period Ending Date (Element 2) then the 
Date of Most Recent Periodic Review (Element 5) may be left blank.
    (3) If Date of Latest Removal From Home (Element 21) is greater than 
nine months from Report Date (Element 2) then the Date of Most Recent 
Periodic Review (Element 5) must not be more than nine months prior to 
the Report Date (Element 2).
    (4) If a child is identified as having a disability(ies) (Element 
10), at least one Type of Disability Condition (Elements 11-15) must be 
indicated. Enter a zero (0) for disabilities that do not apply.
    (5) If the Total Number of Removals From Home to Date (Element 19) 
is one (1), the Date Child was Discharged From Last Foster Care Episode 
(Element 20) must be blank.
    (6) If the Total Number of Removals From Home to Date (Element 19) 
is two or more, then the Date Child was Discharged From Last Foster Care 
Episode (Element 20) must not be blank.
    (7) If Data Child was Discharged From Last Foster Care Episode 
(Element 20) exists, then this date must be a date prior to the Date of 
Latest Removal From Home (Element 21).
    (8) The Date of Latest Removal From Home (Element 21) must be prior 
to the Date of Placement in Current Foster Care Setting (Element 23).
    (9) At least one element between elements 26 and 40 must be answered 
by selecting a ``1''. Enter a zero (0) for conditions that do not apply.
    (10) If Current Placement Setting (Element 41) is a value that 
indicates that the child is not in a foster family or a pre-adoptive 
home, then elements 49-55 must be zero (0).
    (11) At least one element between elements 59 and 65 must be 
answered by selecting a ``1''. Enter a zero for sources that do not 
apply.
    (12) If the answer to the question, ``Has this child ever been 
adopted?'' (Element 16) is ``1'' (Yes), then the question, ``How old was 
the child when the adoption was legalized?'' (Element 17) must have an 
answer from ``1'' to ``5.''
    (13) If the Date of Most Recent Periodic Review (Element 5) is not 
blank, then Manner of Removal From Home for Current Placement Episode 
(Element 25) cannot be option 3, ``Not Yet Determined.''
    (14) If Reason for Discharge (Element 58) is option 3, ``Adoption,'' 
then Parental Rights Termination dates (Elements 46 and 47) must not be 
blank.
    (15) If the Date of Latest Removal From Home (Element 21) is 
present, the Date of Latest Removal From Home Transaction Date (Element 
22) must be present and must be later than or equal to the Date of 
Latest Removal From Home (Element 21).
    (16) If the Date of Discharge From Foster Care (Element 56) is 
present, the Date of Discharge From Foster Care Transaction Date 
(Element 57) must be present and must be later than or equal to the Date 
of Discharge From Foster Care (Element 56).
    (17) If the Date of Discharge From Foster Care (Element 56) is 
present, it must be after the Date of Latest Removal From Home (Element 
21).
    (18) In Elements 8, 52, and 54, race categories (``a'' through 
``e'') and ``f. Unable to Determine'' cannot be coded ``0,'' for it does 
not apply. If any of the race categories apply and are coded as ``1'' 
then ``f. Unable to Determine'' cannot also apply.
    b. Out-of-Range Standards.
    Out-of-range standards relate to the occurrence of values in 
response to data elements that exceed, either positively or negatively, 
the acceptable range of responses to the

[[Page 352]]

question. For example, if the acceptable responses to the element, Sex 
of the Adoptive Child, is ``1'' for a male and ``2'' for a female, but 
the datum provided in the element is ``3,'' this represents an out-of-
range response situation.
    Out-of-range comparisons will be made for all elements. The 
acceptable values are described in Appendix A, Section I.

                        3. Missing Data Standards

    The term ``missing data'' refers to instances where data for an 
element are required but are not present in the submission. Data 
elements with values of ``Unable to Determine,'' ``Not Yet Determined'' 
or which are not applicable, are not considered missing.
    a. In addition, the following situations will result in converting 
data values to a missing data status:
    (1) Data elements whose values fail internal consistency validations 
as outlined in A.2.a.(1)-(18) above, and
    (2) Data elements whose values are out-of-range.
    b. The maximum amount of allowable missing data is dependent on the 
data elements as described below:
    (1) No Missing Data.
    The data for the elements listed below must be present in all 
records in the submission. If any record contains missing data for any 
of these elements, the entire submission will be considered missing and 
processing will not proceed.

------------------------------------------------------------------------
           Element No.                          Element name
------------------------------------------------------------------------
01...............................  State.
02...............................  Report date.
03...............................  Local agency FIPS code.
04...............................  Record number.
------------------------------------------------------------------------

    (2) Less Than Ten Percent Missing Data.
    The data for the elements listed below cannot have ten percent or 
more missing data without incurring a penalty.

------------------------------------------------------------------------
           Element No.                      Element description
------------------------------------------------------------------------
05...............................  Date of most recent periodic, review.
06...............................  Child's date of birth.
07...............................  Child's sex.
08...............................  Child's race.
09...............................  Child's Hispanic or Latino Ethnicity
10...............................  Does child have a disability(ies)?
11-15............................  Type of disability (at least one must
                                    be selected).
16...............................  Has child been adopted?
17...............................  How old was child when adoption was
                                    legalized?
18...............................  Date of first removal from home.
19...............................  Total number of removals from home to
                                    date.
20...............................  Date child was discharged from last
                                    foster care.
21...............................  Date of latest removal from home.
22...............................  Removal transaction date.
23...............................  Date of placement in current foster
                                    care setting.
24...............................  Number of previous placement settings
                                    during this removal episode.
25...............................  Manner of removal from home for
                                    current placement episode.
26-40............................  Actions or conditions associated with
                                    child's removal (at least one must
                                    be selected).
41...............................  Current placement setting.
42...............................  Out of State placement.
43...............................  Most recent case plan goal.
44...............................  Caretaker family structure.
45...............................  Year of birth of 1st principal
                                    caretaker.
46...............................  Year of birth of 2nd principal
                                    caretaker.
47...............................  Date of mother's parental rights
                                    termination.
48...............................  Legal of putative father parental
                                    rights termination date.
49...............................  Foster family structure.
50...............................  Year of birth of 1st foster
                                    caretaker.
51...............................  Year of birth of 2nd foster
                                    caretaker.
52...............................  Race of 1st foster caretaker.
53...............................  Hispanic or Latino Ethnicity of 1st
                                    foster caretaker
54...............................  Race of 2nd foster caretaker.
55...............................  Hispanic or Latino Ethnicity of 2nd
                                    foster caretaker
56...............................  Date of discharge from foster care.
57...............................  Foster care discharge transaction
                                    date.
58...............................  Reason for discharge.
59-65............................  Sources of Federal support/assistance
                                    for child (at least one must be
                                    selected).
66...............................  Amount of monthly foster care payment
                                    (regardless of source).
------------------------------------------------------------------------

    c. Penalty Processing.
    Missing data are a major factor in determining the application of 
the penalty provisions of this regulation.
    (1) Selection Rules.
    All data elements will be used in calculating the missing data 
provision of the penalty unless one of the following limiting rules 
applies to the detailed case record.
    (a) If Date of Latest Removal From Home (Element 21) and the Date of 
Discharge From Foster Care (Element 56) is less than 30 days, then the 
following date elements are the only ones to be used in evaluating the 
missing data provisions for purposes of penalty calculation:

Elements
    1 to 4
    6 to 9
    21 and 22
    41 and 42
    56 to 58

    (b) If Date of Latest Removal From Home (Element 18) is prior to 
October 1, 1995, then the following data elements are the only ones to 
be used in evaluating the missing data provisions for purposes of 
penalty calculation:

Elements
    1 to 4
    6 to 9
    21 and 22
    41 and 43

[[Page 353]]

    56 to 58

    (2) Penalty Calculations.
    The percentage calculation will be performed for each data element. 
The total number of detailed records that are included by the selection 
rules in 3.c.(1), will serve as the denominator. The number of missing 
data occurrences for each element will serve as the numerator. The 
result will be multiplied by one hundred. The penalty is invoked when 
any one element's missing data percentage is ten percent or greater.

                4. Timeliness of Foster Care Data Reports

    The semi-annual reporting periods will be as of the end of March and 
September for each year. The States are required to submit reports 
within 45 calendar days after the end of the semi-annual reporting 
period.
    Computer generated transaction dates indicate the date when key 
foster care events are entered into the State's computer system. The 
intent of these transaction dates is to ensure that information about 
the status of children in foster care is recorded and, thus, reported in 
a timely manner.
    a. Date of Latest Removal From Home
    The Date of Latest Removal From Home Transaction Date (Element 22) 
must not be more than 60 days after the Date of Latest Removal From Home 
(Element 21) event.
    b. Date of Discharge From Foster Care
    The Date of Discharge From Foster Care Transaction Date (Element 57) 
must not be more than 60 days after the Date of Discharge From Foster 
Care (Element 56) event.
    For purposes of penalty processing, ninety percent of the records in 
a detailed data submission, must indicate that:
    (1) The difference between the Date of Latest Removal From Home 
Transaction Date (Element 22) and the Date of Latest Removal From Home 
(Element 21) event is 60 days or less;

and, where applicable,

    (2) The difference between the Date of Discharge From Foster Care 
Transaction Date (Element 57), and the Date of Discharge From Foster 
Care (Element 56) event is 60 days or less.

                               B. Adoption

           1. Summary Data Elements File Submission Standards

    A summary file must accompany the detailed Data Elements File 
submission. Both files must be sent through electronic means (see 
appendix C for details). This summary will be used to verify the 
completeness of the Detailed Data File submission received.
    a. The summary file should be a discrete file separate from the 
semi-annual reporting period detailed data file. The record layout for 
the summary file is included in appendix D, section B.2.c. All data must 
be included. If the value for a numeric field is zero, zero must be 
entered.
    b. The Department will develop a second summary file by computing 
the values from the detailed data file received from the State. The two 
summary files (the one submitted by the State and the one created during 
Federal processing) will be compared, field by field. If the two files 
match, further validation of the detailed data elements will commence. 
(See section B.2 below.) If the two summary files do not match, we will 
assume that there has been an error in transmission and will request a 
retransmission from the State within 24 hours of the time the State has 
been notified. In addition, a log of these occurrences will be kept as a 
means of cataloging problems and offering suggestions on improved 
procedures.

           2. Detailed Data Elements File Submission Standards

    a. Internal Consistency Validations
    Internal consistency validations involve evaluating the logical 
relationships between data elements in a detailed record. For example, 
an adoption cannot be finalized until parental rights have been 
terminated. Thus, the dates of Mother/Father Termination of Parental 
Rights, elements must be present and the dates must be prior to the 
``Date Adoption Legalized.'' If this is not the case, an internal 
inconsistency will be detected and an ``error'' indicated in the 
detailed data file.
    A number of data elements have ``if applicable'' contingency 
relationships with other data elements in the detailed record. For 
example, if the Adoptive Parent is single, then the appropriate sex of 
the single female/male element in the ``Family Structure,'' ``Year of 
Birth'' and ``Race/Origin'' elements must be completed and the ``non-
applicable'' fields for these elements are to be filled with zeros or 
left blank.
    The internal consistency validations that will be performed on the 
adoption detailed data are as follows:
    (1) The Child's Date of Birth (Element 5) must be later than both 
the Mother's and Father's Year of Birth (Elements 16 and 17) unless 
either of these is unknown.)
    (2) If the State child welfare agency has determined that the child 
is a special needs child (Element 9), then ``the primary basis for 
determining that this child has special needs'' (Element 10) must be 
completed. If ``the primary basis for determining that this child has 
special needs'' (Element 10) is answered by option ``4,'' then at least 
one element between Elements 11-15, ``Type of Disability,'' must be 
selected. Enter a zero (0) for disabilities that do not apply.
    (3) Dates of Parental Rights Termination (Elements 19 and 20) must 
be completed and must be prior to the Date Adoption Legalized (Element 
21).

[[Page 354]]

    (4) If ``Is a monthly financial subsidy being paid for this child'' 
(Element 35) is answered negatively, ``2'', then Element 36 must be zero 
(0) and ``Is the subsidy paid under Title IV-E adoption assistance'' 
(Element 37) must be a ``2''.
    (5) If the ``Child Was Placed By'' (Element 34) is answered with 
option 1, ``Public Agency,'' then the question, ``Did the State Agency 
Have any Involvement in This Adoption'' (Element 4) must be ``1''.
    (6) If the ``Relationship of Adoptive Parent(s) to the Child,'' 
``Foster Parent of Child'' (Element 31) is selected, then the question, 
``Did the State Agency Have any Involvement in This Adoption'' (Element 
4) must be ``1''.
    (7) If ``Is a monthly financial subsidy being paid for this child?'' 
(Element 35) answered ``1,'' then the question, ``Did the State Agency 
Have any Involvement in This Adoption'' (Element 4) must be ``1.''
    (8) If the ``Family Structure'' (Element 22) is option 3, Single 
Female, then the Mother's Year of Birth (Element 23), the ``Adoptive 
Mother's Race'' (Element 25) and ``Hispanic or Latino Ethnicity'' 
(Element 26) must be completed. Similarly, if the ``Family Structure'' 
(Element 22) is option 4, Single Male, then the Father's Year of Birth 
(Element 24), the Adoptive Father's Race'' (Element 27) and ``Hispanic 
or Latino Ethnicity'' (Element 28) must be completed. If the ``Family 
Structure'' (Element 22) is option 1 or 2, then both Mother's and 
Father's ``Year of Birth,'' ``Race'' and ``Hispanic or Latino 
Ethnicity'' must be completed.
    (9) In Elements 7, 25, and 27, race categories (``a'' through ``e'') 
and ``f. Unable to Determine'' cannot be coded ``0,'' for it does not 
apply. If any of the race categories apply and are coded as ``1'' then 
``f. Unable to Determine'' cannot also apply.
    b. Out-of-Range Standards.
    Out-of-range standards relate to the occurrence of values in 
response to data elements that exceed, either positively or negatively, 
the acceptable range of responses to the question. For example, if the 
acceptable response to the element, Sex of the Adoptive Child, is ``1'' 
for a male and ``2'' for a female, but the datum provided in the element 
is ``3,'' this represents an out-of-range response situation.
    Out-of-range comparisons will be made for all elements. The 
acceptable values are described in appendix B, section I.

                        3. Missing Data Standards

    The term ``missing data'' refers to instances where data for an 
element are required but are not present in the submission. Data 
elements with values of ``Unable to Determine,'' ``Other'' or which are 
not applicable, are not considered missing.
    a. In addition, the following situations will result in converting 
data values to a missing data status:
    (1) Data elements whose values fail internal consistency validations 
as outlined in 2.a.(1)-(9) above, and
    (2) Data elements whose values are out-of-range.
    b. The maximum amount of allowable missing data is dependent on the 
data elements as described below.
    (1) No Missing Data.
    The data for the elements listed below must be present in all 
records in the submission. If any record contains missing data for any 
of these elements, the entire submission will be considered missing and 
processing will not proceed.

------------------------------------------------------------------------
           Element No.                          Element name
------------------------------------------------------------------------
01...............................  State.
02...............................  Report date.
03...............................  Record number.
04...............................  Did the State agency have any
                                    involvement in this adoption?
------------------------------------------------------------------------

    (2) Less Than Ten Percent Missing Data
    The data for the elements listed below cannot have ten percent or 
more missing data without incurring a penalty.

------------------------------------------------------------------------
           Element No.                          Element name
------------------------------------------------------------------------
05...............................  Child's date of birth.
06...............................  Child's sex.
07...............................  Child's race.
08...............................  Is the child of Hispanic or Latino
                                    ethnicity?
09...............................  Does child have special needs?
10...............................  Indicate the primary basis for
                                    determining that the child has
                                    special needs. (If Element 09 is
                                    yes, you must answer this question.)
11-15............................  Type of special need (at least one
                                    must be selected.)
16...............................  Mother's year of birth.
17...............................  Father's year of birth.
18...............................  Was mother married at time of child's
                                    birth?
19...............................  Date of mother's termination of
                                    parental rights.
20...............................  Date of father's termination of
                                    parental rights.
21...............................  Date adoption legalized.
22...............................  Adoptive parent(s)' family structure.
23...............................  Mother's year of birth.
24...............................  Father's year of birth.
25...............................  Adoptive mother's race.
26...............................  Hispanic or Latino ethnicity of
                                    mother
27...............................  Adoptive father's race.
28...............................  Hispanic or Latino ethnicity of
                                    father
29-32............................  Relationship of adoptive parent(s) to
                                    child (at least one must be
                                    selected.)
33...............................  Child placed from.
34...............................  Child placed by.
35...............................  Is a monthly financial subsidy paid
                                    for this child?
36...............................  If yes, the monthly amount is?
37...............................  Is the child receiving Title IV-E
                                    adoption assistance? (If Element 35
                                    is a ``1'' (Yes) an answer to this
                                    question is required.)
------------------------------------------------------------------------

    c. Penalty Processing.

[[Page 355]]

    Missing data are a major factor in determining the application of 
the penalty provisions of this regulation.
    (1) Selection Rules.
    Only the adoption records with a ``1'' (Yes) answer in Element 4, 
``Did the State Agency have any Involvement in this adoption'' will be 
subject to the penalty assessment process.
    (2) Penalty Calculations.
    The percentage calculation will be performed for each data element. 
The total number of detailed records will serve as the denominator and 
the number of missing data occurrences for each element will serve as 
the numerator. The result will be multiplied by one hundred. The penalty 
is invoked when any one element's missing data percentage is ten percent 
or greater.

                 4. Timeliness of Adoption Data Reports

    The semi-annual reporting periods will be as of the end of March and 
September for each year. The States are required to submit reports 
within 45 calendar days after the end of the semi-annual reporting 
period.
    For penalty assessment purposes, however, no specific timeliness of 
data standards apply. Data on adoptions should be submitted as promptly 
after finalization as possible.
    The desired approach to reporting adoption data is that adoptions 
should be reported during the reporting period in which the adoption is 
legalized. Or, at the State's option, they can be reported in the 
following reporting period if the adoption is legalized within the last 
60 days of the reporting period.
    Negative reports must be submitted for any semi-annual period in 
which no adoptions have been legalized.

[58 FR 67934, Dec. 22, 1993; 59 FR 13535, Mar. 22, 1994, as amended at 
60 FR 40508, Aug. 9, 1995]
                         Appendix F to Part 1355

         Allotment of Funds With 427 Incentive Funds Title IV-B Child Welfare Services Fiscal Year 1993
----------------------------------------------------------------------------------------------------------------
                                                            Allotment at       Allotment at      427 incentive
                     Name of State                        $294,624,000 \1\   $141,000,000 \1\        funds
----------------------------------------------------------------------------------------------------------------
Alabama................................................          5,798,251          2,771,128          3,027,123
Alaska.................................................            674,777            355,179            319,598
Arizona................................................          4,781,390          2,291,632          2,489,758
Arkansas...............................................          3,495,975          1,685,501          1,810,474
California.............................................         30,048,818         14,206,363         15,842,455
Colorado...............................................          3,844,876          1,850,024          1,994,852
Connecticut............................................          2,065,826          1,011,122          1,054,704
Delaware...............................................            763,822            397,168            366,654
Dist of Col............................................            448,212            248,344            199,868
Florida................................................         12,946,006          6,141,615          6,804,391
Georgia................................................          8,386,050          3,991,391          4,394,659
Hawaii.................................................          1,281,048            641,063            639,985
Idaho..................................................          1,734,494            854,884            879,610
Illinois...............................................         12,157,021          5,769,574          6,387,447
Indiana................................................          7,115,189          3,392,123          3,723,066
Iowa...................................................          3,565,712          1,718,385          1,847,327
Kansas.................................................          3,083,341          1,490,926          1,592,415
Kentucky...............................................          5,192,133          2,485,316          2,706,817
Louisiana..............................................          6,750,330          3,220,076          3,530,254
Maine..................................................          1,533,067            759,902            773,165
Maryland...............................................          4,256,288          2,044,023          2,212,265
Massachusetts..........................................          4,566,755          2,190,422          2,376,333
Michigan...............................................         10,860,253          5,158,089          5,702,164
Minnesota..............................................          5,092,532          2,438,349          2,654,183
Mississippi............................................          4,437,556          2,129,499          2,308,057
Missouri...............................................          6,217,709          2,968,921          3,248,788
Montana................................................          1,211,809            608,414            603,395
Nebraska...............................................          2,136,670          1,044,528          1,092,142
Nevada.................................................          1,326,362            662,431            663,931
New Hampshire..........................................          1,078,123            545,375            532,748
New Jersey.............................................          5,307,662          2,539,793          2,767,869
New Mexico.............................................          2,493,475          1,212,778          1,280,697
New York...............................................         15,530,358          7,360,253          8,170,105
North Carolina.........................................          8,326,069          3,963,107          4,362,962
North Dakota...........................................            982,955            500,499            482,456
Ohio...................................................         13,052,582          6,191,871          6,860,711
Oklahoma...............................................          4,428,365          2,125,165          2,303,200
Oregon.................................................          3,576,418          1,723,434          1,852,984
Pennsylvania...........................................         12,649,960          6,002,017          6,647,943
Rhode Island...........................................          1,070,439            541,752            528,687
South Carolina.........................................          5,101,221          2,442,447          2,658,774

[[Page 356]]

 
South Dakota...........................................          1,107,009            558,996            548,013
Tennessee..............................................          6,328,617          3,021,219          3,307,398
Texas..................................................         23,687,998         11,206,947         12,481,051
Utah...................................................          3,478,384          1,667,206          1,801,178
Vermont................................................            749,584            390,454            359,130
Virginia...............................................          6,321,841          3,018,024          3,303,817
Washington.............................................          5,667,518          2,709,481          2,958,037
West Virginia..........................................          2,564,554          1,246,294          1,318,260
Wisconsin..............................................          6,033,052          2,881,847          3,151,205
Wyoming................................................            751,264            391,247            360,017
----------------------------------------------------------------------------------------------------------------
\1\ These totals include allotments to the United States Territories. Therefore, the summation of the States'
  allotments will not be equivalent.

[58 FR 67937, Dec. 22, 1993, as amended at 65 FR 4087, Jan. 25, 2000]



PART 1356--REQUIREMENTS APPLICABLE TO TITLE IV-E--Table of Contents




Sec.
1356.10  Scope.
1356.20  State plan document and submission requirements.
1356.21  Foster care maintenance payments program implementation 
          requirements.
1356.22  Implementation requirements for children voluntarily placed in 
          foster care.
1356.30  Safety requirements for foster care and adoptive home 
          providers.
1356.40  Adoption assistance program: Administrative requirements to 
          implement section 473 of the Act.
1356.41  Nonrecurring expenses of adoption.
1356.50  Withholding of funds for non-compliance with the approved title 
          IV-E State plan.
1356.60  Fiscal requirements (title IV-E).
1356.65-1356.70  [Reserved]
1356.71  Federal review of the eligibility of children in foster care 
          and the eligibility of foster care providers in title IV-E 
          programs.

    Authority: 42 U.S.C. 620 et seq., 42 U.S.C. 670 et seq.; 42 U.S.C. 
1302.



Sec. 1356.10  Scope.

    This part applies to State programs for foster care maintenance 
payments, adoption assistance payments, related foster care and adoption 
administrative and training expenditures, and the independent living 
services program under title IV-E of the Act.

[61 FR 58655, Nov. 18, 1996]



Sec. 1356.20  State plan document and submission requirements.

    (a) To be in compliance with the State plan requirements and to be 
eligible to receive Federal financial participation (FFP) in the costs 
of foster care maintenance payments and adoption assistance under this 
part, a State must have a State plan approved by the Secretary that 
meets the requirements of this part, part 1355 and section 471(a) of the 
Act. The title IV-E State plan must be submitted to the appropriate 
Regional Office, ACYF, in a form determined by the State.
    (b) Failure by a State to comply with the requirements and standards 
for the data reporting system for foster care and adoption (Sec. 1355.40 
of this chapter) shall be considered a substantial failure by the State 
in complying with the State plan for title IV-E. Penalties as described 
in Sec. 1355.40(e) of this chapter shall apply.
    (c) If a State chooses to claim FFP for voluntary foster care 
placements, the State must meet the requirements of paragraph (a) of 
this section and section 102 of Pub. L. 96-272, the Adoption Assistance 
and Child Welfare Act of 1980, as it amends section 472 of the Act.
    (d) The following procedures for approval of State plans and 
amendments apply to the title IV-E program:
    (1) The State plan consists of written documents furnished by the 
State to cover its program under part E of title IV. After approval of 
the original plan

[[Page 357]]

by the Commissioner, ACYF, all relevant changes, required by new 
statutes, rules, regulations, interpretations, and court decisions, are 
required to be submitted currently so that ACYF may determine whether 
the plan continues to meet Federal requirements and policies.
    (2) Submittal. State plans and revisions of the plans are submitted 
first to the State governor or his designee for review and then to the 
regional office, ACYF. The States are encouraged to obtain consultation 
of the regional staff when a plan is in process of preparation or 
revision.
    (3) Review. Staff in the regional offices are responsible for review 
of State plans and amendments. They also initiate discussion with the 
State agency on clarification of significant aspects of the plan which 
come to their attention in the course of this review. State plan 
material on which the regional staff has questions concerning the 
application of Federal policy is referred with recommendations as 
required to the central office for technical assistance. Comments and 
suggestions, including those of consultants in specified areas, may be 
prepared by the central office for use by the regional staff in 
negotiations with the State agency.
    (4) Action. Each Regional Administrator, ACF, has the authority to 
approve State plans and amendments thereto which provide for the 
administration of foster care maintenance payments and adoption 
assistance programs under section 471 of the Act. The Commissioner, 
ACYF, retains the authority to determine that proposed plan material is 
not approvable, or that a previously approved plan no longer meets the 
requirements for approval. The Regional Office, ACYF, formally notifies 
the State agency of the actions taken on State plans or revisions.
    (5) Basis for approval. Determinations as to whether State plans 
(including plan amendments and administrative practice under the plans) 
originally meet or continue to meet, the requirements for approval are 
based on relevant Federal statutes and regulations.
    (6) Prompt approval of State plans. The determination as to whether 
a State plan submitted for approval conforms to the requirements for 
approval under the Act and regulations issued pursuant thereto shall be 
made promptly and not later than the 45th day following the date on 
which the plan submittal is received in the regional office, unless the 
Regional Office, ACYF, has secured from the State agency a written 
agreement to extend that period.
    (7) Prompt approval of plan amendments. Any amendment of an approved 
State plan may, at the option of the State, be considered as a 
submission of a new State plan. If the State requests that such 
amendment be so considered the determination as to its conformity with 
the requirements for approval shall be made promptly and not later than 
the 45th day following the date on which such a request is received in 
the regional office with respect to an amendment that has been received 
in such office, unless the Regional Office, ACYF, has secured from the 
State agency a written agreement to extend that period. In absence of 
request by a State that an amendment of an approved State plan shall be 
considered as a submission of a new State plan, the procedures under 
Sec. 201.6 (a) and (b) shall be applicable.
    (8) Effective date. The effective date of a new plan may not be 
earlier than the first day of the calendar quarter in which an 
approvable plan is submitted, and with respect to expenditures for 
assistance under such plan, may not be earlier than the first day on 
which the plan is in operation on a statewide basis. The same applies 
with respect to plan amendments.
    (e) Once the title IV-E State plan has been submitted and approved, 
it shall remain in effect until amendments are required. An amendment is 
required if there is any significant and relevant change in the 
information or assurances in the plan, or the organization,

[[Page 358]]

policies or operations described in the plan.

(This requirement has been approved by the Office of Management and 
Budget under OMB Control Number 0980-0141. In accordance with the 
Paperwork Reduction Act of 1995, an agency may not conduct or sponsor, 
and a person is not required to respond to, a collection of information 
unless it displays a currently valid OMB control number.)

[48 FR 23115, May 23, 1983, as amended at 58 FR 67938, Dec. 22, 1993; 65 
FR 4088, Jan. 25, 2000; 66 FR 58676, Nov. 23, 2001]



Sec. 1356.21  Foster care maintenance payments program implementation requirements.

    (a) Statutory and regulatory requirements of the Federal foster care 
program. To implement the foster care maintenance payments program 
provisions of the title IV-E State plan and to be eligible to receive 
Federal financial participation (FFP) for foster care maintenance 
payments under this part, a State must meet the requirements of this 
section, 45 CFR 1356.22, 45 CFR 1356.30, and sections 472, 475(1), 
475(4), 475(5) and 475(6) of the Act.
    (b) Reasonable efforts. The State must make reasonable efforts to 
maintain the family unit and prevent the unnecessary removal of a child 
from his/her home, as long as the child's safety is assured; to effect 
the safe reunification of the child and family (if temporary out-of-home 
placement is necessary to ensure the immediate safety of the child); and 
to make and finalize alternate permanency plans in a timely manner when 
reunification is not appropriate or possible. In order to satisfy the 
``reasonable efforts'' requirements of section 471(a)(15) (as 
implemented through section 472(a)(1) of the Act), the State must meet 
the requirements of paragraphs (b) and (d) of this section. In 
determining reasonable efforts to be made with respect to a child and in 
making such reasonable efforts, the child's health and safety must be 
the State's paramount concern.
    (1) Judicial determination of reasonable efforts to prevent a 
child's removal from the home.
    (i) When a child is removed from his/her home, the judicial 
determination as to whether reasonable efforts were made, or were not 
required to prevent the removal, in accordance with paragraph (b)(3) of 
this section, must be made no later than 60 days from the date the child 
is removed from the home pursuant to paragraph (k)(1)(ii) of this 
section.
    (ii) If the determination concerning reasonable efforts to prevent 
the removal is not made as specified in paragraph (b)(1)(i) of this 
section, the child is not eligible under the title IV-E foster care 
maintenance payments program for the duration of that stay in foster 
care.
    (2) Judicial determination of reasonable efforts to finalize a 
permanency plan.
    (i) The State agency must obtain a judicial determination that it 
has made reasonable efforts to finalize the permanency plan that is in 
effect (whether the plan is reunification, adoption, legal guardianship, 
placement with a fit and willing relative, or placement in another 
planned permanent living arrangement) within twelve months of the date 
the child is considered to have entered foster care in accordance with 
the definition at Sec. 1355.20 of this part, and at least once every 
twelve months thereafter while the child is in foster care.
    (ii) If such a judicial determination regarding reasonable efforts 
to finalize a permanency plan is not made in accordance with the 
schedule prescribed in paragraph (b)(2)(i) of this section, the child 
becomes ineligible under title IV-E at the end of the month in which the 
judicial determination was required to have been made, and remains 
ineligible until such a determination is made.
    (3) Circumstances in which reasonable efforts are not required to 
prevent a child's removal from home or to reunify the child and family. 
Reasonable efforts to prevent a child's removal from home or to reunify 
the child and family are not required if the State agency obtains a 
judicial determination that such efforts are not required because:
    (i) A court of competent jurisdiction has determined that the parent 
has subjected the child to aggravated circumstances (as defined in State 
law, which definition may include but need not be limited to 
abandonment, torture, chronic abuse, and sexual abuse);

[[Page 359]]

    (ii) A court of competent jurisdiction has determined that the 
parent has been convicted of:
    (A) Murder (which would have been an offense under section 1111(a) 
of title 18, United States Code, if the offense had occurred in the 
special maritime or territorial jurisdiction of the United States) of 
another child of the parent;
    (B) Voluntary manslaughter (which would have been an offense under 
section 1112(a) of title 18, United States Code, if the offense had 
occurred in the special maritime or territorial jurisdiction of the 
United States) of another child of the parent;
    (C) Aiding or abetting, attempting, conspiring, or soliciting to 
commit such a murder or such a voluntary manslaughter; or
    (D) A felony assault that results in serious bodily injury to the 
child or another child of the parent; or,
    (iii) The parental rights of the parent with respect to a sibling 
have been terminated involuntarily.
    (4) Concurrent planning. Reasonable efforts to finalize an alternate 
permanency plan may be made concurrently with reasonable efforts to 
reunify the child and family.
    (5) Use of the Federal Parent Locator Service. The State agency may 
seek the services of the Federal Parent Locator Service to search for 
absent parents at any point in order to facilitate a permanency plan.
    (c) Contrary to the welfare determination. Under section 472(a)(1) 
of the Act, a child's removal from the home must have been the result of 
a judicial determination (unless the child was removed pursuant to a 
voluntary placement agreement) to the effect that continuation of 
residence in the home would be contrary to the welfare, or that 
placement would be in the best interest, of the child. The contrary to 
the welfare determination must be made in the first court ruling that 
sanctions (even temporarily) the removal of a child from home. If the 
determination regarding contrary to the welfare is not made in the first 
court ruling pertaining to removal from the home, the child is not 
eligible for title IV-E foster care maintenance payments for the 
duration of that stay in foster care.
    (d) Documentation of judicial determinations. The judicial 
determinations regarding contrary to the welfare, reasonable efforts to 
prevent removal, and reasonable efforts to finalize the permanency plan 
in effect, including judicial determinations that reasonable efforts are 
not required, must be explicitly documented and must be made on a case-
by-case basis and so stated in the court order.
    (1) If the reasonable efforts and contrary to the welfare judicial 
determinations are not included as required in the court orders 
identified in paragraphs (b) and (c) of this section, a transcript of 
the court proceedings is the only other documentation that will be 
accepted to verify that these required determinations have been made.
    (2) Neither affidavits nor nunc pro tunc orders will be accepted as 
verification documentation in support of reasonable efforts and contrary 
to the welfare judicial determinations.
    (3) Court orders that reference State law to substantiate judicial 
determinations are not acceptable, even if State law provides that a 
removal must be based on a judicial determination that remaining in the 
home would be contrary to the child's welfare or that removal can only 
be ordered after reasonable efforts have been made.
    (e) Trial home visits. A trial home visit may not exceed six months 
in duration, unless a court orders a longer trial home visit. If a trial 
home visit extends beyond six months and has not been authorized by the 
court, or exceeds the time period the court has deemed appropriate, and 
the child is subsequently returned to foster care, that placement must 
then be considered a new placement and title IV-E eligibility must be 
newly established. Under these circumstances the judicial determinations 
regarding contrary to the welfare and reasonable efforts to prevent 
removal are required.
    (f) Case review system. In order to satisfy the provisions of 
section 471(a)(16) of the Act regarding a case review system, each 
State's case review system must meet the requirements of sections 475(5) 
and 475(6) of the Act.
    (g) Case plan requirements. In order to satisfy the case plan 
requirements of sections 471(a)(16), 475(1) and 475(5) (A)

[[Page 360]]

and (D) of the Act, the State agency must promulgate policy materials 
and instructions for use by State and local staff to determine the 
appropriateness of and necessity for the foster care placement of the 
child. The case plan for each child must:
    (1) Be a written document, which is a discrete part of the case 
record, in a format determined by the State, which is developed jointly 
with the parent(s) or guardian of the child in foster care; and
    (2) Be developed within a reasonable period, to be established by 
the State, but in no event later than 60 days from the child's removal 
from the home pursuant to paragraph (k) of this section;
    (3) Include a discussion of how the case plan is designed to achieve 
a safe placement for the child in the least restrictive (most family-
like) setting available and in close proximity to the home of the 
parent(s) when the case plan goal is reunification and a discussion of 
how the placement is consistent with the best interests and special 
needs of the child. (FFP is not available when a court orders a 
placement with a specific foster care provider);
    (4) Include a description of the services offered and provided to 
prevent removal of the child from the home and to reunify the family; 
and
    (5) Document the steps to finalize a placement when the case plan 
goal is or becomes adoption or placement in another permanent home in 
accordance with sections 475(1)(E) and (5)(E) of the Act. When the case 
plan goal is adoption, at a minimum, such documentation shall include 
child-specific recruitment efforts such as the use of State, regional, 
and national adoption exchanges including electronic exchange systems.

(This requirement has been approved by the Office of Management and 
Budget under OMB Control Number 0980-0140. In accordance with the 
Paperwork Reduction Act of 1995, an agency may not conduct or sponsor, 
and a person is not required to respond to, a collection of information 
unless it displays a currently valid OMB control number.)

    (h) Application of the permanency hearing requirements. (1) To meet 
the requirements of the permanency hearing, the State must, among other 
requirements, comply with section 475(5)(C) of the Act.
    (2) In accordance with paragraph (b)(3) of this section, when a 
court determines that reasonable efforts to return the child home are 
not required, a permanency hearing must be held within 30 days of that 
determination, unless the requirements of the permanency hearing are 
fulfilled at the hearing in which the court determines that reasonable 
efforts to reunify the child and family are not required.
    (3) If the State concludes, after considering reunification, 
adoption, legal guardianship, or permanent placement with a fit and 
willing relative, that the most appropriate permanency plan for a child 
is placement in another planned permanent living arrangement, the State 
must document to the court the compelling reason for the alternate plan. 
Examples of a compelling reason for establishing such a permanency plan 
may include:
    (i) The case of an older teen who specifically requests that 
emancipation be established as his/her permanency plan;
    (ii) The case of a parent and child who have a significant bond but 
the parent is unable to care for the child because of an emotional or 
physical disability and the child's foster parents have committed to 
raising him/her to the age of majority and to facilitate visitation with 
the disabled parent; or,
    (iii) the Tribe has identified another planned permanent living 
arrangement for the child.
    (4) When an administrative body, appointed or approved by the court, 
conducts the permanency hearing, the procedural safeguards set forth in 
the definition of permanency hearing must be so extended by the 
administrative body.
    (i) Application of the requirements for filing a petition to 
terminate parental rights at section 475(5)(E) of the Social Security 
Act. (1) Subject to the exceptions in paragraph (i)(2) of this section, 
the State must file a petition (or, if such a petition has been filed by 
another party, seek to be joined as a party to the petition) to 
terminate the parental rights of a parent(s):
    (i) Whose child has been in foster care under the responsibility of 
the State for 15 of the most recent 22 months. The petition must be 
filed by

[[Page 361]]

the end of the child's fifteenth month in foster care. In calculating 
when to file a petition for termination of parental rights, the State:
    (A) Must calculate the 15 out of the most recent 22 month period 
from the date the child is considered to have entered foster care as 
defined at section 475(5)(F) of the Act and Sec. 1355.20 of this part;
    (B) Must use a cumulative method of calculation when a child 
experiences multiple exits from and entries into foster care during the 
22 month period;
    (C) Must not include trial home visits or runaway episodes in 
calculating 15 months in foster care; and,
    (D) Need only apply section 475(5)(E) of the Act to a child once if 
the State does not file a petition because one of the exceptions at 
paragraph (i)(2) of this section applies;
    (ii) Whose child has been determined by a court of competent 
jurisdiction to be an abandoned infant (as defined under State law). The 
petition to terminate parental rights must be filed within 60 days of 
the judicial determination that the child is an abandoned infant; or,
    (iii) Who has been convicted of one of the felonies listed at 
paragraph (b)(3)(ii) of this section. Under such circumstances, the 
petition to terminate parental rights must be filed within 60 days of a 
judicial determination that reasonable efforts to reunify the child and 
parent are not required.
    (2) The State may elect not to file or join a petition to terminate 
the parental rights of a parent per paragraph (i)(1) of this section if:
    (i) At the option of the State, the child is being cared for by a 
relative;
    (ii) The State agency has documented in the case plan (which must be 
available for court review) a compelling reason for determining that 
filing such a petition would not be in the best interests of the 
individual child. Compelling reasons for not filing a petition to 
terminate parental rights include, but are not limited to:
    (A) Adoption is not the appropriate permanency goal for the child; 
or,
    (B) No grounds to file a petition to terminate parental rights 
exist; or,
    (C) The child is an unaccompanied refugee minor as defined in 45 CFR 
400.111; or
    (D) There are international legal obligations or compelling foreign 
policy reasons that would preclude terminating parental rights; or
    (iii) The State agency has not provided to the family, consistent 
with the time period in the case plan, services that the State deems 
necessary for the safe return of the child to the home, when reasonable 
efforts to reunify the family are required.
    (3) When the State files or joins a petition to terminate parental 
rights in accordance with paragraph (i)(1) of this section, it must 
concurrently begin to identify, recruit, process, and approve a 
qualified adoptive family for the child.
    (j) Child of a minor parent in foster care. Foster care maintenance 
payments made on behalf of a child placed in a foster family home or 
child care institution, who is the parent of a son or daughter in the 
same home or institution, must include amounts which are necessary to 
cover costs incurred on behalf of the child's son or daughter. Said 
costs must be limited to funds expended on items listed in the 
definition of foster care maintenance payments in Sec. 1355.20 of this 
part.
    (k) Removal from the home of a specified relative.
    (1) For the purposes of meeting the requirements of section 
472(a)(1) of the Act, a removal from the home must occur pursuant to:
    (i) A voluntary placement agreement entered into by a parent or 
guardian which leads to a physical or constructive removal (i.e., a non-
physical or paper removal of custody) of the child from the home; or
    (ii) A judicial order for a physical or constructive removal of the 
child from a parent or specified relative.
    (2) A removal has not occurred in situations where legal custody is 
removed from the parent or relative and the child remains with the same 
relative in that home under supervision by the State agency.
    (3) A child is considered constructively removed on the date of the 
first judicial order removing custody, even temporarily, from the 
appropriate

[[Page 362]]

specified relative or the date that the voluntary placement agreement is 
signed by all relevant parties.
    (l) Living with a specified relative.For purposes of meeting the 
requirements for living with a specified relative prior to removal from 
the home under section 472(a)(1) of the Act and all of the conditions 
under section 472(a)(4), one of the two following situations must apply:
    (1) The child was living with the parent or specified relative, and 
was AFDC eligible in that home in the month of the voluntary placement 
agreement or initiation of court proceedings; or
    (2) The child had been living with the parent or specified relative 
within six months of the month of the voluntary placement agreement or 
the initiation of court proceedings, and the child would have been AFDC 
eligible in that month if s/he had still been living in that home.
    (m) Review of payments and licensing standards. In meeting the 
requirements of section 471(a)(11) of the Act, the State must review at 
reasonable, specific, time-limited periods to be established by the 
State:
    (1) The amount of the payments made for foster care maintenance and 
adoption assistance to assure their continued appropriateness; and
    (2) The licensing or approval standards for child care institutions 
and foster family homes.
    (n) Foster care goals. The specific foster care goals required under 
section 471(a)(14) of the Act must be incorporated into State law by 
statute or administrative regulation with the force of law.
    (o) Notice and opportunity to be heard. The State must provide the 
foster parent(s) of a child and any preadoptive parent or relative 
providing care for the child with timely notice of and an opportunity to 
be heard in permanency hearings and six-month periodic reviews held with 
respect to the child during the time the child is in the care of such 
foster parent, preadoptive parent, or relative caregiver. Notice of and 
an opportunity to be heard does not include the right to standing as a 
party to the case.

[65 FR 4088, Jan. 25, 2000, as amended at 66 FR 58677, Nov. 23, 2001]



Sec. 1356.22  Implementation requirements for children voluntarily placed in foster care.

    (a) As a condition of receipt of Federal financial participation 
(FFP) in foster care maintenance payments for a dependent child removed 
from his home under a voluntary placement agreement, the State must meet 
the requirements of:
    (1) Section 472 of the Act, as amended;
    (2) Sections 422(b)(10) and 475(5) of the Act;
    (3) 45 CFR 1356.21(e), (f), (g), (h), and (i); and
    (4) The requirements of this section.
    (b) Federal financial participation is available only for voluntary 
foster care maintenance expenditures made within the first 180 days of 
the child's placement in foster care unless there has been a judicial 
determination by a court of competent jurisdiction, within the first 180 
days of such placement, to the effect that the continued voluntary 
placement is in the best interests of the child.
    (c) The State agency must establish and maintain a uniform procedure 
or system, consistent with State law, for revocation by the parent(s) of 
a voluntary placement agreement and return of the child.

[65 FR 4090, Jan. 25, 2000, as amended at 66 FR 58677, Nov. 23, 2001]



Sec. 1356.30  Safety requirements for foster care and adoptive home providers.

    (a) Unless an election provided for in paragraph (d) of this section 
is made, the State must provide documentation that criminal records 
checks have been conducted with respect to prospective foster and 
adoptive parents.
    (b) The State may not approve or license any prospective foster or 
adoptive parent, nor may the State claim FFP for any foster care 
maintenance or adoption assistance payment made on behalf of a child 
placed in a foster home operated under the auspices of a child placing 
agency or on behalf of a child placed in an adoptive home through a 
private adoption agency, if the State finds that, based on a criminal 
records check conducted in accordance with paragraph (a) of this 
section,

[[Page 363]]

a court of competent jurisdiction has determined that the prospective 
foster or adoptive parent has been convicted of a felony involving:
    (1) Child abuse or neglect;
    (2) Spousal abuse;
    (3) A crime against a child or children (including child 
pornography); or,
    (4) A crime involving violence, including rape, sexual assault, or 
homicide, but not including other physical assault or battery.
    (c) The State may not approve or license any prospective foster or 
adoptive parent, nor may the State claim FFP for any foster care 
maintenance or adoption assistance payment made on behalf of a child 
placed in a foster home operated under the auspices of a child placing 
agency or on behalf of a child placed in an adoptive home through a 
private adoption agency, if the State finds, based on a criminal records 
check conducted in accordance with paragraph (a) of this section, that a 
court of competent jurisdiction has determined that the prospective 
foster or adoptive parent has, within the last five years, been 
convicted of a felony involving:
    (1) Physical assault;
    (2) Battery; or,
    (3) A drug-related offense.
    (d)(1) The State may elect not to conduct or require criminal 
records checks on prospective foster or adoptive parents by:
    (i) Notifying the Secretary in a letter from the Governor; or
    (ii) Enacting State legislation.
    (2) Such an election also removes the State's obligation to comport 
with paragraphs (b) and (c) of this section.
    (e) In all cases where the State opts out of the criminal records 
check requirement, the licensing file for that foster or adoptive family 
must contain documentation which verifies that safety considerations 
with respect to the caretaker(s) have been addressed.
    (f) In order for a child care institution to be eligible for title 
IV-E funding, the licensing file for the institution must contain 
documentation which verifies that safety considerations with respect to 
the staff of the institution have been addressed.

[65 FR 4090, Jan. 25, 2000]



Sec. 1356.40  Adoption assistance program: Administrative requirements to implement section 473 of the Act.

    (a) To implement the adoption assistance program provisions of the 
title IV-E State plan and to be eligible for Federal financial 
participation in adoption assistance payments under this part, the State 
must meet the requirements of this section and sections 471(a), 473 and 
475(3) of the Act.
    (b) The adoption assistance agreement for payments pursuant to 
section 473(a)(2) must meet the requirements of section 475(3) of the 
Act and must:
    (1) Be signed and in effect at the time of or prior to the final 
decree of adoption. A copy of the signed agreement must be given to each 
party; and
    (2) Specify its duration; and
    (3) Specify the nature and amount of any payment, services and 
assistance to be provided under such agreement and, for purposes of 
eligibility under title XIX of the Act, specify that the child is 
eligible for Medicaid services; and
    (4) Specify, with respect to agreements entered into on or after 
October 1, 1983, that the agreement shall remain in effect regardless of 
the State of which the adoptive parents are residents at any given time.
    (c) There must be no income eligibility requirement (means test) for 
the prospective adoptive parent(s) in determining eligibility for 
adoption assistance payments.
    (d) In the event an adoptive family moves from one State to another 
State, the family may apply for social services on behalf of the 
adoptive child in the new State of residence. However, for agreements 
entered into on or after October 1, 1983, if a needed service(s) 
specified in the adoption assistance agreement is not available in the 
new State of residence, the State making the original adoption 
assistance payment remains financially responsible for providing the 
specified service(s).
    (e) A State may make an adoption assistance agreement with adopting 
parent(s) who reside in another State. If so, all provisions of this 
section apply.

[[Page 364]]

    (f) The State agency must actively seek ways to promote the adoption 
assistance program.

[48 FR 23116, May 23, 1983, as amended at 53 FR 50220, Dec. 14, 1988]



Sec. 1356.41  Nonrecurring expenses of adoption.

    (a) The amount of the payment made for nonrecurring expenses of 
adoption shall be determined through agreement between the adopting 
parent(s) and the State agency administering the program. The agreement 
must indicate the nature and amount of the nonrecurring expenses to be 
paid.
    (b) The agreement for nonrecurring expenses may be a separate 
document or a part of an agreement for either State or Federal adoption 
assistance payments or services. The agreement for nonrecurring expenses 
must be signed prior to the final decree of adoption, with two 
exceptions:
    (1) Cases in which the final decree of adoption was entered into on 
or after January 1, 1987 and within six months after the effective date 
of the final rule; or
    (2) Cases in which a final decree was entered into before January 1, 
1987 but nonrecurring adoption expenses were paid after January 1, 1987.
    (c) There must be no income eligibility requirement (means test) for 
adopting parents in determining whether payments for nonrecurring 
expenses of adoption shall be made. However, parents cannot be 
reimbursed for out-of-pocket expenses for which they have otherwise been 
reimbursed.
    (d) For purposes of payment of nonrecurring expenses of adoption, 
the State must determine that the child is a ``child with special 
needs'' as defined in section 473(c) of the Act, and that the child has 
been placed for adoption in accordance with applicable State and local 
laws; the child need not meet the categorical eligibility requirements 
at section 473(a)(2).
    (e)(1) The State agency must notify all appropriate courts and all 
public and licensed private nonprofit adoption agencies of the 
availability of funds for the nonrecurring expenses of adoption of 
children with special needs as well as where and how interested persons 
may apply for these funds. This information should routinely be made 
available to all persons who inquire about adoption services after the 
publication date of this final rule.
    (2) The State agency must send a notice to all public and private 
nonprofit adoption agencies directing them to notify all their clients 
who adopted a special needs child between January 1, 1986 and six months 
following the effective date of this rule of the availability of 
reimbursement for nonrecurring expenses paid after January 1, 1987.
    (3) For adoptions in which a final decree is entered between January 
1, 1987 and six months after the effective date of this rule, or where a 
final decree was entered before January 1, 1987 but nonrecurring 
adoption expenses were paid after January 1, 1987, individuals who seek 
reimbursement must enter into an agreement with the State agency and 
file a claim with the State agency within two years of the effective 
date of this rule. For adoptions in which a final decree is entered more 
than six months after the effective date of this rule, the agreement 
must be signed at the time of or prior to the final decree of adoption. 
In such cases, claims must be filed with the State agency within two 
years of the date of the final decree of adoption.
    (f)(1) Funds expended by the State under an adoption assistance 
agreement, with respect to nonrecurring adoption expenses incurred by or 
on behalf of parents who adopt a child with special needs, shall be 
considered an administrative expenditure of the title IV-E Adoption 
Assistance Program. Federal reimbursement is available at a 50 percent 
matching rate, for State expenditures up to $2,000, for any adoptive 
placement.
    (2) States may set a reasonable lower maximum which must be based on 
reasonable charges, consistent with State and local practices, for 
special needs adoptions within the State. The basis for setting a lower 
maximum must be documented and available for public inspection.
    (3) In cases where siblings are placed and adopted, either 
separately or as a unit, each child is treated as an individual with 
separate reimbursement for nonrecurring expenses up to the

[[Page 365]]

maximum amount allowable for each child.
    (g) Federal financial participation for nonrecurring expenses of 
adoption is limited to costs incurred by or on behalf of adoptive 
parents that are not otherwise reimbursed from other sources. Payments 
for nonrecurring expenses shall be made either directly by the State 
agency or through another public or licensed nonprofit private agency.
    (h) When the adoption of the child involves interstate placement, 
the State that enters into an adoption assistance agreement under 
section 473(a)(1)(B)(ii) of the Act or under a State subsidy program 
will be responsible for paying the nonrecurring adoption expenses of the 
child. In cases where there is interstate placement but no agreement for 
other Federal or State adoption assistance, the State in which the final 
adoption decree is issued will be responsible for reimbursement of 
nonrecurring expenses if the child meets the requirements of section 
473(c).
    (i) The term ``nonrecurring adoption expenses'' means reasonable and 
necessary adoption fees, court costs, attorney fees and other expenses 
which are directly related to the legal adoption of a child with special 
needs, which are not incurred in violation of State or Federal law, and 
which have not been reimbursed from other sources or other funds. 
``Other expenses which are directly related to the legal adoption of a 
child with special needs'' means the costs of the adoption incurred by 
or on behalf of the parents and for which parents carry the ultimate 
liability for payment. Such costs may include the adoption study, 
including health and psychological examination, supervision of the 
placement prior to adoption, transportation and the reasonable costs of 
lodging and food for the child and/or the adoptive parents when 
necessary to complete the placement or adoption process.
    (j) When State statutes must be amended in order to reimburse 
parents for nonrecurring expenses in the adoption of eligible children, 
legislation must be enacted before the close of the second general 
session following publication of the final rule and must apply 
retroactively to January 1, 1987. Failure to honor all eligible claims 
will be considered non-compliance by the State with Title IV-E of the 
Act.
    (k) A State expenditure is considered made in the quarter during 
which the payment was made by a State agency to a private nonprofit 
agency, individual or vendor payee.

[53 FR 50220, Dec. 14, 1988]



Sec. 1356.50  Withholding of funds for non-compliance with the approved title IV-E State plan.

    (a) To be in compliance with the title IV-E State plan requirements, 
a State must meet the requirements of the Act and 45 CFR 1356.20, 
1356.21, 1356.30, and 1356.40 of this part.
    (b) To be in compliance with the title IV-E State plan requirements, 
a State that chooses to claim FFP for voluntary placements must meet the 
requirements of the Act, 45 CFR 1356.22 and paragraph (a) of this 
section; and
    (c) For purposes of this section, the procedures in Sec. 1355.39 of 
this chapter apply.

[48 FR 23117, May 23, 1983, as amended at 65 FR 4091, Jan. 25, 2000; 66 
FR 58677, Nov. 23, 2001]



Sec. 1356.60  Fiscal requirements (title IV-E).

    (a) Federal matching funds for foster care maintenance and adoption 
assistance payments. (1) Effective October 1, 1980, Federal financial 
participation (FFP) is available to States under an approved title IV-E 
State plan for allowable costs in expenditures for:
    (i) Foster care maintenance payments as defined in section 475(4) of 
the Act, made in accordance with 45 CFR 1356.20 through 1356.30 of this 
part, section 472 of the Act and section 102(d) of Pub. L. 96-272, the 
Adoption Assistance and Child Welfare Act of 1980;
    (ii) Adoption assistance payments made in accordance with 45 CFR 
1356.20 and 1356.40 and sections 473 and 475(3) of the Act.
    (2) Federal financial participation is available at the rate of the 
Federal medical assistance percentage as defined in section 1905(b) of 
the Act, Definitions, and pertinent regulations as promulgated by the 
Secretary, or his designee.

[[Page 366]]

    (b) Federal matching funds for State and local training for foster 
care and adoption assistance under title IV-E.
    (1) Federal financial participation is available at the rate of 
seventy-five percent (75%) in the costs of:
    (i) Training personnel employed or preparing for employment by the 
State or local agency administering the plan, and;
    (ii) Providing short-term training (including travel and per diem 
expenses) to current or prospective foster or adoptive parents and the 
members of the state licensed or approved child care institutions 
providing care to foster and adopted children receiving title IV-E 
assistance.
    (2) All training activities and costs funded under title IV-E shall 
be included in the State agency's training plan for title IV-B.
    (3) Short and long term training at educational institutions and in-
service training may be provided in accordance with the provisions of 
Secs. 235.63 through 235.66(a) of this title.
    (c) Federal matching funds for other State and local administrative 
expenditures for foster care and adoption assistance under title IV-E. 
Federal financial participation is available at the rate of fifty 
percent (50%) for administrative expenditures necessary for the proper 
and efficient administration of the title IV-E State plan. The State's 
cost allocation plan shall identify which costs are allocated and 
claimed under this program.
    (1) The determination and redetermination of eligibility, fair 
hearings and appeals, rate setting and other costs directly related only 
to the administration of the foster care program under this part are 
deemed allowable administrative costs under this paragraph. They may not 
be claimed under any other section or Federal program.
    (2) The following are examples of allowable administrative costs 
necessary for the administration of the foster care program:
    (i) Referral to services;
    (ii) Preparation for and participation in judicial determinations;
    (iii) Placement of the child;
    (iv) Development of the case plan;
    (v) Case reviews;
    (vi) Case management and supervision;
    (vii) Recruitment and licensing of foster homes and institutions;
    (viii) Rate setting; and
    (ix) A proportionate share of related agency overhead.
    (x) Costs related to data collection and reporting.
    (3) Allowable administrative costs do not include the costs of 
social services provided to the child, the child's family or foster 
family which provide counseling or treatment to ameliorate or remedy 
personal problems, behaviors or home conditions.
    (d) Cost of the data collection system. (1) Costs related to data 
collection system initiation, implementation and operation may be 
charged as an administrative cost of title IV-E at the 50 percent 
matching rate subject to the restrictions in paragraph (d) (2) of this 
section
    (2) For information systems used for purposes other than those 
specified by section 479 of the Act, costs must be allocated and must 
bear the same ratio as the foster care and adoption population bears to 
the total population contained in the information system as verified by 
reports from all other programs included in the system.
    (e) Federal matching funds for SACWIS. All expenditures of a State 
to plan, design, develop, install and operate the Statewide automated 
child welfare information system approved under Sec. 1355.52 of this 
chapter, shall be treated as necessary for the proper and efficient 
administration of the State plan without regard to whether the system 
may be used with respect to foster or adoptive children other than those 
on behalf of whom foster care maintenance or adoption assistance 
payments may be made under this part.

[47 FR 30925, July 15, 1982, as amended at 48 FR 23117, May 23, 1983; 53 
FR 50221, Dec. 14, 1988; 58 FR 67938, 67947, Dec. 22, 1993; 65 FR 4091, 
Jan. 25, 2000; 66 FR 58677, Nov. 23, 2001]

[[Page 367]]



Secs. 1356.65-1356.70  [Reserved]



Sec. 1356.71  Federal review of the eligibility of children in foster care and the eligibility of foster care providers in title IV-E programs.

    (a) Purpose, scope and overview of the process.
    (1) This section sets forth requirements governing Federal reviews 
of State compliance with the title IV-E eligibility provisions as they 
apply to children and foster care providers under paragraphs (a) and (b) 
of section 472 of the Act.
    (2) The requirements of this section apply to State agencies that 
receive Federal payments for foster care under title IV-E of the Act.
    (3) The review process begins with a primary review of foster care 
cases for the title IV-E eligibility requirements.
    (i) States in substantial compliance. States determined to be in 
substantial compliance based on the primary review will be subject to 
another review in three years.
    (ii) States not in substantial compliance. States that are 
determined not to be in substantial compliance based on the primary 
review will develop and implement a program improvement plan designed to 
correct the areas of noncompliance. A secondary review will be conducted 
after the completion of the program improvement plan. A subsequent 
primary review will be held three years from the date of the secondary 
review.
    (b) Composition of review team and preliminary activities preceding 
an on-site review.
    (1) The review team must be composed of representatives of the State 
agency, and ACF's Regional and Central Offices.
    (2) The State must provide ACF with the complete payment history for 
each of the sample and oversample cases prior to the on-site review.
    (c) Sampling guidance and conduct of review.
    (1) The list of sampling units in the target population (i.e., the 
sampling frame) will be drawn by ACF statistical staff from the Adoption 
and Foster Care Analysis and Reporting System (AFCARS) data which are 
transmitted by the State agency to ACF. The sampling frame will consist 
of cases of children who were eligible for foster care maintenance 
payments during the reporting period reflected in a State's most recent 
AFCARS data submission. For the initial primary review, if these data 
are not available or are deficient, an alternative sampling frame, 
consistent with one AFCARS six-month reporting period, will be selected 
by ACF in conjunction with the State agency.
    (2) A sample of 80 cases (plus a 10 percent oversample of eight 
cases) from the title IV-E foster care program will be selected for the 
primary review utilizing probability sampling methodologies. Usually, 
the chosen methodology will be simple random sampling, but other 
probability samples may be utilized, when necessary and appropriate.
    (3) Cases from the oversample will be substituted and reviewed for 
each of the original sample of 80 cases which is found to be in error.
    (4) At the completion of the primary review, the review team will 
determine the number of ineligible cases. When the total number of 
ineligible cases does not exceed eight, ACF can conclude with a 
probability of 88 percent that in a population of 1000 or more cases the 
population ineligibility case error rate is less than 15 percent and the 
State will be considered in substantial compliance. For primary reviews 
held subsequent to the initial primary reviews, the acceptable 
population ineligibility case error rate threshold will be reduced from 
less than 15 percent (eight or fewer ineligible cases) to less than 10 
percent (four or fewer ineligible cases)). A State agency which meets 
this standard is considered to be in ``substantial compliance'' (see 
paragraph (h) of this section). A disallowance will be assessed for the 
ineligible cases for the period of time the cases are ineligible.
    (5) A State which has been determined to be in ``noncompliance'' 
(i.e., not in substantial compliance) will be required to develop a 
program improvement plan according to the specifications discussed in 
paragraph (i) of this section, as well as undergo a secondary review. 
For the secondary review, a sample of 150 cases (plus a 10 percent 
oversample of 15 cases) will be drawn

[[Page 368]]

from the most recent AFCARS submission. Usually, the chosen methodology 
will be simple random sampling, but other probability samples may be 
utilized, when necessary and appropriate. Cases from the oversample will 
be substituted and reviewed for each of the original sample of 150 cases 
which is found to be in error.
    (6) At the completion of the secondary review, the review team will 
calculate both the sample case ineligibility and dollar error rates for 
the cases determined ineligible during the review. An extrapolated 
disallowance equal to the lower limit of a 90 percent confidence 
interval for the population total dollars in error for the amount of 
time corresponding to the AFCARS reporting period will be assessed if 
both the child/provider (case) ineligibility and dollar error rates 
exceed 10 percent. If neither, or only one, of the error rates exceeds 
10 percent, a disallowance will be assessed for the ineligible cases for 
the period of time the cases are ineligible.
    (d) Requirements subject to review. States will be reviewed against 
the requirements of title IV-E of the Act regarding:
    (1) The eligibility of the children on whose behalf the foster care 
maintenance payments are made (section 472(a)(1)-(4) of the Act) to 
include:
    (i) Judicial determinations regarding ``reasonable efforts'' and 
``contrary to the welfare'' in accordance with Sec. 1356.21(b) and (c), 
respectively;
    (ii) Voluntary placement agreements in accordance with Sec. 1356.22;
    (iii) Responsibility for placement and care vested with the State 
agency;
    (iv) Placement in a licensed foster family home or child care 
institution; and,
    (v) eligibility for AFDC under such State plan as it was in effect 
on July 16, 1996.
    (2) Allowable payments made to foster care providers who comport 
with sections 471(a)(10), 471(a)(20), 472(b) and (c) of the Act and 
Sec. 1356.30.
    (e) Review instrument. A title IV-E foster care eligibility review 
checklist will be used when conducting the eligibility review.
    (f) Eligibility determination--child. The case record of the child 
must contain sufficient documentation to verify a child's eligibility in 
accordance with paragraph (d)(1) of this section, in order to 
substantiate payments made on the child's behalf.
    (g) Eligibility determination--provider.
    (1) For each case being reviewed, the State agency must make 
available a licensing file which contains the licensing history, 
including a copy of the certificate of licensure/approval or letter of 
approval, for each of the providers in the following categories:
    (i) Public child care institutions with 25 children or less in 
residence;
    (ii) Private child care institutions;
    (iii) Group homes; and
    (iv) Foster family homes, including relative homes.
    (2) The licensing file must contain documentation that the State has 
complied with the safety requirements for foster and adoptive placements 
in accordance with Sec. 1356.30.
    (3) If the licensing file does not contain sufficient information to 
support a child's placement in a licensed facility, the State agency may 
provide supplemental information from other sources (e.g., a 
computerized database).
    (h) Standards of compliance.
    (1) Disallowances will be taken, and plans for program improvement 
required, based on the extent to which a State is not in substantial 
compliance with recipient or provider eligibility provisions of title 
IV-E, or applicable regulations in 45 CFR parts 1355 and 1356.
    (2) Substantial compliance and noncompliance are defined as follows:
    (i) Substantial compliance--For the primary review (of the sample of 
80 cases), no more than eight of the title IV-E cases reviewed may be 
determined to be ineligible. (This critical number of allowable 
``errors,'' i.e., ineligible cases, is reduced to four errors or less in 
primary reviews held subsequent to the initial primary review). For the 
secondary review (if required), substantial compliance means either the 
case ineligibility or dollar error rate does not exceed 10 percent.
    (ii) Noncompliance--means not in substantial compliance. For the 
primary review (of the sample of 80 cases), nine

[[Page 369]]

or more of the title IV-E cases reviewed must be determined to be 
ineligible. (This critical number of allowable ``errors,'' i.e., 
ineligible cases, is reduced to five or more in primary reviews 
subsequent to the initial primary review). For the secondary review (if 
required), noncompliance means both the case ineligibility and dollar 
error rates exceed 10 percent.
    (3) ACF will notify the State in writing within 30 calendar days 
after the completion of the review of whether the State is, or is not, 
operating in substantial compliance.
    (4) States which are determined to be in substantial compliance must 
undergo a subsequent review after a minimum of three years.
    (i) Program improvement plans.
    (1) States which are determined to be in noncompliance with 
recipient or provider eligibility provisions of title IV-E, or 
applicable regulations in 45 CFR Parts 1355 and 1356, will develop a 
program improvement plan designed to correct the areas determined not to 
be in substantial compliance. The program improvement plan will:
    (i) Be developed jointly by State and Federal staff;
    (ii) Identify the areas in which the State's program is not in 
substantial compliance;
    (iii) Not extend beyond one year. A State will have a maximum of one 
year in which to implement and complete the provisions of the program 
improvement plan unless State legislative action is required. In such 
instances, an extension may be granted with the State and ACF 
negotiating the terms and length of such extension that shall not exceed 
the last day of the first legislative session after the date of the 
program improvement plan; and
    (iv) Include:
    (A) Specific goals;
    (B) The action steps required to correct each identified weakness or 
deficiency; and,
    (C) a date by which each of the action steps is to be completed.
    (2) States determined not to be in substantial compliance as a 
result of a primary review must submit the program improvement plan to 
ACF for approval within 90 calendar days from the date the State 
receives written notification that it is not in substantial compliance. 
This deadline may be extended an additional 30 calendar days when a 
State agency submits additional documentation to ACF in support of cases 
determined to be ineligible as a result of the on-site eligibility 
review.
    (3) The ACF Regional Office will intermittently review, in 
conjunction with the State agency, the State's progress in completing 
the prescribed action steps in the program improvement plan.
    (4) If a State agency does not submit an approvable program 
improvement plan in accordance with the provisions of paragraphs (i)(1) 
and (2) of this section, ACF will move to a secondary review in 
accordance with paragraph (c) of this section.
    (j) Disallowance of funds. The amount of funds to be disallowed will 
be determined by the extent to which a State is not in substantial 
compliance with recipient or provider eligibility provisions of title 
IV-E, or applicable regulations in 45 CFR parts 1355 and 1356.
    (1) States which are in found to be in substantial compliance during 
the primary or secondary review will have disallowances (if any) 
determined on the basis of individual cases reviewed and found to be in 
error. The amount of disallowance will be computed on the basis of 
payments associated with ineligible cases for the entire period of time 
that each case has been ineligible.
    (2) States which are found to be in noncompliance during the primary 
review will have disallowances determined on the basis of individual 
cases reviewed and found to be in error, and must implement a program 
improvement plan in accordance with the provisions contained within it. 
A secondary review will be conducted no later than during the AFCARS 
reporting period which immediately follows the program improvement plan 
completion date on a sample of 150 cases drawn from the State's most 
recent AFCARS data. If both the case ineligibility and dollar error 
rates exceed 10 percent, the State is not in compliance and an 
additional disallowance will be determined based on extrapolation from 
the sample to the universe of claims paid for the duration of the

[[Page 370]]

AFCARS reporting period (i.e., all title IV-E funds expended for a case 
during the quarter(s) that case is ineligible, including administrative 
costs). If either the case ineligibility or dollar rate does not exceed 
10 percent, the amount of disallowance will be computed on the basis of 
payments associated with ineligible cases for the entire period of time 
the case has been determined to be ineligible.
    (3) The State agency will be liable for interest on the amount of 
funds disallowed by the Department, in accordance with the provisions of 
45 CFR 30.13.
    (4) States may appeal any disallowance actions taken by ACF to the 
HHS Departmental Appeals Board in accordance with regulations at 45 CFR 
Part 16.

[65 FR 4091, Jan. 25, 2000, as amended at 66 FR 58677, Nov. 23, 2001]



PART 1357--REQUIREMENTS APPLICABLE TO TITLE IV-B--Table of Contents




Sec.
1357.10  Scope and definitions.
1357.15  Comprehensive child and family services plan requirements.
1357.16  Annual progress and services reports.
1357.20  Child abuse and neglect programs.
1357.25  Requirements for eligibility for additional payments under 
          section 427.
1357.30  State fiscal requirements (title IV-B, subpart 1, child welfare 
          services).
1357.32  State fiscal requirements (title IV-B, subpart 2, family 
          preservation and family support services).
1357.40  Direct payments to Indian Tribal Organizations (title IV-B, 
          subpart 1, child welfare services).
1357.50  Direct payments to Indian Tribal organizations (title IV-B, 
          subpart 2, family preservation and support services).

    Authority: 42 U.S.C. 620 et seq., 42 U.S.C. 670 et seq.; 42 U.S.C. 
1302.



Sec. 1357.10  Scope and definitions.

    (a) Scope. This part applies to State and Indian Tribal programs for 
child welfare services under subpart 1, and family preservation and 
family support services under subpart 2 of title IV-B of the Act.
    (b) Eligibility. Child and family services under title IV-B, 
subparts 1 and 2, must be available on the basis of need for services 
and must not be denied on the basis of income or length of residence in 
the State or within the Indian Tribe's jurisdiction.
    (c) Definitions.
    Child and Family Services Plan (CFSP) means the document, developed 
through joint planning, which describes the publicly-funded State child 
and family services continuum (family support and family preservation 
services; child welfare services, including child abuse and neglect 
prevention, intervention, and treatment services; services to support 
reunification, adoption, kinship care, foster care, independent living, 
or other permanent living arrangements). For Indian Tribes, the document 
describes the child welfare and/or family preservation and support 
services to be provided by the Indian Tribe; includes goals and 
objectives both for improved outcomes for the safety, permanency and 
well-being of children and families and for service delivery system 
reform; specifies the services and other implementation activities that 
will be undertaken to carry out the goals and objectives; and includes 
plans for program improvement and allocation of resources.
    Child welfare services means public social services directed to 
accomplish the following purposes:
    (1) Protecting and promoting the welfare and safety of all children, 
including individuals with disabilities; homeless, dependent, or 
neglected children;
    (2) Preventing or remedying, or assisting in the solution of 
problems which may result in the neglect, abuse, exploitation, or 
delinquency of children;
    (3) Preventing the unnecessary separation of children from their 
families by identifying family problems and assisting families in 
resolving their problems and preventing the breakup of the family where 
the prevention of child removal is desirable and possible;
    (4) Restoring to their families children who have been removed and 
may be safely returned, by the provision of services to the child and 
the family;
    (5) Assuring adequate care of children away from their homes, in 
cases where the child cannot be returned home or cannot be placed for 
adoption; and

[[Page 371]]

    (6) Placing children in suitable adoptive homes, in cases where 
restoration to the biological family is not possible or appropriate.
    Children refers to individuals from birth to the age of 21 (or such 
age of majority as provided under State law) including infants, 
children, youth, adolescents, and young adults.
    Community-based services refers to programs delivered in accessible 
settings in the community and responsive to the needs of the community 
and the individuals and families residing therein. These services may be 
provided under public or private nonprofit auspices.
    Families includes, but is not limited to, biological, adoptive, 
foster, and extended families.
    Family preservation services refers to services for children and 
families designed to protect children from harm and help families 
(including foster, adoptive, and extended families) at risk or in 
crisis, including--
    (1) Preplacement preventive services programs, such as intensive 
family preservation programs, designed to help children at risk of 
foster care placement remain with their families, where possible;
    (2) Service programs designed to help children, where appropriate, 
return to families from which they have been removed; or be placed for 
adoption, with a legal guardian, or, if adoption or legal guardianship 
is determined not to be appropriate for a child, in some other planned, 
permanent living arrangement;
    (3) Service programs designed to provide follow-up care to families 
to whom a child has been returned after a foster care placement;
    (4) Respite care of children to provide temporary relief for parents 
and other caregivers (including foster parents);
    (5) Services designed to improve parenting skills (by reinforcing 
parents' confidence in their strengths, and helping them to identify 
where improvement is needed and to obtain assistance in improving those 
skills) with respect to matters such as child development, family 
budgeting, coping with stress, health, and nutrition; and
    (6) Case management services designed to stabilize families in 
crisis such as transportation, assistance with housing and utility 
payments, and access to adequate health care.
    Family support services means community-based services to promote 
the well-being of children and families designed to increase the 
strength and stability of families (including adoptive, foster, and 
extended families), to increase parents' confidence and competence in 
their parenting abilities, to afford children a stable and supportive 
family environment, and otherwise to enhance child development. Family 
support services may include:
    (1) Services, including in-home visits, parent support groups, and 
other programs designed to improve parenting skills (by reinforcing 
parents' confidence in their strengths, and helping them to identify 
where improvement is needed and to obtain assistance in improving those 
skills) with respect to matters such as child development, family 
budgeting, coping with stress, health, and nutrition;
    (2) Respite care of children to provide temporary relief for parents 
and other caregivers;
    (3) Structured activities involving parents and children to 
strengthen the parent-child relationship;
    (4) Drop-in centers to afford families opportunities for informal 
interaction with other families and with program staff;
    (5) Transportation, information and referral services to afford 
families access to other community services, including child care, 
health care, nutrition programs, adult education literacy programs, 
legal services, and counseling and mentoring services; and
    (6) Early developmental screening of children to assess the needs of 
such children, and assistance to families in securing specific services 
to meet these needs.
    Joint planning means an ongoing partnership process between ACF and 
the State and between ACF and an Indian Tribe in the development, 
review, analysis, and refinement and/or revision of the State's and the 
Indian Tribe's child and family services plan. Joint planning involves 
discussions, consultation, and negotiation between ACF and the State or 
Indian Tribe in all areas of CFSP creation such as, but

[[Page 372]]

not limited to, identifying the service needs of children, youth, and 
families; selecting the unmet service needs that will be addressed; 
developing goals and objectives that will result in improving outcomes 
for children and families; developing a plan to meet the matching 
requirements; and establishing a more comprehensive, coordinated and 
effective child and family services delivery system. The expectation of 
joint planning is that both ACF and the State or Indian Tribe will reach 
agreement on substantive and procedural matters related to the CFSP.

[61 FR 58655, Nov. 18, 1996]



Sec. 1357.15  Comprehensive child and family services plan requirements.

    (a) Scope. (1) The CFSP provides an opportunity to lay the 
groundwork for a system of coordinated, integrated, culturally relevant 
family focused services. This section describes the requirements for the 
development, implementation and phase-in of the five-year comprehensive 
child and family services plan (CFSP). The State's CFSP must meet the 
requirements of both of the following programs. The Indian Tribe's CFSP 
must meet the requirements of one or both of the following programs 
depending on the Tribe's eligibility:
    (i) Child welfare services under title IV-B, subpart 1; and
    (ii) Family preservation and family support services under title IV-
B, subpart 2.
    (2) For States only, the CFSP also must contain information on the 
following programs:
    (i) The independent living program under title IV-E, section 477 of 
the Act; and
    (ii) The Child Abuse and Neglect State grant program (known as the 
Basic State Grant) under the Child Abuse Prevention and Treatment Act 
(CAPTA) (42 U.S.C. 5101 et. seq.).
    (3) States must meet all requirements of this section except those 
that apply only to Indian Tribes. Indian Tribes must meet the 
requirements of this section only as specified.
    (4) States and eligible Indian Tribes have the option to phase-in 
the requirements for a consolidated CFSP. The consolidated CFSP 
requirements must be in place by June 30, 1997 and meet the requirements 
of 45 CFR 1357.16.
    (b) Eligibility for funds. (1) In order to receive funding under 
title IV-B, subparts 1 and 2, each State and eligible Indian Tribe must 
submit and have approved a consolidated, five-year Child and Family 
Services Plan (CFSP) and a CFS-101, Budget Request and Estimated 
Expenditure Report that meets the requirements under 45 CFR 1357.16.
    (2) States and Indian Tribes that are consolidating the requirements 
for a CFSP in FY 1995, in accordance with Sec. 1357.15(a), must submit 
the CFSP and a CFS-101 for FY 1995 and 1996 by June 30, 1995.
    (3) States and eligible Indian Tribes choosing to phase-in the 
requirements for a consolidated CFSP in FY 1996 and 1997 must submit the 
CFSP, the CFS-101 for FY 1995 for subpart 1 and 2, and the CFS-101 for 
subpart 2 for FY 1996 by June 30, 1995.
    (4) The CFSP will be approved only if the plan was developed jointly 
by ACF and the State (or the Indian Tribe), and only after broad 
consultation by the State (and the Indian Tribe) with a wide range of 
appropriate public and non-profit private agencies and community-based 
organizations with experience in administering programs of services for 
children and families (including family preservation and support 
services).
    (5) By June 30, 1996, each grantee must submit and have approved the 
first Annual Progress and Services Report and a CFS 101 for FY 1997 that 
meets the statutory and regulatory requirements of title IV-B, subparts 
1 and 2.
    (6) The Annual Progress and Services Report will be approved if it 
was developed jointly by ACF and the State (or the Indian Tribe) and if 
it meets the requirements of 45 CFR 1357.16.
    (7) The five-year CFSP for FYs 1995-1999 may be submitted in the 
format of the State's or the Indian Tribe's choice and must be submitted 
no later than June 30, 1995, to the appropriate ACF Regional Office.
    (c) Assurances. The following assurances will remain in effect on an 
ongoing basis and will need to be re-submitted only if a significant 
change in

[[Page 373]]

the State or the Indian Tribe's program affects an assurance:
    (1) The State or Indian Tribe must assure that it will participate 
in any evaluations the Secretary of HHS may require.
    (2) The State or Indian Tribe must assure that it will administer 
the CFSP in accordance with methods determined by the Secretary to be 
proper and efficient.
    (3) The State or Indian Tribe must assure that it has a plan for the 
training and use of paid paraprofessional staff, with particular 
emphasis on the full-time or part-time employment of low-income persons, 
as community service aides; and a plan for the use of nonpaid or 
partially paid volunteers in providing services and in assisting any 
advisory committees established by the State or Tribe.
    (4) The State or Indian Tribe must assure that standards and 
requirements imposed with respect to child care under title XX shall 
apply with respect to day care services, if provided under the CFSP, 
except insofar as eligibility for such services is involved.
    (d) The child and family services plan (CFSP): general. The State 
and the Indian Tribe must base the development of the CFSP on a planning 
process that includes:
    (1) broad involvement and consultation with a wide range of 
appropriate public and non-profit private agencies and community-based 
organizations, parents, including parents who are involved or have 
experience with the child welfare system, and others;
    (2) coordination of the provision of services under the plan with 
other Federal and federally assisted programs serving children and 
families, including youth and adolescents; and
    (3) collection of existing or available information to help 
determine vulnerable or at-risk populations or target areas; assess 
service needs and resources; identify gaps in services; select 
priorities for targeting funding and services; formulate goals and 
objectives; and develop opportunities for bringing about more effective 
and accessible services for children and families.
    (e) State agency administering the programs. (1) The State's CFSP 
must identify the name of the State agency that will administer the 
title IV-B programs under the plan. Except as provided by statute, the 
same agency is required to administer or supervise the administration of 
all programs under titles IV-B and IV-E of the Act and the social 
services block grant program under title XX of the Act. (See the 
definition of ``State agency'' in 45 CFR 1355.20.)
    (2) The CFSP must include a description of the organization and 
function of the State agency and organizational charts as appropriate. 
It also must identify the organizational unit(s) within the State agency 
responsible for the operation and administration of the CFSP, and 
include a description of the unit's organization and function and a copy 
of the organizational chart(s).
    (f) Indian Tribal organization administering the program(s). (1) The 
Indian Tribe's CFSP must provide the name of the Indian Tribal 
organization (ITO) designated to administer funds under title IV-B, 
subpart 1, child welfare services and/or under subpart 2, family 
preservation and family support services. If the Indian Tribe receives 
funds under both subparts, the same agency or organization must 
administer both programs.
    (2) The Indian Tribe's CFSP must include a description of the 
organization and function of the office responsible for the operation 
and administration of the CFSP, an organizational chart of that office, 
and a description of how that office relates to Tribal and other offices 
operating or administering services programs within the Indian Tribe's 
service area (e.g., Indian Health Service.)
    (g) Vision Statement. The CFSP must include a vision statement which 
articulates the grantee's philosophy in providing child and family 
services and developing or improving a coordinated service delivery 
system. The vision should reflect the service principles at section 
1355.25.
    (h) Goals. The CFSP must specify the goals, based on the vision 
statement, that will be accomplished during and by the end of the five-
year period of the plan. The goals must be expressed in terms of 
improved outcomes for and

[[Page 374]]

the safety, permanency and well-being of children and families, and in 
terms of a more comprehensive, coordinated, and effective child and 
family service delivery system.
    (i) Objectives. (1) The CFSP must include the realistic, specific, 
quantifiable and measurable objectives that will be undertaken to 
achieve each goal. Each objective should focus on outcomes for children, 
youth, and/or their families or on elements of service delivery (such as 
quality) that are linked to outcomes in important ways. Each objective 
should include both interim benchmarks and a long-term timetable, as 
appropriate, for achieving the objective.
    (2) For States and Indian Tribes administering the title IV-B, 
subpart 1 program, the CFSP must include objectives to make progress in 
covering additional political subdivisions, reaching additional children 
in need of services, expanding and strengthening the range of existing 
services, and developing new types of services.
    (j) Measures of progress. The CFSP must describe the methods to be 
used in measuring the results, accomplishments, and annual progress 
toward meeting the goals and objectives, especially the outcomes for 
children, youth, and families. Processes and procedures assuring the 
production of valid and reliable data and information must be specified. 
The data and information must be capable of determining whether or not 
the interim benchmarks and multiyear timetable for accomplishing CFSP 
goals and objectives are being met.
    (k) Baseline information. (1) For FY 1995, the State and the Indian 
Tribe must base the development of the CFSP vision, goals, objectives, 
and funding and service decisions on an analysis of available baseline 
information and any trends over time on indicators in the following 
areas: the well-being of children and families; the needs of children 
and families; the nature, scope, and adequacy of existing child and 
family and related social services. Additional and updated information 
on service needs and organizational capacities must be obtained 
throughout the five-year period to measure progress in accomplishing the 
goals and objectives cited in the CFSP. A description of how this 
process will continue to be carried out must be included in the CFSP, 
and any revisions should be provided in the Annual Progress and Services 
Report.
    (2) The State must collect and analyze State-wide information on 
family preservation and family support services currently available to 
families and children, including the nature and scope of existing public 
and privately funded family support and family preservation services; 
the extent to which each service is available and being provided in 
different geographic areas and to different types of families; and 
important gaps in service, including mismatches between available 
services and family needs as identified through baseline data and the 
consultation process. Other services which impact on the ability to 
preserve and support families may be included in the assessment. The 
Indian Tribe must collect and analyze information on family preservation 
and family support services currently available within their service 
delivery area including the information in this paragraph as 
appropriate. An Indian Tribe may submit documentation prepared to 
satisfy the requirements of other Federal child welfare grants, or 
contracts (such as the section 638 reporting form), along with a 
descriptive addendum addressing specifically the family preservation and 
family support services available.
    (3) The CFSP must include a summary of the information used in 
developing the plan; an explanation of how this information and analysis 
were used in developing the goals, objectives, and funding and service 
decisions, including decisions about geographic targeting and service 
mix; a description of how information will be used to measure progress 
over the five-year period; and how this information will be used to 
facilitate the coordination of services.
    (l) Consultation. (1) The State's CFSP must describe the internal 
and external consultation process used to obtain broad and active 
involvement of major actors across the entire spectrum of the child and 
family service delivery system in the development of the plan. The 
description should explain how

[[Page 375]]

this process was coordinated with or was a part of other planning 
processes in the State; how it led or will lead to improved coordination 
of services.
    (2) The Indian Tribe's CFSP must describe the consultation process 
appropriate to its needs and circumstances used to obtain the active 
involvement of major actors providing child and family services within 
the Tribe's area of jurisdiction.
    (3) For States and Indian Tribes, the consultation process must 
involve:
    (i) All appropriate offices and agencies within the State agency or 
within the Indian Tribal service delivery system (e.g., child protective 
services (CPS), foster care and adoption, the social services block 
grant, reunification services, independent living, and other services to 
youth;)
    (ii) In a State-supervised, county-administered State, county social 
services and/or child welfare directors or representatives of the county 
social services/child welfare administrators' association;
    (iii) A wide array of State, local, Tribal, and community-based 
agencies and organizations, both public and private nonprofit with 
experience in administering programs of services for infants, children, 
youth, adolescents, and families, including family preservation and 
family support services;
    (iv) Parents, including birth and adoptive parents, foster parents, 
families with a member with a disability, children both in and outside 
the child welfare system, and consumers of services from diverse groups;
    (v) For States, representatives of Indian Tribes within the State;
    (vi) For States, representatives of local government (e.g., 
counties, cities, and other communities, neighborhoods, or areas where 
needs for services are great;)
    (vii) Representatives of professional and advocacy organizations 
(including, for example foundations and national resource centers with 
expertise to assist States and Indian Tribes to design, expand, and 
improve the delivery of services); individual practitioners working with 
children and families; the courts; representatives or other States or 
Indian Tribes with experience in administering family preservation and 
family support services; and academicians, especially those assisting 
the child and family service agency with management information systems, 
training curricula, and evaluations;
    (viii) Representatives of State and local agencies administering 
Federal and federally assisted programs which may include: Head Start; 
the local education agency (school-linked social services, adult 
education and literacy programs, Part H programs); developmental 
disabilities; nutrition services (Food Stamps, Special Supplemental Food 
Program for Women, Infants and Children (WIC)); Title IV-A; runaway 
youth, youth gang, juvenile justice programs and youth residential and 
training institutions; child care and development block grant (CCDBG) 
and respite care programs; domestic and community violence prevention 
and services programs; housing programs; the health agency (substance 
abuse, Healthy Start, maternal and child health, Early and Periodic 
Screening, Diagnosis, and Treatment (EPSDT), mental health, and public 
health nursing); law enforcement; Children's Trust Funds; Community-
Based Family Resource Programs, and new Federal initiatives such as the 
Empowerment Zones and Enterprise Communities Program; and
    (ix) Administrators, supervisors and front line workers (direct 
service providers) of the State child and family services agency.
    (4) The CFSP must describe the ongoing consultation process that 
each grantee will use to ensure the continued involvement of a wide 
range of major actors in meeting the goals and objectives over the five-
year operational period of the plan and developing the Annual Progress 
and Services Report.
    (m) Services coordination. (1) States must include in the ongoing 
coordination process representatives of the full range of child and 
family services provided by the State agency as well as other service 
delivery systems providing social, health, education, and economic 
services (including mental health, substance abuse, developmental 
disabilities, and housing) to improve access and deliver a range of 
services to children and their families.

[[Page 376]]

    (2) The State's CFSP must describe how services under the plan will 
be coordinated over the five-year period with services or benefits under 
other Federal or federally assisted programs serving the same 
populations to achieve the goals and objectives in the plan. The 
description must include the participants in the process and examples of 
how the process led or will lead to additional coordination of services 
(e.g., integrated service models, improved accessibility, use of a 
consolidated application or intake form, inter-disciplinary training, 
coordinated case management for several programs, pooled resources 
through blended financing, shared information across services providers 
and compatible and linked automated information systems, co-location of 
several services or programs.)
    (3) The Indian Tribe must include in the coordination process 
representatives of other Federal or federally assisted child and family 
services or related programs. The Indian Tribe's CFSP must describe how 
services under the plan will be coordinated over the five-year period 
with services or benefits under other Federal or federally assisted 
programs serving the same populations to achieve the goals and 
objectives in the plan. The descriptions must include the participants 
in the process and any examples of how the process led or will lead to 
additional coordination of services.
    (n) Services. (1) The State's CFSP must describe the publicly funded 
child and family services continuum: child welfare services (including 
child abuse and neglect prevention, intervention, and treatment 
services; and foster care); family preservation services; family support 
services; and services to support reunification, adoption, kinship care, 
independent living, or other permanent living arrangements.
    (2) The Indian Tribe's CFSP must describe the child welfare services 
(including child abuse and neglect prevention, intervention, treatment 
services and foster care) and/or the family support and family 
preservation services to be provided.
    (3) For each service described, the CFSP must include the following 
information, or it must be listed on the CFS-101, Part II:
    (i) The population(s) to be served;
    (ii) The geographic area(s) where the services will be available;
    (iii) The estimated number of individuals and/or families to be 
served;
    (iv) The estimated expenditures for these services from Federal, 
State, local, and donated sources, including title IV-B, subparts 1 and 
2, the CAPTA program referenced in paragraph (a) of this section, and 
the independent living program.
    (o) Family preservation and family support services and linkages to 
other social and health services. (1) The State's CFSP must explain how 
the funds under title IV-B, subpart 2 of the Act, will be used to 
develop or expand family support and family preservation services; how 
the family support and family preservation services relate to existing 
family support and family preservation services; and how these family 
support and preservation services will be linked to other services in 
the child and family services continuum.
    (2) The State's CFSP must explain whether and/or how funds under the 
CAPTA and independent living programs are coordinated with and 
integrated into the child and family services continuum described in the 
plan.
    (3) The State's CFSP must describe the existing or current linkages 
and the coordination of services between the services in the child and 
family services continuum and the services in other public services 
systems (e.g., health, education, housing, substance abuse, the courts), 
and other Federal and non-federally funded public and nonprofit private 
programs (e.g., Children's Trust Funds, Community-Based Family Resource 
Programs, private foundations.)
    (p) Services in relation to service principles. The CFSP must 
describe how the child and family services to be provided are designed 
to assure the safety and protection of children as well as the 
preservation and support of families, and how they are or will be 
designed to be consistent with the other service principles in 45 CFR 
1355.25.
    (q) Services in relation to permanency planning. For States 
administering

[[Page 377]]

both title IV-B programs (subparts 1 and 2), the CFSP must explain how 
these services will help meet the permanency provisions for children and 
families in sections 422(b)(9) and 471 of the Act (e.g., preplacement 
preventive services, reunification services, independent living 
services.) The CFSP must describe the arrangements, jointly developed 
with the Indian Tribes within its borders, made for the provision of the 
child welfare services and protections in section 422(b)(9) to Indian 
children under both State and Tribal jurisdiction.
    (r) Decision-making process: selection of family support programs 
for funding. The State's CFSP must include an explanation of how 
agencies and organizations were selected for funding to provide family 
support services and how these agencies and organizations meet the 
requirement that family support services be community-based.
    (s) Significant portion of funds used for family support and family 
preservation services. With each fiscal year's budget request, each 
State must indicate the specific percentage of family preservation and 
family support funds (title IV-B, subpart 2) that the State will expend 
for community-based family support and for family preservation services, 
and the rationale for the decision. The State must have an especially 
strong rationale if the request for either percentage is below 25 
percent. It must also include an explanation of how this distribution 
was reached and why it meets the requirements that a ``significant 
portion'' of the service funds must be spent for each service. Examples 
of important considerations might include the nature of the planning 
efforts that led to the decision, the level of existing State effort in 
each area, and the resulting need for new or expanded services.
    (t) Staff training, technical assistance, and evaluation. (1) The 
State's CFSP must include a staff development and training plan in 
support of the goals and objectives in the CFSP which addresses both of 
the title IV-B programs covered by the plan. This training plan also 
must be combined with the training plan under title IV-E as required by 
45 CFR 1356.60(b)(2). Training must be an on-going activity and must 
include content from various disciplines and knowledge bases relevant to 
child and family services policies, programs and practices. Training 
content must also support the cross-system coordination consultation 
basic to the development of the CFSP.
    (2) The State's CFSP must describe the technical assistance 
activities that will be undertaken in support of the goals and 
objectives in the plan.
    (3) The State's CFSP must describe any evaluation and research 
activities underway or planned with which the State agency is involved 
or participating and which are related to the goals and objectives in 
the plan.
    (u) Quality assurance. The State must include in the CFSP a 
description of the quality assurance system it will use to regularly 
assess the quality of services under the CFSP and assure that there will 
be measures to address identified problems.
    (v) Distribution of the CFSP and the annual progress and services 
report. The CFSP must include a description of how the State and the 
Indian Tribe will make available to interested parties the CFSP and the 
Annual Progress and Services Report. (See 45 CFR 1355.21(c) and 45 CFR 
1357.16(d)). State agencies and Indian Tribal organizations within the 
State must exchange copies of their CFSPs and their annual services 
reports.

(This requirement has been approved by the Office of Management and 
Budget under OMB Control Number 0980-0047. In accordance with the 
Paperwork Reduction Act of 1995, an agency may not conduct or sponsor, 
and a person is not required to respond to, a collection of information 
unless it displays a currently valid OMB control number.)

[61 FR 58656, Nov. 18, 1996, as amended at 66 FR 58677, Nov. 23, 2001]



Sec. 1357.16  Annual progress and services reports.

    (a) Annual progress and services reports. Annually, each State and 
each Indian Tribe must conduct an interim review of the progress made in 
the previous year toward accomplishing the goals and objectives in the 
plan, based on updated information. In developing paragraphs (a)(2) 
through (a)(4) of this section, the State and the Indian Tribe

[[Page 378]]

must involve the agencies, organizations, and individuals who are a part 
of the on-going CFSP-related consultation and coordination process. On 
the basis of this review, each State and Indian Tribe must prepare and 
submit to ACF, and make available to the public, an Annual Progress and 
Services Report which must include the following--
    (1) A report on the specific accomplishments and progress made in 
the past fiscal year toward meeting each goal and objective, including 
improved outcomes for children and families, and a more comprehensive, 
coordinated, effective child and family services continuum;
    (2) Any revisions in the statement of goals and objectives, or to 
the training plan, if necessary, to reflect changed circumstances;
    (3) For Indian Tribes, a description of the child welfare and/or 
family preservation and family support services to be provided in the 
upcoming fiscal year highlighting any changes in services or program 
design and including the information required in 45 CFR 1357.15(n);
    (4) For States, a description of the child protective, child 
welfare, family preservation, family support, and independent living 
services to be provided in the upcoming fiscal year highlighting any 
additions or changes in services or program design and including the 
information required in 45 CFR 1357.15(n);
    (5) Information on activities in the areas of training, technical 
assistance, research, evaluation, or management information systems that 
will be carried out in the upcoming fiscal year in support of the goals 
and objectives in the plan;
    (6) For States only, the information required to meet the 
maintenance of effort (non-supplantation) requirement in section 432(a) 
(7) and (8) of the Act;
    (7) For States and eligible Indian Tribes phasing in requirements 
for a consolidated CFSP, information on activities and progress directed 
toward a consolidated plan by June 30, 1996 or 1997. The report must 
include information that demonstrates States' and eligible Indian 
Tribes' progress toward the consolidation of a CFSP, including 
activities that have been accomplished and still need to be 
accomplished; and
    (8) Any other information the State or the Indian Tribe wishes to 
include.
    (b) Submittal of the annual progress and services report and CFS-
101. (1) The State and the Indian Tribe must send the Annual Progress 
and Services Report and the CFS-101 to the appropriate ACF Regional 
Office no later than June 30 of the year prior to the fiscal year in 
which the services will be provided (e.g., the report submitted and made 
public by June 30, 1996 will describe the services to be provided in FY 
1997. The report covering FY 1998 services must be submitted by June 30, 
1997.)
    (2) In order for States and eligible Indian Tribes to receive title 
IV-B, subparts 1 and 2 allocations a CFS-101 must be submitted for each 
fiscal year.
    (3) States and Indian Tribes which have consolidated the 
requirements for title IV-B, subparts 1 and 2, must submit the CFS-101 
to the appropriate ACF Regional Office no later than June 30 of the year 
prior to the fiscal year in which the services will be provided (e.g., 
for FY 1997 allocations, the CFS-101 must be submitted by June 30, 1996; 
for FY 1998 allocations, the CFS-101 must be submitted by June 30, 
1997.)
    (4) States and eligible Indian Tribes choosing to phase-in the 
requirements for a consolidated CFSP must:
    (i) Submit by June 30, 1996 a CFS-101 for title IV-B, subpart 1 for 
FY 1996 allocations; a CFS-101 for title IV-B, subpart 2 for FY 1997 
allocations; and, if a State or eligible Indian Tribe chooses, a CFS-101 
for subpart 1 FY 1997 allocations.
    (ii) Submit by June 30, 1997 a CFS-101 for title IV-B, subpart 1 for 
FY 1997 allocations, if not previously submitted by June 30, 1996; and a 
CFS-101 for FY 1998 for subparts 1 and 2 allocations.
    (c) Annual progress and services reports on FY 1994 family support 
and family preservation services. Each State and Indian Tribe that used 
FY 1994 funds under title IV-B, subpart 2, for services must describe in 
the CFSP what services were provided, the population(s) served, and the 
geographic areas where services were available. The CFSP also must 
include the amount of FY 1994 funds used for planning, for family

[[Page 379]]

preservation services, for family support services, and a brief 
statement on how these services met the service priorities of the State 
or the Indian Tribe.
    (d) Availability of the annual progress and services report. The 
State and the Indian Tribe must make the Annual Progress and Services 
Report available to the public including the agencies, organizations, 
and individuals with which the State or the Indian Tribe is coordinating 
services or consulting and to other interested members of the public. 
Each State and eligible Indian Tribe within the State must exchange 
copies of their Annual Progress and Services Reports.
    (e) FY 1999 Final Review. In FY 1999, each State and eligible Indian 
Tribe must conduct a final review of progress toward accomplishing the 
goals and objectives in the plan. On the basis of the final review, it 
must--
    (1) Prepare a final report on the progress made toward accomplishing 
the goals and objectives; and
    (2) Send the final report to the ACF Regional Office and make it 
available to the public.
    (f) FY 2000 Five-Year State Plan. Based on the FY 1999 final review 
and final Annual Progress and Services Report, and in consultation with 
a broad range of agencies, organizations, and individuals, the States 
and eligible Indian Tribes must develop a new five-year CFSP following 
the requirements of 45 CFR 1357.15.

(This requirement has been approved by the Office of Management and 
Budget under OMB Control Number 0980-0047. In accordance with the 
Paperwork Reduction Act of 1995, an agency may not conduct or sponsor, 
and a person is not required to respond to, a collection of information 
unless it displays a currently valid OMB control number.)

[61 FR 58659, Nov. 18, 1996, as amended at 66 FR 58677, Nov. 23, 2001]



Sec. 1357.20  Child abuse and neglect programs.

    The State agency must assure that, with regard to any child abuse 
and neglect programs or projects funded under title IV-B of the Act, the 
requirements of section 106(b) (1) and (2) of the Child Abuse Prevention 
and Treatment Act, as amended, are met. These requirements relate to the 
State plan and assurances required for the Child Abuse and Neglect State 
Grant Program.

[61 FR 58660, Nov. 18, 1996]



Sec. 1357.25  Requirements for eligibility for additional payments under section 427.

    (a) For any fiscal year after FY 1979 in which a sum in excess of 
$141,000,000 is appropriated under Section 420 of the Act, a State is 
not eligible for payment of an amount greater than the amount for which 
it would be eligible if the appropriation were equal to $141,000,000 
unless the State complies with the requirements of Section 427(a) of the 
Act.
    (b) In meeting the requirements for the inventory and statewide 
information system in sections 427 (a)(1) and (2)(A) of the Act, the 
inventory and statewide information system must include those children 
under the placement and care responsibility of the State title IV-B or 
IV-E agencies. At the State's discretion, other children may be 
included. The six month requirement in section 427(a)(1) and the twelve 
month requirement in section 427(a)(2)(A) of the Act must also be met.

(The requirement has been approved by the Office of Management and 
Budget under OMB Control Number 0980-0138)

    (c) If, for each of any two consecutive fiscal years after FY 1979, 
there is appropriated under Section 420 of the Act a sum equal to or 
greater than $266,000,000, a State's allotment amount for any fiscal 
year after two such consecutive fiscal years shall be reduced to an 
amount equal to what the allotment amount would have been for FY 1979 
unless the State has implemented the requirements of section 427(b) of 
the Act.
    (d) In meeting the requirements of section 427(a)(2)(B) of the Act 
for dispositional hearings the State agency must meet the requirements 
of section 475(5)(C) of the Act and 45 CFR 1356.21(e).
    (e) A State may appeal a final decision by ACYF that the State has 
not met the requirements of this section

[[Page 380]]

and section 427 of the Act to the Department Grant Appeals Board under 
the provisions of 45 CFR part 16.

[48 FR 23118, May 23, 1983]



Sec. 1357.30  State fiscal requirements (title IV-B, subpart 1, child welfare services).

    (a) Scope. The requirements of this section shall apply to all funds 
allotted or reallotted to States under title IV-B, subpart 1.
    (b) Allotments. Allotments for each State shall be determined in 
accordance with section 421 of the Act.
    (c) Payments. Payments to States shall be made in accordance with 
section 423 of the Act.
    (d) Enforcement and termination. In the event of a State's failure 
to comply with the terms of the grant under title IV-B, subpart 1, the 
provisions of 45 CFR 92.43 and 92.44 will apply.
    (e) Matching or cost-sharing. Federal financial participation is 
available only if costs are incurred in implementing sections 422, 423, 
and 425 of the Act in accordance with the grants administration 
requirements of 45 CFR part 92 with the following conditions--
    (1) The State's contribution may be in cash, donated funds, and non-
public third party in-kind contributions.
    (2) The total of Federal funds used for the following purposes under 
title IV-B, subpart 1 may not exceed an amount equal to the FY 1979 
Federal payment under title IV-B:
    (i) Child day care necessary solely because of the employment, or 
training to prepare for employment, of a parent or other relative with 
whom the child involved is living, plus;
    (ii) Foster care maintenance payments, plus;
    (iii) Adoption assistance payments.
    (3) Notwithstanding paragraph (e)(2) of this section, State 
expenditures required to match the title IV-B, subpart 1 allotment may 
include foster care maintenance expenditures in any amount.
    (f) Prohibition against purchase or construction of facilities. 
Funds awarded under title IV-B may not be used for the purchase or 
construction of facilities.
    (g) Maintenance of effort. (1) A State may not receive an amount of 
Federal funds under title IV-B in excess of the Federal payment made in 
FY 1979 under title IV-B unless the State's total expenditure of State 
and local appropriated funds for child welfare services under title IV-B 
of the Act is equal to or greater than the total of the State's 
expenditure from State and local appropriated funds used for similar 
covered services and programs under title IV-B in FY 1979.
    (2) In computing a State's level of expenditures under this section 
in FY 1979 and any subsequent fiscal year, the following costs shall not 
be included--
    (i) Expenditures and costs for child day care necessary to support 
the employment of a parent or other relative;
    (ii) Foster care maintenance payments; and
    (iii) Adoption assistance payments.
    (3) A State applying for an amount of Federal funds under title IV-B 
greater than the amount of title IV-B, subpart 1 funds received by that 
State in FY 1979 shall certify:
    (i) The amount of their expenditure in FY 1979 for child welfare 
services as described in paragraphs (g) (1) and (2) of this section, and
    (ii) The amount of State and local funds that have been appropriated 
and are available for child welfare services as described in paragraphs 
(g) (1) and (2) of this section for the fiscal year for which 
application for funds is being made. Records verifying the required 
certification shall be maintained by the State and made available to the 
Secretary as necessary to confirm compliance with this section.
    (h) Reallotment. (1) When a State certifies to the Commissioner that 
funds available to that State under its title IV-B, subpart 1 allotment 
will not be required, those funds shall be available for reallotment to 
other States.
    (2) When a State, after receiving notice from the Commissioner of 
the availability of funds, does not certify by a date fixed by the 
Commissioner that it will be able to expend during the period stated in 
paragraph (i) of this section all of the funds available to it under its 
title IV-B, subpart 1 allotment, those funds shall be available for 
reallotment to other States.

[[Page 381]]

    (3) The Commissioner may reallot available funds to another State 
when it is determined that--
    (i) The requesting State's plan requires funds in excess of the 
State's original allotment; and
    (ii) the State will be able to expend the additional funds during 
the period stated in paragraph (i) of this section.
    (i) Time limit on expenditures. Funds under title IV-B, subpart 1, 
must be expended by September 30 of the fiscal year following the fiscal 
year in which the funds were awarded.

[61 FR 58660, Nov. 18, 1996]



Sec. 1357.32  State fiscal requirements (title IV-B, subpart 2, family preservation and family support services).

    (a) Scope. The requirements of this section apply to all funds 
allocated to States under title IV-B, subpart 2, of the Act.
    (b) Allotments. The annual allotment to each State shall be made in 
accordance with section 433 of the Act.
    (c) Payments. Payments to each State will be made in accordance with 
section 434 of the Act.
    (d) Matching or cost sharing. Funds used to provide services in FY 
1994 and in subsequent years will be federally reimbursed at 75 percent 
of allowable expenditures. (This is the same Federal financial 
participation rate as title IV-B, subpart 1.) Federal funds, however, 
will not exceed the amount of the State's allotment.
    (1) The State's contribution may be in cash, donated funds, and non-
public third party in-kind contributions.
    (2) Except as provided by Federal statute, other Federal funds may 
not be used to meet the matching requirement.
    (e) Prohibition against purchase or construction of facilities. 
Funds awarded under title IV-B may not be used for the purchase or 
construction of facilities.
    (f) Maintenance of effort. States may not use the Federal funds 
under title IV-B, subpart 2, to supplant Federal or non-Federal funds 
for existing family preservation and family support services. For the 
purpose of implementing this requirement, ``non-Federal funds'' means 
State funds. ACF will collect information annually from each State on 
expenditures for family support and family preservation using the State 
fiscal year 1992 as the base year.
    (g) Time limits on expenditures. Funds must be expended by September 
30 of the fiscal year following the fiscal year in which the funds were 
awarded.
    (h) Administrative costs. (1) States claiming Federal financial 
participation for services provided in FY 1994 and subsequent years may 
not claim more than 10 percent of expenditures under subpart 2 for 
administrative costs. There is no limit on the percentage of 
administrative costs which may be reported as State match.
    (2) For the purposes of title IV-B, subpart 2, ``administrative 
costs'' are costs of auxiliary functions as identified through as 
agency's accounting system which are:
    (i) Allocable (in accordance with the agency's approved cost 
allocation plan) to the title IV-B, subpart 2 program cost centers;
    (ii) necessary to sustain the direct effort involved in 
administering the State plan for title IV-B, subpart 2, or an activity 
providing service to the program: and
    (iii) centralized in the grantee department or in some other agency, 
and may include but are not limited to the following: Procurement; 
payroll; personnel functions; management, maintenance and operation of 
space and property; data processing and computer services; accounting; 
budgeting; auditing.
    (3) Program costs are costs, other than administrative costs, 
incurred in connection with developing and implementing the CFSP (e.g., 
delivery of services, planning, consultation, coordination, training, 
quality assurance measures, data collection, evaluations, supervision).

[61 FR 58661, Nov. 18, 1996]



Sec. 1357.40  Direct payments to Indian Tribal Organizations (title IV-B, subpart 1, child welfare services).

    (a) Who may apply for direct funding? Any Indian Tribal Organization 
(ITO) that meets the definitions in section 428(c) of the Act, or any 
consortium or other group of eligible Tribal organizations authorized by 
the membership of the Tribes to act for them is eligible to

[[Page 382]]

apply for direct funding if the ITO, consortium or group has a plan for 
child welfare services that is jointly developed by the ITO and the 
Department.
    (b) Title IV-B Child and Family Services Plan (CFSP). (1) In order 
to receive funds under title IV-B, subpart 1, beginning in FY 1995, the 
Indian Tribe or Tribal organization must have in effect an approved 
five-year child and family services plan that meets the applicable 
requirements of Sec. 1357.15 of this part.
    (2) The Indian Tribe or Tribal organization must also comply with 
section 422(b)(1-8) of the Act; 45 CFR part 1355 (except that the 
requirements in Sec. 1355.30 for a single Tribal agency and Governor's 
review of the CFSP do not apply); and other applicable requirements of 
Secs. 1357.10 and 1357.16.
    (c) Information related to the requirements of Section 422(b)(9) of 
the Act. The following information must be submitted with the assurances 
required to be eligible for title IV-B, subpart 1 funds:
    (1) A description of the arrangements, jointly developed with the 
State, made for the provision of the child welfare services and 
protections in section 422(b)(9) to Indian children under both State and 
Tribal jurisdiction;
    (2) A statement of the legal responsibility, if any, for children 
who are in foster care on the reservation and those awaiting adoption;
    (3) A description of Tribal jurisdiction in civil and criminal 
matters, existence or nonexistence of a Tribal court and the type of 
court and codes, if any;
    (4) An identification of the standards for foster family homes and 
institutional care and day care;
    (5) The Indian Tribal organization's political subdivisions, if any;
    (6) Whether the Tribal organization is controlled, sanctioned or 
chartered by the governing body of Indians to be served and if so, 
documentation of that fact;
    (7) Any limitations on authorities granted to the Indian Tribal 
organizations; and
    (8) The Tribal resolution(s) authorizing an application for a direct 
title IV-B, subpart 1 grant under this Part.
    (d) Grants: General. (1) Grants may be made to eligible Indian 
Tribal organizations in a State which has a jointly developed child and 
family services plan approved and in effect.
    (2) Federal funds made available for a direct grant to an eligible 
ITO shall be paid by the Department, from the title IV-B allotment for 
the State in which the ITO is located. Should a direct grant be 
approved, the Department shall promptly notify the State(s) affected.
    (3) If an eligible ITO includes population from more than one State, 
a proportionate amount of the grant will be paid from each State's 
allotment.
    (4) The receipt of title IV-B funds must be in addition to and not a 
substitute for funds otherwise previously expended by the ITO for child 
welfare services.
    (5) The following fiscal and administrative requirements apply to 
Indian Tribal grants under this section:
    (i) Enforcement and termination. In the event of an Indian Tribe's 
failure to comply with the terms of the grant under title IV-B, subpart 
1, the provisions of 45 CFR 92.43 and 92.44 will apply.
    (ii) Matching or cost-sharing. Federal financial participation is 
available only if costs are incurred in implementing sections 422, 423, 
and 425 of the Act in accordance with the grants administration 
requirements of 45 CFR part 92 with the following conditions--
    (A) The ITO's contribution may be in cash, donated funds, and non-
public third party in-kind contributions.
    (B) The total of Federal funds used for the following purposes under 
title IV-B, subpart 1 may not exceed an amount equal to the FY 1979 
Federal payment under title IV-B:
    (1) Child day care necessary solely because of the employment, or 
training to prepare for employment, of a parent or other relative with 
whom the child involved is living, plus;
    (2) Foster care maintenance payments, plus;
    (3) Adoption assistance payments.
    (C) Notwithstanding paragraph (d)(5)(ii)(B) of this section, Tribal 
expenditures required to match the title IV-B, subpart 1 allotment may 
include

[[Page 383]]

foster care maintenance expenditures in any amount.
    (iii) Prohibition against purchase or construction of facilities. 
Funds awarded under title IV-B may not be used for the purchase or 
construction of facilities.
    (iv) Time limit on expenditures. Funds under title IV-B, subpart 1, 
must be expended by September 30 of the fiscal year following the fiscal 
year in which the funds were awarded.
    (6) In order to determine the amount of Federal funds available for 
a direct grant to an eligible ITO, the Department shall first divide the 
State's title IV-B allotment by the number of children in the State, 
then multiply the resulting amount by a multiplication factor determined 
by the Secretary, and then multiply that amount by the number of Indian 
children in the ITO population. The multiplication factor will be set at 
a level designed to achieve the purposes of the act and revised as 
appropriate.

[61 FR 58661, Nov. 18, 1996, as amended at 65 FR 4093, Jan. 25, 2000]



Sec. 1357.50  Direct payments to Indian Tribal organizations (title IV-B, subpart 2, family preservation and support services).

    (a) Definitions.
    Alaska Native Organization means any organized group of Alaska 
Natives eligible to operate a Federal program under the Indian Self-
Determination Act (Pub. L. 93-638) or such group's designee as defined 
in section 482(i)(7)(A) of the Act.
    Indian Tribe means any Tribe, band, nation, or other organized group 
or community of Indians that is recognized as eligible for the special 
programs and services provided by the United States to Indians because 
of their status as Indians; and for which a reservation (including 
Indian reservations, public domain Indian allotments, and former Indian 
reservations in Oklahoma) exists.
    Tribal organization means the recognized governing body of the 
Indian Tribe.
    (b) Eligibility for funds: FY 1994. (1) Section 432(b)(2) of the Act 
provides that the Secretary may not approve a plan of an Indian Tribe 
whose FY 1995 allotment under subpart 2 would be less than $10,000. 
Therefore, only those Indian Tribes whose FY 1995 allotment is $10,000 
or more are eligible to receive funds beginning in FY 1994.
    (2) ACF will pay any amount to which an Indian Tribe is entitled to 
the Tribal organization of the Indian Tribe.
    (c) Eligibility for funds: FY 1995. In order to receive funds under 
title IV-B, subpart 2, in FY 1995, an Indian Tribe that is eligible for 
planning funds in FY 1994 must submit a Child and Family Services Plan 
that meets the applicable requirements in section 1357.15 of this Part.
    (d) Eligibility for funds: FY 1996 through FY 1998. (1) ACF will 
make grants to additional Indian Tribes in Fys 1996 through 1998 in the 
event that there are increased appropriations.
    (2) Allotments will be calculated in Fys 1996, 1997, and 1998 as 
required in section 433 of the Act. Those Indian Tribes in each year 
whose allotment is at least $10,000 will be notified of their 
eligibility to apply.
    (3) In order to receive funds, additional Indian Tribes which become 
eligible for grants in FY 1996, 1997, and 1998 must submit either a five 
year Child and Family Services Plan (CFSP) that meets the applicable 
requirements of 45 CFR 1357.15 or an application for planning funds by 
June 30 of the year in which they first become eligible for grants. 
Those Indian Tribes which submitted an application for planning funds in 
their first year of funding must submit a five year CFSP that meets the 
applicable requirements of 45 CFR 1357.15 by June 30 of the second year 
they receive funding. For example, in order to receive funds, an Indian 
Tribe which becomes eligible to receive funding beginning in FY 1996 
must submit either an application for planning funds or a CFSP by June 
30, 1996. If the Indian Tribe submitted an application for planning 
funds in FY 1996, they must submit a CFSP by June 30, 1997.
    (4) All Indian Tribes will be Federally reimbursed at 75 percent of 
allowable expenditures. Federal funds without match are available in the 
first year of receipt of funds for additional Indian Tribes meeting the 
following criteria:

[[Page 384]]

    (i) Submittal of an application for planning funds, and not a five 
year CFSP;
    (ii) Receipt of an initial award in FY 1996 or 1997 or 1998; and
    (iii) A proposal to spend the entire grant in the first year on 
planning.
    (e) Allotments. Allotments to Indian Tribes are computed based on 
section 433 of the Act and are based on a ratio of the number of 
children in each Indian Tribe with an approved plan compared to the 
number of children in all Indian Tribes with approved plans, based on 
the most current and reliable data available.
    (f) Exemptions of requirements. (1) ACF has exempted Indian Tribes 
from three statutory requirements:
    (i) The limitation on administrative costs to 10 percent of total 
Federal and Tribal funds-- Indian Tribes may use the indirect cost rate 
agreement in effect for the Tribe;
    (ii) The requirement for maintenance of effort that funds under this 
program may not be used to supplant other Federal and non-Federal funds; 
and
    (iii) The requirement that a significant portion of funds must be 
used for both family support and family preservation services.
    (2) Specific exemptions from other statutory requirements may be 
requested by the Tribe in the course of its joint planning. Such a 
request must contain a compelling reason.
    (g) Matching requirement. (1) Funds used to provide services in FY 
1994 and in subsequent years will be federally reimbursed at 75 percent 
of allowable expenditures. (This is the same Federal financial 
participation rate as title IV-B, subpart 1.) The Indian Tribe's match 
must be at least 25 percent of the total project costs or one-third of 
the Federal share. Federal funds, however, will not exceed the amount of 
the Indian Tribe's allotment.
    (2) The Indian Tribe's contribution may be in cash, donated funds, 
and non-public third party in-kind contributions.
    (3) Indian Tribes, by statute, may use the following three Federal 
sources of funds as matching funds: Indian Child Welfare Act funds, 
Indian Self-Determination and Education Assistance Act funds, and 
Community Development Block Grant funds.
    (h) Time limits on expenditures. An Indian Tribe must expend all 
funds by September 30 of the fiscal year following the fiscal year in 
which the funds were awarded.

[61 FR 58662, Nov. 18, 1996]

[[Page 385]]



     SUBCHAPTER H--FAMILY VIOLENCE PREVENTION AND SERVICES PROGRAMS





PART 1370--FAMILY VIOLENCE PREVENTION AND SERVICES PROGRAMS--Table of Contents




Sec.
1370.1  Purpose.
1370.2  State and Indian tribal grants.
1370.3  Information and technical assistance center grants.
1370.4  State domestic violence coalition grants.
1370.5  Public information campaign grants.

    Authority: 42 U.S.C. 10401 et seq.

    Source: 61 FR 6793, Feb. 22, 1996, unless otherwise noted.



Sec. 1370.1   Purpose.

    This part addresses sections 303, 308, 311, and 314 of the Family 
Violence Prevention and Services Act (the Act), as amended (42 U.S.C. 
10401 et seq.). The Act authorizes the Secretary to implement programs 
for the purposes of increasing public awareness about and preventing 
family violence; providing immediate shelter and related assistance for 
victims of family violence and their dependents; and providing for 
technical assistance and training relating to family violence programs 
to States, tribes, local public agencies (including law enforcement 
agencies, courts, legal, social service, and health care professionals), 
non-profit private organizations and other persons seeking such 
assistance. All programs authorized under the Act are funded subject to 
the availability of funds.



Sec. 1370.2   State and Indian tribal grants.

    Each grantee awarded funds under section 303 of the Act must meet 
the statutory requirements of the Act and all applicable regulations. An 
announcement which describes the application process, including 
information on statutory requirements, other applicable regulations, and 
any required financial and program reports, is published in the Federal 
Register.



Sec. 1370.3   Information and technical assistance center grants.

    Each grantee awarded funds under section 308 of the Act must meet 
the statutory requirements of the Act and all applicable regulations. An 
announcement which describes the application process, including 
information on statutory requirements, other applicable regulations, and 
any required financial and program reports, is published in the Federal 
Register.



Sec. 1370.4   State domestic violence coalition grants.

    Each grantee awarded funds under section 311 of the Act must meet 
the statutory requirements of the Act and all applicable regulations. An 
announcement which describes the application process, including 
information on statutory requirements, other applicable regulations, and 
any required financial and program reports, is published in the Federal 
Register.



Sec. 1370.5   Public information campaign grants.

    Each grantee awarded funds under section 314 of the Act must meet 
the statutory requirements of the Act and all applicable regulations. An 
announcement which describes the application process, including 
information on statutory requirements, other applicable regulations, and 
any required financial and program reports, is published in the Federal 
Register.

[[Page 386]]



    SUBCHAPTER I--THE ADMINISTRATION ON DEVELOPMENTAL DISABILITIES, 
                   DEVELOPMENTAL DISABILITIES PROGRAM





PART 1385--REQUIREMENTS APPLICABLE TO THE DEVELOPMENTAL DISABILITIES PROGRAM--Table of Contents




Sec.
1385.1  General.
1385.2  Purpose of the regulations.
1385.3  Definitions.
1385.4  Rights of individuals with developmental disabilities.
1385.5  [Reserved]
1385.6  Employment of individuals with disabilities.
1385.7  [Reserved]
1385.8  Formula for determining allotments.
1385.9  Grants administration requirements.

    Authority: 42 U.S.C. 6000 et. seq.

    Source: 49 FR 11777, Mar. 27, 1984, unless otherwise noted.



Sec. 1385.1  General.

    Except as specified in Sec. 1385.4, the requirements in this part 
are applicable to the following programs and projects:
    (a) Federal Assistance to State Developmental Disabilities Councils;
    (b) Protection and Advocacy of the Rights of Individuals with 
Developmental Disabilities;
    (c)Projects of National Significance;and
    (d) University Affiliated Programs (UAPs).

[52 FR 44845, Nov. 20, 1987, as amended at 54 FR 47984, Nov. 20, 1989; 
61 FR 51153, Sept. 30, 1996]



Sec. 1385.2  Purpose of the regulations.

    These regulations implement the Developmental Disabilities 
Assistance and Bill of Rights Act as amended (42 U.S.C. 6000, et seq.).



Sec. 1385.3  Definitions.

    In addition to the definitions in section 102 of the Act (42 U.S.C. 
6001), the following definitions apply:
    ACF means the Administration for Children and Families within the 
Department of Health and Human Services.
    Act means the Developmental Disabilities Assistance and Bill of 
Rights Act, as amended (42 U.S.C. 6000 et. seq).
    ADD means the Administration on Developmental Disabilities, within 
the Administration for Children and Families.
    Commissioner means the Commissioner of the Administration on 
Developmental Disabilities, Administration for Children and Families, 
Department of Health and Human Services or his or her designee.
    Department means the U.S. Department of Health and Human Services 
(HHS).
    Developmental disability shall have the same meaning in 45 CFR parts 
1385, 1386, 1387, and 1388 as it does in the Developmental Disabilities 
Act, section 102(8), which reads ``the term `developmental disability' 
means a severe, chronic disability of an individual 5 years of age or 
older that--
    (1) Is attributable to a mental or physical impairment or 
combination of mental and physical impairments;
    (2) Is manifested before the individual attains age 22;
    (3) Is likely to continue indefinitely;
    (4) Results in substantial functional limitations in three or more 
of the following areas of major life activity--
    (i) Self-care;
    (ii) Receptive and expressive language;
    (iii) Learning;
    (iv) Mobility;
    (v) Self-direction;
    (vi) Capacity for independent living; and
    (vii) Economic self-sufficiency.
    (5) Reflects the individual's need for a combination and sequence of 
special, interdisciplinary, or generic services, supports, or other 
assistance that is of lifelong or extended duration and is individually 
planned and coordinated, except that such term, when applied to infants 
and young children means individual from birth to age 5, inclusive, who 
have substantial developmental delay or specific congenital or acquired 
conditions with a high probability of resulting in developmental 
disabilities if services are not provided.'' Such determination shall be 
made on a case-by-case basis and any State eligibility

[[Page 387]]

definition of developmental disability or policy statement which is more 
restrictive than that of the Act does not apply as the Act takes 
precedence.
    Fiscal year means the Federal fiscal year unless otherwise 
specified.
    Governor means the chief executive officer of the State or 
Territory, or his or her designee who has been formally designated to 
act for the Governor in carrying out the requirements of the Act and 
these regulations.
    OHDS means the Office of Human Developmental Services within the 
Department of Health and Human Services.
    Protection and Advocacy Agency means the organization or agency 
designated in a State to administer and operate a protection and 
advocacy (P&A) system for individuals with developmental disabilities 
under part C of the Developmental Disabilities Assistance and Bill of 
Rights Act, as amended (A P&A System under part C is authorized to 
investigate incidents of abuse and neglect regarding persons with 
developmental disabilities; pursue administrative, legal and appropriate 
remedies or approaches to ensure protection of, and advocacy for, the 
rights of such individuals; and provide information on and referral to 
programs and services addressing the needs of such individuals (section 
142(a)(2)(A).); and advocacy programs under the Protection and Advocacy 
for Mentally Ill Individuals Act of 1986 (PAIMI Act), as amended, (42 
U.S.C. 10801 et seq.) the Protection and Advocacy of Individual Rights 
Program (PAIR), (29 U.S.C. 794(e); and the Technology-Related Assistance 
for Individuals With Disabilities Act of 1988, as amended (29 U.S.C. 
2212(e)). The Protection and Advocacy agency also may be designated by 
the Governor of a State to conduct the Client Assistance Program (CAP) 
authorized by section 112 of the Rehabilitation Act of 1973, as amended, 
(29 U.S.C. 732). Finally, the Protection and Advocacy agency may provide 
advocacy services under other Federal programs.
    Secretary means the Secretary of the Department of Health and Human 
Services.

[49 FR 11777, Mar. 27, 1984, as amended at 52 FR 44845, Nov. 20, 1987; 
54 FR 47984, Nov. 20, 1989; 61 FR 51153, Sept. 30, 1996]



Sec. 1385.4  Rights of individuals with developmental disabilities.

    (a) Section 110 of the Act, Rights of Individuals with Developmental 
Disabilities (42 U.S.C. 6009) is applicable to the programs authorized 
under the Act, except for the Protection and Advocacy System.
    (b) In order to comply with section 122(c)(5)(G) of the Act (42 
U.S.C. 6022(c)(5)(G)), regarding the rights of individuals with 
developmental disabilities, the State must meet the requirements of 45 
CFR 1386.30(f)(2).
    (c) Applications from university affiliated programs or for projects 
of national significance grants must also contain an assurance that the 
human rights of individuals assisted by these programs will be protected 
consistent with section 110 (see section 153(c)(3) and section 162(c)(3) 
of the Act).

[61 FR 51154, Sept. 30, 1996]



Sec. 1385.5  [Reserved]



Sec. 1385.6  Employment of individuals with disabilities.

    Each grantee which receives Federal funding under the Act must meet 
the requirements of section 109 of the Act (42 U.S.C. 6008) regarding 
affirmative action. The grantee must take affirmative action to employ 
and advance in employment and otherwise treat qualified individuals with 
disabilities without discrimination based upon their physical or mental 
disability in all employment practices such as the following: 
Advertising, recruitment, employment, rates of pay or other forms of 
compensation, selection for training, including apprenticeship, 
upgrading, demotion or transfer, and layoff or termination. This 
obligation is in addition to the requirements of 45 CFR part 84, subpart 
B, prohibiting discrimination in employment practices on the basis of 
disability in programs receiving assistance from the Department. 
Recipients of funds under the Act also may be bound by the provisions of 
the Americans with Disabilities Act (Pub. L. 101-336, 42 U.S.C. 12101 et 
seq.) with respect to employment of individuals with disabilities. 
Failure to comply with section 109 of the Act may result in loss of 
Federal funds under the Act. If a compliance action is taken, the State 
will

[[Page 388]]

be given reasonable notice and an opportunity for a hearing as provided 
in Subpart D of 45 CFR part 1386.

[61 FR 51154, Sept. 30, 1996]



Sec. 1385.7  [Reserved]



Sec. 1385.8  Formula for determining allotments.

    The Commissioner will allocate funds appropriated under the Act for 
the State Developmental Disabilities Councils and the Protection and 
Advocacy Systems on the following basis:
    (a) Two-thirds of the amount appropriated are allotted to each State 
according to the ratio the population of each State bears to the 
population of the United States. This ratio is weighted by the relative 
per capita income for each State. The data used to compute allotments 
are supplied by the U.S. Department of Commerce, for the three most 
recent consecutive years for which satisfactory data are available.
    (b) One-third of the amount appropriated is allotted to each State 
on the basis of the relative need for services of persons with 
developmental disabilities. The relative need is determined by the 
number of persons receiving benefits under the Childhood Disabilities 
Beneficiary Program (section 202(d)(1)(B)(ii) of the Social Security 
Act), (42 U.S.C. 402(d)(1)(B)(ii)).

[49 FR 11777, Mar. 27, 1984, as amended at 61 FR 51154, Sept. 30, 1996]



Sec. 1385.9  Grants administration requirements.

    (a) The following parts of title 45 CFR apply to grants funded under 
parts 1386 and 1388 of this chapter and to grants for Projects of 
National Significance under section 162 of the Act (42 U.S.C. 6082).

45 CFR Part 16--Procedures of the Departmental Grant Appeals Board.
45 CFR Part 46--Protection of Human Subjects.
45 CFR Part 74--Administration of Grants.
45 CFR Part 75--Informal Grant Appeals Procedures.
45 CFR Part 80--Nondiscrimination under Programs Receiving Federal 
Assistance Through the Department of Health and Human Services--
Effectuation of title VI of the Civil Rights Act of 1964.
45 CFR Part 81--Practice and Procedure for Hearings Act under part 80 of 
this title.
45 CFR Part 84--Nondiscrimination on the Basis of Handicap in Programs 
and Activities Receiving or Benefiting from Federal Financial 
Assistance.
45 CFR Part 86--Nondiscrimination on the Basis of Sex in Education 
Programs and Activities Receiving or Benefiting from Federal Financial 
Assistance.
45 CFR Part 91--Nondiscrimination on the Basis of Age in Programs or 
Activities Receiving Federal Financial Assistance from HHS.
45 CFR Part 92--Uniform Administrative Requirements for Grants and 
Cooperative Agreements to State and Local Governments.

    (b) The Departmental Appeals Board also has jurisdiction over 
appeals by grantees which have received grants under the University 
Affiliated program or for Projects of National Significance. The scope 
of the Board's jurisdiction concerning these appeals is described in 45 
CFR part 16.
    (c) The Departmental Appeals Board also has jurisdiction to decide 
appeals brought by the States concerning any disallowances taken by the 
Commissioner with respect to specific expenditures incurred by the 
States or by contractors or subgrantees of States. This jurisdiction 
relates to funds provided under the two formula programs--Part B of the 
Act--Federal Assistance to State Developmental Disabilities Councils and 
Part C of the Act--Protection and Advocacy of the Rights of Individuals 
with Developmental Disabilities. Appeals filed by States shall be 
decided in accordance with 45 CFR part 16.
    (d) In making audits and examinations to any books, documents, 
papers, and transcripts of records of State Developmental Disabilities 
Councils, the University Affiliated Programs, and the Projects of 
National Significance grantees and subgrantees, as provided for in 45 
CFR part 74 and part 92, the Department will keep information about 
individual clients confidential to the maximum extent permitted by law 
and regulations.
    (e) (1) The Department or other authorized Federal officials may 
access client and case eligibility records or other records of the 
Protection and Advocacy system for audit purposes and for purposes of 
monitoring system compliance pursuant to section 104(b) of the Act. 
However, such information

[[Page 389]]

will be limited pursuant to section 142(j) of the Act. No personal 
identifying information such as name, address, and social security 
number will be obtained. Only eligibility information will be obtained 
regarding type and level of disability of individuals being served by 
the P&A and the nature of the issue concerning which the System 
represented an individual.
    (2) Notwithstanding paragraph (e)(1)of this section, if an audit, 
monitoring review, evaluation, or other investigation by the Department 
produces evidence that the system has violated the Act or the 
regulations, the system will bear the burden of proving its compliance. 
The system's inability to establish compliance because of the 
confidentiality of records will not relieve it of this responsibility. 
The system may elect to obtain a release from all individuals requesting 
or receiving services at the time of intake or application. The release 
shall state only information directly related to client and case 
eligibility will be subject to disclosure to officials of the 
Department.

[49 FR 11777, Mar. 27, 1984, as amended at 52 FR 44846, Nov. 20, 1987; 
54 FR 47984, Nov. 20, 1989; 61 FR 51154, Sept. 30, 1996]



PART 1386--FORMULA GRANT PROGRAMS--Table of Contents




                      Subpart A--Basic Requirements

Sec.
1386.1  General.
1386.2  Obligation of funds.
1386.3  Liquidation of obligations.
1386.4  [Reserved]

  Subpart B--State System for Protection and Advocacy of the Rights of 
              Individuals with Developmental Disabilities.

1386.19  Definitions.
1386.20  Designated State Protection and Advocacy agency.
1386.21  Requirements and authority of the Protection and Advocacy 
          System.
1386.22  Access to records, facilities and individuals with 
          developmental disabilities.
1386.23  Periodic reports: Protection and Advocacy System.
1386.24  Non-allowable costs for the Protection and Advocacy System.
1386.25  Allowable litigation costs.

   Subpart C--Federal Assistance to State Developmental Disabilities 
                                Councils.

1386.30  State plan requirements.
1386.31  State Plan submittal and approval.
1386.32  Periodic reports: Federal assistance to State Developmental 
          Disabilities Councils.
1386.33  Protection of employees' interest.
1386.34  Designated State Agency.
1386.35  Allowable and non-allowable costs for Federal Assistance to 
          State Developmental Disabilities Councils.
1386.36  Final disapproval of the State plan or plan amendments.

  Subpart D--Practice and Procedure for Hearing Pertaining to States' 
 Conformity and Compliance with Developmental Disabilities State Plans, 
                    Reports and Federal Requirements

                                 General

1386.80  Definitions.
1386.81  Scope of rules.
1386.82  Records to be public.
1386.83  Use of gender and number.
1386.84  Suspension of rules.
1386.85  Filing and service of papers.

                 Preliminary Matters--Notice and Parties

1386.90  Notice of hearing or opportunity for hearing.
1386.91  Time of hearing.
1386.92  Place.
1386.93  Issues at hearing.
1386.94  Request to participate in hearing.

                           Hearing Procedures

1386.100  Who presides.
1386.101  Authority of presiding officer.
1386.102  Rights of parties.
1386.103  Discovery.
1386.104  Evidentiary purpose.
1386.105  Evidence.
1386.106  Exclusion from hearing for misconduct.
1386.107  Unsponsored written material.
1386.108  Official transcript.
1386.109  Record for decision.

                    Posthearing Procedures, Decisions

1386.110  Posthearing briefs.
1386.111  Decisions following hearing.
1386.112  Effective date of decision by the Assistant Secretary.

    Authority: 42 U.S.C. 6000 et. seq.

    Source: 49 FR 11779, Mar. 27, 1984, unless otherwise noted.

[[Page 390]]



                      Subpart A--Basic Requirements



Sec. 1386.1  General.

    All rules under this subpart are applicable to both the State 
Developmental Disabilities Councils and the Protection and Advocacy 
Agencies.

[49 FR 11779, Mar. 27, 1984, as amended at 61 FR 51155, Sept. 30, 1996]



Sec. 1386.2  Obligation of funds.

    (a) Funds which the Federal Government allots under this Part during 
a Federal fiscal year are available for obligation by States for a two 
year period beginning with the first day of the Federal fiscal year in 
which the grant is awarded.
    (b) (1) A State incurs an obligation for acquisition of personal 
property or for the performance of work on the date it makes a binding, 
legally enforceable, written commitment, or when the State Developmental 
Disabilities Council enters into an Interagency Agreement with an agency 
of State government for acquisition of personal property or for the 
performance of work.
    (2) A State incurs an obligation for personal services, for services 
performed by public utilities, for travel or for rental of real or 
personal property on the date it receives the services, its personnel 
takes the travel, or it uses the rented property.
    (c) (1) The Protection and Advocacy System may elect to treat entry 
of an appearance in judicial and administrative proceedings on behalf of 
an individual with a developmental disability as a basis for obligating 
funds for the litigation costs. The amount of the funds obligated must 
not exceed a reasonable estimate of the costs, and the way the estimate 
was calculated must be documented.
    (2) For the purpose of this paragraph, litigation costs mean 
expenses for court costs, depositions, expert witness fees, travel in 
connection with a case and similar costs and costs resulting from 
litigation in which the agency has represented an individual with 
developmental disabilities (e.g. monitoring court orders, consent 
decrees), but not for salaries of employees of the Protection and 
Advocacy agency. All funds made available for Federal Assistance to 
State Developmental Disabilities Councils and to the Protection and 
Advocacy System obligated under this paragraph are subject to the 
requirement of paragraph (a) of this section. These funds, if 
reobligated, may be reobligated only within a two year period beginning 
with the first day of the Federal fiscal year in which the funds were 
originally awarded.

[49 FR 11779, Mar. 27, 1984, as amended at 54 FR 47985, Nov. 20, 1989; 
61 FR 51155, Sept. 30, 1996]



Sec. 1386.3  Liquidation of obligations.

    (a) All obligations incurred pursuant to a grant made under the Act 
for a specific Federal fiscal year, must be liquidated within two years 
of the close of the Federal fiscal year in which the grant was awarded.
    (b) The Commissioner may waive the requirements in paragraph (a) of 
this section when State law impedes implementation or the amount of 
obligated funds to be liquidated is in dispute.
    (c) Funds attributable to obligations which are not liquidated in 
accordance with the provisions of this section revert to the Federal 
Government.



Sec. 1386.4  [Reserved]



  Subpart B--State System for Protection and Advocacy of the Rights of 
               Individuals with Developmental Disabilities



Sec. 1386.19  Definitions.

    As used in Secs. 1386.20, 1386.21, 1386.22 and 1386.25 of this part 
the following definitions apply:
    Abuse means any act or failure to act which was performed, or which 
was failed to be performed, knowingly, recklessly, or intentionally, and 
which caused, or may have caused, injury or death to an individual with 
developmental disabilities, and includes such acts as: Verbal, 
nonverbal, mental and emotional harassment; rape or sexual assault; 
striking; the use of excessive force when placing such an individual in 
bodily restraints; the use of bodily or chemical restraints which is not 
in compliance with Federal and State

[[Page 391]]

laws and regulations or any other practice which is likely to cause 
immediate physical or psychological harm or result in long term harm if 
such practices continue.
    Complaint includes, but is not limited to any report or 
communication, whether formal or informal, written or oral, received by 
the system including media accounts, newspaper articles, telephone calls 
(including anonymous calls), from any source alleging abuse or neglect 
of an individual with a developmental disability.
    Designating Official means the Governor or other State official, who 
is empowered by the Governor or State legislature to designate the State 
official or public or private agency to be accountable for the proper 
use of funds by and conduct of the State Protection and Advocacy agency.
    Facility includes any setting that provides care, treatment, 
services and habilitation, even if only ``as needed'' or under a 
contractual arrangement. Facilities include, but are not limited to the 
following:
    Community living arrangements (e.g., group homes, board and care 
homes, individual residences and apartments), day programs, juvenile 
detention centers, hospitals, nursing homes, homeless shelters, jails 
and prisons.
    Full Investigation means access to facilities, clients and records 
authorized under these regulations, that is necessary for a protection 
and advocacy (P&A) system to make a determination about whether alleged 
or suspected instances of abuse and neglect are taking place or have 
taken place. Full investigations may be conducted independently or in 
cooperation with other agencies authorized to conduct similar 
investigations.
    Legal Guardian, conservator and legal representative all mean an 
individual appointed and regularly reviewed by a State court or agency 
empowered under State law to appoint and review such officers and having 
authority to make all decisions on behalf of individuals with 
developmental disabilities. It does not include persons acting only as a 
representative payee, person acting only to handle financial payments, 
attorneys or other persons acting on behalf of an individual with 
developmental disabilities only in individual legal matters, or 
officials responsible for the provision of treatment or habilitation 
services to an individual with developmental disabilities or their 
designees.
    Neglect means a negligent act or omission by an individual 
responsible for providing treatment or habilitation services which 
caused or may have caused injury or death to an individual with 
developmental disabilities or which placed an individual with 
developmental disabilities at risk of injury or death, and includes acts 
or omissions such as failure to: establish or carry out an appropriate 
individual program plan or treatment plan (including a discharge plan); 
provide adequate nutrition, clothing, or health care to an individual 
with developmental disabilities; provide a safe environment which also 
includes failure to maintain adequate numbers of trained staff.
    Probable cause means a reasonable ground for belief that an 
individual with developmental disabilities has been, or may be, subject 
to abuse or neglect. The individual making such determination may base 
the decision on reasonable inferences drawn from his or her experience 
or training regarding similar incidents, conditions or problems that are 
usually associated with abuse or neglect.

[61 FR 51155, Sept. 30, 1996]



Sec. 1386.20  Designated State Protection and Advocacy agency.

    (a) The designating official must designate the State official or 
public or private agency to be accountable for proper use of funds and 
conduct of the Protection and Advocacy agency.
    (b) An agency of the State or private agency providing direct 
services, including guardianship services may not be designated as a 
Protection and Advocacy agency.
    (c) In the event that an entity outside of the State government is 
designated to carry out the program, the designating official or entity 
must assign a responsible State official to receive, on behalf of the 
State, notices of disallowances and compliance actions as the State is 
accountable for the

[[Page 392]]

proper and appropriate expenditure of Federal funds.
    (d) (1) Prior to any redesignation of the agency which administers 
and operates the State Protection and Advocacy (P&A) System, the 
designating official must give written notice of the intention to make 
the redesignation to the agency currently administering and operating 
the State Protection and Advocacy System by registered or certified 
mail. The notice must indicate that the proposed redesignation is being 
made for good cause. The designating official must also publish a public 
notice of the proposed action. The agency and the public shall have a 
reasonable period of time, but not less than 45 days to respond to the 
notice.
    (2) The public notice must include:
    (i) The Federal requirements for the Protection and Advocacy system 
for individuals with developmental disabilities (section 142 of the 
Act); and, where applicable, the requirements of other Federal advocacy 
programs administered by the State Protection and Advocacy System.
    (ii) The goals and function of the State's Protection and Advocacy 
System including the current Statement of Objectives and Priorities;
    (iii) The name and address of the agency currently designated to 
administer and operate the Protection and Advocacy system; and an 
indication of whether the agency also operates other Federal advocacy 
programs;
    (iv) A description of the current Protection and Advocacy agency and 
the system it administers and operates including, as applicable, 
descriptions of other Federal advocacy programs it operates;
    (v) A clear and detailed explanation of the good cause for the 
proposed redesignation;
    (vi) A statement suggesting that interested persons may wish to 
write the current State Protection and Advocacy agency at the address 
provided in paragraph (d)(2)(iii) of this section to obtain a copy of 
its response to the notice required by paragraph (d)(1)of this section. 
Copies shall be provided in accessible formats to individuals with 
disabilities upon request;
    (vii) The name of the new agency proposed to administer and operate 
the Protection and Advocacy System under the Developmental Disabilities 
program. This agency will be eligible to administer other Federal 
advocacy programs;
    (viii) A description of the system which the new agency would 
administer and operate, including a description of all other Federal 
advocacy programs the agency would operate;
    (ix) The timetable for assumption of operations by the new agency 
and the estimated costs of any transfer and start-up operations; and
    (x) A statement of assurance that the proposed new designated State 
P&A System will continue to serve existing clients and cases of the 
current P&A system or refer them to other sources of legal advocacy as 
appropriate, without disruption.
    (3) The public notice as required by paragraph (d)(1) of this 
section, must be in a format accessible to individuals with 
developmental disabilities or their representatives, e.g., tape, 
diskette. The designating official must provide for publication of the 
notice of the proposed redesignation using the State register, State-
wide newspapers, public service announcements on radio and television, 
or any other legally equivalent process. Copies of the notice must be 
made generally available to individuals with developmental disabilities 
and mental illness who live in residential facilities through posting or 
some other means.
    (4) After the expiration of the public comment period required in 
paragraph (d)(1) of this section, the designating official must conduct 
a public hearing on the redesignation proposal. After consideration of 
all public and agency comments, the designating official must give 
notice of the final decision to the currently designated agency and the 
public through the same means used under paragraph (d)(3) of this 
section. This notice must include a clear and detailed explanation of 
the good cause finding. If the notice to the currently designated agency 
states that the redesignation will take place, it also must inform the 
agency of its right to appeal this decision to the Assistant Secretary, 
Administration for Children and Families and provide a

[[Page 393]]

summary of the public comments received in regard to the notice of 
intent to redesignate and the results of the public hearing and its 
responses to those comments. The redesignation shall not be effective 
until 10 working days after notifying the current Protection and 
Advocacy agency or, if the agency appeals, until the Assistant Secretary 
has considered the appeal.
    (e) (1) Following notification pursuant to paragraph (d)(4) of this 
section, the Protection and Advocacy agency which is the subject of such 
action, may appeal the redesignation to the Assistant Secretary. To do 
so, the Protection and Advocacy agency must submit an appeal in writing 
to the Assistant Secretary within 20 days of receiving official 
notification under paragraph (d)(4) of this section, with a separate 
copy sent by registered or certified mail to the designating official 
who made the decision concerning redesignation.
    (2) In the event that the agency subject to redesignation does 
exercise its right to appeal under paragraph (e)(1) of this section, the 
designating official must give public notice of the Assistant 
Secretary's final decision regarding the appeal through the same means 
utilized under paragraph (d)(3) of this section within 10 working days 
of receipt of the Assistant Secretary's final decision under paragraph 
(e)(6) of this section.
    (3) The designating official within 10 working days from the receipt 
of a copy of the appeal must provide written comments to the Assistant 
Secretary (with a copy sent by registered or certified mail to the 
Protection and Advocacy agency appealing under paragraph (e)(1) of this 
section), or withdraw the redesignation. The comments must include a 
summary of the public comments received in regard to the notice of 
intent to redesignate and the results of the public hearing and its 
responses to those comments.
    (4) In the event that the designating official withdraws the 
redesignation while under appeal pursuant to paragraph (e)(1) of this 
section, the designating official must notify the Assistant Secretary, 
and the current agency, and must give public notice of his or her 
decision through the same means utilized under paragraph (d)(3) of this 
section.
    (5) As part of their submission under paragraph (e)(1) or (e)(3) of 
this section, either party may request, and the Assistant Secretary may 
grant, an opportunity for an informal meeting with the Assistant 
Secretary at which representatives of both parties will present their 
views on the issues in the appeal. The meeting will be held within 20 
working days of the submission of written comments by the designating 
official under paragraph (e)(2) of this section. The Assistant Secretary 
will promptly notify the parties of the date and place of the meeting.
    (6) Within 30 days of the informal meeting under paragraph (e)(5) of 
this section, or, if there is no informal meeting under paragraph (e)(5) 
of this section, within 30 days of the submission under paragraph (e)(3) 
of this section, the Assistant Secretary will issue to the parties a 
final written decision on whether the redesignation was for good cause 
as defined in paragraph (d)(1) of this section. The Assistant Secretary 
will consult with Federal advocacy programs that will be directly 
affected by the proposed redesignation in making a final decision on the 
appeal.
    (f) (1) Within 30 days after the redesignation becomes effective 
under paragraph (d)(4) of this section, the designating official must 
submit an assurance to the Assistant Secretary that the newly designated 
Protection and Advocacy agency meets the requirements of the statute and 
the regulations.
    (2) In the event that the Protection and Advocacy agency subject to 
redesignation does not exercise its rights to appeal within the period 
provided under paragraph (e)(1) of this section, the designating 
official must provide to the Assistant Secretary documentation that the 
agency was redesignated for good cause. Such documentation must clearly 
demonstrate that the Protection and Advocacy agency subject to 
redesignation was not redesignated for any actions or activities which 
were carried out under section 142 of the Act, these regulations or any 
other

[[Page 394]]

Federal advocacy program's legislation or regulations.

[49 FR 11779, Mar. 27, 1984, as amended at 52 FR 44846, Nov. 20, 1987; 
61 FR 51156, Sept. 30, 1996]



Sec. 1386.21  Requirements and authority of the Protection and Advocacy System.

    (a) In order for a State to receive Federal financial participation 
for Protection and Advocacy activities under this subpart, as well as 
the State Developmental Disabilities Council activities (subpart C of 
this part), the Protection and Advocacy System must meet the 
requirements of section 142 of the Act (42 U.S.C. 6042) and that system 
must be operational.
    (b) Allotments must be used to supplement and not to supplant the 
level of non-federal funds available in the State for activities under 
the Act, which shall include activities on behalf of individuals with 
developmental disabilities to remedy abuse, neglect and violations of 
rights as well and information and referral activities.
    (c) A Protection and Advocacy System shall not implement a policy or 
practice restricting the remedies which may be sought on the behalf of 
individuals with developmental disabilities or compromising the 
authority of the Protection and Advocacy System (P&A) to pursue such 
remedies through litigation, legal action or other forms of advocacy. 
However, the above requirement does not prevent the P&A from developing 
case or client acceptance criteria as part of the annual priorities 
identified by the P&A system as described in Sec. 1386.23(c) of this 
part. Clients must be informed at the time they apply for services of 
such criteria.
    (d) A P&A system shall be free from hiring freezes, reductions in 
force, prohibitions on staff travel, or other policies, imposed by the 
State, to the extent that such policies would impact system program 
staff or functions funded with Federal funds and would prevent the 
system from carrying out its mandates under the Act.
    (e) A Protection and Advocacy System shall have sufficient staff, 
qualified by training and experience, to carry out the responsibilities 
of the system in accordance with the priorities of the system and 
requirements of the Act, including the investigation of allegations of 
abuse, neglect and representations of individuals with developmental 
disabilities regarding rights violations.
    (f) A Protection and Advocacy System may exercise its authority 
under State law where the authority exceeds the authority required by 
the Developmental Disabilities Assistance and Bill of Rights Act, as 
amended. However, State law must not diminish the required authority of 
the Protection and Advocacy System.
    (g) Each P&A system that is a public system without a multimember 
governing or advisory board must establish an advisory council in order 
to provide a voice for individuals with developmental disabilities. The 
Advisory Council shall advise the P&A on program policies and priorities 
and shall be comprised of a majority of individuals with developmental 
disabilities who are eligible for services, or have received or are 
receiving services or parents or family members, (including those 
representing individuals with developmental disabilities who live in 
institutions and home and community based settings), guardians, 
advocates, or authorized representatives of such individuals.
    (h) Prior to any Federal review of the State program, a 30 day 
notice and an opportunity for public comment must be provided. 
Reasonable effort shall be made by the appropriate Regional Office to 
seek comments through notification to major disability advocacy groups, 
the State Bar, other disability law resources, the State Developmental 
Disabilities Council and the University Affiliated Program, for example, 
through newsletters and publications of those organizations. The 
findings of public comments may be consolidated if sufficiently similar 
issues are raised and they shall be included in the report of the onsite 
visit.
    (i) Before the P&A system releases information to individuals not 
otherwise authorized to receive it, the P&A must obtain written consent 
from the client requesting assistance, if competent, or his or her 
guardian.

[61 FR 51157, Sept. 30, 1996]

[[Page 395]]



Sec. 1386.22  Access to records, facilities and individuals with developmental disabilities.

    (a) Access to records--A protection and advocacy (P&A) system shall 
have access to the records of any of the following individuals with 
developmental disabilities:
    (1) An individual who is a client of the system, including any 
person who has requested assistance from the system, if authorized by 
that individual or their legal guardian, conservator or other legal 
representative.
    (2) An individual, including an individual who has died or whose 
whereabouts is unknown, to whom all of the following conditions apply:
    (i) The individual, due to his or her mental or physical condition 
is unable to authorize the system to have access;
    (ii) The individual does not have a legal guardian, conservator or 
other legal representative, or the individual's guardian is the State 
(or one of its political subdivisions); and
    (iii) With respect to whom a complaint has been received by the 
system or the system has probable cause (which can be the result of 
monitoring or other activities including media reports and newspaper 
articles) to believe that such individual has been subject to abuse or 
neglect.
    (3) An individual who has a legal guardian, conservator, or other 
legal representative, with respect to whom a complaint has been received 
by the system or with respect to whom the system has determined that 
there is probable cause to believe that the health or safety of the 
individual is in serious and immediate jeopardy, whenever all the 
following conditions exist:
    (i) The system has made a good faith effort to contact the 
representative upon receipt of the representative's name and address;
    (ii) The system has offered assistance to the representative to 
resolve the situation; and
    (iii) The representative has failed or refused to act on behalf of 
the individual.
    (b) Individual records to which P&A systems must have access under 
section 142(A)(2)(I) (whether written or in another medium, draft or 
final, including handwritten notes, electronic files, photographs or 
video or audio tape records) shall include, but shall not be limited to:
    (1) Records prepared or received in the course of providing intake, 
assessment, evaluation, education, training and other supportive 
services, including medical records, financial records, and monitoring 
and other reports prepared or received by a member of the staff of a 
facility that is providing care or treatment;
    (2) Reports prepared by an agency charged with investigating 
incidents of abuse or neglect, injury or death occurring at a facility 
or while the individual with a developmental disability is under the 
care of a member of the staff of a facility, or by or for such facility, 
that describe any or all of the following:
    (i) Abuse, neglect, injury, death;
    (ii) The steps taken to investigate the incidents;
    (iii) Reports and records, including personnel records, prepared or 
maintained by the facility in connection with such reports of incidents; 
or,
    (iv) Supporting information that was relied upon in creating a 
report, including all information and records which describe persons who 
were interviewed, physical and documentary evidence that was reviewed, 
and the related investigative findings; and
    (3) Discharge planning records.
    (c) Information in the possession of a facility which must be 
available to P&A systems in investigating instances of abuse and neglect 
under section 142(a)(2)(B) (whether written or in another medium, draft 
or final, including hand written notes, electronic files, photographs or 
video or audio tape records) shall include, but not be limited to:
    (1) Information in reports prepared by individuals and entities 
performing certification or licensure reviews, or by professional 
accreditation organizations, as well as related assessments prepared for 
a facility by its staff, contractors or related entities, except that 
nothing in this section is intended to preempt State law protection 
records produced by medical care evaluation or peer review committees.
    (2) Information in professional, performance, building or other 
safety

[[Page 396]]

standards, demographic and statistical information relating to a 
facility.
    (d) A system shall be permitted to inspect and copy information and 
records, subject to a reasonable charge to offset duplicating costs.
    (e) The client's record is the property of the Protection and 
Advocacy System which must protect it from loss, damage, tampering, or 
use by unauthorized individuals. The Protection and Advocacy System 
must:
    (1) Keep confidential all information contained in a client's 
records, which includes, but is not limited to, information contained in 
an automated data bank. This regulation does not limit access by parents 
or legal guardians of minors unless prohibited by State or Federal law, 
court order or the rules of attorney-client privilege;
    (2) Have written policies governing access to, storage of, 
duplication of, and release of information from the client's record; and
    (3) Be authorized to keep confidential the names and identity of 
individuals who report incidents of abuse and neglect and individuls who 
furnish information that forms the basis for a determination that 
probable cause exists.
    (f) Access to Facilities and Individuals with Developmental 
Disabilities--A system shall have reasonable unaccompanied access to 
public and private facilities which provide services, supports, and 
other assistance for individuals with developmental disabilities in the 
State when necessary to conduct a full investigation of an incident of 
abuse or neglect under section 142(a)(2)(B) of the Act. This authority 
shall include the opportunity: to interview any facility service 
recipient, employee, or other person, including the person thought to be 
the victim of such abuse, who might be reasonably believed by the system 
to have knowledge of the incident under investigation; and to inspect, 
view and photograph all areas of the facility's premises that might be 
reasonably believed by the system to have been connected with the 
incident under investigation.
    (g) Under section 142(a)(2)(H) of the Act, the system and all of its 
authorized agents shall have unaccompanied access to all residents of a 
facility at reasonable times, which at a minimum shall include normal 
working hours and visiting hours, for the purpose of:
    (1) Providing information and training on, and referral to, programs 
addressing the needs of individuals with developmental disabilities, and 
the protection and advocacy services available from the system, 
including the name, address, and telephone number of the system and 
other information and training about individual rights; and
    (2) Monitoring compliance with respect to the rights and safety of 
service recipients.
    (h) Unaccompanied access to residents of a facility shall include 
the opportunity to meet and communicate privately with such individuals 
regularly, both formally and informally, by telephone, mail and in 
person.
    (i) If a system is denied access to facilities and its programs, 
individuals with developmental disabilities, or records covered by the 
Act it shall be provided promptly with a written statement of reasons, 
including, in the case of a denial for alleged lack of authorization, 
the name and address of the legal guardian, conservator, or other legal 
representative of an individual with developmental disabilities.

[61 FR 51158, Sept. 30, 1996]



Sec. 1386.23  Periodic reports: Protection and Advocacy System.

    (a) By January 1 of each year the Protection and Advocacy System 
shall submit an Annual Program Performance Report as required in section 
107(b) of the Act, in a format designated by the Secretary.
    (b) Financial status reports must be submitted by the Protection and 
Advocacy Agency according to a frequency interval specified by the 
Administration for Children and Families. In no case will such reports 
be required more frequently than quarterly.
    (c) By January 1 of each year, the Protection and Advocacy System 
shall submit an Annual Statement of Objectives and Priorities, (SOP) for 
the coming fiscal year as required under section 142(a)(2)(C) of the 
Act.

[[Page 397]]

    (1) The SOP is a description and explanation of the priorities and 
selection criteria for the system's individual advocacy caseload; 
systemic advocacy work and training activities, and the outcomes which 
it strives to accomplish.
    (2) Where applicable, the SOP must include a description of how the 
Protection and Advocacy System operates and how it coordinates the 
Protection and Advocacy program for individuals with developmental 
disabilities with other Protection and Advocacy (P&A) programs 
administered by the State Protection and Advocacy System. This 
description must address the System's intake process, internal and 
external referrals of eligible clients, duplication and overlap of 
services and eligibility, streamlining of advocacy services, 
collaboration and sharing of information on service needs and 
development of Statements of Objectives and Priorities for the various 
advocacy programs.
    (3) Priorities as established through the SOP serve as the basis for 
P&As to determine which cases are selected in a given fiscal year. P&As 
have the authority to turn down a request for assistance when it is 
outside the scope of the SOP but they must inform individuals that this 
is the basis for turning them down.
    (d) Each fiscal year, the Protection and Advocacy Agency shall:
    (1) Obtain formal public input on its Statement of Objectives and 
Priorities;
    (2) At a minimum, provide for a broad distribution of the proposed 
Statement of Objectives and Priorities for the next fiscal year in a 
manner accessible to individuals with developmental disabilities and 
their representatives, allowing at least 45 days from the date of 
distribution for comment;
    (3) Provide to the State Developmental Disabilities Council and the 
University Affiliated Program a copy of the proposed Statement of 
Objectives and Priorities for comments concurrently with the public 
notice;
    (4) Incorporate or address any comments received through the public 
input and any input received from the State Developmental Disabilities 
Council and the University Affiliated Program in the final Statement 
submitted to the Department; and
    (5) Address how the Protection and Advocacy System; State 
Developmental Disabilities Council; and the University Affiliated 
Program will collaborate with each other and with other public and 
private entities.

(The requirements under paragraph (b) are approved under control number 
0348-0039 by the Office of Management and Budget (OMB). Information 
collection requirements contained in paragraph (c) are approved under 
OMB control number 0970-0132 pursuant to sections 142(a)(2) (C) and (D) 
and section 107(b) of the Act.)

[61 FR 51159, Sept. 30, 1996]



Sec. 1386.24  Non-allowable costs for the Protection and Advocacy System.

    (a) Federal financial participation is not allowable for:
    (1) Costs incurred for activities on behalf of individuals with 
developmental disabilities to solve problems not directly related to 
their disabilities and which are faced by the general populace. Such 
activities include but are not limited to: Preparation of wills, divorce 
decrees, and real estate proceedings. Allowable costs in such cases 
would include the Protection and Advocacy System providing disability 
related technical assistance information and referral to appropriate 
programs and services; and
    (2) Costs not allowed under other applicable statutes. Departmental 
regulations and issuances of the Office of Management and Budget.
    (b) Attorneys fees are considered program income pursuant to Part 
74-Administration of Grants and Part 92-Uniform Administrative 
Requirements for Grants and Cooperative Agreements to State and Local 
Governments and must be added to the funds committed to the program and 
used to further the objectives of the program. This requirement shall 
apply to all attorneys fees, including those earned by contractors and 
those received after the project period in which they were earned.

[52 FR 44847, Nov. 20, 1987; 61 FR 51159, Sept. 30, 1996]

[[Page 398]]



Sec. 1386.25  Allowable litigation costs.

    Allotments may be used to pay the otherwise allowable costs incurred 
by a Protection and Advocacy System in bringing lawsuits in its own 
right to redress incidents of abuse or neglect, discrimination and other 
rights violations impacting on individuals with developmental 
disabilities to obtain access to records and when it appears on behalf 
of named plaintiffs or a class of plaintiff for such purposes.

[61 FR 51159, Sept. 30, 1996]



   Subpart C--Federal Assistance to State Developmental Disabilities 
                                Councils



Sec. 1386.30  State plan requirements.

    (a) In order to receive Federal financial assistance under this 
subpart, each State Developmental Disabilities Council must prepare and 
submit to the Secretary, and have in effect, a State Plan which meets 
the requirements of sections 122 and 124 of the Act (42 U.S.C. 6022 and 
6024) and these regulations. Development of the State Plan and 
applicable annual amendments are responsibilities of the State 
Developmental Disabilities Council. The Council will provide 
opportunities for public input during the planning and development of 
the State Plan and will consult with the Designated State Agency to 
determine that the plan is not in conflict with applicable State laws 
and to obtain appropriate State Plan assurances.
    (b) Failure to comply with State plan requirements may result in 
loss of Federal funds as described in section 127 of the Act (42 U.S.C. 
6027).
    (c) The State plan may be submitted in any format the State selects 
as long as the items contained in the Act are addressed. The plan must:
    (1) Identify the program unit(s) within the Designated State Agency 
responsible for helping the Council to obtain assurances and fiscal and 
other support services.
    (2) Identify the priority areas selected by the Council and by the 
State in which 65% of Federal allotment will be expended.
    (3) Where applicable, describe activities in which the State's 
Developmental Disabilities Council, Protection and Advocacy System 
agency, and University Affiliated Program(s) collaborate to remove 
barriers or address critical issues within the State and bring about 
broad systems changes to benefit individuals with developmental 
disabilities and, as appropriate, individuals with other disabilities.
    (d) The State plan must be reviewed at least once every three years.
    (e) (1) The State Plan may provide for funding projects to 
demonstrate new approaches to direct services which enhance the 
independence, productivity, and integration and inclusion into the 
community of individuals with developmental disabilities. Direct service 
demonstrations must be short-term and include a strategy to locate on-
going funding from other sources. For each demonstration funded, the 
State Plan must include an estimated period of the project's duration 
and a brief description of how the services will be continued without 
Federal developmental disabilities program funds. Council funds may not 
be used to fund on-going services which should be paid for by the State 
or other sources.
    (2) The State plan may provide for funding of other projects or 
activities, including but not limited to, studies, evaluation, outreach, 
advocacy, self-advocacy, training, community supports, public education, 
and prevention. Where extended periods of time are needed to achieve 
desired results, these projects and activities need not be time-limited.
    (f) The State Plan must contain assurances that:
    (1) The State will comply with all applicable Federal statutes and 
regulations in effect during the time that the State is receiving 
formula grant funding;
    (2) The human rights of individuals with developmental disabilities 
will be protected consistent with section 110 of the Act (42 U.S.C. 
6009).
    (3) Buildings used in connection with activities assisted under the 
Plan must meet all applicable provisions of Federal and State laws 
pertaining to accessibility, fire, health and safety standards.

[[Page 399]]

    (4) The State Developmental Disabilities Council shall follow the 
requirements of section 124(c) (8), (9) and (10) of the Act regarding 
budgeting, staff hiring and supervision and staff assignment. Budget 
expenditures must be consistent with applicable State laws and policies 
regarding grants and contracts and proper accounting and bookkeeping 
practices and procedures. In relation to staff hiring, the clause 
``consistent with State law'' in section 124(c)(9) means that the hiring 
of State Developmental Disabilities Council staff must be done in 
accordance with State personnel policies and procedures except that a 
State shall not apply hiring freezes, reductions in force, prohibitions 
on staff travel, or other policies, to the extent that such policies 
would impact staff or functions funded with Federal funds and would 
prevent the Council from carrying out its functions under the Act.

(Information collection requirements contained in paragraph (c) under 
control number 0980-0162 and paragraph (e) under control number 0980-
0139 are approved by the Office of Management and Budget)

[49 FR 11779, Mar. 27, 1984, as amended at 52 FR 44847, Nov. 20, 1987; 
54 FR 47985, Nov. 20, 1989; 61 FR 51159, Sept. 30, 1996]



Sec. 1386.31  State Plan submittal and approval.

    (a) The Council shall issue a public notice about the availability 
of the proposed State Plan or State Plan amendment(s) for comment. The 
Notice shall be published in formats accessible to individuals with 
developmental disabilities and the general public (e.g., tape, diskette, 
public forums, newspapers) and shall provide a 45 day period for public 
review and comment. The Council shall take into account comments 
submitted within that period and respond in the State Plan to 
significant comments and suggestions. A summary of the Council's 
response to State Plan comments shall be submitted with the State Plan 
and made available for public review. This document shall be made 
available in accessible formats upon request.
    (b) The State plan must be submitted to the appropriate Regional 
Office of the Department 45 days prior to the fiscal year for which it 
is applicable. Unless State law provides differently, the State plan and 
amendments or related documents must be approved by the Governor or the 
Governor's designee as may be required by any applicable Federal 
issuances.
    (c) Failure to submit an approvable State plan or amendment prior to 
the Federal fiscal years for which it is applicable may result in the 
loss of Federal financial participation. Costs resulting from 
obligations incurred during the period of the fiscal year for which an 
approved plan is not in effect are not eligible for Federal financial 
participation.
    (d) The Commissioner must approve any State plan or plan amendment 
provided it meets the requirements of the Act and these regulations.
    (e) Amendments to the State plan are required when substantive 
changes are contemplated in plan content.

[49 FR 11779, Mar. 27, 1984, as amended at 61 FR 51160, Sept. 30, 1996]



Sec. 1386.32  Periodic reports: Federal assistance to State Developmental Disabilities Councils.

    (a) The Governor or appropriate State financial officer must submit 
financial status reports on the programs funded under this subpart 
according to a frequency interval which will be specified by the 
Administration for Children and Families. In no case will such reports 
be required more frequently than quarterly.
    (b) Pursuant to section 107(a) of the Act (U.S.C. 6006a), the State 
Developmental Disabilities Council shall submit an Annual Program 
Performance Report in a form that facilitates Council reporting of 
results of activities required under sections 122 and 124 of the Act. 
The report shall be submitted to the appropriate Regional ACF office, by 
January 1 of each year.

[61 FR 51160, Sept. 30, 1996]



Sec. 1386.33  Protection of employee's interests.

    (a) Based on section 122(c)(5)(K) of the Act (42 U.S.C. 
6022(c)(5)(K), the

[[Page 400]]

State plan must assure fair and equitable arrangements to protect the 
interest of all institutional employees affected by actions under the 
plan to provide community living activities. Specific arrangements for 
the protection of affected employees must be developed through 
negotiations between the appropriate State authorities and employees or 
their representatives. Fair and equitable arrangements must include 
procedures that provide for the impartial resolution of disputes between 
the State and an employee concerning the interpretation, application, 
and enforcement of protection arrangements. The State must inform 
employees of the State's decision to provide for community living 
activities.
    (b) To the maximum extent practicable, fair and equitable 
arrangements must include provisions for:
    (1) The preservation of rights and benefits;
    (2) Guaranteeing employment to employees affected by action under 
the plan to provide alternative community living arrangements; and
    (3) Employee training and retraining programs.

(Approved by the Office of Management and Budget under control number 
0980-0162)

[49 FR 11779, Mar. 27, 1984, as amended at 52 FR 44847, Nov. 20, 1987; 
54 FR 47985, Nov. 20, 1989; 61 FR 51160, Sept. 30, 1996]



Sec. 1386.34  Designated State Agency.

    (a) The Designated State Agency shall provide the required 
assurances and other support services as requested by and negotiated 
with the Council. These include:
    (1) Provision of financial reporting and other services as provided 
under section 124(d)(3)(C) of the Act; and
    (2) Information and direction, as appropriate, on procedures on the 
hiring, supervision and assignment of staff in accordance with State 
law.
    (b) If the State Developmental Disabilities Council requests a 
review by the Governor (or legislature) of the Designated State Agency, 
the Council must provide documentation of the reason for change and 
recommend a preferred Designated State Agency.
    (c) After the review is completed, a majority of the non-State 
agency members of the Council may appeal to the Assistant Secretary for 
a review of the designation of the designated State agency if the 
Council's independence as an advocate is not assured because of the 
actions or inactions of the designated State agency.
    (d) The following steps apply to the appeal of the Governor's (or 
legislature's) designation of the Designated State Agency.
    (1) Prior to an appeal to the Assistant Secretary, Administration 
for Children and Families, the State Developmental Disabilities Council, 
must give a 30 day written notice, by certified mail, to the Governor 
(or legislature) of the majority of non-State members' intention to 
appeal the designation of the Designated State Agency.
    (2) The appeal must clearly identify the grounds for the claim that 
the Council's independence as an advocate is not assured because of the 
actions or inactions of the designated State agency.
    (3) Upon receipt of the appeal from the State Developmental 
Disabilities Council, the Assistant Secretary will notify the State 
Developmental Disabilities Council and the Governor (or legislature), by 
certified mail, that the appeal has been received and will be acted upon 
within 60 days. The Governor (or legislature) shall within 10 working 
days from the receipt of the Assistant Secretary's notification provide 
written comments to the Assistant Secretary (with a copy sent by 
registered or certified mail to the Council) on the claims in the 
Council's appeal. Either party may request, and the Assistant Secretary 
may grant, an opportunity for an informal meeting with the Assistant 
Secretary at which representatives of both parties will present their 
views on the issues in the appeal. The meeting will be held within 20 
working days of the submission of written comments by the Governor (or 
legislature). The Assistant Secretary will promptly notify the parties 
of the date and place of the meeting.
    (4) The Assistant Secretary will review the issue(s) and provide a 
final written decision within 60 days following receipt of the State 
Developmental Disabilities Council's appeal. If the determination is 
made that the

[[Page 401]]

Designated State Agency should be redesignated, the Governor (or 
legislature) must provide written assurance of compliance within 45 days 
from receipt of the decision.
    (5) During any time of this appeals process the State Developmental 
Disabilities Council may withdraw such request if resolution has been 
reached with the Governor (or legislature) on the designation of the 
Designated State Agency. The Governor (or legislature) must notify the 
Assistant Secretary in writing of such an occurrence.
    (e) The designated State agency may authorize the Council use or 
contract with State agencies other than the designated State agency to 
perform functions of the designated State agency.

[61 FR 51160, Sept. 30, 1996]



Sec. 1386.35  Allowable and non-allowable costs for Federal Assistance to State Developmental Disabilities Councils.

    (a) Under this subpart, Federal financial participation is available 
in costs resulting from obligations incurred under the approved State 
plan for the necessary expenses of the approved State plan for the 
necessary expenses of the State Council, the administration and 
operation of the State plan, and training of personnel.
    (b) Expenditures which are not allowable for Federal financial 
participation are:
    (1) Costs incurred by institutions or other residential or non-
residential programs which do not comply with the Congressional findings 
with respect to the rights of individuals with developmental 
disabilities in section 110 of the Act (42 U.S.C. 6009).
    (2) Costs incurred for activities not provided for in the approved 
State plan; and
    (3) Costs not allowed under other applicable statutes. Departmental 
regulations or issuances of the Office of Management and Budget.
    (c) Expenditure of funds which supplant State and local funds will 
be disallowed. Supplanting occurs when State or local funds previously 
used to fund activities in the developmental disabilities State Plan are 
replaced by Federal funds which are then used for the same purpose. 
However, supplanting does not occur if State or local funds are replaced 
with Federal funds for a particular activity or purpose in the approved 
State Plan if the State or local funds are then used for other 
activities or purposes in the approved State Plan.
    (d) For purposes of determining aggregate minimum State share of 
expenditures, there are three categories of expenditures:
    (1) Expenditures for projects or activities carried out directly by 
the Council and Council staff, as described in section 125A(a)(2) of the 
Act, require no non-Federal aggregate participation.
    (2) Expenditures for projects with activities or products targeted 
to urban or rural poverty areas but not carried out directly by the 
Council and Council staff, as described in section 125A(a)(2) of the 
Act, shall have non-Federal participation of at least 10% in the 
aggregate.
    (3) All other activities not directly carried out by the Council and 
Council staff, shall have non-Federal participation of at least 25% in 
the aggregate.
    (e) The Council may vary the non-Federal participation required on a 
project by project, activity by activity basis (both poverty and non-
poverty activities), including requiring no non-Federal participation 
from particular projects or activities as the Council deems appropriate 
so long as the requirement for aggregate non-Federal participation is 
met.

[49 FR 11779, Mar. 27, 1984, as amended at 52 FR 44847, Nov. 20, 1987; 
54 FR 47985, Nov. 20, 1989; 61 FR 51161, Sept. 30, 1996]



Sec. 1386.36  Final disapproval of the State plan or plan amendments.

    The Department will disapprove any State plan or plan amendment only 
after the following procedures have been complied with:
    (a) The State plan has been submitted to the appropriate HHS 
Regional Office, and the Regional Office and State have been unable to 
resolve their differences.
    (b) The Regional Office has prepared a detailed written analysis of 
its reasons for recommending disapproval and has transmitted its 
analyses and all

[[Page 402]]

other relevant material to the Commissioner, and has provided the State 
Council and State agency with copies of the material.
    (c) The Commissioner, after review of the records and the 
recommendation of the Regional Office, has determined whether the State 
plan, in whole or in part, is not approvable. Notice of this 
determination has been sent to the State and contains appropriate 
references to the records, provisions of the statute and regulations, 
and all relevant interpretations of applicable laws and regulations. The 
notification of the decision must inform the State of its right to 
appeal in accordance with 45 CFR part 1386, subpart D.
    (d) The Commissioner's decision has been forwarded to the State 
Council and agency by certified mail with a return receipt requested.
    (e) A State has filed its request for a hearing with the Assistant 
Secretary within 21 days of the receipt of the decision. The request for 
a hearing must be sent by certified mail to the Assistant Secretary. The 
date of mailing the request is considered the date of filing if it is 
supported by independent evidence of mailing, otherwise the date of 
receipt shall be considered the date of filing.

[49 FR 11779, Mar. 27, 1984, as amended at 61 FR 51161, Sept. 30, 1996]



  Subpart D--Practice and Procedure for Hearings Pertaining to States' 
 Conformity and Compliance With Developmental Disabilities State Plans, 
                    Reports and Federal Requirements

                                 General



Sec. 1386.80  Definitions.

    For purposes of this subpart:
    Assistant Secretary means the Assistant Secretary for Children and 
Families (ACF).
    ADD means Administration on Developmental Disabilities, 
Administration for Children and Families.
    Presiding officer means anyone designated by the Assistant Secretary 
to conduct any hearing held under this subpart. The term includes the 
Assistant Secretary if the Assistant Secretary presides over the 
hearing.
    Payment or Allotment means an amount provided under Part B or C of 
the Developmental Disabilities Assistance and Bill of Rights Act. This 
term includes Federal funds provided under the Act irrespective of 
whether the State must match the Federal portion of the expenditure. 
This term shall include funds previously covered by the terms ``Federal 
financial participation,'' ``the State's total allotment,'' ``further 
payments,'' ``payments,'' ``allotment'' and ``Federal funds.''

[61 FR 51161, Sept. 30, 1996]



Sec. 1386.81  Scope of rules.

    (a) The rules of procedures in this subpart govern the practice for 
hearings afforded by the Department to States pursuant to sections 122, 
127 and 142 of the Act. (42 U.S.C. 6022, 6027 and 6042).
    (b) Nothing in this part is intended to preclude or limit 
negotiations between the Department and the State, whether before, 
during, or after the hearing to resolve the issues which are, or 
otherwise would be, considered at the hearing. Negotiations, and 
resolution of issues are not part of the hearing, and are not governed 
by the rules in this subpart, except as otherwise provided in this 
subpart.

[49 FR 11779, Mar. 27, 1984, as amended at 52 FR 44847, Nov. 20, 1987]



Sec. 1386.82  Records to be public.

    All pleadings, correspondence, exhibits, transcripts of testimony, 
exceptions, briefs, decisions, and other documents filed in the docket 
in any proceeding are subject to public inspection.



Sec. 1386.83  Use of gender and number.

    As used in this subpart, words importing the singular number may 
extend and be applied to several persons or things, and vice versa. 
Words importing either gender may be applied to the other gender or to 
organizations.



Sec. 1386.84  Suspension of rules.

    Upon notice to all parties, the Assistant Secretary may modify or 
waive

[[Page 403]]

any rule in this subpart, unless otherwise expressly provided, upon 
determination that no party will be unduly prejudiced and justice will 
be served.



Sec. 1386.85  Filing and service of papers.

    (a) All papers in the proceedings must be filed with the designated 
individual in an original and two copies. Only the originals of exhibits 
and transcripts of testimony need be filed.
    (b) Copies of papers in the proceedings must be served on all 
parties by personal delivery or by mail. Service on the party's 
designated representative is deemed service upon the party.

[49 FR 11779, Mar. 27, 1984, as amended at 61 FR 51161, Sept. 30, 1996]

                 Preliminary Matters--Notice and Parties



Sec. 1386.90  Notice of hearing or opportunity for hearing.

    Proceedings are commenced by mailing a notice of hearing or 
opportunity for hearing from the Assistant Secretary to the State 
Developmental Disabilities Council and the Designated State Agency, or 
to the State Protection and Advocacy System or designating official. The 
notice must state the time and place for the hearing, and the issues 
which will be considered. The notice must be published in the Federal 
Register.

[49 FR 11779, Mar. 27, 1984, as amended at 61 FR 51161, Sept. 30, 1996]



Sec. 1386.91  Time of hearing.

    The hearing must be scheduled not less than 30 days nor more than 60 
days after the date notice of the hearing is mailed to the State.



Sec. 1386.92  Place.

    The hearing must be held on a date and at a time and place 
determined by the Assistant Secretary with due regard for convenience, 
and necessity of the parties or their representatives. The site of the 
hearing shall be accessible to individuals with disabilities.

[61 FR 51162, Sept. 30, 1996]



Sec. 1386.93  Issues at hearing.

    (a) Prior to a hearing, the Assistant Secretary may notify the State 
in writing of additional issues which will be considered at the hearing. 
That notice must be published in the Federal Register. If that notice is 
mailed to the State less than 20 days before the date of the hearing, 
the State or any other party, at its request, must be granted a 
postponement of the hearing to a date 20 days after the notice was 
mailed, or such later date as may be agreed to by the Assistant 
Secretary.
    (b) If any issue is resolved in whole or in part, but new or 
modified issues are presented, the hearing must proceed on the new or 
modified issues.
    (c)(1) If at any time, whether prior to, during, or after the 
hearing, the Assistant Secretary finds that the State has come into 
compliance with Federal requirements on any issue in whole or in part, 
he or she must remove the issue from the proceedings in whole or in part 
as may be appropriate. If all issues are removed the Assistant Secretary 
must terminate the hearing.
    (2) Prior to the removal of an issue, in whole or in part, from a 
hearing involving issues relating to the conformity with Federal 
requirements under Part B of the Act, of the State plan or the 
activities of the State's Protection and Advocacy System, the Assistant 
Secretary must provide all parties other than the Department and the 
State (see Sec. 1386.94(b)) with the statement of his or her intention 
to remove an issue from the hearings and the reasons for that decision. 
A copy of the proposed State plan provision or document explaining 
changes in the activities of the State's protection and advocacy system 
on which the State and the Assistant Secretary have settled must be sent 
to the parties. The parties must have an opportunity to submit in 
writing within 15 days their views as to, or any information bearing 
upon, the merits of the proposed provision and the merits of the reasons 
for removing the issue from the hearing.
    (d) In hearings involving questions of noncompliance of a State's 
operation of its program under Part B of the Act with the State plan or 
with Federal requirements or compliance of the State's Protection and 
Advocacy System with Federal requirements, the same procedure set forth 
in paragraph (c)(2) of this section must be followed

[[Page 404]]

with respect to any report or evidence resulting in a conclusion by the 
Assistant Secretary that a State has achieved compliance.
    (e) The issues considered at the hearing must be limited to those 
issues of which the State is notified as provided in Sec. 1386.90 and 
paragraph (a) of this section, and new or modified issues described in 
paragraph (b) of this section, and may not include issues or parts of 
issues removed from the proceedings pursuant to paragraph (c) of this 
section.

[49 FR 11779, Mar. 27, 1984, as amended at 61 FR 51162, Sept. 30, 1996]



Sec. 1386.94  Request to participate in hearing.

    (a) The Department, the State, the State Developmental Disabilities 
Council, the Designated State Agency, and the State Protection and 
Advocacy System, as appropriate, are parties to the hearing without 
making a specific request to participate.
    (b)(1) Other individuals or groups may be recognized as parties if 
the issues to be considered at the hearing have caused them injury and 
their interests are relevant to the issues in the hearing.
    (2) Any individual or group wishing to participate as a party must 
file a petition with the designated individual within 15 days after 
notice of the hearing has been published in the Federal Register, and 
must serve a copy on each party of record at that time in accordance 
with Sec. 1386.85(b). The petition must concisely state:
    (i) Petitioner's interest in the proceeding;
    (ii) Who will appear for petitioner;
    (iii) The issues the petitioner wishes to address; and
    (iv) Whether the petitioner intends to present witnesses.
    (c) (1) Any interested person or organization wishing to participate 
as amicus curiae must file a petition with the designated individual 
before the commencement of the hearing. The petition must concisely 
state:
    (i) The petitioner's interest in the hearing;
    (ii) Who will represent the petitioner, and
    (iii) The issues on which the petitioner intends to present 
argument.
    (2) The presiding officer may grant the petition if he or she finds 
that the petitioner has a legitimate interest in the proceedings, that 
such participation will not unduly delay the outcome and may contribute 
materially to the proper disposition of the issues.
    (3) An amicus curiae may present a brief oral statement at the 
hearing at the point in the proceedings specified by the presiding 
officer. It may submit a written statement of position to the presiding 
officer prior to the beginning of a hearing and must serve a copy on 
each party. It also may submit a brief or written statement at such time 
as the parties submit briefs and must serve a copy on each party.

[49 FR 11779, Mar. 27, 1984, as amended at 61 FR 51162, Sept. 30, 1996]

                           Hearing Procedures



Sec. 1386.100  Who presides.

    (a) The presiding officer at a hearing must be the Assistant 
Secretary or

someone designated by the Assistant Secretary.
    (b) The designation of a presiding officer must be in writing. A 
copy of the designation must be served on all parties and amici curiae.



Sec. 1386.101  Authority of presiding officer.

    (a) The presiding officer has the duty to conduct a fair hearing, 
avoid delay, maintain order, and make a record of the proceedings. The 
presiding officer has all powers necessary to accomplish these ends, 
including, but not limited to, the power to:
    (1) Change the date, time, and place of the hearing, upon notice to 
the parties. This includes the power to continue the hearing in whole or 
in part;
    (2) Hold conferences to settle or simplify the issues in a 
proceeding, or to consider other matters that may aid in the expeditious 
disposition of the proceedings;
    (3) Regulate participation of parties and amici curiae and require 
parties and amici curiae to state their positions with respect to the 
issues in the proceeding;

[[Page 405]]

    (4) Administer oaths and affirmations,
    (5) Rule on motions and other procedural items on matters pending 
before him or her, including issuance of protective orders or other 
relief to a party against whom discovery is sought;
    (6) Regulate the course of the hearing and conduct of counsel 
therein;
    (7) Examine witnesses;
    (8) Receive, rule on, exclude, or limit evidence or discovery;
    (9) Fix for the time for filing motions, petitions, briefs, or other 
items in matters pending before him or her,
    (10) If the presiding officer is the Assistant Secretary, make a 
final decision;
    (11) If the presiding officer is a person other than the Assistant 
Secretary, he or she shall certify the entire record, including 
recommended findings and proposed decision, to the Assistant Secretary;
    (12) Take any action authorized by the rules in the subpart or 5 
U.S.C. 551-559; and
    (b) The presiding officer does not have authority to compel the 
production of witnesses, papers, or other evidence by subpoena.
    (c) If the presiding officer is a person other than the Assistant 
Secretary, his or her authority is to render a recommended decision with 
respect to program requirements which are to be considered at the 
hearing. In case of any noncompliance, he or she shall recommend whether 
payments or allotments should be withheld with respect to the entire 
State plan or the activities of the State's Protection and Advocacy 
System, or whether the payments or allotments should be withheld only 
with respect to those parts of the program affected by such 
noncompliance.

[49 FR 11779, Mar. 27, 1984, as amended at 61 FR 51162, Sept. 30, 1996]



Sec. 1386.102  Rights of parties.

    All parties may:
    (a) Appear by counsel, or other authorized representative, in all 
hearing proceedings;
    (b) Participate in any prehearing conference held by the presiding 
officer,
    (c) Agree to stipulations of facts which will be made a part of the 
record;
    (d) Make opening statements at the hearing;
    (e) Present relevant evidence on the issues at the hearing;
    (f) Present witnesses who then must be available for cross-
examination by all other parties;
    (g) Present oral arguments at the hearing;
    (h) Submit written briefs, proposed findings of fact, and proposed 
conclusions of law, after the hearing.



Sec. 1386.103  Discovery.

    The Department and any party named in the Notice issued pursuant to 
Sec. 1386.90 has the right to conduct discovery (including depositions) 
against opposing parties as provided by the Federal Rules of Civil 
Procedure. There is no fixed rule on priority of discovery. Upon written 
motion, the presiding officer must promptly rule upon any objection to 
discovery action. The presiding officer also has the power to grant a 
protective order or relief to any party against whom discovery is sought 
and to restrict or control discovery so as to prevent undue delay in the 
conduct of the hearing. Upon the failure of any party to make discovery, 
the presiding officer may issue any order and impose any sanction other 
than contempt orders authorized by Rule 37 of the Federal Rules of Civil 
Procedure.



Sec. 1386.104  Evidentiary purpose.

    The hearing is directed to receiving factual evidence and expert 
opinion testimony related to the issues in the proceeding. Argument will 
not be received in evidence; rather, it must be presented in statements, 
memoranda, or briefs, as directed by the presiding officer. Brief 
opening statements, which shall be limited to a statement of the party's 
position and what it intends to prove, may be made at hearings.



Sec. 1386.105  Evidence.

    (a) Testimony. Testimony by witnesses at the hearing is given orally 
under oath or affirmation. Witnesses

[[Page 406]]

must be available at the hearing for cross-examination by all parties.
    (b) Stipulations and exhibits. Two or more parties may agree to 
stipulations of fact. Such stipulations, or any exhibit proposed by any 
party, must be exchanged at the prehearing conference or at a different 
time prior to the hearing if the presiding officer requires it.
    (c) Rules of evidence. Technical rules of evidence do not apply to 
hearings conducted pursuant to this subpart, but rules or principles 
designed to assure production of the most credible evidence available 
and to subject testimony to test by cross-examination are applied where 
reasonably necessary by the presiding officer. A witness may be cross-
examined on any matter material to the proceeding without regard to the 
scope of his or her direct examination. The presiding officer may 
exclude irrelevant, immaterial, or unduly repetitious evidence. All 
documents and other evidence offered or taken for the record is open to 
examination by the parties and opportunity must be given to refute facts 
and arguments advanced on either side of the issues.



Sec. 1386.106  Exclusion from hearing for misconduct.

    Disrespectful, disorderly, or contumacious language or contemptuous 
conduct, refusal to comply with directions, or continued use of dilatory 
tactics by any person at the hearing before a presiding officer shall 
constitute grounds for immediate exclusion of such person from the 
hearing by the presiding officer.



Sec. 1386.107  Unsponsored written material.

    Letters expressing views or urging action and other unsponsored 
written material regarding matters in issue in a hearing is placed in 
the correspondence section of the docket of the proceeding. This 
material is not deemed part of the evidence or record in the hearing.



Sec. 1386.108  Official transcript.

    The Department will designate the official reporter for all 
hearings. The official transcript of testimony taken, together with any 
stipulations, exhibits, briefs, or memoranda of law filed with them is 
filed with the Department Transcripts of testimony in hearings may be 
obtained from the official reporter by the parties and the public at 
rates not to exceed the maximum rates fixed by the contract between the 
Department and the reporter. Upon notice to all parties, the presiding 
officer may authorize corrections to the transcript which involve 
matters of substance. Transcripts must be taken by stenotype machine and 
not be voice recording devices, unless otherwise agreed by all of the 
parties and the presiding officer.



Sec. 1386.109  Record for decision.

    The transcript of testimony, exhibits, and all papers and requests 
filed in the proceedings, except the correspondence section of the 
docket, including rulings and any recommended or initial decision, 
constitute the exclusive record for decision.

                    Posthearing Procedures, Decisions



Sec. 1386.110  Posthearing briefs.

    The presiding officer must fix the time for filing posthearing 
briefs. This time may not exceed 30 days after termination of the 
hearing and receipt of the transcript. Briefs may contain proposed 
fundings of fact and conclusions of law. If permitted, reply briefs may 
be filed no later than 15 days after filing of the posthearing briefs.



Sec. 1386.111  Decisions following hearing.

    (a) If the Assistant Secretary is the presiding officer, he or she 
must issue a decision within 60 days after the time for submission of 
posthearing briefs has expired.
    (b)(1) If the presiding officer is a person designated by the 
Assistant Secretary, he or she must, within 30 days after the time for 
submission of posthearing briefs has expired, certify the entire record 
to the Assistant Secretary including recommended findings and proposed 
decision. The Assistant Secretary must serve a copy of the recommended 
findings and proposed decision upon all parties and amici.
    (2) Any party may, within 20 days, file exceptions to the 
recommended

[[Page 407]]

findings and proposed decision and supporting brief or statement with 
the Assistant Secretary.
    (3) The Assistant Secretary must review the recommended decision 
and, within 60 days of its issuance, issue his or her own decision.
    (c) If the Assistant Secretary concludes:
    (1) In the case of a hearing pursuant to sections 122, 127, or 142 
of the Act, that a State plan or the activities of the State's 
Protection and Advocacy System does not comply with Federal 
requirements, he or she shall also specify whether the State's payment 
or allotment for the fiscal year will not be authorized for the State or 
whether, in the exercise of his or her discretion, the payment or 
allotment will be limited to the parts of the State plan or the 
activities of the State's Protection and Advocacy System not affected by 
the noncompliance.
    (2) In the case of a hearing pursuant to section 127 of the Act that 
the State is not complying with the requirements of the State plan, he 
or she must also specify whether the State's payment or allotment will 
not be made available to the State or whether, in the exercise of his or 
her discretion, the payment or allotment will be limited to the parts of 
the State plan not affected by such noncompliance. The Assistant 
Secretary may ask the parties for recommendations or briefs or may hold 
conferences of the parties on these questions.
    (d) The decision of the Assistant Secretary under this section is 
the final decision of the Secretary and constitutes ``final agency 
action'' within the meaning of 5 U.S.C. 704 and the ``Secretary's 
action'' within the meaning of Section 129 of the Act (42 U.S.C. 6029). 
The Assistant Secretary's decision must be promptly served on all 
parties and amici.

[49 FR 11779, Mar. 27, 1984, as amended at 52 FR 44847, Nov. 20, 1987; 
61 FR 51162, Sept. 30, 1996]



Sec. 1386.112  Effective date of decision by the Assistant Secretary.

    (a) If, in the case of a hearing pursuant to section 122 of the Act, 
the Assistant Secretary concludes that a State plan does not comply with 
Federal requirements, and the decision provides that the payment or 
allotment will be authorized but limited to parts of the State plan not 
affected by such noncompliance, the decision must specify the effective 
date for the authorization of the payment or allotment.
    (b) In the case of a hearing pursuant to sections 127 or 142 of the 
Act, if the Assistant Secretary concludes that the State is not 
complying with the requirements of the State plan or the activities of 
the State's Protection and Advocacy System do not comply with Federal 
requirements, the decision that further payments or allotments will not 
be made to the State, or will be limited to the parts of the State plan 
or activities of the State's Protection and Advocacy System not 
affected, must specify the effective date for withholding payments of 
allotments.
    (c) The effective date may not be earlier than the date of the 
decision of the Assistant Secretary and may not be later than the first 
day of the next calendar quarter.
    (d) The provision of this section may not be waived pursuant to 
Sec. 1386.84.

[49 FR 11779, Mar. 27, 1984, as amended 61 FR 51162, Sept. 30, 1996]



PART 1387--PROJECTS OF NATIONAL SIGNIFICANCE--Table of Contents




    Authority: 42 U.S.C. 6000 et. seq.



Sec. 1387.1  General requirements.

    (a) All projects funded under this part must be of national 
significance and serve or relate to individuals with developmental 
disabilities to comply with section 162 of the Act.
    (b) Based on section 162(d), proposed priorities for grants and 
contracts will be published in the Federal Register and a 60 day period 
for public comments will be allowed.
    (c) The requirements concerning format and content of the 
application, submittal procedures, eligible applicants and final 
priority areas will be published in program announcements in the Federal 
Register.
    (d) Projects of National Significance, including technical 
assistance and data

[[Page 408]]

collection grants, must be exemplary and innovative models and have 
potential for dissemination or knowledge utilization at the local level 
as well as nationally or otherwise meet the goals of part E of the Act.

[54 FR 47985, Nov. 20, 1989, as amended at 61 FR 51163, Sept. 30, 1996]



PART 1388--THE UNIVERSITY AFFILIATED PROGRAMS--Table of Contents




Sec.
1388.1  Definitions.
1388.2  Program criteria--purpose.
1388.3  Program criteria--mission.
1388.4  Program criteria--governance and administration.
1388.5  Program criteria--preparation of personnel.
1388.6  Program criteria--services and supports.
1388.7  Program criteria--dissemination.
1388.8  [Reserved]
1388.9  Peer review.

    Authority: 42 U.S.C. 6063 et. seq.

    Source: 61 FR 51163, Sept. 30, 1996, unless otherwise noted.



Sec. 1388.1  Definitions.

    For purposes of this part:
    Accessible means UAPs are characterized by their program and 
physical accommodation and their demonstrated commitment to the goals of 
the Americans with Disabilities Act.
    Capacity Building means that UAPs utilize a variety of approaches to 
strengthen their university and their local, State, regional and 
National communities. These approaches include, but are not limited to 
such activities as:
    (1) Enriching program depth and breadth, for example, recruiting 
individuals with developmental disabilities and their families, local 
community leaders, additional faculty and students to participate in the 
UAP;
    (2) Acquiring additional resources, for example, grants, space, and 
volunteer manpower; and
    (3) Carrying out systems changes, for example, promoting inclusive 
programming for persons with developmental disabilities across all ages.
    Collaboration means that the UAP cooperates with a wide range of 
persons, systems, and agencies, whether they utilize services of the UAP 
or are involved in UAP planning and programs. These entities include 
individuals with developmental disabilities and family members, as well 
as the State Developmental Disabilities Councils, the Protection and 
Advocacy agencies, other advocacy and disability groups, university 
components, generic and specialized human service agencies, State 
agencies and citizen and community groups. An example of this 
cooperation is the Consumer Advisory Committee, a required element in 
each UAP.
    Cultural Diversity means that UAPs are characterized by their 
commitment to involve individuals with disabilities, family members and 
trainees from diverse cultural backgrounds in all levels of their 
activities. This commitment to cultural diversity means that each UAP 
must assure that individuals from racial and ethnic minority background 
are fully included; that efforts are made to recruit individuals from 
minority backgrounds into the field of developmental disabilities; that 
specific efforts must be made to ensure that individuals from minority 
backgrounds have effective and meaningful opportunities for full 
participation in the developmental disabilities service system; and that 
recruitment efforts at the levels of preservice training, community 
training, practice, administration and policymaking must focus on 
bringing large numbers of racial ethnic minorities into the field in 
order to provide appropriate skills, knowledge, role models, and 
sufficient personnel to address the growing needs of an increasingly 
diverse population.
    Culturally competent means provision of services, supports, or other 
assistance in a manner that is responsive to the beliefs, interpersonal 
styles, attitudes, language and behaviors of individuals who are 
receiving services, and that has the greatest likelihood of ensuring 
their maximum participation in the program.
    Diverse Network means that although each UAP has the same mandates 
under the Act, the expression of these common mandates differs across 
programs. Each UAP must implement these mandates within the context of 
their host university, their location within the university, the needs 
of the

[[Page 409]]

local and State community, the cultural composition of their State, 
their resources and funding sources, and their institutional history. 
These factors converge to create a network of unique and distinct 
programs, bound together by common mandates but enriched by diverse 
composition.
    Interdisciplinary Training means the use of individuals from 
different professional specialties for UAP training and service 
delivery.
    Lifespan Approach means that UAP activities address the needs of 
individuals with disabilities who are of all ages.
    Mandated Core Functions means the UAP must perform:
    (1) Interdisciplinary preservice preparation;
    (2) Community service activities (community training and technical 
assistance); and
    (3) Activities related to dissemination of information and research 
findings.
    Program Criteria means a statement of the Department's expectation 
regarding the direction and desired outcome of the University Affiliated 
Program's operation.
    Research and evaluation means that the UAP refines its activities on 
the basis of evaluation results. As members of the university community, 
involvement in program-relevant research and development of new 
knowledge are important components of UAPs.
    State-of-the-art means that UAP activities are of high quality 
(using the latest technology), worthy of replication (consistent with 
available resources), and systemically evaluated.



Sec. 1388.2  Program criteria--purpose.

    The program criteria will be used to assess the quality of the 
University Affiliated Programs (UAP). The overall purpose of the program 
criteria is to assure the promotion of independence, productivity, 
integration and inclusion of individuals with developmental 
disabilities. Compliance with the program criteria is a prerequisite for 
a UAP to receive the minimum funding level of a UAP. However, compliance 
with the program criteria does not, by itself, assure funding. The 
Program Criteria are one part of the Quality Enhancement System (QES), 
and provide a structure for self-assessment and peer review of each UAP. 
(The QES is a holistic approach to enable persons with developmental 
disabilities and their families to achieve maximum potential. All UAPs 
use the QES.)



Sec. 1388.3  Program criteria--mission.

    (a) Introduction to mission: The UAP is guided by values of 
independence, productivity, integration and inclusion of individuals 
with developmental disabilities and their families. The purpose and 
scope of the activities must be consistent with the Act as amended and 
include the provision of training, service, research and evaluation, 
technical assistance and dissemination of information in a culturally 
competent manner, including the meaningful participation of individuals 
from diverse racial and ethnic backgrounds. (The concept of ``diverse 
network'' as defined in Sec. 1388.1 of this part applies to paragraphs 
(b), (f), (g), and (h) of this section.)
    (b) The UAP must develop a written mission statement that reflects 
its values and promotes the goals of the university in which it is 
located, including training, the development of new knowledge and 
service. The UAP's goals, objectives and activities must be consistent 
with the mission statement.
    (c) The UAP's mission and programs must reflect a life span 
approach, incorporate an interdisciplinary approach and include the 
active participation of individuals with developmental disabilities and 
their families.
    (d) The UAP programs must address the needs of individuals with 
developmental disabilities, including individuals with developmental 
disabilities who are unserved or underserved, in institutions, and on 
waiting lists.
    (e) The UAP's mission must reflect a commitment to culturally 
competent attitudes and practices, which are in response to local 
culture and needs.
    (f) The UAP's mission must reflect its unique role as a bridge 
between university programs, individuals with developmental disabilities 
and their families, service agencies and the larger community.
    (g) The UAP's goals, objectives, and activities must be consistent 
with the

[[Page 410]]

mission statement and use capacity building strategies to address 
State's needs.
    (h) The UAP's goals, objectives, and activities must reflect 
interagency collaborations and strategies to effect systemic change 
within the university and in State and local communities and service 
systems.



Sec. 1388.4  Program criteria--governance and administration.

    (a) Introduction to governance and administration: The UAP must be 
associated with, or an integral part of, a university and promote the 
independence, productivity, integration, and inclusion of individuals 
with developmental disabilities and their families. (The concept of 
``diverse network'' as defined in Sec. 1388.1 of this part applies to 
paragraphs (b), (c), (d), (i), and (l) of this section.)
    (b) The UAP must have a written agreement or charter with the 
university that specifies the UAP designation as an official university 
component, the relationships between the UAP and other university 
components, the university commitment to the UAP, and the UAP commitment 
to the university.
    (c) Within the university, the UAP must maintain the autonomy and 
organizational structure required to carry out the UAP mission and 
provide for the mandated activities.
    (d) The UAP must report directly to a University administrator who 
will represent the interests of the UAP within the University.
    (e) The University must demonstrate its support for the UAP through 
the commitment of financial and other resources.
    (f) UAP senior professional staff must hold faculty appointments in 
appropriate academic departments of the host or an affiliated 
university, consistent with university policy. UAP senior professional 
staff contribute to the university by participation on university 
committees, collaboration with other university departments, and other 
university community activities.
    (g) UAP faculty and staff must represent the broad range of 
disciplines and backgrounds necessary to implement the full inclusion of 
individuals with developmental disabilities in all aspects of society, 
consonant with the spirit of the Americans with Disabilities Act (ADA).
    (h) The UAP must meet the requirements of section 109 of the Act [42 
U.S.C. 6008] regarding affirmative action. The UAP must take affirmative 
action to employ and advance in employment and otherwise treat qualified 
individuals with disabilities without discrimination based upon their 
physical or mental disability in all employment practices.
    (i) The management practices of the UAP, as well as the 
organizational structure, must promote the role of the UAP as a bridge 
between the University and the community. The UAP must actively 
participate in community networks and include a range of collaborating 
partners.
    (j) The UAP's Consumer Advisory Committee must meet regularly. The 
membership of the Consumer Advisory Committee must reflect the racial 
and ethnic diversity of the State or community in which the UAP is 
located. The deliberations of the Consumer Advisory Committee must be 
reflected in UAP policies and programs.
    (k) The UAP must maintain collaborative relationships with the State 
Developmental Disabilities Council and the Protection and Advocacy 
agency. In addition, the UAP must be a member of the State Developmental 
Disabilities Council and participate in Council meetings and activities, 
as prescribed by the Act.
    (l) The UAP must maintain collaborative relationships and be an 
active participant with the UAP network and individuals, organizations, 
State agencies and Universities.
    (m) The UAP must demonstrate the ability to leverage resources.
    (n) The UAP must have adequate space to carry out the mandated 
activities.
    (o) The UAP physical facility and all program initiatives conducted 
by the UAP must be accessible to individuals with disabilities as 
provided for by section 504 of the Rehabilitation Act and Titles II and 
III of the Americans with Disabilities Act.
    (p) The UAP must integrate the mandated core functions into its 
activities

[[Page 411]]

and programs and must have a written plan for each core function area.
    (q) The UAP must have in place a long range planning capability to 
enable the UAP to respond to emergent and future developments in the 
field.
    (r) The UAP must utilize state-of-the-art methods, including the 
active participation of individuals, families and other consumers of UAP 
programs and services to evaluate programs. The UAP must refine and 
strengthen its programs based on evaluation findings.
    (s) The UAP Director must demonstrate commitment to the field of 
developmental disabilities and leadership and vision in carrying out the 
mission of the UAP.



Sec. 1388.5  Program criteria--preparation of personnel.

    (a) Introduction to preparation of personnel: UAP interdisciplinary 
training programs reflect state-of-the-art practices and prepare 
personnel concerned with developmental disabilities to promote the 
independence, productivity, integration and inclusion of individuals 
with developmental disabilities and their families.
    (b) UAP interdisciplinary training programs must be based on 
identified personnel preparation needs and have identified outcomes that 
are consistent with the mission and goals of the UAP.
    (c) The interdisciplinary training process, as defined by the UAP, 
must reflect a mix of students from diverse academic disciplines/
academic programs and cultures that reflect the diversity of the 
community. Faculty represent a variety of backgrounds and specialties, 
including individuals with disabilities and family members, and a 
variety of learning experiences, as well as reflecting the cultural 
diversity of the community. Trainees must receive academic credit as 
appropriate for participation in UAP training programs.
    (d) Preservice training must be integrated into all aspects of the 
UAP, including community training and technical assistance, direct 
services (if provided), and dissemination.
    (e) Trainees must be prepared to serve in a variety of roles, 
including advocacy and systems change. The UAP must encourage graduates 
to work in situations where they will promote the independence, 
productivity, integration and inclusion of individuals with 
developmental disabilities and their families.
    (f) The UAP must influence University curricula to prepare personnel 
who, in their future career in a broad range of social and community 
roles, will contribute to the accommodation and inclusion of individuals 
with developmental disabilities, as mandated in the Americans with 
Disabilities Act.
    (g) The UAP core curriculum must incorporate cultural diversity and 
demonstrate cultural competence. Trainees must be prepared to address 
the needs of individuals with developmental disabilities and their 
families in a culturally competent manner.
    (h) The UAP core curriculum must prepare trainees to be active 
participants in research and dissemination efforts. In addition, the 
curriculum must prepare trainees to be consumers of research as it 
informs practice and policy.



Sec. 1388.6  Program criteria--services and supports.

    (a) Introduction to services and supports: The UAP engages in a 
variety of system interventions and may also engage in a variety of 
individual interventions to promote independence, productivity, 
integration and inclusion of individuals with developmental disabilities 
and their families.
    (b) UAP community training and technical assistance activities must:
    (1) Use capacity building strategies to strengthen the capability of 
communities, systems and service providers;
    (2) Plan collaboratively, including the participation of individuals 
with developmental disabilities and their families;
    (3) Target to a wide range of audiences, including individuals with 
disabilities, family members, service and support personnel, and 
community members;
    (4) Plan and be structured in a manner that facilitates the 
participation of targeted audiences; and
    (5) Address the unique needs of individuals with developmental 
disabilities and their families from diverse cultural and ethnic groups 
who reside within the geographic locale.

[[Page 412]]

    (c) Direct Services. These requirements apply only where direct 
services are offered.
    (1) A UAP must integrate direct services and projects into community 
settings. These services may be provided in a service delivery site or 
training setting within the community including the university. Direct 
service projects may involve interdisciplinary student trainees, 
professionals from various disciplines, service providers, families and/
or administrators. Direct services must be extended, as appropriate, to 
include adult and elderly individuals with developmental disabilities. 
The UAP must maintain cooperative relationships with other community 
service providers, including specialized state and local provider 
agencies.
    (2) Services and projects provided in community-integrated settings 
are to:
    (i) Be scheduled at times and in places that are consistent with 
routine activities within the local community; and
    (ii) Interact with and involve community members, agencies, and 
organizations.
    (3) The bases for the services or project development must be:
    (i) A local or universal need that reflects critical problems in the 
field of developmental disabilities; or
    (ii) An emerging, critical problem that reflects current trends or 
anticipated developments in the field of developmental disabilities.
    (4) State-of-the-art and innovative practices include:
    (i) Services and project concepts and practices that facilitate and 
demonstrate independence for the individual, community integration, 
productivity, and human rights;
    (ii) Practices that are economical, accepted by various disciplines, 
and highly beneficial to individuals with developmental disabilities, 
and that are integrated within services and projects;
    (iii) Innovative cost-effective concepts and practices that are 
evaluated according to accepted practices of scientific evaluation;
    (iv) Research methods that are used to test hypotheses, validate 
procedures, and field test projects; and
    (v) Direct service and project practices and models that are 
evaluated, packaged for replication and disseminated through the 
information dissemination component.



Sec. 1388.7  Program criteria--dissemination.

    (a) Introduction to dissemination: The UAP disseminates information 
and research findings, including the empirical validation of activities 
related to training, best practices, services and supports, and 
contributes to the development of new knowledge. Dissemination 
activities promote the independence, productivity, integration and 
inclusion of individuals with developmental disabilities and their 
families.
    (b) The UAP must be a resource for information for individuals with 
developmental disabilities and their families, community members, State 
agencies and other provider and advocacy organizations, produce a 
variety of products to promote public awareness and visibility of the 
UAP, and facilitate replication of best practices.
    (c) Specific target audiences must be identified for dissemination 
activities and include individuals with developmental disabilities, 
family members, service providers, administrators, policy makers, 
university faculty, researchers, and the general public.
    (d) UAP dissemination activities must be responsive to community 
requests for information and must utilize a variety of networks, 
including State Developmental Disabilities Councils, Protection and 
Advocacy agencies, other University Affiliated Programs, and State 
service systems to disseminate information to target audiences.
    (e) The process of developing and evaluating materials must utilize 
the input of individuals with developmental disabilities and their 
families.
    (f) The values of the UAP must be reflected in the language and 
images used in UAP products.
    (g) Dissemination products must reflect the cultural diversity of 
the community.
    (h) Materials disseminated by the UAP must be available in formats 
accessible to individuals with a wide range of disabilities, and 
appropriate target audiences.

[[Page 413]]

    (i) The UAP must contribute to the development of the knowledge base 
through publications and presentations, including those based on 
research and evaluation conducted at the UAP.



Sec. 1388.8  [Reserved]



Sec. 1388.9  Peer review.

    (a) The purpose of the peer review process is to provide the 
Commissioner, ADD, with technical and qualitative evaluation of UAP 
applications, including on-site visits or inspections as necessary.
    (b) Applications for funding opportunities under part D, Section 152 
of the Act, must be evaluated through the peer review process.
    (c) Panels must be composed of non-Federal individuals who, by 
experience and training, are highly qualified to assess the comparative 
quality of applications for assistance.



                       SUBCHAPTERS J-K [RESERVED]



[[Page 415]]



                 CHAPTER XVI--LEGAL SERVICES CORPORATION




  --------------------------------------------------------------------
Part                                                                Page
1600            Definitions.................................         417
1601

[Reserved]

1602            Procedures for disclosure of information 
                    under the Freedom of Information Act....         417
1603            State Advisory councils.....................         426
1604            Outside practice of law.....................         428
1605            Appeals on behalf of clients................         429
1606            Termination and debarment procedures; 
                    recompetition...........................         429
1607            Governing bodies............................         434
1608            Prohibited political activities.............         437
1609            Fee-generating cases........................         438
1610            Use of non-LSC funds, transfers of LSC 
                    funds, program integrity................         439
1611            Eligibility.................................         441
1612            Restrictions on lobbying and certain other 
                    activities..............................         445
1613            Restrictions on legal assistance with 
                    respect to criminal proceedings.........         448
1614            Private attorney involvement................         449
1615            Restrictions on actions collaterally 
                    attacking criminal convictions..........         454
1616            Attorney hiring.............................         454
1617            Class actions...............................         455
1618            Enforcement procedures......................         456
1619            Disclosure of information...................         457
1620            Priorities in use of resources..............         457
1621            Client grievance procedure..................         459
1622            Public access to meetings under the 
                    Government in the Sunshine Act..........         460
1623            Suspension procedures.......................         463
1624            Prohibition against discrimination on the 
                    basis of handicap.......................         465
1625

[Reserved]

1626            Restrictions on legal assistance to aliens..         469
1627            Subgrants and membership fees or dues.......         474

[[Page 416]]

1628            Recipient fund balances.....................         476
1629            Bonding of recipients.......................         478
1630            Costs standards and procedures..............         480
1631            Expenditure of grant funds..................         486
1632            Redistricting...............................         486
1633            Restriction on representation in certain 
                    eviction proceedings....................         487
1634            Competitive bidding for grants and contracts         487
1635            Timekeeping requirement.....................         492
1636            Client identity and statement of facts......         493
1637            Representation of prisoners.................         494
1638            Restriction on solicitation.................         495
1639            Welfare reform..............................         495
1640            Application of Federal law to LSC recipients         496
1641            Debarment, suspension and removal of 
                    recipient auditors......................         497
1642            Attorneys' fees.............................         505
1643            Restriction on assisted suicide, euthanasia, 
                    and mercy killing.......................         507
1644            Disclosure of case information..............         508

[[Page 417]]



PART 1600--DEFINITIONS--Table of Contents




    Authority: 42 U.S.C. 2996.



Sec. 1600.1  Definitions.

    As used in these regulations, chapter XVI, unless otherwise 
indicated, the term--
    Act means the Legal Services Corporation Act, Pub. L. 93-355 (1974), 
as amended, Pub. L. 95-222 (1977), 42 U.S.C. 2996-29961.
    Appeal means any appellate proceeding in a civil action as defined 
by law or usage in the jurisdiction in which the action is filed.
    Attorney means a person who provides legal assistance to eligible 
clients and who is authorized to practice law in the jurisdiction where 
assistance is rendered.
    Control means the direct or indirect ability to determine the 
direction of management and policies or to influence the management or 
operating policies of another organization to the extent that an arm's-
length transaction may not be achieved.
    Corporation means the Legal Services Corporation established under 
the Act.
    Director of a recipient means a person directly employed by a 
recipient in an executive capacity who has overall day-to-day 
responsibility for management of operations by a recipient.
    Eligible client means any person determined to be eligible for legal 
assistance under the Act, these regulations or other applicable law.
    Employee means a person employed by the Corporation or by a 
recipient, or a person employed by a subrecipient whose salary is paid 
in whole or in major part with funds provided by the Corporation.
    Fee generating case means any case or matter which, if undertaken on 
behalf of an eligible client by an attorney in private practice, 
reasonably may be expected to result in a fee for legal services from an 
award to a client from public funds or from an opposing party.
    Financial assistance means annualized funding from the Corporation 
granted under section 1006(a)(1)(A) for the direct delivery of legal 
assistance to eligible clients.
    Legal assistance means the provisions of any legal services 
consistent with the purposes and provisions of the Act or other 
applicable law.
    Outside practice of law means the provisions of legal assistance to 
a client who is not eligible to receive legal assistance from the 
employer of the attorney rendering assistance, but does not include, 
among other activities, teaching, consulting, or performing evaluations.
    Political means that which relates to engendering public support for 
or opposition to candidates for public office, ballot measures, or 
political parties, and would include publicity or propaganda used for 
that purpose.
    President means the President of the Corporation.
    Public funds means the funds received directly or indirectly from 
the Corporation or a Federal, State, or local government or 
instrumentality of a government.
    Recipient means any grantee or contractor receiving financial 
assistance from the Corporation under section 1006(a)(1)(A) of the Act.
    Staff attorney means an attorney more than one half of whose annual 
professional income is derived from the proceeds of a grant from the 
Legal Services Corporation or is received from a recipient, 
subrecipient, grantee, or contractor that limits its activities to 
providing legal assistance to clients eligible for assistance under the 
Act.
    Tribal funds means funds received from an Indian tribe or from a 
private foundation for the benefit of an Indian tribe.

[49 FR 21327, May 21, 1984, as amended at 51 FR 24827, July 9, 1986]



PART 1602--PROCEDURES FOR DISCLOSURE OF INFORMATION UNDER THE FREEDOM OF INFORMATION ACT--Table of Contents




Sec.
1602.1  Purpose.
1602.2  Definitions.
1602.3  Policy.
1602.4  Records published in the Federal Register.
1602.5  Public reading room.
1602.6  Procedures for use of public reading room.

[[Page 418]]

1602.7  Index of records.
1602.8  Requests for records.
1602.9  Exemptions for withholding records.
1602.10  Officials authorized to grant or deny requests for records.
1602.11  Denials.
1602.12  Appeals of denials.
1602.13  Fees.

    Authority: 42 U.S.C. 2996d(g); 5 U.S.C. 552.

    Source: 63 FR 41196, Aug. 3, 1998, unless otherwise noted.



Sec. 1602.1  Purpose.

    This part contains the rules and procedures the Legal Services 
Corporation follows in making records available to the public under the 
Freedom of Information Act.



Sec. 1602.2  Definitions.

    As used in this part--
    (a) Commercial use request means a request from or on behalf of one 
who seeks information for a use or purpose that furthers the commercial, 
trade, or profit interests of the requester or the person on whose 
behalf the request is made. In determining whether a requester properly 
belongs in this category, the Corporation will look to the use to which 
a requester will put the documents requested. When the Corporation has 
reasonable cause to doubt the requester's stated use of the records 
sought, or where the use is not clear from the request itself, it will 
seek additional clarification before assigning the request to a 
category.
    (b) Duplication means the process of making a copy of a requested 
record pursuant to this part. Such copies can take the form of paper 
copy, microform, audio-visual materials, or machine readable electronic 
documents, among others.
    (c) Educational institution means a preschool, a public or private 
elementary or secondary school, an institution of undergraduate or 
graduate higher education, or an institution of professional or 
vocational education which operates a program or programs of scholarly 
research.
    (d) FOIA means the Freedom of Information Act, 5 U.S.C. 552.
    (e) Non-commercial scientific institution means an institution that 
is not operated on a ``commercial'' basis and which is operated solely 
for the purpose of conducting scientific research, the results of which 
are not intended to promote any particular product or industry.
    (f) Office of Inspector General records means those records as 
defined generally in this section which are exclusively in the 
possession and control of the Office of Inspector General of the Legal 
Services Corporation.
    (g) Records means books, papers, maps, photographs, or other 
documentary materials, regardless of whether the format is physical or 
electronic, made or received by the Corporation in connection with the 
transaction of the Corporation's business and preserved by the 
Corporation as evidence of the organization, functions, policies, 
decisions, procedures, operations, or other activities of the 
Corporation, or because of the informational value of data in them. The 
term does not include, inter alia, books, magazines, or other materials 
acquired solely for library purposes.
    (h) Representative of the news media means any person actively 
gathering news for an entity that is organized and operated to publish 
or broadcast news to the public. The term ``news'' means information 
that is about current events or that would be of current interest to the 
public. Examples of news media entities include television or radio 
stations broadcasting to the public at large and publishers of 
periodicals (but only in those instances when they can qualify as 
disseminators of ``news'') who make their products available for 
purchase or subscription by the general public. These examples are not 
intended to be all-inclusive. Moreover, as traditional methods of news 
delivery evolve (e.g., electronic dissemination of newspapers through 
telecommunications services), such alternative media would be included 
in this category. In the case of ``freelance'' journalists, they will be 
regarded as working for a news organization if they can demonstrate a 
solid basis for expecting publication through that organization, even 
though not actually employed by it.
    (i) Review means the process of examining documents located in 
response to a request to determine whether any

[[Page 419]]

portion of any such document is exempt from disclosure. It also includes 
processing any such documents for disclosure. Review does not include 
time spent resolving general legal or policy issues regarding the 
application of exemptions.
    (j) Search means the process of looking for and retrieving records 
that are responsive to a request for records. It includes page-by-page 
or line-by-line identification of material within documents and also 
includes reasonable efforts to locate and retrieve information from 
records maintained in electronic form or format. Searches may be 
conducted manually or by automated means and will be conducted in the 
most efficient and least expensive manner.



Sec. 1602.3  Policy.

    The Corporation will make records concerning its operations, 
activities, and business available to the public to the maximum extent 
reasonably possible. Records will be withheld from the public only in 
accordance with the FOIA and this part. Records exempt from disclosure 
under the FOIA may be made available as a matter of discretion when 
disclosure is not prohibited by law, and disclosure would not 
foreseeably harm a legitimate interest of the public, the Corporation, a 
recipient, or any individual.



Sec. 1602.4  Records published in the Federal Register.

    The Corporation routinely publishes in the Federal Register 
information on its basic structure and operations necessary to inform 
the public how to deal effectively with the Corporation. The Corporation 
will make reasonable efforts to currently update such information, which 
will include basic information on the Corporation's location, functions, 
rules of procedure, substantive rules, statements of general policy, and 
information regarding how the public may obtain information, make 
submittals or requests, or obtain decisions.



Sec. 1602.5  Public reading room.

    (a) The Corporation will maintain a public reading room at its 
office at 750 First Street, NE., Washington DC 20002-4250. This room 
will be supervised and will be open to the public during the regular 
business hours of the Corporation for inspecting and copying records 
described in paragraph (b) of this section.
    (b) Subject to the limitation stated in paragraph (c) of this 
section, the following records will be made available in the public 
reading room:
    (1) All final opinions, including concurring and dissenting 
opinions, and orders issued in the adjudication of cases;
    (2) Statements of policy and interpretations adopted by the 
Corporation that are not published in the Federal Register;
    (3) Administrative staff manuals and instructions to the staff that 
affect the public or recipients;
    (4) Copies of records, regardless of form or format, released to any 
person in response to a public request for records pursuant to 
Sec. 1602.8 which the Corporation has determined are likely to become 
subject to subsequent requests for substantially the same records, and a 
general index of such records;
    (5) The current index required by Sec. 1602.7;
    (6) To the extent feasible, other records considered to be of 
general interest to recipients or members of the public in understanding 
activities of the Corporation or in dealing with the Corporation in 
connection with those activities.
    (c) Certain records otherwise required by FOIA to be available in 
the public reading room may be exempt from mandatory disclosure pursuant 
to section 552(b) of the FOIA and Sec. 1602.9. Such records will not be 
made available in the public reading room. Other records maintained in 
the public reading room may be edited by the deletion of identifying 
details concerning individuals to prevent a clearly unwarranted invasion 
of personal privacy. In such cases, the record shall have attached to it 
a full explanation of the deletion. The extent of the deletion shall be 
indicated, unless doing so would harm an interest protected by the 
exemption under which the deletion is made. If technically feasible,

[[Page 420]]

the extent of the deletion shall be indicated at the place in the record 
where the deletion was made.
    (d) Records required by the FOIA to be maintained and made available 
in the public reading room that are created by the Corporation on or 
after November 1, 1996, shall be made available electronically. This 
includes the index of published and reading room records, which shall 
indicate which records are available electronically.
    (e) Most electronic public reading room records will also be made 
available to the public on the Corporation's websites at http://
www.lsc.gov and http://oig.lsc.gov.



Sec. 1602.6  Procedures for use of public reading room.

    Any member of the public may inspect or copy records described in 
Sec. 1602.5(b) in the public reading room during regular business hours. 
Because it will sometimes be impossible to produce records or copies of 
records on short notice, a person who wishes to inspect or copy records 
is advised to arrange a time in advance, by telephone or letter request 
made to the Office of the General Counsel. Persons submitting requests 
by telephone will be notified whether a written request would be 
advisable to aid in the identification and expeditious processing of the 
records sought. Written requests should identify the records sought in 
the manner provided in Sec. 1602.8(b) and should request a specific date 
for inspecting the records. The requester will be advised as promptly as 
possible if, for any reason, it may not be possible to make the records 
sought available on the date requested.



Sec. 1602.7  Index of records.

    The Corporation will maintain a current index identifying any matter 
within the scope of Sec. 1602.4 and Sec. 1602.5(b) (1) through (5). The 
index will be maintained and made available for public inspection and 
copying at the Corporation's office in Washington, DC. The cost of a 
copy of the index will not exceed the standard charge for duplication 
set out in Sec. 1602.13(e). The Corporation will also make the index 
available on its websites.



Sec. 1602.8  Requests for records.

    (a) Except for records required by the FOIA to be published in the 
Federal Register (Sec. 1602.4) or to be made available in the public 
reading room (Sec. 1602.5), Corporation records will be made promptly 
available, upon request, to any person in accordance with this section, 
unless it is determined that such records should be withheld and are 
exempt from mandatory disclosure under the FOIA and Sec. 1602.9.
    (b) Requests. Requests for records under this section shall be made 
in writing, with the envelope and the letter or e-mail request clearly 
marked Freedom of Information Request. All such requests shall be 
addressed to the Corporation's Office of the General Counsel. Requests 
by letter shall use the address given in Sec. 1602.5(a). E-mail requests 
shall be addressed to [email protected]. Any request not marked and 
addressed as specified in this paragraph will be so marked by 
Corporation personnel as soon as it is properly identified, and will be 
forwarded immediately to the Office of the General Counsel. A request 
improperly addressed will not be deemed to have been received for 
purposes of the time period set forth in paragraph (i) of this section 
until it has been received by the Office of the General Counsel. Upon 
receipt of an improperly addressed request, the General Counsel or 
designee shall notify the requester of the date on which the time period 
began.
    (c) A request must reasonably describe the records requested so that 
employees of the Corporation who are familiar with the subject area of 
the request are able, with a reasonable amount of effort, to determine 
which particular records are within the scope of the request. If it is 
determined that a request does not reasonably describe the records 
sought, the requester shall be so informed and provided an opportunity 
to confer with Corporation personnel in order to attempt to reformulate 
the request in a manner that will meet the needs of the requester and 
the requirements of this paragraph.
    (d) To facilitate the location of records by the Corporation, a 
requester should try to provide the following kinds of information, if 
known:

[[Page 421]]

    (1) The specific event or action to which the record refers;
    (2) The unit or program of the Corporation which may be responsible 
for or may have produced the record;
    (3) The date of the record or the date or period to which it refers 
or relates;
    (4) The type of record, such as an application, a grant, a contract, 
or a report;
    (5) Personnel of the Corporation who may have prepared or have 
knowledge of the record;
    (6) Citations to newspapers or publications which have referred to 
the record.
    (e) The Corporation is not required to create a record or to perform 
research to satisfy a request.
    (f) Estimated fees. The Corporation shall advise the requester of 
any estimated fees as promptly as possible. The Corporation may require 
that fees be paid in advance, in accordance with Sec. 1602.13(i), and 
the Corporation will advise a requester as promptly as possible if the 
fees are estimated to exceed $25 or any limit indicated by the 
requester.
    (g) Any request for a waiver or reduction of fees should be included 
in the FOIA request, and any such request should indicate the grounds 
for a waiver or reduction of fees, as set out in Sec. 1602.13(f). The 
Corporation shall respond to such request as promptly as possible.
    (h) Format. The Corporation will provide records in the form or 
format indicated by the requester to the extent such records are readily 
reproducible in the requested form or format.
    (i)(1) The General Counsel or designee, upon request for any records 
made in accordance with this section, except in the case of a request 
for Office of Inspector General records, shall make an initial 
determination of whether to comply with or deny such request and 
dispatch such determination to the requester within 20 days (excepting 
Saturdays, Sundays, and legal public holidays) after receipt of such 
request, except for unusual circumstances, in which case the time limit 
may be extended for up to 10 working days by written notice to the 
requester setting forth the reasons for such extension and the date on 
which a determination is expected to be dispatched.
    (2) Initial response/delays. If the General Counsel or designee 
determines that a request or portion thereof is for Office of Inspector 
General records, the General Counsel or designee shall promptly refer 
the request or portion thereof to the Office of Inspector General and 
send notice of such referral to the requester. In such case, the Counsel 
to the Inspector General or designee shall make an initial determination 
of whether to comply with or deny such request and dispatch such 
determination to the requester within 20 working days after receipt of 
such request, except for unusual circumstances, in which case the time 
limit may be extended for up to 10 working days by written notice to the 
requester setting forth the reasons for such extension and the date on 
which a determination is expected to be dispatched.
    (3) Unusual circumstances. As used in this part, ``unusual 
circumstances'' are limited to the following, but only to the extent 
reasonably necessary for the proper processing of the particular 
request:
    (i) The need to search for and collect the requested records from 
establishments that are separate from the office processing the request;
    (ii) The need to search for, collect, and appropriately examine a 
voluminous amount of separate and distinct records which are demanded in 
a single request; or
    (iii) The need for consultation, which shall be conducted with all 
practicable speed, with another agency or organization, such as a 
recipient, having a substantial interest in the determination of the 
request or among two or more components of the Corporation having 
substantial subject matter interest therein.
    (j) If a request is particularly broad or complex so that it cannot 
be completed within the time periods stated in paragraph (i) of this 
section, the Corporation may ask the requester to narrow the request or 
agree to an additional delay.
    (k) When no determination can be dispatched within the applicable 
time limit, the General Counsel or designee or the Counsel to the 
Inspector General

[[Page 422]]

or designee shall inform the requester of the reason for the delay, the 
date on which a determination may be expected to be dispatched, and the 
requester's right to treat the delay as a denial and to appeal to the 
Corporation's President or Inspector General, in accordance with 
Sec. 1602.12. If no determination has been dispatched by the end of the 
20-day period, or the last extension thereof, the requester may deem the 
request denied, and exercise a right of appeal in accordance with 
Sec. 1602.12. The General Counsel or designee or the Counsel to the 
Inspector General or designee may ask the requester to forego appeal 
until a determination is made.
    (l) After it has been determined that a request will be granted, the 
Corporation will act with due diligence in providing a substantive 
response.
    (m)(1) Expedited treatment. Requests and appeals will be taken out 
of order and given expedited treatment whenever the requester 
demonstrates a compelling need. A compelling need means:
    (i) Circumstances in which the lack of expedited treatment could 
reasonably be expected to pose an imminent threat to the life or 
physical safety of an individual;
    (ii) An urgency to inform the public about an actual or alleged 
Corporation or Federal government activity and the request is made by a 
person primarily engaged in disseminating information;
    (iii) The loss of substantial due process rights; or
    (iv) A matter of widespread and exceptional media interest in which 
there exist possible questions about the Corporation's or the Federal 
government's integrity which affect public confidence.
    (2) A request for expedited processing may be made at the time of 
the initial request for records or at any later time. For a prompt 
determination, a request for expedited processing must be properly 
addressed and marked and received by the Corporation pursuant to 
paragraphs (b) of this section.
    (3) A requester who seeks expedited processing must submit a 
statement demonstrating a compelling need that is certified by the 
requester to be true and correct to the best of that person's knowledge 
and belief, explaining in detail the basis for requesting expedited 
processing.
    (4) Within ten calendar days of its receipt of a request for 
expedited processing, the General Counsel or designee or the Inspector 
General or designee shall decide whether to grant the request and shall 
notify the requester of the decision. If a request for expedited 
treatment is granted, the request shall be given priority and shall be 
processed as soon as practicable. If a request for expedited processing 
is denied, any appeal of that decision shall be acted on expeditiously 
by the Corporation.



Sec. 1602.9  Exemptions for withholding records.

    (a) A requested record of the Corporation may be withheld from 
public disclosure only if one or more of the following categories 
exempted by the FOIA apply:
    (1) Matter which is related solely to the internal personnel rules 
and practices of the Corporation;
    (2) Matter which is specifically exempted from disclosure by statute 
(other than the exemptions under FOIA at 5 U.S.C. 552(b)), provided that 
such statute requires that the matters be withheld from the public in 
such a manner as to leave no discretion on the issues, or establishes 
particular criteria for withholding, or refers to particular types of 
matters to be withheld;
    (3) Trade secrets and commercial or financial information obtained 
from a person and privileged or confidential;
    (4) Inter-agency or intra-agency memoranda or letters which would 
not be available by law to a party other than an agency in litigation 
with the Corporation;
    (5) Personnel and medical files and similar files, the disclosure of 
which would constitute a clearly unwarranted invasion of personal 
privacy;
    (6) Records or information compiled for law enforcement purposes 
including enforcing the Legal Services Corporation Act or any other law, 
but only to the extent that the production of such law enforcement 
records or information:
    (i) Could reasonably be expected to interfere with enforcement 
proceedings;

[[Page 423]]

    (ii) Would deprive a person or a recipient of a right to a fair 
trial or an impartial adjudication;
    (iii) Could reasonably be expected to constitute an unwarranted 
invasion of personal privacy;
    (iv) Could reasonably be expected to disclose the identity of a 
confidential source, including a State, local, or foreign agency or 
authority or any private institution which furnished information on a 
confidential basis, and in the case of a record or information compiled 
by a criminal law enforcement authority in the course of a criminal 
investigation, information furnished by a confidential source;
    (v) Would disclose techniques and procedures for law enforcement 
investigations or prosecutions, or would disclose guidelines for law 
enforcement investigations or prosecutions if such disclosure could 
reasonably be expected to risk circumvention of the law; or
    (vi) Could reasonably be expected to endanger the life or physical 
safety of any individual;
    (b) In the event that one or more of the exemptions in paragraph (a) 
of this section apply, any reasonably segregable portion of a record 
shall be provided to the requester after deletion of the portions that 
are exempt. The amount of information deleted shall be indicated on the 
released portion of the record, unless doing so would harm the interest 
protected by the exemption under which the deletion is made. If 
technically feasible, the amount of information deleted shall be 
indicated at the place in the record where the deletion is made. In 
appropriate circumstances, at the discretion of the Corporation 
officials authorized to grant or deny a request for records, and after 
appropriate consultation as provided in Sec. 1602.10, it may be possible 
to provide a requester with:
    (1) A summary of information in the exempt portion of a record; or
    (2) An oral description of the exempt portion of a record.
    (c) No requester shall have a right to insist that any or all of the 
techniques in paragraph (b) of this section should be employed in order 
to satisfy a request.
    (d) Records that may be exempt from disclosure pursuant to paragraph 
(a) of this section may be made available at the discretion of the 
Corporation official authorized to grant or deny the request for 
records, after appropriate consultation as provided in Sec. 1602.10. 
Records may be made available pursuant to this paragraph when disclosure 
is not prohibited by law, and it does not appear adverse to legitimate 
interests of the Corporation, the public, a recipient, or any person.



Sec. 1602.10  Officials authorized to grant or deny requests for records.

    (a) The General Counsel shall furnish necessary advice to 
Corporation officials and staff as to their obligations under this part 
and shall take such other actions as may be necessary or appropriate to 
assure a consistent and equitable application of the provisions of this 
part by and within the Corporation.
    (b) The General Counsel or designee and the Counsel to the Inspector 
General or designee are authorized to grant or deny requests under this 
part. In the absence of a Counsel to the Inspector General, the 
Inspector General shall name a designee who will be authorized to grant 
or deny requests under this part and who will perform all other 
functions of the Counsel to the Inspector General under this part. The 
General Counsel or designee shall consult with the Office of Inspector 
General prior to granting or denying any request for records or portions 
of records which originated with the Office of Inspector General, or 
which contain information which originated with the Office of Inspector 
General, but which are maintained by other components of the 
Corporation. The Counsel to the Inspector General or designee shall 
consult with the Office of the General Counsel prior to granting or 
denying any requests for records.



Sec. 1602.11  Denials.

    (a) A denial of a written request for a record that complies with 
the requirements of Sec. 1602.8 shall be in writing and shall include 
the following:
    (1) A reference to the applicable exemption or exemptions in 
Sec. 1602.9 (a) upon which the denial is based;

[[Page 424]]

    (2) An explanation of how the exemption applies to the requested 
records;
    (3) A statement explaining why it is deemed unreasonable to provide 
segregable portions of the record after deleting the exempt portions;
    (4) An estimate of the volume of requested matter denied unless 
providing such estimate would harm the interest protected by the 
exemption under which the denial is made;
    (5) The name and title of the person or persons responsible for 
denying the request; and
    (6) An explanation of the right to appeal the denial and of the 
procedures for submitting an appeal, including the address of the 
official to whom appeals should be submitted.
    (b) Whenever the Corporation makes a record available subject to the 
deletion of a portion of the record, such action shall be deemed a 
denial of a record for purposes of paragraph (a) of this section.
    (c) All denials shall be treated as final opinions under 
Sec. 1602.5(b).



Sec. 1602.12  Appeals of denials.

    (a) Any person whose written request has been denied is entitled to 
appeal the denial within 90 days by writing to the President of the 
Corporation or, in the case of a denial of a request for Office of 
Inspector General records, the Inspector General, at the addresses given 
in Sec. 1602.5(a) and Sec. 1602.8(b). The envelope and letter or e-mail 
appeal should be clearly marked: ``Freedom of Information Appeal.'' An 
appeal need not be in any particular form, but should adequately 
identify the denial, if possible, by describing the requested record, 
identifying the official who issued the denial, and providing the date 
on which the denial was issued.
    (b) No personal appearance, oral argument, or hearing will 
ordinarily be permitted on appeal of a denial. Upon request and a 
showing of special circumstances, however, this limitation may be waived 
and an informal conference may be arranged with the President or 
designee, or Inspector General or designee, for this purpose.
    (c) The decision of the President or the Inspector General on an 
appeal shall be in writing and, in the event the denial is in whole or 
in part upheld, shall contain an explanation responsive to the arguments 
advanced by the requester, the matters described in Sec. 1602.11(a) (1) 
through (4), and the provisions for judicial review of such decision 
under section 552(a)(4) of the FOIA. The decision shall be dispatched to 
the requester within 20 working days after receipt of the appeal, unless 
an additional period is justified pursuant to Sec. 1602.8(i) and such 
period taken together with any earlier extension does not exceed 10 
days. The decision of the President or the Inspector General shall 
constitute the final action of the Corporation. All such decisions shall 
be treated as final opinions under Sec. 1602.5(b).
    (d) On an appeal, the President or designee shall consult with the 
Office of Inspector General prior to reversing in whole or in part the 
denial of any request for records or portions of records which 
originated with the Office of Inspector General, or which contain 
information which originated with the Office of Inspector General, but 
which are maintained by other components of the Corporation. The 
Inspector General or designee shall consult with the President prior to 
reversing in whole or in part the denial.



Sec. 1602.13  Fees.

    (a) No fees will be charged for information routinely provided in 
the normal course of doing business.
    (b) Fees shall be limited to reasonable standard charges for 
document search, review, and duplication, when records are requested for 
commercial use;
    (c) Fees shall be limited to reasonable standard charges for 
document duplication after the first 100 pages, when records are sought 
by a representative of the news media or by an educational or non-
commercial scientific institution; and
    (d) For all other requests, fees shall be limited to reasonable 
standard charges for search time after the first 2 hours and duplication 
after the first 100 pages.
    (e) The schedule of charges for services regarding the production or 
disclosure of the Corporation's records is as follows:

[[Page 425]]

    (1) Manual search for and review of records will be charged as 
follows:
    (i) Band 1: $10.26 per hour;
    (ii) Band 2: $16.12 per hour;
    (iii) Band 3: $25.22 per hour;
    (iv) Band 4-5: $42 per hour;
    (v) Charges for search and review time less than a full hour will be 
billed by quarter-hour segments;
    (2) Computer time: actual charges as incurred;
    (3) Duplication by paper copy: 10 cents per page;
    (4) Duplication by other methods: actual charges as incurred;
    (5) Certification of true copies: $1.00 each;
    (6) Packing and mailing records: no charge for regular mail;
    (7) Special delivery or express mail: actual charges as incurred.
    (f) Fee waivers. Fees will be waived or reduced below the fees 
established under paragraph (e) of this section if disclosure of the 
information is in the public interest because it is likely to contribute 
significantly to public understanding of the operations or activities of 
the Corporation or Federal government and is not primarily in the 
commercial interest of the requester.
    (1) In order to determine whether disclosure of the information is 
in the public interest because it is likely to contribute significantly 
to public understanding of the operations or activities of the 
Corporation or Federal government, the Corporation will consider the 
following four criteria:
    (i) The subject of the request: Whether the subject of the requested 
records concerns ``the operations or activities of the Corporation or 
the Federal government'';
    (ii) The informative value of the information to be disclosed: 
Whether the disclosure is ``likely to contribute'' to an understanding 
of Corporation or Federal government operations or activities;
    (iii) The contribution to an understanding of the subject by the 
general public likely to result from disclosure: Whether disclosure of 
the requested information will contribute to ``public understanding''; 
and
    (iv) The significance of the contribution to public understanding: 
Whether the disclosure is likely to contribute ``significantly'' to 
public understanding of the Corporation or Federal government operations 
or activities.
    (2) In order to determine whether disclosure of the information is 
not primarily in the commercial interest of the requester, the 
Corporation will consider the following two factors:
    (i) The existence and magnitude of a commercial interest: Whether 
the requester has a commercial interest that would be furthered by the 
requested disclosure; and, if so,
    (ii) The primary interest in disclosure: Whether the magnitude of 
the identified commercial interest of the requester is sufficiently 
large, in comparison with the public interest in disclosure, that 
disclosure is ``primarily in the commercial interest of the requester.''
    (3) These fee waiver/reduction provisions will be subject to appeal 
in the same manner as appeals from denial under Sec. 1602.12.
    (g) No fee will be charged under this section unless the cost of 
routine collection and processing of the fee payment is likely to exceed 
$6.50.
    (h) Requesters must agree to pay all fees charged for services 
associated with their requests. The Corporation will assume that 
requesters agree to pay all charges for services associated with their 
requests up to $25 unless otherwise indicated by the requester. For 
requests estimated to exceed $25, the Corporation will first consult 
with the requester prior to processing the request, and such requests 
will not be deemed to have been received by the Corporation until the 
requester agrees in writing to pay all fees charged for services.
    (i) No requester will be required to make an advance payment of any 
fee unless:
    (1) The requester has previously failed to pay a required fee within 
30 days of the date of billing, in which case an advance deposit of the 
full amount of the anticipated fee together with the fee then due plus 
interest accrued may be required. (The request will not be deemed to 
have been received by the Corporation until such payment is made.); or
    (2) The Corporation determines that an estimated fee will exceed 
$250, in

[[Page 426]]

which case the requester shall be notified of the amount of the 
anticipated fee or such portion thereof as can readily be estimated. 
Such notification shall be transmitted as soon as possible, but in any 
event within 5 working days of receipt by the Corporation, giving the 
best estimate then available. The notification shall offer the requester 
the opportunity to confer with appropriate representatives of the 
Corporation for the purpose of reformulating the request so as to meet 
the needs of the requester at a reduced cost. The request will not be 
deemed to have been received by the Corporation for purposes of the 
initial 20-day response period until the requester makes a deposit on 
the fee in an amount determined by the Corporation.
    (j) Interest may be charged to those requesters who fail to pay the 
fees charged. Interest will be assessed on the amount billed, starting 
on the 31st day following the day on which the billing was sent. The 
rate charged will be as prescribed in 31 U.S.C. 3717.
    (k) If the Corporation reasonably believes that a requester or group 
of requesters is attempting to break a request into a series of requests 
for the purpose of evading the assessment of fees, the Corporation shall 
aggregate such requests and charge accordingly. Likewise, the 
Corporation will aggregate multiple requests for documents received from 
the same requester within 45 days.
    (l) The Corporation reserves the right to limit the number of copies 
that will be provided of any document to any one requester or to require 
that special arrangements for duplication be made in the case of bound 
volumes or other records representing unusual problems of handling or 
reproduction.



PART 1603--STATE ADVISORY COUNCILS--Table of Contents




Sec.
1603.1  Purpose.
1603.2  Definitions.
1603.3  Composition and term of office of council membership.
1603.4  Procedure for appointment of council.
1603.5  Council purpose and duties.
1603.6  Duties of Corporation upon receipt of notification of violation.
1603.7  Organization and procedural functioning of council.
1603.8  Corporation support of council.
1603.9  Annual report of council.
1603.10  Multi-state recipients.

    Authority: Sec. 1004(f), 88 Stat. 379-380 (42 U.S.C. 2996c(f)).

    Source: 40 FR 59351, Dec. 23, 1975, unless otherwise noted.



Sec. 1603.1  Purpose.

    The purpose of this part is to implement section 1004(f) of the 
Legal Services Corporation Act of 1974, 42 U.S.C. 2996c(f), which 
provides authority for the appointment of state advisory councils.



Sec. 1603.2  Definitions.

    As used in this part, the term--
    (a) Act means the Legal Services Corporation Act of 1974, Pub. L. 
93-355, 88 Stat. 378, 42 U.S.C. 2996-2996l;
    (b) Apparent violation means a complaint or other written 
communication alleging facts which, if established, constitute a 
violation of the Act, or any applicable rules, regulations or guidelines 
promulgated pursuant to the Act;
    (c) Board means the Board of Directors of the Legal Services 
Corporation;
    (d) Corporation means the Legal Services Corporation established 
under the Act;
    (e) Council means a state advisory council established pursuant to 
Section 1004(f) of the Act;
    (f) Eligible client means any person financially unable to afford 
legal assistance;
    (g) Governor means the chief executive officer of a State;
    (h) Recipient means any grantee, contractee, or recipient of 
financial assistance described in clause (A) of section 1006(a)(1) of 
the Act;
    (i) State means any State of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, 
American Samoa, the Trust Territory of the Pacific Islands, and any 
other territory or possession of the United States.



Sec. 1603.3  Composition and term of office of council membership.

    A council shall be composed of nine members. A majority of the 
members

[[Page 427]]

of a council shall be attorneys admitted to practice in the State. It is 
recommended that the remainder of the council, to the maximum extent 
possible, be broadly representative of persons concerned with the 
effective functioning of legal services programs. Membership of a 
council shall be subject to annual reappointment, but it is recommended 
that no member of a council be appointed to serve for more than three 
consecutive years.



Sec. 1603.4  Procedure for appointment of council.

    At the formal request of the Board, to be made before January 14, 
1976, the Governor may appoint a council for the State. Those council 
members who are attorneys admitted to practice in the State shall be 
appointed by the Governor after recommendations have been received from 
the State bar association. In making such appointments, it is 
recommended the the Governor consult with other bar associations in the 
State, representatives of groups concerned with the interests of 
recipients, eligible clients and other interested groups. It is 
recommended that the Governor appoint attorneys who have interest in and 
knowledge of the delivery of quality legal services to the poor, and 
that the remaining members of the council, who are not attorneys, be 
selected after the Governor has consulted with representatives of groups 
concerned with the interests of eligible clients. It is recommended that 
the Governor seek recommendations from recipients in the State before 
appointing any members to the council. Sixty days prior to the 
expiration of a member's term, the Governor shall notify those groups 
mentioned in this Section so that their recommendations may be solicited 
for purposes of appointment of a new member or reappointment of an 
incumbent member of the council.



Sec. 1603.5  Council purpose and duties.

    (a) The purpose of the council shall be to notify the Corporation of 
any apparent violation as defined in Sec. 1603.2(b) of this chapter.
    (b) In fulfilling the purpose set forth in paragraph (a) of this 
section, the council shall forward any apparent violation to the 
Corporation. The Chairperson of the council shall inform the 
complainant, the Corporation and the recipient of any action taken on 
the complaint. Notification of an apparent violation forwarded by the 
council to the Corporation shall not necessarily constitute a position 
of the council concerning the apparent violation.
    (c) These procedures are not exclusive. Complaints may be submitted 
to the Corporation, and complaints submitted to a council may be 
submitted to the Corporation without regard to council action. The 
Corporation shall inform the complainant, the council and the recipient 
of all action taken on the complaint.



Sec. 1603.6  Duties of Corporation upon receipt of notification of violation.

    (a) Upon receipt of a notification of an apparent violation, the 
matters contained therein shall be investigated and resolved by the 
Corporation in accordance with the Act and rules and regulations issued 
thereunder.
    (b) Upon receipt from a council of a notification of an apparent 
violation, the Corporation shall allow any recipient affected thereby a 
reasonable time (but in no case less than thirty days) to reply to any 
allegation contained in the notication.
    (c) The Corporation shall inform the Chairperson of a council of the 
action, if any, the Corporation has taken with regard to any 
notification received from such council.



Sec. 1603.7  Organization and procedural functioning of council.

    (a) Within 30 days after the appointment of the council, and 
annually thereafter, the Governor shall send to the Secretary of the 
Corporation in Washington, DC, a list of the members of the council for 
the State that shall include the name, address and telephone number of 
each council member, and indicate which members are attorneys.
    (b) It is recommended that the Governor appoint from among those 
named to the council a Chairperson of the council.
    (c) It is recommended that each council establish at its first 
meeting such fair and reasonable procedures for its operation as it may 
deem necessary

[[Page 428]]

to carry out the purpose set forth in Sec. 1603.5(a) of this chapter. 
The procedures for operation of the council shall include provisions for 
notifying the appropriate regional director of the Corporation of the 
time and place of any meeting of the council.
    (d) It is recommended that a council meet at the call of the 
Chairperson thereof, or at the request to the Chairperson of at least 
four members thereof, at such times as may be necessary to carry out its 
duties, but at least annually.



Sec. 1603.8  Corporation support of council.

    (a) The Corporation shall inform the Chairperson of each council of 
the funds available to the council from the Corporation for actual and 
reasonable expenses incurred by members of the council to pursue council 
business.
    (b) It shall be the duty of the President of the Corporation to keep 
the Chairperson of each council informed of the work of the Corporation.
    (c) The Secretary of the Corporation shall mail annually to each 
recipient the name and address of the Chairperson of the appropriate 
council and a form of notice indicating where complaints may be sent. 
The recipient shall post said name and address of the Chairperson and 
said notice in plain public view in each office of the recipient.



Sec. 1603.9  Annual report of council.

    On or before March 31, 1977, and on or before March 31 of each 
succeeding year, a council shall submit to the Corporation a report of 
the activities of the council during the previous calender year. The 
report may contain comments or suggestions regarding how best to provide 
high quality legal assistance to the poor, and regarding such other 
matters having to do with provision of legal services to eligible 
clients in the State as the council may deem advisable.



Sec. 1603.10  Multi-state recipients.

    Where a recipient has offices in more than one State, the council of 
the State in which the apparent violation occurred has the 
responsibility for notifying the Corporation and the recipient at its 
local and administrative offices.



PART 1604--OUTSIDE PRACTICE OF LAW--Table of Contents




Sec.
1604.1  Purpose.
1604.2  Definitions.
1604.3  General policy.
1604.4  Compensated outside practice.
1604.5  Uncompensated outside practice.

    Authority: Secs. 1007(a)(4), 1008(e) (42 U.S.C. 2996f(a)(4), 
2996g(e)).

    Source: 41 FR 18512, May 5, 1976, unless otherwise noted.



Sec. 1604.1  Purpose.

    This part is designed to permit an attorney to comply with the 
reasonable demands made upon all members of the Bar and officers of the 
Court, so long as those demands do not hinder fulfillment of the 
attorney's overriding responsibility to serve those eligible for 
assistance under the Act.



Sec. 1604.2  Definitions.

    (a) Attorney, as used in this part, means a person who is employed 
full time in legal assistance activities supported in major part by the 
Corporation, and who is authorized to practice law in the jurisdiction 
where assistance is rendered.
    (b) Outside practice of law means the provision of legal assistance 
to a client who is not entitled to receive legal assistance from the 
employer of the attorney rendering assistance, but does not include, 
among other activities, teaching, consulting, or performing evaluation.



Sec. 1604.3  General policy.

    No attorney shall engage in any outside practice of law if the 
director of the recipient has determined that such practice is 
inconsistent with the attorney's full time responsibilities.



Sec. 1604.4  Compensated outside practice.

    A recipient may permit an attorney to engage in the outside practice 
of law for compensation if Sec. 1604.3 is satisfied, and
    (a) The attorney is newly employed and has a professional 
responsibility to

[[Page 429]]

close cases from a previous law practice, and does so as expeditiously 
as possible; or
    (b) The attorney is acting pursuant to an appointment made under a 
court rule or practice of equal applicability to all attorneys in the 
jurisdiction, and remits to the recipient all compensation received.



Sec. 1604.5  Uncompensated outside practice.

    A recipient may permit an attorney to engage in uncompensated 
outside practice of law if Sec. 1604.3 is satisfied, and the attorney is 
acting:
    (a) Pursuant to an appointment made under a court rule or practice 
of equal applicability to all attorneys in the jurisdiction; or on 
behalf of;
    (b) A close friend or family member; or
    (c) A religious, community, or charitable group.



PART 1605--APPEALS ON BEHALF OF CLIENTS--Table of Contents




Sec.
1605.1  Purpose.
1605.2  Definition.
1605.3  Review of Appeals.

    Authority: Secs. 1007(a)(7), 1008(e), 42 U.S.C. 2996f(a)(7), 
2996g(e).

    Source: 41 FR 18513, May 5, 1976, unless otherwise noted.



Sec. 1605.1  Purpose.

    This part is intended to promote efficient and effective use of 
Corporation funds. It does not apply to any case or matter in which 
assistance is not being rendered with funds provided under the Act.



Sec. 1605.2  Definition.

    Appeal means any appellate proceeding in a civil action as defined 
by law or usage in the jurisdiction in which the action is filed.



Sec. 1605.3  Review of Appeals.

    The governing body of a recipient shall adopt a policy and procedure 
for review of every appeal to an appellate court taken from a decision 
of any court or tribunal. The policy adopted shall
    (a) Discourage frivolous appeals, and
    (b) Give appropriate consideration to priorities in resource 
allocation adopted by the governing body, or required by the Act, or 
Regulations of the Corporation; but
    (c) Shall not interfere with the professional responsibilities of an 
attorney to a client.



PART 1606--TERMINATION AND DEBARMENT PROCEDURES; RECOMPETITION--Table of Contents




Sec.
1606.1  Purpose.
1606.2  Definitions.
1606.3  Grounds for a termination.
1606.4  Grounds for debarment.
1606.5  Termination and debarment procedures.
1606.6  Preliminary determination.
1606.7  Informal conference.
1606.8  Hearing.
1606.9  Recommended decision.
1606.10  Final decision.
1606.11  Qualifications on hearing procedures.
1606.12  Time and waiver.
1606.13  Interim and termination funding; reprogramming.
1606.14  Recompetition.

    Authority: 42 U.S.C. 2996e (b)(1) and 2996f(a)(3); Pub. L. 105-119, 
111 Stat. 2440, Secs. 501(b) and (c) and 504; Pub. L. 104-134, 110 Stat. 
1321.

    Source: 63 FR 64643, Nov. 23, 1998, unless otherwise noted.



Sec. 1606.1  Purpose.

    The purpose of this rule is to:
    (a) Ensure that the Corporation is able to take timely action to 
deal with incidents of substantial noncompliance by recipients with a 
provision of the LSC Act, the Corporation's appropriations act or other 
law applicable to LSC funds, a Corporation rule, regulation, guideline 
or instruction, or the terms and conditions of the recipient's grant or 
contract with the Corporation;
    (b) Provide timely and fair due process procedures when the 
Corporation has made a preliminary decision to terminate a recipient's 
LSC grant or contract, or to debar a recipient from receiving future LSC 
awards of financial assistance; and
    (c) Ensure that scarce funds are provided to recipients who can 
provide the

[[Page 430]]

most effective and economical legal assistance to eligible clients.



Sec. 1606.2  Definitions.

    For the purposes of this part:
    (a) Debarment means an action taken by the Corporation to exclude a 
recipient from receiving an additional award of financial assistance 
from the Corporation or from receiving additional LSC funds from another 
recipient of the Corporation pursuant to a subgrant, subcontract or 
similar agreement, for the period of time stated in the final debarment 
decision.
    (b) Knowing and willful means that the recipient had actual 
knowledge of the fact that its action or lack thereof constituted a 
violation and despite such knowledge, undertook or failed to undertake 
the action.
    (c) Recipient means any grantee or contractor receiving financial 
assistance from the Corporation under section 1006(a)(1)(A) of the LSC 
Act.
    (d)(1) Termination means that a recipient's level of financial 
assistance under its grant or contract with the Corporation will be 
reduced in whole or in part prior to the expiration of the term of a 
recipient's current grant or contract. A partial termination will affect 
only the recipient's current year's funding, unless the Corporation 
provides otherwise in the final termination decision.
    (2) A termination does not include:
    (i) A reduction of funding required by law, including a reduction in 
or rescission of the Corporation's appropriation that is apportioned 
among all recipients of the same class in proportion to their current 
level of funding;
    (ii) A reduction or deduction of LSC support for a recipient under 
the Corporation's fund balance regulation at 45 CFR part 1628;
    (iii) A recovery of disallowed costs under the Corporation's 
regulation on costs standards and procedures at 45 CFR part 1630;
    (iv) A withholding of funds pursuant to the Corporation's Private 
Attorney Involvement rule at 45 CFR Part 1614; or
    (v) A reduction of funding of less than 5 percent of a recipient's 
current annual level of financial assistance imposed by the Corporation 
in accordance with regulations promulgated by the Corporation. No such 
reduction shall be imposed except in accordance with regulations 
promulgated by the Corporation.



Sec. 1606.3  Grounds for a termination.

    (a) A grant or contract may be terminated when:
    (1) There has been a substantial violation by the recipient of a 
provision of the LSC Act, the Corporation's appropriations act or other 
law applicable to LSC funds, or Corporation rule, regulation, guideline 
or instruction, or a term or condition of the recipient's grant or 
contract, and the violation occurred less than 5 years prior to the date 
the recipient receives notice of the violation pursuant to 
Sec. 1606.6(a); or
    (2) There has been a substantial failure by the recipient to provide 
high quality, economical, and effective legal assistance, as measured by 
generally accepted professional standards, the provisions of the LSC 
Act, or a rule, regulation, including 45 CFR 1634.9(a)(2), or guidance 
issued by the Corporation.
    (b) A determination of whether there has been a substantial 
violation for the purposes of paragraph (a)(1) of this section will be 
based on consideration of the following criteria:
    (1) The number of restrictions or requirements violated;
    (2) Whether the violation represents an instance of noncompliance 
with a substantive statutory or regulatory restriction or requirement, 
rather than an instance of noncompliance with a non-substantive 
technical or procedural requirement;
    (3) The extent to which the violation is part of a pattern of 
noncompliance with LSC requirements or restrictions;
    (4) The extent to which the recipient failed to take action to cure 
the violation when it became aware of the violation; and
    (5) Whether the violation was knowing and willful.



Sec. 1606.4  Grounds for debarment.

    (a) The Corporation may debar a recipient, on a showing of good 
cause, from receiving an additional award of financial assistance from 
the Corporation.

[[Page 431]]

    (b) As used in paragraph (a) of this section, ``good cause'' means:
    (1) A termination of financial assistance to the recipient pursuant 
to part 1640 of this chapter;
    (2) A termination of financial assistance in whole of the most 
recent grant of financial assistance;
    (3) The substantial violation by the recipient of the restrictions 
delineated in Sec. 1610.2 (a) and (b) of this chapter, provided that the 
violation occurred within 5 years prior to the receipt of the debarment 
notice by the recipient;
    (4) Knowing entry by the recipient into:
    (i) A subgrant, subcontract, or other similar agreement with an 
entity debarred by the Corporation during the period of debarment if so 
precluded by the terms of the debarment; or
    (ii) An agreement for professional services with an IPA debarred by 
the Corporation during the period of debarment if so precluded by the 
terms of the debarment; or
    (5) The filing of a lawsuit by a recipient, provided that the 
lawsuit:
    (i) Was filed on behalf of the recipient as plaintiff, rather than 
on behalf of a client of the recipient;
    (ii) Named the Corporation, or any agency or employee of a Federal, 
State, or local government as a defendant;
    (iii) Seeks judicial review of an action by the Corporation or such 
government agency that affects the recipient's status as a recipient of 
Federal funding, except for a lawsuit that seeks review of whether the 
Corporation or agency acted outside of its statutory authority or 
violated the recipient's constitutional rights; and
    (iv) Was initiated after the effective date of this rule.



Sec. 1606.5  Termination and debarment procedures.

    Before a recipient's grant or contract may be terminated or a 
recipient may be debarred, the recipient will be provided notice and an 
opportunity to be heard as set out in this part.



Sec. 1606.6  Preliminary determination.

    (a) When the Corporation has made a preliminary determination that a 
recipient's grant or contract should be terminated and/or that a 
recipient should be debarred, the Corporation employee who has been 
designated by the President as the person to bring such actions 
(hereinafter referred to as the ``designated employee'') shall issue a 
written notice to the recipient and the Chairperson of the recipient's 
governing body. The notice shall:
    (1) State the grounds for the proposed action;
    (2) Identify, with reasonable specificity, any facts or documents 
relied upon as justification for the proposed action;
    (3) Inform the recipient of the proposed sanctions;
    (4) Advise the recipient of its right to request:
    (i) An informal conference under Sec. 1606.7; and
    (ii) a hearing under Sec. 1606.8; and
    (5) Inform the recipient of its right to receive interim funding 
pursuant to Sec. 1606.13.
    (b) If the recipient does not request an informal conference or a 
hearing within the time prescribed in Sec. 1606.7(a) or Sec. 1606.8(a), 
the preliminary determination shall become final.



Sec. 1606.7  Informal conference.

    (a) A recipient may submit a request for an informal conference 
within 30 days of its receipt of the proposed decision.
    (b) Within 5 days of receipt of the request, the designated employee 
shall notify the recipient of the time and place the conference will be 
held.
    (c) The designated employee shall conduct the informal conference.
    (d) At the informal conference, the designated employee and the 
recipient shall both have an opportunity to state their case, seek to 
narrow the issues, and explore the possibilities of settlement or 
compromise.
    (e) The designated employee may modify, withdraw, or affirm the 
preliminary determination in writing, a copy of which shall be provided 
to the recipient within 10 days of the conclusion of the informal 
conference.



Sec. 1606.8  Hearing.

    (a) The recipient may make written request for a hearing within 30 
days of

[[Page 432]]

its receipt of the preliminary determination or within 15 days of 
receipt of the written determination issued by the designated employee 
after the conclusion of the informal conference.
    (b) Within 10 days after receipt of a request for a hearing, the 
Corporation shall notify the recipient in writing of the date, time and 
place of the hearing and the names of the hearing officer and of the 
attorney who will represent the Corporation. The time, date and location 
of the hearing may be changed upon agreement of the Corporation and the 
recipient.
    (c) A hearing officer shall be appointed by the President or 
designee and may be an employee of the Corporation. The hearing officer 
shall not have been involved in the current termination or debarment 
action and the President or designee shall determine that the person is 
qualified to preside over the hearing as an impartial decision maker. An 
impartial decision maker is a person who has not formed a prejudgment on 
the case and does not have a pecuniary interest or personal bias in the 
outcome of the proceeding.
    (d) The hearing shall be scheduled to commence at the earliest 
appropriate date, ordinarily not later than 30 days after the notice 
required by paragraph (b) of this section.
    (e) The hearing officer shall preside over and conduct a full and 
fair hearing, avoid delay, maintain order, and insure that a record 
sufficient for full disclosure of the facts and issues is maintained.
    (f) The hearing shall be open to the public unless, for good cause 
and the interests of justice, the hearing officer determines otherwise.
    (g) The Corporation and the recipient shall be entitled to be 
represented by counsel or by another person.
    (h) At the hearing, the Corporation and the recipient each may 
present its case by oral or documentary evidence, conduct examination 
and cross-examination of witnesses, examine any documents submitted, and 
submit rebuttal evidence.
    (i) The hearing officer shall not be bound by the technical rules of 
evidence and may make any procedural or evidentiary ruling that may help 
to insure full disclosure of the facts, to maintain order, or to avoid 
delay. Irrelevant, immaterial, repetitious or unduly prejudicial matter 
may be excluded.
    (j) Official notice may be taken of published policies, rules, 
regulations, guidelines, and instructions of the Corporation, of any 
matter of which judicial notice may be taken in a Federal court, or of 
any other matter whose existence, authenticity, or accuracy is not open 
to serious question.
    (k) A stenographic or electronic record shall be made in a manner 
determined by the hearing officer, and a copy shall be made available to 
the recipient at no cost.
    (l) The Corporation shall have the initial burden to show grounds 
for a termination or debarment. The burden of persuasion shall then 
shift to the recipient to show by a preponderance of evidence on the 
record that its funds should not be terminated or that it should not be 
disbarred.



Sec. 1606.9  Recommended decision.

    (a) Within 20 calendar days after the conclusion of the hearing, the 
hearing officer shall issue a written recommended decision which may:
    (1) Terminate financial assistance to the recipient as of a specific 
date; or
    (2) Continue the recipient's current grant or contract, subject to 
any modification or condition that may be deemed necessary on the basis 
of information adduced at the hearing; and/or
    (3) Debar the recipient from receiving an additional award of 
financial assistance from the Corporation.
    (b) The recommended decision shall contain findings of the 
significant and relevant facts and shall state the reasons for the 
decision. Findings of fact shall be based solely on the record of, and 
the evidence adduced at the hearing or on matters of which official 
notice was taken.



Sec. 1606.10  Final decision.

    (a) If neither the Corporation nor the recipient requests review by 
the President, a recommended decision shall become final 10 calendar 
days after receipt by the recipient.
    (b) The recipient or the Corporation may seek review by the 
President of a recommended decision. A request shall

[[Page 433]]

be made in writing within 10 days after receipt of the recommended 
decision by the party seeking review and shall state in detail the 
reasons for seeking review.
    (c) The President's review shall be based solely on the information 
in the administrative record of the termination or debarment proceedings 
and any additional submissions, either oral or in writing, that the 
President may request. A recipient shall be given a copy of and an 
opportunity to respond to any additional submissions made to the 
President. All submissions and responses made to the President shall 
become part of the administrative record.
    (d) As soon as practicable after receipt of the request for review 
of a recommended decision, but not later than 30 days after the request 
for review, the President may adopt, modify, or reverse the recommended 
decision, or direct further consideration of the matter. In the event of 
modification or reversal, the President's decision shall conform to the 
requirements of Sec. 1606.9(b).
    (e) The President's decision shall become final upon receipt by the 
recipient.



Sec. 1606.11  Qualifications on hearing procedures.

    (a) Except as modified by paragraph (c) of this section, the hearing 
rights set out in Secs. 1606.6 through 1606.10 shall apply to any action 
to debar a recipient or to terminate a recipient's funding.
    (b) The Corporation may simultaneously take action to debar and 
terminate a recipient within the same hearing procedure that is set out 
in Secs. 1606.6 through 1606.10 of this part. In such a case, the same 
hearing officer shall oversee both the termination and debarment 
actions.
    (c) If the Corporation does not simultaneously take action to debar 
and terminate a recipient under paragraph (b) of this section and 
initiates a debarment action based on a prior termination under 
Sec. 1606.4(b)(1) or (2), the hearing procedures set out in Sec. 1606.6 
through 1606.10 shall not apply. Instead:
    (1) The President shall appoint a hearing officer, as described in 
Sec. 1606.8(c), to review the matter and make a written recommended 
decision on debarment.
    (2) The hearing officer's recommendation shall be based solely on 
the information in the administrative record of the termination 
proceedings providing grounds for the debarment and any additional 
submissions, either oral or in writing, that the hearing officer may 
request. The recipient shall be given a copy of and an opportunity to 
respond to any additional submissions made to the hearing officer. All 
submissions and responses made to the hearing officer shall become part 
of the administrative record.
    (3) If neither party appeals the hearing officer's recommendation 
within 10 days of receipt of the recommended decision, the decision 
shall become final.
    (4) Either party may appeal the recommended decision to the 
President who shall review the matter and issue a final written decision 
pursuant to Sec. 1606.9(b).
    (d) All final debarment decisions shall state the effective date of 
the debarment and the period of debarment, which shall be commensurate 
with the seriousness of the cause for debarment but shall not be for 
longer than 6 years.
    (e) The Corporation may reverse a debarment decision upon request 
for the following reasons:
    (1) Newly discovered material evidence;
    (2) Reversal of the conviction or civil judgment upon which the 
debarment was based;
    (3) Bona fide change in ownership or management of a recipient;
    (4) Elimination of other causes for which the debarment was imposed; 
or
    (5) Other reasons the Corporation deems appropriate.



Sec. 1606.12  Time and waiver.

    (a) Except for the 6-year time limit for debarments in 
Sec. 1606.11(c), any period of time provided in these rules may, upon 
good cause shown and determined, be extended:
    (1) By the designated employee who issued the preliminary decision 
until a hearing officer has been appointed;
    (2) By the hearing officer, until the recommended decision has been 
issued;
    (3) By the President at any time.

[[Page 434]]

    (b) Failure by the Corporation to meet a time requirement of this 
part does not preclude the Corporation from terminating a recipient's 
grant or contract with the Corporation.



Sec. 1606.13  Interim and termination funding; reprogramming.

    (a) Pending the completion of termination proceedings under this 
part, the Corporation shall provide the recipient with the level of 
financial assistance provided for under its current grant or contract 
with the Corporation.
    (b) After a final decision has been made to terminate a recipient's 
grant or contract, the recipient loses all rights to the terminated 
funds.
    (c) After a final decision has been made to terminate a recipient's 
grant or contract, the Corporation may authorize termination funding if 
necessary to enable the recipient to close or transfer current matters 
in a manner consistent with the recipient's professional 
responsibilities to its present clients.
    (d) Funds recovered by the Corporation pursuant to a termination 
shall be used in the same service area from which they were recovered or 
will be reallocated by the Corporation for basic field purposes.



Sec. 1606.14  Recompetition.

    After a final decision has been issued by the Corporation 
terminating financial assistance to a recipient in whole for any service 
area, the Corporation shall implement a new competitive bidding process 
for the affected service area. Until a new recipient has been awarded a 
grant pursuant to such process, the Corporation shall take all practical 
steps to ensure the continued provision of legal assistance in the 
service area pursuant to Sec. 1634.11.



PART 1607--GOVERNING BODIES--Table of Contents




Sec.
1607.1  Purpose.
1607.2  Definitions.
1607.3  Composition.
1607.4  Functions of a governing body.
1607.5  Compensation.
1607.6  Waiver.

    Authority: 42 U.S.C. 2996f(c); Pub. L. 103-317.

    Source: 59 FR 65254, Dec. 19, 1994, unless otherwise noted.



Sec. 1607.1  Purpose.

    This part is designed to insure that the governing body of a 
recipient will be well qualified to guide a recipient in its efforts to 
provide high-quality legal assistance to those who otherwise would be 
unable to obtain adequate legal counsel and to insure that the recipient 
is accountable to its clients.



Sec. 1607.2  Definitions.

    As used in this part,
    (a) Attorney member means a board member who is an attorney admitted 
to practice in a State within the recipient's service area.
    (b) Board member means a member of a recipient's governing body or 
policy body.
    (c) Eligible client member means a board member who is financially 
eligible to receive legal assistance under the Act and part 1611 of this 
chapter at the time of appointment to each term of office to the 
recipient's governing body, without regard to whether the person 
actually has received or is receiving legal assistance at that time. 
Eligibility of client members shall be determined by the recipient or, 
if the recipient so chooses, by the appointing organization(s) or 
group(s) in accordance with written policies adopted by the recipient.
    (d) Governing body means the board of directors or other body with 
authority to govern the activities of a recipient receiving funds under 
Sec. 1006(a)(1)(A) of the Act.
    (e) Policy body means a policy board or other body established by a 
recipient to formulate and enforce policy with respect to the services 
provided under a grant or contract made under the Act.
    (f) Recipient means any grantee or contractor receiving financial 
assistance from the Corporation under Sec. 1006(a)(1)(A) of the Act.



Sec. 1607.3  Composition.

    (a) A recipient shall be incorporated in a State in which it 
provides legal assistance and shall have a governing body which 
reasonably reflects the interests of the eligible clients in the

[[Page 435]]

area served and which consists of members, each of whom is supportive of 
the purposes of the Act and has an interest in, and knowledge of, the 
delivery of quality legal services to the poor.
    (b) At least sixty percent (60%) of a governing body shall be 
attorney members.
    (1) A majority of the members of the governing body shall be 
attorney members appointed by the governing body(ies) of one or more 
State, county or municipal bar associations, the membership of which 
represents a majority of attorneys practicing law in the localities in 
which the recipient provides legal assistance.
    (i) Appointments may be made either by the bar association which 
represents a majority of attorneys in the recipient's service area or by 
bar associations which collectively represent a majority of the 
attorneys practicing law in the recipient's service area.
    (ii) Recipients that provide legal assistance in more than one State 
may provide that appointments of attorney members be made by the 
appropriate bar association(s) in the State(s) or locality(ies) in which 
the recipient's principal office is located or in which the recipient 
provides legal assistance.
    (2) Any additional attorney members may be selected by the 
recipient's governing body or may be appointed by other organizations 
designated by the recipient which have an interest in the delivery of 
legal services to the poor.
    (3) Appointments shall be made so as to insure that the attorney 
members reasonably reflect the diversity of the legal community and the 
population of the areas served by the recipient, including race, 
ethnicity, gender and other similar factors.
    (c) At least one-third of the members of a recipient's governing 
body shall be eligible clients when appointed. The members who are 
eligible clients shall be appointed by a variety of appropriate groups 
designated by the recipient that may include, but are not limited to, 
client and neighborhood associations and community-based organizations 
which advocate for or deliver services or resources to the client 
community served by the recipient. Recipients shall designate groups in 
a manner that reflects, to the extent possible, the variety of interests 
within the client community, and eligible client members should be 
selected so that they reasonably reflect the diversity of the eligible 
client population served by the recipient, including race, gender, 
ethnicity and other similar factors.
    (d) The remaining members of a governing body may be appointed by 
the recipient's governing body or selected in a manner described in the 
recipient's bylaws or policies, and the appointment or selection shall 
be made so that the governing body as a whole reasonably reflects the 
diversity of the areas served by the recipient, including race, 
ethnicity, gender and other similar factors.
    (e) The nonattorney members of a governing body shall not be 
dominated by persons serving as the representatives of a single 
association, group or organization, except that eligible client members 
may be selected from client organizations that are composed of 
coalitions of numerous smaller or regionally based client groups.
    (f) Members of a governing body may be selected by appointment, 
election, or other means consistent with this part and with the 
recipient's bylaws and applicable State law.
    (g) Recipients shall make reasonable and good faith efforts to 
insure that governing body vacancies are filled as promptly as possible.
    (h) Recipients may recommend candidates for governing body 
membership to the appropriate bar associations and other appointing 
groups and should consult with the appointing organizations to insure 
that:
    (1) Appointees meet the criteria for board membership set out in 
this part, including financial eligibility for persons appointed as 
eligible clients, bar admittance requirements for attorney board 
members, and the general requirements that all members be supportive of 
the purposes of the Act and have an interest in and knowledge of the 
delivery of legal services to the poor;
    (2) The particular categories of board membership and the board as a 
whole meet the diversity requirements described in Secs. 1607.3(b)(3), 
1607.3(c) and 1607.3(d);

[[Page 436]]

    (3) Appointees do not have actual and significant individual or 
institutional conflicts of interest with the recipient or the 
recipient's client community that could reasonably be expected to 
influence their ability to exercise independent judgment as members of 
the recipient's governing body.



Sec. 1607.4  Functions of a governing body.

    (a) A governing body shall have at least four meetings a year. A 
recipient shall give timely and reasonable prior public notice of all 
meetings, and all meetings shall be public except for those concerned 
with matters properly discussed in executive session in accordance with 
written policies adopted by the recipient's governing body.
    (b) In addition to other powers and responsibilities that may be 
provided for by State law, a governing body shall establish and enforce 
broad policies governing the operation of a recipient, but neither the 
governing body nor any member thereof shall interfere with any 
attorney's professional responsibilities to a client or obligations as a 
member of the profession or interfere with the conduct of any ongoing 
representation.
    (c) A governing body shall adopt bylaws which are consistent with 
State law and the requirements of this part. Recipients shall submit a 
copy of such bylaws to the Corporation and shall give the Corporation 
notice of any changes in such bylaws within a reasonable time after the 
change is made.



Sec. 1607.5  Compensation.

    (a) While serving on the governing body of a recipient, no attorney 
member shall receive compensation from that recipient, but any member 
may receive a reasonable per diem expense payment or reimbursement for 
actual expenses for normal travel and other reasonable out-of-pocket 
expenses in accordance with written policies adopted by the recipient.
    (b) Pursuant to a waiver granted under Sec. 1607.6(b)(1), a 
recipient may adopt policies that would permit partners or associates of 
attorney members to participate in any compensated private attorney 
involvement activities supported by the recipient.
    (c) A recipient may adopt policies that permit attorney members, 
subject to terms and conditions applicable to other attorneys in the 
service area:
    (1) To accept referrals of fee-generating cases under part 1609 of 
these regulations;
    (2) To participate in any uncompensated private attorney involvement 
activities supported by the recipient;
    (3) To seek and accept attorneys' fees awarded by a court or 
administrative body or included in a settlement in cases undertaken 
pursuant to Secs. 1607.5 (c) (1) and (2); and
    (4) To receive reimbursement from the recipient for out-of-pocket 
expenses incurred by the attorney member as part of the activities 
undertaken pursuant to Sec. 1607.5(c)(2).

[59 FR 65254, Dec. 19, 1994, as amended at 60 FR 2330, Jan. 9, 1995]



Sec. 1607.6  Waiver.

    (a) Upon application, the president shall waive the requirements of 
this part to permit a recipient that was funded under Sec. 222(a)(3) of 
the Economic Opportunity Act of 1964 and, on July 25, 1974, had a 
majority of persons who were not attorneys on its governing body, to 
continue such nonattorney majority.
    (b) Upon application, the president may waive any of the 
requirements of this part which are not mandated by applicable law if a 
recipient demonstrates that it cannot comply with them because of: (1) 
The nature of the population, legal community or area served; or (2) 
Special circumstances, including but not limited to, conflicting 
requirements of the recipient's other major funding source(s) or State 
law.
    (c) A recipient seeking a waiver under Sec. 1607.6(b)(1) shall 
demonstrate that it has made diligent efforts to comply with the 
requirements of this part.
    (d) As a condition of granting a waiver under Sec. 1607.6(b)(2) of 
any of the requirements imposed upon governing bodies by Sec. 1607.3, 
the president shall require that a recipient have a policy body with a 
membership composed and appointed in the manner prescribed by 
Sec. 1607.3. Such policy body shall be subject to the meeting 
requirements of

[[Page 437]]

Sec. 1607.4(a) and its attorney members shall be subject to the 
restrictions on compensation contained in Sec. 1607.5. The policy body 
shall have such specific powers and responsibilities as the President 
determines are necessary to enable it to formulate and enforce policy 
with respect to the services provided under the recipient's LSC grant or 
contract.



PART 1608--PROHIBITED POLITICAL ACTIVITIES--Table of Contents




Sec.
1608.1  Purpose.
1608.2  Definition.
1608.3  Prohibitions applicable to the Corporation and to recipients.
1608.4  Prohibitions applicable to all employees.
1608.5  Prohibitions applicable to Corporation employees and staff 
          attorneys.
1608.6  Prohibitions applicable to attorneys and to staff attorneys.
1608.7  Attorney-client relationship.
1608.8  Enforcement.

    Authority: Secs. 1001(5), 1005(b)(2), 1006(b)(3), 1006(b)(5)(B), 
1006(d)(3), 1006 (d)(4), 1006(e)(1), 1006(e)(2), 1007(a)(6), 1007(b)(2); 
42 U.S.C. 2996(5), 2996d(b)(2), 2996e(b)(3), 2996e(b)(5)(B), 
2996e(d)(3), 2996e(d)(4), 2996e(e)(1), 2996e(e)(2), 2996f(a)(6), 
2996(b)(2).

    Source: 43 FR 32773, July 28, 1978, unless otherwise noted.



Sec. 1608.1  Purpose.

    This part is designed to insure that the Corporation's resources 
will be used to provide high quality legal assistance and not to support 
or promote political activities or interests. The part should be 
construed and applied so as to further this purpose without infringing 
upon the constitutional rights of employees or the professional 
responsibilities of attorneys to their clients.



Sec. 1608.2  Definition.

    Legal assistance activities, as used in this part, means any 
activity.
    (a) Carried out during an employee's working hours;
    (b) Using resources provided by the Corporation or by a recipient; 
or
    (c) That, in fact, provides legal advice, or representation to an 
eligible client.



Sec. 1608.3  Prohibitions applicable to the Corporation and to recipients.

    (a) Neither the Corporation nor any recipient shall use any 
political test or qualification in making any decision, taking any 
action, or performing any function under the act.
    (b) Neither the Corporation nor any recipient shall contribute or 
make available Corporation funds, or any personnel or equipment
    (1) To any political party or association;
    (2) To the campaign of any candidate for public or party office; or
    (3) For use in advocating or opposing any ballot measure, 
initiative, or referendum.



Sec. 1608.4  Prohibitions applicable to all employees.

    (a) No employee shall intentionally identify the Corporation or a 
recipient with any partisian or nonpartisan political activity, or with 
the campaign of any candidate for public or party office.
    (b) No employee shall use any Corporation funds for activities 
prohibited to attorneys under Sec. 1608.6; nor shall an employee 
intentionally identify or encourage others to identify the Corporation 
or a recipient with such activities.



Sec. 1608.5  Prohibitions applicable to Corporation employees and to staff attorneys.

    While employed under the act, no Corporation employee and no staff 
attorney shall, at any time,
    (a) Use official authority or influence for the purpose of 
interfering with or affecting the result of an election or nomination 
for office, whether partisan of nonpartisan;
    (b) Directly or indirectly coerce, attempt to coerce, command or 
advise an employee of the Corporation or of any recipient to pay, lend, 
or contribute anything of value to a political party, or committee, 
organization, agency or person for political purposes; or
    (c) Be a candidate for partisan elective public office.

[[Page 438]]



Sec. 1608.6  Prohibitions applicable to attorneys and to staff attorneys.

    While engaged in legal assistance activities supported under the 
act, no attorney shall engage in
    (a) Any political activity,
    (b) Any activity to provide voters with transportation to the polls, 
or to provide similar assistance in connection with an election, or
    (c) Any voter registration activity.



Sec. 1608.7  Attorney-client relationship.

    Nothing in this part is intended to prohibit an attorney or staff 
attorney from providing any form of legal assistance to an eligible 
client, or to interfere with the fulfillment of any attorney's 
professional responsibilities to a client.



Sec. 1608.8  Enforcement.

    This part shall be enforced according to the procedures set forth in 
Sec. 1612.5.



PART 1609--FEE-GENERATING CASES--Table of Contents




Sec.
1609.1  Purpose.
1609.2  Definition.
1609.3  General requirements.
1609.4  Recipient policies, procedures and recordkeeping.

    Authority: 42 U.S.C. 2996f(b)(1) and 2996e(c)(6).

    Source: 62 FR 19399, Apr. 21, 1997, unless otherwise noted.



Sec. 1609.1  Purpose.

    This part is designed:
    (a) To ensure that recipients do not use scarce legal services 
resources when private attorneys are available to provide effective 
representation and
    (b) To assist eligible clients to obtain appropriate and effective 
legal assistance.



Sec. 1609.2  Definition.

    (a) Fee-generating case means any case or matter which, if 
undertaken on behalf of an eligible client by an attorney in private 
practice, reasonably may be expected to result in a fee for legal 
services from an award to a client, from public funds or from the 
opposing party.
    (b) Fee-generating case does not include a case where:
    (1) A court appoints a recipient or an employee of a recipient to 
provide representation in a case pursuant to a statute or a court rule 
or practice equally applicable to all attorneys in the jurisdiction, or
    (2) A recipient undertakes representation under a contract with a 
government agency or other entity.



Sec. 1609.3   General requirements.

    (a) Except as provided in paragraph (b) of this section, a recipient 
may not provide legal assistance in a fee-generating case unless:
    (1) The case has been rejected by the local lawyer referral service, 
or by two private attorneys; or
    (2) Neither the referral service nor two private attorneys will 
consider the case without payment of a consultation fee.
    (b) A recipient may provide legal assistance in a fee-generating 
case without first attempting to refer the case pursuant to paragraph 
(a) of this section only when:
    (1) An eligible client is seeking benefits under Subchapter II of 
the Social Security Act, 42 U.S.C. 401 et seq., as amended, Federal Old 
Age, Survivors, and Disability Insurance Benefits; or Subchapter XVI of 
the Social Security Act, 42 U.S.C. 1381 et seq., as amended, 
Supplemental Security Income for Aged, Blind, and Disabled;
    (2) The recipient, after consultation with appropriate 
representatives of the private bar, has determined that the type of case 
is one that private attorneys in the area served by the recipient 
ordinarily do not accept, or do not accept without prepayment of a fee; 
or
    (3) The director of the recipient, or the director's designee, has 
determined that referral of the case to the private bar is not possible 
because:
    (i) Documented attempts to refer similar cases in the past generally 
have been futile;
    (ii) Emergency circumstances compel immediate action before referral 
can be made, but the client is advised that, if appropriate, and 
consistent with professional responsibility, referral will be attempted 
at a later time; or

[[Page 439]]

    (iii) Recovery of damages is not the principal object of the 
recipient's client's case and substantial statutory attorneys' fees are 
not likely to be available.
    (c) Recipients should refer to 45 CFR part 1642 for restrictions on 
claiming, or collecting and retaining attorneys' fees.



Sec. 1609.4  Recipient policies, procedures and recordkeeping.

    Each recipient shall adopt written policies and procedures to guide 
its staff in complying with this part and shall maintain records 
sufficient to document the recipient's compliance with this part.



PART 1610--USE OF NON-LSC FUNDS, TRANSFERS OF LSC FUNDS, PROGRAM INTEGRITY--Table of Contents




Sec.
1610.1  Purpose.
1610.2  Definitions.
1610.3  Prohibition.
1610.4  Authorized use of non-LSC funds.
1610.5  Notification.
1610.6  Applicability.
1610.7  Transfers of LSC funds.
1610.8  Program integrity of recipient.
1610.9  Accounting.

    Authority: 42 U.S.C. 2996i; Pub. L. 104-208, 110 Stat. 3009; Pub. L. 
104-134, 110 Stat. 1321.

    Source: 62 FR 27698, May 21, 1997, unless otherwise noted.



Sec. 1610.1  Purpose.

    This part is designed to implement statutory restrictions on the use 
of non-LSC funds by LSC recipients and to ensure that no LSC-funded 
entity shall engage in any restricted activities and that recipients 
maintain objective integrity and independence from organizations that 
engage in restricted activities.



Sec. 1610.2  Definitions.

    (a) Purpose prohibited by the LSC Act means any activity prohibited 
by the following sections of the LSC Act and those provisions of the 
Corporation's regulations that implement such sections of the Act:
    (1) Sections 1006(d)(3), 1006(d)(4), 1007(a)(6), and 1007(b)(4) of 
the LSC Act and 45 CFR part 1608 of the LSC Regulations (Political 
activities);
    (2) Section 1007(a)(10) of the LSC Act (Activities inconsistent with 
professional responsibilities);
    (3) Section 1007(b)(1) of the LSC Act and 45 CFR part 1609 of the 
LSC regulations (Fee-generating cases);
    (4) Section 1007(b)(2) of the LSC Act and 45 CFR part 1613 of the 
LSC Regulations (Criminal proceedings);
    (5) Section 1007(b)(3) of the LSC Act and 45 CFR part 1615 of the 
LSC Regulations (Actions challenging criminal convictions);
    (6) Section 1007(b)(7) of the LSC Act and 45 CFR part 1612 of the 
LSC Regulations (Organizing activities);
    (7) Section 1007(b)(8) of the LSC Act (Abortions);
    (8) Section 1007(b)(9) of the LSC Act (School desegregation); and
    (9) Section 1007(b)(10) of the LSC Act (Violations of Military 
Selective Service Act or military desertion).
    (b) Activity prohibited by or inconsistent with Section 504 means 
any activity prohibited by, or inconsistent with the requirements of, 
the following sections of 110 Stat. 1321 (1996) and those provisions of 
the Corporation's regulations that implement those sections:
    (1) Section 504(a)(1) and 45 CFR part 1632 of the LSC Regulations 
(Redistricting);
    (2) Sections 504(a) (2) through (6), as modified by Sections 504 (b) 
and (e), and 45 CFR part 1612 of the LSC Regulations (Legislative and 
administrative advocacy);
    (3) Section 504(a)(7) and 45 CFR part 1617 of the LSC Regulations 
(Class actions);
    (4) Section 504(a)(8) and 45 CFR part 1636 of the LSC Regulations 
(Client identification and statement of facts);
    (5) Section 504(a)(9) and 45 CFR part 1620 of the LSC Regulations 
(Priorities);
    (6) Section 504(a)(10) and 45 CFR part 1635 of the LSC Regulations 
(Timekeeping);
    (7) Section 504(a)(11) and 45 CFR part 1626 of the LSC Regulations 
(Aliens);
    (8) Section 504(a)(12) and 45 CFR part 1612 of the LSC Regulations 
(Public policy training);

[[Page 440]]

    (9) Section 504(a)(13) and 45 CFR part 1642 of the LSC Regulations 
(Attorneys' fees);
    (10) Section 504(a)(14) (Abortion litigation);
    (11) Section 504(a)(15) and 45 CFR part 1637 of the LSC Regulations 
(Prisoner litigation);
    (12) Section 504(a)(16), as modified by Section 504(e), and 45 CFR 
part 1639 of the LSC Regulations (Welfare reform);
    (13) Section 504(a)(17) and 45 CFR part 1633 of the LSC Regulations 
(Drug-related evictions); and
    (14) Section 504(a)(18) and 45 CFR part 1638 of the LSC Regulations 
(In-person solicitation).
    (c) IOLTA funds means funds derived from programs established by 
State court rules or legislation that collect and distribute interest on 
lawyers' trust accounts.
    (d) Non-LSC funds means funds derived from a source other than the 
Corporation.
    (e) Private funds means funds derived from an individual or entity 
other than a governmental source or LSC.
    (f) Public funds means non-LSC funds derived from a Federal, State, 
or local government or instrumentality of a government. For purposes of 
this part, IOLTA funds shall be treated in the same manner as public 
funds.
    (g) Transfer means a payment of LSC funds by a recipient to a person 
or entity for the purpose of conducting programmatic activities that are 
normally conducted by the recipient, such as the representation of 
eligible clients, or that provide direct support to the recipient's 
legal assistance activities. Transfer does not include any payment of 
LSC funds to vendors, accountants or other providers of goods and 
services made by the recipient in the normal course of business.
    (h) Tribal funds means funds received from an Indian tribe or from a 
private nonprofit foundation or organization for the benefit of Indians 
or Indian tribes.



Sec. 1610.3  Prohibition.

    A recipient may not use non-LSC funds for any purpose prohibited by 
the LSC Act or for any activity prohibited by or inconsistent with 
Section 504, unless such use is authorized by Secs. 1610.4, 1610.6 or 
1610.7 of this part.



Sec. 1610.4  Authorized use of non-LSC funds.

    (a) A recipient may receive tribal funds and expend them in 
accordance with the specific purposes for which the tribal funds were 
provided.
    (b) A recipient may receive public or IOLTA funds and use them in 
accordance with the specific purposes for which they were provided, if 
the funds are not used for any activity prohibited by or inconsistent 
with Section 504.
    (c) A recipient may receive private funds and use them in accordance 
with the purposes for which they were provided, provided that the funds 
are not used for any activity prohibited by the LSC Act or prohibited or 
inconsistent with Section 504.
    (d) A recipient may use non-LSC funds to provide legal assistance to 
an individual who is not financially eligible for services under part 
1611 of this chapter, provided that the funds are used for the specific 
purposes for which those funds were provided and are not used for any 
activity prohibited by the LSC Act or prohibited by or inconsistent with 
Section 504.



Sec. 1610.5  Notification.

    (a) Except as provided in paragraph (b) of this section, no 
recipient may accept funds from any source other than the Corporation, 
unless the recipient provides to the source of the funds written 
notification of the prohibitions and conditions which apply to the 
funds.
    (b) A recipient is not required to provide such notification for 
receipt of contributions of less than $250.



Sec. 1610.6  Applicability.

    Notwithstanding Sec. 1610.7(a), the prohibitions referred to in 
Secs. 1610.2(a)(4) (Criminal proceedings), (a)(5) (Actions challenging 
criminal convictions), (b)(7) (Aliens) or (b)(11) (Prisoner litigation) 
of this part will not apply to:
    (a) A recipient's or subrecipient's separately funded public 
defender program or project; or
    (b) Criminal or related cases accepted by a recipient or 
subrecipient pursuant to a court appointment.

[[Page 441]]



Sec. 1610.7  Transfers of LSC funds.

    (a) If a recipient transfers LSC funds to another person or entity, 
the prohibitions and requirements referred to in this part, except as 
modified by paragraphs (b) and (c) of this section, will apply both to 
the LSC funds transferred and to the non-LSC funds of the person or 
entity to whom those funds are transferred.
    (b)(1) In regard to the requirement in Sec. 1610.2(b)(5) on 
priorities, persons or entities receiving a transfer of LSC funds shall 
either:
    (i) Use the funds transferred consistent with the recipient's 
priorities; or
    (ii) Establish their own priorities for the use of the funds 
transferred consistent with 45 CFR part 1620;
    (2) In regard to the requirement in Sec. 1610.2(b)(6) on 
timekeeping, persons or entities receiving a transfer of LSC funds are 
required to maintain records of time spent on each case or matter 
undertaken with the funds transferred.
    (c) For a transfer of LSC funds to bar associations, pro bono 
programs, private attorneys or law firms, or other entities for the sole 
purpose of funding private attorney involvement activities (PAI) 
pursuant to 45 CFR part 1614, the prohibitions or requirements of this 
part shall apply only to the funds transferred.



Sec. 1610.8  Program integrity of recipient.

    (a) A recipient must have objective integrity and independence from 
any organization that engages in restricted activities. A recipient will 
be found to have objective integrity and independence from such an 
organization if:
    (1) The other organization is a legally separate entity;
    (2) The other organization receives no transfer of LSC funds, and 
LSC funds do not subsidize restricted activities; and
    (3) The recipient is physically and financially separate from the 
other organization. Mere bookkeeping separation of LSC funds from other 
funds is not sufficient. Whether sufficient physical and financial 
separation exists will be determined on a case-by-case basis and will be 
based on the totality of the facts. The presence or absence of any one 
or more factors will not be determinative. Factors relevant to this 
determination shall include but will not be limited to:
    (i) The existence of separate personnel;
    (ii) The existence of separate accounting and timekeeping records;
    (iii) The degree of separation from facilities in which restricted 
activities occur, and the extent of such restricted activities; and
    (iv) The extent to which signs and other forms of identification 
which distinguish the recipient from the organization are present.
    (b) Each recipient's governing body must certify to the Corporation 
within 180 days of the effective date of this part that the recipient is 
in compliance with the requirements of this section. Thereafter, the 
recipient's governing body must certify such compliance to the 
Corporation on an annual basis.



Sec. 1610.9  Accounting.

    Funds received by a recipient from a source other than the 
Corporation shall be accounted for as separate and distinct receipts and 
disbursements in a manner directed by the Corporation.



PART 1611--ELIGIBILITY--Table of Contents




Sec.
1611.1  Purpose.
1611.2  Definitions.
1611.3  Maximum income level.
1611.4  Authorized exceptions.
1611.5  Determination of eligibility.
1611.6  Asset ceilings.
1611.7  Manner of determining eligibility.
1611.8  Retainer agreement.
1611.9  Change in circumstances.

Appendix A of Part 1611--Legal Services Corporation 2002 Poverty 
          Guidelines

    Authority: Secs. 1006(b)(1), 1007(a)(1), Legal Services Corporation 
Act of 1974; 42 U.S.C. 2996e(b)(1), 2996f(a)(1), 2996f(a)(2)).

    Source: 48 FR 54205, Nov. 30, 1983, unless otherwise noted.



Sec. 1611.1  Purpose.

    This part is designed to ensure that a recipient will determine 
eligibility according to criteria that give preference to the legal 
needs of those least able to obtain legal assistance, and afford 
sufficient latitude for a recipient to consider local circumstances and 
its own

[[Page 442]]

resource limitations. The part also seeks to ensure that eligibility is 
determined in a manner conducive to development of an effective 
attorney-client relationship.



Sec. 1611.2  Definitions.

    Governmental program for the poor means any Federal, State or local 
program that provides benefits of any kind to persons whose eligibility 
is determined on the basis of financial need.
    Income means actual current annual total cash receipts before taxes 
of all persons who are resident members of, and contribute to, the 
support of a family unit.
    Total cash receipts include money wages and salaries before any 
deduction, but do not include food or rent in lieu of wages; income from 
self-employment after deductions for business or farm expenses; regular 
payments from public assistance; social security; unemployment and 
worker's compensation; strike benefits from union funds; veterans 
benefits; training stipends; alimony, child support and military family 
allotments or other regular support from an absent family member or 
someone not living in the household; public or private employee 
pensions, and regular insurance or annuity payments; and income from 
dividends, interest, rents, royalties or from estates and trusts. They 
do not include money withdrawn from a bank, tax refunds, gifts, 
compensation and/or one-time insurance payments for injuries sustained, 
and non-cash benefits.



Sec. 1611.3  Maximum income level.

    (a) Every recipient shall establish a maximum annual income level 
for persons to be eligible to receive legal assistance under the Act.
    (b) Unless specifically authorized by the Corporation, a recipient 
shall not establish a maximum annual income level that exceeds one 
hundred and twenty-five percent (125 percent) of the current official 
Federal Poverty Income Guidelines. The maximum annual income levels are 
set forth in Appendix A.
    (c) Before establishing its maximum income level, a recipient shall 
consider relevant factors including:
    (1) Cost-of-living in the locality;
    (2) The number of clients who can be served by the resources of the 
recipient;
    (3) The population who would be eligible at and below alternative 
income levels; and
    (4) The availability and cost of legal services provided by the 
private bar in the area.
    (d) Unless authorized by Sec. 1611.4, no person whose income exceeds 
the maximum annual income level established by a recipient shall be 
eligible for legal assistance under the Act.
    (e) This part does not prohibit a recipient from providing legal 
assistance to a client whose annual income exceeds the maximum income 
level established here, if the assistance provided the client is 
supported by funds from a source other than the Corporation.



Sec. 1611.4  Authorized exceptions.

    (a) A person whose gross income exceeds the maximum income level 
established by a recipient but does not exceed 150 percent of the 
national eligibility level (125% of poverty) may be provided legal 
assistance under the Act if:
    (1) The person's circumstances require that eligibility should be 
allowed on the basis of one or more of the factors set forth in 
Sec. 1611.5(b)(1); or
    (2) The person is seeking legal assistance to secure benefits 
provided by a governmental program for the poor.
    (b) In the event that a recipient determines to serve a person whose 
gross income exceeds 125% of poverty, that decision shall be documented 
and included in the client's file. The recipient shall keep such other 
records as will provide information to the Corporation as to the number 
of clients so served and the factual bases for the decisions made.



Sec. 1611.5  Determination of eligibility.

    (a) The governing body of a recipient shall adopt guidelines, 
consistent with these regulations, for determining the eligibility of 
persons seeking legal assistance under the Act. By January 30, 1984, and 
annually thereafter, guidelines shall be reviewed and appropriate 
adjustments made.

[[Page 443]]

    (b) In addition to gross income, a recipient shall consider the 
other relevant factors listed in paragraphs (b)(1) and (b)(2) of this 
section before determining whether a person is eligible to receive legal 
assistance.
    (1) Factors which shall be used in the determination of the 
eligibility of clients over the maximum income level shall include:
    (A) Current income prospects, taking into account seasonal 
variations in income;
    (B) Medical expenses, and in exceptional instances, with the prior, 
written approval of the project director based on written documentation 
received by the recipient and available for review by the Corporation, 
if a person's gross income is primarily committed to medical or nursing 
home expenses, a person may be served even if that person's gross income 
exceeds 150 percent of the national eligibility level;
    (C) Fixed debts and obligations, including unpaid Federal, state and 
local taxes from prior years;
    (D) Child care, transportation, and other expenses necessary for 
employment;
    (E) Expenses associated with age or physical infirmity of resident 
family members; and
    (F) Other significant factors related to financial inability to 
afford legal assistance.
    (2) Factors which shall be used in the determination of the 
eligibility of clients under the maximum income level shall include:
    (A) Current income prospects, taking into account seasonal 
variations in income;
    (B) The availability of private legal representation at a low cost 
with respect to the particular matter in which assistance is sought;
    (C) The consequences for the individual if legal assistance is 
denied;
    (D) The existence of assets, including both liquid and nonliquid, 
which are available to the applicant and are in excess of the asset 
ceiling set by the recipient pursuant to Sec. 1611.6;
    (E) Other significant factors related to financial inability to 
afford legal assistance, which may include evidence of a prior 
administrative or judicial determination that the person's present lack 
of income results from refusal or unwillingness, without good cause, to 
seek or accept suitable employment.
    (3)(A) If a recipient tentatively determines to serve a client over 
the maximum income level on the basis of factors listed in 
Sec. 1611.5(b)(1), the factors listed in Sec. 1611.5(b)(2) shall also be 
used before reaching a final determination.
    (B) If a recipient tentatively determines not to serve a client 
under the maximum income level on the basis of factors listed in 
Sec. 1611.5(b)(2), the factors listed in Sec. 1611.5(b)(1) must also be 
used before reaching a final determination.
    (c) A recipient may provide legal assistance to a group, 
corporation, or association if it is primarily composed of persons 
eligible for legal assistance under the Act and if it provides 
information showing that it lacks, and has no practical means of 
obtaining, funds to retain private counsel.



Sec. 1611.6  Asset ceilings.

    (a) By January 30, 1984, and annually thereafter, the governing body 
of the recipient shall establish and transmit to the Corporation 
guidelines incorporating specific and reasonable asset ceilings, 
including both liquid and non-liquid assets, to be utilized in 
determining eligibility for services. The guidelines shall consider the 
economy of the service area and the relative cost-of-living of low-
income persons so as to ensure the availability of services to those in 
the greatest economic and legal need.
    (b) The guidelines shall be consistent with the recipient's 
priorities established in accordance with 45 CFR 1620 and special 
consideration shall be given to the legal needs of the elderly, 
institutionalized, and handicapped.
    (c) Assets considered shall include all liquid and non-liquid assets 
of all persons who are resident members of a family unit, except that a 
recipient may exclude the principal residence of a client. The 
guidelines shall take into account impediments to an individual's access 
to assets of the family unit or household.
    (d) Reasonable equity value in work-related equipment which is 
essential to the employment or self-employment of

[[Page 444]]

an applicant or member of a family unit, shall not be utilized to 
disqualify an applicant, provided that the owner is attempting to 
produce income consistent with its fair market value.
    (e) The governing body may establish authority for the project 
director to waive the ceilings on minimum allowable assets in unusual or 
extremely meritorious situations. In the event that a waiver is granted, 
that decision shall be documented and included in the client's file. The 
recipient shall keep such other records as will provide information to 
the Corporation as to the number of clients so served and the factual 
basis for the decisions made.



Sec. 1611.7  Manner of determining eligibility.

    (a) A recipient shall adopt a simple form and procedure to obtain 
information to determine eligibility in a manner that promotes the 
development of trust between attorney and client. The form and procedure 
adopted shall be subject to approval by the Corporation, and the 
information obtained shall be preserved, in a manner that protects the 
identity of the client, for audit by the Corporation.
    (b) If there is substantial reason to doubt the accuracy of the 
information, a recipient shall make appropriate inquiry to verify it, in 
a manner consistent with an attorney-client relationship.
    (c) Information furnished to a recipient by a client to establish 
financial eligibility shall not be disclosed to any person who is not 
employed by the recipient in a manner that permits identification of the 
client, without express written consent of the client, except that the 
recipient shall provide such information to the Corporation when:
    (1) The Corporation is investigating allegations that question the 
financial eligibility of a previously identified client and the 
recipient's representation thereof;
    (2) The information sought by the Corporation relates solely to the 
financial eligibility of that particular client;
    (3) The information sought by the Corporation is necessary to 
confirm or deny specific allegations relating to that particular 
client's financial eligibility and the recipient's representation 
thereof; and
    (4) The specific information sought by the Corporation is not 
protected by the attorney-client privilege.

The information provided to the Corporation by the recipient shall not 
be disclosed to any person who is not employed by the Corporation. Prior 
to providing the information to the Corporation, the recipient shall 
notify the client that the recipient is required to provide to the 
Corporation the information sought.



Sec. 1611.8  Retainer agreement.

    (a) A recipient shall execute a written retainer agreement, in a 
form approved by the Corporation, with each client who receives legal 
services from the recipient. The retainer agreement shall be executed 
when representation commences (or, if not possible owing to an emergency 
situation, as soon thereafter as is practicable), and shall clearly 
identify the relationship between the client and the recipient, the 
matter in which representation is sought, the nature of the legal 
services to be provided, and the rights and responsibilities of the 
client. The recipient shall retain the executed retainer agreement as 
part of the client's file, and shall make the agreement available for 
review by the Corporation in a manner which protects the identity of the 
client.
    (b) A recipient is not required to execute a written retainer 
agreement when the only service to be provided is brief advice and 
consultation.



Sec. 1611.9  Change in circumstances.

    If an eligible client becomes ineligible through a change in 
circumstances, a recipient shall discontinue representation if the 
change in circumstances is sufficiently likely to continue for the 
client to afford private legal assistance, and discontinuation is not 
inconsistent with the attorney's professional responsibilities.

[[Page 445]]

    Appendix A to Part 1611--Legal Services Corporation 2002 Poverty 
                               Guidelines*

           Legal Services Corporation 2002 Poverty Guidelines*
------------------------------------------------------------------------
                                48 contiguous
                               States and the
     Size of family unit         District of   Alaska \ii\  Hawaii \iii\
                                Columbia \i\
------------------------------------------------------------------------
1............................         $11,075     $13,850      $12,750
2............................          14,925      18,663       17,175
3............................          18,775      23,475       21,600
4............................          22,625      28,288       26,025
5............................          26,475      33,100       30,450
6............................          30,325      37,913       34,875
7............................          34,175      42,725       39,300
8............................          38,025      47,538      43,725
------------------------------------------------------------------------
* The figures in this table represent 125% of the poverty guidelines by
  family size as determined by the Department of Health and Human
  Services.
\i\ For family units with more than eight members, add $3,850 for each
  additional member in a family.
\ii\ For family units with more than eight members, add $4,813 for each
  additional member in a family.
\iii\ For family units with more than eight members, add $4,425 for each
  additional member in a family.


[67 FR 8484, Feb. 25, 2002]



PART 1612--RESTRICTIONS ON LOBBYING AND CERTAIN OTHER ACTIVITIES--Table of Contents




Sec.
1612.1  Purpose.
1612.2  Definitions.
1612.3  Prohibited legislative and administrative activities.
1612.4  Grassroots lobbying.
1612.5  Permissible activities using any funds.
1612.6  Permissible activities using non-LSC funds.
1612.7  Public demonstrations and activities.
1612.8  Training.
1612.9  Organizing.
1612.10  Recordkeeping and accounting for activities funded with non-LSC 
          funds.
1612.11  Recipient policies and procedures.

    Authority: Pub. L. 104-208, 110 Stat. 3009; Pub. L. 104-134, 110 
Stat. 1321, secs. 504(a) (2), (3), (4), (5), (6), and (12), 504 (b) and 
(e); 42 U.S.C. 2996e(b)(5), 2996f(a) (5) and (6), 2996f(b) (4), (6) and 
(7), and 2996g(e).

    Source: 62 FR 19404, Apr. 21, 1997, unless otherwise noted.



Sec. 1612.1  Purpose.

    The purpose of this part is to ensure that LSC recipients and their 
employees do not engage in certain prohibited activities, including 
representation before legislative bodies or other direct lobbying 
activity, grassroots lobbying, participation in rulemaking, public 
demonstrations, advocacy training, and certain organizing activities. 
The part also provides guidance on when recipients may participate in 
public rulemaking or in efforts to encourage State or local governments 
to make funds available to support recipient activities, and when they 
may respond to requests of legislative and administrative officials.



Sec. 1612.2  Definitions.

    (a) (1) Grassroots lobbying means any oral, written or 
electronically transmitted communication or any advertisement, telegram, 
letter, article, newsletter, or other printed or written matter or 
device which contains a direct suggestion to the public to contact 
public officials in support of or in opposition to pending or proposed 
legislation, regulations, executive decisions, or any decision by the 
electorate on a measure submitted to it for a vote. It also includes the 
provision of financial contributions by recipients to, or participation 
by recipients in, any demonstration, march, rally, fundraising drive, 
lobbying campaign, letter writing or telephone campaign for the purpose 
of influencing the course of such legislation, regulations, decisions by 
administrative bodies, or any decision by the electorate on a measure 
submitted to it for a vote.
    (2) Grassroots lobbying does not include communications which are 
limited solely to reporting on the content or status of, or explaining, 
pending or proposed legislation or regulations.
    (b) (1) Legislation means any action or proposal for action by 
Congress or by a State or local legislative body which is intended to 
prescribe law or public policy. The term includes, but is not limited 
to, action on bills, constitutional amendments, ratification of treaties 
and intergovernmental agreements, approval of appointments and budgets, 
and approval or disapproval of actions of the executive.
    (2) Legislation does not include those actions of a legislative body 
which adjudicate the rights of individuals under existing laws; nor does 
it include legislation adopted by an Indian Tribal Council.

[[Page 446]]

    (c) Public policy means an overall plan embracing the general goals 
and procedures of any governmental body and pending or proposed 
statutes, rules, and regulations.
    (d) (1) Rulemaking means any agency process for formulating, 
amending, or repealing rules, regulations or guidelines of general 
applicability and future effect issued by the agency pursuant to 
Federal, State or local rulemaking procedures, including:
    (i) The customary procedures that are used by an agency to formulate 
and adopt proposals for the issuance, amendment or revocation of 
regulations or other statements of general applicability and future 
effect, such as negotiated rulemaking and ``notice and comment'' 
rulemaking procedures under the Federal Administrative Procedure Act or 
similar procedures used by State or local government agencies; and
    (ii) Adjudicatory proceedings that are formal adversarial 
proceedings to formulate or modify an agency policy of general 
applicability and future effect.
    (2) Rulemaking does not include:
    (i) Administrative proceedings that produce determinations that are 
of particular, rather than general, applicability and affect only the 
private rights, benefits or interests of individuals, such as Social 
Security hearings, welfare fair hearings, or granting or withholding of 
licenses;
    (ii) Communication with agency personnel for the purpose of 
obtaining information, clarification, or interpretation of the agency's 
rules, regulations, guidelines, policies or practices.
    (e) Public rulemaking means any rulemaking proceeding or portion of 
such proceeding or procedure that is open to the public through notices 
of proposed rulemaking published in the Federal Register or similar 
State or local journals, announcements of public hearings on proposed 
rules or notices of proposed rulemaking including those that are 
routinely sent to interested members of the public, or other similar 
notifications to members of the public;
    (f) Similar procedure refers to a legislative process by which 
matters must be determined by a vote of the electorate.

[62 FR 19404, Apr. 21, 1997; 62 FR 22895, Apr. 28, 1997]



Sec. 1612.3  Prohibited legislative and administrative activities.

    (a) Except as provided in Secs. 1612.5 and 1612.6, recipients shall 
not attempt to influence:
    (1) The passage or defeat of any legislation or constitutional 
amendment;
    (2) Any initiative, or any referendum or any similar procedure of 
the Congress, any State legislature, any local council, or any similar 
governing body acting in any legislative capacity;
    (3) Any provision in a legislative measure appropriating funds to, 
or defining or limiting the functions or authority of, the recipient or 
the Corporation; or,
    (4) The conduct of oversight proceedings concerning the recipient or 
the Corporation.
    (b) Except as provided in Secs. 1612.5 and 1612.6, recipients shall 
not participate in or attempt to influence any rulemaking, or attempt to 
influence the issuance, amendment or revocation of any executive order.
    (c) Recipients shall not use any funds to pay for any personal 
service, advertisement, telegram, telephone communication, letter, 
printed or written matter, administrative expense, or related expense 
associated with an activity prohibited in paragraphs (a) and (b) in this 
section.



Sec. 1612.4  Grassroots lobbying.

    A recipient shall not engage in any grassroots lobbying.



Sec. 1612.5  Permissible activities using any funds.

    (a) A recipient may provide administrative representation for an 
eligible client in a proceeding that adjudicates the particular rights 
or interests of such eligible client or in negotiations directly 
involving that client's legal rights or responsibilities, including pre-
litigation negotiation and negotiation in the course of litigation.
    (b) A recipient may initiate or participate in litigation 
challenging agency rules, regulations, guidelines or

[[Page 447]]

policies, unless such litigation is otherwise prohibited by law or 
Corporation regulations.
    (c) Nothing in this part is intended to prohibit a recipient from:
    (1) Applying for a governmental grant or contract;
    (2) Communicating with a governmental agency for the purpose of 
obtaining information, clarification, or interpretation of the agency's 
rules, regulations, practices, or policies;
    (3) Informing clients, other recipients, or attorneys representing 
eligible clients about new or proposed statutes, executive orders, or 
administrative regulations;
    (4) Communicating directly or indirectly with the Corporation for 
any purpose including commenting upon existing or proposed Corporation 
rules, regulations, guidelines, instructions and policies;
    (5) Permitting its employees to participate in bar association 
activities, provided that recipient resources are not used to support 
and the recipient is not identified with activities of bar associations 
that are devoted to activities prohibited by this part.
    (6) Advising a client of the client's right to communicate directly 
with an elected official; or
    (7) Participating in activity related to the judiciary, such as the 
promulgation of court rules, rules of professional responsibility and 
disciplinary rules.



Sec. 1612.6  Permissible activities using non-LSC funds.

    (a) If the conditions of paragraphs (b) and (c) of this section are 
met, recipients and their employees may use non-LSC funds to respond to 
a written request from a governmental agency or official thereof, 
elected official, legislative body, committee, or member thereof made to 
the employee, or to a recipient to:
    (1) Testify orally or in writing;
    (2) Provide information which may include analysis of or comments 
upon existing or proposed rules, regulations or legislation, or drafts 
of proposed rules, regulations or legislation; or
    (3) Participate in negotiated rulemaking under the Negotiated 
Rulemaking Act of 1990, 5 U.S.C. 561, et seq., or comparable State or 
local laws.
    (b) Communications made in response to requests under paragraph (a) 
may be distributed only to the party or parties that made the request 
and to other persons or entities only to the extent that such 
distribution is required to comply with the request.
    (c) No employee of the recipient shall solicit or arrange for a 
request from any official to testify or otherwise provide information in 
connection with legislation or rulemaking.
    (d) Recipients shall maintain copies of all written requests 
received by the recipient and written responses made in response thereto 
and make such requests and written responses available to monitors and 
other representatives of the Corporation upon request.
    (e) Recipients may use non-LSC funds to provide oral or written 
comment to an agency and its staff in a public rulemaking proceeding.
    (f) Recipients may use non-LSC funds to contact or communicate with, 
or respond to a request from, a State or local government agency, a 
State or local legislative body or committee, or a member thereof, 
regarding funding for the recipient, including a pending or proposed 
legislative or agency proposal to fund such recipient.



Sec. 1612.7  Public demonstrations and activities.

    (a) During working hours, while providing legal assistance or 
representation to the recipient's clients or while using recipient 
resources provided by the Corporation or by private entities, no person 
shall:
    (1) Participate in any public demonstration, picketing, boycott, or 
strike, except as permitted by law in connection with the employee's own 
employment situation; or
    (2) Encourage, direct, or coerce others to engage in such 
activities.
    (b) No employee of a recipient shall at any time engage in or 
encourage others to engage in any:
    (1) Rioting or civil disturbance;
    (2) Activity determined by a court to be in violation of an 
outstanding injunction of any court of competent jurisdiction; or

[[Page 448]]

    (3) Other illegal activity that is inconsistent with an employee's 
responsibilities under applicable law, Corporation regulations, or the 
rules of professional responsibility of the jurisdiction where the 
recipient is located or the employee practices law.
    (c) Nothing in this section shall prohibit an attorney from:
    (1) Informing and advising a client about legal alternatives to 
litigation or the lawful conduct thereof; or
    (2) Taking such action on behalf of a client as may be required by 
professional responsibilities or applicable law of any State or other 
jurisdiction.



Sec. 1612.8  Training.

    (a) A recipient may not support or conduct training programs that:
    (1) Advocate particular public policies;
    (2) Encourage or facilitate political activities, labor or anti-
labor activities, boycotts, picketing, strikes or demonstrations, or the 
development of strategies to influence legislation or rulemaking;
    (3) Disseminate information about such policies or activities; or
    (4) Train participants to engage in activities prohibited by the 
Act, other applicable law, or Corporation regulations, guidelines or 
instructions.
    (b) Nothing in this section shall be construed to prohibit training 
of any attorneys or paralegals, clients, lay advocates, or others 
involved in the representation of eligible clients necessary for 
preparing them:
    (1) To provide adequate legal assistance to eligible clients; or
    (2) To provide advice to any eligible client as to the legal rights 
of the client.



Sec. 1612.9  Organizing.

    (a) Recipients may not use funds provided by the Corporation or by 
private entities to initiate the formation, or to act as an organizer, 
of any association, federation, labor union, coalition, network, 
alliance, or any similar entity.
    (b) This section shall not be construed to apply to:
    (1) Informational meetings attended by persons engaged in the 
delivery of legal services at which information about new developments 
in law and pending cases or matters are discussed; or
    (2) Organizations composed exclusively of eligible clients formed 
for the purpose of advising a legal services program about the delivery 
of legal services.
    (c) Recipients and their employees may provide legal advice or 
assistance to eligible clients who desire to plan, establish or operate 
organizations, such as by preparing articles of incorporation and 
bylaws.



Sec. 1612.10  Recordkeeping and accounting for activities funded with non-LSC funds.

    (a) No funds made available by the Corporation shall be used to pay 
for administrative overhead or related costs associated with any 
activity listed in Sec. 1612.6.
    (b) Recipients shall maintain separate records documenting the 
expenditure of non-LSC funds for legislative and rulemaking activities 
permitted by Sec. 1612.6.
    (c) Recipients shall submit semi-annual reports describing their 
legislative activities with non-LSC funds conducted pursuant to 
Sec. 1612.6, together with such supporting documentation as specified by 
the Corporation.

[62 FR 19404, Apr. 21, 1997; 62 FR 22895, Apr. 28, 1997]



Sec. 1612.11  Recipient policies and procedures.

    Each recipient shall adopt written policies and procedures to guide 
its staff in complying with this part.



PART 1613--RESTRICTIONS ON LEGAL ASSISTANCE WITH RESPECT TO CRIMINAL PROCEEDINGS--Table of Contents




Sec.
1613.1  Purpose.
1613.2  Definition.
1613.3  Prohibition.
1613.4  Authorized representation.

    Authority: Sec. 1007(b)(1); 42 U.S.C. 2996f(b)(1).

    Source: 43 FR 32775, July 28, 1978, unless otherwise noted.

[[Page 449]]



Sec. 1613.1  Purpose.

    This part is designed to insure that Corporation funds will not be 
used to provide legal assistance with respect to criminal proceedings 
unless such assistance is required as part of an attorney's 
responsibilities as a member of the bar.



Sec. 1613.2  Definition.

    Criminal proceeding means the adversary judicial process prosecuted 
by a public officer and initiated by a formal complaint, information, or 
indictment charging a person with an offense denominated ``criminal'' by 
applicable law and punishable by death, imprisonment, or a jail 
sentence. A misdemeanor or lesser offense tried in an Indian tribal 
court is not a ``criminal proceeding''.



Sec. 1613.3  Prohibition.

    Corporation funds shall not be used to provide legal assistance with 
respect to a criminal proceeding, unless authorized by this part.



Sec. 1613.4  Authorized representation.

    Legal assistance may be provided with respect to a criminal 
proceeding.
    (a) Pursuant to a court appointment made under a statute or a court 
rule or practice of equal applicability to all attorneys in the 
jurisdiction, if authorized by the recipient after a determination that 
it is consistent with the recipient's primary responsibility to provide 
legal assistance to eligible clients in civil matters; or
    (b) When professional responsibility requires representation in a 
criminal proceeding arising out of a transaction with respect to which 
the client is being, or has been, represented by a recipient.



PART 1614--PRIVATE ATTORNEY INVOLVEMENT--Table of Contents




Sec.
1614.1  Purpose.
1614.2  General policy.
1614.3  Range of activities.
1614.4  Procedure.
1614.5  Prohibition of revolving litigation funds.
1614.6  Waivers.
1614.7  Failure to comply.

    Authority: Sec. 1007(a)(2)(C) and sec. 1007(a)(3); (42 U.S.C. 
2996f(a)(2)(C) and 42 U.S.C. 2996f(a)(3)).

    Source: 50 FR 48591, Nov. 26, 1985, unless otherwise noted.



Sec. 1614.1  Purpose.

    (a) This part is designed to ensure that recipients of Legal 
Services Corporation funds involve private attorneys in the delivery of 
legal assistance to eligible clients. Except as provided hereafter, a 
recipient of Legal Services Corporation funding shall devote an amount 
equal to at least twelve and one-half percent (12\1/2\%) of the 
recipient's LSC annualized basic field award to the involvement of 
private attorneys in such delivery of legal services; this requirement 
is hereinafter sometimes referred to as the ``PAI requirement''. Funds 
received from the Corporation as one-time special grants shall not be 
considered in determining a recipient's PAI requirement.
    (b) Recipients of Native American or migrant funding shall provide 
opportunity for involvement in the delivery of services by the private 
bar in a manner which is generally open to broad participation in those 
activities undertaken with those funds, or shall demonstrate to the 
satisfaction of the Corporation that such involvement is not feasible.
    (c) Because the Corporation's PAI requirement is based upon an 
effort to generate the most possible legal services for eligible clients 
from available, but limited, resources, recipients should attempt to 
assure that the market value of PAI activities substantially exceeds the 
direct and indirect costs being allocated to meet the requirements of 
this Part.
    (d) As of January 1, 1986, the term ``private attorney'' as used in 
this Part means an attorney who is not a staff attorney as defined in 
Sec. 1600.1 of these regulations.
    (e) After the effective date of this regulation, no PAI funds shall 
be committed for direct payment to any attorney who for any portion of 
the previous two years has been a staff attorney as defined in 
Sec. 1600.1 of these regulations; provided, however, that, for the 
remainder of the 1986 fiscal year,

[[Page 450]]

recipients may honor contractual arrangements made to such private 
attorneys if these arrangements were made before the effective date of 
this regulation; provided, further, however, that this paragraph shall 
not be construed to restrict the use of PAI funds in a pro bono or 
judicare project on the same terms that are available to other 
attorneys; and provided further, however, that this paragraph shall not 
be construed to restrict the payment of PAI funds as a result of work 
performed by an attorney who practices in the same firm with such former 
staff attorney.

[50 FR 48591, Nov. 26, 1985, as amended at 51 FR 21559, June 13, 1986]



Sec. 1614.2  General policy.

    (a) This part implements the policy adopted by the Board of 
Directors of the Corporation which requires that a substantial amount of 
funds be made available to encourage the involvement of private 
attorneys in the delivery of legal assistance to eligible clients 
through both pro bono and compensated mechanisms, and that such funds be 
expended in an economic and efficient manner.
    (b) In the case of recipients whose service areas are adjacent, 
coterminous or overlapping, the recipients may enter into joint efforts 
to involve the private attorneys in the delivery of legal services to 
eligible clients, subject to the prior approval of the Office of Field 
Services. In order to be approved the joint venture plan must meet the 
following conditions:
    (1) The recipients involved in the joint venture must plan to expend 
at least twelve and one-half percent (12\1/2\%) of the aggregate of 
their basic field awards on PAI. In the case of recipients with adjacent 
service areas, 12\1/2\% of each recipient's grant shall be expended to 
PAI; provided, however, that such expenditure is subject to waiver under 
Sec. 1614.6;
    (2) Each recipient in the joint venture must be a bona fide 
participant in the activities undertaken by the joint venture; and
    (3) The joint PAI venture must provide an opportunity for involving 
private attorneys throughout the entire joint service area(s).
    (c) Private attorney involvement shall be an integral part of a 
total local program undertaken within the established priorities of that 
program in a manner that furthers the statutory requirement of high 
quality, economical and effective client-centered legal assistance to 
eligible clients. Decisions concerning implementation of the substantial 
involvement requirement rest with the recipient through its governing 
body, subject to review and evaluation by the Corporation.



Sec. 1614.3  Range of activities.

    (a) Activities undertaken by the recipient to meet the requirements 
of this part must include the direct delivery of legal assistance to 
eligible clients through programs such as organized pro bono plans, 
reduced fee plans, judicare panels, private attorney contracts, or those 
modified pro bono plans which provide for the payment of nominal fees by 
eligible clients and/or organized referral systems; except that payment 
of attorney's fees through ``revolving litigation fund'' systems, as 
described in Sec. 1614.5 of this part, shall neither be used nor funded 
under this part nor funded with any LSC support;
    (b) Activities undertaken by recipients to meet the requirements of 
this part may also include, but are not limited to:
    (1) Support provided by private attorneys to the recipient in its 
delivery of legal assistance to eligible clients on either a reduced fee 
or pro bono basis through the provision of community legal education, 
training, technical assistance, research, advice and counsel; co-
counseling arrangements; or the use of private law firm facilities, 
libraries, computer-assisted legal research systems or other resources; 
and
    (2) Support provided by the recipient in furtherance of activities 
undertaken pursuant to this Section including the provision of training, 
technical assistance, research, advice and counsel, or the use of 
recipient facilities, libraries, computer assisted legal research 
systems or other resources.
    (c) The specific methods to be undertaken by a recipient to involve 
private

[[Page 451]]

attorneys in the provision of legal assistance to eligible clients will 
be determined by the recipient's taking into account the following 
factors:
    (1) The priorities established pursuant to part 1620 of these 
regulations;
    (2) The effective and economic delivery of legal assistance to 
eligible clients;
    (3) The linguistic and cultural barriers to effective advocacy.
    (4) The actual or potential conflicts of interest between specific 
participating attorneys and individual eligible clients; and
    (5) The substantive and practical expertise, skills, and willingness 
to undertake new or unique areas of the law of participating attorneys.
    (d) Systems designed to provide direct services to eligible clients 
by private attorneys on either a pro bono or reduced fee basis, shall 
include at a minimum, the following components:
    (1) Intake and case acceptance procedures consistent with the 
recipient's established priorities in meeting the legal needs of 
eligible clients;
    (2) Case assignments which ensure the referral of cases according to 
the nature of the legal problems involved and the skills, expertise, and 
substantive experience of the participating attorney;
    (3) Case oversight and follow-up procedures to ensure the timely 
disposition of cases to achieve, if possible, the result desired by the 
client and the efficient and economical utilization of recipient 
resources; and
    (4) Access by private attorneys to LSC recipient resources, 
including those of LSC national and state support centers, that provide 
back-up on substantive and procedural issues of the law.
    (e) The recipient shall demonstrate compliance with this part by 
utilizing financial systems and procedures and maintaining supporting 
documentation to identify and account separately for costs related to 
the PAI effort. Such systems and records shall meet the requirements of 
the Corporation's Audit and Accounting Guide for Recipients and Auditors 
and shall have the following characteristics:
    (1) They shall accurately identify and account for:
    (i) The recipient's administrative, overhead, staff, and support 
costs related to PAI activities. Non-personnel costs shall be allocated 
on the basis of reasonable operating data. All methods of allocating 
common costs shall be clearly documented. If any direct or indirect time 
of staff attorneys or paralegals is to be allocated as a cost to PAI, 
such costs must be documented by time sheets accounting for the time 
those employees have spent on PAI activities. The timekeeping 
requirement does not apply to such employees as receptionists, 
secretaries, intake personnel or bookkeepers; however, personnel cost 
allocations for non-attorney or non-paralegal staff should be based on 
other reasonable operating data which is clearly documented;
    (ii) Payments to private attorneys for support or direct client 
services rendered. The recipient shall maintain contracts on file which 
set forth payment systems, hourly rates, and maximum allowable fees. 
Bills and/or invoices from private attorneys shall be submitted before 
payments are made. Encumbrances shall not be included in calculating 
whether a recipient has met the requirement of this part;
    (iii) Contractual payments to individuals or organizations that 
undertake administrative, support, and/or direct services to eligible 
clients on behalf of the recipient consistent with the provisions of 
this part. Contracts concerning transfer of LSC funds for PAI activities 
shall require that such funds be accounted for by the recipient in 
accordance with LSC guidelines, including the requirements of the Audit 
and Accounting Guide for Recipients and Auditors and 45 CFR part 1627;
    (iv) Other such actual costs as may be incurred by the recipient in 
this regard.
    (2) Support and expenses relating to the PAI effort must be reported 
separately in the recipient's year-end audit. This shall be done by 
establishing a separate fund or providing a separate schedule in the 
financial statement to account for the entire PAI allocation. Recipients 
are not required to establish separate bank accounts to segregate funds 
allocated to PAI. Auditors are required to perform sufficient audit 
tests to enable them to render an opinion on

[[Page 452]]

the recipient's compliance with the requirements of this part.
    (3) In private attorney models, attorneys may be reimbursed for 
actual costs and expenses. Attorney's fees paid may not exceed 50% of 
the local prevailing market rate for that type of service.
    (4) All records pertaining to a recipient's PAI requirements which 
do not contain client confidences or secrets as defined by applicable 
state law shall be made available for inspection and review by LSC 
auditors and monitors during regular business hours.



Sec. 1614.4  Procedure.

    (a) The recipient shall develop a plan and budget to meet the 
requirements of this part which shall be incorporated as a part of the 
refunding application or initial grant application. The budget shall be 
modified as necessary to fulfill this part. That plan shall take into 
consideration:
    (1) The legal needs of eligible clients in the geographical area 
served by the recipient and the relative importance of those needs 
consistent with the priorities established pursuant to section 
1007(a)(2)(C) of the Legal Services Corporation Act (42 U.S.C. 
2996f(a)(2)(C)) and part 1620 of the Regulations (45 CFR part 1620) 
adopted pursuant thereto;
    (2) The delivery mechanisms potentially available to provide the 
opportunity for private attorneys to meet the established priority legal 
needs of eligible clients in an economical and effective manner; and
    (3) The results of the consultation as required below.
    (b) The recipient shall consult with significant segments of the 
client community, private attorneys, and bar associations, including 
minority and women's bar associations, in the recipient's service area 
in the development of its annual plan to provide for the involvement of 
private attorneys in the provision of legal assistance to eligible 
clients and shall document that each year its proposed annual plan has 
been presented to all local bar associations within the recipient's 
service area and shall summarize their response.



Sec. 1614.5  Prohibition of revolving litigation funds.

    (a) A revolving litigation fund system is a system under which a 
recipient systematically encourages the acceptance of fee-generating 
cases as defined in Sec. 1609.2 of these regulations by advancing funds 
to private attorneys to enable them to pay costs, expenses, or attorneys 
fees for representing clients.
    (b) No funds received from the Legal Services Corporation shall be 
used to establish or maintain revolving litigation fund systems.
    (c) The prohibition in paragraph (b) of this section does not 
prevent recipients from reimbursing or paying private attorneys for 
costs and expenses, provided:
    (1) The private attorney is representing an eligible client in a 
matter in which representation of the eligible client by the recipient 
would be allowed under the Act and under the Corporation's Regulations; 
and
    (2) The private attorney has expended such funds in accordance with 
a schedule previously approved by the recipient's governing body or, 
prior to initiating action in the matter, has requested the recipient to 
advance the funds.
    (d) Nothing in this section shall prevent a recipient from 
recovering from a private attorney the amount advanced for any costs, 
expenses, or fees from an award to the attorney for representing an 
eligible client.



Sec. 1614.6  Waivers.

    (a) While it is the expectation and experience of the Corporation 
that most basic field programs can effectively expend their PAI 
requirement, there are some circumstances, temporary or permanent, under 
which the goal of economical and effective use of Corporation funds will 
be furthered by a partial, or in exceptional circumstances, a complete 
waiver of the PAI requirement.
    (b) A complete waiver shall be granted by the Office of Field 
Services (OFS) when the recipient shows to the satisfaction of OFS that:
    (1) Because of the unavailability of qualified private attorneys, an 
attempt

[[Page 453]]

to carry out a PAI program would be futile; or
    (2) All qualified private attorneys in the program's service area 
either refuse to participate or have conflicts generated by their 
practice which render their participation inappropriate.
    (c) A partial waiver shall be granted by OFS when the recipient 
shows to the satisfaction of OFS that:
    (1) The population of qualified private attorneys available to 
participate in the program is too small to use the full PAI allocation 
economically and effectively; or
    (2) Despite the recipient's best efforts too few qualified private 
attorneys are willing to participate in the program to use the full PAI 
allocation economically and effectively; or
    (3) Despite a recipient's best efforts,--including, but not limited 
to , communicating its problems expending the required amount to OFS and 
requesting and availing itself of assistance and/or advice from OFS 
regarding the problem--expenditures already made during a program year 
are insufficient to meet the PAI requirement, and there is insufficient 
time to make economical and efficient expenditures during the remainder 
of a program year, but in this instance, unless the shortfall resulted 
from unforeseen and unusual circumstances, the recipient shall accompany 
the waiver request with a plan to avoid such a shortfall in the future; 
or
    (4) The recipient uses a fee-for-service program whose current 
encumbrances and projected expenditures for the current fiscal year 
would meet the requirement, but its actual current expenditures do not 
meet the requirement, and could not be increased to do so economically 
and effectively in the remainder of the program year, or could not be 
increased to do so in a fiscally responsible manner in view of 
outstanding encumbrances; or
    (5) The recipient uses a fee-for-service program and its PAI 
expenditures in the prior year exceeded the twelve and one-half percent 
(12\1/2\%) requirement but, because of variances in the timing of work 
performed by the private attorneys and the consequent billing for that 
work, its PAI expenditures for the current year fail to meet the twelve 
and one-half percent (12\1/2\%) requirement; or
    (6) If, in the reasonable judgment of the recipient's governing 
body, it would not be economical and efficient for the recipient to 
expend its full 12\1/2\% of Corporation funds on PAI activities, 
provided that the recipient has handled and expects to continue to 
handle at least 12\1/2\% of cases brought on behalf of eligible clients 
through its PAI program(s).
    (d) (1) A waiver of special accounting and bookkeeping requirements 
of this part may be granted by the Audit Division with the concurrence 
of OFS, if the recipient shows to the satisfaction of the Audit Division 
of OFS that such waiver will advance the purpose of this part as 
expressed in Secs. 1614.1 and 1614.2.
    (2) As provided in 45 CFR 1627.3(c) with respect to subgrants, 
alternatives to Corporation audit requirements or to the accounting 
requirements of this part may be approved for subgrants by the Audit 
Division with the concurrence of OFS; such alternatives for PAI 
subgrants shall be approved liberally where necessary to foster 
increased PAI participation.
    (e) Waivers of the PAI expenditure requirement may be full or 
partial, that is, the Corporation may waive all or some of the required 
expenditure for a fiscal year.
    (1) Applications for waivers of any requirement under this part may 
be for the current, or next fiscal year. All such applications must be 
in writing. Applications for waivers for the current fiscal year must be 
received by the Corporation during the current fiscal year.
    (2) At the expiration of a waiver a recipient may seek a similar or 
identical waiver.
    (f) All Waiver requests shall be addressed to the Office of Field 
Services (OFS) or the Audit Division as is appropriate under the 
preceding provisions of this Part. The Corporation shall make a written 
response to each such request postmarked not later than thirty (30) days 
after its receipt. If the request is denied, the Corporation will 
provide the recipient with an explanation and statement of the grounds 
for denial. If the waiver is to

[[Page 454]]

be denied because the information submitted is insufficient, the 
Corporation will inform the recipient as soon as possible, both orally 
and in writing, about what additional information is needed. Should the 
Corporation fail to so respond, the request shall be deemed to be 
granted.



Sec. 1614.7  Failure to comply.

    (a) If a recipient fails to comply with the expenditure required by 
this part and if that recipient fails without good cause to seek a 
waiver during the term of the grant or contract, the Corporation shall 
withhold from the recipient's support payments an amount equal to the 
difference between the amount expended on PAI and twelve and one-half 
percent (12\1/2\%) of the recipient's basic field award.
    (b) If a recipient fails with good cause to seek a waiver, or 
applies for but does not receive a waiver, or receives a waiver of part 
of the PAI requirement and does not expend the amount required to be 
expended, the PAI expenditure requirement for the ensuing year shall be 
increased for that recipient by an amount equal to the difference 
between the amount actually expended and the amount required to be 
expended.
    (c) Any funds withheld by the Corporation pursuant to this section 
shall be made available by the Corporation for use in providing legal 
services in the recipient's service area through PAI programs. 
Disbursement of these funds shall be made through a competitive 
solicitation and awarded on the basis of efficiency, quality, 
creativity, and demonstrated commitment to PAI service delivery to low-
income people.
    (d) The withholding of funds under this section shall not be 
construed as a termination of financial assistance under part 1606 of 
these regulations or a denial of refunding under part 1625 of these 
regulations.



PART 1615--RESTRICTIONS ON ACTIONS COLLATERALLY ATTACKING CRIMINAL CONVICTIONS--Table of Contents




Sec.
1615.1  Purpose.
1615.2  Prohibition.
1615.3  Application of this part.

    Authority: Sec. 1007(b)(1); (42 U.S.C. 2996f(b)(1)).

    Source: 41 FR 38508, Sept. 10, 1976, unless otherwise noted.



Sec. 1615.1  Purpose.

    This part prohibits the provision of legal assistance in an action 
in the nature of habeas corpus seeking to collaterally attack a criminal 
conviction.



Sec. 1615.2  Prohibition.

    Except as authorized by this part, no Corporation funds shall be 
used to provide legal assistance in an action in the nature of habeas 
corpus collaterally attacking a criminal conviction if the action
    (a) Is brought against an officer of a court, a law enforcement 
official, or a custodian of an institution for persons convicted of 
crimes; and
    (b) Alleges that the conviction is invalid because of any alleged 
acts or failures to act by an officer of a court or a law enforcement 
official.



Sec. 1615.3  Application of this part.

    This part does not prohibit legal assistance--
    (a) To challenge a conviction resulting from a criminal proceeding 
in which the defendant received representation from a recipient pursuant 
to Corporation regulations; or
    (b) Pursuant to a court appointment made under a statute or a court 
rule or practice of equal applicability to all attorneys in the 
jurisdiction, if authorized by the recipient after a determination that 
it is consistent with the primary responsibility of the recipient to 
provide legal assistance to eligible clients in civil matters.



PART 1616--ATTORNEY HIRING--Table of Contents




Sec.
1616.1  Purpose.
1616.2  Definition.
1616.3  Qualifications.
1616.4  Recommendations.
1616.5  Preference to local applicants.
1616.6  Equal employment opportunity.
1616.7  Language ability.

    Authority: Secs. 1007(a)(8); 1006(b)(6); 1006(b)(4); (42 U.S.C. 
2996f(a)(8); 2996e(b)(6); 2996e(b)(4)).

[[Page 455]]


    Source: 41 FR 38509, Sept. 10, 1976, unless otherwise noted.



Sec. 1616.1  Purpose.

    This part is designed to promote a mutually beneficial relationship 
between a recipient and the local Bar and community, and to insure that 
a recipient will choose highly qualified attorneys for its staff.



Sec. 1616.2  Definition.

    Community, as used in this part, means the geographical area most 
closely corresponding to the area served by a recipient.



Sec. 1616.3  Qualifications.

    A recipient shall establish qualifications for individual positions 
for attorneys providing legal assistance under the Act, that may 
include, among other relevant factors:
    (a) Academic training and performance;
    (b) The nature and extent of prior legal experience;
    (c) Knowledge and understanding of the legal problems and needs of 
the poor;
    (d) Prior working experience in the client community, or in other 
programs to aid the poor;
    (e) Ability to communicate with persons in the client community, 
including, in areas where significant numbers of eligible clients speak 
a language other than English as their principal language, ability to 
speak that language; and
    (f) Cultural similarity with the client community.



Sec. 1616.4  Recommendations.

    (a) Before filling an attorney position, a recipient shall notify 
the organized Bar in the community of the existence of a vacancy, and of 
the qualifications established for it, and seek recommendations for 
attorneys who meet the qualifications established for the position.
    (b) A recipient shall similarly notify and seek recommendations from 
other organizations, deemed appropriate by the recipient, that have 
knowledge of the legal needs of persons in the community unable to 
afford legal assistance.



Sec. 1616.5  Preference to local applicants.

    When equally qualified applicants are under consideration for an 
attorney position, a recipient shall give preference to an applicant 
residing in the community to be served.



Sec. 1616.6  Equal employment opportunity.

    A recipient shall adopt employment qualifications, procedures, and 
policies that meet the requirements of applicable laws prohibiting 
discrimination in employment, and shall take affirmative action to 
insure equal employment opportunity.



Sec. 1616.7  Language ability.

    In areas where a significant number of clients speak a language 
other than English as their principal language, a recipient shall adopt 
employment policies that insure that legal assistance will be provided 
in the language spoken by such clients.



PART 1617--CLASS ACTIONS--Table of Contents




Sec.
1617.1  Purpose.
1617.2  Definitions.
1617.3  Prohibition.
1617.4  Recipient policies and procedures.

    Authority: 29 U.S.C. 2996e(d)(5); 110 Stat. 3009 (1996); 110 Stat. 
1321 (1996).

    Source: 61 FR 63755, Dec. 2, 1996, unless otherwise noted.



Sec. 1617.1  Purpose.

    This rule is intended to ensure that LSC recipients do not initiate 
or participate in class actions.



Sec. 1617.2  Definitions.

    (a) Class action means a lawsuit filed as, or otherwise declared by 
the court having jurisdiction over the case to be, a class action 
pursuant to Rule 23 of the Federal Rules of Civil Procedure or the 
comparable State statute or rule of civil procedure applicable in the 
court in which the action is filed.
    (b)(1) Initiating or participating in any class action means any 
involvement at any stage of a class action prior to or after an order 
granting relief. ``In- volvement'' includes acting as amicus

[[Page 456]]

curiae, co-counsel or otherwise providing representation relating to a 
class action.
    (2) Initiating or participating in any class action does not include 
representation of an individual client seeking to withdraw from or opt 
out of a class or obtain the benefit of relief ordered by the court, or 
non-adversarial activities, including efforts to remain informed about, 
or to explain, clarify, educate or advise others about the terms of an 
order granting relief.



Sec. 1617.3  Prohibition.

    Recipients are prohibited from initiating or participating in any 
class action.



Sec. 1617.4  Recipient policies and procedures.

    Each recipient shall adopt written policies and procedures to guide 
its staff in complying with this part.



PART 1618--ENFORCEMENT PROCEDURES--Table of Contents




Sec.
1618.1  Purpose.
1618.2  Definition.
1618.3  Complaints.
1618.4  Duties of Recipients.
1618.5  Duties of the Corporation.

    Authority: Secs. 1006(b)(1), 1006(b)(2), 1006(b)(5), 1007(d), 
1008(e); (42 U.S.C. 2996e(b)(1), 2996e(b)(2), 2996e(b)(5), 2996f(d), 
2996g(e)).

    Source: 41 FR 51608, Nov. 23, 1976, unless otherwise noted.



Sec. 1618.1  Purpose.

    In order to insure uniform and consistent interpretation and 
application of the Act, and to prevent a question of whether the Act has 
been violated from becoming an ancillary issue in any case undertaken by 
a recipient, this part establishes a systematic procedure for enforcing 
compliance with the Act.



Sec. 1618.2  Definition.

    As used in this part, Act means the Legal Services Corporation Act 
or the rules and regulations issued by the Corporation.



Sec. 1618.3  Complaints.

    A complaint of a violation of the Act by a recipient or an employee 
may be made to the recipient, the State Advisory Council, or the 
Corporation.



Sec. 1618.4  Duties of Recipients.

    A recipient shall:
    (a) Advise its employees of their responsibilities under the Act; 
and
    (b) Establish procedures, consistent with the notice and hearing 
requirements of section 1011 of the Act, for determining whether an 
employee has violated a prohibition of the Act; and shall establish a 
policy for determining the appropriate sanction to be imposed for a 
violation, including:
    (1) Administrative reprimand if a violation is found to be minor and 
unintentional, or otherwise affected by mitigating circumstances;
    (2) Suspension and termination of employment; and
    (3) Other sanctions appropriate for enforcement of the Act; but
    (c) Before suspending or terminating the employment of any person 
for violating a prohibition of the Act, a recipient shall consult the 
Corporation to insure that its interpretation of the Act is consistent 
with Corporation policy.



Sec. 1618.5  Duties of the Corporation.

    (a) Whenever there is reason to believe that a recipient or an 
employee may have violated the Act, or failed to comply with a term of 
its Corporation grant or contract, the Corporation shall investigate the 
matter promptly and attempt to resolve it through informal consultation 
with the recipient.
    (b) Whenever there is substantial reason to believe that a recipient 
has persistently or intentionally violated the Act, or, after notice, 
has failed to take appropriate remedial or disciplinary action to insure 
compliance by its employees with the Act, and attempts at informal 
resolution have been unsuccessful, the Corporation may proceed to 
suspend or terminate financial support of the recipient pursuant to the 
procedures set forth in part 1612, or may take other action to enforce 
compliance with the Act.

[[Page 457]]



PART 1619--DISCLOSURE OF INFORMATION--Table of Contents




Sec.
1619.1  Purpose.
1619.2  Policy.
1619.3  Referral to the Corporation.
1619.4  Exemptions.

    Authority: Sec. 1006(b)(1), (42 U.S.C. 2996e(b)(1)); sec. 1008(e), 
(42 U.S.C. 2996g(e)).

    Source: 42 FR 4848, Jan. 26, 1977, unless otherwise noted.



Sec. 1619.1  Purpose.

    This part is designed to insure disclosure of information that is a 
valid subject of public interest in the activities of a recipient.



Sec. 1619.2  Policy.

    A recipient shall adopt a procedure for affording the public 
appropriate access to the Act, Corporation rules, regulations and 
guidelines, the recipient's written policies, procedures, and 
guidelines, the names and addresses of the members of its governing 
body, and other materials that the recipient determines should be 
disclosed. The procedure adopted shall be subject to approval by the 
Corporation.



Sec. 1619.3  Referral to the Corporation.

    If a person requests information, not required to be disclosed by 
this part, that the Corporation may be required to disclose pursuant to 
part 1602 of this chapter implementing the Freedom of Information Act, 
the recipient shall either provide the information or inform the person 
seeking it how to request it from the Corporation.



Sec. 1619.4  Exemptions.

    Nothing in this part shall require disclosure of:
    (a) Any information furnished to a recipient by a client;
    (b) The work product of an attorney or paralegal;
    (c) Any material used by a recipient in providing representation to 
clients;
    (d) Any matter that is related solely to the internal personnel 
rules and practices of the recipient; or
    (e) Personnel, medical, or similar files.



PART 1620--PRIORITIES IN USE OF RESOURCES--Table of Contents




Sec.
1620.1  Purpose.
1620.2  Definitions.
1620.3  Establishing priorities.
1620.4  Establishing policies and procedures for emergencies.
1620.5  Annual review.
1620.6  Signed written agreement.
1620.7  Reporting.

    Authority: 42 U.S.C. 2996f(a)(2); Pub. L. 104-208, 110 Stat. 3009; 
Pub. L. 104-134,110 Stat. 1321.

    Source: 62 FR 19408, Apr. 21, 1997, unless otherwise noted.



Sec. 1620.1  Purpose.

    This part is designed to provide guidance to recipients for setting 
priorities and to ensure that a recipient's governing body adopts 
written priorities for the types of cases and matters, including 
emergencies, to which the recipient's staff will limit its commitment of 
time and resources.



Sec. 1620.2  Definitions.

    (a) A case is a form of program service in which an attorney or 
paralegal of a recipient provides legal services to one or more specific 
clients, including, without limitation, providing representation in 
litigation, administrative proceedings, and negotiations, and such 
actions as advice, providing brief services and transactional 
assistance, and assistance with individual Private Attorney Involvement 
(PAI) cases.
    (b) A matter is an action which contributes to the overall delivery 
of program services but does not involve direct legal advice to or legal 
representation of one or more specific clients. Examples of matters 
include both direct services, such as community education presentations, 
operating pro se clinics, providing information about the availability 
of legal assistance, and developing written materials explaining legal 
rights and responsibilities; and indirect services, such as training, 
continuing legal education, general supervision of program services, 
preparing and disseminating desk manuals, PAI recruitment, intake when 
no case is undertaken, and tracking substantive law developments.

[[Page 458]]



Sec. 1620.3  Establishing priorities.

    (a) The governing body of a recipient must adopt procedures for 
establishing priorities for the use of all of its Corporation and non-
Corporation resources and must adopt a written statement of priorities, 
pursuant to those procedures, that determines the cases and matters 
which may be undertaken by the recipient.
    (b) The procedures adopted must include an effective appraisal of 
the needs of eligible clients in the geographic area served by the 
recipient, and their relative importance, based on information received 
from potential or current eligible clients that is solicited in a manner 
reasonably calculated to obtain the views of all significant segments of 
the client population. The appraisal must also include and be based on 
information from the recipient's employees, governing body members, the 
private bar, and other interested persons. The appraisal should address 
the need for outreach, training of the recipient's employees, and 
support services.
    (c) The following factors shall be among those considered by the 
recipient in establishing priorities:
    (1) The suggested priorities promulgated by the Legal Services 
Corporation;
    (2) The appraisal described in paragraph (b) of this section;
    (3) The population of eligible clients in the geographic areas 
served by the recipient, including all significant segments of that 
population with special legal problems or special difficulties of access 
to legal services;
    (4) The resources of the recipient;
    (5) The availability of another source of free or low-cost legal 
assistance in a particular category of cases or matters;
    (6) The availability of other sources of training, support, and 
outreach services;
    (7) The relative importance of particular legal problems to the 
individual clients of the recipient;
    (8) The susceptibility of particular problems to solution through 
legal processes;
    (9) Whether legal efforts by the recipient will complement other 
efforts to solve particular problems in the area served;
    (10) Whether legal efforts will result in efficient and economic 
delivery of legal services; and
    (11) Whether there is a need to establish different priorities in 
different parts of the recipient's service area.



Sec. 1620.4  Establishing policies and procedures for emergencies.

    The governing body of a recipient shall adopt written policies and 
procedures to guide the recipient in undertaking emergency cases or 
matters not within the recipient's established priorities. Emergencies 
include those non-priority cases or matters that require immediate legal 
action to:
    (a) Secure or preserve the necessities of life,
    (b) Protect against or eliminate a significant risk to the health or 
safety of the client or immediate family members, or
    (c) Address other significant legal issues that arise because of new 
and unforeseen circumstances.



Sec. 1620.5  Annual review.

    (a) Priorities shall be set periodically and shall be reviewed by 
the governing body of the recipient annually or more frequently if the 
recipient has accepted a significant number of emergency cases outside 
of its priorities.
    (b) The following factors should be among those considered in 
determining whether the recipient's priorities should be changed:
    (1) The extent to which the objectives of the recipient's priorities 
have been accomplished;
    (2) Changes in the resources of the recipient;
    (3) Changes in the size, distribution, or needs of the eligible 
client population; and
    (4) The volume of non-priority emergency cases or matters in a 
particular legal area since priorities were last reviewed.



Sec. 1620.6  Signed written agreement.

    All staff who handle cases or matters, or are authorized to make 
decisions about case acceptance, must sign a simple agreement developed 
by the

[[Page 459]]

recipient which indicates that the signatory:
    (a) Has read and is familiar with the priorities of the recipient;
    (b) Has read and is familiar with the definition of an emergency 
situation and the procedures for dealing with an emergency that have 
been adopted by the recipient; and
    (c) Will not undertake any case or matter for the recipient that is 
not a priority or an emergency.



Sec. 1620.7  Reporting.

    (a) The recipient shall report to the recipient's governing body on 
a quarterly basis information on all emergency cases or matters 
undertaken that were not within the recipient's priorities, and shall 
include a rationale for undertaking each such case or matter.
    (b) The recipient shall report annually to the Corporation, on a 
form provided by the Corporation, information on all emergency cases or 
matters undertaken that were not within the recipient's priorities.
    (c) The recipient shall submit to the Corporation and make available 
to the public an annual report summarizing the review of priorities; the 
date of the most recent appraisal; the timetable for the future 
appraisal of needs and evaluation of priorities; mechanisms which will 
be utilized to ensure effective client participation in priority-
setting; and any changes in priorities.



PART 1621--CLIENT GRIEVANCE PROCEDURE--Table of Contents




Sec.
1621.1  Purpose.
1621.2  Grievance Committee.
1621.3  Complaints about legal assistance.
1621.4  Complaints about denial of assistance.

    Authority: Sec. 1006(b)(1), 41 U.S.C. 2996e(b)(1); sec. 1006(b)(3), 
42 U.S.C. 2996e(b)(3); sec. 1007(a)(1), 42 U.S.C. 2996f(a)(1).

    Source: 42 FR 37551, July 22, 1977, unless otherwise noted.



Sec. 1621.1  Purpose.

    By providing an effective remedy for a person who believes that 
legal assistance has been denied improperly, or who is dissatisfied with 
the assistance provided, this part seeks to insure that every recipient 
will be accountable to those it is expected to serve, and will provide 
the legal assistance required by the Act.



Sec. 1621.2  Grievance Committee.

    The governing body of a recipient shall establish a grievance 
committee or committees, composed of lawyer and client members of the 
governing body in approximately the same proportion in which they are on 
the governing body.



Sec. 1621.3  Complaints about legal assistance.

    (a) A recipient shall establish procedures for determining the 
validity of a complaint about the manner or quality of legal assistance 
that has been rendered.
    (b) The procedures shall provide at least:
    (1) Information to a client at the time of the initial visit about 
how to make a complaint, and
    (2) Prompt consideration of each complaint by the director of the 
recipient, or the director's designee, and, if the director of the 
recipient is unable to resolve the matter,
    (3) An opportunity for a complainant to submit an oral and written 
statement to a grievance committee established by the governing body. 
The complainant may be accompanied by another person. Upon request, the 
recipient shall transcribe a brief written statement, dictated by the 
complainant, for inclusion in the recipient's complaint file.
    (c) A file containing every complaint and a statement of its 
disposition shall be preserved for examination by the Corporation. The 
file shall include any written statement submitted by the complainant.



Sec. 1621.4  Complaints about denial of assistance.

    A recipient shall establish a simple procedure for review of a 
decision that a person is financially ineligible, or that assistance is 
prohibited by the Act or Corporation Regulations, or by priorities 
established by the recipient pursuant to section 1620. The procedure 
shall include information about how to

[[Page 460]]

make a complaint, adequate notice, an opportunity to confer with the 
director of the recipient or the director's designee, and, to the extent 
practicable, with a representative of the governing body.



PART 1622--PUBLIC ACCESS TO MEETINGS UNDER THE GOVERNMENT IN THE SUNSHINE ACT--Table of Contents




Sec.
1622.1  Purpose and scope.
1622.2  Definitions.
1622.3  Open meetings.
1622.4  Public announcement of meetings.
1622.5  Grounds on which meetings may be closed or information withheld.
1622.6  Procedures for closing discussion or withholding information.
1622.7  Certification by the General Counsel.
1622.8  Records of closed meetings.
1622.9  Emergency procedures.
1622.10  Report to Congress.

    Authority: Sec. 1004(g), Pub. L. 95-222, 91 Stat. 1619, (42 U.S.C. 
2996c(g)).

    Source: 49 FR 30940, Aug. 2, 1984, unless otherwise noted.



Sec. 1622.1  Purpose and scope.

    This part is designed to provide the public with full access to the 
deliberations and decisions of the Board of Directors of the Legal 
Services Corporation, committees of the Board, and state Advisory 
Councils, while maintaining the ability of those bodies to carry out 
their responsibilities and protecting the rights of individuals.



Sec. 1622.2  Definitions.

    Board means the Board of Directors of the Legal Services 
Corporation.
    Committee means any formally designated subdivision of the Board 
established pursuant to Sec. 1601.27 of the By-Laws of the Corporation.
    Council means a state Advisory Council appointed by a state Governor 
or the Board pursuant to section 1004(f) of the Legal Services 
Corporation Act of 1974, 42 U.S.C. 2996c(f).
    Director means a voting member of the Board or a Council. Reference 
to actions by or communications to a ``Director'' means action by or 
communications to Board members with respect to proceedings of the 
Board, committee members with respect to proceedings of their 
committees, and council members with respect to proceedings of their 
councils.
    General Counsel means the General Counsel of the Corporation, or, in 
the absence of the General Counsel of the Corporation, a person 
designated by the President to fulfill the duties of the General Counsel 
or a member designated by a council to act as its chief legal officer.
    Meetings means the deliberations of a quorum of the Board, or of any 
committee, or of a council, when such deliberations determine or result 
in the joint conduct or disposition of Corporation business, but does 
not include deliberations about a decision to open or close a meeting, a 
decision to withhold information about a meeting, or the time, place, or 
subject of a meeting.
    Public observation means the right of any member of the public to 
attend and observe a meeting within the limits of reasonable 
accommodations made available for such purposes by the Corporation, but 
does not include any right to participate unless expressly invited by 
the Chairman of the Board of Directors, and does not include any right 
to disrupt or interfere with the disposition of Corporation business.
    Publicly available for the purposes of Sec. 1622.6(e) means to be 
procurable either from the Secretary of the Corporation at the site of 
the meeting or from the Office of Government Relations at Corporation 
Headquarters upon reasonable request made during business hours.
    Quorum means the number of Board or committee members authorized to 
conduct Corporation business pursuant to the Corporation's By-laws, or 
the number of council members authorized to conduct its business.
    Secretary means the Secretary of the Corporation, or, in the absence 
of the Secretary of the Corporation, a person appointed by the Chairman 
of the meeting to fulfill the duties of the Secretary, or a member 
designated by a council to act as its secretary.



Sec. 1622.3  Open meetings.

    Every meeting of the Board, a committee or a council shall be open 
in its entirety to public observation except as otherwise provided in 
Sec. 1622.5.

[[Page 461]]



Sec. 1622.4  Public announcement of meetings.

    (a) Public announcement shall be posted of every meeting. The 
announcement shall include: (1) The time, place, and subject matter to 
be discussed;
    (2) Whether the meeting or a portion thereof is to be open or closed 
to public observation; and
    (3) The name and telephone number of the official designated by the 
Board, committee, or council to respond to requests for information 
about the meeting.
    (b) The announcement shall be posted at least seven calendar days 
before the meeting, unless a majority of the Directors determines by a 
recorded vote that Corporation business requires a meeting on fewer than 
seven days notice. In the event that such a determination is made, 
public announcement shall be posted at the earliest practicable time.
    (c) Each public announcement shall be posted at the offices of the 
Corporation in an area to which the public has access, and promptly 
submitted to the Federal Register for publication. Reasonable effort 
shall be made to communicate the announcement of a Board or committee 
meeting to the chairman of each council and the governing body and the 
program director of each recipient of funds from the Corporation, and of 
a council meeting to the governing body and program director of each 
recipient within the same State.
    (d) An amended announcement shall be issued of any change in the 
information provided by a public announcement. Such changes shall be 
made in the following manner:
    (1) The time or place of a meeting may be changed without a recorded 
vote.
    (2) The subject matter of a meeting, or a decision to open or close 
a meeting or a portion thereof, may be changed by recorded vote of a 
majority of the Directors that Corporation business so requires and that 
no earlier announcement of the change was possible.

An amended public announcement shall be made at the earliest practicable 
time and in the manner specified by Sec. 1622.4 (a) and (c). In the 
event that changes are made pursuant to Sec. 1622.4(d)(2), the amended 
public announcement shall also include the vote of each Director upon 
such change.

[49 FR 30940, Aug. 2,1984, as amended at 50 FR 30714, July 29,1985]



Sec. 1622.5  Grounds on which meetings may be closed or information withheld.

    Except when the Board or council finds that the public interest 
requires otherwise, a meeting or a portion thereof may be closed to 
public observation, and information pertaining to such meeting or 
portion thereof may be withheld, if the Board or council determines that 
such meeting or portion thereof, or disclosure of such information, will 
more probably than not:
    (a) Relate solely to the internal personnel rules and practices of 
the Corporation;
    (b) Disclose matters specifically exempted from disclosure by 
statute (other than the Freedom of Information Act, 5 U.S.C. 552): 
Provided, That such statute (1) requires that the matters be withheld 
from the public in such a manner as to leave no discretion on the issue, 
or
    (2) Establishes particular types of matters to be withheld;
    (c) Disclose trade secrets and commercial or financial information 
obtained from a person and privileged or confidential;
    (d) Involve accusing any person of a crime or formally censuring any 
person;
    (e) Disclose information of a personal nature where disclosure would 
constitute a clearly unwarranted invasion of personal privacy;
    (f) Disclose investigatory records compiled for the purpose of 
enforcing the Act or any other law, or information which if written 
would be contained in such records, but only to the extent that 
production of such records or information would: (1) Interfere with 
enforcement proceedings,
    (2) Deprive a person of a right to a fair trial or an impartial 
adjudication,
    (3) Constitute an unwarranted invasion of personal privacy,
    (4) Disclose the identity of a confidential source,

[[Page 462]]

    (5) Disclose investigative techniques and procedures, or
    (6) Endanger the life or physical safety of law enforcement 
personnel;
    (g) Disclose information the premature disclosure of which would be 
likely to frustrate significantly implementation of a proposed 
Corporation action, except that this paragraph shall not apply in any 
instance where the Corporation has already disclosed to the public the 
content or nature of its proposed action, or where the Corporation is 
required by law to make such disclosure on its own initiative prior to 
taking final action on such proposal; or
    (h) Specifically concern the Corporation's participation in a civil 
action or proceeding, an action in a foreign court or international 
tribunal, or an arbitration, or the initiation, conduct, or disposition 
by the Corporation of a particular case involving a determination on the 
record after opportunity for a hearing.



Sec. 1622.6  Procedures for closing discussion or withholding information.

    (a) No meeting or portion of a meeting shall be closed to public 
observation, and no information about a meeting shall be withheld from 
the public, except by a recorded vote of a majority of the Directors 
with respect to each meeting or portion thereof proposed to be closed to 
the public, or with respect to any information that is proposed to be 
withheld.
    (b) A separate vote of the Directors shall be taken with respect to 
each meeting or portion thereof proposed to be closed to the public, or 
with respect to any information which is proposed to be withheld; 
except, a single vote may be taken with respect to a series of meetings 
or portions thereof which are proposed to be closed to the public, or 
with respect to any information concerning such series of meetings, so 
long as each meeting in such series involves the same particular matters 
and is scheduled to be held no more than thirty days after the initial 
meeting in such series.
    (c) Whenever any person's interest may be directly affected by a 
matter to be discussed at a meeting, the person may request that a 
portion of the meeting be closed to public observation by filing a 
written statement with the Secretary. The statement shall set forth the 
person's interest, the manner in which that interest will be affected at 
the meeting, and the grounds upon which closure is claimed to be proper 
under Sec. 1622.5. The Secretary shall promptly communicate the request 
to the Directors, and a recorded vote as required by paragraph (a) of 
this section shall be taken if any Director so requests.
    (d) With respect to each vote taken pursuant to paragraphs (a) 
through (c) of this section, the vote of each Director participating in 
the vote shall be recorded and no proxies shall be allowed.
    (e) With respect to each vote taken pursuant to paragraphs (a) 
through (c) of this section, the Corporation shall, within one business 
day, make publicly available:
    (1) A written record of the vote of each Director on the question;
    (2) A full written explanation of the action closing the meeting, 
portion(s) thereof, or series of meetings, with reference to the 
specific exemptions listed in Sec. 1622.5, including a statement of 
reasons as to why the specific discussion comes within the cited 
exemption and a list of all persons expected to attend the meeting(s) or 
portion(s) thereof and their affiliation.

[49 FR 30940, Aug. 2,1984, as amended at 50 FR 30714, July 29,1985]



Sec. 1622.7  Certification by the General Counsel.

    Before a meeting or portion thereof is closed, the General Counsel 
shall publicly certify that, in his opinion, the meeting may be so 
closed to the public and shall state each relevant exemption. A copy of 
the certification, together with a statement from the presiding officer 
of the meeting setting forth the time and place of the meeting and the 
persons present, shall be retained by the Corporation.



Sec. 1622.8  Records of closed meetings.

    (a) The Secretary shall make a complete transcript or electronic 
recording adequate to record fully the proceedings of each meeting or 
portion thereof closed to the public, except

[[Page 463]]

that in the case of meeting or any portion thereof closed to the public 
pursuant to paragraph (h) of Sec. 1622.5, a transcript, a recording, or 
a set of minutes shall be made.
    Any such minutes shall describe all matters discussed and shall 
provide a summary of any actions taken and the reasons therefor, 
including a description of each Director's views expressed on any item 
and the record of each Director's vote on the question. All documents 
considered in connection with any action shall be identified in the 
minutes.
    (b) A complete copy of the transcript, recording, or minutes 
required by paragraph (a) of this section shall be maintained at the 
Corporation for a Board or committee meeting, and at the appropriate 
Regional Office for a council meeting, for a period of two years after 
the meeting, or until one year after the conclusion of any Corporation 
proceeding with respect to which the meeting was held, whichever occurs 
later.
    (c) The Corporation shall make available to the public all portions 
of the transcript, recording, or minutes required by paragraph (a) of 
this section that do not contain information that may be withheld under 
Sec. 1622.5. A copy of those portions of the transcript, recording, or 
minutes that are available to the public shall be furnished to any 
person upon request at the actual cost of duplication or transcription.
    (d) Copies of Corporation records other than notices or records 
prepared under this part may be pursued in accordance with part 1602 of 
these regulations.



Sec. 1622.9  Emergency procedures.

    If, in the opinion of the Chairman, the Directors are rendered 
incapable of conducting a meeting by the acts or conduct of any members 
of the public present at the meeting, the Directors may thereupon 
determine by a recorded vote of the majority of the number of Directors 
present at the meeting that the Chairman or presiding officer of the 
Board shall have the authority to have such members of the public who 
are responsible for such acts or conduct removed from the meeting.

[50 FR 30714, July 29,1985]



Sec. 1622.10  Report to Congress.

    The Corporation shall report to the Congress annually regarding its 
compliance with the requirements of the Government in the Sunshine Act, 
5 U.S.C. 552(b), including a tabulation of the number of meetings open 
to the public, the number of meetings or portions of meetings closed to 
the public, the reasons for closing such meetings or portions thereof, 
and a description of any litigation brought against the Corporation 
under 5 U.S.C. 552b, including any costs assessed against the 
Corporation in such litigation.



PART 1623--SUSPENSION PROCEDURES--Table of Contents




Sec.
1623.1  Purpose.
1623.2  Definitions.
1623.3  Grounds for suspension.
1623.4  Suspension procedures.
1623.5  Time extensions and waiver.
1623.6  Interim funding.

    Authority: 42 U.S.C. 2996e(b)(1); Pub. L. 104-134, 110 Stat. 1321, 
Sec. 509; Pub. L. 105-119, 111 Stat. 2440, Sec. 501(b).

    Source: 63 FR 64648, Nov. 23, 1998, unless otherwise noted.



Sec. 1623.1  Purpose.

    The purpose of this rule is to:
    (a) Ensure that the Corporation is able to take prompt action when 
necessary to safeguard LSC funds or to ensure the compliance of a 
recipient with applicable provisions of law, or a rule, regulation, 
guideline or instruction issued by the Corporation, or the terms and 
conditions of a recipient's grant or contract with the Corporation; and
    (b) Provide procedures for prompt review that will ensure informed 
deliberation by the Corporation when it has made a proposed 
determination that financial assistance to a recipient should be 
suspended.



Sec. 1623.2  Definitions.

    For the purposes of this part:
    (a) Knowing and willful means that the recipient had actual 
knowledge of the fact that its action or lack thereof constituted a 
violation and despite such knowledge, undertook or failed to undertake 
the action.

[[Page 464]]

    (b) Recipient means any grantee or contractor receiving legal 
assistance from the Corporation under section 1006(a)(1)(A) of the LSC 
Act.
    (c) Suspension means an action taken during the term of the 
recipient's current grant or contract with the Corporation that 
withholds financial assistance to a recipient, in whole or in part, 
until the end of the suspension period pending corrective action by the 
recipient or a decision by the Corporation to initiate termination 
proceedings.



Sec. 1623.3  Grounds for suspension.

    (a) Financial assistance provided to a recipient may be suspended 
when the Corporation determines that there has been a substantial 
violation by the recipient of an applicable provision of law, or a rule, 
regulation, guideline or instruction issued by the Corporation, or a 
term or condition of the recipient's current grant or contract with the 
Corporation; and the Corporation has reason to believe that prompt 
action is necessary to:
    (1) Safeguard LSC funds; or
    (2) Ensure immediate corrective action necessary to bring a 
recipient into compliance with an applicable provision of law, or a 
rule, regulation, guideline or instruction issued by the Corporation, or 
the terms and conditions of the recipient's grant or contract with the 
Corporation.
    (b) A determination of whether there has been a substantial 
violation for the purposes of paragraph (a) of this section will be 
based on consideration of the following criteria:
    (1) The number of restrictions or requirements violated;
    (2) Whether the violation represents an instance of noncompliance 
with a substantive statutory or regulatory restriction or requirement, 
rather than an instance of noncompliance with a non-substantive 
technical or procedural requirement;
    (3) The extent to which the violation is part of a pattern of 
noncompliance with LSC requirements or restrictions;
    (4) The extent to which the recipient failed to take action to cure 
the violation when it became aware of the violation; and
    (5) Whether the violation was knowing and wilfull.
    (c) Financial assistance provided to a recipient may also be 
suspended by the Corporation pursuant to a recommendation by the Office 
of Inspector General when the recipient has failed to have an acceptable 
audit in accordance with the guidance promulgated by the Corporation's 
Office of Inspector General.



Sec. 1623.4  Suspension procedures.

    (a) When the Corporation has made a proposed determination, based on 
the grounds set out in Sec. 1623.3, that financial assistance to a 
recipient should be suspended, the Corporation shall serve a written 
proposed determination on the recipient. The proposed determination 
shall:
    (1) State the grounds and effective date for the proposed 
suspension;
    (2) Identify, with reasonable specificity, any facts or documents 
relied upon as justification for the suspension;
    (3) Specify what, if any, corrective action the recipient can take 
to avoid or end the suspension;
    (4) Advise the recipient that it may request, within 5 days of 
receipt of the proposed determination, an informal meeting with the 
Corporation at which it may attempt to show that the proposed suspension 
should not be imposed; and
    (5) Advise the recipient that, within 10 days of its receipt of the 
proposed determination and without regard to whether it requests an 
informal meeting, it may submit written materials in opposition to the 
proposed suspension.
    (b) If the recipient requests an informal meeting with the 
Corporation, the Corporation shall designate the time and place for the 
meeting. The meeting shall occur within 5 days after the recipient's 
request is received.
    (c) The Corporation shall consider any written materials submitted 
by the recipient in opposition to the proposed suspension and any oral 
presentation or written materials submitted by the recipient at an 
informal meeting. If, after considering such materials, the Corporation 
determines that the recipient has failed to show that

[[Page 465]]

the suspension should not become effective, the Corporation may issue a 
written final determination to suspend financial assistance to the 
recipient in whole or in part and under such terms and conditions the 
Corporation deems appropriate and necessary.
    (d) The final determination shall be promptly transmitted to the 
recipient in a manner that verifies receipt of the determination by the 
recipient, and the suspension shall become effective when the final 
determination is received by the recipient or on such later date as is 
specified therein.
    (e) The Corporation may at any time rescind or modify the terms of 
the final determination to suspend and, on written notice to the 
recipient, may reinstate the suspension without further proceedings 
under this part. Except as provided in paragraph (f) of this section, 
the total time of a suspension shall not exceed 30 days, unless the 
Corporation and the recipient agree to a continuation of the suspension 
for up to a total of 60 days without further proceedings under this 
part.
    (f) When the suspension is based on the grounds in Sec. 1623.3(c), a 
recipient's funds may be suspended until an acceptable audit is 
completed.



Sec. 1623.5  Time extensions and waiver.

    (a) Except for the time limits in Sec. 1623.4(e), any period of time 
provided in this part may be extended by the Corporation for good cause. 
Requests for extensions of time shall be considered in light of the 
overall objective that the procedures prescribed by this part ordinarily 
shall be concluded within 30 days of the service of the proposed 
determination.
    (b) Any other provision of this part may be waived or modified by 
agreement of the recipient and the Corporation for good cause.
    (c) Failure by the Corporation to meet a time requirement of this 
part shall not preclude the Corporation from suspending a recipient's 
grant or contract with the Corporation.



Sec. 1623.6  Interim funding.

    (a) Pending the completion of suspension proceedings under this 
part, the Corporation shall provide the recipient with the level of 
financial assistance provided for under its current grant or contract 
with the Corporation.
    (b) Funds withheld pursuant to a suspension shall be returned to the 
recipient at the end of the suspension period.



PART 1624--PROHIBITION AGAINST DISCRIMINATION ON THE BASIS OF HANDICAP--Table of Contents




Sec.
1624.1  Purpose.
1624.2  Application.
1624.3  Definitions.
1624.4  Discrimination prohibited.
1624.5  Accessibility of legal services.
1624.6  Employment.
1624.7  Self-evaluation.
1624.8  Enforcement.

    Authority: 49 U.S.C. 794; 42 U.S.C. 2996f(a) (1) and (3).

    Source: 44 FR 55178, Sept. 25, 1979, unless otherwise noted.



Sec. 1624.1  Purpose.

    The purpose of this part is to assist and provide guidance to legal 
services programs supported in whole or in part by Legal Services 
Corporation funds in removing any impediments that may exist to the 
provision of legal assistance to handicapped persons eligible for such 
assistance in accordance with section 504 of the Rehabilitation Act of 
1973, as amended, 29 U.S.C. section 794 and with sections 1007(a) (1) 
and (3) of the Legal Services Corporation Act, as amended, 42 U.S.C. 
sections 2996f(a) (1) and (3), with respect to the provision of services 
to and employment of handicapped persons.



Sec. 1624.2  Application.

    This part applies to each legal services program receiving financial 
assistance from the Legal Services Corporation.



Sec. 1624.3  Definitions.

    As used in this part, the term:
    (a) Legal services program means any recipient, as defined by 
Sec. 1600.1 of these regulations, or any other public or private agency, 
institution, organization, or other entity, or any person to which or to 
whom financial assistance is extended by the Legal Services Corporation 
directly or through another agency, institution, organization, entity or

[[Page 466]]

person, including any successor, assignee, or transferee of a legal 
services program, but does not include the ultimate beneficiary of legal 
assistance;
    (b) Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, or other real or personal 
property or interest in such property;
    (c)(1) Handicapped person means any person who: (i) Has a physical 
or mental impairment which substantially limits one or more major life 
activities, (ii) has a record of such an impairment, or (iii) is 
regarded as having such an impairment;
    (2) As used in paragraph (a)(1) of this section the phrase:
    (i) Physical or mental impairment means: (A) Any physiological 
disorder or condition, cosmetic disfigurement, or anatomical loss 
affecting one or more of the following body systems: Neurological; 
musculoskeletal; special sense organs; digestive; genitourinary; hemic 
and lymphatic; skin; and endocrine; or (B) any mental or psychological 
disorder, such as mental retardation, organic brain syndrome, emotional 
or mental illness, and specific learning disabilities; The phrase 
includes, but is not limited to, such diseases and conditions as 
orthopedic, visual, speech, and hearing impairments, cerebral palsy, 
epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, 
diabetes, mental retardation, emotional illness, and drug addiction and 
alcoholism;
    (ii) Major life activities means functions such as caring for one's 
self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working;
    (iii) Has a record of such impairment means has a history of, or has 
been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities;
    (iv) Is regarded as having an impairment means: (A) Has a physical 
or mental impairment that does not substantially limit major life 
activities but is treated by a legal services program as constituting 
such a limitation; (B) has a physical or mental impairment that 
substantially limits major life activities only as a result of the 
attitudes of others toward such impairments; or (C) has none of the 
impairments defined in paragraph (c)(2)(i) of this section but is 
treated by a legal services program as having such an impairment;
    (d) Qualified handicapped person means: (1) With respect to 
employment, a handicapped person who, with reasonable accommodation, can 
perform the essential functions of the job in question; (2) with respect 
to other services, a handicapped person who meets the eligibility 
requirements for the receipt of such services from the legal services 
program.



Sec. 1624.4  Discrimination prohibited.

    (a) No qualified handicapped person shall, on the basis of handicap, 
be excluded from participation in, be denied the benefits of, or 
otherwise be subjected to discrimination by any legal services program, 
directly or through any contractural or another arrangement.
    (b) A legal services program may not deny a qualified handicapped 
person the opportunity to participate in any of its programs or 
activities or to receive any of its services provided at a facility on 
the ground that the program operates a separate or different program, 
activity or facility that is specifically designed to serve handicapped 
persons.
    (c) In determining the geographic site or location of a facility, a 
legal services program may not make selections that have the purpose or 
effect of excluding handicapped persons from, denying them the benefits 
of, or otherwise subjecting them to discrimination under any program or 
activity of the legal services program.
    (d)(1) A legal services program that employs a total of fifteen or 
more persons, regardless of whether such persons are employed at one or 
more locations, shall provide, when necessary, appropriate auxiliary 
aids to persons with impaired sensory, manual or speaking skills, in 
order to afford such persons an equal opportunity to benefit from the 
legal services program's services. A legal services program is not 
required to maintain such aids at all times, provided they can be 
obtained on reasonable notice.

[[Page 467]]

    (2) The Corporation may require legal services programs with fewer 
than fifteen employees to provide auxiliary aids where the provision of 
such aids would not significantly impair the ability of the legal 
services program to provide its services.
    (3) For the purpose of Sec. 1624.4(d) (1) and (2), auxiliary aids 
include, but are not limited to, brailled and taped material, 
interpreters, telecommunications equipment for the deaf, and other aids 
for persons with impaired hearing, speech or vision.
    (e) A legal services program shall take reasonable steps to insure 
that communications with its applicants, employees, and beneficiaries 
are available to persons with impaired vision and hearing.
    (f) A legal services program may not deny handicapped persons the 
opportunity to participate as members of or in the meetings or 
activities of any planning or advisory board or process established by 
or conducted by the legal services program, including but not limited to 
meetings and activities conducted in response to the requirements of 
part 1620 of these regulations.



Sec. 1624.5  Accessibility of legal services.

    (a) No qualified handicapped person shall, because a legal services 
program's facilities are inaccessible to or unusable by handicapped 
persons, be denied the benefits of, be excluded from participation in, 
or otherwise be subjected to discrimination by any legal services 
program.
    (b) A legal services program shall conduct its programs and 
activities so that, when viewed in their entirety, they are readily 
accessible to and usable by handicapped persons. This paragraph does not 
necessarily require a legal services program to make each of its 
existing facilities or every part of an existing facility accessible to 
and usable by handicapped persons, or require a legal services program 
to make structural changes in existing facilities when other methods are 
effective in achieving compliance. In choosing among available methods 
for meeting the requirements of this paragraph, a legal services program 
shall give priority to those methods that offer legal services to 
handicapped persons in the most integrated setting appropriate.
    (c) A legal services program shall, to the maximum extent feasible, 
insure that new facilities that it rents or purchases are accessible to 
handicapped persons. Prior to entering into any lease or contract for 
the purchase of a building, a legal services program shall submit a 
statement to the appropriate Regional Office certifying that the 
facilities covered by the lease or contract will be accessible to 
handicapped persons, or if the facilities will not be accessible, a 
detailed description of the efforts the program made to obtain 
accessible space, the reasons why the inaccessible facility was 
nevertheless selected, and the specific steps that will be taken by the 
legal services program to insure that its services are accessible to 
handicapped persons who would otherwise use that facility. After a 
statement certifying facility accessibility has been submitted, 
additional statements need not be resubmitted with respect to the same 
facility, unless substantial changes have been made in the facility that 
affect its accessibility.
    (d) A legal services program shall ensure that new facilities 
designed or constructed for it are readily accessible to and usable by 
handicapped persons. Alterations to existing facilities shall, to the 
maximum extent feasible, be designed and constructed to make the altered 
facilities readily accessible to and usable by handicapped persons.



Sec. 1624.6  Employment.

    (a) No qualified handicapped person shall, on the basis of handicap, 
be subjected to discrimination in employment by any legal services 
program.
    (b) A legal services program shall make all decisions concerning 
employment under any program or activity to which this part applies in a 
manner that insures that discrimination on the basis of handicap does 
not occur, and may not limit, segregate, or classify applicants or 
employees in any way that adversely affects their opportunities or 
status because of handicap.
    (c) The prohibition against discrimination in employment applies to 
the following activities:

[[Page 468]]

    (1) Recruitment, advertising, and the processing of applications for 
employment;
    (2) Hiring, upgrading, promotion, award of tenure, demotion, 
transfer, layoff, termination, right of return from layoff, and 
rehiring;
    (3) Rates of pay or any other form of compensation and changes in 
compensation;
    (4) Job assignments, job classifications, organizational structures, 
position descriptions, lines of progression, and seniority lists;
    (5) Leaves of absence, sick leave, or any other leave;
    (6) Fringe benefits available by virtue of employment, whether or 
not adminstered by the legal services program;
    (7) Selection and financial support for training, including 
apprenticeship, professional meetings, conferences, and other related 
activities, and selection for leaves of absence to pursue training;
    (8) Employer sponsored activities, including social or recreational 
programs; and
    (9) Any other term, condition, or privilege of employment.
    (d) A legal services program may not participate in any contractual 
or other relationship with persons, agencies, organizations or other 
entities such as, but not limited to, employment and referral agencies, 
labor unions, organizations providing or administering fringe benefits 
to employees of the legal services program, and organizations providing 
training and apprenticeship programs, if the practices of such person, 
agency, organization, or other entity have the effect of subjecting 
qualified handicapped applicants or employees to discrimination 
prohibited by this paragraph.
    (e) A legal services program shall make reasonable accommodation to 
the known physical or mental limitations of an otherwise qualified 
handicapped applicant or employee unless the accommodation would impose 
an undue hardship on the operation of the program.
    (1) For purposes of this paragraph (e), reasonable accommodation may 
include (i) making facilities used by employees readily accessible to 
and usable by handicapped persons, and (ii) job restructuring, part-time 
or modified work schedules, acquisition or modification of equipment or 
devices, the provision of readers or interpreters, and other similar 
actions.
    (2) In determining whether an accommodation would impose an undue 
hardship on the operation of a legal services program, factors to be 
considered include, but are not limited to, the overall size of the 
legal services program with respect to number of employees, number and 
type of facilities, and size of budget, and the nature and costs of the 
accommodation needed.
    (3) A legal services program may not deny any employment opportunity 
to a qualified handicapped employee or applicant if the basis for the 
denial is a need to make reasonable accommodation to the physical or 
mental limitations of the employee or applicant.
    (f) A legal services program may not use employment tests or 
criteria that discriminate against handicapped persons, and shall insure 
that employment tests are adapted for use by persons who have handicaps 
that impair sensory, manual, or speaking skills.
    (g) A legal services program may not conduct a pre-employment 
medical examination or make a pre-employment inquiry as to whether an 
applicant is a handicapped person or as to the nature or severity of a 
handicap except under the circumstances described in 45 CFR 84.14(a) 
through (d)(2). The Corporation shall have access to relevant 
information obtained in accordance with this section to permit 
investigations of alleged violations of this part.
    (h) A legal services program shall post in prominent places in each 
of its offices a notice stating that the legal services program does not 
discriminate on the basis of handicap.
    (i) Any recruitment materials published or used by a legal services 
program shall include a statement that the legal services program does 
not discriminate on the basis of handicap.



Sec. 1624.7  Self-evaluation.

    (a) By January 1, 1980, a legal services program shall evaluate, 
with the

[[Page 469]]

assistance of interested persons including handicapped persons or 
organizations representing handicapped persons, its current facilities, 
policies and practices and the effects thereof to determine the extent 
to which they may or may not comply with the requirements of this part 
and the cost of structural or other changes that would be necessary to 
make each of its facilities accessible to handicapped persons.
    (b) The results of the self-evaluation, including steps the legal 
services program plans to take to correct any deficiencies revealed and 
the timetable for completing such steps, shall be made available for 
review by the Corporation and interested members of the public.



Sec. 1624.8  Enforcement.

    The procedures described in part 1618 of these regulations shall 
apply to any alleged violation of this part by a legal services program.



PART 1626--RESTRICTIONS ON LEGAL ASSISTANCE TO ALIENS--Table of Contents




Sec.
1626.1  Purpose.
1626.2  Definitions.
1626.3  Prohibition.
1626.4  Applicability.
1626.5  Alien status and eligibility.
1626.6  Verification of citizenship.
1626.7  Verification of eligible alien status.
1626.8  Emergencies.
1626.9  Change in circumstances.
1626.10  Special eligibility questions.
1626.11  H-2 agricultural workers.
1626.12  Recipient policies, procedures and recordkeeping.

Appendix to Part 1626--Alien Eligibility for Representation by LSC 
          Programs

    Authority: Pub. L. 104-208, 110 Stat. 1321; Pub. L. 104-134, 110 
Stat. 3009.

    Source: 62 FR 19414, Apr. 21, 1997, unless otherwise noted.



Sec. 1626.1  Purpose.

    This part is designed to ensure that recipients provide legal 
assistance only to citizens of the United States and eligible aliens. It 
is also designed to assist recipients in determining the eligibility and 
immigration status of persons who seek legal assistance.



Sec. 1626.2  Definitions.

    (a) Citizen includes persons described or defined as citizens or 
nationals of the United States in 8 U.S.C. 1101(a)(22) and Title III of 
the Immigration and Nationality Act (INA), Chapter 1 (8 U.S.C. 1401 et 
seq.) (citizens by birth) and Chapter 2 (8 U.S.C. 1421 et seq.) 
(citizens by naturalization) or antecedent citizen statutes.
    (b) Eligible alien means a person who is not a citizen but who meets 
the requirements of Sec. 1626.5.
    (c) Ineligible alien means a person who is not a citizen and who 
does not meet the requirements of Sec. 1626.5.
    (d) Rejected refers to an application for adjustment of status that 
has been denied by the Immigration and Naturalization Service (INS) and 
is not subject to further administrative appeal.
    (e) To provide legal assistance on behalf of an ineligible alien is 
to render legal assistance to an eligible client which benefits an 
ineligible alien and does not affect a specific legal right or interest 
of the eligible client.
    (f) Battered or subjected to extreme cruelty includes, but is not 
limited to, being the victim of any act or threatened act of violence, 
including any forceful detention, which results or threatens to result 
in physical or mental injury. Psychological or sexual abuse or 
exploitation, including rape, molestation, incest (if the victim is a 
minor), or forced prostitution shall be considered acts of violence. 
Other abusive actions may also be acts of violence under certain 
circumstances, including acts that, in and of themselves, may not 
initially appear violent but that are a part of an overall pattern of 
violence.
    (g) Legal assistance directly related to the prevention of, or 
obtaining relief from, the battery or cruelty means any legal assistance 
that will assist victims of abuse in their escape from the abusive 
situation, ameliorate the current effects of the abuse, or protect 
against future abuse.
    (h) United States, for purposes of this part, has the same meaning 
given that term in 8 U.S.C. 1101(a)(38) of the INA.

[62 FR 19414, Apr. 21, 1997, as amended at 62 FR 45757, Aug. 29, 1997]

[[Page 470]]



Sec. 1626.3  Prohibition.

    Except as provided in Sec. 1626.4, recipients may not provide legal 
assistance for or on behalf of an ineligible alien. For purposes of this 
part, legal assistance does not include normal intake and referral 
services.



Sec. 1626.4  Applicability.

    (a) Except for Sec. 1626.12, the requirements of this part do not 
apply to the use of non-LSC funds by a recipient to provide legal 
assistance to an alien:
    (1) Who has been battered or subjected to extreme cruelty in the 
United States by a spouse or a parent, or by a member of the spouse's or 
parent's family residing in the same household as the alien and the 
spouse or parent consented or acquiesced to such battery or cruelty; or
    (2) Whose child has been battered or subjected to extreme cruelty in 
the United States by a spouse or parent of the alien (without the active 
participation of the alien in the battery or extreme cruelty), or by a 
member of the spouse's or parent's family residing in the same household 
as the alien and the spouse or parent consented or acquiesced to such 
battery or cruelty, and the alien did not actively participate in such 
battery or cruelty; provided that the legal assistance is directly 
related to the prevention of, or obtaining relief from, the battery or 
cruelty.
    (b) Recipients are not required by Sec. 1626.12 to maintain records 
regarding the immigration status of clients represented pursuant to 
paragraph (a) of this section.



Sec. 1626.5  Alien status and eligibility.

    Subject to all other eligibility requirements and restrictions of 
the LSC Act and regulations and other applicable law, a recipient may 
provide legal assistance to an alien who is present in the United States 
and who is within one of the following categories:
    (a) An alien lawfully admitted for permanent residence as an 
immigrant as defined by section 1101(a)(20) of the INA (8 U.S.C. 
1101(a)(20));
    (b) An alien who is either married to a United States citizen or is 
a parent or an unmarried child under the age of 21 of such a citizen and 
who has filed an application for adjustment of status to permanent 
resident under the INA, and such application has not been rejected;
    (c) An alien who is lawfully present in the United States pursuant 
to an admission under section 207 of the INA (8 U.S.C. 1157) (relating 
to refugee admissions) or who has been granted asylum by the Attorney 
General under section 208 of the INA (8 U.S.C. 1158).
    (d) An alien who is lawfully present in the United States as a 
result of being granted conditional entry pursuant to section 203(a)(7) 
of the INA (8 U.S.C. 1153(a)(7), as in effect on March 31, 1980) before 
April 1, 1980, because of persecution or fear of persecution on account 
of race, religion, or political opinion or because of being uprooted by 
catastrophic natural calamity;
    (e) An alien who is lawfully present in the United States as a 
result of the Attorney General's withholding of deportation pursuant to 
section 243(h) of the INA (8 U.S.C. 1253(h)); or
    (f) An alien who meets the requirements of Sec. 1626.10 or 1626.11.



Sec. 1626.6  Verification of citizenship.

    (a) A recipient shall require all applicants for legal assistance 
who claim to be citizens to attest in writing in a standard form 
provided by the Corporation that they are citizens, unless the only 
service provided for a citizen is brief advice and consultation by 
telephone which does not include continuous representation.
    (b) When a recipient has reason to doubt that an applicant is a 
citizen, the recipient shall require verification of citizenship. A 
recipient shall not consider factors such as a person's accent, limited 
English-speaking ability, appearance, race or national origin as a 
reason to doubt that the person is a citizen.
    (1) If verification is required, a recipient may accept originals, 
certified copies, or photocopies that appear to be complete, correct and 
authentic of any of the following documents as evidence of citizenship:
    (i) United States passport;
    (ii) Birth certificate;
    (iii) Naturalization certificate;

[[Page 471]]

    (iv) United States Citizenship Identification Card (INS Form 1-197 
or I-197); or
    (v) Baptismal certificate showing place of birth within the United 
States and date of baptism within two months after birth.
    (2) A recipient may also accept any other authoritative document 
such as a document issued by INS, by a court or by another governmental 
agency, that provides evidence of citizenship.
    (3) If a person is unable to produce any of the above documents, the 
person may submit a notarized statement signed by a third party, who 
shall not be an employee of the recipient and who can produce proof of 
that party's own United States citizenship, that the person seeking 
legal assistance is a United States citizen.



Sec. 1626.7  Verification of eligible alien status.

    (a) An alien seeking representation shall submit appropriate 
documents to verify eligibility, unless the only service provided for an 
eligible alien is brief advice and consultation by telephone which does 
not include continuous representation of a client.
    (1) As proof of eligibility, a recipient may accept originals, 
certified copies, or photocopies that appear to be complete, correct and 
authentic, of any of the documents found in the appendix to this part.
    (2) A recipient may also accept any other authoritative document 
issued by the INS, by a court or by another governmental agency, that 
provides evidence of alien status.
    (b) A recipient shall upon request furnish each person seeking legal 
assistance with a list of the documents in the appendix to this part.



Sec. 1626.8  Emergencies.

    In an emergency, legal services may be provided prior to compliance 
with Secs. 1626.6 and Sec. 1626.7 if:
    (a) An applicant cannot feasibly come to the recipient's office or 
otherwise transmit written documentation to the recipient before 
commencement of the representation required by the emergency, and the 
applicant provides oral information to establish eligibility which the 
recipient records, and the applicant submits the necessary documentation 
as soon as possible; or
    (b) An applicant is able to come to the recipient's office but 
cannot produce the required documentation before commencement of the 
representation, and the applicant signs a statement of eligibility and 
submits the necessary documentation as soon as possible; and
    (c) The recipient informs clients accepted under paragraph (a) or 
(b) of this section that only limited emergency legal assistance may be 
provided without satisfactory documentation and that, if the client 
fails to produce timely and satisfactory written documentation, the 
recipient will be required to discontinue representation consistent with 
the recipient's professional responsibilities.



Sec. 1626.9  Change in circumstances.

    If, to the knowledge of the recipient, a client who was an eligible 
alien becomes ineligible through a change in circumstances, continued 
representation is prohibited by this part and a recipient must 
discontinue representation consistent with applicable rules of 
professional responsibility.



Sec. 1626.10  Special eligibility questions.

    (a) This part is not applicable to recipients providing services in 
the Commonwealth of the Northern Mariana Islands, the Republic of Palau, 
the Federated States of Micronesia, or the Republic of the Marshall 
Islands.
    (b) All Canadian-born American Indians at least 50% Indian by blood 
are eligible to receive legal assistance provided they are otherwise 
eligible under the Act.
    (c) Members of the Texas Band of Kickapoo are eligible to receive 
legal assistance provided they are otherwise eligible under the Act.
    (d) An alien who qualified as a special agricultural worker and 
whose status is adjusted to that of temporary resident alien under the 
provisions of the Immigration Reform and Control Act (``IRCA'') is 
considered a permanent resident alien for all purposes except 
immigration under the provisions of section 302 of 100 Stat. 3422, 8 
U.S.C. 1160(g). Since the status of these aliens is that of permanent 
resident alien

[[Page 472]]

under section 1101(a)(20) of Title 8, these workers may be provided 
legal assistance. These workers are ineligible for legal assistance in 
order to obtain the adjustment of status of temporary resident under 
IRCA, but are eligible for legal assistance after the application for 
adjustment of status to that of temporary resident has been filed, and 
the application has not been rejected.
    (e) A recipient may provide legal assistance to indigent foreign 
nationals who seek assistance pursuant to the Hague Convention on the 
Civil Aspects of International Child abduction and the Federal 
implementing statute, the International Child Abduction Remedies Act, 42 
U.S.C. 11607(b), provided that they are otherwise financially eligible.

[62 FR 19414, Apr. 21, 1997; 62 FR 22895, Apr. 28, 1997]



Sec. 1626.11  H-2 agricultural workers.

    (a) Nonimmigrant agricultural workers admitted under the provisions 
of 8 U.S.C. 1101(a)(15)(h)(ii), commonly called H-2 workers, may be 
provided legal assistance regarding the matters specified in paragraph 
(b) of this section.
    (b) The following matters which arise under the provisions of the 
worker's specific employment contract may be the subject of legal 
assistance by an LSC-funded program:
    (1) Wages;
    (2) Housing;
    (3) Transportation; and
    (4) Other employment rights as provided in the worker's specific 
contract under which the nonimmigrant worker was admitted.



Sec. 1626.12  Recipient policies, procedures and recordkeeping.

    Each recipient shall adopt written policies and procedures to guide 
its staff in complying with this part and shall maintain records 
sufficient to document the recipient's compliance with this part.

[62 FR 19414, Apr. 21, 1997; 62 FR 22895, Apr. 28, 1997]
                          Appendix to Part 1626

                              Alien Eligibility for Representation by LSC Programs
----------------------------------------------------------------------------------------------------------------
                                    Immigration Act     LSC Regs 45 CFR Sec.
         Alien category                  (INA)                  1626            Examples of acceptable documents
----------------------------------------------------------------------------------------------------------------
LAWFUL PERMANENT RESIDENT.......  INA Sec.            Sec.  1626.5(a)          I-551 or I-151
                                   101(a)(20) 8 USC,                           or I-181 (Memorandum of Creation
                                   Sec.  1101(a)(20).                           of Record of Lawful Permanent
                                                                                Residence), with approval stamp;
                                                                               or passport bearing immigrant
                                                                                visa or stamp indicating
                                                                                admission for lawful permanent
                                                                                residence
                                                                               or order granting residency or
                                                                                suspension or adjustment of
                                                                                status
                                                                               or I-327 Reentry Permit
                                                                               or I-94, with stamp indicating
                                                                                admission for lawful permanent
                                                                                residence
                                                                               or any computerized verification
                                                                                from INS or other authoritative
                                                                                document.

[[Page 473]]

 
ALIEN WHO IS                      INA Secs.  209,     Sec.  1626.5(b)          Proof of relationship to U.S.
--married to U.S. citizen,......   210, 244,                                    citizen*
--parent of U.S. citizen, or....   (replaced by INA                            and
--unmarried child under 21 of      Sec.  240A(b) for                           I-485 (application for adjustment
 U.S. citizen.                     aliens in                                    of status on the basis of a
and.............................   proceedings                                  family-based visa, registry,
--has filed an application for     initiated after 4/                           Cuban Adjustment, Cuban-Haitian
 adjustment of status to           1/97), 245, 245A,                            Adjustment, or spouses and
 permanent residency.              249 8 USC Secs.                              children eligible for Violence
                                   1159, 1160, 1259,                            Against Women Act relief) and
                                   1254, 1255,                                  proof of filing**
                                   1255a, 1259.                                or I-256A or EOIR-40 (application
                                                                                for suspension of
                                                                                deportation)*** and proof of
                                                                                filing**
                                                                               or EOIR-42 (application for
                                                                                cancellation of removal) and
                                                                                proof of filing**
                                                                               or OF-230 (application at
                                                                                consulate for visa) and proof of
                                                                                filing with consulate**
                                                                               or I-360 (application to qualify
                                                                                as abused spouse or child under
                                                                                the Violence Against Women Act)
                                                                               or I-688B or I-766 (employment
                                                                                authorization document) coded 8
                                                                                CFR Sec.  274a.12(c)(9)
                                                                                (applicant for adjustment)
                                                                               or (c)(16)(registry applicant) or
                                                                                (c)(10)(suspension applicant)
                                                                               or letter or Form I-797 from INS
                                                                                acknowledging receipt of I-485;
                                                                               or I-94, with stamp indicated
                                                                                entry pursuant to advance parole
                                                                                (INASec.  212(d)(5)) for pending
                                                                                Sec.  245;
                                                                               or I-512 (advance parole),
                                                                                indicating entry to pursue
                                                                                pending Sec.  245 application
                                                                               or passport, with stamp or
                                                                                writing by INS officer,
                                                                                indicating pending Sec.  245
                                                                                application
                                                                               or I-130 (visa petition) and
                                                                                proof of filing**
                                                                               or any computerized verification
                                                                                from INS or other authoritative
                                                                                document
                                                                               *Proof of relationship may
                                                                                include a copy of the alien's
                                                                                marriage certificate accompanied
                                                                                by proof of the spouse's U.S.
                                                                                citizenship; a copy of the birth
                                                                                certificate, baptismal
                                                                                certificate, adoption decree or
                                                                                other documents demonstrating
                                                                                that the alien is the parent of
                                                                                a U.S. citizen under the age of
                                                                                21; a copy of the alien's birth
                                                                                certificate, baptismal
                                                                                certificate, adoption decree, or
                                                                                other documents demonstrating
                                                                                that the alien is a child under
                                                                                the age of 21, accompanied by
                                                                                proof that the alien's parent is
                                                                                a U.S. citizen; or in lieu of
                                                                                the above, a copy of INS Form I-
                                                                                130 (visa petition) containing
                                                                                information that demonstrates
                                                                                that the alien is related to
                                                                                such a U.S. citizen, accompanied
                                                                                by proof of filing.
                                                                               **Proof of filing may include a
                                                                                fee receipt showing that the
                                                                                application was filed with the
                                                                                INS or the immigration court; a
                                                                                filing stamp showing that the
                                                                                application was filed; or a copy
                                                                                of the application accompanied
                                                                                by a notarized statement signed
                                                                                by the alien that such form was
                                                                                filed.
                                                                               ***Note: ``cancellation of
                                                                                removal and adjustment of
                                                                                status'' replaces ``suspension
                                                                                of deportation'' for aliens in
                                                                                proceedings initiated on or
                                                                                after April 1, 1997.
REFUGEE.........................  INA Sec.  207, 8    Sec.  1626.5(c)          I-94 or passport stamped
                                   USC Sec.  1157.                              ``refugee'' or ``Sec.  207''
                                                                               or I-688B or I-766 coded 8 CFR
                                                                                Sec.  274a.12(a)(3)(Refugee) or
                                                                                (a)(4)(paroled asylees)
                                                                               or I-571 refugee travel document,
                                                                               or any computerized verification
                                                                                from INS or other authoritative
                                                                                document.
ASYLEE..........................  INA Sec.  208 8     Sec.  1626.5 (c)         I-94 or passport stamped
                                   USC Sec.  1158.                              ``asylee'' on ``Sec.  208''
                                                                               or order granting asylum from
                                                                                INS, immigration judge, BIA, or
                                                                                federal court
                                                                               or I-571 refugee travel document
                                                                               or I-688B or I-766 coded 8 CFR
                                                                                Sec.  274a.12(a) (5)(asylee)
                                                                               or other computerized
                                                                                verification from INS or other
                                                                                authoritative document.

[[Page 474]]

 
GRANTING WITHHOLDING OF           INA Sec.  243(h) 8  Sec.  1626.5(e)          I-94 stamped ``Sec.  243(h)'' or
 DEPORTATION.                      USC Sec.  1253(h)                            order granting withholding of
                                   (as of 4/1/97,                               deportation from INS,
                                   repealed and                                 immigration court, BIA, or
                                   redesignated INA                             federal court
                                   Sec.  241(b)(3),                            or I-688B or I-766 coded 8 CFR
                                   ``Restriction on                             Sec.  274a.12(a)(10)(withholding
                                   Removal'').                                  of deportation)
                                                                               or I-571 refugee travel document;
                                                                               or any computerized verification
                                                                                from INS or other authoritative
                                                                                document.
CONDITIONAL ENTRANT.............  INA Sec.            Sec.  1626.5(d)          I-94 or passport stamped
                                   203(a)(7) (prior                             ``conditional entrant''
                                   to 4/1/80), 8 USC                           or any computerized verification
                                   Sec.  1153(a)(7).                            from INS or other authoritative
                                                                                document.
AGRICULTURAL WORKER.............  INA Sec.            Sec.  1626.11            I-94 or passport stamped ``H-2A''
                                   101(a)(15)                                  or any computerized verification
                                   (H)(II), 8 USC                               from INS or other authoritative
                                   Sec.  1101(a)(15)                            document.
                                   (H)(II).
SPECIAL AGRICULTURAL WORKER       INA Sec.  210, 8    Sec.  1626.10(d)         I-688, 688A, 688 or 766
 TEMPORARY RESIDENT.               USC Sec.  1160.                              indicating issuance under Sec.
                                                                                210 (or under 8 CFR Sec.
                                                                                274a.12 (a)(2), with other
                                                                                evidence indicating eligibility
                                                                                under INA Sec.  210).
                                                                               or any computerized verification
                                                                                from INS or other authoritative
                                                                                document.
----------------------------------------------------------------------------------------------------------------
 National Immigration Law Center 3/7/97.


[62 FR 19414, Apr. 21, 1997; 62 FR 24159, May 2, 1997]



PART 1627--SUBGRANTS AND MEMBERSHIP FEES OR DUES--Table of Contents




Sec.
1627.1  Purpose.
1627.2  Definitions.
1627.3  Requirements for all subgrants.
1627.4  Membership fees or dues.
1627.5  Contributions.
1627.6  Transfers to other recipients.
1627.7  Tax sheltered annuities, retirement accounts and pensions.
1627.8  Recipient policies, procedures and recordkeeping.

    Authority: 42 U.S.C. 2996e(b)(1), 2996f(a), and 2996g(e); Pub. L. 
104-208, 110 Stat 3009; Pub. L. 104-134, 110 Stat 1321.

    Source: 48 FR 54209, Nov. 30, 1983, unless otherwise noted.



Sec. 1627.1  Purpose.

    In order to promote accountability for Corporation funds and the 
observance of the provisions of the Legal Services Corporation Act and 
the Corporation's regulations adopted pursuant thereto, it is necessary 
to set out the rules under which Corporation funds may be transferred by 
recipients to other organizations (including other recipients).



Sec. 1627.2  Definitions.

    (a) Recipient as used in this part means any recipient as defined in 
section 1002(6) of the Act and any grantee or contractor receiving funds 
from the Corporation under section 1006(a)(1)(B) or 1006(a)(3) of the 
Act.
    (b)(1) Subrecipient shall mean any entity that accepts Corporation 
funds from a recipient under a grant contract, or agreement to conduct 
certain activities specified by or supported by the recipient related to 
the recipient's programmatic activities. Such activities would normally 
include those that might otherwise be expected to be conducted directly 
by the recipient itself, such as representation of eligible clients, or 
which provide direct support to a recipient's legal assistance 
activities or such activities as client involvement, training or state 
support activities. Such activities would not normally include those 
that are covered by a fee-for-service arrangement, such as those 
provided by a private law firm or attorney representing a recipient's 
clients on a contract or judicare basis, except that any such 
arrangement involving more than $25,000 shall be included. Subrecipient 
activities would normally also not include the provision of goods or 
services by vendors or consultants in the normal course of business if 
such goods or services would not

[[Page 475]]

be expected to be provided directly by the recipient itself, such as 
auditing or business machine purchase and/or maintenance. A single 
entity could be a subrecipient with respect to some activities it 
conducts for a recipient while not being a subrecipient with respect to 
other activities it conducts for a recipient.
    (2) Subgrant shall mean any transfer of Corporation funds from a 
recipient which qualifies the organization receiving such funds as a 
subrecipient under the definition set forth in paragraph (b)(1) of this 
section.
    (c) Membership fees or dues as used in this part means payments to 
an organization on behalf of a program or individual to be a member 
thereof, or to acquire voting or participatory rights therein.

[48 FR 54209, Nov. 30, 1983, as amended at 61 FR 45754, Aug. 29, 1996; 
62 FR 19418, Apr. 21, 1997]



Sec. 1627.3  Requirements for all subgrants.

    (a)(1) All subgrants must be submitted in writing to the Corporation 
for prior, written approval. The submission shall include the terms and 
conditions of the subgrant and the amount of funds intended to be 
transferred.
    (2) The Corporation shall have 45 days to approve, disapprove, or 
suggest modifications to the subgrant. A subgrant which is disapproved 
or to which modifications are suggested may be resubmitted for approval. 
Should the Corporation fail to take action within 45 days, the recipient 
shall notify the Corporation of this failure and, unless the Corporation 
responds within 7 days of the receipt of such notification, the subgrant 
shall be deemed to have been approved.
    (3) Any subgrant not approved according to the procedures of 
paragraph (a)(2) of this section shall be subject to audit disallowance 
and recovery of all the funds expended pursuant thereto.
    (4) Any subgrant which is a continuation of a previous subgrant and 
which expires before March 1, 1984 may be extended until March 1, 1984, 
if a new subgrant agreement is submitted for approval to the Corporation 
by January 15, 1984. In the event the Corporation refuses to allow the 
renewal of any such submitted agreement, the recipient shall be 
permitted to allow the subrecipient 60 days' funding to close out the 
subgrant activities.
    (b)(1) A subgrant may not be for a period longer than one year, and 
all funds remaining at the end of the grant period shall be considered 
part of the recipient's fund balance.
    (2) All subgrants shall contain a provision providing for their 
orderly termination in the event that the recipient's funding is 
terminated or the recipient is not refunded and for suspension of 
activities if the recipient's funding is suspended.
    (3) A substantial change in the work program of a subgrant or an 
increase or decrease in funding of more than 10% shall require 
Corporation approval pursuant to the provisions of section 1627.3(a). 
Minor changes of work program or changes in funding of less than 10% 
shall not require prior Corporation approval, but the Corporation shall 
be informed in writing thereof.
    (c) Recipients shall be responsible for ensuring that subrecipients 
comply with the financial and audit provisions of the Corporation. The 
recipient is responsible for ensuring the proper expenditure, accounting 
for, and audit of delegated funds. Any funds delegated by a recipient to 
a subrecipient shall be subject to the audit and financial requirements 
of the Audit and Accounting Guide for Recipients and Auditors. The 
delegated funds may be separately disclosed and accounted for, and 
reported upon in the audited financial statements of a recipient; or 
such funds may be included in a separate audit report of the 
subrecipient. The relationship between the recipient and subrecipient 
will determine the proper method of financial reporting in accordance 
with generally accepted accounting principles. A subgrant agreement may 
provide for alternative means of assuring the propriety of subrecipient 
expenditures, especially in instances where a large organization 
receives a small subgrant. If such an alternate means is approved by the 
Audit Division of the Corporation, the information provided thereby 
shall satisfy

[[Page 476]]

the recipient's annual audit requirement with regard to the subgrant 
funds.
    (d) The recipient shall be responsible for repaying the Corporation 
for any disallowed expenditures by a subrecipient, irrespective of 
whether the recipient is able to recover such expenditures from the 
subrecipient.
    (e) To assure subrecipient compliance with the Act, Congressional 
restrictions having the force of law, Corporation Regulations (45 CFR 
chapter XVI), and Corporation Guidelines or Instructions, contracts 
between a recipient and a subrecipient shall provide for the same 
oversight rights for the Corporation with respect to subrecipients as 
apply to recipients.

[48 FR 54209, Nov. 30, 1983, as amended at 49 FR 1703, Jan. 13, 1984]



Sec. 1627.4  Membership fees or dues.

    (a) LSC funds may not be used to pay membership fees or dues to any 
private or nonprofit organization, whether on behalf of a recipient or 
an individual.
    (b) Paragraph (a) of this section does not apply to the payment of 
membership fees or dues mandated by a governmental organization to 
engage in a profession, or to the payment of membership fees or dues 
from non-LSC funds.

[62 FR 19418, Apr. 21, 1997]



Sec. 1627.5  Contributions.

    Any contributions or gifts of Corporation funds to another 
organization or to an individual are prohibited.



Sec. 1627.6  Transfers to other recipients.

    (a) The requirements of Sec. 1627.3 shall apply to all subgrants by 
one recipient to another recipient.
    (b) The subrecipient shall audit any funds subgranted to it in its 
annual audit and supply a copy of this audit to the recipient. The 
recipient shall either submit the relevant part of this audit with its 
next annual audit or, if an audit has been recently submitted, submit it 
as an addendum to that recently submitted audit.
    (c) In addition to the provisions of Sec. 1627.3(d), the Corporation 
may hold the subrecipient directly responsible for any disallowed 
expenditures of subgrant funds. Thus, the Corporation may recover all of 
the disallowed costs from either recipient or subrecipient or may divide 
the recovery between the two; the Corporation's total recovery may not 
exceed the amount of expenditures disallowed.
    (d) Funds received by a recipient from other recipients in the form 
of fees and dues shall be accounted for and included in the annual audit 
of the recipient receiving these funds as Corporation funds.



Sec. 1627.7  Tax sheltered annuities, retirement accounts and pensions.

    No provision contained in this part shall be construed to affect any 
payment by a recipient on behalf of its employees for the purpose of 
contributing to or funding a tax sheltered annuity, retirement account, 
or pension fund.

[62 FR 19418, Apr. 21, 1997]



Sec. 1627.8  Recipient policies, procedures and recordkeeping.

    Each recipient shall adopt written policies and procedures to guide 
its staff in complying with this part and shall maintain records 
sufficient to document the recipient's compliance with this part.

[62 FR 19418, Apr. 21, 1997]



PART 1628--RECIPIENT FUND BALANCES--Table of Contents




Sec.
1628.1  Purpose.
1628.2  Definitions.
1628.3  Policy.
1628.4  Procedures.
1628.5  Fund balance deficits.

    Authority: 42 U.S.C. 2996e(b)(1)(A), 2996f (a)(3).

    Source: 65 FR 66642, Nov. 7, 2000, unless otherwise noted.



Sec. 1628.1  Purpose

    The purpose of this part is to set out the Corporation's policies 
and procedures applicable to recipient fund balances. The Corporation's 
fund balance policies are intended to ensure the timely expenditure of 
LSC funds for the effective and economical provision of high quality 
legal assistance to eligible clients.

[[Page 477]]



Sec. 1628.2  Definitions.

    (a) Excess fund balance means a recipient's LSC fund balance that 
exceeds the amount a recipient is permitted to retain under this part.
    (b) LSC support means the sum of:
    (1) The amount of financial assistance awarded by the Corporation to 
the recipient for the fiscal year included in the recipient's annual 
audited financial statement, not including one-time and special purpose 
grants; and
    (2) Any LSC derivative income, as defined in Sec. 1630.2(c), earned 
by the recipient for the fiscal year included in the recipient's annual 
audited financial statement, not including derivative income from one-
time and special purpose grants.
    (c) The LSC fund balance is the excess of LSC support plus the prior 
year carryover amount over expenditures of LSC funds (including capital 
acquisitions), as each is reported in the recipient's annual financial 
statements.
    (d) The fund balance percentage is the amount of the LSC fund 
balance expressed as a percentage of the recipient's LSC support.
    (e) Recipient, as used in this part, means any grantee or contractor 
receiving financial assistance from the Corporation under section 
1006(a)(1)(A) of the LSC Act.



Sec. 1628.3  Policy.

    (a) Recipients are permitted to retain from one fiscal year to the 
next LSC fund balances up to 10% of their LSC support.
    (b) Recipients may request a waiver to retain a fund balance up to a 
maximum of 25% of their LSC support for special circumstances.
    (c) Recipients may request a waiver to retain a fund balance in 
excess of 25% of a recipient's LSC support only for the following 
extraordinary and compelling circumstances when the recipient receives 
an insurance reimbursement, the proceeds from the sale of real property, 
or a payment from a lawsuit in which the recipient was a party.
    (d) A waiver pursuant to paragraph (b) or (c) of this section may be 
granted at the discretion of the Corporation pursuant to the criteria 
set out in Sec. 1628.4(d).
    (e) In the absence of a waiver, a fund balance in excess of 10% of 
LSC support shall be repaid to the Corporation. If a waiver of the 10% 
ceiling is granted, any fund balance in excess of the amount permitted 
to be retained shall be repaid to the Corporation.
    (f) A recovery of an excess fund balance pursuant to this part does 
not constitute a termination under 45 CFR part 1606. See 
Sec. 1606.2(c)(2)(ii).
    (g) One-time and special purpose grants awarded by the Corporation 
are not subject to the fund balance policy set forth in this part. 
Revenue and expenses relating to such grants shall be reflected 
separately in the audit report submitted to the Corporation. This may be 
done by establishing a separate fund or by providing a separate 
supplemental schedule of revenue and expenses related to such grants as 
a part of the audit report. No funds provided under a one-time or 
special purpose grant may be expended subsequent to the expiration date 
of the grant without the prior written approval of the Corporation. 
Absent approval from the Corporation, all unexpended funds under such 
grants shall be returned to the Corporation.



Sec. 1628.4  Procedures.

    (a) Within 30 days of the submission to LSC of its annual audited 
financial statements, a recipient may request a waiver of the 10% 
ceiling on LSC fund balances. The request shall specify:
    (1) The LSC fund balance as reported in the recipient's annual 
audited financial statements;
    (2) The reason(s) the excess fund balance resulted;
    (3) The recipient's plan for disposition of the excess fund balance 
during the current fiscal year;
    (4) The amount of fund balance projected to be carried forward at 
the close of the recipient's current fiscal year; and
    (5) The special circumstances justifying the retention of the excess 
fund balance up to 25%, or the extraordinary and compelling 
circumstances set out in Sec. 1628.3(c) justifying a fund balance in 
excess of 25%.
    (b) Within 45 days of receipt of the recipient's waiver request 
submitted pursuant to paragraph (a) of this section,

[[Page 478]]

the Corporation shall provide a written response to the request and a 
written notice to the recipient of any fund balance due and payable to 
the Corporation as well as the method for repayment.
    (c) In the event that repayment is required, the Corporation shall 
give written notice 30 days prior to the effective date for repayment. 
Repayment shall be in a lump sum or by pro rata deductions from the 
recipient's grant checks for a specific number of months. The 
Corporation shall determine which of the specified methods of repayment 
is reasonable and appropriate in each case after consultation with the 
recipient.
    (d) The decision of the Corporation regarding the granting of a 
waiver shall be guided by the statutory mandate requiring the recipient 
to provide high quality legal services in an effective and economical 
manner. In addition, the Corporation shall consider the following 
factors:
    (1) Emergencies, unusual or unexpected occurrences, or the 
circumstances giving rise to the existence of a fund balance in excess 
of 10% of LSC support set out in Sec. 1628.3(b) or (c);
    (2) the special needs of clients;
    (3) The need to retain a cash reserve for payments to private 
attorneys participating in the recipient's private attorney involvement 
(PAI) program; for acquisition of equipment or property; or for other 
expenditures which are reasonable and necessary for the performance of 
the LSC grant; and
    (4) The recipient's financial management record.
    (e) The Corporation's written approval of a request for a waiver 
shall require that the recipient use the funds it is permitted to retain 
within the time period set out in the approval and for the purposes 
approved by the Corporation.
    (f) Excess fund balances approved by the Corporation for expenditure 
by a recipient shall be separately reported by natural line item in the 
current fiscal year's audited financial statements. This may be done by 
establishing a separate fund or by providing a separate supplemental 
schedule as part of the audit report.
    (g) The recipient shall promptly inform and seek guidance from the 
Corporation when it determines a need for any changes to the conditions 
on timing or purposes set out in the Corporation's written approval of a 
recipient's request for a waiver.



Sec. 1628.5  Fund balance deficits.

    (a) Sound financial management practices such as those set out in 
Chapter 3 of the Corporation's Accounting Guide for LSC Recipients 
should preclude deficit spending. Use of current year LSC grant funds to 
liquidate deficit balances in the LSC fund from a preceding period 
requires the prior written approval of the Corporation.
    (b) Within 30 days of the submission of the recipient's annual 
audit, the recipient may apply to the Corporation for approval of the 
expenses associated with the liquidation of the deficit balance in the 
LSC fund.
    (c) In the absence of approval by the Corporation, expenditures of 
current year LSC grant funds to liquidate a deficit from a prior year 
shall be identified as questioned costs under 45 CFR part 1630.
    (d) The recipient's request must specify the same information 
relative to the deficit LSC fund balance as that set forth in 
Sec. 1628.4(a)(1) and (2). Additionally, the recipient must develop and 
submit a plan approved by its governing body describing the measures 
which will be implemented to prevent a recurrence of a deficit balance 
in the LSC fund. The Corporation reserves the right to require changes 
in the submitted plan.
    (e) The decision of the Corporation regarding acceptance of these 
deficit-related costs shall be guided by the statutory mandate requiring 
the recipient to provide high quality legal services performed in an 
effective and economical manner. Special consideration will be given for 
emergencies, unusual occurrences, or other special circumstances giving 
rise to a deficit balance.



PART 1629--BONDING OF RECIPIENTS--Table of Contents




Sec.
1629.1  General.

[[Page 479]]

1629.2  Persons required to be bonded.
1629.3  Criteria for determining handling.
1629.4  Meaning of fraud or dishonesty.
1629.5  Form of bonds.
1629.6  Effective date.

    Authority: Secs. 1006(b)(1)(A) and 1007(a)(3), Pub. L. 93-355, as 
amended, Pub. L. 95-222 (42 U.S.C. 2996e(1)(A) and 2996f(3)).

    Source: 49 FR 28717, July 16, 1984, unless otherwise noted.



Sec. 1629.1  General.

    (a) If any program which receives Corporation funds is not a 
government, or an agency or instrumentality thereof, such program shall 
carry fidelity bond coverage at a minimum level of at least ten (10) 
percent of the program's annualized LSC funding level for the previous 
fiscal year, or of the initial grant or contract, if the program is a 
new grantee or contractor. No coverage carried pursuant to this part 
shall be at a level less than $50,000.
    (b) A fidelity bond is a bond indemnifying such program against 
losses resulting from the fraud or lack of integrity, honesty or 
fidelity of one or more employees, officers, agents, directors or other 
persons holding a position of trust with the program.



Sec. 1629.2  Persons required to be bonded.

    (a) Every director, officer, employee and agent of a program who 
handles funds or property of the program shall be bonded as provided in 
this part.
    (b) Such bond shall provide protection to the program against loss 
by reason of acts of fraud or dishonesty on the part of such director, 
officer, employee or agent directly or through connivance with others.



Sec. 1629.3  Criteria for determining handling.

    (a) The term ``handles'' shall be deemed to encompass any 
relationship of a director, officer, employee or agent with respect to 
funds or other property which can give rise to a risk of loss through 
fraud or dishonesty. This shall include relationships such as those 
which involve access to funds or other property or decision-making 
powers with respect to funds or property which can give rise to such 
risk of loss.
    (b) Subject to the application of the basic standard of risk of loss 
to each situation, the criteria for determining whether there is 
``handling'' so as to require bonding are:
    (1) Physical contact with cash, checks or similar property;
    (2) The power to secure physical possession of cash, checks or 
similar property such as through access to a safe deposit box or similar 
depository, access to cash or negotiable instruments and assets, power 
of custody or safe-keeping, or the power to borrow or withdraw funds 
from a bank or other account whether or not physical contact actually 
takes place;
    (3) The power to transfer or cause to be transferred property such 
as mortgages, title to land and buildings, or securities, through actual 
or apparent authority, to oneself or to a third party, or to be 
negotiated for value.
    (c) Persons who actually disburse funds or other property, such as 
officers authorized to sign checks or other negotiable instruments, or 
persons who make cash disbursements, shall be considered to be 
``handling'' such funds or property.
    (d) In connection with disbursements, any persons with the power to 
sign or endorse checks or similar instruments or otherwise render them 
transferable, whether individually or as cosigners with one or more 
persons, shall each be considered to be ``handling'' such funds or other 
property.
    (e) To the extent a person's supervisory or decision-making 
responsibility involves factors in relationship to funds discussed in 
paragraphs (b) (1), (2), (3), or paragraphs (c) and (d) of this section, 
such persons shall be considered to be ``handling'' in the same manner 
as any person to whom the criteria of those subparagraphs apply.



Sec. 1629.4  Meaning of fraud or dishonesty.

    The term ``fraud or dishonesty'' shall be deemed to encompass all 
those risks of loss that might arise through dishonest or fraudulent 
acts in the handling of funds as delineated in Sec. 1629.3. As such, the 
bond must provide recovery for loss occasioned by such acts even though 
no personal gain accrues to the person committing the act and

[[Page 480]]

the act is not subject to punishment as a crime or misdemeanor, provided 
that within the law of the state in which the act is committed, a court 
could afford recovery under a bond providing protection against fraud or 
dishonesty. As applied under state laws, the term ``fraud or 
dishonesty'' encompasses such matters as larceny, theft, embezzlement, 
forgery, misappropriation, wrongful abstraction, wrongful conversion, 
willful misapplication or any other fraudulent or dishonest acts.



Sec. 1629.5  Form of bonds.

    Any form of bond which may be described as individual, schedule or 
blanket, or any combination of such forms of bonds, shall be acceptable 
to meet the requirements of this part. The basic types of bonds in 
general usage are:
    (a) An individual bond which covers a named individual in a stated 
penalty;
    (b) A name schedule bond which covers a number of named individuals 
in the respective amounts set opposite their names;
    (c) A position schedule bond which covers all of the occupants of 
positions listed in the schedule in the respective amounts set opposite 
such positions;
    (d) A blanket bond which covers all the insured's directors, 
officers, employees and agents with no schedule or list of those covered 
being necessary and with all new directors, officers, employees and 
agents bonded automatically, in a blanket penalty.



Sec. 1629.6  Effective date.

    (a) Each program shall certify in its Application for Refunding, 
beginning with the application for FY 1985 funds, that it has obtained a 
bond or bonds which satisfy the requirements of this part.
    (b) A copy of such bond or bonds shall be provided to the 
Corporation at its request.



PART 1630--COST STANDARDS AND PROCEDURES--Table of Contents




Sec.
1630.1  Purpose.
1630.2  Definitions.
1630.3  Standards governing allowability of costs under Corporation 
          grants or contracts.
1630.4  Burden of proof.
1630.5  Costs requiring Corporation prior approval.
1530.6  Timetable and basis for granting prior approval.
1630.7  Review of questioned costs and appeal of disallowed costs.
1630.8  Recovery of disallowed costs and other corrective action.
1630.9  Other remedies; effect on other parts.
1630.10  Applicability to subgrants.
1630.11  Applicability to non-LSC funds.
1630.12  Applicability to derivative income.
1630.13  Time.

    Authority: 5 U.S.C. App. 3, 42 U.S.C. 2996e, 2996f, 2996g, 
2996h(c)(1), and 2996i(c); Pub. L. 105-119, 111 Stat. 2440; Pub. L. 104-
134, 110 Stat. 3009.

    Source: 62 FR 68224, Dec. 31, 1997, unless otherwise noted.



Sec. 1630.1  Purpose.

    This part is intended to provide uniform standards for allowability 
of costs and to provide a comprehensive, fair, timely, and flexible 
process for the resolution of questioned costs.



Sec. 1630.2  Definitions.

    (a) Allowed costs means a questioned cost that the Corporation, in a 
management decision, has determined to be eligible for payment from a 
recipient's Corporation funds.
    (b) Corrective action means action taken by a recipient that:
    (1) Corrects identified deficiencies;
    (2) Produces recommended improvements; or
    (3) Demonstrates that audit or other findings are either invalid or 
do not warrant recipient action.
    (c) Derivative income means income earned by a recipient from 
Corporation-supported activities during the term of a Corporation grant 
or contract, and includes, but is not limited to, income from fees for 
services (including attorney fee awards and reimbursed costs), sales and 
rentals of real or personal property, and interest earned on Corporation 
grant or contract advances.
    (d) Disallowed cost means a questioned cost that the Corporation, in 
a management decision, has determined should not be charged to a 
recipient's Corporation funds.

[[Page 481]]

    (e) Final action means the completion of all actions that 
Corporation management, in a management decision, has concluded are 
necessary with respect to the findings and recommendations in an audit 
or other report. In the event that Corporation management concludes no 
corrective action is necessary, final action occurs when a management 
decision has been made.
    (f) Management decision means the evaluation by Corporation 
management of findings and recommendations in an audit or other report 
and the recipient's response to the report, and the issuance of a final, 
written decision by management concerning its response to such findings 
and recommendations, including any corrective actions which Corporation 
management has concluded are necessary to address the findings and 
recommendations.
    (g) Questioned cost means a cost that a recipient has charged to 
Corporation funds which Corporation management, the Office of Inspector 
General, the General Accounting Office, or an independent auditor or 
other audit organization authorized to conduct an audit of a recipient 
has questioned because of an audit or other finding that:
    (1) There may have been a violation of a provision of a law, 
regulation, contract, grant, or other agreement or document governing 
the use of Corporation funds;
    (2) The cost is not supported by adequate documentation; or
    (3) The cost incurred appears unnecessary or unreasonable and does 
not reflect the actions a prudent person would take in the 
circumstances.
    (h) Recipient as used in this part means any grantee or contractor 
receiving funds from the Corporation under sections 1006(a)(1) or 
1006(a)(3) of the Act.

[62 FR 68225, Dec. 31, 1997; 63 FR 1532, Jan. 9, 1998]



Sec. 1630.3  Standards governing allowability of costs under Corporation grants or contracts.

    (a) General criteria. Expenditures by a recipient are allowable 
under the recipient's grant or contract only if the recipient can 
demonstrate that the cost was:
    (1) Actually incurred in the performance of the grant or contract 
and the recipient was liable for payment;
    (2) Reasonable and necessary for the performance of the grant or 
contract as approved by the Corporation;
    (3) Allocable to the grant or contract;
    (4) In compliance with the Act, applicable appropriations law, 
Corporation rules, regulations, guidelines, and instructions, the 
Accounting Guide for LSC Recipients, the terms and conditions of the 
grant or contract, and other applicable law;
    (5) Consistent with accounting policies and procedures that apply 
uniformly to both Corporation-financed and other activities of the 
recipient;
    (6) Accorded consistent treatment over time;
    (7) Determined in accordance with generally accepted accounting 
principles;
    (8) Not included as a cost or used to meet cost sharing or matching 
requirements of any other federally financed program, unless the agency 
whose funds are being matched determines in writing that Corporation 
funds may be used for federal matching purposes; and
    (9) Adequately and contemporaneously documented in business records 
accessible during normal business hours to Corporation management, the 
Office of Inspector General, the General Accounting Office, and 
independent auditors or other audit organizations authorized to conduct 
audits of recipients.
    (b) Reasonable costs. A cost is reasonable if, in its nature or 
amount, it does not exceed that which would be incurred by a prudent 
person under the same or similar circumstances prevailing at the time 
the decision was made to incur the cost. If a questioned cost is 
disallowed solely on the ground that it is excessive, only the amount 
that is larger than reasonable shall be disallowed. In determining the 
reasonableness of a given cost, consideration shall be given to:
    (1) Whether the cost is of a type generally recognized as ordinary 
and necessary for the operation of the recipient or the performance of 
the grant or contract;
    (2) The restraints or requirements imposed by such factors as 
generally

[[Page 482]]

accepted sound business practices, arms-length bargaining, Federal and 
State laws and regulations, and the terms and conditions of the grant or 
contract;
    (3) Whether the recipient acted with prudence under the 
circumstances, considering its responsibilities to its clients and 
employees, the public at large, the Corporation, and the Federal 
government; and
    (4) Significant deviations from the established practices of the 
recipient which may unjustifiably increase the grant or contract costs.
    (c) Allocable costs. A cost is allocable to a particular cost 
objective, such as a grant, project, service, or other activity, in 
accordance with the relative benefits received. Costs may be allocated 
to Corporation funds either as direct or indirect costs according to the 
provisions of this section. A cost is allocable to a Corporation grant 
or contract if it is treated consistently with other costs incurred for 
the same purpose in like circumstances and if it:
    (1) Is incurred specifically for the grant or contract;
    (2) Benefits both the grant or contract and other work and can be 
distributed in reasonable proportion to the benefits received; or
    (3) Is necessary to the overall operation of the recipient, although 
a direct relationship to any particular cost objective cannot be shown.
    (d) Direct costs. Direct costs are those that can be identified 
specifically with a particular final cost objective, i.e., a particular 
grant award, project, service, or other direct activity of an 
organization. Costs identified specifically with grant awards are direct 
costs of the awards and are to be assigned directly thereto. Direct 
costs include, but are not limited to, the salaries and wages of 
recipient staff who are working on cases or matters that are identified 
with specific grants or contracts. Salary and wages charged directly to 
Corporation grants and contracts must be supported by personnel activity 
reports.
    (e) Indirect costs. Indirect costs are those that have been incurred 
for common or joint objectives and cannot be readily identified with a 
particular final cost objective. Any direct cost of a minor amount may 
be treated as an indirect cost for reasons of practicality where the 
accounting treatment for such cost is consistently applied to all final 
cost objectives. Indirect costs include, but are not limited to, the 
costs of operating and maintaining facilities, and the costs of general 
program administration, such as the salaries and wages of program staff 
whose time is not directly attributable to a particular grant or 
contract. Such staff may include, but are not limited to, executive 
officers and personnel, accounting, secretarial and clerical staff.
    (f) Allocation of indirect costs. Where a recipient has only one 
major function, i.e., the delivery of legal services to low-income 
clients, allocation of indirect costs may be by a simplified allocation 
method, whereby total allowable indirect costs (net of applicable 
credits) are divided by an equitable distribution base and distributed 
to individual grant awards accordingly. The distribution base may be 
total direct costs, direct salaries and wages, attorney hours, numbers 
of cases, numbers of employees, or another base which results in an 
equitable distribution of indirect costs among funding sources.
    (g) Exception for certain indirect costs. Some funding sources may 
refuse to allow the allocation of certain indirect costs to an award. In 
such instances, a recipient may allocate a proportional share of another 
funding source's share of an indirect cost to Corporation funds, 
provided that the activity associated with the indirect cost is 
permissible under the LSC Act and regulations.
    (h) Applicable credits. Applicable credits are those receipts or 
reductions of expenditures which operate to offset or reduce expense 
items that are allocable to grant awards as direct or indirect costs. 
Applicable credits include, but are not limited to, purchase discounts, 
rebates or allowances, recoveries or indemnities on losses, insurance 
refunds, and adjustments of overpayments or erroneous charges. To the 
extent that such credits relate to allowable costs, they shall be 
credited as a cost reduction or cash refund in the same fund to which 
the related costs are charged.
    (i) Guidance. The Circulars of the Office of Management and Budget 
shall

[[Page 483]]

provide guidance for all allowable cost questions arising under this 
part when relevant policies or criteria therein are not inconsistent 
with the provisions of the Act, applicable appropriations law, this 
part, the Accounting Guide for LSC Recipients, Corporation rules, 
regulations, guidelines, instructions, and other applicable law.

[62 FR 68225, Dec. 31, 1997; 63 FR 1532, Jan. 9, 1998]



Sec. 1630.4  Burden of proof.

    The recipient shall have the burden of proof under this part.



Sec. 1630.5   Costs requiring Corporation prior approval.

    (a) Advance understandings. Under any given grant award, the 
reasonableness and allocability of certain cost items may be difficult 
to determine. In order to avoid subsequent disallowance or dispute based 
on unreasonableness or nonallocability, recipients may seek a written 
understanding from the Corporation in advance of incurring special or 
unusual costs. If a recipient elects not to seek an advance 
understanding from the Corporation, the absence of an advance 
understanding on any element of a cost does not affect the 
reasonableness or allocability of the cost.
    (b) Prior approvals. Without prior written approval of the 
Corporation, no cost attributable to any of the following may be charged 
to Corporation funds:
    (1) Pre-award costs and costs incurred after the cessation of 
funding;
    (2) Purchases and leases of equipment, furniture, or other personal, 
non-expendable property, if the current purchase price of any individual 
item of property exceeds $10,000;
    (3) Purchases of real property; and
    (4) Capital expenditures exceeding $10,000 to improve real property.
    (c) Duration. The Corporation's approval or advance understanding 
shall be valid for one year, or for a greater period of time which the 
Corporation may specify in its approval or understanding.



Sec. 1630.6   Timetable and basis for granting prior approval.

    (a) The Corporation shall grant prior approval of a cost if the 
recipient has provided sufficient written information to demonstrate 
that the cost would be consistent with the standards and policies of 
this part. If the Corporation denies a request for approval, it shall 
provide to the recipient a written explanation of the grounds for 
denying the request.
    (b) Except as provided in paragraphs (c) and (d) of this section, 
the Corporation may not assert the absence of prior approval as a basis 
for disallowing a questioned cost, if the Corporation has not responded 
to a written request for approval within sixty (60) days of receiving 
the request.
    (c) If additional information is necessary to enable the Corporation 
to respond to a request for prior approval, the Corporation may make a 
written request for additional information within forty-five (45) days 
of receiving the request for approval.
    (d) If the Corporation has made a written request for additional 
information about a cost as provided by paragraph (c) of this section, 
and if the Corporation has not responded within thirty (30) days of 
receiving in writing all additional, requested information, the 
Corporation may not assert the absence of prior approval as a basis for 
disallowing the cost.



Sec. 1630.7   Review of questioned costs and appeal of disallowed costs.

    (a) When the Office of Inspector General, the General Accounting 
Office, or an independent auditor or other audit organization authorized 
to conduct an audit of a recipient has identified and referred a 
questioned cost to the Corporation, Corporation management shall review 
the findings of the Office of Inspector General, General Accounting 
Office, or independent auditor or other authorized audit organization, 
as well as the recipient's written response to the findings, in order to 
determine accurately the amount of the questioned cost, the factual 
circumstances giving rise to the cost, and the legal basis for 
disallowing the cost. Corporation management may also identify

[[Page 484]]

questioned costs in the course of its oversight of recipients.
    (b) If Corporation management determines that there is a basis for 
disallowing a questioned cost, and if not more than five years have 
elapsed since the recipient incurred the cost, Corporation management 
shall provide to the recipient written notice of its intent to disallow 
the cost. The written notice shall state the amount of the cost and the 
factual and legal basis for disallowing it.
    (c) Within thirty (30) days of receiving written notice of the 
Corporation's intent to disallow the questioned cost, the recipient may 
respond with written evidence and argument to show that the cost was 
allowable, or that the Corporation, for equitable, practical, or other 
reasons, should not recover all or part of the amount, or that the 
recovery should be made in installments. If the recipient does not 
respond to the Corporation's written notice, Corporation management 
shall issue a management decision on the basis of information available 
to it.
    (d) Within sixty (60) days of receiving the recipient's written 
response to the notice of intent to disallow the questioned cost, 
Corporation management shall issue a management decision stating whether 
or not the cost has been disallowed, the reasons for the decision, and 
the method of appeal as provided in this section.
    (1) If Corporation management has determined that the questioned 
cost should be allowed, and that no corrective action by the recipient 
is necessary, final action with respect to the questioned cost occurs at 
the time when the Corporation issues the management decision.
    (2) If Corporation management has determined that the questioned 
cost should be disallowed, the management decision shall also describe 
the expected recipient action to repay the cost, including the method 
and schedule for collection of the amount of the cost. The management 
decision may also require the recipient to make financial adjustments or 
take other corrective action to prevent a recurrence of the 
circumstances giving rise to the disallowed cost.
    (e) If the amount of a disallowed cost exceeds $2,500, the recipient 
may appeal in writing to the Corporation President within thirty (30) 
days of receiving the Corporation's management decision to disallow the 
cost. The written appeal should state in detail the reasons why the 
Corporation should not disallow part or all of the questioned cost. If 
the amount of a disallowed cost does not exceed $2,500, or if the 
recipient elects not to appeal the disallowance of a cost in excess of 
$2,500, the Corporation's management decision shall be final.
    (f) Within thirty (30) days of receipt of the recipient's appeal of 
a disallowed cost in excess of $2,500, the President shall either adopt, 
modify, or reverse the Corporation's management decision to disallow the 
cost. If the President has had prior involvement in the consideration of 
the disallowed cost, the President shall designate another senior 
Corporation employee who has not had prior involvement to review the 
recipient's appeal. The President shall also have discretion, in 
circumstances where the President has not had prior involvement in the 
disallowed cost, to designate another senior Corporation employee to 
review the recipient's appeal, provided that the senior Corporation 
employee has not had prior involvement in the disallowed cost.
    (g) The decision of the President or designee shall be final and 
shall be based on the written record, consisting of the Corporation's 
notice of intent to disallow the questioned cost, the recipient's 
response, the management decision, the recipient's written appeal, any 
additional response or analysis provided to the President or designee by 
Corporation staff, and the relevant findings, if any, of the Office of 
Inspector General, General Accounting Office, or other authorized 
auditor or audit organization. Upon request, the Corporation shall 
provide a copy of the written record to the recipient.



Sec. 1630.8  Recovery of disallowed costs and other corrective action.

    (a) The Corporation shall recover any disallowed costs from the 
recipient within the time limits and conditions

[[Page 485]]

set forth in the Corporation's management decision. Recovery of the 
disallowed costs may be in the form of a reduction in the amount of 
future grant checks or in the form of direct payment from the recipient 
to the Corporation.
    (b) The Corporation shall ensure that a recipient which has incurred 
a disallowed cost takes any additional, necessary corrective action 
within the time limits and conditions set forth in the Corporation's 
management decision. The recipient shall have taken final action when 
the recipient has repaid all disallowed costs and has taken all 
corrective action which the Corporation has stated in its management 
decision is necessary to prevent the recurrence of circumstances giving 
rise to a questioned cost.
    (c) In the event of an appeal of the Corporation's management 
decision, the decision of the President or designee shall supersede the 
Corporation's management decision, and the recipient shall repay any 
disallowed costs and take necessary corrective action according to the 
terms and conditions of the decision of the President or designee.



Sec. 1630.9  Other remedies; effect on other parts.

    (a) In cases of serious financial mismanagement, fraud, or 
defalcation of funds, the Corporation shall refer the matter to the 
Office of Inspector General, and may take appropriate action pursuant to 
parts 1606, 1623, 1625, and 1640 of this chapter.
    (b) The recovery of a disallowed cost according to the procedures of 
this part does not constitute a permanent reduction in the annualized 
funding level of the recipient, nor does it constitute a termination of 
financial assistance under part 1606, a suspension of funding under part 
1623, or a denial of refunding under part 1625.



Sec. 1630.10  Applicability to subgrants.

    When disallowed costs arise from expenditures incurred under a 
subgrant of Corporation funds, the recipient and the subrecipient will 
be jointly and severally responsible for the actions of the 
subrecipient, as provided by 45 CFR part 1627, and will be subject to 
all remedies available under this part. Both the recipient and the 
subrecipient shall have access to the review and appeal procedures of 
this part.



Sec. 1630.11  Applicability to non-LSC funds.

    (a) No costs attributable to a purpose prohibited by the LSC Act, as 
defined by 45 CFR 1610.2(a), may be charged to private funds, except for 
tribal funds used for the specific purposes for which they were 
provided. No cost attributable to an activity prohibited by or 
inconsistent with section 504, as defined by 45 CFR 1610.2(b), may be 
charged to non-LSC funds, except for tribal funds used for the specific 
purposes for which they were provided.
    (b) According to the review and appeal procedures of 45 CFR 1630.7, 
the Corporation may recover from a recipient's Corporation funds an 
amount not to exceed the amount improperly charged to non-LSC funds.



Sec. 1630.12  Applicability to derivative income.

    (a) Derivative income resulting from an activity supported in whole 
or in part with funds provided by the Corporation shall be allocated to 
the fund in which the recipient's LSC grant is recorded in the same 
proportion that the amount of Corporation funds expended bears to the 
total amount expended by the recipient to support the activity.
    (b) Derivative income which is allocated to the LSC fund in 
accordance with paragraph (a) of this section is subject to the 
requirements of this part, including the requirement of 45 CFR 
1630.3(a)(4) that expenditures of such funds be in compliance with the 
Act, applicable appropriations law, Corporation rules, regulations, 
guidelines, and instructions, the Accounting Guide for LSC recipients, 
the terms and conditions of the grant or contract, and other applicable 
law.

[62 FR 68227, Dec. 31, 1997; 63 FR 1532, Jan. 9, 1998]



Sec. 1630.13  Time.

    (a) Computation. Time limits specified in this part shall be 
computed in accordance with Rules 6(a) and 6(e) of the Federal Rules of 
Civil Procedure.

[[Page 486]]

    (b) Extensions. The Corporation may, on a recipient's written 
request for good cause, grant an extension of time and shall so notify 
the recipient in writing.



PART 1631--EXPENDITURE OF GRANT FUNDS--Table of Contents




Sec.
1631.1  Policy.
1631.2  Application and waiver.

    Authority: 42 U.S.C. 2996e(b)(1)(A), 2996f(a)(3); Pub. L. 99-190, 99 
Stat. 1185; Pub. L. 99-180, 99 Stat. 1136.

    Source: 51 FR 24827, July 9, 1986, unless otherwise noted.



Sec. 1631.1  Policy.

    No Legal Services Corporation funds, including income derived 
therefrom and those LSC funds held by organizations which control, are 
controlled by, or are subject to common control with, a recipient or 
subrecipient, a group of recipients and/or subrecipients, or agents or 
employees of such organizations shall be expended, unless such funds are 
expended in accordance with all of the restrictions and provisions of 
Pub. L. 99-180 of December 13, 1985, except that such funds may be 
expended for the continued representation of aliens prohibited by said 
Public Law where such representation commenced prior to January 1, 1983, 
or as approved by the Corporation.



Sec. 1631.2  Application and waiver.

    (a) The Corporation may grant a waiver of the restrictions contained 
in this part to enable a program to complete representation in cases 
which commenced prior to January 1, 1986.
    (b) Programs seeking a waiver pursuant to paragraph (a) of this 
section must submit documentation to the Corporation detailing their 
efforts to dispose of such cases in accordance with the procedures 
required in Sec. 1626.6(a) (1), (2) and (3), and receive Corporation 
approval to expend funds for completion of the affected cases.



PART 1632--REDISTRICTING--Table of Contents




Sec.
1632.1  Purpose.
1632.2  Definitions.
1632.3  Prohibition.
1632.4  Recipient policies.

    Authority: 42 U.S.C. 2996e(b)(1)(A); 2996f(a)(2)(C); 2996f(a)(3); 
2996(g)(e); 110 Stat. 3009; 110 Stat. 1321(1996).

    Source: 61 FR 63756, Dec. 2, 1996, unless otherwise noted.



Sec. 1632.1   Purpose.

    This part is intended to ensure that recipients do not engage in 
redistricting activities.



Sec. 1632.2   Definitions.

    (a) Advocating or opposing any plan means any effort, whether by 
request or otherwise, even if of a neutral nature, to revise a 
legislative, judicial, or elective district at any level of government.
    (b) Recipient means any grantee or contractor receiving funds made 
available by the Corporation under sections 1006(a)(1) or 1006(a)(3) of 
the LSC Act. For the purposes of this part, recipient includes 
subrecipient and employees of recipients and subrecipients.
    (c) Redistricting means any effort, directly or indirectly, that is 
intended to or would have the effect of altering, revising, or 
reapportioning a legislative, judicial, or elective district at any 
level of government, including influencing the timing or manner of the 
taking of a census.



Sec. 1632.3   Prohibition.

    (a) Neither the Corporation nor any recipient shall make available 
any funds, personnel, or equipment for use in advocating or opposing any 
plan or proposal, or representing any party, or participating in any 
other way in litigation, related to redistricting.
    (b) This part does not prohibit any litigation brought by a 
recipient under the Voting Rights Act of 1965, as amended, 42 U.S.C. 
1971 et seq., provided such litigation does not involve redistricting.



Sec. 1632.4   Recipient policies.

    Each recipient shall adopt written policies to implement the 
requirements of this part.

[[Page 487]]



PART 1633--RESTRICTION ON REPRESENTATION IN CERTAIN EVICTION PROCEEDINGS--Table of Contents




Sec.
1633.1  Purpose.
1633.2  Definitions.
1633.3  Prohibition.
1633.4  Recipient policies, procedures and recordkeeping.

    Authority: 42 U.S.C. 2996e(a), 2996e(b)(1)(A), 2996f(a)(2)(C), 
2996f(a)(3), 2996g(e); 110 Stat. 3009; 110 Stat. 1321 (1996).

    Source: 61 FR 63758, Dec. 2, 1996, unless otherwise noted.



Sec. 1633.1  Purpose.

    This part is designed to ensure that in certain public housing 
eviction proceedings recipients refrain from defending persons charged 
with or convicted of illegal drug activities.



Sec. 1633.2  Definitions.

    (a) Controlled substance has the meaning given that term in section 
102 of the Controlled Substances Act (21 U.S.C. 802);
    (b) Public housing project and public housing agency have the 
meanings given those terms in section 3 of the United States Housing Act 
of 1937 (42 U.S.C. 1437a);
    (c) Charged with means that a person is subject to a pending 
criminal proceeding instituted by a governmental entity with authority 
to initiate such proceeding against that person for engaging in illegal 
drug activity.



Sec. 1633.3  Prohibition.

    Recipients are prohibited from defending any person in a proceeding 
to evict that person from a public housing project if:
    (a) The person has been charged with or has been convicted of the 
illegal sale, distribution, or manufacture of a controlled substance, or 
possession of a controlled substance with the intent to sell or 
distribute; and
    (b) The eviction proceeding is brought by a public housing agency on 
the basis that the illegal drug activity for which the person has been 
charged or for which the person has been convicted threatens the health 
or safety of other tenants residing in the public housing project or 
employees of the public housing agency.



Sec. 1633.4  Recipient policies, procedures and recordkeeping.

    Each recipient shall adopt written policies and procedures to guide 
its staff in complying with this part and shall maintain records 
sufficient to document the recipient's compliance with this part.



PART 1634--COMPETITIVE BIDDING FOR GRANTS AND CONTRACTS--Table of Contents




Sec.
1634.1  Purpose.
1634.2  Definitions.
1634.3  Competition for grants and contracts.
1634.4  Announcement of competition.
1634.5  Identification of qualified applicants for grants and contracts.
1634.6  Notice of intent to compete.
1634.7  Application process.
1634.8  Selection process.
1634.9  Selection criteria.
1634.10  Transition provisions.
1634.11  Replacement of recipient that does not complete grant term.
1634.12  Emergency procedures and waivers.

    Authority: 42 U.S.C. 2996e(a)(1)(A); 2996f(a)(3).

    Source: 61 FR 14258, Apr. 1, 1996, unless otherwise noted.



Sec. 1634.1  Purpose.

    This part is designed to improve the delivery of legal assistance to 
eligible clients through the use of a competitive system to award grants 
and contracts for the delivery of legal services. The purposes of such a 
competitive system are to:
    (a) Encourage the effective and economical delivery of high quality 
legal services to eligible clients that is consistent with the 
Corporation's Performance Criteria and the American Bar Association's 
Standards for Providers of Civil Legal Services to the Poor through an 
integrated system of legal services providers;
    (b) Provide opportunities for qualified attorneys and entities to 
compete for grants and contracts to deliver high quality legal services 
to eligible clients;

[[Page 488]]

    (c) Encourage ongoing improvement of performance by recipients in 
providing high quality legal services to eligible clients;
    (d) Preserve local control over resource allocation and program 
priorities; and
    (e) Minimize disruptions in the delivery of legal services to 
eligible clients within a service area during a transition to a new 
provider.



Sec. 1634.2  Definitions.

    (a) Qualified applicants are those persons, groups or entities 
described in section 1634.5(a) of this part who are eligible to submit 
notices of intent to compete and applications to participate in a 
competitive bidding process as described in this part.
    (b) Review panel means a group of individuals who are not 
Corporation staff but who are engaged by the Corporation to review 
applications and make recommendations regarding awards of grants or 
contracts for the delivery of legal assistance to eligible clients. A 
majority of review panel members shall be lawyers who are supportive of 
the purposes of the LSC Act and experienced in and knowledgeable about 
the delivery of legal assistance to low-income persons, and eligible 
clients or representatives of low-income community groups. The remaining 
members of the review panel shall be persons who are supportive of the 
purposes of the LSC Act and have an interest in and knowledge of the 
delivery of quality legal services to the poor. No person may serve on a 
review panel for an applicant with whom the person has a financial 
interest or ethical conflict; nor may the person have been a board 
member of or employed by that applicant in the past five years.
    (c) Service area is the area defined by the Corporation to be served 
by grants or contracts to be awarded on the basis of a competitive 
bidding process. A service area is defined geographically and may 
consist of all or part of the area served by a current recipient, or it 
may include an area larger than the area served by a current recipient.
    (d) Subpopulation of eligible clients includes Native Americans and 
migrant farm workers and may include other groups of eligible clients 
that, because they have special legal problems or face special 
difficulties of access to legal services, might better be addressed by a 
separate delivery system to serve that client group effectively.



Sec. 1634.3  Competition for grants and contracts.

    (a) After the effective date of this part, all grants and contracts 
for legal assistance awarded by the Corporation under Section 
1006(a)(1)(A) of the LSC Act shall be subject to the competitive bidding 
process described in this part. No grant or contract for the delivery of 
legal assistance shall be awarded by the Corporation for any period 
after the effective date of this part, unless the recipient of that 
grant has been selected on the basis of the competitive bidding process 
described in this part.
    (b) The Corporation shall determine the service areas to be covered 
by grants or contracts and shall determine whether the population to be 
served will consist of all eligible clients within the service area or a 
specific subpopulation of eligible clients within one or more service 
areas.
    (c) The use of the competitive bidding process to award grant(s) or 
contract(s) shall not constitute a termination or denial of refunding of 
financial assistance to a current recipient pursuant to parts 1606 and 
1625 of this chapter.
    (d) Wherever possible, the Corporation shall award no more than one 
grant or contract to provide legal assistance to eligible clients or a 
subpopulation of eligible clients within a service area. The Corporation 
may award more than one grant or contract to provide legal assistance to 
eligible clients or a subpopulation of eligible clients within a service 
area only when the Corporation determines that it is necessary to award 
more than one such grant or contract in order to ensure that all 
eligible clients within the service area will have access to a full 
range of high quality legal services in accordance with the LSC Act or 
other applicable law.
    (e) In no event may the Corporation award a grant or contract for a 
term longer than five years. The amount of funding provided annually 
under each such grant or contract is subject to

[[Page 489]]

changes in congressional appropriations or restrictions on the use of 
those funds by the Corporation. A reduction in a recipient's annual 
funding required as a result of a change in the law or a reduction in 
funding appropriated to the Corporation shall not be considered a 
termination or denial of refunding under parts 1606 or 1625 of this 
chapter.



Sec. 1634.4  Announcement of competition.

    (a) The Corporation shall give public notice that it intends to 
award a grant or contract for a service area on the basis of a 
competitive bidding process, shall take appropriate steps to announce 
the availability of such a grant or contract in the periodicals of State 
and local bar associations, and shall publish a notice of the Request 
For Proposals (RFP) in at least one daily newspaper of general 
circulation in the area to be served under the grant or contract. In 
addition, the Corporation shall notify current recipients, other bar 
associations, and other interested groups within the service area of the 
availability of the grant or contract and shall conduct such other 
outreach as the Corporation determines to be appropriate to ensure that 
interested parties are given an opportunity to participate in the 
competitive bidding process.
    (b) The Corporation shall issue an RFP which shall include 
information regarding: who may apply, application procedures, the 
selection process, selection criteria, the service areas that will be 
the subject of the competitive bidding process, the amount of funding 
available for the service area, if known, applicable timetables and 
deadlines, and the LSC Act, regulations, guidelines and instructions and 
any other applicable federal law. The RFP may also include any other 
information that the Corporation determines to be appropriate.
    (c) The Corporation shall make a copy of the RFP available to any 
person, group or entity that requests a copy in accordance with 
procedures established by the Corporation.



Sec. 1634.5  Identification of qualified applicants for grants and contracts.

    (a) The following persons, groups and entities are qualified 
applicants who may submit a notice of intent to compete and an 
application to participate in the competitive bidding process:
    (1) Current recipients;
    (2) Other non-profit organizations that have as a purpose the 
furnishing of legal assistance to eligible clients;
    (3) Private attorneys, groups of attorneys or law firms (except that 
no private law firm that expends 50 percent or more of its resources and 
time litigating issues in the broad interests of a majority of the 
public may be awarded a grant or contract under the LSC Act);
    (4) State or local governments;
    (5) Substate regional planning and coordination agencies which are 
composed of substate areas and whose governing boards are controlled by 
locally elected officials.
    (b) All persons, groups and entities listed in paragraph (a) of this 
section must have a governing or policy body consistent with the 
requirements of part 1607 of this chapter or other law that sets out 
requirements for recipients' governing bodies, unless such governing 
body requirements are inconsistent with applicable law.
    (c) Applications may be submitted jointly by more than one qualified 
applicant so long as the application delineates the respective roles and 
responsibilities of each qualified applicant.



Sec. 1634.6  Notice of intent to compete.

    (a) In order to participate in the competitive bidding process, an 
applicant must submit a notice of intent to compete on or before the 
date designated by the Corporation in the RFP. The Corporation may 
extend the date if necessary to take account of special circumstances or 
to permit the Corporation to solicit additional notices of intent to 
compete.
    (b) At the time of the filing of the notice of intent to compete, 
each applicant must provide the Corporation with the following 
information as well as any additional information that the Corporation 
determines is appropriate:
    (1) Names and resumes of principals and key staff;
    (2) Names and resumes of current and proposed governing board or 
policy

[[Page 490]]

body members and their appointing organizations;
    (3) Initial description of area proposed to be served by the 
applicant and the services to be provided.



Sec. 1634.7  Application process.

    (a) The Corporation shall set a date for receipt of applications and 
shall announce the date in the RFP. The date shall afford applicants 
adequate opportunity, after filing the notice of intent to compete, to 
complete the application process. The Corporation may extend the 
application date if necessary to take account of special circumstances.
    (b) The application shall be submitted in a form to be determined by 
the Corporation.
    (c) A completed application shall include all of the information 
requested by the RFP. It may also include any additional information 
needed to fully address the selection criteria, and any other 
information requested by the Corporation. Incomplete applications will 
not be considered for awards by the Corporation.
    (d) The Corporation shall establish a procedure to provide 
notification to applicants of receipt of the application.



Sec. 1634.8  Selection process.

    (a) After receipt of all applications for a particular service area, 
Corporation staff shall:
    (1) Review each application and any additional information that the 
Corporation has regarding each applicant, including for any applicant 
that is or includes a current or former recipient, past monitoring and 
compliance reports, performance evaluations and other pertinent records 
for the past six years;
    (2) Request from an applicant and review any additional information 
that the Corporation determines is appropriate to evaluate the 
application fully;
    (3) Conduct one or more on-site visits to an applicant if the 
Corporation determines that such visits are appropriate to evaluate the 
application fully;
    (4) Summarize in writing information regarding the applicant that is 
not contained in the application if appropriate for the review process; 
and
    (5) Convene a review panel unless there is only one applicant for a 
particular service area and the Corporation determines that use of a 
review panel is not appropriate. The review panel shall:
    (i) Review the applications and the summaries prepared by the 
Corporation staff. The review panel may request other information 
identified by the Corporation as necessary to evaluate the applications 
fully; and
    (ii) Make a written recommendation to the Corporation regarding the 
award of grants or contracts from the Corporation for a particular 
service area.
    (6) After considering the recommendation made by the review panel, 
if a review panel was convened, make a staff recommendation to the 
President. The staff recommendation shall include the recommendation of 
the review panel and, if the staff recommendation differs from that of 
the review panel, an explanation of the basis for the difference in the 
recommendations.
    (b) After reviewing the written recommendations, the President shall 
select the applicants to be awarded grants or contracts from the 
Corporation and the Corporation shall notify each applicant in writing 
of the President's decision regarding each applicant's application.
    (c) In the event that there are no applicants for a service area or 
that the Corporation determines that no applicant meets the criteria and 
therefore determines not to award a grant or contract for a particular 
service area, the Corporation shall take all practical steps to ensure 
the continued provision of legal assistance in that service area. The 
Corporation shall have discretion to determine how legal assistance is 
to be provided to the service area, including, but not limited to, 
enlarging the service area of a neighboring recipient, putting a current 
recipient on month-to-month funding or entering into a short term, 
interim grant or contract with another qualified provider for the 
provision of legal assistance in the service area until the completion 
of a competitive bidding process within a reasonable period of time.

[[Page 491]]



Sec. 1634.9  Selection criteria.

    (a) The criteria to be used to select among qualified applicants 
shall include the following:
    (1) Whether the applicant has a full understanding of the basic 
legal needs of the eligible clients in the area to be served;
    (2) The quality, feasibility and cost-effectiveness of the 
applicant's legal services delivery and delivery approach in relation to 
the Corporation's Performance Criteria and the American Bar 
Association's Standards for Providers of Civil Legal Services to the 
Poor, as evidenced by, among other things, the applicant's experience 
with the delivery of the type of legal assistance contemplated under the 
proposal;
    (3) Whether the applicant's governing or policy body meets or will 
meet all applicable requirements of the LSC Act, regulations, 
guidelines, instructions and any other requirements of law in accordance 
with a time schedule set out by the Corporation;
    (4) The applicant's capacity to comply with all other applicable 
provisions of the LSC Act, rules, regulations, guidelines and 
instructions, as well as with ethical requirements and any other 
requirements imposed by law. Evidence of the applicant's capacity to 
comply with this criterion may include, among other things, the 
applicant's compliance experience with the Corporation or other funding 
sources or regulatory agencies, including but not limited to Federal or 
State agencies, bar associations or foundations, courts, IOLTA programs, 
and private foundations;
    (5) The reputations of the applicant's principals and key staff;
    (6) The applicant's knowledge of the various components of the legal 
services delivery system in the State and its willingness to coordinate 
with the various components as appropriate to assure the availability of 
a full range of legal assistance, including:
    (i) its capacity to cooperate with State and local bar associations, 
private attorneys and pro bono programs to increase the involvement of 
private attorneys in the delivery of legal assistance and the 
availability of pro bono legal services to eligible clients; and
    (ii) its knowledge of and willingness to cooperate with other legal 
services providers, community groups, public interest organizations and 
human services providers in the service area;
    (7) The applicant's capacity to develop and increase non-Corporation 
resources;
    (8) The applicant's capacity to ensure continuity in client services 
and representation of eligible clients with pending matters; and
    (9) The applicant does not have known or potential conflicts of 
interest, institutional or otherwise, with the client community and 
demonstrates a capacity to protect against such conflicts.
    (b) In selecting recipients of awards for grants or contracts under 
this part, the Corporation shall not grant any preference to current or 
previous recipients of funds from the Corporation.



Sec. 1634.10  Transition provisions.

    (a) When the competitive bidding process results in the award of a 
grant or contract to an applicant, other than the current recipient, to 
serve the area currently served by that recipient, the Corporation--
    (1) may provide, if the law permits, continued funding to the 
current recipient, for a period of time and at a level to be determined 
by the Corporation after consultation with the recipient, to ensure the 
prompt and orderly completion of or withdrawal from pending cases or 
matters or the transfer of such cases or matters to the new recipient or 
to other appropriate legal service providers in a manner consistent with 
the rules of ethics or professional responsibility for the jurisdiction 
in which those services are being provided; and
    (2) shall ensure, after consultation with the recipient, the 
appropriate disposition of real and personal property purchased by the 
current recipient in whole or in part with Corporation funds consistent 
with the Corporation's policies.
    (b) Awards of grants or contracts for legal assistance to any 
applicant that is not a current recipient may, in the Corporation's 
discretion, provide for incremental increases in funding up to the 
annualized level of the grant or

[[Page 492]]

contract award in order to ensure that the applicant has the capacity to 
utilize Corporation funds in an effective and economical manner.



Sec. 1634.11  Replacement of recipient that does not complete grant term.

    In the event that a recipient is unable or unwilling to continue to 
perform the duties required under the terms of its grant or contract, 
the Corporation shall take all practical steps to ensure the continued 
provision of legal assistance in that service area. The Corporation 
shall have discretion to determine how legal assistance is to be 
provided to the service area, including, but not limited to, enlarging 
the service area of a neighboring recipient, putting a current recipient 
on month-to-month funding or entering into a short term, interim grant 
or contract with another qualified provider for the provision of legal 
assistance in the service area until the completion of a competitive 
bidding process within a reasonable period of time.



Sec. 1634.12  Emergency procedures and waivers.

    The President of the Corporation may waive the requirements of 
Secs. 1634.6 and 1634.8(a) (3) and (5) when necessary to comply with 
requirements imposed by law on the awards of grants and contracts for a 
particular fiscal year.



PART 1635--TIMEKEEPING REQUIREMENT--Table of Contents




Sec.
1635.1  Purpose.
1635.2  Definitions.
1635.3  Timekeeping requirement.
1635.4  Administrative provisions.

    Authority: 42 U.S.C. Secs. 2996e(b)(1)(A), 2996g(a), 2996g(b), 
2996g(e).

    Source: 65 FR 41882, July 7, 2000, unless otherwise noted.



Sec. 1635.1  Purpose.

    This part is intended to improve accountability for the use of all 
funds of a recipient by:
    (a) Assuring that allocations of expenditures of LSC funds pursuant 
to 45 CFR part 1630 are supported by accurate and contemporaneous 
records of the cases, matters, and supporting activities for which the 
funds have been expended;
    (b) Enhancing the ability of the recipient to determine the cost of 
specific functions; and
    (c) Increasing the information available to LSC for assuring 
recipient compliance with Federal law and LSC rules and regulations.



Sec. 1635.2  Definitions.

    As used in this part--
    (a) A case is a form of program service in which an attorney or 
paralegal of a recipient provides legal services to one or more specific 
clients, including, without limitation, providing representation in 
litigation, administrative proceedings, and negotiations, and such 
actions as advice, providing brief services and transactional 
assistance, and assistance with individual PAI cases.
    (b) A matter is an action which contributes to the overall delivery 
of program services but does not involve direct legal advice to or legal 
representation of one or more specific clients. Examples of matters 
include both direct services, such as but not limited to, community 
education presentations, operating pro se clinics, providing information 
about the availability of legal assistance, and developing written 
materials explaining legal rights and responsibilities; and indirect 
services, such as training, continuing legal education, general 
supervision of program services, preparing and disseminating desk 
manuals, PAI recruitment, referral, intake when no case is undertaken, 
and tracking substantive law developments.
    (c) Restricted activities means those activities that recipients may 
not undertake as set out in 45 CFR part 1610.
    (d) A supporting activity is any action that is not a case or 
matter, including management in general, and fund-raising.



Sec. 1635.3  Timekeeping requirement.

    (a) All expenditures of funds for recipient actions are, by 
definition, for cases, matters, or supporting activities. The allocation 
of all expenditures must be carried out in accordance with 45 CFR part 
1630.

[[Page 493]]

    (b) Time spent by attorneys and paralegals must be documented by 
time records which record the amount of time spent on each case, matter, 
or supporting activity.
    (1) Time records must be created contemporaneously and account for 
time by date and in increments not greater than one-quarter of an hour 
which comprise all of the efforts of the attorneys and paralegals for 
which compensation is paid by the recipient.
    (2) Each record of time spent must contain: for a case, a unique 
client name or case number; for matters or supporting activities, an 
identification of the category of action on which the time was spent.
    (c) The timekeeping system must be able to aggregate time record 
information on both closed and pending cases by legal problem type.
    (d) Recipients shall require any attorney or paralegal who works 
part-time for the recipient and part-time for an organization that 
engages in restricted activities to certify in writing that the attorney 
or paralegal has not engaged in restricted activity during any time for 
which the attorney or paralegal was compensated by the recipient or has 
not used recipient resources for restricted activities. The 
certification requirement does not apply to a de minimis action related 
to a restricted activity. Actions consistent with the de minimis 
standard are those that meet all or most of the following criteria: 
actions that are of little substance; require little time; are not 
initiated by the part-time employee; and, for the most part, are 
unavoidable. Certifications shall be made on a quarterly basis and shall 
be made on a form determined by LSC.



Sec. 1635.4  Administrative provisions.

    Time records required by this section shall be available for 
examination by auditors and representatives of LSC, and by any other 
person or entity statutorily entitled to access to such records. LSC 
shall not disclose any time record except to a Federal, State or local 
law enforcement official or to an official of an appropriate bar 
association for the purpose of enabling such bar association official to 
conduct an investigation of an alleged violation of the rules of 
professional conduct.



PART 1636--CLIENT IDENTITY AND STATEMENT OF FACTS--Table of Contents




Sec.
1636.1  Purpose.
1636.2  Requirements.
1636.3  Access to written statements.
1636.4  Applicability.
1636.5  Recipient policies, procedures and recordkeeping.

    Authority: Pub. L. 104-208, 110 Stat. 3009; Pub. L. 104-134, 110 
Stat. 1321.

    Source: 62 FR 19420, Apr. 21, 1997, unless otherwise noted.



Sec. 1636.1  Purpose.

    The purpose of this rule is to ensure that, when an LSC recipient 
files a complaint in a court of law or otherwise initiates or 
participates in litigation against a defendant or engages in pre-
complaint settlement negotiations, the recipient identifies the 
plaintiff it represents to the defendant and ensures that the plaintiff 
has a colorable claim.



Sec. 1636.2  Requirements.

    (a) When a recipient files a complaint in a court of law or 
otherwise initiates or participates in litigation against a defendant, 
or before a recipient engages in pre-complaint settlement negotiations 
with a prospective defendant on behalf of a client who has authorized it 
to file suit in the event that the settlement negotiations are 
unsuccessful, it shall:
    (1) Identify each plaintiff it represents by name in any complaint 
it files, or in a separate notice provided to the defendant against whom 
the complaint is filed where disclosure in the complaint would be 
contrary to law or court rules or practice, and identify each plaintiff 
it represents to prospective defendants in pre-litigation settlement 
negotiations, unless a court of competent jurisdiction has entered an 
order protecting the client from such disclosure based on a finding, 
after notice and an opportunity for a hearing on the matter, of 
probable, serious harm to the plaintiff if the disclosure is not 
prevented; and

[[Page 494]]

    (2) Prepare a dated written statement signed by each plaintiff it 
represents, enumerating the particular facts supporting the complaint, 
insofar as they are known to the plaintiff when the statement is signed.
    (b) The statement of facts must be written in English and, if 
necessary, in a language other than English that the plaintiff 
understands.
    (c) In the event of an emergency, where the recipient reasonably 
believes that delay is likely to cause harm to a significant safety, 
property or liberty interest of the client, the recipient may proceed 
with the litigation or negotiation without a signed statement of facts, 
provided that the statement is prepared and signed as soon as possible 
thereafter.



Sec. 1636.3  Access to written statements.

    (a) Written statements of facts prepared in accordance with this 
part are to be kept on file by the recipient and made available to the 
Corporation or to any Federal department or agency auditing or 
monitoring the activities of the recipient or to any auditor or monitor 
receiving Federal funds to audit or monitor on behalf of a Federal 
department or agency or on behalf of the Corporation.
    (b) This part does not give any person or party other than those 
listed in paragraph (a) of this section any right of access to the 
plaintiff's written statement of facts, either in the lawsuit or through 
any other procedure. Access to the statement of facts by such other 
persons or parties is governed by applicable law and the discovery rules 
of the court in which the action is brought.



Sec. 1636.4  Applicability.

    This part applies to cases for which private attorneys are 
compensated by the recipient as well as to those cases initiated by the 
recipient's staff.



Sec. 1636.5  Recipient policies, procedures and recordkeeping.

    Each recipient shall adopt written policies and procedures to guide 
its staff in complying with this part and shall maintain records 
sufficient to document the recipient's compliance with this part.



PART 1637--REPRESENTATION OF PRISONERS--Table of Contents




Sec.
1637.1  Purpose.
1637.2  Definitions.
1637.3  Prohibition.
1637.4  Change in circumstances.
1637.5  Recipient policies, procedures and recordkeeping.

    Authority: 42 U.S.C. 2996g(e); Pub. L. 104-208, 110 Stat. 3009; Pub. 
L. 104-134, 110 Stat. 1321.

    Source: 62 FR 19422, Apr. 21, 1997, unless otherwise noted.



Sec. 1637.1  Purpose.

    This part is intended to ensure that recipients do not participate 
in any civil litigation on behalf of persons incarcerated in Federal, 
State or local prisons.



Sec. 1637.2  Definitions.

    (a) Incarcerated means the involuntary physical restraint of a 
person who has been arrested for or convicted of a crime.
    (b) Federal, State or local prison means any penal facility 
maintained under governmental authority.



Sec. 1637.3  Prohibition.

    A recipient may not participate in any civil litigation on behalf of 
a person who is incarcerated in a Federal, State or local prison, 
whether as a plaintiff or as a defendant, nor may a recipient 
participate on behalf of such an incarcerated person in any 
administrative proceeding challenging the conditions of incarceration.



Sec. 1637.4  Change in circumstances.

    If, to the knowledge of the recipient, a client becomes incarcerated 
after litigation has commenced, the recipient must use its best efforts 
to withdraw promptly from the litigation, unless the period of 
incarceration is anticipated to be brief and the litigation is likely to 
continue beyond the period of incarceration.



Sec. 1637.5  Recipient policies, procedures and recordkeeping.

    Each recipient shall adopt written policies and procedures to guide 
its staff in complying with this part and

[[Page 495]]

shall maintain records sufficient to document the recipient's compliance 
with this part.



PART 1638--RESTRICTION ON SOLICITATION--Table of Contents




Sec.
1638.1  Purpose.
1638.2  Definitions.
1638.3  Prohibition.
1638.4  Permissible activities.
1638.5  Recipient policies.

    Authority: Sec. 504(a)(18), Pub. L. 104-208, 110 Stat. 3009; Pub. L. 
104-134, 110 Stat. 1321.

    Source: 62 FR 19424, Apr. 21, 1997, unless otherwise noted.



Sec. 1638.1  Purpose.

    This part is designed to ensure that recipients and their employees 
do not solicit clients.



Sec. 1638.2  Definitions.

    (a) In-person means a face-to-face encounter or a personal encounter 
via other means of communication such as a personal letter or telephone 
call.
    (b) Unsolicited advice means advice to obtain counsel or take legal 
action given by a recipient or its employee to an individual who did not 
seek the advice and with whom the recipient does not have an attorney-
client relationship.



Sec. 1638.3  Prohibition.

    (a) Recipients and their employees are prohibited from representing 
a client as a result of in-person unsolicited advice.
    (b) Recipients and their employees are also prohibited from 
referring to other recipients individuals to whom they have given in-
person unsolicited advice.



Sec. 1638.4  Permissible activities.

    (a) This part does not prohibit recipients or their employees from 
providing information regarding legal rights and responsibilities or 
providing information regarding the recipient's services and intake 
procedures through community legal education activities such as 
outreach, public service announcements, maintaining an ongoing presence 
in a courthouse to provide advice at the invitation of the court, 
disseminating community legal education publications, and giving 
presentations to groups that request them.
    (b) A recipient may represent an otherwise eligible individual 
seeking legal assistance from the recipient as a result of information 
provided as described in Sec. 1638.4(a), provided that the request has 
not resulted from in-person unsolicited advice.
    (c) This part does not prohibit representation or referral of 
clients by recipients pursuant to a statutory or private ombudsman 
program that provides investigatory and referral services and/or legal 
assistance on behalf of persons who are unable to seek assistance on 
their own, including those who are institutionalized or are physically 
or mentally disabled.



Sec. 1638.5  Recipient policies.

    Each recipient shall adopt written policies to implement the 
requirements of this part.



PART 1639--WELFARE REFORM--Table of Contents




Sec.
1639.1  Purpose.
1639.2  Definitions.
1639.3  Prohibition.
1639.4  Permissible representation of eligible clients.
1639.5  Exceptions for public rulemaking and responding to requests with 
          non-LSC funds.
1639.6  Recipient policies and procedures.

    Authority: 42 U.S.C. 2996g(e); Pub. L. 104-208, 110 Stat. 3009; Pub. 
L. 104-134, 110 Stat. 1321.

    Source: 62 FR 30766, June 5, 1997, unless otherwise noted.



Sec. 1639.1  Purpose.

    The purpose of this rule is to ensure that LSC recipients do not 
initiate litigation involving, or challenge or participate in, efforts 
to reform a Federal or State welfare system. The rule also clarifies 
when recipients may engage in representation on behalf of an individual 
client seeking specific relief from a welfare agency and under what 
circumstances recipients may use funds from sources other than the 
Corporation to comment on public rulemaking or respond to requests from 
legislative or administrative officials

[[Page 496]]

involving a reform of a Federal or State welfare system.



Sec. 1639.2  Definitions.

    An effort to reform a Federal or State welfare system includes all 
of the provisions, except for the Child Support Enforcement provisions 
of Title III, of the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996 (Personal Responsibility Act), 110 Stat. 2105 
(1996), and subsequent legislation enacted by Congress or the States to 
implement, replace or modify key components of the provisions of the 
Personal Responsibility Act or by States to replace or modify key 
components of their General Assistance or similar means-tested programs 
conducted by States or by counties with State funding or under State 
mandates.

[67 FR 19343, Apr. 19, 2002]



Sec. 1639.3  Prohibition.

    Except as provided in Secs. 1639.4 and 1639.5, recipients may not 
initiate legal representation, or participate in any other way in 
litigation, lobbying or rulemaking, involving an effort to reform a 
Federal or State welfare system. Prohibited activities include 
participation in:
    (a) Litigation challenging laws or regulations enacted as part of an 
effort to reform a Federal or State welfare system.
    (b) Rulemaking involving proposals that are being considered to 
implement an effort to reform a Federal or State welfare system.
    (c) Lobbying before legislative or administrative bodies undertaken 
directly or through grassroots efforts involving pending or proposed 
legislation that is part of an effort to reform a Federal or State 
welfare system.



Sec. 1639.4  Permissible representation of eligible clients.

    Recipients may represent an individual eligible client who is 
seeking specific relief from a welfare agency.

[62 FR 30766, June 5, 1997, as amended at 67 FR 19343, Apr. 19, 2002]



Sec. 1639.5  Exceptions for public rulemaking and responding to requests with non-LSC funds.

    Consistent with the provisions of 45 CFR 1612.6 (a) through (e), 
recipients may use non-LSC funds to comment in a public rulemaking 
proceeding or respond to a written request for information or testimony 
from a Federal, State or local agency, legislative body, or committee, 
or a member thereof, regarding an effort to reform a Federal or State 
welfare system.



Sec. 1639.6  Recipient policies and procedures.

    Each recipient shall adopt written policies and procedures to guide 
its staff in complying with this part.



PART 1640--APPLICATION OF FEDERAL LAW TO LSC RECIPIENTS--Table of Contents




Sec.
1640.1  Purpose.
1640.2  Definitions.
1640.3  Contractual agreement.
1640.4  Violation of agreement.

    Authority: Sec. 504(a)(19), Pub. L. 104-208, 110 Stat. 3009; Pub. L. 
104-134, 110 Stat. 1321.

    Source: 62 FR 19426, Apr. 21, 1997, unless otherwise noted.



Sec. 1640.1  Purpose.

    The purpose of this part is to ensure that recipients use their LSC 
funds in accordance with Federal law related to the proper use of 
Federal funds. This part also identifies the Federal laws which apply, 
and it provides notice of the consequences to a recipient of a violation 
of such Federal laws by a recipient, its employees or board members.



Sec. 1640.2  Definitions.

    (a)(1) Federal law relating to the proper use of Federal funds 
means:
    (i) 18 U.S.C. 201(Bribery of Public Officials and Witnesses);
    (ii) 18 U.S.C. 286 (Conspiracy to Defraud the Government With 
Respect to Claims);
    (iii) 18 U.S.C. 287 (False, Fictitious or Fraudulent Claims);
    (iv) 18 U.S.C. 371 (Conspiracy to Commit Offense or Defraud the 
United States);

[[Page 497]]

    (v) 18 U.S.C. 641 (Public Money, Property or Records);
    (vi) 18 U.S.C. 1001 (Statements or Entries Generally);
    (vii) 18 U.S.C. 1002 (Possession of False Papers to Defraud the 
United States);
    (viii) 18 U.S.C. 1516 (Obstruction of Federal Audit);
    (ix) 31 U.S.C. 3729 (False Claims);
    (x) 31 U.S.C. 3730 (Civil Actions for False Claims), except that 
actions that are authorized by 31 U.S.C. 3730(b) to be brought by 
persons may not be brought against the Corporation, any recipient, 
subrecipient, grantee, or contractor of the Corporation, or any employee 
thereof;
    (xi) 31 U.S.C. 3731 (False Claims Procedure);
    (xii) 31 U.S.C. 3732 (False Claims Jurisdiction); and
    (xiii) 31 U.S.C. 3733 (Civil Investigative Demands).
    (2) For the purposes of the laws listed in paragraph (a)(1) of this 
section, LSC shall be considered a Federal agency and a recipient's LSC 
funds shall be considered to be Federal funds provided by grant or 
contract.
    (b) A violation of the agreement means:
    (1) That the recipient has been convicted of, or judgment has been 
entered against the recipient for, a violation of any of the laws listed 
in paragraph (a)(1) of this section, with respect to its LSC grant or 
contract, by the court having jurisdiction of the matter, and any 
appeals of the conviction or judgment have been exhausted or the time 
for the appeal has expired; or
    (2) An employee or board member of the recipient has been convicted 
of, or judgment has been entered against the employee or board member 
for, a violation of any of the laws listed in paragraph (a)(1) of this 
section with respect to a recipient's grant or contract with LSC by the 
court having jurisdiction of the matter, and any appeals of the 
conviction or judgment have been exhausted or the time for appeal has 
expired, and the Corporation finds that the recipient has knowingly or 
through gross negligence allowed the employee or board member to engage 
in such activities.



Sec. 1640.3  Contractual agreement.

    As a condition of receiving LSC funds, a recipient must enter into a 
written contractual agreement with the Corporation that, with respect to 
its LSC funds, it will be subject to the Federal laws listed in 
Sec. 1640.2(a)(1). The agreement shall include a statement that all of 
the recipient's employees and board members have been informed of such 
Federal law and of the consequences of a violation of such law, both to 
the recipient and to themselves as individuals.



Sec. 1640.4  Violation of agreement.

    (a) A violation of the agreement under Sec. 1640.2(b)(1) shall 
result in the recipient's LSC grant or contract being terminated by the 
Corporation without need for a termination hearing. During the pendency 
of any appeal of a conviction or judgment, the Corporation may take such 
steps as it determines necessary to safeguard its funds.
    (b) A violation of the agreement under Sec. 1640.2(b)(2) shall 
result in the recipient's LSC grant or contract being terminated by the 
Corporation. Prior to such termination, the Corporation shall provide 
notice and an opportunity to be heard for the sole purpose of 
determining whether the recipient knowingly or through gross negligence 
allowed the employee or board member to engage in the activities which 
led to the conviction or judgment. During the pendency of any appeal of 
a conviction or judgment or during the pendency of a hearing, the 
Corporation may take such steps as it determines necessary to safeguard 
its funds.



PART 1641--DEBARMENT, SUSPENSION AND REMOVAL OF RECIPIENT AUDITORS--Table of Contents




                           Subpart A--General

Sec.
1641.1  Purpose/Applicability.
1641.2  Definitions.
1641.3  Scope of debarment, suspension and removal.
1641.4  Duration of debarment, suspension and removal.

                          Subpart B--Debarment

1641.5  Debarment.

[[Page 498]]

1641.6  Procedures for debarment.
1641.7  Causes for debarment.
1641.8  Notice of proposed debarment.
1641.9  Response to notice of proposed debarment.
1641.10  Additional proceedings as to disputed material facts.

                          Subpart C--Suspension

1641.11  Suspension.
1641.12  Procedures for suspension.
1641.13  Causes for suspension.
1641.14  Notice of proposed suspension.
1641.15  Response to notice of proposed suspension.

                           Subpart D--Removal

1641.16  Removal.
1641.17  Procedures for removal.
1641.18  Causes for removal.
1641.19  Notice of proposed removal.
1641.20  Response to notice of proposed removal.
1641.21  Additional proceedings as to disputed material facts.

                          Subpart E--Decisions

1641.22  Decisions of debarring official.
1641.23  Exceptions to debarment, suspension and removal.
1641.24  Appeal and reconsideration of debarring official decisions.

    Authority: 42 U.S.C. 2996e(g); Pub. L. 105-277.

    Source: 64 FR 67507, Dec. 2, 1999, unless otherwise noted.



                           Subpart A--General



Sec. 1641.1  Purpose/Applicability.

    In order to assist in ensuring that recipients receive acceptable 
audits, this part sets out the authority of the Legal Services 
Corporation (``LSC'') Office of Inspector General (``OIG'') to debar, 
suspend or remove independent public accountants (``IPAs'') from 
performing audit services for recipients. This rule informs IPAs of 
their rights to notice and an opportunity to be heard on actions 
involving debarment, suspension or removal, and the standards upon which 
such actions will be taken. This part applies to IPAs performing audit 
services for recipients, subrecipients or other entities which receive 
LSC funds and are required to have an audit performed in accordance with 
guidance promulgated by the OIG.



Sec. 1641.2  Definitions.

    Adequate evidence means information sufficient to support the 
reasonable belief that a particular act or omission has occurred.
    Audit services means the annual financial statement audit of a 
recipient, including an audit of the recipient's financial statements, 
systems of internal control, and compliance with laws and regulations.
    Contract means an agreement between a recipient and an IPA for an 
IPA to provide audit services to the recipient.
    Conviction means a judgment or conviction of a criminal offense by 
any court, whether entered upon a verdict or plea, including but not 
limited to, pleas of nolo contendere.
    Debarment means a decision by the debarring official to prohibit an 
IPA from soliciting or entering into new contracts to perform audit 
services for recipient(s) based upon a finding by a preponderance of the 
evidence that any of the causes for debarment set out in Sec. 1641.7 
exist. Debarment may cover an IPA's contracts with all recipients or 
with one or more specific recipients.
    Debarring official is the official responsible for debarment, 
suspension or removal actions under this part. The OIG legal counsel is 
the debarring official. In the absence of an OIG legal counsel or in the 
discretion of the Inspector General, the debarring official shall be the 
OIG staff person or other individual designated by the Inspector 
General.
    Indictment means a charge by a grand jury that the person named 
therein has committed a criminal offense. An information, presentment, 
or other filing by competent authority charging a criminal offense shall 
be given the same effect as an indictment.
    IPA means an independent public accountant or firm of accountants.
    Knowingly means that an act was done voluntarily and intentionally 
and not because of mistake or accident.
    Material fact means one which is necessary to determine the outcome 
of an issue or case and without which the case could not be supported.
    Person means an individual or a firm, partnership, corporation, 
association, or other legal entity.

[[Page 499]]

    Preponderance of the evidence means proof by information that, 
compared with that opposing it, leads to the conclusion that the fact at 
issue is more probably true than not.
    Removal means a decision by the debarring official to prohibit an 
IPA from performing audit services in subsequent years of an existing 
contract with one or more specific recipients based upon a finding by a 
preponderance of the evidence that any of the causes set out in 
Sec. 1641.18 exist.
    Suspension means a decision by the debarring official, in 
anticipation of a debarment, to prohibit an IPA from soliciting or 
entering into new contracts to perform audit services for recipient(s) 
based upon a finding of adequate evidence that any of the causes 
referred to in Sec. 1641.13 exist. Suspension may preclude an IPA from 
soliciting or entering into new contracts with all recipients or with 
one or more specific recipients.



Sec. 1641.3  Scope of debarment, suspension and removal.

    An IPA may be debarred, suspended or removed under this part only if 
the IPA is specifically named and given notice of the proposed action 
and an opportunity to respond in accordance with this part.
    (a) Actions against individual IPAs. Debarment, suspension or 
removal of an individual IPA, debars, suspends or removes that 
individual from performing audit services as an individual or as an 
employee, independent contractor, agent or other representative of an 
IPA firm.
    (b) Actions against IPA firms. (1) Debarment, suspension or removal 
shall affect only those divisions or other organizational elements 
materially involved in the relevant engagement and as to which there is 
cause to debar, suspend or remove.
    (2) The debarment, suspension or removal action contemplated in 
paragraph (b)(1) of this section may include any firm that is an 
affiliate, subcontractor, joint venturer, agent or representative of the 
IPA firm only if such firm was materially involved in the relevant 
engagement and is specifically named and given notice of the proposed 
action and an opportunity to respond in accordance with this part.
    (3) The debarment, suspension or removal action contemplated in 
paragraph (b)(1) of this section may include an individual officer, 
director, or partner responsible for the engagement, or an individual 
employee, independent contractor, agent, representative or other 
individual associated with an IPA firm only if such individual is 
specifically named and given notice of the proposed action and an 
opportunity to respond in accordance with this part.



Sec. 1641.4  Duration of debarment, suspension and removal.

    A debarment, suspension or removal is effective as set out in the 
debarring official's decision to debar, suspend or remove, issued 
pursuant to Sec. 1641.22.
    (a) Debarment. (1) Debarment generally should not exceed three 
years, but may be for a shorter period based on a consideration of the 
evidence presented by the IPA. Debarment may exceed three years in 
extraordinary circumstances.
    (2) If a suspension precedes a debarment, the suspension period 
shall be considered in determining the debarment period.
    (3) The debarring official may extend an existing debarment for an 
additional period if the debarring official determines, based on 
additional facts not previously in the record, that an extension is 
necessary to protect LSC funds. The standards and procedures in this 
part shall be applied in any proceeding to extend a debarment.
    (b) Suspension. (1) The debarring official may determine that a 
cause for suspension exists, but that an investigation or other legal or 
debarment proceeding should be completed before proceeding to a 
debarment. Suspension shall be for a temporary period pending the 
completion of an investigation or other legal or debarment proceedings, 
including a proceeding conducted by the OIG, a law enforcement or other 
government agency, an investigative or audit official from another OIG, 
a court, or a state licensing body or other organization with authority 
over IPAs.
    (2) If debarment proceedings are not initiated within 12 months 
after the

[[Page 500]]

date of the suspension notice, the suspension shall be terminated unless 
an official or organization conducting a proceeding referred to in 
paragraph (b)(1) of this section requests its extension in writing. In 
such cases, the suspension may be extended up to an additional six 
months. In no event may a suspension be imposed for more than 18 months, 
unless debarment proceedings have been initiated within that period.
    (3) The OIG shall notify the appropriate official or organization 
conducting a proceeding referred to in paragraph (b)(1) of this section, 
if any, of the suspension within 10 days of its implementation, and 
shall notify such official or organization of an impending termination 
of a suspension at least 30 days before the 12-month period expires to 
allow an opportunity to request an extension.
    (4) The limit on the duration of a suspension in paragraph (b)(2) of 
this section may be waived by the affected IPA.
    (c) Removal. Removal shall be effective for the years remaining on 
the existing contract(s) between the IPA and the recipient(s).



                          Subpart B--Debarment



Sec. 1641.5  Debarment.

    (a) IPAs debarred from providing audit services for all recipients 
are prohibited from soliciting or entering into any new contracts for 
audit services with recipients for the duration of the specified period 
of debarment. Recipients shall not knowingly award contracts to, extend 
or modify existing contracts with, or solicit proposals from, such IPAs. 
Debarred IPAs also are prohibited from providing audit services to 
recipients as agents or representatives of other IPAs.
    (b) IPAs debarred from providing audit services for one or more 
specific recipient(s) are prohibited from soliciting or entering into 
any new contracts for audit services with such recipient(s) for the 
duration of the period of debarment as determined pursuant to this part. 
The affected recipient(s) shall not knowingly award contracts to, extend 
or modify existing contracts with, or solicit proposals from, such IPAs. 
Debarred IPAs also are prohibited from providing audit services to the 
affected recipient(s) as agents or representatives of other IPAs, and 
are required to provide prior written notice to the debarring official 
before providing such services to other recipients. Debarred IPAs also 
must provide prior written notice of the debarment to any recipient for 
which the IPA provides audit services.



Sec. 1641.6  Procedures for debarment.

    Before debarring an IPA, the OIG shall provide the IPA with a 
hearing in accordance with the procedures set out in Secs. 1641.7 
through 1641.9. Such hearing shall be held entirely by written 
submissions, except:
    (a) Additional proceedings shall be held under Sec. 1641.10 if the 
debarring official finds there is a genuine dispute of material fact; 
and/or
    (b) A meeting may be held under Sec. 1641.9(c).



Sec. 1641.7  Causes for debarment.

    The debarring official may debar an IPA from performing audit 
services in accordance with the procedures set forth in this part upon a 
finding by a preponderance of the evidence that:
    (a) The IPA has failed significantly to comply with government 
auditing standards established by the Comptroller General of the United 
States, generally accepted auditing standards and/or OIG audit guidance 
as stated in the OIG Audit Guide for Recipients and Auditors, including 
the Compliance Supplement for Audits of LSC Recipients, and in OIG Audit 
Bulletins;
    (b) The IPA is currently debarred from contracting with any Federal 
agency or entity receiving Federal funds, including when the IPA has 
stipulated to such debarment;
    (c) The IPA's license to practice accounting has been revoked, 
terminated or suspended by a state licensing body or other organization 
with authority over IPAs;
    (d) The IPA has been convicted of any offense indicating a breach of 
trust, dishonesty or lack of integrity, or conspiracy to commit such an 
offense, and the conviction is final; or
    (e) The IPA has been found subject to a civil judgment for any 
action indicating a breach of trust, dishonesty or

[[Page 501]]

lack of integrity, or conspiracy to take such action, and the judgment 
is final.



Sec. 1641.8  Notice of proposed debarment.

    (a) Before debarring an IPA, the OIG shall send the IPA written 
notice of the proposed debarment. The notice shall be sent in a manner 
that provides evidence of its receipt and shall:
    (1) State that debarment is being considered;
    (2) Identify the reasons for the proposed debarment sufficient to 
put the IPA on notice of the conduct or transaction(s) upon which a 
debarment proceeding is based;
    (3) Identify the regulatory provisions governing the debarment 
proceeding; and
    (4) State that debarment may be for a period of up to three years or 
longer under extraordinary circumstances. If the OIG has determined that 
extraordinary circumstances warranting debarment in excess of three 
years may exist, the notice shall so state.
    (b) A copy of the notice also shall be sent to the affected 
recipient(s), if any, which may comment on the proposed action in the 
time frame set out in Sec. 1641.9.



Sec. 1641.9  Response to notice of proposed debarment.

    (a) The IPA shall have 30 days from receipt of the notice within 
which to respond.
    (b) The response shall be in writing and may include information and 
argument in opposition to the proposed debarment, including any 
additional specific information pertaining to the possible causes for 
debarment, and information and argument in mitigation of the proposed 
period of debarment.
    (c) The response may request a meeting with the debarring official 
to permit the IPA to discuss issues of fact or law relating to the 
proposed debarment, or to otherwise resolve the pending matters. Any 
such meeting shall take the form that the debarring official deems 
appropriate and shall be held within 20 days of the response. If the IPA 
requests an in person meeting, it shall be held at LSC headquarters.
    (d) Failure to respond to the notice shall be deemed an admission of 
the existence of the cause(s) for debarment set forth in the notice and 
an acceptance of the period of debarment. In such circumstances, without 
further proceedings, the debarring official may enter a final decision 
stating the period of debarment.



Sec. 1641.10  Additional proceedings as to disputed material facts.

    (a) In actions not based upon a conviction or civil judgment under 
Sec. 1641.7 (d) or (e), if the debarring official finds that the IPA's 
submission raises a genuine dispute of material fact, the IPA shall be 
afforded an opportunity to appear (with counsel, if desired), submit 
documentary evidence, present witnesses, and confront any witnesses the 
OIG presents. If the debarring official finds that the IPA's submission 
does not raise a genuine issue of material fact, additional proceedings 
will not be provided. In such case, the hearing shall be held entirely 
by written submissions, except that a meeting may be held under 
Sec. 1641.9(c).
    (b) If the debarring official determines additional proceedings to 
be warranted, OIG shall notify the IPA. Such notice shall include notice 
of the procedures under which such proceedings shall be conducted.
    (c) A transcribed record of any additional proceedings shall be 
prepared and a copy shall be made available to the IPA without cost.
    (d) The debarring official may refer disputed material facts to a 
fact finder, who need not be a member of the OIG staff, for fact 
finding, analysis and recommendation.



                          Subpart C--Suspension



Sec. 1641.11  Suspension.

    (a) IPAs suspended from providing audit services for all recipients 
are prohibited from soliciting or entering into any new contracts for 
audit services with recipients for the duration of the suspension. 
Recipients shall not knowingly award contracts to, extend or modify 
existing contracts with, or solicit proposals from, such IPAs. Suspended 
IPAs also are prohibited from providing audit services to recipients as 
agents or representatives of other IPAs.

[[Page 502]]

    (b) IPAs suspended from providing audit services for one or more 
specific recipient(s) are prohibited from soliciting or entering into 
any new contracts for audit services with such recipient(s) for the 
duration of the period of suspension as determined pursuant to this 
part. The affected recipient(s) shall not knowingly award contracts to, 
extend or modify existing contracts with, or solicit proposals from, 
such IPAs. Suspended IPAs also are prohibited from providing audit 
services to the affected recipient(s) as agents or representatives of 
other IPAs, and are required to provide prior written notice to the 
debarring official before providing such services to other recipients. 
Suspended IPAs also must provide prior written notice of the suspension 
to any recipient for which the IPA provides audit services.



Sec. 1641.12  Procedures for suspension.

    Before suspending an IPA, the OIG shall provide the IPA with a show 
cause hearing in accordance with the procedures set out in Secs. 1641.13 
through 1641.15. Such hearing shall be held entirely by written 
submissions, except that a meeting may be held under Sec. 1641.15(c).



Sec. 1641.13  Causes for suspension.

    The debarring official may suspend an IPA in accordance with the 
procedures set forth in this part upon adequate evidence that:
    (a) A cause for debarment under Sec. 1641.7 may exist;
    (b) The IPA has been indicted for or convicted of any offense 
described in Sec. 1641.7;
    (c) The IPA has been found subject to a civil judgment described in 
Sec. 1641.7(e), whether the judgment is final or not.
    (d) The IPA has been suspended from contracting with a Federal 
agency or entity receiving Federal funds including when the IPA has 
stipulated to the suspension.



Sec. 1641.14  Notice of proposed suspension.

    (a) Before suspending an IPA, OIG shall send it written notice of 
cause to suspend. Such notice shall:
    (1) Include a directive to show cause, signed by the debarring 
official, which shall inform the IPA that unless the IPA responds within 
10 days as provided in Sec. 1641.15, a suspension will be imposed;
    (2) Identify the reasons for the proposed suspension sufficient to 
put the IPA on notice of the conduct or transaction(s) upon which a 
suspension proceeding is based;
    (3) Identify the regulatory provisions governing the suspension 
proceeding; and
    (4) State that, if imposed, the suspension shall be for a temporary 
period pending the completion of a investigation or other legal or 
debarment proceeding.
    (b) A copy of the notice also shall be sent to the affected 
recipient(s), if any, who may comment on the proposed action in the time 
frame set out in Sec. 1641.15.



Sec. 1641.15  Response to notice of proposed suspension.

    (a) The IPA shall have 10 days from receipt of the notice within 
which to respond.
    (b) The response shall be in writing and may include information and 
argument in opposition to the proposed suspension, including any 
additional specific information pertaining to the possible causes for 
suspension, and information and argument in mitigation of the proposed 
period of suspension.
    (c) The response may request a meeting with the OIG official 
identified in the notice to permit the IPA to discuss issues of fact or 
law relating to the proposed suspension, or to otherwise resolve the 
pending matters.
    (1) Any such meeting shall take such form as the debarring official 
deems appropriate and shall be held within 10 days of the response.
    (2) No meeting will be held if a law enforcement official, an 
investigative or audit official from another OIG, a state licensing body 
or other organization with authority over IPAs, or a governmental agency 
has advised in writing that the substantial interest of a governmental 
unit would be prejudiced by such a meeting and the debarring official 
determines that the suspension is based on the same facts as

[[Page 503]]

the pending legal proceedings referenced by the law enforcement 
official.
    (d) Failure to respond to the notice shall be deemed an admission of 
the existence of the cause(s) for suspension set forth in the notice and 
an acceptance of the period of suspension. In such circumstances, the 
OIG may proceed to a final decision without further proceedings.



                           Subpart D--Removal



Sec. 1641.16  Removal.

    Removed IPAs are prohibited from performing audit services in 
subsequent years under an existing contract(s) with one or more specific 
recipients. The affected recipient(s) shall not extend existing 
contracts with such IPAs. Removed IPAs also are prohibited from 
providing audit services to the affected recipient(s) as agents or 
representatives of other IPAs, and are required to provide prior written 
notice to the debarring official before providing such services to other 
recipients. Removed IPAs also must provide prior written notice of the 
removal to any such recipient.



Sec. 1641.17  Procedures for removal.

    (a) Before removing an IPA, the OIG shall provide the IPA with a 
hearing in accordance with the procedures set out in Secs. 1641.18 
through 1641.21. Such hearing shall be held entirely by written 
submissions, except:
    (1) Additional proceedings shall be held under Sec. 1641.21 if the 
debarring official finds there is a genuine dispute of material fact; 
and/or
    (2) A meeting may be held under Sec. 1641.20(c).
    (b) A Notice of Proposed Removal normally will be accompanied by a 
Notice of Proposed Debarment, and the proceedings may be consolidated.



Sec. 1641.18  Causes for removal.

    The debarring official may remove an IPA from performing audit 
services in accordance with the procedures set forth in this part upon a 
finding by a preponderance of the evidence that:
    (a) The IPA has failed significantly to comply with government 
auditing standards established by the Comptroller General of the United 
States, generally accepted auditing standards and/or OIG audit guidance 
as stated in the OIG Audit Guide for Recipients and Auditors, including 
the Compliance Supplement for Audits of LSC Recipients, and in OIG Audit 
Bulletins;
    (b) The IPA is currently debarred from contracting with any Federal 
agency or entity receiving Federal funds, including when the IPA has 
stipulated to such debarment;
    (c) The IPA's license to practice accounting has been revoked, 
terminated or suspended by a state licensing body or other organization 
with authority over IPAs;
    (d) The IPA has been convicted of any offense indicating a breach of 
trust, dishonesty or lack of integrity, or conspiracy to commit such an 
offense, and the conviction is final; or
    (e) The IPA has been found subject to a civil judgment for any 
action indicating a breach of trust, dishonesty or lack of integrity, or 
conspiracy to take such action, and the judgment is final.



Sec. 1641.19  Notice of proposed removal.

    (a) Before removing an IPA, the OIG shall send the IPA written 
notice of the proposed removal. The notice shall be sent in a manner 
that provides evidence of its receipt and shall:
    (1) State that removal is being considered;
    (2) Identify the reasons for the proposed removal sufficient to put 
the IPA on notice of the conduct or transaction(s) upon which a removal 
proceeding is based;
    (3) Identify the regulatory provisions governing the removal 
proceeding; and
    (4) State that removal shall be for the years remaining on the 
existing contract(s) between the IPA and the recipient(s).
    (b) A copy of the notice also shall be sent to the affected 
recipient(s), if any, which may comment on the proposed action in the 
time frame set out in Sec. 1641.20.



Sec. 1641.20  Response to notice of proposed removal.

    (a) The IPA shall have 30 days from receipt of the notice within 
which to respond.

[[Page 504]]

    (b) The response shall be in writing and may include information and 
argument in opposition to the proposed removal, including any additional 
specific information pertaining to the possible causes for removal.
    (c) The response may request a meeting with the debarring official 
to permit the IPA to discuss issues of fact or law relating to the 
proposed removal, or to otherwise resolve the pending matters. Any such 
meeting shall take the form that the debarring official deems 
appropriate and shall be held within 20 days of the response. If the IPA 
requests an in person meeting, it shall be held at LSC headquarters.
    (d) Failure to respond to the notice shall be deemed an admission of 
the existence of the cause(s) for removal set forth in the notice and an 
acceptance of the removal. In such circumstances, without further 
proceedings, the debarring official may enter a final decision removing 
the IPA.



Sec. 1641.21  Additional proceedings as to disputed material facts.

    (a) In actions not based upon a conviction or civil judgment under 
Sec. 1641.18(d) or (e), if the debarring official finds that the IPA's 
submission raises a genuine dispute of material fact, the IPA shall be 
afforded an opportunity to appear (with counsel, if desired), submit 
documentary evidence, present witnesses, and confront any witnesses the 
OIG presents. If the debarring official finds that the IPA's submission 
does not raise a genuine issue of material fact, additional proceedings 
will not be provided. In such case, the hearing shall be held entirely 
by written submissions, except that a meeting may be held under 
Sec. 1641.20(c).
    (b) If the debarring official determines additional proceedings to 
be warranted, OIG shall notify the IPA. Such notice shall include notice 
of the procedures under which such proceedings shall be conducted.
    (c) A transcribed record of any additional proceedings shall be 
prepared and a copy shall be made available to the IPA without cost.
    (d) The debarring official may refer disputed material facts to a 
fact finder, who need not be a member of the OIG staff, for fact 
finding, analysis and recommendation.



                          Subpart E--Decisions



Sec. 1641.22  Decisions of debarring official.

    (a) Standard of proof. (1) A debarment or removal must be based on a 
finding that the cause or causes for debarment or removal are 
established by a preponderance of the evidence in the administrative 
record of the case.
    (2) A suspension must be based on a finding that the cause or causes 
are established by adequate evidence in the administrative record of the 
case.
    (b) The administrative record consists of any information, reports, 
documents or other evidence identified and relied upon in the Notice of 
Proposed Debarment, the Notice of Proposed Suspension, or the Notice of 
Proposed Removal, together with any relevant material contained in the 
IPA's response or submitted by an affected recipient. In the case of 
debarment or removal, when additional proceedings are necessary to 
determine disputed material facts, the administrative record also shall 
consist of any relevant material submitted or presented at such 
proceedings.
    (c) Failure of the OIG to meet a time requirement of this part does 
not preclude the OIG from debarring, suspending or removing an IPA. In 
extraordinary circumstances, the OIG may grant an IPA an extension of 
the time requirements set out in this part.
    (d) Notice of decisions. IPAs shall be given prompt notice of the 
debarring official's decision. A copy of the decision also will be sent 
to the affected recipient. If the debarring official debars, suspends or 
removes an IPA, the decision shall:
    (1) Set forth the finding(s) upon which the decision is based;
    (2) Set forth the effect of the debarment, suspension or removal 
action and the effective dates of the action;
    (3) Refer the IPA to its procedural rights of appeal and 
reconsideration under Sec. 1641.24; and
    (4) Inform the IPA that a copy of the debarring official's decision 
will be a

[[Page 505]]

public document and the fact of debarment, suspension or removal will be 
a matter of public record.
    (e) If the debarring official decides that a debarment, suspension, 
or removal is not warranted, the Notice may be withdrawn or the 
proceeding may be otherwise terminated.
    (f) If the debarring official deems it appropriate, the debarring 
official may, at any time, settle by agreement with the IPA a debarment, 
suspension, or removal action. Such a negotiated settlement may include 
the imposition of appropriate conditions on the IPA.



Sec. 1641.23  Exceptions to debarment, suspension and removal.

    Exceptions to the effects of debarment, suspension or removal may be 
available in unique circumstances, when there are compelling reasons to 
use a particular IPA for a specific task. Requests for such exceptions 
may be submitted only by the recipient requiring audit services. The 
Inspector General may except a contract from the effects of debarment, 
suspension or removal upon a written determination that a compelling 
reason exists for using the IPA in the particular instance.



Sec. 1641.24  Appeal and reconsideration of debarring official decisions.

    (a) Appeal and reconsideration generally. A debarred, suspended or 
removed IPA may submit the debarring official's decision for appeal or 
reconsideration in accordance with this section. Within 60 days, IPAs 
shall be given notice of decisions on appeal and reconsideration. The 
relief, if any, granted upon appeal or reconsideration shall be limited 
to the relief stated in the decision on the appeal or reconsideration.
    (b) Appeal. (1) A debarred, suspended or removed IPA may appeal the 
decision to the Inspector General, who may uphold, reverse or modify the 
debarring official's decision.
    (2) The appeal shall be filed in writing:
    (i) By a debarred or removed IPA, within 30 days of receipt of the 
decision;
    (ii) By a suspended IPA, within 15 days of receipt of the decision.
    (3) The Inspector General, at his or her discretion and after 
determining that a compelling reason exists, may stay the effect of the 
debarment, suspension or removal pending conclusion of his or her review 
of the matter.
    (c) Reconsideration. (1) A debarred, suspended or removed IPA may 
submit a request to the debarring official to reconsider the debarment, 
suspension or removal decision, reduce the period of debarment or 
removal, or terminate the suspension.
    (2) Such requests shall be in writing and supported by documentation 
that the requested action is justified by:
    (i) In the case of suspension, reversal of the conviction or civil 
judgment upon which the suspension was based;
    (ii) Newly discovered material evidence;
    (iii) Bona fide change in ownership or management;
    (iv) Elimination of other causes for which the debarment, suspension 
or removal was imposed; or
    (v) Other reasons the debarring official deems appropriate.
    (3) A request for reconsideration of a suspension which was based a 
conviction, civil judgment, or sanction that has been reversed may be 
filed at any time.
    (4) Requests for reconsideration based on other grounds may only be 
filed during the period commencing 60 days after the debarring 
official's decision imposing the debarment or suspension. Only one such 
request may be filed in any twelve month period.
    (5) The debarring official's decision on a request for 
reconsideration is subject to the appeal procedure set forth in 
paragraph (b) of this section.



PART 1642--ATTORNEYS' FEES--Table of Contents




Sec.
1642.1  Purpose.
1642.2  Definitions.
1642.3  Prohibition.
1642.4  Applicability of restriction on attorneys' fees.
1642.5  Accounting for and use of attorneys' fees.
1642.6  Acceptance of reimbursement from a client.
1642.7  Recipient policies, procedures and recordkeeping.


[[Page 506]]


    Authority: 42 U.S.C. 2996e(d)(6); Pub. L. 104-208, 110 Stat. 3009; 
Pub. L. 104-134, 110 Stat 1321, section 504(a)(13).

    Source: 62 FR 25864, May 12, 1997, unless otherwise noted.



Sec. 1642.1  Purpose.

    This part is designed to insure that recipients or employees of 
recipients do not claim, or collect and retain attorneys' fees available 
under any Federal or State law permitting or requiring the awarding of 
attorneys' fees.



Sec. 1642.2  Definitions.

    (a) Attorneys' fees means an award to compensate an attorney of the 
prevailing party made pursuant to common law or Federal or State law 
permitting or requiring the awarding of such fees or a payment to an 
attorney from a client's retroactive statutory benefits.
    (b) Attorneys' fees do not include the following:
    (1) Payments made to a recipient or an employee of a recipient for a 
case in which a court appoints the recipient employee to provide 
representation pursuant to a statute or court rule or practice equally 
applicable to all attorneys in the jurisdiction, and in which the 
recipient or employee receives compensation under the same terms and 
conditions as are applied generally to attorneys practicing in the court 
in which the appointment is made;
    (2) Payments made to a recipient or an employee of a recipient 
pursuant to a grant, contract or other agreement by a governmental 
agency or other third party for representation of clients;
    (3) Payments received as a result of sanctions imposed by a court 
for violations of court rules or practices, or statutes relating to 
court practice, including Rule 11 or discovery rules of the Federal 
Rules of Civil Procedure, or similar State court rules or practices, or 
statutes; and
    (4) Reimbursement of costs and expenses from an opposing party or 
from a client pursuant to Sec. 1642.6.
    (c) An award is an order by a court or an administrative agency that 
the unsuccessful party pay the attorneys' fees of the prevailing party 
or an order by a court or administrative agency approving a settlement 
agreement of the parties which provides for payment of attorneys' fees 
by an adversarial party.
    (d) To claim attorneys' fees means to include a request for 
attorneys' fees in any pleading.



Sec. 1642.3  Prohibition.

    Except as permitted by Sec. 1642.4, no recipient or employee of a 
recipient may claim, or collect and retain attorneys' fees in any case 
undertaken on behalf of a client of the recipient.



Sec. 1642.4  Applicability of restriction on attorneys' fees.

    (a) The prohibition contained in Sec. 1642.3 shall not apply to 
cases filed prior to April 26, 1996, except that the prohibition shall 
apply to any additional related claim for the client made in such a case 
on or subsequent to April 26, 1996.
    (b) Except as permitted in paragraph (a) of this section, the 
prohibition contained in Sec. 1642.3 shall apply to any case undertaken 
by a private attorney on behalf of an eligible client when the attorney 
receives compensation from a recipient to provide legal assistance to 
such client under the recipient's private attorney involvement (PAI) 
program, judicare program, contract or other financial arrangement.



Sec. 1642.5  Accounting for and use of attorneys' fees.

    (a) Attorneys' fees received by a recipient pursuant to 
Sec. 1642.4(a) for representation supported in whole or in part with 
funds provided by the Corporation shall be allocated to the fund in 
which the recipient's LSC grant is recorded in the same proportion that 
the amount of Corporation funds expended bears to the total amount 
expended by the recipient to support the representation.
    (b) Attorneys' fees received pursuant to Sec. 1642.4(a) shall be 
recorded during the accounting period in which the money from the fee 
award is actually received by the recipient and may be expended for any 
purpose permitted by the LSC Act, regulations and other law applicable 
at the time the money is received.

[[Page 507]]



Sec. 1642.6  Acceptance of reimbursement from a client.

    (a) When a case results in a recovery of damages or statutory 
benefits, a recipient may accept reimbursement from the client for out-
of-pocket costs and expenses incurred in connection with the case, if 
the client has agreed in writing to reimburse the recipient for such 
costs and expenses out of any such recovery.
    (b) A recipient may require a client to pay court costs when the 
client does not qualify to proceed in forma pauperis under the rules of 
the jurisdiction.



Sec. 1642.7  Recipient policies, procedures and recordkeeping.

    The recipient shall adopt written policies and procedures to guide 
its staff in complying with this part and shall maintain records 
sufficient to document the recipient's compliance with this part.



PART 1643--RESTRICTION ON ASSISTED SUICIDE, EUTHANASIA, AND MERCY KILLING--Table of Contents




Sec.
1643.1  Purpose.
1643.2  Definitions.
1643.3  Prohibition.
1643.4  Applicability.
1643.5  Recipient policies and recordkeeping.

    Authority: Pub. L. 105-12; 42 U.S.C. 2996f(b)(11).

    Source: 62 FR 67749, Dec. 30, 1997, unless otherwise noted.



Sec. 1643.1  Purpose.

    This part is intended to ensure that recipients do not use any LSC 
funds for any assisted suicide, euthanasia or mercy killing activities 
prohibited by this part.



Sec. 1643.2  Definitions.

    (a) Assisted suicide means the provision of any means to another 
person with the intent of enabling or assisting that person to commit 
suicide.
    (b) Euthanasia (or mercy killing) is the use of active means by one 
person to cause the death of another person for reasons assumed to be 
merciful, regardless of whether the person killed consents to be killed.
    (c) Suicide means the act or instance of taking one's own life 
voluntarily and intentionally.



Sec. 1643.3  Prohibition.

    No recipient may use LSC funds to assist in, support, or fund any 
activity or service which has a purpose of assisting in, or to bring 
suit or provide any other form of legal assistance for the purpose of:
    (a) Securing or funding any item, benefit, program, or service 
furnished for the purpose of causing, or the purpose of assisting in 
causing, the suicide, euthanasia, or mercy killing of any individual;
    (b) Compelling any person, institution, or governmental entity to 
provide or fund any item, benefit, program, or service for such purpose; 
or
    (c) Asserting or advocating a legal right to cause, or to assist in 
causing, the suicide, euthanasia, or mercy killing of any individual.



Sec. 1643.4  Applicability.

    (a) Nothing in Sec. 1643.3 shall be interpreted to apply to:
    (1) The withholding or withdrawing of medical treatment or medical 
care;
    (2) The withholding or withdrawing of nutrition or hydration;
    (3) Abortion;
    (4) The use of items, goods, benefits, or services furnished for 
purposes relating to the alleviation of pain or discomfort even if they 
may increase the risk of death, unless they are furnished for the 
purpose of causing or assisting in causing death; or
    (5) The provision of factual information regarding applicable law on 
assisted suicide, euthanasia and mercy killing. Nor shall Sec. 1643.3 be 
interpreted as limiting or interfering with the operation of any other 
statute or regulation governing the activities listed in this paragraph.
    (b) This part does not apply to activities funded with a recipient's 
non-LSC funds.



Sec. 1643.5  Recipient policies and recordkeeping.

    The recipient shall adopt written policies to guide its staff in 
complying with this part and shall maintain

[[Page 508]]

records sufficient to document the recipient's compliance with this 
part.



PART 1644--DISCLOSURE OF CASE INFORMATION--Table of Contents




Sec.
1644.1  Purpose.
1644.2  Definitions.
1644.3  Applicability.
1644.4  Case disclosure requirement.
1644.5  Recipient policies and procedures.

    Authority: Pub. L. 105-119, 111 Stat. 2440, Sec. 505; Pub. L. 104-
134, 110 Stat. 1321; 42 U.S.C. 2996g(a).

    Source: 63 FR 33254, June 18, 1994, unless otherwise noted.



Sec. 1644.1  Purpose.

    The purpose of this rule is to ensure that recipients disclose to 
the public and to the Corporation certain information on cases filed in 
court by their attorneys.



Sec. 1644.2  Definitions.

    For the purposes of this part:
    (a) To disclose the cause of action means to provide a sufficient 
description of the case to indicate the type r principal nature of the 
case.
    (b) Recipient means any entity receiving funds from the Corporation 
pursuant to a grant or contract under section 1006(a)(1)(A) of the Act.
    (c) Attorney means any full-time or part-time attorney employed by 
the recipient as a regular or contract employee.



Sec. 1644.3  Applicability.

    (a) The case disclosure requirements of this part apply:
    (1) To actions filed on behalf of plaintiffs or petitioners who are 
clients of a recipient;
    (2) Only to the original filing of a case, except for appeals filed 
in appellate courts by a recipient if the recipient was not the attorney 
of record in the case below and the recipient's client is the appellant;
    (3) To a request filed on behalf of a client of the recipient in a 
court of competent jurisdiction for judicial review of an administrative 
action; and
    (4) To cases filed pursuant to subgrants under 45 CFR part 1627 for 
the direct representation of eligible clients, except for subgrants for 
private attorney involvement activities under part 1614 of this chapter.
    (b) This part does not apply to any cases filed by private attorneys 
as part of a recipient's private attorney involvement activities 
pursuant to part 1614 of this chapter.



Sec. 1644.4  Case disclosure requirement.

    (a) For each case filed in court by its attorneys on behalf of a 
client of the recipient after January 1, 1998, a recipient shall 
disclose, in accordance with the requirements of this part, the 
following information:
    (1) The name and full address of each party to a case, unless:
    (i) the information is protected by an order or rule of court or by 
State or Federal law; or
    (ii) the recipient's attorney reasonably believes that revealing 
such information would put the client of the recipient at risk of 
physical harm;
    (2) The cause of action;
    (3) The name and full address of the court where the case is filed; 
and
    (4) The case number assigned to the case by the court.
    (b) Recipients shall provide the information required in paragraph 
(a) of this section to the Corporation in semiannual reports in the 
manner specified by the Corporation. Recipients may file such reports on 
behalf of their subrecipients for cases that are filed under subgrants. 
Reports filed with the Corporation will be made available by the 
Corporation to the public upon request pursuant to the Freedom of 
Information Act, 5 U.S.C. 552.
    (c) Upon request, a recipient shall make the information required in 
paragraph (a) of this section available in written form to any person. 
Recipients may charge a reasonable fee for mailing and copying 
documents.



Sec. 1644.5  Recipient policies and procedures.

    Each recipient shall adopt written policies and procedures to 
implement the requirements of this part.

[[Page 509]]



 CHAPTER XVII--NATIONAL COMMISSION ON LIBRARIES AND INFORMATION SCIENCE




  --------------------------------------------------------------------

Part                                                                Page
1700            Organization and functions..................         511
1701            Disclosure of information...................         512
1703            Government in the Sunshine Act..............         515
1705            Privacy regulations.........................         520
1706            Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by National 
                    Commission on Libraries and Information 
                    Science.................................         522

[[Page 511]]



PART 1700--ORGANIZATION AND FUNCTIONS--Table of Contents




Sec.
1700.1  Purpose.
1700.2  Functions.
1700.3  Membership.
1700.4  Chairperson.
1700.5  Executive Director.

    Authority: 5 U.S.C. 552; 20 U.S.C. 1501 et seq.

    Source: 63 FR 51533, Sept. 28, 1998, unless otherwise noted.



Sec. 1700.1  Purpose.

    The National Commission on Libraries and Information Science 
(NCLIS):
    (a) Advises the President and the Congress on library and 
information services adequate to meet the needs of the people of the 
United States;
    (b) Advises Federal, State, and local governments, and other public 
and private organizations regarding library services and information 
science, including consultations on relevant treaties, international 
agreements, and implementing legislation; and
    (c) Promotes research and development activities to extend and 
improve the nation's library and information handling capabilities as 
essential links in national and international networks.



Sec. 1700.2  Functions.

    The Commission's functions include the following:
    (a) Developing and recommending overall plans for library and 
information services adequate to meet the needs of the people of the 
United States;
    (b) Coordinating, at the Federal, State and local levels, 
implementation of the plans referred to in paragraph (a) of this section 
and related activities;
    (c) Conducting studies, surveys and analyses of, and hearings on, 
the library and informational needs of the Nation, including the special 
needs of rural areas, economically, socially or culturally deprived 
persons and the elderly;
    (d) Evaluating the means by which the needs referred to in paragraph 
(c) of this section may be met through the establishment or improvement 
of information centers and libraries;
    (e) Appraising the adequacies and deficiencies of current library 
and information resources and services; and
    (f) Evaluating current library and information science programs.



Sec. 1700.3  Membership.

    (a) The Commission is composed of the Librarian of Congress, the 
Director of the Institute of Museum and Library Services (who serves as 
an ex officio, nonvoting member), and 14 members appointed by the 
President, by and with the advice and consent of the Senate.
    (b) The President designates one of the members of the Commission as 
the Chairperson.



Sec. 1700.4  Chairperson.

    (a) To facilitate its work, the Commission from time to time 
delegates to the Chairperson various duties and responsibilities.
    (b) The Commission records formal delegation of the duties and 
responsibilities referred to in paragraph (a) of this section in 
resolutions and in the minutes of its meetings.
    (c) The Chairperson may delegate the duties and responsibilities 
referred to in paragraph (a) of this section, as necessary, to other 
Commissioners or the Executive Director of the Commission.



Sec. 1700.5  Executive Director.

    (a) The Executive Director serves as the administrative and 
technical head of the Commission staff, directly responsible for 
managing its day-to-day operations and assuring that Commission 
operations conform to all applicable Federal laws.
    (b) The Executive Director is directly responsible to the 
Commission, works under the general direction of the Chairperson, and 
assists the Chairperson in carrying out the Commission's organizational 
and administrative responsibilities.
    (c) The Executive Director acts as the principal staff advisor to 
the Chairperson and Commissioners, participating with the Commissioners 
in the development, recommendation and implementation of overall plans 
and policies to achieve the Commission's goals.
    (d) To facilitate its work, the Commission from time to time 
delegates to

[[Page 512]]

the Executive Director various duties and responsibilities.
    (e) The Commission records formal delegation of the duties and 
responsibilities referred to in paragraph (d) of this section in 
resolutions and in the minutes of its meetings.
    (f) The Executive Director may delegate the duties and 
responsibilities referred to in paragraph (d) of this section, as 
necessary, to other members of the Commission staff.



PART 1701--DISCLOSURE OF INFORMATION--Table of Contents




Sec.
1701.1  Statement of policy.
1701.2  Disclosure of records and informational materials.
1701.3  Requests.
1701.4  Fees.
1701.5  Prompt response.
1701.6  Form of denial.
1701.7  Appeals.

    Authority: 5 U.S.C. 552, 20 U.S.C. 1501 et seq.



Sec. 1701.1  Statement of policy.

    The records of the National Commission on Libraries and Information 
Science shall be available to the fullest extent possible consistent 
with the terms and policies of 5 U.S.C. section 552 and on request will 
be promptly furnished to any member of the public.

[39 FR 39879, Nov. 4, 1974]



Sec. 1701.2  Disclosure of records and informational materials.

    (a) With the exception of records and materials exempt from 
disclosure pursuant to paragraph (b) of this section, any person in 
accordance with the procedure provided in Sec. 1701.3 may inspect and 
copy any document of the National Commission on Libraries and 
Information Science.
    (b) The provisions of 5 U.S.C. section 552 which require that 
agencies make their records available for public inspection and copying 
do not apply to Commission records which are:
    (1)(i) Specifically authorized under criteria established by an 
Executive Order to be kept secret in the interest of national defense or 
foreign policy and (ii) are in fact properly classified pursuant to such 
Executive Order;
    (2) Related solely to the internal personnel rules and practices of 
the Commission;
    (3) Specifically exempted from disclosure by statute;
    (4) Trade secrets and information which is privileged or which 
relates to the business, personal or financial affairs of any person and 
which is furnished in confidence;
    (5) Inter-agency and intra-agency memoranda or letters which would 
not be available by law to a private party in litigation with the 
Commission;
    (6) Personnel, medical and similar files the disclosure of which 
would constitute a clearly unwarranted invasion of personal privacy;
    (7) Investigatory records compiled for law enforcement purposes, but 
only to the extent that the production of such records would: (i) 
Interfere with enforcement proceedings, (ii) deprive a person of a right 
to a fair trial or an impartial adjudication, (iii) constitute an 
unwarranted invasion of personal privacy, (iv) disclose the identity of 
a confidential source and, in the case of a record compiled by a 
criminal law enforcement authority in the course of a criminal 
investigation, or by an agency conducting a lawful national security 
intelligence investigation, confidential information furnished only by 
the confidential source, (v) disclose investigative techniques and 
procedures, or (vi) endanger the life or physical safety of law 
enforcement personnel.
    (8) Contained in or related to examination, operating or condition 
reports prepared by, on behalf of, or for the use of an agency 
responsible for the regulation or supervision of financial institutions; 
or
    (9) Geological and geophysical information and data, including maps, 
concerning wells.
    (c) The Commission shall maintain and make available for public 
inspection and copying a current index providing identifying information 
for the public as to any matter issued, adopted, or promulgated by the 
Commission since its creation on July 20, 1970, and required by section 
552(a)(2) of title 5 to be made available or published. However, in 
accordance with 5 U.S.C. 552(a)(4)(A) the Commission deems that 
publication of the index or supplements

[[Page 513]]

thereto would be unnecessary and impracticable. Accordingly, it shall 
provide copies of such index on request but shall not publish and 
distribute it quarterly or more frequently.

[39 FR 39879, Nov. 12, 1974, as amended at 40 FR 7652, Feb. 21, 1975]



Sec. 1701.3  Requests.

    (a) A member of the public may request records from the National 
Commission on Libraries and Information Science by writing to the 
Associate Director, National Commission on Libraries and Information 
Science, Suite 601, 1717 K Street, NW, Washington, DC 20036.
    (b) A request for access to records should reasonably describe the 
records requested such that Commission personnel will be able to locate 
them with a reasonable amount of effort. Where possible, specific 
information regarding dates, titles, file designations, and other 
information which may help identify the records should be supplied by 
the requester.
    (c) Records or materials will be available for inspection and 
copying at the offices of the Commission during the normal business 
hours of regular business days or they may be obtained by mail.

[39 FR 39879, Nov. 12, 1974, as amended at 40 FR 7652, Feb. 21, 1975]



Sec. 1701.4  Fees.

    (a) A fee may be charged for direct costs of document search and 
duplication at the rate of $0.10 per page for copying and $5.00 per hour 
for time expended in identifying and locating records.
    (b) A fee may be waived in whole or in part where it is determined 
that it is in the public interest because furnishing the information can 
be considered as primarily benefiting the general public or where other 
circumstances indicate that a waiver is appropriate.
    (c) The Commission may limit the number of copies of any document 
provided to any person.

[40 FR 7653, Feb. 21, 1975]



Sec. 1701.5  Prompt response.

    (a) Within ten days (excluding Saturdays, Sundays and legal public 
holidays) of the receipt of a request, the Associate Director shall 
determine whether to comply with or deny such request and shall dispatch 
such determination to the requester, unless an extension is made under 
paragraph (c) of this section.
    (b) Only the Associate Director may deny a request and is the 
``person responsible for the denial'' within the meaning of 5 U.S.C. 
552(a). When a denial is made at the behest of another agency, the 
person in that agency responsible for urging the denial may also be a 
``person responsible for the denial'' if he is so advised before the 
Associate Director informs the requester that his request is denied.
    (c) In unusual circumstances as specified in this paragraph, the 
Associate Director may extend the time for the initial determination of 
a request up to a total of ten days (excluding Saturdays, Sundays and 
legal public holidays). Extensions shall be made by written notice to 
the requester setting forth the reason for the extension and the date 
upon which a determination is expected to be dispatched. As used in this 
paragraph ``unusual circumstances'' means, but only to the extent 
necessary to the proper processing of the request--
    (1) The need to search for and collect the requested records from 
field facilities or other establishments that are separate from the 
Commission;
    (2) The need to search for, collect, and appropriately examine a 
voluminous amount of separate and distinct records which are demanded in 
a single request; or
    (3) The need for consultation, which shall be conducted with all 
practicable speed, with another agency having substantial interest in 
the determination of the request.
    (d) If no determination has been dispatched at the end of the ten-
day period, or the last extension thereof, the requester may deem his 
request denied, and exercise a right of appeal in accordance with 
Sec. 1701.7. When no determination can be dispatched within the 
applicable time limit, the Associate Director shall nevertheless 
continue to

[[Page 514]]

process the request. On expiration of the time limit he shall inform the 
requester of the reason for the delay, of the date on which a 
determination may be expected to be dispatched, and of his rights to 
treat the delay as a denial and appeal to the Executive Director in 
accordance with Sec. 1701.7. He may also ask the requester to forgo 
appeal until a determination is made.

[40 FR 7653, Feb. 21, 1975]



Sec. 1701.6  Form of denial.

    A reply denying a request shall be in writing, signed by the 
Associate Director, and shall include: (a) A specific reference to the 
exemption or exemptions under the Freedom of Information Act authorizing 
the withholding of the record, (b) brief explanation of how the 
exemption(s) applies to the record(s) withheld, (c) a statement that the 
denial may be appealed under Sec. 1701.7 within thirty days by writing 
to the Executive Director, National Commission on Libraries and 
Information Science, Suite 601, 1717 K Street NW., Washington, DC 20036, 
and (d) that judicial review will thereafter be available in the 
district in which the requester resides or has his principal place of 
business, the district in which the agency records are situated, or in 
the District of Columbia.

[40 FR 7653, Feb. 21, 1975]



Sec. 1701.7  Appeals.

    (a) When the Associate Director has denied a request for records in 
whole or in part, the requester may, within thirty days of receipt of 
the letter notifying him of the denial, appeal to the Commission. 
Appeals to the Commission shall be in writing, addressed to the 
Executive Director, National Commission on Libraries and Information 
Science, 1717 K Street NW., Washington, DC 20036.
    (b) The Commission will act upon an appeal within twenty days 
(excepting Saturdays, Sundays or legal public holidays) of its receipt, 
unless an extension is made under paragraph (c) of this section.
    (c) In unusual circumstances as specified in this paragraph, the 
time for action on an appeal may be extended up to ten days (excluding 
Saturdays, Sundays, and legal public holidays) minus any extension 
granted at the initial request level pursuant to Sec. 1701.5(c). Such 
extension shall be made by written notice to the requester setting forth 
the reason for the extension and the date on which a determination is 
expected to be dispatched. As used in this paragraph ``unusual 
circumstances'' means, but only to the extent necessary to the proper 
processing of the appeal--
    (1) The need to search for and collect the requested records from 
field facilities or other establishments that are separate from the 
Commission;
    (2) The need to search for, collect, and appropriately examine a 
voluminous amount of separate and distinct records which are demanded in 
a single request; or
    (3) The need for consultation, which shall be conducted with all 
practicable speed, with another agency having substantial interest in 
the determination of the request.
    (d) If no determination of the appeal has been dispatched at the end 
of the twenty-day period or the last extension thereof, the requester is 
deemed to have exhausted his administrative remedies, giving rise to a 
right of review in a district court of the United States as specified in 
5 U.S.C. 552(a)(4). When no determination can be dispatched within the 
applicable time limit, the appeal will nevertheless continue to be 
processed. On expiration of the time limit the requester shall be 
informed of the reason for the delay, of the date on which a 
determination may be expected to be dispatched, and of his right to seek 
judicial review in the United States district court in the district in 
which he resides or has his principal place of business, the district in 
which the records are situated, or the District of Columbia. The 
requester may be asked to forgo judicial review until determination of 
the appeal.
    (e) The Commission's determination on appeal shall be in writing. An 
affirmance in whole or in part of a denial on appeal shall include: (1) 
A reference to the specific exemption or exemptions under the Freedom of 
Information Act authorizing the withholding of the record,

[[Page 515]]

    (2) A brief explanation of how the exemption(s) applies to the 
record(s) withheld, and
    (3) A statement that judicial review of the denial is available in 
the district in which the requester resides or has his principal place 
of business, the district in which the agency records are situated, or 
the District of Columbia.

[40 FR 7653, Feb. 21, 1975]



PART 1703--GOVERNMENT IN THE SUNSHINE ACT--Table of Contents




                      Subpart A--General Provisions

Sec.
1703.101  Purpose.
1703.102  Definitions.
1703.103  Applicability and scope.
1703.104  Open meeting policy.

        Subpart B--Procedures Governing Decisions About Meetings

1703.201  Decision to hold meetings.
1703.202  Provisions under which a meeting may be closed.
1703.203  Decision to close meeting.
1703.204  Public availability of recorded vote to close meeting.
1703.205  Public announcement of meeting.
1703.206  Providing information to the public.
1703.207  Change in meeting plans after public announcement.
1703.208  Meetings for extraordinary agency business.
1703.209  Notice of meeting in Federal Register.

                     Subpart C--Conduct of Meetings

1703.301  Meeting place.
1703.302  Role of observers.

                Subpart D--Maintenance of Meeting Records

1703.401  Requirements for maintaining records of closed meetings.
1703.402  Availability of records to the public.
1703.403  Requests for records under Freedom of Information and Privacy 
          Acts.
1703.404  Copying and transcription charges.

                    Subpart E--Administrative Review

1703.501  Administrative Review.

                       Subpart F--Judicial Review

1703.601  Judicial review.

    Authority: 5 U.S.C. 552b.

    Source: 42 FR 13553, Mar. 11, 1977, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 1703.101  Purpose.

    This part sets forth the regulations under which the Commission 
shall engage in public decision-making processes, make public 
announcement of meetings at which a quorum of or all Commission members 
consider and determine official Commission action, and inform the public 
of which meetings they are entitled to observe.



Sec. 1703.102  Definitions.

    In this part:
    (a) Meeting means the deliberations of a majority of the Commission 
members who have been appointed by the President and confirmed by the 
Senate where such deliberations determine or result in the joint conduct 
of official Commission business.
    (b) Member means one of the Commissioners of the National Commission 
on Libraries and Information Science (NCLIS) who is appointed to that 
position by the President with the advice and consent of the Senate.



Sec. 1703.103  Applicability and scope.

    This part applies to deliberations of a majority of the Commission 
members who have been appointed by the President and confirmed by the 
Senate. Excluded from coverage of this part are deliberations of 
interagency committees whose composition includes Commission members and 
deliberations of Commission officials who are not members; individual 
member's consideration of official agency business circulated to the 
members in writing for disposition or notation; and deliberations by the 
agency in determining whether or not to close a portion or portions of a 
meeting or series of meetings as provided in Sec. 1703.202.



Sec. 1703.104  Open meeting policy.

    The public is entitled to the fullest practicable information 
regarding the decision-making processes of the Commission. Commission 
meetings involving deliberations which determine or result in the joint 
conduct or disposition of official Commission business

[[Page 516]]

are presumptively open to the public. It is the intent of these 
regulations to open such meetings to public observation while protecting 
individuals' rights and the Commission's ability to carry out its 
responsibilities. Meetings or portions of meetings may be closed to 
public observation only if closure can be justified under one of the 
provisions set forth in Sec. 1703.202.



        Subpart B--Procedures Governing Decisions About Meetings



Sec. 1703.201  Decision to hold meeting.

    When Commission members make a decision to hold a meeting, the 
proposed meeting will ordinarily be scheduled for a date no earlier than 
eight days after the decision to allow sufficient time to give 
appropriate public notice. At the time a decision is made to hold a 
meeting, the time, place, and subject matter of the meeting will be 
determined, as well as whether the meeting is to be open or closed to 
the public.



Sec. 1703.202  Provisions under which a meeting may be closed.

    (a) A meeting or portion thereof may be closed to public 
observation, and information pertaining to such meeting may be withheld 
from the public, where the Commission determines that such portion or 
portions of its meeting or disclosure of such information is likely to:
    (1) Disclose matters that are: (i) Specifically authorized under 
criteria established by an Executive order to be kept secret in the 
interests of national defense or foreign policy and
    (ii) In fact properly classified pursuant to such Executive order;
    (2) Relate solely to the internal personnel rules and practices of 
an agency;
    (3) Disclose matters specifically exempted from disclosure by 
statute (other than section 552 of this title). Provided that such 
statute: (i) Requires that the matters be withheld from the public in 
such a manner as to leave no discretion on the issue, or
    (ii) Establishes particular criteria for withholding or refers to 
particular types of matters to be withheld;
    (4) Disclose trade secrets and commercial or financial information 
obtained from a person and privileged or confidential;
    (5) Involve accusing any person of a crime, or formally censuring 
any person;
    (6) Disclose information of a personal nature where disclosure would 
constitute a clearly unwarranted invasion of personal privacy;
    (7) Disclose investigatory records compiled for law enforcement 
purposes, or information which if written would be contained in such 
records, but only to the extent that the production of such records or 
information would: (i) Interfere with enforcement proceedings,
    (ii) Deprive a person of a right to a fair trial or an impartial 
adjudication,
    (iii) Constitute an unwarranted invasion of personal privacy,
    (iv) Disclose the identity of a confidential source and, in the case 
of a record compiled by a criminal law enforcement authority in the 
course of a criminal investigation, or by an agency conducting a lawful 
national security intelligence investigation, confidential information 
furnished only by the confidential source,
    (v) Disclose investigative techniques and procedures, or
    (vi) Endanger the life or physical safety of law enforcement 
personnel;
    (8) Disclose information contained in or related to examination, 
operating, or condition reports prepared by, on behalf of, or for the 
use of an agency responsible for the regulation or supervision of 
financial institutions;
    (9) Disclose information the premature disclosure of which would be 
likely to significantly frustrate implementation of a proposed agency 
action, except this subparagraph shall not apply in any instance where 
the agency has already disclosed to the public the content or nature of 
its proposed action, or where the agency is required by law to make such 
disclosure on its own initiative prior to taking final agency action on 
such proposal; or
    (10) Specifically concern the agency's issuance of a subpoena, or 
the agency's participation in a civil action or proceeding, an action in 
a foreign court or

[[Page 517]]

international tribunal, or an arbitration, or the initiation, conduct, 
or disposition by the agency of a particular case of formal agency 
adjudication pursuant to the procedures in section 554 of this title or 
otherwise involving a determination on the record after opportunity for 
a hearing.
    (b) The Commission may exercise its authority to open to public 
observation a meeting which could be closed under one of the provisions 
of Sec. 1703.202(a), if it would be in the public interest to do so. The 
Commission will determine whether the discussion comes within one of the 
specific exemptions. If the discussion is determined to be exempt, the 
Commission will consider and determine whether the public interest 
nevertheless requires that the meeting be open.



Sec. 1703.203  Decision to close meeting.

    (a) Commission members may decide before the meeting to close to 
public observation a meeting or portion or portions thereof, or to 
withhold information pertaining to such meeting, only if a majority of 
the members vote on the record to take such action. No proxy votes on 
this action shall be allowed. A single vote may be taken with respect to 
a series of meetings, a portion or portions of which are proposed to be 
closed to the public, or with respect to any information concerning such 
series of meetings, so long as each meeting in such series involves the 
same particular matters and is scheduled to be held no more than thirty 
days after the initial meeting in such series. If a decision is made to 
close a portion or portions of a meeting or a series of meetings, the 
Commission shall prepare a full written explanation of the closure 
action together with a list naming all persons expected to attend the 
meeting and identifying their affiliation.
    (b) For every meeting or portion thereof which Commission members 
have voted to close, the Chairman of NCLIS shall certify that, in his or 
her opinion, the meeting may properly be closed to the public. In 
addition, the Chairman shall state each relevant exemptive provision as 
set forth in Sec. 1703.202(a). A copy of the Chairman's certification, 
together with a statement from the Chairman setting forth the time and 
place of the meeting and listing the persons present, shall be retained 
by the Commission.
    (c) Whenever any person whose interests may be directly affected by 
a portion of a meeting requests that the Commission close such portion 
to the public for any of the reasons referred to in Sec. 1703.202 (a) 
(5), (6), or (7), the Commission members, upon request of any of the 
Commissioners, shall decide by recorded vote whether to close such 
portion. If a closure decision is made, the Commission shall prepare a 
full written explanation of the closure action together with a list 
naming all persons expected to attend the meeting and identifying their 
affiliation.



Sec. 1703.204  Public availability of recorded vote to close meeting.

    Within one day of any vote taken on a proposal to close a meeting, 
the Commission shall make publicly available a record reflecting the 
vote of each member on the question. In addition, within one day of any 
vote which closes a portion or portions of a meeting to the public, the 
Commission shall make publicly available a full written explanation of 
its closure action together with a list naming all persons expected to 
attend and identifying their affiliation, unless such disclosure would 
reveal the information that the meeting itself was closed to protect.



Sec. 1703.205  Public announcement of meeting.

    (a) Except as provided in Secs. 1703.207 and 1703.208, the 
Commission shall make a public announcement at least one week before the 
scheduled meeting, to include the following:
    (1) Time, place, and subject matter of the meeting;
    (2) Whether the meeting is to be open or closed; and
    (3) Name and telephone number of agency official who will respond to 
requests for information about the meeting.
    (b) If announcement of the subject matter of a closed meeting would 
reveal the information that the meeting was closed to protect, the 
subject matter shall not be announced.

[[Page 518]]



Sec. 1703.206  Providing information to the public.

    Individuals or organizations interested in obtaining copies of 
information available in accordance with Sec. 1703.204 may request same 
under provisions set forth in Secs. 1703.402 and 1704.404. Individuals 
or organizations having a special interest in activities of the 
Commission may request the Executive Director to the Commissioners to 
place them on a mailing list for receipt of information available under 
Sec. 1703.205. The Commission shall provide information to publications 
whose readers are likely to have a special interest in the work of the 
Commission.



Sec. 1703.207  Change in meeting plans after public announcement.

    (a) Following public announcement of a meeting, the time or place of 
a meeting may be changed only if the change is announced publicly at the 
earliest practicable time.



Sec. 1703.208  Meetings for extraordinary agency business.

    Where agency business so requires, Commission members may decide by 
majority, recorded vote to schedule a meeting for a date earlier than 
eight days after the decision. Such a decision would obviate the general 
requirement for a public announcement at least one week before the 
scheduled meeting. At the earliest practicable time, however, the 
Commission will announce publicly the time, place, and subject matter of 
the meeting, whether the meeting is to be open or closed, and the name 
and telephone number of an agency official who will respond to requests 
for information about the meeting.



Sec. 1703.209  Notice of meeting in Federal Register.

    Immediately following each public announcement required by this 
subpart, the following information, as applicable, shall be submitted 
for publication in the Federal Register:
    (a) Notice of the time, place, and subject matter of a meeting;
    (b) Whether the meeting is open or closed;
    (c) Any change in one of the preceding; and
    (d) The name and telephone number of an agency official who will 
respond to requests for information about the meeting.



                     Subpart C--Conduct of Meetings



Sec. 1703.301  Meeting place.

    Meetings will be held in meeting rooms designated in the public 
announcement. Whenever the number of observers is greater than can be 
accommodated in the meeting room designated, every reasonable effort 
will be made to provide alternative facilities.



Sec. 1703.302  Role of observers.

    The public may attend open meetings for the sole purpose of 
observation and may not record any of the discussions by means of 
electronic or other devices or cameras unless approved in advance by the 
Executive Committee of the Commission. Observers may not participate in 
meetings unless expressly invited or create distractions to interfere 
with the conduct and disposition of Commission business. Such 
participation or attempted participation shall be cause for removal of 
any person so engaged at the discretion of the presiding member of the 
Commission. When meetings are partially closed, observers will leave the 
meeting room promptly upon request so that discussion, of matters exempt 
under provisions of subpart B of this part, Sec. 1703.202, may take 
place expeditiously.



                Subpart D--Maintenance of Meeting Records



Sec. 1703.401  Requirements for maintaining records of closed meetings.

    (a) A record of each meeting or portion thereof which is closed to 
the public must be made and retained for two years or for one year after 
the conclusion of the Commission proceeding involved in the meeting. The 
record of any portion of a meeting closed to the public shall be a 
transcript or electronic recording.
    (b) When minutes are produced, such minutes shall fully and clearly 
describe all matters discussed, and will provide a full and accurate 
summary of any actions taken and the reasons expressed

[[Page 519]]

therefor. The minutes must also reflect the vote of each member on any 
roll call vote taken during the proceedings and identify all documents 
produced at the meeting.
    (c) The following documents produced under provisions of paragraph 
(b) of this section shall be retained by the agency as part of the 
minutes of the meeting:
    (1) Certification by the Chairman that the meeting may properly be 
closed; and
    (2) Statement from the presiding officer of the meeting setting 
forth the date, time and place of the meeting and listing the persons 
present.



Sec. 1703.402  Availability of records to the public.

    (a) The Commission shall make promptly available to the public the 
minutes maintained as a record of a closed meeting, except for such 
information as may be withheld under one of the provisions of 
Sec. 1703.202(a) of this report. Copies of such minutes, disclosing the 
identity of each speaker, shall be furnished to any person at the actual 
cost of duplication or transcription.
    (b) The nonexempt part of the minutes shall be in the official 
custody of the Executive Director of the Commission. Appropriate 
facilities will be made available to any persons who make a request to 
review these records.
    (c) Requests for copies of nonexempt parts of minutes, shall be 
directed to the Executive Director of the Commission. Such requests 
shall identify the records being sought and include a statement that 
whatever costs are involved in furnishing the records will be acceptable 
or, alternatively, that costs will be acceptable up to a specified 
amount.



Sec. 1703.403  Requests for records under Freedom of Information and Privacy Acts.

    Requests to review or obtain copies of records other than the 
minutes of a meeting will be processed under the Freedom of Information 
Act (5 U.S.C. 552) or, where applicable, the Privacy Act (5 U.S.C. 
552a).



Sec. 1703.404  Copying and transcription charges.

    (a) The Commission will charge fees for furnishing records at the 
rate of ten cents per page for photocopies and at the actual cost of 
transcription. When the anticipated charges exceed $50, a deposit of 20 
percent of the amount anticipated must be made within 30 days. Requested 
information will not be released until the deposit is received. Fees 
shall be paid by check or money order made payable to the National 
Commission on Libraries and Information Science.
    (b) The Executive Director of the Commission has the discretion to 
waive charges whenever release of the copies is determined to be in the 
public interest.



                    Subpart E--Administrative Review



Sec. 1703.501  Administrative Review.

    Any person who believes a Commission action governed by this part to 
be contrary to the provisions of this part may file an objection in 
writing with the Executive Director to the Commissioners. Wherever 
possible, the Executive Director will respond within two working days to 
objections concerning decisions to close meetings or portions thereof. 
Responses to objections concerning matters other than closed meetings 
will be made within ten working days.



                       Subpart F--Judicial Review



Sec. 1703.601  Judicial review.

    Any person may bring an action in a United States District Court to 
challenge or enforce the provisions of this part or the manner of their 
implementation. Such action may be brought prior to or within sixty days 
after the meeting in question, except that if proper public announcement 
of the meeting is not made, the action may be instituted at any time 
within sixty days after such announcement is made. An action may be 
brought where the Commission meeting was or is to be held or in the 
District of Columbia.

[[Page 520]]



PART 1705--PRIVACY REGULATIONS--Table of Contents




Sec.
1705.1  Purpose and scope.
1705.2  Definitions.
1705.3  Procedures for requests pertaining to individual records in the 
          D/AC File.
1705.4  Times, places, and requirements for identification of 
          individuals making requests.
1705.5  Disclosure of requested information to individuals.
1705.6  Request for correction or amendment to the record.
1705.7  Agency review of request for correction or amendment of the 
          record.
1705.8  Appeal of an initial adverse agency determination on correction 
          or amendment of the record.
1705.9  Disclosure of record to a person other than the individual to 
          whom the record pertains.
1705.10  Fees.
1705.11  Penalties.
1705.12  Exemptions.

    Authority: 5 U.S.C. 552a.

    Source: 43 FR 47195, Oct. 13, 1978, unless otherwise noted.



Sec. 1705.1  Purpose and scope.

    These procedures provide the means by which individuals may 
safeguard their privacy by obtaining access to, and requesting 
amendments or corrections in, information, if any, about these 
individuals which is contained in the White House Conference Delegate/
Alternate Certification File (D/AC File), which is under the control of 
the National Commission on Libraries and Information Science (hereafter, 
the Commission).



Sec. 1705.2  Definitions.

    For the purpose of these procedures:
    (a) The term individual means a citizen of the United States or an 
alien lawfully admitted for permanent residence;
    (b) The term maintain includes maintain, collect, use or 
disseminate;
    (c) The term record means any item or set of items about an 
individual that is maintained by the Commision in either hard copy or 
computerized form, including name, residence and other information 
obtained from the form, ``Certification of State/Territorial Delegates/
Alternates to the White House Conference on Library and Information 
Services.''
    (d) The term routine use means, with respect to the disclosure of a 
record, the use of such record for a purpose which is compatible with 
the purpose for which it was collected.



Sec. 1705.3  Procedures for requests pertaining to individual records in the D/AC File.

    (a) An individual who wishes to know whether the D/AC File contains 
a record pertaining to him or her shall submit a written request to that 
effect to the System Manager at the Commission. The System Manager 
shall, within 10 days of receipt of such submission, inform the 
individual whether the D/AC File contains such a record.
    (b) An individual who desires access to any identified record shall 
file a request therefor addressed to the System Manager indicating 
whether such individual intends to appear in person at the Commission's 
offices or whether he or she desires to receive a copy of any identified 
record through the mail.



Sec. 1705.4  Times, places, and requirements for identification of individuals making requests.

    (a) An individual who, in accord with Sec. 1705.3(b) indicated that 
he or she would appear personally shall do so at the Commission's 
offices, 1717 K Street NW., Suite 601, Washington, DC, between the hours 
of 8:30 a.m. and 4 p.m. Monday through Friday (legal holidays excluded) 
and present either: (1) The response from the System Manager indicating 
that such a record exists; or
    (2) A copy of the executed certification form, as well as another 
suitable form of identification, such as a valid drivers license or 
equivalent.
    (b) In response to a request for mail delivery, the Commission will 
mail only to the home address appearing in the D/AC File a copy of the 
record for that individual within 10 working days.



Sec. 1705.5  Disclosure of requested information to individuals.

    Upon verification of identity, the System Manager shall disclose to 
the individual: (a) The information contained in the record which 
pertains to that individual; and (b) the accounting

[[Page 521]]

of disclosures of the record, if any, required by 5 U.S.C. 552a(c).



Sec. 1705.6  Request for correction or amendment to the record.

    If a person wishes a change to be made in the record, he or she 
should follow the procedures for making changes which are included in 
the instructions accompanying the certification form by which the 
information was obtained. Copies of these instructions will be mailed to 
any delegate/alternate upon request.



Sec. 1705.7  Agency review of request for correction or amendment of the record.

    Within 10 days of the receipt of the request to correct or to amend 
the record, the System Manager will acknowledge in writing such receipt 
and promptly either: (a) Make any correction or amendment of any portion 
thereof which the individual believes is not accurate, relevant, timely, 
or complete and inform the individual of same: or
    (b) Inform the individual of his or her refusal to correct or amend 
the record in accordance with the request, the reason for the refusal, 
and the procedures established by the Commission for the individual to 
request a review of that refusal.



Sec. 1705.8  Appeal of an initial adverse agency determination on correction or amendment of the record.

    An individual who disagrees with the refusal of the System Manager 
to correct or to amend his or her record may submit a request for review 
of such refusal to the Chairman of the Commission, 1717 K Street NW., 
Suite 601, Washington, DC 20036. The Chairman will, not later than 30 
days from the date on which the individual requests such review, 
complete such review and make a final determination unless, for good 
cause shown, the Chairman extends such 30-day period. If, after his or 
her review, the Chairman also refuses to correct or to amend the record 
in accordance with the request, the individual may file with the 
Commission a concise statement setting forth the reasons for his or her 
disagreement with the refusal of the Commission and may seek judicial 
review of the Chairman's determination under 5 U.S.C. 552a(g)(1)(A).



Sec. 1705.9  Disclosure of record to a person other than the individual to whom the record pertains.

    An individual to whom a record is to be disclosed in person may have 
a person of his or her own choosing accompany the individual when the 
record is disclosed.



Sec. 1705.10  Fees.

    (a) The Commission will not charge an individual for the costs of 
making a search for a record or the costs of reviewing the record. When 
the Commission makes a copy of a record as a necessary part of the 
process of disclosing the record to an individual, the Commission will 
not charge the individual for the cost of making that copy.
    (b) If an individual requests the Commission to furnish him or her 
with a copy of the record (when a copy has not otherwise been made as a 
necessary part of the process of disclosing the record to the 
individual) the Commission will charge a fee of $0.25 per page (maximum 
per page dimension of 8\1/2\ by 13 inches) to the extent that the 
request exceeds $5 in cost to the Commission. Requests not exceeding $5 
in cost to the Commission will be met without cost to the requester.



Sec. 1705.11  Penalties.

    Title 18 U.S.C. 1001, Crimes and Criminal Procedures, makes it a 
criminal offense, subject to a maximum fine of $10,000 or imprisonment 
for not more than 5 years or both to knowingly and willfully make or 
cause to be made any false or fraudulent statements or representations 
in any matter within the jurisdiction of any agency of the United 
States. Section 552a(i)(3) of the Privacy Act (5 U.S.C. 552a(i)(3)), 
makes it a misdemeanor, subject to a maximum fine of $5,000, to 
knowingly and willfully request or obtain any record concerning an 
individual under false pretenses. Section 552a(i) (1) and (2) of the 
Privacy Act (5 U.S.C. 552a(i) (1) and (2)) provide penalties for 
violations by agency employees of the Privacy Act or regulations 
established thereunder.

[[Page 522]]



Sec. 1705.12  Exemptions.

    No Commission records system is exempted from the provisions of 5 
U.S.C. 552a as permitted under certain conditions by 5 U.S.C. 552a (j) 
and (k).



  PART 1706--ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF HANDICAP IN PROGRAMS OR ACTIVITIES CONDUCTED BY NATIONAL COMMISSION ON LIBRARIES AND INFORMATION 
SCIENCE--Table of Contents




Sec.
1706.101  Purpose.
1706.102  Application.
1706.103  Definitions.
1706.104-1706.109  [Reserved]
1706.110  Self-evaluation.
1706.111  Notice.
1706.112-1706.129  [Reserved]
1706.130  General prohibitions against discrimination.
1706.131-1706.139  [Reserved]
1706.140  Employment.
1706.141-1706.148  [Reserved]
1706.149  Program accessibility: Discrimination prohibited.
1706.150  Program accessibility: Existing facilities.
1706.151  Program accessibility: New construction and alterations.
1706.152-1706.159  [Reserved]
1706.160  Communications.
1706.161-1706.169  [Reserved]
1706.170  Compliance procedures.
1706.171-1706.999  [Reserved]

    Authority: 29 U.S.C. 794.

    Source: 51 FR 4578, 4579, Feb. 5, 1986, unless otherwise noted.



Sec. 1706.101  Purpose.

    This part effectuates section 119 of the Rehabilitation, 
Comprehensive Services, and Developmental Disabilities Amendments of 
1978, which amended section 504 of the Rehabilitation Act of 1973 to 
prohibit discrimination on the basis of handicap in programs or 
activities conducted by Executive agencies or the United States Postal 
Service.



Sec. 1706.102  Application.

    This part applies to all programs or activities conducted by the 
agency.



Sec. 1706.103  Definitions.

    For purposes of this part, the term--
    Assistant Attorney General means the Assistant Attorney General, 
Civil Rights Division, United States Department of Justice.
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and enjoy the benefits of, programs or 
activities conducted by the agency. For example, auxiliary aids useful 
for persons with impaired vision include readers, Brailled materials, 
audio recordings, telecommunications devices and other similar services 
and devices. Auxiliary aids useful for persons with impaired hearing 
include telephone handset amplifiers, telephones compatible with hearing 
aids, telecommunication devices for deaf persons (TDD's), interpreters, 
notetakers, written materials, and other similar services and devices.
    Complete complaint means a written statement that contains the 
complainant's name and address and describes the agency's alleged 
discriminatory action in sufficient detail to inform the agency of the 
nature and date of the alleged violation of section 504. It shall be 
signed by the complainant or by someone authorized to do so on his or 
her behalf. Complaints filed on behalf of classes or third parties shall 
describe or identify (by name, if possible) the alleged victims of 
discrimination.
    Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, rolling stock or other 
conveyances, or other real or personal property.
    Handicapped person means any person who has a physical or mental 
impairment that substantially limits one or more major life activities, 
has a record of such an impairment, or is regarded as having such an 
impairment.
    As used in this definition, the phrase:
    (l) Physical or mental impairment includes--
    (i) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one of more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genitourinary; hemic and lymphatic; skin; and endocrine; or

[[Page 523]]

    (ii) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term ``physical or mental 
impairment'' includes, but is not limited to, such diseases and 
conditions as orthopedic, visual, speech, and hearing impairments, 
cerebral palsy, epilepsy, muscular dystrophy, multiple sclerosis, 
cancer, heart disease, diabetes, mental retardation, emotional illness, 
and drug addition and alcholism.
    (2) Major life activities includes functions such as caring for 
one's self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (3) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (4) Is regarded as having an impairment means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the agency as constituting 
such a limitation;
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) Has none of the impairments defined in subparagraph (1) of 
this definition but is treated by the agency as having such an 
impairment.
    Qualified handicapped person means--
    (1) With respect to any agency program or activity under which a 
person is required to perform services or to achieve a level of 
accomplishment, a handicapped person who meets the essential eligibility 
requirements and who can achieve the purpose of the program or activity 
without modifications in the program or activity that the agency can 
demonstrate would result in a fundamental alteration in its nature; or
    (2) With respect to any other program or activity, a handicapped 
person who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or activity.
    (3) Qualified handicapped person is defined for purposes of 
employment in 29 CFR 1613.702(f), which is made applicable to this part 
by Sec. 1706.140.
    Section 504 means section 504 of the Rehabilitation Act of 1973 
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended by the 
Rehabilitation Act Amendments of 1974 (Pub. L. 93-516, 88 Stat. 1617), 
and the Rehabilitation, Comprehensive Services, and Developmental 
Disabilities Amendments of 1978 (Pub. L. 95-602, 92 Stat. 2955). As used 
in this part, section 504 applies only to programs or activities 
conducted by Executive agencies and not to federally assisted programs.

[51 FR 4578, 4579, Feb. 5, 1986; 51 FR 7543, Mar. 5, 1986]



Secs. 1706.104-1706.109  [Reserved]



Sec. 1706.110  Self-evaluation.

    (a) The agency shall, by April 9, 1987, evaluate its current 
policies and practices, and the effects thereof, that do not or may not 
meet the requirements of this part, and, to the extent modification of 
any such policies and practices is required, the agency shall proceed to 
make the necessary modifications.
    (b) The agency shall provide an opportunity to interested persons, 
including handicapped persons or organizations representing handicapped 
persons, to participate in the self-evaluation process by submitting 
comments (both oral and written).
    (c) The agency shall, until three years following the completion of 
the self-evaluation, maintain on file and make available for public 
inspections:
    (1) A description of areas examined and any problems identified, and
    (2) A description of any modifications made.



Sec. 1706.111  Notice.

    The agency shall make available to employees, applicants, 
participants, beneficiaries, and other interested persons such 
information regarding the provisions of this part and its applicability 
to the programs or activities conducted by the agency, and make such 
information available to them in such manner as the head of the agency 
finds necessary to apprise such persons

[[Page 524]]

of the protections against discrimination assured them by section 504 
and this regulation.



Secs. 1706.112-1706.129  [Reserved]



Sec. 1706.130  General prohibitions against discrimination.

    (a) No qualified handicapped person shall, on the basis of handicap, 
be excluded from participation in, be denied the benefits of, or 
otherwise be subjected to discrimination under any program or activity 
conducted by the agency.
    (b)(1) The agency, in providing any aid, benefit, or service, may 
not, directly or through contractual, licensing, or other arrangements, 
on the basis of handicap--
    (i) Deny a qualified handicapped person the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualfied handicapped person an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified handicapped person with an aid, benefit, 
or service that is not as effective in affording equal opportunity to 
obtain the same result, to gain the same benefit, or to reach the same 
level of achievement as that provided to others;
    (iv) Provide different or separate aid, benefits, or services to 
handicapped persons or to any class of handicapped persons than is 
provided to others unless such action is necessary to provide qualified 
handicapped persons with aid, benefits, or services that are as 
effective as those provided to others;
    (v) Deny a qualified handicapped person the opportunity to 
participate as a member of planning or advisory boards; or
    (vi) Otherwise limit a qualified handicapped person in the enjoyment 
of any right, privilege, advantage, or opportunity enjoyed by others 
receiving the aid, benefit, or service.
    (2) The agency may not deny a qualified handicapped person the 
opportunity to participate in programs or activities that are not 
separate or different, despite the existence of permissibly separate or 
different programs or activities.
    (3) The agency may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration the purpose 
or effect of which would--
    (i) Subject qualified handicapped persons to discrimination on the 
basis of handicap; or
    (ii) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to handicapped persons.
    (4) The agency may not, in determining the site or location of a 
facility, make selections the purpose or effect of which would--
    (i) Exclude handicapped persons from, deny them the benefits of, or 
otherwise subject them to discrimination under any program or activity 
conducted by the agency; or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program or activity with respect to handicapped persons.
    (5) The agency, in the selection of procurement contractors, may not 
use criteria that subject qualified handicapped persons to 
discrimination on the basis of handicap.
    (c) The exclusion of nonhandicapped persons from the benefits of a 
program limited by Federal statute or Executive order to handicapped 
persons or the exclusion of a specific class of handicapped persons from 
a program limited by Federal statute or Executive order to a different 
class of handicapped persons is not prohibited by this part.
    (d) The agency shall administer programs and activities in the most 
integrated setting appropriate to the needs of qualified handicapped 
persons.



Secs. 1706.131-1706.139  [Reserved]



Sec. 1706.140  Employment.

    No qualified handicapped person shall, on the basis of handicap, be 
subjected to discrimination in employment under any program or activity 
conducted by the agency. The definitions, requirements, and procedures 
of section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 791), as 
established by the Equal Employment Opportunity

[[Page 525]]

Commission in 29 CFR part 1613, shall apply to employment in federally 
conducted programs or activities.



Secs. 1706.141-1706.148  [Reserved]



Sec. 1706.149  Program accessibility: Discrimination prohibited.

    Except as otherwise provided in Sec. 1706.150, no qualified 
handicapped person shall, because the agency's facilities are 
inaccessible to or unusable by handicapped persons, be denied the 
benefits of, be excluded from participation in, or otherwise be 
subjected to discrimination under any program or activity conducted by 
the agency.



Sec. 1706.150  Program accessibility: Existing facilities.

    (a) General. The agency shall operate each program or activity so 
that the program or activity, when viewed in its entirety, is readily 
accessible to and usable by handicapped persons. This paragraph does 
not--
    (1) Necessarily require the agency to make each of its existing 
facilities accessible to and usable by handicapped persons; or
    (2) Require the agency to take any action that it can demonstrate 
would result in a fundamental alteration in the nature of a program or 
activity or in undue financial and administrative burdens. In those 
circumstances where agency personnel believe that the proposed action 
would fundamentally alter the program or activity or would result in 
undue financial and administrative burdens, the agency has the burden of 
proving that compliance with Sec. 1706.150(a) would result in such 
alteration or burdens. The decision that compliance would result in such 
alteration or burdens must be made by the agency head or his or her 
designee after considering all agency resources available for use in the 
funding and operation of the conducted program or activity, and must be 
accompanied by a written statement of the reasons for reaching that 
conclusion. If an action would result in such an alteration or such 
burdens, the agency shall take any other action that would not result in 
such an alteration or such burdens but would nevertheless ensure that 
handicapped persons receive the benefits and services of the program or 
activity.
    (b) Methods. The agency may comply with the requirements of this 
section through such means as redesign of equipment, reassignment of 
services to accessible buildings, assignment of aides to beneficiaries, 
home visits, delivery of services at alternate accessible sites, 
alteration of existing facilities and construction of new facilities, 
use of accessible rolling stock, or any other methods that result in 
making its programs or activities readily accessible to and usable by 
handicapped persons. The agency is nor required to make structural 
changes in existing facilities where other methods are effective in 
achieving compliance with this section. The agency, in making 
alterations to existing buildings, shall meet accessibility requirements 
to the extent compelled by the Architectural Barriers Act of 1968, as 
amended (42 U.S.C. 4151-4157), and any regulations implementing it. In 
choosing among available methods for meeting the requirements of this 
section, the agency shall give priority to those methods that offer 
programs and activities to qualified handicapped persons in the most 
integrated setting appropriate.
    (c) Time period for compliance. The agency shall comply with the 
obligations established under this section by June 6, 1986, except that 
where structural changes in facilities are undertaken, such changes 
shall be made by April 7, 1989, but in any event as expeditiously as 
possible.
    (d) Transition plan. In the event that structural changes to 
facilities will be undertaken to achieve program accessibility, the 
agency shall develop, by October 7, 1986, a transition plan setting 
forth the steps necessary to complete such changes. The agency shall 
provide an opportunity to interested persons, including handicapped 
persons or organizations representing handicapped persons, to 
participate in the development of the transition plan by submitting 
comments (both oral and written). A copy of the transition plan shall be 
made available for public inspection. The plan shall, at a minimum--

[[Page 526]]

    (1) Identify physical obstacles in the agency's facilities that 
limit the accessibility of its programs or activities to handicapped 
persons;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period; and
    (4) Indicate the official responsible for implementation of the 
plan.

[51 FR 4578, 4579, Feb. 5, 1986; 51 FR 7543, Mar. 5, 1986]



Sec. 1706.151  Program accessibility: New construction and alterations.

    Each building or part of a building that is constructed or altered 
by, on behalf of, or for the use of the agency shall be designed, 
constructed, or altered so as to be readily accessible to and usable by 
handicapped persons. The definitions, requirements, and standards of the 
Architectural Barriers Act (42 U.S.C. 4151-4157), as established in 41 
CFR 101-19.600 to 101-19.607, apply to buildings covered by this 
section.



Secs. 1706.152-1706.159  [Reserved]



Sec. 1706.160  Communications.

    (a) The agency shall take appropriate steps to ensure effective 
communication with applicants, participants, personnel of other Federal 
entities, and members of the public.
    (1) The agency shall furnish appropriate auxiliary aids where 
necessary to afford a handicapped person an equal opportunity to 
participate in, and enjoy the benefits of, a program or activity 
conducted by the agency.
    (i) In determining what type of auxiliary aid is necessary, the 
agency shall give primary consideration to the requests of the 
handicapped person.
    (ii) The agency need not provide individually prescribed devices, 
readers for personal use or study, or other devices of a personal 
nature.
    (2) Where the agency communicates with applicants and beneficiaries 
by telephone, telecommunication devices for deaf persons (TDD's) or 
equally effective telecommunication systems shall be used.
    (b) The agency shall ensure that interested persons, including 
persons with impaired vision or hearing, can obtain information as to 
the existence and location of accessible services, activities, and 
facilities.
    (c) The agency shall provide signage at a primary entrance to each 
of its inaccessible facilities, directing users to a location at which 
they can obtain information about accessible facilities. The 
international symbol for accessibility shall be used at each primary 
entrance of an accessible facility.
    (d) This section does not require the agency to take any action that 
it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity or in undue financial and administrative 
burdens. In those circumstances where agency personnel believe that the 
proposed action would fundamentally alter the program or activity or 
would result in undue financial and administrative burdens, the agency 
has the burden of proving that compliance with Sec. 1706.160 would 
result in such alteration or burdens. The decision that compliance would 
result in such alteration or burdens must be made by the agency head or 
his or her designee after considering all agency resources available for 
use in the funding and operation of the conducted program or activity, 
and must be accompanied by a written statement of the reasons for 
reaching that conclusion. If an action required to comply with this 
section would result in such an alteration or such burdens, the agency 
shall take any other action that would not result in such an alteration 
or such burdens but would nevertheless ensure that, to the maximum 
extent possible, handicapped persons receive the benefits and services 
of the program or activity.



Secs. 1706.161-1706.169  [Reserved]



Sec. 1706.170  Compliance procedures.

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
handicap in programs or activities conducted by the agency.

[[Page 527]]

    (b) The agency shall process complaints alleging violations of 
section 504 with respect to employment according to the procedures 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613 pursuant to section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791).
    (c) The Deputy Director shall be responsible for coordinating 
implementation of this section. Complaints may be sent to Deputy 
Director, National Commission on Libraries and Information Science, 
Suite 3122, GSA-ROB 3, Washington, DC 20024.
    (d) The agency shall accept and investigate all complete complaints 
for which it has jurisdiction. All complete complaints must be filed 
within 180 days of the alleged act of discrimination. The agency may 
extend this time period for good cause.
    (e) If the agency receives a complaint over which it does not have 
jurisdiction, it shall promptly notify the complainant and shall make 
reasonable efforts to refer the complaint to the appropriate government 
entity.
    (f) The agency shall notify the Architectural and Transportation 
Barriers Compliance Board upon receipt of any complaint alleging that a 
building or facility that is subject to the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151-4157), or section 502 of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 792), is not readily 
accessible to and usable by handicapped persons.
    (g) Within 180 days of the receipt of a complete complaint for which 
it has jurisdiction, the agency shall notify the complainant of the 
results of the investigation in a letter containing--
    (1) Findings of fact and conclusions of law;
    (2) A description of a remedy for each violation found;
    (3) A notice of the right to appeal.
    (h) Appeals of the findings of fact and conclusions of law or 
remedies must be filed by the complainant within 90 days of receipt from 
the agency of the letter required by Sec. 1706.170(g). The agency may 
extend this time for good cause.
    (i) Timely appeals shall be accepted and processed by the head of 
the agency.
    (j) The head of the agency shall notify the complainant of the 
results of the appeal within 60 days of the receipt of the request. If 
the head of the agency determines that additional information is needed 
from the complainant, he or she shall have 60 days from the date of 
receipt of the additional information to make his or her determination 
on the appeal.
    (k) The time limits cited in paragraphs (g) and (j) of this section 
may be extended with the permission of the Assistant Attorney General.
    (l) The agency may delegate its authority for conducting complaint 
investigations to other Federal agencies, except that the authority for 
making the final determination may not be delegated to another agency.

[51 FR 4578, 4579, Feb. 5, 1986, as amended at 51 FR 4578, Feb. 5, 1986]



Secs. 1706.171-1706.999  [Reserved]

[[Page 529]]



          CHAPTER XVIII--HARRY S. TRUMAN SCHOLARSHIP FOUNDATION




  --------------------------------------------------------------------

Part                                                                Page
1800            Privacy Act of 1974.........................         531
1801            Harry S. Truman scholarship program.........         532
1802            Public meeting procedures of the board of 
                    trustees................................         538
1803            Nondiscrimination on the basis of handicap..         542

[[Page 531]]



PART 1800--PRIVACY ACT OF 1974--Table of Contents




Sec.
1800.1  Purpose and scope.
1800.2  Definitions.
1800.3  Procedures for requests for access to individual records in a 
          record system.
1800.4  Times, places, and requirements for the identification of the 
          individual making a request.
1800.5  Access to requested information to the individual.
1800.6  Request for correction or amendment to the record.
1800.7  Agency review of request for correction or amendment of the 
          record.
1800.8  Appeal of an initial adverse agency determination on correction 
          or amendment of the record.
1800.9  Disclosure of record to a person other than the individual to 
          whom the record pertains.
1800.10  Fees.

    Authority: 5 U.S.C. 552a; Pub. L. 93-579.

    Source: 41 FR 52677, Dec. 1, 1976, unless otherwise noted.



Sec. 1800.1  Purpose and scope.

    The purposes of these regulations are to:
    (a) Establish a procedure by which an individual can determine if 
the Harry S. Truman Scholarship Foundation (hereafter known as the 
Foundation) maintains a system of records which includes a record 
pertaining to the individual; and
    (b) Establish a procedure by which an individual can gain access to 
a record pertaining to him or her for the purpose of review, amendment 
and/or correction.



Sec. 1800.2  Definitions.

    For the purpose of these regulations--
    (a) The term individual means a citizen of the United States or an 
alien lawfully admitted for permanent residence;
    (b) The term maintain includes maintain, collect, use or 
disseminate;
    (c) The term record means any item, collection or grouping of 
information about an individual that is maintained by the Foundation, 
including, but not limited to, his or her employment history, payroll 
information, and financial transactions and that contains his or her 
name, or the identifying number, symbol, or other identifying particular 
assigned to the individual, such as social security number;
    (d) The term system of records means a group of any records under 
the control of the Foundation from which information is retrieved by the 
name of the individual or by some identifying number, symbol, or other 
identifying particular assigned to the individual; and
    (e) The term routine use means, with respect to the disclosure of a 
record, the use of such record for a purpose which is compatible with 
the purpose for which it was collected.



Sec. 1800.3  Procedures for requests for access to individual records in a record system.

    An individual shall submit a request to the Deputy Executive 
Secretary of the Foundation to determine if a system of records named by 
the individual contains a record pertaining to the individual. The 
individual shall submit a request to the Deputy Executive Secretary of 
the Foundation which states the individual's desire to review his or her 
record.



Sec. 1800.4  Times, places, and requirements for the identification of the individual making a request.

    An individual making a request to the Deputy Executive Secretary of 
the Foundation pursuant to Sec. 1800.3 shall present the request at the 
Foundation offices, 712 Jackson Place, NW., Washington, DC 20006, on any 
business day between the hours of 9 a.m. and 5 p.m. The individual 
submitting the request should present himself or herself at the 
Foundation's offices with a form of identification which will permit the 
Foundation to verify that the individual is the same individual as 
contained in the record requested.



Sec. 1800.5  Access to requested information to the individual.

    Upon verification of identity the Foundation shall disclose to the 
individual the information contained in the record which pertains to 
that individual.

[[Page 532]]



Sec. 1800.6  Request for correction or amendment to the record.

    The individual should submit a request to the Deputy Executive 
Secretary of the Foundation which states the individual's desire to 
correct or to amend his or her record. This request is to be made in 
accord with the provisions of Sec. 1800.4.



Sec. 1800.7  Agency review of request for correction or amendment of the record.

    Within ten working days of the receipt of the request to correct or 
to amend the record, the Deputy Executive Secretary of the Foundation 
will acknowledge in writing such receipt and promptly either--
    (a) Make any correction or amendment of any portion thereof which 
the individual believes is not accurate, relevant, timely, or complete; 
or
    (b) Inform the individual of his or her refusal to correct or to 
amend the record in accordance with the request, the reason for the 
refusal, and the procedures established by the Foundation for the 
individual to request a review of that refusal.



Sec. 1800.8  Appeal of an initial adverse agency determination on correction or amendment of the record.

    An individual who disagrees with the refusal of the Deputy Executive 
Secretary of the Foundation to correct or to amend his or her record may 
submit a request for a review of such refusal to the Executive 
Secretary, Harry S. Truman Scholarship Foundation, 712 Jackson Place, 
NW., Washington, DC 20006. The Executive Secretary will, not later than 
thirty working days from the date on which the individual requests such 
review, complete such review and make a final determination unless, for 
good cause shown, the Executive Secretary extends such thirty day 
period. If, after his or her review, the Executive Secretary also 
refuses to correct or to amend the record in accordance with the 
request, the individual may file with the Foundation a concise statement 
setting forth the reasons for his or her disagreement with the refusal 
of the Foundation and may seek judicial review of the Executive 
Secretary's determination under 5 U.S.C. 552a(g)(1)(A).



Sec. 1800.9  Disclosure of record to a person other than the individual to whom the record pertains.

    The Foundation will not disclose a record to any individual other 
than to the individual to whom the record pertains without receiving the 
prior written consent of the individual to whom the record pertains, 
unless the disclosure has been listed as a ``routine use'' in the 
Foundation's notices of its systems of records.



Sec. 1800.10  Fees.

    If an individual requests copies of his or her record, he or she 
shall be charged ten cents per page, excluding the cost of any search 
for review of the record, in advance of receipt of the pages.



PART 1801--HARRY S. TRUMAN SCHOLARSHIP PROGRAM--Table of Contents




                           Subpart A--General

Sec.
1801.1  Annual Truman Scholarship competition.
1801.2  Truman Scholars are selected from qualified applicants from each 
          State.
1801.3  Students eligible for nomination.
1801.4  Definitions.

                         Subpart B--Nominations

1801.10  Nomination by institution of higher education.
1801.11  Annual nomination.
1801.12  Institutions with more than one campus.
1801.13  Two-year institutions.
1801.14  Faculty Representative.
1801.15  Submission of application to the Foundation.
1801.16  Closing date for receipt of nominations.
1801.17  Contents of application.
1801.18  Limitations on nominations.

                       Subpart C--The Competition

1801.20  Selection of finalists.
1801.21  Evaluation criteria.
1801.22  Interview of finalists with panel.
1801.23  Recommendation by panel.
1801.24  Selection of Truman Scholars by the Foundation.

[[Page 533]]

                        Subpart D--Graduate Study

1801.30  Continuation into graduate study.
1801.31  Approval of graduate programs by the Foundation.
1801.32  Eligible institutions and degree programs.

              Subpart E--Payments to finalists and Scholars

1801.40  Travel expenses of finalists.
1801.41  Scholarship stipends.
1801.42  Definition of ``fee''.
1801.43  Allowance for books.
1801.44  Allowance for room and board.
1801.45  Deduction for benefits from other sources.

              Subpart F--Payment Conditions and Procedures

1801.50  Acceptance of the scholarship.
1801.51  Report at the beginning of each term.
1801.52  Payment schedule.
1801.53  Postponement of payment.
1801.54  Annual report.

                   Subpart G--Duration of Scholarship

1801.60  Renewal of scholarship.
1801.61  Termination of scholarship.
1801.62  Recovery of scholarship funds.

    Authority: Pub. L. 93-642, 88 Stat. 2276 (20 U.S.C. 2001-2012).

    Source: 65 FR 81405, Dec. 26, 2000, unless otherwise noted.



                           Subpart A--General



Sec. 1801.1  Annual Truman Scholarship competition.

    Each year, the Harry S. Truman Scholarship Foundation carries out a 
nationwide competition to select students to be Truman Scholars.



Sec. 1801.2  Truman Scholars are selected from qualified applicants from each State.

    (a) At least one Truman Scholar is selected each year from each 
State in which there is a resident applicant who meets minimum 
eligibility criteria as established by the Foundation. These minimum 
eligibility criteria are stated in Secs. 1801.3, 1801.21 and 1801.23.
    (b) As used in this part, State means each of the States, the 
District of Columbia, the Commonwealth of Puerto Rico, and considered as 
a single entity: Guam, the Virgin Islands, American Samoa, and the 
Commonwealth of the Northern Mariana Islands (The Islands).



Sec. 1801.3  Students eligible for nomination.

    A student is eligible to be nominated for a Truman Scholarship if he 
or she:
    (a) Is a junior-level student pursuing a bachelor's degree as a 
full-time student at an accredited institution of higher education and 
will receive a baccalaureate degree the following academic year; or, is 
a full-time senior level student from the Commonwealth of Puerto Rico or 
from The Islands;
    (b) Has an undergraduate field of study that permits admission to a 
graduate program leading to a career in public service;
    (c) Ranks in the upper quarter of his or her class; and
    (d) Is a U.S. citizen, a U.S. national, or a permanent resident of 
the Commonwealth of the Northern Mariana Islands.



Sec. 1801.4  Definitions.

    As used in this part:
    Academic year means the period of time, typically 8 or 9 months in 
which a full-time student would normally complete two semesters, three 
quarters, or the equivalent.
    Foundation means the Harry S. Truman Scholarship Foundation.
    Full-time student means a student who is carrying a sufficient 
number of credit hours or their equivalent to secure the degree or 
certificate toward which he or she is working, in no more time than the 
length of time normally taken at his or her institution.
    Graduate study means the courses of study beyond the baccalaureate 
level which lead to an advanced degree.
    Institution means an institution of higher education. ``Institution 
of higher education'' has the meaning given in section 1201(a) of the 
Higher Education Act of 1965 (20 U.S.C. 1141 (a)).
    Junior means a student who, following completion of the current 
academic year, has one more year of full-time course work to receive a 
baccalaureate degree.
    President means the principal official responsible for the overall 
direction of the operations of an institution.

[[Page 534]]

    Public service means employment in: government at any level, the 
uniformed services, public interest organizations, non-governmental 
research and/or educational organizations, public and private schools, 
and public service oriented non-profit organizations such as those whose 
primary purposes are to help needy or disadvantaged persons or to 
protect the environment.
    Resident means a person who has legal residence in the State, 
recognized under State law. If a question arises concerning the State of 
residence, the Foundation determines, for the purposes of this program 
of which State the person is a resident, taking into account place of 
registration to vote, family's place of residence, home address listed 
for school registration, and eligibility for ``in-State'' tuition rates 
at public institutions of higher education.
    Scholar means a person who has been selected by the Foundation as a 
Truman Scholar, has accepted the Scholarship and agreed to the 
conditions of the award, and is eligible for Scholarship stipend(s).
    Senior means a student who is in his or her last year of study 
before receiving a baccalaureate degree.
    Term means the period which the institution uses to divide its 
academic year: semester, trimester, or quarter.



                         Subpart B--Nominations



Sec. 1801.10  Nomination by institution of higher education.

    To be considered in the competition a student must be nominated by 
the institution that he or she attends.



Sec. 1801.11  Annual nomination.

    (a) Except as provided in Secs. 1801.11 (b), 1801.12, and 1801.24, 
each institution may nominate up to four students annually. 
Additionally, a four-year institution may nominate up to three currently 
enrolled juniors who completed their first two college years at a two-
year institution. Nominees may have legal residence in the same State as 
the institution or in different States.
    (b) The Foundation may announce each year in its Bulletin of 
Information or on its website (http://www.truman.gov) special 
circumstances under which an institution may nominate additional 
candidates.
    (c) All nominations must be made by the President of the institution 
or the designated Faculty Representative.



Sec. 1801.12  Institutions with more than one campus.

    If an institution has more than one component separately listed in 
the current edition of the Directory of Postsecondary Institutions 
published by the U.S. Department of Education, each component will be 
considered to be a separate institution under this regulation, and each 
may nominate up to four students. However, a component that is organized 
solely for administrative purposes and has no students may not nominate 
a student.



Sec. 1801.13  Two-year institutions.

    If an institution does not offer education beyond the sophomore 
level, the institution may nominate only students who have completed two 
years at that institution and who are currently enrolled as full-time 
juniors at accredited four-year institutions. Faculty Representatives at 
two-year institutions may submit the materials directly to the 
Foundation or they may forward the nomination materials to the Faculty 
Representative of the four-year institution attended by the nominee.



Sec. 1801.14  Faculty Representative.

    (a) Each institution which nominates a student must give the 
Foundation the name, business address, and business telephone number of 
a member of the faculty or administrator who will serve as liaison 
between the institution and the Foundation.
    (b) The Faculty Representative is responsible for a timely 
submission of all nominations and supporting documentation.
    (c) The Foundation delegates the responsibility to the Faculty 
Representative to establish a process to publicize the scholarship, 
recruit candidates, select nominees, and assist nominees.



Sec. 1801.15  Submission of application to the Foundation.

    To nominate a student for the competition, the Faculty 
Representative

[[Page 535]]

must submit the completed nomination packet to the Foundation as 
provided in Sec. 1801.16. The Foundation does not accept nominations 
packets directly from students.



Sec. 1801.16  Closing date for receipt of nominations.

    The Foundation announces in its Bulletin of Information and in the 
Federal Register and posts on its website (http://www.truman.gov) the 
date and address at which the Foundation must receive nominations. 
Nominations not received by this date at the address specified will not 
be considered.



Sec. 1801.17  Contents of application.

    (a) The Foundation provides a form that must be used as the 
application.
    (b) Each application must include the following:
    (1) A certification of nomination and eligibility signed by the 
Faculty Representative;
    (2) A completed Truman Scholarship Application signed by the 
nominee;
    (3) A policy proposal written by the nominee;
    (4) A current official college transcript; and
    (5) A letter of nomination from the Faculty Representative and three 
letters of recommendation.



Sec. 1801.18  Limitations on nominations.

    A candidate nominated by an institution and not selected as a Truman 
Scholar may not be renominated the following year.



                       Subpart C--The Competition



Sec. 1801.20  Selection of Finalists.

    The Foundation selects Finalists from the students who are 
nominated.



Sec. 1801.21  Evaluation criteria.

    (a) The Foundation appoints a committee to select finalists from the 
students nominated on the basis of the following criteria:
    (1) Extent and quality of community service and government 
involvement;
    (2) Leadership record;
    (3) Academic performance and writing and analytical skills; and
    (4) Suitability of the nominee's proposed program of study and its 
appropriateness for a leadership career in public service.
    (b) The Foundation selects Finalists solely on the basis of the 
information required under Sec. 1801.17.



Sec. 1801.22  Interview of Finalists with panel.

    The Foundation invites each Finalist to an interview with a regional 
review panel. Panels evaluate Truman Finalists primarily on:
    (a) Leadership potential and communication skills;
    (b) Likelihood of ``making a difference'' in public service; and
    (c) Intellectual strength, analytical abilities, and prospects of 
performing well in graduate school.



Sec. 1801.23  Recommendation by panel.

    (a) Each Panel is asked to recommend to the Board of Trustees the 
name of one candidate from each state in the region to be appointed as a 
Truman Scholar. The Foundation may authorize each regional review panel 
to recommend additional Scholars from the States in its region.
    (b) A panel's recommendations are based on the material required 
under Sec. 1801.17 and, as determined in the interview, the panel's 
assessment of each Finalist in terms of criteria presented in 
Sec. 1801.22.
    (c) In the event that a regional review panel determines that none 
of the Finalists from a state meets all the requirements expected of a 
Truman Scholar, it does not provide a recommendation. The Foundation 
will carry over the Scholarship for that state making two Scholarships 
available the following year.



Sec. 1801.24  Selection of Truman Scholars by the Foundation.

    The Foundation names Truman Scholars after receiving recommendations 
from the regional review panels.



                        Subpart D--Graduate Study



Sec. 1801.30  Continuation into graduate study.

    (a) Only Scholars who satisfactorily complete their undergraduate 
education and who comply with Sec. 1801.31

[[Page 536]]

shall be eligible for continued Foundation support for an approved 
program of graduate study.
    (b) The Foundation does not conduct a competition for graduate 
scholarships and does not add new Truman Scholars at the graduate level.



Sec. 1801.31  Approval of graduate programs by the Foundation.

    (a) By December 1, Scholars desiring Foundation support for graduate 
study the following academic year must submit a proposed program of 
graduate study to the Foundation for approval. The graduate program 
proposed for approval may differ from that proposed by the Scholar when 
nominated for a Truman Scholarship. Factors to be used by the Foundation 
in considering approval include being consistent with:
    (1) Field of study initially proposed in the Scholar's Application;
    (2) Graduate school programs given priority in the current Bulletin 
of Information;
    (3) Undergraduate educational program and work experience of the 
Scholar; and
    (4) Preparation specifically for a career in public service.
    (b) Foundation approval in writing of the Scholar's proposal is 
required before financial support is granted for graduate work.
    (c) Scholars must include in their submission to the Foundation a 
statement of interest in a career in public service that specifies in 
detail how their graduate program and their overall educational and work 
experience plans will realistically prepare them for their chosen career 
goal in government or elsewhere in public service.
    (d) After completing his or her undergraduate studies, a Scholar 
each year may request in writing a deferral of support for graduate 
studies. Deferrals must be requested no later than June 15 for the 
succeeding academic year. Scholars failing to request a year's deferral 
and to receive written approval from the Foundation may lose one year of 
funding support for each year for which they fail to request and receive 
deferrals. Total deferrals may not exceed four years unless an extension 
is granted in writing by the Foundation.



Sec. 1801.32  Eligible institutions and degree programs.

    (a) Truman Scholars at the graduate level may use Foundation support 
to study at any accredited college or university in the United States or 
abroad that offers graduate study appropriate and relevant to their 
public service career goals.
    (b) They may enroll in any relevant graduate program for a career in 
public service.
    (c) Foundation support for graduate study is restricted to three 
years of full-time study.



              Subpart E--Payments to Finalists and Scholars



Sec. 1801.40  Travel expenses of finalists.

    The Foundation will provide partial funding for intercity round-trip 
transportation from the finalist's nominating institution to the 
interview site. The Foundation does not reimburse finalists for lodging, 
meals, local transportation, or other expenses. The Foundation announces 
the terms and conditions of support on its website (http://
www.truman.gov) and in the Bulletin of Information.



Sec. 1801.41  Scholarship stipends.

    The Scholarship stipend may be used only for eligible expenses in 
the following categories: tuition, fees, books, and room and board. 
Payments from the Foundation may be received to supplement, but not to 
duplicate, benefits received by the Scholar from the educational 
institution or from other foundations or organizations. The designated 
benefits received from all sources combined may not exceed the costs of 
tuition, fees, books, and room and board as determined by the 
Foundation. The Foundation's Bulletin of Information, current at the 
time of the Scholar's selection, contains additional information about 
the terms and conditions of scholarship support.



Sec. 1801.42  Definition of ``fee''.

    As used in this part, fee means a typical and usual non-refundable 
charge

[[Page 537]]

by the institution for a service, a privilege, or the use of property 
which is required for a Scholar's enrollment and registration.



Sec. 1801.43  Allowance for books.

    The cost allowance for a Scholar's books is $1000 per year, or such 
higher amount published on the Foundation's website (http://
www.truman.gov).



Sec. 1801.44  Allowance for room and board.

    The cost allowed for a Scholar's room and board is the amount the 
institution reports to the Foundation as the average cost of room and 
board for the Scholar's institution, given the type of housing the 
Scholar occupies.



Sec. 1801.45  Deduction for benefits from other sources.

    The cost allowed for a Scholar's tuition, fees, books, room and 
board must be reduced to the extent that the cost is paid by another 
organization, or provided for or waived by the Scholar's institution.



              Subpart F--Payment Conditions and Procedures



Sec. 1801.50  Acceptance of the scholarship.

    To receive any payment, a Scholar must sign an acceptance of the 
scholarship and acknowledgement of the conditions of the award and 
submit it to the Foundation.



Sec. 1801.51  Report at the beginning of each term.

    (a) To receive a Scholarship stipend, a Scholar must submit a 
current transcript and Payment Request Form containing the following:
    (1) A statement of the Scholar's costs for tuition, fees, books, 
room and board;
    (2) A certification by an authorized official of the institution 
that the Scholar is a full-time student and is taking a course of study, 
training, or other educational activities to prepare for a career in 
public service; and is not engaged in gainful employment that interferes 
with the Scholar's studies; and
    (3) A certification by an authorized official of the institution of 
whether the Scholar is in academic good standing.
    (b) At the beginning of each academic year, the Scholar must have 
his or her institution submit a certified Educational Expense Form 
containing the following:
    (1) A certification by an authorized official of the institution 
that the Scholar's statement of costs for tuition, fees, books, room and 
board and other expenses required for the academic year is accurate; and
    (2) A certification of the amounts of those costs that are paid or 
waived by the institution or paid by another organization.



Sec. 1801.52  Payment schedule.

    The Foundation will pay the Scholar a portion of the award of the 
Scholarship stipend (as described in the Foundation's Bulletin of 
Information) after each report submitted under Sec. 1801.51.



Sec. 1801.53  Postponement of payment.

    (a) A Scholar may request the Foundation to postpone one or more 
payments because of sickness or other circumstances.
    (b) If the Foundation grants a postponement, it may impose 
conditions as it deems appropriate.



Sec. 1801.54  Annual report.

    (a) Scholars with remaining eligibility for scholarship stipends 
must submit no later than July 15 an annual report to the Foundation.
    (b) The annual report should be in narrative form and cover: courses 
taken and grades earned; courses planned for the coming year if 
Foundation support will be requested; public service and school 
activities; part-time or full-time employment and summer employment or 
internships; and achievements, awards and recognition, publications or 
significant developments.
    (c) Newly selected Scholars are required to submit by the July 15 
following their selection an annual report updating the Foundation on 
their activities and accomplishments since the time they submitted their 
applications for the Truman Scholarship.

[[Page 538]]



                   Subpart G--Duration of Scholarship



Sec. 1801.60  Renewal of scholarship.

    It is the intent of the Foundation to provide scholarship awards for 
a period not to exceed a total of four academic years, only in 
accordance with the regulations established by its Board of Trustees, 
and subject to an annual review for compliance with the requirements of 
this part.



Sec. 1801.61  Termination of scholarship.

    (a) The Foundation may suspend or terminate a scholarship under the 
following specific conditions:
    (1) Unsatisfactory academic performance for two terms, failure to 
pursue preparation for a career in public service, or loss of interest 
in a career in public service;
    (2) Failure to meet the criteria in Sec. 1801.3(d), Sec. 1801.30(a) 
Sec. 1801.31(a) and (b), or Sec. 1801.51;
    (3) Failure to submit a report or request required by the Foundation 
or providing false, misleading, or materially incomplete information on 
any report, payment request or other submission to the Foundation; or
    (4) Failure to begin use of the graduate portion of the scholarship 
within four years of the date of receipt of a baccalaureate degree 
unless granted an extension in writing by the Foundation.
    (b) Before it terminates a scholarship, the Foundation will notify 
the Scholar of the proposed action and will provide an opportunity to be 
heard with respect to the grounds for termination.



Sec. 1801.62  Recovery of scholarship funds.

    (a) When a Truman Scholarship is terminated for any reason, the 
Scholar must return to the Foundation any stipend funds which have not 
yet been spent or which the Scholar may recover.
    (b) A Scholar who fails for any reason to complete, as a full-time 
student, a school term for which he or she has received a Foundation 
stipend, must return the amount of that stipend to the Foundation. The 
Foundation may waive this requirement upon application by the Scholar 
showing good cause for doing so.



PART 1802--PUBLIC MEETING PROCEDURES OF THE BOARD OF TRUSTEES--Table of Contents




Sec.
1802.1  Purpose and scope.
1802.2  Definitions.
1802.3  Open meetings.
1802.4  Grounds on which meetings may be closed, or information may be 
          withheld.
1802.5  Procedure for announcing meetings.
1802.6  Procedure for closing meetings.
1802.7  Transcripts, recordings, minutes of meetings.

    Authority: 5 U.S.C. 552b(g); 20 U.S.C. 2001-2012.

    Source: 42 FR 14722, Mar. 16, 1977, unless otherwise noted.



Sec. 1802.1  Purpose and scope.

    The Harry S. Truman Scholarship Foundation will provide the public 
with the fullest practical information regarding its decision-making 
processes while protecting the rights of individuals and the 
Foundation's abilities to carry out its responsibilities. Accordingly, 
these procedures apply to meetings of the Board of Trustees, Harry S. 
Truman Scholarship Foundation, including committees of the Board of 
Trustees.



Sec. 1802.2  Definitions.

    As used in this part:
    Board or Board of Trustees means the collegial body that conducts 
the business of the Harry S. Truman Scholarship Foundation as specified 
in section 5(b), Pub. L. 93-642 (20 U.S.C. 2004), consisting of:
    (a) Eight persons appointed by the President, by and with the advice 
and consent of the Senate;
    (b) Two members of the Senate, one from each political party, 
appointed by the President of the Senate;
    (c) Two members of the House of Representatives, one from each 
political party, appointed by the Speaker; and
    (d) The Commissioner of Education or his designee, who serves as an 
ex officio member of the Board.
    Chairman means the presiding officer of the Board.

[[Page 539]]

    Committee means any formally designated subdivision of the Board, 
consisting of at least two Board members, authorized to act on behalf of 
the Board, including the Board's standing committees and any ad hoc 
committees appointed by the Board for special purposes.
    Executive Secretary means the individual appointed by the Board to 
serve as the chief executive officer of the Foundation.
    Meeting means the deliberations of at least the number of individual 
voting members of the Board required to take action on behalf of the 
Board, where such deliberations determine or result in the joint conduct 
or disposition of official business of the Board, but does not include: 
(1) Deliberations to open or close a meeting, to establish the agenda 
for a meeting, or to release or withhold information, required or 
permitted by Sec. 1802.5 or Sec. 1802.6, (2) notation voting or similar 
consideration of matters whether by circulation of material to members 
individually in writing, or polling of members individually by telephone 
or telegram and (3) instances where individual members, authorized to 
conduct business on behalf of the Board or to take action on behalf of 
the Board, meet with members of the public or staff. Conference 
telephone calls that involve the requisite number of members, and 
otherwise come within the definition, are included.
    Member means a member of the Board of Trustees.
    Staff includes the employees of the Harry S. Truman Scholarship 
Foundation, other than the members of the Board.



Sec. 1802.3  Open meetings.

    (a) Members shall not jointly conduct or dispose of business of the 
Board of Trustees other than in accordance with these procedures. Every 
portion of every meeting of the Board of Trustees or any committees of 
the Board shall be open to public observation subject to the exceptions 
provided in Sec. 1802.4.
    (b) Open meetings will be attended by members of the Board, certain 
staff, and any other individual or group desiring to observe the 
meeting. The public will be invited to observe and listen to the meeting 
but not to participate. The use of cameras and disruptive recording 
devices will not be permitted.



Sec. 1802.4  Grounds on which meetings may be closed, or information may be withheld.

    Except in a case where the Board or a committee finds that the 
public interest requires otherwise, the open meeting requirement as set 
forth in the second sentence of Sec. 1802.3(a) shall not apply to any 
portion of a Board or committee meeting, and the informational 
disclosure requirements of Secs. 1802.5 and 1802.6 shall not apply to 
any information pertaining to such meeting otherwise required by this 
part to be disclosed to the public, where the Board or committee, as 
applicable, properly determines that such portion or portions of its 
meetings or the disclosure of such information is likely to:
    (a) Disclose matters that are: (1) Specifically authorized under 
criteria established by an Executive Order to be kept secret in the 
interests of national defense or foreign policy and (2) in fact properly 
classified pursuant to such Executive Order;
    (b) Relate solely to the internal personnel rules and practices of 
the Harry S. Truman Scholarship Foundation;
    (c) Disclose matters specifically exempted from disclosure by 
statute (other than section 552, Title 5, United States Code), provided 
that such statute: (1) Requires that the matters be withheld from the 
public in such a manner as to leave no discretion on the issue, or (2) 
establishes particular criteria for withholding or refers to particular 
types of matters to be withheld;
    (d) Disclose trade secrets and commercial and financial information 
obtained from a person and privileged or confidential;
    (e) Involve accusing any person of a crime or formally censuring any 
person;
    (f) Disclose information of a personal nature where disclosure would 
constitute a clearly unwarranted invasion of personal privacy;
    (g) Disclose investigatory records compiled for law enforcement 
purposes, or information which if written would be contained in such 
records, but only to the extent that the production of

[[Page 540]]

such records or information would: (1) Interfere with enforcement 
proceedings,
    (2) Deprive a person of a right to a fair trial or an impartial 
adjudication,
    (3) Constitute an unwarranted invasion of personal privacy,
    (4) Disclose the identity of a confidential source and, in the case 
of a record compiled by a criminal law enforcement authority in the 
course of a criminal investigation, or by an agency conducting a lawful 
national security intelligence investigation, confidential information 
furnished only by the confidential source,
    (5) Disclose investigative techniques and procedures, or
    (6) Endanger the life or physical safety of law enforcement 
personnel;
    (h) Disclose information contained in or related to examination, 
operating, or condition reports prepared by, on behalf of, or for the 
use of an agency responsible for the regulation or supervision of 
financial institutions;
    (i) Disclose information the premature disclosure of which would be 
likely to significantly frustrate implementation of a proposed agency 
action, except that this paragraph shall not apply in any instance where 
the agency has already disclosed to the public the content or nature of 
its proposed action, or where the agency is required by law to make such 
disclosure on its own initiative prior to taking final agency action on 
such proposal; or
    (j) Specifically concern the issuance of a subpoena, or Foundation 
participation in a civil action or proceeding, an action in a foreign 
court or international tribunal, or an arbitration, or the initiation, 
conduct, or disposition by the Foundation of a particular case of formal 
adjudication pursuant to the procedures in section 554 of title 5, 
United States Code, or otherwise involving a determination on the record 
after opportunity for a hearing.



Sec. 1802.5  Procedure for announcing meetings.

    (a) Except to the extent that such information is exempt from 
disclosure under the provisions of Sec. 1802.4, in the case of each 
Board or committee meeting, the Executive Secretary, acting at the 
direction of the Board, shall publish in the Federal Register, at least 
seven days before the meeting, the following information:
    (1) Time of the meeting;
    (2) Place of the meeting;
    (3) Subject matter of the meeting;
    (4) Whether the meeting or parts thereof are to be open or closed to 
the public; and
    (5) The name and phone number of the person designated by the Board 
or committee to respond to requests for information about the meeting.
    (b) The seven-day period for the public announcement required by 
paragraph (a) of this section may be reduced if a majority of the 
members of the Board or committee, as applicable, determine by a 
recorded vote that Board or committee business requires that such 
expedited meeting be called at an earlier date. The Board or committee 
shall make public announcement of the time, place, and subject matter of 
such meeting, and whether open or closed to the public, at the earliest 
practicable time.
    (c) The time or place of a meeting may be changed following the 
public announcement required by paragraph (a) only if the Executive 
Secretary, acting at the direction of the Board, publicly announces such 
change at the earliest practicable time. Such change need not be voted 
on by the members.
    (d) The subject matter of a meeting, or the determination of the 
Board or committee, as applicable, to open or close a meeting, or 
portion of a meeting, to the public, may be changed following the public 
announcement required by paragraph (a) of this section only if: (1) A 
majority of the entire voting membership of the Board or a majority of 
the entire voting membership of a committee, determines by a recorded 
vote that Board or committee business so requires and that no earlier 
announcement of the change was possible, and
    (2) The Board or committee publicly announces such change and the 
vote of each member upon such change at the earliest practicable time.
    (e) The ``earliest practicable time'' as used in this section, means 
as soon as possible, which should in few, if any,

[[Page 541]]

instances be no later than commencement of the meeting or portion in 
question.
    (f) Immediately following each public announcement required by this 
section, notice of the time, place and subject matter of a meeting, 
whether the meeting is open or closed, any change in one of the 
preceding, and the name and phone number of the person designated by the 
Board or committee to respond to requests for information about the 
meeting, shall be submitted for publication in the Federal Register.



Sec. 1802.6  Procedure for closing meetings.

    (a) Action to close a meeting or a portion thereof, pursuant to the 
exemptions set forth in Sec. 1802.4, shall be taken only when a majority 
of the entire voting membership of the Board or a majority of the entire 
voting membership of a committee, as applicable, vote to take such 
action. Any such action shall include a specific finding by the Board 
that an open meeting is not required by the public interest.
    (b) A separate vote of the Board or committee members shall be taken 
with respect to each Board or committee meeting, a portion or portions 
of which are proposed to be closed to the public pursuant to Sec. 1802.4 
or with respect to any information which is proposed to be withheld 
under Sec. 1802.4.
    (c) A single vote of the Board or committee may be taken with 
respect to a series of meetings, a portion or portions of which are 
proposed to be closed to the public, or with respect to any information 
concerning such series of meetings, so long as each meeting in such 
series involves the same particular matters and is scheduled to be held 
no more than 30 days after the initial meeting in such series.
    (d) The vote of each member shall be recorded, and may be by 
notation voting, telephone polling or similar consideration.
    (e) Whenever any person whose interests may be directly affected by 
a portion of a meeting requests that the Board or a committee close such 
portion to the public under any of the exemptions relating to personal 
privacy, criminal accusation, or law enforcement information referred to 
in paragraph (e), (f), or (g) of Sec. 1802.4, the Board or committee, as 
applicable, upon request of any one of its members, shall vote by 
recorded vote whether to close such meeting. Where the Board receives 
such a request prior to a meeting, the Board may ascertain by notation 
voting, or similar consideration, the vote of each member of the Board, 
or committee, as applicable, as to the following:
    (1) Whether the business of the Board or committee permits 
consideration of the request at the next meeting, and delay of the 
matter in issue until the meeting following, or
    (2) Whether the members wish to close the meeting.
    (f) Within one day of any vote taken pursuant to paragraph (a), (b), 
(c) or (e), of this section, the Board or committee shall make publicly 
available a written copy of such vote reflecting the vote of each member 
on the question. If a portion of a meeting is to be closed to the 
public, the Board or committee shall, within one day of the vote taken 
pursuant to paragraph (a), (b), (c), or (e) of this section, make 
publicly available a full written explanation of its action closing the 
portion together with a list of all persons expected to attend the 
meeting and their affiliation. The information required by this 
paragraph shall be disclosed except to the extent it is exempt from 
disclosure under the provisions of Sec. 1802.4.
    (g) For every meeting closed pursuant to Sec. 1802.4, the General 
Counsel of the Harry S. Truman Scholarship Foundation shall certify 
before the meeting may be closed that, in his or her opinion, the 
meeting may be closed to the public and shall state each relevant 
exemptive provision. A copy of such certification, together with a 
statement from the presiding officer of the meeting setting forth the 
time and place of the meeting, and the persons present, shall be 
retained by the Board as part of the transcript, recording or minutes 
required by Sec. 1802.7.



Sec. 1802.7  Transcripts, recordings, minutes of meetings.

    (a) The Board of Trustees shall maintain a complete transcript or 
electronic recording adequate to record fully the proceedings of each 
meeting,

[[Page 542]]

or portion of a meeting, closed to the public, except that in the case 
of a meeting closed to the public pursuant to paragraph (j) of 
Sec. 1802.4, the Board shall maintain either such a transcript or 
recording, or a set of minutes.
    (b) Where minutes are maintained they shall fully and clearly 
describe all matters discussed and shall provide a full and accurate 
summary of any actions taken, and the reasons for such actions, 
including a description of each of the views expressed on any item and 
the record of any roll call vote (reflecting the vote of each member on 
the question). All documents considered in connection with any action 
shall be identified in such minutes.
    (c) The Board shall maintain a complete verbatim copy of the 
transcript, a complete copy of the minutes, or a complete electronic 
recording of each meeting or portion of a meeting, closed to the public, 
for a period of at least two years after such meeting, or until one year 
after the conclusion of any Board proceeding with respect to which the 
meeting or portion was held, whichever occurs later.
    (d) Public availability of records shall be as follows:
    (1) Within ten days of receipt of a request for information 
(excluding Saturdays, Sundays, and legal public holidays), the 
Foundation shall make available to the public, in the offices of the 
Harry S. Truman Scholarship Foundation, 712 Jackson Place NW., 
Washington, DC, the transcript, electronic recording, or minutes of the 
discussion of any item on the agenda, or of any item of the testimony of 
any witness received at the meeting except for such item or items of 
such discussion or testimony as the General Counsel determines to 
contain information which may be withheld under Sec. 1802.4.
    (2) Copies of such transcript, or minutes, or a transcription of 
such recording disclosing the identify of each speaker, shall be 
available at the actual cost of duplication or transcription.
    (3) The determination of the General Counsel to withhold information 
pursuant to paragraph (d)(1) of this section may be appealed to the 
Board. The appeal shall be circulated to individual Board members. The 
Board shall make a determination to withhold or release the requested 
information within twenty days from the date of receipt of a written 
request for review (excluding Saturdays, Sundays, and legal public 
holidays).
    (4) A written request for review shall be deemed received by the 
Board when it has arrived at the offices of the Board in a form that 
describes in reasonable detail the material sought.



PART 1803--NONDISCRIMINATION ON THE BASIS OF HANDICAP--Table of Contents




Sec.
1803.1  Purpose.
1803.2  Application.
1803.3  Definitions.
1803.4  Self-evaluation.
1803.5  Notice.
1803.6  General prohibitions against discrimination.
1803.7  Program accessibility: Existing facilities.
1803.8  Program accessibility: New construction and alterations.
1803.9  Employment.
1803.10  Communications.
1803.11  Compliance procedures.

    Authority: 29 U.S.C. 794.

    Source: 54 FR 4795, Jan. 31, 1989, unless otherwise noted.



Sec. 1803.1  Purpose.

    This part effectuates section 119 of the Rehabilitation, 
Comprehensive Services, and Developmental Disabilities Amendments of 
1978, which amended section 504 of the Rehabilitation Act of 1973 to 
prohibit discrimination on the basis of handicap in programs or 
activities conducted by executive agencies.



Sec. 1803.2  Application.

    This part applies to all programs or activities conducted by the 
Foundation, except for programs or activities conducted outside the 
United States that do not involve individual(s) with handicaps in the 
United States.



Sec. 1803.3  Definitions.

    For purposes of this part, the term--
    Assistant Attorney General means the Assistant Attorney General, 
Civil Rights Division, United States Department of Justice.

[[Page 543]]

    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in and enjoy the benefits of programs or 
activities conducted by the Foundation.
    Complete complaint means a written statement containing: (1) Date 
and nature of the alleged violation of section 504; (2) the 
complainant's name and address; and (3) the signature of the complainant 
or of someone authorized to act on his or her behalf.

Complaints filed on behalf of classes or third parties shall describe or 
identify, by name if possible, the alleged victims of discrimination.
    Executive Secretary means the Executive Secretary of the Harry S. 
Truman Scholarship Foundation.
    Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, rolling stock or other 
conveyances, or other real or personal property.
    Foundation means the Harry S. Truman Scholarship Foundation.
    General Counsel means the General Counsel of the Harry S. Truman 
Scholarship Foundation.
    Individual with handicaps means any person who has a physical or 
mental impairment that substantially limits one or more major life 
activities, has a record of such an impairment, or is regarded as having 
such an impairment. As used in this definition, the phrase:
    (1) Physical or mental impairment includes--
    (i) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genitourinary; hemic and lymphatic; skin; and endocrine; or
    (ii) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term ``physical or mental 
impairment'' includes, but is not limited to, such diseases and 
conditions as orthopedic, visual, speech, and hearing impairments, 
cerebral palsy, epilepsy, muscular dystrophy, multiple sclerosis, 
cancer, heart disease, diabetes, mental retardation, emotional illness, 
and drug addiction and alcoholism.
    (2) Major life activities includes functions such as caring for 
one's self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (3) Has a record of such an impairment means has a history of, or 
has been classified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (4) Is regarded as having an impairment means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the Foundation as 
constituting such a limitation;
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) Has none of the impairments defined in subparagraph (1) of 
this definition, but is treated by the Foundation as having such an 
impairment.
    Qualified individual with handicaps means an individual with 
handicaps who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, any Foundation program or 
activity. For purposes of employment, ``qualified individual with 
handicaps'' means ``qualified handicapped person'' as defined in 29 CFR 
1613.702(f), which is made applicable to this part by Sec. 1803.10.
    Section 504 means section 504 of the Rehabilitation Act of 1973, 
Pub. L. 93-112, 87 Stat. 394, 29 U.S.C. 794, as amended by the 
Rehabilitation Act Amendments of 1974, Pub. L. 93-516, 88 Stat. 1617; 
the Rehabilitation, Comprehensive Services, and Developmental 
Disabilities Amendments of 1978, Pub. L. 95-602, 92 Stat. 2955; and by 
the Rehabilitation Act amendments of 1986, Pub. L. 99-506, 100 Stat. 
1810. As used in this part, section 504 applies only to programs or 
activities conducted by the Foundation and not to federally assisted 
programs.

[[Page 544]]



Sec. 1803.4  Self-evaluation.

    (a) The Foundation shall, within one year of the effective date of 
this part, evaluate, with the assistance of interested persons, 
including individuals with handicaps or organizations representing 
individuals with handicaps, its current policies and practices, and the 
effects thereof, that do not or may not meet the requirements of this 
part, and, to the extent modification of any such policies and practices 
is required, the Foundation shall proceed to make the necessary 
modification.
    (b) The Foundation shall, for at least three years following 
completion of the evaluation required under paragraph (a) of this 
section, maintain on file and make available for public inspection--
    (1) A description of areas examined and any problems identified; and
    (2) A description of any modifications made.



Sec. 1803.5  Notice.

    The Foundation shall make available to employees, applicants, 
participants, beneficiaries, and other interested persons such 
information regarding the provisions of this part and its applicability 
to the programs or activities conducted by the Foundation as the 
Executive Secretary finds necessary to apprise such persons of the 
protections against discrimination assured them by section 504 and this 
regulation.



Sec. 1803.6  General prohibitions against discrimination.

    (a) No qualified individual with handicaps shall, on the basis of 
handicap, be excluded from participation in, be denied the benefits of, 
or otherwise be subjected to discrimination under any program or 
activity subject to this part.
    (b) The Foundation may not, either directly or through arrangements 
with others, on the basis of handicap--
    (1) Discriminate against a qualified individual with handicaps in 
the award or renewal of scholarships, through selection criteria or 
otherwise;
    (2) Deny a qualified individual with handicaps the opportunity to 
participate as a member of boards or panels used to screen scholarship 
applicants;
    (3) Deny a qualified individual with handicaps the opportunity to 
participate as a member of planning or advisory boards; or
    (4) Otherwise subject a qualified individual with handicaps to 
discrimination.
    (c) The Foundation may not, either directly or through arrangements 
with others, utilize criteria or methods of administration the purpose 
or effect of which would--
    (1) Subject qualified individuals with handicaps to discrimination 
on the basis of handicap; or
    (2) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to individuals with handicaps.
    (d) The Foundation shall administer programs and activities in the 
most feasibly integrated setting appropriate to the needs of qualified 
individuals with handicaps.



Sec. 1803.7  Program accessibility: Existing facilities.

    (a) The Foundation shall operate each program or activity so that 
the program or activity, when viewed in its entirety, is readily 
accessible to and usable by individuals with handicaps. This paragraph 
does not necessarily require the Foundation to make each of its existing 
facilities accessible to and usable by individuals with handicaps, but 
no qualified individual with handicaps shall be denied the benefit of, 
be excluded from participation in, or otherwise be subjected to 
discrimination under any of the Foundation's programs and activities 
because any of the Foundation's facilities are inaccessible to or 
unusable by individuals with handicaps.
    (b) When the Foundation uses facilities leased or otherwise provided 
by the General Services Administration (GSA), it shall request GSA to 
make any structural changes that the Foundation determines are required 
to provide necessary accessibility for individuals with handicaps, and 
shall inform that agency of any complaints regarding accessibility by 
individuals with handicaps.
    (c) The Foundation periodically uses meeting rooms or similar 
facilities made available by non-federal entities.

[[Page 545]]

In any instances in which such temporarily used facilities are not 
readily accessible to qualified individuals with handicaps, the 
Foundation shall make alternative arrangements so that such qualified 
individuals with handicaps can participate fully in the Foundation's 
activity.
    (d) This section does not require the Foundation to take any action 
that it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity or in undue financial and administration 
burdens. In those circumstances where Foundation personnel believe that 
the proposed action would fundamentally alter a program or activity or 
would result in undue financial and administrative burdens, the 
Foundation has the burden of proving that compliance with paragraph (a) 
of this section would result in such alteration or burdens. The decision 
that compliance would result in such alteration or burdens must be made 
by the Executive Secretary after considering all agency resources 
available for use in the funding and operation of the conducted program 
or activity, and must be accompanied by a written statement of the 
reasons for reaching that conclusion. If an action required to comply 
with this section would result in such an alteration or such burdens, 
the Foundation shall take other action not resulting in such an 
alteration or such burdens, but would nevertheless ensure that, to the 
maximum extent possible, individuals with handicaps receive the benefits 
and services of the programs or activities.



Sec. 1803.8  Program accessibility: New construction and alterations.

    Each building or part of a building that is constructed or altered 
by, on behalf of, or for the use of the Foundation shall be designed, 
constructed, or altered so as to be readily accessible to and usable by 
individuals with handicaps. The definitions, requirements, and standards 
of the Architectural Barriers Act (42 U.S.C. 4151-4157), as established 
in 41 CFR 101-19.600 to 101-19.607, apply to buildings covered by this 
section.



Sec. 1803.9  Employment.

    No qualified individual with handicaps shall, on the basis of 
handicap, be subjected to discrimination in employment under any program 
or activity conducted by the Foundation. The definitions, requirements 
and procedures of section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791), as established by the Equal Employment Opportunity 
Commission in 29 CFR part 1613, shall apply to employment in federally 
conducted programs or activities.



Sec. 1803.10  Communications.

    (a) The Foundation shall take appropriate steps to assure that 
interested persons, including persons with impaired vision or hearing, 
can effectively communicate with the Foundation and obtain information 
as to the existence and availability of the Foundation's programs and 
activities.
    (1) The Foundation shall furnish appropriate auxiliary aids where 
necessary to afford an individual with handicaps an equal opportunity to 
participate in the scholarship interview process or other programs or 
activities conducted by the Foundation.
    (i) In determining what type of auxiliary aid is necessary, the 
Foundation shall give primary consideration to the requests of the 
individual with handicaps.
    (ii) The Foundation need not provide individually prescribed devices 
or other devices of a personal nature.
    (2) When the Foundation communicates with applicants and 
beneficiaries by telephone, the Foundation shall use, for persons with 
impaired hearing, a telecommunication device for deaf persons or equally 
effective telecommunication device.
    (b) The Foundation shall take appropriate steps to provide 
individuals with handicaps with information regarding their section 504 
rights under the Foundation's programs or activities.
    (c) This section does not require the Foundation to take any action 
that it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity or in undue financial and administrative 
burdens. In those circumstances where Foundation

[[Page 546]]

personnel believe that the proposed action would fundamentally alter a 
program or activity or would result in undue financial and 
administrative burdens, the Foundation has the burden of proving that 
compliance with paragraphs (a) and (b) of this section would result in 
such alteration or burdens. The decision that compliance would result in 
such alteration or burdens must be made by the Executive Secretary after 
considering all Foundation resources available for use in the funding 
and operation of a conducted program or activity, and must be 
accompanied by a written statement of the reasons for reaching that 
conclusion. If an action required to comply with this section would 
result in such an alteration or such burdens, the Foundation shall take 
other action not resulting in such an alteration or such burdens, but 
would nevertheless ensure that, to the maximum extent possible, 
individuals with handicaps receive the benefits and services of the 
programs or activities.



Sec. 1803.11  Compliance procedures.

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
handicap in programs or activities conducted by the Foundation.
    (b) The Foundation shall process complaints alleging violations of 
Sec. 504 with respect to employment according to the procedures 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613 pursuant to section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791).
    (c) Responsibility for implementation and operation of this section 
shall be vested in the Executive Secretary.
    (d) The Foundation shall accept and investigate all complete 
complaints for which it has jurisdiction. All complete complaints must 
be filed within 180 days of the alleged act of discrimination. The 
Foundation may extend this time period for good cause.
    (e) If the Foundation receives a complaint over which it does not 
have jurisdiction, it shall promptly notify the complainant and shall 
make reasonable efforts to refer the complaint to the appropriate 
government entity.
    (f) The Foundation shall notify the Architectural and Transportation 
Barriers Compliance Board upon receipt of any complaint alleging that a 
building or facility that is used by the Foundation that is subject to 
the Architectural Barriers Act of 1968, as amended (42 U.S.C. 4151-
4157), is not readily accessible to and usable by individuals with 
handicaps.
    (g) The Foundation shall notify the complainant of the results of 
the investigation within 90 days of the receipt of a complete complaint 
over which it has jurisdiction. Notification must be in a letter, and 
must include--
    (1) Findings of fact and conclusions of law;
    (2) A description of a remedy for each violation discovered; and
    (3) A notice of the right to appeal.
    (h) Appeals of the findings of fact and conclusions of law or 
remedies must be filed by the complainant within 90 days of receipt from 
the agency of the letter required by paragraph (f) of this section. The 
Foundation may extend this time for good cause.
    (i) Timely appeals shall be accepted and processed by the General 
Counsel.
    (j) The Foundation shall notify the complainant of the results of 
the appeal within 90 days of the receipt of the request. If the 
Foundation determines that it needs additional information from the 
complainant, it shall have 90 days from the date it receives the 
additional information to make its determination on the appeal.
    (k) The time limits cited in paragraphs (g) and (h) of this section 
may be extended with the permission of the Assistant Attorney General.
    (l) The Foundation may delegate its authority for conducting 
complaint investigations to other federal agencies, but may not delegate 
to another agency the authority for making the final determination.

[[Page 547]]



                  CHAPTER XXI--COMMISSION OF FINE ARTS




  --------------------------------------------------------------------

Part                                                                Page
2101            Functions and organization..................         549
2102            Meetings and procedures of the Commission...         551
2103            Statements of policy........................         554
2104            Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by the Commission 
                    of Fine Arts............................         554
2105            Rules for compliance with 5 U.S.C. 552, the 
                    Freedom of Information Act..............         560
2106            Rules for compliance with 5 U.S.C. 552a, the 
                    Privacy Act of 1974.....................         562

[[Page 549]]



PART 2101--FUNCTIONS AND ORGANIZATION--Table of Contents




       Subpart A--Functions and Responsibilities of the Commission

Sec.
2101.1  Statutory and Executive Order authority.
2101.2  Relationships of Commission's functions to responsibilities of 
          other government units.

                     Subpart B--General Organization

2101.10  The Commission.
2101.11  Secretary to the Commission.
2101.12  Georgetown Board of Architectural Consultants.

    Authority: Pub. L. 81-808, 64 Stat. 903; 10 U.S.C. 4594; 36 U.S.C. 
124; 40 U.S.C. 72, 104, 106, 121, 1001; E.O. 1259 of October 25, 1910; 
E.O. 1862 of November 28, 1913; and E.O. 3524 of July 28, 1921.

    Source: 62 FR 4646, Jan. 31, 1997, unless otherwise noted.



       Subpart A--Functions and Responsibilities of the Commission



Sec. 2101.1  Statutory and Executive Order Authority.

    The Commission of Fine Arts (referred to as the ``Commission'') 
functions pursuant to statutes of the United States and Executive Orders 
of Presidents, as follows:
    (a) Public buildings, other structures, and parklands. (1) For 
public buildings to be erected in the District of Columbia by the 
federal government and for other structures to be so erected which 
affect the appearance of the city, the Commission comments and advises 
on the plans and on the merits of the designs before final approval or 
action;
    (2) For statues, fountains and monuments to be erected in the 
District of Columbia under authority of the federal government, the 
Commission advises upon their location in public squares, streets, and 
parks, and the merits of their designs;
    (3) For monuments to be erected at any location pursuant to the 
American Battle Monuments Act, the Commission approves the designs 
before they are accepted by the American Battle Monuments Commission 
(See also Sec. 2101.1 (g));
    (4) For parks within the District of Columbia, when plans of 
importance are under consideration, the Commission advises upon the 
merits of the designs; and
    (5) For the selection by the National Capital Planning Commission of 
lands suitable for development of the National Capital park, parkway, 
and playground system in the District of Columbia, Maryland, and 
Virginia, the Commission provides advice.
    (b) Private buildings bordering certain public areas in Washington, 
D.C. (Shipstead-Luce Act). For buildings to be erected or altered \1\ in 
locations which border the Capitol, the White House, the intermediate 
portion of Pennsylvania Avenue, the Mall Park System, Lafayette Park, 
the Zoological Park, Rock Creek Park or Parkway, or Potomac Park or 
Parkway, or are otherwise within areas defined by the official plats 
prepared pursuant to Sec. 2 of the Shipstead-Luce Act, the Commission 
reviews the plans as they relate to height and appearance, color and 
materials of the exteriors, and makes recommendations to the Government 
of the District of Columbia which, in the judgement of the Commission, 
are necessary to prevent reasonably avoidable impairment of the public 
values represented by the areas along which the buildings border. 
(Shipstead-Luce Act, 46 Stat. 366 as amended (40 U.S.C. 121; D.C. Code 
5-410).)
---------------------------------------------------------------------------

    \1\ Alteration does not include razing (Commissioner of the District 
of Columbia v. Bennenson, D.C. Court of App. 1974, 329 A.2d 437). 
Partial demolition, however, is viewed as an alteration (The Committee 
to Preserve Rhodes Tavern and the Natl. Processional Route v. Oliver T. 
Carr Company, et. al., U.S. Court of App. for D.C. Cir., 1979, 79-1457, 
Dept. Justice Brief for Fed. Appellee).
---------------------------------------------------------------------------

    (c) Georgetown buildings (Old Georgetown Act). For buildings to be 
constructed, altered, reconstructed, or razed within the area of the 
District of Columbia known as ``Old Georgetown'', the Commission reviews 
and reports to the District of Columbia Government on proposed exterior 
architectural features, height, appearance, color, and texture of 
exterior materials as would be seen from public space; and the 
Commission makes recommendations

[[Page 550]]

to such government as to the effect of the plans on the preservation and 
protection of places and areas that have historic interest or that 
manifest exemplary features and types of architecture, including 
recommendations for any changes in plans necessary in the judgement of 
the Commission to preserve the historic value of Old Georgetown, and 
takes any such actions as in the judgement of the Commission are right 
or proper in the circumstances. (Old Georgetown Act, Public Law 81-808, 
64 Stat. 903 (D.C. Code 5-801).)
    (d) United States medals, insignia, and coins. On medals, insignia, 
and coins to be produced by an executive department of the United States 
including the Mint, the Commission advises as to the merits of their 
designs which shall be submitted before the executive officer having 
charge of the same shall approve thereof.
    (e) Heraldic services provided by the Department of the Army. The 
Commission upon request advises the Heraldic Branch of the Army upon the 
merits of proposed designs for medals, insignia, seals, etc. prepared 
under the authority of the Act of August 26, 1957 to furnish heraldic 
services to the other departments and agencies of the government.
    (f) Questions of art with which the Federal government is concerned. 
When required to do so by the President or by Committees of either House 
of Congress, the Commission advises generally on questions of art, and 
whenever questions of such nature are submitted to it by an officer or 
department of the federal government the Commission advises and 
comments.
    (g) Commemorative works. The Commemorative Works Act provides 
standards for placement of commemorative works on certain federal lands 
in the District of Columbia and its environs, and for other purposes; 
and requires site and design approval of all commemorative works by the 
Commission of Fine Arts, National Capital Planning Commission, and (as 
appropriate) the Secretary of Interior or the Administrator of General 
Services. The sponsoring agencies therefore shall submit designs to the 
Commission for review and shall provide such design changes as may be 
required to obtain approval.



Sec. 2101.2  Relationships of Commission's functions to responsibilities of other government units.

    (a) Projects involving the Capitol building and the Library of 
Congress. Plans concerning the Capitol building and the buildings of the 
Library of Congress are outside the purview of the Commission except as 
to questions on which the Committees of Congress require the Commission 
to advise.
    (b) Other Federal government projects. Officers and departments of 
the federal government responsible for finally approving or acting upon 
proposed projects within the purview of the Commission's functions as 
described in Sec. 2101.1 (a) are required first to submit plans or 
designs for such projects to the Commission for its advice and comments.
    (c) Projects within the jurisdiction of the District of Columbia 
government. The District of Columbia seeks Commission advice on exterior 
alteration or new construction of public buildings or major public works 
within its boundaries. The District of Columbia government also shall 
seek Commission advice on certain private construction requiring 
building or demolition permits from the D.C. Permit Branch (D.C. Law 5-
422). These include certain actions by the District of Columbia 
government pursuant to either D.C. Law 5-422 or D.C. Law 2-144 within 
areas subject to the Shipstead-Luce or Old Georgetown Acts (Sec. 2101.1 
(b) and (c)) prior to the issuance of a permit.\2\ Alterations of 
buildings, demolition, or new construction at individually designated 
landmarks or within historic districts are further subject to the permit 
requirements of the Historic Landmark and Historic District Protection 
Act of 1978 (D.C. Law 2-144). Upon request, advice will be given on the 
subject of lot subdivisions.
---------------------------------------------------------------------------

    \2\ Provisions of the Shipstead-Luce Act (Sec. 2101.1 (b)) do not 
include full demolition, though partial demolition is viewed as an 
alteration.

---------------------------------------------------------------------------

[[Page 551]]



                     Subpart B--General Organization



Sec. 2101.10  The Commission.

    The Commission is composed of seven members, each of whom is 
appointed by the President and serves for a period of four years or 
until his or her successor is appointed and qualified. The Chairman and 
Vice Chairman are elected by the members. The Commission is assisted by 
a staff as authorized by the Commission.



Sec. 2101.11  Secretary to the Commission.

    Subject to the direction of the Chairman, the Secretary to the 
Commission is responsible for the day-to-day operations of the agency 
and for supervising the staff in its support of the functions of the 
Commission; for preparing the agenda of Commission meetings; for 
organizing presentations before the Commission of plans, designs, or 
questions upon which it is to advise, comment, or respond; for 
interpreting the Commission's conclusions, advice, or recommendations on 
each matter submitted to it; for maintaining a liaison with other 
governmental entities, professionals, and the public; and for 
maintaining the Commission's records. The Assistant Secretary of the 
Commission shall carry out duties delegated to him/her by the Secretary 
and shall act in place of the Secretary during his/her absence or 
disability.



Sec. 2101.12  Georgetown Board of Architectural Consultants.

    To assist the Commission in carrying out the purposes of the Old 
Georgetown Act (Sec. 2101.1 (c)), a committee of three architects 
appointed for a term of three years by the Commission serves as the 
Board of Architectural Consultants without expense to the United States. 
This committee advises the Commission regarding designs and plans 
referred to it. The Chairman is elected by its members.



PART 2102--MEETINGS AND PROCEDURES OF THE COMMISSION--Table of Contents




                     Subpart A--Commission Meetings

Sec.
2102.1  Times and places of meetings.
2102.2  Actions outside of meetings.
2102.3  Public notice of meetings.
2102.4  Public attendance and participation.
2102.5  Records and minutes; public inspection.

         Subpart B--Procedures on Submission of Plans or Designs

2102.10  Timing, scope and content of submissions for proposed projects 
          involving land, buildings or other structures.
2102.11  Scope and content of submission for proposed medals, insignia, 
          coins, seals, and the like.
2102.12  Responses of Commission to submissions.

    Authority: 5 U.S.C., App. 1; OMB Circular No. A-63.

    Source: 62 FR 4647, Jan. 31, 1997, unless otherwise noted.



                     Subpart A--Commission Meetings



Sec. 2102.1  Times and places of meetings.

    Regular meetings of the Commission, open to the public, are held 
monthly on the third Thursday of the month, beginning at 10:00 o'clock 
a.m., at its offices in Suite 312, 441 F Street, N.W. Washington, D.C. 
20001, except that by action of the Commission a regular meeting in any 
particular month may be omitted or it may be held on another day or at a 
different time or place. A special meeting, open to the public, may be 
held in the interval between regular meetings upon call of the Chairman 
and five days' written notice of the time and place mailed to each 
member who does not in writing waive such notice. On all matters of 
official business, the Commission shall conduct its deliberations and 
reach its conclusions at such open meetings except as stated in 
Sec. 2101.12 provided, however, the Commission members may receive staff 
briefings or may have informal background discussions among themselves 
and the staff outside of such meetings.



Sec. 2102.2  Actions outside of meetings.

    Between meetings in situations of emergency, the Commission may act 
through a canvass by the Secretary of individual members, provided that 
any action so taken is brought up and ratified at the next meeting. In 
addition, the Commission members may convene away from the Commission's 
offices to

[[Page 552]]

make inspections at the site of a proposed project or at the location of 
a mock-up for the project and may then and there reach its conclusions 
respecting such project which shall be recorded in the minutes of the 
meeting held on the same day or, if none was then held, in the minutes 
of the next meeting.



Sec. 2102.3  Public notice of meetings.

    Notice of each meeting of the Commission shall be published in the 
Federal Register.



Sec. 2102.4  Public attendance and participation.

    Interested persons are permitted to attend meetings of the 
Commission, to file statements with the Commission at or before a 
meeting, and to appear before the Commission when it is in meeting, 
provided that an appearance is germane to the functions and policies of 
the Commission and to the matter or issues then before the Commission, 
and if the presentation or argument is made in a concise manner, within 
reasonable time limits and avoids duplicating information or views 
already before the Commission. A decision of the Chairman as to the 
order of appearances and as to compliance with these regulations by any 
person shall be final unless the Commission determines otherwise.



Sec. 2102.5  Records and minutes; public inspection.

    A detailed record of each meeting shall be made and kept which shall 
contain copies of all written, printed, or graphic materials presented. 
The Secretary shall have prepared minutes of each meeting which shall 
state the time and place it was held and attendance by Commission 
members and staff and which shall contain a complete summary of matters 
discussed and conclusions reached and an explanation of the extent of 
public participation, including names of persons who presented oral or 
written statements; and he shall send a copy to all members of the 
Commission for their approval. Subsequent to such approval, the minutes 
shall be certified by the Secretary. The minutes and any completed 
reports, studies, agenda or other documents made available to, or 
prepared for or by, the Commission shall be available for public 
inspection and, at the requesting party's expense, for copying at the 
offices of the Commission.



        Subpart B--Procedures on Submissions of Plans or Designs



Sec. 2102.10  Timing, scope and content of submissions for proposed projects involving land, buildings, or other structures.

    (a) A party proposing a project which is within the purview of the 
Commission's functions under Sec. 2101.1 (a), (b), or (c) should make a 
submission when concept plans for the project are ready but before 
detailed plans and specifications or working drawings are prepared. In 
order to assure that a submission will be considered at the next 
scheduled meeting of the Commission, it should be delivered to the 
Commissions offices not later than ten (10) working days before the 
meeting; if it is a project subject to review first by the Georgetown 
Board, not later than ten (10) working days before the Georgetown Board 
meeting. The Commission will attempt to consider a submission which is 
not made in conformity with this schedule, but it reserves the right to 
postpone consideration until its next subsequent meeting.
    (b) (1) Each submission should state or disclose:
    (i) The nature, location, and justification of the project, 
including any relevant historical information about the building or 
other structure to be altered or razed;
    (ii) The identity of the owner or developer (or for public 
buildings, the governmental unit with authority to approve or act upon 
the plans) and of the architect;
    (iii) The functions, uses, and purpose of the project; and
    (iv) Other information to the extent it is relevant, such as area 
studies, site plans, building and landscape schematics, renderings, 
models, depictions or samples of exterior materials and components, and 
photographs of existing conditions to be affected by the project.

[[Page 553]]

    (2) Alternative proposals may be included within one submission. The 
information submitted shall be sufficiently complete, detailed, and 
accurate as will enable the Commission to judge the ultimate character, 
siting, height, bulk, and appearance of the project, in its entirety, 
including the grounds within the scope of the project, its setting and 
environs, and its effect upon existing conditions and upon historical 
and prevailing architectural values. Record drawings and photographs 
will be submitted by the applicant for a permanent Commission record of 
the submission.
    (c) If a project consists of a first or intermediate phase of a 
contemplated larger program of construction, similar information about 
the eventual plans should accompany the submission. Even though a 
submission relates only to approval for razing or removal of a building 
or other structure, the project will be regarded as part of phased 
development, and the submission is subject to such requirement.
    (d) If the project involves a statue, fountain or a monument within 
the purview of the Commission under Sec. 2101.1 (a)(2), partial 
submissions should be made as appropriate to permit the Commission to 
advise on each aspect of the project as prescribed by the Commemorative 
Works Act (Pub. L. 99-652, H.R. 4378, 40 U.S.C. 1001).
    (e) The Commission staff will advise owners and architects 
concerning the scope and content of particular submissions. Material 
relevant to the functions and policies of the Commission varies greatly 
depending upon the nature, size, and importance of the project to be 
reviewed by the Commission. Also, it is the policy of the Commission not 
to impose unnecessary burdens or delays on persons who make submissions 
to the Commission. However, the Commission at any meeting may decline to 
reach a conclusion about a proposed project if it deems the submission 
materials inadequate for its purposes, or it may condition its 
conclusions on the submission of further information to it at a later 
meeting or, in its discretion, may delegate final action to the staff.
    (f) The Commission staff, members of the Georgetown Board, 
interested members of the public, or the submitting party may augment 
any submission by additional relevant information made available to the 
Commission before or at the meeting where the submission is considered. 
The staff should also make information available concerning prior 
considerations or conclusions of the Commission regarding the same 
project or earlier versions of it.



Sec. 2102.11  Scope and content of submissions for proposed medals, insignia, coins, seals, and the like.

    Each submission of the design for a proposed item which is within 
the Commission's purview under Sec. 2101.1 (d) should identify the 
sponsoring government unit and disclose the uses and purpose of the 
item, the size and forms in which it will be produced, and the materials 
and finishes to be used, including colors if any, along with a sketch, 
model, or prototype.



Sec. 2102.12  Responses of Commission to submissions.

    (a) The Commission before disposing of any project presented to it 
may ask for the proposed plans or designs to be changed in certain 
particulars and resubmitted, or for the opportunity to review plans, 
designs, and specifications in certain particulars at a later stage in 
their development, and to see samples or mock-ups of materials or 
components; and when appropriate in the matter of a statue or other 
object of art, the Commission may ask for the opportunity to see a 
larger or full-scale model. All conclusions, advice, or comments of the 
Commission which lead to further development of plans, designs, and 
specifications or to actual carrying out of the project are made in 
contemplation that such steps will conform in all substantial respects 
with the plans or designs submitted to the Commission, including only 
such changes as the Commission may have recommended; any other changes 
in plans or designs require further submission to the Commission.
    (b) In the case of plans for a project subject to the Old Georgetown 
Act (Sec. 2101.1 (c)), if the Commission does not respond with a report 
on such plans within forty-five days after their receipt by the 
Commission, its approval

[[Page 554]]

shall be assumed and a permit may be issued by the government of the 
District of Columbia.
    (c) In the case of plans for a project subject to the Shipstead-Luce 
Act (Sec. 2101.1 (b)), if the Commission does not respond with a report 
on such plans within thirty days after their receipt by the Commission, 
its approval shall be assumed and a permit may be issued by the 
government of the District of Columbia.
    (d) In the event that any project or item within the Commission's 
purview under 2101.1 has not progressed to a substantial start of 
construction or production within four years following the Commission 
meeting date on which the final design was approved, the Commission's 
approval is suspended. The plans or designs previously approved or 
alternative plans or designs, may thereupon be resubmitted for 
Commission review. The Commission's subsequent approval, if granted, 
shall remain in effect for four years.



PART 2103--STATEMENTS OF POLICY--Table of Contents




    Authority: Pub. L. 81-808, 64 Stat. 903; 40 U.S.C. 72, 104, 106, and 
121; E.O. 1259 of October 25, 1910; E.O. 1862 of November 28, 1913; E.O. 
3524 of July 28, 1921.



Sec. 2103.1  General approaches to review of plans by the Commission.

    The Commission functions relate to the appearance of proposed 
projects within its purview as specified herein. These functions are to 
serve the purpose of conserving and enhancing the visual assets which 
contribute significantly to the character and quality of Washington as 
the nation's capital and which appropriately reflect the history and 
features of its development over two centuries. Where existing 
conditions detract from the overall appearance of official Washington or 
historic Georgetown--such as conditions caused by temporary, 
deteriorated, or abandoned buildings of little or no historical or 
architectural value, by interrupted developments, or by vacant lots not 
devoted to public use as parks or squares--the Commission will favor 
suitable corrections to these conditions. When changes or additions are 
proposed in other circumstances, the Commission may consider whether the 
public need or value of the project or the private interests to be 
served thereby justify making any change or addition, and it will 
consider whether the project can be accomplished in reasonable harmony 
with the nearby area, with a minimum loss of attractive features of the 
existing building or site, with due deference to the historical and 
architectural values affected, and without creating an anomalous 
disturbing element in the public view of the city.

[62 FR 4649, Jan. 31, 1997]



PART 2104--ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF HANDICAP IN PROGRAMS OR ACTIVITIES CONDUCTED BY THE COMMISSION OF FINE ARTS--Table of Contents




Sec.
2104.101  Purpose.
2104.102  Application.
2104.103  Definitions.
2104.104-2104.109  [Reserved]
2104.110  Self-evaluation.
2104.111  Notice.
2104.112-2104.129  [Reserved]
2104.130  General prohibitions against discrimination.
2104.131-2104.139  [Reserved]
2104.140  Employment.
2104.141-2104.148  [Reserved]
2104.149  Program accessibility: Discrimination prohibited.
2104.150  Program accessibility: Existing facilities.
2104.151  Program accessibility: New construction and alterations.
2104.152-2104.159  [Reserved]
2104.160  Communications.
2104.161-2104.169  [Reserved]
2104.170  Compliance procedures.
2104.171-2104.999  [Reserved]

    Authority: 29 U.S.C. 794.

    Source: 51 FR 22895, 22896, June 23, 1986, unless otherwise noted.



Sec. 2104.101  Purpose.

    This part effectuates section 119 of the Rehabilitation, 
Comprehensive Services, and Developmental Disabilities Amendments of 
1978, which

[[Page 555]]

amended section 504 of the Rehabilitation Act of 1973 to prohibit 
discrimination on the basis of handicap in programs or activities 
conducted by Executive agencies or the United States Postal Service.



Sec. 2104.102  Application.

    This part applies to all programs or activities conducted by the 
agency.



Sec. 2104.103  Definition.

    For purposes of this part, the term--
    Assistant Attorney General means the Assistant Attorney General, 
Civil Rights Division, United States Department of Justice.
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and enjoy the benefits of, programs or 
activities conducted by the agency. For example, auxiliary aids useful 
for persons with impaired vision include readers, brailled materials, 
audio recordings, telecommunications devices and other similar services 
and devices. Auxiliary aids useful for persons with impaired hearing 
include telephone handset amplifiers, telephones compatible with hearing 
aids, telecommunication devices for deaf persons (TDD's), interpreters, 
notetakers, written materials, and other similar services and devices.
    Complete complaint means a written statement that contains the 
complainant's name and address and describes the agency's alleged 
discriminatory action in sufficient detail to inform the agency of the 
nature and date of the alleged violation of section 504. It shall be 
signed by the complainant or by someone authorized to do so on his or 
her behalf. Complaints filed on behalf of classes or third parties shall 
describe or identify (by name, if possible) the alleged victims of 
discrimination.
    Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, rolling stock or other 
conveyances, or other real or personal property.
    Handicapped person means any person who has a physical or mental 
impairment that substantially limits one or more major life activities, 
has a record of such an impairment, or is regarded as having such an 
impairment.
    As used in this definition, the phrase:
    (1) Physical or mental impairment includes--
    (i) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genitourinary; hemic and lymphatic; skin; and endocrine; or
    (ii) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term ``physical or mental 
impairment'' includes, but is not limited to, such diseases and 
conditions as orthopedic, visual, speech, and hearing impairments, 
cerebral palsy, epilepsy, muscular dystrophy, multiple sclerosis, 
cancer, heart disease, diabetes, mental retardation, emotional illness, 
and drug addiction and alocoholism.
    (2) Major life activities includes functions such as caring for 
one's self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (3) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (4) Is regarded as having an impairment means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the agency as constituting 
such a limitation;
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) Has none of the impairments defined in subparagraph (1) of 
this definition but is treated by the agency as having such an 
impairment.
    Historic preservation programs means programs conducted by the 
agency that have preservation of historic properties as a primary 
purpose.

[[Page 556]]

    Historic properties means those properties that are listed or 
eligible for listing in the National Register of Historic Places or 
properties designated as historic under a statute of the appropriate 
State or local government body.
    Qualified handicapped person means--
    (1) With respect to preschool, elementary, or secondary education 
services provided by the agency, a handicapped person who is a member of 
a class of persons otherwise entitled by statute, regulation, or agency 
policy to receive education services from the agency.
    (2) With respect to any other agency program or activity under which 
a person is required to perform services or to achieve a level of 
accomplishment, a handicapped person who meets the essential eligibility 
requirements and who can acheive the purpose of the program or activity 
without modifications in the program or activity that the agency can 
demonstrate would result in a fundamental alteration in its nature;
    (3) With respect to any other program or activity, a handicapped 
person who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or activity; 
and
    (4) Qualified handicapped person is defined for purposes of 
employment in 29 CFR 1613.702(f), which is made applicable to this part 
by Sec. 2104.140.
    Section 504 means section 504 of the Rehabilitation Act of 1973 
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended by the 
Rehabilitation Act Amendments of 1974 (Pub. L. 93-516, 88 Stat. 1617), 
and the Rehabilitation, Comprehensive Services, and Developmental 
Disabilities Amendments of 1978 (Pub. L. 95-602, 92 Stat. 2955). As used 
in this part, section 504 applies only to programs or activities 
conducted by Executive agencies and not to federally assisted programs.
    Substantial impairment means a significant loss of the integrity of 
finished materials, design quality, or special character resulting from 
a permanent alteration.



Secs. 2104.104-2104.109  [Reserved]



Sec. 2104.110  Self-evaluation.

    (a) The agency shall, by August 24, 1987, evaluate its current 
policies and practices, and the effects thereof, that do not or may not 
meet the requirements of this part, and, to the extent modification of 
any such policies and practices is required, the agency shall proceed to 
make the necessary modifications.
    (b) The agency shall provide an opportunity to interested persons, 
including handicapped persons or organizations representing handicapped 
persons, to participate in the self-evaluation process by submitting 
comments (both oral and written).
    (c) The agency shall, until three years following the completion of 
the self-evaluation, maintain on file and make available for public 
inspection:
    (1) a description of areas examined and any problems identified, and
    (2) a description of any modifications made.



Sec. 2104.111  Notice.

    The agency shall make available to employees, applicants, 
participants, beneficiaries, and other interested persons such 
information regarding the provisions of this part and its applicability 
to the programs or activities conducted by the agency, and make such 
information available to them in such manner as the head of the agency 
finds necessary to apprise such persons of the protections against 
discrimination assured them by section 504 and this regulation.



Secs. 2104.112-2104.129  [Reserved]



Sec. 2104.130  General prohibitions against discrimination.

    (a) No qualified handicapped person shall, on the basis of handicap, 
be excluded from participation in, be denied the benefits of, or 
otherwise be subjected to discrimination under any program or activity 
conducted by the agency.

[[Page 557]]

    (b)(1) The agency, in providing any aid, benefit, or service, may 
not, directly or through contractual, licensing, or other arrangements, 
on the basis of handicap--
    (i) Deny a qualified handicapped person the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualified handicapped person an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified handicapped person with an aid, benefit, 
or service that is not as effective in affording equal opportunity to 
obtain the same result, to gain the same benefit, or to reach the same 
level of achievement as that provided to others;
    (iv) Provide different or separate aid, benefits, or services to 
handicapped persons or to any class of handicapped persons than is 
provided to others unless such action is necessary to provide qualified 
handicapped persons with aid, benefits, or services that are as 
effective as those provided to others;
    (v) Deny a qualified handicapped person the opportunity to 
participate as a member of planning or advisory boards; or
    (vi) Otherwise limit a qualified handicapped person in the enjoyment 
of any right, privilege, advantage, or opportunity enjoyed by others 
receiving the aid, benefit, or service.
    (2) The agency may not deny a qualified handicapped person the 
opportunity to participate in programs or activities that are not 
separate or different, despite the existence of permissibly separate or 
different programs or activities.
    (3) The agency may not, directly or through contractual or other 
arrangments, utilize criteria or methods of administration the purpose 
or effect of which would--
    (i) Subject qualified handicapped persons to discrimination on the 
basis of handicap; or
    (ii) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to handicapped persons.
    (4) The agency may not, in determining the site or location of a 
facility, make selections the purpose or effect of which would--
    (i) Exclude handicapped persons from, deny them the benefits of, or 
otherwise subject them to discrimination under any program or activity 
conducted by the agency; or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program or activity with respect to handicapped persons.
    (5) The agency, in the selection of procurement contractors, may not 
use criteria that subject qualified handicapped persons to 
discrimination on the basis of handicap.
    (6) The agency may not administer a licensing or certification 
program in a manner that subjects qualified handicapped persons to 
discrimination on the basis of handicap, nor may the agency establish 
requirements for the programs or activites of licensees or certified 
entities that subject qualified handicapped persons to discrimination on 
the basis of handicap. However, the programs or activities of entities 
that are licensed or certified by the agency are not, themselves, 
covered by this part.
    (c) The exclusion of nonhandicapped persons from the benefits of a 
program limited by Federal statute or Executive order to handicapped 
persons or the exclusion of a specific class of handicapped persons from 
a program limited by Federal statute or Executive order to a different 
class of handicapped persons is not prohibited by this part.
    (d) The agency shall administer programs and activities in the most 
integrated setting appropriate to the needs of qualified handicapped 
persons.



Secs. 2104.131-2104.139  [Reserved]



Sec. 2104.140  Employment.

    No qualified handicapped person shall, on the basis of handicap, be 
subjected to discrimination in employment under any program or activity 
conducted by the agency. The definitions, requirements, and procedures 
of section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 791), as 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613, shall

[[Page 558]]

apply to employment in federally conducted programs or activities.



Secs. 2104.141--2104.148  [Reserved]



Sec. 2104.149  Program accessibility: Discrimination prohibited.

    Except as otherwise provided in Sec. 2104.150, no qualified 
handicapped person shall, because the agency's facilities are 
inaccessible to or unusable by handicapped persons, be denied the 
benefits of, be excluded from participation in, or otherwise be 
subjected to discrimination under any program or activity conducted by 
the agency.



Sec. 2104.150  Program accessibility: Existing facilities.

    (a) General. The agency shall operate each program or activity so 
that the program or activity, when viewed in its entirety, is readily 
accessible to and usable by handicapped persons. This paragraph does 
not--
    (1) Necessarily require the agency to make each of its existing 
facilities accessible to and usable by handicapped persons;
    (2) In the case of historic preservation programs, require the 
agency to take any action that would result in a substantial impairment 
of significant historic features of an historic property; or
    (3) Require the agency to take any action that it can demonstrate 
would result in a fundamental alteration in the nature of a program or 
activity or in undue financial and administrative burdens. In those 
circumstances where agency personnel believe that the proposed action 
would fundamentally alter the program or activity or would result in 
undue financial and administrative burdens, the agency has the burden of 
proving that compliance with Sec. 2104.150(a) would result in such 
alteration or burdens. The decision that compliance would result in such 
alteration or burdens must be made by the agency head or his or her 
designee after considering all agency resources available for use in the 
funding and operation of the conducted program or activity, and must be 
accompanied by a written statement of the reasons for reaching that 
conclusion. If an action would result in such an alteration or such 
burdens, the agency shall take any other action that would not result in 
such an alteration or such burdens but would nevertheless ensure that 
handicapped persons receive the benefits and services of the program or 
activity.
    (b) Methods--(1) General. The agency may comply with the 
requirements of this section through such means as redesign of 
equipment, reassignment of services to accessible buildings, assignment 
of aides to beneficiaries, home visits, delivery of services at 
alternate accessible sites, alteration of existing facilities and 
construction of new facilities, use of accessible rolling stock, or any 
other methods that result in making its programs or activities readily 
accessible to and usable by handicapped persons. The agency is not 
required to make structural changes in existing facilities where other 
methods are effective in achieving compliance with this section. The 
agency, in making alterations to existing buildings, shall meet 
accessibility requirements to the extent compelled by the Architectural 
Barriers Act of 1968, as amended (42 U.S.C. 4151-4157), and any 
regulations implementing it. In choosing among available methods for 
meeting the requirements of this section, the agency shall give priority 
to those methods that offer programs and activities to qualified 
handicapped persons in the most integrated setting appropriate.
    (2) Historic preservation programs. In meeting the requirements of 
Sec. 2104.150(a) in historic preservation programs, the agency shall 
give priority to methods that provide physical access to handicapped 
persons. In cases where a physical alteration to an historic property is 
not required because of Sec. 2104.150(a)(2) or (a)(3), alternative 
methods of achieving program accessibility include--
    (i) Using audio-visual materials and devices to depict those 
portions of an historic property that cannot otherwise be made 
accessible;
    (ii) Assigning persons to guide handicapped persons into or through 
portions of historic properties that cannot otherwise be made 
accessible; or
    (iii) Adopting other innovative methods.

[[Page 559]]

    (c) Time period for compliance. The agency shall comply with the 
obligations established under this section by October 21, 1986, except 
that where structural changes in facilities are undertaken, such changes 
shall be made by August 22, 1989, but in any event as expeditiously as 
possible.
    (d) Transition plan. In the event that structural changes to 
facilities will be undertaken to achieve program accessibility, the 
agency shall develop, by February 23, 1987 a transition plan setting 
forth the steps necessary to complete such changes. The agency shall 
provide an opportunity to interested persons, including handicapped 
persons or organizations representing handicapped persons, to 
participate in the development of the transition plan by submitting 
comments (both oral and written). A copy of the transition plan shall be 
made available for public inspection. The plan shall, at a minimum--
    (1) Identify physical obstacles in the agency's facilities that 
limit the accessibility of its programs or activities to handicapped 
persons;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period; and
    (4) Indicate the official responsible for implementation of the 
plan.



Sec. 2104.151  Program accessibility: New construction and alterations.

    Each building or part of a building that is constructed or altered 
by, on behalf of, or for the use of the agency shall be designed, 
constructed, or altered so as to be readily accessible to and usable by 
handicapped persons. The definitions, requirements, and standards of the 
Architectural Barriers Act (42 U.S.C. 4151-4157), as established in 41 
CFR 101-19.600 to 101-19.607, apply to buildings covered by this 
section.



Secs. 2104.152-2104.159  [Reserved]



Sec. 2104.160  Communications.

    (a) The agency shall take appropriate steps to ensure effective 
communication with applicants, participants, personnel of other Federal 
entities, and members of the public.
    (1) The agency shall furnish appropriate auxiliary aids where 
necessary to afford a handicapped person an equal opportunity to 
participate in, and enjoy the benefits of, a program or activity 
conducted by the agency.
    (i) In determining what type of auxiliary aid is necessary, the 
agency shall give primary consideration to the requests of the 
handicapped person.
    (ii) The agency need not provide individually precribed devices, 
readers for personal use or study, or other devices of a personal 
nature.
    (2) Where the agency communicates with applicants and beneficiaries 
by telephone, telecommunication devices for deaf person (TDD's) or 
equally effective telecommunication systems shall be used.
    (b) The agency shall ensure that interested persons, including 
persons with impaired vision or hearing, can obtain information as to 
the existence and location of accessible services, activities, and 
facilities.
    (c) The agency shall provide signage at a primary entrance to each 
of its inaccessible facilities, directing users to a location at which 
they can obtain information about accessible facilities. The 
international symbol for accessibility shall be used at each primary 
entrance of an accessible facility.
    (d) This section does not require the agency to take any action that 
it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity or in undue financial and adminstrative 
burdens. In those circumstances where agency personnel believe that the 
proposed action would fundamentally alter the program or activity or 
would result in undue financial and administrative burdens, the agency 
has the burden of proving that compliance with Sec. 2104.160 would 
result in such alteration or burdens. The decision that compliance would 
result in such alteration or burdens must

[[Page 560]]

be made by the agency head or his or her designee after considering all 
agency resources available for use in the funding and operation of the 
conducted program or activity, and must be accompanied by a written 
statement of the reasons for reaching that conclusion. If an action 
required to comply with this section would result in such an alteration 
or such burdens, the agency shall take any other action that would not 
result in such an alteration or such burdens but would nevertheless 
ensure that, to the maximum extent possible, handicapped persons receive 
the benefits and services of the program or activity.



Sec. 2104.161-2104.169  [Reserved]



Sec. 2104.170  Compliance procedures.

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
handicap in programs or activities conducted by the agency.
    (b) The agency shall process complaints alleging violations of 
section 504 with respect to employment according to the procedures 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613 pursuant to section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791).
    (c) The Secretary, Commission of Fine Arts, shall be responsible for 
coordinating implementation of this section. Complaints may be sent to 
Secretary, Commission of Fine Arts, 708 Jackson Place NW., Washington, 
DC 20006.
    (d) The agency shall accept and investigate all complete complaints 
for which it has jurisdiction. All complete complaints must be filed 
within 180 days of the alleged act of discrimination. The agency may 
extend this time period for good cause.
    (e) If the agency receives a complaint over which it does not have 
jurisdiction, it shall promptly notify the complainant and shall make 
reasonable efforts to refer the complaint to the appropriate government 
entity.
    (f) The agency shall notify the Architectural and Transportation 
Barriers Compliance Board upon receipt of any complaint alleging that a 
building or facility that is subject to the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151-4157), or section 502 of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 792), is not readily 
accessible to and usable by handicapped persons.
    (g) Within 180 days of the receipt of a complete complaint for which 
it has jurisdiction, the agency shall notify the complainant of the 
results of the investigation in a letter containing--
    (1) Findings of fact and conclusions of law;
    (2) A description of a remedy for each violation found; and
    (3) A notice of the right to appeal.
    (h) Appeals of the findings of fact and conclusions of law or 
remedies must be filed by the complainant within 90 days of receipt from 
the agency of the letter required by Sec. 2104.170(g). The agency may 
extend this time for good cause.
    (i) Timely appeals shall be accepted and processed by the head of 
the agency.
    (j) The head of the agency shall notify the complainant of the 
results of the appeal within 60 days of the receipt of the request. If 
the head of the agency determines that additional information is needed 
from the complainant, he or she shall have 60 days from the date of 
receipt of the additional information to make his or her determination 
on the appeal.
    (k) The time limits cited in paragraphs (g) and (j) of this section 
may be extended with the permission of the Assistant Attorney General.
    (l) The agency may delegate its authority for conducting complaint 
investigations to other Federal agencies, except that the authority for 
making the final determination may not be delegated to another agency.

[51 FR 22895, 22896, June 23, 1986, as amended at 51 FR 22895, June 23, 
1986]



Secs. 2104.171-2104.999  [Reserved]



PART 2105--RULES FOR COMPLIANCE WITH 5 U.S.C. 552, THE FREEDOM OF INFORMATION ACT--Table of Contents




Sec.
2105.1  Purpose and scope.
2105.2  Requests for identifiable records and copies.
2105.3  Action on initial requests.

[[Page 561]]

2105.4  Appeals.
2105.5  Fees.

    Authority: 5 U.S.C. 552, as amended.

    Source: 40 FR 40802, Sept. 4, 1975. Redesignated and amended at 51 
FR 23056, June 25, 1986, unless otherwise noted.

    Editorial Note: The regulations in this part 2105 were formerly 
codified in 36 CFR chapter X, part 1000.



Sec. 2105.1  Purpose and scope.

    This part contains the regulations of the Commission of Fine Arts 
implementing 5 U.S.C. 552. The regulations of this part provide 
information concerning the procedures by which records may be obtained 
from the Commission. Members and employees of the Commission may 
continue to furnish to the public, informally and without neglecting the 
rights of requesters described herein, information and records which 
prior to enactment of 5 U.S.C. 552 were furnished customarily in the 
regular performance of their duties. Persons seeking information or 
records of the Commission may find it useful to consult with the 
Secretary before invoking the formal procedures set out below.



Sec. 2105.2  Requests for identifiable records and copies.

    (a) Formal public requests for information from the records of the 
Commission of Fine Arts shall be made in writing with the letter clearly 
marked ``FREEDOM OF INFORMATION REQUEST.'' All such requests should be 
addressed to the Secretary, Commission of Fine Arts, 708 Jackson Place, 
NW., Washington, DC 20006.
    (b) Records must be reasonably described. A request for all records 
falling within a reasonably specific category shall be regarded as 
conforming to the requirement that records be reasonably described if it 
enables the records requested to be identified by any process that is 
not unreasonably burdensome or disruptive of Commission operations.



Sec. 2105.3  Action on initial requests.

    (a) The Secretary will make a determination as to whether or not to 
release requested information. Generally, determination will be made to 
release the requested information if: (1) It is not exempt from 
disclosure or
    (2) It is exempt from disclosure but its withholding is neither 
required by statute, nor supported by sound grounds.
    (b) Determination will be dispatched within ten days, excluding 
Saturdays, Sundays, and legal public holidays, after initial receipt of 
the request.
    (c) In unusual circumstances, the time for initial determination on 
requests may be delayed up to a total of ten additional days, excluding 
Saturdays, Sundays, and legal public holidays and notice of such delay 
shall be dispatched within the first ten days, excluding Saturdays, 
Sundays, and legal public holidays following the initial receipt of the 
request.
    (d) Letters denying access to information will:
    (1) Provide the requester with the reason for the denial.
    (2) Inform the requester of his right to appeal the denial within 30 
days.
    (3) Give the name and title of the official to whom the appeal may 
be sent.
    (4) Give the name and title of the official responsible for the 
denial.



Sec. 2105.4  Appeals.

    (a) The Chairman of the Commission is the appellate authority for 
all denials.
    (b) The Chairman will act upon the appeal within twenty days, 
excluding Saturdays, Sundays, and legal public holidays.
    (c) In unusual circumstances, the time for action on an appeal may 
be extended by an additional ten days, excluding Saturdays, Sundays, and 
legal public holidays minus any extension granted at the initial request 
level under Sec. 2105.3(c).
    (d) In the event that the appeal upholds the denial, the requester 
will be advised that there are provisions for judicial review of such 
decisions under the Freedom of Information Act.



Sec. 2105.5  Fees.

    (a) Fees shall be charged according to the schedule in paragraph (b) 
of this section for services rendered in responding to requests for 
Commission of Fine Arts records under this part unless determination is 
made that such

[[Page 562]]

charges or a portion of them are not in the public interest because 
furnishing the information primarily benefits the general public.
    (b) The following charges will be assessed for the services listed:
    (1) For copies of documents 8\1/2\'' x 14'' or smaller, $0.25 for 
the first copy of the first page and $0.10 for each copy of each page 
thereafter.
    (i) Ordinarily, no more than one copy of each page will be supplied.
    (ii) Ordinarily, photographs 8\1/2\'' x 14'' or smaller will be 
copied on a photocopy machine, rather than by photographing and printing 
of such photographs.
    (2) When in responding to a request, copying of bound works such as 
books or periodicals, copying of documents larger than 8\1/2\'' x 14'', 
photographing and printing of records, or other services not normally 
performed by the Commission and its staff are required, the direct cost 
of such services or material to the Commission of Fine Arts may be 
charged, but only if the requester has been notified of such cost before 
it is incurred.
    (3) For each one quarter hour spent by clerical personnel in excess 
of the first quarter hour in searching for and producing a requested 
record, $1.50.
    (4) When a search cannot be performed by clerical personnel and the 
amount of time that must be expended in the search and collection of the 
requested records by such higher level personnel is substantial, charges 
may be made at a rate in excess of the clerical rate, namely, for each 
one quarter hour spent in excess of the first quarter hour by such 
higher level personnel in searching for a requested record, $3.
    (5) No charge will be made for time spent in resolving legal or 
policy issues affecting access to records of known contents. In 
addition, no charge will be made for the time involved in examining 
records in connection with determining whether they are exempt from 
mandatory disclosure and should be withheld, as a matter of sound 
policy. In addition, no charge will ordinarily be made if the records 
requested are not found. However, if the time expended in processing the 
request is substantial, and if the requester has been notified that it 
cannot be determined in advance whether any records will be made 
available, fees may be charged.
    (c) Where it is anticipated that the fees chargeable under this 
section will amount to more than $10, and the requester has not 
indicated in advance his willingness to pay fees as high as are 
anticipated, the requester shall be notified of the amount of the 
anticipated fee or such portion thereof as can readily be estimated. In 
such cases, a request will not be deemed to have been received until the 
requester is notified of the anticipated cost and agrees to bear it. 
Such a notification will be transmitted as soon as possible but in any 
event, within five days, excluding Saturdays, Sundays, and legal public 
holidays after the receipt of the initial request.
    (d) Payment should be made by check or money order payable to the 
U.S. Treasury.
    (e)(1) Where the anticipated fee chargeable under this section 
exceeds $10, an advance deposit of 25% of the anticipated fee or $10, 
whichever is greater may be required.
    (2) Where a requester has previously failed to pay a fee under this 
section, an advance deposit of the full amount of the anticipated fee 
may be required.



PART 2106--RULES FOR COMPLIANCE WITH 5 U.S.C. 552a, THE PRIVACY ACT OF 1974--Table of Contents




Sec.
2106.1  Rules for determining if an individual is the subject of a 
          record.
2106.2  Requests for access.
2106.3  Access to the accounting of disclosures from records.
2106.4  Requests for copies of records.
2106.5  Requests to amend records.
2106.6  Request for review.
2106.7  Schedule of fees.

    Authority: Pub. L. 93-579, 88 Stat. 1896 (5 U.S.C. 552a(f)).

    Source: 40 FR 52369, Nov. 10, 1975. Redesignated and amended at 51 
FR 23056, June 25, 1986, unless otherwise noted.

    Editorial Note: The regulations in this part 2106 were formerly 
codified in 36 CFR chapter X, part 1002.

[[Page 563]]



Sec. 2106.1  Rules for determining if an individual is the subject of a record.

    (a) Individuals desiring to know if a specific system of records 
maintained by the Commission of Fine Arts contains a record pertaining 
to them should address their inquiries to the Secretary, Commission of 
Fine Arts, 708 Jackson Place, NW., Washington, DC 20006. The written 
inquiry should contain a specific reference to the system of records 
maintained by CFA listed in the CFA Notices of Systems of Records or it 
should describe the type of record in sufficient detail to reasonably 
identify the system of records. Notice of CFA Systems of Records will be 
made in the Federal Register and copies of the notices will be available 
upon request to the Secretary when so published. A compilation of such 
notices will also be made and published by the Office of the Federal 
Register in accordance with section 5 U.S.C. 552a(f).
    (b) At a minimum, the request should contain sufficient identifying 
information to allow CFA to determine if there is a record pertaining to 
the individual making the request in a particular system of records. In 
instances where identification is insufficient to insure disclosure to 
the individual to whom the information pertains in view of the 
sensitivity of the information, CFA reserves the right to solicit from 
the requester additional identifying information.
    (c) Ordinarily the requester will be informed whether the named 
system of records contains a record pertaining to the requester within 
10 days of the receipt of such a request (excluding Saturdays, Sundays, 
and legal Federal holidays). Such a response will also contain or 
reference the procedures which must be followed by the individual making 
the request in order to gain access to the record.
    (d) Whenever a response cannot be made within 10 days, the Secretary 
will inform the requester of the reasons for the delay and the date by 
which a response may be anticipated.



Sec. 2106.2  Requests for access.

    (a) Requirement for written requests. Individuals desiring to gain 
access to a record pertaining to them in a system of records maintained 
by CFA must submit their request in writing in accordance with the 
procedures set forth in paragraph (b) of this section.
    (b) Procedures. (1) Content of the request. The request for access 
to a record in a system of records shall be addressed to the Secretary, 
at the address cited above; and shall name the system of records or 
contain a description (as concise as possible) of such system of 
records. The request should state that the request is pursuant to the 
Privacy Act of 1974. In the absence of such a statement, if the request 
is for a record pertaining to the requester maintained by CFA in a 
system of records, the request will be presumed to be made under the 
Privacy Act of 1974. The requester should include any other information 
which may assist in the rapid identification of the record for which 
access is being requested (e.g., maiden name, dates of employment, 
etc.).
    (2) Requirements for identification will normally be limited to the 
presentation of any standard picture and signature or signature 
identification card, such as driver's license, so that a comparison of 
the signature and the signature on the original request may be made. The 
appearing individual will be read paragraph (3), subsection (i) to title 
5 U.S.C. 552a which specifies the penalty for knowingly or willfully 
requesting or obtaining a record concerning an individual from an agency 
under false pretenses and asked to sign a statement attesting to the 
fact that he or she understands the paragraph and that he or she is, in 
fact, the individual who made the request (or the individual authorized 
to receive the disclosure by the requesting individual). This signature 
will be compared with the other two. If the appearing individual is 
other than the requesting individual, then he or she must also present a 
letter of introduction signed by the requesting individual so that the 
comparison of signature may be made.

[[Page 564]]

    (c) CFA action on request. (1) A request for access will ordinarily 
be answered within 10 days (excluding Saturdays, Sundays, and legal 
Federal holidays), except when the Secretary determines otherwise, in 
which case the requester will be informed of the reason for the delay 
and an anticipated date by which the request will be answered. When the 
request can be answered within 10 days, it shall include the following:
    (i) A statement that there is a record as requested or a statement 
that there is not a record in the system of records maintained by CFA;
    (ii) A statement as to whether access will be granted only by 
providing a copy of the record through the mail; or the address of the 
location and the date and time at which the record may be examined. In 
the event the requester is unable to meet the specified date and time, 
alternate arrangements may be made with the official specified in 
paragraph (b)(1) of this section;
    (iii) A statement, when appropriate, that examination in person will 
be the sole means of granting access only when the Secretary has 
determined that it would not unduly impede the requester's right of 
access;
    (iv) The amount of fees charged, if any (see Secs. 2106.4 and 
2106.7); and
    (v) The name, title, and telephone number of the CFR official having 
operational control over the record.
    (A) Access by the parent of a minor, or legal guardian. A parent of 
a minor, upon presenting suitable personal identification, may access on 
behalf of the minor any record pertaining to the minor maintained by CFA 
in a system of records. A legal guardian may similarly act on behalf of 
an individual declared to be incompetent due to physical or mental 
incapacity or age by a court of competent jurisdiction, upon the 
presentation of documents authorizing the legal guardian to so act; and 
upon suitable personal identification of the guardian.
    (B) Granting access when accompanied or represented by another 
individual. When an individual requesting access to his or her record in 
a system of records maintained by CFA wishes to be accompanied or 
represented by another individual during the course of the examination 
of the record, the individual making the request shall submit to the 
official having operational control of the record a signed statement 
authorizing that person access to the record.
    (C) Access in response to congressional inquiries. Disclosure may be 
made to a congressional office from the record of an individual in 
response to an inquiry from the congressional office made at the request 
of that individual.
    (vi) Medical records. The records in a system of records which are 
medical records shall be disclosed to the individual in such a manner 
and following such procedures as the Secretary shall direct. When CFA, 
in consultation with a physician, determines that the disclosure of 
medical information could have an adverse effect upon the individual to 
whom it pertains, CFA may transmit such information to a physician named 
by the individual.
    (vii) Exceptions. Nothing in this section shall be construed to 
entitle an individual the right to access to any information compiled in 
reasonable anticipation of a civil action or proceeding.

[40 FR 52369, Nov. 10, 1975, as amended at 41 FR 2385, Jan. 16, 1976]



Sec. 2106.3  Access to the accounting of disclosures from records.

    Rules governing the granting of access to the accounting of 
disclosures are the same as those for granting access to the records 
outlined in Sec. 2106.2 of this part.



Sec. 2106.4  Requests for copies of records.

    Rules governing requests for copies of records are the same as those 
for the granting of access to the records outlined in Sec. 2106.2 of 
this part (see also Sec. 2106.7 for rules regarding fees).



Sec. 2106.5  Requests to amend records.

    (a) Requirements for written requests. Individuals desiring to amend 
a record that pertains to them in a system of records maintained by CFA 
must submit their request in writing in accordance with the procedures 
set forth herein unless the requirement is waived by the official having 
responsibility for the system of records. Records not subject to the 
Privacy Act of

[[Page 565]]

1974 will not be amended in accordance with these provisions; however, 
individuals who believe that such records are inaccurate may bring this 
to the attention of the CFA.
    (b) Procedures. (1)(i) The request to amend a record in a system of 
records shall be addressed to the Secretary. Included in the request 
shall be the name of the system and a brief description of the record 
proposed for amendment. In the event the request to amend the record is 
the result of the individual's having gained access to the record as set 
forth above, copies of previous correspondence between the requester and 
CFA will serve in lieu of a separate description of the record.
    (ii) Individuals desiring assistance in the preparation of a request 
to amend a record should contact the Secretary at the address cited 
above.
    (iii) The exact portion of the record the individual seeks to have 
amended should be clearly indicated. If possible, the proposed 
alternative language should also be set forth, or, at a minimum, the 
facts which the individual believes are not accurate, relevant, timely, 
or complete, should be set forth with such particularity as to permit 
CFA not only to understand the individual's basis for the request, but 
also to make an appropriate amendment to the record.
    (iv) The request must also set forth the reasons why the individual 
believes his record is not accurate, relevant, timely, or complete. In 
order to avoid the retention by CFA of personal information merely to 
permit the verification of records, the burden of persuading CFA to 
amend a record will be upon the individual. The individual must furnish 
sufficient facts to persuade the official in charge of the system of the 
inaccuracy, irrelevancy, timeliness, or incompleteness of the record.
    (2) CFA action on the request. To the extent possible, a decision 
upon a request to amend a record will be made within 10 days (excluding 
Saturdays, Sundays, and legal Federal holidays). In the event that a 
decision cannot be made within this time frame, the individual making 
the request will be informed within the 10 days of the expected date for 
a decision. The decision upon a request for amendment will include the 
following:
    (i) The decision of the Commission of Fine Arts whether to grant in 
full, or deny any part of the request to amend the record;
    (ii) The reasons for the determination for any part of the request 
which is denied;
    (iii) The name and address of the official with whom an appeal of 
the denial may be lodged;
    (iv) The name and address of the official designated to assist, as 
necessary, and upon the request of, the individual making the request in 
preparation of the appeal;
    (v) A description of the review of the appeal within CFA (see 
Sec. 2106.6); and
    (vi) A description of any other procedures which may be required of 
the individual in order to process an appeal.



Sec. 2106.6  Request for review.

    (a) Individuals wishing to request a review of the decision by CFA 
with regard to an initial request to amend a record in accordance with 
the provisions of Sec. 2106.5 of this part, should submit the request 
for review in writing and, to the extent possible, include the 
information specified in paragraph (a) of this section. Individuals 
desiring assistance in the preparation of their request for review 
should contact the Secretary at the address provided herein.
    (b) The request for review should contain a brief description of the 
record involved or in lieu thereof, copies of the correspondence from 
CFA in which the request to amend was denied and also the reasons why 
the requester believes that the disputed information should be amended. 
The request for review should make reference to the information 
furnished by the individual in support of his claim and the reasons as 
required by Sec. 2106.5 of this part set forth by CFA in its decision 
denying the amendment. Appeals filed without a complete statement by the 
requester setting forth the reasons for the review will, of course, be 
processed. However, in order to make the appellate process as meaningful 
as possible, the requester's disagreement should be understandably set 
forth. In order to avoid the unnecessary retention of personal

[[Page 566]]

information, CFA reserves the right to dispose of the material 
concerning the request to amend a record if no request for review in 
accordance with this section is received by CFA within 180 days of the 
mailing by CFA of its decision upon an initial request. A request for 
review received after the 180-day period may, at the discretion of the 
Secretary, be treated as an initial request to amend a record.
    (c) The request for review should be addressed to the Secretary.
    (d) Upon receipt of a request for review, the Secretary will convene 
a review group composed of the Secretary and the Chairman. This group 
will review the basis for the requested review and will develop a 
recommended course of action to the office's Committee on Freedom of 
Information and Privacy (hereinafter referred to as the Committee). If 
at any time additional information is required from the requestee, the 
Secretary is authorized to acquire it or authorize its acquisition from 
the requester.
    (e) The Committee is composed of:
    (1) The Chairman;
    (2) The Secretary;
    (3) The Assistant Secretary;
    (4) The Administrative Assistant.
    (f) The Committee will review the request for review and the 
recommended course of action and will recommend a decision on the 
request for review to the Chairman, who has the final authority 
regarding appeals.
    (g) The Chairman will inform the requester in writing of the 
decision on the request for review within 30 days (excluding Saturdays, 
Sundays, and legal Federal holidays) from the date of receipt by CFA of 
the individual's request for review unless the Chairman extends the 30-
day period for good cause. The extension of and the reasons therefor 
will be sent by CFA to the requester within the initial 30-day period. 
Included in the notice of a decision being reviewed, if the decision 
does not grant in full the request for review, will be a description of 
the steps the individual may take to obtain judicial review of such a 
decision, and a statement that the individual may file a concise 
statement with CFA setting forth the individual's reasons for his 
disagreement with the decision upon the request for review. The 
Secretary has the authority to determine the ``conciseness'' of the 
statement, taking into account the scope of the disagreement and the 
complexity of the issues. Upon the filing of a proper concise statement 
by the individual, any subsequent disclosure of the information in 
dispute will have the information in dispute clearly noted and a copy of 
the concise statement furnished, as well as a concise statement by CFA 
setting forth its reasons for not making the requested changes, if CFA 
chooses to file such a statement. A copy of the individual's statement, 
and, if it chooses, CFA's statement will be sent to any prior 
transferree of the disputed information who is listed on the accounting 
required by 5 U.S.C. 552a(c).



Sec. 2106.7  Schedule of fees.

    No fees will be charged for search, review, or copies of the record.

[[Page 567]]



                CHAPTER XXIII--ARCTIC RESEARCH COMMISSION




  --------------------------------------------------------------------

Part                                                                Page
2301            Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by the United 
                    States Arctic Research Commission.......         569

[[Page 569]]



PART 2301--ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF HANDICAP IN PROGRAMS OR ACTIVITIES CONDUCTED BY THE UNITED STATES ARCTIC RESEARCH COMMISSION--Table of Contents




Sec.
2301.101  Purpose.
2301.102  Application.
2301.103  Definitions.
2301.104-2301.109  [Reserved]
2301.110  Self-evaluation.
2301.111  Notice.
2301.112-2301.129  [Reserved]
2301.130  General prohibitions against discrimination.
2301.131-2301.139  [Reserved]
2301.140  Employment.
2301.141-2301.148  [Reserved]
2301.149  Program accessibility: Discrimination prohibited.
2301.150  Program accessibility: Existing facilities.
2301.151  Program accessibility: New construction and alterations.
2301.152-2301.159  [Reserved]
2301.160  Communications.
2301.161-2301.169  [Reserved]
2301.170  Compliance procedures.
2301.171-2301.999  [Reserved]

    Authority: 29 U.S.C. 794.

    Source: 58 FR 57698, 57699, Oct. 26, 1993, unless otherwise noted.



Sec. 2301.101  Purpose.

    The purpose of this part is to effectuate section 119 of the 
Rehabilitation, Comprehensive Services, and Developmental Disabilities 
Amendments of 1978, which amended section 504 of the Rehabilitation Act 
of 1973 to prohibit discrimination on the basis of handicap in programs 
or activities conducted by Executive agencies or the United States 
Postal Service.



Sec. 2301.102  Application.

    This part (Secs. 2301.101--2301.170) applies to all programs or 
activities conducted by the agency, except for programs or activities 
conducted outside the United States that do not involve individuals with 
handicaps in the United States.



Sec. 2301.103  Definitions.

    For purposes of this part, the term--
    Assistant Attorney General means the Assistant Attorney General, 
Civil Rights Division, United States Department of Justice.
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and enjoy the benefits of, programs or 
activities conducted by the agency. For example, auxiliary aids useful 
for persons with impaired vision include readers, Brailled materials, 
audio recordings, and other similar services and devices. Auxiliary aids 
useful for persons with impaired hearing include telephone handset 
amplifiers, telephones compatible with hearing aids, telecommunication 
devices for deaf persons (TTD's), interpreters, notetakers, written 
materials, and other similar services and devices.
    Complete complaint means a written statement that contains the 
complainant's name and address and describes the agency's alleged 
discriminatory action in sufficient detail to inform the agency of the 
nature and date of the alleged violation of section 504. It shall be 
signed by the complainant or by someone authorized to do so on his or 
her behalf. Complaints filed on behalf of classes or third parties shall 
describe or identify (by name, if possible) the alleged victims of 
discrimination.
    Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, rolling stock or other 
conveyances, or other real or personal property.
    Historic preservation programs means programs conducted by the 
agency that have preservation of historic properties as a primary 
purpose.
    Historic properties means those properties that are listed or 
eligible for listing in the National Register of Historic Places or 
properties designated as historic under a statute of the appropriate 
State or local government body.
    Individual with handicaps means any person who has a physical or 
mental impairment that substantially limits one or more major life 
activities, has a record of such an impairment, or is regarded as having 
such an impairment. As used in this definition, the phrase:
    (1) Physical or mental impairment includes--

[[Page 570]]

    (i) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genitourinary; hemic and lymphatic; skin; and endocrine; or
    (ii) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term ``physical or mental 
impairment'' includes, but is not limited to, such diseases and 
conditions as orthopedic, visual, speech, and hearing impairments, 
cerebral palsy, epilepsy, muscular dystrophy, multiple sclerosis, 
cancer, heart disease, diabetes, mental retardation, emotional illness, 
HIV disease (whether symptomatic or asymptomatic), and drug addiction 
and alcoholism.
    (2) Major life activities include functions such as caring for one's 
self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (3) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (4) Is regarded as having an impairment means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the agency as constituting 
such a limitation;
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) Has none of the impairments defined in paragraph (1) of this 
definition but is treated by the agency as having such an impairment.
    Qualified individual with handicaps means--
    (1) With respect to preschool, elementary, or secondary education 
services provided by the agency, an individual with handicaps who is a 
member of a class of persons otherwise entitled by statute, regulation, 
or agency policy to receive education services from the agency;
    (2) With respect to any other agency program or activity under which 
a person is required to perform services or to achieve a level of 
accomplishment, an individual with handicaps who meets the essential 
eligibility requirements and who can achieve the purpose of the program 
or activity without modifications in the program or activity that the 
agency can demonstrate would result in a fundamental alteration in its 
nature;
    (3) With respect to any other program or activity, an individual 
with handicaps who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or activity; 
and
    (4) Qualified handicapped person as that term is defined for 
purposes of employment in 29 CFR 1614.203(a)(6), which is made 
applicable to this part by Sec. 2301.140.
    Section 504 means section 504 of the Rehabilitation Act of 1973 
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended. As used in 
this part, section 504 applies only to programs or activities conducted 
by Executive agencies and not to federally assisted programs.
    Substantial impairment means a significant loss of the integrity of 
finished materials, design quality, or special character resulting from 
a permanent alteration.



Secs. 2301.104-2301.109  [Reserved]



Sec. 2301.110  Self-evaluation.

    (a) The agency shall, by November 28, 1994, evaluate its current 
policies and practices, and the effects thereof, that do not or may not 
meet the requirements of this part and, to the extent modification of 
any such policies and practices is required, the agency shall proceed to 
make the necessary modifications.
    (b) The agency shall provide an opportunity to interested persons, 
including individuals with handicaps or organizations representing 
individuals with handicaps, to participate in the self-evaluation 
process by submitting comments (both oral and written).
    (c) The agency shall, for at least three years following completion 
of the

[[Page 571]]

self-evaluation, maintain on file and make available for public 
inspection:
    (1) A description of areas examined and any problems identified; and
    (2) A description of any modifications made.



Sec. 2301.111  Notice.

    The agency shall make available to employees, applicants, 
participants, beneficiaries, and other interested persons such 
information regarding the provisions of this part and its applicability 
to the programs or activities conducted by the agency, and make such 
information available to them in such manner as the head of the agency 
finds necessary to apprise such persons of the protections against 
discrimination assured them by section 504 and this part.



Secs. 2301.112-2301.129  [Reserved]



Sec. 2301.130  General prohibitions against discrimination.

    (a) No qualified individual with handicaps shall, on the basis of 
handicap, be excluded from participation in, be denied the benefits of, 
or otherwise be subjected to discrimination under any program or 
activity conducted by the agency.
    (b)(1) The agency, in providing any aid, benefit, or service, may 
not, directly or through contractual, licensing, or other arrangements, 
on the basis of handicap--
    (i) Deny a qualified individual with handicaps the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualified individual with handicaps an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified individual with handicaps with an aid, 
benefit, or service that is not as effective in according equal 
opportunity to obtain the same result, to gain the same benefit, or to 
reach the same level of achievement as that provided to others;
    (iv) Provide different or separate aid, benefits, or services to 
individuals with handicaps or to any class of individuals with handicaps 
than is provided to others unless such action is necessary to provide 
qualified individuals with handicaps with aid, benefits, or services 
that are as effective as those provided to others;
    (v) Deny a qualified individual with handicaps the opportunity to 
participate as a member of planning or advisory boards;
    (vi) Otherwise limit a qualified individual with handicaps in the 
enjoyment of any right, privilege, advantage, or opportunity enjoyed by 
others receiving the aid, benefit, or service.
    (2) The agency may not deny a qualified individual with handicaps 
the opportunity to participate in programs or activities that are no 
separate or different, despite the existence of permissibly separate or 
different programs or activities.
    (3) The agency may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration the purpose 
or effect of which would--
    (i) Subject qualified individuals with handicaps to discrimination 
on the basis of handicap; or
    (ii) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to individuals with handicaps.
    (4) The agency may not, in determining the site or location of a 
facility, make selections the purpose or effect of which would--
    (i) Exclude individuals with handicaps from, deny them the benefits 
of, or otherwise subject them to discrimination under any program or 
activity conducted by the agency; or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program or activity with respect to individuals with 
handicaps.
    (5) The agency, in the selection of procurement contractors, may not 
use criteria that subject qualified individuals with handicaps to 
discrimination on the basis of handicap.
    (6) The agency may not administer a licensing or certification 
program in a manner that subjects qualified individuals with handicaps 
to discrimination on the basis of handicap, nor may the agency establish 
requirements for the programs or activities of licensees or certified 
entities that subject qualified

[[Page 572]]

individuals with handicaps to discrimination on the basis of handicap. 
However, the programs or activities of entities that are licensed or 
certified by the agency are not, themselves, covered by this part.
    (c) The exclusion of nonhandicapped persons from the benefits of a 
program limited by Federal statute or Executive order to individuals 
with handicaps or the exclusion of a specific class of individuals with 
handicaps from a program limited by Federal statute or Executive order 
to a different class of individuals with handicaps is not prohibited by 
this part.
    (d) The agency shall administer programs and activities in the most 
integrated setting appropriate to the needs of qualified individuals 
with handicaps.



Secs. 2301.131-2301.139  [Reserved]



Sec. 2301.140  Employment.

    No qualified individual with handicaps shall, on the basis of 
handicap, be subjected to discrimination in employment under any program 
or activity conducted by the agency. The definitions, requirements, and 
procedures of section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 
791), as established by the Equal Employment Opportunity Commission in 
29 CFR part 1614, shall apply to employment in federally conducted 
programs or activities.



Secs. 2301.141-2301.148  [Reserved]



Sec. 2301.149  Program accessibility: Discrimination prohibited.

    Except as otherwise provided in Sec. 2301.150, no qualified 
individual with handicaps shall, because the agency's facilities are 
inaccessible to or unusable by individuals with handicaps, be denied the 
benefits of, be excluded from participation in, or otherwise be 
subjected to discrimination under any program or activity conducted by 
the agency.



Sec. 2301.150  Program accessibility: Existing facilities.

    (a) General. The agency shall operate each program or activity so 
that the program or activity, when viewed in its entirety, is readily 
accessible to and usable by individuals with handicaps. This paragraph 
does not--
    (1) Necessarily require the agency to make each of its existing 
facilities accessible to and usable by individuals with handicaps;
    (2) In the case of historic preservation programs, require the 
agency to take any action that would result in a substantial impairment 
of significant historic features of an historic property; or
    (3) Require the agency to take any action that it can demonstrate 
would result in a fundamental alteration in the nature of a program or 
activity or in undue financial and administrative burdens. In those 
circumstances where agency personnel believe that the proposed action 
would fundamentally alter the program or activity or would result in 
undue financial and administrative burdens, the agency has the burden of 
proving that compliance with Sec. 2301.150(a) would result in such 
alteration or burdens. The decision that compliance would result in such 
alteration or burdens must be made by the agency head or his or her 
designee after considering all agency resources available for use in the 
funding and operation of the conducted program or activity, and must be 
accompanied by a written statement of the reasons for reaching that 
conclusion. If an action would result in such an alteration or such 
burdens, the agency shall take any other action that result in such an 
alteration or such burdens but would nevertheless ensure that 
individuals with handicaps receive the benefits and services of the 
program or activity.
    (b) Methods.--(1) General. The agency may comply with the 
requirements of this section through such means as redesign of 
equipment, reassignment of services to accessible buildings, assignment 
of aides to beneficiaries, home visits, delivery of services at 
alternate accessible sites, alteration of existing facilities and 
construction of new facilities, use of accessible rolling stock, or any 
other methods that result in making its programs or activities readily 
accessible to and usable by individuals with handicaps. The agency is 
not required to make structural changes in existing facilities where 
other methods are effective in achieving compliance with this section. 
The agency, in making alterations to existing buildings,

[[Page 573]]

shall meet accessibility requirements to the extent compelled by the 
Architectural Barriers Act of 1968, as amended (42 U.S.C. 4151-4157), 
and any regulations implementing it. In choosing among available methods 
for meeting the requirements of this section, the agency shall give 
priority to those methods that offer programs and activities to 
qualified individuals with handicaps in the most integrated setting 
appropriate.
    (2) Historic preservation programs. In meeting the requirements of 
Sec. 2301.150(a) in historic preservation programs, the agency shall 
give priority to methods that provide physical access to individuals 
with handicaps. In cases where a physical alteration to an historic 
property is not required because of Sec. 2301.150(a)(2) or (a)(3), 
alternative methods of achieving program accessibility include--
    (i) Using audio-visual materials and devices to depict those 
portions of an historic property that cannot otherwise be made 
accessible;
    (ii) Assigning persons to guide individuals with handicaps into or 
through portions of historic properties that cannot otherwise be made 
accessible; or
    (iii) Adopting other innovative methods.
    (c) Time period for compliance. The agency shall comply with the 
obligations established under this section by January 24, 1994, except 
that where structural changes in facilities are undertaken, such changes 
shall be made by November 26, 1996, but in any event as expeditiously as 
possible.
    (d) Transition plan. In the event that structural changes to 
facilities will be undertaken to achieve program accessibility, the 
agency shall develop, by May 26, 1994, a transition plan setting forth 
the steps necessary to complete such changes. The agency shall provide 
an opportunity to interested persons, including individuals with 
handicaps or organizations representing individuals with handicaps, to 
participate in the development of the transition plan by submitting 
comments (both oral and written). A copy of the transition plan shall be 
made available for public inspection. The plan shall, at a minimum--
    (1) Identify physical obstacles in the agency's facilities that 
limit the accessibility of its programs or activities to individuals 
with handicaps;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period; and
    (4) Indicate the official responsible for implementation of the 
plan.



Sec. 2301.151  Program accessibility: New construction and alterations.

    Each building or part of a building that is constructed or altered 
by, on behalf of, or for the use of the agency shall be designed, 
constructed, or altered so as to be readily accessible to and usable by 
individuals with handicaps. The definitions, requirements, and standards 
of the Architectural Barriers Act (42 U.S.C. 4151-4157), as established 
in 41 CFR 101-19.600 to 101-19.607, apply to buildings covered by this 
section.



Secs. 2301.152-2301.159  [Reserved]



Sec. 2301.160  Communications.

    (a) The agency shall take appropriate steps to ensure effective 
communication with applicants, participants, personnel of other Federal 
entities, and members of the public.
    (1) The agency shall furnish appropriate auxiliary aids where 
necessary to afford an individual with handicaps an equal opportunity to 
participate in, and enjoy the benefits of, a program or activity 
conducted by the agency.
    (i) In determining what type of auxiliary aid is necessary, the 
agency shall give primary consideration to the requests of the 
individual with handicaps.
    (ii) The agency need not provide individually prescribed devices, 
readers for personal use or study, or other devices of a personal 
nature.
    (2) Where the agency communicates with applicants and beneficiaries 
by telephone, telecommunication devices

[[Page 574]]

for deaf persons (TDD's) or equally effective telecommunication systems 
shall be used to communicate with persons with impaired hearing.
    (b) The agency shall ensure that interested persons, including 
persons with impaired vision or hearing, can obtain information as to 
the existence and location of accessible services, activities, and 
facilities.
    (c) The agency shall provide signage at a primary entrance to each 
of its inaccessible facilities, directing users to a location at which 
they can obtain information about accessible facilities. The 
international symbol for accessibility shall be used at each primary 
entrance of an accessible facility.
    (d) This section does not require the agency to take any action that 
it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity or in undue financial and administrative 
burdens. In those circumstances where agency personnel believe that the 
proposed action would fundamentally alter the program or activity or 
would result in undue financial and administrative burdens, the agency 
has the burden of proving that compliance with Sec. 2301.160 would 
result in such alteration or burdens. The decision that compliance would 
result in such alteration or burdens must be made by the agency head or 
his or her designee after considering all agency resources available for 
use in the funding and operation of the conducted program or activity 
and must be accompanied by a written statement of the reasons for 
reaching that conclusion. If an action required to comply with this 
section would result in such an alteration or such burdens, the agency 
shall take any other action that would not result in such an alteration 
or such burdens but would nevertheless ensure that, to the maximum 
extent possible, individuals with handicaps receive the benefits and 
services of the program or activity.



Secs. 2301.161-2301.169  [Reserved]



Sec. 2301.170  Compliance procedures.

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
handicap in programs and activities conducted by the agency.
    (b) The agency shall process complaints alleging violations of 
section 504 with respect to employment according to the procedures 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1614 pursuant to section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791).
    (c) The Executive Director shall be responsible for coordinating 
implementation of this section. Complaints may be sent to Executive 
Director, United States Arctic Research Commission, ICC Building, room 
6333, 12th & Constitution Avenue, NW., Washington, DC 20423.
    (d) The agency shall accept and investigate all complete complaints 
for which it has jurisdiction. All complete complaints must be filed 
within 180 days of the alleged act of discrimination. The agency may 
extend this time period for good cause.
    (e) If the agency receives a complaint over which it does not have 
jurisdiction, it shall promptly notify the complainant and shall make 
reasonable efforts to refer the complaint to the appropriate Government 
entity.
    (f) The agency shall notify the Architectural and Transportation 
Barriers Compliance Board upon receipt of any complaint alleging that a 
building or facility that is subject to the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151-4157), is not readily accessible to 
and usable by individuals with handicaps.
    (g) Within 180 days of the receipt of a complete complaint for which 
it has jurisdiction, the agency shall notify the complainant of the 
results of the investigation in a letter containing--
    (1) Findings of fact and conclusions of law;
    (2) A description of a remedy for each violation found; and
    (3) A notice of the right to appeal.
    (h) Appeals of the findings of fact and conclusions of law or 
remedies must be filed by the complainant within 90 days of receipt from 
the agency of the letter required by Sec. 2301.170(g). The agency may 
extend this time for good cause.
    (i) Timely appeals shall be accepted and processed by the head of 
the agency.

[[Page 575]]

    (j) The head of the agency shall notify the complainant of the 
results of the appeal within 60 days of the receipt of the request. If 
the head of the agency determines that additional information is needed 
from the complainant, he or she shall have 60 days from the date of 
receipt of the additional information to make his or her determination 
on the appeal.
    (k) The time limits cited in paragraphs (g) and (j) of this section 
may be extended with the permission of the Assistant Attorney General.
    (l) The agency may delegate its authority for conducting complaint 
investigations to other Federal agencies, except that the authority for 
making the final determination may not be delegated to another agency.

[58 FR 57698, 57699, Oct. 26, 1993]



Secs. 2301.171-2301.999  [Reserved]

[[Page 577]]



       CHAPTER XXIV--JAMES MADISON MEMORIAL FELLOWSHIP FOUNDATION




  --------------------------------------------------------------------

Part                                                                Page
2400            Fellowship Program requirements.............         579
2490            Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by the James 
                    Madison Memorial Fellowship Foundation..         589

[[Page 579]]



PART 2400--FELLOWSHIP PROGRAM REQUIREMENTS--Table of Contents




                           Subpart A--General

2400.1  Purposes.
2400.2  Annual competition.
2400.3  Eligibility.
2400.4  Definitions.

                         Subpart B--Application

2400.10  Application.
2400.11  Faculty representatives.

                     Subpart C--Application Process

2400.20  Preparation of application.
2400.21  Contents of application.
2400.22  Application deadline.

                     Subpart D--Selection of Fellows

2400.30  Selection criteria.
2400.31  Selection process.

                        Subpart E--Graduate Study

2400.40  Institutions of graduate study.
2400.41  Degree programs.
2400.42  Approval of Plan of Study.
2400.43  Required courses of graduate study.
2400.44  Commencement of graduate study.
2400.45  Special consideration: Junior Fellows' Plan of study.
2400.46  Special consideration: second master's degrees.
2400.47  Summer Institute's relationship to fellowship.
2400.48  Fellows' participation in the Summer Institute.
2400.49  Contents of the Summer Institute.
2400.50  Allowances and Summer Institute costs.
2400.51  Summer Institute accreditation.

                      Subpart F--Fellowship Stipend

2400.52  Amount of stipend.
2400.53  Duration of stipend.
2400.54  Use of stipend.
2400.55  Certification for stipend.
2400.56  Payment of stipend.
2400.57  Termination of stipend.
2400.58  Repayment of stipend.

                      Subpart G--Special Conditions

2400.59  Other awards.
2400.60  Renewal of award.
2400.61  Postponement of award.
2400.62  Evidence of master's degree.
2400.63  Excluded graduate study.
2400.64  Alterations to Plan of Study.
2400.65  Teaching obligation.
2400.66  Completion of fellowship.

    Authority: 20 U.S.C. 4501 et. seq.

    Source: 61 FR 46734, Sept. 5, 1996, unless otherwise noted.



                           Subpart A--General



Sec. 2400.1  Purposes.

    (a) The purposes of the James Madison Memorial Fellowship Program 
are to:
    (1) Provide incentives for master's degree level graduate study of 
the history, principles, and development of the United States 
Constitution by outstanding in-service teachers of American history, 
American government, social studies, and political science in grades 7-
12 and by outstanding college graduates who plan to become teachers of 
the same subjects; and
    (2) Strengthen teaching in the nation's secondary schools about the 
principles, framing, ratification, and subsequent history of the United 
States Constitution.
    (b) The Foundation may from time to time operate its own programs 
and undertake other closely-related activities to fulfill these goals.



Sec. 2400.2  Annual competition.

    To achieve its principal purposes, the Foundation holds an annual 
national competition to select teachers in grades 7-12, college seniors, 
and college graduates to be James Madison Fellows.



Sec. 2400.3  Eligibility.

    Individuals eligible to apply for and hold James Madison Fellowships 
are United States citizens, United States nationals, or permanent 
residents of the Northern Mariana Islands who are:
    (a) Teachers of American history, American government, social 
studies, or political science in grades 7-12 who:
    (1) Are teaching full time during the year in which they apply for a 
fellowship;
    (2) Are under contract, or can provide evidence of being under 
prospective contract, to teach full time as teachers of American 
history, American government, social studies, or political science in 
grades 7-12;
    (3) Have demonstrated records of willingness to devote themselves to

[[Page 580]]


civic responsibilities and to professional and collegial activities 
within their schools and school districts;
    (4) Are highly recommended by their department heads, school heads, 
school district superintendents, or other supervisors;
    (5) Qualify for admission with graduate standing at accredited 
universities of their choice that offer master's degree programs 
allowing at least 12 semester hours or their equivalent of study of the 
origins, principles, and development of the Constitution of the United 
States and of its comparison with the constitutions of other forms of 
government;
    (6) Are able to complete their proposed courses of graduate study 
within five calendar years from the commencement of study under their 
fellowships, normally through part-time study during summers or in 
evening or weekend programs;
    (7) Agree to attend the Foundation's four-week Summer Institute on 
the Constitution, normally during the summer following the commencement 
of study under their fellowships; and
    (8) Sign agreements that, after completing the education for which 
the fellowship is awarded, they will teach American history, American 
government, social studies, or political science full time in secondary 
schools for a period of not less than one year for each full academic 
year of study for which assistance was received, preferably in the state 
listed as their legal residence at the time of their fellowship award. 
For the purposes of this provision, a full academic year of study is the 
number of credit hours determined by each university at which Fellows 
are studying as constituting a full year of study at that university. 
Fellows' teaching obligations will be figured at full academic years of 
study; and when Fellows have studies for partial academic years, those 
years will be rounded upward to the nearest one-half year to determine 
Fellows' total teaching obligations.
    (b) Those who aspire to become full-time teachers of American 
history, American government, social studies, or political science in 
grades 7-12 who:
    (1) Are matriculated college seniors pursuing their baccalaureate 
degrees full time and will receive those degrees no later than August 
31st of the year of the fellowship competition in which they apply or 
prior recipients of baccalaureate degrees;
    (2) Plan to begin graduate study on a full-time basis;
    (3) Have demonstrated records of willingness to devote themselves to 
civic responsibilities;
    (4) Are highly recommended by faculty members, deans, or other 
persons familiar with their potential for graduate study of American 
history and government and with their serious intention to enter the 
teaching profession as secondary school teachers of American history, 
American government, social studies, or political science in grades 7-
12;
    (5) Qualify for admission with graduate standing at accredited 
universities of their choice that offer master's degree programs that 
allow at least 12 semester hours or their equivalent of study of the 
origins, principles, and development of the Constitution of the United 
States and of its comparison with the constitutions and history of other 
forms of government;
    (6) Are able to complete their proposed courses of graduate study in 
no more than two calendar years from the commencement of study under 
their fellowships, normally through full-time study;
    (7) Agree to attend the Foundation's four-week Summer Institute on 
the Constitution, normally during the summer following the commencement 
of study under their fellowships; and
    (8) Sign an agreement that, after completing the education for which 
the fellowship is awarded, they will teach American history, American 
government, social studies, or political science full time in secondary 
schools for a period of not less than one year for each full academic 
year of study for which assistance was received, preferably in the state 
listed as their legal residence at the time of their fellowship award. 
For the purposes of this provision, a full academic year of study is the 
number of credit hours determined by each university at which Fellows 
are studying as constituting a full

[[Page 581]]

year of study at that university. Fellows' teaching obligations will be 
figured at full academic years of study; and when Fellows have studies 
for partial academic years, those years will be rounded upward to the 
nearest one-half year to determine Fellows' total teaching obligations.



Sec. 2400.4  Definitions.

    As used in this part:
    Academic year means the period of time in which a full-time student 
would normally complete two semesters, two trimesters, three quarters, 
or their equivalent of study.
    Act means the James Madison Memorial Fellowship Act.
    College means an institution of higher education offering only a 
baccalaureate degree or the undergraduate division of a university in 
which a student is pursuing a baccalaureate degree.
    Credit Hour Equivalent means the number of graduate credit hours 
obtained in credits, courses or units during a quarter, a trimester, or 
a semester which are needed to equal a specific number of semester 
graduate credit hours.
    Fee means a typical and usually non-refundable charge levied by an 
institution of higher education for a service, privilege, or use of 
property which is required for a Fellow's enrollment and registration.
    Fellow means a recipient of a fellowship from the Foundation.
    Fellowship means an award, called a James Madison Fellowship, made 
to a person by the Foundation for graduate study.
    Foundation means the James Madison Memorial Fellowship Foundation.
    Full-time study means study for an enrolled student who is carrying 
a full-time academic workload as determined by the institution under a 
standard applicable to all students enrolled in a particular educational 
program.
    Graduate study means the courses of study beyond the baccalaureate 
level, which are offered as part of a university's master's degree 
program and which lead to a master's degree.
    Incomplete means a course which the Foundation has paid for but the 
Fellow has received an incomplete grade or the Fellow has not received 
graduate credit for the course.
    Institution of higher education has the meaning given in Section 
1201(a) of the Higher Education Act of 1965 (20 U.S.C. 1141(a)).
    Junior Fellowship means a James Madison Fellowship granted either to 
a college senior or to a college graduate who has received a 
baccalaureate degree and who seeks to become a secondary school teacher 
of American history, American government, social studies, or political 
science for full-time graduate study toward a master's degree whose 
course of study emphasizes the framing, principles, history, and 
interpretation of the United States Constitution.
    Master's degree means the first pre-doctoral graduate degree offered 
by a university beyond the baccalaureate degree, for which the 
baccalaureate degree is a prerequisite.
    Matriculated means formally enrolled in a master's degree program in 
a university.
    Repayment means if the fellowship is relinquished by the fellow or 
is terminated by the Foundation prior to the completion of the Fellow's 
degree, and/or the Fellow fails to fulfill the teaching obligation after 
the graduate degree is awarded, the Fellow must repay to the Foundation 
all Fellowship costs received plus interest at a rate of 6% per annum 
and, if applicable, reasonable collection fees.
    Resident means a person who has legal residence in the state, 
recognized under state law. If a question arises concerning a Fellow's 
state of residence, the Foundation determines, for the purposes of this 
program, of which state the person is a resident, taking into account 
the Fellow's place of registration to vote, his or her parent's place of 
residence, and the Fellow's eligibility for in-state tuition rates at 
public institutions of higher education.
    Satisfactory progress for a Junior Fellow means the completion of 
the number of required courses normally expected of full-time master's 
degree candidates at the university that the Fellow attends, with grades 
acceptable to that university, in not more than two calendar years from 
the commencement of that study. Satisfactory

[[Page 582]]

progress for a Senior Fellow means the completion each year of a 
specific number of required courses in the Fellow's master's degree 
program, as agreed upon each year with the Foundation and outlined on 
the Plan of Study form, with grades acceptable to the Fellow's 
university, in not more than five calendar years from the commencement 
of that study.
    Secondary school means grades 7 through 12.
    Senior means a student at the academic level recognized by an 
institution of higher education as being the last year of study before 
receiving the baccalaureate degree.
    Senior Fellowship means a James Madison Fellowship granted to a 
secondary school teacher of American history, American government, 
social studies, or political science for part-time graduate study toward 
a master's degree whose course of study emphasizes the framing, 
principles, history, and interpretation of the United States 
Constitution.
    State means each of the 50 states, the District of Columbia, the 
Commonwealth of Puerto Rico, and, considered as a single entity, Guam, 
the United States Virgin Islands, American Samoa, the Commonwealth of 
the Northern Mariana Islands, and, until adoption of its Compact of Free 
Association, the Republic of Palau.
    Stipend means the amount paid by the Foundation to a Fellow or on 
his or her behalf to pay the allowable costs of graduate study which 
have been approved under the fellowship.
    Teaching Obligation means that a Fellow, upon receiving a master's 
degree, must teach American history, American government, social 
studies, or political science on a full-time basis to students in 
secondary school for a period of not less than one year for each year 
for which financial assistance was received.
    Term means the period--semester, trimester, or quarter--used by an 
institution of higher education to divide its academic year.
    Termination means the non-voluntary ending of a fellowship by the 
Foundation when the Fellow has not complied with the rules and 
regulations of the fellowship or has not made satisfactory progress in 
his or her program of study.
    University means an institution of higher education that offers 
post-baccalaureate degrees.
    Withdrawal means the voluntary relinquishment or surrender of a 
Fellowship by the Fellow.



                         Subpart B--Application



Sec. 2400.10  Application.

    Eligible applicants for fellowships must apply directly to the 
Foundation.



Sec. 2400.11  Faculty representatives.

    Each college and university that chooses to do so may annually 
appoint or reappoint a faculty representative who will be asked to 
identify and recruit fellowship applicants on campus, publicize the 
annual competition on campus, and otherwise assist eligible candidates 
in preparation for applying. In order to elicit the appointment of 
faculty representatives, the Foundation will each year request the head 
of each college and university campus to appoint or reappoint a faculty 
representative and to provide the Foundation with the name, business 
address, and business telephone number of a member of its faculty 
representative on forms provided for that purpose.



                     Subpart C--Application Process



Sec. 2400.20  Preparation of application.

    Applications, on forms mailed directly by the Foundation to those 
who request applications, must be completed by all fellowship candidates 
in order that they be considered for an award.



Sec. 2400.21  Contents of application.

    Applications must include for
    (a) Senior Fellowships:
    (1) Supporting information which affirms an applicant's wish to be 
considered for a fellowship; provides information about his or her 
background, interests, goals, and the school in which he or she teaches; 
and includes a statement about the applicant's educational plans and 
specifies how those plans will

[[Page 583]]

enhance his or her career as a secondary school teacher of American 
history, American government, social studies, or political science;
    (2) An essay of up to 600 words that explains the importance of the 
study of the Constitution to:
    (i) Young students;
    (ii) The applicant's career aspirations and his or her contributions 
to public service; and
    (iii) Citizenship generally in a constitutional republic;
    (3) The applicant's proposed course of graduate study, including the 
name of the degree to be sought, the required courses to be taken, as 
well as information about the specific degree sought;
    (4) Three evaluations, one from an immediate supervisor, that attest 
to the applicant's strengths and abilities as a teacher in grades 7-12; 
and
    (5) A copy of his or her academic transcript.
    (b) Junior Fellowships:
    (1) Supporting information which affirms an applicant's wish to be 
considered for a fellowship; provides information about the applicant's 
background, interests, goals, and the college which he or she attends or 
attended; and includes a statement about the applicant's educational 
plans and specifies how those plans will lead to a career as a teacher 
of American history, American government, social studies, or political 
science in grades 7-12;
    (2) An essay of up to 600 words that explains the importance of the 
study of the Constitution to:
    (i) Young students;
    (ii) The applicant's career aspirations and his or her contribution 
to public service; and
    (iii) Citizenship generally in a constitutional republic;
    (3) Applicant's proposed course of graduate study, including the 
name of the degree sought, the name of the required courses to be taken, 
and information about the specific degree sought;
    (4) Three evaluations that attest to the applicant's academic 
achievements and to his or her potential to become an outstanding 
secondary school teacher; and
    (5) A copy of his or her academic transcript.



Sec. 2400.22  Application deadline.

    Completed applications must be received by the Foundation no later 
than March 1st of each year preceding the start of the academic year for 
which candidates are applying.



                     Subpart D--Selection of Fellows



Sec. 2400.30  Selection criteria.

    Applicants will be evaluated, on the basis of materials in their 
applications, as follows:
    (a) Demonstrated commitment to teaching American history, American 
government, social studies, or political science at the secondary school 
level;
    (b) Demonstrated intention to pursue a program of graduate study 
that emphasizes the Constitution and to offer classroom instruction in 
that subject;
    (c) Demonstrated record of willingness to devote themselves to civic 
responsibility;
    (d) Outstanding performance or potential of performance as classroom 
teachers;
    (e) Academic achievements and demonstrated capacity for graduate 
study; and
    (f) Proposed courses of graduate study, especially the nature and 
extent of their subject matter components, and their relationship to the 
enhancement of applicants' teaching and professional activities.



Sec. 2400.31  Selection process.

    (a) An independent Fellow Selection Committee will evaluate all 
valid applications and recommend to the Foundation the most outstanding 
applicants from each state for James Madison Fellowships.
    (b) From among candidates recommended for fellowships by the Fellow 
Selection Committee, the Foundation will name James Madison Fellows. The 
selection procedure will assure that at least one James Madison Fellow, 
junior or senior, is selected from each state in which there are at 
least two legally resident applicants who meet the eligibility 
requirements set forth in Sec. 2400.3 and are judged favorably against 
the selection criteria in Sec. 2400.30.

[[Page 584]]

    (c) The Foundation may name, from among those applicants recommended 
by the Fellow Selection Committee, an alternate or alternates for each 
fellowship. An alternate will receive a fellowship if the person named 
as a James Madison Fellow declines the award or is not able to pursue 
graduate study as contemplated at the time the fellowship was accepted. 
An alternate may be named to replace a Fellow who declines or 
relinquishes an award until, but no later than, March 1st following the 
competition in which the alternate has been selected.
    (d) Funds permitting, the Foundation may also select, from among 
those recommended by the Fellow Selection Committee, Fellows at large.



                        Subpart E--Graduate Study



Sec. 2400.40  Institutions of graduate study.

    Fellowship recipients may attend any accredited university in the 
United States with a master's degree program offering courses or 
training that emphasize the origins, principles, and development of the 
Constitution of the United States and its comparison with the 
constitutions and history of other forms of government.



Sec. 2400.41  Degree programs.

    (a) Fellows may pursue a master's degree in history or political 
science (including government or politics), the degree of Master of Arts 
in Teaching in history or political science (including government or 
politics), or a related master's degree in education that permits a 
concentration in American history, American government, social studies, 
or political science. Graduate degrees under which study is excluded 
from fellowship support are indicated in Sec. 2400.63.
    (b) A master's degree pursued under a James Madison Fellowship may 
entail either one or two years or their equivalent of study, according 
to the requirements of the university at which a Fellow is enrolled.



Sec. 2400.42  Approval of Plan of Study.

    The Foundation must approve each Fellow's Plan of Study. To be 
approved, the plan must:
    (a) On a part-time or full-time basis lead to a master's degree in 
history or political science, the degree of Master of Arts in Teaching 
in history or political science, or a related master's degree in 
education that permits a concentration in American history, American 
government, social studies, or political science;
    (b) Include courses, graduate seminars, or opportunities for 
independent study in topics directly related to the framing and history 
of the constitution of the United States;
    (c) Be pursued at a university that assures a willingness to accept 
up to 6 semester hours of accredited transfer credits from another 
graduate institution for a Fellow's satisfactory completion of the 
Foundation's Summer Institute on the Constitution. For the Foundation's 
purposes, these 6 semester hours may be included in the required minimum 
of 12 semester hours or their equivalent of study of the United States 
Constitution; and
    (d) Be pursued at a university that encourages the Fellow to enhance 
his or her capacities as a teacher of American history, American 
government, social studies, or political science and to continue his or 
her career as a secondary school teacher. The Foundation reserves the 
right to refuse to approve a Fellow's Plan of Study at a university that 
will not accept on transfer the 6 credits for the Institute.



Sec. 2400.43  Required courses of graduate study.

    (a) To be acceptable to the Foundation, those courses related to the 
Constitution referred to in Sec. 2400.43(b) must amount to at least 12 
semester or 18 quarter hours or their credit hour equivalent of study of 
topics directly related to the United States Constitution. More than 12 
semester hours or their credit hour equivalent of such study is strongly 
encouraged.
    (b) The courses that fulfill the required minimum of 12 semester 
hours or their credit hour equivalent of study of the United States 
Constitution must cover one or more of the following subject areas:
    (1) The history of colonial America leading up to the framing of the 
Constitution;

[[Page 585]]

    (2) The Constitution itself, its framing, the history and principles 
upon which it is based, its ratification, the Federalist Papers, Anti-
Federalist writings, and the Bill of Rights;
    (3) The historical development of political theory, constitutional 
law, and civil liberties as related to the Constitution;
    (4) Interpretations of the Constitution by the Supreme Court and 
other branches of the federal government;
    (5) Debates about the Constitution in other forums and about the 
effects of constitutional norms and decisions upon American society and 
culture; and
    (6) Any other subject clearly related to the framing, history, and 
principles of the Constitution.
    (c) If a master's degree program in which a Fellow is enrolled 
requires a master's thesis in place of a course or courses, the Fellow 
will have the option of writing the thesis based on the degree 
requirements. The preparation of a master's thesis should not add 
additional required credits to the minimum number of credits required 
for the master's degree. If a Fellow must write a thesis, the topic of 
the thesis must relate to subjects concerning the framing, principles, 
or history of the United States Constitution. If the Fellow can choose 
between two degree tracks, a thesis track or a non-thesis track, the 
Foundation strongly encourages the non-thesis track.



Sec. 2400.44  Commencement of graduate study.

    (a) Fellows may commence study under their fellowships as early as 
the summer following the announcement of their award. Fellows are 
normally expected to commence study under their fellowships in the fall 
term of the academic year following the date on which their award is 
announced. However, as indicated in Sec. 2400.6, they may seek to 
postpone the commencement of fellowship study under extenuating 
circumstances.
    (b) In determining the two- and five-year fellowship periods of 
Junior and Senior Fellows respectively, the Foundation will consider the 
commencement of the fellowship period to be the date on which each 
Fellow commences study under a fellowship.



Sec. 2400.45  Special consideration: Junior Fellows' Plan of Study.

    Applicants for Junior Fellowships who seek or hold baccalaureate 
degrees in education are strongly encouraged to pursue master's degrees 
in history or political science. Those applicants who hold undergraduate 
degrees in history, political science, government, or any other subjects 
may take some teaching methods and related courses, although the 
Foundation will not pay for them unless they are required for the degree 
for which the Fellow is matriculated. The Foundation will review each 
proposed Plan of Study for an appropriate balance of subject matter and 
other courses based on the Fellow's goals, background, and degree 
requirements.



Sec. 2400.46  Special consideration: second master's degree.

    The Foundation may award Senior Fellowships to applicants who are 
seeking their second master's degrees providing that the applicants' 
first master's degree was obtained at least five years prior to the year 
in which the applicants would normally commence study under a 
fellowship. In evaluating applications from individuals intending to 
pursue a second master's degree, the Fellow Selection Committee will 
favor those applicants who are planning to become American history, 
American government, social studies, or political science teachers after 
having taught another subject and applicants whose initial master's 
degree was in a subject different from that sought under the second 
master's degree.



Sec. 2400.47  Summer Institute's relationship to fellowship.

    Each year, the Foundation offers, normally during July, a four-week 
graduate-level Institute on the principles, framing, ratification, and 
implementation of the United States Constitution at an accredited 
university in the Washington, DC area. The Institute is an integral part 
of each fellowship.

[[Page 586]]



Sec. 2400.48  Fellows' participation in the Summer Institute.

    Each Fellow is required as part of his or her fellowship to attend 
the Institute, normally during the summer following the Fellow's 
commencement of graduate study under a fellowship.



Sec. 2400.49  Contents of the Summer Institute.

    The principal element of the Institute is a graduate history course, 
``Foundations of American Constitutionalism.'' Other components of the 
Institute include study visits to sites associated with the lives and 
careers of members of the founding generation.



Sec. 2400.50  Allowances and Summer Institute costs.

    For their participation in the Institute, Fellows are paid an 
allowance to help offset income foregone by their required attendance. 
The Foundation also funds the costs of the Institute and Fellows' round-
trip transportation to and from the Institute site. The costs of 
tuition, required fees, books, room, and board entailed by the Institute 
will be paid for by the Foundation directly but may be offset against 
fellowship award limits if the credits earned for the Institute are 
included within the Fellows' degree requirements.



Sec. 2400.51  Summer Institute accreditation.

    The Institute is accredited for six graduate semester credits by the 
university at which it is held. It is expected that the universities at 
which Fellows are pursuing their graduate study will, upon Fellows' 
satisfactory completion of the Institute, accept these credits or their 
credit-hour equivalent upon transfer from the university at which the 
Institute is held in fulfillment of the minimum number of credits 
required for Fellows' graduate degrees. Satisfactory completion of the 
Institute will fulfill 6 of the Foundation's 12 semester credits 
required in graduate study of the history and development of the 
Constitution. Fellows, with the Foundation's assistance, are strongly 
encouraged to make good faith efforts to have their universities 
incorporate the Institute into their Plan of Study and accept the 6 
Institute credits toward the minimum number of credits required for 
their master's degrees.



                      Subpart F--Fellowship Stipend



Sec. 2400.52  Amount of stipend.

    Junior and Senior Fellowships carry a stipend of up to a maximum of 
$24,000 pro-rated over the period of Fellows' graduate study. In no case 
shall the stipend for a fellowship exceed $12,000 per academic year. 
Within this limit, stipends will be pro-rated over the period of 
Fellows' graduate study as follows: a maximum of $6,000 per academic 
semester or trimester of full-time study, and a maximum of $4,000 per 
academic quarter of full-time study. Stipends for part-time study will 
be pro rata shares of those allowable for full-time study.



Sec. 2400.53  Duration of stipend.

    Stipends for Junior Fellowships may be payable over a period up to 2 
calendar years of full-time graduate study, and those for Senior 
Fellowships may be payable over a period of not more than 5 calendar 
years of part-time graduate study, beginning with the dates under which 
Fellows commence their graduate study under their fellowships. However, 
the duration of stipend payments will be subject to the maximum payment 
limits, the length of award time limits, and the completion of the 
minimum degree requirements, whichever occurs first.



Sec. 2400.54  Use of stipend.

    Stipends shall be used only to pay the costs of tuition, required 
fees, books, room, and board associated with graduate study under a 
fellowship. The costs allowed for a Fellow's room and board will be the 
amount the Fellow's university reports to the Foundation as the cost of 
room and board for a graduate student if that student were to share a 
room at the student's university. If no shared graduate housing exists, 
then costs for regular shared student housing will be used. If no campus 
housing exists, the equivalent room and board costs at neighboring 
universities will be used. Stipends for room, board, and books will be 
pro-

[[Page 587]]

rated for Fellows enrolled in study less than full time. The Foundation 
will not reimburse Fellows for any portion of their master's degree 
study, that Fellows may have completed prior to the commencement of 
their fellowships. Nor will the Foundation reimburse Fellows for any 
credits acquired above the minimum number of credits required for the 
degree. If a Fellow has already taken and paid for courses that can be 
credited toward the Fellow's graduate degree under a fellowship, those 
must be credited to the degree; the remaining required courses will be 
paid for by the Foundation.



Sec. 2400.55  Certification for stipend.

    In order to receive a fellowship stipend, a Fellow must submit the 
following nine items in writing:
    (a) An acceptance of the terms and conditions of the fellowship 
including a completed certificate of compliance form;
    (b) Evidence of admission to an approved graduate program;
    (c) Certified copies of undergraduate and, if any, graduate 
transcripts;
    (d) A certified payment request form indicating the estimated costs 
for tuition, required fees, books, room, and board;
    (e) a photo copy of the university's bulletin of cost information;
    (f) the amount of income from any other grants or awards;
    (g) information about the Fellow's degree requirements, including 
the number of required credits to fulfill the degree;
    (h) a statement of the university's willingness to accept the 
transfer of 6 credits toward the Fellow's degree requirements for the 
Fellow's satisfactory completion of the Summer Institute (see Sec. 2400. 
51); and
    (i) a full Plan of Study over the duration of the fellowship, 
including information on the contents of required courses. Senior 
Fellows must provide evidence of their continued full-time employment as 
teachers in grades 7-12.



Sec. 2400.56  Payment of stipend.

    Payment for tuition, required fees, books, room, and board subject 
to the limitations in Sec. 2400.52 through Sec. 2400.55 and Sec. 2400.59 
through Sec. 2400.60 will be paid to each Fellow at the beginning of 
each term of enrollment upon the Fellow's submission of a completed 
Payment Request Form and the University bulletin of cost information.



Sec. 2400.57  Termination of stipend.

    (a) The Foundation may suspend or terminate the payment of a stipend 
if a Fellow fails to meet the criteria set forth in Sec. 2400.40 through 
Sec. 2400.44 and Sec. 2400.60, except as provided for in Sec. 2400.61. 
Before it suspends or terminates a fellowship under these circumstances, 
the Foundation will give notice to the Fellow, as well as the 
opportunity to be heard with respect to the grounds for suspension or 
termination.
    (b) The Foundation will normally suspend the payment of a stipend if 
a Fellow has more than one grade of ``Incomplete'' in courses for which 
the Foundation has made payment to the Fellow.



Sec. 2400.58  Repayment of stipend.

    (a) If a Fellow fails to secure a master's degree, fails to teach 
American history, American government, social studies, or political 
science on a full-time basis in a secondary school for at least one 
school year for each academic year for which assistance was provided 
under a fellowship, fails to secure fewer than 12 semester hours or 
their credit hour equivalent for study of the Constitution as indicated 
in Sec. 2400.43(b), or fails to attend the Foundation's Summer Institute 
on the Constitution, the Fellow must repay all of the fellowship costs 
received plus interest at the rate of 6% per annum or as otherwise 
authorized and, if applicable, reasonable collection fees, as prescribed 
in Section 807 of the Act (20 U.S.C. 4506(b)).
    (b) If a Fellow withdraws from the fellowship or has a fellowship 
terminated by the Foundation, the Foundation will seek to recover all 
fellowship funds which have been remitted to the Fellow or on his or her 
behalf under a fellowship.

[[Page 588]]



                      Subpart G--Special Conditions



Sec. 2400.59  Other awards.

    Fellows may accept grants from other foundations, institutions, 
corporations, or government agencies to support their graduate study or 
to replace any income foregone for study. However, the stipend paid by 
the Foundation for allowable costs indicated in Sec. 2400.52 will be 
reduced to the extent these costs are paid from other sources, and in no 
case will fellowship funds be paid to Fellows to provide support in 
excess of their actual total costs of tuition, required fees, books, 
room, and board. The Foundation may also reduce a Fellow's stipend if 
the Fellow is remunerated for the costs of tuition under a research or 
teaching assistantship or a work-study program. In such a case, the 
Foundation will require information from a Fellow's university about the 
intended use of assistantship or work-study support before remitting 
fellowship payments.



Sec. 2400.60  Renewal of award.

    (a) Provided that Fellows have submitted all required documentation 
and are making satisfactory academic progress, it is the intent of the 
Foundation to renew Junior Fellowship awards annually for a period not 
to exceed two calendar years or the completion of their graduate 
degrees, whichever comes first, and Senior Fellowships for a period not 
to exceed 5 calendar years (except when those periods have been altered 
because of changes in Fellows' Plan of Study as provided for in 
Sec. 2400.64), or until a Fellow has completed all requirements for a 
master's degree, whichever comes first. In no case, however, will the 
Foundation continue payments under a fellowship to a Fellow who has 
reached the maximum payments under a fellowship as indicated in 
Sec. 2400.52, or completed the minimum number of credits required for 
the degree. Although Fellows are not discouraged in taking courses in 
addition to those required for the degree or required to maintain full-
time status, the Foundation will not in such cases pay for those 
additional courses unless they are credited to the minimum number of 
credits required for the degree.
    (b) Fellowship renewal will be subject to an annual review by the 
Foundation and certification by an authorized official of the university 
at which a Fellow is registered that the Fellow is making satisfactory 
progress toward the degree and is in good academic standing according to 
the standards of each university.
    (c) As a condition of renewal of awards, each Fellow must submit an 
annual activity report to the Foundation by July 15th. That report must 
indicate, through submission of a copy of the Fellow's most recent 
transcript, courses taken and grades achieved; courses planned for the 
coming year; changes in academic or professional plans or situations; 
any awards, recognitions, or special achievements in the Fellow's 
academic study or school employment; and such other information as may 
relate to the fellowship and its holder.



Sec. 2400.61  Postponement of award.

    Upon application to the Foundation, a Fellow may seek postponement 
of his or her fellowship because of ill health or other mitigating 
circumstances, such as military duty, temporary disability, necessary 
care of an immediate family member, or unemployment as a teacher. 
Substantiation of the reasons for the requested postponement of study 
will be required.



Sec. 2400.62  Evidence of master's degree.

    At the conclusion of graduate studies, each Fellow must provide a 
certified transcript which indicates that he or she has secured an 
approved master's degree as set forth in the Fellow's original Plan of 
Study or approved modifications thereto.



Sec. 2400.63  Excluded graduate study.

    James Madison Fellowships do not provide support for study toward 
doctoral degrees, for the degree of master of arts in public affairs or 
public administration, or toward the award of teaching certificates. Nor 
do fellowships support practice teaching required for professional 
certification or other courses related to teaching unless those courses 
are required for the degree. In those cases, however, the

[[Page 589]]

Foundation will provide reimbursement only toward those courses related 
to teaching that fall within the minimum number of courses required for 
the degree, not in addition to that minimum.



Sec. 2400.64  Alterations to Plan of Study.

    Although Junior Fellows are expected to pursue full-time study and 
Senior Fellows to pursue part-time study, the Foundation may permit 
Junior Fellows with an established need (such as the need to accept a 
teaching position) to study part time and Senior Fellows with 
established need (such as great distance between the Fellow's residence 
and the nearest university, thus necessitating a full-time leave of 
absence from employment in order to study) to study full time.



Sec. 2400.65  Teaching obligation.

    Upon receiving a Master's degree, each Fellow must teach American 
history, American government, social studies, or political science on a 
full-time basis to students in secondary school for a period of not less 
than one year for each academic year for which financial assistance was 
received. Each Fellow will be required to provide the Foundation with an 
annual certification from an official of the secondary school where the 
Fellow is employed indicating the teaching activities of the Fellow 
during the past year. This same certification will be required each year 
until the Fellow's teaching obligation is completed. Any teaching done 
by the Fellow prior to or during graduate studies does not count towards 
meeting this teaching obligation.



Sec. 2400.66  Completion of fellowship.

    A Fellow will be deemed to have satisfied all terms of a fellowship 
and all obligations under it when the Fellow has completed no fewer than 
12 graduate semester hours or the equivalent of study of the 
Constitution, formally secured the masters degree, attended the 
Foundation's Summer Institute on the Constitution, completed teaching 
for the number of years and fractions thereof required as a condition of 
accepting Foundation support for study, and submitted all required 
reports.



PART 2490--ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF HANDICAP IN PROGRAMS OR ACTIVITIES CONDUCTED BY THE JAMES MADISON MEMORIAL FELLOWSHIP FOUNDATION--Table of Contents




Sec.
2490.101  Purpose.
2490.102  Application.
2490.103  Definitions.
2490.104-2490.109  [Reserved]
2490.110  Self-evaluation.
2490.111  Notice.
2490.112-2490.129  [Reserved]
2490.130  General prohibitions against discrimination.
2490.131-2490.139  [Reserved]
2490.140  Employment.
2490.141-2490.148  [Reserved]
2490.149  Program accessibility: Discrimination prohibited.
2490.150  Program accessibility: Existing facilities.
2490.151  Program accessibility: New construction and alterations.
2490.152-2490.159  [Reserved]
2490.160  Communications.
2490.161-2490.169  [Reserved]
2490.170  Compliance procedures.
2490.171-2490.999  [Reserved]

    Authority: 29 U.S.C. 794.

    Source: 58 FR 57699, Oct. 26, 1993, unless otherwise noted.



Sec. 2490.101  Purpose.

    The purpose of this part is to effectuate section 119 of the 
Rehabilitation, Comprehensive Services, and Developmental Disabilities 
Amendments of 1978, which amended section 504 of the Rehabilitation Act 
of 1973 to prohibit discrimination on the basis of handicap in programs 
or activities conducted by Executive agencies or the United States 
Postal Service.



Sec. 2490.102  Application.

    This part (Secs. 2490.101--2490.170) applies to all programs or 
activities conducted by the agency, except for programs or activities 
conducted outside the United States that do not involve individuals with 
handicaps in the United States.

[[Page 590]]



Sec. 2490.103  Definitions.

    For purposes of this part, the term--
    Assistant Attorney General means the Assistant Attorney General, 
Civil Rights Division, United States Department of Justice.
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and enjoy the benefits of, programs or 
activities conducted by the agency. For example, auxiliary aids useful 
for persons with impaired vision include readers, Brailled materials, 
audio recordings, and other similar services and devices. Auxiliary aids 
useful for persons with impaired hearing include telephone handset 
amplifiers, telephones compatible with hearing aids, telecommunication 
devices for deaf persons (TTD's), interpreters, notetakers, written 
materials, and other similar services and devices.
    Complete complaint means a written statement that contains the 
complainant's name and address and describes the agency's alleged 
discriminatory action in sufficient detail to inform the agency of the 
nature and date of the alleged violation of section 504. It shall be 
signed by the complainant or by someone authorized to do so on his or 
her behalf. Complaints filed on behalf of classes or third parties shall 
describe or identify (by name, if possible) the alleged victims of 
discrimination.
    Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, rolling stock or other 
conveyances, or other real or personal property.
    Historic preservation programs means programs conducted by the 
agency that have preservation of historic properties as a primary 
purpose.
    Historic properties means those properties that are listed or 
eligible for listing in the National Register of Historic Places or 
properties designated as historic under a statute of the appropriate 
State or local government body.
    Individual with handicaps means any person who has a physical or 
mental impairment that substantially limits one or more major life 
activities, has a record of such an impairment, or is regarded as having 
such an impairment. As used in this definition, the phrase:
    (1) Physical or mental impairment includes--
    (i) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genitourinary; hemic and lymphatic; skin; and endocrine; or
    (ii) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term ``physical or mental 
impairment'' includes, but is not limited to, such diseases and 
conditions as orthopedic, visual, speech, and hearing impairments, 
cerebral palsy, epilepsy, muscular dystrophy, multiple sclerosis, 
cancer, heart disease, diabetes, mental retardation, emotional illness, 
HIV disease (whether symptomatic or asymptomatic), and drug addiction 
and alcoholism.
    (2) Major life activities include functions such as caring for one's 
self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (3) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (4) Is regarded as having an impairment means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the agency as constituting 
such a limitation;
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) Has none of the impairments defined in paragraph (1) of this 
definition but is treated by the agency as having such an impairment.
    Qualified individual with handicaps means--
    (1) With respect to preschool, elementary, or secondary education 
services provided by the agency, an individual with handicaps who is a 
member of a

[[Page 591]]

class of persons otherwise entitled by statute, regulation, or agency 
policy to receive education services from the agency;
    (2) With respect to any other agency program or activity under which 
a person is required to perform services or to achieve a level of 
accomplishment, an individual with handicaps who meets the essential 
eligibility requirements and who can achieve the purpose of the program 
or activity without modifications in the program or activity that the 
agency can demonstrate would result in a fundamental alteration in its 
nature;
    (3) With respect to any other program or activity, an individual 
with handicaps who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or activity; 
and
    (4) Qualified handicapped person as that term is defined for 
purposes of employment in 29 CFR 1614.203(a)(6), which is made 
applicable to this part by Sec. 2490.140.
    Section 504 means section 504 of the Rehabilitation Act of 1973 
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended. As used in 
this part, section 504 applies only to programs or activities conducted 
by Executive agencies and not to federally assisted programs.
    Substantial impairment means a significant loss of the integrity of 
finished materials, design quality, or special character resulting from 
a permanent alteration.



Secs. 2490.104-2490.109  [Reserved]



Sec. 2490.110  Self-evaluation.

    (a) The agency shall, by November 28, 1994, evaluate its current 
policies and practices, and the effects thereof, that do not or may not 
meet the requirements of this part and, to the extent modification of 
any such policies and practices is required, the agency shall proceed to 
make the necessary modifications.
    (b) The agency shall provide an opportunity to interested persons, 
including individuals with handicaps or organizations representing 
individuals with handicaps, to participate in the self-evaluation 
process by submitting comments (both oral and written).
    (c) The agency shall, for at least three years following completion 
of the self-evaluation, maintain on file and make available for public 
inspection:
    (1) A description of areas examined and any problems identified; and
    (2) A description of any modifications made.



Sec. 2490.111  Notice.

    The agency shall make available to employees, applicants, 
participants, beneficiaries, and other interested persons such 
information regarding the provisions of this part and its applicability 
to the programs or activities conducted by the agency, and make such 
information available to them in such manner as the head of the agency 
finds necessary to apprise such persons of the protections against 
discrimination assured them by section 504 and this part.



Secs. 2490.112-2490.129  [Reserved]



Sec. 2490.130  General prohibitions against discrimination.

    (a) No qualified individual with handicaps shall, on the basis of 
handicap, be excluded from participation in, be denied the benefits of, 
or otherwise be subjected to discrimination under any program or 
activity conducted by the agency.
    (b)(1) The agency, in providing any aid, benefit, or service, may 
not, directly or through contractual, licensing, or other arrangements, 
on the basis of handicap--
    (i) Deny a qualified individual with handicaps the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualified individual with handicaps an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified individual with handicaps with an aid, 
benefit, or service that is not as effective in according equal 
opportunity to obtain the same result, to gain the same benefit, or to 
reach the same level of achievement as that provided to others;
    (iv) Provide different or separate aid, benefits, or services to 
individuals with

[[Page 592]]

handicaps or to any class of individuals with handicaps than is provided 
to others unless such action is necessary to provide qualified 
individuals with handicaps with aid, benefits, or services that are as 
effective as those provided to others;
    (v) Deny a qualified individual with handicaps the opportunity to 
participate as a member of planning or advisory boards;
    (vi) Otherwise limit a qualified individual with handicaps in the 
enjoyment of any right, privilege, advantage, or opportunity enjoyed by 
others receiving the aid, benefit, or service.
    (2) The agency may not deny a qualified individual with handicaps 
the opportunity to participate in programs or activities that are no 
separate or different, despite the existence of permissibly separate or 
different programs or activities.
    (3) The agency may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration the purpose 
or effect of which would--
    (i) Subject qualified individuals with handicaps to discrimination 
on the basis of handicap; or
    (ii) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to individuals with handicaps.
    (4) The agency may not, in determining the site or location of a 
facility, make selections the purpose or effect of which would--
    (i) Exclude individuals with handicaps from, deny them the benefits 
of, or otherwise subject them to discrimination under any program or 
activity conducted by the agency; or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program or activity with respect to individuals with 
handicaps.
    (5) The agency, in the selection of procurement contractors, may not 
use criteria that subject qualified individuals with handicaps to 
discrimination on the basis of handicap.
    (6) The agency may not administer a licensing or certification 
program in a manner that subjects qualified individuals with handicaps 
to discrimination on the basis of handicap, nor may the agency establish 
requirements for the programs or activities of licensees or certified 
entities that subject qualified individuals with handicaps to 
discrimination on the basis of handicap. However, the programs or 
activities of entities that are licensed or certified by the agency are 
not, themselves, covered by this part.
    (c) The exclusion of nonhandicapped persons from the benefits of a 
program limited by Federal statute or Executive order to individuals 
with handicaps or the exclusion of a specific class of individuals with 
handicaps from a program limited by Federal statute or Executive order 
to a different class of individuals with handicaps is not prohibited by 
this part.
    (d) The agency shall administer programs and activities in the most 
integrated setting appropriate to the needs of qualified individuals 
with handicaps.



Secs. 2490.131-2490.139  [Reserved]



Sec. 2490.140  Employment.

    No qualified individual with handicaps shall, on the basis of 
handicap, be subjected to discrimination in employment under any program 
or activity conducted by the agency. The definitions, requirements, and 
procedures of section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 
791), as established by the Equal Employment Opportunity Commission in 
29 CFR part 1614, shall apply to employment in federally conducted 
programs or activities.



Secs. 2490.141-2490.148  [Reserved]



Sec. 2490.149  Program accessibility: Discrimination prohibited.

    Except as otherwise provided in Sec. 2490.150, no qualified 
individual with handicaps shall, because the agency's facilities are 
inaccessible to or unusable by individuals with handicaps, be denied the 
benefits of, be excluded from participation in, or otherwise be 
subjected to discrimination under any program or activity conducted by 
the agency.



Sec. 2490.150  Program accessibility: Existing facilities.

    (a) General. The agency shall operate each program or activity so 
that the program or activity, when viewed in its entirety, is readily 
accessible to and

[[Page 593]]

usable by individuals with handicaps. This paragraph does not--
    (1) Necessarily require the agency to make each of its existing 
facilities accessible to and usable by individuals with handicaps;
    (2) In the case of historic preservation programs, require the 
agency to take any action that would result in a substantial impairment 
of significant historic features of an historic property; or
    (3) Require the agency to take any action that it can demonstrate 
would result in a fundamental alteration in the nature of a program or 
activity or in undue financial and administrative burdens. In those 
circumstances where agency personnel believe that the proposed action 
would fundamentally alter the program or activity or would result in 
undue financial and administrative burdens, the agency has the burden of 
proving that compliance with Sec. 2490.150(a) would result in such 
alteration or burdens. The decision that compliance would result in such 
alteration or burdens must be made by the agency head or his or her 
designee after considering all agency resources available for use in the 
funding and operation of the conducted program or activity, and must be 
accompanied by a written statement of the reasons for reaching that 
conclusion. If an action would result in such an alteration or such 
burdens, the agency shall take any other action that result in such an 
alteration or such burdens but would nevertheless ensure that 
individuals with handicaps receive the benefits and services of the 
program or activity.
    (b) Methods.--(1) General. The agency may comply with the 
requirements of this section through such means as redesign of 
equipment, reassignment of services to accessible buildings, assignment 
of aides to beneficiaries, home visits, delivery of services at 
alternate accessible sites, alteration of existing facilities and 
construction of new facilities, use of accessible rolling stock, or any 
other methods that result in making its programs or activities readily 
accessible to and usable by individuals with handicaps. The agency is 
not required to make structural changes in existing facilities where 
other methods are effective in achieving compliance with this section. 
The agency, in making alterations to existing buildings, shall meet 
accessibility requirements to the extent compelled by the Architectural 
Barriers Act of 1968, as amended (42 U.S.C. 4151-4157), and any 
regulations implementing it. In choosing among available methods for 
meeting the requirements of this section, the agency shall give priority 
to those methods that offer programs and activities to qualified 
individuals with handicaps in the most integrated setting appropriate.
    (2) Historic preservation programs. In meeting the requirements of 
Sec. 2490.150(a) in historic preservation programs, the agency shall 
give priority to methods that provide physical access to individuals 
with handicaps. In cases where a physical alteration to an historic 
property is not required because of Sec. 2490.150(a)(2) or (a)(3), 
alternative methods of achieving program accessibility include--
    (i) Using audio-visual materials and devices to depict those 
portions of an historic property that cannot otherwise be made 
accessible;
    (ii) Assigning persons to guide individuals with handicaps into or 
through portions of historic properties that cannot otherwise be made 
accessible; or
    (iii) Adopting other innovative methods.
    (c) Time period for compliance. The agency shall comply with the 
obligations established under this section by January 24, 1994, except 
that where structural changes in facilities are undertaken, such changes 
shall be made by November 26, 1996, but in any event as expeditiously as 
possible.
    (d) Transition plan. In the event that structural changes to 
facilities will be undertaken to achieve program accessibility, the 
agency shall develop, by May 26, 1994, a transition plan setting forth 
the steps necessary to complete such changes. The agency shall provide 
an opportunity to interested persons, including individuals with 
handicaps or organizations representing individuals with handicaps, to 
participate in the development of the transition plan by submitting 
comments (both oral and written). A copy of the transition plan

[[Page 594]]

shall be made available for public inspection. The plan shall, at a 
minimum--
    (1) Identify physical obstacles in the agency's facilities that 
limit the accessibility of its programs or activities to individuals 
with handicaps;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period; and
    (4) Indicate the official responsible for implementation of the 
plan.



Sec. 2490.151  Program accessibility: New construction and alterations.

    Each building or part of a building that is constructed or altered 
by, on behalf of, or for the use of the agency shall be designed, 
constructed, or altered so as to be readily accessible to and usable by 
individuals with handicaps. The definitions, requirements, and standards 
of the Architectural Barriers Act (42 U.S.C. 4151-4157), as established 
in 41 CFR 101-19.600 to 101-19.607, apply to buildings covered by this 
section.



Secs. 2490.152-2490.159  [Reserved]



Sec. 2490.160  Communications.

    (a) The agency shall take appropriate steps to ensure effective 
communication with applicants, participants, personnel of other Federal 
entities, and members of the public.
    (1) The agency shall furnish appropriate auxiliary aids where 
necessary to afford an individual with handicaps an equal opportunity to 
participate in, and enjoy the benefits of, a program or activity 
conducted by the agency.
    (i) In determining what type of auxiliary aid is necessary, the 
agency shall give primary consideration to the requests of the 
individual with handicaps.
    (ii) The agency need not provide individually prescribed devices, 
readers for personal use or study, or other devices of a personal 
nature.
    (2) Where the agency communicates with applicants and beneficiaries 
by telephone, telecommunication devices for deaf persons (TDD's) or 
equally effective telecommunication systems shall be used to communicate 
with persons with impaired hearing.
    (b) The agency shall ensure that interested persons, including 
persons with impaired vision or hearing, can obtain information as to 
the existence and location of accessible services, activities, and 
facilities.
    (c) The agency shall provide signage at a primary entrance to each 
of its inaccessible facilities, directing users to a location at which 
they can obtain information about accessible facilities. The 
international symbol for accessibility shall be used at each primary 
entrance of an accessible facility.
    (d) This section does not require the agency to take any action that 
it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity or in undue financial and administrative 
burdens. In those circumstances where agency personnel believe that the 
proposed action would fundamentally alter the program or activity or 
would result in undue financial and administrative burdens, the agency 
has the burden of proving that compliance with Sec. 2490.160 would 
result in such alteration or burdens. The decision that compliance would 
result in such alteration or burdens must be made by the agency head or 
his or her designee after considering all agency resources available for 
use in the funding and operation of the conducted program or activity 
and must be accompanied by a written statement of the reasons for 
reaching that conclusion. If an action required to comply with this 
section would result in such an alteration or such burdens, the agency 
shall take any other action that would not result in such an alteration 
or such burdens but would nevertheless ensure that, to the maximum 
extent possible, individuals with handicaps receive the benefits and 
services of the program or activity.

[[Page 595]]



Secs. 2490.161-2490.169  [Reserved]



Sec. 2490.170  Compliance procedures.

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
handicap in programs and activities conducted by the agency.
    (b) The agency shall process complaints alleging violations of 
section 504 with respect to employment according to the procedures 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1614 pursuant to section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791).
    (c) The Director of Administration and Finance shall be responsible 
for coordinating implementation of this section. Complaints may be sent 
to James Madison Memorial Fellowship Foundation, 2000 K Street, NW., 
suite 303, Washington, DC 20006.
    (d) The agency shall accept and investigate all complete complaints 
for which it has jurisdiction. All complete complaints must be filed 
within 180 days of the alleged act of discrimination. The agency may 
extend this time period for good cause.
    (e) If the agency receives a complaint over which it does not have 
jurisdiction, it shall promptly notify the complainant and shall make 
reasonable efforts to refer the complaint to the appropriate Government 
entity.
    (f) The agency shall notify the Architectural and Transportation 
Barriers Compliance Board upon receipt of any complaint alleging that a 
building or facility that is subject to the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151-4157), is not readily accessible to 
and usable by individuals with handicaps.
    (g) Within 180 days of the receipt of a complete complaint for which 
it has jurisdiction, the agency shall notify the complainant of the 
results of the investigation in a letter containing--
    (1) Findings of fact and conclusions of law;
    (2) A description of a remedy for each violation found; and
    (3) A notice of the right to appeal.
    (h) Appeals of the findings of fact and conclusions of law or 
remedies must be filed by the complainant within 90 days of receipt from 
the agency of the letter required by Sec. 2490.170(g). The agency may 
extend this time for good cause.
    (i) Timely appeals shall be accepted and processed by the head of 
the agency.
    (j) The head of the agency shall notify the complainant of the 
results of the appeal within 60 days of the receipt of the request. If 
the head of the agency determines that additional information is needed 
from the complainant, he or she shall have 60 days from the date of 
receipt of the additional information to make his or her determination 
on the appeal.
    (k) The time limits cited in paragraphs (g) and (j) of this section 
may be extended with the permission of the Assistant Attorney General.
    (l) The agency may delegate its authority for conducting complaint 
investigations to other Federal agencies, except that the authority for 
making the final determination may not be delegated to another agency.

[58 FR 57699, Oct. 26, 1993]



Secs. 2490.171-2490.999  [Reserved]

[[Page 597]]



       CHAPTER XXV--CORPORATION FOR NATIONAL AND COMMUNITY SERVICE




  --------------------------------------------------------------------

Part                                                                Page
2500-2504

[Reserved]

2505            Rules implementing the Government in the 
                    Sunshine Act............................         599
2506            Claims collection...........................         602
2507            Procedures for disclosure of records under 
                    the Freedom of Information Act..........         614
2508            Implementation of the Privacy Act of 1974...         624
2510            Overall purposes and definitions............         633
2513            State Plan: Purpose, application 
                    requirements and selection criteria.....         638
2515            Service-learning program purposes...........         639
2516            School-based service-learning programs......         639
2517            Community-based service-learning programs...         647
2518            Service-learning clearinghouse..............         651
2519            Higher education innovative programs for 
                    community service.......................         652
2520            General provisions: Americorps Subtitle C 
                    programs................................         655
2521            Eligible Americorps Subtitle C program 
                    applicants and types of grants available 
                    for award...............................         656
2522            Americorps participants, programs, and 
                    applicants..............................         659
2523            Agreements with other Federal agencies for 
                    the provision of Americorps program 
                    assistance..............................         674
2524            Americorps technical assistance and other 
                    special grants..........................         676
2525            National Service Trust: Purpose and 
                    definitions.............................         678
2526            Eligibility for an education award..........         679
2527            Determining the amount of an education award         682
2528            Using an education award....................         682
2529            Payment of accrued interest.................         685
2530            Purpose and availability of grants for 
                    investment for quality and innovation 
                    activities..............................         686
2531            Innovative and special demonstration 
                    programs................................         686

[[Page 598]]

2532            Technical assistance, training, and other 
                    service infrastructure-building 
                    activities..............................         688
2533            Special activities..........................         690
2540            General administration provisions...........         690
2541            Uniform administrative requirements for 
                    grants and cooperative agreements to 
                    State and local governments.............         696
2542            Governmentwide debarment and suspension 
                    (nonprocurement) and governmentwide 
                    requirements for drug-free workplace 
                    (grants)................................         723
2543            Grants and agreements with institutions of 
                    higher education, hospitals, and other 
                    non-profit organizations................         742
2544            Solicitation and acceptance of donations....         770
2550            Requirements and general provision for State 
                    commissions, alternative administrative 
                    entities and transitional entities......         772
2551            Senior Companion Program....................         780
2552            Foster Grandparent Program..................         794
2553            The Retired and Senior Volunteer Program....         808
2555            Nondiscrimination on the basis of sex in 
                    education programs or activities 
                    receiving Federal financial assistance..         817

[[Page 599]]



PARTS 2500-2504 [RESERVED]--Table of Contents






PART 2505--RULES IMPLEMENTING THE GOVERNMENT IN THE SUNSHINE ACT--Table of Contents




Sec.
2505.1  Applicability.
2505.2  Definitions.
2505.3  To what extent are meetings of the Board open to the public?
2505.4  On what grounds may the Board close a meeting or withhold 
          information?
2505.5  What are the procedures for closing a meeting, withholding 
          information, and responding to requests by affected persons to 
          close a meeting?
2505.6  What are the procedures for making a public announcement of a 
          meeting?
2505.7  What are the procedures for changing the time or place of a 
          meeting following the public announcement?

    Authority: 5 U.S.C. 552b; 42 U.S.C. 12651c(c).

    Source: 64 FR 66403, Nov. 26, 1999, unless otherwise noted.



Sec. 2505.1  Applicability.

    (a) This part implements the provisions of section 3(a) of the 
Government in the Sunshine Act (5 U.S.C. 552b). These procedures apply 
to meetings of the Corporation's Board of Directors, or to any 
subdivision of the Board that is authorized to act on its behalf. The 
Board of Directors may waive the provisions of this part to the extent 
authorized by law.
    (b) Nothing in this part expands or limits the present rights of any 
person under the Freedom of Information Act (5 U.S.C. 552), except that 
the exemptions set forth in Sec. 2505.4 shall govern in the case of any 
request made pursuant to the Freedom of Information Act to copy or 
inspect the transcript, recording, or minutes described in Sec. 2505.5.
    (c) Nothing is this part authorizes the Corporation to withhold from 
any individual any record, including transcripts, recordings, or minutes 
required by this part, which is otherwise accessible to such individual 
under the Privacy Act (5 U.S.C. 552a).



Sec. 2505.2  Definitions.

    As used in this part:
    (a) Board means the Board of Directors established pursuant to 42 
U.S.C. 12651a, or any subdivision of the Board that is authorized to act 
on its behalf.
    (b) Chairperson means the Member elected by the Board to serve as 
Chairperson.
    (c) General Counsel means the Corporation's principal legal officer 
or other attorney acting at the designation of the Corporation's 
principal legal officer.
    (d) Corporation means the Corporation for National and Community 
Service established pursuant to 42 U.S.C. 12651.
    (e) Meeting means the deliberations of at least a quorum of the 
Corporation's Board of Directors where such deliberations determine or 
result in the joint conduct or disposition of official Corporation 
business. A meeting may be conducted under this part through telephone 
or similar communications equipment by means of which all participants 
may communicate with each other. The term meeting includes a portion 
thereof. The term meeting does not include:
    (1) Notation voting or similar consideration of business, whether by 
circulation of material to the Members individually in writing or by a 
polling of the members individually by telephone.
    (2) Action by a quorum of the Board to--
    (i) Open or to close a meeting or to release or to withhold 
information pursuant to Sec. 2505.5;
    (ii) Set an agenda for a proposed meeting;
    (iii) Call a meeting on less than seven days' notice as permitted by 
Sec. 2505.6(b); or
    (iv) Change the subject-matter or the determinations to open or to 
close a publicly announced meeting under Sec. 2505.7(b).
    (3) A gathering for the purpose of receiving briefings from the 
Corporation's staff or expert consultants, provided that Members of the 
Board do not engage in deliberations at such sessions that determine or 
result in the joint conduct or disposition of official Corporation 
business on such matters.
    (4) A gathering for the purpose of engaging in preliminary 
discussions or

[[Page 600]]

exchanges of views that do not effectively predetermine official 
Corporation action on a particular matter.
    (f) Member means a current member of the Corporation's Board of 
Directors.
    (g) Presiding Officer means the Chairperson or, in the absence of 
the Chairperson, the Vice Chairperson of the Board of Directors or other 
member authorized to act in this capacity by the Board.
    (h) Quorum means the number of Members authorized to conduct 
Corporation business pursuant to the Board's bylaws.



Sec. 2505.3  To what extent are meetings of the Board open to the public?

    The Board shall conduct meetings, as defined in Sec. 2505.2, in 
accordance with this part. Except as provided in Sec. 2505.4, the 
Board's meetings shall be open to the public. The public is invited to 
attend all meetings of the Board that are open to the public but may not 
participate in the Board's deliberations at such meetings or record any 
meeting by means of electronic, photographic, or other device.



Sec. 2505.4  On what grounds may the Board close a meeting or withhold information?

    The Board may close a meeting or withhold information that otherwise 
would be required to be disclosed under Secs. 2505.5, 2505.6 and 2505.7 
if it properly determines that an open meeting or disclosure is likely 
to--
    (a) Disclose matters that are--
    (1) Specifically authorized under criteria established by an 
Executive order to be kept secret in the interests of national defense 
or foreign policy; and
    (2) In fact properly classified pursuant to such Executive order;
    (b) Relate solely to the internal personnel rules and practices of 
the Corporation;
    (c) Disclose matters specifically exempted from disclosure by 
statute (other than 5 U.S.C. 552), provided that such statute--
    (1) Requires that the matters be withheld from the public in such a 
manner as to leave no discretion on the issue; or
    (2) Establishes particular criteria for withholding or refers to 
particular types of matters to be withheld;
    (d) Disclose trade secrets and commercial or financial information 
obtained from a person and privileged or confidential;
    (e) Involve accusing any person of a crime, or formally censuring 
any person;
    (f) Disclose information of a personal nature where disclosure would 
constitute a clearly unwarranted invasion of personal privacy;
    (g) Disclose investigatory records compiled for law enforcement 
purposes, or information which, if written, would be contained in such 
records, but only to the extent that the production of such records or 
information would--
    (1) Interfere with enforcement proceedings;
    (2) Deprive a person of a right to a fair trial or an impartial 
adjudication;
    (3) Constitute an unwarranted invasion of personal privacy;
    (4) Disclose the identity of a confidential source and, in the case 
of a record compiled by a criminal law enforcement authority in the 
course of a criminal investigation, or by an agency conducting a lawful 
national security intelligence investigation, confidential information 
furnished only by the confidential source;
    (5) Disclose investigative techniques and procedures; or
    (6) Endanger the life or physical safety of law enforcement 
personnel;
    (h) Disclose information contained in or related to examination, 
operating or condition reports prepared by, on behalf of, or for the use 
of an agency responsible for the regulation or supervision of financial 
institution;
    (i) Disclose information the premature disclosure of which would be 
likely to significantly frustrate implementation of a proposed action of 
the Corporation, except that this provision shall not apply in any 
instance where the Corporation has already disclosed to the public the 
content or nature of its proposed action, or where the Corporation is 
required by law to make such disclosure on its own initiative prior to 
taking final action; or
    (j) Specifically concerning the Corporation's issuance of a subpoena 
or

[[Page 601]]

the Corporation's participation in a civil action or proceeding, an 
action in a foreign court or international tribunal, or an arbitration, 
or the initiation, conduct, or disposition by the Corporation of a 
particular case of formal adjudication pursuant to the procedures in 5 
U.S.C. 554 or otherwise involving a determination on the record after 
opportunity for a hearing.



Sec. 2505.5  What are the procedures for closing a meeting, withholding information, and responding to requests by affected persons to close a meeting?

    (a) The Board may vote to close a meeting or withhold information 
pertaining to a meeting. Such action may be taken only when a majority 
of the entire membership of the Board votes to take such action. A 
separate vote shall be taken with respect to each action under 
Sec. 2505.4. The Board may act by taking a single vote with respect to a 
series of meetings which are proposed to be closed to the public, or 
with respect to any information concerning a series of meetings, so long 
as each meeting in the series involves the same particular matters and 
is scheduled to be held no more than thirty days after the initial 
meeting in the series. Each Member's vote under this paragraph shall be 
recorded and no proxies shall be allowed.
    (b) If your interests may be directly affected if a meeting is open 
you may request that the Board close the meeting on one of the grounds 
referred to in Sec. 2505.4(e), (f), or (g). You should submit your 
request to the Office of the General Counsel, Corporation for National 
and Community Service, 1201 New York Avenue NW, Washington, D.C. 20525. 
The Board shall, upon the request of any one of its members, determine 
by recorded vote whether to grant your request.
    (c) Within one working day of any vote taken pursuant to this 
section, the Board shall make publicly available a written copy of such 
vote reflecting the vote of each Member on the question. If a meeting is 
to be closed to the public, the Board shall, within one working day, 
make available a full written explanation of its action closing the 
meeting and a list of all persons expected to attend the meeting and 
their affiliation.
    (d) For each closed meeting, the General Counsel shall publicly 
certify that, in his or her opinion, the meeting may be closed to the 
public and shall state each relevant exemption relied upon. A copy of 
the certification shall be available for public inspection.
    (e) For each closed meeting, the Board shall issue a statement 
setting forth the time, place, and persons present. A copy of such 
statement shall be available for public inspection.
    (f)(1) For each closed meeting, with the exception of a meeting 
closed pursuant to Sec. 2505.4(h) or (j), the Board shall maintain a 
complete transcript or electronic recording adequate to record fully the 
proceedings of each meeting.
    (2) For meetings that are closed pursuant to Sec. 2505.4(h) or (j), 
the Board may maintain a set of minutes in lieu of a transcript or 
recording. Such minutes shall fully and clearly describe all matters 
discussed and shall provide a full and accurate summary of any actions 
taken, and the reasons therefor, including a description of each of the 
views expressed on any item and the record of any vote. All documents 
considered in connection with any action shall be identified in such 
minutes.
    (3) The Corporation shall make promptly available to the public, in 
a place easily accessible to the public, the transcript, electronic 
recording, or minutes of the discussion of any item on the agenda, or of 
any item of the testimony of any witness received at the meeting, except 
for such item or items of such discussion or testimony as the 
Corporation determines to contain information which may be properly 
withheld. Copies of such transcript, or minutes, or a transcription of 
such recording disclosing the identity of each speaker, shall be 
furnished to any person at the actual cost of duplication or 
transcription. The Corporation shall maintain the transcript, recording, 
or minutes for each closed meeting for at least two years or at least 
one year after the conclusion of any Corporation business acted upon at 
the meeting, whichever occurs later.

[[Page 602]]



Sec. 2505.6  What are the procedures for making a public announcement of a meeting?

    (a) For each meeting, the Board shall make a public announcement, at 
least one week before the meeting, of--
    (1) The meeting's time and place;
    (2) The matters to be considered;
    (3) Whether the meeting is to be open or closed; and
    (4) The name and business telephone number of the official 
designated by the Board to respond to requests for information about the 
meeting.
    (b) The one week advance notice required by paragraph (a) of this 
section may be reduced only if--
    (1) The Board determines by recorded vote that Board business 
requires that the meeting be scheduled in less than seven days; and
    (2) The public announcement required by paragraph (a) of this 
section is made at the earliest practicable time and posted on the 
Corporation's home page.
    (c) Immediately following a public announcement required by 
paragraph (a) of this section, the Corporation will submit for 
publication in the Federal Register a notice of the time, place, and 
subject matter of the meeting, whether the meeting is open or closed, 
any change in one of the preceding, and the name and phone number of the 
official designated by the agency to respond to requests for information 
about the meeting.



Sec. 2505.7  What are the procedures for changing the time or place of a meeting following the public announcement?

    (a) After there has been a public announcement of a meeting, the 
time or place of the meeting may be changed only if the Board publicly 
announces the change at the earliest practicable time. Such a change 
need not be determined by recorded vote.
    (b) After there has been a public announcement of a meeting, the 
subject-matter of the meeting, or the determination of the Board to open 
or to close a meeting may be changed only when--
    (1) The Board determines, by recorded vote, that Board business so 
requires and that no earlier announcement of the change was possible; 
and
    (2) The Board publicly announces the change and the vote of each 
Member at the earliest practicable time.
    (c) The deletion of any subject-matter previously announced for a 
meeting is not a change requiring the approval of the Board under 
paragraph (b) of this section.



PART 2506--CLAIMS COLLECTION--Table of Contents




     Subpart A--Definitions, Authority, Administrative Collection, 
             Compromise, Termination, and Referral of Claims

Sec.
2506.1  What definitions apply to the regulations in this part?
2506.2  What is the Corporation's authority to issue these regulations?
2506.3  What other regulations also apply to the Corporation's debt 
          collection efforts?
2506.4  Do these regulations apply to claims involving fraud or 
          misrepresentation?
2506.5  What is the extent of the Chief Executive Officer's authority to 
          compromise debts owed to the Corporation?
2506.6  What notice will I be provided if I owe a debt to the 
          Corporation?
2506.7  What interest, penalty, and administrative costs will I have to 
          pay on a debt owed to the Corporation?
2506.8  What opportunity do I have to obtain a review of my debt within 
          the Corporation?
2506.9  How can I resolve the Corporation's claim through a voluntary 
          repayment agreement?
2506.10  How will the Corporation use credit reporting agencies to 
          collect its claims?
2506.11  How will the Corporation contract for collection services?
2506.12  When will the Corporation refer claims to the DOJ?
2506.13  Will the Corporation use a cross-servicing agreement with the 
          Treasury to collect its claims?

                        Subpart B--Salary Offset

2506.20  What debts are included or excluded from coverage of these 
          regulations on salary offset?
2506.21  May I ask the Corporation to waive an overpayment that would 
          otherwise be collected by offsetting my salary as a federal 
          employee?
2506.22  What are the Corporation's procedures for salary offset?
2506.23  How will the Corporation coordinate salary offsets with other 
          agencies?

[[Page 603]]

2506.24  Under what conditions will the Corporation make a refund of 
          amounts collected by salary offset?
2506.25  Will the collection of a claim by salary offset act as a waiver 
          of my rights to dispute the claimed debt?

                      Subpart C--Tax Refund Offset

2506.30  Which debts can the Corporation refer to the Department of the 
          Treasury for collection by offsetting tax refunds?
2506.31  What are the Corporation's procedures for collecting debts by 
          tax refund offset?

                    Subpart D--Administrative Offset

2506.40  Under what circumstances will the Corporation collect amounts 
          that I owe to the Corporation (or some other federal agency) 
          by offsetting the debt against payments that the Corporation 
          (or some other federal agency) owes me?
2506.41  How will the Corporation request that my debt to the 
          Corporation be collected by offsetting against some payment 
          that another federal agency owes me?
2506.42  What procedures will the Corporation use to collect amounts I 
          owe to a federal agency by offsetting a payment that the 
          Corporation would otherwise make to me?
2506.43  When may the Corporation make an offset in an expedited manner?

    Authority: 31 U.S.C. 3711, 3716, 3720A; 42 U.S.C. 12651f.

    Source: 64 FR 4316, Jan. 28, 1999, unless otherwise noted.



     Subpart A--Definitions, Authority, Administrative Collection, 
             Compromise, Termination, and Referral of Claims



Sec. 2506.1  What definitions apply to the regulations in this part?

    As used in this part:
    (a) Administrative offset means the withholding of funds payable by 
the United States to any person (including funds payable to the United 
States on behalf of a State government), or the withholding of funds 
held by the United States for any person, in order to satisfy a debt 
owed to the United States.
    (b) Agency means an executive department or agency, the United 
States Postal Service, the Postal Rate Commission, the United States 
Senate, the United States House of Representatives, and any court, court 
administrative office, or instrumentality in the judicial or legislative 
branches of the Government, and Government corporations.
    (c) Corporation means the Corporation for National and Community 
Service.
    (d) Certification means a written debt claim form received from a 
creditor agency which requests the paying agency to offset the salary of 
an employee.
    (e) Chief Executive Officer means the Chief Executive Officer of the 
Corporation for National and Community Service, or his or her designee.
    (f) Creditor agency means an agency of the Federal Government to 
which the debt is owed.
    (g) Debt means money owed by a person to the United States, 
including a debt owed to the Corporation or to any other Federal agency.
    (h) Debtor means a person who owes a debt. Uses of the terms ``I'', 
``you,'' ``me,'' and similar references to the reader of the regulations 
in this part are meant to apply to debtors as defined in this paragraph 
(h).
    (i) Delinquent debt means a debt that has not been paid within the 
time limit prescribed by the Corporation.
    (j) Disposable pay means that part of current basic pay, special 
pay, incentive pay, retirement pay, retainer pay, or, in the case of an 
employee not entitled to basic pay, other authorized pay remaining after 
the deduction of any amount required by law to be withheld, excluding 
any garnishment under 5 CFR parts 581 and 582. The Corporation will 
deduct the following items in determining the amount of disposable pay 
that will be subject to salary offset:
    (1) Federal Social Security and Medicare taxes;
    (2) Federal, state, and local income taxes, but no more than would 
be the case if the employee claimed all dependents to which he or she is 
entitled and any additional amounts for which the employee presents 
evidence of a tax obligation supporting the additional withholding;
    (3) Health insurance premiums;
    (4) Normal retirement contributions as set forth in 5 CFR 
581.105(e);

[[Page 604]]

    (5) Normal life insurance premiums, excluding optional life 
insurance premiums; and
    (6) Levies pursuant to the Internal Revenue Code, as defined in 5 
U.S.C. 5514(d).
    (k) Employee means a current employee of an agency, including a 
current member of the Armed Forces or Reserve of the Armed Forces of the 
United States.
    (l) Federal Claims Collection Standards means the standards 
published at 4 CFR chapter II.
    (m) Paying agency means the agency of the Federal Government that 
employs the individual who owes a debt to the United States. In some 
cases, the Corporation may be both the creditor agency and the paying 
agency.
    (n) Payroll office means the payroll office in the paying agency 
that is primarily responsible for the payroll records and the 
coordination of pay matters with the appropriate personnel office with 
respect to an employee.
    (o) Person includes a natural person or persons, profit or non-
profit corporation, partnership, association, trust, estate, consortium, 
State and local government, or other entity that is capable of owing a 
debt to the United States Government; however, agencies of the United 
States are excluded.
    (p) Private collection contractor means a private debt collector 
under contract with an agency to collect a non-tax debt owed to the 
United States.
    (q) Salary offset means a payroll procedure to collect a debt under 
5 U.S.C. 5514 by deduction(s) at one or more officially established pay 
intervals from the current pay account of an employee, without his or 
her consent.
    (r) Tax refund offset means the reduction of a tax refund by the 
amount of a past-due legally enforceable debt owed to the Corporation or 
any other Federal agency.
    (s) Waiver means the cancellation, remission, forgiveness, or non-
recovery of a debt allegedly owed by a person to the Corporation or any 
other Federal agency as permitted or required by 5 U.S.C. 5584 or 
8346(b), 10 U.S.C. 2774, 32 U.S.C. 716, or any other law.



Sec. 2506.2  What is the Corporation's authority to issue these regulations?

    The Corporation is issuing regulations in this part under 42 U.S.C. 
12651f and 31 U.S.C. 3711, 3716, and 3720A. The Corporation is also 
issuing the regulations in this part in conformity with the Federal 
Claims Collection Standards, 4 CFR chapter II, which prescribe standards 
for the handling of the federal government's claims for money or 
property, including standards for administrative collection, compromise, 
termination of agency collection action, and referral to the U.S. 
Department of Justice (DOJ) for litigation.



Sec. 2506.3  What other regulations also apply to the Corporation's debt collection efforts?

    All provisions of the Federal Claims Collection Standards also apply 
to the regulations in this part. This part supplements the Federal 
Claims Collection Standards by prescribing procedures and directives 
necessary and appropriate for operations of the Corporation.



Sec. 2506.4  Do these regulations apply to claims involving fraud or misrepresentation?

    The Federal Claims Collection Standards and this part do not apply 
to any claim as to which there is an indication of fraud or 
misrepresentation, as described in the Federal Claims Collection 
Standards, unless returned to the Corporation by the DOJ to the 
Corporation for handling.



Sec. 2506.5  What is the extent of the Chief Executive Officer's authority to compromise debts owed to the Corporation?

    The Chief Executive Officer may exercise his or her compromise 
authority for those debts not exceeding $100,000, excluding interest, in 
conformity with the Federal Claims Collection Act of 1966, as amended; 
the Federal Claims Collection Standards issued thereunder; and this 
part, except where standards are established by other statutes or 
authorized regulations issued pursuant to them.

[[Page 605]]



Sec. 2506.6  What notice will I be provided if I owe a debt to the Corporation?

    (a) When the Chief Executive Officer determines that you owe a debt 
to the Corporation, he or she will send you a written notice. The notice 
will be hand-delivered or sent to you by certified mail, return receipt 
requested at the most current address known to the Corporation. The 
notice will inform you of the following:
    (1) The amount, nature, and basis of the debt, and that a designated 
Corporation official has reviewed the claim and has determined that the 
debt is valid;
    (2) That payment of your debt is due as of the date of the notice, 
and that the debt will be considered delinquent if you do not pay it 
within 30 days of the date the notice is mailed or hand-delivered;
    (3) The Corporation's policy concerning interest, penalties, and 
administrative costs, including a statement that such assessments must 
be made against you unless excused in accordance with the Federal Claims 
Collection Standards and this part;
    (4) That you have the right to inspect and copy Corporation records 
pertaining to your debt, or to receive copies of those records if 
personal inspection is impractical;
    (5) That you have the opportunity to enter into an agreement, in 
writing and signed by both you and the Chief Executive Officer, for 
voluntary repayment of the debt; and
    (6) The address, telephone number, and name of the Corporation 
official available to discuss the debt.
    (b) Notice of possible collection actions. The notice provided by 
the Chief Executive Officer under paragraph (a) of this section will 
also advise you that, if your debt (including any interest, penalties 
and administrative costs) is not paid within 60 days of the date of the 
notice, or you do not enter into a voluntary repayment agreement within 
60 days of the date of the notice, the Corporation may enforce the 
collection of the debt by any or all of the following methods:
    (1) Referral to a credit reporting agency (See Sec. 2506.10), a 
collection agency (See Sec. 2506.11), or the DOJ (See Sec. 2506.12);
    (2) If you are a Corporation employee, by deducting money from your 
disposable pay account (in the amount and with the frequency, 
approximate beginning date and duration specified by the Corporation) 
until the debt (and all accumulated interest, penalties, and 
administrative costs) is paid in full, and that such proceedings with 
respect to the debt are governed by 5 U.S.C. 5514;
    (3) If you are an employee of a federal agency other than the 
Corporation, by initiating certification procedures to implement a 
salary offset by the federal agency, as appropriate (which may not 
exceed 15 percent of the employee's disposable pay), and that such 
proceedings with respect to the debt are governed by 5 U.S.C. 5514;
    (4) By referring the debt to the U.S. Department of the Treasury 
(Treasury) for offset against any refund of overpayment of tax (see 
Subpart C of this part); or
    (5) By administrative offset (see Subpart D of this part).
    (c) Notice of opportunity for review. The notice provided by the 
Chief Executive Officer under paragraph (a) of this section will also 
advise you of the opportunity to obtain a review within the Corporation 
concerning the existence or amount of the debt, the proposed schedule 
for offset of federal employee salary payments, or whether the debt is 
past due or legally enforceable. The notice shall also advise you:
    (1) Of the name, address, and telephone number of an officer or 
employee of the Corporation who may be contacted concerning procedures 
for requesting a review;
    (2) Of the method and time period for requesting a review;
    (3) That the timely filing of a request for a review on or before 
the 60th calendar day following the date of the notice to the debtor 
will stay the commencement of collection proceedings;
    (4) Of the name and address of the officer or employee of the 
Corporation to whom you should send the request for a review;
    (5) That a final decision on the review (if one is requested) will 
be issued at the earliest practical date, but not later than 60 days 
after the receipt of

[[Page 606]]

the request for a review, unless you request, and the review official 
grants, a delay in the proceedings;
    (6) That any knowingly false or frivolous statements, 
representations, or evidence may subject you to:
    (i) Disciplinary procedures appropriate under 5 U.S.C. chapter 75, 5 
CFR part 752, or any other applicable statute or regulations;
    (ii) Penalties under the False Claims Act, 31 U.S.C. 3729-3733, or 
any other applicable statutory authority; and
    (iii) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 102, or 
any other applicable statutory authority;
    (7) Of any other rights available to you to dispute the validity of 
the debt or to have recovery of the debt waived, or remedies available 
to you under statutes or regulations governing the program for which the 
collection is being made; and
    (8) That unless there are applicable contractual or statutory 
provisions to the contrary, amounts paid on or deducted for the debt 
which are later waived or found not owed will be promptly refunded to 
you.
    (d) The Corporation will respond promptly to communications from 
you.



Sec. 2506.7  What interest, penalty, and administrative costs will I have to pay on a debt owed to the Corporation?

    (a) Interest. (1) The Corporation will assess interest on all 
delinquent debts unless prohibited by statute, regulation, or contract.
    (2) Interest begins to accrue on all debts from the date that the 
debt becomes delinquent. The Corporation will not recover interest if 
you pay the debt within 30 days of the date on which interest begins to 
accrue. Unless otherwise established in a contract, repayment agreement, 
or by statute, the Corporation shall assess interest at the rate 
established annually by the Secretary of the Treasury under 31 U.S.C. 
3717, unless a different rate is necessary to protect the interests of 
the Corporation. The Corporation will notify you of the basis for its 
finding when a different rate is necessary to protect the Corporation's 
interests.
    (3) The Chief Executive Officer may extend the 30-day period for 
payment without interest where he or she determines that such action is 
in the best interest of the Corporation. A decision to extend or not to 
extend the payment period is final and is not subject to further review.
    (b) Penalty. The Corporation will assess a penalty charge, not to 
exceed six percent a year, on any portion of a debt that is delinquent 
for more than 90 days.
    (c) Administrative costs. The Corporation will assess charges to 
cover administrative costs incurred as a result of your failure to pay a 
debt before it becomes delinquent. Administrative costs include the 
additional costs incurred in processing and handling the debt because it 
became delinquent, such as costs incurred in obtaining a credit report, 
or in using a private collection contractor, or service fees charged by 
a Federal agency for collection activities undertaken on behalf of the 
Corporation.
    (d) Allocation of payments. A partial payment by a debtor will be 
applied first to outstanding administrative costs, second to penalty 
assessments, third to accrued interest, and then to the outstanding debt 
principal.
    (e) Waiver. (1) The Chief Executive Officer may (without regard to 
the amount of the debt) waive collection of all or part of accrued 
interest, penalty, or administrative costs, if he or she determines that 
collection of these charges would be against equity and good conscience 
or not in the best interest of the Corporation.
    (2) A decision to waive interest, penalty charges, or administrative 
costs may be made at any time before a debt is paid. However, where 
these charges have been collected before the waiver decision, they will 
not be refunded. The Chief Executive Officer's decision to waive or not 
waive collection of these charges is final and is not subject to further 
review.



Sec. 2506.8  What opportunity do I have to obtain a review of my debt within the Corporation.

    (a) Request for review. If you desire a review within the 
Corporation concerning the existence or amount of the debt, the proposed 
schedule for offset of federal employee salary payments, or whether the 
debt is past due or legally

[[Page 607]]

enforceable, you must send such a request to the Corporation office 
designated in the notice to debtor. (See Sec. 2506.6(c)).
    (1) Your request for review must be signed by you and fully identify 
and explain with reasonable specificity all the facts and evidence that 
support your position.
    (2) The request for review must be received by the designated office 
on or before the 60th calendar day following the date of the notice. 
Timely filing will stay the commencement of collection procedures. If 
you file a request for a review after the expiration of the 60 day 
period provided for in this section, the Corporation will accept the 
request if you can show that the delay was the result of circumstances 
beyond his or her control or because you did not receive notice of the 
filing deadline (unless you had actual notice of the filing deadline).
    (b) Review of Corporation records related to the debt. (1) In 
accordance with Sec. 2506.6, if you want to inspect or copy Corporation 
records related to the debt, you must send a letter to the official 
designated in the notice to the debtor stating his or her intention. 
Your letter must be received within 30 calendar days after the date of 
the notice to debtor.
    (2) In response to a timely request submitted by the debtor, the 
designated official will notify you of the location and time when you 
may inspect and copy records related to the debt.
    (3) If personal inspection is impractical, reasonable arrangements 
will be made to send you copies of those records.
    (c) Review official. The Chief Executive Officer shall designate an 
officer or employee of the Corporation (who was not involved in the 
determination of the debt) as the review official. When required by law 
or regulation, the Corporation may request an administrative law judge 
to conduct the review, or may obtain a review official who is an 
official, employee, or agent of the United States (but who is not under 
the supervision or control of the Chief Executive Officer). However, 
unless the review is conducted by an official or employee of the 
Corporation, any unresolved dispute you have regarding whether all or 
part of the debt is past due or legally enforceable (for purposes of 
collection by tax refund offset under Sec. 2506.31), must be referred to 
the Chief Executive Officer for ultimate administrative disposition, and 
the Chief Executive Officer must directly notify you of his or her 
determination.
    (d) Review procedure. After you request a review, the reviewing 
official will notify you of the form of the review to be provided. The 
reviewing official shall determine the type of review to be conducted 
(i.e. whether an oral hearing is required), and shall conduct the review 
in accordance with the standards included in 4 CFR 102.3(c). If the 
review will include an oral hearing, the notice will set forth the date, 
time, and location of the hearing. If the review will be on a written 
record, you will be notified that you should submit arguments and 
evidence in writing to the review official by a specified date after 
which the record will be closed. This date will give you reasonable time 
to submit documentation.
    (e) Date of decision. The reviewing official will issue a written 
decision, based upon either the written record or documentary evidence 
and information developed at an oral hearing, as soon as practical, but 
not later than 60 days after the date on which the Corporation received 
your request for a review, unless you request and the review official 
grants a delay in the proceedings.
    (f) Content of review decision. The review official shall prepare a 
written decision that will include:
    (1) A statement of the facts presented to support the origin, 
nature, and amount of the debt;
    (2) The reviewing official's findings, analysis, and conclusions; 
and
    (3) The terms of any repayment schedules, if applicable.
    (g) Interest, penalty, and administrative cost accrual during review 
period. During the review period, interest, penalties, and 
administrative costs authorized by law will continue to accrue.

[[Page 608]]



Sec. 2506.9  How can I resolve the Corporation's claim through a voluntary repayment agreement?

    In response to a notice of a debt owed to the Corporation, you may 
propose to the Corporation you be allowed to repay a debt through a 
voluntary payment agreement in lieu of the Corporation taking other 
collection actions under this part.
    (a) Your request to enter into a voluntary repayment must:
    (1) Admit the existence of the debt; and
    (2) Either propose payment of the debt (together with interest, 
penalties, and administrative costs) in a lump sum, or set forth a 
proposed repayment schedule.
    (b) The Corporation will consider a request to enter into a 
voluntary repayment agreement consistent with the standards in 4 CFR 
102.11. The Chief Executive Officer may request additional information 
from you in order to make a determination of whether to accept a 
voluntary repayment agreement, including requesting financial statements 
if you request to make payments in installments. It is within the Chief 
Executive Officer's discretion to accept a repayment agreement instead 
of proceeding with other debt collection actions under this part, and to 
set the necessary terms of any voluntary repayment agreement. At the 
Corporation's option, you may be required to enter into a confess-
judgment note or bond of indemnity with surety as part of an agreement 
to make payments in installments. Notwithstanding the provisions of this 
section, any reduction or compromise of a claim will be governed by 31 
U.S.C. 3711.



Sec. 2506.10  How will the Corporation use credit reporting agencies to collect its claims?

    (a) The Corporation may report delinquent debts to appropriate 
credit reporting agencies by providing the following information:
    (1) A statement that the debt is valid and is overdue;
    (2) The name, address, taxpayer identification number, and any other 
information necessary to establish the identity of the debtor;
    (3) The amount, status, and history of the debt; and
    (4) The program or pertinent activity under which the debt arose.
    (b) Before disclosing debt information to a credit reporting agency, 
the Corporation will:
    (1) Take reasonable action to locate the debtor if a current address 
is not available; and
    (2) If a current address is available, provide the notice required 
under Sec. 2506.6.
    (c) At the time debt information is submitted to a credit reporting 
agency, the Corporation will provide a written statement to the 
reporting agency that all required actions have been taken. In addition, 
the Corporation will, thereafter, ensure that the credit reporting 
agency is promptly informed of any substantive change in the conditions 
or amount of the debt, and promptly verify or correct information 
relevant to the claim.
    (d) If a debtor disputes the validity of the debt, the credit 
reporting agency will refer the matter to the appropriate Corporation 
official. The credit reporting agency will exclude the debt from its 
reports until the Corporation certifies in writing that the debt is 
valid.



Sec. 2506.11  How will the Corporation contract for collection services?

    The Corporation will use the services of a private collection 
contractor where it determines that such use is in the best interest of 
the Corporation. When the Corporation determines that there is a need to 
contract for collection services, it will--
    (a) Retain sole authority to:
    (1) Resolve any dispute with the debtor regarding the validity of 
the debt;
    (2) Compromise the debt;
    (3) Suspend or terminate collection action;
    (4) Refer the debt to the DOJ for litigation; and
    (5) Take any other action under this part which does not result in 
full collection of the debt;
    (b) Require the contractor to comply with the Privacy Act of 1974, 
as amended, to the extent specified in 5 U.S.C. 552a(m), with applicable 
Federal and

[[Page 609]]

State laws pertaining to debt collection practices (e.g., the Fair Debt 
Collection Practices Act (15 U.S.C. 1692-1692o)), and with applicable 
regulations of the Corporation in this chapter;
    (c) Require the contractor to account accurately and fully for all 
amounts collected; and
    (d) Require the contractor to provide to the Corporation, upon 
request, all data and reports contained in its files relating to its 
collection actions on a debt.



Sec. 2506.12  When will the Corporation refer claims to the DOJ?

    The Chief Executive Officer will refer to the DOJ for litigation all 
claims on which aggressive collection actions have been taken but which 
could not be collected, compromised, suspended, or terminated. Referrals 
will be made as early as possible, consistent with aggressive 
Corporation collection action, and within the period for bringing a 
timely suit against the debtor.



Sec. 2506.13  Will the Corporation use a cross-servicing agreement with the Treasury to collect its claims?

    Yes. The Corporation will enter into a cross-servicing agreement 
with the Treasury which will authorize the Treasury to take all of the 
debt collection actions described in this part. These debt collection 
services will be provided to the Corporation in accordance with 31 
U.S.C. Chapter 37.



                        Subpart B--Salary Offset



Sec. 2506.20  What debts are included or excluded from coverage of these regulations on salary offset?

    (a) The regulations in this subpart provide Corporation procedures 
for the collection by salary offset of a federal employee's pay to 
satisfy certain debts owed to the Corporation or to other federal 
agencies.
    (b) The regulations in this subpart apply to collections by the 
Chief Executive Officer, from:
    (1) Federal employees who owe debts to the Corporation; and
    (2) Employees of the Corporation who owe debts to other federal 
agencies.
    (c) The regulations in subpart A and this subpart do not apply to 
debts arising under the Internal Revenue Code of 1986, as amended (title 
26, United States Code); the Social Security Act (42 U.S.C. 301 et 
seq.); the tariff laws of the United States; or to any case where 
collection of a debt by salary offset is explicitly provided for or 
prohibited by another statute (e.g., travel advances in 5 U.S.C. 5705 
and employee training expenses in 5 U.S.C. 4108).
    (d) Nothing in the regulations in this subpart precludes the 
compromise, suspension, or termination of collection actions under the 
standards implementing the Federal Claims Collection Act (31 U.S.C. 3711 
et seq., 4 CFR parts 101-105, 38 CFR 1.900-1.994).
    (e) A levy pursuant to the Internal Revenue Code takes precedence 
over a salary offset under this subpart, as provided in 5 U.S.C. 
5514(d).
    (f) This subpart does not apply to any adjustment to pay arising out 
of an employee's election of coverage or a change in coverage under a 
Federal benefits program requiring periodic deductions from pay, if the 
amount to be recovered was accumulated over four or fewer pay periods.



Sec. 2506.21  May I ask the Corporation to waive an overpayment that would otherwise be collected by offsetting my salary as a federal employee?

    Yes, the regulations in this subpart do not preclude an employee 
from requesting waiver of an overpayment under 5 U.S.C. 5584 or 8346(b), 
10 U.S.C. 2774, 32 U.S.C. 716, or under other statutory provisions 
pertaining to the particular debts being collected.



Sec. 2506.22  What are the Corporation's procedures for salary offset?

    (a) The Corporation will coordinate salary deductions under this 
subpart as appropriate.
    (b) The Corporation's payroll office will determine the amount of an 
employee's disposable pay and will implement the salary offset.
    (c) Deductions will begin within three official pay periods 
following receipt by the Corporation's payroll office of certification 
of debt from the creditor agency.
    (d) Types of collection--

[[Page 610]]

    (1) Lump-sum offset. If the amount of the debt is equal to or less 
than 15 percent of disposable pay, the debt generally will be collected 
through one lump-sum offset.
    (2) Installment deductions. Installment deductions will be made over 
a period not greater than the anticipated period of employment. The size 
and frequency of installment deductions will bear a reasonable relation 
to the size of the debt and the employee's ability to pay. However, the 
amount deducted from any period will not exceed 15 percent of the 
disposable pay from which the deduction is made unless the employee has 
agreed in writing to the deduction of a greater amount.
    (3) Deductions from final check. A deduction exceeding the 15 
percent disposable pay limitation may be made from any final salary 
payment under 31 U.S.C. 3716 and the Federal Claims Collection 
Standards, in order to liquidate the debt, whether the employee is being 
separated voluntarily or involuntarily.
    (4) Deductions from other sources. If an employee subject to salary 
offset is separated from the Corporation, and the balance of the debt 
cannot be liquidated by offset of the final salary check, the 
Corporation may offset any later payments of any kind against the 
balance of the debt, as allowed by 31 U.S.C. 3716 and the Federal Claims 
Collection Standards.
    (e)  Multiple debts. In instances where two or more creditor 
agencies are seeking salary offsets, or where two or more debts are owed 
to a single creditor agency, the Corporation's payroll office may, at 
its discretion, determine whether one or more debts should be offset 
simultaneously within the 15 percent limitation.



Sec. 2506.23  How will the Corporation coordinate salary offsets with other agencies?

    (a) Responsibilities of the Corporation as the creditor agency. Upon 
completion of the procedures established in the regulations in this 
subpart and pursuant to 5 U.S.C. 5514, the Corporation must submit a 
debt claim to a paying agency.
    (1) The Corporation must include in its claim a certification, in 
writing, that:
    (i) The employee owes the debt;
    (ii) The amount and basis of the debt;
    (iii) The date the Corporation's right to collect the debt first 
accrued;
    (iv) That the Corporation's regulations in this subpart have been 
approved by the Office of Personnel Management under 5 CFR part 550, 
subpart K;
    (2) If the collection must be made in installments, the 
Corporation's claim will also advise the paying agency of the amount or 
percentage of disposable pay to be collected in each installment. The 
Corporation may also advise the paying agency of the number of 
installments to be collected, and the date of the first installment if 
that date is other than the next officially established pay period.
    (3) The Corporation shall also include in its claim either:
    (i) The employee's written consent to the salary offset;
    (ii) The employee's signed statement acknowledging receipt of the 
procedures required by 5 U.S.C. 5514; or
    (iii) Information regarding the completion of procedures required by 
5 U.S.C. 5514, including the actions taken and the dates of those 
actions.
    (4) If the employee is in the process of separating and has not 
received a final salary check or other final payment(s) from the paying 
agency, the Corporation must submit its debt claim to the paying agency 
for collection under 31 U.S.C. 3716. The paying agency will (under its 
regulations adopted under 5 U.S.C. 5514 and 5 CFR part 550, subpart K), 
certify the total amount of its collection on the debt and notify the 
employee and the Corporation. If the paying agency's collection does not 
fully satisfy the debt, and the paying agency is aware that the debtor 
is entitled to payments from the Civil Service Retirement and Disability 
Fund or other similar payments that may be due the debtor employee from 
other Federal Government sources, then (under its regulations adopted 
under 5 U.S.C. 5514 and 5 CFR part 550, subpart K), the paying agency 
will provide written notice of the outstanding debt to the agency 
responsible

[[Page 611]]

for making the other payments to the debtor employee. The written notice 
will state that the employee owes a debt, the amount of the debt, and 
that the provisions of this section have been fully complied with. 
However, the Corporation must submit a properly certified claim under 
this paragraph (a)(4) to the agency responsible for making the payments 
before the collection can be made.
    (5) Separated employee. If the employee is already separated and all 
payments due from his or her former paying agency have been paid, the 
Corporation may request, unless otherwise prohibited, that money due and 
payable to the employee from the Civil Service Retirement and Disability 
Fund (5 CFR part 831, subpart R, or 5 CFR part 845, subpart D) or other 
similar funds, be administratively offset to collect the debt.
    (6) Employee transfer. When an employee transfers from one paying 
agency to another paying agency, the Corporation will not repeat the due 
process procedures described in 5 U.S.C. 5514 and this subpart to resume 
the collection. The Corporation will submit a properly certified claim 
to the new paying agency and will subsequently review the debt to make 
sure the collection is resumed by the new paying agency.
    (b) Responsibility of the Corporation as the paying agency. (1) 
Complete claim. When the Corporation receives a certified claim from a 
creditor agency (under the creditor agency's regulations adopted under 5 
U.S.C. 5514 and 5 CFR part 550, subpart K), deductions should be 
scheduled to begin within three officially established pay intervals. 
Before deductions can begin, the employee will receive a written notice 
from the Corporation including:
    (i) A statement that the Corporation has received a certified debt 
claim from the creditor agency;
    (ii) The amount of the debt claim;
    (iii) The date salary offset deductions will begin; and
    (iv) The amount of such deductions.
    (2) Incomplete claim. When the Corporation receives an incomplete 
certification of debt from a creditor agency, the Corporation will 
return the debt claim with a notice that the creditor agency must comply 
with the procedures required under 5 U.S.C. 5514 and 5 CFR part 550, 
subpart K, and must properly certify a debt claim to the Corporation 
before the Corporation will take action to collect from the employee's 
current pay account.
    (3) Review. The Corporation is not authorized to review the merits 
of the creditor agency's determination with respect to the amount or 
validity of the debt certified by the creditor agency.
    (4) Employees who transfer from the Corporation to another paying 
agency. If, after the creditor agency has submitted the debt claim to 
the Corporation, the employee transfers from the Corporation to a 
different paying agency before the debt is collected in full, the 
Corporation will certify the total amount collected on the debt and 
notify the employee and the creditor agency in writing. The notification 
to the creditor agency will include information on the employee's 
transfer.



Sec. 2506.24  Under what conditions will the Corporation make a refund of amounts collected by salary offset?

    If the Corporation is the creditor agency, it will promptly refund 
any amount deducted under the authority of 5 U.S.C. 5514, when:
    (a) The debt is waived or all or part of the funds deducted are 
otherwise found not to be owed (unless expressly prohibited by statute 
or regulation); or
    (b) An administrative or judicial order directs the Corporation to 
make a refund.
    (c) Unless required or permitted by law or contract, refunds under 
this section will not bear interest.



Sec. 2506.25  Will the collection of a claim by salary offset act as a waiver of my rights to dispute the claimed debt?

    Your involuntary payment of all or any portion of a debt being 
collected under this subpart will not be construed as a waiver of any 
rights which you may have under 5 U.S.C. 5514 or any other provisions of 
a written contract or law, unless there are statutory or contractual 
provisions to the contrary.

[[Page 612]]



                      Subpart C--Tax Refund Offset



Sec. 2506.30  Which debts can the Corporation refer to the Department of the Treasury for collection by offsetting tax refunds?

    (a) The regulations in this subpart implement 31 U.S.C. 3720A which 
authorizes the Treasury to reduce a tax refund by the amount of a past-
due legally enforceable debt owed to a Federal agency.
    (b) For purposes of this section, a past-due legally enforceable 
debt referable to the Treasury for tax refund offset is a debt that is 
owed to the Corporation; and:
    (1) Is at least $25.00 dollars;
    (2) Except in the case of a judgment debt, has been delinquent for 
at least three months and will not have been delinquent more than 10 
years at the time the offset is made;
    (3) Cannot be currently collected under the salary offset provisions 
of 5 U.S.C. 5514;
    (4) Is ineligible for administrative offset under 31 U.S.C. 3716(a) 
by reason of 31 U.S.C. 3716(c)(2) or cannot be collected by 
administrative offset under 31 U.S.C. 3716(a) by the Corporation against 
amounts payable to the debtor by the Corporation;
    (5) With respect to which the Corporation has given the debtor at 
least 60 days to present evidence that all or part of the debt is not 
past due or legally enforceable, has considered evidence presented by 
the debtor, and has determined that an amount of the debt is past due 
and legally enforceable;
    (6) Which has been disclosed by the Corporation to a credit 
reporting agency as authorized by 31 U.S.C. 3711(e), unless the credit 
reporting agency would be prohibited from reporting information 
concerning the debt by reason of 15 U.S.C. 1681c;
    (7) With respect to which the Corporation has notified or has made a 
reasonable attempt to notify the debtor that:
    (i) The debt is past due, and
    (ii) Unless repaid within 60 days thereafter, the debt will be 
referred to the Treasury for offset against any refund of overpayment of 
tax; and
    (8) All other requirements of 31 U.S.C. 3720A and the Treasury 
regulations relating to the eligibility of a debt for tax return offset 
have been satisfied (31 CFR 285.2).



Sec. 2506.31  What are the Corporation's procedures for collecting debts by tax refund offset?

    (a) The Chief Executive Officer will be the point of contact with 
the Treasury for administrative matters regarding the offset program.
    (b) The Corporation will ensure that the procedures prescribed by 
the Treasury are followed in developing information about past-due debts 
and submitting the debts to the Treasury.
    (c) The Corporation will submit a notification of a taxpayer's 
liability for past-due legally enforceable debt to the Treasury which 
will contain:
    (1) The name and taxpayer identifying number (as defined in section 
6109 of the Internal Revenue Code, 26 U.S.C. 6109) of the person who is 
responsible for the debt;
    (2) The dollar amount of the past-due and legally enforceable debt;
    (3) The date on which the original debt became past due;
    (4) A statement certifying that, with respect to each debt reported, 
all of the requirements of eligibility of the debt for referral for the 
refund offset have been satisfied. (See Sec. 2506.30(b)). For purposes 
of this section, notice that collection of the debt is affected by a 
bankruptcy proceeding involving the individual will bar referral of the 
debt to the Treasury.
    (d) The Corporation shall promptly notify the Treasury to correct 
Corporation data submitted when it:
    (1) Determines that an error has been made with respect to a debt 
that has been referred;
    (2) Receives or credits a payment on the debt; or
    (3) Receives notice that the person owing the debt has filed for 
bankruptcy under Title 11 of the United States Code or has been 
adjudicated bankrupt and the debt has been discharged.
    (e) When advising debtors of an intent to refer a debt to the 
Treasury for offset, the Corporation will also advise the debtors of 
remedial actions available to defer or prevent the offset from taking 
place.

[[Page 613]]



                    Subpart D--Administrative Offset



Sec. 2506.40  Under what circumstances will the Corporation collect amounts 

that I owe to the Corporation (or some other federal agency) by offsetting the debt 
          against payments that the Corporation (or some other federal 
          agency) owes me?

    (a) The regulations in this subpart apply to the collection of any 
debts you owe to the Corporation, or to any request from another federal 
agency that the Corporation collect a debt you owe by offsetting your 
debt against a payment the Corporation owes you. Administrative offset 
is authorized under section 5 of the Federal Claims Collection Act of 
1966, as amended (31 U.S.C. 3716). The Corporation shall carry out 
administrative offset in accordance with the provisions of the Federal 
Claims Collection Standards; the regulations in this subpart are 
intended only to supplement the provisions of the Federal Claims 
Collection Standards.
    (b) The Chief Executive Officer, after attempting to collect a debt 
you owe to the Corporation under section 3(a) of the Federal Claims 
Collection Act of 1966, as amended (31 U.S.C. 3711(a)), may collect the 
debt by administrative offset, subject to the following:
    (1) The debt you owe is certain in amount; and
    (2) It is in the best interest of the Corporation to collect your 
debt by administrative offset because of the decreased costs of 
collection and acceleration in the payment of the debt.
    (c) The Chief Executive Officer may initiate administrative offset 
with regard to debts you owe to another federal agency. The head of the 
creditor agency, or his or her designee, must submit a written request 
for the offset with a certification that the debt exists and that you 
have been afforded the necessary due process rights.
    (d) The Chief Executive Officer may request another federal agency 
that holds funds payable to you to instead pay those funds to the 
Corporation in settlement of your debt. The Corporation will provide 
certification that:
    (1) The debt exists; and
    (2) You have been afforded the necessary due process rights.
    (e) No collection by administrative offset will be made on any debt 
that has been outstanding for more than 10 years unless facts material 
to the Corporation or a federal agency's right to collect the debt were 
not known, and reasonably could not have been known, by the official or 
officials responsible for discovering and collecting the debt.
    (f) The regulations in this subpart do not apply to:
    (1) A case in which administrative offset of the type of debt 
involved is explicitly provided for or prohibited by another statute; or
    (2) Debts owed to the Corporation by federal agencies or by any 
State or local government.



Sec. 2506.41  How will the Corporation request that my debt to the Corporation be collected by offsetting against some payment that another federal agency owes 
          me?

    The Chief Executive Officer may request that funds due and payable 
to you by another federal agency instead be paid to the Corporation in 
payment of a debt you owe to the Corporation. In requesting 
administrative offset, the Corporation, as creditor, will certify in 
writing to the federal agency that is holding funds for you:
    (a) That you owe the debt;
    (b) The amount and basis of the debt; and
    (c) That the Corporation has complied with the requirements of 31 
U.S.C. 3716, its own administrative offset regulations in this subpart, 
and the applicable provisions of the Federal Claims Collection Standards 
with respect to providing the debtor with due process.



Sec. 2506.42  What procedures will the Corporation use to collect amounts I owe to a federal agency by offsetting a payment that the Corporation would otherwise 
          make to me?

    Any federal agency may request that the Corporation administratively 
offset funds due and payable to you in order to collect a debt you owe 
to that agency. The Corporation will initiate the requested offset only:
    (a) Upon receipt of written certification from the creditor agency 
stating:
    (1) That you owe the debt;

[[Page 614]]

    (2) The amount and basis of the debt;
    (3) That the agency has prescribed regulations for the exercise of 
administrative offset; and
    (4) That the agency has complied with its own administrative offset 
regulations and with the applicable provisions of the Federal Claims 
Collection Standards, including providing you with any required hearing 
or review; and
    (b) Upon a determination by the Chief Executive Officer that 
offsetting funds payable to you by the Corporation in order to collect a 
debt owed by you would be in the best interest of the United States as 
determined by the facts and circumstances of the particular case, and 
that such an offset would not otherwise be contrary to law.



Sec. 2506.43  When may the Corporation make an offset in an expedited manner?

    The Corporation may effect an administrative offset against a 
payment to be made to you before completion of the procedures required 
by Secs. 2506.41 and 2506.42 if failure to take the offset would 
substantially jeopardize the Corporation's ability to collect the debt 
and the time before the payment is to be made does not reasonably permit 
the completion of those procedures. An expedited offset will be promptly 
followed by the completion of those procedures. Amounts recovered by 
offset, but later found not to be owed to the Corporation, will be 
promptly refunded.



PART 2507--PROCEDURES FOR DISCLOSURE OF RECORDS UNDER THE FREEDOM OF INFORMATION ACT--Table of Contents




Sec.
2507.1  Definitions.
2507.2  What is the purpose of this part?
2507.3  What types of records are available for disclosure to the 
          public?
2507.4  How are requests for records made?
2507.5  How does the Corporation process requests for records?
2507.6  Under what circumstances may the Corporation extend the time 
          limits for an initial response?
2507.7  How does one appeal the Corporation's denial of access to 
          records?
2507.8  How are fees determined?
2507.9  What records will be denied disclosure under this part?
2507.10  What records are specifically exempt from disclosure?
2507.11  What are the procedures for the release of commercial business 
          information?
2507.12  Authority.

Appendix A to Part 2507--Freedom of Information Act Request Letter 
          (Sample)
Appendix B to Part 2507--Freedom of Information Act Appeal for Release 
          of Information (Sample)

    Authority: 42 U.S.C. 12501 et seq.

    Source: 63 FR 26489, May 13, 1998, unless otherwise noted.



Sec. 2507.1  Definitions.

    As used in this part, the following definitions shall apply:
    (a) Act means section 552 of Title 5, United States Code, sometimes 
referred to as the ``Freedom of Information Act'', and Pub. L. 104-231, 
110 Stat. 3048, sometimes referred to as the ``Electronic Freedom of 
Information Act Amendments of 1996.''
    (b) Agency means any executive department, military department, 
government corporation, or other establishment in the executive branch 
of the Federal Government, or any independent regulatory agency. Thus, 
the Corporation is a Federal agency.
    (c) Commercial use request means a request from, or on behalf of, a 
person who seeks information for a use or purpose that furthers the 
commercial, trade, or profit interests of the requester or the person on 
whose behalf the request is made. The use to which the requester will 
put the records sought will be considered in determining whether the 
request is a commercial use request.
    (d) Corporation means the Corporation for National and Community 
Service.
    (e) Educational institution means a pre-school, elementary or 
secondary school, institution of undergraduate or graduate higher 
education, or institution of professional or vocational education, which 
operates a program of scholarly research.
    (f) Electronic data means records and information (including e-mail) 
which

[[Page 615]]

are created, stored, and retrievable by electronic means.
    (g) Freedom of Information Act Officer (FOIA Officer) means the 
Corporation official who has been delegated the authority to make the 
initial determination on whether to release or withhold records, and to 
assess, waive, or reduce fees in response to FOIA requests.
    (h) Non-commercial scientific institution means an institution that 
is not operated substantially for purposes of furthering its own or 
someone else's business trade, or profit interests, and that is operated 
for purposes of conducting scientific research whose results are not 
intended to promote any particular product or industry.
    (i) Public interest means the interest in obtaining official 
information that sheds light on an agency's performance of its statutory 
duties because the information falls within the statutory purpose of the 
FOIA to inform citizens about what their government is doing.
    (j) Record includes books, brochures, electronic mail messages, 
punch cards, magnetic tapes, cards, discs, paper tapes, audio or video 
recordings, maps, pamphlets, photographs, slides, microfilm, and motion 
pictures, or other documentary materials, regardless of physical form or 
characteristics, made or received by the Corporation pursuant to Federal 
law or in connection with the transaction of public business and 
preserved by the Corporation as evidence of the organization, functions, 
policies, decisions, procedures, operations, programs, or other 
activities. Record does not include objects or articles such as tangible 
exhibits, models, equipment, or processing materials; or formulas, 
designs, drawings, or other items of valuable property. Record does not 
include books, magazines, pamphlets or other materials acquired solely 
for reference purposes. Record does not include personal records of an 
individual not subject to agency creation or retention requirements, 
created and maintained primarily for the convenience of an agency 
employee, and not distributed to other agency employees for their 
official use. Record does not include information stored within a 
computer for which there is no existing computer program for retrieval 
of the requested information. A record must exist and be in the 
possession and control of the Corporation at the time of the request to 
be considered subject to this part and the FOIA. There is no obligation 
to create, compile, or obtain a record to satisfy a FOIA request. See 
Sec. 2507.5(d) with respect to creating a record in the electronic 
environment.
    (k) Representative of the news media means a person who is actively 
gathering information for an entity organized to publish, broadcast or 
otherwise disseminate news to the public. News media entities include 
television and radio broadcasters, publishers of periodicals who 
distribute their products to the general public or who make their 
products available for purchase or subscription by the general public, 
and entities that may disseminate news through other media (e.g., 
electronic dissemination of text). Freelance journalists will be treated 
as representatives of a new media entity if they can show a likelihood 
of publication through such an entity. A publication contract would be 
the clearest proof, but the Corporation may also look to the past 
publication record of a requester in making this determination.
    (l) FOIA request means a written request for Corporation records, 
made by any person, including a member of the public (U.S. or foreign 
citizen), an organization, or a business, but not including a Federal 
agency, an order from a court, or a fugitive from the law, that either 
explicitly or implicitly involves the FOIA, or this part. Written 
requests may be received by postal service or by facsimile.
    (m) Review means the process of examining records located in 
response to a request to determine whether any record or portion of a 
record is permitted to be withheld. It also includes processing records 
for disclosure (i.e., excising portions not subject to disclosure under 
the Act and otherwise preparing them for release). Review does not 
include time spent resolving legal or policy issues regarding the 
application of exemptions under the Act.
    (n) Search means looking for records or portions of records 
responsive to a request. It includes reading and interpreting a request, 
and also page-by-page and line-by-line examination to

[[Page 616]]

identify responsive portions of a document. However, it does not include 
line-by-line examination where merely duplicating the entire page would 
be a less expensive and quicker way to comply with the request.



Sec. 2507.2  What is the purpose of this part?

    The purpose of this part is to prescribe rules for the inspection 
and release of records of the Corporation for National and Community 
Service pursuant to the Freedom of Information Act (``FOIA''), 5 U.S.C. 
552, as amended. Information customarily furnished to the public in the 
regular course of the Corporation's official business, whether hard copy 
or electronic records which are available to the public through an 
established distribution system, or through the Federal Register, the 
National Technical Information Service, or the Internet, may continue to 
be furnished without processing under the provisions of the FOIA or 
complying with this part.



Sec. 2507.3  What types of records are available for disclosure to the public?

    (a) (1) The Corporation will make available to any member of the 
public who requests them, the following Corporation records:
    (i) All publications and other documents provided by the Corporation 
to the public in the normal course of agency business will continue to 
be made available upon request to the Corporation;
    (ii) Final opinions, including concurring and dissenting opinions, 
as well as orders, made in the adjudication of administrative cases;
    (iii) Statements of policy and interpretation adopted by the agency 
and not published in the Federal Register;
    (iv) Administrative staff manuals and instructions to the staff that 
affect a member of the public; and
    (v) Copies of all records, regardless of form or format, which, 
because of the nature of their subject matter, the agency determines 
have become or are likely to become the subject of subsequent requests 
for substantially the same records.
    (2) Copies of a current index of the materials in paragraphs 
(a)(1)(i) through (v) of this section that are maintained by the 
Corporation, or any portion thereof, will be furnished or made available 
for inspection upon request.
    (b) To the extent necessary to prevent a clearly unwarranted 
invasion of personal privacy, the Corporation may delete identifying 
details from materials furnished under this part.
    (c) Brochures, leaflets, and other similar published materials shall 
be furnished to the public on request to the extent they are available. 
Copies of any such materials which are out of print shall be furnished 
to the public at the cost of duplication, provided, however, that, in 
the event no copy exists, the Corporation shall not be responsible for 
reprinting the document.
    (d) All records of the Corporation which are requested by a member 
of the public in accordance with the procedures established in this part 
shall be duplicated for the requester, except to the extent that the 
Corporation determines that such records are exempt from disclosure 
under the Act.
    (e) The Corporation will not be required to create new records, 
compile lists of selected items from its files, or provide a requester 
with statistical or other data (unless such data has been compiled 
previously and is available in the form of a record.)
    (f) These records will be made available for public inspection and 
copying in the Corporation's reading room located at the Corporation for 
National and Community Service, 1201 New York Avenue, NW., Room 8200, 
Washington, D.C. 20525, during the hours of 9:30 a.m. to 4:00 p.m., 
Monday through Friday, except on official holidays.
    (g) Corporation records will be made available to the public unless 
it is determined that such records should be withheld from disclosure 
under subsection 552(b) of the Act and or in accordance with this part.



Sec. 2507.4  How are requests for records made?

    (a) How made and addressed. (1) Requests for Corporation records 
under the Act must be made in writing, and

[[Page 617]]

can be mailed, hand-delivered, or received by facsimile, to the FOIA 
Officer, Corporation for National and Community Service, Office of the 
General Counsel, 1201 New York Avenue, N.W., Room 8200, Washington, D.C. 
20525. (See Appendix A for an example of a FOIA request.) All such 
requests, and the envelopes in which they are sent, must be plainly 
marked ``FOIA Request''. Hand-delivered requests will be received 
between 9 a.m. and 4 p.m., Monday through Friday, except on official 
holidays. Although the Corporation maintains offices throughout the 
continental United States, all FOIA requests must be submitted to the 
Corporation's Headquarters office in Washington, DC.
    (2) Corporation records that are available in the Corporation's 
reading room will also be made available for public access through the 
Corporation's ``electronic reading room'' internet site under ``Resource 
Links''. The following address is the Corporation's Internet Web site: 
http://www.nationalservice.org.
    (b) Request must adequately describe the records sought. A request 
must describe the records sought in sufficient detail to enable 
Corporation personnel to locate the records with reasonable effort, and 
without unreasonable burden to or disruption of Corporation operations. 
Among the kinds of identifying information which a requester may provide 
are the following:
    (1) The name of the specific program within the Corporation which 
may have produced or may have custody of the record (e.g., 
AmeriCorps*State/National Direct, AmeriCorps*NCCC (National Civilian 
Community Corps), AmeriCorps*VISTA (Volunteers In Service To America), 
Learn and Serve America, National Senior Service Corps (NSSC), Retired 
and Senior Volunteer Program (RSVP), Foster Grandparent Program (FGP), 
Senior Companion Program (SCP), and HUD Hope VI);
    (2) The specific event or action, if any, to which the record 
pertains;
    (3) The date of the record, or an approximate time period to which 
it refers or relates;
    (4) The type of record (e.g. contract, grant or report);
    (5) The name(s) of Corporation personnel who may have prepared or 
been referenced in the record; and
    (6) Citation to newspapers or other publications which refer to the 
record.
    (c) Agreement to pay fees. The filing of a request under this 
section shall be deemed to constitute an agreement by the requester to 
pay all applicable fees, up to $25.00, unless a waiver of fees is sought 
in the request letter. When filing a request, a requester may agree to 
pay a greater amount, if applicable. (See Sec. 2507.8 for further 
information on fees.)



Sec. 2507.5  How does the Corporation process requests for records?

    (a) Initial processing. Upon receipt of a request for agency 
records, the FOIA Officer will make an initial determination as to 
whether the requester has reasonably described the records being sought 
with sufficient specificity to determine which Corporation office may 
have possession of the requested records. The office head or his or her 
designees shall determine whether the description of the record(s) 
requested is sufficient to permit a determination as to existence, 
identification, and location. It is the responsibility of the FOIA 
Officer to provide guidance and assistance to the Corporation staff 
regarding all FOIA policies and procedures. All requests for records 
under the control and jurisdiction of the Office of the Inspector 
General will be forwarded to the Inspector General, through the FOIA 
Officer, for the Corporation's initial determination and reply to the 
requester.
    (b) Insufficiently identified records. On making a determination 
that the description contained in the request does not reasonably 
describe the records being sought, the FOIA Officer shall promptly 
advise the requester in writing or by telephone if possible. The FOIA 
Officer shall provide the requester with appropriate assistance to help 
the requester provide any additional information which would better 
identify the record. The requester may submit an amended request 
providing the necessary additional identifying information. Receipt of 
an amended request shall start a new 20 day period in

[[Page 618]]

which the Corporation will respond to the request.
    (c) Furnishing records. The Corporation is required to furnish only 
copies of what it has or can retrieve. It is not compelled to create new 
records or do statistical computations. For example, the Corporation is 
not required to write a new program so that a computer will print 
information in a special format. However, if the requested information 
is maintained in computerized form, and it is possible, without 
inconvenience or unreasonable burden, to produce the information on 
paper, the Corporation will do this if this is the only feasible way to 
respond to a request. The Corporation is not required to perform any 
research for the requester. The Corporation reserves the right to make a 
decision to conserve government resources and at the same time supply 
the records requested by consolidating information from various records 
rather than duplicating all of them. For example, if it requires less 
time and expense to provide a computer record as a paper printout rather 
than in an electronic medium, the Corporation will provide the printout. 
The Corporation is only required to furnish one copy of a record.
    (d) Format of the disclosure of a record. The requester, not the 
Corporation, will be entitled to choose the form of disclosure when 
multiple forms of a record already exist. Any further request for a 
record to be disclosed in a new form or format will have to be 
considered by the Corporation, on a case-by-case basis, to determine 
whether the records are ``readily reproducible'' in that form or format 
with ``reasonable efforts'' on the part of the Corporation. The 
Corporation shall make reasonable efforts to maintain its records in 
forms or formats that are reproducible for purposes of replying to a 
FOIA request.
    (e) Release of record. Upon receipt of a request specifically 
identifying existing Corporation records, the Corporation shall, within 
20 days (excepting Saturdays, Sundays, and legal public holidays), 
either grant or deny the request in whole or in part, as provided in 
this section. Any notice of denial in whole or in part shall require the 
FOIA Officer to inform the requester of his/her right to appeal the 
denial, in accordance with the procedures set forth in Sec. 2507.7. If 
the FOIA Officer determines that a request describes a requested record 
sufficiently to permit its identification, he/she shall make it 
available unless he/she determines, as appropriate, to withhold the 
record as being exempt from mandatory disclosure under the Act.
    (f) Form and content of notice granting a request. The Corporation 
shall provide written notice of a determination to grant access within 
20 days (excepting Saturdays, Sundays, and legal public holidays) of 
receipt of the request. This will be done either by providing a copy of 
the record to the requester or by making the record available for 
inspection at a reasonable time and place. If the record cannot be 
provided at the time of the initial response, the Corporation shall make 
such records available promptly. Records disclosed in part shall be 
marked or annotated to show both the amount and the location of the 
information deleted wherever practicable.
    (g) Form and content of notice denying request. The Corporation 
shall notify the requester in writing of the denial of access within 20 
days (excepting Saturdays, Sundays, and legal public holidays) of 
receipt of the request. Such notice shall include:
    (1) The name and title or position of the person responsible for the 
denial;
    (2) A brief statement of the reason(s) for denial, including the 
specific exemption(s) under the Act on which the Corporation has relied 
in denying each document that was requested;
    (3) A statement that the denial may be appealed under Sec. 2507.7, 
and a description of the requirements of that Sec. 2507.7;
    (4) An estimate of the volume of records or information withheld, in 
number of pages or in some other reasonable form of estimation. This 
estimate does not need to be provided if the volume is otherwise 
indicated through deletions on records disclosed in part, or if 
providing an estimate would harm an interest protected by an applicable 
exemption.

[[Page 619]]



Sec. 2507.6  Under what circumstances may the Corporation extend the time limits for an initial response?

    The time limits specified for the Corporation's initial response in 
Sec. 2507.5, and for its determination on an appeal in Sec. 2507.7, may 
be extended by the Corporation upon written notice to the requester 
which sets forth the reasons for such extension and the date upon which 
the Corporation will respond to the request. Such extension may be 
applied at either the initial response stage or the appeal stage, or 
both, provided the aggregate of such extensions shall not exceed ten 
working days. Circumstances justifying an extension under this section 
may include the following:
    (a) Time necessary to search for and collect requested records from 
field offices of the Corporation;
    (b) Time necessary to locate, collect and review voluminous records; 
or
    (c) Time necessary for consultation with another agency having an 
interest in the request; or among two or more offices of the Corporation 
which have an interest in the request; or with a submitter of business 
information having an interest in the request.



Sec. 2507.7  How does one appeal the Corporation's denial of access to records?

    (a) Right of appeal. A requester has the right to appeal a partial 
or full denial of an FOIA request. The appeal must be put in writing and 
sent to the reviewing official identified in the denial letter. The 
requester must send the appeal within 60 days of the letter denying the 
appeal.
    (b) Contents of appeal. The written appeal may include as much or as 
little information as the requester wishes for the basis of the appeal.
    (c) Review process. The Chief Operating Officer (COO) is the 
designated official to act on all FOIA appeals. The COO's determination 
of an appeal constitutes the Corporation's final action. If the appeal 
is granted, in whole or in part, the records will be made available for 
inspection or sent to the requester, promptly, unless a reasonable delay 
is justified. If the appeal is denied, in whole or in part, the COO will 
state the reasons for the decision in writing, providing notice of the 
right to judicial review. A decision will be made on the appeal within 
20 days (excepting Saturdays, Sundays, and legal public holidays), from 
the date the appeal was received by the COO.
    (d) When appeal is required. If a requester wishes to seek review by 
a court of an unfavorable determination, an appeal must first be 
submitted under this section.



Sec. 2507.8  How are fees determined?

    (a) Policy. It is the policy of the Corporation to provide the 
widest possible access to releasable Corporation records at the least 
possible cost. The purpose of the request is relevant to the fees 
charged.
    (b) Types of request. Fees will be determined by category of 
requests as follows:
    (1) Commercial use requests. When a request for records is made for 
commercial use, charges will be assessed to cover the costs of searching 
for, reviewing for release, and reproducing the records sought.
    (2) Requests for educational and non-commercial scientific 
institutions. When a request for records is made by an educational or 
non-commercial scientific institution in furtherance of scholarly or 
scientific research, respectively, charges may be assessed to cover the 
cost of reproduction alone, excluding charges for reproduction of the 
first 100 pages. Whenever the total fee calculated is $18.00 or less, no 
fee shall be charged.
    (3) Requests from representatives of the news media. When a request 
for records is made by a representative of the news media for the 
purpose of news dissemination, charges may be assessed to cover the cost 
of reproduction alone, excluding the charges for reproduction of the 
first 100 pages. Whenever the total fee calculated is $18.00 or less, no 
fee shall be charged.
    (4) Other requests. When other requests for records are made which 
do not fit the three preceding categories, charges will be assessed to 
cover the costs of searching for and reproducing the records sought, 
excluding charges for the first two hours of search time and for 
reproduction of the first 100

[[Page 620]]

pages. (However, requests from individuals for records about themselves 
contained in the Agency's systems of records will be treated under the 
fee provisions of the Privacy Act of 1974 (5 U.S.C. 552a) which permit 
the assessment of fees for reproduction costs only, regardless of the 
requester's characterization of the request.) Whenever the total fee 
calculated is $18.00 or less, no fee shall be charged to the requester.
    (c) Direct costs. Fees assessed shall provide only for recovery of 
the Corporation's direct costs of search, review, and reproduction. 
Review costs shall include only the direct costs incurred during the 
initial examination of a record for the purposes of determining whether 
a record must be disclosed under this part and whether any portion of a 
record is exempt from disclosure under this part. Review costs shall not 
include any costs incurred in resolving legal or policy issues raised in 
the course of processing a request or an appeal under this part.
    (d) Charging of fees. The following charges may be assessed for 
copies of records provided to a requester:
    (1) Copies made by photostat shall be charged at the rate of $0.10 
per page.
    (2) Searches for requested records performed by clerical/
administrative personnel shall be charged at the rate of $4.00 per 
quarter hour.
    (3) Where a search for requested records cannot be performed by 
clerical administrative personnel (for example, where the tasks of 
identifying and compiling records responsive to a request must be 
performed by a skilled technician or professional), such search shall be 
charged at the rate of $7.00 per quarter hour.
    (4) Where the time of managerial personnel is required, the fee 
shall be $10.25 for each quarter hour of time spent by such managerial 
personnel.
    (5) Computer searches for requested records shall be charged at a 
rate commensurate with the combined cost of computer operation and 
operator's salary attributable to the search.
    (6) Charges for non-release. Charges may be assessed for search and 
review time, even if the Corporation fails to locate records responsive 
to a request or if records located are determined to be exempt from 
disclosure.
    (e) Consent to pay fees. In the event that a request for records 
does not state that the requester will pay all reasonable costs, or 
costs up to a specified dollar amount, and the FOIA Officer determines 
that the anticipated assessable costs for search, review and 
reproduction of requested records will exceed $25.00, or will exceed the 
limit specified in the request, the requester shall be promptly notified 
in writing. Such notification shall state the anticipated assessable 
costs of search, review and reproduction of records requested. The 
requester shall be afforded an opportunity to amend the request to 
narrow the scope of the request, or, alternatively, may agree to be 
responsible for paying the anticipated costs. Such a request shall be 
deemed to have been received by the Corporation upon the date of receipt 
of the amended request.
    (f) Advance payment. (1) Advance payment of assessable fees are not 
required from a requester unless:
    (i) The Corporation estimates or determines that assessable charges 
are likely to exceed $250.00, and the requester has no history of 
payment of FOIA fees. (Where the requester has a history of prompt 
payment of fees, the Corporation shall notify the requester of the 
likely cost and obtain written assurance of full payment.)
    (ii) A requester has previously failed to pay a FOIA fee charged in 
a timely fashion (i.e., within 30 days of the date of the billing).
    (2) When the Corporation acts under paragraphs (f)(1)(i) or (ii) of 
this section, the administrative time limits prescribed in 
Sec. 2507.5(a) and (b) will begin to run only after the Corporation has 
received fee payments or assurances.
    (g) Interest on non-payment. Interest charges on an unpaid bill may 
be assessed starting on the 31st day following the day on which the 
billing was sent. Interest will be assessed at the rate prescribed in 31 
U.S.C. 3717 and will accrue from the date of the billing. The 
Corporation may use the authorization of the Debt Collection Act of 1982 
(Pub. L. 97-365, 96 Stat. 1749), as

[[Page 621]]

amended, and its administrative procedures, including disclosure to 
consumer reporting agencies and the use of collection agencies, to 
encourage payment of delinquent fees.
    (h) Aggregating requests. Where the Corporation reasonably believes 
that a requester or a group of requesters acting together is attempting 
to divide a request into a series of requests for the purpose of 
avoiding fees, the Corporation may aggregate those requests and charge 
accordingly. The Corporation may presume that multiple requests of this 
type made within a 30-day period have been made in order to avoid fees. 
Where requests are separated by a longer period, the Corporation will 
aggregate them only where there exists a solid basis for determining 
that aggregation is warranted under the circumstances involved. Multiple 
requests involving unrelated matters will not be aggregated.
    (i) Making payment. Payment of fees shall be forwarded to the FOIA 
Officer by check or money order payable to ``Corporation for National 
and Community Service''. A receipt for any fees paid will be provided 
upon written request.
    (j) Fee processing. No fee shall be charged if the administrative 
costs of collection and processing of such fees are equal to or do not 
exceed the amount of the fee.
    (k) Waiver or reduction of fees. A requester may, in the original 
request, or subsequently, apply for a waiver or reduction of document 
search, review and reproduction fees. Such application shall be in 
writing, and shall set forth in detail the reason(s) a fee waiver or 
reduction should be granted. The amount of any reduction requested shall 
be specified in the request. Upon receipt of such a request, the FOIA 
Officer will determine whether a fee waiver or reduction should be 
granted.
    (1) A waiver or reduction of fees shall be granted only if release 
of the requested information to the requester is in the public interest 
because it is likely to contribute significantly to public understanding 
of the operations or activities of the Corporation, and it is not 
primarily in the commercial interest of the requester. The Corporation 
shall consider the following factors in determining whether a waiver or 
reduction of fees will be granted:
    (i) Does the requested information concern the operations or 
activities of the Corporation?
    (ii) If so, will disclosure of the information be likely to 
contribute to public understanding of the Corporation's operations and 
activities?
    (iii) If so, would such a contribution be significant?
    (iv) Does the requester have a commercial interest that would be 
furthered by disclosure of the information?
    (v) If so, is the magnitude of the identified commercial interest of 
the requester sufficiently large, in comparison with the public interest 
in disclosure, that disclosure is primarily in the commercial interest 
of the requester?
    (2) In applying the criteria in paragraph (k)(1) of this section, 
the Corporation will weigh the requester's commercial interest against 
any public interest in disclosure. Where there is a public interest in 
disclosure, and that interest can fairly be regarded as being of greater 
magnitude than the requester's commercial interest, a fee waiver or 
reduction may be granted.
    (3) When a fee waiver application has been included in a request for 
records, the request shall not be considered officially received until a 
determination is made regarding the fee waiver application. Such 
determination shall be made within five working days from the date any 
such request is received in writing by the Corporation.



Sec. 2507.9  What records will be denied disclosure under this part?

    Since the policy of the Corporation is to make the maximum amount of 
information available to the public consistent with its other 
responsibilities, written requests for a Corporation record made under 
the provisions of the FOIA may be denied when:
    (a) The record is subject to one or more of the exemptions of the 
FOIA.
    (b) The record has not been described clearly enough to enable the 
Corporation staff to locate it within a reasonable amount of effort by 
an employee familiar with the files.
    (c) The requestor has failed to comply with the procedural 
requirements,

[[Page 622]]

including the agreement to pay any required fee.
    (d) For other reasons as required by law, rule, regulation or 
policy.



Sec. 2507.10  What records are specifically exempt from disclosure?

    Any reasonably segregable portion of a record shall be provided to 
any person requesting such record after deletion of portions which are 
exempt under this section. The following categories are examples of 
records maintained by the Corporation which, under the provision of 5 
U.S.C. 552(b), are exempted from disclosure:
    (a) Records required to be withheld under criteria established by an 
Executive Order in the interest of national defense and policy and which 
are in fact properly classified pursuant to any such Executive Order. 
Included in this category are records required by Executive Order No. 
12958 (3 CFR, 1995 Comp., p. 333), as amended, to be classified in the 
interest of national defense or foreign policy.
    (b) Records related solely to internal personnel rules and 
practices. Included in this category are internal rules and regulations 
relating to personnel management operations which cannot be disclosed to 
the public without substantial prejudice to the effective performance of 
significant functions of the Corporation.
    (c) Records specifically exempted from disclosure by statute.
    (d) Information of a commercial or financial nature including trade 
secrets given in confidence. Included in this category are records 
containing commercial or financial information obtained from any person 
and customarily regarded as privileged and confidential by the person 
from whom they were obtained.
    (e) Interagency or intra-agency memoranda or letters which would not 
be available by law to a party other than a party in litigation with the 
Corporation. Included in this category are memoranda, letters, inter-
agency and intra-agency communications and internal drafts, opinions and 
interpretations prepared by staff or consultants and records meant to be 
used as part of deliberations by staff, or ordinarily used in arriving 
at policy determinations and decisions.
    (f) Personnel, medical and similar files. Included in this category 
are personnel and medical information files of staff, individual 
national service applicants and participants, lists of names and home 
addresses, and other files or material containing private or personal 
information, the public disclosure of which would amount to a clearly 
unwarranted invasion of the privacy of any person to whom the 
information pertains.
    (g) Investigatory files. Included in this category are files 
compiled for the enforcement of all laws, or prepared in connection with 
government litigation and adjudicative proceedings, provided however, 
that such records shall be made available to the extent that their 
production will not:
    (1) Interfere with enforcement proceedings;
    (2) Deprive a person of a right to a fair trial or an impartial 
adjudication;
    (3) Constitute an unwarranted invasion of personal privacy;
    (4) Disclose the identity of a confidential source, and in the case 
of a record compiled by a criminal law enforcement authority in the 
course of a criminal investigation, or by an agency conducting a lawful 
security intelligence investigation, confidential information furnished 
by confidential source;
    (5) Disclose investigative techniques and procedures; or
    (6) Endanger the life or physical safety of law enforcement 
personnel.



Sec. 2507.11  What are the procedures for the release of commercial business information?

    (a) Notification of business submitter. The Corporation shall 
promptly notify a business submitter of any request for Corporation 
records containing business information. The notice shall either 
specifically describe the nature of the business information requested 
or provide copies of the records, or portions thereof containing the 
business information.
    (b) Business submitter reply. The Corporation shall afford a 
business submitter 10 working days to object to disclosure, and to 
provide the Corporation

[[Page 623]]

with a written statement specifying the grounds and arguments why the 
information should be withheld under Exemption (b)(4) of the Act.
    (c) Considering and balancing respective interests. (1) The 
Corporation shall carefully consider and balance the business 
submitter's objections and specific grounds for nondisclosure against 
such factors as:
    (i) The general custom or usage in the occupation or business to 
which the information relates that it be held confidential; and
    (ii) The number and situation of the individuals who have access to 
such information; and
    (iii) The type and degree of risk of financial injury to be expected 
if disclosure occurs; and
    (iv) The length of time such information should be regarded as 
retaining the characteristics noted in paragraphs (c)(1) (i) through 
(iii) of this section in determining whether to release the requested 
business information.
    (2)(i) Whenever the Corporation decides to disclose business 
information over the objection of a business submitter, the Corporation 
shall forward to the business submitter a written notice of such 
decision, which shall include:
    (A) The name, and title or position, of the person responsible for 
denying the submitter's objection;
    (B) A statement of the reasons why the business submitter's 
objection was not sustained;
    (C) A description of the business information to be disclosed; and
    (D) A specific disclosure date.
    (ii) The notice of intent to disclose business information shall be 
mailed by the Corporation not less than six working days prior to the 
date upon which disclosure will occur, with a copy of such notice to the 
requester.
    (d) When notice to business submitter is not required. The notice to 
business submitter shall not apply if:
    (1) The Corporation determines that the information shall not be 
disclosed;
    (2) The information has previously been published or otherwise 
lawfully been made available to the public; or
    (3) Disclosure of the information is required by law (other than 5 
U.S.C. 552).
    (e) Notice of suit for release. Whenever a requester brings suit to 
compel disclosure of business information, the Corporation shall 
promptly notify the business submitter.



Sec. 2507.12  Authority.

    The Corporation receives authority to change its governing 
regulations from the National and Community Service Act of 1990, as 
amended (42 U.S.C. 12501 et seq.).

   Appendix A to Part 2507--Freedom of Information Act Request Letter 
                                (Sample)

Freedom of Information Act Officer______________________________________
Name of Agency__________________________________________________________
Address of Agency_______________________________________________________
City, State, Zip Code___________________________________________________

Re: Freedom of Information Act Request.

    Dear--------: This is a request under the Freedom of Information 
Act.
    I request that a copy of the following documents [or documents 
containing the following information] be provided to me: [identify the 
documents or information as specifically as possible].
[Sample requester descriptions]

    --A representative of the news media affiliated with the -------- 
newspaper (magazine, television station, etc.) and this request is made 
as part of news gathering and not for commercial use.
    --Affiliated with an educational or non-commercial scientific 
institution, and this request is not for commercial use.
    --An individual seeking information for personal use and not for 
commercial use.
    --Affiliated with a private corporation and am seeking information 
for use in the company's business.
    [Optional] I am willing to pay fees for this request up to a maximum 
of $--------. If you estimate that the fees will exceed this limit, 
please inform me first.
    [Optional] I request a waiver of all fees for this request. 
Disclosure of the requested information to me is in the public interest 
because it is likely to contribute significantly to public understanding 
of the operations or activities of government and is not primarily in my 
commercial interest. [Include a specific explanation.]
    In order to help you determine my status to assess fees, you should 
know that I am (insert a suitable description of the requester and the 
purpose of the request).
    Thank you for your consideration of this request.

      Sincerely,

Name____________________________________________________________________
Address_________________________________________________________________

[[Page 624]]

City, State, Zip Code___________________________________________________
Telephone Number [Optional]_____________________________________________

 Appendix B to Part 2507--Freedom of Information Act Appeal for Release 
                         of Information (Sample)

Appeal Officer__________________________________________________________
Name of Agency__________________________________________________________
Address of Agency_______________________________________________________
City, State, Zip Code___________________________________________________

Re: Freedom of Information Act Appeal.

    Dear--------: This is an appeal under the Freedom of Information 
Act.
    On (date), I requested documents under the Freedom of Information 
Act. My request was assigned the following identification number ------
--. On (date), I received a response to my request in a letter signed by 
(name of official). I appeal the denial of my request.
    [Optional] The documents that were withheld must be disclosed under 
the FOIA because * * *.
    [Optional] Respond for waiver of fees. I appeal the decision to deny 
my request for a waiver of fees. I believe that I am entitled to a 
waiver of fees. Disclosure of the documents I requested is in the public 
interest because the information is likely to contribute significantly 
to public understanding of the operation or activities of government and 
is not primarily in my commercial interest. (Provide details)
    [Optional] I appeal the decision to require me to pay review costs 
for this request. I am not seeking the documents for a commercial use. 
(Provide details)
    (Optional] I appeal the decision to require me to pay search charges 
for this request. I am a reporter seeking information as part of news 
gathering and not for commercial use.
    Thank you for your consideration of this appeal.

      Sincerely,
Name____________________________________________________________________
Address_________________________________________________________________
City, State, Zip Code___________________________________________________
Telephone Number [Optional]_____________________________________________



PART 2508--IMPLEMENTATION OF THE PRIVACY ACT OF 1974--Table of Contents




Sec.
2508.1  Definitions.
2508.2  What is the purpose of this part?
2508.3  What is the Corporation's Privacy Act policy?
2508.4  When can Corporation records be disclosed?
2508.5  When does the Corporation publish its notice of its system of 
          records?
2508.6  When will the Corporation publish a notice for new routine uses 
          of information in its system of records?
2508.7  To whom does the Corporation provide reports to regarding 
          changes in its system of records?
2508.8  Who is responsible for establishing the Corporation's rules of 
          conduct for Privacy Act compliance?
2508.9  What officials are responsible for the security, management and 
          control of Corporation record keeping systems?
2508.10  Who has the responsibility for maintaining adequate technical, 
          physical, and security safeguards to prevent unauthorized 
          disclosure or destruction of manual and automatic record 
          systems?
2508.11  How shall offices maintaining a system of records be 
          accountable for those records to prevent unauthorized 
          disclosure of information?
2508.12  What are the contents of the systems of records that are to be 
          maintained by the Corporation?
2508.13  What are the procedures for acquiring access to Corporation 
          records by an individual about whom a record is maintained?
2508.14  What are the identification requirements for individuals who 
          request access to records?
2508.15  What are the procedures for requesting inspection of, amendment 
          or correction to, or appeal of an individual's records 
          maintained by the Corporation other than that individual's 
          official personnel file?
2508.16  What are the procedures for filing an appeal for refusal to 
          amend or correct records?
2508.17  When shall fees be charged and at what rate?
2508.18  What are the penalties for obtaining a record under false 
          pretenses?
2508.19  What Privacy Act exemptions or control of systems of records 
          are exempt from disclosure?
2508.20  What are the restrictions regarding the release of mailing 
          lists?

    Authority: 5 U.S.C. 552a; 42 U.S.C. 12501 et seq.; 42 U.S.C. 4950 et 
seq.

    Source: 64 FR 19294, Apr. 20, 1999, unless otherwise noted.



Sec. 2508.1  Definitions.

    (a) Amend means to make a correction to, or expunge any portion of, 
a record about an individual which that individual believes is not 
accurate, relevant, timely, or complete.
    (b) Appeal Officer means the individual delegated the responsibility 
to act on all appeals filed under the Privacy Act.
    (c) Chief Executive Officer means the Head of the Corporation.

[[Page 625]]

    (d) Corporation means the Corporation for National and Community 
Service.
    (e) Individual means any citizen of the United States or an alien 
lawfully admitted for permanent residence.
    (f) Maintain means to collect, use, store, disseminate or any 
combination of these recordkeeping functions; exercise of control over 
and therefore, responsibility and accountability for, systems of 
records.
    (g) Personnel record means any information about an individual that 
is maintained in a system of records by the Corporation that is needed 
for personnel management or processes such as staffing, employment 
development, retirement, grievances, and appeals.
    (h) Privacy Act Officer means the individual delegated the authority 
to allow access to, the release of, or the withholding of records 
pursuant to an official Privacy Act request. The Privacy Act Officer is 
further delegated the authority to make the initial determination on all 
requests to amend records.
    (i) Record means any document or other information about an 
individual maintained by the agency whether collected or grouped, and 
including, but not limited to, information regarding education, 
financial transactions, medical history, criminal or employment history, 
or any other personal information that contains the name or other 
personal identification number, symbol, etc. assigned to such 
individual.
    (j) Routine use means, with respect to the disclosure of a record, 
the use of such record for a purpose which is compatible with the 
purpose for which it was collected.
    (k) System of records means a group of any records under the 
maintenance and control of the Corporation from which information is 
retrieved by use of the name of an individual or by some personal 
identifier of the individual.



Sec. 2508.2  What is the purpose of this part?

    The purpose of this part is to set forth the basic policies of the 
Corporation governing the maintenance of its system of records which 
contains personal information concerning its employees as defined in the 
Privacy Act (5 U.S.C. 552a). Records included in this part are those 
described in aforesaid act and maintained by the Corporation and/or any 
component thereof.



Sec. 2508.3  What is the Corporation's Privacy Act policy?

    It is the policy of the Corporation to protect, preserve, and defend 
the right of privacy of any individual about whom the Corporation 
maintains personal information in any system of records and to provide 
appropriate and complete access to such records including adequate 
opportunity to correct any errors in said records. Further, it is the 
policy of the Corporation to maintain its records in such a manner that 
the information contained therein is, and remains material and relevant 
to the purposes for which it is received in order to maintain its 
records with fairness to the individuals who are the subjects of such 
records.



Sec. 2508.4  When can Corporation records be disclosed?

    (a) (1) The Corporation will not disclose any record that is 
contained in its system of records by any means of communication to any 
person, or to another agency, except pursuant to a written request by, 
or with the prior written consent of the individual to whom the record 
pertains, unless disclosure of the record would be:
    (i) To employees of the Corporation who maintain the record and who 
have a need for the record in the performance of their official duties;
    (ii) When required under the provisions of the Freedom of 
Information Act (5 U.S.C. 552);
    (iii) For routine uses as appropriately published in the annual 
notice of the Federal Register;
    (iv) To the Bureau of the Census for purposes of planning or 
carrying out a census or survey or related activity pursuant to the 
provisions of title 13;
    (v) To a recipient who has provided the Corporation with advance 
adequate written assurance that the record will be used solely as a 
statistical research or reporting record, and the record is to be 
transferred in a form that is not individually identifiable;
    (vi) To the National Archives and Records Administration of the 
United States as a record which has sufficient

[[Page 626]]

historical or other value to warrant its continued preservation by the 
United States Government, or for evaluation by the Archivist of the 
United States or the designee of the Archivist to determine whether the 
record has such value;
    (vii) To another agency or to an instrumentality of any governmental 
jurisdiction within or under the control of the United States for civil 
or criminal law enforcement activity if the activity is authorized by 
law, and if the head of the agency or instrumentality has made a written 
request to the Corporation for such records specifying the particular 
portion desired and the law enforcement activity for which the record is 
sought. Such a record may also be disclosed by the Corporation to the 
law enforcement agency on its own initiative in situations in which 
criminal conduct is suspected provided that such disclosure has been 
established as a routine use or in situations in which the misconduct is 
directly related to the purpose for which the record is maintained;
    (viii) To a person pursuant to a showing of compelling circumstances 
affecting the health or safety of any individual if, upon such 
disclosure, notification is transmitted to the last known address of 
such individual;
    (ix) To either House of Congress, or, to the extent of matter within 
its jurisdiction, any committee or subcommittee thereof, any joint 
committee of Congress or subcommittee of any such joint committee;
    (x) To the Comptroller General or any of his or her authorized 
representatives, in the course of the performance of official duties in 
the General Accounting Office;
    (xi) Pursuant to an order of a court of competent jurisdiction 
served upon the Corporation pursuant to 45 CFR 1201.3, and provided that 
if any such record is disclosed under such compulsory legal process and 
subsequently made public by the court which issued it, the Corporation 
must make a reasonable effort to notify the individual to whom the 
record pertains of such disclosure;
    (xii) To a contractor, expert, or consultant of the Corporation (or 
an office within the Corporation) when the purpose of the release to 
perform a survey, audit, or other review of the Corporation's procedures 
and operations; and
    (xiii) To a consumer reporting agency in accordance with section 
3711(f) of title 31.



Sec. 2508.5  When does the Corporation publish its notice of its system of records?

    The Corporation shall publish annually a notice of its system of 
records maintained by it as defined herein in the format prescribed by 
the General Services Administration in the Federal Register; provided, 
however, that such publication shall not be made for those systems of 
records maintained by other agencies while in the temporary custody of 
the Corporation.



Sec. 2508.6  When will the Corporation publish a notice for new routine uses of information in its system of records?

    At least 30 days prior to publication of information under the 
preceding section, the Corporation shall publish in the Federal Register 
a notice of its intention to establish any new routine use of any system 
of records maintained by it with an opportunity for public comments on 
such use. Such notice shall contain the following:
    (a) The name of the system of records for which the routine use is 
to be established.
    (b) The authority for the system.
    (c) The purpose for which the record is to be maintained.
    (d) The proposed routine use(s).
    (e) The purpose of the routine use(s).
    (f) The categories of recipients of such use. In the event of any 
request for an addition to the routine uses of the systems which the 
Corporation maintains, such request may be sent to the following office: 
Corporation for National and Community Service, Director, Administration 
and Management Services, Room 6100, 1201 New York Avenue, NW, 
Washington, DC 20525.



Sec. 2508.7  To whom does the Corporation provide reports regarding changes in its system of records?

    The Corporation shall provide to the Committee on Government 
Operations

[[Page 627]]

of the House of Representatives, the Committee on Governmental Affairs 
of the Senate, and the Office of Management and Budget, advance notice 
of any proposal to establish or alter any system of records as defined 
herein. This report will be submitted in accordance with guidelines 
provided by the Office of Management and Budget.



Sec. 2508.8  Who is responsible for establishing the Corporation's rules of conduct for Privacy Act compliance?

    (a) The Chief Executive Officer shall ensure that all persons 
involved in the design, development, operation or maintenance of any 
system of records as defined herein are informed of all requirements 
necessary to protect the privacy of individuals who are the subject of 
such records. All employees shall be informed of all implications of the 
Act in this area including the civil remedies provided under 5 U.S.C. 
552a(g)(1) and the fact that the Corporation may be subject to civil 
remedies for failure to comply with the provisions of the Privacy Act 
and this regulation.
    (b) The Chief Executive Officer shall also ensure that all personnel 
having access to records receive adequate training in the protection of 
the security of personal records, and that adequate and proper storage 
is provided for all such records with sufficient security to assure the 
privacy of such records.



Sec. 2508.9  What officials are responsible for the security, management and control of Corporation record keeping systems?

    (a) The Director of Administration and Management Services shall 
have overall control and supervision of the security of all systems of 
records and shall be responsible for monitoring the security standards 
set forth in this regulation.
    (b) A designated official (System Manager) shall be named who shall 
have management responsibility for each record system maintained by the 
Corporation and who shall be responsible for providing protection and 
accountability for such records at all times and for insuring that such 
records are secured in appropriate containers whenever not in use or in 
the direct control of authorized personnel.



Sec. 2508.10  Who has the responsibility for maintaining adequate technical, physical, and security safeguards to prevent unauthorized disclosure or destruction 
          of manual and automatic record systems?

    The Chief Executive Officer has the responsibility of maintaining 
adequate technical, physical, and security safeguards to prevent 
unauthorized disclosure or destruction of manual and automatic record 
systems. These security safeguards shall apply to all systems in which 
identifiable personal data are processed or maintained, including all 
reports and outputs from such systems that contain identifiable personal 
information. Such safeguards must be sufficient to prevent negligent, 
accidental, or unintentional disclosure, modification or destruction of 
any personal records or data, and must furthermore minimize, to the 
extent practicable, the risk that skilled technicians or knowledgeable 
persons could improperly obtain access to modify or destroy such records 
or data and shall further insure against such casual entry by unskilled 
persons without official reasons for access to such records or data.
    (a) Manual systems. (1) Records contained in a system of records as 
defined herein may be used, held or stored only where facilities are 
adequate to prevent unauthorized access by persons within or outside the 
Corporation.
    (2) All records, when not under the personal control of the 
employees authorized to use the records, must be stored in a locked 
metal filing cabinet. Some systems of records are not of such 
confidential nature that their disclosure would constitute a harm to an 
individual who is the subject of such record. However, records in this 
category shall also be maintained in locked metal filing cabinets or 
maintained in a secured room with a locking door.
    (3) Access to and use of a system of records shall be permitted only 
to persons whose duties require such access within the Corporation, for 
routine uses as defined in Sec. 2508.4 as to any given system, or for 
such other uses as may be provided herein.

[[Page 628]]

    (4) Other than for access within the Corporation to persons needing 
such records in the performance of their official duties or routine uses 
as defined in Sec. 2508.4, or such other uses as provided herein, access 
to records within a system of records shall be permitted only to the 
individual to whom the record pertains or upon his or her written 
request to the Director, Administration and Management Services.
    (5) Access to areas where a system of records is stored will be 
limited to those persons whose duties require work in such areas. There 
shall be an accounting of the removal of any records from such storage 
areas utilizing a written log, as directed by the Director, 
Administration and Management Services. The written log shall be 
maintained at all times.
    (6) The Corporation shall ensure that all persons whose duties 
require access to and use of records contained in a system of records 
are adequately trained to protect the security and privacy of such 
records.
    (7) The disposal and destruction of records within a system of 
records shall be in accordance with rules promulgated by the General 
Services Administration.
    (b) Automated systems. (1) Identifiable personal information may be 
processed, stored or maintained by automated data systems only where 
facilities or conditions are adequate to prevent unauthorized access to 
such systems in any form. Whenever such data, whether contained in punch 
cards, magnetic tapes or discs, are not under the personal control of an 
authorized person, such information must be stored in a locked or 
secured room, or in such other facility having greater safeguards than 
those provided for herein.
    (2) Access to and use of identifiable personal data associated with 
automated data systems shall be limited to those persons whose duties 
require such access. Proper control of personal data in any form 
associated with automated data systems shall be maintained at all times, 
including maintenance of accountability records showing disposition of 
input and output documents.
    (3) All persons whose duties require access to processing and 
maintenance of identifiable personal data and automated systems shall be 
adequately trained in the security and privacy of personal data.
    (4) The disposal and disposition of identifiable personal data and 
automated systems shall be done by shredding, burning or in the case of 
tapes or discs, degaussing, in accordance with any regulations now or 
hereafter proposed by the General Services Administration or other 
appropriate authority.



Sec. 2508.11  How shall offices maintaining a system of records be accountable for those records to prevent unauthorized disclosure of information?

    (a) Each office maintaining a system of records shall account for 
all records within such system by maintaining a written log in the form 
prescribed by the Director, Administration and Management Services, 
containing the following information:
    (1) The date, nature, and purpose of each disclosure of a record to 
any person or to another agency. Disclosures made to employees of the 
Corporation in the normal course of their duties, or pursuant to the 
provisions of the Freedom of Information Act, need not be accounted for.
    (2) Such accounting shall contain the name and address of the person 
or agency to whom the disclosure was made.
    (3) The accounting shall be maintained in accordance with a system 
of records approved by the Director, Administration and Management 
Services, as sufficient for the purpose but in any event sufficient to 
permit the construction of a listing of all disclosures at appropriate 
periodic intervals.
    (4) The accounting shall reference any justification or basis upon 
which any release was made including any written documentation required 
when records are released for statistical or law enforcement purposes 
under the provisions of subsection (b) of the Privacy Act of 1974 (5 
U.S.C. 552a).
    (5) For the purpose of this part, the system of accounting for 
disclosures is not a system of records under the definitions hereof, and 
need not be maintained within a system of records.

[[Page 629]]

    (6) Any subject individual may request access to an accounting of 
disclosures of a record. The subject individual shall make a request for 
access to an accounting in accordance with Sec. 2508.13. An individual 
will be granted access to an accounting of the disclosures of a record 
in accordance with the procedures of this subpart which govern access to 
the related record. Access to an accounting of a disclosure of a record 
made under Sec. 2508.13 may be granted at the discretion of the 
Director, Administration and Management Services.



Sec. 2508.12  What are the contents of the systems of record that are to be maintained by the Corporation?

    (a) The Corporation shall maintain all records that are used in 
making determinations about any individual with such accuracy, 
relevance, timeliness, and completeness as is reasonably necessary to 
assure fairness to the individual in the determination;
    (b) In situations in which the information may result in adverse 
determinations about such individual's rights, benefits and privileges 
under any Federal program, all information placed in a system of records 
shall, to the greatest extent practicable, be collected from the 
individual to whom the record pertains.
    (c) Each form or other document that an individual is expected to 
complete in order to provide information for any system of records shall 
have appended thereto, or in the body of the document:
    (1) An indication of the authority authorizing the solicitation of 
the information and whether the provision of the information is 
mandatory or voluntary.
    (2) The purpose or purposes for which the information is intended to 
be used.
    (3) Routine uses which may be made of the information and published 
pursuant to Sec. 2508.6.
    (4) The effect on the individual, if any, of not providing all or 
part of the required or requested information.
    (d) Records maintained in any system of records used by the 
Corporation to make any determination about any individual shall be 
maintained with such accuracy, relevancy, timeliness, and completeness 
as is reasonably necessary to assure fairness to the individual in the 
making of any determination about such individual, provided, however, 
that the Corporation shall not be required to update or keep current 
retired records.
    (e) Before disseminating any record about any individual to any 
person other than an employee in the Corporation, unless the 
dissemination is made pursuant to the provisions of the Freedom of 
Information Act (5 U.S.C. 552), the Corporation shall make reasonable 
efforts to ensure that such records are, or were at the time they were 
collected, accurate, complete, timely and relevant for Corporation 
purposes.
    (f) Under no circumstances shall the Corporation maintain any record 
about any individual with respect to or describing how such individual 
exercises rights guaranteed by the First Amendment of the Constitution 
of the United States, unless expressly authorized by statute or by the 
individual about whom the record is maintained, or unless pertinent to 
and within the scope of an authorized law enforcement activity.
    (g) In the event any record is disclosed as a result of the order of 
a court of appropriate jurisdiction, the Corporation shall make 
reasonable efforts to notify the individual whose record was so 
disclosed after the process becomes a matter of public record.



Sec. 2508.13  What are the procedures for acquiring access to Corporation records by an individual about whom a record is maintained?

    (a) Any request for access to records from any individual about whom 
a record is maintained will be addressed to the Corporation for National 
and Community Service, Office of the General Counsel, Attn: Privacy Act 
Officer, Room 8200, 1201 New York Avenue, NW, Washington, DC 20525, or 
delivered in person during regular business hours, whereupon access to 
his or her record, or to any information contained therein, if 
determined to be releasable, shall be provided.
    (b) If the request is made in person, such individual may, upon his 
or her request, be accompanied by a person of his or her choosing to 
review the

[[Page 630]]

record and shall be provided an opportunity to have a copy made of any 
record about such individual.
    (c) A record may be disclosed to a representative chosen by the 
individual as to whom a record is maintained upon the proper written 
consent of such individual.
    (d) A request made in person will be promptly complied with if the 
records sought are in the immediate custody of the Corporation. Mailed 
requests or personal requests for documents in storage or otherwise not 
immediately available, will be acknowledged within 10 working days, and 
the information requested will be promptly provided thereafter.
    (e) With regard to any request for disclosure of a record, the 
following procedures shall apply:
    (1) Medical or psychological records shall be disclosed to an 
individual unless, in the judgment of the Corporation, access to such 
records might have an adverse effect upon such individual. When such 
determination has been made, the Corporation may require that the 
information be disclosed only to a physician chosen by the requesting 
individual. Such physician shall have full authority to disclose all or 
any portion of such record to the requesting individual in the exercise 
of his or her professional judgment.
    (2) Test material and copies of certificates or other lists of 
eligibles or any other listing, the disclosure of which would violate 
the privacy of any other individual, or be otherwise exempted by the 
provisions of the Privacy Act, shall be removed from the record before 
disclosure to any individual to whom the record pertains.



Sec. 2508.14  What are the identification requirements for individuals who request access to records?

    The Corporation shall require reasonable identification of all 
individuals who request access to records to ensure that records are 
disclosed to the proper person.
    (a) In the event an individual requests disclosure in person, such 
individual shall be required to show an identification card such as a 
drivers license, etc., containing a photo and a sample signature of such 
individual. Such individual may also be required to sign a statement 
under oath as to his or her identity, acknowledging that he or she is 
aware of the penalties for improper disclosure under the provisions of 
the Privacy Act.
    (b) In the event that disclosure is requested by mail, the 
Corporation may request such information as may be necessary to 
reasonably ensure that the individual making such request is properly 
identified. In certain cases, the Corporation may require that a mail 
request be notarized with an indication that the notary received an 
acknowledgment of identity from the individual making such request.
    (c) In the event an individual is unable to provide suitable 
documentation or identification, the Corporation may require a signed 
notarized statement asserting the identity of the individual and 
stipulating that the individual understands that knowingly or willfully 
seeking or obtaining access to records about another person under false 
pretenses is punishable by a fine of up to $5,000.
    (d) In the event a requestor wishes to be accompanied by another 
person while reviewing his or her records, the Corporation may require a 
written statement authorizing discussion of his or her records in the 
presence of the accompanying representative or other persons.



Sec. 2508.15  What are the procedures for requesting inspection of, amendment or correction to, or appeal of an individual's records maintained by the 
          Corporation other than that individual's official personnel 
          file?

    (a) A request for inspection of any record shall be made to the 
Director, Administration and Management Services. Such request may be 
made by mail or in person provided, however, that requests made in 
person may be required to be made upon a form provided by the Director 
of Administration and Management Services who shall keep a current list 
of all systems of records maintained by the Corporation and published in 
accordance with the provisions of this regulation. However, the request 
need not be in writing

[[Page 631]]

if the individual makes his or her request in person. The requesting 
individual may request that the Corporation compile all records 
pertaining to such individual at any named Service Center/State Office, 
AmeriCorps*NCCC Campus, or at Corporation Headquarters in Washington, 
DC, for the individual's inspection and/or copying. In the event an 
individual makes such request for a compilation of all records 
pertaining to him or her in various locations, appropriate time for such 
compilation shall be provided as may be necessary to promptly comply 
with such requests.
    (b) Any such requests should contain, at a minimum, identifying 
information needed to locate any given record and a brief description of 
the item or items of information required in the event the individual 
wishes to see less than all records maintained about him or her.
    (1) In the event an individual, after examination of his or her 
record, desires to request an amendment or correction of such records, 
the request must be submitted in writing and addressed to the 
Corporation for National and Community Service, Office of the General 
Counsel, Attn: Privacy Act Officer, Room 8200, 1201 New York Avenue, NW, 
Washington, DC 20525. In his or her written request, the individual 
shall specify:
    (i) The system of records from which the record is retrieved;
    (ii) The particular record that he or she is seeking to amend or 
correct;
    (iii) Whether he or she is seeking an addition to or a deletion or 
substitution of the record; and,
    (iv) His or her reasons for requesting amendment or correction of 
the record.
    (2) A request for amendment or correction of a record will be 
acknowledged within 10 working days of its receipt unless the request 
can be processed and the individual informed of the Privacy Act 
Officer's decision on the request within that 10 day period.
    (3) If the Privacy Act Officer agrees that the record is not 
accurate, timely, or complete, based on a preponderance of the evidence, 
the record will be corrected or amended. The record will be deleted 
without regard to its accuracy, if the record is not relevant or 
necessary to accomplish the Corporation's function for which the record 
was provided or is maintained. In either case, the individual will be 
informed in writing of the amendment, correction, or deletion and, if 
accounting was made of prior disclosures of the record, all previous 
recipients of the record will be informed of the corrective action 
taken.
    (4) If the Privacy Act Officer does not agree that the record should 
be amended or corrected, the individual will be informed in writing of 
the refusal to amend or correct the record. He or she will also be 
informed that he or she may appeal the refusal to amend or correct his 
or her record in accordance with Sec. 2508.17.
    (5) Requests to amend or correct a record governed by the regulation 
of another government agency will be forwarded to such government agency 
for processing and the individual will be informed in writing of the 
referral.
    (c) In the event an individual disagrees with the Privacy Act 
Officer's initial determination, he or she may appeal such determination 
to the Appeal Officer in accordance with Sec. 2508.17. Such request for 
review must be made within 30 days after receipt by the requestor of the 
initial refusal to amend.



Sec. 2508.16  What are the procedures for filing an appeal for refusal to amend or correct records?

    (a) In the event an individual desires to appeal any refusal to 
correct or amend records, he or she may do so by addressing, in writing, 
such appeal to the Corporation for National and Community Service, 
Office of the Chief Operating Officer, Attn: Appeal Officer, 1201 New 
York Avenue NW, Washington, DC 20525. Although there is no time limit 
for such appeals, the Corporation shall be under no obligation to 
maintain copies of original requests or responses thereto beyond 180 
days from the date of the original request.
    (b) An appeal will be completed within 30 working days from its 
receipt by the Appeal Officer; except that, the appeal authority may, 
for good cause, extend this period for an additional 30 days. Should the 
appeal period be extended, the individual appealing the

[[Page 632]]

original refusal will be informed in writing of the extension and the 
circumstances of the delay. The individual's request for access to or to 
amend or correct the record, the Privacy Act Officer's refusal to amend 
or correct the record, and any other pertinent material relating to the 
appeal will be reviewed. No hearing will be held.
    (c) If the Appeal Officer determines that the record that is the 
subject of the appeal should be amended or corrected, the record will be 
amended or corrected and the individual will be informed in writing of 
the amendment or correction. Where an accounting was made of prior 
disclosures of the record, all previous recipients of the record will be 
informed of the corrective action taken.
    (d) If the appeal is denied, the subject individual will be informed 
in writing:
    (1) Of the denial and reasons for the denial;
    (2) That he or she has a right to seek judicial review of the 
denial; and
    (3) That he or she may submit to the Appeal Officer a concise 
statement of disagreement to be associated with the disputed record and 
disclosed whenever the record is disclosed.
    (e) Whenever an individual submits a statement of disagreement to 
the Appeal Officer in accordance with paragraph (d)(3) of this section, 
the record will be annotated to indicate that it is disputed. In any 
subsequent disclosure, a copy of the subject individual's statement of 
disagreement will be disclosed with the record. If the appeal authority 
deems it appropriate, a concise statement of the Appeal Officer's 
reasons for denying the individual's appeal may also be disclosed with 
the record. While the individual will have access to this statement of 
reasons, such statement will not be subject to correction or amendment. 
Where an accounting was made of prior disclosures of the record, all 
previous recipients of the record will be provided a copy of the 
individual's statement of disagreement, as well as the statement, if 
any, of the Appeal Officer's reasons for denying the individual's 
appeal.



Sec. 2508.17  When shall fees be charged and at what rate?

    (a) No fees shall be charged for search time or for any other time 
expended by the Corporation to review or produce a record except where 
an individual requests that a copy be made of the record to which he or 
she is granted access. Where a copy of the record must be made in order 
to provide access to the record (e.g., computer printout where no screen 
reading is available), the copy will be made available to the individual 
without cost.
    (b) The applicable fee schedule is as follows:
    (1) Each copy of each page, up to 8\1/2\''x14'', made by photocopy 
or similar process is $0.10 per page.
    (2) Each copy of each microform frame printed on paper is $0.25.
    (3) Each aperture card is $0.25.
    (4) Each 105-mm fiche is $0.25.
    (5) Each 100[foot] foot role of 35-mm microfilm is $7.00.
    (6) Each 100[foot] foot role of 16-mm microfilm is $6.00.
    (7) Each page of computer printout without regard to the number of 
carbon copies concurrently printed is $0.20.
    (8) Copying records not susceptible to photocopying (e.g., punch 
cards or magnetic tapes), at actual cost to be determined on a case-by-
case basis.
    (9) Other copying forms (e.g., typing or printing) will be charged 
at direct costs, including personnel and equipment costs.
    (c) All copying fees shall be paid by the individual before the 
copying will be undertaken. Payments shall be made by check or money 
order payable to the ``Corporation for National and Community Service,'' 
and provided to the Privacy Act Officer processing the request.
    (d) A copying fee shall not be charged or collected, or 
alternatively, it may be reduced, when it is determined by the Privacy 
Act Officer, based on a petition, that the petitioning individual is 
indigent and that the Corporation's resources permit a waiver of all or 
part of the fee. An individual is deemed to be indigent when he or she 
is without income or lacks the resources sufficient to pay the fees.

[[Page 633]]

    (e) Special and additional services provided at the request of the 
individual, such as certification or authentication, postal insurance 
and special mailing arrangement costs, will be charged to the 
individual.
    (f) A copying fee totaling $5.00 or less shall be waived, but the 
copying fees for contemporaneous requests by the same individual shall 
be aggregated to determine the total fee.



Sec. 2508.18  What are the penalties for obtaining a record under false pretenses?

    The Privacy Act provides, in pertinent part that:
    (a) Any person who knowingly and willfully requests to obtain any 
record concerning an individual from the Corporation under false 
pretenses shall be guilty of a misdemeanor and fined not more than 
$5,000 (5 U.S.C. 552a(I)(3)).
    (b) A person who falsely or fraudulently attempts to obtain records 
under the Privacy Act also may be subject to prosecution under such 
other criminal statutes as 18 U.S.C. 494, 495 and 1001.



Sec. 2508.19  What Privacy Act exemptions or control of systems of records are exempt from disclosure?

    (a) Certain systems of records that are maintained by the 
Corporation are exempted from provisions of the Privacy Act in 
accordance with exemptions (j) and (k) of 5 U.S.C. 552a.
    (1) Exemption of Inspector General system of records. Pursuant to, 
and limited by 5 U.S.C. 552a(j)(2), the system of records maintained by 
the Office of the Inspector General that contains the Investigative 
Files shall be exempted from the provisions of 5 U.S.C. 552a, except 
subsections (b), (c) (1) and (2), (e)(4) (A) through (F), (e)(6)(7), 
(9), (10), and (11), and (I), and 45 CFR 2508.11, 2508.12, 2508.13, 
2508.14, 2508.15, 2508.16, and 2508.17, insofar as the system contains 
information pertaining to criminal law enforcement investigations.
    (2) Pursuant to, and limited by 5 U.S.C. 552a(k)(2), the system of 
records maintained by the Office of the Inspector General that contains 
the Investigative Files shall be exempted from 5 U.S.C. 552a (c)(3), 
(d), (e)(1), (e)(4) (G), (H), and (I), and (f), and 45 CFR 2508.11, 
2508.12, 2508.13, 2508.14, 2508.15, 2508.16, and 2508.17, insofar as the 
system contains investigatory materials compiled for law enforcement 
purposes.
    (b) Exemptions to the General Counsel system of records. Pursuant 
to, and limited by 5 U.S.C. 552a(d)(5), the system of records maintained 
by the Office of the General Counsel that contains the Legal Office 
Litigation/Correspondence Files shall be exempted from the provisions of 
5 U.S.C. 552a(d)(5), and 45 CFR 2508.4, insofar as the system contains 
information compiled in reasonable anticipation of a civil action or 
proceeding.



Sec. 2508.20  What are the restrictions regarding the release of mailing lists?

    An individual's name and address may not be sold or rented by the 
Corporation unless such action is specifically authorized by law. This 
section does not require the withholding of names and addresses 
otherwise permitted to be made public.



PART 2510--OVERALL PURPOSES AND DEFINITIONS--Table of Contents




Sec.
2510.10  What are the purposes of the programs and activities of the 
          Corporation for National and Community Service?
2510.20  Definitions.

    Authority: 42 U.S.C. 12501 et seq.



Sec. 2510.10  What are the purposes of the programs and activities of the Corporation for National and Community Service?

    The National and Community Service Trust Act of 1993 established the 
Corporation for National and Community Service (the Corporation). The 
Corporation's mission is to engage Americans of all ages and backgrounds 
in community-based service. This service will address the Nations 
educational, public safety, human, and environmental needs to achieve 
direct and demonstrable results. In doing so, the Corporation will 
foster civic responsibility, strengthen the ties that bind us together 
as a people, and provide educational opportunity for those who make a 
substantial commitment

[[Page 634]]

to service. The Corporation will undertake activities and provide 
assistance to States and other eligible entities to support national and 
community service programs and to achieve other purposes consistent with 
its mission.

[59 FR 13783, Mar. 23, 1994]



Sec. 2510.20  Definitions.

    The following definitions apply to terms used in 45 CFR parts 2510 
through 2550:
    Act. The term Act means the National and Community Service Act of 
1990, as amended (42 U.S.C. 12501 et seq.).
    Administrative costs. The term administrative costs means general or 
centralized expenses of overall administration of an organization that 
receives assistance under the Act and does not include program costs.
    (1) For organizations that have an established indirect cost rate 
for Federal awards, administrative costs mean those costs that are 
included in the organization's indirect cost rate. Such costs are 
generally identified with the organization's overall operation and are 
further described in Office of Management and Budget Circulars A-21 
(Cost Principles for Educational Institutions), A-87 (Cost Principles 
for State, Local and Indian Tribal Governments), and A-122 (Cost 
Principles for Nonprofit Organizations) that provide guidance on 
indirect cost to Federal agencies. Copies of Office of Management and 
Budget Circulars are available from the Executive Office of the 
President, 725 17th Street, NW., room 2200, New Executive Office 
Building, Washington, D.C. 20503. They may also be accessed on-line at: 
http://www.whitehouse.gov/WH/EOP/OMB/grants/index.html.
    (2) For organizations that do not have an established indirect cost 
rate for Federal awards, administrative costs include:
    (i) Costs for financial, accounting, auditing, contracting, or 
general legal services except in unusual cases when they are 
specifically approved in writing by the Corporation as program costs.
    (ii) Costs for internal evaluation, including overall organizational 
management improvement costs (except for independent evaluations and 
internal evaluations of a program or project).
    (iii) Costs for general liability insurance that protects the 
organization(s) responsible for operating a program or project, other 
than insurance costs solely attributable to a program or project.
    Adult Volunteer. (1) The term adult volunteer means an individual, 
such as an older adult, an individual with disability, a parent, or an 
employee of a business of public or private nonprofit organization, who-
-
    (i) Works without financial remuneration in an educational 
institution to assist students of out-of-school youth; and
    (2) Is beyond the age of compulsory school attendance in the State 
in which the educational institution is located.
    AmeriCorps. The term AmeriCorps means the combination of all 
AmeriCorps programs and participants.
    AmeriCorps educational award. The term AmeriCorps educational award 
means a national service educational award described in section 147 of 
the Act.
    AmeriCorps participant. The term AmeriCorps participant means any 
individual who is serving in--
    (1) An AmeriCorps program;
    (2) An approved AmeriCorps position; or
    (3) Both.
    AmeriCorps program. The term AmeriCorps program means--
    (1) Any program that receives approved AmeriCorps positions;
    (2) Any program that receives Corporation funds under section 121 of 
the Act; or
    (3) Both.
    Approved AmeriCorps position. The term approved AmeriCorps position 
means an AmeriCorps position for which the Corporation has approved the 
provision of an AmeriCorps educational award as one of the benefits to 
be provided for successful service in the position.
    Carry out. The term carry out, when used in connection with an 
AmeriCorps program described in section 122 of the Act, means the 
planning, establishment, operation, expansion, or replication of the 
program.

[[Page 635]]

    Chief Executive Officer. The term Chief Executive Officer, except 
when used to refer to the chief executive officer of a State, means the 
Chief Executive Officer of the Corporation appointed under section 193 
of the Act.
    Community-based agency. The term community-based agency means a 
private nonprofit organization (including a church or other religious 
entity) that--
    (1) Is representative of a community or a significant segment of a 
community; and
    (2) Is engaged in meeting educational, public safety, human, or 
environmental community needs.
    Corporation. The term Corporation means the Corporation for National 
and Community Service established under section 191 of the Act.
    Economically disadvantaged. The term economically disadvantaged, 
with respect to an individual, has the same meaning as such term as 
defined in the Job Training Partnership Act (29 U.S.C. 1503(8)).
    Elementary school. The term elementary school has the same meaning 
given the term in section 1471(8) of the Elementary and Secondary 
Education Act of 1965 (20 U.S.C. 2891(8)).
    Empowerment zone. The term empowerment zone means an area designated 
as an empowerment zone by the Secretary of the Department of Housing and 
Urban Development or the Secretary of the Department of Agriculture.
    Grantmaking entity. (1) For school-based programs, the term 
grantmaking entity means a public or private nonprofit organization 
experienced in service-learning that--
    (i) Submits an application to make grants for school-based service-
learning programs in two or more States; and
    (ii) Was in existence at least one year before the date on which the 
organization submitted the application.
    (2) For community-based programs, the term grantmaking entity means 
a qualified organization that--
    (i) Submits an application to make grants to qualified organizations 
to implement, operate, expand, or replicate community-based service 
programs that provide for educational, public safety, human, or 
environmental service by school-age youth in two or more States; and
    (ii) Was in existence at least one year before the date on which the 
organization submitted the application.
    Higher Education partnerships. The term higher education partnership 
means one or more public or private nonprofit organizations, or public 
agencies, including States, and one or more institutions of higher 
education that have entered into a written agreement specifying the 
responsibilities of each partner.
    Indian. The term Indian means a person who is a member of an Indian 
tribe, or is a ``Native'', as defined in section 3(b) of the Alaska 
Native Claims Settlement Act (43 U.S.C. 1602(b)).
    Indian lands. The term Indian lands means any real property owned by 
an Indian tribe, any real property held in trust by the United States 
for an Indian or Indian tribe, and any real property held by an Indian 
or Indian tribe that is subject to restrictions on alienation imposed by 
the United States.
    Indian tribe. The term Indian tribe means--
    (1) An Indian tribe, band, nation, or other organized group or 
community that is recognized as eligible for the special programs and 
services provided by the United States under Federal law to Indians 
because of their status as Indians, including--
    (i) Any Native village, as defined in section 3(c) of the Alaska 
Native Claims Settlement Act (43 U.S.C. 1602(c)), whether organized 
traditionally or pursuant to the Act of June 18, 1934 (commonly known as 
the ``Indian Reorganization Act'', 25 U.S.C. 461 et seq.); and
    (ii) Any Regional Corporation or Village Corporation, as defined in 
subsection (g) or (j), respectively, of section 3 of the Alaska Native 
Claims Settlement Act (43 U.S.C. 1602 (g) or (j)); and
    (2) Any tribal organization controlled, sanctioned, or chartered by 
an entity described in paragraph (1) of this definition.
    Individual with a disability. Except as provided in section 175(a) 
of the Act, the term individual with a disability has the meaning given 
the term in section

[[Page 636]]

7(8)(B) of the Rehabilitation Act of 1973 (29 U.S.C. 706(8)(B)), which 
includes individuals with cognitive and other mental impairments, as 
well as individuals with physical impairments, who meet the criteria in 
that definition.
    Infrastructure-building activities. The term infrastructure-building 
activities refers to activities that increase the capacity of 
organizations, programs and individuals to provide high quality service 
to communities.
    Institution of higher education. The term institution of higher 
education has the same meaning given the term in section 101 of the 
Higher Education Act of 1965 (20 U.S.C. 1001).
    Local educational agency (LEA). The term local educational agency 
has the same meaning given the term in section 1471(12) of the 
Elementary and Secondary Education Act of 1965 (20 U.S.C. 2891(12)).
    Local partnership. The term local partnership means a partnership, 
as defined in Sec. 2510.20 of this chapter, that meets the eligibility 
requirements to apply for subgrants under Sec. 2516.110 or Sec. 2517.110 
of this chapter.
    National nonprofit. The term national nonprofit means any nonprofit 
organization whose mission, membership, activities, or constituencies 
are national in scope.
    National service laws. The term national service laws means the Act 
and the Domestic Volunteer Service Act of 1973 (42 U.S.C. 4950 et seq.).
    Objective. The term objective means a desired accomplishment of a 
program.
    Out-of-school youth. The term out-of-school youth means an 
individual who--
    (1) Has not attained the age of 27;
    (2) Has not completed college or its equivalent; and
    (3) Is not enrolled in an elementary or secondary school or 
institution of higher education.
    Participant. (1) The term participant means an individual enrolled 
in a program that receives assistance under the Act.
    (2) A participant may not be considered to be an employee of the 
program in which the participant is enrolled.
    Partnership. The term partnership means two or more entities that 
have entered into a written agreement specifying the partnership's goals 
and activities as well as the responsibilities, goals, and activities of 
each partner.
    Partnership program. The term partnership program means a program 
through which an adult volunteer, a public or private nonprofit 
organization, an institution of higher education, or a business assists 
a local educational agency.
    Program. The term program, unless the context otherwise requires, 
and except when used as part of the term academic program, means a 
program described in section 111(a) (other than a program referred to in 
paragraph (3)(B) of that section), 117A(a), 119(b)(1), or 122(a) of the 
Act, or in paragraph (1) or (2) of section 152(b) of the Act, or an 
activity that could be funded under sections 198, 198C, or 198D of the 
Act.
    Program costs. The term program costs means expenses directly 
related to a program or project, including their operations and 
objectives. Program costs include, but are not limited to:
    (1) Costs attributable to participants, including: living 
allowances, insurance payments, and expenses for training and travel.
    (2) Costs (including salary, benefits, training, travel) 
attributable to staff who recruit, train, place, support, coordinate, or 
supervise participants, or who develop materials used in such 
activities.
    (3) Costs for independent evaluations and internal evaluations to 
the extent that the evaluations cover only the funded program or 
project.
    (4) Costs, excluding those already covered in an organization's 
indirect cost rate, attributable to staff that work in a direct program 
or project support, operational, or oversight capacity, including, but 
not limited to: support staff whose functions directly support program 
or project activities; staff who coordinate and facilitate single or 
multi-site program and project activities; and staff who review, 
disseminate and implement Corporation guidance and policies directly 
relating to a program or project.
    (5) Space, facility, and communications costs for program or project 
operations and other costs that primarily support program or project 
operations, excluding those costs that are already

[[Page 637]]

covered by an organization's indirect cost rate.
    (6) Other allowable costs, excluding those costs that are already 
covered by an organization's indirect cost rate, specifically approved 
by the Corporation as directly attributable to a program or project.
    Program sponsor. The term program sponsor means an entity 
responsible for recruiting, selecting, and training participants, 
providing them benefits and support services, engaging them in regular 
group activities, and placing them in projects.
    Project. The term project means an activity, or a set of activities, 
carried out through a program that receives assistance under the Act, 
that results in a specific identifiable service or improvement that 
otherwise would not be done with existing funds, and that does not 
duplicate the routine services or functions of the employer to whom 
participants are assigned.
    Project sponsor. The term project sponsor means an organization, or 
other entity, that has been selected to provide a placement for a 
participant.
    Qualified individual with a disability. The term qualified 
individual with a disability has the meaning given the term in section 
101(8) of the Americans with Disabilities Act of 1990 (42 U.S.C. 
12111(8)).
    Qualified organization. The term qualified organization means a 
public or private nonprofit organization, other than a grantmaking 
entity, that--
    (1) Has experience in working with school-age youth; and
    (2) Was in existence at least one year before the date on which the 
organization submitted an application for a service-learning program.
    School-age youth. The term school-age youth means--
    (1) Individuals between the ages of 5 and 17, inclusive; and
    (2) Children with disabilities, as defined in section 602(a)(1) of 
the Individuals with Disabilities Education Act (20 U.S.C. 1401(a)(1)), 
who receive services under part B of that Act.
    Secondary school. The term secondary school has the same meaning 
given the term in section 1471(21) of the Elementary and Secondary 
Education Act of 1965 (20 U.S.C. 2891(21)).
    Service-learning. The term service-learning means a method under 
which students or participants learn and develop through active 
participation in thoughtfully organized service that--
    (1) Is conducted in and meets the needs of a community;
    (2) Is coordinated with an elementary school, secondary school, 
institution of higher education, or community service program, and with 
the community;
    (3) Helps foster civic responsibility;
    (4) Is integrated into and enhances the academic curriculum of the 
students or the educational components of the community service program 
in which the participants are enrolled; and
    (5) Includes structured time for the students and participants to 
reflect on the service experience.
    Service-learning coordinator. The term service-learning coordinator 
means an individual trained in service-learning who identifies community 
partners for LEAs; assists in designing and implementing local 
partnerships service-learning programs; provides technical assistance 
and information to, and facilitates the training of, teachers; and 
provides other services for an LEA.
    State. The term State means each of the several States, the District 
of Columbia, the Commonwealth of Puerto Rico, the United States Virgin 
Islands, Guam, American Samoa, and the Commonwealth of the Northern 
Mariana Islands. The term also includes Palau, until the Compact of Free 
Association is ratified.
    State Commission. The term State Commission means a State Commission 
on National and Community Service maintained by a State pursuant to 
section 178 of the Act. Except when used in section 178, the term 
includes an alternative administrative entity for a State approved by 
the Corporation under that section to act in lieu of a State Commission.
    State educational agency (SEA). The term State educational agency 
has the same meaning given that term in section 1471(23) of the 
Elementary and Secondary Education Act of 1965 (20 U.S.C. 2891(23)).

[[Page 638]]

    Student. The term student means an individual who is enrolled in an 
elementary or secondary school or institution of higher education on a 
full-time or part-time basis.
    Subdivision of a State. The term subdivision of a State means an 
governmental unit within a State other than a unit with Statewide 
responsibilities.
    Subtitle C program. The term subtitle C program means an AmeriCorps 
program authorized and funded under subtitle C of the National and 
Community Service Act of 1990, as amended. (NCSA) (42 U.S.C. 12501 et 
seq.) It does not include demonstration programs, or other AmeriCorps 
programs, funded under subtitle H of the NCSA.
    U.S. Territory. The term U.S. Territory means the Virgin Islands, 
Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, 
and Palau, until the Compact of Free Association with Palau is ratified.

[59 FR 13783, Mar. 23, 1994, as amended at 63 FR 18137, Apr. 14, 1998; 
67 FR 45359, July 9, 2002]



PART 2513--STATE PLAN: PURPOSE, APPLICATION REQUIREMENTS AND SELECTION CRITERIA--Table of Contents




Sec.
2513.10  Who must submit a State Plan?
2513.20  What are the purposes of a State Plan?
2513.30  What information must a State Plan contain?
2513.40  How will the State Plans be evaluated?

    Authority: 42 U.S.C. 12501 et seq.

    Source: 59 FR 13785, Mar. 23, 1994, unless otherwise noted.



Sec. 2513.10  Who must submit a State Plan?

    The fifty States, the District of Columbia, and Puerto Rico, through 
a Corporation-approved State Commission, Alternative Administrative 
Entity, or Transitional Entity must submit a comprehensive national and 
community service plan (``State Plan'') in order to apply to the 
Corporation for support under parts 2515 through 2524 of this chapter.



Sec. 2513.20  What are the purposes of a State Plan?

    The purposes of the State Plan are: (a) To set forth the States plan 
for promoting national and community service and strengthening its 
service infrastructure, including how Corporation-funded programs fit 
into the plan;
    (b) To establish specific priorities and goals that advance the 
State's plan for strengthening its service program infrastructure and to 
specify strategies for achieving the stated goals;
    (c) To inform the Corporation of the relevant historical background 
of the State's infrastructure for supporting national and community 
service and other volunteer opportunities, as well as the current status 
of such infrastructure;
    (d) To assist the Corporation in making decisions on applications to 
receive formula and competitive funding under Sec. 2521.30 of this 
chapter and to assist the Corporation in assessing a State's application 
for renewal funding for State administrative funds as provided in part 
2550 of this chapter; and
    (e) To serve as a working document that forms the basis of on-going 
dialogue between the State and the Corporation and which is subject to 
modifications as circumstances require.



Sec. 2513.30  What information must a State Plan contain?

    The State Plan must include the following information: (a) An 
overview of a State's experience in coordinating and supporting the 
network of service programs within the State that address educational, 
public safety, human, and environmental needs, including, where 
appropriate, a description of specific service programs. This overview 
should encompass programs that have operated independently of and/or 
without financial support from the State;
    (b) A description of the State's priorities and vision for 
strengthening the service program infrastructure, including how programs 
proposed for Corporation funding fit into this vision. The plan should 
also describe how State priorities relate to any national priorities 
established by the Corporation;

[[Page 639]]

    (c) A description of the goals established to advance the State's 
plan, including the strategies for achieving such goals. With respect to 
technical assistance activities (if any) and programs proposed to be 
funded by the Corporation, the plan should describe how such activities 
and programs will be coordinated with other service programs within the 
State. The plan should also describe the manner and extent to which the 
proposed programs will build on existing programs, including Corporation 
programs such as both the K-12 and Higher Education components of the 
Learn and Serve America program, and programs funded under the Domestic 
Volunteer Service Act and other programs;
    (d) A description of the extent to which the State entity has 
coordinated its efforts with the State educational agency (SEA) in the 
SEA's application for school-based service learning funds;
    (e) A description of how the State reached out to a broad cross-
section of individuals and organizations to obtain their participation 
in the development of the State plan, including a discussion of the 
types of organizations and individuals who were actually involved in the 
process and the manner and extent of their involvement; and
    (f) Such other information as the Corporation may reasonably 
require.



Sec. 2513.40  How will the State Plans be evaluated?

    State plans will be evaluated on the basis of the following 
criteria:
    (a) The quality of the plan as evidenced by: (1) The development and 
quality of realistic goals and objectives for moving service ahead in 
the State;
    (2) The extent to which proposed strategies can reasonably be 
expected to accomplish stated goals;
    (3) The extent of input in the development of the State plan from a 
broad cross-section of individuals and organizations including 
community-based agencies; organizations with a demonstrated record of 
providing educational, public safety, human, or environmental services; 
residents of the State, including youth and other prospective 
participants, State Education Agencies; traditional service 
organizations; and labor unions;
    (b) The sustainability of the national service efforts outlined in 
the plan, as evidenced by the extent to which they are supported by: (1) 
The State, through financial, in-kind, and bi-partisan political 
support, including the existence of supportive legislation; and
    (2) Other support, including the financial, in-kind, and other 
support of the private sector, foundations, and other entities and 
individuals; and
    (c) Such other criteria as the Corporation deems necessary.



PART 2515--SERVICE-LEARNING PROGRAM PURPOSES--Table of Contents




    Authority: 42 U.S.C. 12501 et seq.



Sec. 2515.10  What are the service-learning programs of the Corporation for National and Community Service?

    (a) There are three service-learning programs: (1) School-based 
programs, described in part 2516 of this chapter.
    (2) Community-based programs, described in part 2517 of this 
chapter.
    (3) Higher education programs, described in part 2519 of this 
chapter.
    (b) Each program gives participants the opportunity to learn and 
develop their own capabilities through service-learning, while 
addressing needs in the community.

[59 FR 13786, Mar. 23, 1994]



PART 2516--SCHOOL-BASED SERVICE-LEARNING PROGRAMS--Table of Contents




                     Subpart A--Eligibility To Apply

Sec.
2516.100  Who may apply for a direct grant from the Corporation?
2516.110  Who may apply for a subgrant from a Corporation grantee?

                      Subpart B--Use of Grant Funds

2516.200  How may grant funds be used?

                  Subpart C--Eligibility To Participate

2516.300  Who may participate in a school-based service-learning 
          program?
2516.310  May private school students participate?
2516.320  Is a participant eligible to receive an AmeriCorps educational 
          award?

[[Page 640]]

                     Subpart D--Application Contents

2516.400  What must a State or Indian tribe include in an application 
          for a grant?
2516.410  What must a grantmaking entity, local partnership, or LEA 
          include in an application for a grant?
2516.420  What must an LEA, local partnership, or qualified organization 
          include in an application for a subgrant?

                      Subpart E--Application Review

2516.500  How does the Corporation review the merits of an application?
2516.510  What happens if the Corporation rejects a State's application 
          for an allotment grant?
2516.520  How does a State, Indian tribe, or grantmaking entity review 
          the merits of an application?

                    Subpart F--Distribution of Funds

2516.600  How are funds for school-based service-learning programs 
          distributed?

                     Subpart G--Funding Requirements

2516.700  Are matching funds required?
2516.710  Are there limits on the use of funds?
2516.720  What is the length of each type of grant?
2516.730  May an applicant submit more than one application to the 
          Corporation for the same project at the same time?

                   Subpart H--Evaluation Requirements

2516.800  What are the purposes of an evaluation?
2516.810  What types of evaluations are grantees and subgrantees 
          required to perform?
2516.820  What types of internal evaluation activities are required of 
          programs?
2516.830  What types of activities are required of Corporation grantees 
          to evaluate the effectiveness of their subgrantees?
2516.840  By what standards will the Corporation evaluate individual 
          Learn and Serve America programs?
2516.850  What will the Corporation do to evaluate the overall success 
          of the service-learning program?
2516.860  Will information on individual participants be kept 
          confidential?

    Authority: 42 U.S.C. 12501 et seq.

    Source: 59 FR 13786, Mar. 23, 1994, unless otherwise noted.



                     Subpart A--Eligibility To Apply



Sec. 2516.100  Who may apply for a direct grant from the Corporation?

    (a) The following entities may apply for a direct grant from the 
Corporation:
    (1) A State, through a State educational agency (SEA) as defined in 
Sec. 2510.20 of this chapter. For the purpose of part, ``State'' means 
one of the 50 States, the District of Columbia, the Commonwealth of 
Puerto Rico, and, except for the purpose of Sec. 2516.600 (b), U.S. 
Territories.
    (2) An Indian tribe.
    (3) A grantmaking entity as defined in Sec. 2515.20 of this chapter.
    (4) For activities in a nonparticipating State, a local educational 
agency (LEA) as defined in Sec. 2510.20 of this chapter or a local 
partnership as described in Sec. 2516.110.
    (b) The types of grants for which each entity is eligible are 
described in Sec. 2516.200.



Sec. 2516.110  Who may apply for a subgrant from a Corporation grantee?

    Entities that may apply for a subgrant from a State, Indian tribe, 
or grantmaking entity are:
    (a) An LEA, for a grant from a State for planning school-based 
service-learning programs.
    (b) A local partnership, for a grant from a State or a grantmaking 
entity to implement, operate, or expand a school-based service learning 
program.
    (1) The local partnership must include an LEA and one or more 
community partners. The local partnership may include a private for-
profit business or private elementary or secondary school.
    (2) The community partners must include a public or private 
nonprofit organization that has demonstrated expertise in the provision 
of services to meet educational, public safety, human, or environmental 
needs; was in existence at least one year before the date on which the 
organization submitted an application under this part; and will make 
projects available for participants, who must be students.
    (c) A local partnership, for a grant from a State or a grantmaking 
entity

[[Page 641]]

to implement, operate, or expand an adult volunteer program. The local 
partnership must include an LEA and one or more public or private 
nonprofit organizations, other educational agencies, or private for-
profit businesses that coordinate and operate projects for participants 
who must be students.
    (d) A qualified organization, as defined in Sec. 2515.20 of this 
chapter, for a grant from a State or Indian tribe for planning or 
building the capacity of the State or Indian tribe.



                      Subpart B--Use of Grant Funds



Sec. 2516.200  How may grant funds be used?

    Funds under a school based service learning grant may be used for 
the purposes described in this section.
    (a) Planning and capacity-building for States and Indian tribes. (1) 
A State or Indian tribe may use funds to pay for planning and building 
its capacity to implement school-based service-learning programs. These 
entities may use funds either directly or through subgrants or contracts 
with qualified organizations.
    (2) Authorized activities include the following: (i) Providing 
training for teachers, supervisors, personnel from community-based 
agencies (particularly with regard to the utilization of participants) 
and trainers, conducted by qualified individuals or organizations 
experienced in service-learning.
    (ii) Developing service-learning curricula to be integrated into 
academic programs, including the age-appropriate learning components for 
students to analyze and apply their service experiences.
    (iii) Forming local partnerships described in Sec. 2516.110 to 
develop school-based service-learning programs in accordance with this 
part.
    (iv) Devising appropriate methods for research and evaluation of the 
educational value of service-learning and the effect of service-learning 
activities on communities.
    (v) Establishing effective outreach and dissemination of information 
to ensure the broadest possible involvement of community-based agencies 
with demonstrated effectiveness in working with school-age youth in 
their communities.
    (b) Implementing, operating, and expanding school-based programs. 
(1) A State, Indian Tribe, or grantmaking entity may use funds to make 
subgrants to local partnerships described in Sec. 2516.110 (b) to 
implement, operate, or expand school-based service-learning programs.
    (2) If a State does not submit an application that meets the 
requirements for an allotment grant under Sec. 2516.400, the Corporation 
may use the allotment to fund applications from those local partnerships 
for programs in that State.
    (3) Authorized activities include paying the costs of the 
recruitment, training, supervision, placement, salaries and benefits of 
service learning coordinators.
    (4) A grantmaking entity may also use funds to provide technical 
assistance and training to appropriate persons relating to its 
subgrants.
    (c) Planning programs. (1) A State may use funds to make subgrants 
to LEAs for planning school-based service-learning programs.
    (2) If a State does not submit an application that meets the 
requirements for an allotment grant under Sec. 2516.400, the Corporation 
may use the allotment to fund applications from LEAs for planning 
programs in that State.
    (3) Authorized activities include paying the costs of--
    (i) The salaries and benefits of service-learning coordinators as 
defined in Sec. 2510.20 of this chapter; and
    (ii) The recruitment, training, supervision, and placement of 
service-learning coordinators who may be participants in an AmeriCorps 
program described in parts 2520 through 2524 of this chapter or who 
receive AmeriCorps educational awards.
    (d) Adult volunteer programs. (1) A State, Indian tribe, or 
grantmaking entity may use funds to make subgrants to local partnerships 
described in Sec. 2516.110 (c) to implement, operate, or expand school-
based programs involving adult volunteers to utilize service-learning to 
improve the education of students.
    (2) If a State does not submit an application that meets the 
requirements

[[Page 642]]

for an allotment grant under Sec. 2516.400, the Corporation may use the 
allotment to fund applications from those local partnerships for adult 
volunteer programs in that State.
    (e) Planning by Indian tribes and U.S. Territories. If the 
Corporation makes a grant to an Indian tribe or a U.S. Territory to plan 
school-based service-learning programs, the grantee may use the funds 
for that purpose.



                  Subpart C--Eligibility To Participate



Sec. 2516.300  Who may participate in a school-based service-learning program?

    Students who are enrolled in elementary or secondary schools on a 
full-time or part-time basis may participate in school-based programs.



Sec. 2516.310  May private school students participate?

    (a) Yes. To the extent consistent with the number of students in the 
State or Indian tribe or in the school district of the LEA involved who 
are enrolled in private nonprofit elementary or secondary schools, the 
State, Indian tribe, or LEA must (after consultation with appropriate 
private school representatives) make provision--
    (1) For the inclusion of services and arrangements for the benefit 
of those students so as to allow for the equitable participation of the 
students in the programs under this part; and
    (2) For the training of the teachers of those students so as to 
allow for the equitable participation of those teachers in the programs 
under this part.
    (b) (1) If a State, Indian tribe, or LEA is prohibited by law from 
providing for the participation of students or teachers from private 
nonprofit schools as required by paragraph (a) of this section, or if 
the Corporation determines that a State, Indian tribe, or LEA 
substantially fails or is unwilling to provide for their participation 
on an equitable basis, the Corporation will waive those requirements and 
arrange for the provision of services to the students and teachers.
    (2) Waivers will be subject to the Corporation procedures that are 
consistent with the consultation, withholding, notice, and judicial 
review requirements of section 1017(b) (3) and (4) of the Elementary and 
Secondary Education Act of 1965 (20 U.S.C. 2727 (b)).



Sec. 2516.320  Is a participant eligible to receive an AmeriCorps educational award?

    No. However, service-learning coordinators who are approved 
AmeriCorps positions are eligible for AmeriCorps educational awards.



                     Subpart D--Application Contents



Sec. 2516.400  What must a State or Indian tribe include in an application for a grant?

    In order to apply for a grant from the Corporation under this part, 
a State (SEA) or Indian tribe must submit the following: (a) A three-
year strategic plan for promoting service-learning through programs 
under this part, or a revision of a previously approved three-year 
strategic plan. The application of a SEA must include a description of 
how the SEA will coordinate its service-learning plan with the State 
Plan under part 2513 of this chapter and with other federally-assisted 
activities.
    (b) A proposal containing the specific program, budget, and other 
information specified by the Corporation in the grant application 
package.
    (c) Assurances that the applicant will--
    (1) Keep such records and provide such information to the 
Corporation with respect to the programs as may be required for fiscal 
audits and program evaluation; and
    (2) Comply with the nonduplication, nondisplacement, and grievance 
procedure requirements of part 2540 of this chapter.



Sec. 2516.410  What must a grantmaking entity, local partnership, or LEA include in an application for a grant?

    In order to apply to the Corporation for a grant, a grantmaking 
entity, local partnership, or LEA must submit the following: (a) A 
detailed description of the proposed program goals and activities. The 
application of a grantmaking entity must include--

[[Page 643]]

    (1) A description of how the applicant will coordinate its 
activities with the State Plan under part 2513 of this chapter, 
including a description of plans to meet and consult with the State 
Commission, if possible, and to provide a copy of the program 
application to the State Commission and with other federally-assisted 
activities; and
    (2) A description of how the program will be carried out in more 
than one State.
    (b) The specific program, budget, and other information specified by 
the Corporation in the grant application package.
    (c) Assurances that the applicant will--
    (1) Keep such records and provide such information to the 
Corporation with respect to the program as may be required for fiscal 
audits and program evaluation;
    (2) Prior to the placement of a participant, consult with the 
appropriate local labor organization, if any, representing employees in 
the area who are engaged in the same or similar work as that proposed to 
be carried out by the program, to prevent the displacement and protect 
the rights of those employees;
    (3) Develop an age-appropriate learning component for participants 
in the program that includes a chance for participants to analyze and 
apply their service experiences; and
    (4) Comply with the nonduplication, nondisplacement, and grievance 
procedure requirements of part 2540 of this chapter.
    (d) For a local partnership, an assurance that the LEA will serve as 
the fiscal agent.



Sec. 2516.420  What must an LEA, local partnership, or qualified organization include in an application for a subgrant?

    In order to apply for a subgrant from an SEA, Indian tribe, or 
grantmaking entity under this part, an applicant must include the 
information required by the Corporation grantee.



                      Subpart E--Application Review



Sec. 2516.500  How does the Corporation review the merits of an application?

    (a) In reviewing the merits of an application submitted to the 
Corporation under this part, the Corporation evaluates the quality, 
innovation, replicability, and sustainability of the proposal on the 
basis of the following criteria: (1) Quality, as indicated by the extent 
to which--
    (i) The program will provide productive meaningful, educational 
experiences that incorporate service-learning methods;
    (ii) The program will meet community needs and involve individuals 
from diverse backgrounds (including economically disadvantaged youth) 
who will serve together to explore the root causes of community 
problems;
    (iii) The principal leaders of the program will be well qualified 
for their responsibilities;
    (iv) The program has sound plans and processes for training, 
technical assistance, supervision, quality control, evaluation, 
administration, and other key activities; and
    (v) The program will advance knowledge about how to do effective and 
innovative community service and service-learning and enhance the 
broader elementary and secondary education field.
    (2) Replicability, as indicated by the extent to which the program 
will assist others in learning from experience and replicating the 
approach of the program.
    (3) Sustainability, as indicated by the extent to which--
    (i) An SEA, Indian tribe or grantmaking entity applicant 
demonstrates the ability and willingness to coordinate its activities 
with the State Plan under part 2513 of this chapter and with other 
federally assisted activities;
    (ii) The program will foster collaborative efforts among local 
educational agencies, local government agencies, community based 
agencies, businesses, and State agencies;
    (iii) The program will enjoy strong, broad-based community support; 
and

[[Page 644]]

    (iv) There is evidence that financial resources will be available to 
continue the program after the expiration of the grant.
    (b) The Corporation also gives priority to proposals that--
    (1) Involve participants in the design and operation of the program;
    (2) Reflect the greatest need for assistance, such as programs 
targeting low-income areas;
    (3) Involve students from public and private schools serving 
together;
    (4) Involve students of different ages, races, genders, ethnicities, 
abilities and disabilities, or economic backgrounds, serving together;
    (5) Are integrated into the academic program of the participants;
    (6) Best represent the potential of service-learning as a vehicle 
for education reform and school-to-work transition;
    (7) Develop civic responsibility and leadership skills and qualities 
in participants;
    (8) Demonstrate the ability to achieve the goals of this part on the 
basis of the proposal's quality, innovation, replicability, and 
sustainability; or
    (9) Address any other priority established by the Corporation for a 
particular period.
    (c) In reviewing applications submitted by Indian tribes and U.S. 
Territories, the Corporation--
    (1) May decide to approve only planning of school-based service-
learning programs; and
    (2) Will set the amounts of grants in accordance with the respective 
needs of applicants.



Sec. 2516.510  What happens if the Corporation rejects a State's application for an allotment grant?

    If the Corporation rejects a State's application for an allotment 
grant under Sec. 2516.600(b)(2), the Corporation will--
    (a) Promptly notify the State of the reasons for the rejection;
    (b) Provide the State with a reasonable opportunity to revise and 
resubmit the application;
    (c) Provide technical assistance, if necessary; and
    (d) Promptly reconsider the resubmitted application and make a 
decision.



Sec. 2516.520  How does a State, Indian tribe, or grantmaking entity review the merits of an application?

    In reviewing the merits of an application for a subgrant under this 
part, a Corporation grantee must use the criteria and priorities in 
Sec. 2516.500.



                    Subpart F--Distribution of Funds



Sec. 2516.600  How are funds for school-based service-learning programs distributed?

    (a) Of the amounts appropriated to carry out this part for any 
fiscal year, the Corporation will reserve not more than three percent 
for grants to Indian tribes and U.S. Territories to be allotted in 
accordance with their respective needs.
    (b) The Corporation will use the remainder of the funds appropriated 
as follows: (1) Competitive Grants. From 25 percent of the remainder, 
the Corporation may make grants on a competitive basis to States, Indian 
tribes, or grantmaking entities.
    (2) Allotments to States.
    (i) From 37.5 percent of the remainder, the Corporation will allot 
to each State an amount that bears the same ratio to 37.5 percent of the 
remainder as the number of school-age youth in the State bears to the 
total number of school-age youth of all States.
    (ii) From 37.5 percent of the remainder, the Corporation will allot 
to each State an amount that bears the same ratio to 37.5 percent of the 
remainder as the allocation to the State for the previous fiscal year 
under Chapter 1 of Title I of the Elementary and Secondary Education Act 
of 1965 (20 U.S.C. 2711 et seq.) bears to the allocations to all States.
    (iii) Notwithstanding other provisions of paragraph (b)(2) of this 
section, no State will receive an allotment that is less than the 
allotment the State received for fiscal year 1993 from the Commission on 
National and Community Service. If the amount of funds made available in 
a fiscal year is insufficient to make those allotments, the Corporation 
will make additional funds

[[Page 645]]

available from the 25 percent described in paragraph (b)(1) of this 
section for that fiscal year to make those allotments.
    (3) For the purpose of paragraph (b) of this section, ``State'' 
means one of the 50 States, the District of Columbia, and the 
Commonwealth of Puerto Rico.
    (c) If a State or Indian tribe does not submit an application that 
meets the requirements for approval under this part, the Corporation 
(after making any grants to local partnerships or LEAs for activities in 
nonparticipating States) may use its allotment for States and Indian 
tribes with approved applications, as the Corporation determines 
appropriate.
    (d) Notwithstanding other provisions of this section, if less than 
$20,000,000 is made available in any fiscal year to carry out this part, 
the Corporation will make all grants to States and Indian tribes on a 
competitive basis.



                     Subpart G--Funding Requirements



Sec. 2516.700  Are matching funds required?

    (a) Yes. The Corporation share of the cost of carrying out a program 
funded under this part may not exceed--
    (1) Ninety percent of the total cost for the first year for which 
the program receives assistance;
    (2) Eighty percent of the total cost for the second year;
    (3) Seventy percent of the total cost for the third year; and
    (4) Fifty percent of the total cost for the fourth year and any 
subsequent year.
    (b) In providing for the remaining share of the cost of carrying out 
a program, each recipient of assistance must provide for that share 
through a payment in cash or in kind, fairly evaluated, including 
facilities, equipment, or services, and may provide for that share 
through State sources, local sources, or Federal sources (other than 
funds made available under the national service laws).
    (c) However, the Corporation may waive the requirements of paragraph 
(b) of this section in whole or in part with respect to any program in 
any fiscal year if the Corporation determines that the waiver would be 
equitable due to a lack of available financial resources at the local 
level.



Sec. 2516.710  Are there limits on the use of funds?

    Yes. The following limits apply to funds available under this part:
    (a) (1) Not more than five percent of the grant funds provided under 
this part for any fiscal year may be used to pay for administrative 
costs, as defined in Sec. 2510.20 of this chapter.
    (2) The distribution of administrative costs between the grant and 
any subgrant will be subject to the approval of the Corporation.
    (3) In applying the limitation on administrative costs the 
Corporation will approve one of the following methods in the award 
document:
    (i) Limit the amount or rate of indirect costs that may be paid with 
Corporation funds under a grant or subgrant to five percent of total 
Corporation funds expended, provided that--
    (A) Organizations that have an established indirect cost rate for 
Federal awards will be limited to this method; and
    (B) Unreimbursed indirect costs may be applied to meeting 
operational matching requirements under the Corporation's award;
    (ii) Specify that a fixed rate of five percent or less (not subject 
to supporting cost documentation) of total Corporation funds expended 
may be used to pay for administrative costs, provided that the fixed 
rate is in conjunction with an overall 15 percent administrative cost 
factor to be used for organizations that do not have established 
indirect cost rates; or
    (iii) Utilize such other method that the Corporation determines in 
writing is consistent with OMB guidance and other applicable 
requirements, helps minimize the burden on grantees or subgrantees, and 
is beneficial to grantees or subgrantees and the Federal Government.
    (b) (1) An SEA or Indian tribe must spend between ten and 15 percent 
of the grant to build capacity through training, technical assistance, 
curriculum development, and coordination activities.

[[Page 646]]

    (2) The Corporation may waive this requirement in order to permit an 
SEA or a tribe to use between ten percent and 20 percent of the grant 
funds to build capacity. To be eligible to receive the waiver, the SEA 
or tribe must submit an application to the Corporation.
    (c) Funds made available under this part may not be used to pay any 
stipend, allowance, or other financial support to any participant in a 
service-learning program under this part except reimbursement for 
transportation, meals, and other reasonable out-of-pocket expenses 
directly related to participation in a program assisted under this part.

[63 FR 18137, Apr. 14, 1998]



Sec. 2516.720  What is the length of each type of grant?

    (a) One year is the maximum length of--
    (1) A planning grant under Sec. 2516.200 (a), (c) or (e); and
    (2) A grant to a local partnership for activities in a 
nonparticipating State under Sec. 2516.200 (b)(2) and (d)(2).
    (b) All other grants are for a period of up to three years, subject 
to satisfactory performance and annual appropriations.



Sec. 2516.730  May an applicant submit more than one application to the Corporation for the same project at the same time?

    No. The Corporation will reject an application for a project if an 
application for funding or educational awards for the same project is 
already pending before the Corporation.



                   Subpart H--Evaluation Requirements



Sec. 2516.800  What are the purposes of an evaluation?

    Every evaluation effort should serve to improve program quality, 
examine benefits of service, or fulfill legislative requirements.



Sec. 2516.810  What types of evaluations are grantees and subgrantees required to perform?

    All grantees and subgrantees are required to perform internal 
evaluations which are ongoing efforts to assess performance and improve 
quality. Grantees and subgrantees may, but are not required to, arrange 
for independent evaluations which are assessments of program 
effectiveness by individuals who are not directly involved in the 
administration of the program. The cost of independent evaluations is 
allowable.



Sec. 2516.820  What types of internal evaluation activities are required of programs?

    Programs are required to: (a) Continuously assess management 
effectiveness, the quality of services provided, and the satisfaction of 
both participants and service recipients. Internal evaluations should 
seek frequent feedback and provide for quick correction of weakness. The 
Corporation encourages programs to use internal evaluation methods, such 
as community advisory councils, participant advisory councils, peer 
reviews, quality control inspections, and service recipient and 
participant surveys.
    (b) Track progress toward pre-established objectives. Objectives 
must be established by programs and approved by the Corporation. 
Programs must submit to the Corporation (or the Corporation grantee as 
applicable) periodic performance reports.
    (c) Collect and submit to the Corporation (through the Corporation 
grantee as applicable) the following data: (1) The total number of 
participants in each program and basic demographic characteristics of 
the participants including sex, age, economic background, education 
level, ethnic group, disability classification, and geographic region.
    (2) Other information as required by the Corporation.
    (d) Cooperate fully with all Corporation evaluation activities.



Sec. 2516.830  What types of activities are required of Corporation grantees to evaluate the effectiveness of their subgrantees?

    A Corporation grantee that makes subgrants must do the following: 
(a) Ensure that subgrantees comply with the requirements of 
Sec. 2516.840.

[[Page 647]]

    (b) Track program performance in terms of progress toward pre-
established objectives; ensure that corrective action is taken when 
necessary; and submit to the Corporation periodic performance reports.
    (c) Collect from programs and submit to the Corporation the 
descriptive information required in Sec. 2516.820(c)(1).
    (d) Cooperate fully with all Corporation evaluation activities.



Sec. 2516.840  By what standards will the Corporation evaluate individual Learn and Serve America programs?

    The Corporation will evaluate programs based on the following: (a) 
The extent to which the program meets the objectives established and 
agreed to by the grantee and the Corporation before the grant award.
    (b) The extent to which the program is cost-effective.
    (c) Other criteria as determined and published by the Corporation.



Sec. 2516.850  What will the Corporation do to evaluate the overall success of the service-learning program?

    (a) The Corporation will conduct independent evaluations. These 
evaluations will consider the opinions of participants and members of 
the communities where services are delivered. If appropriate, these 
evaluations will compare participants with individuals who have not 
participated in service-learning programs. These evaluations will--
    (1) Study the extent to which service-learning programs as a whole 
affect the involved communities;
    (2) Determine the extent to which service-learning programs as a 
whole increase academic learning of participants, enhance civic 
education, and foster continued community involvement; and
    (3) Determine the effectiveness of different program models.
    (b) The Corporation will also determine by June 30, 1995, whether 
outcomes of service-learning programs are defined and measured 
appropriately, and the implications of the results from such a study for 
authorized funding levels.



Sec. 2516.860  Will information on individual participants be kept confidential?

    (a) Yes. The Corporation will maintain the confidentiality of 
information regarding individual participants that is acquired for the 
purpose of the evaluations described in Sec. 2516.840. The Corporation 
will disclose individual participant information only with the prior 
written consent of the participant. However, the Corporation may 
disclose aggregate participant information.
    (b) Grantees and subgrantees under this part must comply with the 
provisions of paragraph (a) of this section.



PART 2517--COMMUNITY-BASED SERVICE-LEARNING PROGRAMS--Table of Contents




                     Subpart A--Eligibility To Apply

Sec.
2517.100  Who may apply for a direct grant from the Corporation?
2517.110  Who may apply for a subgrant from a Corporation grantee?

                      Subpart B--Use of Grant Funds

2517.200  How may grant funds be used?

                  Subpart C--Eligibility To Participate

2517.300  Who may participate in a community-based service-learning 
          program?

                     Subpart D--Application Contents

2517.400  What must a State Commission or grantmaking entity include in 
          an application for a grant?
2517.410  What must a qualified organization include in an application 
          for a grant or a subgrant?

                      Subpart E--Application Review

2517.500  How is an application reviewed?

                    Subpart F--Distribution of Funds

2517.600  How are funds for community-based service-learning programs 
          distributed?

                     Subpart G--Funding Requirements

2517.700  Are matching funds required?
2517.710  Are there limits on the use of funds?
2517.720  What is the length of a grant?
2517.730  May an applicant submit more than one application to the 
          Corporation for the same project at the same time?

[[Page 648]]

                   Subpart H--Evaluation Requirements

2517.800  What are the evaluation requirements for community-based 
          programs?

    Authority: 42 U.S.C. 12501 et seq.

    Source: 59 FR 13790, Mar. 23, 1994, unless otherwise noted.



                     Subpart A--Eligibility To Apply



Sec. 2517.100  Who may apply for a direct grant from the Corporation?

    (a) The following entities may apply for a direct grant from the 
Corporation: (1) A State Commission established under part 2550 of this 
chapter.
    (2) A grantmaking entity as defined in Sec. 2510.20 of this chapter.
    (3) A qualified organization as defined in Sec. 2515.20 of this 
chapter.
    (b) The types of grants for which each entity is eligible are 
described in Sec. 2517.200.



Sec. 2517.110  Who may apply for a subgrant from a Corporation grantee?

    Entities that may apply for a subgrant from a State Commission or 
grantmaking entity are qualified organizations that have entered into a 
local partnership with one or more--
    (a) Local educational agencies (LEAs);
    (b) Other qualified organizations; or
    (c) Both.



                      Subpart B--Use of Grant Funds



Sec. 2517.200  How may grant funds be used?

    Funds under a community-based Learn and Serve grant may be used for 
the purposes described in this section.
    (a) A State Commission or grantmaking entity may use funds--
    (1) To make subgrants to qualified organizations described in 
Sec. 2517.110 to implement, operate, expand, or replicate a community-
based service program that provides direct and demonstrable educational, 
public safety, human, or environmental service by participants, who must 
be school-age youth; and
    (2) To provide training and technical assistance to qualified 
organizations.
    (b) (1) A qualified organization may use funds under a direct grant 
or a subgrant to implement, operate, expand, or replicate a community-
based service program.
    (2) If a qualified organization receives a direct grant, its program 
must be carried out at multiple sites or be particularly innovative.



                  Subpart C--Eligibility To Participate



Sec. 2517.300  Who may participate in a community-based service-learning program?

    School-age youth as defined in Sec. 2510.20 of this chapter may 
participate in a community-based program.



                     Subpart D--Application Contents



Sec. 2517.400  What must a State Commission or grantmaking entity include in an application for a grant?

    (a) In order to apply for a grant from the Corporation under this 
part, a State Commission or a grantmaking entity must submit the 
following: (1) A three-year plan for promoting service-learning through 
programs under this part. The plan must describe the types of community-
based program models proposed to be carried out during the first year.
    (2) A proposal containing the specific program, budget, and other 
information specified by the Corporation in the grant application 
package.
    (3) A description of how the applicant will coordinate its 
activities with the State Plan under part 2513 of this chapter and with 
other federally-assisted activities, including a description of plans to 
meet and consult with the State Commission, if possible, and to provide 
a copy of the program application to the State Commission.
    (4) Assurances that the applicant will--
    (i) Keep such records and provide such information to the 
Corporation with respect to the programs as may be required for fiscal 
audits and program evaluation;
    (ii) Comply with the nonduplication, nondisplacement, and grievance 
procedure requirements of part 2540 of this chapter; and
    (iii) Ensure that, prior to placing a participant in a program, the 
entity

[[Page 649]]

carrying out the program will consult with the appropriate local labor 
organization, if any, representing employees in the area in which the 
program will be carried out that are engaged in the same or similar work 
as the work proposed to be carried out by the program, to prevent the 
displacement of those employees.
    (b) In addition, a grantmaking entity must submit information 
demonstrating that the entity will make grants for a program--
    (1) To carry out activities in two or more States, under 
circumstances in which those activities can be carried out more 
efficiently through one program than through two or more programs; and
    (2) To carry out the same activities, such as training activities or 
activities related to exchanging information on service experiences, 
through each of the projects assisted through the program.



Sec. 2517.410  What must a qualified organization include in an application for a grant or a subgrant?

    (a) In order to apply to the Corporation for a direct grant, a 
qualified organization must submit the following: (1) A plan describing 
the goals and activities of the proposed program;
    (2) A proposal containing the specific program, budget, and other 
information specified by the Corporation in the grant application 
package; and
    (3) Assurances that the applicant will--
    (i) Keep such records and provide such information to the 
Corporation with respect to the program as may be required for fiscal 
audits and program evaluation;
    (ii) Comply with the nonduplication, nondisplacement, and grievance 
procedure requirements of part 2540 of this chapter; and
    (iii) Prior to placing a participant in the program, consult with 
the appropriate local labor organization, if any, representing employees 
in the area in which the program will be carried out who are engaged in 
the same or similar work as the work proposed to be carried out by the 
program, to prevent the displacement of those employees.
    (b) In order to apply to a State Commission or a grantmaking entity 
for a subgrant, a qualified organization must submit the following: (1) 
A plan describing the goals and activities of the proposed program; and
    (2) Such specific program, budget, and other information as the 
Commission or entity reasonably requires.



                      Subpart E--Application Review



Sec. 2517.500  How is an application reviewed?

    In reviewing an application for a grant or a subgrant, the 
Corporation, a State Commission, or a grantmaking entity will apply the 
following criteria: (a) The quality of the program proposed.
    (b) The innovation of, and feasibility of replicating, the program.
    (c) The sustainability of the program, based on--
    (1) Strong and broad-based community support;
    (2) Multiple funding sources or private funding; and
    (3) Coordination with the State Plan under part 2513 of this chapter 
and other federally-assisted activities.
    (d) The quality of the leadership of the program, past performance 
of the program, and the extent to which the program builds on existing 
programs.
    (e) The applicant's efforts--
    (1) To recruit participants from among residents of the communities 
in which projects would be conducted;
    (2) To ensure that the projects are open to participants of 
different ages, races, genders, ethnicities, abilities and disabilities, 
and economic backgrounds; and
    (3) To involve participants and community residents in the design, 
leadership, and operation of the program.
    (f) The extent to which projects would be located in areas that are-
-
    (1) Empowerment zones, redevelopment areas, or other areas with high 
concentrations of low-income people; or
    (2) Environmentally distressed.

[[Page 650]]



                    Subpart F--Distribution of Funds



Sec. 2517.600  How are funds for community-based service-learning programs distributed?

    All funds are distributed by the Corporation through competitive 
grants.



                     Subpart G--Funding Requirements



Sec. 2517.700  Are matching funds required?

    (a) Yes. The Corporation share of the cost of carrying out a program 
funded under this part may not exceed--
    (1) Ninety percent of the total cost for the first year for which 
the program receives assistance;
    (2) Eighty percent of the total cost for the second year;
    (3) Seventy percent of the total cost for the third year; and
    (4) Fifty percent of the total cost for the fourth year and any 
subsequent year.
    (b) In providing for the remaining share of the cost of carrying out 
a program, each recipient of assistance must provide for that share 
through a payment in cash or in kind, fairly evaluated, including 
facilities, equipment, or services, and may provide for that share 
through State sources, local sources, or Federal sources (other than 
funds made available under the national service laws).
    (c) However, the Corporation may waive the requirements of paragraph 
(b) of this section in whole or in part with respect to any program in 
any fiscal year if the Corporation determines that the waiver would be 
equitable due to lack of available financial resources at the local 
level.



Sec. 2517.710  Are there limits on the use of funds?

    Yes. The following limits apply to funds available under this part:
    (a) (1) Not more than five percent of the grant funds provided under 
this part for any fiscal year may be used to pay for administrative 
costs, as defined in Sec. 2510.20 of this chapter.
    (2) The distribution of administrative costs between the grant and 
any subgrant will be subject to the approval of the Corporation.
    (3) In applying the limitation on administrative costs the 
Corporation will approve one of the following methods in the award 
document:
    (i) Limit the amount or rate of indirect costs that may be paid with 
Corporation funds under a grant or subgrant to five percent of total 
Corporation funds expended, provided that--
    (A) Organizations that have an established indirect cost rate for 
Federal awards will be limited to this method; and
    (B) Unreimbursed indirect costs may be applied to meeting 
operational matching requirements under the Corporation's award;
    (ii) Specify that a fixed rate of five percent or less (not subject 
to supporting cost documentation) of total Corporation funds expended 
may be used to pay for administrative costs, provided that the fixed 
rate is in conjunction with an overall 15 percent administrative cost 
factor to be used for organizations that do not have established 
indirect cost rates; or
    (iii) Utilize such other method that the Corporation determines in 
writing is consistent with OMB guidance and other applicable 
requirements, helps minimize the burden on grantees or subgrantees, and 
is beneficial to grantees or subgrantees and the Federal Government.
    (b) (1) An SEA or Indian tribe must spend between ten and 15 percent 
of the grant to build capacity through training, technical assistance, 
curriculum development, and coordination activities.
    (2) The Corporation may waive this requirement in order to permit an 
SEA or a tribe to use between ten percent and 20 percent of the grant 
funds to build capacity. To be eligible to receive the waiver, the SEA 
or tribe must submit an application to the Corporation.
    (c) Funds made available under this part may not be used to pay any 
stipend, allowance, or other financial support to any participant in a 
service-learning program under this part except reimbursement for 
transportation, meals, and other reasonable out-of-pocket expenses 
directly related to

[[Page 651]]

participation in a program assisted under this part.

[63 FR 18137, Apr. 14, 1998]



Sec. 2517.720  What is the length of a grant?

    A grant under this part is for a period of up to three years, 
subject to satisfactory performance and annual appropriations.



Sec. 2517.730  May an applicant submit more than one application to the Corporation for the same project at the same time?

    No. The Corporation will reject an application for a project if an 
application for funding or educational awards for the same project is 
already pending before the Corporation.



                   Subpart H--Evaluation Requirements



Sec. 2517.800  What are the evaluation requirements for community-based programs?

    The evaluation requirements for recipients of grants and subgrants 
under part 2516 of this chapter, relating to school-based service-
learning programs, apply to recipients under this part.



PART 2518--SERVICE-LEARNING CLEARINGHOUSE--Table of Contents




Sec.
2518.100  What is the purpose of a Service-Learning Clearinghouse?
2518.110  What are the functions of a Service-Learning Clearinghouse?

    Authority: 42 U.S.C. 12501 et seq.



Sec. 2518.100  What is the purpose of a Service-Learning Clearinghouse?

    The Corporation will provide financial assistance, from funds 
appropriated to carry out the activities listed under parts 2530 through 
2533 of this chapter, to public or private nonprofit organizations that 
have extensive experience with service-learning, including use of adult 
volunteers to foster service-learning, to establish a clearinghouse, 
which will carry out activities, either directly or by arrangement with 
another such organization, with respect to information about service-
learning.

[59 FR 13792, Mar. 23, 1994]



Sec. 2518.110  What are the functions of a Service-Learning Clearinghouse?

    An organization that receives assistance from funds appropriated to 
carry out the activities listed under parts 2530 through 2533 of this 
chapter may--
    (a) Assist entities carrying out State or local service-learning 
programs with needs assessments and planning;
    (b) Conduct research and evaluations concerning service-learning;
    (c)(1) Provide leadership development and training to State and 
local service-learning program administrators, supervisors, project 
sponsors, and participants; and
    (2) Provide training to persons who can provide the leadership 
development and training described in paragraph (c)(1) of this section;
    (d) Facilitate communication among entities carrying out service-
learning programs and participants in such programs;
    (e) Provide information, curriculum materials, and technical 
assistance relating to planning and operation of service-learning 
programs, to States and local entities eligible to receive financial 
assistance under this title;
    (f) Provide information regarding methods to make service-learning 
programs accessible to individuals with disabilities;
    (g)(1) Gather and disseminate information on successful service-
learning programs, components of such successful programs, innovative 
youth skills curricula related to service-learning, and service-learning 
projects; and
    (2) Coordinate the activities of the Clearinghouse with appropriate 
entities to avoid duplication of effort;
    (h) Make recommendations to State and local entities on quality 
controls to improve the quality of service-learning programs;
    (i) Assist organizations in recruiting, screening, and placing 
service-learning coordinators; and
    (j) Carry out such other activities as the Chief Executive Officer 
determines to be appropriate.

[59 FR 13792, Mar. 23, 1994]

[[Page 652]]



PART 2519--HIGHER EDUCATION INNOVATIVE PROGRAMS FOR COMMUNITY SERVICE--Table of Contents




               Subpart A--Purpose and Eligibility To Apply

Sec.
2519.100  What is the purpose of the Higher Education programs?
2519.110  Who may apply for a grant?

                      Subpart B--Use of Grant Funds

2519.200  How may grant funds be used?

             Subpart C--Participant Eligibility and Benefits

2519.300  Who may participate in a Higher Education program?
2519.310  Is a participant eligible to receive an AmeriCorps educational 
          award?
2519.320  May a program provide a stipend to a participant?

                     Subpart D--Application Contents

2519.400  What must an applicant include in an application for a grant?

                      Subpart E--Application Review

2519.500  How does the Corporation review the merits of an application?

                    Subpart F--Distribution of Funds

2519.600  How are funds for Higher Education programs distributed?

                     Subpart G--Funding Requirements

2519.700  Are matching funds required?
2519.710  Are there limits on the use of funds?
2519.720  What is the length of a grant?
2519.730  May an applicant submit more than one application to the 
          Corporation for the same project at the same time?

                   Subpart H--Evaluation Requirements

2519.800  What are the evaluation requirements for Higher Education 
          programs?

    Authority: 42 U.S.C. 12501 et seq.

    Source: 59 FR 13792, Mar. 23, 1994, unless otherwise noted.



               Subpart A--Purpose and Eligibility To Apply



Sec. 2519.100  What is the purpose of the Higher Education programs?

    The purpose of the higher education innovative programs for 
community service is to expand participation in community service by 
supporting high-quality, sustainable community service programs carried 
out through institutions of higher education, acting as civic 
institutions helping to meet the educational, public safety, human, and 
environmental needs of the communities in which the programs operate.



Sec. 2519.110  Who may apply for a grant?

    The following entities may apply for a grant from the Corporation: 
(a) An institution of higher education.
    (b) A consortium of institutions of higher education.
    (c) A higher education partnership, as defined in Sec. 2510.20 of 
this chapter.



                      Subpart B--Use of Grant Funds



Sec. 2519.200  How may grant funds be used?

    Funds under a higher education program grant may be used for the 
following activities: (a) Enabling an institution of higher education, a 
higher education partnership or a consortium to create or expand an 
organized community service program that--
    (1) Engenders a sense of social responsibility and commitment to the 
community in which the institution is located; and
    (2) Provides projects for the participants described in 
Sec. 2519.300.
    (b) Supporting student-initiated and student-designed community 
service projects.
    (c) Strengthening the leadership and instructional capacity of 
teachers at the elementary, secondary, and postsecondary levels with 
respect to service-learning by--
    (1) Including service-learning as a key component of the preservice 
teacher education of the institution; and
    (2) Encouraging the faculty of the institution to use service-
learning methods throughout the curriculum.
    (d) Facilitating the integration of community service carried out 
under the grant into academic curricula, including integration of 
clinical programs into the curriculum for students in professional 
schools, so that students may obtain credit for their community service 
projects.

[[Page 653]]

    (e) Supplementing the funds available to carry out work-study 
programs under part C of title IV of the Higher Education Act of 1965 
(42 U.S.C. 2751 et seq.) to support service-learning and community 
service.
    (f) Strengthening the service infrastructure within institutions of 
higher education in the United States that supports service-learning and 
community service.
    (g) Providing for the training of teachers, prospective teachers, 
related education personnel, and community leaders in the skills 
necessary to develop, supervise, and organize service-learning.



             Subpart C--Participant Eligibility and Benefits



Sec. 2519.300  Who may participate in a Higher Education program?

    Students, faculty, administration and staff of an institution, as 
well as residents of the community may participate. For the purpose of 
this part, the term ``student'' means an individual who is enrolled in 
an institution of higher education on a full-time or part-time basis.



Sec. 2519.310  Is a participant eligible to receive an AmeriCorps educational award?

    In general, no. However, certain positions in programs funded under 
this part may qualify as approved AmeriCorps positions. The Corporation 
will establish eligibility requirements for these positions as a part of 
the application package.



Sec. 2519.320  May a program provide a stipend to a participant?

    (a) A program may provide a stipend for service activities for a 
participant who is a student if the provision of stipends in reasonable 
in the context of a program's design and objectives.
    (1) A program may not provide a stipend to a student who is 
receiving academic credit for service activities unless the service 
activities require a substantial time commitment beyond that expected 
for the credit earned.
    (2) A participant who is earning money for service activities under 
the work-study program described in Sec. 2519.200(e) may not receive an 
additional stipend from funds under this part.
    (b) Consistent with the AmeriCorps program requirements in 
Sec. 2522.100 of this chapter, a program with participants serving in 
approved full-time AmeriCorps positions must ensure the provision of a 
living allowance and, if necessary, health care and child care to those 
participants. A program may, but is not required to, provide a prorated 
living allowance to individuals participating in approved AmeriCorps 
positions on a part-time basis, consistent with the AmeriCorps program 
requirements in Sec. 2522.240 of this chapter.



                     Subpart D--Application Contents



Sec. 2519.400  What must an applicant include in an application for a grant?

    In order to apply to the Corporation for a grant, an applicant must 
submit the following: (a) A plan describing the goals and activities of 
the proposed program.
    (b) The specific program, budget, and other information and 
assurances specified by the Corporation in the grant application 
package.
    (c) Assurances that the applicant will--
    (1) Keep such records and provide such information to the 
Corporation with respect to the program as may be required for fiscal 
audits and program evaluation;
    (2) Comply with the nonduplication, nondisplacement, and grievance 
procedure requirements of part 2540 of this chapter;
    (3) Prior to the placement of a participant in the program, consult 
with the appropriate local labor organization, if any, representing 
employees in the area who are engaged in the same or similar work as the 
work proposed to be carried out by the program, to prevent the 
displacement and protect the rights of those employees; and
    (4) Comply with any other assurances that the Corporation deems 
necessary.

[[Page 654]]



                      Subpart E--Application Review



Sec. 2519.500  How does the Corporation review an application?

    (a) The Corporation will review an application submitted under this 
part on the basis of the quality, innovation, replicability, and 
sustainability of the proposed program and such other criteria as the 
Corporation establishes in an application package.
    (b) In addition, in reviewing an application submitted under this 
part, the Corporation will give a proposed program increased priority 
for each characteristic described in paragraphs (b) (1) through (7) of 
this section. Priority programs--
    (1) Demonstrate the commitment of the institution of higher 
education, other than by demonstrating the commitment of its students, 
to supporting the community service projects carried out under the 
program;
    (2) Specify how the institution will promote faculty, 
administration, and staff participation in the community service 
projects;
    (3) Specify the manner in which the institution will provide service 
to the community through organized programs, including, where 
appropriate, clinical programs for students in professional schools;
    (4) Describe any higher education partnership that will participate 
in the community service projects, such as a higher education 
partnership comprised of the institution, a student organization, a 
community-based agency, a local government agency, or a nonprofit entity 
that serves or involves school-age youth or older adults;
    (5) Demonstrate community involvement in the development of the 
proposal;
    (6) Specify that the institution will use funds under this part to 
strengthen the infrastructure in institutions of higher education; or
    (7) With respect to projects involving delivery of service, specify 
projects that involve leadership development of school-age youth.
    (c) In addition, the Corporation may designate additional priorities 
in an application package that will be used in selecting programs.



                    Subpart F--Distribution of Funds



Sec. 2519.600  How are funds for Higher Education programs distributed?

    All funds under this part are distributed by the Corporation through 
grants or by contract.



                     Subpart G--Funding Requirements



Sec. 2519.700  Are matching funds required?

    (a) Yes. The Corporation share of the cost of carrying out a program 
funded under this part may not exceed 50 percent.
    (b) In providing for the remaining share of the cost of carrying out 
a program, each recipient of assistance must provide for that share 
through a payment in cash or in kind, fairly evaluated, including 
facilities, equipment, or services, and may provide for that share 
through State sources, local sources, of Federal sources (other than 
funds made available under the national service laws).
    (c) However, the Corporation may waive the requirements of paragraph 
(b) of this section in whole or in part with respect to any program in 
any fiscal year if the Corporation determines that the waiver would be 
equitable due to lack of available financial resources at the local 
level.



Sec. 2519.710  Are there limits on the use of funds?

    Yes. The following limits apply to funds available under this part:
    (a) (1) Not more than five percent of the grant funds provided under 
this part for any fiscal year may be used to pay for administrative 
costs, as defined in Sec. 2510.20 of this chapter.
    (2) The distribution of administrative costs between the grant and 
any subgrant will be subject to the approval of the Corporation.
    (3) In applying the limitation on administrative costs the 
Corporation will approve one of the following methods in the award 
document:
    (i) Limit the amount or rate of indirect costs that may be paid with 
Corporation funds under a grant or subgrant to five percent of total 
Corporation funds expended, provided that--

[[Page 655]]

    (A) Organizations that have an established indirect cost rate for 
Federal awards will be limited to this method; and
    (B) Unreimbursed indirect costs may be applied to meeting 
operational matching requirements under the Corporation's award;
    (ii) Specify that a fixed rate of five percent or less (not subject 
to supporting cost documentation) of total Corporation funds expended 
may be used to pay for administrative costs, provided that the fixed 
rate is in conjunction with an overall 15 percent administrative cost 
factor to be used for organizations that do not have established 
indirect cost rates; or
    (iii) Utilize such other method that the Corporation determines in 
writing is consistent with OMB guidance and other applicable 
requirements, helps minimize the burden on grantees or subgrantees, and 
is beneficial to grantees or subgrantees and the Federal Government.

[63 FR 18138, Apr. 14, 1998]



Sec. 2519.720  What is the length of a grant?

    A grant under this part is for a period of up to three years, 
subject to satisfactory performance and annual appropriations.



Sec. 2519.730  May an applicant submit more than one application to the Corporation for the same project at the same time?

    No. The Corporation will reject an application for a project if an 
application for funding or educational awards for the same project is 
already pending before the Corporation.



                   Subpart H--Evaluation Requirements



Sec. 2519.800  What are the evaluation requirements for Higher Education programs?

    The monitoring and evaluation requirements for recipients of grants 
and subgrants under part 2516 of this chapter, relating to school-based 
service-learning programs, apply to recipients under this part.



PART 2520--GENERAL PROVISIONS: AMERICORPS SUBTITLE C PROGRAMS--Table of Contents




Sec.
2520.10  What is the purpose of the AmeriCorps subtitle C program 
          described in parts 2520 through 2524 of this chapter?
2520.20  What types of service activities are allowed for AmeriCorps 
          subtitle C programs supported under parts 2520 through 2524 of 
          this chapter?
2520.30  What activities are prohibited in AmeriCorps subtitle C 
          programs?

    Authority: 42 U.S.C. 12501 et seq.

    Source: 59 FR 13794, Mar. 23, 1994, unless otherwise noted.



Sec. 2520.10  What is the purpose of the AmeriCorps subtitle C program described in parts 2520 through 2524 of this chapter?

    The purpose of the AmeriCorps subtitle C program is to provide 
financial assistance under subtitle C of the National and Community 
Service Act to support AmeriCorps programs that address educational, 
public safety, human, or environmental needs through national and 
community service, and to provide AmeriCorps education awards to 
participants in such programs.

[67 FR 45359, July 9, 2002]



Sec. 2520.20  What types of service activities are allowed for AmeriCorps subtitle C programs supported under parts 2520 through 2524 of this chapter?

    (a) Except as provided in paragraph (b) of this section, the service 
must either provide a direct benefit to the community where it is 
performed, or involve the supervision of participants or volunteers 
whose service provides a direct benefit to the community where it is 
performed. Moreover, the approved AmeriCorps activities must result in a 
specific identifiable service or improvement that otherwise would not be 
provided and that does not duplicate the routine functions of workers or 
displace paid employees. Programs must develop service opportunities 
that are appropriate to the skill levels of participants and that 
provide a demonstrable, identifiable benefit that the community values.

[[Page 656]]

    (b) In certain circumstances, some activities may not provide a 
direct benefit to the communities in which the service is performed. 
Such activities may include, but are not limited to, clerical work and 
research. However, a participant may engage in such activities only if 
the performance of the activity is incidental to the program's provision 
of service that does provide a direct benefit to the community in which 
the service is performed, or if the Corporation approves such activities 
in connection with disaster relief, homeland defense, or other 
compelling community needs.

[67 FR 45359, July 9, 2002]



Sec. 2520.30  What activities are prohibited in AmeriCorps subtitle C programs?

    (a) While charging time to the AmeriCorps program, accumulating 
service or training hours, or otherwise performing activities supported 
by the AmeriCorps program or the Corporation, staff and members may not 
engage in the following activities:
    (1) Attempting to influence legislation;
    (2) Organizing or engaging in protests, petitions, boycotts, or 
strikes;
    (3) Assisting, promoting, or deterring union organizing;
    (4) Impairing existing contracts for services or collective 
bargaining agreements;
    (5) Engaging in partisan political activities, or other activities 
designed to influence the outcome of an election to any public office;
    (6) Participating in, or endorsing, events or activities that are 
likely to include advocacy for or against political parties, political 
platforms, political candidates, proposed legislation, or elected 
officials;
    (7) Engaging in religious instruction, conducting worship services, 
providing instruction as part of a program that includes mandatory 
religious instruction or worship, constructing or operating facilities 
devoted to religious instruction or worship, maintaining facilities 
primarily or inherently devoted to religious instruction or worship, or 
engaging in any form of religious proselytization;
    (8) Providing a direct benefit to--
    (i) A business organized for profit;
    (ii) A labor union;
    (iii) A partisan political organization;
    (iv) A nonprofit organization that fails to comply with the 
restrictions contained in section 501(c)(3) of the Internal Revenue Code 
of 1986 except that nothing in this section shall be construed to 
prevent participants from engaging in advocacy activities undertaken at 
their own initiative; and
    (v) An organization engaged in the religious activities described in 
paragraph (g) of this section, unless Corporation assistance is not used 
to support those religious activities; and
    (9) Such other activities as the Corporation may prohibit.
    (b) Individuals may exercise their rights as private citizens and 
may participate in the activities listed above on their initiative, on 
non-AmeriCorps time, and using non-Corporation funds. Individuals should 
not wear the AmeriCorps logo while doing so.

[67 FR 45359, July 9, 2002]



PART 2521--ELIGIBLE AMERICORPS SUBTITLE C PROGRAM APPLICANTS AND TYPES OF GRANTS AVAILABLE FOR AWARD--Table of Contents




Sec.
2521.10  Who may apply to receive an AmeriCorps subtitle C grant?
2521.20  What types of AmeriCorps subtitle C program grants are 
          available for award?
2521.30  How will AmeriCorps subtitle C program grants be awarded?

    Authority: 42 U.S.C. 12501 et seq.

    Source: 59 FR 13794, Mar. 23, 1994, unless otherwise noted.



Sec. 2521.10  Who may apply to receive an AmeriCorps subtitle C grant?

    (a) States (including Territories), subdivisions of States, Indian 
tribes, public or private nonprofit organizations (including religious 
organizations and labor organizations), and institutions of higher 
education are eligible to apply for AmeriCorps subtitle C grants. 
However, the fifty States, the District of Columbia and Puerto Rico must 
first receive Corporation authorization for the use of a State 
Commission or alternative administrative or

[[Page 657]]

transitional entity pursuant to part 2550 of this chapter in order to be 
eligible.
    (b) The Corporation may also enter into contracts or cooperative 
agreements for AmeriCorps assistance with Federal agencies that are 
Executive Branch agencies or departments. Bureaus, divisions, and local 
and regional offices of such departments and agencies may only receive 
assistance pursuant to a contract or agreement with the central 
department or agency. The requirements relating to Federal agencies are 
described in part 2523 of this chapter.

[59 FR 13794, Mar. 23, 1994, as amended at 67 FR 45360, July 9, 2002]



Sec. 2521.20  What types of AmeriCorps subtitle C program grants are available for award?

    The Corporation may make the following types of grants to eligible 
applicants. The requirements of this section will also apply to any 
State or other applicant receiving assistance under this part that 
proposes to conduct a grant program using the assistance to support 
other national or community service programs.
    (a) Planning grants.--(1) Purpose. The purpose of a planning grant 
is to assist an applicant in completing the planning necessary to 
implement a sound concept that has already been developed.
    (2) Eligibility. (i) States may apply directly to the Corporation 
for planning grants.
    (ii) Subdivisions of States, Indian Tribes, public or private 
nonprofit organizations (including religious organizations and labor 
organizations), and institutions of higher education may apply either to 
a State or directly to the Corporation for planning grants.
    (3) Duration. A planning grant will be negotiated for a term not to 
exceed one year.
    (b) Operational grants.--(1) Purpose. The purpose of an operational 
grant is to fund an organization that is ready to establish, operate, or 
expand an AmeriCorps program. An operational grant may include 
AmeriCorps educational awards. An operational grant may also include a 
short planning period of up to six months, if necessary, to implement a 
program.
    (2) Eligibility. (i) States may apply directly to the Corporation 
for operational grants.
    (ii) Subdivisions of States, Indian Tribes, public or private 
nonprofit organizations (including religious organizations and labor 
organizations), and institutions of higher education may apply either to 
a State or directly to the Corporation for operational grants. The 
Corporation may limit the categories of applicants eligible to apply 
directly to the Corporation for assistance under this section consistent 
with its National priorities.
    (3) Duration. An operational grant will be negotiated for a term not 
to exceed three years. Within a three-year term, renewal funding will be 
contingent upon periodic assessment of program quality, progress to 
date, and availability of Congressional appropriations.
    (c) Replication Grants. The Corporation may provide assistance for 
the replication of an existing national service program to another 
geographical location.
    (d) Training, technical assistance and other special grants.--(1) 
Purpose. The purpose of these grants is to ensure broad access to 
AmeriCorps programs for all Americans, including those with 
disabilities; support disaster relief efforts; assist efforts to secure 
private support for programs through challenge grants; and ensure 
program quality by supporting technical assistance and training 
programs.
    (2) Eligibility. Eligibility varies and is detailed under 45 CFR 
part 2524, ``Technical Assistance and Other Special Grants.''
    (3) Duration. Grants will be negotiated for a renewable term of up 
to three years.

[59 FR 13794, Mar. 23, 1994, as amended at 67 FR 45360, July 9, 2002]



Sec. 2521.30  How will AmeriCorps subtitle C program grants be awarded?

    In any fiscal year, the Corporation will award AmeriCorps subtitle C 
program grants as follows:
    (a) Grants to State Applicants. (1) For the purposes of this 
section, the term

[[Page 658]]

``State'' means the fifty States, Puerto Rico, and the District of 
Columbia.
    (2) One-third of the funds available under this part and a 
corresponding allotment of AmeriCorps educational awards, as specified 
by the Corporation, will be distributed according to a population-based 
formula to the 50 States, Puerto Rico and the District of Columbia if 
they have applications approved by the Corporation.
    (3) At least one-third of funds available under this part and an 
appropriate number of AmeriCorps awards, as determined by the 
Corporation, will be awarded to States on a competitive basis. In order 
to receive these funds, a State must receive funds under paragraphs 
(a)(2) or (b)(1) of this section in the same fiscal year.
    (4) In making subgrants with funds awarded by formula or competition 
under paragraphs (a) (2) or (3) of this section, a State must: (i) 
Provide a description of the process used to select programs for funding 
including a certification that the State or other entity used a 
competitive process and criteria that were consistent with the selection 
criteria in Sec. 2522.410 of this chapter. In making such competitive 
selections, the State must ensure the equitable allocation within the 
State of assistance and approved AmeriCorps positions provided under 
this subtitle to the State taking into consideration such factors as the 
location of the programs applying to the State, population density, and 
economic distress;
    (ii) Provide a written assurance that not less than 60 percent of 
the assistance provided to the State will be used to make grants in 
support of AmeriCorps programs other than AmeriCorps programs carried 
out by the State or a State agency. The Corporation may permit a State 
to deviate from this percentage if the State demonstrates that it did 
not receive a sufficient number of acceptable applications; and
    (iii) Ensure that a minimum of 50 percent of funds going to States 
will be used for programs that operate in the areas of need or on 
Federal or other public lands, and that place a priority on recruiting 
participants who are residents in high need areas, or on Federal or 
other public lands. The Corporation may waive this requirement for an 
individual State if at least 50 percent of the total amount of 
assistance to all States will be used for such programs.
    (b) Grants to Applicants other than States. (1) One percent of 
available funds will be distributed to the U.S. Territories \1\ that 
have applications approved by the Corporation according to a population-
based formula.\2\
---------------------------------------------------------------------------

    \1\ The United States Virgin Islands, Guam, American Samoa, and the 
Commonwealth of the Northern Mariana Islands.
    \2\ The amount allotted as a grant to each such territory or 
possession is equal to the ratio of each such Territory's population to 
the population of all such territories multiplied by the amount of the 
one percent set-aside.
---------------------------------------------------------------------------

    (2) One percent of available funds will be reserved for distribution 
to Indian tribes on a competitive basis.
    (3) The Corporation will use any funds available under this part 
remaining after the award of the grants described in paragraphs (a) and 
(b) (1) and (2) of this section to make direct competitive grants to 
subdivisions of States, Indian tribes, public or private nonprofit 
organizations (including religious organizations and labor 
organizations), institutions of higher education, and Federal agencies. 
No more than one-third of the these remaining funds may be awarded to 
Federal agencies.
    (c) Allocation of AmeriCorps educational awards only. The 
Corporation will determine on an annual basis the appropriate number of 
educational awards to make available for eligible applicants who have 
not applied for program assistance.
    (d) Effect of States' or Territories' failure to apply. If a State 
or U.S. Territory does not apply for or fails to give adequate notice of 
its intent to apply for a formula-based grant as announced by the 
Corporation and published in applications and the Notice of Funds 
Availability, the Corporation will use the amount of that State's 
allotment to make grants to eligible entities to carry out AmeriCorps 
programs in that State or Territory. Any funds remaining from that 
State's allotment after making such grants will be reallocated to the 
States, Territories, and Indian tribes with approved AmeriCorps 
applications at the Corporation's discretion.

[[Page 659]]

    (e) Effect of rejection of State application. If a State's 
application for a formula-based grant is ultimately rejected by the 
Corporation pursuant to Sec. 2522.320 of this chapter, the State's 
allotment will be available for redistribution by the Corporation to the 
States, Territories, and Indian Tribes with approved AmeriCorps 
applications as the Corporation deems appropriate.
    (f) The Corporation will make grants for training, technical 
assistance and other special programs described in part 2524 of this 
chapter at the Corporation's discretion.
    (g) Matching funds.--(1) Requirements. (i) The matching requirements 
for participant benefits are specified in Sec. 2522.240(b)(5) of this 
chapter.
    (ii) The Corporation share of other AmeriCorps program costs may not 
exceed 75 percent, whether the assistance is provided directly or as a 
subgrant from the original recipient of the assistance.
    (iii) These matching requirements apply only to programs receiving 
assistance under parts 2521 through 2524 of this chapter.
    (2) Calculation. In providing for the remaining share of other 
AmeriCorps program costs, the program--
    (i) Must provide for its share through a payment in cash or in kind, 
fairly evaluated, including facilities, equipment, or services; and
    (ii) May provide for its share through State sources, local sources, 
or other Federal sources (other than funds made available by the 
Corporation).
    (3) Limitation on cost of health care. A program may not count more 
than 85 percent of a cash payment for the cost of providing a health 
care policy toward its 15 percent remaining share under paragraph 
(g)(2)(i) of this section.
    (4) Waiver. The Corporation reserves the right to waive, in whole or 
in part, the requirements of paragraph (g)(1) of this section if the 
Corporation determines that a waiver would be equitable due to a lack of 
available financial resources at the local level.
    (h)(1) Not more than five percent of the grant funds provided under 
this part for any fiscal year may be used to pay for administrative 
costs, as defined in Sec. 2510.20 of this chapter.
    (2) The distribution of administrative costs between the grant and 
any subgrant will be subject to the approval of the Corporation.
    (3) In applying the limitation on administrative costs the 
Corporation will approve one of the following methods in the award 
document:
    (i) Limit the amount or rate of indirect costs that may be paid with 
Corporation funds under a grant or subgrant to five percent of total 
Corporation funds expended, provided that--
    (A) Organizations that have an established indirect cost rate for 
Federal awards will be limited to this method; and
    (B) Unreimbursed indirect costs may be applied to meeting 
operational matching requirements under the Corporation's award;
    (ii) Specify that a fixed rate of five percent or less (not subject 
to supporting cost documentation) of total Corporation funds expended 
may be used to pay for administrative costs, provided that the fixed 
rate is in conjunction with an overall 15 percent administrative cost 
factor to be used for organizations that do not have established 
indirect cost rates; or
    (iii) Utilize such other method that the Corporation determines in 
writing is consistent with OMB guidance and other applicable 
requirements, helps minimize the burden on grantees or subgrantees, and 
is beneficial to grantees or subgrantees and the Federal Government.

[59 FR 13794, Mar. 23, 1994, as amended at 63 FR 18138, Apr. 14, 1998; 
67 FR 45360, July 9, 2002]



PART 2522--AMERICORPS PARTICIPANTS, PROGRAMS, AND APPLICANTS--Table of Contents




            Subpart A--Minimum Requirements and Program Types

Sec.
2522.100  What are the minimum requirements that AmeriCorps subtitle C 
          grantees must meet?
2522.110  What types of programs are eligible to compete for AmeriCorps 
          grants?

[[Page 660]]

     Subpart B--Participant Eligibility, Requirements, and Benefits

2522.200  What are the eligibility requirements for an AmeriCorps 
          participant?
2522.210  How are AmeriCorps participants recruited and selected?
2522.220  What are the required terms of service for AmeriCorps 
          participants, and may they serve for more than one term?
2522.230  Under what circumstances may AmeriCorps participants be 
          released from completing a term of service, and what are the 
          consequences?
2522.240  What financial benefits do AmeriCorps participants serving in 
          approved AmeriCorps positions receive?
2522.250  What other benefits do AmeriCorps participants serving in 
          approved AmeriCorps positions receive?

                   Subpart C--Application Requirements

2522.300  What are the application requirements for AmeriCorps program 
          grants?
2522.310  What are the application requirements for AmeriCorps 
          educational awards only?
2522.320  May an applicant submit more than one application to the 
          Corporation for the same project at the same time?

               Subpart D--Selection of AmeriCorps Programs

2522.400  How will the basic selection criteria be applied?
2522.410  What are the basic selection criteria for AmeriCorps programs?
2522.420  Can a State's application for formula funds be rejected?

                   Subpart E--Evaluation Requirements

2522.500  What are the purposes of an evaluation?
2522.510  What types of evaluations are States, grant-making entities, 
          and programs required to perform?
2522.520  What types of internal evaluation activities are required of 
          programs?
2522.530  What types of activities are required of States or grantmaking 
          entities to evaluate the effectiveness of their subgrantees?
2522.540  How will the Corporation evaluate individual AmeriCorps 
          programs?
2522.550  What will the Corporation do to evaluate the overall success 
          of the AmeriCorps programs?
2522.560  Will information on individual participants be kept 
          confidential?

    Authority: 42 U.S.C. 12501 et seq.

    Source: 59 FR 13796, Mar. 23, 1994, unless otherwise noted.



            Subpart A--Minimum Requirements and Program Types



Sec. 2522.100  What are the minimum requirements that every AmeriCorps program, regardless of type, must meet?


    Although a wide range of programs may be eligible to apply for and 
receive support from the Corporation, all AmeriCorps subtitle C programs 
must meet certain minimum program requirements. These requirements apply 
regardless of whether a program is supported directly by the Corporation 
or through a subgrant. All AmeriCorps programs must: (a) Address 
educational, public safety, human, or environmental needs, and provide a 
direct and demonstrable benefit that is valued by the community in which 
the service is performed;
    (b) Perform projects that are designed, implemented, and evaluated 
with extensive and broad-based local input, including consultation with 
representatives from the community served, participants (or potential 
participants) in the program, community-based agencies with a 
demonstrated record of experience in providing services, and local labor 
organizations representing employees of project sponsors (if such 
entities exist in the area to be served by the program);
    (c) Obtain, in the case of a program that also proposes to serve as 
the project sponsor, the written concurrence of any local labor 
organization representing employees of the project sponsor who are 
engaged in the same or substantially similar work as that proposed to be 
carried out by the AmeriCorps participant;
    (d) Establish and provide outcome objectives, including a strategy 
for achieving these objectives, upon which self-assessment and 
Corporation-assessment of progress can rest. Such assessment will be 
used to help determine the extent to which the program has had a 
positive impact: (1) On communities and persons served by the projects 
performed by the program;
    (2) On participants who take part in the projects; and
    (3) In such other areas as the program or Corporation may specify;

[[Page 661]]

    (e) Strengthen communities and encourage mutual respect and 
cooperation among citizens of different races, ethnicities, 
socioeconomic backgrounds, educational levels, both men and women and 
individuals with disabilities;
    (f) Agree to seek actively to include participants and staff from 
the communities in which projects are conducted, and agree to seek 
program staff and participants of different races and ethnicities, 
socioeconomic backgrounds, educational levels, and genders as well as 
individuals with disabilities unless a program design requires 
emphasizing the recruitment of staff and participants who share a 
specific characteristic or background. In no case may a program violate 
the nondiscrimination, nonduplication and nondisplacement rules 
governing participant selection described in part 2540 of this chapter. 
In addition, programs are encouraged to establish, if consistent with 
the purposes of the program, an intergenerational component that 
combines students, out-of-school youths, and older adults as 
participants;
    (g)(1) Determine the projects in which participants will serve and 
establish minimum qualifications that individuals must meet to be 
eligible to participate in the program; these qualifications may vary 
based on the specific tasks to be performed by participants. Regardless 
of the educational level or background of participants sought, programs 
are encouraged to select individuals who posses leadership potential and 
a commitment to the goals of the AmeriCorps program. In any case, 
programs must select participants in a non-partisan, non-political, non-
discriminatory manner, ensuring fair access to participation. In 
addition, programs are required to ensure that they do not displace any 
existing paid employees as provided in part 2540 of this chapter;
    (2) In addition, all programs are required to comply with any pre-
service orientation or training period requirements established by the 
Corporation to assist in the selection of motivated participants. 
Finally, all programs must agree to select a percentage (to be 
determined by the Corporation) of the participants for the program from 
among prospective participants recruited by the Corporation or State 
Commissions under part 2532 of this chapter. The Corporation may also 
specify a minimum percentage of participants to be selected from the 
national leadership pool established under Sec. 2522.210(c). The 
Corporation may vary either percentage for different types of AmeriCorps 
programs;
    (h) Provide reasonable accommodation, including auxiliary aids and 
services (as defined in section 3(1) of the Americans with Disabilities 
Act of 1990 (42 U.S.C. 12102(1)) based on the individualized need of a 
participant who is a qualified individual with a disability (as defined 
in section 101(8) of such Act (42 U.S.C. 12111(8)). For the purpose of 
complying with this provision, AmeriCorps programs may apply for 
additional financial assistance from the Corporation pursuant to 
Sec. 2524.40 of this chapter;
    (i) Use service experiences to help participants achieve the skills 
and education needed for productive, active citizenship, including the 
provision, if appropriate, of structured opportunities for participants 
to reflect on their service experiences. In addition, all programs must 
encourage every participant who is eligible to vote to register prior to 
completing a term of service;
    (j) Provide participants in the program with the training, skills, 
and knowledge necessary to perform the tasks required in their 
respective projects, including, if appropriate, specific training in a 
particular field and background information on the community, including 
why the service projects are needed;
    (k) Provide support services--
    (1) To participants who are completing a term of service and making 
the transition to other educational and career opportunities; and
    (2) To those participants who are school dropouts in order to assist 
them in earning the equivalent of a high school diploma;
    (l) Ensure that participants serving in approved AmeriCorps 
positions receive the living allowance and other benefits described in 
Secs. 2522.240 through 2522.250 of this chapter;

[[Page 662]]

    (m) Describe the manner in which the AmeriCorps educational awards 
will be apportioned among individuals serving in the program. If a 
program proposes to provide such benefits to less than 100 percent of 
the participants in the program, the program must provide a compelling 
rationale for determining which participants will receive the benefits 
and which participants will not. AmeriCorps programs are strongly 
encouraged to offer alternative post-service benefits to participants 
who will not receive AmeriCorps educational awards, however AmeriCorps 
grant funds may not be used to provide such benefits;
    (n) Agree to identify the program, through the use of logos, common 
application materials, and other means (to be specified by the 
Corporation), as part of a larger national effort and to participate in 
other activities such as common opening ceremonies (including the 
administration of a national oath or affirmation), service days, and 
conferences designed to promote a national identity for all AmeriCorps 
programs and participants, including those participants not receiving 
AmeriCorps educational awards. This provision does not preclude an 
AmeriCorps program from continuing to use its own name as the primary 
identification, or from using its name, logo, or other identifying 
materials on uniforms or other items;
    (o) Agree to begin terms of service at such times as the Corporation 
may reasonably require and to comply with any restrictions the 
Corporation may establish as to when the program may take to fill an 
approved AmeriCorps position left vacant due to attrition;
    (p) Comply with all evaluation procedures specified by the 
Corporation, as explained in Secs. 2522.500 through 2522.560;
    (q) In the case of a program receiving funding directly from the 
Corporation, meet and consult with the State Commission for the State in 
which the program operates, if possible, and submit a copy of the 
program application to the State Commission; and
    (r) Address any other requirements as specified by the Corporation.

[59 FR 13796, Mar. 23, 1994, as amended at 67 FR 45360, July 9, 2002]



Sec. 2522.110  What types of programs are eligible to compete for AmeriCorps grants?

    Types of programs eligible to compete for AmeriCorps grants include 
the following: (a) Specialized skills programs. (1) A service program 
that is targeted to address specific educational, public safety, human, 
or environmental needs and that--
    (i) Recruits individuals with special skills or provides specialized 
pre-service training to enable participants to be placed individually or 
in teams in positions in which the participants can meet such needs; and
    (ii) If consistent with the purposes of the program, brings 
participants together for additional training and other activities 
designed to foster civic responsibility, increase the skills of 
participants, and improve the quality of the service provided.
    (2) A preprofessional training program in which students enrolled in 
an institution of higher education--
    (i) Receive training in specified fields, which may include classes 
containing service-learning;
    (ii) Perform service related to such training outside the classroom 
during the school term and during summer or other vacation periods; and
    (iii) Agree to provide service upon graduation to meet educational, 
public safety, human, or environmental needs related to such training.
    (3) A professional corps program that recruits and places qualified 
participants in positions--
    (i) As teachers, nurses and other health care providers, police 
officers, early childhood development staff, engineers, or other 
professionals providing service to meet educational, public safety, 
human, or environmental needs in communities with an inadequate number 
of such professionals;
    (ii) That may include a salary in excess of the maximum living 
allowance authorized in Sec. 2522.240(b)(2); and
    (iii) That are sponsored by public or private nonprofit employers 
who agree to pay 100 percent of the salaries and benefits (other than 
any AmeriCorps educational award from the National Service Trust) of the 
participants.
    (b) Specialized service programs. (1) A community service program 
designed

[[Page 663]]

to meet the needs of rural communities, using teams or individual 
placements to address the development needs of rural communities and to 
combat rural poverty, including health care, education, and job 
training.
    (2) A program that seeks to eliminate hunger in communities and 
rural areas through service in projects--
    (i) Involving food banks, food pantries, and nonprofit organizations 
that provide food during emergencies;
    (ii) Involving the gleaning of prepared and unprepared food that 
would otherwise be discarded as unusable so that the usable portion of 
such food may be donated to food banks, food pantries, and other 
nonprofit organizations;
    (iii) Seeking to address the long-term causes of hunger through 
education and the delivery of appropriate services; or
    (iv) Providing training in basic health, nutrition, and life skills 
necessary to alleviate hunger in communities and rural areas.
    (3) A program in which economically disadvantaged individuals who 
are between the ages of 16 and 24 years of age, inclusive, are provided 
with opportunities to perform service that, while enabling such 
individuals to obtain the education and employment skills necessary to 
achieve economic self-sufficiency, will help their communities meet--
    (i) The housing needs of low-income families and the homeless; and
    (ii) The need for community facilities in low-income areas.
    (c) Community-development programs. (1) A community corps program 
that meets educational, public safety, human, or environmental needs and 
promotes greater community unity through the use of organized teams of 
participants of varied social and economic backgrounds, skill levels, 
physical and developmental capabilities, ages, ethnic backgrounds, or 
genders.
    (2) A program that is administered by a combination of nonprofit 
organizations located in a low-income area, provides a broad range of 
services to residents of such an area, is governed by a board composed 
in significant part of low-income individuals, and is intended to 
provide opportunities for individuals or teams of individuals to engage 
in community projects in such an area that meet unaddressed community 
and individual needs, including projects that would--
    (i) Meet the needs of low-income children and youth aged 18 and 
younger, such as providing after-school `safe-places', including 
schools, with opportunities for learning and recreation; or
    (ii) Be directed to other important unaddressed needs in such an 
area.
    (d) Programs that expand service program capacity. (1) A program 
that provides specialized training to individuals in service-learning 
and places the individuals after such training in positions, including 
positions as service-learning coordinators, to facilitate service-
learning in programs eligible for funding under Serve-America.
    (2) An AmeriCorps entrepreneur program that identifies, recruits, 
and trains gifted young adults of all backgrounds and assists them in 
designing solutions to community problems.
    (e) Campus-based programs. A campus-based program that is designed 
to provide substantial service in a community during the school term and 
during summer or other vacation periods through the use of--
    (1) Students who are attending an institution of higher education, 
including students participating in a work-study program assisted under 
part C of title IV of the Higher Education Act of 1965 (42 U.S.C. 2751 
et seq.);
    (2) Teams composed of such students; or
    (3) Teams composed of a combination of such students and community 
residents.
    (f) Intergenerational programs. An intergenerational program that 
combines students, out-of-school youths, and older adults as 
participants to provide needed community services, including an 
intergenerational component for other AmeriCorps programs described in 
this subsection.
    (g) Youth development programs. A full-time, year-round youth corps 
program or full-time summer youth corps program, such as a conservation 
corps or youth service corps (including youth corps programs under 
subtitle I, the Public Lands Corps established under the Public Lands 
Corps Act of 1993, the

[[Page 664]]

Urban Youth Corps established under section 106 of the National and 
Community Service Trust Act of 1993, and other conservation corps or 
youth service corps that perform service on Federal or other public 
lands or on Indian lands or Hawaiian home lands), that:
    (1) Undertakes meaningful service projects with visible public 
benefits, including natural resource, urban renovation, or human 
services projects;
    (2) Includes as participants youths and young adults between the 
ages of 16 and 25, inclusive, including out-of-school youths and other 
disadvantaged youths (such as youths with limited basic skills, youths 
in foster care who are becoming too old for foster care, youths of 
limited English proficiency, homeless youths, and youths who are 
individuals with disabilities) who are between those ages; and
    (3) Provides those participants who are youths and young adults 
with--
    (i) Crew-based, highly structured, and adult-supervised work 
experience, life skills, education, career guidance and counseling, 
employment training, and support services; and
    (ii) The opportunity to develop citizenship values and skills 
through service to their community and the United States.
    (h) Individualized placement programs. An individualized placement 
program that includes regular group activities, such as leadership 
training and special service projects.
    (i) Other programs. Such other AmeriCorps programs addressing 
educational, public safety, human, or environmental needs as the 
Corporation may designate in the application.



     Subpart B--Participant Eligibility, Requirements, and Benefits



Sec. 2522.200  What are the eligibility requirements for an AmeriCorps participant?

    (a) Eligibility. An AmeriCorps participant must--
    (1)(i) Be at least 17 years of age at the commencement of service; 
or
    (ii) Be an out-of-school youth 16 years of age at the commencement 
of service participating in a program described in Sec. 2522.110(b)(3) 
or (g);
    (2)(i) Have a high school diploma or its equivalent; or
    (ii) Not have dropped out of elementary or secondary school to 
enroll as an AmeriCorps participant and must agree to obtain a high 
school diploma or its equivalent prior to using the education award; or
    (iii) Obtain a waiver from the Corporation of the requirements in 
paragraphs (a)(2)(i) and (a)(2)(ii) of this section based on an 
independent evaluation secured by the program demonstrating that the 
individual is not capable of obtaining a high school diploma or its 
equivalent; or
    (iv) Be enrolled in an institution of higher education on an ability 
to benefit basis and be considered eligible for funds under section 484 
of the Higher Education Act of 1965 (20 U.S.C. 1091);
    (3) Be a citizen, national, or lawful permanent resident alien of 
the United States.
    (b) Written declaration regarding high school diploma sufficient for 
enrollment. For purposes of enrollment, if an individual provides a 
written declaration under penalty of law that he or she meets the 
requirements in paragraph (a) of this section relating to high school 
education, a program need not obtain additional documentation of that 
fact.
    (c) Primary documentation of status as a U.S. citizen or national. 
The following are acceptable forms of certifying status as a U.S. 
citizen or national:
    (1) A birth certificate showing that the individual was born in one 
of the 50 states, the District of Columbia, Puerto Rico, Guam, the U.S. 
Virgin Islands, American Samoa, or the Northern Mariana Islands;
    (2) A United States passport;
    (3) A report of birth abroad of a U.S. Citizen (FS-240) issued by 
the State Department;
    (4) A certificate of birth-foreign service (FS 545) issued by the 
State Department;
    (5) A certification of report of birth (DS-1350) issued by the State 
Department;
    (6) A certificate of naturalization (Form N-550 or N-570) issued by 
the Immigration and Naturalization Service; or

[[Page 665]]

    (7) A certificate of citizenship (Form N-560 or N-561) issued by the 
Immigration and Naturalization Service.
    (d) Primary documentation of status as a lawful permanent resident 
alien of the United States. The following are acceptable forms of 
certifying status as a lawful permanent resident alien of the United 
States:
    (1) Permanent Resident Card, INS Form I-551;
    (2) Alien Registration Receipt Card, INS Form I-551;
    (3) A passport indicating that the INS has approved it as temporary 
evidence of lawful admission for permanent residence; or
    (4) A Departure Record (INS Form I-94) indicating that the INS has 
approved it as temporary evidence of lawful admission for permanent 
residence.
    (e) Secondary documentation of citizenship or immigration status. If 
primary documentation is not available, the program must obtain written 
approval from the Corporation that other documentation is sufficient to 
demonstrate the individual's status as a U.S. citizen, U.S. national, or 
lawful permanent resident alien.

[64 FR 37413, July 12, 1999, as amended at 67 FR 45360, July 9, 2002]



Sec. 2522.210  How are AmeriCorps participants recruited and selected?

    (a) Local recruitment and selection. In general, AmeriCorps 
participants will be selected locally by an approved AmeriCorps program, 
and the selection criteria will vary widely among the different 
programs. Nevertheless, AmeriCorps programs must select their 
participants in a fair and non-discriminatory manner which complies with 
part 2540 of this chapter. In selecting participants, programs must also 
comply with the recruitment and selection requirements specified in this 
section.
    (b)(1) National and State recruitment and selection. The Corporation 
and each State Commission will establish a system to recruit individuals 
who desire to perform national service and to assist the placement of 
these individuals in approved AmeriCorps positions, which may include 
positions available under titles I and II of the Domestic Volunteer 
Service Act of 1973 (42 U.S.C. 4951 et seq.). The national and state 
recruitment and placement system will be designed and operated according 
to Corporation guidelines.
    (2) Dissemination of information. The Corporation and State 
Commissions will disseminate information regarding available approved 
AmeriCorps positions through cooperation with secondary schools, 
institutions of higher education, employment service offices, community-
based organizations, State vocational rehabilitation agencies within the 
meaning of the Rehabilitation Act of 1973 (29 U.S.C. 701 et seq.) and 
other State agencies that primarily serve qualified individuals with 
disabilities, and other appropriate entities, particularly those 
organizations that provide outreach to disadvantaged youths and youths 
who are qualified individuals with disabilities.
    (c) National leadership pool--(1) Selection and training. From among 
individuals recruited under paragraph (b) of this section or nominated 
by service programs, the Corporation may select individuals with 
significant leadership potential, as determined by the Corporation, to 
receive special training to enhance their leadership ability. The 
leadership training will be provided by the Corporation directly or 
through a grant, contract, or cooperative agreement as the Corporation 
determines.
    (2) Emphasis on certain individuals. In selecting individuals to 
receive leadership training under this provision, the Corporation will 
make special efforts to select individuals who have served--
    (i) In the Peace Corps;
    (ii) As VISTA volunteers;
    (iii) As participants in AmeriCorps programs receiving assistance 
under parts 2520 through 2524 of this chapter;
    (iv) As participants in National Service Demonstration programs that 
received assistance from the Commission on National and Community 
Service; or
    (v) As members of the Armed Forces of the United States and who were 
honorably discharged from such service.
    (3) Assignment. At the request of a program that receives 
assistance, the Corporation may assign an individual who receives 
leadership training under paragraph (c)(1) of this section to work with 
the program in a leadership position and carry out assignments not

[[Page 666]]

otherwise performed by regular participants. An individual assigned to a 
program will be considered to be a participant of the program.



Sec. 2522.220  What are the required terms of service for AmeriCorps participants, and may they serve for more than one term?

    (a) Term of service. In order to be eligible for the educational 
award described in Sec. 2522.240(a), participants serving in approved 
AmeriCorps positions must complete a term of service as defined in this 
section:
    (1) Full-time service. 1,700 hours of service during a period of not 
less than nine months and not more than one year.
    (2) Part-time service. 900 hours of service during a period of not 
more than two years, or, if the individual is enrolled in an institution 
of higher education while performing all or a portion of the service, 
not more than three years.
    (3) Reduced part-time term of service. The Corporation may reduce 
the number of hours required to be served in order to receive an 
educational award for certain part-time participants serving in approved 
AmeriCorps positions. In such cases, the educational award will be 
reduced in direct proportion to the reduction in required hours of 
service. These reductions may be made for summer programs, for 
categories of participants in certain approved AmeriCorps programs and 
on a case-by-case, individual basis as determined by the Corporation.
    (4) Summer programs. A summer program, in which less than 1700 hours 
of service are performed, are part-time programs.
    (b) Restriction on multiple terms. An AmeriCorps participant may 
only receive the benefits described in Secs. 2522.240 through 2522.250 
for the first two successfully-completed terms of service, regardless of 
whether those terms were served on a full-, part-, or reduced part-time 
basis.
    (c) Eligibility for second term. A participant will only be eligible 
to serve a second or additional term of service if that individual has 
received satisfactory performance review(s) for any previous term(s) of 
service in accordance with the requirements of paragraph (d) of this 
section. Mere eligibility for a second or further term of service in no 
way guarantees a participant selection or placement.
    (d) Participant performance review. For the purposes of determining 
a participant's eligibility for a second or additional term of service 
and/or for an AmeriCorps educational award, each AmeriCorps program will 
evaluate the performance of a participant mid-term and upon completion 
of a participant's term of service. The end-of-term performance 
evaluation will assess the following: (1) Whether the participant has 
completed the required number of hours described in paragraph (a) of 
this section;
    (2) Whether the participant has satisfactorily completed 
assignments, tasks or projects; and
    (3) Whether the participant has met any other performance criteria 
which had been clearly communicated both orally and in writing at the 
beginning of the term of service.
    (e) Limitation. The Corporation may set a minimum or maximum 
percentage of hours of a full-time, part-time, or reduced term of 
service described in paragraphs (a)(1),(a)(2), and (a)(3) of this 
section that a participant may engage in training, education, or other 
similar approved activities
    (f) Grievance procedure. Any AmeriCorps participant wishing to 
contest a program's ruling of unsatisfactory performance may file a 
grievance according to the procedures set forth in part 2540 of this 
chapter. If that grievance procedure or subsequent binding arbitration 
procedure finds that the participant did in fact satisfactorily complete 
a term of service, then that individual will be eligible to receive an 
educational award and/or be eligible to serve a second term of service.



Sec. 2522.230  Under what circumstances may AmeriCorps participants be released from completing a term of service, and what are the consequences?

    An AmeriCorps program may release a participant from completing a 
term of service for compelling personal circumstances as demonstrated by 
the participant, or for cause.

[[Page 667]]

    (a) Release for compelling personal circumstances. (1) An AmeriCorps 
program may release a participant upon a determination by the program, 
consistent with the criteria listed in paragraphs (a)(5) through (a)(6) 
of this section, that the participant is unable to complete the term of 
service because of compelling personal circumstances.
    (2) A participant who is released for compelling personal 
circumstances and who completes at least 15 percent of the required term 
of service is eligible for a pro-rated education award.
    (3) The participant has the primary responsibility for demonstrating 
that compelling personal circumstances prevent the participant from 
completing the term of service.
    (4) The program must document the basis for any determination that 
compelling personal circumstances prevent a participant from completing 
a term of service.
    (5) Compelling personal circumstances include:
    (i) Those that are beyond the participant's control, such as, but 
not limited to:
    (A) A participant's disability or serious illness;
    (B) Disability, serious illness, or death of a participant's family 
member if this makes completing a term unreasonably difficult or 
impossible; or
    (C) Conditions attributable to the program or otherwise 
unforeseeable and beyond the participant's control, such as a natural 
disaster, a strike, relocation of a spouse, or the nonrenewal or 
premature closing of a project or program, that make completing a term 
unreasonably difficult or impossible;
    (ii) Those that the Corporation, has for public policy reasons, 
determined as such, including:
    (A) Military service obligations;
    (B) Acceptance by a participant of an opportunity to make the 
transition from welfare to work; or
    (C) Acceptance of an employment opportunity by a participant serving 
in a program that includes in its approved objectives the promotion of 
employment among its participants.
    (6) Compelling personal circumstances do not include leaving a 
program:
    (i) To enroll in school;
    (ii) To obtain employment, other than in moving from welfare to work 
or in leaving a program that includes in its approved objectives the 
promotion of employment among its participants; or
    (iii) Because of dissatisfaction with the program.
    (7) As an alternative to releasing a participant, an 
AmeriCorps*State/National program may, after determining that compelling 
personal circumstances exist, suspend the participant's term of service 
for up to two years (or longer if approved by the Corporation based on 
extenuating circumstances) to allow the participant to complete service 
with the same or similar AmeriCorps program at a later time.
    (b) Release for cause. (1) A release for cause encompasses any 
circumstances other than compelling personal circumstances that warrant 
an individual's release from completing a term of service.
    (2) AmeriCorps programs must release for cause any participant who 
is convicted of a felony or the sale or distribution of a controlled 
substance during a term of service.
    (3) A participant who is released for cause may not receive any 
portion of the AmeriCorps education award or any other payment from the 
National Service Trust.
    (4) An individual who is released for cause must disclose that fact 
in any subsequent applications to participate in an AmeriCorps program. 
Failure to do so disqualifies the individual for an education award, 
regardless of whether the individual completes a term of service.
    (5) An AmeriCorps*State/National participant released for cause may 
contest the program's decision by filing a grievance. Pending the 
resolution of a grievance procedure filed by an individual to contest a 
determination by a program to release the individual for cause, the 
individual's service is considered to be suspended. For this type of 
grievance, a program may not--while the grievance is pending or as part 
of its resolution--provide a participant with federally-funded benefits 
(including payments from the National

[[Page 668]]

Service Trust) beyond those attributable to service actually performed, 
without the program receiving written approval from the Corporation.
    (c) Suspended service. (1) A program must suspend the service of an 
individual who faces an official charge of a violent felony (e.g., rape, 
homicide) or sale or distribution of a controlled substance.
    (2) A program must suspend the service of an individual who is 
convicted of possession of a controlled substance.
    (3) An individual may not receive a living allowance or other 
benefits, and may not accrue service hours, during a period of 
suspension under this provision.
    (d) Reinstatement. (1) A program may reinstate an individual whose 
service was suspended under paragraph (c)(1) of this section if the 
individual is found not guilty or if the charge is dismissed.
    (2) A program may reinstate an individual whose service was 
suspended under paragraph (c)(2) of this section only if the individual 
demonstrates the following:
    (i) For an individual who has been convicted of a first offense of 
the possession of a controlled substance, the individual must have 
enrolled in a drug rehabilitation program;
    (ii) For an individual who has been convicted for more than one 
offense of the possession of a controlled substance, the individual must 
have successfully completed a drug rehabilitation program.

[64 FR 37413, July 12, 1999]



Sec. 2522.240  What financial benefits do AmeriCorps participants serving in approved AmeriCorps positions receive?

    (a) AmeriCorps educational awards. An individual serving in an 
approved AmeriCorps position will receive an educational award from the 
National Service Trust upon successful completion of each of up to two 
terms of service as defined in Sec. 2522.220.
    (b) Living allowances--(1) Amount. Subject to the provisions of this 
part, any individual who participates on a full-time basis in an 
AmeriCorps program carried out using assistance provided pursuant to 
Sec. 2521.30 of this chapter, including an AmeriCorps program that 
receives educational awards only pursuant to Sec. 2521.30(c) of this 
chapter, will receive a living allowance in an amount equal to or 
greater than the average annual subsistence allowance provided to VISTA 
volunteers under Sec. 105 of the Domestic Volunteer Service Act of 1973 
(42 U.S.C. 4955). This requirement will not apply to any program that 
was in existence prior to September 21, 1993 (the date of the enactment 
of the National and Community Service Trust Act of 1993).
    (2) Maximum living allowance. With the exception of a professional 
corps described in Sec. 2522.110(a)(3), the AmeriCorps living allowances 
may not exceed 200 percent of the average annual subsistence allowance 
provided to VISTA volunteers under section 105 of the Domestic Volunteer 
Service Act of 1973 (42 U.S.C. 4955). A professional corps AmeriCorps 
program may provide a stipend in excess of the maximum, subject to the 
following conditions: (i) Corporation assistance may not be used to pay 
for any portion of the allowance; and
    (ii) The program must be operated directly by the applicant, 
selected on a competitive basis by submitting an application directly to 
the Corporation, and may not be included in a State's application for 
the AmeriCorps program funds distributed by formula, or competition 
described in Secs. 2521.30 (a)(2) and (a)(3) of this chapter.
    (3) Living allowances for part-time participants. Programs may, but 
are not required to, provide living allowances to individuals 
participating on a part-time basis (or a reduced term of part-time 
service authorized under Sec. 2522.220(a)(3). Such living allowances 
should be prorated to the living allowance authorized in paragraph 
(b)(1) of this section and will comply with such restrictions therein.
    (4) Waiver or reduction of living allowance. The Corporation may, at 
its discretion, waive or reduce the living allowance requirements if a 
program can demonstrate to the satisfaction of the Corporation that such 
requirements are inconsistent with the objectives of the program, and 
that participants will be able to meet the necessary and reasonable 
costs of living (including food,

[[Page 669]]

housing, and transportation) in the area in which the program is 
located.
    (5) Limitation on Federal share. The Federal share, including 
Corporation and other Federal funds, of the total amount provided to an 
AmeriCorps participant for a living allowance is limited as follows: (i) 
In no case may the Federal share exceed 85% of the minimum required 
living allowance enumerated in paragraph (b)(1) of this section.
    (ii) For professional corps described in paragraph (b)(2)(i) of this 
section, Corporation and other Federal funds may be used to pay for no 
portion of the living allowance.
    (iii) If the minimum living allowance requirements has been waived 
or reduced pursuant to paragraph (b)(4) of this section and the amount 
of the living allowance provided to a participant has been reduced 
correspondingly--
    (A) In general, the Federal share may not exceed 85% of the reduced 
living allowance; however,
    (B) If a participant is serving in a program that provides room or 
board, the Corporation will consider on a case-by-case basis allowing 
the portion of that living allowance that may be paid using Corporation 
and other Federal funds to be between 85% and 100%.



Sec. 2522.250  What other benefits do AmeriCorps participants serving in approved AmeriCorps positions receive?

    (a) Child Care. Grantees must provide child care through an eligible 
provider or a child care allowance in an amount determined by the 
Corporation to those full-time participants who need child care in order 
to participate.
    (1) Need. A participant is considered to need child care in order to 
participate in the program if he or she: (i) Is the parent or legal 
guardian of, or is acting in loco parentis for, a child under 13 who 
resides with the participant;
    (ii) Has a family income that does not exceed 75 percent of the 
State's median income for a family of the same size;
    (iii) At the time of acceptance into the program, is not currently 
receiving child care assistance from another source, including a parent 
or guardian, which would continue to be provided while the participant 
serves in the program; and
    (iv) Certifies that he or she needs child care in order to 
participate in the program.
    (2) Provider eligibility. Eligible child care providers are those 
who are eligible child care providers as defined in the Child Care and 
Development Block Grant Act of 1990 (42 U.S.C. 9858n(5)).
    (3) Child care allowance. The amount of the child care allowance 
will be determined by the Corporation based on payment rates for the 
Child Care and Development Block Grant Act of 1990 (42 U.S.C. 
9858c(4)(A)).
    (4) Corporation share. The Corporation will pay 100 percent of the 
child care allowance, or, if the program provides child care through an 
eligible provider, the actual cost of the care or the amount of the 
allowance, whichever is less.
    (b) Health care. (1) Grantees must provide to all eligible 
participants who meet the requirements of paragraph (b)(2) of this 
section health care coverage that--
    (i) Provides the minimum benefits determined by the Corporation;
    (ii) Provides the alternative minimum benefits determined by the 
Corporation; or
    (iii) Does not provide all of either the minimum or the alternative 
minimum benefits but that has a fair market value equal to or greater 
than the fair market value of a policy that provides the minimum 
benefits.
    (2) Participant eligibility. A full-time participant is eligible for 
health care benefits if he or she is not otherwise covered by a health 
benefits package providing minimum benefits established by the 
Corporation at the time he or she is accepted into a program. If, as a 
result of participation, or if, during the term of service, a 
participant demonstrates loss of coverage through no deliberate act of 
his or her own, such as parental or spousal job loss or disqualification 
from Medicaid, the participant will be eligible for health care 
benefits.
    (3) Corporation share. (i) Except as provided in paragraph 
(b)(3)(ii) of this section, the Corporation will pay up to 85% of the 
cost of health care coverage

[[Page 670]]

that includes the minimum or alternative minimum benefits and is not 
excessive in cost.
    (ii) The Corporation will pay no share of the cost of a policy that 
does not provide the minimum or alternative minimum benefits described 
in paragraphs (b)(1)(i) and (b)(1)(ii) of this section.



                   Subpart C--Application Requirements



Sec. 2522.300  What are the application requirements for AmeriCorps program grants?

    All eligible applicants seeking AmeriCorps program grants must--
    (a) Provide a description of the specific program(s) being proposed, 
including the type of program and of how it meets the minimum program 
requirements described in Sec. 2522.100; and
    (b) Comply with any additional requirements as specified by the 
Corporation in the application package.



Sec. 2522.310  What are the application requirements for AmeriCorps educational awards only?

    (a) Eligible applicants may apply for AmeriCorps educational awards 
only for one of the following eligible service positions: (1) A position 
for a participant in an AmeriCorps program that:
    (i) Is carried out by an entity eligible to receive support under 
part 2521 of this chapter;
    (ii) Would be eligible to receive assistance under this part, based 
on criteria established by the Corporation, but has not applied for such 
assistance;
    (2) A position facilitating service-learning in a program described 
in parts 2515 through 2519 of this chapter;
    (3) A position involving service as a crew leader in a youth corps 
program or a similar position supporting an AmeriCorps program; and
    (4) Such other AmeriCorps positions as the Corporation considers to 
be appropriate.
    (b) Because programs applying only for AmeriCorps educational awards 
must, by definition, meet the same basic requirements as other approved 
AmeriCorps programs, applicants must comply with the same application 
requirements specified in Sec. 2522.300.



Sec. 2522.320  May an applicant submit more than one application to the Corporation for the same project at the same time?

    No. The Corporation will reject an application for a project if an 
application for funding or educational awards for the same project is 
already pending before the Corporation.



               Subpart D--Selection of AmeriCorps Programs



Sec. 2522.400  How will the basic selection criteria be applied?

    From among the eligible programs that meet the minimum program 
requirements and that have submitted applications to the Corporation, 
the Corporation must select the best ones to receive funding. Although 
there is a wide range of factors that must be taken into account during 
the selection process, there are certain fundamental selection criteria 
that apply to all programs in each grant competition, regardless of 
whether they receive funding or educational awards directly or through 
subgrants. States and other subgranting applicants are required to use 
these criteria during the competitive selection of subgrantees. The 
Corporation may adjust the relative weight given to each criterion. 
(Additional and more specific criteria will be published in the 
applications).



Sec. 2522.410  What are the basic selection criteria for AmeriCorps programs?

    The Corporation will consider how well the program will be able to 
achieve the three impacts mentioned in paragraph (a) of this section as 
demonstrated by the program design, the capacity of the organization to 
carry it out and other factors relating to need. The Corporation will 
also consider the extent to which the program promotes the Corporation's 
goals; and the extent to which the program contributes to the overall 
diversity of programs desired by the Corporation. These criteria are 
discussed in this section. Additional detail relating to these criteria 
may be published in any notice of availability of funding.
    (a) Program impacts. The Corporation will consider the extent to 
which the

[[Page 671]]

program: (1) Achieves direct and demonstrable results;
    (2) Strengthens communities; and
    (3) Promotes citizenship and increases educational opportunities for 
participants.
    (b) Program Criteria.--(1) Program design. The Corporation will 
consider four factors relating to the program design: (i) The quality of 
the program proposed to be carried out directly by the applicant or 
supported by a grant from the applicant;
    (ii) The innovative aspects of the AmeriCorps program;
    (iii) The feasibility of replicating the program; and
    (iv) The sustainability of the program, based on evidence such as 
the existence of strong and broad-based community support for the 
program and of multiple funding sources or private funding.
    (2) Organizational capacity. The Corporation will also consider an 
organization's capacity to carry out the program based on--
    (i) The quality of the leadership of the AmeriCorps program;
    (ii) The past performance of the organization or program; and
    (iii) The extent to which the program builds on existing programs.
    (c) Need criteria. In selecting programs, the Corporation will take 
into consideration the extent to which projects address State-identified 
issue priorities (if the program will be funded out of formula funds) or 
national priorities (if the program will be funded out of competitive 
funds), and whether projects would be conducted in areas of need.
    (1) Issue priorities. In order to concentrate national efforts on 
meeting certain educational, public safety, human, or environmental 
needs, and to achieve the other purposes of this Act, the Corporation 
will establish, and after review of the strategic plan approved by the 
Board, periodically alter priorities regarding the AmeriCorps programs 
that will receive assistance (funding or approved AmeriCorps positions) 
and the purposes for which such assistance may be used. These priorities 
will be applied to assistance provided on a competitive basis as 
described in Sec. 2521.30 of this chapter, and to any assistance 
provided through a subgrant of such funds.
    (i) States must establish, and through the national service plan 
process described in part 2513 of this chapter, periodically alter 
priorities regarding the programs that will receive assistance (funding 
or approved AmeriCorps positions) provided on a formula basis as 
described in Sec. 2521.30(a)(2) of this chapter. The State priorities 
will be subject to Corporation review as part of the application process 
under part 2521 of this chapter.
    (ii) The Corporation will provide advance notice to potential 
applicants of any AmeriCorps priorities to be in effect for a fiscal 
year. The notice will describe any alternation made in the priorities 
since the previous notice. If a program receives multi-year funding 
based on conformance to national or state priorities and such priorities 
are altered after the first year of funding, the program will not be 
adversely affected due to the change in priorities until the term of the 
grant is ended.
    (2) Areas of need. Areas of need are: (i) Communities designated by 
the Federal government or States as empowerment zones or redevelopment 
areas, targeted for special economic incentives, or otherwise 
identifiable as having high concentrations of low-income people;
    (ii) Areas that are environmentally distressed;
    (iii) Areas adversely affected by Federal actions related to the 
management of Federal lands that result in significant regional job 
losses and economic dislocation;
    (iv) Areas adversely affected by reductions in defense spending or 
the closure or realignment of military installations; and
    (v) Areas that have an unemployment rate greater than the national 
average unemployment rate for the most recent 12 months for which 
satisfactory data are available.
    (d) Contribution to overall diversity of programs funded by the 
Corporation. The Corporation will select programs that will help to 
achieve participant, program type, and geographic diversity across 
programs.
    (e) Additional considerations. The Corporation may publish in any 
notice of

[[Page 672]]

availability of funding additional factors that it may take into 
consideration in selecting programs, including any additional priorities 
applicable to any or all funds.



Sec. 2522.420  Can a State's application for formula funds be rejected?

    Yes. Formula funds are not an entitlement.
    (a) Notification. If the Corporation rejects an application 
submitted by a State Commission under part 2550 of this chapter for 
funds described in Sec. 2521.30 of this chapter, the Corporation will 
promptly notify the State Commission of the reasons for the rejection of 
the application.
    (b) Revision. The Corporation will provide a State Commission 
notified under paragraph (a) of this section with a reasonable 
opportunity to revise and resubmit the application. At the request of 
the State Commission, the Corporation will provide technical assistance 
to the State Commission as part of the resubmission process. The 
Corporation will promptly reconsider an application resubmitted under 
this paragraph.
    (c) Redistribution. The amount of any State's allotment under 
Sec. 2521.30(a) of this chapter for a fiscal year that the Corporation 
determines will not be provided for that fiscal year will be available 
for redistribution by the Corporation to the States, Territories and 
Indian Tribes with approved AmeriCorps applications as the Corporation 
deems appropriate.



                   Subpart E--Evaluation Requirements



Sec. 2522.500  What are the purposes of an evaluation?

    Every evaluation effort should serve to improve program quality, 
examine benefits of service, or fulfill legislative requirements.



Sec. 2522.510  What types of evaluations are States, grant-making entities, and programs required to perform?

    All grantees and subgrantees are required to perform internal 
evaluations which are ongoing efforts to assess performance and improve 
quality. Grantees and subgrantees may, but are not required to, arrange 
for independent evaluation which are assessments of program 
effectiveness by individuals who are not directly involved in the 
administration of the program. The cost of independent evaluations is 
allowable.



Sec. 2522.520  What types of internal evaluation activities are required of programs?

    Programs are required to: (a) Continuously assess management 
effectiveness, the quality of services provided, and the satisfaction of 
both participants and persons served. Internal evaluation activities 
should seek frequent feedback and provide for quick correction of 
weaknesses. The Corporation encourages programs to use internal 
evaluation methods such as community advisory councils, participant 
advisory councils, peer reviews, quality control inspections, and 
customer and participant surveys;
    (b) Track progress toward objectives. Objectives will be established 
by programs and approved by the Corporation. Programs must submit to the 
Corporation (or State or grantmaking entity as applicable) periodic 
performance reports and, as part of an annual report, an annual 
performance report;
    (c) Collect and submit to the Corporation (through the State or 
grantmaking entity as applicable) the following data: (1) Information on 
participants including the total number of participants in the program, 
and the number of participants by race, ethnicity, age, gender, economic 
background, education level, ethnic group, disability classification, 
geographic region, and marital status;
    (2) Information on services conducted in areas classified as 
empowerment zones (or redevelopment areas), in areas that are targeted 
for special economic incentives or otherwise identifiable as having high 
concentrations of low-income people, in areas that are environmentally 
distressed, in areas that are adversely affected by Federal actions 
related to the management of Federal lands, in areas that are adversely 
affected by reductions in defense spending, or in areas that have an 
unemployment rate greater than the national average unemployment rate;

[[Page 673]]

    (3) Other information as required by the Corporation; and
    (d) Cooperate fully with all Corporation evaluation activities.



Sec. 2522.530  What types of activities are required of States or grantmaking entities to evaluate the effectiveness of their subgrantees?

    In cases where a State or grantmaking entity is the direct grantee 
they will be required to: (a) Ensure that subgrantees comply with the 
requirements of this subpart;
    (b) Track program performance in terms of progress towards pre-
established objectives and ensure that corrective action is taken when 
necessary. Submit periodic performance reports and, as part of an annual 
report, an annual performance report to the Corporation for each 
subgrantee;
    (c) Collect from programs and submit to the Corporation the 
descriptive information required in this subpart; and
    (d) Cooperate fully with all Corporation evaluation activities.



Sec. 2522.540  How will the Corporation evaluate individual AmeriCorps programs?

    The Corporation will evaluate programs based on the following: (a) 
The extent to which the program meets the objectives established and 
agreed to by the grantee and the Corporation before the grant award;
    (b) The extent to which the program is cost-effective; and
    (c) The effectiveness of the program in meeting the following 
legislative objectives: (1) Providing direct and demonstrable services 
and projects that benefit the community by addressing educational, 
public safety, human, or environmental needs;
    (2) Recruiting and enrolling diverse participants consistent with 
the requirements of part 2540 of this chapter, based on economic 
background, race, ethnicity, age, gender, marital status, education 
levels, and disability;
    (3) Promoting the educational achievement of each participant based 
on earning a high school diploma or its equivalent and future enrollment 
in and completion of increasingly higher levels of education;
    (4) Encouraging each participant to engage in public and community 
service after completion of the program based on career choices and 
participation in other service programs;
    (5) Promoting an ethic of active and productive citizenship among 
participants;
    (6) Supplying additional volunteer assistance to community agencies 
without providing more volunteers than can be effectively utilized;
    (7) Providing services and activities that could not otherwise be 
performed by employed workers and that will not supplant the hiring of, 
or result in the displacement of, employed workers; and
    (8) Other criteria determined and published by the Corporation.



Sec. 2522.550  What will the Corporation do to evaluate the overall success of the AmeriCorps programs?

    (a) The Corporation will conduct independent evaluations of 
programs, including in-depth studies of selected programs. These 
evaluations will consider the opinions of participants and members of 
the community where services are delivered. Where appropriate these 
studies will compare participants with individuals who have not 
participated in service programs. These evaluations will: (1) Study the 
extent to which the national service impacts involved communities;
    (2) Study the extent to which national service increases positive 
attitudes among participants regarding the responsibilities of citizens 
and their role in solving community problems;
    (3) Study the extent to which national service enables participants 
to afford post-secondary education with fewer student loans;
    (4) Determine the costs and effectiveness of different program 
models in meeting program objectives including full- and part-time 
programs, programs involving different types of national service, 
programs using different recruitment methods, programs offering 
alternative non-federally funded vouchers or post-service benefits, and 
programs utilizing individual placements and teams;
    (5) Determine the impact of programs in each State on the ability of 
VISTA and National Senior Volunteer Corps, each regular and reserve 
component of

[[Page 674]]

the Armed Forces, and the Peace Corps to recruit individuals residing in 
that State; and
    (6) Determine the levels of living allowances paid in all AmeriCorps 
programs and American Conservation and Youth Corps, individually, by 
State, and by region and determine the effects that such living 
allowances have had on the ability of individuals to participate in such 
programs.
    (b) The Corporation will also determine by June 30, 1995: (1) 
Whether the State and national priorities designed to meet educational, 
public safety, human, or environmental needs are being addressed;
    (2) Whether the outcomes of both stipended and nonstipended service 
programs are defined and measured appropriately;
    (3) Whether stipended service programs, and service programs 
providing educational benefits in return for service, should focus on 
economically disadvantaged individuals or at risk youth, or whether such 
programs should include a mix of individuals, including individuals from 
middle and upper income families;
    (4) The role and importance of stipends and educational benefits in 
achieving desired outcomes in the service programs;
    (5) The income distribution of AmeriCorps participants, to determine 
the level of participation of economically disadvantaged individuals. 
The total income of participants will be determined as of the date the 
participant was first selected to participate in a program and will 
include family total income unless the evaluating entity determines that 
the participant was independent at the time of selection. Definitions 
for ``independent'' and ``total income'' are those used in section 
480(a) of the Higher Education Act of 1965;
    (6) The amount of assistance provided under the AmeriCorps programs 
that has been expended for projects conducted in areas classified as 
empowerment zones (or redevelopment areas), in areas that are targeted 
for special economic incentives or are otherwise identifiable as having 
high concentrations of low-income people, in areas that are 
environmentally distressed or adversely affected by Federal actions 
related to the management of Federal lands, in areas that are adversely 
affected by reductions in defense spending, or in areas that have an 
unemployment rate greater than the national average unemployment rate 
for the most recent 12 months for which satisfactory data are available; 
and
    (7) The implications of the results of these studies as appropriate 
for authorized funding levels.



Sec. 2522.560  Will information on individual participants be kept confidential?

    (a) Yes. The Corporation will maintain the confidentiality of 
information regarding individual participants that is acquired for the 
purpose of the evaluations described in Sec. 2522.540. The Corporation 
will disclose individual participant information only with the prior 
written consent of the participant. However, the Corporation may 
disclose aggregate participant information.
    (b) Grantees and subgrantees that receive assistance under this 
chapter must comply with the provisions of paragraph (a) of this 
section.



PART 2523--AGREEMENTS WITH OTHER FEDERAL AGENCIES FOR THE PROVISION OF AMERICORPS PROGRAM ASSISTANCE--Table of Contents




Sec.
2523.10  Are Federal agencies eligible to apply for AmeriCorps program 
          funds?
2523.20  Which Federal agencies may apply for such funds?
2523.30  Must Federal agencies meet the requirements imposed on grantees 
          under parts 2521 and 2522 of this chapter?
2523.40  For what purposes should Federal agencies use AmeriCorps 
          program funds?
2523.50  What types of grants are Federal agencies eligible to receive?
2523.60  May Federal agencies enter into partnerships or participate in 
          consortia?
2523.70  Will the Corporation give special consideration to Federal 
          agency applications that address certain needs?
2523.80  Are there restrictions on the use of Corporation funds?
2523.90  Is there a matching requirement for Federal agencies?
2523.100  Are participants in programs operated by Federal agencies 
          Federal employees?
2523.110  Can Federal agencies submit multiple applications?

[[Page 675]]

2523.120  Must Federal agencies consult with State Commissions?

    Authority: 42 U.S.C. 12501 et seq.

    Source: 59 FR 13804, Mar. 23, 1994, unless otherwise noted.



Sec. 2523.10  Are Federal agencies eligible to apply for AmeriCorps program funds?

    Yes. Federal agencies may apply for and receive AmeriCorps funds 
under parts 2521 and 2522 of this chapter, and they are eligible to 
receive up to one-third of the funds available for competitive 
distribution under Sec. 2521.30(b)(3) of this chapter. The Corporation 
may enter into a grant, contract or cooperative agreement with another 
Federal agency to support an AmeriCorps program carried out by the 
agency. The Corporation may transfer funds available to it to other 
Federal agencies.



Sec. 2523.20  Which Federal agencies may apply for such funds?

    The Corporation will consider applications only from Executive 
Branch agencies or departments. Bureaus, divisions, and local and 
regional offices of such departments and agencies can only apply through 
the central department or agency; however, it is possible for the 
department or agency to submit an application proposing more than one 
program.



Sec. 2523.30  Must Federal agencies meet the requirements imposed on grantees under parts 2521 and 2522 of this chapter?

    Yes, except as provided in Sec. 2523.90. Federal agency programs 
must meet the same requirements and serve the same purposes as all other 
applicants seeking support under part 2522 of this chapter.



Sec. 2523.40  For what purposes should Federal agencies use AmeriCorps program funds?

    AmeriCorps funds should enable Federal agencies to establish 
programs that leverage agencies' existing resources and grant-making 
powers toward the goal of integrating service more fully into agencies' 
programs and activities. Agencies should plan to ultimately support new 
service initiatives out of their own budgets and appropriations.



Sec. 2523.50  What types of funds are Federal agencies eligible to receive?

    Federal agencies may apply for planning and operating funds subject 
to the terms established by the Corporation in Sec. 2521.20 of this 
chapter, except that operating grants will be awarded with the 
expectation that the Federal agencies will support the proposed programs 
from their own budgets once the Corporation grant(s) expire.



Sec. 2523.60  May Federal agencies enter into partnerships or participate in consortia?

    Yes. Such partnerships or consortia may consist of other Federal 
agencies, Indian Tribes, subdivisions of States, community based 
organizations, institutions of higher education, or other non-profit 
organizations. Partnerships and consortia must be approved by the 
Corporation.



Sec. 2523.70  Will the Corporation give special consideration to Federal agency applications that address certain needs?

    Yes. The Corporation will give special consideration to those 
applications that address the national priorities established by the 
Corporation. The Corporation may also give special consideration to 
those applications that demonstrate the agency's intent to leverage its 
own funds through a Corporation-approved partnership or consortium, by 
raising other funds from Federal or non-Federal sources, by giving 
grantees incentives to build service opportunities into their programs, 
by committing appropriate in-kind resources, or by other means.



Sec. 2523.80  Are there restrictions on the use of Corporation funds?

    Yes. The supplantation and nondisplacement provisions specified in 
part 2540 of this chapter apply to the Federal AmeriCorps programs 
supported with such assistance.

[[Page 676]]



Sec. 2523.90  Is there a matching requirement for Federal agencies?

    No. A Federal agency is not required to match funds in programs that 
receive support under this chapter. However, Federal agency subgrantees 
are required to match funds in accordance with the requirements of 
Sec. 2521.30(g) and Sec. 2522.240(b)(5) of this chapter.



Sec. 2523.100  Are participants in programs operated by Federal agencies Federal employees?

    No. Participants in these programs have the same employee status as 
participants in other approved AmeriCorps programs, and are not 
considered Federal employees, except for the purposes of the Family and 
Medical Leave Act as specified in Sec. 2540.220(b) of this chapter.



Sec. 2523.110  Can Federal agencies submit multiple applications?

    No. The Corporation will only consider one application from a 
Federal agency for each AmeriCorps competition. The application may 
propose more than one program, however, and the Corporation may choose 
to fund any or all of those programs.



Sec. 2523.120  Must Federal agencies consult with State Commissions?

    Yes. Federal agencies must provide a description of the manner in 
which the proposed AmeriCorps program(s) is coordinated with the 
application of the State in which the projects will be conducted. 
Agencies must also describe proposed efforts to coordinate AmeriCorps 
activities with State Commissions and other funded AmeriCorps programs 
within the State in order to build upon existing programs and not 
duplicate efforts.



PART 2524--AMERICORPS TECHNICAL ASSISTANCE AND OTHER SPECIAL GRANTS--Table of Contents




Sec.
2524.10  For what purposes will technical assistance and training funds 
          be made available?
2524.20  What are the guidelines for program development assistance and 
          training grants?
2524.30  What are the guidelines for challenge grants?
2524.40  What are the guidelines for grants to involve persons with 
          disabilities?
2524.50  What are the guidelines for assistance with disaster relief?

    Authority: 42 U.S.C. 12501 et seq.

    Source: 59 FR 13805, Mar. 23, 1994, unless otherwise noted.



Sec. 2524.10  For what purposes will technical assistance and training funds be made available?

    (a) To the extent appropriate and necessary, the Corporation may 
make technical assistance available to States, Indian tribes, labor 
organizations, religious organizations, organizations operated by young 
adults, organizations serving economically disadvantaged individuals, 
and other entities eligible to apply for assistance under parts 2521 and 
2522 of this chapter that desire--
    (1) To develop AmeriCorps programs; or
    (2) To apply for assistance under parts 2521 and 2522 of this 
chapter or under a grant program conducted using such assistance.
    (b) In addition, the Corporation may provide program development 
assistance and conduct, directly or by grant or contract, appropriate 
training programs regarding AmeriCorps in order to--
    (1) Improve the ability of AmeriCorps programs assisted under parts 
2521 and 2522 of this chapter to meet educational, public safety, human, 
or environmental needs in communities--
    (i) Where services are needed most; and
    (ii) Where programs do not exist, or are too limited to meet 
community needs, as of the date on which the Corporation makes the grant 
or enters into the contract;
    (2) Promote leadership development in such programs;
    (3) Improve the instructional and programmatic quality of such 
programs to build an ethic of civic responsibility;
    (4) Develop the management and budgetary skills of program 
operators;
    (5) Provide for or improve the training provided to the participants 
in such programs;

[[Page 677]]

    (6) Encourage AmeriCorps programs to adhere to risk management 
procedures, including the training of participants in appropriate risk 
management practices; and
    (7) Assist in such other manner as the Corporation may specify.

[59 FR 13805, Mar. 23, 1994, as amended at 67 FR 45360, July 9, 2002]



Sec. 2524.20  What are the guidelines for program development assistance and training grants?

    (a) Eligibility. States, Federal agencies, Indian tribes, public or 
private nonprofit agencies, institutions of higher education, for-profit 
businesses, and individuals may apply for assistance under this section.
    (b) Duration. A grant made under this section will be for a term of 
up to one year and is renewable.
    (c) Application requirements. Eligible applicants must comply with 
the requirements specified in the Corporation's application package.



Sec. 2524.30  What are the guidelines for challenge grants?

    (a) Purpose. The purpose of these grants is to challenge high 
quality AmeriCorps programs to diversify their funding base by matching 
private dollars they have raised with Corporation support. The 
Corporation will provide not more than $1 for each $1 raised in cash by 
the program from private sources in excess of amounts otherwise required 
to be provided by the program to satisfy the matching funds requirements 
specified under Sec. 2521.30(g) of this chapter.
    (b) Eligibility. Only Corporation grantees that meet all of the 
following eligibility criteria may apply for challenge grants: (1) They 
are funded under parts 2520 through 2523 of this chapter.
    (2) They are high quality programs with demonstrated experience in 
establishing and implementing projects that provide benefits to 
participants and communities.
    (3) They have operated with Corporation funds for at least six 
months.
    (4) They have secured the minimum matching funds required by 
Secs. 2521.30(g), 2522.240(b)(5), 2522.250(a)(4), and 2522.250(b)(2) of 
this chapter.
    (c) Allowable program activities. Challenge grants are intended to 
provide special opportunities for national and community service 
programs to enroll additional participants or undertake other activities 
specified by the Corporation.
    (d) Application procedures. Eligible applicants must comply with the 
requirements specified in the Corporation's application materials.
    (e) Limitation on use of the funds. Each year the Corporation will 
establish a maximum award that a program may receive as a challenge 
grant.
    (f) Allocation of funds. The Corporation will determine annually how 
much funding will be allocated to challenge grants from funds 
appropriated for AmeriCorps programs.



Sec. 2524.40  What are the guidelines for grants to involve persons with disabilities?

    (a) Purpose. There are two general purposes for these grants: (1) To 
assist AmeriCorps grantees in placing applicants who require reasonable 
accommodation (as defined in section 101(9) of the Americans With 
Disabilities Act of 1990, 42 U.S.C. 12111(9)) or auxiliary aids and 
services (as defined in section 3(1) of such Act, 42 U.S.C. 12102(1)) in 
an AmeriCorps program; and
    (2) To conduct outreach activities to individuals with disabilities 
to recruit them for participation in AmeriCorps programs.
    (b) Eligibility--(1) Placement, accommodation, and auxiliary 
services. Eligibility for assistance under this part is limited to 
AmeriCorps programs that: (i) Receive competitive funding from the 
Corporation under Sec. 2521.30(a)(3) or 2521.30(b)(3) of this chapter; 
and
    (ii) Demonstrate that the program has received a substantial number 
of applications for placement from persons who are individuals with a 
disability and who require a reasonable accommodation (as defined in 
section 101(9) of the Americans with Disabilities Act of 1990), or 
auxiliary aids and services (as defined in section 3(1) of such Act) in 
order to perform national service; and
    (iii) Demonstrate that additional funding would assist the program 
in placing a substantial number of such

[[Page 678]]

individuals with a disability as participants in projects carried out 
through the program.
    (2) Outreach. Corporation grantees and any public or private 
nonprofit organization may apply for funds to conduct outreach to 
individuals with disabilities to recruit them for participation in 
AmeriCorps programs. Outreach funds can also be used by any organization 
to assist AmeriCorps programs in adapting their programs to encourage 
greater participation by individuals with disabilities.
    (c) Application procedures. Eligible applicants must comply with the 
requirements specified in the Corporation's application materials.



Sec. 2524.50  What are the guidelines for assistance with disaster relief?

    (a) Purpose. Disaster relief funds are intended to provide emergency 
assistance not otherwise available to enable national and community 
service programs to respond quickly and effectively to a Presidentially-
declared disaster.
    (b) Eligibility. Any AmeriCorps program (including youth corps, the 
National Civilian Community Corps, VISTA, and other programs authorized 
under the Domestic Volunteer Services Act) or grant making entity (such 
as a State or Federal agency) that is supported by the Corporation may 
apply for disaster relief grants.
    (c) Application process. Eligible applicants must comply with the 
requirements specified in the Corporation's application materials.
    (d) Waivers. In appropriate cases, due to the limited nature of 
disaster activities, the Corporation may waive specific program 
requirements such as matching requirements and the provision of 
AmeriCorps educational awards for participants supported with disaster 
relief funds.



PART 2525--NATIONAL SERVICE TRUST: PURPOSE AND DEFINITIONS--Table of Contents




Sec.
2525.10  What is the National Service Trust?
2525.20  Definitions.

    Authority: 42 U.S.C. 12601-12604.

    Source: 59 FR 30710, June 15, 1994, unless otherwise noted.



Sec. 2525.10  What is the National Service Trust?

    The National Service Trust is an account in the Treasury of the 
United States from which the Corporation makes payments of education 
awards, pays interest that accrues on qualified student loans for 
AmeriCorps participants during terms of service in approved national 
service positions, and makes other payments authorized by Congress.

[64 FR 37414, July 12, 1999]



Sec. 2525.20  Definitions.

    In addition to the definitions in Sec. 2510.20 of this chapter, the 
following definitions apply to terms used in parts 2525 through 2529 of 
this chapter:
    Approved school-to-work program. The term approved school-to-work 
program means a program that is involved in a federally-approved school-
to-work system, as certified by a State, designated local partnership, 
or other entity that receives a grant under the School-to-Work 
Opportunities Act of 1994 (20 U.S.C. 6101 et seq.).
    Cost of attendance. The term cost of attendance has the same meaning 
as in title IV of the Higher Education Act of 1965, as amended (20 
U.S.C. 1070 et. seq.).
    Current educational expenses. The term current educational expenses 
means the cost of attendance, or other costs attributable to an 
educational course offered by an institution of higher education that 
has in effect a program participation agreement under Title IV of the 
Higher Education Act, for a period of enrollment that begins after an 
individual enrolls in an approved national service position.
    Education award. The term education award means the financial 
assistance available under parts 2526 and 2528 of this chapter for which 
an individual in an approved AmeriCorps position may be eligible.
    Educational expenses at a Title IV institution of higher education. 
The term educational expenses means--
    (1) Cost of attendance as determined by the institution; or
    (2) Other costs at a title IV institution of higher education 
attributable

[[Page 679]]

to a non-title IV educational course as follows:
    (i) Tuition and fees normally assessed a student for a course or 
program of study by the institution, including costs for rental or 
purchase of any books or supplies required of all students in the same 
course of study;
    (ii) For a student engaged in a course of study by correspondence, 
only tuition and fees and, if required, books, and supplies;
    (iii) For a student with a disability, an allowance (as determined 
by the institution) for those expenses related to the student's 
disability, including special services, personal assistance, 
transportation, equipment, and supplies that are reasonably incurred and 
not provided for by other assisting agencies; and
    (iv) For a student engaged in a work experience under a cooperative 
education program or course, an allowance for reasonable costs 
associated with such employment (as determined by the institution).
    Holder. The term holder means--
    (1) The original lender; or
    (2) Any other entity to whom a loan is subsequently sold, 
transferred, or assigned if such entity acquires a legally enforceable 
right to receive payments from the borrower.
    Institution of higher education. For the purposes of parts 2525 
through 2529 of this chapter, the term institution of higher education 
has the same meaning given the term in section 481(a) of the Higher 
Education Act of 1965, as amended (20 U.S.C. 1088(a)).
    Period of enrollment. Period of enrollment means the period that the 
title IV institution has established for which institutional charges are 
generally assessed (i.e., length of the student's course, program, or 
academic year.)
    Qualified student loan. The term qualified student loan means any 
loan made, insured, or guaranteed pursuant to title IV of the Higher 
Education Act of 1965 (20 U.S.C. 1070 et seq.), other than a loan to a 
parent of a student pursuant to section 428B of such Act (20 U.S.C. 
1078-2), any loan made pursuant to title VII or VIII of the Public 
Service Health Act (42 U.S.C. 292a et seq.), or any other loan 
designated as such by Congress. This includes, but is not necessarily 
limited to, the following:
    (1) Federal Family Education Loans. (i) Subsidized and Unsubsidized 
Stafford Loans.
    (ii) Supplemental Loans to Students (SLS).
    (iii) Federal Consolidation Loans.
    (iv) Guaranteed Student Loans (predecessor to Stafford Loans).
    (v) Federally Insured Student Loans (FISL).
    (2) William D. Ford Federal Direct Loans. (i) Direct Subsidized and 
Unsubsidized Stafford Loans.
    (ii) Direct Subsidized and Unsubsidized Ford Loans.
    (iii) Direct Consolidation Loans.
    (3) Federal Perkins Loans. (i) National Direct Student Loans.
    (ii) National Defense Student Loans.
    (4) Public Health Service Act Loans. (i) Health Education Assistance 
Loans (HEAL).
    (ii) Health Professions Student Loans (HPSL).
    (iii) Loans for Disadvantaged Students (LDS).
    (iv) Nursing Student Loans (NSL).
    (v) Primary Care Loans (PCL).
    Term of service. The term term of service means--
    (1) For AmeriCorps participants other than VISTA volunteers, any of 
the terms of service specified in Sec. 2522.220 of this chapter; and
    (2) For VISTA volunteers, not less than a full year of service as a 
VISTA volunteer.

[59 FR 30711, June 15, 1994 as amended at 64 FR 37414, July 12, 1999; 65 
FR 77821, Dec. 13, 2000; 67 FR 45360, July 9, 2002]



PART 2526--ELIGIBILITY FOR AN EDUCATION AWARD--Table of Contents




Sec.
2526.10  Who is eligible to receive an education award from the National 
          Service Trust?
2526.20  Is an AmeriCorps participant who does not complete an 
          originally-approved term of service eligible to receive a pro-
          rated education award?
2526.30  How do convictions for the possession or sale of controlled 
          substances affect an education award recipient's ability to 
          use that award?

[[Page 680]]

2526.40  What is the time period during which an individual must use an 
          education award?
2526.50  Is there a limit on the number of education awards an 
          individual may receive?
2526.60  May an individual receive an education award and related 
          interest benefits from the National Service Trust as well as 
          other loan cancellation benefits for the same service?

    Authority: 42 U.S.C. 12601-12604.

    Source: 59 FR 30711, June 15, 1994, unless otherwise noted.



Sec. 2526.10  Who is eligible to receive an education award from the National Service Trust?

    (a) General. An individual is eligible to receive an education award 
from the National Service Trust if the individual--
    (1) Is a citizen, national, or lawful permanent resident alien of 
the United States;
    (2) Is either at least 17 years of age at the commencement of 
service or is an out-of-school youth 16 years of age at the commencement 
of service participating in a program described in Sec. 2522.110(b)(3) 
or (g) of this chapter;
    (3) Successfully completes a term of service in an approved national 
service position.
    (b) High school diploma or equivalent. To use an education award, an 
individual must--
    (1) Have received a high school diploma or its equivalent; or
    (2) Be enrolled at an institution of higher education on the basis 
of meeting the standard described in paragraph (1) or (2) of subsection 
(a) of section 484 of the Higher Education Act of 1965 (20 U.S.C. 1091) 
and meet the requirements of subsection of section 484; or
    (3) Have received a waiver described in Sec. 2522.200(b) of this 
chapter.
    (c) Written declaration regarding high school diploma sufficient for 
disbursement. For purposes of disbursing an education award, if an 
individual provides a written declaration under penalty of law that he 
or she meets the requirements in paragraph (b) of this section relating 
to high school education, no additional documentation is needed.
    (d) Prohibition on duplicate benefits. An individual who receives a 
post-service benefit in lieu of an education award may not receive an 
education award for the same term of service.
    (e) Penalties for false information. Any individual who makes a 
materially false statement or representation in connection with the 
approval or disbursement of an education award or other payment from the 
National Service Trust may be liable for the recovery of funds and 
subject to civil and criminal sanctions.

[64 FR 37414, July 12, 1999, as amended at 67 FR 45361, July 9, 2002]



Sec. 2526.20  Is an AmeriCorps participant who does not complete an originally-approved term of service eligible to receive a pro-rated education award?

    (a) Compelling personal circumstances. A participant who is released 
prior to completing an originally-approved term of service for 
compelling personal circumstances and who completes at least 15 percent 
of the originally-approved term of service is eligible for a pro-rated 
education award.
    (b) Release for cause. A participant who is released prior to 
completing an originally-approved term of service for cause is not 
eligible for any portion of an education award.

[64 FR 37415, July 12, 1999]



Sec. 2526.30  How do convictions for the possession or sale of controlled substances affect an education award recipient's ability to use that award?

    (a) Except as provided in paragraph (b) of this section, a recipient 
of an education award who is convicted under pertinent Federal or State 
law of the possession or sale of a controlled substance is not eligible 
to use his or her education award from the date of the conviction until 
the end of a specified time period, which is determined based on the 
type of conviction as follows:
    (1) For conviction of the possession of a controlled substance, the 
ineligibility periods are--
    (i) One year for a first conviction;
    (ii) Two years for a second conviction; and
    (iii) For a third or subsequent conviction, indefinitely, as 
determined by the

[[Page 681]]

Corporation according to the following factors--
    (A) Type of controlled substance;
    (B) Amount of controlled substance;
    (C) Whether firearms or other dangerous weapons were involved in the 
offense;
    (D) Nature and extent of any other criminal record;
    (E) Nature and extent of any involvement in trafficking of 
controlled substances;
    (F) Length of time between offenses;
    (G) Employment history;
    (H) Service to the community;
    (I) Recommendations from community members and local officials, 
including experts in substance abuse and treatment; and
    (J) Any other relevant aggravating or ameliorating circumstances.
    (2) For conviction of the sale of a controlled substance, the 
ineligibility periods are--
    (i) Two years for a first conviction; and
    (ii) Two years plus such additional time as the Corporation 
determines as appropriate for second and subsequent convictions, based 
on the factors set forth in paragraphs (a)(1)(iii) (A) through (J) of 
this section.
    (b) (1) If the Corporation determines that an individual who has had 
his or her eligibility to use the education award suspended pursuant to 
paragraph (a) of this section has successfully completed a legitimate 
drug rehabilitation program, or in the case of a first conviction that 
the individual has enrolled in a legitimate drug rehabilitation program, 
the individual's eligibility to use the education award will be 
restored.
    (2) In order for the Corporation to determine that the requirements 
of paragraph (b)(1) of this section have been met--
    (i) The drug rehabilitation program must be recognized as legitimate 
by appropriate Federal, State or local authorities; and
    (ii) The individual's enrollment in or successful completion of the 
legitimate drug rehabilitation program must be certified by an 
appropriate official of that program.

[59 FR 30711, June 15, 1994. Redesignated at 64 FR 37415, July 12, 1999]



Sec. 2526.40  What is the time period during which an individual must use an education award?

    (a) General requirement. An individual must use an education award 
within seven years of the date on which the individual successfully 
completes a term of service, unless the individual applies for and 
receives an extension in accordance with the requirements of paragraph 
(b) of this section.
    (b) Extensions. In order to receive an extension of the seven-year 
time period for using an education award, an individual must apply to 
the Corporation for an extension prior to the end of that time period. 
The Corporation will grant an application for an extension under the 
following circumstances:
    (1) If the Corporation determines that an individual was performing 
another term of service in an approved AmeriCorps position during the 
seven-year period, the Corporation will grant an extension for a time 
period that is equivalent to the time period during which the individual 
was performing the other term of service.
    (2) If the Corporation determines that an individual was unavoidably 
prevented from using the education award during the seven-year period, 
the Corporation will grant an extension for a period of time that the 
Corporation deems appropriate. An individual who is ineligible to use an 
education award as a result of the individual's conviction of the 
possession or sale of a controlled substance is not considered to be 
unavoidably prevented from using the education award for the purposes of 
this paragraph.

[59 FR 30711, June 15, 1994. Redesignated and amended at 64 FR 37415, 
July 12, 1999]



Sec. 2526.50  Is there a limit on the number of education awards an individual may receive?

    (a) First and second terms of service. An individual may receive an 
education award for only the first and second terms of service for which 
an education award is available, regardless of the length of the term.
    (b) Release for cause. Except as provided in paragraph (c) of this 
section, a term of service from which an individual is released for 
cause counts as one of the two terms of service for

[[Page 682]]

which an individual may receive an education award.
    (c) Early release. If a participant is released for reasons other 
than misconduct prior to completing fifteen percent of a term of 
service, the term will not be considered one of the two terms of service 
for which an individual may receive an education award.

[64 FR 37415, July 12, 1999]



Sec. 2526.60  May an individual receive an education award and related interest benefits from the National Service Trust as well as other loan cancellation 
          benefits for the same service?

    No. An individual may not receive an education award and related 
interest benefits from the National Service Trust for a term of service 
and have that same service credited toward repayment, discharge, or 
cancellation of other student loans.

[64 FR 37415, July 12, 1999]



PART 2527--DETERMINING THE AMOUNT OF AN EDUCATION AWARD--Table of Contents




    Authority: 42 U.S.C. 12601-12604.

    Source: 64 FR 37415, July 12, 1999, unless otherwise noted.



Sec. 2527.10  What is the amount of an AmeriCorps education award?

    (a) Full-time term of service. The education award for a full-time 
term of service of at least 1,700 hours is $4,725.
    (b) Part-time term of service. The education award for a part-time 
term of service of at least 900 hours is $2,362.50.
    (c) Reduced part-time term of service. The education award for a 
reduced part-time term of service of fewer than 900 hours is--
    (1) An amount equal to the product of--
    (i) The number of hours of service required to complete the reduced 
part-time term of service divided by 900; and
    (ii) 2,362.50; or
    (2) An amount as determined otherwise by the Corporation.
    (d) Release for compelling personal circumstances. The education 
award for an individual who is released from completing an originally-
approved term of service for compelling personal circumstances is equal 
to the product of--
    (1) The number of hours completed divided by the number of hours in 
the originally-approved term of service; and
    (2) The amount of the education award for the originally-approved 
term of service.



PART 2528--USING AN EDUCATION AWARD--Table of Contents




Sec.
2528.10  For what purposes may an education award be used?
2528.20  What steps are necessary to use an education award to repay a 
          qualified student loan?
2528.30  What steps are necessary to use an education award to pay all 
          or part of the current educational expenses at an institution 
          of higher education?
2528.40  Is there a limit on the amount of an individual's education 
          award that the Corporation will disburse to an institution of 
          higher education for a given period of enrollment?
2528.50  What happens if an individual withdraws or fails to complete 
          the period of enrollment in an institution of higher education 
          for which the Corporation has disbursed all or part of that 
          individual's education award?
2528.60  What steps are necessary to use an education award to pay 
          expenses incurred in participating in an approved school-to-
          work program?
2528.70  What happens if an individual withdraws or fails to complete 
          the period of enrollment in an approved school-to-work program 
          for which the Corporation has disbursed all or part of that 
          individual's education award?

    Authority: 42 U.S.C. 12601-12604.

    Source: 64 FR 37415, July 12, 1999, unless otherwise noted.



Sec. 2528.10  For what purposes may an education award be used?

    (a) Authorized uses. An education award may be used--
    (1) To repay qualified student loans in accordance with 
Sec. 2528.20;
    (2) To pay all or part of the current educational expenses at an 
institution of higher education in accordance with Secs. 2528.30 through 
2528.50;
    (3) To pay expenses incurred in participating in an approved school-
to-work program in accordance with Sec. 2528.60 through Sec. 2528.70.

[[Page 683]]

    (b) Multiple uses. An education award is divisible and may be 
applied to any combination of loans, costs, or expenses described in 
paragraph (a) of this section.

[64 FR 37415, July 12, 1999, as amended at 67 FR 45361, July 9, 2002]



Sec. 2528.20  What steps are necessary to use an education award to repay a qualified student loan?

    (a) Required information. Before disbursing an amount from an 
education award to repay a qualified student loan, the Corporation must 
receive--
    (1) An individual's written authorization and request for a specific 
payment amount;
    (2) Identifying and other information from the holder of the loan as 
requested by the Corporation and necessary to ensure compliance with 
this part.
    (b) Payment. When the Corporation receives the information required 
under paragraph (a) of this section, the Corporation will pay the holder 
of the loan and notify the individual of the payment.
    (c) Aggregate payments. The Corporation may establish procedures to 
aggregate payments to holders of loans for more than a single 
individual.



Sec. 2528.30  What steps are necessary to use an education award to pay all or part of the current educational expenses at an institution of higher education?

    (a) Required information. Before disbursing an amount from an 
education award to pay all or part of the current educational expenses 
at an institution of higher education, the Corporation must receive--
    (1) An individual's written authorization and request for a specific 
payment amount;
    (2) Information from the institution of higher education as 
requested by the Corporation, including verification that--
    (i) It has in effect a program participation agreement under section 
487 of the Higher Education Act of 1965 (20 U.S.C. 1094);
    (ii) Its eligibility to participate in any of the programs under 
title IV of the Higher Education Act of 1965 has not been limited, 
suspended, or terminated;
    (iii) If an individual who has used an education award withdraws or 
otherwise fails to complete the period of enrollment for which the 
education award was provided, the institution of higher education will 
ensure an appropriate refund to the Corporation of the unused portion of 
the education award under its own published refund policy, or if it does 
not have one, provide a pro-rata refund to the Corporation of the unused 
portion of the education award;
    (iv) Individuals using education awards to pay for the current 
educational expenses at that institution do not comprise more than 15 
percent of the institution's total student population;
    (v) The amount requested will be used to pay all or part of the 
individual's cost of attendance or other educational expenses 
attributable to a course offered by the institution;
    (vi) The amount requested does not exceed the difference between:
    (A) The individual's cost of attendance; and
    (B) The sum of the individual's estimated student financial 
assistance for that period under part A of title IV of the Higher 
Education Act and the individual's veterans' education benefits as 
defined in section 480(c) of the Higher Education Act (20 U.S.C. 
1087vv(c)).
    (b) Payment. When the Corporation receives the information required 
under paragraph (a) of this section, the Corporation will pay the 
institution and notify the individual of the payment.
    (c) Installment payments. The Corporation will disburse the 
education award to the institution of higher education in at least two 
separate installments, none of which exceeds 50 percent of the total 
amount. The interval between installments may not be less than one-half 
of the period of enrollment, except as necessary to permit the second 
installment to be paid at the beginning of the second semester, quarter, 
or other division of a period of enrollment.

[64 FR 37415, July 12, 1999, as amended at 67 FR 45361, July 9, 2002]

[[Page 684]]



Sec. 2528.40  Is there a limit on the amount of an individual's education award that the Corporation will disburse to an institution of higher education for a 
          given period of enrollment?

    Yes. The Corporation's disbursement from an individual's education 
award for any period of enrollment may not exceed the difference 
between--
    (a) The individual's cost of attendance for that period of 
enrollment, determined by the institution of higher education in 
accordance with section 472 of the Higher Education Act of 1965 (20 
U.S.C. 1987ll); and
    (b) The sum of--
    (1) The individual's estimated financial assistance for that period 
under part A of title IV of the Higher Education Act; and
    (2) The individual's veterans' education benefits as defined under 
section 480(c) of the Higher Education Act (20 U.S.C. 1087vv(c)).



Sec. 2528.50  What happens if an individual withdraws or fails to complete the period of enrollment in an institution of higher education for which the 
          Corporation has disbursed all or part of that individual's 
          education award?

    (a)(1) If an individual for whom the Corporation has disbursed 
education award funds withdraws or otherwise fails to complete a period 
of enrollment, an institution of higher education that receives a 
disbursement of education award funds from the Corporation must provide 
a refund to the Corporation in an amount determined under that 
institution's published refund requirements.
    (2) If an institution for higher education does not have a published 
refund policy, the institution must provide a pro-rata refund to the 
Corporation of the unused portion of the education award.
    (b) The Corporation will credit any refund received for an 
individual under paragraph (a) of this section to the individual's 
education award allocation in the National Service Trust.

[64 FR 37415, July 12, 1999, as amended at 67 FR 45361, July 9, 2002]



Sec. 2528.60  What steps are necessary to use an education award to pay expenses incurred in participating in an approved school-to-work program?

    (a) Required information. Before disbursing an amount from an 
education award to pay expenses incurred in participating in an approved 
school-to-work program, the Corporation must receive--
    (1) An individual's written authorization and request for a specific 
payment amount;
    (2) Information from the school-to-work program as requested by the 
Corporation, including verification that--
    (i) It is involved in a federally-approved school-to-work system, as 
certified by a State, designated local partnership, or other entity that 
receives a grant under the School-to-Work Opportunities Act of 1994 (20 
U.S.C. 6101);
    (ii) The amount requested will be used to pay all or part of the 
individual's cost of participating in the school-to-work program;
    (iii) If an individual who has used an education award withdraws or 
otherwise fails to complete the period of enrollment for which the 
education award was provided, the school-to-work program will ensure an 
appropriate refund to the Corporation of the unused portion of the 
education award under its own published refund policy, or if it does not 
have one, provide a pro-rata refund to the Corporation of the unused 
portion of the education award.
    (b) Payment. When the Corporation receives the information required 
under paragraph (a) of this section, the Corporation will pay the 
program and notify the individual of the payment.

[64 FR 37415, July 12, 1999, as amended at 67 FR 45361, July 9, 2002]



Sec. 2528.70  What happens if an individual withdraws or fails to complete the period of enrollment in an approved school-to-work program for which the 
          Corporation has disbursed all or part of that individual's 
          education award?

    (a)(1) If an individual for whom the Corporation has disbursed 
education award funds withdraws or otherwise

[[Page 685]]

fails to complete a period of enrollment, an approved school-to-work 
program that receives a disbursement of education award funds from the 
Corporation must provide a refund to the Corporation determined under 
that program's published refund policy.
    (2) If a school-to-work program does not have a published refund 
policy, the program must provide a pro-rata refund to the Corporation of 
the unused portion of the education award.
    (b) The Corporation will credit any refund received for an 
individual under paragraph (a) of this section to the individual's 
education award allocation in the National Service Trust.

[64 FR 37415, July 12, 1999, as amended at 67 FR 45361, July 9, 2002]



PART 2529--PAYMENT OF ACCRUED INTEREST--Table of Contents




Sec.
2529.10  Under what circumstances will the Corporation pay interest that 
          accrues on qualified student loans during an individual's term 
          of service in an approved AmeriCorps position?
2529.20  What steps are necessary to obtain forbearance in the repayment 
          of a qualified student loan during an individual's term of 
          service in an approved AmeriCorps position?
2529.30  What steps are necessary for using funds in the National 
          Service Trust to pay interest that has accrued on a qualified 
          student loan during a term of service for which the individual 
          has obtained forbearance?

    Authority: 42 U.S.C. 12601-12604.

    Source: 64 FR 37417, July 12, 1999, unless otherwise noted.



Sec. 2529.10  Under what circumstances will the Corporation pay interest that accrues on qualified student loans during an individual's term of service in an 
          approved AmeriCorps position?

    (a) Eligibility. The Corporation will pay interest that accrues on 
an individual's qualified student loan, subject to the limitation on 
amount in paragraph (b) of this section, if--
    (1) The individual successfully completes a term of service in an 
approved AmeriCorps position; and
    (2) The holder of the loan approves the individual's request for 
forbearance during the term of service.
    (b) Amount. The percentage of accrued interest that the Corporation 
will pay is the lesser of--
    (1) The product of--
    (i) The number of hours of service completed divided by the number 
of days for which forbearance was granted; and
    (ii) 365 divided by 17; and (2) 100.
    (c) Supplemental to education award. A payment of accrued interest 
under this part is supplemental to an education award received by an 
individual under parts 2526 through 2528 of this chapter.
    (d) Limitation. The Corporation is not responsible for the repayment 
of any accrued interest in excess of the amount determined in accordance 
with paragraph (b) of this section.
    (e) Suspended service. The Corporation will not pay any interest 
expenses that accrue on an individual's qualified student loan during a 
period of suspended service.



Sec. 2529.20  What steps are necessary to obtain forbearance in the repayment of a qualified student loan during an individual's term of service in an approved 
          AmeriCorps position?

    (a) An individual seeking forbearance must submit a request to the 
holder of the loan.
    (b) If, before approving a request for forbearance, the holder of 
the loan requires verification that the individual is serving in an 
approved AmeriCorps position, the Corporation will provide verification 
upon a request from the individual or the holder of the loan.



Sec. 2529.30  What steps are necessary for using funds in the National Service Trust to pay interest that has accrued on a qualified student loan during a term 
          of service for which an individual has obtained forbearance?

    (a) The Corporation will make payments from the National Service 
Trust for interest that has accrued on a qualified student loan during a 
term of service which the individual has successfully completed and for 
which an individual has obtained forbearance, after the following:

[[Page 686]]

    (1) The program verifies that the individual has successfully 
completed the term of service and the dates upon which the term of 
service began and ended;
    (2) The holder of the loan verifies the amount of interest that has 
accrued during the term of service.
    (b) When the Corporation receives all necessary information from the 
program and the holder of the loan, the Corporation will pay the holder 
of the loan and notify the individual of the payment.



PART 2530--PURPOSES AND AVAILABILITY OF GRANTS FOR INVESTMENT FOR QUALITY AND INNOVATION ACTIVITIES--Table of Contents




Sec.
2530.10  What are the purposes of the Investment for Quality and 
          Innovation activities?
2530.20  Funding priorities.

    Authority: 42 U.S.C. 12501 et seq.



2530.10  What are the purposes of the Investment for Quality and Innovation activities?

    Investment for Quality and Innovation activities are designed to 
develop service infrastructure and improve the overall quality of 
national and community service efforts. Specifically, the Corporation 
will support innovative and model programs that otherwise may not be 
eligible for funding; and support other activities, such as training and 
technical assistance, summer programs, leadership training, research, 
promotion and recruitment, and special fellowships and awards. The 
Corporation may conduct these activities either directly or through 
grants to or contracts with qualified organizations.

[59 FR 13806, Mar. 23, 1994]



Sec. 2530.20  Funding priorities.

    The Corporation may choose to set priorities (and to periodically 
revise such priorities) that limit the types of innovative and model 
programs and support activities it will undertake or fund in a given 
fiscal year. In setting these priorities, the Corporation will seek to 
concentrate funds on those activities that will be most effective and 
efficient in fulfilling the purposes of this part.

[59 FR 13806, Mar. 23, 1994]



PART 2531--INNOVATIVE AND SPECIAL DEMONSTRATION PROGRAMS--Table of Contents




Sec.
2531.10  Military Installation Conversion Demonstration programs.
2531.20  Special Demonstration Project for the Yukon-Kuskokwim Delta of 
          Alaska.
2531.30  Other innovative and model programs.

    Authority: 42 U.S.C. 12501 et seq.

    Source: 59 FR 13806, Mar. 23, 1994, unless otherwise noted.



Sec. 2531.10  Military Installation Conversion Demonstration programs.

    (a) Purposes. The purposes of this section are to: (1) Provide 
direct and demonstrable service opportunities for economically 
disadvantaged youth;
    (2) Fully utilize military installations affected by closures or 
realignments;
    (3) Encourage communities affected by such closures or realignments 
to convert the installations to community use; and
    (4) Foster a sense of community pride in the youth in the community.
    (b) Definitions. As used in this section: (1) Affected military 
installation. The term affected military installation means a military 
installation described in section 325(e)(1) of the Job Training 
Partnership Act (29 U.S.C. 1662d(e)(1)).
    (2) Community. The term community includes a county.
    (3) Convert to community use. The term convert to community use, 
used with respect to an affected military installation, includes--
    (i) Conversion of the installation or a part of the installation to-
-
    (A) A park;
    (B) A community center;
    (C) A recreational facility; or
    (D) A facility for a Head Start program under the Head Start Act (42 
U.S.C. 9831 et seq.); and

[[Page 687]]

    (ii) Carrying out, at the installation, a construction or economic 
development project that is of substantial benefit, as determined by the 
Chief Executive Officer, to--
    (A) The community in which the installation is located; or
    (B) A community located within 50 miles of the installation or such 
further distance as the Chief Executive Officer may deem appropriate on 
a case-by-case basis.
    (4) Demonstration program. The term demonstration program means a 
program described in paragraph (c) of this section.
    (c) Demonstration programs. (1) Grants-- The Corporation may make 
grants to communities and community-based agencies to pay for the 
Federal share of establishing and carrying out military installation 
conversion demonstration programs, to assist in converting to community 
use affected military installations located--
    (i) Within the community; or
    (ii) Within 50 miles of the community.
    (2) Duration. In carrying out such a demonstration program, the 
community or community-based agency may carry out--
    (i) A program of not less than 6 months in duration; or
    (ii) A full-time summer program.
    (d) Use of Funds--(1) Stipend. A community or community-based agency 
that receives a grant under paragraph (c) of this section to establish 
and carry out a project through a demonstration program may use the 
funds made available through such grant to pay for a portion of a 
stipend for the participants in the project.
    (2) Limitation on amount of stipend. The amount of the stipend 
provided to a participant under paragraph (d)(1) of this section that 
may be paid using assistance provided under this section and using any 
other Federal funds may not exceed the lesser of--
    (i) 85 percent of the total average annual subsistence allowance 
provided to VISTA volunteers under section 105 of the Domestic Volunteer 
Service Act of 1973 (42 U.S.C. 4955); and
    (ii) 85 percent of the stipend established by the demonstration 
program involved.
    (e) Participants--(1) Eligibility. A person will be eligible to be 
selected as a participant in a project carried out through a 
demonstration program if the person is--
    (i) Economically disadvantaged and between the ages of 16 and 24, 
inclusive;
    (ii) In the case of a full-time summer program, economically 
disadvantaged and between the ages of 14 and 24; or
    (iii) An eligible youth as described in section 423 of the Job 
Training Partnership Act (29 U.S.C. 1693).
    (2) Participation. Persons desiring to participate in such a project 
must enter into an agreement with the sponsor of the project to 
participate--
    (i) On a full-time or a part-time basis; and
    (ii) For the duration referred to in paragraph (f)(2)(iii) of this 
section.
    (f) Application--(1) In general. To be eligible to receive a grant 
under paragraph (c) of this section, a community or community-based 
agency must submit an application to the Chief Executive Officer at such 
time, in such manner, and containing such information as the Chief 
Executive Officer may require.
    (2) Contents. At a minimum, such application must contain--
    (i) A description of the demonstration program proposed to be 
conducted by the applicant;
    (ii) A proposal for carrying out the program that describes the 
manner in which the applicant will--
    (A) Provide preservice and inservice training, for supervisors and 
participants, that will be conducted by qualified individuals or 
qualified organizations;
    (B) Conduct an appropriate evaluation of the program; and
    (C) Provide for appropriate community involvement in the program;
    (iii) Information indicating the duration of the program; and
    (iv) An assurance that the applicant will comply with the 
nonduplication, nondisplacement and grievance procedure provisions of 
part 2540 of this chapter.
    (g) Limitation on Grant. In making a grant under paragraph (c) of 
this section with respect to a demonstration

[[Page 688]]

program to assist in converting an affected military installation, the 
Corporation will not make a grant for more than 25 percent of the total 
cost of the conversion.



Sec. 2531.20  Special Demonstration Project for the Yukon-Kuskokwim Delta of Alaska.

    (a) Special Demonstration Project for the Yukon-Kuskokwim Delta of 
Alaska. The President may award grants to, and enter into contracts 
with, organizations to carry out programs that address significant human 
needs in the Yukon-Kuskokwim delta region of Alaska.
    (b) Application.--(1) General requirements. To be eligible to 
receive a grant or enter into a contract under paragraph (a) of this 
section with respect to a program, an organization must submit an 
application to the President at such time, in such manner, and 
containing such information as required.
    (2) Contents. The application submitted by the organization must, at 
a minimum--
    (i) Include information describing the manner in which the program 
will utilize VISTA volunteers, individuals who have served in the Peace 
Corps, and other qualified persons, in partnership with the local 
nonprofit organizations known as the Yukon-Kuskokwim Health Corporation 
and the Alaska Village Council Presidents;
    (ii) Take into consideration--
    (A) The primarily noncash economy of the region; and
    (B) The needs and desires of residents of the local communities in 
the region; and
    (iii) Include specific strategies, developed in cooperation with the 
Yupi'k speaking population that resides in such communities, for 
comprehensive and intensive community development for communities in the 
Yukon-Kuskokwim delta region.



Sec. 2531.30  Other innovative and model programs.

    (a) The Corporation may support other innovative and model programs 
such as the following: (1) Programs, including programs for rural youth, 
described in parts 2515 through 2524 of this chapter;
    (2) Employer-based retiree programs;
    (3) Intergenerational programs;
    (4) Programs involving individuals with disabilities providing 
service;
    (5) Programs sponsored by Governors; and
    (6) Summer programs carried out between May 1 and October 1 (which 
may also contain a year-round component).
    (b) The Corporation will support innovative service-learning 
programs.
    (c) Application procedures, selection criteria, timing, and other 
requirements will be announced in the Federal Register.



PART 2532--TECHNICAL ASSISTANCE, TRAINING, AND OTHER SERVICE INFRASTRUCTURE-BUILDING ACTIVITIES--Table of Contents




    Authority: 42 U.S.C. 12501 et seq.



Sec. 2532.10  Eligible activities.

    The Corporation may support--either directly or through a grant, 
contract or agreement--any activity designed to meet the purposes 
described in part 2530 of this chapter. These activities include, but 
are not limited to, the following: (a) Community-based agencies. The 
Corporation may provide training and technical assistance and other 
assistance to project sponsors and other community-based agencies that 
provide volunteer placements in order to improve the ability of such 
agencies to use participants and other volunteers in a manner that 
results in high-quality service and a positive service experience for 
the participants and volunteers.
    (b) Improve ability to apply for assistance. The Corporation will 
provide training and technical assistance, where necessary, to 
individuals, programs, local labor organizations, State educational 
agencies, State Commissions, local educational agencies, local 
governments, community-based agencies, and other entities to enable them 
to apply for funding under one of the national service laws, to conduct 
high-quality programs, to evaluate such programs, and for other 
purposes.

[[Page 689]]

    (c) Conferences and materials. The Corporation may organize and hold 
conferences, and prepare and publish materials, to disseminate 
information and promote the sharing of information among programs for 
the purpose of improving the quality of programs and projects.
    (d) Peace Corps and VISTA training. The Corporation may provide 
training assistance to selected individuals who volunteer to serve in 
the Peace Corps or a program authorized under title I of the Domestic 
Volunteer Service Act of 1973 (42 U.S.C. 4951 et seq.). The training 
will be provided as part of the course of study of the individual at an 
institution of higher education, involve service-learning, and cover 
appropriate skills that the individual will use in the Peace Corps or 
VISTA.
    (e) Promotion and recruitment. The Corporation may conduct a 
campaign to solicit funds for the National Service Trust and other 
programs and activities authorized under the national service laws and 
to promote and recruit participants for programs that receive assistance 
under the national service laws.
    (f) Training. The Corporation may support national and regional 
participant and supervisor training, including leadership training and 
training in specific types of service and in building the ethic of civic 
responsibility.
    (g) Research. The Corporation may support research on national 
service, including service-learning.
    (h) Intergenerational support. The Corporation may assist programs 
in developing a service component that combines students, out-of-school 
youths, and older adults as participants to provide needed community 
services.
    (i) Planning coordination. The Corporation may coordinate community-
wide planning among programs and projects.
    (j) Youth leadership. The Corporation may support activities to 
enhance the ability of youth and young adults to play leadership roles 
in national service.
    (k) National program identity. The Corporation may support the 
development and dissemination of materials, including training 
materials, and arrange for uniforms and insignia, designed to promote 
unity and shared features among programs that receive assistance under 
the national service laws.
    (l) Service-learning. The Corporation will support innovative 
programs and activities that promote service-learning.
    (m) National youth service day--(1) Designation. April 19, 1994, and 
April 18, 1995 are each designated as ``National Youth Service Day''. 
The President is authorized and directed to issue a proclamation calling 
on the people of the United States to observe the day with appropriate 
ceremonies and activities.
    (2) Federal activities. In order to observe National Youth Service 
Day at the Federal level, the Corporation may organize and carry out 
appropriate ceremonies and activities.
    (3) Activities. The Corporation may make grants to public or private 
nonprofit organizations with demonstrated ability to carry out 
appropriate activities, in order to support such activities on National 
Youth Service Day.
    (n) Clearinghouses--(1) Authority. The Corporation may establish 
clearinghouses, either directly or through a grant or contract. Any 
service-learning clearinghouse to be established pursuant to part 2518 
of this chapter is eligible to apply for a grant under this section. In 
addition, public or private nonprofit organizations are eligible to 
apply for clearinghouse grants.
    (2) Function. A Clearinghouse may perform the following activities: 
(i) Assist entities carrying out State or local community service 
programs with needs assessments and planning;
    (ii) Conduct research and evaluations concerning community service;
    (iii) Provide leadership development and training to State and local 
community service program administrators, supervisors, and participants; 
and provide training to persons who can provide such leadership 
development and training;
    (iv) Facilitate communication among entities carrying out community 
service programs and participants;
    (v) Provide information, curriculum materials, and technical 
assistance relating to planning and operation of community service 
programs, to States and local entities eligible to receive funds under 
this chapter;

[[Page 690]]

    (vi) Gather and disseminate information on successful community 
service programs, components of such successful programs, innovative 
youth skills curriculum, and community service projects;
    (vii) Coordinate the activities of the clearinghouse with 
appropriate entities to avoid duplication of effort;
    (viii) Make recommendations to State and local entities on quality 
controls to improve the delivery of community service programs and on 
changes in the programs under this chapter; and
    (ix) Carry out such other activities as the Chief Executive Officer 
determines to be appropriate.
    (o) Assistance for Head Start. The Corporation may make grants to, 
and enter into contracts and cooperative agreements with, public or 
nonprofit private agencies and organizations that receive grants or 
contracts under the Foster Grandparent Program (part B of title II of 
the Domestic Volunteer Service Act of 1973 (29 U.S.C. 5011 et seq.)), 
for projects of the type described in section 211(a) of such Act (29 
U.S.C. 5011) operating under memoranda of agreement with the ACTION 
Agency, for the purpose of increasing the number of low-income 
individuals who provide services under such program to children who 
participate in Head Start programs under the Head Start Act (42 U.S.C. 
9831 et seq.).
    (p) Other assistance. The Corporation may support other activities 
that are consistent with the purposes described in part 2530 of this 
chapter.

[59 FR 13807, Mar. 23, 1994]



PART 2533--SPECIAL ACTIVITIES--Table of Contents




Sec.
2533.10  National service fellowships.
2533.20  Presidential awards for service.

    Authority: 42 U.S.C. 12501 et seq.



Sec. 2533.10  National service fellowships.

    The Corporation may award national service fellowships on a 
competitive basis. Application procedures, selection criteria, timing 
and other requirements will be announced in the Federal Register.

[59 FR 13808, Mar. 23, 1994]



Sec. 2533.20  Presidential awards for service.

    The President, acting through the Corporation, may make Presidential 
awards for service to individuals providing significant service, and to 
outstanding programs. Information about recipients of such awards will 
be widely disseminated. The President may provide such awards to any 
deserving individual or program, regardless of whether the individual is 
serving in a program authorized by this chapter or whether the program 
is itself authorized by this chapter. In no instance, however, may the 
award be a cash award.

[59 FR 13808, Mar. 23, 1994]



PART 2540--GENERAL ADMINISTRATIVE PROVISIONS--Table of Contents




     Subpart A--Requirements Concerning the Distribution and Use of 
                         Corporation Assistance

Sec.
2540.100  What restrictions govern the use of Corporation assistance?
2540.110  Limitation on use of Corporation funds for administrative 
          costs.

 Subpart B--Requirements Directly Affecting the Selection and Treatment 
                             of Participants

2540.200  Under what circumstances may participants be engaged?
2540.210  What provisions exist to ensure that Corporation-supported 
          programs do not discriminate in the selection of participants 
          and staff?
2540.220  Under what circumstances and subject to what conditions are 
          participants in Corporation-assisted projects eligible for 
          family and medical leave?
2540.230  What grievance procedures must recipients of Corporation 
          assistance establish?

 Subpart C--Other Requirements for Recipients of Corporation Assistance

2540.300  What must be included in annual State reports to the 
          Corporation?
2540.310  Must programs that receive Corporation assistance establish 
          standards of conduct?
2540.320  How are participant benefits treated?

[[Page 691]]

     Subpart D--Suspension and Termination of Corporation Assistance

2540.400  Under what circumstances will the Corporation suspend or 
          terminate a grant or contract?

    Authority: 42 U.S.C. 12501 et seq.

    Source: 59 FR 13808, Mar. 23, 1994, unless otherwise noted.



     Subpart A--Requirements Concerning the Distribution and Use of 
                         Corporation Assistance



Sec. 2540.100  What restrictions govern the use of Corporation assistance?

    (a) Supplantation. Corporation assistance may not be used to replace 
State and local public funds that had been used to support programs of 
the type eligible to receive Corporation support. For any given program, 
this condition will be satisfied if the aggregate non-Federal public 
expenditure for that program in the fiscal year that support is to be 
provided is not less than the previous fiscal year.
    (b) Religious use. Corporation assistance may not be used to provide 
religious instruction, conduct worship services, or engage in any form 
of proselytization.
    (c) Political activity. Corporation assistance may not be used by 
program participants or staff to assist, promote, or deter union 
organizing; or finance, directly or indirectly, any activity designed to 
influence the outcome of a Federal, State or local election to public 
office.
    (d) Contracts or collective bargaining agreements. Corporation 
assistance may not be used to impair existing contracts for services or 
collective bargaining agreements.
    (e) Nonduplication. Corporation assistance may not be used to 
duplicate an activity that is already available in the locality of a 
program. And, unless the requirements of paragraph (f) of this section 
are met, Corporation assistance will not be provided to a private 
nonprofit entity to conduct activities that are the same or 
substantially equivalent to activities provided by a State or local 
government agency in which such entity resides.
    (f) Nondisplacement. (1) An employer may not displace an employee or 
position, including partial displacement such as reduction in hours, 
wages, or employment benefits, as a result of the use by such employer 
of a participant in a program receiving Corporation assistance.
    (2) A service opportunity will not be created under this chapter 
that will infringe in any manner on the promotional opportunity of an 
employed individual.
    (3) A participant in a program receiving Corporation assistance may 
not perform any services or duties or engage in activities that would 
otherwise be performed by an employee as part of the assigned duties of 
such employee.
    (4) A participant in any program receiving assistance under this 
chapter may not perform any services or duties, or engage in activities, 
that--
    (i) Will supplant the hiring of employed workers; or
    (ii) Are services, duties, or activities with respect to which an 
individual has recall rights pursuant to a collective bargaining 
agreement or applicable personnel procedures.
    (5) A participant in any program receiving assistance under this 
chapter may not perform services or duties that have been performed by 
or were assigned to any--
    (i) Presently employed worker;
    (ii) Employee who recently resigned or was discharged;
    (iii) Employee who is subject to a reduction in force or who has 
recall rights pursuant to a collective bargaining agreement or 
applicable personnel procedures;
    (iv) Employee who is on leave (terminal, temporary, vacation, 
emergency, or sick); or
    (v) Employee who is on strike or who is being locked out.



Sec. 2540.110  Limitation on use of Corporation funds for administrative costs.

    (a)(1) Not more than five percent of the grant funds provided under 
45 CFR 2516, 2517, 2519, and 2521 for any fiscal year may be used to pay 
for administrative costs, as defined in Sec. 2510.20 of this chapter.
    (2) The distribution of administrative costs between the grant and 
any

[[Page 692]]

subgrant will be subject to the approval of the Corporation.
    (3) In applying the limitation on administrative costs the 
Corporation will approve one of the following methods in the award 
document:
    (i) Limit the amount or rate of indirect costs that may be paid with 
Corporation funds under a grant or subgrant to five percent of total 
Corporation funds expended, provided that--
    (A) Organizations that have an established indirect cost rate for 
Federal awards will be limited to this method; and
    (B) Unreimbursed indirect costs may be applied to meeting 
operational matching requirements under the Corporation's award;
    (ii) Specify that a fixed rate of five percent or less (not subject 
to supporting cost documentation) of total Corporation funds expended 
may be used to pay for administrative costs, provided that the fixed 
rate is in conjunction with an overall 15 percent administrative cost 
factor to be used for organizations that do not have established 
indirect cost rates; or
    (iii) Utilize such other method that the Corporation determines in 
writing is consistent with OMB guidance and other applicable 
requirements, helps minimize the burden on grantees or subgrantees, and 
is beneficial to grantees or subgrantees and the Federal Government.
    (b) Costs attributable to administrative functions as well as 
program functions should be prorated between administrative costs and 
program costs.

[63 FR 18138, Apr. 14, 1998]



 Subpart B--Requirements Directly Affecting the Selection and Treatment 
                             of Participants



Sec. 2540.200  Under what circumstances may participants be engaged?

    A State may not engage a participant to serve in any program that 
receives Corporation assistance unless and until amounts have been 
appropriated under section 501 of the Act (42 U.S.C. 12681) for the 
provision of AmeriCorps educational awards and for the payment of other 
necessary expenses and costs associated with such participant.



Sec. 2540.210  What provisions exist to ensure that Corporation-supported programs do not discriminate in the selection of participants and staff?

    (a) An individual with responsibility for the operation of a project 
that receives Corporation assistance must not discriminate against a 
participant in, or member of the staff of, such project on the basis of 
race, color, national origin, sex, age, or political affiliation of such 
participant or member, or on the basis of disability, if the participant 
or member is a qualified individual with a disability.
    (b) Any Corporation assistance constitutes Federal financial 
assistance for purposes of title VI of the Civil Rights Act of 1964 (42 
U.S.C. 2000d et seq.), title IX of the Education Amendments of 1972 (20 
U.S.C. 1681 et seq.), section 504 of the Rehabilitation Act of 1973 (29 
U.S.C. 794), and the Age Discrimination Act of 1975 (42 U.S.C. 6101 et 
seq.), and constitutes Federal financial assistance to an education 
program or activity for purposes of the Education Amendments of 1972 (20 
U.S.C. 1681 et seq.).
    (c) An individual with responsibility for the operation of a project 
that receives Corporation assistance may not discriminate on the basis 
of religion against a participant in such project or a member of the 
staff of such project who is paid with Corporation funds. This provision 
does not apply to the employment (with Corporation assistance) of any 
staff member of a Corporation-supported project who was employed with 
the organization operating the project on the date the Corporation grant 
was awarded.



Sec. 2540.220  Under what circumstances and subject to what conditions are participants in Corporation-assisted programs eligible for family and medical leave?

    (a) Participants in State, local, or private nonprofits programs. A 
participant in a State, local, or private nonprofit program receiving 
support from the Corporation is considered an eligible employee of the 
program's project sponsor under the Family and Medical Leave Act of 1993 
(29 CFR part 825) if--

[[Page 693]]

    (1) The participant has served for at least 12 months and 1,250 
hours during the year preceding the start of the leave; and
    (2) The program's project sponsors engages in commerce or any 
industry or activity affecting commerce, and employs at least 50 
employees for each working day during 20 or more calendar workweeks in 
the current or preceding calendar year.
    (b) Participants in Federal programs. Participants in Federal 
programs operated by the Corporation or by another Federal agency will 
be considered Federal employees for the purposes of the Family and 
Medical Leave Act if the participants have completed 12 months of 
service and the project sponsor is an employing agency as defined in 5 
U.S.C 6381 et seq.; such participants therefore will be eligible for the 
same family and medical leave benefits afforded to such Federal 
employees.
    (c) General terms and conditions. Participants that qualify as 
eligible employees under paragraphs (a) or (b) of this section are 
entitled to take up to 12 weeks of unpaid leave during a 12 month period 
for any of the following reasons (in the cases of both paragraphs (c)(1) 
and (2) of this section the entitlement to leave expires 12 months after 
the birth or placement of such child): (1) The birth of a child to a 
participant;
    (2) The placement of a child with a participant for adoption or 
foster care;
    (3) The serious illness of a participant's spouse, child or parent; 
or
    (4) A participants serious health condition that makes that 
participant unable to perform his or her essential service duties (a 
serious health condition is an illness or condition that requires either 
inpatient care or continuing treatment by a health care provider).
    (d) Intermittent leave or reduced service. The program, serving as 
the project sponsor, may allow a participant to take intermittent leave 
or reduce his or her service hours due to the birth of or placement of a 
child for adoption or foster care. The participant may also take leave 
to care for a seriously ill immediate family member or may take leave 
due to his or her own serious illness whenever it is medically 
necessary.
    (e) Alternate placement. If a participant requests intermittent 
leave or a reduced service hours due to a serious illness or a family 
member's sickness, and the need for leave is foreseeable based on 
planned medical treatment, the program, or project sponsor may 
temporarily transfer the participant to an alternative service position 
if the participant: (1) Is qualified for the position; and
    (2) Receives the same benefits such as stipend or living allowance 
and the position better accommodates the participants recurring periods 
of leave.
    (f) Certification of cause. A program, or project sponsor may 
require that the participant support a leave request with a 
certification from the health care provider of the participant or the 
participant's family member. If a program sponsor requests a 
certification, the participant must provide it in a timely manner.
    (g) Continuance of coverage. (1) If a State, local or private 
program provides for health insurance for the full-time participant, the 
sponsor must continue to provide comparable health coverage at the same 
level and conditions that coverage would have been provided for the 
duration of the participant's leave.
    (2) If the Federal program provides health insurance coverage for 
the full-time participant, the sponsor must also continue to provide the 
same health care coverage for the duration of the participant's leave.
    (h) Failure to return. If the participant fails to return to the 
program at the end of leave for any reason other than continuation, 
recurrence or onset of a serious health condition or other circumstances 
beyond his or her control, the program may recover the premium that he 
or she paid during any period of unpaid leave.
    (i) Applicability to term of service. Any absence, due to family and 
medical leave, will not be counted towards the participant's term of 
service.

[[Page 694]]



Sec. 2540.230  What grievance procedures must recipients of Corporation assistance establish?

    State and local applicants that receive assistance from the 
Corporation must establish and maintain a procedure for the filing and 
adjudication of grievances from participants, labor organizations, and 
other interested individuals concerning programs that receive assistance 
from the Corporation. A grievance procedure may include dispute 
resolution programs such as mediation, facilitation, assisted 
negotiation and neutral evaluation. If the grievance alleges fraud or 
criminal activity, it must immediately be brought to the attention of 
the Corporation's inspector general.
    (a) Alternative dispute resolution. (1) The aggrieved party may seek 
resolution through alternative means of dispute resolution such as 
mediation or facilitation. Dispute resolution proceedings must be 
initiated within 45 calendar days from the date of the alleged 
occurrence. At the initial session of the dispute resolution 
proceedings, the party must be advised in writing of his or her right to 
file a grievance and right to arbitration. If the matter is resolved, 
and a written agreement is reached, the party will agree to forego 
filing a grievance in the matter under consideration.
    (2) If mediation, facilitation, or other dispute resolution 
processes are selected, the process must be aided by a neutral party 
who, with respect to an issue in controversy, functions specifically to 
aid the parties in resolving the matter through a mutually achieved and 
acceptable written agreement. The neutral party may not compel a 
resolution. Proceedings before the neutral party must be informal, and 
the rules of evidence will not apply. With the exception of a written 
and agreed upon dispute resolution agreement, the proceeding must be 
confidential.
    (b) Grievance procedure for unresolved complaints. If the matter is 
not resolved within 30 calendar days from the date the informal dispute 
resolution process began, the neutral party must again inform the 
aggrieving party of his or her right to file a formal grievance. In the 
event an aggrieving party files a grievance, the neutral may not 
participate in the formal complaint process. In addition, no 
communication or proceedings of the informal dispute resolution process 
may be referred to or introduced into evidence at the grievance and 
arbitration hearing. Any decision by the neutral party is advisory and 
is not binding unless both parties agree.
    (c) Time limitations. Except for a grievance that alleges fraud or 
criminal activity, a grievance must be made no later than one year after 
the date of the alleged occurrence. If a hearing is held on a grievance, 
it must be conducted no later than 30 calendar days after the filing of 
such grievance. A decision on any such grievance must be made no later 
than 60 calendar days after the filing of the grievance.
    (d) Arbitration--(1) Arbitrator--(i) Joint selection by parties. If 
there is an adverse decision against the party who filed the grievance, 
or 60 calendar days after the filing of a grievance no decision has been 
reached, the filing party may submit the grievance to binding 
arbitration before a qualified arbitrator who is jointly selected and 
independent of the interested parties.
    (ii) Appointment by Corporation. If the parties cannot agree on an 
arbitrator within 15 calendar days after receiving a request from one of 
the grievance parties, the Corporations Chief Executive Officer will 
appoint an arbitrator from a list of qualified arbitrators.
    (2) Time Limits--(i) Proceedings. An arbitration proceeding must be 
held no later than 45 calendar days after the request for arbitration, 
or, if the arbitrator is appointed by the Chief Executive Officer, the 
proceeding must occur no later than 30 calendar days after the 
arbitrator's appointment.
    (ii) Decision. A decision must be made by the arbitrator no later 
than 30 calendar days after the date the arbitration proceeding begins.
    (3) The cost. The cost of the arbitration proceeding must be divided 
evenly between the parties to the arbitration. If, however, a 
participant, labor organization, or other interested individual prevails 
under a binding arbitration proceeding, the State or local applicant 
that is a party to the grievance must pay the total cost of the 
proceeding and the attorney's fees of the prevailing party.

[[Page 695]]

    (e) Suspension of placement. If a grievance is filed regarding a 
proposed placement of a participant in a program that receives 
assistance under this chapter, such placement must not be made unless 
the placement is consistent with the resolution of the grievance.
    (f) Remedies. Remedies for a grievance filed under a procedure 
established by a recipient of Corporation assistance may include--
    (1) Prohibition of a placement of a participant; and
    (2) In grievance cases where there is a violation of nonduplication 
or nondisplacement requirements and the employer of the displaced 
employee is the recipient of Corporation assistance--
    (i) Reinstatement of the employee to the position he or she held 
prior to the displacement;
    (ii) Payment of lost wages and benefits;
    (iii) Re-establishment of other relevant terms, conditions and 
privileges of employment; and
    (iv) Any other equitable relief that is necessary to correct any 
violation of the nonduplication or nondisplacement requirements or to 
make the displaced employee whole.
    (g) Suspension or termination of assistance. The Corporation may 
suspend or terminate payments for assistance under this chapter.
    (h) Effect of noncompliance with arbitration. A suit to enforce 
arbitration awards may be brought in any Federal district court having 
jurisdiction over the parties without regard to the amount in 
controversy or the parties' citizenship.



 Subpart C--Other Requirements for Recipients of Corporation Assistance



Sec. 2540.300  What must be included in annual State reports to the Corporation?

    (a) In general. Each State receiving assistance under this title 
must prepare and submit, to the Corporation, an annual report concerning 
the use of assistance provided under this chapter and the status of the 
national and community service programs in the State that receive 
assistance under this chapter. A State's annual report must include 
information that demonstrates the State's compliance with the 
requirements of this chapter.
    (b) Local grantees. Each State may require local grantees that 
receive assistance under this chapter to supply such information to the 
State as is necessary to enable the State to complete the report 
required under paragraph (a) of this section, including a comparison of 
actual accomplishments with the goals established for the program, the 
number of participants in the program, the number of service hours 
generated, and the existence of any problems, delays or adverse 
conditions that have affected or will affect the attainment of program 
goals.
    (c) Availability of report. Reports submitted under paragraph (a) of 
this section must be made available to the public on request.



Sec. 2540.310  Must programs that receive Corporation assistance establish standards of conduct?

    Yes. Programs that receive assistance under this title must 
establish and stringently enforce standards of conduct at the program 
site to promote proper moral and disciplinary conditions.



Sec. 2540.320  How are participant benefits treated?

    Section 142(b) of the Job Training Partnership Act (29 U.S.C. 
1552(b)) shall apply to the programs conducted under this chapter as if 
such programs were conducted under the Job Training Partnership Act (29 
U.S.C. 1501 et seq.).



     Subpart D--Suspension and Termination of Corporation Assistance



Sec. 2540.400  Under what circumstances will the Corporation suspend or terminate a grant or contract?

    (a) Suspension of a grant or contract. In emergency situations, the 
Corporation may suspend a grant or contract for not more than calendar 
30 days. Examples of such situations may include, but are not limited 
to: (1) Serious risk to persons or property;
    (2) Violations of Federal, State or local criminal statutes; and

[[Page 696]]

    (3) Material violation(s) of the grant or contract that are 
sufficiently serious that they outweigh the general policy in favor of 
advance notice and opportunity to show cause.
    (b) Termination of a grant or contract. The Corporation may 
terminate or revoke assistance for failure to comply with applicable 
terms and conditions of this chapter. However, the Corporation must 
provide the recipient reasonable notice and opportunity for a full and 
fair hearing, subject to the following conditions: (1) The Corporation 
will notify a recipient of assistance by letter or telegram that the 
Corporation intends to terminate or revoke assistance, either in whole 
or in part, unless the recipient shows good cause why such assistance 
should not be terminated or revoked. In this communication, the grounds 
and the effective date for the proposed termination or revocation will 
be described. The recipient will be given at least 7 calendar days to 
submit written material in opposition to the proposed action.
    (2) The recipient may request a hearing on a proposed termination or 
revocation. Providing five days notice to the recipient, the Corporation 
may authorize the conduct of a hearing or other meetings at a location 
convenient to the recipient to consider the proposed suspension or 
termination. A transcript or recording must be made of a hearing 
conducted under this section and be available for inspection by any 
individual.



PART 2541--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE AGREEMENTS TO STATE AND LOCAL GOVERNMENTS--Table of Contents




                           Subpart A--General

Sec.
2541.10  Purpose and scope of this part.
2541.20  Scope of subpart.
2541.30  Definitions.
2541.40  Applicability.
2541.50  Effect on other issuances.
2541.60  Additions and exceptions.

                    Subpart B--Pre-Award Requirements

2541.100  Forms for applying for grants.
2541.110  State plans.
2541.120  Special grant or subgrant conditions for ``high-risk'' 
          grantees.

                   Subpart C--Post Award Requirements

2541.200  Standards for financial management systems.
2541.210  Payment.
2541.220  Allowable costs.
2541.230  Period of availability of funds.
2541.240  Matching or cost sharing.
2541.250  Program income.
2541.260  Non-Federal audit.

               Subpart D--Changes, Property and Subawards

2541.300  Changes.
2541.310  Real property.
2541.320  Equipment.
2541.330  Supplies.
2541.340  Copyrights.
2541.350  Subawards to debarred and suspended parties.
2541.360  Procurement.
2541.370  Subgrants.

         Subpart E--Reports, Records, Retention and Enforcement

2541.400  Monitoring and reporting program performance.
2541.410  Financial reporting.
2541.420  Retention and access requirements for records.
2541.430  Enforcement.
2541.440  Termination for convenience.

                 Subpart F--After the Grant Requirements

2541.500  Closeout.
2541.510  Later disallowances and adjustments.
2541.520  Collection of amounts due.

    Authority: 42 U.S.C. 4950 et seq. and 12501 et seq.

    Source: 59 FR 41598, Aug. 12, 1994, unless otherwise noted.



                           Subpart A--General



Sec. 2541.10  Purpose and scope of this part.

    This part establishes uniform administrative rules for Federal 
grants and cooperative agreements and subawards to State, local and 
Indian tribal governments.



Sec. 2541.20  Scope of subpart.

    This subpart contains general rules pertaining to this part and 
procedures for control of exceptions from this part.

[[Page 697]]



Sec. 2541.30  Definitions.

    The following definitions apply to terms used in this part and part 
2542 of this chapter.
    Accrued expenditures. The term accrued expenditures means the 
charges incurred by the grantee during a given period requiring the 
provision of funds for:
    (1) Goods and other tangible property received;
    (2) Services performed by employees, contractors, subgrantees, 
subcontractors, and other payees; and
    (3) Other amounts becoming owed under programs for which no current 
services or performance is required, such as annuities, insurance 
claims, and other benefit payments.
    Accrued income. The term accrued income means the sum of:
    (1) Earnings during a given period from services performed by the 
grantee and goods and other tangible property delivered to purchasers; 
and
    (2) Amounts becoming owed to the grantee for which no current 
services or performance is required by the grantee.
    Acquisition cost. The term acquisition cost of an item of purchased 
equipment means the net invoice unit price of the property including the 
cost of modifications, attachments, accessories, or auxiliary apparatus 
necessary to make the property usable for the purpose for which it was 
acquired. Other charges such as the cost of installation, 
transportation, taxes, duty or protective in-transit insurance, shall be 
included or excluded from the unit acquisition cost in accordance with 
the grantee's regular accounting practices.
    Administrative requirements. The term administrative requirements 
means those matters common to grants in general, such as financial 
management, kinds and frequency of reports, and retention of records. 
These are distinguished from ``programmatic'' requirements, which 
concern matters that can be treated only on a program-by-program or 
grant-by-grant basis, such as kinds of activities that can be supported 
by grants under a particular program.
    Awarding agency. The term awarding agency means:
    (1) With respect to a grant, the Federal agency; and
    (2) With respect to a subgrant, the party that awarded the subgrant.
    Cash contributions. The term cash contributions means the grantee's 
cash outlay, including the outlay of money contributed to the grantee or 
subgrantee by other public agencies and institutions, and private 
organizations and individuals. When authorized by Federal legislation, 
Federal funds received from other assistance agreements may be 
considered as grantee or subgrantee cash contributions.
    Contract. The term contract means (except as used in the definitions 
for ``grant'' and ``subgrant'' in this section and except where 
qualified by ``Federal'') a procurement contract under a grant or 
subgrant, and means a procurement subcontract under a contract.
    Cost sharing (or matching). The term cost sharing (or matching) 
means the value of the third party in-kind contributions and the portion 
of the costs of a federally assisted project or program not borne by the 
Federal Government.
    Cost-type contract. The term cost-type contract means a contract or 
subcontract under a grant in which the contractor or subcontractor is 
paid on the basis of the costs it incurs, with or without a fee.
    Equipment. The term equipment means tangible, nonexpendable, 
personal property having a useful life of more than one year and an 
acquisition cost of $5,000 or more per unit. A grantee may use its own 
definition of equipment provided that such definition would at least 
include all equipment mentioned in this definition.
    Expenditure report. The term expenditure report means:
    (1) For nonconstruction grants, the SF-269 ``Financial Status 
Report'' (or other equivalent report);
    (2) for construction grants, the SF-271 ``Outlay Report and Request 
for Reimbursement'' (or other equivalent report).
    Federally recognized Indian tribal government. The term federally 
recognized Indian tribal government means the governing body or a 
governmental agency of any Indian tribe, band, nation, or other 
organized group or community

[[Page 698]]

(including any Native village as defined in section 3 of the Alaska 
Native Claims Settlement Act, 85 Stat. 688) certified by the Secretary 
of the Interior as eligible for the special programs and services 
provided by him through the Bureau of Indian Affairs.
    Government. The term government means a State or local government or 
a federally recognized Indian tribal government.
    Grant. The term grant means an award of financial assistance, 
including cooperative agreements, in the form of money, or property in 
lieu of money, by the Federal Government to an eligible grantee. The 
term does not include technical assistance which provides services 
instead of money, or other assistance in the form of revenue sharing, 
loans, loan guarantees, interest subsidies, insurance, or direct 
appropriations. Also, the term does not include assistance, such as a 
fellowship or other lump sum award, which the grantee is not required to 
account for.
    Grantee. The term grantee means the government to which a grant is 
awarded and which is accountable for the use of the funds provided. The 
grantee is the entire legal entity even if only a particular component 
of the entity is designated in the grant award document.
    Local government. The term local government means a county, 
municipality, city, town, township, local public authority (including 
any public and Indian housing agency under the United States Housing Act 
of 1937 (42 U.S.C. 1401 et seq.) school district, special district, 
intrastate district, council of governments (whether or not incorporated 
as a nonprofit corporation under state law), any other regional or 
interstate government entity, or any agency or instrumentality of a 
local government.
    Obligations. The term obligations means the amounts of orders 
placed, contracts and subgrants awarded, goods and services received, 
and similar transactions during a given period that will require payment 
by the grantee during the same or a future period.
    OMB. The term OMB means the United States Office of Management and 
Budget.
    Outlays (expenditures). The term outlays (expenditures) means 
charges made to the project or program. They may be reported on a cash 
or accrual basis. For reports prepared on a cash basis, outlays are the 
sum of actual cash disbursement for direct charges for goods and 
services, the amount of indirect expense incurred, the value of in-kind 
contributions applied, and the amount of cash advances and payments made 
to contractors and subgrantees. For reports prepared on an accrued 
expenditure basis, outlays are the sum of actual cash disbursements, the 
amount of indirect expense incurred, the value of in-kind contributions 
applied, and the new increase (or decrease) in the amounts owed by the 
grantee for goods and other property received, for services performed by 
employees, contractors, subgrantees, subcontractors, and other payees, 
and other amounts becoming owed under programs for which no current 
services or performance are required, such as annuities, insurance 
claims, and other benefit payments.
    Percentage of completion method. The term percentage of completion 
method refers to a system under which payments are made for construction 
work according to the percentage of completion of the work, rather than 
to the grantee's cost incurred.
    Prior approval. The term prior approval means documentation 
evidencing consent prior to incurring specific cost.
    Real property. The term real property means land, including land 
improvements, structures and appurtenances thereto, excluding movable 
machinery and equipment.
    Share. The term share, when referring to the awarding agency's 
portion of real property, equipment or supplies, means the same 
percentage as the awarding agency's portion of the acquiring party's 
total costs under the grant to which the acquisition costs under the 
grant to which the acquisition cost of the property was charged. Only 
costs are to be counted--not the value of third-party in-kind 
contributions.
    State. The term State means any of the several States of the United 
States, the District of Columbia, the Commonwealth of Puerto Rico, any 
territory or

[[Page 699]]

possession of the United States, or any agency or instrumentality of a 
State exclusive of local governments. The term does not include any 
public and Indian housing agency under the United States Housing Act of 
1937.
    Subgrant. The term subgrant means 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.
    Subgrantee. The term subgrantee means 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.
    Supplies. The term supplies means all tangible personal property 
other than ``equipment'' as defined in this part.
    Suspension. The term suspension means, depending on the context, 
either--
    (1) Temporary withdrawal of the authority to obligate grant funds 
pending corrective action by the grantee or subgrantee or a decision to 
terminate the grant; or
    (2) An action taken by a suspending official in accordance with 
agency regulations implementing E.O. 12549 (3 CFR, 1986 Comp., p. 189) 
to immediately exclude a person from participating in grant transactions 
for a period, pending completion of an investigation and such legal or 
debarment proceedings as may ensue.
    Termination. The term termination means permanent withdrawal of the 
authority to obligate previously-awarded grant funds before that 
authority would otherwise expire. It also means the voluntary 
relinquishment of that authority by the grantee or subgrantee. 
Termination does not include--
    (1) Withdrawal of funds awarded on the basis of the grantee's 
underestimate of the unobligated balance in a prior period;
    (2) Withdrawal of the unobligated balance as of the expiration of a 
grant;
    (3) Refusal to extend a grant or award additional funds, to make a 
competing or noncompeting continuation, renewal, extension, or 
supplemental award; or
    (4) Voiding of a grant upon determination that the award was 
obtained fraudulently, or was otherwise illegal or invalid from 
inception.
    Terms of a grant or subgrant mean all requirements of the grant or 
subgrant, whether in statute, regulations, or the award document.
    Third party in-kind contributions. The term third party in-kind 
contributions means property or services which benefit a federally 
assisted project or program and which are contributed by non-Federal 
third parties without charge to the grantee, or a cost-type contractor 
under the grant agreement.
    Unliquidated obligations for reports prepared on a cash basis. The 
term unliquidated obligations for reports prepared on a cash basis means 
the amount of obligations incurred by the grantee that has not been 
paid. For reports prepared on an accrued expenditure basis, they 
represent the amount of obligations incurred by the grantee for which an 
outlay has not been recorded.
    Unobligated balance. The term unobligated balance means the portion 
of the funds authorized by the Federal agency that has not been 
obligated by the grantee and is determined by deducting the cumulative 
obligations from the cumulative funds authorized.



Sec. 2541.40  Applicability.

    (a) General. Subparts A through D of this part apply to all grants 
and subgrants to governments, except where inconsistent with Federal 
statutes or with regulations authorized in accordance with the exception 
provision of Sec. 2541.60, or:
    (1) Grants and subgrants to State and local institutions of higher 
education or State and local hospitals.
    (2) The block grants authorized by the Omnibus Budget Reconciliation 
Act of 1981 (Pub. L. 97-35, 95 Stat. 357) (Community Services; 
Preventive Health and Health Services; Alcohol, Drug Abuse, and Mental 
Health Services; Maternal and Child Health Services; Social Services; 
Low-Income Home Energy Assistance; States' Program of Community 
Development

[[Page 700]]

Block Grants for Small Cities; and Elementary and Secondary Education 
other than programs administered by the Secretary of Education under 
title V, subtitle D, chapter 2, section 583--the Secretary's 
discretionary grant program) and titles I-III of the Job Training 
Partnership Act of 1982 (29 U.S.C. 1501 et seq.) and under the Public 
Health Services Act (42 U.S.C. 201 et seq.), Alcohol and Drug Abuse 
Treatment and Rehabilitation Block Grant and part C of title V, Mental 
Health Service for the Homeless Block Grant).
    (3) Entitlement grants to carry out the following programs of the 
Social Security Act (42 U.S.C. 301 et seq.):
    (i) Aid to Needy Families with Dependent Children (title IV-A of the 
Act, not including the Work Incentive Program (WIN) authorized by 
section 402(a)19(G); HHS grants for WIN are subject to this part);
    (ii) Child Support Enforcement and Establishment of Paternity (title 
IV-D of the Act);
    (iii) Foster Care and Adoption Assistance (title IV-E of the Act);
    (iv) Aid to the Aged, Blind, and Disabled (titles I, X, XIV, and 
XVI-AABD of the Act); and
    (v) Medical Assistance (Medicaid) (title XIX of the Act) not 
including the State Medicaid Fraud Control program authorized by section 
1903(a)(6)(B).
    (4) Entitlement grants under the following programs of The National 
School Lunch Act (42 U.S.C. 1751 et seq.):
    (i) School Lunch (section 4 of the Act);
    (ii) Commodity Assistance (section 6 of the Act);
    (iii) Special Meal Assistance (section 11 of the Act);
    (iv) Summer Food Service for Children (section 13 of the Act); and
    (v) Child Care Food Program (section 17 of the Act).
    (5) Entitlement grants under the following programs of The Child 
Nutrition Act of 1966:
    (i) Special Milk (section 3 of the Act); and
    (ii) School Breakfast (section 4 of the Act).
    (6) Entitlement grants for State Administrative expenses under The 
Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.).
    (7) A grant for an experimental, pilot, or demonstration project 
that is also supported by a grant listed in paragraph (a)(3) of this 
section.
    (8) Grant funds awarded under subsection 412(e) of the Immigration 
and Nationality Act (8 U.S.C. 1522(e)) and subsection 501(a) of the 
Refugee Education Assistance Act of 1980 (Pub. L. 96-422, 94 Stat. 
1809), for cash assistance, medical assistance, and supplemental 
security income benefits to refugees and entrants and the administrative 
costs of providing the assistance and benefits.
    (9) Grants to local education agencies under 20 U.S.C. 236 through 
241-1(a), and 242 through 244 (portions of the Impact Aid program), 
except for 20 U.S.C. 238(d)(2)(c) and 240(f) (Entitlement Increase for 
Handicapped Children).
    (10) Payments under the Veterans Administration's State Home Per 
Diem Program (38 U.S.C. 641(a)).
    (b) Entitlement programs. Entitlement programs enumerated in 
Sec. 2541.40(a) (3) through (8) are subject to subpart E of this part.



Sec. 2541.50  Effect on other issuances.

    All other grants administration provisions of codified program 
regulations, program manuals, handbooks and other nonregulatory 
materials which are inconsistent with this part are superseded, except 
to the extent they are required by statute, or authorized in accordance 
with the exception provision in Sec. 2541.60.



Sec. 2541.60  Additions and exceptions.

    (a) For classes of grants and grantees subject to this part, Federal 
agencies may not impose additional administrative requirements except in 
codified regulations published in the Federal Register.
    (b) Exceptions for classes of grants or grantees may be authorized 
only by OMB.
    (c) Exceptions on a case-by-case basis and for subgrantees may be 
authorized by the affected Federal agencies.

[[Page 701]]



                    Subpart B--Pre-Award Requirements



Sec. 2541.100  Forms for applying for grants.

    (a) Scope. (1) This section prescribes forms and instructions to be 
used by governmental organizations (except hospitals and institutions of 
higher education operated by a government) in applying for grants. This 
section is not applicable, however, to formula grant programs which do 
not require applicants to apply for funds on a project basis.
    (2) This section applies only to applications to Federal agencies 
for grants, and is not required to be applied by grantees in dealing 
with applicants for subgrants. However, grantees are encouraged to avoid 
more detailed or burdensome application requirements for subgrants.
    (b) Authorized forms and instructions for governmental 
organizations. (1) In applying for grants, applicants shall only use 
standard application forms or those prescribed by the granting agency 
with the approval of OMB under the Paperwork Reduction Act of 1980 (44 
U.S.C. 3501 et seq.).
    (2) Applicants are not required to submit more than the original and 
two copies of preapplications or applications.
    (3) Applicants must follow all applicable instructions that bear OMB 
clearance numbers. Federal agencies may specify and describe the 
programs, functions, or activities that will be used to plan, budget, 
and evaluate the work under a grant. Other supplementary instructions 
may be issued only with the approval of OMB to the extent required under 
the Paperwork Reduction Act of 1980. For any standard form, except the 
SF-424 facesheet, Federal agencies may shade out or instruct the 
applicant to disregard any line item that is not needed.
    (4) When a grantee applies for additional funding (such as a 
continuation or supplemental award) or amends a previously submitted 
application, only the affected pages need be submitted. Previously 
submitted pages with information that is still current need not be 
resubmitted.



Sec. 2541.110  State plans.

    (a) Scope. The statutes for some programs require States to submit 
plans before receiving grants. Under regulations implementing Executive 
Order 12372 (3 CFR, 1982 Comp., p. 197), ``Intergovernmental Review of 
Federal Programs,'' States are allowed to simplify, consolidate and 
substitute plans. This section contains additional provisions for plans 
that are subject to regulations implementing the Executive order.
    (b) Requirements. A State need meet only Federal administrative or 
programmatic requirements for a plan that are in statutes or codified 
regulations.
    (c) Assurances. In each plan the State will include an assurance 
that the State shall comply with all applicable Federal statutes and 
regulations in effect with respect to the periods for which it receives 
grant funding. For this assurance and other assurances required in the 
plan, the State may:
    (1) Cite by number the statutory or regulatory provisions requiring 
the assurances and affirm that it gives the assurances required by those 
provisions;
    (2) Repeat the assurance language in the statutes or regulations; or
    (3) Develop its own language to the extent permitted by law.
    (d) Amendments. A State will amend a plan whenever necessary to 
reflect: New or revised Federal statutes or regulations; or a material 
change in any State law, organization, policy, or State agency 
operation. The State will obtain approval for the amendment and its 
effective date but need submit for approval only the amended portions of 
the plan.



Sec. 2541.120  Special grant or subgrant conditions for ``high-risk'' grantees.

    (a) A grantee or subgrantee may be considered ``high risk'' if an 
awarding agency determines that a grantee or subgrantee:
    (1) Has a history of unsatisfactory performance; or
    (2) Is not financially stable; or
    (3) Has a management system which does not meet the management 
standards set forth in this part; or

[[Page 702]]

    (4) Has not conformed to terms and conditions of previous awards; or
    (5) Is otherwise not responsible; and if the awarding agency 
determines that an award will be made, special conditions and/or 
restrictions shall correspond to the high risk condition and shall be 
included in the award.
    (b) Special conditions or restrictions may include:
    (1) Payment on a reimbursement basis;
    (2) Withholding authority to proceed to the next phase until receipt 
of evidence of acceptable performance within a given funding period;
    (3) Requiring additional, more detailed financial reports;
    (4) Additional project monitoring;
    (5) Requiring the grantee or subgrantee to obtain technical or 
management assistance; or
    (6) Establishing additional prior approvals.
    (c) If an awarding agency decides to impose such conditions, the 
awarding official will notify the grantee or subgrantee as early as 
possible, in writing, of:
    (1) The nature of the special conditions/restrictions;
    (2) The reason(s) for imposing them;
    (3) The corrective actions which must be taken before they will be 
removed and the time allowed for completing the corrective actions; and
    (4) The method of requesting reconsideration of the conditions/
restrictions imposed.



                   Subpart C--Post-Award Requirements



Sec. 2541.200  Standards for financial management systems.

    (a) A State must expand and account for grant funds in accordance 
with State laws and procedures for expending and accounting for its own 
funds. Fiscal control and accounting procedures of the State, as well as 
its subgrantees and cost-type contractors, must be sufficient to--
    (1) Permit preparation of reports required by this part and the 
statutes authorizing the grant; and
    (2) Permit the tracing of funds to a level of expenditures adequate 
to establish that such funds have not been used in violation of the 
restrictions and prohibitions of applicable statutes.
    (b) The financial management systems of other grantees and 
subgrantees must meet the following standards:
    (1) Financial reporting. Accurate, current, and complete disclosure 
of the financial results of financially assisted activities must be made 
in accordance with the financial reporting requirements of the grant or 
subgrant.
    (2) Accounting records. Grantees and subgrantees must maintain 
records which adequately identify the source and application of funds 
provided for financially-assisted activities. These records must contain 
information pertaining to grant or subgrant awards and authorizations, 
obligations, unobligated balances, assets, liabilities, outlays or 
expenditures, and income.
    (3) Internal control. Effective control and accountability must be 
maintained for all grant and subgrant cash, real and personal property, 
and other assets. Grantees and subgrantees must adequately safeguard all 
such property and must assure that it is used solely for authorized 
purposes.
    (4) Budget control. Actual expenditures or outlays must be compared 
with budgeted amounts for each grant or subgrant. Financial information 
must be related to performance or productivity data, including the 
development of unit cost information whenever appropriate or 
specifically required in the grant or subgrant agreement. If unit cost 
data are required, estimates based on available documentation will be 
accepted whenever possible.
    (5) Allowable cost. Applicable OMB cost principles, agency program 
regulations, and the terms of grant and subgrant agreements will be 
followed in determining the reasonableness, allowability, and 
allocability of costs.
    (6) Source documentation. Accounting records must be supported by 
such source documentation as canceled checks, paid bills, payrolls, time 
and attendance records, contract and subgrant award documents, etc.
    (7) Cash management. Procedures for minimizing the time elapsing 
between the transfer of funds from the U.S. Treasury and disbursement by 
grantees and subgrantees must be followed

[[Page 703]]

whenever advance payment procedures are used. Grantees must establish 
reasonable procedures to ensure the receipt of reports on subgrantees' 
cash balances and cash disbursements in sufficient time to enable them 
to prepare complete and accurate cash transactions reports to the 
awarding agency. When advances are made by letter-of-credit or 
electronic transfer of funds methods, the grantee must make drawdowns as 
close as possible to the time of making disbursements. Grantees must 
monitor cash drawdowns by their subgrantees to assure that they conform 
substantially to the same standards of timing and amount as apply to 
advances to the grantees.
    (c) An awarding agency may review the adequacy of the financial 
management system of any applicant for financial assistance as part of a 
preaward review or at any time subsequent to award.



Sec. 2541.210  Payment.

    (a) Scope. This section prescribes the basic standard and the 
methods under which a Federal agency will make payments to grantees, and 
grantees will make payments to subgrantees and contractors.
    (b) Basic standard. Methods and procedures for payment shall 
minimize the time elapsing between the transfer of funds and 
disbursement by the grantee or subgrantee, in accordance with Treasury 
regulations at 31 CFR part 205.
    (c) Advances. Grantees and subgrantees shall be paid in advance, 
provided they maintain or demonstrate the willingness and ability to 
maintain procedures to minimize the time elapsing between the transfer 
of the funds and their disbursement by the grantee or subgrantee.
    (d) Reimbursement. Reimbursement shall be the preferred method when 
the requirements in paragraph (c) of this section are not met. Grantees 
and subgrantees may also be paid by reimbursement for any construction 
grant. Except as otherwise specified in regulation, Federal agencies 
shall not use the percentage of completion method to pay construction 
grants. The grantee or subgrantee may use that method to pay its 
construction contractor, and if it does, the awarding agency's payments 
to the grantee or subgrantee will be based on the grantee's or 
subgrantee's actual rate of disbursement.
    (e) Working capital advances. If a grantee cannot meet the criteria 
for advance payments described in paragraph (c) of this section, and the 
Federal agency has determined that reimbursement is not feasible because 
the grantee lacks sufficient working capital, the awarding agency may 
provide cash on a working capital advance basis. Under this procedure 
the awarding agency shall advance cash to the grantee to cover its 
estimated disbursement needs for an initial period generally geared to 
the grantee's disbursing cycle. Thereafter, the awarding agency shall 
reimburse the grantee for its actual cash disbursements. The working 
capital advance method of payment shall not be used by grantees or 
subgrantees if the reason for using such method is the unwillingness or 
inability of the grantee to provide timely advances to the subgrantee to 
meet the subgrantee's actual cash disbursements.
    (f) Effect of program income, refunds, and audit recoveries on 
payment. (1) Grantees and subgrantees shall disburse repayments to and 
interest earned on a revolving fund before requesting additional cash 
payments for the same activity.
    (2) Except as provided in paragraph (f)(1) of this section, grantees 
and subgrantees shall disburse program income, rebates, refunds, 
contract settlements, audit recoveries and interest earned on such funds 
before requesting additional cash payments.
    (g) Withholding payments. (1) Unless otherwise required by Federal 
statute, awarding agencies shall not withhold payments for proper 
charges incurred by grantees or subgrantees unless--
    (i) The grantee or subgrantee has failed to comply with grant award 
conditions; or
    (ii) The grantee or subgrantee is indebted to the United States.
    (2) Cash withheld for failure to comply with grant award condition, 
but without suspension of the grant, shall

[[Page 704]]

be released to the grantee upon subsequent compliance. When a grant is 
suspended, payment adjustments will be made in accordance with 
Sec. 2541.410(c).
    (3) A Federal agency shall not make payment to grantees for amounts 
that are withheld by grantees or subgrantees from payment to contractors 
to assure satisfactory completion of work. Payments shall be made by the 
Federal agency when the grantees or subgrantees actually disburse the 
withheld funds to the contractors or to escrow accounts established to 
assure satisfactory completion of work.
    (h) Cash depositories. (1) Consistent with the national goal of 
expanding the opportunities for minority business enterprises, grantees 
and subgrantees are encouraged to use minority banks (a bank which is 
owned at least 50 percent by minority group members). A list of minority 
owned banks can be obtained from the Minority Business Development 
Agency, Department of Commerce, Washington, DC 20230.
    (2) A grantee or subgrantee shall maintain a separate bank account 
only when required by Federal-State agreement.
    (i) Interest earned on advances. Except for interest earned on 
advances of funds exempt under the Intergovernmental Cooperation Act (31 
U.S.C. 6501 et seq.) and the Indian Self-Determination Act (23 U.S.C. 
450), grantees and subgrantees shall promptly, but at least quarterly, 
remit interest earned on advances to the Federal agency. The grantee or 
subgrantee may keep interest amounts up to $100 per year for 
administrative expenses.



Sec. 2541.220  Allowable costs.

    (a) Limitation on use of funds. Grant funds may be used only for--
    (1) The allowable costs of the grantees, subgrantees and cost-type 
contractors, including allowable costs in the form of payments to fixed-
price contractors; and
    (2) Reasonable fees or profit to cost-type contractors but not any 
fee or profit (or other increment above allowable costs) to the grantee 
or subgrantee.
    (b) Applicable cost principles. For each kind of organization, there 
is a set of Federal principles for determining allowable costs. 
Allowable costs will be determined in accordance with the cost 
principles applicable to the organization incurring the costs. The 
following chart lists the kinds of organizations and the applicable cost 
principles:

------------------------------------------------------------------------
            For the costs of a                 Use the principles in--
------------------------------------------------------------------------
State, local or Indian tribal government    OMB Circular A-87.
Private nonprofit organization other than   OMB Circular A-122.
 an (1) institution of higher education,
 (2) hospital, or (3) organization named
 in OMB Circular A-122 as not subject to
 that circular
Educational institutions                    OMB Circular A-21.
For-profit organization other than a        48 CFR Part 31. Contract
 hospital and an organization named in OMB   Cost Principles and
 Circular A-122 as not subject to that       Procedures, or uniform cost
 circular                                    accounting standards that
                                             comply with cost principles
                                             acceptable to the Federal
                                             agency.
------------------------------------------------------------------------



Sec. 2541.230  Period of availability of funds.

    (a) General. Where a funding period is specified, a grantee may 
charge to the award only costs resulting from obligations of the funding 
period unless carryover of unobligated balances is permitted, in which 
case the carryover balances may be charged for costs resulting from 
obligations of the subsequent funding period.
    (b) Liquidation of obligations. A grantee must liquidate all 
obligations incurred under the award not later than 90 days after the 
end of the funding period (or as specified in a program regulation) to 
coincide with the submission of the annual Financial Status Report (SF-
269). The Federal agency may extend this deadline at the request of the 
grantee.



Sec. 2541.240  Matching or cost sharing.

    (a) Basic rule; costs and contributions acceptable. With the 
qualifications and exceptions listed in paragraph (b) of this section, a 
matching or cost sharing requirement may be satisfied by either or both 
of the following:
    (1) Allowable costs incurred by the grantee, subgrantee or a cost-
type contractor under the assistance agreement. This includes allowable 
costs borne by non-Federal grants or by other cash donations from non-
Federal third parties.

[[Page 705]]

    (2) The value of third party in-kind contributions applicable to the 
period to which the cost sharing or matching requirements applies.
    (b) Qualifications and exceptions--(1) Costs borne by other Federal 
grant agreements. Except as provided by Federal statute, a cost sharing 
or matching requirement may not be met by costs borne by another Federal 
grant. This prohibition does not apply to income earned by a grantee or 
subgrantee from a contract awarded under another Federal grant.
    (2) General revenue sharing. For the purpose of this section, 
general revenue sharing funds distributed under 31 U.S.C. 6702 are not 
considered Federal grant funds.
    (3) Cost or contributions counted towards other Federal costs-
sharing requirements. Neither costs nor the values of third party in-
kind contributions may count towards satisfying a cost sharing or 
matching requirement of a grant agreement if they have been or will be 
counted towards satisfying a cost sharing or matching requirement of 
another Federal grant agreement, a Federal procurement contract, or any 
other award of Federal funds.
    (4) Costs financed by program income. Costs financed by program 
income, as defined in Sec. 2541.250, shall not count towards satisfying 
a cost sharing or matching requirement unless they are expressly 
permitted in the terms of the assistance agreement. (This use of general 
program income is described in Sec. 2541.250(g).)
    (5) Services or property financed by income earned by contractors. 
Contractors under a grant may earn income from the activities carried 
out under the contract in addition to the amounts earned from the party 
awarding the contract. No costs of services or property supported by 
this income may count toward satisfying a cost sharing or matching 
requirement unless other provisions of the grant agreement expressly 
permit this kind of income to be used to meet the requirement.
    (6) Records. Costs and third party in-kind contributions counting 
towards satisfying a cost sharing or matching requirement must be 
verifiable from the records of grantees and subgrantee or cost-type 
contractors. These records must show how the value placed on third party 
in-kind contributions was derived. To the extent feasible, volunteer 
services will be supported by the same methods that the organization 
uses to support the allocability of regular personnel costs.
    (7) Special standards for third party in-kind contributions. (i) 
Third party in-kind contributions count towards satisfying a cost 
sharing or matching requirement only where, if the party receiving the 
contributions were to pay for them, the payments would be allowable 
costs.
    (ii) Some third party in-kind contributions are goods and services 
that, if the grantee, subgrantee, or contractor receiving the 
contribution had to pay for them, the payments would have been an 
indirect costs. Costs sharing or matching credit for such contributions 
shall be given only if the grantee, subgrantee, or contractor has 
established, along with its regular indirect cost rate, a special rate 
for allocating to individual projects or programs the value of the 
contributions.
    (iii) A third party in-kind contribution to a fixed-price contract 
may count towards satisfying a cost sharing or matching requirement only 
if it results in:
    (A) An increase in the services or property provided under the 
contract (without additional cost to the grantee or subgrantee); or
    (B) A cost savings to the grantee or subgrantee.
    (iv) The values placed on third party in-kind contributions for cost 
sharing or matching purposes will conform to the rules in the succeeding 
sections of this part. If a third party in-kind contribution is a type 
not treated in those sections, the value placed upon it shall be fair 
and reasonable.
    (c) Valuation of donated services--(1) Volunteer services. Unpaid 
services provided to a grantee or subgrantee by individuals will be 
valued at rates consistent with those ordinarily paid for similar work 
in the grantee's or subgrantee's organization. If the grantee or 
subgrantee does not have employees performing similar work, the rates 
will be consistent with those ordinarily paid by other employers for 
similar

[[Page 706]]

work in the same labor market. In either case, a reasonable amount for 
fringe benefits may be included in the valuation.
    (2) Employees of other organizations. When an employer other than a 
grantee, subgrantee, or cost-type contractor furnishes free of charge 
the services of an employee in the employee's normal line of work, the 
services will be valued at the employee's regular rate of pay exclusive 
of the employee's fringe benefits and overhead costs. If the services 
are in a different line of work, paragraph (c)(1) of this section 
applies.
    (d) Valuation of third party donated supplies and loaned equipment 
or space. (1) If a third party donates supplies, the contribution will 
be valued at the market value of the supplies at the time of donation.
    (2) If a third party donates the use of equipment or space in a 
building but retains title, the contribution will be valued at the fair 
rental rate of the equipment or space.
    (e) Valuation of third party donated equipment, buildings, and land. 
If a third party donates equipment, buildings, or land, and title passes 
to a grantee or subgrantee, the treatment of the donated property will 
depend upon the purpose of the grant or subgrant, as follows:
    (1) Awards for capital expenditures. If the purpose of the grant or 
subgrant is to assist the grantee or subgrantee in the acquisition of 
property, the market value of that property at the time of donation may 
be counted as cost sharing or matching.
    (2) Other awards. If assisting in the acquisition of property is not 
the purpose of the grant or subgrant, paragraphs (e)(2) (i) and (ii) of 
this section apply:
    (i) If approval is obtained from the awarding agency, the market 
value at the time of donation of the donated equipment or buildings and 
the fair rental rate of the donated land may be counted as cost sharing 
or matching. In the case of a subgrant, the terms of the grant agreement 
may require that the approval be obtained from the Federal agency as 
well as the grantee. In all cases, the approval may be given only if a 
purchase of the equipment or rental of the land would be approved as an 
allowable direct cost. If any part of the donated property was acquired 
with Federal funds, only the non-federal share of the property may be 
counted as cost-sharing or matching.
    (ii) If approval is not obtained under paragraph (e)(2)(i) of this 
section, no amount may be counted for donated land, and only 
depreciation or use allowances may be counted for donated equipment and 
buildings. The depreciation or use allowances for this property are not 
treated as third party in-kind contributions. Instead, they are treated 
as costs incurred by the grantee or subgrantee. They are computed and 
allocated (usually as indirect costs) in accordance with the cost 
principles specified in Sec. 2541.220, in the same way as depreciation 
or use allowances for purchased equipment and buildings. The amount of 
depreciation or use allowances for donated equipment and buildings is 
based on the property's market value at the time it was donated.
    (f) Valuation of grantee or subgrantee donated real property for 
construction/acquisition. If a grantee or subgrantee donates real 
property for a construction or facilities acquisition project, the 
current market value of that property may be counted as cost sharing or 
matching. If any part of the donated property was acquired with Federal 
funds, only the non-federal share of the property may be counted as cost 
sharing or matching.
    (g) Appraisal of real property. In some cases under paragraphs (d), 
(e) and (f) of this section, it will be necessary to establish the 
market value of land or a building or the fair rental rate of land or of 
space in a building. In these cases, the Federal agency may require the 
market value or fair rental value be set by an independent appraiser, 
and that the value or rate be certified by the grantee. This requirement 
will also be imposed by the grantee on subgrantees.



Sec. 2541.250  Program income.

    (a) General. Grantees are encouraged to earn income to defray 
program costs. Program income includes income from fees for services 
performed, from the use or rental of real or personal property acquired 
with grant funds, from the sale of commodities or items

[[Page 707]]

fabricated under a grant agreement, and from payments of principal and 
interest on loans made with grant funds. Except as otherwise provided in 
regulations of the Federal agency, program income does not include 
interest on grant funds, rebates, credits, discounts, refunds, etc. and 
interest earned on any of them.
    (b) Definition of program income. Program income means gross income 
received by the grantee or subgrantee directly generated by a grant 
supported activity, or earned only as a result of the grant agreement 
during the grant period. ``During the grant period'' is the time between 
the effective date of the award and the ending date of the award 
reflected in the final financial report.
    (c) Cost of generating program income. If authorized by Federal 
regulations or the grant agreement, costs incident to the generation of 
program income may be deducted from gross income to determine program 
income.
    (d) Governmental revenues. Taxes, special assessments, levies, 
fines, and other such revenues raised by a grantee or subgrantee are not 
program income unless the revenues are specifically identified in the 
grant agreement or Federal agency regulations as program income.
    (e) Royalties. Income from royalties and license fees for 
copyrighted material, patents, and inventions developed by a grantee or 
subgrantee is program income only if the revenues are specifically 
identified in the grant agreement or Federal agency regulations as 
program income. (See Sec. 2541.340)
    (f) Property. Proceeds from the sale of real property or equipment 
will be handled in accordance with the requirements of Secs. 2541.310 
and 2541.320.
    (g) Use of program income. Program income shall be deducted from 
outlays which may be both Federal and non-Federal as described in 
paragraphs (g)(1) and (2) of this section, unless the Federal agency 
regulations or the grant agreement specify another alternative (or a 
combination of the alternatives). In specifying alternatives, the 
Federal agency may distinguish between income earned by the grantee and 
income earned by subgrantees and between the sources, kinds, or amounts 
of income. When Federal agencies authorize the alternatives in 
paragraphs (g) (2) and (3) of this section, program income in excess of 
any limits stipulated shall also be deducted from outlays.
    (1) Deduction. Ordinarily program income shall be deducted from 
total allowable costs to determine the net allowable costs. Program 
income shall be used for current costs unless the Federal agency 
authorizes otherwise. Program income which the grantee did not 
anticipate at the time of the award shall be used to reduce the Federal 
agency and grantee contributions rather than to increase the funds 
committed to the project.
    (2) Addition. When authorized, program income may be added to the 
funds committed to the grant agreement by the Federal agency and the 
grantee. The program income shall be used for the purposes and under the 
conditions of the grant agreement.
    (3) Cost sharing or matching. When authorized, program income may be 
used to meet the cost sharing or matching requirement of the grant 
agreement. The amount of the Federal grant award remains the same.
    (h) Income after the award period. There are no Federal requirements 
governing the disposition of program income earned after the end of the 
award period (i.e., until the ending date of the final financial report, 
see paragraph (a) of this section), unless the terms of the agreement or 
the Federal agency regulations provide otherwise.



Sec. 2541.260  Non-Federal audit.

    (a) Basic rule. Grantees and subgrantees are responsible for 
obtaining audits in accordance with the Single Audit Act Amendments of 
1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of 
States, Local Governments, and Non-Profit Organizations.'' The audits 
shall be made by an independent auditor in accordance with generally 
accepted government auditing standards covering financial audits.
    (b) Subgrantees. State or local governments, as those terms are 
defined for purposes of the Single Audit Act

[[Page 708]]

Amendments of 1996, that provide Federal awards to a subgrantee, which 
expends $300,000 or more (or other amount as specified by OMB) in 
Federal awards in a fiscal year, shall:
    (1) Determine whether State or local subgrantees have met the audit 
requirements of the Act and whether subgrantees covered by OMB Circular 
A-110, ``Uniform Administrative Requirements for Grants and Agreements 
with Institutions of Higher Education, Hospitals, and Other Non-Profit 
Organizations,'' have met the audit requirements of the Act. Commercial 
contractors (private for-profit and private and governmental 
organizations) providing goods and services to State and local 
governments are not required to have a single audit performed. State and 
local governments should use their own procedures to ensure that the 
contractor has complied with laws and regulations affecting the 
expenditure of Federal funds;
    (2) Determine whether the subgrantee spent Federal assistance funds 
provided in accordance with applicable laws and regulations. This may be 
accomplished by reviewing an audit of the subgrantee made in accordance 
with the Act, Circular A-110, or through other means (e.g., program 
reviews) if the subgrantee has not had such an audit;
    (3) Ensure that appropriate corrective action is taken within six 
months after receipt of the audit report in instance of noncompliance 
with Federal laws and regulations;
    (4) Consider whether subgrantee audits necessitate adjustment of the 
grantee's own records; and
    (5) Require each subgrantee to permit independent auditors to have 
access to the records and financial statements.
    (c) Auditor selection. In arranging for audit services, 
Sec. 2541.360 shall be followed.

[59 FR 41598, Aug. 12, 1994, as amended at 62 FR 45939, 45947, Aug. 29, 
1997]



               Subpart D--Changes, Property and Subawards



Sec. 2541.300  Changes.

    (a) General. Grantees and subgrantees are permitted to re budget 
within the approved direct cost budget to meet unanticipated 
requirements and may make limited program changes to the approved 
project. However, unless waived by the awarding agency, certain types of 
post-award changes in budgets and projects shall require the prior 
written approval of the awarding agency.
    (b) Relation to cost principles. The applicable cost principles (see 
Sec. 2541.220) contain requirements for prior approval of certain types 
of costs. Except where waived, those requirements apply to all grants 
and subgrants even if paragraphs (c) through (f) of this section do not.
    (c) Budget changes.--(1) Nonconstruction projects. Except as stated 
in other regulations or an award document, grantees or subgrantees shall 
obtain the prior approval of the awarding agency whenever any of the 
following changes is anticipated under a nonconstruction award:
    (i) Any revision which would result in the need for additional 
funding.
    (ii) Unless waived by the awarding agency, cumulative transfers 
among direct cost categories, or, if applicable, among separately 
budgeted programs, projects, functions, or activities which exceed or 
are expected to exceed ten percent of the current total approved budget, 
whenever the awarding agency's share exceeds $100,000.
    (iii) Transfer of funds allotted for training allowances (i.e., from 
direct payments to trainees to other expense categories).
    (2) Construction projects. Grantees and subgrantees shall obtain 
prior written approval for any budget revision which would result in the 
need for additional funds.
    (3) Combined construction and nonconstruction projects. When a grant 
or subgrant provides funding for both construction and nonconstruction 
activities, the grantee or subgrantee must obtain prior written approval 
from the awarding agency before making any fund or budget transfer from 
nonconstruction to construction or vice versa.

[[Page 709]]

    (d) Programmatic changes. Grantees or subgrantees must obtain the 
prior approval of the awarding agency whenever any of the following 
actions is anticipated:
    (1) Any revision of the scope or objectives of the project 
(regardless of whether there is an associated budget revision requiring 
prior approval).
    (2) Need to extend the period of availability of funds.
    (3) Changes in key persons in cases where specified in an 
application or a grant award. In research projects, a change in the 
project director or principal investigator shall always require approval 
unless waived by the awarding agency.
    (4) Under nonconstruction projects, contracting out, subgranting (if 
authorized by law) or otherwise obtaining the services of a third party 
to perform activities which are central to the purposes of the award. 
This approval requirement is in addition to the approval requirements of 
Sec. 2541.360 but does not apply to the procurement of equipment, 
supplies, and general support services.
    (e) Additional prior approval requirements. The awarding agency may 
not require prior approval for any budget revision which is not 
described in paragraph (c) of this section.
    (f) Requesting prior approval. (1) A request for prior approval of 
any budget revision will be in the same budget formal the grantee used 
in its application and shall be accompanied by a narrative justification 
for the proposed revision.
    (2) A request for a prior approval under the applicable Federal cost 
principles (see Sec. 2541.220) may be made by letter.
    (3) A request by a subgrantee for prior approval will be addressed 
in writing to the grantee. The grantee will promptly review such request 
and shall approve or disapprove the request in writing. A grantee will 
not approve any budget or project revision which is inconsistent with 
the purpose or terms and conditions of the Federal grant to the grantee. 
If the revision, requested by the subgrantee would result in a change to 
the grantee's approved project which requires Federal prior approval, 
the grantee will obtain the Federal agency's approval before approving 
the subgrantee's request.



Sec. 2541.310  Real property.

    (a) Title. Subject to the obligations and conditions set forth in 
this section, title to real property acquired under a grant or subgrant 
will vest upon acquisition in the grantee or subgrantee respectively.
    (b) Use. Except as otherwise provided by Federal statutes, real 
property will be used for the originally authorized purposes as long as 
needed for that purposes, and the grantee or subgrantee shall not 
dispose of or encumber its title or other interests.
    (c) Disposition. When real property is no longer needed for the 
originally authorized purpose, the grantee or subgrantee will request 
disposition instructions from the awarding agency. The instructions will 
provide for one of the following alternatives:
    (1) Retention of title. Retain title after compensating the awarding 
agency. The amount paid to the awarding agency will be computed by 
applying the awarding agency's percentage of participation in the cost 
of the original purchase to the fair market value of the property. 
However, in those situations where a grantee or subgrantee is disposing 
of real property acquired with grant funds and acquiring replacement 
real property under the same program, the net proceeds from the 
disposition may be used as an offset to the cost of the replacement 
property.
    (2) Sale of property. Sell the property and compensate the awarding 
agency. The amount due to the awarding agency will be calculated by 
applying the awarding agency's percentage of participation in the cost 
of the original purchase to the proceeds of the sale after deduction of 
any actual and reasonable selling and fixing-up expenses. If the grant 
is still active, the net proceeds from sale may be offset against the 
original cost of the property. When a grantee or subgrantee is directed 
to sell property, sales procedures shall be followed that provide for 
competition to the extent practicable and result in the highest possible 
return.
    (3) Transfer of title. Transfer title to the awarding agency or to a 
third-party designated/approved by the

[[Page 710]]

awarding agency. The grantee or subgrantee shall be paid an amount 
calculated by applying the grantee or subgrantee's percentage of 
participation in the purchase of the real property to the current fair 
market value of the property.



Sec. 2541.320  Equipment.

    (a) Title. Subject to the obligations and conditions set forth in 
this section, title to equipment acquired under a grant or subgrant will 
vest upon acquisition in the grantee or subgrantee respectively.
    (b) States. A State will use, manage, and dispose of equipment 
acquired under a grant by the State in accordance with State laws and 
procedures. Other grantees and subgrantees will follow paragraphs (c) 
through (e) of this section.
    (c) Use. (1) Equipment shall be used by the grantee or subgrantee in 
the program or project for which it was acquired as long as needed, 
whether or not the project or program continues to be supported by 
Federal funds. When no longer needed for the original program or 
project, the equipment may be used in other activities currently or 
previously supported by a Federal agency.
    (2) The grantee or subgrantee shall also make equipment available 
for use on other projects or programs currently or previously supported 
by the Federal Government, providing such use will not interfere with 
the work on the projects or program for which it was originally 
acquired. First preference for other use shall be given to other 
programs or projects supported by the awarding agency. User fees should 
be considered if appropriate.
    (3) Notwithstanding the encouragement in Sec. 2541.250(a) to earn 
program income, the grantee or subgrantee must not use equipment 
acquired with grant funds to provide services for a fee to compete 
unfairly with private companies that provide equivalent services, unless 
specifically permitted or contemplated by Federal statute.
    (4) When acquiring replacement equipment, the grantee or subgrantee 
may use the equipment to be replaced as a trade-in or sell the property 
and use the proceeds to offset the cost of the replacement property, 
subject to the approval of the awarding agency.
    (d) Management requirements. Procedures for managing equipment 
(including replacement equipment), whether acquired in whole or in part 
with grant funds, until disposition takes place will, as a minimum, meet 
the following requirements:
    (1) Property records must be maintained that include a description 
of the property, a serial number or other identification number, the 
source of property, who holds title, the acquisition date, and cost of 
the property, percentage of Federal participation in the cost of the 
property, the location, use and condition of the property, and any 
ultimate disposition data including the date of disposal and sale price 
of the property.
    (2) A physical inventory of the property must be taken and the 
results reconciled with the property records at least once every two 
years.
    (3) A control system must be developed to ensure adequate safeguards 
to prevent loss, damage, or theft of the property. Any loss, damage, or 
theft shall be investigated.
    (4) Adequate maintenance procedures must be developed to keep the 
property in good condition.
    (5) If the grantee or subgrantee is authorized or required to sell 
the property, proper sales procedures must be established to ensure the 
highest possible return.
    (e) Disposition. When original or replacement equipment acquired 
under a grant or subgrant is no longer needed for the original project 
or program or for other activities currently or previously supported by 
a Federal agency, disposition of the equipment will be made as follows:
    (1) Items of equipment with a current per-unit fair market value of 
less than $5,000 may be retained, sold or otherwise disposed of with no 
further obligation to the awarding agency.
    (2) Items of equipment with a current per unit fair market value in 
excess of $5,000 may be retained or sold and the awarding agency shall 
have a right to an amount calculated by multiplying the current market 
value or proceeds from sale by the awarding agency's share of the 
equipment.

[[Page 711]]

    (3) In cases where a grantee or subgrantee fails to take appropriate 
disposition actions, the awarding agency may direct the grantee or 
subgrantee to take excess and disposition actions.
    (f) Federal equipment. In the event a grantee or subgrantee is 
provided federally-owned equipment:
    (1) Title will remain vested in the Federal Government.
    (2) Grantees or subgrantees will manage the equipment in accordance 
with Federal agency rules and procedures, and submit an annual inventory 
listing.
    (3) When the equipment is no longer needed, the grantee or 
subgrantee will request disposition instructions from the Federal 
agency.
    (g) Right to transfer title. The Federal awarding agency may reserve 
the right to transfer title to the Federal Government or a third part 
named by the awarding agency when such a third party is otherwise 
eligible under existing statutes. Such transfers shall be subject to the 
following standards:
    (1) The property shall be identified in the grant or otherwise made 
known to the grantee in writing.
    (2) The Federal awarding agency shall issue disposition instruction 
within 120 calendar days after the end of the Federal support of the 
project for which it was acquired. If the Federal awarding agency fails 
to issue disposition instructions within the 120 calendar-day period the 
grantee shall follow paragraph (e) of this section.
    (3) When title to equipment is transferred, the grantee shall be 
paid an amount calculated by applying the percentage of participation in 
the purchase to the current fair market value of the property.



Sec. 2541.330  Supplies.

    (a) Title. Title to supplies acquired under a grant or subgrant will 
vest, upon acquisition, in the grantee or subgrantee respectively.
    (b) Disposition. If there is a residual inventory of unused supplies 
exceeding $5,000 in total aggregate fair market value upon termination 
or completion of the award, and if the supplies are not needed for any 
other federally sponsored programs or projects, the grantee or 
subgrantee shall compensate the awarding agency for its share.



Sec. 2541.340  Copyrights.

    The Federal awarding agency reserves a royalty-free, non-exclusive, 
and irrevocable license to reproduce, publish or otherwise use, and to 
authorize others to use, for Federal Government purposes:
    (a) The copyright in any work developed under a grant, subgrant, or 
contract under a grant or subgrant; and
    (b) Any rights of copyright to which a grantee, subgrantee or a 
contractor purchases ownership with grant support.



Sec. 2541.350  Subawards to debarred and suspended parties.

    Grantees and subgrantees must not make any award or permit any award 
(subgrant or contract) at any tier to any party which is debarred or 
suspended or is otherwise excluded from or ineligible for participation 
in Federal assistance programs under Executive Order 12549, ``Debarment 
and Suspension.''



Sec. 2541.360  Procurement.

    (a) States. When procuring property and services under a grant, a 
State will follow the same policies and procedures it uses for 
procurements from its non-Federal funds. The State will ensure that 
every purchase order or other contract includes any clauses required by 
Federal statutes and executive orders and their implementing 
regulations. Other grantees and subgrantees will follow paragraphs (b) 
through (i) of this section.
    (b) Procurement standards. (1) Grantees and subgrantees will use 
their own procurement procedures which reflect applicable State and 
local laws and regulations, provided that the procurements conform to 
applicable Federal law and the standards identified in this section.
    (2) Grantees and subgrantees will maintain a contract administration 
system which ensures that contractors perform in accordance with the 
terms, conditions, and specifications of their contracts or purchase 
orders.
    (3) Grantees and subgrantees will maintain a written code of 
standards of

[[Page 712]]

conduct governing the performance of their employees engaged in the 
award and administration of contracts. No employee, officer or agent of 
the grantee or subgrantee shall participate in selection, or in the 
award or administration of a contract supported by Federal funds if a 
conflict of interest, real or apparent, would be involved. Such a 
conflict would arise when--
    (i) The employee, officer or agent;
    (ii) Any member of his immediate family;
    (iii) His or her partner; or
    (iv) An organization which employs, or is about to employ, any of 
the above, has a financial or other interest in the firm selected for 
award. The grantee's or subgrantee's officers, employees or agents will 
neither solicit nor accept gratuities, favors or anything of monetary 
value from contractors, potential contractors, or parties to 
subagreements. Grantee and subgrantees may set minimum rules where the 
financial interest is not substantial or the gift is an unsolicited item 
of nominal intrinsic value. To the extent permitted by State or local 
law or regulations, such standards or conduct will provide for 
penalties, sanctions, or other disciplinary actions for violations of 
such standards by the grantee's and subgrantee's officers, employees, or 
agents, or by contractors or their agents. The awarding agency may in 
regulation provide additional prohibitions relative to real, apparent, 
or potential conflicts of interest.
    (4) Grantee and subgrantee procedures will provide for a review of 
proposed procurements to avoid purchase of unnecessary or duplicative 
items. Consideration should be given to consolidating or breaking out 
procurements to obtain a more economical purchase. Where appropriate, an 
analysis will be made of lease versus purchase alternatives, and any 
other appropriate analysis to determine the most economical approach.
    (5) To foster greater economy and efficiency, grantees and 
subgrantees are encouraged to enter into State and local 
intergovernmental agreements for procurement or use of common goods and 
services.
    (6) Grantees and subgrantees are encouraged to use Federal excess 
and surplus property in lieu of purchasing new equipment and property 
whenever such use is feasible and reduces project costs.
    (7) Grantees and subgrantees are encouraged to use value engineering 
clauses in contracts for construction projects of sufficient size to 
offer reasonable opportunities for cost reductions. Value engineering is 
a systematic and creative analysis of each contract item or task to 
ensure that its essential function is provided at the overall lower 
cost.
    (8) Grantees and subgrantees will make awards only to responsible 
contractors possessing the ability to perform successfully under the 
terms and conditions of a proposed procurement. Consideration will be 
given to such matters as contractor integrity, compliance with public 
policy, record of past performance, and financial and technical 
resources.
    (9) Grantees and subgrantees will maintain records sufficient to 
detail the significant history of a procurement. These records will 
include, but are not necessarily limited to the following: Rationale for 
the method of procurement, selection of contract type, contractor 
selection or rejection, and the basis for the contract price.
    (10) Grantees and subgrantees will use time and material type 
contracts only--
    (i) After a determination that no other contract is suitable; and
    (ii) If the contract includes a ceiling price that the contractor 
exceeds at its own risk.
    (11) Grantees and subgrantees alone will be responsible, in 
accordance with good administrative practice and sound business 
judgment, for the settlement of all contractual and administrative 
issues arising out of procurements. These issues include, but are not 
limited to source evaluation, protests, disputes, and claims. These 
standards do not relieve the grantee or subgrantee of any contractual 
responsibilities under its contracts. Federal agencies will not 
substitute their judgment for that of the grantee or subgrantee unless 
the matter is primarily a Federal concern. Violations of law will be 
referred to the local, State, or Federal authority having proper 
jurisdiction.

[[Page 713]]

    (12) Grantees and subgrantees will have protest procedures to handle 
and resolve disputes relating to their procurements and shall in all 
instances disclose information regarding the protest to the awarding 
agency. A protester must exhaust all administrative remedies with the 
grantee and subgrantee before pursuing a protest with the Federal 
agency. Reviews of protests by the Federal agency will be limited to:
    (i) Violations of Federal law or regulations and the standards of 
this section (violations of State or local law will be under the 
jurisdiction of State or local authorities); and
    (ii) Violations of the grantee's or sub-grantee's protest procedures 
for failure to review a complaint or protest. Protests received by the 
Federal agency other than those specified in this paragraph (b)(12)(ii) 
will be referred to the grantee or subgrantee.
    (c) Competition. (1) All procurement transactions will be conducted 
in a manner providing full and open competition consistent with the 
standards of this section. Some of the situations considered to be 
restrictive of competition include but are not limited to:
    (i) Placing unreasonable requirements on firms in order for them to 
qualify to do business;
    (ii) Requiring unnecessary experience and excessive bonding;
    (iii) Noncompetitive pricing practices between firms or between 
affiliated companies;
    (iv) Noncompetitive awards to consultants that are on retainer 
contracts;
    (v) Organizational conflicts of interest;
    (vi) Specifying only a ``brand name'' product instead of allowing 
``an equal'' product to be offered and describing the performance of 
other relevant requirements of the procurement; and
    (vii) Any arbitrary action in the procurement process.
    (2) Grantees and subgrantees will conduct procurements in a manner 
that prohibits the use of statutory or administratively imposed in-State 
or local geographical preferences in the evaluation of bids or 
proposals, except in those cases where applicable Federal statutes 
expressly mandate or encourage geographic preference. Nothing in this 
section preempts State licensing laws. When contracting for 
architectural and engineering (A/E) services, geographic location may be 
a selection criteria provided its application leaves an appropriate 
number of qualified firms, given the nature and size of the project, to 
compete for the contract.
    (3) Grantees will have written selection procedures for procurement 
transactions. These procedures will ensure that all solicitations:
    (i) Incorporate a clear and accurate description of the technical 
requirements for the material, product, or service to be procured. Such 
description shall not, in competitive procurements, contain features 
which unduly restrict competition. The description may include a 
statement of the qualitative nature of the material, product or service 
to be procured, and when necessary, shall set forth those minimum 
essential characteristics and standards to which it must conform if it 
is to satisfy its intended use. Detailed product specifications should 
be avoided if at all possible. When it is impractical or uneconomical to 
make a clear and accurate description of the technical requirements, a 
``brand name or equal'' description may be used as a means to define the 
performance or other salient requirements of a procurement. The specific 
features of the named brand which must be met by offerors shall be 
clearly stated; and
    (ii) Identify all requirements which the offerors must fulfill and 
all other factors to be used in evaluating bids or proposals.
    (4) Grantees and subgrantees will ensure that all prequalified lists 
of persons, firms, or products which are used in acquiring goods and 
services are current and include enough qualified sources to ensure 
maximum open and free competition. Also, grantees and subgrantees will 
not preclude potential bidders from qualifying during the solicitation 
period.
    (d) Methods of procurement to be followed--(1) Procurement by small 
purchase procedures. Small purchase procedures are those relatively 
simple and informal procurement methods for securing services, supplies, 
or other property that do not cost more than the simplified acquisition 
threshold fixed at 41

[[Page 714]]

U.S.C. 403(11) (currently set at $100,000). If small purchase procedures 
are used, price or rate quotations shall be obtained from an adequate 
number of qualified sources.
    (2) Procurement by sealed bids (formal advertising). Bids are 
publicly solicited and a firm-fixed-price contract (lump sum or unit 
price) is awarded to the responsible bidder whose bid, conforming with 
all the material terms and conditions of the invitation for bids, is the 
lowest in price. The sealed bid method is the preferred method for 
procuring construction, if the conditions in Sec. 2541.36(d)(2)(i) 
apply.
    (i) In order for sealed bidding to be feasible, the following 
conditions should be present:
    (A) A complete, adequate, and realistic specification or purchase 
description is available;
    (B) Two or more responsible bidders are willing and able to compete 
effectively and for the business; and
    (C) The procurement lends itself to a firm fixed price contract and 
the selection of the successful bidder can be made principally on the 
basis of price.
    (ii) If sealed bids are used, the following requirements apply:
    (A) The invitation for bids will be publicly advertised and bids 
shall be solicited from an adequate number of known suppliers, providing 
them sufficient time prior to the date set for opening the bids;
    (B) The invitation for bids, which will include any specifications 
and pertinent attachments, shall define the items or services in order 
for the bidder to properly respond;
    (C) All bids will be publicly opened at the time and place 
prescribed in the invitation for bids;
    (D) A firm fixed-price contract award will be made in writing to the 
lowest responsive and responsible bidder. Where specified in bidding 
documents, factors such as discounts, transportation cost, and life 
cycle costs shall be considered in determining which bid is lowest. 
Payment discounts will only be used to determine the low bid when prior 
experience indicates that such discounts are usually taken advantage of; 
and
    (E) Any or all bids may be rejected if there is a sound documented 
reason.
    (3) Procurement by competitive proposals. The technique of 
competitive proposals is normally conducted with more than one source 
submitting an offer, and either a fixed-price or cost-reimbursement type 
contract is awarded. It is generally used when conditions are not 
appropriate for the use of sealed bids. If this method is used, the 
following requirements apply:
    (i) Requests for proposals will be publicized and identify all 
evaluation factors and their relative importance. Any response to 
publicized requests for proposals shall be honored to the maximum extent 
practical;
    (ii) Proposals will be solicited from an adequate number of 
qualified sources;
    (iii) Grantees and subgrantees will have a method for conducting 
technical evaluations of the proposals received and for selecting 
awardees;
    (iv) Awards will be made to the responsible firm whose proposal is 
most advantageous to the program, with price and other factors 
considered; and
    (v) Grantees and subgrantees may use competitive proposal procedures 
for qualifications-based procurement of architectural/engineering (A/E) 
professional services whereby competitors' qualifications are evaluated 
and the most qualified competitor is selected, subject to negotiation of 
fair and reasonable compensation. The method, where price is not used as 
a selection factor, can only be used in procurement of A/E professional 
services. It cannot be used to purchase other types of services though 
A/E firms are a potential source to perform the proposed effort.
    (4) Procurement by noncompetitive proposals is procurement through 
solicitation of a proposal from only one source, or after solicitation 
of a number of sources, competition is determined inadequate.
    (i) Procurement by noncompetitive proposals may be used only when 
the award of a contract is infeasible under small purchase procedures, 
sealed bids or competitive proposals and one of the following 
circumstances applies:
    (A) The item is available only from a single source;
    (B) The public exigency or emergency for the requirement will not 
permit a

[[Page 715]]

delay resulting from competitive solicitation;
    (C) The awarding agency authorizes noncompetitive proposals; or
    (D) After solicitation of a number of sources, competition is 
determined inadequate.
    (ii) Cost analysis, i.e., verifying the proposed cost data, the 
projections of the data, and the evaluation of the specific elements of 
costs and profits, is required.
    (iii) Grantees and subgrantees may be required to submit the 
proposed procurement to the awarding agency for pre-award review in 
accordance with paragraph (g) of this section.
    (e) Contracting with small and minority firms, women's business 
enterprise and labor surplus area firms. (1) The grantee and subgrantee 
will take all necessary affirmative steps to assure that minority firms, 
women's business enterprises, and labor surplus area firms are used when 
possible.
    (2) Affirmative steps shall include:
    (i) Placing qualified small and minority businesses and women's 
business enterprises on solicitation lists;
    (ii) Assuring that small and minority businesses, and women's 
business enterprises are solicited whenever they are potential sources;
    (iii) Dividing total requirements, when economically feasible, into 
smaller tasks or quantities to permit maximum participation by small and 
minority business, and women's business enterprises;
    (iv) Establishing delivery schedules, where the requirement permits, 
which encourage participation by small and minority business, and 
women's business enterprises;
    (v) Using the services and assistance of the Small Business 
Administration, and the Minority Business Development Agency of the 
Department of Commerce; and
    (vi) Requiring the prime contractor, if subcontracts are to be let, 
to take the affirmative steps listed in paragraphs (e)(2) (i) through 
(v) of this section.
    (f) Contract cost and price. (1) Grantees and subgrantees must 
perform a cost or price analysis in connection with every procurement 
action including contract modifications. The method and degree of 
analysis is dependent on the facts surrounding the particular 
procurement situation, but as a starting point, grantees must make 
independent estimates before receiving bids or proposals. A cost 
analysis must be performed when the offeror is required to submit the 
elements of his estimated cost, e.g., under professional, consulting, 
and architectural engineering services contracts. A cost analysis will 
be necessary when adequate price competition is lacking, and for sole 
source procurements, including contract modifications or change orders, 
unless price reasonableness can be established on the basis of a catalog 
or market price of a commercial product sold in substantial quantities 
to the general public or based on prices set by law or regulation. A 
price analysis will be used in all other instances to determine the 
reasonableness of the proposed contract price.
    (2) Grantees and subgrantees will negotiate profit as a separate 
element of the price for each contract in which there is no price 
competition and in all cases where cost analysis is performed. To 
establish a fair and reasonable profit, consideration will be given to 
the complexity of the work to be performed, the risk borne by the 
contractor, the contractor's investment, the amount of subcontracting, 
the quality of its record of past performance, and industry profit rates 
in the surrounding geographical area for similar work.
    (3) Costs or prices based on estimated costs for contracts under 
grants will be allowable only to the extent that costs incurred or cost 
estimates included in negotiated prices are consistent with Federal cost 
principles (see Sec. 2541.220). Grantees may reference their own cost 
principles that comply with the applicable Federal cost principles.
    (4) The cost plus a percentage of cost and percentage of 
construction cost methods of contracting shall not be used.
    (g) Awarding agency review. (1) Grantees and subgrantees must make 
available, upon request of the awarding agency, technical specifications 
on proposed procurements where the awarding agency believes such review 
is needed to ensure that the item and/or

[[Page 716]]

service specified is the one being proposed for purchase. This review 
generally will take place prior to the time the specification is 
incorporated into a solicitation document. However, if the grantee or 
subgrantee desires to have the review accomplished after a solicitation 
has been developed, the awarding agency may still review the 
specifications, with such review usually limited to the technical 
aspects of the proposed purchase.
    (2) Grantees and subgrantees must on request make available for 
awarding agency pre-award review procurement documents, such as requests 
for proposals or invitations for bids, independent cost estimates, etc. 
when:
    (i) A grantee's or subgrantee's procurement procedures or operation 
fails to comply with the procurement standards in this section; or
    (ii) The procurement is expected to exceed the simplified 
acquisition threshold and is to be awarded without competition or only 
one bid or offer is received in response to a solicitation; or
    (iii) The procurement, which is expected to exceed the simplified 
acquisition threshold, specifies a ``brand name'' product; or
    (iv) The proposed award is more than the simplified acquisition 
threshold and is to be awarded to other than the apparent low bidder 
under a sealed bid procurement; or
    (v) A proposed contract modification changes the scope of a contract 
or increases the contract amount by more than the simplified acquisition 
threshold.
    (3) A grantee or subgrantee will be exempt from the pre-award review 
in paragraph (g)(2) of this section if the awarding agency determines 
that its procurement systems comply with the standards of this section.
    (i) A grantee or subgrantee may request that its procurement system 
be reviewed by the awarding agency to determine whether its system meets 
these standards in order for its system to be certified. Generally, 
these reviews shall occur where there is a continuous high-dollar 
funding, and third-party contracts are awarded on a regular basis.
    (ii) A grantee or subgrantee may self-certify its procurement 
system. Such self-certification shall not limit the awarding agency's 
right to survey the system. Under a self-certification procedure, 
awarding agencies may wish to rely on written assurances from the 
grantee or subgrantee that it is complying with these standards. A 
grantee or subgrantee will cite specific procedures, regulations, 
standards, etc., as being in compliance with these requirements and have 
its system available for review.
    (h) Bonding requirements. For construction or facility improvement 
contracts or subcontracts exceeding the simplified acquisition 
threshold, the awarding agency may accept the bonding policy and 
requirements of the grantee or subgrantee provided the awarding agency 
has made a determination that the awarding agency's interest is 
adequately protected. If such a determination has not been made, the 
minimum requirements shall be as follows:
    (1) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The ``bid guarantee'' shall consist of a firm commitment 
such as a bid bond, certified check, or other negotiable instrument 
accompanying a bid as assurance that the bidder will, upon acceptance of 
his bid, execute such contractual documents as may be required within 
the time specified.
    (2) A performance bond on the part of the contractor for 100 percent 
of the contract price. A ``performance bond'' is one executed in 
connection with a contract to secure fulfillment of all the contractor's 
obligations under such contract.
    (3) A payment bond on the part of the contractor for 100 percent of 
the contract price. A ``payment bond'' is one executed in connection 
with a contract to assure payment as required by law of all persons 
supplying labor and material in the execution of the work provided for 
in the contract.
    (i) Contract provisions. A grantee's and subgrantee's contracts must 
contain provisions in paragraph (i) of this section. Federal agencies 
are permitted to require changes, remedies, changed conditions, access 
and records retention, suspension of work, and other

[[Page 717]]

clauses approved by the Office of Federal Procurement Policy.
    (1) Administrative, contractual, or legal remedies in instances 
where contractors violate or breach contract terms, and provide for such 
sanctions and penalties as may be appropriate. (Contracts more than the 
simplified acquisition threshold)
    (2) Termination for cause and for convenience by the grantee or 
subgrantee including the manner by which it will be effected and the 
basis for settlement. (All contracts in excess of $10,000)
    (3) Compliance with Executive Order 11246 of September 24, 1965, 
entitled ``Equal Employment Opportunity,'' as amended by Executive Order 
11375 of October 13, 1967, and as supplemented in Department of Labor 
regulations (41 CFR chapter 60). (All construction contracts awarded in 
excess of $10,000 by grantees and their contractors or subgrantees)
    (4) Compliance with the Copeland ``Anti-Kickback'' Act (18 U.S.C. 
874) as supplemented in Department of Labor regulations (29 CFR Part 3). 
(All contracts and subgrants for construction or repair)
    (5) Compliance with the Davis-Bacon Act (40 U.S.C. 276a to 276a-7) 
as supplemented by Department of Labor regulations (29 CFR Part 5). 
(Construction contracts in excess of $2000 awarded by grantees and 
subgrantees when required by Federal grant program legislation)
    (6) Compliance with Sections 103 and 107 of the Contract Work Hours 
and Safety Standards Act (40 U.S.C. 327-330) as supplemented by 
Department of Labor regulations (29 CFR Part 5). (Construction contracts 
awarded by grantees and subgrantees in excess of $2000, and in excess of 
$2500 for other contracts which involve the employment of mechanics or 
laborers)
    (7) Notice of awarding agency requirements and regulations 
pertaining to reporting.
    (8) Notice of awarding agency requirements and regulations 
pertaining to patent rights with respect to any discovery or invention 
which arises or is developed in the course of or under such contract.
    (9) Awarding agency requirements and regulations pertaining to 
copyrights and rights in data.
    (10) Access by the grantee, the subgrantee, the Federal grantor 
agency, the Comptroller General of the United States, or any of their 
duly authorized representatives to any books, documents, papers, and 
records of the contractor which are directly pertinent to that specific 
contract for the purpose of making audit, examination, excerpts, and 
transcriptions.
    (11) Retention of all required records for three years after 
grantees or subgrantees make final payments and all other pending 
matters are closed.
    (12) Compliance with all applicable standards, orders, or 
requirements issued under section 306 of the Clean Air Act (42 U.S.C. 
1857(h)), section 508 of the Clean Water Act (33 U.S.C. 1368), Executive 
Order 11738, and Environmental Protection Agency regulations (40 CFR 
part 15). (Contracts, subcontracts, and subgrants of amounts in excess 
of $100,000)
    (13) Mandatory standards and policies relating to energy efficiency 
which are contained in the state energy conservation plan issued in 
compliance with the Energy Policy and Conservation Act (Pub. L. 94-163, 
89 Stat. 871).

[59 FR 41598, Aug. 12, 1994, as amended at 60 FR 19639, 19646, Apr. 19, 
1995]



Sec. 2541.370  Subgrants.

    (a) States. States shall follow State law and procedures when 
awarding and administering subgrants (whether on a cost reimbursement or 
fixed amount basis) of financial assistance to local and Indian tribal 
governments. States shall:
    (1) Ensure that every subgrant includes any clauses required by 
Federal statute and executive orders and their implementing regulations;
    (2) Ensure that subgrantees are aware of requirements imposed upon 
them by Federal statute and regulation;
    (3) Ensure that a provision for compliance with Sec. 2541.400 is 
placed in every cost reimbursement subgrant; and
    (4) Conform any advances of grant funds to subgrantees substantially 
to the same standards of timing and

[[Page 718]]

amount that apply to cash advances by Federal agencies.
    (b) All other grantees. All other grantees shall follow the 
provisions of this part which are applicable to awarding agencies when 
awarding and administering subgrants (whether on a cost reimbursement or 
fixed amount basis) of financial assistance to local and Indian tribal 
governments. Grantees shall:
    (1) Ensure that every subgrant includes a provision for compliance 
with this part;
    (2) Ensure that every subgrant includes any clauses required by 
Federal statute and executive orders and their implementing regulations; 
and
    (3) Ensure that subgrantees are aware of requirements imposed upon 
them by Federal statutes and regulations.
    (c) Exceptions. By their own terms, certain provisions of this part 
do not apply to the award and administration of subgrants:
    (1) Sec. 2541.100;
    (2) Sec. 2541.110;
    (3) The letter-of-credit procedures specified in Treasury 
Regulations at 31 CFR part 205, cited in Sec. 2541.210; and
    (4) Sec. 2541.500.



         Subpart E--Reports, Records, Retention and Enforcement



Sec. 2541.400  Monitoring and reporting program performance.

    (a) Monitoring by grantees. Grantees are responsible for managing 
the day-to-day operations of grant and subgrant supported activities. 
Grantees must monitor grant and subgrant supported activities to assure 
compliance with applicable Federal requirements and that performance 
goals are being achieved. Grantee monitoring must cover each program, 
function or activity.
    (b) Nonconstruction performance reports. The Federal agency may, if 
it decides that performance information available from subsequent 
applications contains sufficient information to meet its programmatic 
needs, require the grantee to submit a performance report only upon 
expiration or termination of grant support. Unless waived by the Federal 
agency this report will be due on the same date as the final Financial 
Status Report.
    (1) Grantees shall submit annual performance reports unless the 
awarding agency requires quarterly or semi-annual reports. However, 
performance reports will not be required more frequently than quarterly. 
Annual reports shall be due 90 days after the grant year, quarterly or 
semi-annual reports shall be due 30 days after the reporting period. The 
final performance report will be due 90 days after the expiration or 
termination of grant support. If a justified request is submitted by a 
grantee, the Federal agency may extend the due date for any performance 
report. Additionally, requirements for unnecessary performance reports 
may be waived by the Federal agency.
    (2) Performance reports will contain, for each grant, brief 
information on the following:
    (i) 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.
    (ii) The reasons for slippage if established objectives were not 
met.
    (iii) Additional pertinent information including, when appropriate, 
analysis and explanation of cost overruns or high unit costs.
    (3) Grantees will not be required to submit more than the original 
and two copies of performance reports.
    (4) Grantees will adhere to the standards in this section in 
prescribing performance reporting requirements for subgrantees.
    (c) Construction performance reports. For the most part, on-site 
technical inspections and certified percentage-of-completion data are 
relied on heavily by Federal agencies to monitor progress under 
construction grants and subgrants. The Federal agency will require 
additional formal performance reports only when considered necessary, 
and never more frequently than quarterly.
    (d) Significant developments. Events may occur between the scheduled 
performance reporting dates which have significant impact upon the grant 
or subgrant supported activity. In such

[[Page 719]]

cases, the grantee must inform the Federal agency as soon as the 
following types of conditions become known:
    (1) Problems, delays, or adverse conditions which will materially 
impair the ability to meet the objective of the award. This disclosure 
must include a statement of the action taken, or contemplated, and any 
assistance needed to resolve the situation.
    (2) Favorable developments which enable meeting time schedules and 
objectives sooner or at less cost than anticipated or producing more 
beneficial results than originally planned.
    (e) Site visits. Federal agencies may make site visits as warranted 
by program needs.
    (f) Waivers, extensions. (1) Federal agencies may waive any 
performance report required by this part if not needed.
    (2) The grantee may waive any performance report from a subgrantee 
when not needed. The grantee may extend the due date for any performance 
report from a subgrantee if the grantee will still be able to meet its 
performance reporting obligations to the Federal agency.



Sec. 2541.410  Financial reporting.

    (a) General.--(1) Except as provided in paragraphs (a) (2) and (5) 
of this section, grantees will use only the forms specified in 
paragraphs (a) through (e) of this section, and such supplementary or 
other forms as may from time to time be authorized by OMB, for:
    (i) Submitting financial reports to Federal agencies; or
    (ii) Requesting advances or reimbursements when letters of credit 
are not used.
    (2) Grantees need not apply the forms prescribed in this section in 
dealing with their subgrantees. However, grantees shall not impose more 
burdensome requirements on subgrantees.
    (3) Grantees shall follow all applicable standard and supplemental 
Federal agency instructions approved by OMB to the extent required under 
the Paperwork Reduction Act of 1980 for use in connection with forms 
specified in paragraphs (b) through (e) of this section. Federal 
agencies may issue substantive supplementary instructions only with the 
approval of OMB. Federal agencies may shade out or instruct the grantee 
to disregard any line item that the Federal agency finds unnecessary for 
its decision making purposes.
    (4) Grantees will not be required to submit more than the original 
and two copies of forms required under this part.
    (5) Federal agencies may provide computer outputs to grantees to 
expedite or contribute to the accuracy of reporting. Federal agencies 
may accept the required information from grantees in machine usable 
format or computer printouts instead of prescribed forms.
    (6) Federal agencies may waive any report required by this section 
if not needed.
    (7) Federal agencies may extend the due date of any financial report 
upon receiving a justified request from a grantee.
    (b) Financial Status Report.--(1) Form. Grantees will use Standard 
Form 269 or 269A, Financial Status Report, to report the status of funds 
for all nonconstruction grants and for construction grants when required 
in accordance with paragraph (e)(2)(iii) of this section.
    (2) Accounting basis. Each grantee will report program outlays and 
program income on a cash or accrual basis as prescribed by the awarding 
agency. If the Federal agency requires accrual information and the 
grantee's accounting records are not normally kept on the accrual basis, 
the grantee shall not be required to convert its accounting system but 
shall develop such accrual information through an analysis of the 
documentation on hand.
    (3) Frequency. The Federal agency may prescribe the frequency of the 
report for each project or program. However, the report will not be 
required more frequently than quarterly. If the Federal agency does not 
specify the frequency of the report, it will be submitted annually. A 
final report will be required upon expiration or termination of grant 
support.
    (4) Due date. When reports are required on a quarterly or semiannual 
basis, they will be due 30 days after the reporting period. When 
required on an annual basis, they will be due 90 days after the grant 
year. Final reports will

[[Page 720]]

be due 90 days after the expiration or termination of grant support.
    (c) Federal Cash Transactions Report.--(1) Form. (i) For grants paid 
by letter or credit, Treasury check advances or electronic transfer of 
funds, the grantee will submit the Standard Form 272, Federal Cash 
Transactions Report, and when necessary, its continuation sheet, 
Standard Form 272a, unless the terms of the award exempt the grantee 
from this requirement.
    (ii) These reports will be used by the Federal agency to monitor 
cash advanced to grantees and to obtain disbursement or outlay 
information for each grant from grantees. The format of the report may 
be adapted as appropriate when reporting is to be accomplished with the 
assistance of automatic data processing equipment provided that the 
information to be submitted is not changed in substance.
    (2) Forecasts of Federal cash requirements. Forecasts of Federal 
cash requirements may be required in the ``Remarks'' section of the 
report.
    (3) Cash in hands of subgrantees. When considered necessary and 
feasible by the Federal agency, grantees may be required to report the 
amount of cash advances in excess of three days' needs in the hands of 
their subgrantees or contractors and to provide short narrative 
explanations of actions taken by the grantee to reduce the excess 
balances.
    (4) Frequency and due date. Grantees must submit the report no later 
than 15 working days following the end of each quarter. However, where 
an advance either by letter of credit or electronic transfer of funds is 
authorized at an annualized rate of one million dollars or more, the 
Federal agency may require the report to be submitted within 15 working 
days following the end of each month.
    (d) Request for advance or reimbursement.--(1) Advance payments. 
Requests for Treasury check advance payments will be submitted on 
Standard Form 270, Request for Advance or Reimbursement. (This form will 
not be used for drawdowns under a letter of credit, electronic funds 
transfer or when Treasury check advance payments are made to the grantee 
automatically on a predetermined basis.)
    (2) Reimbursements. Requests for reimbursement under nonconstruction 
grants will also be submitted on Standard Form 270. (For reimbursement 
requests under construction grants, see paragraph (e)(1) of this 
section.)
    (3) The frequency for submitting payment requests is treated in 
paragraph (b)(3) of this section.
    (e) Outlay report and request for reimbursement for construction 
programs.--(1) Grants that support construction activities paid by 
reimbursement method. (i) Requests for reimbursement under construction 
grants will be submitted on Standard Form 271, Outlay Report and Request 
for Reimbursement for Construction Programs. Federal agencies may, 
however, prescribe the Request for Advance or Reimbursement form, 
specified in paragraph (d) of this section, instead of this form.
    (ii) The frequency for submitting reimbursement requests is treated 
in paragraph (b)(3) of this section.
    (2) Grants that support construction activities paid by letter of 
credit, electronic funds transfer or Treasury check advance. (i) When a 
construction grant is paid by letter of credit, electronic funds 
transfer or Treasury check advances, the grantee will report its outlays 
to the Federal agency using Standard Form 271, Outlay Report and Request 
for Reimbursement for Construction Programs. The Federal agency will 
provide any necessary special instruction. However, frequency and due 
date shall be governed by paragraphs (b) (3) and (4) of this section.
    (ii) When a construction grant is paid by Treasury check advances 
based on periodic requests from the grantee, the advances will be 
requested on the form specified in paragraph (d) of this section.
    (iii) The Federal agency may substitute the Financial Status Report 
specified in paragraph (b) of this section for the Outlay Report and 
Request for Reimbursement for Construction Programs.
    (3) Accounting basis. The accounting basis for the Outlay Report and 
Request for Reimbursement for Construction Programs shall be governed by 
paragraph (b)(2) of this section.

[[Page 721]]



Sec. 2541.420  Retention and access requirements for records.

    (a) Applicability. (1) This section applies to all financial and 
programmatic records, supporting documents, statistical records, and 
other records of grantees or subgrantees which are:
    (i) Required to be maintained by the terms of this part, program 
regulations or the grant agreement; or
    (ii) Otherwise reasonably considered as pertinent to program 
regulations or the grant agreement.
    (2) This section does not apply to records maintained by contractors 
or subcontractors. For a requirement to place a provision concerning 
records in certain kinds of contracts, see Sec. 2541.360(i)(10).
    (b) Length of retention period. (1) Except as otherwise provided, 
records must be retained for three years from the starting date 
specified in paragraph (c) of this section.
    (2) If any litigation, claim, negotiation, audit or other action 
involving the records has been started before the expiration of the 3-
year period, the records must be retained until completion of the action 
and resolution of all issues which arise from it, or until the end of 
the regular 3-year period, whichever is later.
    (3) To avoid duplicate recordkeeping, awarding agencies may make 
special arrangements with grantees and subgrantees to retain any records 
which are continuously needed for joint use. The awarding agency will 
request transfer of records to its custody when it determines that the 
records possess long-term retention value. When the records are 
transferred to or maintained by the Federal agency, the 3-year retention 
requirement is not applicable to the grantee or subgrantee.
    (c) Starting date of retention period.--(1) General. When grant 
support is continued or renewed at annual or other intervals, the 
retention period for the records of each funding period starts on the 
day the grantee or subgrantee submits to the awarding agency its single 
or last expenditure report for that period. However, if grant support is 
continued or renewed quarterly, the retention period for each year's 
records starts on the day the grantee submits its expenditure report for 
the last quarter of the Federal fiscal year. In all other cases, the 
retention period starts on the day the grantee submits its final 
expenditure report. If an expenditure report has been waived, the 
retention period starts on the day the report would have been due.
    (2) Real property and equipment records. The retention period for 
real property and equipment records starts from the date of the 
disposition or replacement or transfer at the direction of the awarding 
agency.
    (3) Records for income transactions after grant or subgrant support. 
In some cases grantees must report income after the period of grant 
support. Where there is such a requirement, the retention period for the 
records pertaining to the earning of the income starts from the end of 
the grantee's fiscal year in which the income is earned.
    (4) Indirect cost rate proposals, cost allocations plans, etc. This 
paragraph applies to the following types of documents, and their 
supporting records: indirect cost rate computations or proposals, cost 
allocation plans, and any similar accounting computations of the rate at 
which a particular group of costs is chargeable (such as computer usage 
charge back rates or composite fringe benefit rates).
    (i) If submitted for negotiation. If the proposal, plan, or other 
computation is required to be submitted to the Federal Government (or to 
the grantee) to form the basis for negotiation of the rate, then the 3-
year retention period for its supporting records starts from the date of 
such submission.
    (ii) If not submitted for negotiation. If the proposal, plan, or 
other computation is not required to be submitted to the Federal 
Government (or to the grantee) for negotiation purposes, then the 3-year 
retention period for the proposal plan, or computation and its 
supporting records starts from end of the fiscal year (or other 
accounting period) covered by the proposal, plan, or other computation.
    (d) Substitution of microfilm. Copies made by microfilming, 
photocopying, or similar methods may be substituted for the original 
records.
    (e) Access to records.--(1) Records of grantees and subgrantees. The 
awarding agency and the Comptroller General of

[[Page 722]]

the United States, or any of their authorized representatives, shall 
have the right of access to any pertinent books, documents, papers, or 
other records of grantees and subgrantees which are pertinent to the 
grant, in order to make audits, examinations, excerpts, and transcripts.
    (2) Expiration of right of access. The rights of access in this 
section must not be limited to the required retention period but shall 
last as long as the records are retained.
    (f) Restrictions on public access. The Federal Freedom of 
Information Act (5 U.S.C. 552) does not apply to records. Unless 
required by Federal, State, or local law, grantees and subgrantees are 
not required to permit public access to their records.



Sec. 2541.430  Enforcement.

    (a) Remedies for noncompliance. If a grantee or subgrantee 
materially fails to comply with any term of an award, whether stated in 
a Federal statute or regulation, an assurance, in a State plan or 
application, a notice of award, or elsewhere, the awarding agency may 
take one or more of the following actions, as appropriate in the 
circumstances:
    (1) Temporarily withhold cash payments pending correction of the 
deficiency by the grantee or subgrantee or more severe enforcement 
action by the awarding agency;
    (2) Disallow (that is, deny both use of funds and matching credit 
for) all or part of the cost of the activity or action not in 
compliance;
    (3) Wholly or partly suspend or terminate the current award for the 
grantee's or subgrantee's program;
    (4) Withhold further awards for the program; or
    (5) Take other remedies that may be legally available.
    (b) Hearings, appeals. In taking an enforcement action, the awarding 
agency will provide the grantee or subgrantee an opportunity for such 
hearing, appeal, or other administrative proceeding to which the grantee 
or subgrantee is entitled under any statute or regulation applicable to 
the action involved.
    (c) Effects of suspension and termination. Costs of grantee or 
subgrantee resulting from obligations incurred by the grantee or 
subgrantee during a suspension or after termination of an award are not 
allowable unless the awarding agency expressly authorizes them in the 
notice of suspension or termination or subsequently. Other grantee or 
subgrantee costs during suspension or after termination which are 
necessary and not reasonably avoidable are allowable if:
    (1) The costs result from obligations which were properly incurred 
by the grantee or subgrantee before the effective date of suspension or 
termination, are not in anticipation of it, and, in the case of a 
termination, are noncancellable; and
    (2) The costs would be allowable if the award were not suspended or 
expired normally at the end of the funding period in which the 
termination takes effect.
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude grantee or subgrantee from being subject to 
``Debarment and Suspension'' under E.O. 12549 (see Sec. 2541.350).



Sec. 2541.440  Termination for convenience.

    Except as provided in Sec. 2541.430 awards may be terminated in 
whole or in part only as follows:
    (a) By the awarding agency with the consent of the grantee or 
subgrantee in which case the two parties shall agree upon the 
termination conditions, including the effective date and in the case of 
partial termination, the portion to be terminated; or
    (b) By the grantee or subgrantee upon written notification to the 
awarding agency, setting forth the reasons for such termination, the 
effective date, and in the case of partial termination, the portion to 
be terminated. However, if, in the case of a partial termination, the 
awarding agency determines that the remaining portion of the award will 
not accomplish the purposes for which the award was made, the awarding 
agency may terminate the award in its entirety under either 
Sec. 2541.430 or paragraph (a) of this section.

[[Page 723]]



                 Subpart F--After the Grant Requirement



Sec. 2541.500  Closeout.

    (a) General. The Federal agency will close out the award when it 
determines that all applicable administrative actions and all required 
work of the grant has been completed.
    (b) Reports. Within 90 days after the expiration or termination of 
the grant, the grantee must submit all financial, performance, and other 
reports required as a condition of the grant. Upon request by the 
grantee, Federal agencies may extend this time frame. These may include 
but are not limited to:
    (1) Final performance or progress report;
    (2) Financial Status Report (SF 269) or Outlay Report and Request 
for Reimbursement for Construction Programs (SF-271) (as applicable);
    (3) Final request for payment (SF-270) (if applicable);
    (4) Invention disclosure (if applicable);
    (5) Federally-owned property report. In accordance with 
Sec. 2541.320(f), a grantee must submit an inventory of all federally 
owned property (as distinct from property acquired with grant funds) for 
which it is accountable and request disposition instructions from the 
Federal agency of property no longer needed.
    (c) Cost adjustment. The Federal agency will, within 90 days after 
receipt of reports in paragraph (b) of this section, make upward or 
downward adjustments to the allowable costs.
    (d) Cash adjustments. (1) The Federal agency will make prompt 
payment to the grantee for allowable reimbursable costs.
    (2) The grantee must immediately refund to the Federal agency any 
balance of unobligated (unencumbered) cash advanced that is not 
authorized to be retained for use on other grants.



Sec. 2541.510  Later disallowances and adjustments.

    The closeout of a grant does not affect:
    (a) The Federal agency's right to disallow costs and recover funds 
on the basis of a later audit or other review;
    (b) The grantee's obligation to return any funds due as a result of 
later refunds, corrections, or other transactions;
    (c) Records retention as required in Sec. 2541.420;
    (d) Property management requirements in Secs. 2541.3120 and 
2541.320; and
    (e) Audit requirements in Sec. 2541.410.



Sec. 2541.520  Collection of amounts due.

    (a) Any funds paid to a grantee in excess of the amount to which the 
grantee is finally determined to be entitled under the terms of the 
award constitute a debt to the Federal Government. If not paid within a 
reasonable period after demand, the Federal agency may reduce the debt 
by:
    (1) Making an administrative offset against other requests for 
reimbursements;
    (2) Withholding advance payments otherwise due to the grantee; or
    (3) Other action permitted by law.
    (b) Except where otherwise provided by statutes or regulations, the 
Federal agency will charge interest on an overdue debt in accordance 
with the Federal Claims Collection Standards (4 CFR Ch. II). The date 
from which interest is computed is not extended by litigation or the 
filing of any form of appeal.



PART 2542--GOVERNMENTWIDE DEBARMENT AND SUSPENSION (NONPROCUREMENT) AND GOVERNMENTWIDE REQUIREMENTS FOR DRUG-FREE WORKPLACE (GRANTS)--Table of Contents




                           Subpart A--General

Sec.
2542.10  Purpose.
2542.20  Definitions.
2542.30  Coverage.
2542.40  Policy.

                       Subpart B--Effect of Action

2542.100  Debarment or suspension.
2542.110  Ineligible persons.
2542.120  Voluntary exclusion.
2542.130  Exception provision.
2542.140  Continuation of covered transactions.
2542.150  Failure to adhere to restrictions.

[[Page 724]]

                          Subpart C--Debarment

2542.200  General.
2542.210  Causes for debarment.
2542.220  Procedures.
2542.230  Investigation and referral.
2542.240  Notice of proposed debarment.
2542.250  Opportunity to contest proposed debarment.
2542.260  Debarring official's decision.
2542.270  Settlement and voluntary exclusion.
2542.280  Period of debarment.
2542.290  Scope of debarment.

                          Subpart D--Suspension

2542.300  General.
2542.310  Causes for suspension.
2542.320  Procedures.
2542.330  Notice of suspension.
2542.340  Opportuntiy to contest suspension.
2542.350  Suspending official's decision.
2542.360  Period of suspension.
2542.370  Scope of suspension.

       Subpart E--Responsibilities of GSA, Agency and Participants

2542.400  GSA responsibilities.
2542.410  Corporation responsibilities.
2542.420  Participants' responsibilities.

          Subpart F--Drug-Free Workplace Requirements (Grants)

2542.500  Purpose.
2542.510  Definitions.
2542.520  Coverage.
2542.530  Grounds for suspension of payments, suspension or termination 
          of grants, or suspension or debarment.
2542.540  Effect of violation.
2542.550  Exception provision.
2542.560  Certification requirements and procedures.
2542.570  Reporting of and employee sanctions for convictions of 
          criminal drug offenses.

Appendix A to Part 2542--Certification Regarding Debarment, Suspension, 
          and Other Responsibility Matters--Primary Covered Transactions
Appendix B to Part 2542--Certification Regarding Debarment, Suspension, 
          Ineligibility and Voluntary Exclusion--Lower Tier Covered 
          Transactions
Appendix C to Part 2542--Certification Regarding Drug-Free Workplace 
          Requirements

    Authority: 42 U.S.C. 4951 et seq., 5060 and 12644; E.O. 12549, 51 FR 
6370, February 21, 1986 (3 CFR, 1986 Comp., p. 189).

    Source: 59 FR 41614, Aug. 12, 1994, unless otherwise noted.

    Cross Reference: See also Office of Management and Budget notice 
published at 55 FR 21679, May 25, 1990, and the governmentwide common 
rule published at 53 FR 19161, May 26, 1988, and 60 FR 33036, June 26, 
1995.



                           Subpart A--General



Sec. 2542.10  Purpose.

    (a) Executive Order (E.O.) 12549 provides that, to the extent 
permitted by law, Executive departments and agencies shall participate 
in a governmentwide system for nonprocurement debarment and suspension. 
A person who is debarred or suspended shall be excluded from Federal 
financial and nonfinancial assistance and benefits under Federal 
programs and activities. Debarment or suspension of a participant in a 
program by one agency shall have governmentwide effect.
    (b) These regulations implement section 3 of E.O. 12549 and the 
guidelines promulgated by the Office of Management and Budget under 
section 6 of the E.O. by:
    (1) Prescribing the programs and activities that are covered by the 
governmentwide system;
    (2) Prescribing the governmentwide criteria and governmentwide 
minimum due process procedures that each agency shall use;
    (3) Providing for the listing of debarred and suspended 
participants, participants declared ineligible (see definition of 
``ineligible'' in Sec. 2542.20), and participants who have voluntarily 
excluded themselves from participation in covered transactions;
    (4) Setting forth the consequences of a debarment, suspension, 
determination of ineligibility, or voluntary exclusion; and
    (5) Offering such other guidance as necessary for the effective 
implementation and administration of the governmentwide system.
    (c) These regulations also implement Executive Order 12689 (3 CFR, 
1989 Comp., p. 235) and 31 U.S.C. 6101 note (Public Law 103-355, sec. 
2455, 108 Stat. 3327) by--
    (1) Providing for the inclusion in the List of Parties Excluded from 
Federal Procurement and Nonprocurement Programs all persons proposed for 
debarment,

[[Page 725]]

debarred or suspended under the Federal Acquisition Regulation, 48 CFR 
Part 9, subpart 9.4; persons against which governmentwide exclusions 
have been entered under this part; and persons determined to be 
ineligible; and
    (2) Setting forth the consequences of a debarment, suspension, 
determination of ineligibility, or voluntary exclusion.
    (d) Although these regulations cover the listing of ineligible 
participants and the effect of such listing, they do not prescribe 
policies and procedures governing declarations of ineligibility.

[60 FR 33040, 33063, June 26, 1995]



Sec. 2542.20  Definitions.

    The following definitions apply to this part:
    Adequate evidence. The term adequate evidence means information 
sufficient to support the reasonable belief that a particular act or 
omission has occurred.
    Affiliate. Persons are affiliates of each other if, directly or 
indirectly, either one controls or has the power to control the other, 
or, a third person controls or has the power to control both. Indicia of 
control include, but are not limited to: interlocking management or 
ownership, identity of interests among family members, shared facilities 
and equipment, common use of employees, or a business entity organized 
following the suspension or debarment of a person which has the same or 
similar management, ownership, or principal employees as the suspended, 
debarred, ineligible, or voluntarily excluded person.
    Agency. The term agency means any executive department, military 
department or defense agency or other agency of the executive branch, 
excluding the independent regulatory agencies.
    Civil judgment. The term civil judgment means the disposition of a 
civil action by any court of competent jurisdiction, whether entered by 
verdict, decision, settlement, stipulation, or otherwise creating a 
civil liability for the wrongful acts complained of; or a final 
determination of liability under the Program Fraud Civil Remedies Act of 
1988 (31 U.S.C. 3801-12).
    Conviction. A judgment or conviction of a criminal offense by any 
court of competent jurisdiction, whether entered upon a verdict or a 
plea, including a plea of nolo contendere.
    Debarment. The term debarment means an action taken by a debarring 
official in accordance with these regulations to exclude a person from 
participating in covered transactions. A person so excluded is 
``debarred.''
    Debarring official. The term debarring official means an official 
authorized to impose debarment. The debarring official is either:
    (1) The agency head; or
    (2) An official designated by the agency head.
    Indictment. Indictment for a criminal offense. An information or 
other filing by competent authority charging a criminal offense shall be 
given the same effect as an indictment.
    Ineligible. The term ineligible means excluded from participation in 
Federal nonprocurement programs pursuant to a determination of 
ineligibility under statutory, executive order, or regulatory authority, 
other than Executive Order 12549 and its agency implementing 
regulations; for example, excluded pursuant to the Davis-Bacon Act and 
its implementing regulations, the equal employment opportunity acts and 
executive orders, or the environmental protection acts and executive 
orders. A person is ineligible where the determination of ineligibility 
affects such person's eligibility to participate in more than one 
covered transaction.
    Legal proceedings. Any criminal proceeding or any civil judicial 
proceeding to which the Federal Government or a State or local 
government or quasi-governmental authority is a party. The term includes 
appeals from such proceedings.
    List of Parties Excluded from Federal Procurement and Nonprocurement 
Programs. A list compiled, maintained and distributed by the General 
Services Administration (GSA) containing the names and other information 
about persons who have been debarred, suspended, or voluntarily excluded 
under Executive Orders 12549 and 12689 and these regulations or 48 CFR 
part 9, subpart 9.4, persons who have been proposed for debarment under 
48 CFR part

[[Page 726]]

9, subpart 9.4, and those persons who have been determined to be 
ineligible.
    Notice. The term notice means a written communication served in 
person or sent by certified mail, return receipt requested, or its 
equivalent, to the last known address of a party, its identified 
counsel, its agent for service of process, or any partner, officer, 
director, owner, or joint venturer of the party. Notice, if 
undeliverable, shall be considered to have been received by the 
addressee five days after being properly sent to the last address known 
by the agency.
    Participant. The term participant means any person who submits a 
proposal for, enters into, or reasonably may be expected to enter into a 
covered transaction. This term also includes any person who acts on 
behalf of or is authorized to commit a participant in a covered 
transaction as an agent or representative of another participant.
    Person. The term person means any individual, corporation, 
partnership, association, unit of government or legal entity, however 
organized, except: Foreign governments or foreign governmental entities, 
public international organizations, foreign government owned (in whole 
or in part) or controlled entities, and entities consisting wholly or 
partially of foreign governments or foreign governmental entities.
    Preponderance of the evidence. The term preponderance of the 
evidence means proof by information that, compared with that opposing 
it, leads to the conclusion that the fact at issue is more probably true 
than not.
    Principal. The term principal means an officer, director, owner, 
partner, key employee, or other person within a participant with primary 
management or supervisory responsibilities; or a person who has a 
critical influence on or substantive control over a covered transaction, 
whether or not employed by the participant. Persons who have a critical 
influence on or substantive control over a covered transaction are 
principal investigators.
    Proposal. The term proposal means a solicited or unsolicited bid, 
application, request, invitation to consider or similar communication by 
or on behalf of a person seeking to participate or to receive a benefit, 
directly or indirectly, in or under a covered transaction.
    Respondent. The term respondent means a person against whom a 
debarment or suspension action has been initiated.
    State. The term state means any of the States of the United States, 
the District of Columbia, the Commonwealth of Puerto Rico, any territory 
or possession of the United States, or any agency of a State, exclusive 
of institutions of higher education, hospitals, and units of local 
government. A State instrumentality will be considered part of the State 
government if it has a written determination from a State government 
that such State considers that instrumentality to be an agency of the 
State government.
    Suspending official. The term suspending official means an official 
authorized to impose suspension. The suspending official is either:
    (1) The agency head; or
    (2) An official designated by the agency head.
    Suspension. The term suspension means an action taken by a 
suspending official in accordance with these regulations that 
immediately excludes a person from participating in covered transactions 
for a temporary period, pending completion of an investigation and such 
legal, debarment, or Program Fraud Civil Remedies Act proceedings as may 
ensue. A person so excluded is ``suspended.''
    Voluntary exclusion (or) voluntarily excluded. The term voluntary 
exclusion (or) voluntarily excluded means a status of nonparticipation 
or limited participation in covered transactions assumed by a person 
pursuant to the terms of a settlement.

[59 FR 41614, Aug. 12, 1994, as amended at 60 FR 33041, 33063, June 26, 
1995]



Sec. 2542.30  Coverage.

    (a) The regulations in this part apply to all persons who have 
participated, are currently participating or may reasonably be expected 
to participate in transactions under Federal nonprocurement programs. 
For purposes of the regulations in this part such transactions will be 
referred to as ``covered transactions.''

[[Page 727]]

    (1) Covered transaction. For purposes of the regulations in this 
part, a covered transaction is a primary covered transaction or a lower 
tier covered transaction. Covered transactions at any tier need not 
involve the transfer of Federal funds.
    (i) Primary covered transaction. Except as noted in paragraph (a)(2) 
of this section, a primary covered transaction is any nonprocurement 
transaction between an agency and a person, regardless of type, 
including: Grants, cooperative agreements, scholarships, fellowships, 
contracts of assistance, loans, loan guarantees, subsidies, insurance, 
payments for specified use, donation agreements and any other 
nonprocurement transactions between a Federal agency and a person. 
Primary covered transactions also include those transactions specially 
designated by the U.S. Department of Housing and Urban Development in 
such agency's regulations governing debarment and suspension.
    (ii) Lower tier covered transaction. A lower tier covered 
transaction is:
    (A) Any transaction between a participant and a person other than a 
procurement contract for goods or services, regardless of type, under a 
primary covered transaction.
    (B) Any procurement contract for goods or services between a 
participant and a person, regardless of type, expected to equal or 
exceed the Federal procurement small purchase threshold fixed at 10 
U.S.C. 2304(g) and 41 U.S.C. 253(g) (currently $25,000) under a primary 
covered transaction.
    (C) Any procurement contract for goods or services between a 
participant and a person under a covered transaction, regardless of 
amount, under which that person will have a critical influence on or 
substantive control over that covered transaction. Such persons are:
    (1) Principal investigators.
    (2) Providers of federally-required audit services.
    (3) Exceptions. The following transactions are not covered:
    (i) Statutory entitlements or mandatory awards (but not subtier 
awards thereunder which are not themselves mandatory), including 
deposited funds insured by the Federal Government;
    (ii) Direct awards to foreign governments or public international 
organizations, or transactions with foreign governments or foreign 
governmental entities, public international organizations, foreign 
government owned (in whole or in part) or controlled entities, entities 
consisting wholly or partially of foreign governments or foreign 
governmental entities;
    (iii) Benefits to an individual as a personal entitlement without 
regard to the individual's present responsibility (but benefits received 
in an individual's business capacity are not excepted);
    (iv) Federal employment;
    (v) Transactions pursuant to national or agency-recognized 
emergencies or disasters;
    (vi) Incidental benefits derived from ordinary governmental 
operations; and
    (vii) Other transactions where the application of these regulations 
would be prohibited by law.
    (b) Relationship to other sections. This section describes the types 
of transactions to which a debarment or suspension under this part will 
apply. Subpart B, ``Effect of Action,'' Sec. 2542.50, ``Debarment or 
suspension,'' sets forth the consequences of a debarment or suspension. 
Those consequences would obtain only with respect to participants and 
principals in the covered transactions and activities described in 
Sec. 2542.30(a). Sections 2542.200 ``Scope of debarment,'' and 2542.280, 
``Scope of suspension,'' govern the extent to which a specific 
participant or organizational elements of a participant would be 
automatically included within a debarment or suspension action, and the 
conditions under which affiliates or persons associated with a 
participant may also be brought within the scope of the action.
    (c) Relationship to Federal procurement activities. In accordance 
with E.O. 12689 and section 2455 of Public Law 103-355, any debarment, 
suspension, proposed debarment or other governmentwide exclusion 
initiated under the Federal Acquisition Regulation (FAR) on or after 
August 25, 1995 shall be recognized by and effective for Executive 
Branch agencies and participants as an exclusion under this regulation. 
Similarly, any debarment, suspension or

[[Page 728]]

other governmentwide exclusion initiated under this regulation on or 
after August 25, 1995 shall be recognized by and effective for those 
agencies as a debarment or suspension under the FAR.

[59 FR 41614, Aug. 12, 1994, as amended at 60 FR 33041, 33063, June 26, 
1995]



Sec. 2542.40  Policy.

    (a) In order to protect the public interest, it is the policy of the 
Federal Government to conduct business only with responsible persons. 
Debarment and suspension are discretionary actions that, taken in 
accordance with Executive Order 12549 and this part, are appropriate 
means to implement this policy.
    (b) Debarment and suspension are serious actions which shall be used 
only in the public interest and for the Federal Government's protection 
and not for purposes of punishment. Agencies may impose debarment or 
suspension for the causes and in accordance with the procedures set 
forth in this part.
    (c) When more than one agency has an interest in the proposed 
debarment or suspension of a person, consideration shall be given to 
designating one agency as the lead agency for making the decision. 
Agencies are encouraged to establish methods and procedures for 
coordinating their debarment or suspension actions.



                       Subpart B--Effect of Action



Sec. 2542.100  Debarment or suspension.

    (a) Primary covered transactions. Except to the extent prohibited by 
law, persons who are debarred or suspended shall be excluded from 
primary covered transactions as either participants or principals 
throughout the Executive Branch of the Federal Government for the period 
of their debarment, suspension, or the period they are proposed for 
debarment under 48 CFR part 9, subpart 9.4. Accordingly, no agency shall 
enter into primary covered transactions with such excluded persons 
during such period, except as permitted pursuant to Sec. 2542.130.
    (b) Lower tier covered transactions. Except to the extent prohibited 
by law, persons who have been proposed for debarment under 48 CFR part 
9, subpart 9.4, debarred or suspended shall be excluded from 
participating as either participants or principals in all lower tier 
covered transactions (see Sec. 2542.30(a)(1)(ii)) for the period of 
their exclusion.
    (c) Exceptions. Debarment or suspension does not affect a person's 
eligibility for--
    (1) Statutory entitlements or mandatory awards (but not subtier 
awards thereunder which are not themselves mandatory), including 
deposited funds insured by the Federal Government;
    (2) Direct awards to foreign governments or public international 
organizations, or transactions with foreign governments or foreign 
governmental entities, public international organizations, foreign 
government owned (in whole or in part) or controlled entities, and 
entities consisting wholly or partially of foreign governments or 
foreign governmental entities;
    (3) Benefits to an individual as a personal entitlement without 
regard to the individual's present responsibility (but benefits received 
in an individual's business capacity are not excepted);
    (4) Federal employment;
    (5) Transactions pursuant to national or agency-recognized 
emergencies or disasters;
    (6) Incidental benefits derived from ordinary governmental 
operations; and
    (7) Other transactions where the application of these regulations 
would be prohibited by law.

[60 FR 33041, 33063, June 26, 1995]



Sec. 2542.110  Ineligible persons.

    Persons who are ineligible, as defined in Sec. 2542.20, are excluded 
in accordance with the applicable statutory, executive order, or 
regulatory authority.



Sec. 2542.120  Voluntary exclusion.

    Persons who accept voluntary exclusions under Sec. 2542.270 are 
excluded in accordance with the terms of their settlements. Corporation 
shall, and participants may, contact the original action agency to 
ascertain the extent of the exclusion.



Sec. 2542.130  Exception provision.

    The Corporation may grant an exception permitting a debarred, 
suspended, or voluntarily excluded person, or a

[[Page 729]]

person proposed for debarment under 48 CFR part 9, subpart 9.4, to 
participate in a particular covered transaction upon a written 
determination by the agency head or an authorized designee stating the 
reason(s) for deviating from the Presidential policy established by 
Executive Order 12549 and Sec. 2542.100. However, in accordance with the 
President's stated intention in the Executive Order, exceptions shall be 
granted only infrequently. Exceptions shall be reported in accordance 
with Sec. 2542.410(a).

[60 FR 33041, 33063, June 26, 1995]



Sec. 2542.140  Continuation of covered transactions.

    (a) Notwithstanding the debarment, suspension, proposed debarment 
under 48 CFR part 9, subpart 9.4, determination of ineligibility, or 
voluntary exclusion of any person by an agency, agencies and 
participants may continue covered transactions in existence at the time 
the person was debarred, suspended, proposed for debarment under 48 CFR 
part 9, subpart 9.4, declared ineligible, or voluntarily excluded. A 
decision as to the type of termination action, if any, to be taken 
should be made only after thorough review to ensure the propriety of the 
proposed action.
    (b) Agencies and participants shall not renew or extend covered 
transactions (other than no-cost time extensions) with any person who is 
debarred, suspended, proposed for debarment under 48 CFR part 9, subpart 
9.4, ineligible or voluntary excluded, except as provided in 
Sec. 2542.130.

[60 FR 33041, 33063, June 26, 1995]



Sec. 2542.150  Failure to adhere to restrictions.

    (a) Except as permitted under Sec. 2542.130 or Sec. 2542.140, a 
participant shall not knowingly do business under a covered transaction 
with a person who is--
    (1) Debarred or suspended;
    (2) Proposed for debarment under 48 CFR part 9, subpart 9.4; or
    (3) Ineligible for or voluntarily excluded from the covered 
transaction.
    (b) Violation of the restriction under paragraph (a) of this section 
may result in disallowance of costs, annulment or termination of award, 
issuance of a stop work order, debarment or suspension, or other 
remedies as appropriate.
    (c) A participant may rely upon the certification of a prospective 
participant in a lower tier covered transaction that it and its 
principals are not debarred, suspended, proposed for debarment under 48 
CFR part 9, subpart 9.4, ineligible, or voluntarily excluded from the 
covered transaction (See Appendix B of these regulations), unless it 
knows that the certification is erroneous. An agency has the burden of 
proof that a participant did knowingly do business with a person that 
filed an erroneous certification.

[60 FR 33041, 33063, June 26, 1995]



                          Subpart C--Debarment



Sec. 2542.200  General.

    The debarring official may debar a person for any of the causes in 
Sec. 2542.210, using procedures established in Secs. 2542.220 through 
2542.260. The existence of a cause for debarment, however, does not 
necessarily require that the person be debarred; the seriousness of the 
person's acts or omissions and any mitigating factors shall be 
considered in making any debarment decision.



Sec. 2542.210  Causes for debarment.

    Debarment may be imposed in accordance with the provisions of 
Secs. 2542.200 through 2542.260 for:
    (a) Conviction of or civil judgment for:
    (1) Commission of fraud or a criminal offense in connection with 
obtaining, attempting to obtain, or performing a public or private 
agreement or transaction;
    (2) Violation of Federal or State antitrust statutes, including 
those proscribing price fixing between competitors, allocation of 
customers between competitors, and bid rigging;
    (3) Commission of embezzlement, theft, forgery, bribery, 
falsification or destruction of records, making false statements, 
receiving stolen property, making false claims, or obstruction of 
justice; or

[[Page 730]]

    (4) Commission of any other offense indicating a lack of business 
integrity or business honesty that seriously and directly affects the 
present responsibility of a person.
    (b) Violation of the terms of a public agreement or transaction so 
serious as to affect the integrity of an agency program, such as:
    (1) A willful failure to perform in accordance with the terms of one 
or more public agreements or transactions;
    (2) A history of failure to perform or of unsatisfactory performance 
of one or more public agreements or transactions; or
    (3) A willful violation of a statutory or regulatory provision or 
requirement applicable to a public agreement or transaction.
    (c) Any of the following causes:
    (1) A nonprocurement debarment by any Federal agency taken before 
October 1, 1988, the effective date of the Governmentwide debarment and 
suspension (nonprocurement) regulations, or a procurement debarment by 
any Federal agency taken pursuant to 48 CFR part 9, subpart 9.4;
    (2) Knowingly doing business with a debarred, suspended, ineligible, 
or voluntarily excluded person, in connection with a covered 
transaction, except as permitted in Sec. 2542.130 or Sec. 2542.140;
    (3) Failure to pay a single substantial debt, or a number of 
outstanding debts (including disallowed costs and overpayments, but not 
including sums owed the Federal Government under the Internal Revenue 
Code) owed to any Federal agency or instrumentality, provided the debt 
is uncontested by the debtor or, if contested, provided that the 
debtor's legal and administrative remedies have been exhausted;
    (4) Violation of a material provision of a voluntary exclusion 
agreement entered into under Sec. 2542.270 or of any settlement of a 
debarment or suspension action; or
    (5) Violation of any requirement of subpart F of this part, relating 
to providing a drug-free workplace, as set forth in Sec. 2542.530 of 
this part.
    (d) Any other cause of so serious or compelling a nature that it 
affects the present responsibility of a person.



Sec. 2542.220  Procedures.

    The Corporation shall process debarment actions as informally as 
practicable, consistent with the principles of fundamental fairness, 
using the procedures in Secs. 2542.230 through 2542.260.



Sec. 2542.230  Investigation and referral.

    Information concerning the existence of a cause for debarment from 
any source shall be promptly reported, investigated, and referred, when 
appropriate, to the debarring official for consideration. After 
consideration, the debarring official may issue a notice of proposed 
debarment.



Sec. 2542.240  Notice of proposed debarment.

    A debarment proceeding shall be initiated by notice to the 
respondent advising:
    (a) That debarment is being considered;
    (b) Of the reasons for the proposed debarment in terms sufficient to 
put the respondent on notice of the conduct or transaction(s) upon which 
it is based;
    (c) Of the cause(s) relied upon under Sec. 2452.210 for proposing 
debarment;
    (d) Of the provisions of Secs. 2542.230 through 2542.260, and any 
other Corporation procedures, if applicable, governing debarment 
decision making; and
    (e) Of the potential effect of a debarment.



Sec. 2542.250  Opportunity to contest proposed debarment.

    (a) Submission in opposition. Within 30 days after receipt of the 
notice of proposed debarment, the respondent may submit, in person, in 
writing, or through a representative, information and argument in 
opposition to the proposed debarment.
    (b) Additional proceedings as to disputed material facts. (1) In 
actions not based upon a conviction or civil judgment, if the debarring 
official finds that the respondent's submission in opposition raises a 
genuine dispute over facts material to the proposed debarment, 
respondent(s) shall be afforded an opportunity to appear with a 
representative, submit documentary evidence, present witnesses, and 
confront any witness the agency presents.

[[Page 731]]

    (2) A transcribed record of any additional proceedings shall be made 
available at cost to the respondent, upon request, unless the respondent 
and the agency, by mutual agreement, waive the requirement for a 
transcript.



Sec. 2542.260  Debarring official's decision.

    (a) No additional proceedings necessary. In actions based upon a 
conviction or civil judgment, or in which there is no genuine dispute 
over material facts, the debarring official shall make a decision on the 
basis of all the information in the administrative record, including any 
submission made by the respondent. The decision shall be made within 45 
days after receipt of any information and argument submitted by the 
respondent, unless the debarring official extends this period for good 
cause.
    (b) Additional proceedings necessary. (1) In actions in which 
additional proceedings are necessary to determine disputed material 
facts, written findings of fact shall be prepared. The debarring 
official shall base the decision on the facts as found, together with 
any information and argument submitted by the respondent and any other 
information in the administrative record.
    (2) The debarring official may refer disputed material facts to 
another official for findings of fact. The debarring official may reject 
any such findings, in whole or in part, only after specifically 
determining them to be arbitrary and capricious or clearly erroneous.
    (3) The debarring official's decision shall be made after the 
conclusion of the proceedings with respect to disputed facts.
    (c) (1) Standard of proof. In any debarment action, the cause for 
debarment must be established by a preponderance of the evidence. Where 
the proposed debarment is based upon a conviction or civil judgment, the 
standard shall be deemed to have been met.
    (2) Burden of proof. The burden of proof is on the agency proposing 
debarment.
    (d) Notice of debarring official's decision. (1) If the debarring 
official decides to impose debarment, the respondent shall be given 
prompt notice:
    (i) Referring to the notice of proposed debarment;
    (ii) Specifying the reasons for debarment;
    (iii) Stating the period of debarment, including effective dates; 
and
    (iv) Advising that the debarment is effective for covered 
transactions throughout the executive branch of the Federal Government 
unless an agency head or an authorized designee makes the determination 
referred to in Sec. 2542.130.
    (2) If the debarring official decides not to impose debarment, the 
respondent shall be given prompt notice of that decision. A decision not 
to impose debarment shall be without prejudice to a subsequent 
imposition of debarment by any other agency.



Sec. 2542.270  Settlement and voluntary exclusion.

    (a) When in the best interest of the Government, the Corporation 
may, at any time, settle a debarment or suspension action.
    (b) If a participant and the agency agree to a voluntary exclusion 
of the participant, such voluntary exclusion shall be entered on the 
Nonprocurement List (see subpart E of this part).



Sec. 2542.280  Period of debarment.

    (a) Debarment shall be for a period commensurate with the 
seriousness of the cause(s). If a suspension precedes a debarment, the 
suspension period shall be considered in determining the debarment 
period.
    (1) Debarment for causes other than those related to a violation of 
the requirements of subpart F of this part generally should not exceed 
three years. Where circumstances warrant, a longer period of debarment 
may be imposed.
    (2) In the case of a debarment for a violation of the requirements 
of subpart F of this part (see Sec. 2542.210(c)(5)), the period of 
debarment shall not exceed five years.
    (b) The debarring official may extend an existing debarment for an 
additional period, if that official determines that an extension is 
necessary to protect the public interest. However, a debarment may not 
be extended solely

[[Page 732]]

on the basis of the facts and circumstances upon which the initial 
debarment action was based. If debarment for an additional period is 
determined to be necessary, the procedures of Secs. 2542.230 through 
2542.260 shall be followed to extend the debarment.
    (c) The respondent may request the debarring official to reverse the 
debarment decision or to reduce the period or scope of debarment. Such a 
request shall be in writing and supported by documentation. The 
debarring official may grant such a request for reasons including, but 
not limited to:
    (1) Newly discovered material evidence;
    (2) Reversal of the conviction or civil judgment upon which the 
debarment was based;
    (3) Bona fide change in ownership or management;
    (4) Elimination of other causes for which the debarment was imposed; 
or
    (5) Other reasons the debarring official deems appropriate.



Sec. 2542.290  Scope of debarment.

    (a) Scope in general. (1) Debarment of a person under this part 
constitutes debarment of all its divisions and other organizational 
elements from all covered transactions, unless the debarment decision is 
limited by its terms to one or more specifically identified individuals, 
divisions or other organizational elements or to specific types of 
transactions.
    (2) The debarment action may include any affiliate of the 
participant that is specifically named and given notice of the proposed 
debarment and an opportunity to respond (see Secs. 2542.230 through 
2542.260).
    (b) Imputing conduct. For purposes of determining the scope of 
debarment, conduct may be imputed as follows:
    (1) Conduct imputed to participant. The fraudulent, criminal or 
other seriously improper conduct of any officer, director, shareholder, 
partner, employee, or other individual associated with a participant may 
be imputed to the participant when the conduct occurred in connection 
with the individual's performance of duties for or on behalf of the 
participant, or with the participant's knowledge, approval, or 
acquiescence. The participant's acceptance of the benefits derived from 
the conduct shall be evidence of such knowledge, approval, or 
acquiescence.
    (2) Conduct imputed to individuals associated with participant. The 
fraudulent, criminal, or other seriously improper conduct of a 
participant may be imputed to any officer, director, shareholder, 
partner, employee, or other individual associated with the participant 
who participated in, knew of, or had reason to know of the participant's 
conduct.
    (3) Conduct of one participant imputed to other participants in a 
joint venture. The fraudulent, criminal, or other seriously improper 
conduct of one participant in a joint venture, grant pursuant to a joint 
application, or similar arrangement may be imputed to other participants 
if the conduct occurred for or on behalf of the joint venture, grant 
pursuant to a joint application, or similar arrangement or with the 
knowledge, approval, or acquiescence of these participants. Acceptance 
of the benefits derived from the conduct shall be evidence of such 
knowledge, approval, or acquiescence.



                          Subpart D--Suspension



Sec. 2542.300  General.

    (a) The suspending official may suspend a person for any of the 
causes in Sec. 2542.310 using procedures established in Secs. 2542.320 
through 2542.350.
    (b) Suspension is a serious action to be imposed only when:
    (1) There exists adequate evidence of one or more of the causes set 
out in Sec. 2542.320; and
    (2) Immediate action is necessary to protect the public interest.
    (c) In assessing the adequacy of the evidence, the agency should 
consider how much information is available, how credible it is given the 
circumstances, whether or not important allegations are corroborated, 
and what inferences can reasonably be drawn as a result. This assessment 
should include an examination of basic documents such as grants, 
cooperative agreements, loan authorizations, and contracts.

[[Page 733]]



Sec. 2542.310  Causes for suspension.

    (a) Suspension may be imposed in accordance with the provisions of 
Secs. 2542.300 through 2542.350 upon adequate evidence:
    (1) To suspect the commission of an offense listed in 
Sec. 2542.300(a); or
    (2) That a cause for debarment under Sec. 2542.300 may exist.
    (b) Indictment shall constitute adequate evidence for purposes of 
suspension actions.



Sec. 2542.320  Procedures.

    (a) Investigation and referral. Information concerning the existence 
of a cause for suspension from any source shall be promptly reported, 
investigated, and referred, when appropriate, to the suspending official 
for consideration. After consideration, the suspending official may 
issue a notice of suspension.
    (b) Decisionmaking process. The Corporation shall process suspension 
actions as informally as practicable, consistent with principles of 
fundamental fairness, using the procedures in Secs. 2541.330 through 
2542.350.



Sec. 2542.330  Notice of suspension.

    When a respondent is suspended, notice shall immediately be given:
    (a) That suspension has been imposed;
    (b) That the suspension is based on an indictment, conviction, or 
other adequate evidence that the respondent has committed irregularities 
seriously reflecting on the propriety of further Federal Government 
dealings with the respondent;
    (c) Describing any such irregularities in terms sufficient to put 
the respondent on notice without disclosing the Federal Government's 
evidence;
    (d) Of the cause(s) relied upon under Sec. 2542.310 for imposing 
suspension;
    (e) That the suspension is for a temporary period pending the 
completion of an investigation or ensuing legal, debarment, or Program 
Fraud Civil Remedies Act proceedings;
    (f) Of the provisions of Secs. 2542.330 through 2542.350 and any 
other Corporation procedures, if applicable, governing suspension 
decisionmaking; and
    (g) Of the effect of the suspension.



Sec. 2542.340  Opportunity to contest suspension.

    (a) Submission in opposition. Within 30 days after receipt of the 
notice of suspension, the respondent may submit, in person, in writing, 
or through a representative, information and argument in opposition to 
the suspension.
    (b) Additional proceedings as to disputed material facts. (1) If the 
suspending official finds that the respondent's submission in opposition 
raises a genuine dispute over facts material to the suspension, 
respondent(s) shall be afforded an opportunity to appear with a 
representative, submit documentary evidence, present witnesses, and 
confront any witness the agency presents, unless:
    (i) The action is based on an indictment, conviction or civil 
judgment; or
    (ii) A determination is made, on the basis of Department of Justice 
advice, that the substantial interests of the Federal Government in 
pending or contemplated legal proceedings based on the same facts as the 
suspension would be prejudiced.
    (2) A transcribed record of any additional proceedings shall be 
prepared and made available at cost to the respondent, upon request, 
unless the respondent and the agency, by mutual agreement, waive the 
requirement for a transcript.



Sec. 2542.350  Suspending official's decision.

    The suspending official may modify or terminate the suspension (for 
example, see Sec. 2542.280(c) for reasons for reducing the period or 
scope of debatement or may leave it in force. However, a decision to 
modify or terminate the suspension shall be without prejudice to the 
subsequent imposition of suspension by any agency. The decision shall be 
rendered in accordance with the following provisions.
    (a) No additional proceedings necessary. In actions: Based on an 
indictment, conviction, or civil judgment; in which there is no genuine 
dispute over material facts; or in which additional proceedings to 
determine disputed material facts have been denied on the basis of 
Department of Justice advice, the suspending official shall make a 
decision on the basis of all the information

[[Page 734]]

in the administrative record, including any submission made by the 
respondent. The decision shall be made within 45 days after receipt of 
any information and argument submitted by the respondent, unless the 
suspending official extends this period for good cause.
    (b) Additional proceedings necessary. (1) In actions in which 
additional proceedings are necessary to determine disputed material 
facts, written findings of fact shall be prepared. The suspending 
official shall base the decision on the facts as found, together with 
any information and argument submitted by the respondent and any other 
information in the administrative record.
    (2) The suspending official may refer matters involving disputed 
material facts to another official for findings of fact. The suspending 
official may reject any such findings, in whole or in part, only after 
specifically determining them to be arbitrary or capricious or clearly 
erroneous.
    (c) Notice of suspending official's decision. Prompt written notice 
of the suspending official's decision shall be sent to the respondent.



Sec. 2542.360  Period of suspension.

    (a) Suspension shall be for a temporary period pending the 
completion of an investigation or ensuing legal, debarment, or Program 
Fraud Civil Remedies Act proceedings, unless terminated sooner by the 
suspending official or as provided in paragraph (b) of this section.
    (b) If legal or administrative proceedings are not initiated within 
12 months after the date of the suspension notice, the suspension shall 
be terminated unless an Assistant Attorney General or United States 
Attorney requests its extension in writing, in which case it may be 
extended for an additional six months. In no event may a suspension 
extend beyond 18 months, unless such proceedings have been initiated 
within that period.
    (c) The suspending official shall notify the Department of Justice 
of an impending termination of a suspension, at least 30 days before the 
12-month period expires, to give that Department an opportunity to 
request an extension.



Sec. 2542.370  Scope of suspension.

    The scope of a suspension is the same as the scope of a debarment 
(see Sec. 2542.290) except that the procedures of Secs. 2542.320 through 
2542.350 shall be used in imposing a suspension.



       Subpart E--Responsibilities of GSA, Agency and Participants



Sec. 2542.400  GSA responsibilities.

    (a) In accordance with the OMB guidelines, GSA shall compile, 
maintain, and distribute a list of all persons who have been debarred, 
suspended, or voluntarily excluded by agencies under Executive Order 
12549 and this part, and those who have been determined to be 
ineligible.
    (b) At a minimum, this list shall indicate:
    (1) The names and addresses of all debarred, suspended, ineligible, 
and voluntarily excluded persons, in alphabetical order, with cross-
references when more than one name is involved in a single action;
    (2) The type of action;
    (3) The cause for the action;
    (4) The scope of the action;
    (5) Any termination date for each listing; and
    (6) The agency and name and telephone number of the agency point of 
contact for the action.



Sec. 2542.410  Corporation responsibilities.

    (a) The agency shall provide GSA with current information concerning 
debarments, suspension, determinations of ineligibility, and voluntary 
exclusions it has taken. Until February 18, 1989, the agency shall also 
provide GSA and OMB with information concerning all transactions in 
which the Corporation has granted exceptions under Sec. 2542.130 
permitting participation by debarred, suspended, or voluntarily excluded 
persons.
    (b) Unless an alternative schedule is agreed to by GSA, the agency 
shall advise GSA of the information set forth in Sec. 2542.400(b) and of 
the exceptions granted under Sec. 2542.130 within five working days 
after taking such actions.

[[Page 735]]

    (c) The agency shall direct inquiries concerning listed persons to 
the agency that took the action.
    (d) Agency officials shall check the Nonprocurement List before 
entering covered transactions to determine whether a participant in a 
primary transaction is debarred, suspended, ineligible, or voluntarily 
excluded.
    (e) Agency officials shall check the Nonprocurement List before 
approving principals or lower tier participants where agency approval of 
the principal or lower tier participant is required under the terms of 
the transaction, to determine whether such principals or participants 
are debarred, suspended, ineligible, or voluntarily excluded.



Sec. 2542.420  Participants' responsibilities.

    (a) Certification by participants in primary covered transactions. 
Each participant shall submit the certification in Appendix A of this 
part for it and its principals at the time the participant submits its 
proposal in connection with a primary covered transaction, except that 
States need only complete such certification as to their principals. 
Participants may decide the method and frequency by which they determine 
the eligibility of their principals. In addition, each participant may, 
but is not required to, check the Nonprocurement List for its 
principals. Adverse information on the certification will not 
necessarily result in denial of participation. However, the 
certification, and any additional information pertaining to the 
certification submitted by the participant, shall be considered in the 
administration of covered transactions.
    (b) Certification by participants in lower tier covered 
transactions. (1) Each participant shall require participants in lower 
tier covered transactions to include the certification in Appendix B of 
this part for it and its principals in any proposal submitted in 
connection with such lower tier covered transactions.
    (2) A participant may rely upon the certification of a prospective 
participant in a lower tier covered transaction that it and its 
principals are not debarred, suspended, ineligible, or voluntarily 
excluded from the covered transaction by any Federal agency, unless it 
knows that the certification is erroneous. Participants may decide the 
method and frequency by which they determine the eligibility of their 
principals. In addition, a participant may, but is not required to, 
check the Nonprocurement List for its principals and for participants.
    (c) Changed circumstances regarding certification. A participant 
shall provide immediate written notice to Corporation if at any time the 
participant learns that its certification was erroneous when submitted 
or has become erroneous by reason of changed circumstances. Participants 
in lower tier covered transactions shall provide the same updated notice 
to the participant to which it submitted its proposals.



          Subpart F--Drug-Free Workplace Requirements (Grants)



Sec. 2542.500  Purpose.

    (a) The purpose of this subpart is to carry out the Drug-Free 
Workplace Act of 1988 (41 U.S.C. 701 et seq.) by requiring that--
    (1) A grantee, other than an individual, shall certify to the agency 
that it will provide a drug-free workplace;
    (2) A grantee who is an individual shall certify to the agency that, 
as a condition of the grant, he or she will not engage in the unlawful 
manufacture, distribution, dispensing, possession or use of a controlled 
substance in conducting any activity with the grant.
    (b) Requirements implementing the Drug-Free Workplace Act of 1988 
for contractors with the agency are found at 48 CFR part 9, subpart 9.4, 
part 23, subpart 23.5, and part 52, subpart 52.2.



Sec. 2542.510  Definitions.

    (a) Except as amended in this section, the definitions of 
Sec. 2542.20 apply to this subpart.
    (b) For purposes of this subpart--
    (1) Controlled substance. The term controlled substance means a 
controlled substance in schedules I through V of the Controlled 
Substances Act (21 U.S.C. 812), and as further defined by regulation at 
21 CFR 1308.11 through 1308.15;

[[Page 736]]

    (2) Conviction. The term conviction means a finding of guilt 
(including a plea of nolo contendere) or imposition of sentence, or 
both, by any judicial body charged with the responsibility to determine 
violations of the Federal or State criminal drug statutes;
    (3) Criminal drug statute. The term criminal drug statute means a 
Federal or non-Federal criminal statute involving the manufacture, 
distribution, dispensing, use, or possession of any controlled 
substance;
    (4) Drug-free workplace. The term drug-free workplace means a site 
for the performance of work done in connection with a specific grant at 
which employees of the grantee are prohibited from engaging in the 
unlawful manufacture, distribution, dispensing, possession, or use of a 
controlled substance;
    (5) Employee. (i) The term employee means the employee of a grantee 
directly engaged in the performance of work under the grant, including:
    (A) All direct charge employees;
    (B) All indirect charge employees, unless their impact or 
involvement is insignificant to the performance of the grant; and
    (C) Temporary personnel and consultants who are directly engaged in 
the performance of work under the grant and who are on the grantee's 
payroll.
    (ii) This definition does not include workers not on the payroll of 
the grantee (e.g., volunteers, even if used to meet a matching 
requirement; consultants or independent contractors not on the payroll; 
or employees of subrecipients or subcontractors in covered workplaces);
    (6) Federal agency (or agency). The term federal agency (or agency) 
means any United States executive department, military department, 
government corporation, government controlled corporation, any other 
establishment in the executive branch (including the Executive Office of 
the President), or any independent regulatory agency;
    (7) Grant. The term grant means an award of financial assistance, 
including a cooperative agreement, in the form of money, or property in 
lieu of money, by a Federal agency directly to a grantee. The term grant 
includes block grant and entitlement grant programs, whether or not 
exempted from coverage under the grants management government-wide 
common rule on uniform administrative requirements for grants and 
cooperative agreements. The term does not include technical assistance 
that provides services instead of money, or other assistance in the form 
of loans, loan guarantees, interest subsidies, insurance, or direct 
appropriations; or any veterans' benefits to individuals, i.e., any 
benefit to veterans, their families, or survivors by virtue of the 
service of a veteran in the Armed Forces of the United States;
    (8) Grantee. The term grantee means a person who applies for or 
receives a grant directly from a Federal agency (except another Federal 
agency);
    (9) Individual. The term individual means a natural person;
    (10) State. The term State means any of the States of the United 
States, the District of Columbia, the Commonwealth of Puerto Rico, any 
territory or possession of the United States, or any agency of a State, 
exclusive of institutions of higher education, hospitals, and units of 
local government. A State instrumentality will be considered part of the 
State government if it has a written determination from a State 
government that such State considers the instrumentality to be an agency 
of the State government.



Sec. 2542.520  Coverage.

    (a) This subpart applies to any grantee of the agency.
    (b) This subpart applies to any grant, except where application of 
this subpart would be inconsistent with the international obligations of 
the United States or the laws or regulations of a foreign government. A 
determination of such inconsistency may be made only by the agency head 
or his/her designee.
    (c) The provisions of subparts A, B, C, D and E of this part apply 
to matters covered by this subpart, except where specifically modified 
by this subpart. In the event of any conflict between provisions of this 
subpart and other provisions of this part, the provisions of this 
subpart are deemed to control with respect to the implementation of

[[Page 737]]

drug-free workplace requirements concerning grants.



Sec. 2542.530  Grounds for suspension of payments, suspension or termination of grants, or suspension or debarment.

    A grantee shall be deemed in violation of the requirements of this 
subpart if the agency head or his or her official designee determines, 
in writing, that--
    (a) The grantee has made a false certification under Sec. 2542.560;
    (b) With respect to a grantee other than an individual--
    (1) The grantee has violated the certification by failing to carry 
out the requirements of paragraphs (A) (a)-(g) and/or (B) of the 
certification (Alternate I in Appendix C of this part); or
    (2) Such a number of employees of the grantee have been convicted of 
violations of criminal drug statutes for violations occurring in the 
workplace as to indicate that the grantee has failed to make a good 
faith effort to provide a drug-free workplace; or
    (c) With respect to a grantee who is an individual--
    (1) The grantee has violated the certification by failing to carry 
out its requirements (Alternate II of Appendix C of this part); or
    (2) The grantee is convicted of a criminal drug offense resulting 
from a violation occurring during the conduct of any grant activity.



Sec. 2542.540  Effect of violation.

    (a) In the event of a violation of this subpart as provided in 
Sec. 2542.520, and in accordance with applicable law, the grantee shall 
be subject to one or more of the following actions:
    (1) Suspension of payments under the grant;
    (2) Suspension or termination of the grant; and
    (3) Suspension or debarment of the grantee under the provisions of 
this part.
    (b) Upon issuance of any final decision under this part requiring 
debarment of a grantee, the debarred grantee shall be ineligible for 
award of any grant from any Federal agency for a period specified in the 
decision, not to exceed five years (see Sec. 2542.280(a)(2)).



Sec. 2542.550  Exception provision.

    The agency head may waive with respect to a particular grant, in 
writing, a suspension of payments under a grant, suspension or 
termination of a grant, or suspension or debarment of a grantee if the 
agency head determines that such a waiver would be in the public 
interest. This exception authority cannot be delegated to any other 
official.



Sec. 2542.560  Certification requirements and procedures.

    (a) (1) As a prior condition of being awarded a grant, each grantee 
shall make the appropriate certification to the Federal agency providing 
the grant, as provided in Appendix C of this part.
    (2) Grantees are not required to make a certification in order to 
continue receiving funds under a grant awarded before March 18, 1989, or 
under a no-cost time extension of such a grant. However, the grantee 
shall make a one-time drug-free workplace certification for a non-
automatic continuation of such a grant made on or after March 18, 1989.
    (b) Except as provided in this section, all grantees shall make the 
required certification for each grant. For mandatory formula grants and 
entitlements that have no application process, grantees shall submit a 
one-time certification in order to continue receiving awards.
    (c) A grantee that is a State may elect to make one certification in 
each Federal fiscal year. States that previously submitted an annual 
certification are not required to make a certification for Fiscal Year 
1990 until June 30, 1990. Except as provided in paragraph (d) of this 
section, this certification shall cover all grants to all State agencies 
from any Federal agency. The State shall retain the original of this 
statewide certification in its Governor's office and, prior to grant 
award, shall ensure that a copy is submitted individually with respect 
to each grant, unless the Federal agency has designated a central 
location for submission.
    (d) (1) The Governor of a State may exclude certain State agencies 
from

[[Page 738]]

the statewide certification and authorize these agencies to submit their 
own certifications to Federal agencies. The statewide certification 
shall name any State agencies so excluded.
    (2) A State agency to which the statewide certification does not 
apply, or a State agency in a State that does not have a statewide 
certification, may elect to make one certification in each Federal 
fiscal year. State agencies that previously submitted a State agency 
certification are not required to make a certification for Fiscal Year 
1990 until June 30, 1990. The State agency shall retain the original of 
this State agency-wide certification in its central office and, prior to 
grant award, shall ensure that a copy is submitted individually with 
respect to each grant, unless the Federal agency designates a central 
location for submission.
    (3) When the work of a grant is done by more than one State agency, 
the certification of the State agency directly receiving the grant shall 
be deemed to certify compliance for all workplaces, including those 
located in other State agencies.
    (e) (1) For a grant of less than 30 days performance duration, 
grantees shall have this policy statement and program in place as soon 
as possible, but in any case by a date prior to the date on which 
performance is expected to be completed.
    (2) For a grant of 30 days or more performance duration, grantees 
shall have this policy statement and program in place within 30 days 
after award.
    (3) Where extraordinary circumstances warrant for a specific grant, 
the grant officer may determine a different date on which the policy 
statement and program shall be in place.



Sec. 2542.570  Reporting of and employee sanctions for convictions of criminal drug offenses.

    (a) When a grantee other than an individual is notified that an 
employee has been convicted for a violation of a criminal drug statute 
occurring in the workplace, it shall take the following actions:
    (1) Within 10 calendar days of receiving notice of the conviction, 
the grantee shall provide written notice, including the convicted 
employee's position title, to every grant officer, or other designee on 
whose grant activity the convicted employee was working, unless a 
Federal agency has designated a central point for the receipt of such 
notifications. Notification shall include the identification number(s) 
for each of the Federal agency's affected grants.
    (2) Within 30 calendar days of receiving notice of the conviction, 
the grantee shall do the following with respect to the employee who was 
convicted:
    (i) Take appropriate personnel action against the employee, up to 
and including termination, consistent with requirements of the 
Rehabilitation Act of 1973, as amended; or
    (ii) Require the employee to participate satisfactorily in a drug 
abuse assistance or rehabilitation program approved for such purposes by 
a Federal, State, or local health law enforcement, or other appropriate 
agency.
    (b) A grantee who is an individual who is convicted for a violation 
of a criminal drug statute occurring during the conduct of any grant 
activity shall report the conviction, in writing, within 10 calendar 
days, to his or her Federal agency grant officer, or other designee, 
unless the Federal agency has designated a central point for the receipt 
of such notices. Notification shall include the identification number(s) 
for each of the Federal agency's affected grants.

(Approved by the Office of Management and Budget under control number 
0991-0002)

Appendix A to Part 2542--Certification Regarding Debarment, Suspension, 
     and Other Responsibility Matters--Primary Covered Transactions

                     Instructions for Certification

    1. By signing and submitting this proposal, the prospective primary 
participant is providing the certification set out below.
    2. The inability of a person to provide the certification required 
below will not necessarily result in denial of participation in this 
covered transaction. The prospective participant shall submit an 
explanation of why it cannot provide the certification set out below. 
The certification or explanation will be considered in connection with 
the department or agency's determination whether to enter into this 
transaction. However, failure of the prospective primary participant to

[[Page 739]]

furnish a certification or an explanation shall disqualify such person 
from participation in this transaction.
    3. The certification in this clause is a material representation of 
fact upon which reliance was placed when the department or agency 
determined to enter into this transaction. If it is later determined 
that the prospective primary participant knowingly rendered an erroneous 
certification, in addition to other remedies available to the Federal 
Government, the department or agency may terminate this transaction for 
cause or default.
    4. The prospective primary participant shall provide immediate 
written notice to the department or agency to which this proposal is 
submitted if at any time the prospective primary participant learns that 
its certification was erroneous when submitted or has become erroneous 
by reason of changed circumstances.
    5. The terms covered transaction, debarred, suspended, ineligible, 
lower tier covered transaction, participant, person, primary covered 
transaction, principal, proposal, and voluntarily excluded, as used in 
this clause, have the meanings set out in the Definitions and Coverage 
sections of the rules implementing Executive Order 12549. You may 
contact the department or agency to which this proposal is being 
submitted for assistance in obtaining a copy of those regulations.
    6. The prospective primary participant agrees by submitting this 
proposal that, should the proposed covered transaction be entered into, 
it shall not knowingly enter into any lower tier covered transaction 
with a person who is proposed for debarment under 48 CFR part 9, subpart 
9.4, debarred, suspended, declared ineligible, or voluntarily excluded 
from participation in this covered transaction, unless authorized by the 
department or agency entering into this transaction.
    7. The prospective primary participant further agrees by submitting 
this proposal that it will include the clause titled ``Certification 
Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion-
Lower Tier Covered Transaction,'' provided by the department or agency 
entering into this covered transaction, without modification, in all 
lower tier covered transactions and in all solicitations for lower tier 
covered transactions.
    8. A participant in a covered transaction may rely upon a 
certification of a prospective participant in a lower tier covered 
transaction that it is not proposed for debarment under 48 CFR part 9, 
subpart 9.4, debarred, suspended, ineligible, or voluntarily excluded 
from the covered transaction, unless it knows that the certification is 
erroneous. A participant may decide the method and frequency by which it 
determines the eligibility of its principals. Each participant may, but 
is not required to, check the List of Parties Excluded from Federal 
Procurement and Nonprocurement Programs.
    9. Nothing contained in the foregoing shall be construed to require 
establishment of a system of records in order to render in good faith 
the certification required by this clause. The knowledge and information 
of a participant is not required to exceed that which is normally 
possessed by a prudent person in the ordinary course of business 
dealings.
    10. Except for transactions authorized under paragraph 6 of these 
instructions, if a participant in a covered transaction knowingly enters 
into a lower tier covered transaction with a person who is proposed for 
debarment under 48 CFR part 9, subpart 9.4, suspended, debarred, 
ineligible, or voluntarily excluded from participation in this 
transaction, in addition to other remedies available to the Federal 
Government, the department or agency may terminate this transaction for 
cause or default.

Certification Regarding Debarment, Suspension, and Other Responsibility 
                  Matters--Primary Covered Transactions

    (1) The prospective primary participant certifies to the best of its 
knowledge and belief, that it and its principals:
    (a) Are not presently debarred, suspended, proposed for debarment, 
declared ineligible, or voluntarily excluded by any Federal department 
or agency;
    (b) Have not within a three-year period preceding this proposal been 
convicted of or had a civil judgment rendered against them for 
commission of fraud or a criminal offense in connection with obtaining, 
attempting to obtain, or performing a public (Federal, State or local) 
transaction or contract under a public transaction; violation of Federal 
or State antitrust statutes or commission of embezzlement, theft, 
forgery, bribery, falsification or destruction of records, making false 
statements, or receiving stolen property;
    (c) Are not presently indicted for or otherwise criminally or 
civilly charged by a governmental entity (Federal, State or local) with 
commission of any of the offenses enumerated in paragraph (1)(b) of this 
certification; and
    (d) Have not within a three-year period preceding this application/
proposal had one or more public transactions (Federal, State or local) 
terminated for cause or default.
    (2) Where the prospective primary participant is unable to certify 
to any of the statements in this certification, such prospective 
participant shall attach an explanation to this proposal.

[60 FR 33042, 33063, June 26, 1995]

[[Page 740]]

Appendix B to Part 2542--Certification Regarding Debarment, Suspension, 
 Ineligibility and Voluntary Exclusion--Lower Tier Covered Transactions

                     Instructions for Certification

    1. By signing and submitting this proposal, the prospective lower 
tier participant is providing the certification set out below.
    2. The certification in this clause is a material representation of 
fact upon which reliance was placed when this transaction was entered 
into. If it is later determined that the prospective lower tier 
participant knowingly rendered an erroneous certification, in addition 
to other remedies available to the Federal Government the department or 
agency with which this transaction originated may pursue available 
remedies, including suspension and/or debarment.
    3. The prospective lower tier participant shall provide immediate 
written notice to the person to which this proposal is submitted if at 
any time the prospective lower tier participant learns that its 
certification was erroneous when submitted or had become erroneous by 
reason of changed circumstances.
    4. The terms covered transaction, debarred, suspended, ineligible, 
lower tier covered transaction, participant, person, primary covered 
transaction, principal, proposal, and voluntarily excluded, as used in 
this clause, have the meaning set out in the Definitions and Coverage 
sections of rules implementing Executive Order 12549. You may contact 
the person to which this proposal is submitted for assistance in 
obtaining a copy of those regulations.
    5. The prospective lower tier participant agrees by submitting this 
proposal that, should the proposed covered transaction be entered into, 
it shall not knowingly enter into any lower tier covered transaction 
with a person who is proposed for debarment under 48 CFR part 9, subpart 
9.4, debarred, suspended, declared ineligible, or voluntarily excluded 
from participation in this covered transaction, unless authorized by the 
department or agency with which this transaction originated.
    6. The prospective lower tier participant further agrees by 
submitting this proposal that it will include this clause titled 
``Certification Regarding Debarment, Suspension, Ineligibility and 
Voluntary Exclusion-Lower Tier Covered Transaction,'' without 
modification, in all lower tier covered transactions and in all 
solicitations for lower tier covered transactions.
    7. A participant in a covered transaction may rely upon a 
certification of a prospective participant in a lower tier covered 
transaction that it is not proposed for debarment under 48 CFR part 9, 
subpart 9.4, debarred, suspended, ineligible, or voluntarily excluded 
from covered transactions, unless it knows that the certification is 
erroneous. A participant may decide the method and frequency by which it 
determines the eligibility of its principals. Each participant may, but 
is not required to, check the List of Parties Excluded from Federal 
Procurement and Nonprocurement Programs.
    8. Nothing contained in the foregoing shall be construed to require 
establishment of a system of records in order to render in good faith 
the certification required by this clause. The knowledge and information 
of a participant is not required to exceed that which is normally 
possessed by a prudent person in the ordinary course of business 
dealings.
    9. Except for transactions authorized under paragraph 5 of these 
instructions, if a participant in a covered transaction knowingly enters 
into a lower tier covered transaction with a person who is proposed for 
debarment under 48 CFR part 9, subpart 9.4, suspended, debarred, 
ineligible, or voluntarily excluded from participation in this 
transaction, in addition to other remedies available to the Federal 
Government, the department or agency with which this transaction 
originated may pursue available remedies, including suspension and/or 
debarment.

    Certification Regarding Debarment, Suspension, Ineligibility an 
          Voluntary Exclusion--Lower Tier Covered Transactions

    (1) The prospective lower tier participant certifies, by submission 
of this proposal, that neither it nor its principals is presently 
debarred, suspended, proposed for debarment, declared ineligible, or 
voluntarily excluded from participation in this transaction by any 
Federal department or agency.
    (2) Where the prospective lower tier participant is unable to 
certify to any of the statements in this certification, such prospective 
participant shall attach an explanation to this proposal.

[60 FR 33042, 33063, June 26, 1995]

  Appendix C to Part 2542--Certification Regarding Drug-Free Workplace 
                              Requirements

                     Instructions for Certification

    1. By signing and/or submitting this application or grant agreement, 
the grantee is providing the certification set out below.
    2. The certification set out below is a material representation of 
fact upon which reliance is placed when the agency awards the grant. If 
it is later determined that the grantee knowingly rendered a false 
certification, or otherwise violates the requirements of the Drug-Free 
Workplace Act, the agency, in addition to any other remedies available 
to the Federal Government, may

[[Page 741]]

take action authorized under the Drug-Free Workplace Act.
    3. For grantees other than individuals, Alternate I applies.
    4. For grantees who are individuals, Alternate II applies.
    5. Workplaces under grants, for grantees other than individuals, 
need not be identified on the certification. If known, they may be 
identified in the grant application. If the grantee does not identify 
the workplaces at the time of application, or upon award, if there is no 
application, the grantee must keep the identity of the workplace(s) on 
file in its office and make the information available for Federal 
inspection. Failure to identify all known workplaces constitutes a 
violation of the grantee's drug-free workplace requirements.
    6. Workplace identifications must include the actual address of 
buildings (or parts of buildings) or other sites where work under the 
grant takes place. Categorical descriptions may be used (e.g., all 
vehicles of a mass transit authority or State highway department while 
in operation, State employees in each local unemployment office, 
performers in concert halls or radio studios).
    7. If the workplace identified to the agency changes during the 
performance of the grant, the grantee shall inform the agency of the 
change(s), if it previously identified the workplaces in question (see 
paragraph five).
    8. Definitions of terms in the Nonprocurement Suspension and 
Debarment common rule and Drug-Free Workplace common rule apply to this 
certification. Grantees' attention is called, in particular, to the 
following definitions from these rules:
    Controlled substance means a controlled substance in Schedules I 
through V of the Controlled Substances Act (21 U.S.C. Sec. 812) and as 
further defined by regulation (21 CFR 1308.11 through 1308.15);
    Conviction means a finding of guilt (including a plea of nolo 
contendere) or imposition of sentence, or both, by any judicial body 
charged with the responsibility to determine violations of the Federal 
or State criminal drug statutes;
    Criminal drug statute means a Federal or non-Federal criminal 
statute involving the manufacture, distribution, dispensing, use, or 
possession of any controlled substance;
    Employee means the employee of a grantee directly engaged in the 
performance of work under a grant, including: (i) All direct charge 
employees; (ii) All indirect charge employees unless their impact or 
involvement is insignificant to the performance of the grant; and, (iii) 
Temporary personnel and consultants who are directly engaged in the 
performance of work under the grant and who are on the grantee's 
payroll. This definition does not include workers not on the payroll of 
the grantee (e.g., volunteers, even if used to meet a matching 
requirement; consultants or independent contractors not on the grantee's 
payroll; or employees of sub recipients or subcontractors in covered 
workplaces).

        Certification Regarding Drug-Free Workplace Requirements

    Alternate I. (Grantees Other Than Individuals)
    A. The grantee certifies that it will or will continue to provide a 
drug-free workplace by:
    (a) Publishing a statement notifying employees that the unlawful 
manufacture, distribution, dispensing, possession, or use of a 
controlled substance is prohibited in the grantee's workplace and 
specifying the actions that will be taken against employees for 
violation of such prohibition;
    (b) Establishing an ongoing drug-free awareness program to inform 
employees about--
    (1) The dangers of drug abuse in the workplace;
    (2) The grantee's policy of maintaining a drug-free workplace;
    (3) Any available drug counseling, rehabilitation, and employee 
assistance programs; and
    (4) The penalties that may be imposed upon employees for drug abuse 
violations occurring in the workplace;
    (c) Making it a requirement that each employee to be engaged in the 
performance of the grant be given a copy of the statement required by 
paragraph (a);
    (d) Notifying the employee in the statement required by paragraph 
(a) that, as a condition of employment under the grant, the employee 
will--
    (1) Abide by the terms of the statement; and
    (2) Notify the employer in writing of his or her conviction for a 
violation of a criminal drug statute occurring in the workplace no later 
than five calendar days after such conviction;
    (e) Notifying the agency in writing, within ten calendar days after 
receiving notice under paragraph (d)(2) from an employee or otherwise 
receiving actual notice of such conviction. Employers of convicted 
employees must provide notice, including position title, to every grant 
officer or other designee on whose grant activity the convicted employee 
was working, unless the Federal agency has designated a central point 
for the receipt of such notices. Notice shall include the identification 
number(s) of each affected grant;
    (f) Taking one of the following actions, within 30 calendar days of 
receiving notice under paragraph (d)(2), with respect to any employee 
who is so convicted--

[[Page 742]]

    (1) Taking appropriate personnel action against such an employee, up 
to and including termination, consistent with the requirements of the 
Rehabilitation Act of 1973, as amended; or
    (2) Requiring such employee to participate satisfactorily in a drug 
abuse assistance or rehabilitation program approved for such purposes by 
a Federal, State, or local health, law enforcement, or other appropriate 
agency;
    (g) Making a good faith effort to continue to maintain a drug-free 
workplace through implementation of paragraphs (a), (b), (c), (d), (e) 
and (f).
    B. The grantee may insert in the space provided below the site(s) 
for the performance of work done in connection with the specific grant: 
Place of Performance (Street address, city, county, state, zip code)

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________
Check [  ] if there are workplaces on file that are not identified here.

              Alternate II. (Grantees Who Are Individuals)

    (a) The grantee certifies that, as a condition of the grant, he or 
she will not engage in the unlawful manufacture, distribution, 
dispensing, possession, or use of a controlled substance in conducting 
any activity with the grant;
    (b) If convicted of a criminal drug offense resulting from a 
violation occurring during the conduct of any grant activity, he or she 
will report the conviction, in writing, within 10 calendar days of the 
conviction, to every grant officer or other designee, unless the Federal 
agency designates a central point for the receipt of such notices. When 
notice is made to such a central point, it shall include the 
identification number(s) of each affected grant.



PART 2543--GRANTS AND AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, AND OTHER NON-PROFIT ORGANIZATIONS--Table of Contents




                           Subpart A--General

Sec.
2543.1  Purpose.
2543.2  Definitions.
2543.3  Effect on other issuances.
2543.4  Deviations.
2543.5  Subawards.

                    Subpart B--Pre-Award Requirements

2543.10  Purpose.
2543.11  Pre-award policies.
2543.12  Forms for applying for Federal assistance.
2543.13  Debarment and suspension.
2543.14  Special award conditions.
2543.15  Metric system of measurement.
2543.16  Resource Conservation and Recovery Act.
2543.17  Certifications and representations.

                   Subpart C--Post-Award Requirements

                    Financial and Program Management

2543.20  Purpose of financial and program management.
2543.21  Standards for financial management systems.
2543.22  Payment.
2543.23  Cost sharing or matching.
2543.24  Program income.
2543.25  Revision of budget and program plans.
2543.26  Non-Federal audits.
2543.27  Allowable costs.
2543.28  Period of availability of funds.

                           Property Standards

2543.30  Purpose of property standards.
2543.31  Insurance coverage.
2543.32  Real property.
2543.33  Federally-owned and exempt property.
2543.34  Equipment.
2543.35  Supplies and other expendable property.
2543.36  Intangible property.
2543.37  Property trust relationship.

                          Procurement Standards

2543.40  Purpose of procurement standards.
2543.41  Recipient responsibilities.
2543.42  Codes of conduct.
2543.43  Competition.
2543.44  Procurement procedures.
2543.45  Cost and price analysis.
2543.46  Procurement records.
2543.47  Contract administration.
2543.48  Contract provisions.

                           Reports and Records

2543.50  Purpose of reports and records.
2543.51  Monitoring and reporting program performance.
2543.52  Financial reporting.
2543.53  Retention and access requirements for records.

                       Termination and Enforcement

2543.60  Purpose of termination and enforcement.
2543.61  Termination.
2543.62  Enforcement.

                 Subpart D--After-the-Award Requirements

2543.70  Purpose.
2543.71  Closeout procedures.

[[Page 743]]

2543.72  Subsequent adjustments and continuing responsibilities.
2543.73  Collection of amounts due.

                     Subpart E--Statutory Compliance

2543.80  Contract provisions.
2543.81  Equal employment opportunity.
2543.82  Copeland ``Anti-Kickback'' Act.
2543.83  Davis-Bacon Act.
2543.84  Contract Work Hours and Safety Standards Act.
2543.85  Rights to inventions made under contract or agreement.
2543.86  Clean Air Act and the Federal Water Pollution Control Act.
2543.87  Byrd anti-lobbying amendment.
2543.88  Debarment and suspension.

    Authority: 42 U.S.C. 12501 et seq.

    Source: 60 FR 13055, Mar. 10, 1995, unless otherwise noted.



                           Subpart A--General



Sec. 2543.1  Purpose.

    This Circular establishes uniform administrative requirements for 
Federal grants and agreements awarded to institutions of higher 
education, hospitals, and other non-profit organizations. Federal 
awarding agencies shall not impose additional or inconsistent 
requirements, except as provided in Sections 2543.4, and 2543.14 or 
unless specifically required by Federal statute or executive order. Non-
profit organizations that implement Federal programs for the States are 
also subject to State requirements.



Sec. 2543.2  Definitions.

    (a) Accrued expenditures means the charges incurred by the recipient 
during a given period requiring the provision of funds for:
    (1) Goods and other tangible property received;
    (2) Services performed by employees, contractors, subrecipients, and 
other payees; and,
    (3) Other amounts becoming owed under programs for which no current 
services or performance is required.
    (b) Accrued income means the sum of:
    (1) Earnings during a given period from
    (i) Services performed by the recipient, and
    (ii) Goods and other tangible property delivered to purchasers, and
    (2) Amounts becoming owed to the recipient for which no current 
services or performance is required by the recipient.
    (c) Acquisition cost of equipment means the net invoice price of the 
equipment, including the cost of modifications, attachments, 
accessories, or auxiliary apparatus necessary to make the property 
usable for the purpose for which it was acquired. Other charges, such as 
the cost of installation, transportation, taxes, duty or protective in-
transit insurance, shall be included or excluded from the unit 
acquisition cost in accordance with the recipient's regular accounting 
practices.
    (d) Advance means a payment made by Treasury check or other 
appropriate payment mechanism to a recipient upon its request either 
before outlays are made by the recipient or through the use of 
predetermined payment schedules.
    (e) Award means financial assistance that provides support or 
stimulation to accomplish a public purpose. Awards include grants and 
other agreements in the form of money or property in lieu of money, by 
the Federal Government to an eligible recipient. The term does not 
include: technical assistance, which provides services instead of money; 
other assistance in the form of loans, loan guarantees, interest 
subsidies, or insurance; direct payments of any kind to individuals; 
and, contracts which are required to be entered into and administered 
under procurement laws and regulations.
    (f) Cash contributions means the recipient's cash outlay, including 
the outlay of money contributed to the recipient by third parties.
    (g) Closeout means the process by which a Federal awarding agency 
determines that all applicable administrative actions and all required 
work of the award have been completed by the recipient and Federal 
awarding agency.
    (h) Contract means a procurement contract under an award or 
subaward, and a procurement subcontract under a recipient's or 
subrecipient's contract.
    (i) Cost sharing or matching means that portion of project or 
program costs not borne by the Federal Government.

[[Page 744]]

    (j) Date of completion means the date on which all work under an 
award is completed or the date on the award document, or any supplement 
or amendment thereto, on which Federal sponsorship ends.
    (k) Disallowed costs means those charges to an award that the 
Federal awarding agency determines to be unallowable, in accordance with 
the applicable Federal cost principles or other terms and conditions 
contained in the award.
    (l) Equipment means tangible nonexpendable personal property 
including exempt property charged directly to the award having a useful 
life of more than one year and an acquisition cost of $5,000 or more per 
unit. However, consistent with recipient policy, lower limits may be 
established.
    (m) Excess property means property under the control of any Federal 
awarding agency that, as determined by the head thereof, is no longer 
required for its needs or the discharge of its responsibilities.
    (n) Exempt property means tangible personal property acquired in 
whole or in part with Federal funds, where the Federal awarding agency 
has statutory authority to vest title in the recipient without further 
obligation to the Federal Government. An example of exempt property 
authority is contained in the Federal Grant and Cooperative Agreement 
Act (31 U.S.C. 6306), for property acquired under an award to conduct 
basic or applied research by a non-profit institution of higher 
education or non-profit organization whose principal purpose is 
conducting scientific research.
    (o) Federal awarding agency means the Federal agency that provides 
an award to the recipient.
    (p) Federal funds authorized means the total amount of Federal funds 
obligated by the Federal Government for use by the recipient. This 
amount may include any authorized carryover of unobligated funds from 
prior funding periods when permitted by agency regulations or agency 
implementing instructions.
    (q) Federal share of real property, equipment, or supplies means 
that percentage of the property's acquisition costs and any improvement 
expenditures paid with Federal funds.
    (r) Funding period means the period of time when Federal funding is 
available for obligation by the recipient.
    (s) Intangible property and debt instruments means, but is not 
limited to, trademarks, copyrights, patents and patent applications and 
such property as loans, notes and other debt instruments, lease 
agreements, stock and other instruments of property ownership, whether 
considered tangible or intangible.
    (t) Obligations means the amounts of orders placed, contracts and 
grants awarded, services received and similar transactions during a 
given period that require payment by the recipient during the same or a 
future period.
    (u) Outlays or expenditures means charges made to the project or 
program. They may be reported on a cash or accrual basis. For reports 
prepared on a cash basis, outlays are the sum of cash disbursements for 
direct charges for goods and services, the amount of indirect expense 
charged, the value of third party in-kind contributions applied and the 
amount of cash advances and payments made to subrecipients. For reports 
prepared on an accrual basis, outlays are the sum of cash disbursements 
for direct charges for goods and services, the amount of indirect 
expense incurred, the value of in-kind contributions applied, and the 
net increase (or decrease) in the amounts owed by the recipient for 
goods and other property received, for services performed by employees, 
contractors, subrecipients and other payees and other amounts becoming 
owed under programs for which no current services or performance are 
required.
    (v) Personal property means property of any kind except real 
property. It may be tangible, having physical existence, or intangible, 
having no physical existence, such as copyrights, patents, or 
securities.
    (w) Prior approval means written approval by an authorized official 
evidencing prior consent.
    (x) Program income means gross income earned by the recipient that 
is directly generated by a supported activity or earned as a result of 
the award (see exclusions in paragraphs Sec. 2543.24

[[Page 745]]

(e) and (h)). Program income includes, but is not limited to, income 
from fees for services performed, the use or rental of real or personal 
property acquired under federally-funded projects, the sale of 
commodities or items fabricated under an award, license fees and 
royalties on patents and copyrights, and interest on loans made with 
award funds. Interest earned on advances of Federal funds is not program 
income. Except as otherwise provided in Federal awarding agency 
regulations or the terms and conditions of the award, program income 
does not include the receipt of principal on loans, rebates, credits, 
discounts, etc., or interest earned on any of them.
    (y) Project costs means all allowable costs, as set forth in the 
applicable Federal cost principles, incurred by a recipient and the 
value of the contributions made by third parties in accomplishing the 
objectives of the award during the project period.
    (z) Project period means the period established in the award 
document during which Federal sponsorship begins and ends.
    (aa) Property means, unless otherwise stated, real property, 
equipment, intangible property and debt instruments.
    (bb) Real property means land, including land improvements, 
structures and appurtenances thereto, but excludes movable machinery and 
equipment.
    (cc) Recipient means an organization receiving financial assistance 
directly from Federal awarding agencies to carry out a project or 
program. The term includes public and private institutions of higher 
education, public and private hospitals, and other quasi-public and 
private non-profit organizations such as, but not limited to, community 
action agencies, research institutes, educational associations, and 
health centers. The term may include commercial organizations, foreign 
or international organizations (such as agencies of the United Nations) 
which are recipients, subrecipients, or contractors or subcontractors of 
recipients or subrecipients at the discretion of the Federal awarding 
agency. The term does not include government-owned contractor-operated 
facilities or research centers providing continued support for mission-
oriented, large-scale programs that are government-owned or controlled, 
or are designated as federally-funded research and development centers.
    (dd) Research and development means all research activities, both 
basic and applied, and all development activities that are supported at 
universities, colleges, and other non-profit institutions. ``Research'' 
is defined as a systematic study directed toward fuller scientific 
knowledge or understanding of the subject studied. ``Development'' is 
the systematic use of knowledge and understanding gained from research 
directed toward the production of useful materials, devices, systems, or 
methods, including design and development of prototypes and processes. 
The term research also includes activities involving the training of 
individuals in research techniques where such activities utilize the 
same facilities as other research and development activities and where 
such activities are not included in the instruction function.
    (ee) Small awards means a grant or cooperative agreement not 
exceeding the small purchase threshold fixed at 41 U.S.C. 403(11) 
(currently $25,000).
    (ff) Subaward means an award of financial assistance in the form of 
money, or property in lieu of money, made under an award by a recipient 
to an eligible subrecipient or by a subrecipient to a lower tier 
subrecipient. The term includes financial assistance when provided by 
any legal agreement, even if the agreement is called a contract, but 
does not include procurement of goods and services nor does it include 
any form of assistance which is excluded from the definition of 
``award'' in paragraph (e).
    (gg) Subrecipient means the legal entity to which a subaward is made 
and which is accountable to the recipient for the use of the funds 
provided. The term may include foreign or international organizations 
(such as agencies of the United Nations) at the discretion of the 
Federal awarding agency.
    (hh) Supplies means all personal property excluding equipment, 
intangible property, and debt instruments as defined in this section, 
and inventions of a contractor conceived or first actually

[[Page 746]]

reduced to practice in the performance of work under a funding agreement 
(``subject inventions''), as defined in 37 CFR part 401, ``Rights to 
Inventions Made by Nonprofit Organizations and Small Business Firms 
Under Government Grants, Contracts, and Cooperative Agreements.''
    (ii) Suspension means an action by a Federal awarding agency that 
temporarily withdraws Federal sponsorship under an award, pending 
corrective action by the recipient or pending a decision to terminate 
the award by the Federal awarding agency. Suspension of an award is a 
separate action from suspension under Federal agency regulations 
implementing E.O.s 12549 and 12689, ``Debarment and Suspension.''
    (jj) Termination means the cancellation of Federal sponsorship, in 
whole or in part, under an agreement at any time prior to the date of 
completion.
    (kk) Third party in-kind contributions means the value of non-cash 
contributions provided by non-Federal third parties. Third party in-kind 
contributions may be in the form of real property, equipment, supplies 
and other expendable property, and the value of goods and services 
directly benefiting and specifically identifiable to the project or 
program.
    (ll) Unliquidated obligations, for financial reports prepared on a 
cash basis, means the amount of obligations incurred by the recipient 
that have not been paid. For reports prepared on an accrued expenditure 
basis, they represent the amount of obligations incurred by the 
recipient for which an outlay has not been recorded.
    (mm) Unobligated balance means the portion of the funds authorized 
by the Federal awarding agency that has not been obligated by the 
recipient and is determined by deducting the cumulative obligations from 
the cumulative funds authorized.
    (nn) Unrecovered indirect cost means the difference between the 
amount awarded and the amount which could have been awarded under the 
recipient's approved negotiated indirect cost rate.
    (oo) Working capital advance means a procedure where by funds are 
advanced to the recipient to cover its estimated disbursement needs for 
a given initial period.



Sec. 2543.3  Effect on other issuances.

    For awards subject to this Circular, all administrative requirements 
of codified program regulations, program manuals, handbooks and other 
nonregulatory materials which are inconsistent with the requirements of 
this Circular shall be superseded, except to the extent they are 
required by statute, or authorized in accordance with the deviations 
provision in Section Sec. 2543.4.



Sec. 2543.4  Deviations.

    The Office of Management and Budget (OMB) may grant exceptions for 
classes of grants or recipients subject to the requirements of this 
Circular when exceptions are not prohibited by statute. However, in the 
interest of maximum uniformity, exceptions from the requirements of this 
Circular shall be permitted only in unusual circumstances. Federal 
awarding agencies may apply more restrictive requirements to a class of 
recipients when approved by OMB. Federal awarding agencies may apply 
less restrictive requirements when awarding small awards, except for 
those requirements which are statutory. Exceptions on a case-by-case 
basis may also be made by Federal awarding agencies.



Sec. 2543.5  Subawards.

    Unless sections of this Circular specifically exclude subrecipients 
from coverage, the provisions of this Circular shall be applied to 
subrecipients performing work under awards if such subrecipients are 
institutions of higher education, hospitals or other non-profit 
organizations. State and local government subrecipients are subject to 
the provisions of regulations implementing the grants management common 
rule, ``Uniform Administrative Requirements for Grants and Cooperative 
Agreements to State and Local Governments,'' published at 53 FR 8034.

[[Page 747]]



                    Subpart B--Pre-Award Requirements



Sec. 2543.10  Purpose.

    Sections Sec. 2543.11 through Sec. 2543.17 prescribes forms and 
instructions and other pre-award matters to be used in applying for 
Federal awards.



Sec. 2543.11  Pre-award policies.

    (a) Use of Grants and Cooperative Agreements, and Contracts. In each 
instance, the Federal awarding agency shall decide on the appropriate 
award instrument (i.e., grant, cooperative agreement, or contract). The 
Federal Grant and Cooperative Agreement Act (31 U.S.C. 6301-08) governs 
the use of grants, cooperative agreements and contracts. A grant or 
cooperative agreement shall be used only when the principal purpose of a 
transaction is to accomplish a public purpose of support or stimulation 
authorized by Federal statute. The statutory criterion for choosing 
between grants and cooperative agreements is that for the latter, 
``substantial involvement is expected between the executive agency and 
the State, local government, or other recipient when carrying out the 
activity contemplated in the agreement.'' Contracts shall be used when 
the principal purpose is acquisition of property or services for the 
direct benefit or use of the Federal Government.
    (b) Public Notice and Priority Setting. Federal awarding agencies 
shall notify the public of its intended funding priorities for 
discretionary grant programs, unless funding priorities are established 
by Federal statute.



Sec. 2543.12  Forms for applying for Federal assistance.

    (a) Federal awarding agencies shall comply with the applicable 
report clearance requirements of 5 CFR part 1320, ``Controlling 
Paperwork Burdens on the Public,'' with regard to all forms used by the 
Federal awarding agency in place of or as a supplement to the Standard 
Form 424 (SF-424) series.
    (b) Applicants shall use the SF-424 series or those forms and 
instructions prescribed by the Federal awarding agency.
    (c) For Federal programs covered by E.O. 12372, ``Intergovernmental 
Review of Federal Programs,'' the applicant shall complete the 
appropriate sections of the SF-424 (Application for Federal Assistance) 
indicating whether the application was subject to review by the State 
Single Point of Contact (SPOC). The name and address of the SPOC for a 
particular State can be obtained from the Federal awarding agency or the 
Catalog of Federal Domestic Assistance. The SPOC shall advise the 
applicant whether the program for which application is made has been 
selected by that State for review.
    (d) Federal awarding agencies that do not use the SF-424 form should 
indicate whether the application is subject to review by the State under 
E.O. 12372.



Sec. 2543.13  Debarment and suspension.

    Federal awarding agencies and recipients shall comply with the 
nonprocurement debarment and suspension common rule implementing E.O.s 
12549 and 12689, ``Debarment and Suspension.'' This common rule 
restricts subawards and contracts with certain parties that are 
debarred, suspended or otherwise excluded from or ineligible for 
participation in Federal assistance programs or activities.



Sec. 2543.14  Special award conditions.

    If an applicant or recipient:
    (a) Has a history of poor performance,
    (b) Is not financially stable,
    (c) Has a management system that does not meet the standards 
prescribed in this Circular,
    (d) Has not conformed to the terms and conditions of a previous 
award, or
    (e) is not otherwise responsible, Federal awarding agencies may 
impose additional requirements as needed, provided that such applicant 
or recipient is notified in writing as to: the nature of the additional 
requirements, the reason why the additional requirements are being 
imposed, the nature of the corrective action needed, the time allowed 
for completing the corrective actions, and the method for requesting 
reconsideration of the additional requirements imposed. Any special 
conditions shall be promptly removed once

[[Page 748]]

the conditions that prompted them have been corrected.



Sec. 2543.15  Metric system of measurement.

    The Metric Conversion Act, as amended by the Omnibus Trade and 
Competitiveness Act (15 U.S.C. 205) declares that the metric system is 
the preferred measurement system for U.S. trade and commerce. The Act 
requires each Federal agency to establish a date or dates in 
consultation with the Secretary of Commerce, when the metric system of 
measurement will be used in the agency's procurements, grants, and other 
business-related activities. Metric implementation may take longer where 
the use of the system is initially impractical or likely to cause 
significant inefficiencies in the accomplishment of federally-funded 
activities. Federal awarding agencies shall follow the provisions of 
E.O. 12770, ``Metric Usage in Federal Government Programs.''



Sec. 2543.16  Resource Conservation and Recovery Act.

    Under the Act Resource Conservation and Recovery Act (42 U.S.C. 
6962), any State agency or agency of a political subdivision of a State 
which is using appropriated Federal funds must comply with Section 6002. 
Section 6002 requires that preference be given in procurement programs 
to the purchase of specific products containing recycled materials 
identified in guidelines developed by the Environmental Protection 
Agency (EPA) (40 CFR parts 247-254).
    Accordingly, State and local institutions of higher education, 
hospitals, and non-profit organizations that receive direct Federal 
awards or other Federal funds shall give preference in their procurement 
programs funded with Federal funds to the purchase of recycled products 
pursuant to the EPA guidelines.



Sec. 2543.17  Certifications and representations.

    Unless prohibited by statute or codified regulation, each Federal 
awarding agency is authorized and encouraged to allow recipients to 
submit certifications and representations required by statute, executive 
order, or regulation on an annual basis, if the recipients have ongoing 
and continuing relationships with the agency. Annual certifications and 
representations shall be signed by responsible officials with the 
authority to ensure recipients' compliance with the pertinent 
requirements.



                   Subpart C--Post-Award Requirements

                    Financial and Program Management



Sec. 2543.20  Purpose of financial and program management.

    Sections 2543.21 through 2543.25 prescribe standards for financial 
management systems, methods for making payments and rules for: 
satisfying cost sharing and matching requirements, accounting for 
program income, budget revision approvals, making audits, determining 
allowability of cost, and establishing fund availability.



Sec. 2543.21  Standards for financial management systems.

    (a) Federal awarding agencies shall require recipients to relate 
financial data to performance data and develop unit cost information 
whenever practical.
    (b) Recipients' financial management systems shall provide for the 
following:
    (1) Accurate, current and complete disclosure of the financial 
results of each federally-sponsored project or program in accordance 
with the reporting requirements set forth in Sec. 2543.51. If a Federal 
awarding agency requires reporting on an accrual basis from a recipient 
that maintains its records on other than an accrual basis, the recipient 
shall not be required to establish an accrual accounting system. These 
recipients may develop such accrual data for its reports on the basis of 
an analysis of the documentation on hand.
    (2) Records that identify adequately the source and application of 
funds for federally-sponsored activities. These records shall contain 
information pertaining to Federal awards, authorizations, obligations, 
unobligated balances, assets, outlays, income and interest.
    (3) Effective control over and accountability for all funds, 
property and

[[Page 749]]

other assets. Recipients shall adequately safeguard all such assets and 
assure they are used solely for authorized purposes.
    (4) Comparison of outlays with budget amounts for each award. 
Whenever appropriate, financial information should be related to 
performance and unit cost data.
    (5) Written procedures to minimize the time elapsing between the 
transfer of funds to the recipient from the U.S. Treasury and the 
issuance or redemption of checks, warrants or payments by other means 
for program purposes by the recipient. To the extent that the provisions 
of the Cash Management Improvement Act (CMIA) (Pub. L. 101-453) govern, 
payment methods of State agencies, instrumentalities, and fiscal agents 
shall be consistent with CMIA Treasury-State Agreements or the CMIA 
default procedures codified at 31 CFR part 205, ``Withdrawal of Cash 
from the Treasury for Advances under Federal Grant and Other Programs.''
    (6) Written procedures for determining the reasonableness, 
allocability and allowability of costs in accordance with the provisions 
of the applicable Federal cost principles and the terms and conditions 
of the award.
    (7) Accounting records including cost accounting records that are 
supported by source documentation.
    (c) Where the Federal Government guarantees or insures the repayment 
of money borrowed by the recipient, the Federal awarding agency, at its 
discretion, may require adequate bonding and insurance if the bonding 
and insurance requirements of the recipient are not deemed adequate to 
protect the interest of the Federal Government.
    (d) The Federal awarding agency may require adequate fidelity bond 
coverage where the recipient lacks sufficient coverage to protect the 
Federal Government's interest.
    (e) Where bonds are required in the situations described above, the 
bonds shall be obtained from companies holding certificates of authority 
as acceptable sureties, as prescribed in 31 CFR part 223, ``Surety 
Companies Doing Business With the United States.''



Sec. 2543.22  Payment.

    (a) Payment methods shall minimize the time elapsing between the 
transfer of funds from the United States Treasury and the issuance or 
redemption of checks, warrants, or payment by other means by the 
recipients. Payment methods of State agencies or instrumentalities shall 
be consistent with Treasury-State CMIA agreements or default procedures 
codified at 31 CFR part 205.
    (b) Recipients are to be paid in advance, provided they maintain or 
demonstrate the willingness to maintain:
    (1) Written procedures that minimize the time elapsing between the 
transfer of funds and disbursement by the recipient, and
    (2) Financial management systems that meet the standards for fund 
control and accountability as established in Sec. 2543.21. Cash advances 
to a recipient organization shall be limited to the minimum amounts 
needed and be timed to be in accordance with the actual, immediate cash 
requirements of the recipient organization in carrying out the purpose 
of the approved program or project. The timing and amount of cash 
advances shall be as close as is administratively feasible to the actual 
disbursements by the recipient organization for direct program or 
project costs and the proportionate share of any allowable indirect 
costs.
    (c) Whenever possible, advances shall be consolidated to cover 
anticipated cash needs for all awards made by the Federal awarding 
agency to the recipient.
    (1) Advance payment mechanisms include, but are not limited to, 
Treasury check and electronic funds transfer.
    (2) Advance payment mechanisms are subject to 31 CFR part 205.
    (3) Recipients shall be authorized to submit requests for advances 
and reimbursements at least monthly when electronic fund transfers are 
not used.
    (d) Requests for Treasury check advance payment shall be submitted 
on SF-270, ``Request for Advance or Reimbursement,'' or other forms as 
may be authorized by OMB. This form is not to be used when Treasury 
check advance payments are made to the recipient

[[Page 750]]

automatically through the use of a predetermined payment schedule or if 
precluded by special Federal awarding agency instructions for electronic 
funds transfer.
    (e) Reimbursement is the preferred method when the requirements in 
paragraph (b) cannot be met. Federal awarding agencies may also use this 
method on any construction agreement, or if the major portion of the 
construction project is accomplished through private market financing or 
Federal loans, and the Federal assistance constitutes a minor portion of 
the project.
    (1) When the reimbursement method is used, the Federal awarding 
agency shall make payment within 30 days after receipt of the billing, 
unless the billing is improper.
    (2) Recipients shall be authorized to submit request for 
reimbursement at least monthly when electronic funds transfers are not 
used.
    (f) If a recipient cannot meet the criteria for advance payments and 
the Federal awarding agency has determined that reimbursement is not 
feasible because the recipient lacks sufficient working capital, the 
Federal awarding agency may provide cash on a working capital advance 
basis. Under this procedure, the Federal awarding agency shall advance 
cash to the recipient to cover its estimated disbursement needs for an 
initial period generally geared to the awardee's disbursing cycle. 
Thereafter, the Federal awarding agency shall reimburse the recipient 
for its actual cash disbursements. The working capital advance method of 
payment shall not be used for recipients unwilling or unable to provide 
timely advances to their subrecipient to meet the subrecipient's actual 
cash disbursements.
    (g) To the extent available, recipients shall disburse funds 
available from repayments to and interest earned on a revolving fund, 
program income, rebates, refunds, contract settlements, audit recoveries 
and interest earned on such funds before requesting additional cash 
payments.
    (h) Unless otherwise required by statute, Federal awarding agencies 
shall not withhold payments for proper charges made by recipients at any 
time during the project period unless:
    (1) A recipient has failed to comply with the project objectives, 
the terms and conditions of the award, or Federal reporting 
requirements, or
    (2) The recipient or subrecipient is delinquent in a debt to the 
United States as defined in OMB Circular A-129, ``Managing Federal 
Credit Programs.'' Under such conditions, the Federal awarding agency 
may, upon reasonable notice, inform the recipient that payments shall 
not be made for obligations incurred after a specified date until the 
conditions are corrected or the indebtedness to the Federal Government 
is liquidated.
    (i) Standards governing the use of banks and other institutions as 
depositories of funds advanced under awards are as follows:
    (1) Except for situations described in paragraph (i)(2), Federal 
awarding agencies shall not require separate depository accounts for 
funds provided to a recipient or establish any eligibility requirements 
for depositories for funds provided to a recipient. However, recipients 
must be able to account for the receipt, obligation and expenditure of 
funds.
    (2) Advances of Federal funds shall be deposited and maintained in 
insured accounts whenever possible.
    (j) Consistent with the national goal of expanding the opportunities 
for women-owned and minority-owned business enterprises, recipients 
shall be encouraged to use women-owned and minority-owned banks (a bank 
which is owned at least 50 percent by women or minority group members).
    (k) Recipients shall maintain advances of Federal funds in interest 
bearing accounts, unless:
    (1) The recipient receives less than $120,000 in Federal awards per 
year.
    (2) The best reasonably available interest bearing account would not 
be expected to earn interest in excess of $250 per year on Federal cash 
balances.
    (3) The depository would require an average or minimum balance so 
high that it would not be feasible within the expected Federal and non-
Federal cash resources.
    (l) For those entities where CMIA and its implementing regulations 
do

[[Page 751]]

not apply, interest earned on Federal advances deposited in interest 
bearing accounts shall be remitted annually to Department of Health and 
Human Services, Payment Management System, Rockville, MD 20852. Interest 
amounts up to $250 per year may be retained by the recipient for 
administrative expense. State universities and hospitals shall comply 
with CMIA, as it pertains to interest. If an entity subject to CMIA uses 
its own funds to pay pre-award costs for discretionary awards without 
prior written approval from the Federal awarding agency, it waives its 
right to recover the interest under CMIA.
    (m) Except as noted elsewhere in this Circular, only the following 
forms shall be authorized for the recipients in requesting advances and 
reimbursements. Federal agencies shall not require more than an original 
and two copies of these forms.
    (1) SF-270, Request for Advance or Reimbursement. Each Federal 
awarding agency shall adopt the SF-270 as a standard form for all 
nonconstruction programs when electronic funds transfer or predetermined 
advance methods are not used. Federal awarding agencies, however, have 
the option of using this form for construction programs in lieu of the 
SF-271, ``Outlay Report and Request for Reimbursement for Construction 
Programs.''
    (2) SF-271, Outlay Report and Request for Reimbursement for 
Construction Programs. Each Federal awarding agency shall adopt the SF-
271 as the standard form to be used for requesting reimbursement for 
construction programs. However, a Federal awarding agency may substitute 
the SF-270 when the Federal awarding agency determines that it provides 
adequate information to meet Federal needs.



Sec. 2543.23  Cost sharing or matching.

    (a) All contributions, including cash and third party in-kind, shall 
be accepted as part of the recipient's cost sharing or matching when 
such contributions meet all of the following criteria.
    (1) Are verifiable from the recipient's records.
    (2) Are not included as contributions for any other federally-
assisted project or program.
    (3) Are necessary and reasonable for proper and efficient 
accomplishment of project or program objectives.
    (4) Are allowable under the applicable cost principles.
    (5) Are not paid by the Federal Government under another award, 
except where authorized by Federal statute to be used for cost sharing 
or matching.
    (6) Are provided for in the approved budget when required by the 
Federal awarding agency.
    (7) Conform to other provisions of this Circular, as applicable.
    (b) Unrecovered indirect costs may be included as part of cost 
sharing or matching only with the prior approval of the Federal awarding 
agency.
    (c) Values for recipient contributions of services and property 
shall be established in accordance with the applicable cost principles. 
If a Federal awarding agency authorizes recipients to donate buildings 
or land for construction/facilities acquisition projects or long-term 
use, the value of the donated property for cost sharing or matching 
shall be the lesser of:
    (1) The certified value of the remaining life of the property 
recorded in the recipient's accounting records at the time of donation, 
or.
    (2) The current fair market value. However, when there is sufficient 
justification, the Federal awarding agency may approve the use of the 
current fair market value of the donated property, even if it exceeds 
the certified value at the time of donation to the project.
    (d) Volunteer services furnished by professional and technical 
personnel, consultants, and other skilled and unskilled labor may be 
counted as cost sharing or matching if the service is an integral and 
necessary part of an approved project or program. Rates for volunteer 
services shall be consistent with those paid for similar work in the 
recipient's organization. In those instances in which the required 
skills are not found in the recipient organization, rates shall be 
consistent with those paid for similar work in the labor market in which 
the recipient competes for the kind of services involved. In either

[[Page 752]]

case, paid fringe benefits that are reasonable, allowable, and allocable 
may be included in the valuation.
    (e) When an employer other than the recipient furnishes the services 
of an employee, these services shall be valued at the employee's regular 
rate of pay (plus an amount of fringe benefits that are reasonable, 
allowable, and allocable, but exclusive of overhead costs), provided 
these services are in the same skill for which the employee is normally 
paid.
    (f) Donated supplies may include such items as expendable equipment, 
office supplies, laboratory supplies or workshop and classroom supplies. 
Value assessed to donated supplies included in the cost sharing or 
matching share shall be reasonable and shall not exceed the fair market 
value of the property at the time of the donation.
    (g) The method used for determining cost sharing or matching for 
donated equipment, buildings and land for which title passes to the 
recipient may differ according to the purpose of the award:
    (1) If the purpose of the award is to assist the recipient in the 
acquisition of equipment, buildings or land, the total value of the 
donated property may be claimed as cost sharing or matching, or.
    (2) If the purpose of the award is to support activities that 
require the use of equipment, buildings or land, normally only 
depreciation or use charges for equipment and buildings may be made. 
However, the full value of equipment or other capital assets and fair 
rental charges for land may be allowed, provided that the Federal 
awarding agency has approved the charges.
    (h) The value of donated property shall be determined in accordance 
with the usual accounting policies of the recipient, with the following 
qualifications.
    (1) The value of donated land and buildings shall not exceed its 
fair market value at the time of donation to the recipient as 
established by an independent appraiser (e.g., certified real property 
appraiser or General Services Administration representative) and 
certified by a responsible official of the recipient.
    (2) The value of donated equipment shall not exceed the fair market 
value of equipment of the same age and condition at the time of 
donation.
    (3) The value of donated space shall not exceed the fair rental 
value of comparable space as established by an independent appraisal of 
comparable space and facilities in a privately-owned building in the 
same locality.
    (4) The value of loaned equipment shall not exceed its fair rental 
value.
    (5) The following requirements pertain to the recipient's supporting 
records for in-kind contributions from third parties.
    (i) Volunteer services shall be documented and, to the extent 
feasible, supported by the same methods used by the recipient for its 
own employees.
    (ii) The basis for determining the valuation for personal service, 
material, equipment, buildings and land shall be documented.



Sec. 2543.24  Program income.

    (a) Federal awarding agencies shall apply the standards set forth in 
this section in requiring recipient organizations to account for program 
income related to projects financed in whole or in part with Federal 
funds.
    (b) Except as provided in paragraph (h) below, program income earned 
during the project period shall be retained by the recipient and, in 
accordance with Federal awarding agency regulations or the terms and 
conditions of the award, shall be used in one or more of the ways listed 
in the following:
    (1) Added to funds committed to the project by the Federal awarding 
agency and recipient and used to further eligible project or program 
objectives.
    (2) Used to finance the non-Federal share of the project or program.
    (3) Deducted from the total project or program allowable cost in 
determining the net allowable costs on which the Federal share of costs 
is based.
    (c) When an agency authorizes the disposition of program income as 
described in paragraph (b)(1) or (b)(2), program income in excess of any 
limits stipulated shall be used in accordance with paragraph (b)(3).
    (d) In the event that the Federal awarding agency does not specify 
in its

[[Page 753]]

regulations or the terms and conditions of the award how program income 
is to be used, paragraph (b)(3) shall apply automatically to all 
projects or programs except research. For awards that support research, 
paragraph (b)(1) shall apply automatically unless the awarding agency 
indicates in the terms and conditions another alternative on the award 
or the recipient is subject to special award conditions, as indicated in 
Sec. 2543.14.
    (e) Unless Federal awarding agency regulations or the terms and 
conditions of the award provide otherwise, recipients shall have no 
obligation to the Federal Government regarding program income earned 
after the end of the project period.
    (f) If authorized by Federal awarding agency regulations or the 
terms and conditions of the award, costs incident to the generation of 
program income may be deducted from gross income to determine program 
income, provided these costs have not been charged to the award.
    (g) Proceeds from the sale of property shall be handled in 
accordance with the requirements of the Property Standards. (See 
Sec. 2543.28 through Sec. 2543.36.)
    (h) Unless Federal awarding agency regulations or the terms and 
condition of the award provide otherwise, recipients shall have no 
obligation to the Federal Government with respect to program income 
earned from license fees and royalties for copyrighted material, 
patents, patent applications, trademarks, and inventions produced under 
an award. However, Patent and Trademark Amendments (35 U.S.C. 18) apply 
to inventions made under an experimental, developmental, or research 
award.



Sec. 2543.25  Revision of budget and program plans.

    (a) The budget plan is the financial expression of the project or 
program as approved during the award process. It may include either the 
Federal and non-Federal share, or only the Federal share, depending upon 
Federal awarding agency requirements. It shall be related to performance 
for program evaluation purposes whenever appropriate.
    (b) Recipients are required to report deviations from budget and 
program plans, and request prior approvals for budget and program plan 
revisions, in accordance with this section.
    (c) For nonconstruction awards, recipients shall request prior 
approvals from Federal awarding agencies for one or more of the 
following program or budget related reasons:
    (1) Change in the scope or the objective of the project or program 
(even if there is no associated budget revision requiring prior written 
approval).
    (2) Change in a key person specified in the application or award 
document.
    (3) The absence for more than three months, or a 25 percent 
reduction in time devoted to the project, by the approved project 
director or principal investigator.
    (4) The need for additional Federal funding.
    (5) The transfer of amounts budgeted for indirect costs to absorb 
increases in direct costs, or vice versa, if approval is required by the 
Federal awarding agency.
    (6) The inclusion, unless waived by the Federal awarding agency, of 
costs that require prior approval in accordance with OMB Circular A-21, 
``Cost Principles for Institutions of Higher Education,'' OMB Circular 
A-122, ``Cost Principles for Non-Profit Organizations,'' or 45 CFR part 
74 Appendix E, ``Principles for Determining Costs Applicable to Research 
and Development Under Grants and Contracts With Hospitals,'' or 48 CFR 
part 31, ``Contract Cost Principles and Procedures,'' as applicable.
    (7) The transfer of funds allotted for training allowances (direct 
payment to trainees) to other categories of expense.
    (8) Unless described in the application and funded in the approved 
awards, the subaward, transfer or contracting out of any work under an 
award. This provision does not apply to the purchase of supplies, 
material, equipment or general support services.
    (d) No other prior approval requirements for specific items may be 
imposed unless a deviation has been approved by OMB.
    (e) Except for requirements listed in paragraphs (c)(1) and (c)(4) 
of this section, Federal awarding agencies are authorized, at their 
option, to waive cost-

[[Page 754]]

related and administrative prior written approvals required by this 
Circular and OMB Circulars A-21 and A-122. Such waivers may include 
authorizing recipients to do any one or more of the following:
    (1) Incur pre-award costs 90 calendar days prior to award or more 
than 90 calendar days with the prior approval of the Federal awarding 
agency. All pre-award costs are incurred at the recipient's risk (i.e., 
the Federal awarding agency is under no obligation to reimburse such 
costs if for any reason the recipient does not receive an award or if 
the award is less than anticipated and inadequate to cover such costs).
    (2) Initiate a one-time extension of the expiration date of the 
award of up to 12 months unless one or more of the following conditions 
apply. For one-time extensions, the recipient must notify the Federal 
awarding agency in writing with the supporting reasons and revised 
expiration date at least 10 days before the expiration date specified in 
the award. This one-time extension may not be exercised merely for the 
purpose of using unobligated balances.
    (i) The terms and conditions of award prohibit the extension.
    (ii) The extension requires additional Federal funds.
    (iii) The extension involves any change in the approved objectives 
or scope of the project.
    (3) Carry forward unobligated balances to subsequent funding 
periods.
    (4) For awards that support research, unless the Federal awarding 
agency provides otherwise in the award or in the agency's regulations, 
the prior approval requirements described in paragraph (e) are 
automatically waived (i.e., recipients need not obtain such prior 
approvals) unless one of the conditions included in paragraph (e)(2) 
applies.
    (f) The Federal awarding agency may, at its option, restrict the 
transfer of funds among direct cost categories or programs, functions 
and activities for awards in which the Federal share of the project 
exceeds $100,000 and the cumulative amount of such transfers exceeds or 
is expected to exceed 10 percent of the total budget as last approved by 
the Federal awarding agency. No Federal awarding agency shall permit a 
transfer that would cause any Federal appropriation or part thereof to 
be used for purposes other than those consistent with the original 
intent of the appropriation.
    (g) All other changes to nonconstruction budgets, except for the 
changes described in paragraph (j), do not require prior approval.
    (h) For construction awards, recipients shall request prior written 
approval promptly from Federal awarding agencies for budget revisions 
whenever (1), (2) or (3) apply.
    (1) The revision results from changes in the scope or the objective 
of the project or program.
    (2) The need arises for additional Federal funds to complete the 
project.
    (3) A revision is desired which involves specific costs for which 
prior written approval requirements may be imposed consistent with 
applicable OMB cost principles listed in Section Sec. 2543.27.
    (i) No other prior approval requirements for specific items may be 
imposed unless a deviation has been approved by OMB.
    (j) When a Federal awarding agency makes an award that provides 
support for both construction and nonconstruction work, the Federal 
awarding agency may require the recipient to request prior approval from 
the Federal awarding agency before making any fund or budget transfers 
between the two types of work supported.
    (k) For both construction and nonconstruction awards, Federal 
awarding agencies shall require recipients to notify the Federal 
awarding agency in writing promptly whenever the amount of Federal 
authorized funds is expected to exceed the needs of the recipient for 
the project period by more than $5,000 or five percent of the Federal 
award, whichever is greater. This notification shall not be required if 
an application for additional funding is submitted for a continuation 
award.
    (l) When requesting approval for budget revisions, recipients shall 
use the budget forms that were used in the application unless the 
Federal awarding agency indicates a letter of request suffices.

[[Page 755]]

    (m) Within 30 calendar days from the date of receipt of the request 
for budget revisions, Federal awarding agencies shall review the request 
and notify the recipient whether the budget revisions have been 
approved. If the revision is still under consideration at the end of 30 
calendar days, the Federal awarding agency shall inform the recipient in 
writing of the date when the recipient may expect the decision.



Sec. 2543.26  Non-Federal audits.

    (a) Recipients and subrecipients that are institutions of higher 
education or other non-profit organizations (including hospitals) shall 
be subject to the audit requirements contained in the Single Audit Act 
Amendments of 1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, 
``Audits of States, Local Governments, and Non-Profit Organizations.''
    (b) State and local governments shall be subject to the audit 
requirements contained in the Single Audit Act Amendments of 1996 (31 
U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of States, 
Local Governments, and Non-Profit Organizations.''
    (c) For-profit hospitals not covered by the audit provisions of 
revised OMB Circular A-133 shall be subject to the audit requirements of 
the Federal awarding agencies.
    (d) Commercial organizations shall be subject to the audit 
requirements of the Federal awarding agency or the prime recipient as 
incorporated into the award document.

[60 FR 13055, Mar. 10, 1995, as amended at 62 FR 45939, 45947, Aug. 29, 
1997]



Sec. 2543.27  Allowable costs.

    For each kind of recipient, there is a set of Federal principles for 
determining allowable costs. Allowability of costs shall be determined 
in accordance with the cost principles applicable to the entity 
incurring the costs. Thus, allowability of costs incurred by State, 
local or federally-recognized Indian tribal governments is determined in 
accordance with the provisions of OMB Circular A-87, ``Cost Principles 
for State and Local Governments.'' The allowability of costs incurred by 
non-profit organizations is determined in accordance with the provisions 
of OMB Circular A-122, ``Cost Principles for Non-Profit Organizations.'' 
The allowability of costs incurred by institutions of higher education 
is determined in accordance with the provisions of OMB Circular A-21, 
``Cost Principles for Educational Institutions.'' The allowability of 
costs incurred by hospitals is determined in accordance with the 
provisions of Appendix E of 45 CFR part 74, ``Principles for Determining 
Costs Applicable to Research and Development Under Grants and Contracts 
with Hospitals.'' The allowability of costs incurred by commercial 
organizations and those non-profit organizations listed in Attachment C 
to Circular A-122 is determined in accordance with the provisions of the 
Federal Acquisition Regulation (FAR) at 48 CFR part 31.



Sec. 2543.28  Period of availability of funds.

    Where a funding period is specified, a recipient may charge to the 
grant only allowable costs resulting from obligations incurred during 
the funding period and any pre-award costs authorized by the Federal 
awarding agency.

                           Property Standards



Sec. 2543.30  Purpose of property standards.

    Sections 2543.31 through 2543.37 set forth uniform standards 
governing management and disposition of property furnished by the 
Federal Government whose cost was charged to a project supported by a 
Federal award. Federal awarding agencies shall require recipients to 
observe these standards under awards and shall not impose additional 
requirements, unless specifically required by Federal statute. The 
recipient may use its own property management standards and procedures 
provided it observes the provisions of Sec. 2543.31 through 
Sec. 2543.37.



Sec. 2543.31  Insurance coverage.

    Recipients shall, at a minimum, provide the equivalent insurance 
coverage for real property and equipment acquired with Federal funds as 
provided to property owned by the recipient. Federally-owned property 
need not be insured unless required by the terms and conditions of the 
award.

[[Page 756]]



Sec. 2543.32  Real property.

    Each Federal awarding agency shall prescribe requirements for 
recipients concerning the use and disposition of real property acquired 
in whole or in part under awards. Unless otherwise provided by statute, 
such requirements, at a minimum, shall contain the following:
    (a) Title to real property shall vest in the recipient subject to 
the condition that the recipient shall use the real property for the 
authorized purpose of the project as long as it is needed and shall not 
encumber the property without approval of the Federal awarding agency.
    (b) The recipient shall obtain written approval by the Federal 
awarding agency for the use of real property in other federally-
sponsored projects when the recipient determines that the property is no 
longer needed for the purpose of the original project. Use in other 
projects shall be limited to those under federally-sponsored projects 
(i.e., awards) or programs that have purposes consistent with those 
authorized for support by the Federal awarding agency.
    (c) When the real property is no longer needed as provided in 
paragraphs (a) and (b), the recipient shall request disposition 
instructions from the Federal awarding agency or its successor Federal 
awarding agency. The Federal awarding agency shall observe one or more 
of the following disposition instructions.
    (1) The recipient may be permitted to retain title without further 
obligation to the Federal Government after it compensates the Federal 
Government for that percentage of the current fair market value of the 
property attributable to the Federal participation in the project.
    (2) The recipient may be directed to sell the property under 
guidelines provided by the Federal awarding agency and pay the Federal 
Government for that percentage of the current fair market value of the 
property attributable to the Federal participation in the project (after 
deducting actual and reasonable selling and fix-up expenses, if any, 
from the sales proceeds). When the recipient is authorized or required 
to sell the property, proper sales procedures shall be established that 
provide for competition to the extent practicable and result in the 
highest possible return.
    (3) The recipient may be directed to transfer title to the property 
to the Federal Government or to an eligible third party provided that, 
in such cases, the recipient shall be entitled to compensation for its 
attributable percentage of the current fair market value of the 
property.



Sec. 2543.33  Federally-owned and exempt property.

    (a) Federally-owned property.
    (1) Title to federally-owned property remains vested in the Federal 
Government. Recipients shall submit annually an inventory listing of 
federally-owned property in their custody to the Federal awarding 
agency. Upon completion of the award or when the property is no longer 
needed, the recipient shall report the property to the Federal awarding 
agency for further Federal agency utilization.
    (2) If the Federal awarding agency has no further need for the 
property, it shall be declared excess and reported to the General 
Services Administration, unless the Federal awarding agency has 
statutory authority to dispose of the property by alternative methods 
(e.g., the authority provided by the Federal Technology Transfer Act (15 
U.S.C. 3710(I)) to donate research equipment to educational and non-
profit organizations in accordance with E.O. 12821, ``Improving 
Mathematics and Science Education in Support of the National Education 
Goals''). Appropriate instructions shall be issued to the recipient by 
the Federal awarding agency.
    (b) Exempt property. When statutory authority exists, the Federal 
awarding agency has the option to vest title to property acquired with 
Federal funds in the recipient without further obligation to the Federal 
Government and under conditions the Federal awarding agency considers 
appropriate. Such property is ``exempt property.'' Should a Federal 
awarding agency not establish conditions, title to exempt property upon 
acquisition shall vest in the recipient without further obligation to 
the Federal Government.

[[Page 757]]



Sec. 2543.34  Equipment.

    (a) Title to equipment acquired by a recipient with Federal funds 
shall vest in the recipient, subject to conditions of this section.
    (b) The recipient shall not use equipment acquired with Federal 
funds to provide services to non-Federal outside organizations for a fee 
that is less than private companies charge for equivalent services, 
unless specifically authorized by Federal statute, for as long as the 
Federal Government retains an interest in the equipment.
    (c) The recipient shall use the equipment in the project or program 
for which it was acquired as long as needed, whether or not the project 
or program continues to be supported by Federal funds and shall not 
encumber the property without approval of the Federal awarding agency. 
When no longer needed for the original project or program, the recipient 
shall use the equipment in connection with its other federally-sponsored 
activities, in the following order of priority:
    (1) Activities sponsored by the Federal awarding agency which funded 
the original project; then
    (2) activities sponsored by other Federal awarding agencies.
    (d) During the time that equipment is used on the project or program 
for which it was acquired, the recipient shall make it available for use 
on other projects or programs if such other use will not interfere with 
the work on the project or program for which the equipment was 
originally acquired. First preference for such other use shall be given 
to other projects or programs sponsored by the Federal awarding agency 
that financed the equipment; second preference shall be given to 
projects or programs sponsored by other Federal awarding agencies. If 
the equipment is owned by the Federal Government, use on other 
activities not sponsored by the Federal Government shall be permissible 
if authorized by the Federal awarding agency. User charges shall be 
treated as program income.
    (e) When acquiring replacement equipment, the recipient may use the 
equipment to be replaced as trade-in or sell the equipment and use the 
proceeds to offset the costs of the replacement equipment subject to the 
approval of the Federal awarding agency.
    (f) The recipient's property management standards for equipment 
acquired with Federal funds and federally-owned equipment shall include 
all of the following:
    (1) Equipment records shall be maintained accurately and shall 
include the following information.
    (i) A description of the equipment.
    (ii) Manufacturer's serial number, model number, Federal stock 
number, national stock number, or other identification number.
    (iii) Source of the equipment, including the award number.
    (iv) Whether title vests in the recipient or the Federal Government.
    (v) Acquisition date (or date received, if the equipment was 
furnished by the Federal Government) and cost.
    (vi) Information from which one can calculate the percentage of 
Federal participation in the cost of the equipment (not applicable to 
equipment furnished by the Federal Government).
    (vii) Location and condition of the equipment and the date the 
information was reported.
    (viii) Unit acquisition cost.
    (ix) Ultimate disposition data, including date of disposal and sales 
price or the method used to determine current fair market value where a 
recipient compensates the Federal awarding agency for its share.
    (2) Equipment owned by the Federal Government shall be identified to 
indicate Federal ownership.
    (3) A physical inventory of equipment shall be taken and the results 
reconciled with the equipment records at least once every two years. Any 
differences between quantities determined by the physical inspection and 
those shown in the accounting records shall be investigated to determine 
the causes of the difference. The recipient shall, in connection with 
the inventory, verify the existence, current utilization, and continued 
need for the equipment.
    (4) A control system shall be in effect to insure adequate 
safeguards to prevent loss, damage, or theft of the equipment. Any loss, 
damage, or theft of equipment shall be investigated and fully 
documented; if the equipment was

[[Page 758]]

owned by the Federal Government, the recipient shall promptly notify the 
Federal awarding agency.
    (5) Adequate maintenance procedures shall be implemented to keep the 
equipment in good condition.
    (6) Where the recipient is authorized or required to sell the 
equipment, proper sales procedures shall be established which provide 
for competition to the extent practicable and result in the highest 
possible return.
    (g) When the recipient no longer needs the equipment, the equipment 
may be used for other activities in accordance with the following 
standards. For equipment with a current per unit fair market value of 
$5,000 or more, the recipient may retain the equipment for other uses 
provided that compensation is made to the original Federal awarding 
agency or its successor. The amount of compensation shall be computed by 
applying the percentage of Federal participation in the cost of the 
original project or program to the current fair market value of the 
equipment. If the recipient has no need for the equipment, the recipient 
shall request disposition instructions from the Federal awarding agency. 
The Federal awarding agency shall determine whether the equipment can be 
used to meet the agency's requirements. If no requirement exists within 
that agency, the availability of the equipment shall be reported to the 
General Services Administration by the Federal awarding agency to 
determine whether a requirement for the equipment exists in other 
Federal agencies. The Federal awarding agency shall issue instructions 
to the recipient no later than 120 calendar days after the recipient's 
request and the following procedures shall govern.
    (1) If so instructed or if disposition instructions are not issued 
within 120 calendar days after the recipient's request, the recipient 
shall sell the equipment and reimburse the Federal awarding agency an 
amount computed by applying to the sales proceeds the percentage of 
Federal participation in the cost of the original project or program. 
However, the recipient shall be permitted to deduct and retain from the 
Federal share $500 or ten percent of the proceeds, whichever is less, 
for the recipient's selling and handling expenses.
    (2) If the recipient is instructed to ship the equipment elsewhere, 
the recipient shall be reimbursed by the Federal Government by an amount 
which is computed by applying the percentage of the recipient's 
participation in the cost of the original project or program to the 
current fair market value of the equipment, plus any reasonable shipping 
or interim storage costs incurred.
    (3) If the recipient is instructed to otherwise dispose of the 
equipment, the recipient shall be reimbursed by the Federal awarding 
agency for such costs incurred in its disposition.
    (4) The Federal awarding agency may reserve the right to transfer 
the title to the Federal Government or to a third party named by the 
Federal Government when such third party is otherwise eligible under 
existing statutes. Such transfer shall be subject to the following 
standards.
    (i) The equipment shall be appropriately identified in the award or 
otherwise made known to the recipient in writing.
    (ii) The Federal awarding agency shall issue disposition 
instructions within 120 calendar days after receipt of a final 
inventory. The final inventory shall list all equipment acquired with 
grant funds and federally-owned equipment. If the Federal awarding 
agency fails to issue disposition instructions within the 120 calendar 
day period, the recipient shall apply the standards of this section, as 
appropriate.
    (iii) When the Federal awarding agency exercises its right to take 
title, the equipment shall be subject to the provisions for federally-
owned equipment.



Sec. 2543.35  Supplies and other expendable property.

    (a) Title to supplies and other expendable property shall vest in 
the recipient upon acquisition. If there is a residual inventory of 
unused supplies exceeding $5,000 in total aggregate value upon 
termination or completion of the project or program and the supplies are 
not needed for any other federally-sponsored project or program,

[[Page 759]]

the recipient shall retain the supplies for use on non-Federal sponsored 
activities or sell them, but shall, in either case, compensate the 
Federal Government for its share. The amount of compensation shall be 
computed in the same manner as for equipment.
    (b) The recipient shall not use supplies acquired with Federal funds 
to provide services to non-Federal outside organizations for a fee that 
is less than private companies charge for equivalent services, unless 
specifically authorized by Federal statute as long as the Federal 
Government retains an interest in the supplies.



Sec. 2543.36  Intangible property.

    (a) The recipient may copyright any work that is subject to 
copyright and was developed, or for which ownership was purchased, under 
an award. The Federal awarding agency(ies) reserve a royalty-free, 
nonexclusive and irrevocable right to reproduce, publish, or otherwise 
use the work for Federal purposes, and to authorize others to do so.
    (b) Recipients are subject to applicable regulations governing 
patents and inventions, including government-wide regulations issued by 
the Department of Commerce at 37 CFR part 401, ``Rights to Inventions 
Made by Nonprofit Organizations and Small Business Firms Under 
Government Grants, Contracts and Cooperative Agreements.''
    (c) The Federal Government has the right to:
    (1) Obtain, reproduce, publish or otherwise use the data first 
produced under an award; and
    (2) Authorize others to receive, reproduce, publish, or otherwise 
use such data for Federal purposes.
    (d)(1) In addition, in response to a Freedom of Information Act 
(FOIA) request for research data relating to published research findings 
produced under an award that were used by the Federal Government in 
developing an agency action that has the force and effect of law, the 
Federal awarding agency shall request, and the recipient shall provide, 
within a reasonable time, the research data so that they can be made 
available to the public through the procedures established under the 
FOIA. If the Federal awarding agency obtains the research data solely in 
response to a FOIA request, the agency may charge the requester a 
reasonable fee equaling the full incremental cost of obtaining the 
research data. This fee should reflect costs incurred by the agency, the 
recipient, and applicable subrecipients. This fee is in addition to any 
fees the agency may assess under the FOIA (5 U.S.C. 552(a)(4)(A)).
    (2) The following definitions apply for purposes of this paragraph 
(d):
    (i) Research data is defined as the recorded factual material 
commonly accepted in the scientific community as necessary to validate 
research findings, but not any of the following: preliminary analyses, 
drafts of scientific papers, plans for future research, peer reviews, or 
communications with colleagues. This ``recorded'' material excludes 
physical objects (e.g., laboratory samples). Research data also do not 
include:
    (A) Trade secrets, commercial information, materials necessary to be 
held confidential by a researcher until they are published, or similar 
information which is protected under law; and
    (B) Personnel and medical information and similar information the 
disclosure of which would constitute a clearly unwarranted invasion of 
personal privacy, such as information that could be used to identify a 
particular person in a research study.
    (ii) Published is defined as either when:
    (A) Research findings are published in a peer-reviewed scientific or 
technical journal; or
    (B) A Federal agency publicly and officially cites the research 
findings in support of an agency action that has the force and effect of 
law.
    (iii) Used by the Federal Government in developing an agency action 
that has the force and effect of law is defined as when an agency 
publicly and officially cites the research findings in support of an 
agency action that has the force and effect of law.
    (3) The requirements set forth in paragraph (d)(1) of this section 
do not apply to commercial organizations.
    (e) Title to intangible property and debt instruments acquired under 
an award or subaward vests upon acquisition in the recipient. The 
recipient

[[Page 760]]

shall use that property for the originally-authorized purpose, and the 
recipient shall not encumber the property without approval of the 
Federal awarding agency. When no longer needed for the originally 
authorized purpose, disposition of the intangible property shall occur 
in accordance with the provisions of paragraph Sec. 2543.34 (g).

[60 FR 13055, Mar. 10, 1995, as amended at 65 FR 53609, Sept. 5, 2000]



Sec. 2543.37  Property trust relationship.

    Real property, equipment, intangible property and debt instruments 
that are acquired or improved with Federal funds shall be held in trust 
by the recipient as trustee for the beneficiaries of the project or 
program under which the property was acquired or improved. Agencies may 
require recipients to record liens or other appropriate notices of 
record to indicate that personal or real property has been acquired or 
improved with Federal funds and that use and disposition conditions 
apply to the property.

                          Procurement Standards



Sec. 2543.40  Purpose of procurement standards.

    Sections Sec. 2543.41 through Sec. 2543.48 set forth standards for 
use by recipients in establishing procedures for the procurement of 
supplies and other expendable property, equipment, real property and 
other services with Federal funds. These standards are furnished to 
ensure that such materials and services are obtained in an effective 
manner and in compliance with the provisions of applicable Federal 
statutes and executive orders. No additional procurement standards or 
requirements shall be imposed by the Federal awarding agencies upon 
recipients, unless specifically required by Federal statute or executive 
order or approved by OMB.



Sec. 2543.41  Recipient responsibilities.

    The standards contained in this section do not relieve the recipient 
of the contractual responsibilities arising under its contract(s). The 
recipient is the responsible authority, without recourse to the Federal 
awarding agency, regarding the settlement and satisfaction of all 
contractual and administrative issues arising out of procurements 
entered into in support of an award or other agreement. This includes 
disputes, claims, protests of award, source evaluation or other matters 
of a contractual nature. Matters concerning violation of statute are to 
be referred to such Federal, State or local authority as may have proper 
jurisdiction.



Sec. 2543.42  Codes of conduct.

    The recipient shall maintain written standards of conduct governing 
the performance of its employees engaged in the award and administration 
of contracts. No employee, officer, or agent shall participate in the 
selection, award, or administration of a contract supported by Federal 
funds if a real or apparent conflict of interest would be involved. Such 
a conflict would arise when the employee, officer, or agent, any member 
of his or her immediate family, his or her partner, or an organization 
which employs or is about to employ any of the parties indicated herein, 
has a financial or other interest in the firm selected for an award. The 
officers, employees, and agents of the recipient shall neither solicit 
nor accept gratuities, favors, or anything of monetary value from 
contractors, or parties to subagreements. However, recipients may set 
standards for situations in which the financial interest is not 
substantial or the gift is an unsolicited item of nominal value. The 
standards of conduct shall provide for disciplinary actions to be 
applied for violations of such standards by officers, employees, or 
agents of the recipient.



Sec. 2543.43  Competition.

    All procurement transactions shall be conducted in a manner to 
provide, to the maximum extent practical, open and free competition. The 
recipient shall be alert to organizational conflicts of interest as well 
as noncompetitive practices among contractors that may restrict or 
eliminate competition or otherwise restrain trade. In order to ensure 
objective contractor performance and eliminate unfair competitive 
advantage, contractors that develop or draft specifications, 
requirements, statements of work, invitations for bids and/or requests 
for proposals shall

[[Page 761]]

be excluded from competing for such procurements. Awards shall be made 
to the bidder or offeror whose bid or offer is responsive to the 
solicitation and is most advantageous to the recipient, price, quality 
and other factors considered. Solicitations shall clearly set forth all 
requirements that the bidder or offeror shall fulfill in order for the 
bid or offer to be evaluated by the recipient. Any and all bids or 
offers may be rejected when it is in the recipient's interest to do so.



Sec. 2543.44  Procurement procedures.

    (a) All recipients shall establish written procurement procedures. 
These procedures shall provide for, at a minimum, that:
    (1) Recipients avoid purchasing unnecessary items,
    (2) Where appropriate, an analysis is made of lease and purchase 
alternatives to determine which would be the most economical and 
practical procurement for the Federal Government, and
    (3) Solicitations for goods and services provide for all of the 
following:
    (i) A clear and accurate description of the technical requirements 
for the material, product or service to be procured. In competitive 
procurements, such a description shall not contain features which unduly 
restrict competition.
    (ii) Requirements which the bidder/offeror must fulfill and all 
other factors to be used in evaluating bids or proposals.
    (iii) A description, whenever practicable, of technical requirements 
in terms of functions to be performed or performance required, including 
the range of acceptable characteristics or minimum acceptable standards.
    (iv) The specific features of ``brand name or equal'' descriptions 
that bidders are required to meet when such items are included in the 
solicitation.
    (v) The acceptance, to the extent practicable and economically 
feasible, of products and services dimensioned in the metric system of 
measurement.
    (vi) Preference, to the extent practicable and economically 
feasible, for products and services that conserve natural resources and 
protect the environment and are energy efficient.
    (b) Positive efforts shall be made by recipients to utilize small 
businesses, minority-owned firms, and women's business enterprises, 
whenever possible. Recipients of Federal awards shall take all of the 
following steps to further this goal.
    (1) Ensure that small businesses, minority-owned firms, and women's 
business enterprises are used to the fullest extent practicable.
    (2) Make information on forthcoming opportunities available and 
arrange time frames for purchases and contracts to encourage and 
facilitate participation by small businesses, minority-owned firms, and 
women's business enterprises.
    (3) Consider in the contract process whether firms competing for 
larger contracts intend to subcontract with small businesses, minority-
owned firms, and women's business enterprises.
    (4) Encourage contracting with consortiums of small businesses, 
minority-owned firms and women's business enterprises when a contract is 
too large for one of these firms to handle individually.
    (5) Use the services and assistance, as appropriate, of such 
organizations as the Small Business Administration and the Department of 
Commerce's Minority Business Development Agency in the solicitation and 
utilization of small businesses, minority-owned firms and women's 
business enterprises.
    (c) The type of procuring instruments used (e.g., fixed price 
contracts, cost reimbursable contracts, purchase orders, and incentive 
contracts) shall be determined by the recipient but shall be appropriate 
for the particular procurement and for promoting the best interest of 
the program or project involved. The ``cost-plus-a-percentage-of-cost'' 
or ``percentage of construction cost'' methods of contracting shall not 
be used.
    (d) Contracts shall be made only with responsible contractors who 
possess the potential ability to perform successfully under the terms 
and conditions of the proposed procurement. Consideration shall be given 
to such matters as contractor integrity, record of past performance, 
financial and technical resources or accessibility to

[[Page 762]]

other necessary resources. In certain circumstances, contracts with 
certain parties are restricted by agencies' implementation of E.O.s 
12549 and 12689, ``Debarment and Suspension.''
    (e) Recipients shall, on request, make available for the Federal 
awarding agency, pre-award review and procurement documents, such as 
request for proposals or invitations for bids, independent cost 
estimates, etc., when any of the following conditions apply.
    (1) A recipient's procurement procedures or operation fails to 
comply with the procurement standards in the Federal awarding agency's 
implementation of this Circular.
    (2) The procurement is expected to exceed the small purchase 
threshold fixed at 41 U.S.C. 403 (11) (currently $25,000) and is to be 
awarded without competition or only one bid or offer is received in 
response to a solicitation.
    (3) The procurement, which is expected to exceed the small purchase 
threshold, specifies a ``brand name'' product.
    (4) The proposed award over the small purchase threshold is to be 
awarded to other than the apparent low bidder under a sealed bid 
procurement.
    (5) A proposed contract modification changes the scope of a contract 
or increases the contract amount by more than the amount of the small 
purchase threshold.



Sec. 2543.45  Cost and price analysis.

    Some form of cost or price analysis shall be made and documented in 
the procurement files in connection with every procurement action. Price 
analysis may be accomplished in various ways, including the comparison 
of price quotations submitted, market prices and similar indicia, 
together with discounts. Cost analysis is the review and evaluation of 
each element of cost to determine reasonableness, allocability and 
allowability.



Sec. 2543.46  Procurement records.

    Procurement records and files for purchases in excess of the small 
purchase threshold shall include the following at a minimum:
    (a) Basis for contractor selection;
    (b) Justification for lack of competition when competitive bids or 
offers are not obtained; and
    (c) Basis for award cost or price.



Sec. 2543.47  Contract administration.

    A system for contract administration shall be maintained to ensure 
contractor conformance with the terms, conditions and specifications of 
the contract and to ensure adequate and timely follow up of all 
purchases. Recipients shall evaluate contractor performance and 
document, as appropriate, whether contractors have met the terms, 
conditions and specifications of the contract.



Sec. 2543.48  Contract provisions.

    The recipient shall include, in addition to provisions to define a 
sound and complete agreement, the following provisions in all contracts. 
The following provisions shall also be applied to subcontracts.
    (a) Contracts in excess of the small purchase threshold shall 
contain contractual provisions or conditions that allow for 
administrative, contractual, or legal remedies in instances in which a 
contractor violates or breaches the contract terms, and provide for such 
remedial actions as may be appropriate.
    (b) All contracts in excess of the small purchase threshold shall 
contain suitable provisions for termination by the recipient, including 
the manner by which termination shall be effected and the basis for 
settlement. In addition, such contracts shall describe conditions under 
which the contract may be terminated for default as well as conditions 
where the contract may be terminated because of circumstances beyond the 
control of the contractor.
    (c) Except as otherwise required by statute, an award that requires 
the contracting (or subcontracting) for construction or facility 
improvements shall provide for the recipient to follow its own 
requirements relating to bid guarantees, performance bonds, and payment 
bonds unless the construction contract or subcontract exceeds $100,000. 
For those contracts or subcontracts exceeding $100,000, the Federal 
awarding agency may accept the bonding policy and requirements of the

[[Page 763]]

recipient, provided the Federal awarding agency has made a determination 
that the Federal Government's interest is adequately protected. If such 
a determination has not been made, the minimum requirements shall be as 
follows.
    (1) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The ``bid guarantee'' shall consist of a firm commitment 
such as a bid bond, certified check, or other negotiable instrument 
accompanying a bid as assurance that the bidder shall, upon acceptance 
of his bid, execute such contractual documents as may be required within 
the time specified.
    (2) A performance bond on the part of the contractor for 100 percent 
of the contract price. A ``performance bond'' is one executed in 
connection with a contract to secure fulfillment of all the contractor's 
obligations under such contract.
    (3) A payment bond on the part of the contractor for 100 percent of 
the contract price. A ``payment bond'' is one executed in connection 
with a contract to assure payment as required by statute of all persons 
supplying labor and material in the execution of the work provided for 
in the contract.
    (4) Where bonds are required in the situations described herein, the 
bonds shall be obtained from companies holding certificates of authority 
as acceptable sureties pursuant to 31 CFR part 223, ``Surety Companies 
Doing Business with the United States.''
    (d) All negotiated contracts (except those for less than the small 
purchase threshold) awarded by recipients shall include a provision to 
the effect that the recipient, the Federal awarding agency, the 
Comptroller General of the United States, or any of their duly 
authorized representatives, shall have access to any books, documents, 
papers and records of the contractor which are directly pertinent to a 
specific program for the purpose of making audits, examinations, 
excerpts and transcriptions.
    (e) All contracts, including small purchases, awarded by recipients 
and their contractors shall contain the procurement provisions of 
Appendix A to this Circular, as applicable.

                           Reports and Records



Sec. 2543.50  Purpose of reports and records.

    Sections Sec. 2543.51 through Sec. 2543.53 set forth the procedures 
for monitoring and reporting on the recipient's financial and program 
performance and the necessary standard reporting forms. They also set 
forth record retention requirements.



Sec. 2543.51  Monitoring and reporting program performance.

    (a) Recipients are responsible for managing and monitoring each 
project, program, subaward, function or activity supported by the award. 
Recipients shall monitor subawards to ensure subrecipients have met the 
audit requirements as delineated in Section Sec. 2543.26.
    (b) The Federal awarding agency shall prescribe the frequency with 
which the performance reports shall be submitted. Except as provided in 
paragraph Sec. 2543.51(f), performance reports shall not be required 
more frequently than quarterly or, less frequently than annually. Annual 
reports shall be due 90 calendar days after the grant year; quarterly or 
semi-annual reports shall be due 30 days after the reporting period. The 
Federal awarding agency may require annual reports before the 
anniversary dates of multiple year awards in lieu of these requirements. 
The final performance reports are due 90 calendar days after the 
expiration or termination of the award.
    (c) If inappropriate, a final technical or performance report shall 
not be required after completion of the project.
    (d) When required, performance reports shall generally contain, for 
each award, brief information on each of the following.
    (1) A comparison of actual accomplishments with the goals and 
objectives established for the period, the findings of the investigator, 
or both. Whenever appropriate and the output of programs or projects can 
be readily quantified, such quantitative data should be related to cost 
data for computation of unit costs.
    (2) Reasons why established goals were not met, if appropriate.
    (3) Other pertinent information including, when appropriate, 
analysis

[[Page 764]]

and explanation of cost overruns or high unit costs.
    (e) Recipients shall not be required to submit more than the 
original and two copies of performance reports.
    (f) Recipients shall immediately notify the Federal awarding agency 
of developments that have a significant impact on the award-supported 
activities. Also, notification shall be given in the case of problems, 
delays, or adverse conditions which materially impair the ability to 
meet the objectives of the award. This notification shall include a 
statement of the action taken or contemplated, and any assistance needed 
to resolve the situation.
    (g) Federal awarding agencies may make site visits, as needed.
    (h) Federal awarding agencies shall comply with clearance 
requirements of 5 CFR part 1320 when requesting performance data from 
recipients.



Sec. 2543.52  Financial reporting.

    (a) The following forms or such other forms as may be approved by 
OMB are authorized for obtaining financial information from recipients.
    (1) SF-269 or SF-269A, Financial Status Report.
    (i) Each Federal awarding agency shall require recipients to use the 
SF-269 or SF-269A to report the status of funds for all nonconstruction 
projects or programs. A Federal awarding agency may, however, have the 
option of not requiring the SF-269 or SF-269A when the SF-270, Request 
for Advance or Reimbursement, or SF-272, Report of Federal Cash 
Transactions, is determined to provide adequate information to meet its 
needs, except that a final SF-269 or SF-269A shall be required at the 
completion of the project when the SF-270 is used only for advances.
    (ii) The Federal awarding agency shall prescribe whether the report 
shall be on a cash or accrual basis. If the Federal awarding agency 
requires accrual information and the recipient's accounting records are 
not normally kept on the accrual basis, the recipient shall not be 
required to convert its accounting system, but shall develop such 
accrual information through best estimates based on an analysis of the 
documentation on hand.
    (iii) The Federal awarding agency shall determine the frequency of 
the Financial Status Report for each project or program, considering the 
size and complexity of the particular project or program. However, the 
report shall not be required more frequently than quarterly or less 
frequently than annually. A final report shall be required at the 
completion of the agreement.
    (iv) The Federal awarding agency shall require recipients to submit 
the SF-269 or SF-269A (an original and no more than two copies) no later 
than 30 days after the end of each specified reporting period for 
quarterly and semi-annual reports, and 90 calendar days for annual and 
final reports. Extensions of reporting due dates may be approved by the 
Federal awarding agency upon request of the recipient.
    (2) SF-272, Report of Federal Cash Transactions.
    (i) When funds are advanced to recipients the Federal awarding 
agency shall require each recipient to submit the SF-272 and, when 
necessary, its continuation sheet, SF-272a. The Federal awarding agency 
shall use this report to monitor cash advanced to recipients and to 
obtain disbursement information for each agreement with the recipients.
    (ii) Federal awarding agencies may require forecasts of Federal cash 
requirements in the ``Remarks'' section of the report.
    (iii) When practical and deemed necessary, Federal awarding agencies 
may require recipients to report in the ``Remarks'' section the amount 
of cash advances received in excess of three days. Recipients shall 
provide short narrative explanations of actions taken to reduce the 
excess balances.
    (iv) Recipients shall be required to submit not more than the 
original and two copies of the SF-272 15 calendar days following the end 
of each quarter. The Federal awarding agencies may require a monthly 
report from those recipients receiving advances totaling $1 million or 
more per year.
    (v) Federal awarding agencies may waive the requirement for 
submission of the SF-272 for any one of the following reasons:

[[Page 765]]

    (A) When monthly advances do not exceed $25,000 per recipient, 
provided that such advances are monitored through other forms contained 
in this section;
    (B) If, in the Federal awarding agency's opinion, the recipient's 
accounting controls are adequate to minimize excessive Federal advances; 
or,
    (C) When the electronic payment mechanisms provide adequate data.
    (b) When the Federal awarding agency needs additional information or 
more frequent reports, the following shall be observed.
    (1) When additional information is needed to comply with legislative 
requirements, Federal awarding agencies shall issue instructions to 
require recipients to submit such information under the ``Remarks'' 
section of the reports.
    (2) When a Federal awarding agency determines that a recipient's 
accounting system does not meet the standards in Section Sec. 2543.21, 
additional pertinent information to further monitor awards may be 
obtained upon written notice to the recipient until such time as the 
system is brought up to standard. The Federal awarding agency, in 
obtaining this information, shall comply with report clearance 
requirements of 5 CFR part 1320.
    (3) Federal awarding agencies are encouraged to shade out any line 
item on any report if not necessary.
    (4) Federal awarding agencies may accept the identical information 
from the recipients in machine readable format or computer printouts or 
electronic outputs in lieu of prescribed formats.
    (5) Federal awarding agencies may provide computer or electronic 
outputs to recipients when such expedites or contributes to the accuracy 
of reporting.



Sec. 2543.53  Retention and access requirements for records.

    (a) This section sets forth requirements for record retention and 
access to records for awards to recipients. Federal awarding agencies 
shall not impose any other record retention or access requirements upon 
recipients.
    (b) Financial records, supporting documents, statistical records, 
and all other records pertinent to an award shall be retained for a 
period of three years from the date of submission of the final 
expenditure report or, for awards that are renewed quarterly or 
annually, from the date of the submission of the quarterly or annual 
financial report, as authorized by the Federal awarding agency. The only 
exceptions are the following:
    (1) If any litigation, claim, or audit is started before the 
expiration of the 3-year period, the records shall be retained until all 
litigation, claims or audit findings involving the records have been 
resolved and final action taken.
    (2) Records for real property and equipment acquired with Federal 
funds shall be retained for 3 years after final disposition.
    (3) When records are transferred to or maintained by the Federal 
awarding agency, the 3-year retention requirement is not applicable to 
the recipient.
    (4) Indirect cost rate proposals, cost allocations plans, etc. as 
specified in paragraph (g) of this section.
    (c) Copies of original records may be substituted for the original 
records if authorized by the Federal awarding agency.
    (d) The Federal awarding agency shall request transfer of certain 
records to its custody from recipients when it determines that the 
records possess long term retention value. However, in order to avoid 
duplicate record keeping, a Federal awarding agency may make 
arrangements for recipients to retain any records that are continuously 
needed for joint use.
    (e) The Federal awarding agency, the Inspector General, Comptroller 
General of the United States, or any of their duly authorized 
representatives, have the right of timely and unrestricted access to any 
books, documents, papers, or other records of recipients that are 
pertinent to the awards, in order to make audits, examinations, 
excerpts, transcripts and copies of such documents. This right also 
includes timely and reasonable access to a recipient's personnel for the 
purpose of interview and discussion related to such documents. The 
rights of access in this paragraph are not limited to the required 
retention period,

[[Page 766]]

but shall last as long as records are retained.
    (f) Unless required by statute, no Federal awarding agency shall 
place restrictions on recipients that limit public access to the records 
of recipients that are pertinent to an award, except when the Federal 
awarding agency can demonstrate that such records shall be kept 
confidential and would have been exempted from disclosure pursuant to 
the Freedom of Information Act (5 U.S.C. 552) if the records had 
belonged to the Federal awarding agency.
    (g) Indirect cost rate proposals, cost allocations plans, etc. 
Paragraphs (g)(1) and (g)(2) apply to the following types of documents, 
and their supporting records: indirect cost rate computations or 
proposals, cost allocation plans, and any similar accounting 
computations of the rate at which a particular group of costs is 
chargeable (such as computer usage chargeback rates or composite fringe 
benefit rates).
    (1) If submitted for negotiation. If the recipient submits to the 
Federal awarding agency or the subrecipient submits to the recipient the 
proposal, plan, or other computation to form the basis for negotiation 
of the rate, then the 3-year retention period for its supporting records 
starts on the date of such submission.
    (2) If not submitted for negotiation. If the recipient is not 
required to submit to the Federal awarding agency or the subrecipient is 
not required to submit to the recipient the proposal, plan, or other 
computation for negotiation purposes, then the 3-year retention period 
for the proposal, plan, or other computation and its supporting records 
starts at the end of the fiscal year (or other accounting period) 
covered by the proposal, plan, or other computation.

                       Termination and Evaluation



Sec. 2543.60  Purpose of termination and enforcement.

    Sections Sec. 2543.61 and Sec. 2543.62 set forth uniform suspension, 
termination and enforcement procedures.



Sec. 2543.61  Termination.

    (a) Awards may be terminated in whole or in part only if:
    (1) By the Federal awarding agency, if a recipient materially fails 
to comply with the terms and conditions of an award,
    (2) By the Federal awarding agency with the consent of the 
recipient, in which case the two parties shall agree upon the 
termination conditions, including the effective date and, in the case of 
partial termination, the portion to be terminated, or
    (3) By the recipient upon sending to the Federal awarding agency 
written notification setting forth the reasons for such termination, the 
effective date, and, in the case of partial termination, the portion to 
be terminated. However, if the Federal awarding agency determines in the 
case of partial termination that the reduced or modified portion of the 
grant will not accomplish the purposes for which the grant was made, it 
may terminate the grant in its entirety under either paragraphs (a) (1) 
or (2) of this section.
    (b) If costs are allowed under an award, the responsibilities of the 
recipient referred to in paragraph Sec. 2543.71(a), including those for 
property management as applicable, shall be considered in the 
termination of the award, and provision shall be made for continuing 
responsibilities of the recipient after termination, as appropriate.



Sec. 2543.62  Enforcement.

    (a) Remedies for noncompliance. If a recipient materially fails to 
comply with the terms and conditions of an award, whether stated in a 
Federal statute, regulation, assurance, application, or notice of award, 
the Federal awarding agency may, in addition to imposing any of the 
special conditions outlined in Section Sec. 2543.14, take one or more of 
the following actions, as appropriate in the circumstances.
    (1) Temporarily withhold cash payments pending correction of the 
deficiency by the recipient or more severe enforcement action by the 
Federal awarding agency.
    (2) Disallow (that is, deny both use of funds and any applicable 
matching

[[Page 767]]

credit for) all or part of the cost of the activity or action not in 
compliance.
    (3) Wholly or partly suspend or terminate the current award.
    (4) Withhold further awards for the project or program.
    (5) Take other remedies that may be legally available.
    (b) Hearings and appeals. In taking an enforcement action, the 
awarding agency shall provide the recipient an opportunity for hearing, 
appeal, or other administrative proceeding to which the recipient is 
entitled under any statute or regulation applicable to the action 
involved.
    (c) Effects of suspension and termination. Costs of a recipient 
resulting from obligations incurred by the recipient during a suspension 
or after termination of an award are not allowable unless the awarding 
agency expressly authorizes them in the notice of suspension or 
termination or subsequently. Other recipient costs during suspension or 
after termination which are necessary and not reasonably avoidable are 
allowable if:
    (1) The costs result from obligations which were properly incurred 
by the recipient before the effective date of suspension or termination, 
are not in anticipation of it, and in the case of a termination, are 
noncancellable, and
    (2) The costs would be allowable if the award were not suspended or 
expired normally at the end of the funding period in which the 
termination takes effect.
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude a recipient from being subject to debarment 
and suspension under E.O.s 12549 and 12689 and the Federal awarding 
agency implementing regulations (see Section Sec. 2543.13).



                 Subpart D--After-the-Award Requirements



Sec. 2543.70  Purpose.

    Sections Sec. 2543.71 through Sec. 2543.73 contain closeout 
procedures and other procedures for subsequent disallowances and 
adjustments.



Sec. 2543.71  Closeout procedures.

    (a) Recipients shall submit, within 90 calendar days after the date 
of completion of the award, all financial, performance, and other 
reports as required by the terms and conditions of the award. The 
Federal awarding agency may approve extensions when requested by the 
recipient.
    (b) Unless the Federal awarding agency authorizes an extension, a 
recipient shall liquidate all obligations incurred under the award not 
later than 90 calendar days after the funding period or the date of 
completion as specified in the terms and conditions of the award or in 
agency implementing instructions.
    (c) The Federal awarding agency shall make prompt payments to a 
recipient for allowable reimbursable costs under the award being closed 
out.
    (d) The recipient shall promptly refund any balances of unobligated 
cash that the Federal awarding agency has advanced or paid and that is 
not authorized to be retained by the recipient for use in other 
projects. OMB Circular A-129 governs unreturned amounts that become 
delinquent debts.
    (e) When authorized by the terms and conditions of the award, the 
Federal awarding agency shall make a settlement for any upward or 
downward adjustments to the Federal share of costs after closeout 
reports are received.
    (f) The recipient shall account for any real and personal property 
acquired with Federal funds or received from the Federal Government in 
accordance with Sections Sec. 2543.31 through Sec. 2543.37.
    (g) In the event a final audit has not been performed prior to the 
closeout of an award, the Federal awarding agency shall retain the right 
to recover an appropriate amount after fully considering the 
recommendations on disallowed costs resulting from the final audit.



Sec. 2543.72  Subsequent adjustments and continuing responsibilities.

    (a) The closeout of an award does not affect any of the following:
    (1) The right of the Federal awarding agency to disallow costs and 
recover funds on the basis of a later audit or other review.

[[Page 768]]

    (2) The obligation of the recipient to return any funds due as a 
result of later refunds, corrections, or other transactions.
    (3) Audit requirements in Section Sec. 2543.26.
    (4) Property management requirements in Sections Sec. 2543.31 
through Sec. 2543.37.
    (5) Records retention as required in Section Sec. 2543.53.
    (b) After closeout of an award, a relationship created under an 
award may be modified or ended in whole or in part with the consent of 
the Federal awarding agency and the recipient, provided the 
responsibilities of the recipient referred to in paragraph 
Sec. 2543.73(a), including those for property management as applicable, 
are considered and provisions made for continuing responsibilities of 
the recipient, as appropriate.



Sec. 2543.73  Collection of amounts due.

    (a) Any funds paid to a recipient in excess of the amount to which 
the recipient is finally determined to be entitled under the terms and 
conditions of the award constitute a debt to the Federal Government. If 
not paid within a reasonable period after the demand for payment, the 
Federal awarding agency may reduce the debt by:
    (1) Making an administrative offset against other requests for 
reimbursements,
    (2) Withholding advance payments otherwise due to the recipient,
    (3) Taking other action permitted by statute, or
    (b) Except as otherwise provided by law, the Federal awarding agency 
shall charge interest on an overdue debt in accordance with 4 CFR 
Chapter II, ``Federal Claims Collection Standards.''



                     Subpart E--Statutory Compliance



Sec. 2543.80  Contract provisions.

    All contracts, awarded by a recipient including small purchases, 
shall contain the following provisions as applicable:



Sec. 2543.81  Equal employment opportunity.

    All contracts shall contain a provision requiring compliance with 
E.O. 11246, ``Equal Employment Opportunity,'' as amended by E.O. 11375, 
``Amending Executive Order 11246 Relating to Equal Employment 
Opportunity,'' and as supplemented by regulations at 41 CFR part 60, 
``Office of Federal Contract Compliance Programs, Equal Employment 
Opportunity, Department of Labor.''



Sec. 2543.82  Copeland ``Anti-Kickback'' Act.

    All contracts and subgrants in excess of $2000 for construction or 
repair awarded by recipients and subrecipients shall include a provision 
for compliance with the Copeland ``Anti-Kickback'' Act (18 U.S.C. 874), 
as supplemented by Department of Labor regulations (29 CFR part 3, 
``Contractors and Subcontractors on Public Building or Public Work 
Financed in Whole or in Part by Loans or Grants from the United 
States''). The Act provides that each contractor or subrecipient shall 
be prohibited from inducing, by any means, any person employed in the 
construction, completion, or repair of public work, to give up any part 
of the compensation to which he is otherwise entitled. The recipient 
shall report all suspected or reported violations to the Federal 
awarding agency.



Sec. 2543.83  Davis-Bacon Act.

    When required by Federal program legislation, all construction 
contracts awarded by the recipients and subrecipients of more than $2000 
shall include a provision for compliance with the Davis-Bacon Act (40 
U.S.C. 276a to a-7) and as supplemented by Department of Labor 
regulations (29 CFR part 5, ``Labor Standards Provisions Applicable to 
Contracts Governing Federally Financed and Assisted Construction''). 
Under this Act, contractors shall be required to pay wages to laborers 
and mechanics at a rate not less than the minimum wages specified in a 
wage determination made by the Secretary of Labor. In addition, 
contractors shall be required to pay wages not less than once a week. 
The recipient shall place a copy of the current prevailing wage

[[Page 769]]

determination issued by the Department of Labor in each solicitation and 
the award of a contract shall be conditioned upon the acceptance of the 
wage determination. The recipient shall report all suspected or reported 
violations to the Federal awarding agency.



Sec. 2543.84  Contract Work Hours and Safety Standards Act.

    Where applicable, all contracts awarded by recipients in excess of 
$2000 for construction contracts and in excess of $2500 for other 
contracts that involve the employment of mechanics or laborers shall 
include a provision for compliance with Sections 102 and 107 of the 
Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333), as 
supplemented by Department of Labor regulations (29 CFR part 5). Under 
Section 102 of the Act, each contractor shall be required to compute the 
wages of every mechanic and laborer on the basis of a standard work week 
of 40 hours. Work in excess of the standard work week is permissible 
provided that the worker is compensated at a rate of not less than 1\1/
2\ times the basic rate of pay for all hours worked in excess of 40 
hours in the work week. Section 107 of the Act is applicable to 
construction work and provides that no laborer or mechanic shall be 
required to work in surroundings or under working conditions which are 
unsanitary, hazardous or dangerous. These requirements do not apply to 
the purchases of supplies or materials or articles ordinarily available 
on the open market, or contracts for transportation or transmission of 
intelligence.



Sec. 2543.85  Rights to inventions made under a contract or agreement.

    Contracts or agreements for the performance of experimental, 
developmental, or research work shall provide for the rights of the 
Federal Government and the recipient in any resulting invention in 
accordance with 37 CFR part 401, ``Rights to Inventions Made by 
Nonprofit Organizations and Small Business Firms Under Government 
Grants, Contracts and Cooperative Agreements,'' and any implementing 
regulations issued by the awarding agency.



Sec. 2543.86  Clean Air Act and the Federal Water Pollution Control Act.

    Contracts and subgrants of amounts in excess of $100,000 shall 
contain a provision that requires the recipient to agree to comply with 
all applicable standards, orders or regulations issued pursuant to the 
Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water Pollution 
Control Act as amended (33 U.S.C. 1251 et seq.). Violations shall be 
reported to the Federal awarding agency and the Regional Office of the 
Environmental Protection Agency (EPA).



Sec. 2543.87  Byrd anti-lobbying amendment.

    Contractors who apply or bid for an award of $100,000 or more shall 
file the required certification. Each tier certifies to the tier above 
that it will not and has not used Federal appropriated funds to pay any 
person or organization for influencing or attempting to influence an 
officer or employee of any agency, a member of Congress, officer or 
employee of Congress, or an employee of a member of Congress in 
connection with obtaining any Federal contract, grant or any other award 
covered by 31 U.S.C. 1352. Each tier shall also disclose any lobbying 
with non-Federal funds that takes place in connection with obtaining any 
Federal award. Such disclosures are forwarded from tier to tier up to 
the recipient.



Sec. 2543.88  Debarment and suspension.

    No contract shall be made to parties listed on the General Services 
Administration's List of Parties Excluded from Federal Procurement or 
Nonprocurement Programs in accordance with E.O.s 12549 and 12689, 
``Debarment and Suspension.'' This list contains the names of parties 
debarred, suspended, or otherwise excluded by agencies, and contractors 
declared ineligible under statutory or regulatory authority other than 
E.O. 12549. Contractors with awards that exceed the small purchase 
threshold shall provide the required certification regarding its 
exclusion status and that of its principal employees.

[[Page 770]]



PART 2544--SOLICITATION AND ACCEPTANCE OF DONATIONS--Table of Contents




Sec.
2544.100  What is the purpose of this part?
2544.105  What is the legal authority for soliciting and accepting 
          donations to the Corporation?
2544.110  What definitions apply to terms used in this part?
2544.115  Who may offer a donation?
2544.120  What personal services from a volunteer may be solicited and 
          accepted?
2544.125  Who has the authority to solicit and accept or reject a 
          donation?
2544.130  How will the Corporation determine whether to solicit or 
          accept a donation?
2544.135  How should an offer of a donation be made?
2544.140  How will the Corporation accept or reject an offer?
2544.145  What will be done with property that is not accepted?
2544.150  How will accepted donations be recorded and used?

    Authority: 42 U.S.C. 12501 et seq.

    Source: 60 FR 28355, May 31, 1995, unless otherwise noted.



Sec. 2544.100  What is the purpose of this part?

    This part establishes rules to ensure that the solicitation, 
acceptance, holding, administration, and use of property and services 
donated to the Corporation:
    (a) Will not reflect unfavorably upon the ability of the Corporation 
or its officers and employees, to carry out their official duties and 
responsibilities in a fair and objective manner; and
    (b) Will not compromise the integrity of the Corporation's programs 
or its officers and employees involved in such programs.



Sec. 2544.105  What is the legal authority for soliciting and accepting donations to the Corporation?

    Section 196(a) of the National and Community Service Act of 1990, as 
amended (42 U.S.C. 12651g(a)).



Sec. 2544.110  What definitions apply to terms used in this part?

    (a) Donation means a transfer of money, property, or services to or 
for the use of the Corporation by gift, devise, bequest, or other means.
    (b) Solicitation means a request for a donation.
    (c) Volunteer means an individual who donates his/her personal 
service to the Corporation to assist the Corporation in carrying out its 
duties under the national service laws, but who is not a participant in 
a program funded or sponsored by the Corporation under the National and 
Community Service Act of 1990, as amended. Such individual is not 
subject to provisions of law related to Federal employment, including 
those relating to hours of work, rates of compensation, leave, 
unemployment compensation and Federal employee benefits, except that--
    (1) Volunteers will be considered Federal employees for the purpose 
of the tort claims provisions of 28 U.S.C. chapter 171;
    (2) Volunteers will be considered Federal employees for the purposes 
of 5 U.S.C. chapter 81, subchapter I, relating to compensation to 
Federal employees for work injuries; and
    (3) Volunteers will be considered special Government employees for 
the purpose of ethics and public integrity under the provisions of 18 
U.S.C. chapter 11, part I, and 5 CFR chapter XVI, subchapter B.
    (d) Inherently governmental function means any activity that is so 
intimately related to the public interest as to mandate performance by 
an officer or employee of the Federal Government, including an activity 
that requires either the exercise of discretion in applying the 
authority of the Government or the use of value judgment in making a 
decision for the Government.



Sec. 2544.115  Who may offer a donation?

    Anyone, including an individual, group of individuals, organization, 
corporation, or association may offer a donation to the Corporation.



Sec. 2544.120  What personal services from a volunteer may be solicited and accepted?

    A donation in the form of personal services from a volunteer may be 
solicited and accepted to assist the Corporation in carrying out its 
duties. However, volunteers may not perform an inherently governmental 
function.

[[Page 771]]



Sec. 2544.125  Who has the authority to solicit and accept or reject a donation?

    The Chief Executive Officer (CEO) of the Corporation has the 
authority to solicit, accept, or reject a donation offered to the 
Corporation and to make the determinations described in Sec. 2544.130 
(c) and (d). The CEO may delegate this authority in writing to other 
officials of the Corporation.



Sec. 2544.130  How will the Corporation determine whether to solicit or accept a donation?

    (a) The Corporation will solicit and accept a donation only for the 
purpose of furthering the mission and goals of the Corporation.
    (b) In order to be accepted, the donation must be economically 
advantageous to the Corporation, considering foreseeable expenditures 
for matters such as storage, transportation, maintenance, and 
distribution.
    (c) An official or employee of the Corporation will not solicit or 
accept a donation if the solicitation or acceptance would present a real 
or apparent conflict of interest. An apparent conflict of interest is 
presented if the solicitation or acceptance would raise a question in 
the mind of a reasonable person, with knowledge of the relevant facts, 
about the integrity of the Corporation's programs or operations.
    (d) The Corporation will determine whether a conflict of interest 
exists by considering any business relationship, financial interest, 
litigation, or other factors that may indicate such a conflict. 
Donations of property or voluntary services may not be solicited or 
accepted from a source which:
    (1) Is a party to a grant or contract with the Corporation or is 
seeking to do business with the Corporation;
    (2) Has pecuniary interests that may be substantially affected by 
performance or nonperformance of the Corporation; or
    (3) Is an organization a majority of whose members are described in 
paragraphs (d)(1) and (2) of this section.
    (e) Any solicitation or offer of a donation that raises a question 
or concern of a potential, real, or apparent conflict of interest will 
be forwarded to the Corporation's Designated Ethics Official for an 
opinion.



Sec. 2544.135  How should an offer of a donation be made?

    (a) In general, an offer of donation should be made by providing a 
letter of tender that offers a donation. The letter should be directed 
to an official authorized to accept donations, describe the property or 
service offered, and specify any purpose for, or condition on, the use 
of the donation.
    (b) If an offer is made orally, the Corporation will send a letter 
of acknowledgment to the offeror. If the donor is anonymous, the 
Corporation will prepare a memorandum to the file acknowledging receipt 
of a tendered donation and describing the donation including any special 
terms or conditions.
    (c) Only those employees or officials with expressed notice of 
authority may accept donations on behalf of the Corporation. If an offer 
is directed to an unauthorized employee or official of the Corporation, 
that person must immediately forward the offer to an appropriate 
official for disposition.



Sec. 2544.140  How will the Corporation accept or reject an offer?

    (a) In general, the Corporation will respond to an offer of a 
donation in writing and include in the response:
    (1) An acknowledgment of receipt of the offer;
    (2) A brief description of the offer and any purpose or condition 
that the offeror specified for the use of the donation;
    (3) A statement either accepting or rejecting the donation; and
    (4) A statement informing the donor that any acceptance of services 
or property can not be used in any manner, directly or indirectly, that 
endorses the donor's products or services or appears to benefit the 
financial interests or business goals of the donor.
    (b) If a purpose or condition for the use of the donation specified 
by the offeror can not be accommodated, the Corporation may request the 
offeror to modify the terms of the donation.

[[Page 772]]



Sec. 2544.145  What will be done with property that is not accepted?

    In general, property offered to the Corporation but not accepted 
will be returned to the offeror. If the offeror is unknown or the 
donation would spoil if returned, the property will either be disposed 
of in accordance with Federal Property Management regulations (41 CFR 
chapter 101) or given to local charities determined by the Corporation.



Sec. 2544.150  How will accepted donations be recorded and used?

    (a) All accepted donations of money and other property will be 
reported to the Chief Financial Officer (CFO) of the Corporation for 
recording and appropriate disposition.
    (b) All donations of personal services of a volunteer will be 
reported to the CFO and to the Personnel Division of the Corporation for 
processing and documentation.
    (c) Donations not designated for a particular purpose will be used 
for an authorized purpose described in Sec. 2544.125.
    (d) Property will be used as nearly as possible in accordance with 
the terms of the donation. If no terms are specified, or the property 
can no longer be used for its original purpose, the property will be 
converted to another authorized use or sold in accordance with Federal 
regulations. The proceeds of the sale will be used for an authorized 
purpose described in Sec. 2544.125.



PART 2550--REQUIREMENTS AND GENERAL PROVISION FOR STATE COMMISSIONS, ALTERNATIVE ADMINISTRATIVE ENTITIES AND TRANSITIONAL ENTITIES--Table of Contents




Sec.
2550.10  What is the purpose of this part?
2550.20  Definitions.
2550.30  How does a State decide which of the three entities to 
          establish?
2550.40  How does a State get Corporation authorization and approval for 
          the entity it has chosen?
2550.50  What are the composition requirements and other requirements, 
          restrictions or guidelines for State Commissions?
2550.60  From which of the State Commission requirements is an 
          Alternative Administrative Entity exempt?
2550.70  What are the composition or other requirements for Transitional 
          Entities?
2550.80  What are the duties of the State entities?
2550.90  Are there any restrictions on the activities of the members of 
          State Commissions or Alternative Administrative Entities?
2550.100  Do State entities or their members incur any risk of 
          liability?
2550.110  What money will be available from the Corporation to assist in 
          establishing and operating a State Commission, Alternative 
          Administrative Entity, or Transitional Entity?

    Authority: 42 U.S.C. 12501 et seq.

    Source: 58 FR 60981, Nov. 18, 1993, unless otherwise noted.



Sec. 2550.10  What is the purpose of this part?

    (a) The Corporation for National and Community Service (the 
Corporation) seeks to meet the Nation's pressing human, educational, 
environmental and public safety needs through service and to 
reinvigorate the ethic of civic responsibility across the Nation. If the 
Corporation is to meet these goals, it is critical for each of the 
States to be actively involved.
    (b) The Corporation will distribute nearly $200 million in grants 
under subtitle C of the Act (hereinafter, ``subtitle C'') to help 
establish, operate and expand national service programs. At least two-
thirds of these funds will go to the States, which will then subgrant to 
State agencies or local programs. However, in order to be eligible to 
apply for program funding and/or approved national service positions 
with an educational award, each State is required to establish a State 
Commission on National and Community Service to administer the State 
program grantmaking process and to develop a State plan. The Corporation 
may, in some instances approve Alternative Administrative Entities 
(AAEs) or allow a State agency to perform the duties of the State 
Commission. (For the purposes of this part, a State agency which has 
been authorized by the Corporation to perform State Commission duties is 
called a ``Transitional Entity''.)
    (c) The Corporation will distribute grants of between $125,000 and 
$750,000 to States to cover the Federal share of

[[Page 773]]

operating the State Commissions, AAEs, or Transitional Entities.
    (d) The purpose of this part is to provide States with the basic 
information essential to participate in the subtitle C programs. Of 
equal importance, this part gives an explanation of the preliminary 
steps States must take in order to receive money from the Corporation. 
This part also offers guidance on which of the three State entities 
States should seek to establish, and it explains the composition 
requirements, duties, responsibilities, restrictions, and other relevant 
information regarding State Commissions, AAEs, and approved Transitional 
Entities.

[58 FR 60981, Nov. 18, 1993, as amended at 67 FR 45362, July 9, 2002]



Sec. 2550.20  Definitions.

    (a) AAE. Alternative Administrative Entity.
    (b) Administrative costs. As used in this part, those costs incurred 
by a State in the establishing and operating a State entity; the 
specific administrative costs for which a Corporation administrative 
grant may be used as defined in the Uniform Administrative Requirements 
for Grants and Agreements to State and Local Governments.
    (c) Alternative Administrative Entity (AAE). A State entity approved 
by the Corporation to perform the duties of a State Commission, 
including developing a three-year comprehensive national service plan, 
preparing applications to the Corporation for funding and approved 
national service positions, and administering service program grants; in 
general, an AAE must meet the same composition and other requirements as 
a State Commission, but may receive waivers from the Corporation to 
accommodate State laws that prohibit inquiring as to the political 
affiliation of members, to have more than 25 voting members (the maximum 
for a State Commission), and/or to select members in a manner other than 
selection by the chief executive officer of the State.
    (d) Approved National Service Position. A national service program 
position for which the Corporation has approved the provision of a 
national service educational award as one of the benefits to be provided 
for successful completion of a term of service.
    (e) Corporation. As used in this part, the Corporation for National 
and Community Service established pursuant to the National and Community 
Service Trust Act of 1993 (42 U.S.C. 12651).
    (f) Corporation representative. Each of the individuals employed by 
the Corporation for National and Community Service to assist the States 
in carrying out national and community service activities; the 
Corporation representative must be included as a member of the State 
Commission or AAE.
    (g) Indian tribe. (1) An Indian tribe, band, nation, or other 
organized group or community, including--
    (i) Any Native village, as defined in section 3(c) of the Alaska 
Native Claims Settlement Act (43 U.S.C. 1602(c)), whether organized 
traditionally or pursuant to the Act of June 18, 1934 (commonly known as 
the ``Indian Reorganization Act''; 48 Stat. 984, chapter 576; 25 U.S.C. 
461 et seq.); and
    (ii) Any Regional Corporation or Village Corporation as defined in 
the Alaska Native Claims Settlement Act (43 U.S.C. 1602 (g) or (j)), 
that is recognized as eligible for the special programs and services 
provided by the United States under Federal law to Indians because of 
their status as Indians; and
    (2) Any tribal organization controlled, sanctioned, or chartered by 
an entity described in paragraph (g)(1) of this section.
    (h) Older adult. An individual 55 years of age or older.
    (i) Service-learning. A method under which students or participants 
learn and develop through active participation in thoughtfully organized 
service that is conducted in and meets the needs of a community and that 
is coordinated with an elementary school, secondary school, institution 
of higher education, or community service program, and with the 
community; service-learning is integrated into and enhances the academic 
curriculum of the students, or the educational components of the 
community service program in which the participants are enrolled, and it 
provides time for the students or participants to reflect on the service 
experience.

[[Page 774]]

    (j) Service learning programs. The totality of the service learning 
programs receiving assistance from the Corporation under subtitle B of 
the Act, either directly or through a grant-making entity; this includes 
school-based, community-based, and higher education-based service-
learning programs.
    (k) State. As used in this part, the term State refers to each of 
the 50 States, the District of Columbia, the Commonwealth of Puerto 
Rico, the United States Virgin Islands, Guam, American Samoa, and the 
Commonwealth of the Northern Mariana Islands.
    (l) State Commission. A bipartisan or nonpartisan State entity, 
approved by the Corporation, consisting of 15-25 members (appointed by 
the chief executive officer of the State), that is responsible for 
developing a comprehensive national service plan, assembling 
applications for funding and approved national service positions, and 
administering national and community service programs in the State.
    (m) State Educational Agency. The same meaning given to such term in 
section 1471(23) of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 2891(23)).
    (n) State entity. A State Commission, AAE, or Transitional Entity 
that has been authorized by the Corporation to perform the duties of a 
State Commission.
    (o) Transitional Entity. An existing State agency which has been 
authorized by the Corporation to perform the duties of a State 
Commission; the Corporation will not authorize the use of a Transitional 
Entity unless a State is demonstrably unable to establish a State 
Commission or AAE.

[58 FR 60981, Nov. 18, 1993, as amended at 67 FR 45362, July 9, 2002]



Sec. 2550.30  How does a State decide which of the three entities to establish?

    (a) Although each State's chief executive officer has the authority 
to select an administrative option, the Corporation strongly encourages 
States to establish State Commissions which meet the requirements in 
this part as quickly as possible. The requirements for State Commissions 
were established to try to create informed and effective entities.
    (b) The Corporation recognizes that some States, for legal or other 
legitimate reasons, may not be able to meet all of the requirements of 
the State Commissions. The AAE is essentially the same as a State 
Commission; however, it may be exempt from some of the State Commission 
requirements. A State that cannot meet one of the waivable requirements 
of the State Commission (as explained in Sec. 2550.60), and which can 
demonstrate this to the Corporation, should seek to establish an AAE.
    (c) Over the long term, States that wish to participate in the 
Corporation's grant programs must have either a State Commission or an 
AAE approved by the Corporation. Some States, due to legal or other 
procedural requirements, may be unable to establish one of these two 
entities in time to participate in fiscal years 1994 or 1995. Therefore, 
during the 27-month period beginning on September 21, 1993 and ending on 
December 21, 1995, a State may apply to the Corporation for 
authorization to use a Transitional Entity.
    (d) A State should consider applying to have a Transitional Entity 
approved only if it can demonstrate that it is impossible, for legal or 
procedural reasons, to establish a State Commission or AAE in time to 
participate in the national service programs.
    (e) Regardless of which entity a State employs, each State is 
required to solicit broad-based, local input in an open, inclusive, non-
political planning process.



Sec. 2550.40  How does a State obtain Corporation authorization and approval for the entity it has chosen?

    (a) To receive approval of a State Commission or AAE, a State must 
formally establish an entity that meets the corresponding composition, 
membership, authority, and duty requirements of this part. (For the AAE, 
a State must demonstrate why it is impossible or unreasonable to 
estalbish a State Commission; an approved AAE, however, has the same 
rights and responsibilities as a State Commission.) Once the entity is 
established, the

[[Page 775]]

State must provide written notice--in a format to be prescribed by the 
Corporation--to the chief executive officer of the Corporation of the 
composition, membership, and authorities of the State Commission or AAE 
and explain how the entity will perform its duties and functions. 
Further, the State must agree to, first, request approval from the 
Corporation for any subsequent changes in the composition or duties of a 
State Commission or AAE the State may wish to make, and, second, to 
comply with any future changes in Corporation requirements with regard 
to the composition or duties of a State Commission or AAE. If a State 
meets the applicable requirements, the Corporation will approve the 
State Commission or AAE.
    (b) If the Corporation rejects a State application for approval of a 
State Commission or AAE because that application does not meet one or 
more of the requirements of Secs. 2250.50 or 2550.60, it will notify the 
State of the reasons for rejection and offer assistance to make any 
necessary changes. The Corporation will reconsider revised applications 
within 14 working days of resubmission.
    (c) To receive approval to use an existing State agency as a 
Transitional Entity, a State must, first, satisfactorily demonstrate why 
it is unable to establish a State Commission or AAE, and, second, 
explain how it will carry out the duties of the State Commission and 
conduct a broad-based, open and inclusive planning process in a non-
political manner. In addition, in order to receive any administrative 
funds from the Corporation, a State must commit to establish a State 
Commission or AAE as soon as possible, and prior to the expiration of 
the 27-month transition period ending on December 21, 1995. 
Administrative grants will only be given for up to 12-month periods. If 
a Transitional Entity wishes to receive an additional administrative 
grant subsequent to the expiration of an initial 12-month administrative 
grant, that State entity must demonstrate satisfactory progress toward 
establishment of a State Commission or AAE.



Sec. 2550.50  What are the composition requirements and other requirements, restrictions or guidelines for State Commissions?

    The following provisions apply to both State Commissions and AAEs, 
except that AAEs may obtain waivers from certain provisions as explained 
in Sec. 2550.60.
    (a) Size of the State Commission and terms of State Commission 
members. The chief executive officer of a State must appoint 15-25 
voting members to the State Commission (in addition to any non-voting 
members he or she may appoint). Voting members of a State Commission 
must be appointed to renewable three-year terms, except that initially a 
chief executive officer must appoint a third of the members to one-year 
terms and another third of the members to two-year terms.
    (b) Required voting members on a State Commission. A member may 
represent none, one, or more than one category, but each of the 
following categories must be represented:
    (1) A representative of a community-based agency or organization in 
the State;
    (2) The head of the State education agency or his or her designee;
    (3) A representative of local government in the State;
    (4) A representative of local labor organizations in the State;
    (5) A representative of business;
    (6) An individual between the ages of 16 and 25, inclusive, who is a 
participant or supervisor of a service program for school-age youth, or 
of a campus-based or national service program;
    (7) A representative of a national service program;
    (8) An individual with expertise in the educational, training, and 
development needs of youth, particularly disadvantaged youth; and
    (9) An individual with experience in promoting the involvement of 
older adults (age 55 and older) in service and volunteerism.
    (c) Appointment of other voting members of a State Commission. Any 
remaining voting members of a State Commission are appointed at the 
discretion of the chief executive officer of the State; however, 
although this list should not be construed as exhaustive,

[[Page 776]]

the Corporation suggests the following types of individuals:
    (1) Educators, including representatives from institutions of higher 
education and local education agencies;
    (2) Experts in the delivery of human, educational, environmental, or 
public safety services to communities and persons;
    (3) Representatives of Indian tribes;
    (4) Out-of-school or at-risk youth; and
    (5) Representatives of programs that are administered or receive 
assistance under the Domestic Volunteer Service Act of 1973, as amended 
(DVSA) (42 U.S.C. 4950 et seq.).
    (d) Appointment of ex officio, non-voting members of a State 
Commission. The chief executive officer of a State may appoint as ex 
officio, non-voting members of the State Commission officers or 
employees of State agencies operating community service, youth service, 
education, social service, senior service, or job training programs.
    (e) Other composition requirements. To the extent possible, the 
chief executive officer of a State shall ensure that the membership of 
the State Commission is balanced with respect to race, ethnicity, age, 
gender, and disability characteristics. Not more than 50% plus one of 
the members of a State Commission may be from the same political party. 
In addition, the number of voting members of a State Commission who are 
officers or employees of the State may not exceed 25% of the total 
membership of that State Commission.
    (f) Selection of Chairperson. The chairperson is elected by the 
voting members of a State Commission. To be eligible to serve as 
chairperson, an individual must be an appointed, voting member of a 
State Commission.
    (g) Vacancies. If a vacancy occurs on a State Commission, a new 
member must be appointed by the chief executive officer of the State to 
serve for the remainder of the term for which the predecessor of such 
member was appointed. The vacancy will not affect the power of the 
remaining members to execute the duties of the Commission.
    (h) Compensation of State Commission members. A member of a State 
Commission may not receive compensation for his or her services, but may 
be reimbursed (at the discretion of the State) for travel and daily 
expenses in the same manner as employees intermittently serving the 
State.
    (i) The role of the Corporation representative. The Corporation will 
designate one of its employees to serve as a representative to each 
State or group of States. This individual must be included as an ex 
officio member on the State Commission, and may be designated as a 
voting member by the chief executive officer of a State. However, 
because the Corporation wishes to encourage State autonomy in the design 
and development of the State plan and in State national service 
programs, States are discouraged from allowing the Corporation 
representative to vote. In general, the Corporation representative will 
be responsible for assisting States in carrying out national service 
activities.



Sec. 2550.60  From which of the State Commission requirements is an Alternative Administrative Entity exempt?

    (a) An AAE is not automatically exempt from any of the requirements 
that govern State Commissions. However, there are three specific State 
Commission requirements which the Corporation may waive if a State can 
demonstrate that one or more of them is impossible or unreasonable to 
meet. If the Corporation waives a State Commission requirement for a 
State entity, that State entity is, de facto, an AAE. The three criteria 
which may be waived for an AAE are as follows:
    (1) The requirement that a State's chief executive officer appoint 
the members of a State Commission. If a State can offer a compelling 
reason why some or all of the State Commission members should be 
appointed by the State legislature or by some other appropriate means, 
the Corporation may grant a waiver.
    (2) The requirement that a State Commission have 15-25 members. If a 
State compellingly demonstrates why its commission should have a larger 
number of members, the Corporation may grant a waiver.
    (3) The requirement that not more than 50% plus one of the State 
Commission's voting members be from the same political

[[Page 777]]

party. This requirement was established to prevent State Commissions 
from being politically motivated or controlled; however, in some States 
it is illegal to require prospective members to provide information 
about political party affiliation. For this or another compelling 
reason, the Corporation may grant a waiver.
    (b) Again, any time the Corporation grants one or more of these 
waivers for a State entity, that entity becomes an AAE; in all other 
respects an AAE is the same as a State Commission, having the same 
requirements, rights, duties and responsibilities.



Sec. 2550.70  What are the composition or other requirements for Transitional Entities?

    Because a Transitional Entity is by definition contained within a 
State agency, there are no membership or composition requirements. If a 
State takes the necessary steps to obtain approval for a Transitional 
Entity (listed in Sec. 2550.40(c)), it meets the requirements of a 
Transitional Entity.



Sec. 2250.80  What are the duties of the State entities?

    The duties of each of the three eligible State entities--States 
Commissions, AAEs and Transitional Entities--are precisely the same. The 
duties listed in this section apply to all three, and they are jointly 
referred to as ``State entities.'' Functions described in paragraphs (a) 
through (d) of this section require policymaking and may not be 
delegated to another State agency or nonprofit organization. Functions 
described in paragraphs (e) through (j) of this section are non-
policymaking and may be delegated to another State agency or nonprofit 
organization. The duties are as follows:
    (a) Development of a three-year comprehensive national and community 
service plan and establishment of State priorities. The State entity 
must develop and annually update a Statewide plan for national service 
that is consistent with the Corporation's broad goals of meeting human, 
educational, environmental and public safety needs and that meets the 
following minimum requirements:
    (1) The plan must be developed through an open and public process 
(such as through regional forums or hearings) that provides for maximum 
participation and input from national service programs within the State, 
and from other interested members of the public.
    (2) The outreach process must, to the maximum extent practicable, 
include input from representatives of established State service 
programs, representatives of diverse, broad-based community 
organizations that serve underserved populations, and other interested 
individuals, including young people; the State entity should do so by 
creating State networks and registries or by utilizing existing ones.
    (3) The plan may contain such other information as the State 
Commission considers appropriate and must contain such other information 
as the Corporation may require.
    (b) Pre-selection of subtitle C programs and preparation of 
application to the Corporation. Each State must:
    (1) Administer a competitive process to select national service 
programs to be included in any application to the Corporation for 
funding; and
    (2) Prepare an application to the Corporation to receive funding 
and/or educational awards for the programs selected pursuant to 
paragraph (b)(1) of this section.
    (c) Preparation of Service Learning applications. (1) The State 
entity is required to assist the State education agency in preparing the 
application for subtitle B school-based service learning programs.
    (2) The State entity may apply to the Corporation to receive funding 
for community-based subtitle programs after coordination with the State 
Educational Agency.
    (d) Administration of the grants program. After subtitle C and 
community-based subtitle B funds are awarded, States entities will be 
responsible for administering the grants and overseeing and monitoring 
the performance and progress of funded programs.

[[Page 778]]

    (e) Evaluation and monitoring. State entities, in concert with the 
Corporation, shall be responsible for implementing comprehensive, non-
duplicative evaluation and monitoring systems.
    (f) Technical assistance. The State entity will be responsible for 
providing technical assistance to local nonprofit organizations and 
other entities in planning programs, applying for funds, and in 
implementing and operating high quality programs. States should 
encourage proposals from underserved communities.
    (g) Program development assistance and training. The State entity 
must assist in the development of subtitle C programs; such development 
might include staff training, curriculum materials, and other relevant 
materials and activities. A description of such proposed assistance must 
be included in the State comprehensive plan referred to in paragraph (a) 
of this section. A State may apply for additional subtitle C programs 
training and technical assistance funds to perform these functions. The 
Corporation will issue notices of availability of funds with respect to 
training and technical assistance.
    (h) Recruitment and placement. The State entity, as well as the 
Corporation, will develop mechanisms for recruitment and placement of 
people interested in participating in national service programs.
    (i) Benefits. The State entity shall assist in the provision of 
health and child care benefits to subtitle C program participants, as 
will be specified in the regulations implementing the subtitle C 
programs.
    (j) Activity ineligible for assistance. A State Commission or AAE 
may not directly operate or run any national service program receiving 
financial assistance, in any form, from the Corporation.
    (k) Make recommendations to the Corporation with respect to 
priorities within the State for programs receiving assistance under 
DVSA.
    (l) Coordination. (1) Coordination with other State agencies.--A 
State entity must coordinate its activities with the activities of other 
State agencies that administer Federal financial assistance programs 
under the Community Services Block Grant Act (42 U.S.C. 9901 et seq.) or 
other appropriate Federal financial assistance programs.
    (2) Coordination with volunteer service programs.--In general, the 
State entity shall coordinate its functions (including recruitment, 
public awareness, and training activities) with such functions of any 
division of ACTION, or the Corporation, that carries out volunteer 
service programs in the State. Specifically, the State entity may enter 
into an agreement with a division of ACTION or the Corporation to carry 
out its functions jointly, to perform its functions itself, or to assign 
responsibility for its functions to ACTION or the Corporation.
    (3) In carrying out the activities under paragraphs (l) (1) and (2) 
of this section, the parties involved must exchange information about 
the programs carried out in the State by the State entity, a division of 
ACTION or the Corporation, as well as information about opportunities to 
coordinate activities.



Sec. 2550.90  Are there any restrictions on the activities of the members of State Commissions or Alternative Administrative Entities?

    To avoid a conflict of interest (or the appearance of a conflict of 
interest) regarding the provision of assistance or approved national 
service positions, members of a State Commission or AAE must adhere to 
the following provisions:
    (a) General restriction. Members of State Commissions and AAEs are 
restricted in several ways from the grant approval and administration 
process for any grant application submitted by an organization for which 
they are currently, or were within one year of the submission of the 
application, officers, directors, trustees, full-time volunteers or 
employees. The restrictions for such individuals are as follows:
    (1) They cannot assist the applying organization in preparing the 
grant application;
    (2) They must recuse themselves from the discussions or decisions 
regarding the grant application and any other grant applications 
submitted to the Commission or AAE under the

[[Page 779]]

same program (e.g., subtitle B programs or subtitle C programs); and
    (3) They cannot participate in the oversight, evaluation, 
continuation, suspension or termination of the grant award.
    (b) Exception to achieve a quorum. If this general restriction 
creates a situation in which a Commission or AAE does not have enough 
eligible voting members to achieve a quorum, the Commission or AAE may 
involve some normally-excluded members subject to the following 
conditions:
    (1) A Commission or AAE may randomly and in a non-discretionary 
manner select the number of refused members necessary to achieve a 
quorum;
    (2) Notwithstanding paragraph (b)(1) of this section, no Commission 
or AAE member may, under any circumstances, participate in any 
discussions or decisions regarding a grant application submitted by an 
organization with which he or she is or was affiliated according to the 
definitions in paragraph (a) of this section; and
    (3) If recused members are included so as to achieve quorum, the 
State Commission or AAE must document the event and report to the 
Corporation within 30 days of the vote.
    (c) Rule of construction. Paragraph (a) of this section shall not be 
construed to limit the authority of any voting member of the State 
Commission or AAE to participate in--
    (1) Discussion of, and hearings and forums on, the general duties, 
policies and operations of the Commission or AAE, or general program 
administration; or
    (2) Similar general matters relating to the Commission or AAE.



Sec. 2550.100  Do State entities or their members incur any risk of liability?

    (a) State liability. Except as provided in paragraph (b) of this 
section, a State must agree to assume liability with respect to any 
claim arising out of or resulting from any act or omission by a member 
of the State Commission or AAE, within the scope of the service of that 
member.
    (b) Individual liability. A member of the State Commission or AAE 
shall have no personal liability with respect to any claim arising out 
of or resulting from any act or omission by that member, within the 
scope of the service of that member. This does not, however, limit 
personal liability for criminal acts or omissions, willful or malicious 
misconduct, acts or omissions for private gain, or any other act or 
omission outside the scope of the service of that member. Similarly, 
this part does not limit or alter in any way any other immunities that 
are available under applicable law for State officials and employees not 
described in this section; nor does this part affect any other right or 
remedy against the State or any person other than a member of a State 
Commission or AAE.



Sec. 2550.110  What money will be available from the Corporation to assist in establishing and operating a State Commission, Alternative Administrative Entity, 
          or Transitional Entity?

    (a) Range of grants. The Corporation may make administrative grants 
to States of between $125,000 and $750,000 (inclusive) for the purpose 
of establishing or operating a State Commission or AAE; these grants 
will be available to States which have Corporation-approved Transitional 
Entities only if those States commit to establishing a Corporation-
approved State Commission or AAE prior to the expiration of the 
transitional period.
    (b) Limitation on Federal share. Notywithstanding the amounts 
specified in this section, the amount of a grant that may be provided to 
a State under this subsection, together with other Federal funds 
available to establish or operate the State Commission or AAE, may not 
exceed 85 percent of the total cost to establish or operate the State 
Commission or AAE for the first year for which the State Commission or 
AAE receives an administrative grant under this section.\1\ In 
subsequent years, the Corporation will establish larger matching 
requirements

[[Page 780]]

for States so that by the fifth and subsequent years of assistance, the 
Federal share does not exceed 50 percent.
---------------------------------------------------------------------------

    \1\ See OMB Circulars A-102 and A-122. Copies of the circulars may 
be obtained from the Office of Administration, EOP Publications, 725 
17th Street, NW., Room 2200, New EOB, Washington, DC 20503.
---------------------------------------------------------------------------



PART 2551--SENIOR COMPANION PROGRAM--Table of Contents




                           Subpart A--General

Sec.
2551.11  What is the Senior Companion Program?
2551.12  Definitions.

        Subpart B--Eligibility and Responsibilities of a Sponsor

2551.21  Who is eligible to serve as a sponsor?
2551.22  What are the responsibilities of a sponsor?
2551.23  What are a sponsor's program responsibilities?
2551.24  What are a sponsor's responsibilities for securing community 
          participation?
2551.25  What are a sponsor's administrative responsibilities?
2551.26  May a sponsor administer more than one program grant from the 
          Corporation?

     Subpart C--Suspension and Termination of Corporation Assistance

2551.31  What are the rules on suspension, termination, and denial of 
          refunding of grants?

Subpart D--Senior Companion Eligibility, Status, and Cost Reimbursements

2551.41  Who is eligible to be a Senior Companion?
2551.42  What income guidelines govern eligibility to serve as a 
          stipended Senior Companion?
2551.43  What is considered income for determining volunteer 
          eligibility?
2551.44  Is a Senior Companion a federal employee, an employee of the 
          sponsor or of the volunteer station?
2551.45  What cost reimbursements are provided to Senior Companions?
2551.46  May the cost reimbursements of a Senior Companion be subject to 
          any tax or charge, be treated as wages or compensation, or 
          affect eligibility to receive assistance from other programs?

              Subpart E--Senior Companion Terms of Service

2551.51  What are the terms of service of a Senior Companion?
2551.52  What factors are considered in determining a Senior Companion's 
          service schedule?
2551.53  Under what circumstances may a Senior Companion's service be 
          terminated?

           Subpart F--Responsibilities of a Volunteer Station

2551.61  When may a sponsor serve as a volunteer station?
2551.62  What are the responsibilities of a volunteer station?

         Subpart G--Senior Companion Placements and Assignments

2551.71  What requirements govern the assignment of Senior Companions?
2551.72  Is a written volunteer assignment plan required for each 
          volunteer?

                        Subpart H--Clients Served

2551.81  What type of clients are eligible to be served?

             Subpart I--Application and Fiscal Requirements

2551.91  What is the process for application and award of a grant?
2551.92  What are project funding requirements?
2551.93  What are grants management requirements?

               Subpart J--Non-Stipended Senior Companions

2551.101  What rule governs the recruitment and enrollment of persons 
          who do not meet the income eligibility guidelines to serve as 
          Senior Companions without stipends?
2551.102  What are the conditions of service of non-stipended Senior 
          Companions?
2551.103  Must a sponsor be required to enroll non-stipended Senior 
          Companions?
2551.104  May Corporation funds be used for non-stipended Senior 
          Companions?

             Subpart K--Non-Corporation Funded SCP Projects

2551.111  Under what conditions can an agency or organization sponsor a 
          Senior Companion project without Corporation funding?
2551.112  What benefits are a non-Corporation funded project entitled 
          to?
2551.113  What financial obligation does the Corporation incur for non-
          Corporation funded projects?
2551.114  What happens if a non-Corporation funded sponsor does not 
          comply with the Memorandum of Agreement?

[[Page 781]]

            Subpart L--Restrictions and Legal Representation

2551.121  What legal limitations apply to the operation of the Senior 
          Companion Program and to the expenditure of grant funds?
2551.122  What legal coverage does the Corporation make available to 
          Senior Companions?

    Authority: 42 U.S.C. 4950 et seq.

    Source: 64 FR 14115, Mar. 24, 1999, unless otherwise noted.



                           Subpart A--General



Sec. 2551.11  What is the Senior Companion Program?

    The Senior Companion Program provides grants to qualified agencies 
and organizations for the dual purpose of: engaging persons 60 and 
older, particularly those with limited incomes, in volunteer service to 
meet critical community needs; and to provide a high quality experience 
that will enrich the lives of the volunteers. Program funds are used to 
support Senior Companions in providing supportive, individualized 
services to help adults with special needs maintain their dignity and 
independence.



Sec. 2551.12  Definitions.

    (a) Act. The Domestic Volunteer Service Act of 1973, as amended, 
Pub. L. 93-113, Oct. 1, 1973, 87 Stat. 396, 42 U.S.C. 4950 et seq.
    (b) Adult with special needs. Any individual over 21 years of age 
who has one or more physical, emotional, or mental health limitations 
and is in need of assistance to achieve and maintain their highest level 
of independent living.
    (c) Adequate staffing level. The number of project staff or full-
time equivalent needed by a sponsor to manage NSSC project operations 
considering such factors as: number of budgeted Volunteer Service Years 
(VSY), number of volunteer stations, and the size of the service area.
    (d) Annual income. Total cash and in-kind receipts from all sources 
over the preceding 12 months including: the applicant or enrollee's 
income and, the applicant or enrollee's spouse's income, if the spouse 
lives in the same residence. The value of shelter, food, and clothing, 
shall be counted if provided at no cost by persons related to the 
applicant/enrollee, or spouse.
    (e) Chief Executive Officer. The Chief Executive Officer of the 
Corporation appointed under the National and Community Service Act of 
1990, as amended, (NCSA), 42 U.S.C. 12501 et seq.
    (f) Corporation. The Corporation for National and Community Service 
established under the Trust Act. The Corporation is also sometimes 
referred to as CNCS.
    (g) Cost reimbursements. Reimbursements provided to volunteers such 
as stipends to cover incidental costs, meals, and transportation, to 
enable them to serve without cost to themselves. Also included are the 
costs of annual physical examinations, volunteer insurance and 
recognition which are budgeted as Volunteer Expenses.
    (h) In-home. The non-institutional assignment of a Senior Companion 
in a private residence.
    (i) Letter of Agreement. A written agreement between a volunteer 
station, the sponsor and the adult served or the persons legally 
responsible for that adult. It authorizes the assignment of a Senior 
Companion in the clients home, defines the Senior Companion's activities 
and delineates specific arrangements for supervision.
    (j) Memorandum of Understanding. A written statement prepared and 
signed by the Senior Companion project sponsor and the volunteer station 
that identifies project requirements, working relationships and mutual 
responsibilities.
    (k) National Senior Service Corps (NSSC). The collective name for 
the Foster Grandparent Program (FGP), the Retired and Senior Volunteer 
Program (RSVP), the Senior Companion Program (SCP), and Demonstration 
Programs established under Title II Parts A, B, C, and E, of the Act. 
NSSC is also referred to as the ``Senior Corps''.
    (l) Non-Corporation support (required). The percentage share of non-
Federal cash and in-kind contributions, required to be raised by the 
sponsor in support of the grant.
    (m) Non-Corporation support (excess). The amount of non-Federal cash 
and in-kind contributions generated by a

[[Page 782]]

sponsor in excess of the required percentage.
    (n) Project. The locally planned and implemented Senior Companion 
Program activity or set of activities as agreed upon between a sponsor 
and the Corporation.
    (o) Qualified individual with a disability. An individual with a 
disability (as defined in the Rehabilitation Act, 29 U.S.C. 705 (20)) 
who, with or without reasonable accommodation, can perform the essential 
functions of a volunteer position that such individual holds or desires. 
If a sponsor has prepared a written description before advertising or 
interviewing applicants for the position, the written description may be 
considered evidence of the essential functions of the volunteer 
position.
    (p) Service area. The geographically defined area in which Senior 
Companions are recruited, enrolled, and placed on assignments.
    (q) Service schedule. A written delineation of the days and times a 
Senior Companion serves each week.
    (r) Sponsor. A public agency or private non-profit organization that 
is responsible for the operation of a Senior Companion project.
    (s) Stipend. A payment to Senior Companions to enable them to serve 
without cost to themselves. The amount of the stipend is determined by 
the Corporation and is payable in regular installments. The minimum 
amount of the stipend is set by law and shall be adjusted by the CEO 
from time to time.
    (t) Trust Act. The National and Community Service Trust Act of 1993, 
Pub. L. 103-82, Sept. 21, 1993, 107 Stat. 785.
    (u) United States and States. Each of the several States, the 
District of Columbia, the U.S. Virgin Islands, the Commonwealth of 
Puerto Rico, Guam and American Samoa, and Trust Territories of the 
Pacific Islands.
    (v) Volunteer assignment plan. A written description of a Senior 
Companion's assignment with a client. The plan identifies specific 
outcomes for the client served and the activities of the Senior 
Companion.
    (w) Volunteer station. A public agency, private non-profit 
organization or proprietary health care agency or organization that 
accepts the responsibility for assignment and supervision of Senior 
Companions in health, social service or related settings such as multi-
purpose centers, home health care agencies or similar establishments. 
Each volunteer station must be licensed or otherwise certified, when 
required, by the appropriate state or local government. Private homes 
are not volunteer stations.



        Subpart B--Eligibility and Responsibilities of a Sponsor



Sec. 2551.21  Who is eligible to serve as a sponsor?

    The Corporation awards grants to public agencies, including Indian 
tribes and non-profit private organizations, in the United States that 
have the authority to accept and the capability to administer a Senior 
Companion project.



Sec. 2551.22  What are the responsibilities of a sponsor?

    A sponsor is responsible for fulfilling all project management 
requirements necessary to accomplish the purposes of the Senior 
Companion Program as specified in the Act. A sponsor shall not delegate 
or contract these responsibilities to another entity. The sponsor shall 
comply with all program regulations and policies, and grant provisions 
prescribed by the Corporation.



Sec. 2551.23  What are a sponsor's program responsibilities?

    A sponsor shall:
    (a) Focus Senior Companion resources on critical problems affecting 
the frail elderly and other adults with special needs within the 
project's service area.
    (b) Assess in collaboration with other community organizations or 
utilize existing assessment of the needs of the client population in the 
community and develop strategies to respond to those needs using the 
resources of Senior Companions.
    (c) Develop and manage a system of volunteer stations by:
    (1) Insuring that a volunteer station is a public or non-profit 
private organization, or an eligible proprietary health care agency, 
capable of serving

[[Page 783]]

as a volunteer station for the placement of Senior Companions;
    (2) Ensuring that the placement of Senior Companions is governed by 
a Memorandum of Understanding:
    (i) That is negotiated prior to placement;
    (ii) That specifies the mutual responsibilities of the station and 
sponsor;
    (iii) That is renegotiated at least every three years; and
    (iv) That states the station assures it will not discriminate 
against Senior Companions or in the operation of its program on the 
basis of race, color, national origin, sex, age, political affiliation, 
religion, or on the basis of disability, if the participant or member is 
a qualified individual with a disability; and
    (3) Reviewing volunteer placements regularly to ensure that clients 
are eligible to be served.
    (d) Develop service opportunities that consider the skills and 
experiences of the Senior Companion.
    (e) Consider the demographic make-up of the project service area in 
the enrollment of Senior Companions, taking special efforts to recruit 
eligible individuals from minority groups, persons with disabilities, 
and under-represented groups.
    (f) Provide Senior Companions with assignments that show direct and 
demonstrable benefits to the adults and the community served, the Senior 
Companions, and the volunteer station; with required cost reimbursements 
specified in Sec. 2551.45; with not less than 40 hours of orientation of 
which 20 hours must be pre-service, and an average of 4 hours of monthly 
in-service training.
    (g) Encourage the most efficient and effective use of Senior 
Companions by coordinating project services and activities with related 
national, state and local programs, including other Corporation 
programs.
    (h) Conduct an annual appraisal of volunteers' performance and 
annual review of their income eligibility.
    (i) Develop, and annually update, a plan for promoting senior 
service within the project's service area.
    (j) Annually assess the accomplishments and impact of the project on 
the identified needs and problems of the client population in the 
community.
    (k) Establish written service policies for Senior Companions that 
include but are not limited to annual and sick leave, holidays, service 
schedules, termination, appeal procedures, meal and transportation 
reimbursements.

    Effective Date Note: At 67 FR 60998, Sept. 27, 2002, Sec. 2551.23 
was amended by revising paragraph (c)(2)(iv), effective Oct. 28, 2002. 
For the convenience of the user the add text follows:

Sec. 2551.23  What are a sponsor's program responsibilities?

                                * * * * *

    (c) * * *
    (2) * * *
    (iv) That states the station assures it will not discriminate 
against volunteers or in the operation of its program on the basis of 
race; color; national origin, including individuals with limited English 
proficiency; sex; age; political affiliation; religion; or on the basis 
of disability, if the participant or member is a qualified individual 
with a disability; and



Sec. 2551.24  What are a sponsor's responsibilities for securing community participation?

    (a) A sponsor shall secure community participation in local project 
operation by establishing an Advisory Council or a similar 
organizational structure with a membership that includes people:
    (1) Knowledgeable of human and social needs of the community;
    (2) Competent in the field of community service and volunteerism;
    (3) Capable of helping the sponsor meet its administrative and 
program responsibilities including fund-raising, publicity and impact 
programming;
    (4) With interest in and knowledge of the capability of older 
adults; and
    (5) Of a diverse composition that reflects the demographics of the 
service area.
    (b) The sponsor determines how such participation shall be secured, 
consistent with the provisions of paragraphs (a)(1) through (a)(5) of 
this section.



Sec. 2551.25  What are a sponsor's administrative responsibilities?

    A sponsor shall:

[[Page 784]]

    (a) Assume full responsibility for securing maximum and continuing 
community financial and in-kind support to operate the project 
successfully.
    (b) Provide levels of staffing and resources appropriate to 
accomplish the purposes of the project and carry out its project 
management responsibilities.
    (c) Employ a full-time project director to accomplish program 
objectives and manage the functions and activities delegated to project 
staff for NSSC program(s) within its control. A full-time project 
director shall not serve concurrently in another capacity, paid or 
unpaid, during established working hours. The project director may 
participate in activities to coordinate program resources with those of 
related local agencies, boards or organizations. A sponsor may negotiate 
the employment of a part-time project director with the Corporation when 
it can be demonstrated that such an arrangement will not adversely 
affect the size, scope, and quality of project operations.
    (d) Consider all project staff as sponsor employees subject to its 
personnel policies and procedures.
    (e) Compensate project staff at a level that is comparable with 
other similar staff positions in the sponsor organization and/or project 
service area.
    (f) Establish risk management policies and procedures covering 
project and Senior Companion activities. This includes provision of 
appropriate insurance coverage for Senior Companions, vehicles and other 
properties used in the project.
    (g) Establish record keeping/reporting systems in compliance with 
Corporation requirements that ensure quality of program and fiscal 
operations, facilitate timely and accurate submission of required 
reports and cooperate with Corporation evaluation and data collection 
efforts.
    (h) Comply with and ensure that all volunteer stations comply with 
all applicable civil rights laws and regulations, including providing 
reasonable accommodation to qualified individuals with disabilities.



Sec. 2551.26  May a sponsor administer more than one program grant from the Corporation?

    A sponsor may administer more than one Corporation program.



     Subpart C--Suspension and Termination of Corporation Assistance



Sec. 2551.31  What are the rules on suspension, termination, and denial of refunding of grants?

    (a) The Chief Executive Officer or designee is authorized to suspend 
further payments or to terminate payments under any grant providing 
assistance under the Act whenever he/she determines there is a material 
failure to comply with applicable terms and conditions of the grant. The 
Chief Executive Officer shall prescribe procedures to insure that:
    (1) Assistance under the Act shall not be suspended for failure to 
comply with applicable terms and conditions, except in emergency 
situations for thirty days;
    (2) An application for refunding under the Act may not be denied 
unless the recipient has been given:
    (i) Notice at least 75 days before the denial of such application of 
the possibility of such denial and the grounds for any such denial; and
    (ii) Opportunity to show cause why such action should not be taken;
    (3) In any case where an application for refunding is denied for 
failure to comply with the terms and conditions of the grant, the 
recipient shall be afforded and opportunity for an informal hearing 
before an impartial hearing officer, who has been agreed to by the 
recipient and the Corporation; and
    (4) Assistance under the Act shall not be terminated for failure to 
comply with applicable terms and conditions unless the recipient has 
been afforded reasonable notice and opportunity for a full and fair 
hearing.
    (b) In order to assure equal access to all recipients, such hearings 
or other meetings as may be necessary to fulfill the requirements of 
this section shall be held in locations convenient to the recipient 
agency.
    (c) The procedures for suspension, termination, and denial of 
refunding,

[[Page 785]]

that apply to the Senior Companion Program are specified in 45 CFR Part 
1206.



Subpart D--Senior Companion Eligibility, Status, and Cost Reimbursements



Sec. 2551.41  Who is eligible to be a Senior Companion?

    (a) To be a Senior Companion, an individual must:
    (1) Be 60 years of age or older;
    (2) Be determined by a physical examination to be capable, with or 
without reasonable accommodation, of serving adults with special needs 
without detriment to either himself/herself or the adults served;
    (3) Agree to abide by all requirements as set forth in this part; 
and
    (4) In order to receive a stipend, have an income that is within the 
income eligibility guidelines specified in this subpart D.
    (b) Eligibility to be a Senior Companion shall not be restricted on 
the basis of formal education, experience, race, religion, color, 
national origin, sex, age, handicap, or political affiliation.



Sec. 2551.42  What income guidelines govern eligibility to serve as a stipended Senior Companion?

    (a) To be enrolled and receive a stipend, a Senior Companion cannot 
have an annual income from all sources, after deducting allowable 
medical expenses, which exceeds the program's income eligibility 
guideline for the state in which he or she resides. The income 
eligibility guideline for each state is the higher amount of either:
    (1) 125 percent of the poverty line as set forth in 42 U.S.C. 9902 
(2); or
    (2) 135 percent of the poverty line, in those primary metropolitan 
statistical areas (PMSA), metropolitan statistical areas (MSA) and non-
metropolitan counties identified by the Corporation as being higher in 
cost of living, as determined by application of the Volunteers in 
Service to America (VISTA) subsistence rates. In Alaska the guideline 
may be waived by the Corporation State Director if a project 
demonstrates that low-income individuals in that location are 
participating in the project.
    (b) Annual income is counted for the past 12 months and includes the 
applicant or enrollee's income and that of his/her spouse, if the spouse 
lives in the same residence. Sponsors shall count the value of shelter, 
food, and clothing, if provided at no cost by persons related to the 
applicant, enrollee, or spouse.
    (c) Allowable medical expenses are annual out-of-pocket medical 
expenses for health insurance premiums, health care services, and 
medications provided to the applicant, enrollee, or spouse which were 
not and will not be paid by Medicare, Medicaid, other insurance, or 
other third party payor, and which do not exceed 15 percent of the 
applicable income guideline.
    (d) Applicants whose income is not more than 100 percent of the 
poverty line shall be given special consideration for enrollment.
    (e) Once enrolled, a Senior Companion shall remain eligible to serve 
and to receive a stipend so long as his or her income, does not exceed 
the applicable income eligibility guideline by 20 percent.

    Effective Date Note: At 67 FR 60998, Sept. 27, 2002, Sec. 2551.42 
was amended by revising paragraph (b), effective Oct. 28, 2002. For the 
convenience of the user the revised text follows:

Sec. 2551.42  What income guidelines govern eligibility to serve as a 
          stipended Senior Companion?

                                * * * * *

    (b) For applicants to become stipended Senior Companions, annual 
income is projected for the following 12 months, based on income at the 
time of application. For serving stipended Senior Companions, annual 
income is counted for the past 12 months. Annual income includes the 
applicant or enrollee's income and that of his/her spouse, if the spouse 
lives in the same residence. Sponsors shall count the value of shelter, 
food, and clothing, if provided at no cost by persons related to the 
applicant, enrollee, or spouse.



Sec. 2551.43  What is considered income for determining volunteer eligibility?

    (a) For determining eligibility, ``in- come'' refers to total cash 
or in-kind

[[Page 786]]

receipts before taxes from all sources including:
    (1) Money, wages, and salaries before any deduction, but not 
including food or rent in lieu of wages;
    (2) Receipts from self-employment or from a farm or business after 
deductions for business or farm expenses;
    (3) Regular payments for public assistance, Social Security, 
Unemployment or Workers Compensation, strike benefits, training 
stipends, alimony, child support, and military family allotments, or 
other regular support from an absent family member or someone not living 
in the household;
    (4) Government employee pensions, private pensions, and regular 
insurance or annuity payments; and
    (5) Income from dividends, interest, net rents, royalties, or income 
from estates and trusts.
    (b) For eligibility purposes, income does not refer to the following 
money receipts:
    (1) Any assets drawn down as withdrawals from a bank, sale of 
property, house or car, tax refunds, gifts, one-time insurance payments 
or compensation from injury;
    (2) Non-cash income, such as the bonus value of food and fuel 
produced and consumed on farms and the imputed value of rent from owner-
occupied farm or non-farm housing.



Sec. 2551.44  Is a Senior Companion a federal employee, an employee of the sponsor or of the volunteer station?

    Senior Companions are volunteers, and are not employees of the 
sponsor, the volunteer station, the Corporation, or the Federal 
Government.



Sec. 2551.45  What cost reimbursements are provided to Senior Companions?

    Cost reimbursements include:
    (a) Stipend. Senior Companions who are income eligible will receive 
a stipend in an amount determined by the Corporation and payable in 
regular installments, to enable them to serve without cost to 
themselves. The stipend is paid for the time Senior Companions spend 
with their assigned clients, for earned leave, and for attendance at 
official project events.
    (b) Insurance. A Senior Companion is provided with the Corporation-
specified minimum levels of insurance as follows:
    (1) Accident insurance. Accident insurance covers Senior Companions 
for personal injury during travel between their homes and places of 
assignment, during their volunteer service, during meal periods while 
serving as a volunteer, and while attending project-sponsored 
activities. Protection shall be provided against claims in excess of any 
benefits or services for medical care or treatment available to the 
volunteer from other sources.
    (2) Personal liability insurance. Protection is provided against 
claims in excess of protection provided by other insurance. It does not 
include professional liability coverage.
    (3) Excess automobile liability insurance. (i) For Senior Companions 
who drive in connection with their service, protection is provided 
against claims in excess of the greater of either:
    (A) Liability insurance volunteers carry on their own automobiles; 
or
    (B) The limits of applicable state financial responsibility law, or 
in its absence, levels of protection to be determined by the Corporation 
for each person, each accident, and for property damage.
    (ii) Senior Companions who drive their personal vehicles to or on 
assignments or project-related activities must maintain personal 
automobile liability insurance equal to or exceeding the levels 
established by the Corporation.
    (c) Transportation. Senior Companions shall receive assistance with 
the cost of transportation to and from volunteer assignments and 
official project activities, including orientation, training, and 
recognition events.
    (d) Physical examination. Senior Companions are provided a physical 
examination prior to assignment and annually thereafter to ensure that 
they will be able to provide supportive service without injury to 
themselves or the clients served.
    (e) Meals and recognition. Senior Companions shall be provided the 
following within limits of the project's available resources:
    (1) Assistance with the cost of meals taken while on assignment; and
    (2) Recognition for their service.

[[Page 787]]


    Effective Date Note: At 67 FR 60998, Sept. 27, 2002, Sec. 2551.45 
was amended by republishing the introductory text and adding paragraph 
(f), effective Oct. 28, 2002. For the convenience of the user the added 
text follows:

Sec. 2551.45  What cost reimbursements are provided to Senior 
          Companions?

    Cost reimbursements include:

                                * * * * *

    (f) Leadership incentive. Senior Companions who serve as volunteer 
leaders, assisting new Senior Companions or coordinating other Senior 
Companions in accordance with the Act, may be paid a monetary incentive.



Sec. 2551.46  May the cost reimbursements of a Senior Companion be subject to any tax or charge, be treated as wages or compensation, or affect eligibility to 
          receive assistance from other programs?

    No. Senior Companion's cost reimbursements are not subject to any 
tax or charge or treated as wages or compensation for the purposes of 
unemployment insurance, worker's compensation, temporary disability, 
retirement, public assistance, or similar benefit payments or minimum 
wage laws. Cost reimbursements are not subject to garnishment and do not 
reduce or eliminate the level of, or eligibility for, assistance or 
services a Senior Companion may be receiving under any governmental 
program.



              Subpart E--Senior Companion Terms of Service



Sec. 2551.51  What are the terms of service of a Senior Companion?

    A Senior Companion shall serve a minimum of nine months a year for 
an average of 20 hours of service a week. A Senior Companion shall not 
serve more than 1044 hours per year.

    Effective Date Note: At 67 FR 60998, Sept. 27, 2002, Sec. 2551.51 
was revised, effective Oct. 28, 2002. For the convenience of the user 
the revised text follows:

Sec. 2551.51  What are the terms of service of a Senior Companion?

    A Senior Companion shall serve a minimum of 15 hours per week and a 
maximum of 40 hours per week. A Senior Companion shall not serve more 
than 2088 hours per year. Within these limitations, a sponsor may set 
service policies consistent with local needs.



Sec. 2551.52  What factors are considered in determining a Senior Companion's service schedule?

    (a) Travel time between the Senior Companion's home and place of 
assignment is not part of the service schedule and is not stipended.
    (b) Travel time between individual assignments is a part of the 
service schedule and is stipended.
    (c) Meal time may be part of the service schedule and is stipended 
only if it is specified in the goal statement as part of the service 
activity.



Sec. 2551.53  Under what circumstances may a Senior Companion's service be terminated?

    (a) A sponsor may remove a Senior Companion from service for cause. 
Grounds for removal include but are not limited to: extensive and 
unauthorized absences; misconduct; inability to perform assignments; and 
failure to accept supervision. A Senior Companion may also be removed 
from service for having income in excess of the eligibility level.
    (b) The sponsor shall establish appropriate policies on service 
termination as well as procedures for appeal from such adverse action.



           Subpart F--Responsibilities of a Volunteer Station



Sec. 2551.61  When may a sponsor serve as a volunteer station?

    (a) A sponsor may function as a volunteer station if it is:
    (1) A State organization administering a statewide Senior Companion 
project where the volunteer station is part of the State organization; 
or
    (2) A Federal or State-recognized Indian tribal government.
    (b) Other sponsors not included in the categories specified in 
paragraphs (a)(1) and (a)(2) of this section, can serve as a volunteer 
station provided that no more than 20 percent of its budgeted VSYs can 
be placed in programs administered by such sponsors. In special 
circumstances, the Corporation may grant a waiver to increase this 
percentage.

[[Page 788]]


    Effective Date Note: At 67 FR 60999, Sept. 27, 2002, Sec. 2551.61 
was revised, effective Oct. 28, 2002. For the convenience of the user 
the revised text follows:

Sec. 2551.61  May a sponsor serve as a volunteer station?

    Yes, a sponsor may serve as a volunteer station, provided this is 
part of the application workplan approved by the Corporation.



Sec. 2551.62  What are the responsibilities of a volunteer station?

    A volunteer station shall undertake the following responsibilities 
in support of Senior Companion volunteers:
    (a) Develop volunteer assignments that meet the requirements 
specified in Secs. 2551.71 through 2551.72, and regularly assess those 
assignments for continued appropriateness.
    (b) Select eligible clients for assigned volunteers.
    (c) Develop a written volunteer assignment plan for each client that 
identifies the role and activities of the Senior Companion and expected 
outcomes for the client served.
    (d) Obtain a Letter of Agreement for Senior Companions assigned in-
home. This letter must comply with all Federal, State and local 
regulations.
    (e) Provide Senior Companions serving the station with:
    (1) Orientation to the station and any in-service training necessary 
to enhance performance of assignments;
    (2) Resources required for performance of assignments including 
reasonable accommodation; and
    (3) Appropriate recognition.
    (f) Designate a staff member to oversee fulfillment of station 
responsibilities and supervision of Senior Companions while on 
assignment.
    (g) Keep records and prepare reports required by the sponsor.
    (h) Provide for the safety of Senior Companions assigned to it.
    (i) Comply with all applicable civil rights laws and regulations 
including reasonable accommodation for Senior Companions with 
disabilities.
    (j) Undertake such other responsibilities as may be necessary to the 
successful performance of Senior Companions in their assignments or as 
agreed to in the Memorandum of Understanding.



         Subpart G--Senior Companion Placements and Assignments



Sec. 2551.71  What requirements govern the assignment of Senior Companions?

    Senior Companion assignments shall:
    (a) Provide for Senior Companions to give direct services to one or 
more eligible adults. Senior Companions cannot provide services such as 
those performed by medical personnel, services to large numbers of 
clients, custodial services, administrative support services or other 
services that would detract from the person-to-person relationship.
    (b) Result in person-to-person supportive relationships with each 
client served.
    (c) Support the achievement and maintenance of the highest level of 
independent living for their clients.
    (d) Be meaningful to the Senior Companion.
    (e) Be supported by appropriate orientation, training and 
supervision.

    Effective Date Note: At 67 FR 60999, Sept. 27, 2002, Sec. 2551.71 
was revised, effective Oct. 28, 2002. For the convenience of the user 
the revised text follows:

Sec. 2551.71  What requirements govern the assignment of Senior 
          Companions?

    (a) Senior Companion assignments shall provide for Senior Companions 
to give direct services to one or more eligible adults that:
    (1) Result in person-to-person supportive relationships with each 
client served.
    (2) Support the achievement and maintenance of the highest level of 
independent living for their clients.
    (3) Are meaningful to the Senior Companion.
    (4) Are supported by appropriate orientation, training, and 
supervision.
    (b) Senior Companions may serve as volunteer leaders, and in this 
capacity may provide indirect services. Senior Companions with special 
skills or demonstrated leadership ability may assist newer Senior 
Companion volunteers in performing their assignments and in coordinating 
activities of such volunteers.
    (c) Senior Companions shall not provide services such as those 
performed by medical personnel, services to large numbers of clients, 
custodial services, administrative support services, or other services 
that would detract from their assignment.

[[Page 789]]



Sec. 2551.72  Is a written volunteer assignment plan required for each volunteer?

    (a) All Senior Companions shall receive a written volunteer 
assignment plan developed by the volunteer station that:
    (1) Is approved by the sponsor and accepted by the Senior Companion;
    (2) Identifies the individual client to be served;
    (3) Identifies the role and activities of the Senior Companion and 
expected outcomes for the client;
    (4) Addresses the period of time each client should receive such 
services; and
    (5) Is used to review the status of the Senior Companion's services 
in working with the assigned client, as well as the impact of the 
assignment on the client.
    (b) If there is an existing plan that incorporates paragraphs 
(a)(2), (3), and (4) of this section, that plan shall meet the 
requirement.

    Effective Date Note: At 67 FR 60999, Sept. 27, 2002, Sec. 2551.72 
was revised, effective Oct. 28, 2002. For the convenience of the user 
the revised text follows:

Sec. 2551.72  Is a written volunteer assignment plan required for each 
          volunteer?

    (a) All Senior Companions performing direct services to individual 
clients in home settings and individual clients in community-based 
settings, shall receive a written volunteer assignment plan developed by 
the volunteer station that:
    (1) Is approved by the sponsor and accepted by the Senior Companion;
    (2) Identifies the client(s) to be served;
    (3) Identifies the role and activities of the Senior Companion and 
expected outcomes for the client(s);
    (4) Addresses the period of time each client is expected to receive 
such services; and
    (5) Is used to review the status of the Senior Companion's services 
in working with the assigned client(s), as well as the impact of the 
assignment on the client(s).
    (b) If there is an existing plan that incorporates paragraphs 
(a)(2), (3), and (4) of this section, that plan shall meet the 
requirement.
    (c) All Senior Companions serving as volunteer leaders shall receive 
a written volunteer assignment plan developed by the volunteer station 
that:
    (1) Is approved by the sponsor and accepted by the Senior Companion;
    (2) Identifies the role and activities of the Senior Companion and 
expected outcomes;
    (3) Addresses the period of time of service; and
    (4) Is used to review the status of the Senior Companion's services 
identified in the assignment plan, as well as the impact of those 
services.



                        Subpart H--Clients Served



Sec. 2551.81  What type of clients are eligible to be served?

    Senior Companions serve only adults, primarily older adults, who 
have one or more physical, emotional, or mental health limitations and 
are in need of assistance to achieve and maintain their highest level of 
independent living.



             Subpart I--Application and Fiscal Requirements



Sec. 2551.91  What is the process for application and award of a grant?

    (a) How and when may an eligible organization apply for a grant?
    (1) An eligible organization may file an application for a grant at 
any time.
    (2) Before submitting an application an applicant shall determine 
the availability of funds from the Corporation.
    (3) The Corporation may also solicit grant applicants. Applicants 
solicited under this provision are not assured of selection or approval 
and may have to compete with other solicited or unsolicited 
applications.
    (b) What must an eligible organization include in a grant 
application?
    (1) An applicant shall complete standard forms prescribed by the 
Corporation.
    (2) The applicant shall comply with the provisions of Executive 
Order 12372, ``Intergovernmental Review of Federal Programs,'' (3 CFR, 
1982 Comp., p. 197) in 45 CFR part 1233 and any other applicable 
requirements.
    (c) Who reviews the merits of an application and how is a grant 
awarded?
    (1) The Corporation reviews and determines the merit of an 
application by its responsiveness to published guidelines and to the 
overall purpose and objectives of the program. When funds are available, 
the Corporation awards a grant in writing to each applicant whose grant 
proposal provides the best potential for serving the purpose of the

[[Page 790]]

program. The award will be documented by Notice of Grant Award (NGA).
    (2) The Corporation and the sponsoring organization are the parties 
to the NGA. The NGA will document the sponsor's commitment to fulfill 
specific programmatic objectives and financial obligations. It will 
document the extent of the Corporation's obligation to provide financial 
support to the sponsor.
    (d) What happens if the Corporation rejects an application? The 
Corporation will return to the applicant an application that is not 
approved for funding, with an explanation of the Corporation's decision.
    (e) For what period of time does the Corporation award a Senior 
Companion grant? The Corporation awards a Senior Companion grant for a 
specified period that is usually 12 months in duration.



Sec. 2551.92  What are project funding requirements?

    (a) Is non-Corporation support required? A Corporation grant may be 
awarded to fund up to 90 percent of the cost of development and 
operation of a Senior Companion project. The sponsor is required to 
contribute at least 10 percent of the total project cost from non-
Federal sources or authorized Federal sources.
    (b) Under what circumstances does the Corporation allow less than 
the 10 percent non-Corporation support? The Corporation may allow 
exceptions to the 10 percent local support requirement in cases of 
demonstrated need such as:
    (1) Initial difficulties in the development of local funding sources 
during the first three years of operations; or
    (2) An economic downturn, the occurrence of a natural disaster, or 
similar events in the service area that severely restrict or reduce 
sources of local funding support; or
    (3) The unexpected discontinuation of local support from one or more 
sources that a project has relied on for a period of years.
    (c) May the Corporation restrict how a sponsor uses locally 
generated contributions in excess of the 10 percent non-Corporation 
support required? Whenever locally generated contributions to Senior 
Companion projects are in excess of the minimum 10 percent non-
Corporation support required, the Corporation may not restrict the 
manner in which such contributions are expended provided such 
expenditures are consistent with the provisions of the Act.
    (d) Are program expenditures subject to audit? All expenditures by 
the grantee of Federal and non-Federal funds, including expenditures 
from excess locally generated contributions in support of the grant are 
subject to audit by the Corporation, its Inspector General, or their 
authorized agents.
    (e) How are Senior Companion cost reimbursements budgeted? The total 
of cost reimbursements for Senior Companions, including stipends, 
insurance, transportation, meals, physical examinations, and 
recognition, shall be a sum equal to at least 80 percent of the amount 
of the federal share of the grant award. Federal, required non-Federal, 
and excess non-federal resources can be used to make up the amount 
allotted for cost reimbursements.
    (f) May a sponsor pay stipends at a rate different than the rate 
established by the Corporation? A sponsor shall pay stipends at the same 
rate as that established by the Corporation.



Sec. 2551.93  What are grants management requirements?

    What rules govern a sponsor's management of grants?
    (a) A sponsor shall manage a grant in accordance with:
    (1) The Act;
    (2) Regulations in this part;
    (3) 45 CFR Part 2541, ``Uniform Administrative Requirements for 
Grants and Cooperative Agreements to State and Local Governments'', or 
45 CFR Part 2543, ``Grants and Agreements with Institutions of Higher 
Education, Hospitals, and Other Non-Profit Organizations';
    (4) The following OMB Circulars, as appropriate A-21, ``Cost 
Principles for Educational Institution'', A-87, ``Cost Principles for 
State, Local and Indian Tribal Governments'', A-122, ``Cost Principles 
for Non-Profit Organizations'', and A-133, ``Audits of States, Local 
Governments, and Other Non-Profit Organizations'' (OMB circulars are 
available electronically at the OMB

[[Page 791]]

homepage www.whitehouse.gov/WH/EOP/omb); and
    (5) Other applicable Corporation requirements.
    (b) Project support provided under a Corporation grant shall be 
furnished at the lowest possible cost consistent with the effective 
operation of the project.
    (c) Project costs for which Corporation funds are budgeted must be 
justified as being necessary and essential to project operation.
    (d) Other than reimbursement for meals during a normal meal period, 
project funds shall not be used to reimburse volunteers for expenses, 
including transportation costs, incurred while performing their 
volunteer assignments. Equipment or supplies for volunteers on 
assignment are not allowable costs. Assignment-related costs of 
transportation, equipment, supplies, etc. are the responsibility of the 
volunteer station or a third party, and are not an allowable grant cost.
    (e) Volunteer expense items, including transportation, meals, 
recognition activities and items purchased at the volunteers' own 
expense and which are not reimbursed, are not allowable as contributions 
to the non-Federal share of the budget.
    (f) Costs of other insurance not required by program policy, but 
maintained by a sponsor for the general conduct of its activities are 
allowable with the following limitations:
    (1) Types and extent of and cost of coverage are according to sound 
institutional and business practices;
    (2) Costs of insurance or a contribution to any reserve covering the 
risk of loss of or damage to Government-owned property are unallowable 
unless the government specifically requires and approves such costs; and
    (3) The cost of insurance on the lives of officers, trustees or 
staff is unallowable except where such insurance is part of an employee 
plan which is not unduly restricted.
    (g) Costs to bring a sponsor into basic compliance with 
accessibility requirements for individuals with disabilities are not 
allowable costs.
    (h) Payments to settle discrimination allegations, either informally 
through a settlement agreement or formally as a result of a decision 
finding discrimination, are not allowable costs.
    (i) Written Corporation approval/concurrence is required for the 
following changes in the approved grant:
    (1) Reduction in budgeted volunteer service years.
    (2) Change in the service area.
    (3) Transfer of budgeted line items from Volunteer Expenses to 
Support Expenses. This requirement does not apply if the 80 percent 
volunteer cost reimbursement ratio is maintained.



               Subpart J--Non-Stipended Senior Companions.



Sec. 2551.101  What rule governs the recruitment and enrollment of persons who do not meet the income eligibility guidelines to serve as Senior Companions 
          without stipends?

    Over-income persons, age 60 or over, may be enrolled in SCP projects 
as non-stipended volunteers in communities where there is no RSVP 
project or where agreement is reached with the RSVP project that allows 
for the enrollment of non-stipended volunteers in the SCP project.



Sec. 2551.102  What are the conditions of service of non-stipended Senior Companions?

    Non-stipended Senior Companions serve under the following 
conditions:
    (a) They must not displace or prevent eligible low-income 
individuals from becoming Senior Companions.
    (b) No special privilege or status is granted or created among 
Senior Companions, stipended or non-stipended, and equal treatment is 
required.
    (c) Training, supervision, and other support services and cost 
reimbursements, other than the stipend, are available equally to all 
Senior Companions.
    (d) All regulations and requirements applicable to the program, with 
the exception listed in paragraph (f) of this section, apply to all 
Senior Companions.
    (e) Non-stipended Senior Companions may be placed in separate 
volunteer stations where warranted.
    (f) Non-stipended Senior Companions will be encouraged but not 
required to serve an average of 20 hours per week

[[Page 792]]

and nine months per year. Senior Companions will maintain a close 
person-to-person relationship with their assigned special needs clients 
on a regular basis.
    (g) Non-stipended Senior Companions may contribute the costs they 
incur in connection with their participation in the program. Such 
contributions are not counted as part of the required non-federal share 
of the grant but may be reflected in the budget column for excess non-
federal resources.



Sec. 2551.103  Must a sponsor be required to enroll non-stipended Senior Companions?

    Enrollment of non-stipended Senior Companions is not a factor in the 
award of new or continuation grants.



Sec. 2551.104  May Corporation funds be used for non-stipended Senior Companions?

    Federally appropriated funds for SCP shall not be used to pay any 
cost, including any administrative cost, incurred in implementing the 
regulations in this part for non-stipended Senior Companions.



             Subpart K--Non-Corporation Funded SCP Projects



Sec. 2551.111  Under what conditions can an agency or organization sponsor a Senior Companion project without Corporation funding?

    An eligible agency or organization who wishes to sponsor a Senior 
Companion project without Corporation funding, must sign a Memorandum of 
Agreement with the Corporation that:
    (a) Certifies its intent to comply with all Corporation requirements 
for the Senior Companion Program; and
    (b) Identifies responsibilities to be carried out by each party.



Sec. 2551.112  What benefits are a non-Corporation funded project entitled to?

    The Memorandum of Agreement entitles the sponsor of a non-
Corporation funded project to:
    (a) All technical assistance and materials provided to Corporation-
funded Senior Companion projects; and
    (b) The application of the provisions of 42 U.S.C. 5044 and 5058.



Sec. 2551.113  What financial obligation does the Corporation incur for non-Corporation funded projects?

    Entry into a Memorandum of Agreement with, or issuance of an NGA to 
a sponsor of a non-Corporation funded project, does not create a 
financial obligation on the part of the Corporation for any costs 
associated with the project, including increases in required payments to 
Senior Companion's that may result from changes in the Act or in program 
regulations.



Sec. 2551.114  What happens if a non-Corporation funded sponsor does not comply with the Memorandum of Agreement?

    A non-Corporation funded project sponsor's noncompliance with the 
Memorandum of Agreement may result in suspension or termination of the 
Corporation's agreement and all benefits specified in Sec. 2551.112.



            Subpart L--Restrictions and Legal Representation



Sec. 2551.121  What legal limitations apply to the operation of the Senior Companion Program and to the expenditure of grant funds?

    (a) Political activities. (1) No part of any grant shall be used to 
finance, directly or indirectly, any activity to influence the outcome 
of any election to public office, or any voter registration activity.
    (2) No project shall be conducted in a manner involving the use of 
funds, the provision of services, or the employment or assignment of 
personnel in a matter supporting or resulting in the identification of 
such project with:
    (i) Any partisan or nonpartisan political activity associated with a 
candidate, or contending faction or group, in an election; or
    (ii) Any activity to provide voters or prospective voters with 
transportation to the polls or similar assistance in connection with any 
such election; or

[[Page 793]]

    (iii) Any voter registration activity, except that voter 
registration applications and nonpartisan voter registration information 
may be made available to the public at the premises of the sponsor. But 
in making registration applications and nonpartisan voter registration 
information available, employees of the sponsor shall not express 
preferences or seek to influence decisions concerning any candidate, 
political party, election issue, or voting decision.
    (3) The sponsor shall not use grant funds in any activity for the 
purpose of influencing the passage or defeat of legislation or proposals 
by initiative petition, except:
    (i) In any case in which a legislative body, a committee of a 
legislative body, or a member of a legislative body requests any 
volunteer in, or employee of such a program to draft, review or testify 
regarding measures or to make representation to such legislative body, 
committee or member; or
    (ii) In connection with an authorization or appropriations measure 
directly affecting the operation of the Senior Companion Program.
    (b) Non-displacement of employed workers. A Senior Companion shall 
not perform any service or duty or engage in any activity which would 
otherwise be performed by an employed worker or which would supplant the 
hiring of or result in the displacement of employed workers, or impair 
existing contracts for service.
    (c) Compensation for service. (1) An agency or organization to which 
NSSC volunteers are assigned or which operates or supervises any NSSC 
program shall not request or receive any compensation from NSSC 
volunteers or from beneficiaries for services of NSSC volunteers.
    (2) This section does not prohibit a sponsor from soliciting and 
accepting voluntary contributions from the community at large to meet 
its local support obligations under the grant or from entering into 
agreements with parties other than beneficiaries to support additional 
volunteers beyond those supported by the Corporation grant.
    (3) A Senior Companion volunteer station may contribute to the 
financial support of the Senior Companion Program. However, this support 
shall not be a required precondition for a potential station to obtain 
Senior Companion service.
    (4) If a volunteer station agrees to provide funds to support 
additional Senior Companions or pay for other Senior Companion support 
costs, the agreement shall be stated in a written Memorandum of 
Understanding. The sponsor shall withdraw services if the station's 
inability to provide monetary or in-kind support to the project under 
the Memorandum of Understanding diminishes or jeopardizes the project's 
financial capabilities to fulfill its obligations.
    (5) Under no circumstances shall a Senior Companion receive a fee 
for service from service recipients, their legal guardian, members of 
their family, or friends.
    (d) Labor and anti-labor activity. The sponsor shall not use grant 
funds directly or indirectly to finance labor or anti-labor organization 
or related activity.
    (e) Fair labor standards. A sponsor that employs laborers and 
mechanics for construction, alteration, or repair of facilities shall 
pay wages at prevailing rates as determined by the Secretary of Labor in 
accordance with the Davis-Bacon Act, as amended, 40 U.S.C. 276a.
    (f) Nondiscrimination. A sponsor or sponsor employee shall not 
discriminate against a Senior Companion on the basis of race, color, 
national origin, sex, age, religion, or political affiliation, or on the 
basis of disability, if the Senior Companion with a disability is 
qualified to serve.
    (g) Religious activities. A Senior Companion or a member of the 
project staff funded by the Corporation shall not give religious 
instruction, conduct worship services or engage in any form of 
proselytization as part of his or her duties.
    (h) Nepotism. Persons selected for project staff positions shall not 
be related by blood or marriage to other project staff, sponsor staff or 
officers, or members of the sponsor Board of Directors, unless there is 
written concurrence from the community group established by the sponsor 
under Subpart

[[Page 794]]

B of this part and with notification to the Corporation.



Sec. 2551.122  What legal coverage does the Corporation make available to Senior Companions?

    It is within the Corporation's discretion to determine if Counsel is 
employed and counsel fees, court costs, bail and other expenses 
incidental to the defense of a Senior Companion are paid in a criminal, 
civil or administrative proceeding, when such a proceeding arises 
directly out of performance of the Senior Companion's activities. The 
circumstances under which the Corporation shall pay such expenses are 
specified in 45 CFR part 1220.



PART 2552--FOSTER GRANDPARENT PROGRAM--Table of Contents




                           Subpart A--General

Sec.
2552.11  What is the Foster Grandparent Program?
2552.12  Definitions.

        Subpart B--Eligibility and Responsibilities of a Sponsor

2552.21  Who is eligible to serve as a sponsor?
2552.22  What are the responsibilities of a sponsor?
2552.23  What are a sponsor's program responsibilities?
2552.24  What are a sponsor's responsibilities for securing community 
          participation?
2552.25  What are a sponsor's administrative responsibilities?
2552.26  May a sponsor administer more than one program grant from the 
          Corporation?

     Subpart C--Suspension and Termination of Corporation Assistance

2552.31  What are the rules on suspension, termination, and denial of 
          refunding of grants?

       Subpart D--Foster Grandparent Eligibility, Status and Cost 
                             Reimbursements

2552.41  Who is eligible to be a Foster Grandparent?
2552.42  What income guidelines govern eligibility to serve as a 
          stipended Foster Grandparent?
2552.43  What is considered income for determining volunteer 
          eligibility?
2552.44  Is a Foster Grandparent a federal employee, an employee of the 
          sponsor or of the volunteer station?
2552.45  What cost reimbursements are provided to Foster Grandparents?
2552.46  May the cost reimbursements of a Foster Grandparent be subject 
          to any tax or charge, be treated as wages or compensation, or 
          affect eligibility to receive assistance from other programs?

             Subpart E--Foster Grandparent Terms of Service

2552.51  What are the terms of service of a Foster Grandparent?
2552.52  What factors are considered in determining a Foster 
          Grandparent's service schedule?
2552.53  Under what circumstances may a Foster Grandparent's service be 
          terminated?

           Subpart F--Responsibilities of a Volunteer Station

2552.61  When may a sponsor serve as a volunteer station?
2552.62  What are the responsibilities of a volunteer station?

        Subpart G--Foster Grandparent Placements and Assignments

2552.71  What requirements govern the assignment of Foster Grandparents?
2552.72  Is a written volunteer assignment plan required for each 
          volunteer?

                       Subpart H--Children Served

2552.81  What type of children are eligible to be served?
2552.82  Under what circumstances may a Foster Grandparent continue to 
          serve an individual beyond his or her 21st birthday?

             Subpart I--Application and Fiscal Requirements

2552.91  What is the process for application and award of a grant?
2552.92  What are project funding requirements?
2552.93  What are grants management requirements?

              Subpart J--Non-Stipended Foster Grandparents

2552.101  What rule governs the recruitment and enrollment of persons 
          who do not meet the income eligibility guidelines to serve as 
          Foster Grandparents without stipends?
2552.102  What are the conditions of service of non-stipended Foster 
          Grandparents?
2552.103  Must a sponsor be required to enroll non-stipended Foster 
          Grandparents?

[[Page 795]]

2552.104  May Corporation funds be used for non-stipended Foster 
          Grandparents?

  Subpart K--Non-Corporation Funded Foster Grandparent Program Projects

2552.111  Under what conditions can an agency or organization sponsor a 
          Foster Grandparent project without Corporation funding?
2552.112  What benefits are a non-Corporation funded project entitled 
          to?
2552.113  What financial obligation does the Corporation incur for non-
          Corporation funded projects?
2552.114  What happens if a non-Corporation funded sponsor does not 
          comply with the Memorandum of Agreement?

            Subpart L--Restrictions and Legal Representation

2552.121  What legal limitations apply to the operation of the Foster 
          Grandparent Program and to the expenditure of grant funds?
2552.122  What legal coverage does the Corporation make available to 
          Foster Grandparents?

    Authority: 42 U.S.C. 4950 et seq.

    Source: 64 FR 14126, Mar. 24, 1999, unless otherwise noted.



                           Subpart A--General



Sec. 2552.11  What is the Foster Grandparent Program?

    The Foster Grandparent Program provides grants to qualified agencies 
and organizations for the dual purpose of: engaging persons 60 and 
older, particularly those with limited incomes, in volunteer service to 
meet critical community needs; and to provide a high quality experience 
that will enrich the lives of the volunteers. Program funds are used to 
support Foster Grandparents in providing supportive, person to person 
service to children with exceptional or special needs.



Sec. 2552.12  Definitions.

    (a) Act. The Domestic Volunteer Service Act of 1973, as amended, 
Pub. L. 93-113, Oct. 1, 1973, 87 Stat. 396, 42 U.S.C. 4950 et seq.
    (b) Adequate staffing level. The number of project staff or full-
time equivalent needed by a sponsor to manage NSSC project operations 
considering such factors as: number of budgeted volunteers/Volunteer 
Service Years (VSYs), number of volunteer stations, and the size of the 
service area.
    (c) Annual income. Total cash and in-kind receipts from all sources 
over the preceding 12 months including: the applicant or enrollee's 
income and, the applicant or enrollee's spouse's income, if the spouse 
lives in the same residence. The value of shelter, food, and clothing, 
shall be counted if provided at no cost by persons related to the 
applicant/enrollee, or spouse.
    (d) Chief Executive Officer. The Chief Executive Officer of the 
Corporation appointed under the National and Community Service Act of 
1990, as amended, (NCSA), 42 U.S.C. 12501 et seq.
    (e) Child. Any individual who is less than 21 years of age.
    (f) Children having exceptional needs. Children who are 
developmentally disabled, such as those who are autistic, have cerebral 
palsy or epilepsy, are visually impaired, speech impaired, hearing 
impaired, orthopedically impaired, are emotionally disturbed or have a 
language disorder, specific learning disability, have multiple 
disabilities, other significant health impairment or have literacy 
needs. Existence of a child's exceptional need shall be verified by an 
appropriate professional, such as a physician, psychiatrist, 
psychologist, registered nurse or licensed practical nurse, speech 
therapist or educator before a Foster Grandparent is assigned to the 
child.
    (g) Children with special needs. Children who are abused or 
neglected; in need of foster care; adjudicated youth; homeless youths; 
teen-age parents; and children in need of protective intervention in 
their homes. Existence of a child's special need shall be verified by an 
appropriate professional before a Foster Grandparent is assigned to the 
child.
    (h) Corporation. The Corporation for National and Community Service 
established under the NCSA. The Corporation is also sometimes referred 
to as CNCS.
    (i) Cost reimbursements. Reimbursements provided to volunteers such 
as stipends to cover incidental costs, meals, and transportation, to 
enable them to serve without cost to themselves. Also included are the 
costs of

[[Page 796]]

annual physical examinations, volunteer insurance and recognition which 
are budgeted as Volunteer Expenses.
    (j) In-home. The non-institutional assignment of a Foster 
Grandparent in a private residence or a foster home.
    (k) Letter of Agreement. A written agreement between a volunteer 
station, the sponsor and the parent or persons legally responsible for 
the child served by the Foster Grandparent. It authorizes the assignment 
of a Foster Grandparent in the child's home, defines the Foster 
Grandparent's activities and delineates specific arrangements for 
supervision.
    (l) Memorandum of Understanding. A written statement prepared and 
signed by the Foster Grandparent project sponsor and the volunteer 
station that identifies project requirements, working relationships and 
mutual responsibilities.
    (m) National Senior Service Corps (NSSC). The collective name for 
the Foster Grandparent Program (FGP), the Retired and Senior Volunteer 
Program (RSVP), the Senior Companion Program (SCP), and Demonstration 
Programs established under Title II Parts A, B, C, and E, of the Act. 
NSSC is also referred to as the ``Senior Corps''.
    (n) Non-Corporation support (required). The percentage share of non-
Federal cash and in-kind contributions, required to be raised by the 
sponsor in support of the grant.
    (o) Non-Corporation support (excess). The amount of non-Federal cash 
and in-kind contributions generated by a sponsor in excess of the 
required percentage.
    (p) Parent. A natural parent or a person acting in place of a 
natural parent, such as a guardian, a child's natural grandparent, or a 
step-parent with whom the child lives. The term also includes otherwise 
unrelated individuals who are legally responsible for a child's welfare.
    (q) Project. The locally planned and implemented Foster Grandparent 
Program activity or set of activities as agreed upon between a sponsor 
and the Corporation.
    (r) Qualified individual with a disability. An individual with a 
disability (as defined in the Rehabilitation Act, 29 U.S.C. 705 (20)) 
who, with or without reasonable accommodation, can perform the essential 
functions of a volunteer position that such individual holds or desires. 
If a sponsor has prepared a written description before advertising or 
interviewing applicants for the position, the written description may be 
considered evidence of the essential functions of the volunteer 
position.
    (s) Service area. The geographically defined area in which Foster 
Grandparents are recruited, enrolled, and placed on assignments.
    (t) Service schedule. A written delineation of the days and times a 
Foster Grandparent serves each week.
    (u) Sponsor. A public agency or private non-profit organization that 
is responsible for the operation of a Foster Grandparent project.
    (v) Stipend. A payment to Foster Grandparents to enable them to 
serve without cost to themselves. The amount of the stipend is 
determined by the Corporation and is payable in regular installments. 
The minimum amount of the stipend is set by law and shall be adjusted by 
the CEO from time to time.
    (w) Trust Act. The National and Community Service Trust Act of 1993, 
Pub. L. 103-82, Sept. 21, 1993, 107 Stat. 785.
    (x) United States and States. Each of the several States, the 
District of Columbia, the U.S. Virgin Islands, the Commonwealth of 
Puerto Rico, Guam and American Samoa, and Trust Territories of the 
Pacific Islands.
    (y) Volunteer assignment plan. A written description of a Foster 
Grandparent's assignment with a child. The plan identifies specific 
outcomes for the child served and the activities of the Foster 
Grandparent.
    (z) Volunteer station. A public agency, private non-profit 
organization or proprietary health care agency or organization that 
accepts the responsibility for assignment and supervision of Foster 
Grandparents in health, education, social service or related settings 
such as hospitals, homes for dependent and neglected children, or 
similar establishments. Each volunteer station must be licensed or 
otherwise certified, when required, by the appropriate state or local 
government. Private homes are not volunteer stations.

[[Page 797]]



        Subpart B--Eligibility and Responsibilities of a Sponsor



Sec. 2552.21  Who is eligible to serve as a sponsor?

    The Corporation awards grants to public agencies, including Indian 
tribes and non-profit private organizations, in the United States that 
have the authority to accept and the capability to administer a Foster 
Grandparent project.



Sec. 2552.22  What are the responsibilities of a sponsor?

    A sponsor is responsible for fulfilling all project management 
requirements necessary to accomplish the purposes of the Foster 
Grandparent Program as specified in the Act. A sponsor shall not 
delegate or contract these responsibilities to another entity. A sponsor 
shall comply with all program regulations and policies, and grant 
provisions prescribed by the Corporation.



Sec. 2552.23  What are a sponsor's program responsibilities?

    A sponsor shall:
    (a) Focus Foster Grandparent resources on critical problems 
affecting children with special and exceptional needs within the 
project's service area.
    (b) Assess in collaboration with other community organizations or 
utilize existing assessment of the needs of the client population in the 
community and develop strategies to respond to those needs using the 
resources of Foster Grandparents.
    (c) Develop and manage a system of volunteer stations by:
    (1) Ensuring that a volunteer station is a public or non-profit 
private organization, or an eligible proprietary health care agency, 
capable of serving as a volunteer station for the placement of Foster 
Grandparents;
    (2) Ensuring that the placement of Foster Grandparents will be 
governed by a Memorandum of Understanding:
    (i) That is negotiated prior to placement;
    (ii) That specifies the mutual responsibilities of the station and 
sponsor;
    (iii) That is renegotiated at least every three years; and
    (iv) That states the station assures it will not discriminate 
against Foster Grandparents or in the operation of its program on the 
basis of race, color, national origin, sex, age, political affiliation, 
religion, or on the basis of disability, if the participant or member is 
a qualified individual with a disability; and
    (3) Reviewing volunteer placements regularly to ensure that clients 
are eligible to be served.
    (d) Develop Foster Grandparent service opportunities to support 
locally-identified needs of eligible children in a way that considers 
the skills and experiences of Foster Grandparents.
    (e) Consider the demographic make-up of the project service area in 
the enrollment of Foster Grandparents, taking special efforts to recruit 
eligible individuals from minority groups, persons with disabilities, 
and under-represented groups.
    (f) Provide Foster Grandparents with assignments that show direct 
and demonstrable benefits to the children and the community served, the 
Foster Grandparents, and the volunteer station; with required cost 
reimbursements specified in Sec. 2552.45; with not less than 40 hours of 
orientation of which 20 hours must be pre-service, and an average of 4 
hours of monthly in-service training.
    (g) Encourage the most efficient and effective use of Foster 
Grandparents by coordinating project services and activities with 
related national, state and local programs, including other Corporation 
programs.
    (h) Conduct an annual appraisal of volunteers' performance and 
annual review of their income eligibility.
    (i) Develop, and annually update, a plan for promoting senior 
service within the project's service area.
    (j) Annually assess the accomplishments and impact of the project on 
the identified needs and problems of the client population in the 
community.
    (k) Establish written service policies for Foster Grandparents that 
include but are not limited to annual and sick leave, holidays, service 
schedules, termination, appeal procedures, meal and transportation 
reimbursements.

    Effective Date Note: At 67 FR 61000, Sept. 27, 2002, Sec. 2552.23 
was amended by revising paragraph (c)(2)(iv), effective Oct. 28,

[[Page 798]]

2002. For the convenience of the user the revised text follows:

Sec. 2552.23  What are a sponsor's program responsibilities?

                                * * * * *

    (c) * * *
    (2) * * *
    (iv) That states the station assures it will not discriminate 
against Foster Grandparents or in the operation of its program on the 
basis of race; color; national origin, including individuals with 
limited English proficiency; sex; age; political affiliation; religion; 
or on the basis of disability, if the participant or member is a 
qualified individual with a disability; and



Sec. 2552.24  What are a sponsor's responsibilities for securing community participation?

    (a) A sponsor shall secure community participation in local project 
operation by establishing an Advisory Council or a similar 
organizational structure with a membership that includes people:
    (1) Knowledgeable of human and social needs of the community;
    (2) Competent in the field of community service, volunteerism and 
children's issues;
    (3) Capable of helping the sponsor meet its administrative and 
program responsibilities including fund-raising, publicity and 
programming for impact;
    (4) With interest in and knowledge of the capability of older 
adults; and
    (5) Of a diverse composition that reflects the demographics of the 
service area.
    (b) The sponsor determines how such participation shall be secured 
consistent with the provisions of paragraphs (a)(1) through (a)(5) of 
this section.



Sec. 2552.25  What are a sponsor's administrative responsibilities?

    A sponsor shall:
    (a) Assume full responsibility for securing maximum and continuing 
community financial and in-kind support to operate the project 
successfully.
    (b) Provide levels of staffing and resources appropriate to 
accomplish the purposes of the project and carry out its project 
management responsibilities.
    (c) Employ a full-time project director to accomplish program 
objectives and manage the functions and activities delegated to project 
staff for NSSC program(s) within its control. A full-time project 
director shall not serve concurrently in another capacity, paid or 
unpaid, during established working hours. The project director may 
participate in activities to coordinate program resources with those of 
related local agencies, boards or organizations. A sponsor may negotiate 
the employment of a part-time project director with the Corporation when 
it can be demonstrated that such an arrangement will not adversely 
affect the size, scope, and quality of project operations.
    (d) Consider all project staff as sponsor employees subject to its 
personnel policies and procedures.
    (e) Compensate project staff at a level that is comparable with 
other similar staff positions in the sponsor organization and/or project 
service area.
    (f) Establish risk management policies and procedures covering 
project and Foster Grandparent activities. This includes provision of 
appropriate insurance coverage for Foster Grandparents, vehicles and 
other properties used in the project.
    (g) Establish record keeping/reporting systems in compliance with 
Corporation requirements that ensure quality of program and fiscal 
operations, facilitate timely and accurate submission of required 
reports and cooperate with Corporation evaluation and data collection 
efforts.
    (h) Comply with and ensure that all volunteer stations comply with 
all applicable civil rights laws and regulations, including providing 
reasonable accommodation to qualified individuals with disabilities.



Sec. 2552.26  May a sponsor administer more than one program grant from the Corporation?

    A sponsor may administer more than one Corporation program grant.

[[Page 799]]



     Subpart C--Suspension and Termination of Corporation Assistance



Sec. 2552.31  What are the rules on suspension, termination, and denial of refunding of grants?

    (a) The Chief Executive Officer or designee is authorized to suspend 
further payments or to terminate payments under any grant providing 
assistance under the Act whenever he/she determines there is a material 
failure to comply with applicable terms and conditions of the grant. The 
Chief Executive Officer shall prescribe procedures to ensure that:
    (1) Assistance under the Act shall not be suspended for failure to 
comply with applicable terms and conditions, except in emergency 
situations for thirty days;
    (2) An application for refunding under the Act may not be denied 
unless the recipient has been given:
    (i) Notice at least 75 days before the denial of such application of 
the possibility of such denial and the grounds for any such denial; and
    (ii) Opportunity to show cause why such action should not be taken;
    (3) In any case where an application for refunding is denied for 
failure to comply with the terms and conditions of the grant, the 
recipient shall be afforded an opportunity for an informal hearing 
before an impartial hearing officer, who has been agreed to by the 
recipient and the Corporation; and
    (4) Assistance under the Act shall not be terminated for failure to 
comply with applicable terms and conditions unless the recipient has 
been afforded reasonable notice and opportunity for a full and fair 
hearing.
    (b) In order to assure equal access to all recipients, such hearings 
or other meetings as may be necessary to fulfill the requirements of 
this section shall be held in locations convenient to the recipient 
agency.
    (c) The procedures for suspension, termination, and denial of 
refunding, that apply to the Foster Grandparent Program are specified in 
45 CFR part 1206.



       Subpart D--Foster Grandparent Eligibility, Status and Cost 
                             Reimbursements



Sec. 2552.41  Who is eligible to be a Foster Grandparent?

    (a) To be a Foster Grandparent an individual must:
    (1) Be 60 years of age or older;
    (2) Be determined by a physical examination to be capable, with or 
without reasonable accommodation, of serving children with exceptional 
or special needs without detriment to either himself/herself or the 
children served;
    (3) Agree to abide by all requirements as set forth in this part; 
and
    (4) In order to receive a stipend, have an income that is within the 
income eligibility guidelines specified in this subpart D.
    (b) Eligibility to be a Foster Grandparent shall not be restricted 
on the basis of formal education, experience, race, religion, color, 
national origin, sex, age, handicap, or political affiliation.



Sec. 2552.42  What income guidelines govern eligibility to serve as a stipended Foster Grandparent?

    (a) To be enrolled and receive a stipend, a Foster Grandparent 
cannot have an annual income from all sources, after deducting allowable 
medical expenses, which exceeds the program's income eligibility 
guideline for the state in which he or she resides. The income 
eligibility guideline for each state is the higher amount of either:
    (1) 125 percent of the poverty line as set forth in 42 U.S.C. 9902 
(2); or
    (2) 135 percent of the poverty line, in those primary metropolitan 
statistical areas (PMSA), metropolitan statistical areas (MSA) and non-
metropolitan counties identified by the Corporation as being higher in 
cost of living, as determined by application of the Volunteers in 
Service to America (VISTA) subsistence rates. In Alaska the guideline 
may be waived by the Corporation State Director if a project 
demonstrates that low-income individuals in that location are 
participating in the project.

[[Page 800]]

    (b) Annual income is counted for the past 12 months and includes the 
applicant or enrollee's income and that of his/her spouse, if the spouse 
lives in the same residence. Sponsors shall count the value of shelter, 
food, and clothing, if provided at no cost by persons related to the 
applicant, enrollee, or spouse.
    (c) Allowable medical expenses are annual out-of-pocket medical 
expenses for health insurance premiums, health care services, and 
medications provided to the applicant, enrollee, or spouse which were 
not and will not be paid by Medicare, Medicaid, other insurance, or 
other third party pay or, and which do not exceed 15 percent of the 
applicable income guideline.
    (d) Applicants whose income is not more than 100 percent of the 
poverty line shall be given special consideration for enrollment.
    (e) Once enrolled, a Foster Grandparent shall remain eligible to 
serve and to receive a stipend so long as his or her income, does not 
exceed the applicable income eligibility guideline by 20 percent.

    Effective Date Note: At 67 FR 61000, Sept. 27, 2002, Sec. 2552.42 
was amended by revising paragraph (b), effective Oct. 28, 2002. For the 
convenience of the user the revised text follows:

Sec. 2552.42  What income guidelines govern eligibility to serve as a 
          stipended Foster Grandparent?

                                * * * * *

    (b) For applicants to become stipended Foster Grandparents, annual 
income is projected for the following 12 months, based on income at the 
time of application. For serving stipended Foster Grandparents, annual 
income is counted for the past 12 months. Annual income includes the 
applicant or enrollee's income and that of his/her spouse, if the spouse 
lives in the same residence. Sponsors shall count the value of shelter, 
food, and clothing, if provided at no cost by persons related to the 
applicant, enrollee, or spouse.



Sec. 2552.43  What is considered income for determining volunteer eligibility?

    (a) For determining eligibility, ``income'' refers to total cash and 
in-kind receipts before taxes from all sources including:
    (1) Money, wages, and salaries before any deduction, but not 
including food or rent in lieu of wages;
    (2) Receipts from self-employment or from a farm or business after 
deductions for business or farm expenses;
    (3) Regular payments for public assistance, Social Security, 
Unemployment or Workers Compensation, strike benefits, training 
stipends, alimony, child support, and military family allotments, or 
other regular support from an absent family member or someone not living 
in the household;
    (4) Government employee pensions, private pensions, and regular 
insurance or annuity payments; and
    (5) Income from dividends, interest, net rents, royalties, or income 
from estates and trusts.
    (b) For eligibility purposes, income does not refer to the following 
money receipts:
    (1) Any assets drawn down as withdrawals from a bank, sale of 
property, house or car, tax refunds, gifts, one-time insurance payments 
or compensation from injury.
    (2) Non-cash income, such as the bonus value of food and fuel 
produced and consumed on farms and the imputed value of rent from owner-
occupied farm or non-farm housing.



Sec. 2552.44  Is a Foster Grandparent a federal employee, an employee of the sponsor or of the volunteer station?

    Foster Grandparents are volunteers, and are not employees of the 
sponsor, the volunteer station, the Corporation, or the Federal 
Government.



Sec. 2552.45  What cost reimbursements are provided to Foster Grandparents?

    Cost reimbursements include:
    (a) Stipend. Foster Grandparents who are income eligible will 
receive a stipend in an amount determined by the Corporation and payable 
in regular installments, to enable them to serve without cost to 
themselves. The stipend is paid for the time Foster Grandparents spend 
with their assigned children, for earned leave, and for attendance at 
official project events.

[[Page 801]]

    (b) Insurance. A Foster Grandparent is provided with the 
Corporation-specified minimum levels of insurance as follows:
    (1) Accident insurance. Accident insurance covers Foster 
Grandparents for personal injury during travel between their homes and 
places of assignment, during their volunteer service, during meal 
periods while serving as a volunteer, and while attending project-
sponsored activities. Protection shall be provided against claims in 
excess of any benefits or services for medical care or treatment 
available to the volunteer from other sources.
    (2) Personal liability insurance. Protection is provided against 
claims in excess of protection provided by other insurance. It does not 
include professional liability coverage.
    (3) Excess automobile liability insurance. (i) For Foster 
Grandparents who drive in connection with their service, protection is 
provided against claims in excess of the greater of either:
    (A) Liability insurance volunteers carry on their own automobiles; 
or
    (B) The limits of applicable state financial responsibility law, or 
in its absence, levels of protection to be determined by the Corporation 
for each person, each accident, and for property damage.
    (ii) Foster Grandparents who drive their personal vehicles to or on 
assignments or project-related activities shall maintain personal 
automobile liability insurance equal to or exceeding the levels 
established by the Corporation.
    (c) Transportation. Foster Grandparents shall receive assistance 
with the cost of transportation to and from volunteer assignments and 
official project activities, including orientation, training, and 
recognition events.
    (d) Physical examination. Foster Grandparents are provided a 
physical examination prior to assignment and annually thereafter to 
ensure that they will be able to provide supportive service without 
injury to themselves or the children served.
    (e) Meals and recognition. Foster Grandparents shall be provided the 
following within limits of the project's available resources:
    (1) Assistance with the cost of meals taken while on assignment; and
    (2) Recognition for their service.



Sec. 2552.46  May the cost reimbursements of a Foster Grandparent be subject to any tax or charge, be treated as wages or compensation, or affect eligibility to 
          receive assistance from other programs?

    No. Foster Grandparent's cost reimbursements are not subject to any 
tax or charge or treated as wages or compensation for the purposes of 
unemployment insurance, worker's compensation, temporary disability, 
retirement, public assistance, or similar benefit payments or minimum 
wage laws. Cost reimbursements are not subject to garnishment, and do 
not reduce or eliminate the level of, or eligibility for, assistance or 
services a Foster Grandparent may be receiving under any governmental 
program.



             Subpart E--Foster Grandparent Terms of Service



Sec. 2552.51  What are the terms of service of a Foster Grandparent?

    A Foster Grandparent shall serve a minimum of nine months a year for 
an average of 20 hours of service per week. A Foster Grandparent shall 
not serve more than 1044 hours per year.

    Effective Date Note: At 67 FR 61000, Sept. 27, 2002, Sec. 2552.51 
was revised, effective Oct. 28, 2002. For the convenience of the user 
the revised text follows:

Sec. 2552.51  What are the terms of service of a Foster Grandparent?

    A Foster Grandparent shall serve a minimum of 15 hours per week and 
a maximum of 40 hours per week. A Foster Grandparent shall not serve 
more than 2088 hours per year. Within these limitations, a sponsor may 
set service policies consistent with local needs.



Sec. 2552.52  What factors are considered in determining a Foster Grandparent's service schedule?

    (a) Travel time between the Foster Grandparent's home and place of 
assignment is not part of the service schedule and is not stipended.
    (b) Travel time between individual assignments is a part of the 
service schedule and is stipended.

[[Page 802]]

    (c) Meal time may be part of the service schedule and is stipended 
only if it is specified in the goal statement as part of the service 
activity.



Sec. 2552.53  Under what circumstances may a Foster Grandparent's service be terminated?

    (a) A sponsor may remove a Foster Grandparent from service for 
cause. Grounds for removal include but are not limited to: extensive and 
unauthorized absences; misconduct; inability to perform assignments; and 
failure to accept supervision. A Foster Grandparent may also be removed 
from service for having income in excess of the eligibility level.
    (b) The sponsor shall establish appropriate policies on service 
termination as well as procedures for appeal from such adverse action.



           Subpart F--Responsibilities of a Volunteer Station



Sec. 2552.61  When may a sponsor serve as a volunteer station?

    (a) A sponsor may function as a volunteer station if it is:
    (1) A State organization administering a statewide Foster 
Grandparent project where the volunteer station is part of the State 
organization; or
    (2) A Federal or State-recognized Indian tribal government.
    (b) Other sponsors not included in the categories specified in 
paragraphs (a)(1) and (a)(2) of this section, can serve as a volunteer 
station provided that no more than 20 percent of its budgeted VSYs can 
be placed in programs administered by such sponsors. In special 
circumstances, the Corporation may grant a waiver to increase this 
percentage.

    Effective Date Note: At 67 FR 61000, Sept. 27, 2002, Sec. 2552.61 
was revised, effective Oct. 28, 2002. For the convenience of the user 
the revised text follows:

Sec. 2552.61  May a sponsor serve as a volunteer station?

    Yes, a sponsor may serve as a volunteer station, provided this is 
part of the application workplan approved by the Corporation.



Sec. 2552.62  What are the responsibilities of a volunteer station?

    A volunteer station shall undertake the following responsibilities 
in support of Foster Grandparent volunteers:
    (a) Develop volunteer assignments that meet the requirements 
specified in Secs. 2552.71 through 2552.72 and regularly assess those 
assignments for continued appropriateness.
    (b) Select eligible children for assigned volunteers.
    (c) Develop a written volunteer assignment plan for each child that 
identifies the role and activities of the Foster Grandparent and 
expected outcomes for the child served.
    (d) Obtain a Letter of Agreement for Foster Grandparents assigned 
in-home. This letter must comply with all Federal, State and local 
regulations.
    (e) Provide Foster Grandparents serving the station with:
    (1) Orientation to the station and any in-service training necessary 
to enhance performance of assignments;
    (2) Resources required for performance of assignments including 
reasonable accommodation; and
    (3) Appropriate recognition.
    (f) Designate a staff member to oversee fulfillment of station 
responsibilities and supervision of Foster Grandparents while on 
assignment.
    (g) Keep records and prepare reports required by the sponsor.
    (h) Provide for the safety of Foster Grandparents assigned to it.
    (i) Comply with all applicable civil rights laws and regulations 
including reasonable accommodation for Foster Grandparents with 
disabilities.
    (j) Undertake such other responsibilities as may be necessary to the 
successful performance of Foster Grandparents in their assignments or as 
agreed to in the Memorandum of Understanding.



        Subpart G--Foster Grandparent Placements and Assignments



Sec. 2552.71  What requirements govern the assignment of Foster Grandparents?

    Foster Grandparent assignments shall:
    (a) Provide for Foster Grandparents to give direct services to one 
or more

[[Page 803]]

eligible children. Foster Grandparents cannot be assigned to roles such 
as teacher's aides, group leaders or other similar positions that would 
detract from the person-to-person relationship.
    (b) Result in person-to-person supportive relationships with each 
child served.
    (c) Support the development and growth of each child served.
    (d) Be meaningful to the Foster Grandparent.
    (e) Be supported by appropriate orientation, training and 
supervision.



Sec. 2552.72  Is a written volunteer assignment plan required for each volunteer?

    (a) All Foster Grandparents shall receive a written volunteer 
assignment plan developed by the volunteer station that:
    (1) Is approved by the sponsor and accepted by the Foster 
Grandparent;
    (2) Identifies the individual child(ren) to be served;
    (3) Identifies the role and activities of the Foster Grandparent and 
expected outcomes for the child;
    (4) Addresses the period of time each child should receive such 
services; and
    (5) Is used to review the status of the Foster Grandparent's 
services in working with the assigned child, as well as the impact of 
the assignment on the child's development.
    (b) If there is an existing plan that incorporates paragraphs 
(a)(2), (3), and (4) of this section, that plan shall meet the 
requirement.



                       Subpart H--Children Served



Sec. 2552.81  What type of children are eligible to be served?

    Foster Grandparents serve only children and youth with special and 
exceptional needs who are less than 21 years of age.



Sec. 2552.82  Under what circumstances may a Foster Grandparent continue to serve an individual beyond his or her 21st birthday?

    (a) Only when a Foster Grandparent has been assigned to, and has 
developed a relationship with, a mentally retarded child, that 
assignment may continue beyond the individual's 21st birthday, provided 
that:
    (1) Such individual was receiving such services prior to attaining 
the chronological age of 21, and the continuation of service is in the 
best interest of the individual; and
    (2) The sponsor determines that it is in the best interest of both 
the Foster Grandparent and the individual for the assignment to 
continue. Such a determination will be made through mutual agreement by 
all parties involved in the provision of services to the individual 
served.
    (b) In cases where the assigned Foster Grandparent becomes 
unavailable to serve a particular individual, the sponsor may select 
another Foster Grandparent to continue the service.
    (c) The sponsor may terminate service to a mentally retarded 
individual over age 21, if it determines that such service is no longer 
in the best interest of either the Foster Grandparent or the individual 
served.



             Subpart I--Application and Fiscal Requirements



Sec. 2552.91  What is the process for application and award of a grant?

    (a) How and when may an eligible organization apply for a grant? (1) 
An eligible organization may file an application for a grant at any 
time.
    (2) Before submitting an application an applicant shall determine 
the availability of funds from the Corporation.
    (3) The Corporation may also solicit grants. Applicants solicited 
under this provision are not assured of selection or approval and may 
have to compete with other solicited or unsolicited applications.
    (b) What must an eligible organization include in a grant 
application? (1) An applicant shall complete standard forms prescribed 
by the Corporation.
    (2) The applicant shall comply with the provisions of Executive 
Order 12372 ``Intergovernmental Review of Federal Programs,'' (3 CFR, 
1982 Comp., p.197) in 45 CFR Part 1233, and any other applicable 
requirements.
    (c) Who reviews the merits of an application and how is a grant 
awarded? (1) The Corporation reviews and determines the merit of an 
application by

[[Page 804]]

its responsiveness to published guidelines and to the overall purpose 
and objectives of the program. When funds are available, the Corporation 
awards a grant in writing to each applicant whose grant proposal 
provides the best potential for serving the purpose of the program. The 
award will be documented by Notice of Grant Award (NGA).
    (2) The Corporation and the sponsoring organization are the parties 
to the NGA. The NGA will document the sponsor's commitment to fulfill 
specific programmatic objectives and financial obligations. It will 
document the extent of the Corporation's obligation to provide financial 
support to the sponsor.
    (d) What happens if the Corporation rejects an application? The 
Corporation will return an application that is not approved for funding 
to the applicant with an explanation of the Corporation's decision.
    (e) For what period of time does the Corporation award a grant? The 
Corporation awards a Foster Grandparent grant for a specified period 
that is usually 12 months in duration.



Sec. 2552.92  What are project funding requirements?

    (a) Is non-Corporation support required? A Corporation grant may be 
awarded to fund up to 90 percent of the cost of development and 
operation of a Foster Grandparent project. The sponsor is required to 
contribute at least 10 percent of the total project cost from non-
Federal sources or authorized Federal sources.
    (b) Under what circumstances does the Corporation allow less than 
the 10 percent non-Corporation support? The Corporation may allow 
exceptions to the 10 percent local support requirement in cases of 
demonstrated need such as:
    (1) Initial difficulties in the development of local funding sources 
during the first three years of operations; or
    (2) An economic downturn, the occurrence of a natural disaster, or 
similar events in the service area that severely restrict or reduce 
sources of local funding support; or
    (3) The unexpected discontinuation of local support from one or more 
sources that a project has relied on for a period of years.
    (c) May the Corporation restrict how a sponsor uses locally 
generated contributions in excess of the 10 percent non-Corporation 
support required? Whenever locally generated contributions to Foster 
Grandparent projects are in excess of the minimum 10 percent non-
Corporation support required, the Corporation may not restrict the 
manner in which such contributions are expended provided such 
expenditures are consistent with the provisions of the Act.
    (d) Are program expenditures subject to audit? All expenditures by 
the grantee of Federal and non-Federal funds, including expenditures 
from excess locally generated contributions in support of the grant, are 
subject to audit by the Corporation, its Inspector General or their 
authorized agents.
    (e) How are Foster Grandparent cost reimbursements budgeted? The 
total of cost reimbursements for Foster Grandparents, including 
stipends, insurance, transportation, meals, physical examinations, and 
recognition, shall be a sum equal to at least 80 percent of the amount 
of the federal share of the grant award. Federal, required and excess 
non-Corporation resources can be used to make up the amount allotted for 
cost reimbursements.
    (f) May a sponsor pay stipends at a rate different than the rate 
established by the Corporation? A sponsor shall pay stipends at the same 
rate as that established by the Corporation.



Sec. 2552.93  What are grants management requirements?

    What rules govern a sponsor's management of grants?
    (a) A sponsor shall manage a grant awarded in accordance with:
    (1) The Act;
    (2) Regulations in this part;
    (3) 45 CFR Part 2541, ``Uniform Administrative Requirements for 
Grants and Cooperative Agreements to State and Local Governments'', or 
45 CFR Part 2543, ``Grants and Agreements with Institutions of Higher 
Education, Hospitals, and Other Non-Profit Organizations'';
    (4) The following OMB Circulars, as appropriate A-21, ``Cost 
Principles for Educational Institutions'', A-87, ``Cost

[[Page 805]]

Principles for State, Local and Indian Tribal Governments'', A-122, 
``Cost Principles for Non-Profit Organizations'', and A-133, ``Audits of 
States, Local Governments, and Other Non-Profit Organizations'' (OMB 
circulars are available electronically at the OMB homepage 
www.whitehouse.gov/WH/EOP/omb); and
    (5) Other applicable Corporation requirements.
    (b) Project support provided under a Corporation grant shall be 
furnished at the lowest possible cost consistent with the effective 
operation of the project.
    (c) Project costs for which Corporation funds are budgeted must be 
justified as being necessary and essential to project operation.
    (d) Other than reimbursement for meals during a normal meal period, 
project funds shall not be used to reimburse volunteers for expenses, 
including transportation costs, incurred while performing their 
volunteer assignments. Equipment or supplies for volunteers on 
assignment are not allowable costs. Assignment-related costs of 
transportation, equipment, supplies, etc. are the responsibility of the 
volunteer station or a third party, and are not an allowable grant cost.
    (e) Volunteer expense items, including transportation, meals, 
recognition activities and items purchased at the volunteers' own 
expense and which are not reimbursed, are not allowable as contributions 
to the non-Federal share of the budget.
    (f) Costs of other insurance not required by program policy, but 
maintained by a sponsor for the general conduct of its activities are 
allowable with the following limitations:
    (1) Types and extent of and cost of coverage are according to sound 
institutional and business practices;
    (2) Costs of insurance or a contribution to any reserve covering the 
risk of loss of or damage to Government-owned property are unallowable 
unless the government specifically requires and approves such costs; and
    (3) The cost of insurance on the lives of officers, trustees or 
staff is unallowable except where such insurance is part of an employee 
plan which is not unduly restricted.
    (g) Costs to bring a sponsor into basic compliance with 
accessibility requirements for individuals with disabilities are not 
allowable costs.
    (h) Payments to settle discrimination allegations, either informally 
through a settlement agreement or formally as a result of a decision 
finding discrimination, are not allowable costs.
    (i) Written Corporation approval/concurrence is required for the 
following changes in the approved grant:
    (1) Reduction in budgeted volunteer service years.
    (2) Change in the service area.
    (3) Transfer of budgeted line items from Volunteer Expenses to 
Support Expenses. This requirement does not apply if the 80 percent 
volunteer cost reimbursement ratio is maintained.



              Subpart J--Non-Stipended Foster Grandparents



Sec. 2552.101  What rule governs the recruitment and enrollment of persons who do not meet the income eligibility guidelines to serve as Foster Grandparents 
          without stipends?

    Over-income persons, age 60 or over, may be enrolled in FGP projects 
as non-stipended volunteers in communities where there is no RSVP 
project or where agreement is reached with the RSVP project that allows 
for the enrollment of non-stipended volunteers in the FGP project.



Sec. 2552.102  What are the conditions of service of non-stipended Foster Grandparents?

    Non-stipended Foster Grandparents serve under the following 
conditions:
    (a) They must not displace or prevent eligible low-income 
individuals from becoming Foster Grandparents.
    (b) No special privilege or status is granted or created among 
Foster Grandparents, stipended or non-stipended, and equal treatment is 
required.
    (c) Training, supervision, and other support services and cost 
reimbursements, other than the stipend, are available equally to all 
Foster Grandparents.
    (d) All regulations and requirements applicable to the program, with 
the exception listed in paragraph (f) of this

[[Page 806]]

section, apply to all Foster Grandparents.
    (e) Non-stipended Foster Grandparents may be placed in separate 
volunteer stations where warranted.
    (f) Non-stipended Foster Grandparents will be encouraged but not 
required to serve an average of 20 hours per week and nine months per 
year. Foster Grandparents will maintain a close person-to-person 
relationship with their assigned children on a regular basis.
    (g) Non-stipended Foster Grandparents may contribute the costs they 
incur in connection with their participation in the program. Such 
contributions are not counted as part of the required non-federal share 
of the grant but may be reflected in the budget column for excess non-
federal resources.



Sec. 2552.103  Must a sponsor be required to enroll non-stipended Foster Grandparents?

    Enrollment of non-stipended Foster Grandparents is not a factor in 
the award of new or continuation grants.



Sec. 2552.104  May Corporation funds be used for non-stipended Foster Grandparents?

    Federally appropriated funds for FGP shall not be used to pay any 
cost, including any administrative cost, incurred in implementing the 
regulations in this part for non-stipended Foster Grandparents.



  Subpart K--Non-Corporation Funded Foster Grandparent Program Projects



Sec. 2552.111  Under what conditions can an agency or organization sponsor a Foster Grandparent project without Corporation funding?

    An eligible agency or organization who wishes to sponsor a Foster 
Grandparent project without Corporation funding, must sign a Memorandum 
of Agreement with the Corporation that:
    (a) Certifies its intent to comply with all Corporation requirements 
for the Foster Grandparent Program; and
    (b) Identifies responsibilities to be carried out by each party.



Sec. 2552.112  What benefits are a non-Corporation funded project entitled to?

    The Memorandum of Agreement entitles the sponsor of a non-
Corporation funded project to:
    (a) All technical assistance and materials provided to Corporation-
funded Foster Grandparent projects; and
    (b) The application of the provisions of 42 U.S.C. 5044 and 5058.



Sec. 2552.113  What financial obligation does the Corporation incur for non-Corporation funded projects?

    Entry into a Memorandum of Agreement with, or issuance of an NGA to 
a sponsor of a non-Corporation funded project, does not create a 
financial obligation on the part of the Corporation for any costs 
associated with the project, including increases in required payments to 
Foster Grandparents that may result from changes in the Act or in 
program regulations.



Sec. 2552.114  What happens if a non-Corporation funded sponsor does not comply with the Memorandum of Agreement?

    A non-Corporation funded project sponsor's noncompliance with the 
Memorandum of Agreement may result in suspension or termination of the 
Corporation's agreement and all benefits specified in Sec. 2552.112.



            Subpart L--Restrictions and Legal Representation



Sec. 2552.121  What legal limitations apply to the operation of the Foster Grandparent Program and to the expenditure of grant funds?

    (a) Political activities. (1) No part of any grant shall be used to 
finance, directly or indirectly, any activity to influence the outcome 
of any election to public office, or any voter registration activity.
    (2) No project shall be conducted in a manner involving the use of 
funds, the provision of services, or the employment or assignment of 
personnel in a matter supporting or resulting in the identification of 
such project with:

[[Page 807]]

    (i) Any partisan or nonpartisan political activity associated with a 
candidate, or contending faction or group, in an election; or
    (ii) Any activity to provide voters or prospective voters with 
transportation to the polls or similar assistance in connection with any 
such election; or
    (iii) Any voter registration activity, except that voter 
registration applications and nonpartisan voter registration information 
may be made available to the public at the premises of the sponsor. But 
in making registration applications and nonpartisan voter registration 
information available, employees of the sponsor shall not express 
preferences or seek to influence decisions concerning any candidate, 
political party, election issue, or voting decision.
    (3) The sponsor shall not use grant funds in any activity for the 
purpose of influencing the passage or defeat of legislation or proposals 
by initiative petition, except:
    (i) In any case in which a legislative body, a committee of a 
legislative body, or a member of a legislative body requests any 
volunteer in, or employee of such a program to draft, review or testify 
regarding measures or to make representation to such legislative body, 
committee or member; or
    (ii) In connection with an authorization or appropriations measure 
directly affecting the operation of the FGP.
    (b) Non-displacement of employed workers. A Foster Grandparent shall 
not perform any service or duty or engage in any activity which would 
otherwise be performed by an employed worker or which would supplant the 
hiring of or result in the displacement of employed workers, or impair 
existing contracts for service.
    (c) Compensation for service. (1) An agency or organization to which 
NSSC volunteers are assigned, or which operates or supervises any NSSC 
program shall not request or receive any compensation from NSSC 
volunteers or from beneficiaries for services of NSSC volunteers.
    (2) This section does not prohibit a sponsor from soliciting and 
accepting voluntary contributions from the community at large to meet 
its local support obligations under the grant or from entering into 
agreements with parties other than beneficiaries to support additional 
volunteers beyond those supported by the Corporation grant.
    (3) A Foster Grandparent volunteer station may contribute to the 
financial support of the FGP. However, this support shall not be a 
required precondition for a potential station to obtain Foster 
Grandparent service.
    (4) If a volunteer station agrees to provide funds to support 
additional Foster Grandparents or pay for other Foster Grandparent 
support costs, the agreement shall be stated in a written Memorandum of 
Understanding. The sponsor shall withdraw services if the station's 
inability to provide monetary or in-kind support to the project under 
the Memorandum of Understanding diminishes or jeopardizes the project's 
financial capabilities to fulfill its obligations.
    (5) Under no circumstances shall a Foster Grandparent receive a fee 
for service from service recipients, their legal guardian, members of 
their family, or friends.
    (d) Labor and anti-labor activity. The sponsor shall not use grant 
funds directly or indirectly to finance labor or anti-labor organization 
or related activity.
    (e) Fair labor standards. A sponsor that employs laborers and 
mechanics for construction, alteration, or repair of facilities shall 
pay wages at prevailing rates as determined by the Secretary of Labor in 
accordance with the Davis-Bacon Act, as amended, 40 U.S.C. 276a.
    (f) Nondiscrimination. A sponsor or sponsor employee shall not 
discriminate against a Foster Grandparent on the basis of race, color, 
national origin, sex, age, religion, or political affiliation, or on the 
basis of disability, if the Foster Grandparent with a disability is 
qualified to serve.
    (g) Religious activities. A Foster Grandparent or a member of the 
project staff funded by the Corporation shall not give religious 
instruction, conduct worship services or engage in any form of 
proselytization as part of his or her duties.

[[Page 808]]

    (h) Nepotism. Persons selected for project staff positions shall not 
be related by blood or marriage to other project staff, sponsor staff or 
officers, or members of the sponsor Board of Directors, unless there is 
written concurrence from the community group established by the sponsor 
under Subpart B of this part and with notification to the Corporation.



Sec. 2552.122  What legal coverage does the Corporation make available to Foster Grandparents?

    It is within the Corporation's discretion to determine if Counsel is 
employed and counsel fees, court costs, bail and other expenses 
incidental to the defense of a Foster Grandparent are paid in a 
criminal, civil or administrative proceeding, when such a proceeding 
arises directly out of performance of the Foster Grandparent's 
activities pursuant to the Act. The circumstances under which the 
Corporation may pay such expenses are specified in 45 CFR part 1220.



PART 2553--THE RETIRED AND SENIOR VOLUNTEER PROGRAM--Table of Contents




                           Subpart A--General

Sec.
2553.11  What is the Retired and Senior Volunteer Program?
2553.12  Definitions.

        Subpart B--Eligibility and Responsibilities of a Sponsor

2553.21  Who is eligible to serve as a sponsor?
2553.22  What are the responsibilities of a sponsor?
2553.23  What are a sponsor's program responsibilities?
2553.24  What are a sponsor's responsibilities for securing community 
          participation?
2553.25  What are a sponsor's administrative responsibilities?
2553.26  May a sponsor administer more than one program grant from the 
          Corporation?

       Subpart C--Suspension, Termination and Denial of Refunding

2553.31  What are the rules on suspension, termination and denial of 
          refunding of grants?

  Subpart D--Eligibility, Cost Reimbursements and Volunteer Assignments

2553.41  Who is eligible to be a RSVP volunteer?
2553.42  Is a RSVP volunteer a federal employee, an employee of the 
          sponsor or of the volunteer station?
2553.43  What cost reimbursements are provided to RSVP volunteers?
2553.44  May cost reimbursements received by a RSVP volunteer be subject 
          to any tax or charge, treated as wages or compensation, or 
          affect eligibility to receive assistance from other programs?

                  Subpart E--Volunteer Terms of Service

2553.51  What are the terms of service of a RSVP volunteer?
2553.52  Under what circumstances may a RSVP volunteer's service be 
          terminated?

           Subpart F--Responsibilities of a Volunteer Station

2553.61  When may a sponsor serve as a volunteer station?
2553.62  What are the responsibilities of a volunteer station?

             Subpart G--Application and Fiscal Requirements

2553.71  What is the process for application and award of a grant?
2553.72  What are project funding requirements?
2553.73  What are grants management requirements?

               Subpart H--Non-Corporation Funded Projects

2553.81  Under what conditions may an agency or organization sponsor a 
          RSVP project without Corporation funding?
2553.82  What benefits are a non-Corporation funded project entitled to?
2553.83  What financial obligation does the Corporation incur for non-
          Corporation funded projects?
2553.84  What happens if a non-Corporation funded sponsor does not 
          comply with the Memorandum of Agreement?

            Subpart I--Restrictions and Legal Representation

2553.91  What legal limitations apply to the operation of the RSVP 
          Program and to the expenditure of grant funds?
2553.92  What legal coverage does the Corporation make available to RSVP 
          volunteers.

    Authority: 42 U.S.C. 4950 et seq.

[[Page 809]]


    Source: 64 FR 14135, Mar. 24, 1999, unless otherwise noted.



                           Subpart A--General



Sec. 2553.11  What is the Retired and Senior Volunteer Program?

    The Retired and Senior Volunteer Program (RSVP) provides grants to 
qualified agencies and organizations for the dual purpose of: engaging 
persons 55 and older in volunteer service to meet critical community 
needs; and to provide a high quality experience that will enrich the 
lives of volunteers.



Sec. 2553.12  Definitions.

    (a) Act. The Domestic Volunteer Service Act of 1973, as amended, 
Pub. L. 93-113, Oct. 1, 1973, 87 Stat. 396, 42 U.S.C. 4950 et seq.
    (b) Adequate staffing level. The number of project staff or full-
time equivalent needed by a sponsor to manage NSSC project operations 
considering such factors as: number of budgeted volunteers, number of 
volunteer stations, and the size of the service area.
    (c) Assignment. The activities, functions or responsibilities to be 
performed by volunteers identified in a written outline or description.
    (d) Chief Executive Officer. The Chief Executive Officer of the 
Corporation appointed under the National and Community Service Act of 
1990, as amended, (NCSA), 42 U.S.C. 12501 et seq.
    (e) Corporation. The Corporation for National and Community Service 
established under the NCSA. The Corporation is also sometimes referred 
to as CNCS.
    (f) Cost reimbursements. Reimbursements budgeted as Volunteer 
Expenses and provided to volunteers to cover incidental costs, meals, 
transportation, volunteer insurance, and recognition to enable them to 
serve without cost to themselves.
    (g) Letter of Agreement. A written agreement between a volunteer 
station, the sponsor, and person(s) served or the person legally 
responsible for that person. It authorizes the assignment of a RSVP 
volunteer in the home of a client, defines RSVP volunteer activities, 
and specifies supervision arrangements.
    (h) Memorandum of Understanding. A written statement prepared and 
signed by the RSVP project sponsor and the volunteer station that 
identifies project requirements, working relationships and mutual 
responsibilities.
    (i) National Senior Service Corps (NSSC). The collective name for 
the Foster Grandparent Program (FGP), the Retired and Senior Volunteer 
Program (RSVP), and the Senior Companion Program (SCP), and 
Demonstration Programs established under Parts A, B, C, and E, Title II 
of the Act. NSSC is also referred to as the ``Senior Corps''.
    (j) Non-Corporation support (required). The percentage share of non-
Federal cash and in-kind contributions required to be raised by the 
sponsor in support of the grant, including non-Corporation federal, 
state and local governments and privately raised contributions.
    (k) Non-Corporation support (excess). The amount of non-Federal cash 
and in-kind contributions generated by a sponsor in excess of the 
required percentage.
    (l) Project. The locally planned and implemented RSVP activity or 
set of activities in a service area as agreed upon between a sponsor and 
the Corporation.
    (m) Qualified individual with a disability. An individual with a 
disability (as defined in the Rehabilitation Act, 29 U.S.C. 705 (20)) 
who, with or without reasonable accommodation, can perform the essential 
functions of a volunteer position that such individual holds or desires. 
If a sponsor has prepared a written description before advertising or 
interviewing applicants for the position, the written description may be 
considered evidence of the essential functions of the volunteer 
position.
    (n) Service area. The geographically defined area approved in the 
grant application, in which RSVP volunteers are recruited, enrolled, and 
placed on assignments.
    (o) Sponsor. A public agency or private non-profit organization that 
is responsible for the operation of a RSVP project.
    (p) Trust Act. The National and Community Service Trust Act of 1993, 
as

[[Page 810]]

amended, Public Law 103-82, Sept. 21, 1993, 107 Stat. 785.
    (q) United States and States. Each of the several States, the 
District of Columbia, the U.S. Virgin Islands, the Commonwealth of 
Puerto Rico, Guam and American Samoa, and Trust Territories of the 
Pacific Islands.
    (r) Volunteer station. A public agency, private non-profit 
organization or proprietary health care agency or organization that 
accepts responsibility for assignment, supervision and training of RSVP 
volunteers. Each volunteer station must be licensed or otherwise 
certified, when required, by appropriate state or local government. 
Private homes are not volunteer stations.



        Subpart B--Eligibility and Responsibilities of a Sponsor



Sec. 2553.21  Who is eligible to serve as a sponsor?

    The Corporation awards grants to public agencies, including Indian 
tribes and non-profit private organizations, in the United States that 
have the authority to accept and the capability to administer a RSVP 
project.



Sec. 2553.22  What are the responsibilities of a sponsor?

    A sponsor is responsible for fulfilling all project management 
requirements necessary to accomplish the purposes of the RSVP program as 
specified in the Act. A sponsor shall not delegate or contract these 
responsibilities to another entity. A sponsor shall comply with all 
regulations contained in this part, policies, and grant provisions 
prescribed by the Corporation.



Sec. 2553.23  What are a sponsor's program responsibilities?

    A sponsor shall:
    (a) Focus RSVP resources to have a positive impact on critical human 
and social needs within the project service area.
    (b) Assess in collaboration with other community organizations or 
utilize existing assessments of the needs of the community or service 
area and develop strategies to respond to those needs using the 
resources of RSVP volunteers.
    (c) Develop and manage a system of volunteer stations to provide a 
wide range of placement opportunities that appeal to persons age 55 and 
over by:
    (1) Ensuring that a volunteer station is a public or non-profit 
private organization or an eligible proprietary health care agency 
capable of serving as a volunteer station for the placement of RSVP 
volunteers to meet locally identified needs;
    (2) Ensuring the placement of RSVP volunteers is governed by a 
Memorandum of Understanding:
    (i) That is negotiated prior to placement;
    (ii) That specifies the mutual responsibilities of the station and 
sponsor;
    (iii) That is renegotiated at least every three years; and
    (iv) That states the station assures it will not discriminate 
against RSVP volunteers or in the operation of its program on the basis 
of race; color; national origin, including individuals with limited 
English proficiency; sex; age; political affiliation; religion; or on 
the basis of disability, if the participant or member is a qualified 
individual with a disability; and
    (3) Annually assessing the placement of RSVP volunteers to ensure 
the safety of volunteers and their impact on meeting the needs of the 
community.
    (d) Consider the demographic make-up of the project service area in 
the enrollment of RSVP volunteers, taking special efforts to recruit 
eligible individuals from minority groups, persons with disabilities and 
under represented groups.
    (e) Encourage the most efficient and effective use of RSVP 
volunteers by coordinating project services and activities with related 
national, state and local programs, including other Corporation 
programs.
    (f) Develop, and annually update, a plan for promoting service by 
older adults within the project service area.
    (g) Conduct an annual assessment of the accomplishments and impact 
of the project and how they meet the identified needs and problems of 
the community.

[[Page 811]]

    (h) Provide RSVP volunteers with cost reimbursements specified in 
Sec. 2553.43.

[64 FR 14135, Mar. 24, 1999, as amended at 67 FR 6875, Feb. 14, 2002]



Sec. 2553.24  What are a sponsor's responsibilities for securing community participation?

    (a) A sponsor shall secure community participation in local project 
operation by establishing an Advisory Council or a similar 
organizational structure with a membership that includes people:
    (1) Knowledgeable about human and social needs of the community;
    (2) Competent in the field of community service and volunteerism;
    (3) Capable of helping the sponsor meet its administrative and 
program responsibilities including fund-raising, publicity and 
programming for impact;
    (4) With an interest in and knowledge of the capability of older 
adults; and
    (5) Of a diverse composition that reflects the demographics of the 
service area.
    (b) The sponsor determines how this participation shall be secured, 
consistent with the provisions of paragraphs (a)(1) through (a)(5) of 
this section.



Sec. 2553.25  What are a sponsor's administrative responsibilities?

    A sponsor shall:
    (a) Assume full responsibility for securing maximum and continuing 
community financial and in-kind support to operate the project 
successfully.
    (b) Provide levels of staffing and resources appropriate to 
accomplish the purposes of the project and carry out its project 
management responsibilities.
    (c) Employ a full-time project director to accomplish program 
objectives and manage the functions and activities delegated to project 
staff for NSSC program(s) within its control. A full-time project 
director shall not serve concurrently in another capacity, paid or 
unpaid, during established working hours. The project director may 
participate in activities to coordinate program resources with those of 
related local agencies, boards or organizations. A sponsor may negotiate 
the employment of a part-time project director with the Corporation when 
it can be demonstrated that such an arrangement will not adversely 
affect the size, scope and quality of project operations.
    (d) Consider all project staff as sponsor employees subject to its 
personnel policies and procedures.
    (e) Compensate project staff at a level that is comparable with 
similar staff positions in the sponsor organization and/or project 
service area.
    (f) Establish risk management policies and procedures covering 
project and RSVP activities. This includes provision of appropriate 
insurance coverage for RSVP volunteers, vehicles and other properties 
used in the project.
    (g) Establish record keeping and reporting systems in compliance 
with Corporation requirements that ensure quality of program and fiscal 
operations, facilitate timely and accurate submission of required 
reports and cooperate with Corporation evaluation and data collection 
efforts.
    (h) Comply with and ensure that all volunteer stations comply with 
all applicable civil rights laws and regulations, including providing 
reasonable accommodation to qualified individuals with disabilities.



Sec. 2553.26  May a sponsor administer more than one program grant from the Corporation?

    A sponsor may administer more than one Corporation program grant.



       Subpart C--Suspension, Termination and Denial of Refunding



Sec. 2553.31  What are the rules on suspension, termination and denial of refunding of grants?

    (a) The Chief Executive Officer or designee is authorized to suspend 
further payments or to terminate payments under any grant providing 
assistance under the Act whenever he or she determines there is a 
material failure to comply with applicable terms and conditions of the 
grant. The Chief Executive Officer shall prescribe procedures to insure 
that:
    (1) Assistance under the Act shall not be suspended for failure to 
comply with applicable terms and conditions, except

[[Page 812]]

in emergency situations for thirty days;
    (2) An application for refunding under the Act may not be denied 
unless the recipient has been given:
    (i) Notice at least 75 days before the denial of such application of 
the possibility of such denial and the grounds for any such denial; and
    (ii) Opportunity to show cause why such action should not be taken;
    (3) In any case where an application for refunding is denied for 
failure to comply with the terms and conditions of the grant, the 
recipient shall be afforded an opportunity for an informal hearing 
before an impartial hearing officer, who has been agreed to by the 
recipient and the Corporation; and
    (4) Assistance under the Act shall not be terminated for failure to 
comply with applicable terms and conditions unless the recipient has 
been afforded reasonable notice and opportunity for a full and fair 
hearing.
    (b) In order to assure equal access to all recipients, such hearings 
or other meetings as may be necessary to fulfill the requirements of 
this section shall be held in locations convenient to the recipient 
agency.
    (c) The procedures for suspension, termination, and denial of 
refunding, that apply to the Retired and Senior Volunteer Program are 
specified in 45 CFR Part 1206.



  Subpart D--Eligibility, Cost Reimbursements and Volunteer Assignments



Sec. 2553.41  Who is eligible to be a RSVP volunteer?

    (a) To be an RSVP volunteer, an individual must:
    (1) Be 55 years of age or older;
    (2) Agree to serve without compensation;
    (3) Reside in or nearby the community served by RSVP;
    (4) Agree to abide by all requirements as set forth in this part.
    (b) Eligibility to serve as a RSVP volunteer shall not be restricted 
on the basis of formal education, experience, race, religion, color, 
national origin, sex, age, handicap or political affiliation.



Sec. 2553.42  Is a RSVP volunteer a federal employee, an employee of the sponsor or of the volunteer station?

    RSVP volunteers are not employees of the sponsor, the volunteer 
station, the Corporation, or the Federal Government.



Sec. 2553.43  What cost reimbursements are provided to RSVP volunteers?

    RSVP volunteers are provided the following cost reimbursements 
within the limits of the project's available resources:
    (a) Transportation. RSVP volunteers shall receive assistance with 
the cost of transportation to and from volunteer assignments and 
official project activities, including orientation, training, and 
recognition events. On-the-job or assignment related transportation 
costs are the responsibility of the volunteer station or a third party.
    (b) Meals. RSVP volunteers shall receive assistance with the cost of 
meals taken while on assignment.
    (c) Recognition. RSVP volunteers shall be provided recognition for 
their service.
    (d) Insurance. A RSVP volunteer is provided with the Corporation-
specified minimum levels of insurance as follows:
    (1) Accident insurance. Accident insurance covers RSVP volunteers 
for personal injury during travel between their homes and places of 
assignment, during their volunteer service, during meal periods while 
serving as a volunteer, and while attending project sponsored 
activities. Protection shall be provided against claims in excess of any 
benefits or services for medical care or treatment available to the 
volunteer from other sources.
    (2) Personal liability insurance. Protection is provided against 
claims in excess of protection provided by other insurance. It does not 
include professional liability coverage.
    (3) Excess automobile liability insurance. (i) For RSVP volunteers 
who drive in connection with their service, protection is provided 
against claims in excess of the greater of either:
    (A) Liability insurance the volunteers carry on their own 
automobiles; or

[[Page 813]]

    (B) The limits of applicable state financial responsibility law, or 
in its absence, levels of protection to be determined by the Corporation 
for each person, each accident, and for property damage.
    (ii) RSVP volunteers who drive their personal vehicles to or on 
assignments or project-related activities shall maintain personal 
automobile liability insurance equal to or exceeding the levels 
established by the Corporation.



Sec. 2553.44  May cost reimbursements received by a RSVP volunteer be subject to any tax or charge, treated as wages or compensation, or affect eligibility to 
          receive assistance from other programs?

    No. RSVP volunteers' cost reimbursements are not subject to any tax 
or charge and are not treated as wages or compensation for the purposes 
of unemployment insurance, worker's compensation, temporary disability, 
retirement, public assistance, or similar benefit payments or minimum 
wage laws. Cost reimbursements are not subject to garnishment, do not 
reduce or eliminate the level of or eligibility for assistance or 
services a volunteer may be receiving under any governmental program.



                  Subpart E--Volunteer Terms of Service



Sec. 2553.51  What are the terms of service of a RSVP volunteer?

    A RSVP volunteer shall serve weekly on a regular basis, or 
intensively on short-term assignments consistent with the assignment 
description.



Sec. 2553.52  Under what circumstances may a RSVP volunteer's service be terminated?

    (a) A sponsor may remove a RSVP volunteer from service for cause. 
Grounds for removal include but are not limited to: extensive and 
unauthorized absences; misconduct; inability to perform assignments; and 
failure to accept supervision.
    (b) The sponsor shall establish appropriate policies on service 
termination as well as procedures for appeal from such adverse action.



           Subpart F--Responsibilities of a Volunteer Station



Sec. 2553.61  When may a sponsor serve as a volunteer station?

    The sponsor may function as a volunteer station, provided that no 
more than 5% of the total number of volunteers budgeted for the project 
are assigned to it in administrative or support positions. This 
limitation does not apply to the assignment of volunteers to other 
programs administered by the sponsor or special volunteer activities of 
the project. The RSVP project itself may function as a volunteer station 
or may initiate special volunteer activities provided the Corporation 
agrees that these activities are in accord with program objectives and 
will not hinder overall project operations.



Sec. 2553.62  What are the responsibilities of a volunteer station?

    A volunteer station shall undertake the following responsibilities 
in support of RSVP volunteers:
    (a) Develop volunteer assignments that impact critical human and 
social needs, and regularly assess those assignments for continued 
appropriateness;
    (b) Assign staff member responsible for day to day oversight of the 
placement of RSVP volunteers within the volunteer station and for 
assessing the impact of volunteers in addressing community needs;
    (c) Obtain a Letter of Agreement for an RSVP volunteer assigned in-
home. The Letter of Agreement shall comply with all Federal, State and 
local regulations;
    (d) Keep records and prepare reports as required;
    (e) Comply with all applicable civil rights laws and regulations 
including reasonable accommodation for RSVP volunteers with 
disabilities; and
    (f) Provide assigned RSVP volunteers the following support:
    (1) Orientation to station and appropriate in-service training to 
enhance performance of assignments;
    (2) Resources required for performance of assignments including 
reasonable accommodation;
    (3) Supervision while on assignment;
    (4) Appropriate recognition; and

[[Page 814]]

    (5) Provide for the safety of RSVP volunteers assigned to it.
    (g) Undertake such other responsibilities as may be necessary to the 
successful performance of RSVP volunteers in their assignments or as 
agreed to in the Memorandum of Understanding.



             Subpart G--Application and Fiscal Requirements



Sec. 2553.71  What is the process for application and award of a grant?

    (a) How and when may an eligible organization apply for a grant? (1) 
An eligible organization may file an application for a RSVP grant at any 
time.
    (2) Before submitting an application, an applicant shall determine 
the availability of funds.
    (3) The Corporation may also solicit grant applicants. Applicants 
solicited by the Corporation are not assured of selection or approval 
and may have to compete with other solicited or unsolicited applicants.
    (b) What must an eligible organization include in a grant 
application? (1) An applicant shall complete standard forms prescribed 
by the Corporation.
    (2) The applicant shall comply with the provisions of Executive 
Order 12372, the ``Intergovernmental Review of Federal Programs,'' (3 
CFR, 1982 Comp., p. 197) in 45 CFR part 1233, and any other applicable 
requirements.
    (c) Who reviews the merits of a RSVP application and how is a grant 
awarded? (1) The Corporation reviews and determines the merit of an 
application by its responsiveness to published guidelines and to the 
overall purpose and objectives of the program. When funds are available, 
the Corporation awards a grant in writing to each applicant whose grant 
proposal provides the best potential for serving the purpose of the 
program. The award will be documented by a Notice of Grant Award (NGA).
    (2) The Corporation and the sponsoring organization are parties to 
the NGA. The NGA will document the sponsor's commitment to fulfill 
specific programmatic objectives and financial obligations. It will 
document the extent of the Corporation's obligation to provide financial 
support to the sponsor.
    (d) What happens if the Corporation rejects an application? The 
Corporation will return to the applicant an application that is not 
approved for funding, with an explanation of the Corporation's decision.
    (e) For what period of time does the Corporation award a grant? The 
Corporation awards a RSVP grant for a specified period that is usually 
12 months in duration.



Sec. 2553.72  What are project funding requirements?

    (a) Is non-Corporation support required? (1) A Corporation grant may 
be awarded to fund up to 90 percent of the total project cost in the 
first year, 80 percent in the second year, and 70 percent in the third 
and succeeding years.
    (2) A sponsor is responsible for identifying non-Corporation funds 
which may include in-kind contributions.
    (b) Under what circumstances does the Corporation allow less than 
the percentage identified in paragraph (a) of this section? The 
Corporation may allow exceptions to the local support requirement 
identified in paragraph (a) of this section in cases of demonstrated 
need such as:
    (1) Initial difficulties in the development of local funding sources 
during the first three years of operations; or
    (2) An economic downturn, the occurrence of a natural disaster, or 
similar events in the service area that severely restrict or reduce 
sources of local funding support; or
    (3) The unexpected discontinuation of local support from one or more 
sources that a project has relied on for a period of years.
    (c) May the Corporation restrict how a sponsor uses locally 
generated contributions in excess of the non-Corporation support 
required? Whenever locally generated contributions to RSVP projects are 
in excess of the non-Corporation funds required (10 percent of the total 
cost in the first year, 20 percent in the second year and 30 percent in 
the third and succeeding years), the Corporation may not restrict the 
manner in which such contributions are expended provided such 
expenditures are consistent with the provisions of the Act.

[[Page 815]]

    (d) Are program expenditures subject to audit? All expenditures by 
the grantee of Federal and Non-Federal funds, including expenditures 
from excess locally generated contributions, are subject to audit by the 
Corporation, its Inspector General, or their authorized agents.

[64 FR 14135, Mar. 24, 1999, as amended at 67 FR 6875, Feb. 14, 2002]



Sec. 2553.73  What are grants management requirements?

    What rules govern a sponsor's management of grants?
    (a) A sponsor shall manage a grant awarded in accordance with:
    (1) The Act;
    (2) Regulations in this part;
    (3) 45 CFR Part 2541, ``Uniform Administrative Requirements for 
Grants and Cooperative Agreements to State and Local Governments'', or 
45 CFR Part 2543, ``Grants and Agreements with Institutions of Higher 
Education, Hospitals, and Other Non-Profit Organizations'';
    (4) The following OMB Circulars, as appropriate A-21, ``Cost 
Principles for Educational Institutions'', A-87, ``Cost Principles for 
State, Local and Indian Tribal Governments'', A-122, ``Cost Principles 
for Non-Profit Organizations'', and A-133, ``Audits of States, Local 
Governments, and Other Non-Profit Organizations'' (OMB circulars are 
available electronically at the OMB homepage www.whitehouse.gov/WH/EOP/
omb); and
    (5) Other applicable Corporation requirements.
    (b) Project support provided under a Corporation grant shall be 
furnished at the lowest possible cost consistent with the effective 
operation of the project.
    (c) Project costs for which Corporation funds are budgeted must be 
justified as being essential to project operation.
    (d) Project funds shall not be used to reimburse volunteers for 
expenses, including transportation costs, incurred while performing 
their volunteer assignments. Volunteers on assignment during a normal 
meal period may be reimbursed for the meal cost. Equipment or supplies 
for volunteers on assignment are not allowable costs. Assignment related 
costs of transportation, equipment, supplies, etc. are the 
responsibility of the volunteer station or a third party.
    (e) Volunteer expense items, including transportation, meals, 
recognition activities and items purchased at the volunteers own expense 
that are not reimbursed, are not allowable as contributions to the non-
Federal share of the budget.
    (f) Costs of other insurance not required by program policy, but 
maintained by a sponsor for the general conduct of its activities are 
allowable with the following limitations:
    (1) Types and extent of and cost of coverage are according to sound 
institutional and business practices;
    (2) Costs of insurance or a contribution to any reserve covering the 
risk of loss of or damage to Government-owned property are unallowable 
unless the government specifically requires and approves such costs; and
    (3) The cost of insurance on the lives of officers, trustees or 
staff is unallowable except where such insurance is part of an employee 
plan which is not unduly restricted.
    (g) Costs to bring a sponsor into basic compliance with 
accessibility requirements for individuals with disabilities are not 
allowable costs.
    (h) Payments to settle discrimination allegations, either informally 
through a settlement agreement or formally as a result of a decision 
finding discrimination, are not allowable costs.
    (i) Written Corporation State Office approval/concurrence is 
required for a change in the approved service area.

[64 FR 14135, Mar. 24, 1999, as amended at 67 FR 6875, Feb. 14, 2002]



               Subpart H--Non-Corporation Funded Projects



Sec. 2553.81  Under what conditions may an agency or organization sponsor a RSVP project without Corporation funding?

    An eligible agency or organization who wishes to sponsor a RSVP 
project without Corporation funding, must sign a Memorandum of Agreement 
with the Corporation that:
    (a) Certifies its intent to comply with all Corporation requirements 
for the

[[Page 816]]

Retired and Senior Volunteer Program; and
    (b) Identifies responsibilities to be carried out by each party.



Sec. 2553.82  What benefits are a non-Corporation funded project entitled to?

    (a) All technical assistance and materials provided to Corporation-
funded RSVP projects; and
    (b) The application of the provisions of 42 U.S.C. 5044 and 5058.



Sec. 2553.83  What financial obligation does the Corporation incur for non-Corporation funded projects?

    Entry into a Memorandum of Agreement with, or issuance of an NGA to 
a sponsor of a non-Corporation funded project does not create a 
financial obligation on the part of the Corporation for any costs 
associated with the project.



Sec. 2553.84  What happens if a non-Corporation funded sponsor does not comply with the Memorandum of Agreement?

    A non-Corporation funded project sponsor's noncompliance with the 
Memorandum of Agreement may result in suspension or termination of the 
Corporation's agreement and all benefits specified in Sec. 2553.82.



            Subpart I--Restrictions and Legal Representation



Sec. 2553.91  What legal limitations apply to the operation of the RSVP Program and to the expenditure of grant funds?

    (a) Political activities. (1) No part of any grant shall be used to 
finance, directly or indirectly, any activity to influence the outcome 
of any election to public office, or any voter registration activity.
    (2) No project shall be conducted in a manner involving the use of 
funds, the provision of services, or the employment or assignment of 
personnel in a matter supporting or resulting in the identification of 
such project with:
    (i) Any partisan or nonpartisan political activity associated with a 
candidate, or contending faction or group, in an election; or
    (ii) Any activity to provide voters or prospective voters with 
transportation to the polls or similar assistance in connection with any 
such election; or
    (iii) Any voter registration activity, except that voter 
registration applications and nonpartisan voter registration information 
may be made available to the public at the premises of the sponsor. But 
in making registration applications and nonpartisan voter registration 
information available, employees of the sponsor shall not express 
preferences or seek to influence decisions concerning any candidate, 
political party, election issue, or voting decision.
    (3) The sponsor shall not use grant funds in any activity for the 
purpose of influencing the passage or defeat of legislation or proposals 
by initiative petition, except:
    (i) In any case in which a legislative body, a committee of a 
legislative body, or a member of a legislative body requests any 
volunteer in, or employee of such a program to draft, review or testify 
regarding measures or to make representation to such legislative body, 
committee or member; or
    (ii) In connection with an authorization or appropriations measure 
directly affecting the operation of the RSVP Program.
    (b) Nondisplacement of employed workers. A RSVP volunteer shall not 
perform any service or duty or engage in any activity which would 
otherwise be performed by an employed worker or which would supplant the 
hiring of or result in the displacement of employed workers, or impair 
existing contracts for service.
    (c) Compensation for service. (1) An agency or organization to which 
NSSC volunteers are assigned, or which operates or supervises any NSSC 
program, shall not request or receive any compensation from NSSC 
volunteers or from beneficiaries for services of NSSC volunteers.
    (2) This section does not prohibit a sponsor from soliciting and 
accepting voluntary contributions from the community at large to meet 
its local support obligations under the grant; or, from entering into 
agreements with parties other than beneficiaries to support additional 
volunteers beyond

[[Page 817]]

those supported by the Corporation grant.
    (3) A RSVP volunteer station may contribute to the financial support 
of the RSVP Program. However, this support shall not be a required 
precondition for a potential station to obtain RSVP volunteers.
    (4) If a volunteer station agrees to provide funds to support 
additional volunteers or pay for other volunteer support costs, the 
agreement shall be stated in a written Memorandum of Understanding. The 
sponsor shall withdraw services if the station's inability to provide 
monetary or in-kind support to the project under the Memorandum of 
Understanding diminishes or jeopardizes the project's financial 
capabilities to fulfill its obligations.
    (5) Under no circumstances shall a RSVP volunteer receive a fee for 
service from service recipients, their legal guardian, members of their 
family, or friends.
    (d) Labor and anti-labor activity. The sponsor shall not use grant 
funds directly or indirectly to finance labor or anti-labor organization 
or related activity.
    (e) Fair labor standards. A sponsor that employs laborers and 
mechanics for construction, alteration, or repair of facilities shall 
pay wages at prevailing rates as determined by the Secretary of Labor in 
accordance with the Davis-Bacon Act, as amended, 40 U.S.C. 276a.
    (f) Nondiscrimination. A sponsor or sponsor employee shall not 
discriminate against a RSVP volunteer on the basis of race, color, 
national origin, sex, age, religion, or political affiliation, or on the 
basis of disability, if the volunteer with a disability is qualified to 
serve.
    (g) Religious activities. A RSVP volunteer or a member of the 
project staff funded by the Corporation shall not give religious 
instruction, conduct worship services or engage in any form of 
proselytization as part of his/her duties.
    (h) Nepotism. Persons selected for project staff positions shall not 
be related by blood or marriage to other project staff, sponsor staff or 
officers, or members of the sponsor Board of Directors, unless there is 
written concurrence from the Advisory Council or community group 
established by the sponsor under subpart B of this part, and with 
notification to the Corporation.



Sec. 2553.92  What legal coverage does the Corporation make available to RSVP volunteers?

    It is within the Corporation's discretion to determine if Counsel is 
employed and counsel fees, court costs, bail and other expenses 
incidental to the defense of a RSVP volunteer are paid in a criminal, 
civil or administrative proceeding, when such a proceeding arises 
directly out of performance of the volunteer's activities. The 
circumstances under which the Corporation may pay such expenses are 
specified in 45 CFR part 1220.



PART 2555--NONDISCRIMINATION ON THE BASIS OF SEX IN EDUCATION PROGRAMS OR ACTIVITIES RECEIVING FEDERAL FINANCIAL ASSISTANCE--Table of Contents




                         Subpart A--Introduction

Sec.
2555.100  Purpose and effective date.
2555.105  Definitions.
2555.110  Remedial and affirmative action and self-evaluation.
2555.115  Assurance required.
2555.120  Transfers of property.
2555.125  Effect of other requirements.
2555.130  Effect of employment opportunities.
2555.135  Designation of responsible employee and adoption of grievance 
          procedures.
2555.140  Dissemination of policy.

                           Subpart B--Coverage

2555.200   Application.
2555.205  Educational institutions and other entities controlled by 
          religious organizations.
2555.210  Military and merchant marine educational institutions.
2555.215  Membership practices of certain organizations.
2555.220  Admission.
2555.225  Educational institutions eligible to submit transition plans.
2555.230  Transition plans.

[[Page 818]]

2555.235  Statutory amendments.

     Subpart C--Discrimination on the Basis of Sex in Admission and 
                         Recruitment Prohibited

2555.300  Admission.
2555.305  Preference in admission.
2555.310  Recruitment.

 Subpart D--Discrimination on the Basis of Sex in Education Programs or 
                          Activities Prohibited

2555.400  Education programs or activities.
2555.405  Housing.
2555.410  Comparable facilities.
2555.415  Access to course offerings.
2555.420  Access to schools operated by LEAs.
2555.425  Counseling and use of appraisal and counseling materials.
2555.430  Financial assistance.
2555.435  Employment assistance to students.
2555.440  Health and insurance benefits and services.
2555.445  Marital or parental status.
2555.450  Athletics.
2555.455  Textbooks and curricular material.

Subpart E--Discrimination on the Basis of Sex in Employment in Education 
                    Programs or Activities Prohibited

2555.500  Employment.
2555.505  Employment criteria.
2555.510  Recruitment.
2555.515  Compensation.
2555.520  Job classification and structure.
2555.525  Fringe benefits.
2555.530  Marital or parental status.
2555.535  Effect of state or local law or other requirements.
2555.540  Advertising.
2555.545  Pre-employment inquiries.
2555.550  Sex as a bona fide occupational qualification.

                          Subpart F--Procedures

2555.600  Notice of covered programs.
2555.605  Enforcement procedures.

    Authority: 20 U.S.C. 1681, 1682, 1683, 1685, 1686, 1687, 1688.

    Source: 65 FR 52865, 52893, Aug. 30, 2000, unless otherwise noted.



                         Subpart A--Introduction



Sec. 2555.100  Purpose and effective date.

    The purpose of these Title IX regulations is to effectuate Title IX 
of the Education Amendments of 1972, as amended (except sections 904 and 
906 of those Amendments) (20 U.S.C. 1681, 1682, 1683, 1685, 1686, 1687, 
1688), which is designed to eliminate (with certain exceptions) 
discrimination on the basis of sex in any education program or activity 
receiving Federal financial assistance, whether or not such program or 
activity is offered or sponsored by an educational institution as 
defined in these Title IX regulations. The effective date of these Title 
IX regulations shall be September 29, 2000.



Sec. 2555.105  Definitions.

    As used in these Title IX regulations, the term:
    Administratively separate unit means a school, department, or 
college of an educational institution (other than a local educational 
agency) admission to which is independent of admission to any other 
component of such institution.
    Admission means selection for part-time, full-time, special, 
associate, transfer, exchange, or any other enrollment, membership, or 
matriculation in or at an education program or activity operated by a 
recipient.
    Applicant means one who submits an application, request, or plan 
required to be approved by an official of the Federal agency that awards 
Federal financial assistance, or by a recipient, as a condition to 
becoming a recipient.
    Designated agency official means ``Director, Equal Opportunity''.
    Educational institution means a local educational agency (LEA) as 
defined by 20 U.S.C. 8801(18), a preschool, a private elementary or 
secondary school, or an applicant or recipient that is an institution of 
graduate higher education, an institution of undergraduate higher 
education, an institution of professional education, or an institution 
of vocational education, as defined in this section.
    Federal financial assistance means any of the following, when 
authorized or extended under a law administered by the Federal agency 
that awards such assistance:
    (1) A grant or loan of Federal financial assistance, including funds 
made available for:
    (i) The acquisition, construction, renovation, restoration, or 
repair of a

[[Page 819]]

building or facility or any portion thereof; and
    (ii) Scholarships, loans, grants, wages, or other funds extended to 
any entity for payment to or on behalf of students admitted to that 
entity, or extended directly to such students for payment to that 
entity.
    (2) A grant of Federal real or personal property or any interest 
therein, including surplus property, and the proceeds of the sale or 
transfer of such property, if the Federal share of the fair market value 
of the property is not, upon such sale or transfer, properly accounted 
for to the Federal Government.
    (3) Provision of the services of Federal personnel.
    (4) Sale or lease of Federal property or any interest therein at 
nominal consideration, or at consideration reduced for the purpose of 
assisting the recipient or in recognition of public interest to be 
served thereby, or permission to use Federal property or any interest 
therein without consideration.
    (5) Any other contract, agreement, or arrangement that has as one of 
its purposes the provision of assistance to any education program or 
activity, except a contract of insurance or guaranty.
    Institution of graduate higher education means an institution that:
    (1) Offers academic study beyond the bachelor of arts or bachelor of 
science degree, whether or not leading to a certificate of any higher 
degree in the liberal arts and sciences;
    (2) Awards any degree in a professional field beyond the first 
professional degree (regardless of whether the first professional degree 
in such field is awarded by an institution of undergraduate higher 
education or professional education); or
    (3) Awards no degree and offers no further academic study, but 
operates ordinarily for the purpose of facilitating research by persons 
who have received the highest graduate degree in any field of study.
    Institution of professional education means an institution (except 
any institution of undergraduate higher education) that offers a program 
of academic study that leads to a first professional degree in a field 
for which there is a national specialized accrediting agency recognized 
by the Secretary of Education.
    Institution of undergraduate higher education means:
    (1) An institution offering at least two but less than four years of 
college-level study beyond the high school level, leading to a diploma 
or an associate degree, or wholly or principally creditable toward a 
baccalaureate degree; or
    (2) An institution offering academic study leading to a 
baccalaureate degree; or
    (3) An agency or body that certifies credentials or offers degrees, 
but that may or may not offer academic study.
    Institution of vocational education means a school or institution 
(except an institution of professional or graduate or undergraduate 
higher education) that has as its primary purpose preparation of 
students to pursue a technical, skilled, or semiskilled occupation or 
trade, or to pursue study in a technical field, whether or not the 
school or institution offers certificates, diplomas, or degrees and 
whether or not it offers full-time study.
    Recipient means any State or political subdivision thereof, or any 
instrumentality of a State or political subdivision thereof, any public 
or private agency, institution, or organization, or other entity, or any 
person, to whom Federal financial assistance is extended directly or 
through another recipient and that operates an education program or 
activity that receives such assistance, including any subunit, 
successor, assignee, or transferee thereof.
    Student means a person who has gained admission.
    Title IX means Title IX of the Education Amendments of 1972, Public 
Law 92-318, 86 Stat. 235, 373 (codified as amended at 20 U.S.C. 1681-
1688) (except sections 904 and 906 thereof), as amended by section 3 of 
Public Law 93-568, 88 Stat. 1855, by section 412 of the Education 
Amendments of 1976, Public Law 94-482, 90 Stat. 2234, and by Section 3 
of Public Law 100-259, 102 Stat. 28, 28-29 (20 U.S.C. 1681, 1682, 1683, 
1685, 1686, 1687, 1688).
    Title IX regulations means the provisions set forth at 
Secs. 2555.100 through 2555.605.

[[Page 820]]

    Transition plan means a plan subject to the approval of the 
Secretary of Education pursuant to section 901(a)(2) of the Education 
Amendments of 1972, 20 U.S.C. 1681(a)(2), under which an educational 
institution operates in making the transition from being an educational 
institution that admits only students of one sex to being one that 
admits students of both sexes without discrimination.

[65 FR 52865, 52893, Aug. 30, 2000, as amended at 65 FR 52894, Aug. 30, 
2000]



Sec. 2555.110  Remedial and affirmative action and self-evaluation.

    (a) Remedial action. If the designated agency official finds that a 
recipient has discriminated against persons on the basis of sex in an 
education program or activity, such recipient shall take such remedial 
action as the designated agency official deems necessary to overcome the 
effects of such discrimination.
    (b) Affirmative action. In the absence of a finding of 
discrimination on the basis of sex in an education program or activity, 
a recipient may take affirmative action consistent with law to overcome 
the effects of conditions that resulted in limited participation therein 
by persons of a particular sex. Nothing in these Title IX regulations 
shall be interpreted to alter any affirmative action obligations that a 
recipient may have under Executive Order 11246, 3 CFR, 1964-1965 Comp., 
p. 339; as amended by Executive Order 11375, 3 CFR, 1966-1970 Comp., p. 
684; as amended by Executive Order 11478, 3 CFR, 1966-1970 Comp., p. 
803; as amended by Executive Order 12086, 3 CFR, 1978 Comp., p. 230; as 
amended by Executive Order 12107, 3 CFR, 1978 Comp., p. 264.
    (c) Self-evaluation. Each recipient education institution shall, 
within one year of September 29, 2000:
    (1) Evaluate, in terms of the requirements of these Title IX 
regulations, its current policies and practices and the effects thereof 
concerning admission of students, treatment of students, and employment 
of both academic and non-academic personnel working in connection with 
the recipient's education program or activity;
    (2) Modify any of these policies and practices that do not or may 
not meet the requirements of these Title IX regulations; and
    (3) Take appropriate remedial steps to eliminate the effects of any 
discrimination that resulted or may have resulted from adherence to 
these policies and practices.
    (d) Availability of self-evaluation and related materials. 
Recipients shall maintain on file for at least three years following 
completion of the evaluation required under paragraph (c) of this 
section, and shall provide to the designated agency official upon 
request, a description of any modifications made pursuant to paragraph 
(c)(2) of this section and of any remedial steps taken pursuant to 
paragraph (c)(3) of this section.



Sec. 2555.115  Assurance required.

    (a) General. Either at the application stage or the award stage, 
Federal agencies must ensure that applications for Federal financial 
assistance or awards of Federal financial assistance contain, be 
accompanied by, or be covered by a specifically identified assurance 
from the applicant or recipient, satisfactory to the designated agency 
official, that each education program or activity operated by the 
applicant or recipient and to which these Title IX regulations apply 
will be operated in compliance with these Title IX regulations. An 
assurance of compliance with these Title IX regulations shall not be 
satisfactory to the designated agency official if the applicant or 
recipient to whom such assurance applies fails to commit itself to take 
whatever remedial action is necessary in accordance with 
Sec. 2555.110(a) to eliminate existing discrimination on the basis of 
sex or to eliminate the effects of past discrimination whether occurring 
prior to or subsequent to the submission to the designated agency 
official of such assurance.
    (b) Duration of obligation. (1) In the case of Federal financial 
assistance extended to provide real property or structures thereon, such 
assurance shall obligate the recipient or, in the case of a subsequent 
transfer, the transferee, for the period during which the real property 
or structures are used to provide an education program or activity.

[[Page 821]]

    (2) In the case of Federal financial assistance extended to provide 
personal property, such assurance shall obligate the recipient for the 
period during which it retains ownership or possession of the property.
    (3) In all other cases such assurance shall obligate the recipient 
for the period during which Federal financial assistance is extended.
    (c) Form. (1) The assurances required by paragraph (a) of this 
section, which may be included as part of a document that addresses 
other assurances or obligations, shall include that the applicant or 
recipient will comply with all applicable Federal statutes relating to 
nondiscrimination. These include but are not limited to: Title IX of the 
Education Amendments of 1972, as amended (20 U.S.C. 1681-1683, 1685-
1688).
    (2) The designated agency official will specify the extent to which 
such assurances will be required of the applicant's or recipient's 
subgrantees, contractors, subcontractors, transferees, or successors in 
interest.



Sec. 2555.120  Transfers of property.

    If a recipient sells or otherwise transfers property financed in 
whole or in part with Federal financial assistance to a transferee that 
operates any education program or activity, and the Federal share of the 
fair market value of the property is not upon such sale or transfer 
properly accounted for to the Federal Government, both the transferor 
and the transferee shall be deemed to be recipients, subject to the 
provisions of Secs. 2555.205 through 2555.235(a).



Sec. 2555.125  Effect of other requirements.

    (a) Effect of other Federal provisions. The obligations imposed by 
these Title IX regulations are independent of, and do not alter, 
obligations not to discriminate on the basis of sex imposed by Executive 
Order 11246, 3 CFR, 1964-1965 Comp., p. 339; as amended by Executive 
Order 11375, 3 CFR, 1966-1970 Comp., p. 684; as amended by Executive 
Order 11478, 3 CFR, 1966-1970 Comp., p. 803; as amended by Executive 
Order 12087, 3 CFR, 1978 Comp., p. 230; as amended by Executive Order 
12107, 3 CFR, 1978 Comp., p. 264; sections 704 and 855 of the Public 
Health Service Act (42 U.S.C. 295m, 298b-2); Title VII of the Civil 
Rights Act of 1964 (42 U.S.C. 2000e et seq.); the Equal Pay Act of 1963 
(29 U.S.C. 206); and any other Act of Congress or Federal regulation.
    (b) Effect of State or local law or other requirements. The 
obligation to comply with these Title IX regulations is not obviated or 
alleviated by any State or local law or other requirement that would 
render any applicant or student ineligible, or limit the eligibility of 
any applicant or student, on the basis of sex, to practice any 
occupation or profession.
    (c) Effect of rules or regulations of private organizations. The 
obligation to comply with these Title IX regulations is not obviated or 
alleviated by any rule or regulation of any organization, club, athletic 
or other league, or association that would render any applicant or 
student ineligible to participate or limit the eligibility or 
participation of any applicant or student, on the basis of sex, in any 
education program or activity operated by a recipient and that receives 
Federal financial assistance.



Sec. 2555.130  Effect of employment opportunities.

    The obligation to comply with these Title IX regulations is not 
obviated or alleviated because employment opportunities in any 
occupation or profession are or may be more limited for members of one 
sex than for members of the other sex.



Sec. 2555.135  Designation of responsible employee and adoption of grievance procedures.

    (a) Designation of responsible employee. Each recipient shall 
designate at least one employee to coordinate its efforts to comply with 
and carry out its responsibilities under these Title IX regulations, 
including any investigation of any complaint communicated to such 
recipient alleging its noncompliance with these Title IX regulations or 
alleging any actions that would be prohibited by these Title IX 
regulations. The recipient shall notify all its students and employees 
of the name, office address, and telephone number of

[[Page 822]]

the employee or employees appointed pursuant to this paragraph.
    (b) Complaint procedure of recipient. A recipient shall adopt and 
publish grievance procedures providing for prompt and equitable 
resolution of student and employee complaints alleging any action that 
would be prohibited by these Title IX regulations.



Sec. 2555.140  Dissemination of policy.

    (a) Notification of policy. (1) Each recipient shall implement 
specific and continuing steps to notify applicants for admission and 
employment, students and parents of elementary and secondary school 
students, employees, sources of referral of applicants for admission and 
employment, and all unions or professional organizations holding 
collective bargaining or professional agreements with the recipient, 
that it does not discriminate on the basis of sex in the educational 
programs or activities that it operates, and that it is required by 
Title IX and these Title IX regulations not to discriminate in such a 
manner. Such notification shall contain such information, and be made in 
such manner, as the designated agency official finds necessary to 
apprise such persons of the protections against discrimination assured 
them by Title IX and these Title IX regulations, but shall state at 
least that the requirement not to discriminate in education programs or 
activities extends to employment therein, and to admission thereto 
unless Secs. 2555.300 through 2555.310 do not apply to the recipient, 
and that inquiries concerning the application of Title IX and these 
Title IX regulations to such recipient may be referred to the employee 
designated pursuant to Sec. 2555.135, or to the designated agency 
official.
    (2) Each recipient shall make the initial notification required by 
paragraph (a)(1) of this section within 90 days of September 29, 2000 or 
of the date these Title IX regulations first apply to such recipient, 
whichever comes later, which notification shall include publication in:
    (i) Newspapers and magazines operated by such recipient or by 
student, alumnae, or alumni groups for or in connection with such 
recipient; and
    (ii) Memoranda or other written communications distributed to every 
student and employee of such recipient.
    (b) Publications. (1) Each recipient shall prominently include a 
statement of the policy described in paragraph (a) of this section in 
each announcement, bulletin, catalog, or application form that it makes 
available to any person of a type, described in paragraph (a) of this 
section, or which is otherwise used in connection with the recruitment 
of students or employees.
    (2) A recipient shall not use or distribute a publication of the 
type described in paragraph (b)(1) of this section that suggests, by 
text or illustration, that such recipient treats applicants, students, 
or employees differently on the basis of sex except as such treatment is 
permitted by these Title IX regulations.
    (c) Distribution. Each recipient shall distribute without 
discrimination on the basis of sex each publication described in 
paragraph (b)(1) of this section, and shall apprise each of its 
admission and employment recruitment representatives of the policy of 
nondiscrimination described in paragraph (a) of this section, and shall 
require such representatives to adhere to such policy.



                           Subpart B--Coverage



Sec. 2555.200  Application.

    Except as provided in Secs. 2555.205 through 2555.235(a), these 
Title IX regulations apply to every recipient and to each education 
program or activity operated by such recipient that receives Federal 
financial assistance.



Sec. 2555.205  Educational institutions and other entities controlled by religious organizations.

    (a) Exemption. These Title IX regulations do not apply to any 
operation of an educational institution or other entity that is 
controlled by a religious organization to the extent that application of 
these Title IX regulations would not be consistent with the religious 
tenets of such organization.
    (b) Exemption claims. An educational institution or other entity 
that wishes to claim the exemption set forth in paragraph (a) of this 
section shall do so

[[Page 823]]

by submitting in writing to the designated agency official a statement 
by the highest-ranking official of the institution, identifying the 
provisions of these Title IX regulations that conflict with a specific 
tenet of the religious organization.



Sec. 2555.210  Military and merchant marine educational institutions.

    These Title IX regulations do not apply to an educational 
institution whose primary purpose is the training of individuals for a 
military service of the United States or for the merchant marine.



Sec. 2555.215  Membership practices of certain organizations.

    (a) Social fraternities and sororities. These Title IX regulations 
do not apply to the membership practices of social fraternities and 
sororities that are exempt from taxation under section 501(a) of the 
Internal Revenue Code of 1954, 26 U.S.C. 501(a), the active membership 
of which consists primarily of students in attendance at institutions of 
higher education.
    (b) YMCA, YWCA, Girl Scouts, Boy Scouts, and Camp Fire Girls. These 
Title IX regulations do not apply to the membership practices of the 
Young Men's Christian Association (YMCA), the Young Women's Christian 
Association (YWCA), the Girl Scouts, the Boy Scouts, and Camp Fire 
Girls.
    (c) Voluntary youth service organizations. These Title IX 
regulations do not apply to the membership practices of a voluntary 
youth service organization that is exempt from taxation under section 
501(a) of the Internal Revenue Code of 1954, 26 U.S.C. 501(a), and the 
membership of which has been traditionally limited to members of one sex 
and principally to persons of less than nineteen years of age.



Sec. 2555.220  Admissions.

    (a) Admissions to educational institutions prior to June 24, 1973, 
are not covered by these Title IX regulations.
    (b) Administratively separate units. For the purposes only of this 
section, Secs. 2555.225 and 2555.230, and Secs. 2555.300 through 
2555.310, each administratively separate unit shall be deemed to be an 
educational institution.
    (c) Application of Secs. 2555.300 through 2555.310. Except as 
provided in paragraphs (d) and (e) of this section, Secs. 2555.300 
through 2555.310 apply to each recipient. A recipient to which 
Secs. 2555.300 through 2555.310 apply shall not discriminate on the 
basis of sex in admission or recruitment in violation of Secs. 2555.300 
through 2555.310.
    (d) Educational institutions. Except as provided in paragraph (e) of 
this section as to recipients that are educational institutions, 
Secs. 2555.300 through 2555.310 apply only to institutions of vocational 
education, professional education, graduate higher education, and public 
institutions of undergraduate higher education.
    (e) Public institutions of undergraduate higher education. 
Secs. 2555.300 through 2555.310 do not apply to any public institution 
of undergraduate higher education that traditionally and continually 
from its establishment has had a policy of admitting students of only 
one sex.



Sec. 2555.225  Educational institutions eligible to submit transition plans.

    (a) Application. This section applies to each educational 
institution to which Secs. 2555.300 through 2555.310 apply that:
    (1) Admitted students of only one sex as regular students as of June 
23, 1972; or
    (2) Admitted students of only one sex as regular students as of June 
23, 1965, but thereafter admitted, as regular students, students of the 
sex not admitted prior to June 23, 1965.
    (b) Provision for transition plans. An educational institution to 
which this section applies shall not discriminate on the basis of sex in 
admission or recruitment in violation of Secs. 2555.300 through 
2555.310.



Sec. 2555.230  Transition plans.

    (a) Submission of plans. An institution to which Sec. 2555.225 
applies and that is composed of more than one administratively separate 
unit may submit either a single transition plan applicable to all such 
units, or a separate transition plan applicable to each such unit.
    (b) Content of plans. In order to be approved by the Secretary of 
Education, a transition plan shall:

[[Page 824]]

    (1) State the name, address, and Federal Interagency Committee on 
Education Code of the educational institution submitting such plan, the 
administratively separate units to which the plan is applicable, and the 
name, address, and telephone number of the person to whom questions 
concerning the plan may be addressed. The person who submits the plan 
shall be the chief administrator or president of the institution, or 
another individual legally authorized to bind the institution to all 
actions set forth in the plan.
    (2) State whether the educational institution or administratively 
separate unit admits students of both sexes as regular students and, if 
so, when it began to do so.
    (3) Identify and describe with respect to the educational 
institution or administratively separate unit any obstacles to admitting 
students without discrimination on the basis of sex.
    (4) Describe in detail the steps necessary to eliminate as soon as 
practicable each obstacle so identified and indicate the schedule for 
taking these steps and the individual directly responsible for their 
implementation.
    (5) Include estimates of the number of students, by sex, expected to 
apply for, be admitted to, and enter each class during the period 
covered by the plan.
    (c) Nondiscrimination. No policy or practice of a recipient to which 
Sec. 2555.225 applies shall result in treatment of applicants to or 
students of such recipient in violation of Secs. 2555.300 through 
2555.310 unless such treatment is necessitated by an obstacle identified 
in paragraph (b)(3) of this section and a schedule for eliminating that 
obstacle has been provided as required by paragraph (b)(4) of this 
section.
    (d) Effects of past exclusion. To overcome the effects of past 
exclusion of students on the basis of sex, each educational institution 
to which Sec. 2555.225 applies shall include in its transition plan, and 
shall implement, specific steps designed to encourage individuals of the 
previously excluded sex to apply for admission to such institution. Such 
steps shall include instituting recruitment programs that emphasize the 
institution's commitment to enrolling students of the sex previously 
excluded.



Sec. 2555.235  Statutory amendments.

    (a) This section, which applies to all provisions of these Title IX 
regulations, addresses statutory amendments to Title IX.
    (b) These Title IX regulations shall not apply to or preclude:
    (1) Any program or activity of the American Legion undertaken in 
connection with the organization or operation of any Boys State 
conference, Boys Nation conference, Girls State conference, or Girls 
Nation conference;
    (2) Any program or activity of a secondary school or educational 
institution specifically for:
    (i) The promotion of any Boys State conference, Boys Nation 
conference, Girls State conference, or Girls Nation conference; or
    (ii) The selection of students to attend any such conference;
    (3) Father-son or mother-daughter activities at an educational 
institution or in an education program or activity, but if such 
activities are provided for students of one sex, opportunities for 
reasonably comparable activities shall be provided to students of the 
other sex;
    (4) Any scholarship or other financial assistance awarded by an 
institution of higher education to an individual because such individual 
has received such award in a single-sex pageant based upon a combination 
of factors related to the individual's personal appearance, poise, and 
talent. The pageant, however, must comply with other nondiscrimination 
provisions of Federal law.
    (c) Program or activity or program means:
    (1) All of the operations of any entity described in paragraphs 
(c)(1)(i) through (iv) of this section, any part of which is extended 
Federal financial assistance:
    (i)(A) A department, agency, special purpose district, or other 
instrumentality of a State or of a local government; or
    (B) The entity of such State or local government that distributes 
such assistance and each such department or agency (and each other State 
or local

[[Page 825]]

government entity) to which the assistance is extended, in the case of 
assistance to a State or local government;
    (ii)(A) A college, university, or other postsecondary institution, 
or a public system of higher education; or
    (B) A local educational agency (as defined in section 8801 of title 
20), system of vocational education, or other school system;
    (iii)(A) An entire corporation, partnership, or other private 
organization, or an entire sole proprietorship--
    (1) If assistance is extended to such corporation, partnership, 
private organization, or sole proprietorship as a whole; or
    (2) Which is principally engaged in the business of providing 
education, health care, housing, social services, or parks and 
recreation; or
    (B) The entire plant or other comparable, geographically separate 
facility to which Federal financial assistance is extended, in the case 
of any other corporation, partnership, private organization, or sole 
proprietorship; or
    (iv) Any other entity that is established by two or more of the 
entities described in paragraphs (c)(1)(i), (ii), or (iii) of this 
section.
    (2)(i) Program or activity does not include any operation of an 
entity that is controlled by a religious organization if the application 
of 20 U.S.C. 1681 to such operation would not be consistent with the 
religious tenets of such organization.
    (ii) For example, all of the operations of a college, university, or 
other postsecondary institution, including but not limited to 
traditional educational operations, faculty and student housing, campus 
shuttle bus service, campus restaurants, the bookstore, and other 
commercial activities are part of a ``program or activity'' subject to 
these Title IX regulations if the college, university, or other 
institution receives Federal financial assistance.
    (d)(1) Nothing in these Title IX regulations shall be construed to 
require or prohibit any person, or public or private entity, to provide 
or pay for any benefit or service, including the use of facilities, 
related to an abortion. Medical procedures, benefits, services, and the 
use of facilities, necessary to save the life of a pregnant woman or to 
address complications related to an abortion are not subject to this 
section.
    (2) Nothing in this section shall be construed to permit a penalty 
to be imposed on any person or individual because such person or 
individual is seeking or has received any benefit or service related to 
a legal abortion. Accordingly, subject to paragraph (d)(1) of this 
section, no person shall be excluded from participation in, be denied 
the benefits of, or be subjected to discrimination under any academic, 
extracurricular, research, occupational training, employment, or other 
educational program or activity operated by a recipient that receives 
Federal financial assistance because such individual has sought or 
received, or is seeking, a legal abortion, or any benefit or service 
related to a legal abortion.



     Subpart C--Discrimination on the Basis of Sex in Admission and 
                         Recruitment Prohibited



Sec. 2555.300  Admission.

    (a) General. No person shall, on the basis of sex, be denied 
admission, or be subjected to discrimination in admission, by any 
recipient to which Secs. 2555.300 through 2555.310 apply, except as 
provided in Secs. 2555.225 and 2555.230.
    (b) Specific prohibitions. (1) In determining whether a person 
satisfies any policy or criterion for admission, or in making any offer 
of admission, a recipient to which Secs. 2555.300 through 2555.310 apply 
shall not:
    (i) Give preference to one person over another on the basis of sex, 
by ranking applicants separately on such basis, or otherwise;
    (ii) Apply numerical limitations upon the number or proportion of 
persons of either sex who may be admitted; or
    (iii) Otherwise treat one individual differently from another on the 
basis of sex.
    (2) A recipient shall not administer or operate any test or other 
criterion for admission that has a disproportionately adverse effect on 
persons on the basis of sex unless the use of such test or criterion is 
shown to predict validly success in the education program or activity in 
question and alternative tests

[[Page 826]]

or criteria that do not have such a disproportionately adverse effect 
are shown to be unavailable.
    (c) Prohibitions relating to marital or parental status. In 
determining whether a person satisfies any policy or criterion for 
admission, or in making any offer of admission, a recipient to which 
Secs. 2555.300 through 2555.310 apply:
    (1) Shall not apply any rule concerning the actual or potential 
parental, family, or marital status of a student or applicant that 
treats persons differently on the basis of sex;
    (2) Shall not discriminate against or exclude any person on the 
basis of pregnancy, childbirth, termination of pregnancy, or recovery 
therefrom, or establish or follow any rule or practice that so 
discriminates or excludes;
    (3) Subject to Sec. 2555.235(d), shall treat disabilities related to 
pregnancy, childbirth, termination of pregnancy, or recovery therefrom 
in the same manner and under the same policies as any other temporary 
disability or physical condition; and
    (4) Shall not make pre-admission inquiry as to the marital status of 
an applicant for admission, including whether such applicant is ``Miss'' 
or ``Mrs.'' A recipient may make pre-admission inquiry as to the sex of 
an applicant for admission, but only if such inquiry is made equally of 
such applicants of both sexes and if the results of such inquiry are not 
used in connection with discrimination prohibited by these Title IX 
regulations.



Sec. 2555.305  Preference in admission.

    A recipient to which Secs. 2555.300 through 2555.310 apply shall not 
give preference to applicants for admission, on the basis of attendance 
at any educational institution or other school or entity that admits as 
students only or predominantly members of one sex, if the giving of such 
preference has the effect of discriminating on the basis of sex in 
violation of Secs. 2555.300 through 2555.310.



Sec. 2555.310  Recruitment.

    (a) Nondiscriminatory recruitment. A recipient to which 
Secs. 2555.300 through 2555.310 apply shall not discriminate on the 
basis of sex in the recruitment and admission of students. A recipient 
may be required to undertake additional recruitment efforts for one sex 
as remedial action pursuant to Sec. 2555.110(a), and may choose to 
undertake such efforts as affirmative action pursuant to 
Sec. 2555.110(b).
    (b) Recruitment at certain institutions. A recipient to which 
Secs. 2555.300 through 2555.310 apply shall not recruit primarily or 
exclusively at educational institutions, schools, or entities that admit 
as students only or predominantly members of one sex, if such actions 
have the effect of discriminating on the basis of sex in violation of 
Secs. 2555.300 through 2555.310.



 Subpart D--Discrimination on the Basis of Sex in Education Programs or 
                          Activities Prohibited



Sec. 2555.400  Education programs or activities.

    (a) General. Except as provided elsewhere in these Title IX 
regulations, no person shall, on the basis of sex, be excluded from 
participation in, be denied the benefits of, or be subjected to 
discrimination under any academic, extracurricular, research, 
occupational training, or other education program or activity operated 
by a recipient that receives Federal financial assistance. Sections 
2555.400 through 2555.455 do not apply to actions of a recipient in 
connection with admission of its students to an education program or 
activity of a recipient to which Secs. 2555.300 through 2555.310 do not 
apply, or an entity, not a recipient, to which Secs. 2555.300 through 
2555.310 would not apply if the entity were a recipient.
    (b) Specific prohibitions. Except as provided in Secs. 2555.400 
through 2555.455, in providing any aid, benefit, or service to a 
student, a recipient shall not, on the basis of sex:
    (1) Treat one person differently from another in determining whether 
such person satisfies any requirement or condition for the provision of 
such aid, benefit, or service;
    (2) Provide different aid, benefits, or services or provide aid, 
benefits, or services in a different manner;
    (3) Deny any person any such aid, benefit, or service;

[[Page 827]]

    (4) Subject any person to separate or different rules of behavior, 
sanctions, or other treatment;
    (5) Apply any rule concerning the domicile or residence of a student 
or applicant, including eligibility for in-state fees and tuition;
    (6) Aid or perpetuate discrimination against any person by providing 
significant assistance to any agency, organization, or person that 
discriminates on the basis of sex in providing any aid, benefit, or 
service to students or employees;
    (7) Otherwise limit any person in the enjoyment of any right, 
privilege, advantage, or opportunity.
    (c) Assistance administered by a recipient educational institution 
to study at a foreign institution. A recipient educational institution 
may administer or assist in the administration of scholarships, 
fellowships, or other awards established by foreign or domestic wills, 
trusts, or similar legal instruments, or by acts of foreign governments 
and restricted to members of one sex, that are designed to provide 
opportunities to study abroad, and that are awarded to students who are 
already matriculating at or who are graduates of the recipient 
institution; Provided, that a recipient educational institution that 
administers or assists in the administration of such scholarships, 
fellowships, or other awards that are restricted to members of one sex 
provides, or otherwise makes available, reasonable opportunities for 
similar studies for members of the other sex. Such opportunities may be 
derived from either domestic or foreign sources.
    (d) Aids, benefits or services not provided by recipient. (1) This 
paragraph (d) applies to any recipient that requires participation by 
any applicant, student, or employee in any education program or activity 
not operated wholly by such recipient, or that facilitates, permits, or 
considers such participation as part of or equivalent to an education 
program or activity operated by such recipient, including participation 
in educational consortia and cooperative employment and student-teaching 
assignments.
    (2) Such recipient:
    (i) Shall develop and implement a procedure designed to assure 
itself that the operator or sponsor of such other education program or 
activity takes no action affecting any applicant, student, or employee 
of such recipient that these Title IX regulations would prohibit such 
recipient from taking; and
    (ii) Shall not facilitate, require, permit, or consider such 
participation if such action occurs.



Sec. 2555.405  Housing.

    (a) Generally. A recipient shall not, on the basis of sex, apply 
different rules or regulations, impose different fees or requirements, 
or offer different services or benefits related to housing, except as 
provided in this section (including housing provided only to married 
students).
    (b) Housing provided by recipient. (1) A recipient may provide 
separate housing on the basis of sex.
    (2) Housing provided by a recipient to students of one sex, when 
compared to that provided to students of the other sex, shall be as a 
whole:
    (i) Proportionate in quantity to the number of students of that sex 
applying for such housing; and
    (ii) Comparable in quality and cost to the student.
    (c) Other housing. (1) A recipient shall not, on the basis of sex, 
administer different policies or practices concerning occupancy by its 
students of housing other than that provided by such recipient.
    (2)(i) A recipient which, through solicitation, listing, approval of 
housing, or otherwise, assists any agency, organization, or person in 
making housing available to any of its students, shall take such 
reasonable action as may be necessary to assure itself that such housing 
as is provided to students of one sex, when compared to that provided to 
students of the other sex, is as a whole:
    (A) Proportionate in quantity; and
    (B) Comparable in quality and cost to the student.
    (ii) A recipient may render such assistance to any agency, 
organization, or person that provides all or part of such housing to 
students of only one sex.

[[Page 828]]



Sec. 2555.410  Comparable facilities.

    A recipient may provide separate toilet, locker room, and shower 
facilities on the basis of sex, but such facilities provided for 
students of one sex shall be comparable to such facilities provided for 
students of the other sex.



Sec. 2555.415  Access to course offerings.

    (a) A recipient shall not provide any course or otherwise carry out 
any of its education program or activity separately on the basis of sex, 
or require or refuse participation therein by any of its students on 
such basis, including health, physical education, industrial, business, 
vocational, technical, home economics, music, and adult education 
courses.
    (b)(1) With respect to classes and activities in physical education 
at the elementary school level, the recipient shall comply fully with 
this section as expeditiously as possible but in no event later than one 
year from September 29, 2000. With respect to physical education classes 
and activities at the secondary and post-secondary levels, the recipient 
shall comply fully with this section as expeditiously as possible but in 
no event later than three years from September 29, 2000.
    (2) This section does not prohibit grouping of students in physical 
education classes and activities by ability as assessed by objective 
standards of individual performance developed and applied without regard 
to sex.
    (3) This section does not prohibit separation of students by sex 
within physical education classes or activities during participation in 
wrestling, boxing, rugby, ice hockey, football, basketball, and other 
sports the purpose or major activity of which involves bodily contact.
    (4) Where use of a single standard of measuring skill or progress in 
a physical education class has an adverse effect on members of one sex, 
the recipient shall use appropriate standards that do not have such 
effect.
    (5) Portions of classes in elementary and secondary schools, or 
portions of education programs or activities, that deal exclusively with 
human sexuality may be conducted in separate sessions for boys and 
girls.
    (6) Recipients may make requirements based on vocal range or quality 
that may result in a chorus or choruses of one or predominantly one sex.



Sec. 2555.420  Access to schools operated by LEAs.

    A recipient that is a local educational agency shall not, on the 
basis of sex, exclude any person from admission to:
    (a) Any institution of vocational education operated by such 
recipient; or
    (b) Any other school or educational unit operated by such recipient, 
unless such recipient otherwise makes available to such person, pursuant 
to the same policies and criteria of admission, courses, services, and 
facilities comparable to each course, service, and facility offered in 
or through such schools.



Sec. 2555.425  Counseling and use of appraisal and counseling materials.

    (a) Counseling. A recipient shall not discriminate against any 
person on the basis of sex in the counseling or guidance of students or 
applicants for admission.
    (b) Use of appraisal and counseling materials. A recipient that uses 
testing or other materials for appraising or counseling students shall 
not use different materials for students on the basis of their sex or 
use materials that permit or require different treatment of students on 
such basis unless such different materials cover the same occupations 
and interest areas and the use of such different materials is shown to 
be essential to eliminate sex bias. Recipients shall develop and use 
internal procedures for ensuring that such materials do not discriminate 
on the basis of sex. Where the use of a counseling test or other 
instrument results in a substantially disproportionate number of members 
of one sex in any particular course of study or classification, the 
recipient shall take such action as is necessary to assure itself that 
such disproportion is not the result of discrimination in the instrument 
or its application.
    (c) Disproportion in classes. Where a recipient finds that a 
particular class contains a substantially disproportionate number of 
individuals of one

[[Page 829]]

sex, the recipient shall take such action as is necessary to assure 
itself that such disproportion is not the result of discrimination on 
the basis of sex in counseling or appraisal materials or by counselors.



Sec. 2555.430  Financial assistance.

    (a) General. Except as provided in paragraphs (b) and (c) of this 
section, in providing financial assistance to any of its students, a 
recipient shall not:
    (1) On the basis of sex, provide different amounts or types of such 
assistance, limit eligibility for such assistance that is of any 
particular type or source, apply different criteria, or otherwise 
discriminate;
    (2) Through solicitation, listing, approval, provision of 
facilities, or other services, assist any foundation, trust, agency, 
organization, or person that provides assistance to any of such 
recipient's students in a manner that discriminates on the basis of sex; 
or
    (3) Apply any rule or assist in application of any rule concerning 
eligibility for such assistance that treats persons of one sex 
differently from persons of the other sex with regard to marital or 
parental status.
    (b) Financial aid established by certain legal instruments. (1) A 
recipient may administer or assist in the administration of 
scholarships, fellowships, or other forms of financial assistance 
established pursuant to domestic or foreign wills, trusts, bequests, or 
similar legal instruments or by acts of a foreign government that 
require that awards be made to members of a particular sex specified 
therein; Provided, that the overall effect of the award of such sex-
restricted scholarships, fellowships, and other forms of financial 
assistance does not discriminate on the basis of sex.
    (2) To ensure nondiscriminatory awards of assistance as required in 
paragraph (b)(1) of this section, recipients shall develop and use 
procedures under which:
    (i) Students are selected for award of financial assistance on the 
basis of nondiscriminatory criteria and not on the basis of availability 
of funds restricted to members of a particular sex;
    (ii) An appropriate sex-restricted scholarship, fellowship, or other 
form of financial assistance is allocated to each student selected under 
paragraph (b)(2)(i) of this section; and
    (iii) No student is denied the award for which he or she was 
selected under paragraph (b)(2)(i) of this section because of the 
absence of a scholarship, fellowship, or other form of financial 
assistance designated for a member of that student's sex.
    (c) Athletic scholarships. (1) To the extent that a recipient awards 
athletic scholarships or grants-in-aid, it must provide reasonable 
opportunities for such awards for members of each sex in proportion to 
the number of students of each sex participating in interscholastic or 
intercollegiate athletics.
    (2) A recipient may provide separate athletic scholarships or 
grants-in-aid for members of each sex as part of separate athletic teams 
for members of each sex to the extent consistent with this paragraph (c) 
and Sec. 2555.450.



Sec. 2555.435  Employment assistance to students.

    (a) Assistance by recipient in making available outside employment. 
A recipient that assists any agency, organization, or person in making 
employment available to any of its students:
    (1) Shall assure itself that such employment is made available 
without discrimination on the basis of sex; and
    (2) Shall not render such services to any agency, organization, or 
person that discriminates on the basis of sex in its employment 
practices.
    (b) Employment of students by recipients. A recipient that employs 
any of its students shall not do so in a manner that violates 
Secs. 2555.500 through 2555.550.



Sec. 2555.440  Health and insurance benefits and services.

    Subject to Sec. 2555.235(d), in providing a medical, hospital, 
accident, or life insurance benefit, service, policy, or plan to any of 
its students, a recipient shall not discriminate on the basis of sex, or 
provide such benefit, service, policy, or plan in a manner that would 
violate Secs. 2555.500 through 2555.550 if it were provided to employees 
of the recipient.

[[Page 830]]

This section shall not prohibit a recipient from providing any benefit 
or service that may be used by a different proportion of students of one 
sex than of the other, including family planning services. However, any 
recipient that provides full coverage health service shall provide 
gynecological care.



Sec. 2555.445  Marital or parental status.

    (a) Status generally. A recipient shall not apply any rule 
concerning a student's actual or potential parental, family, or marital 
status that treats students differently on the basis of sex.
    (b) Pregnancy and related conditions. (1) A recipient shall not 
discriminate against any student, or exclude any student from its 
education program or activity, including any class or extracurricular 
activity, on the basis of such student's pregnancy, childbirth, false 
pregnancy, termination of pregnancy, or recovery therefrom, unless the 
student requests voluntarily to participate in a separate portion of the 
program or activity of the recipient.
    (2) A recipient may require such a student to obtain the 
certification of a physician that the student is physically and 
emotionally able to continue participation as long as such a 
certification is required of all students for other physical or 
emotional conditions requiring the attention of a physician.
    (3) A recipient that operates a portion of its education program or 
activity separately for pregnant students, admittance to which is 
completely voluntary on the part of the student as provided in paragraph 
(b)(1) of this section, shall ensure that the separate portion is 
comparable to that offered to non-pregnant students.
    (4) Subject to Sec. 2555.235(d), a recipient shall treat pregnancy, 
childbirth, false pregnancy, termination of pregnancy and recovery 
therefrom in the same manner and under the same policies as any other 
temporary disability with respect to any medical or hospital benefit, 
service, plan, or policy that such recipient administers, operates, 
offers, or participates in with respect to students admitted to the 
recipient's educational program or activity.
    (5) In the case of a recipient that does not maintain a leave policy 
for its students, or in the case of a student who does not otherwise 
qualify for leave under such a policy, a recipient shall treat 
pregnancy, childbirth, false pregnancy, termination of pregnancy, and 
recovery therefrom as a justification for a leave of absence for as long 
a period of time as is deemed medically necessary by the student's 
physician, at the conclusion of which the student shall be reinstated to 
the status that she held when the leave began.



Sec. 2555.450  Athletics.

    (a) General. No person shall, on the basis of sex, be excluded from 
participation in, be denied the benefits of, be treated differently from 
another person, or otherwise be discriminated against in any 
interscholastic, intercollegiate, club, or intramural athletics offered 
by a recipient, and no recipient shall provide any such athletics 
separately on such basis.
    (b) Separate teams. Notwithstanding the requirements of paragraph 
(a) of this section, a recipient may operate or sponsor separate teams 
for members of each sex where selection for such teams is based upon 
competitive skill or the activity involved is a contact sport. However, 
where a recipient operates or sponsors a team in a particular sport for 
members of one sex but operates or sponsors no such team for members of 
the other sex, and athletic opportunities for members of that sex have 
previously been limited, members of the excluded sex must be allowed to 
try out for the team offered unless the sport involved is a contact 
sport. For the purposes of these Title IX regulations, contact sports 
include boxing, wrestling, rugby, ice hockey, football, basketball, and 
other sports the purpose or major activity of which involves bodily 
contact.
    (c) Equal opportunity. (1) A recipient that operates or sponsors 
interscholastic, intercollegiate, club, or intramural athletics shall 
provide equal athletic opportunity for members of both sexes. In 
determining whether equal opportunities are available, the designated 
agency official will consider, among other factors:
    (i) Whether the selection of sports and levels of competition 
effectively accommodate the interests and abilities of members of both 
sexes;

[[Page 831]]

    (ii) The provision of equipment and supplies;
    (iii) Scheduling of games and practice time;
    (iv) Travel and per diem allowance;
    (v) Opportunity to receive coaching and academic tutoring;
    (vi) Assignment and compensation of coaches and tutors;
    (vii) Provision of locker rooms, practice, and competitive 
facilities;
    (viii) Provision of medical and training facilities and services;
    (ix) Provision of housing and dining facilities and services;
    (x) Publicity.
    (2) For purposes of paragraph (c)(1) of this section, unequal 
aggregate expenditures for members of each sex or unequal expenditures 
for male and female teams if a recipient operates or sponsors separate 
teams will not constitute noncompliance with this section, but the 
designated agency official may consider the failure to provide necessary 
funds for teams for one sex in assessing equality of opportunity for 
members of each sex.
    (d) Adjustment period. A recipient that operates or sponsors 
interscholastic, intercollegiate, club, or intramural athletics at the 
elementary school level shall comply fully with this section as 
expeditiously as possible but in no event later than one year from 
September 29, 2000. A recipient that operates or sponsors 
interscholastic, intercollegiate, club, or intramural athletics at the 
secondary or postsecondary school level shall comply fully with this 
section as expeditiously as possible but in no event later than three 
years from September 29, 2000.



Sec. 2555.455  Textbooks and curricular material.

    Nothing in these Title IX regulations shall be interpreted as 
requiring or prohibiting or abridging in any way the use of particular 
textbooks or curricular materials.



Subpart E--Discrimination on the Basis of Sex in Employment in Education 
                    Programs or Activities Prohibited



Sec. 2555.500  Employment.

    (a) General. (1) No person shall, on the basis of sex, be excluded 
from participation in, be denied the benefits of, or be subjected to 
discrimination in employment, or recruitment, consideration, or 
selection therefor, whether full-time or part-time, under any education 
program or activity operated by a recipient that receives Federal 
financial assistance.
    (2) A recipient shall make all employment decisions in any education 
program or activity operated by such recipient in a nondiscriminatory 
manner and shall not limit, segregate, or classify applicants or 
employees in any way that could adversely affect any applicant's or 
employee's employment opportunities or status because of sex.
    (3) A recipient shall not enter into any contractual or other 
relationship which directly or indirectly has the effect of subjecting 
employees or students to discrimination prohibited by Secs. 2555.500 
through 2555.550, including relationships with employment and referral 
agencies, with labor unions, and with organizations providing or 
administering fringe benefits to employees of the recipient.
    (4) A recipient shall not grant preferences to applicants for 
employment on the basis of attendance at any educational institution or 
entity that admits as students only or predominantly members of one sex, 
if the giving of such preferences has the effect of discriminating on 
the basis of sex in violation of these Title IX regulations.
    (b) Application. The provisions of Secs. 2555.500 through 2555.550 
apply to:
    (1) Recruitment, advertising, and the process of application for 
employment;
    (2) Hiring, upgrading, promotion, consideration for and award of 
tenure,

[[Page 832]]

demotion, transfer, layoff, termination, application of nepotism 
policies, right of return from layoff, and rehiring;
    (3) Rates of pay or any other form of compensation, and changes in 
compensation;
    (4) Job assignments, classifications, and structure, including 
position descriptions, lines of progression, and seniority lists;
    (5) The terms of any collective bargaining agreement;
    (6) Granting and return from leaves of absence, leave for pregnancy, 
childbirth, false pregnancy, termination of pregnancy, leave for persons 
of either sex to care for children or dependents, or any other leave;
    (7) Fringe benefits available by virtue of employment, whether or 
not administered by the recipient;
    (8) Selection and financial support for training, including 
apprenticeship, professional meetings, conferences, and other related 
activities, selection for tuition assistance, selection for sabbaticals 
and leaves of absence to pursue training;
    (9) Employer-sponsored activities, including social or recreational 
programs; and
    (10) Any other term, condition, or privilege of employment.



Sec. 2555.505  Employment criteria.

    A recipient shall not administer or operate any test or other 
criterion for any employment opportunity that has a disproportionately 
adverse effect on persons on the basis of sex unless:
    (a) Use of such test or other criterion is shown to predict validly 
successful performance in the position in question; and
    (b) Alternative tests or criteria for such purpose, which do not 
have such disproportionately adverse effect, are shown to be 
unavailable.



Sec. 2555.510  Recruitment.

    (a) Nondiscriminatory recruitment and hiring. A recipient shall not 
discriminate on the basis of sex in the recruitment and hiring of 
employees. Where a recipient has been found to be presently 
discriminating on the basis of sex in the recruitment or hiring of 
employees, or has been found to have so discriminated in the past, the 
recipient shall recruit members of the sex so discriminated against so 
as to overcome the effects of such past or present discrimination.
    (b) Recruitment patterns. A recipient shall not recruit primarily or 
exclusively at entities that furnish as applicants only or predominantly 
members of one sex if such actions have the effect of discriminating on 
the basis of sex in violation of Secs. 2555.500 through 2555.550.



Sec. 2555.515  Compensation.

    A recipient shall not make or enforce any policy or practice that, 
on the basis of sex:
    (a) Makes distinctions in rates of pay or other compensation;
    (b) Results in the payment of wages to employees of one sex at a 
rate less than that paid to employees of the opposite sex for equal work 
on jobs the performance of which requires equal skill, effort, and 
responsibility, and that are performed under similar working conditions.



Sec. 2555.520  Job classification and structure.

    A recipient shall not:
    (a) Classify a job as being for males or for females;
    (b) Maintain or establish separate lines of progression, seniority 
lists, career ladders, or tenure systems based on sex; or
    (c) Maintain or establish separate lines of progression, seniority 
systems, career ladders, or tenure systems for similar jobs, position 
descriptions, or job requirements that classify persons on the basis of 
sex, unless sex is a bona fide occupational qualification for the 
positions in question as set forth in Sec. 2555.550.



Sec. 2555.525  Fringe benefits.

    (a) ``Fringe benefits'' defined. For purposes of these Title IX 
regulations, fringe benefits means: Any medical, hospital, accident, 
life insurance, or retirement benefit, service, policy or plan, any 
profit-sharing or bonus plan, leave, and any other benefit or service of 
employment not subject to the provision of Sec. 2555.515.
    (b) Prohibitions. A recipient shall not:

[[Page 833]]

    (1) Discriminate on the basis of sex with regard to making fringe 
benefits available to employees or make fringe benefits available to 
spouses, families, or dependents of employees differently upon the basis 
of the employee's sex;
    (2) Administer, operate, offer, or participate in a fringe benefit 
plan that does not provide for equal periodic benefits for members of 
each sex and for equal contributions to the plan by such recipient for 
members of each sex; or
    (3) Administer, operate, offer, or participate in a pension or 
retirement plan that establishes different optional or compulsory 
retirement ages based on sex or that otherwise discriminates in benefits 
on the basis of sex.



Sec. 2555.530  Marital or parental status.

    (a) General. A recipient shall not apply any policy or take any 
employment action:
    (1) Concerning the potential marital, parental, or family status of 
an employee or applicant for employment that treats persons differently 
on the basis of sex; or
    (2) Which is based upon whether an employee or applicant for 
employment is the head of household or principal wage earner in such 
employee's or applicant's family unit.
    (b) Pregnancy. A recipient shall not discriminate against or exclude 
from employment any employee or applicant for employment on the basis of 
pregnancy, childbirth, false pregnancy, termination of pregnancy, or 
recovery therefrom.
    (c) Pregnancy as a temporary disability. Subject to 
Sec. 2555.235(d), a recipient shall treat pregnancy, childbirth, false 
pregnancy, termination of pregnancy, recovery therefrom, and any 
temporary disability resulting therefrom as any other temporary 
disability for all job-related purposes, including commencement, 
duration, and extensions of leave, payment of disability income, accrual 
of seniority and any other benefit or service, and reinstatement, and 
under any fringe benefit offered to employees by virtue of employment.
    (d) Pregnancy leave. In the case of a recipient that does not 
maintain a leave policy for its employees, or in the case of an employee 
with insufficient leave or accrued employment time to qualify for leave 
under such a policy, a recipient shall treat pregnancy, childbirth, 
false pregnancy, termination of pregnancy, and recovery therefrom as a 
justification for a leave of absence without pay for a reasonable period 
of time, at the conclusion of which the employee shall be reinstated to 
the status that she held when the leave began or to a comparable 
position, without decrease in rate of compensation or loss of 
promotional opportunities, or any other right or privilege of 
employment.



Sec. 2555.535  Effect of state or local law or other requirements.

    (a) Prohibitory requirements. The obligation to comply with 
Secs. 2555.500 through 2555.550 is not obviated or alleviated by the 
existence of any State or local law or other requirement that imposes 
prohibitions or limits upon employment of members of one sex that are 
not imposed upon members of the other sex.
    (b) Benefits. A recipient that provides any compensation, service, 
or benefit to members of one sex pursuant to a State or local law or 
other requirement shall provide the same compensation, service, or 
benefit to members of the other sex.



Sec. 2555.540  Advertising.

    A recipient shall not in any advertising related to employment 
indicate preference, limitation, specification, or discrimination based 
on sex unless sex is a bona fide occupational qualification for the 
particular job in question.



Sec. 2555.545  Pre-employment inquiries.

    (a) Marital status. A recipient shall not make pre-employment 
inquiry as to the marital status of an applicant for employment, 
including whether such applicant is ``Miss'' or ``Mrs.''
    (b) Sex. A recipient may make pre-employment inquiry as to the sex 
of an applicant for employment, but only if such inquiry is made equally 
of such applicants of both sexes and if the results of such inquiry are 
not used in connection with discrimination prohibited by these Title IX 
regulations.

[[Page 834]]



Sec. 2555.550  Sex as a bona fide occupational qualification.

    A recipient may take action otherwise prohibited by Secs. 2555.500 
through 2555.550 provided it is shown that sex is a bona fide 
occupational qualification for that action, such that consideration of 
sex with regard to such action is essential to successful operation of 
the employment function concerned. A recipient shall not take action 
pursuant to this section that is based upon alleged comparative 
employment characteristics or stereotyped characterizations of one or 
the other sex, or upon preference based on sex of the recipient, 
employees, students, or other persons, but nothing contained in this 
section shall prevent a recipient from considering an employee's sex in 
relation to employment in a locker room or toilet facility used only by 
members of one sex.



                          Subpart F--Procedures



Sec. 2555.600  Notice of covered programs.

    Within 60 days of September 29, 2000, each Federal agency that 
awards Federal financial assistance shall publish in the Federal 
Register a notice of the programs covered by these Title IX regulations. 
Each such Federal agency shall periodically republish the notice of 
covered programs to reflect changes in covered programs. Copies of this 
notice also shall be made available upon request to the Federal agency's 
office that enforces Title IX.



Sec. 2555.605  Enforcement procedures.

    The investigative, compliance, and enforcement procedural provisions 
of Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d) (``Title 
VI'') are hereby adopted and applied to these Title IX regulations. 
These procedures may be found at 45 CFR 1203.6 through 1203.12.

[65 FR 52894, Aug. 30, 2000]


[[Page 835]]



                              FINDING AIDS




  --------------------------------------------------------------------

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected



[[Page 837]]



                    Table of CFR Titles and Chapters




                     (Revised as of October 1, 2002)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
        IV  Miscellaneous Agencies (Parts 400--500)

                          Title 2  [Reserved]

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  General Accounting Office (Parts 1--99)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Part 2100)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
        XV  Office of Administration, Executive Office of the 
                President (Parts 2500--2599)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Part 3201)
     XXIII  Department of Energy (Part 3301)
      XXIV  Federal Energy Regulatory Commission (Part 3401)
       XXV  Department of the Interior (Part 3501)
      XXVI  Department of Defense (Part 3601)

[[Page 838]]

    XXVIII  Department of Justice (Part 3801)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  Overseas Private Investment Corporation (Part 4301)
      XXXV  Office of Personnel Management (Part 4501)
        XL  Interstate Commerce Commission (Part 5001)
       XLI  Commodity Futures Trading Commission (Part 5101)
      XLII  Department of Labor (Part 5201)
     XLIII  National Science Foundation (Part 5301)
       XLV  Department of Health and Human Services (Part 5501)
      XLVI  Postal Rate Commission (Part 5601)
     XLVII  Federal Trade Commission (Part 5701)
    XLVIII  Nuclear Regulatory Commission (Part 5801)
         L  Department of Transportation (Part 6001)
       LII  Export-Import Bank of the United States (Part 6201)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Part 6401)
      LVII  General Services Administration (Part 6701)
     LVIII  Board of Governors of the Federal Reserve System (Part 
                6801)
       LIX  National Aeronautics and Space Administration (Part 
                6901)
        LX  United States Postal Service (Part 7001)
       LXI  National Labor Relations Board (Part 7101)
      LXII  Equal Employment Opportunity Commission (Part 7201)
     LXIII  Inter-American Foundation (Part 7301)
       LXV  Department of Housing and Urban Development (Part 
                7501)
      LXVI  National Archives and Records Administration (Part 
                7601)
      LXIX  Tennessee Valley Authority (Part 7901)
      LXXI  Consumer Product Safety Commission (Part 8101)
    LXXIII  Department of Agriculture (Part 8301)
     LXXIV  Federal Mine Safety and Health Review Commission (Part 
                8401)
     LXXVI  Federal Retirement Thrift Investment Board (Part 8601)
    LXXVII  Office of Management and Budget (Part 8701)

                          Title 6  [Reserved]

              

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)

[[Page 839]]

        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy, Department of Agriculture (Parts 
                2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  Cooperative State Research, Education, and Extension 
                Service, Department of Agriculture (Parts 3400--
                3499)

[[Page 840]]

      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

                    Title 8--Aliens and Nationality

         I  Immigration and Naturalization Service, Department of 
                Justice (Parts 1--599)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 1000-
                -1099)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Part 1800)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)

[[Page 841]]

         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board (Parts 
                500--599)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--499)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)

[[Page 842]]

       VII  Bureau of Industry and Security, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  Technology Administration, Department of Commerce 
                (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  United States Customs Service, Department of the 
                Treasury (Parts 1--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)

[[Page 843]]

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Employment Standards Administration, Department of 
                Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 800-
                -899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training, Department of Labor 
                (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (Parts 700--
                799)
        IX  Foreign Service Grievance Board (Parts 900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 1600-
                -1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

[[Page 844]]

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--1699)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

[[Page 845]]

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)
        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Part 1200)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--899)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Bureau of Alcohol, Tobacco and Firearms, Department of 
                the Treasury (Parts 1--299)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--199)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)
        XI  Department of Justice and Department of State (Parts 
                1100--1199)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 0-
                -99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)

[[Page 846]]

        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Pension and Welfare Benefits Administration, 
                Department of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Minerals Management Service, Department of the 
                Interior (Parts 200--299)
       III  Board of Surface Mining and Reclamation Appeals, 
                Department of the Interior (Parts 300--399)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 200-
                -399)
        IV  Secret Service, Department of the Treasury (Parts 400-
                -499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of International Investment, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)

[[Page 847]]

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Corps of Engineers, Department of the Army (Parts 200-
                -399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Vocational and Adult Education, Department 
                of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599)
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvement, 
                Department of Education (Parts 700--799)
        XI  National Institute for Literacy (Parts 1100--1199)
            Subtitle C--Regulations Relating to Education
       XII  National Council on Disability (Parts 1200--1299)

[[Page 848]]

                        Title 35--Panama Canal

         I  Panama Canal Regulations (Parts 1--299)

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 300-
                -399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
        XV  Oklahoma City National Memorial Trust (Part 1501)
       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  Copyright Office, Library of Congress (Parts 200--299)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--499)
         V  Under Secretary for Technology, Department of Commerce 
                (Parts 500--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--99)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Rate Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--799)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)

[[Page 849]]

       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)

          Title 41--Public Contracts and Property Management

            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 61-1--61-999)
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System
       201  Federal Information Resources Management Regulation 
                (Parts 201-1--201-99) [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)
       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-70)
       304  Payment from a Non-Federal Source for Travel Expenses 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--499)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

[[Page 850]]

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 200--499)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10005)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Office of Human Development Services, Department of 
                Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)

[[Page 851]]

     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Transportation (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 300-
                -399)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Department of Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  United States Agency for International Development 
                (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  Broadcasting Board of Governors (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)

[[Page 852]]

        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        35  Panama Canal Commission (Parts 3500--3599)
        44  Federal Emergency Management Agency (Parts 4400--4499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399)
        54  Defense Logistics Agency, Department of Defense (Part 
                5452)
        57  African Development Foundation (Parts 5700--5799)
        61  General Services Administration Board of Contract 
                Appeals (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Research and Special Programs Administration, 
                Department of Transportation (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Transportation (Parts 400--
                499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board, Department of 
                Transportation (Parts 1000--1399)

[[Page 853]]

        XI  Bureau of Transportation Statistics, Department of 
                Transportation (Parts 1400--1499)
       XII  Transportation Security Administration, Department of 
                Transportation (Parts 1500--1599)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

                      CFR Index and Finding Aids

            Subject/Agency Index
            List of Agency Prepared Indexes
            Parallel Tables of Statutory Authorities and Rules
            List of CFR Titles, Chapters, Subchapters, and Parts
            Alphabetical List of Agencies Appearing in the CFR



[[Page 855]]





           Alphabetical List of Agencies Appearing in the CFR




                     (Revised as of October 1, 2002)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Advanced Research Projects Agency                 32, I
Advisory Council on Historic Preservation         36, VIII
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development, United      22, II
     States
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department                            5, LXXIII
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Cooperative State Research, Education, and      7, XXXIV
       Extension Service
  Economic Research Service                       7, XXXVII
  Energy, Office of                               7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Alcohol, Tobacco and Firearms, Bureau of          27, I
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX
Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII

[[Page 856]]

Armed Forces Retirement Home                      5, XI
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase From People Who Are
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X
Civil Rights, Commission on                       45, VII
Civil Rights, Office for                          34, I
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce Department                               44, IV
  Census Bureau                                   15, I
  Economic Affairs, Under Secretary               37, V
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  Fishery Conservation and Management             50, VI
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II
  National Marine Fisheries Service               50, II, IV, VI
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Productivity, Technology and Innovation,        37, IV
       Assistant Secretary for
  Secretary of Commerce, Office of                15, Subtitle A
  Technology, Under Secretary for                 37, V
  Technology Administration                       15, XI
  Technology Policy, Assistant Secretary for      37, IV
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Product Safety Commission                5, LXXI; 16, II
Cooperative State Research, Education, and        7, XXXIV
     Extension Service
Copyright Office                                  37, II
Corporation for National and Community Service    45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Court Services and Offender Supervision Agency    28, VIII
     for the District of Columbia
Customs Service, United States                    19, I
Defense Contract Audit Agency                     32, I
Defense Department                                5, XXVI; 32, Subtitle A; 
                                                  40, VII
  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII

[[Page 857]]

  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 2
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
District of Columbia, Court Services and          28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Affairs, Under Secretary                 37, V
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Vocational and Adult Education, Office of       34, IV
Educational Research and Improvement, Office of   34, VII
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             5, XXIII; 10, II, III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   5, LIV; 40, I, IV, VII
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Administration, Office of                       5, XV
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                5, III, LXXVII; 14, VI; 
                                                  48, 99
  National Drug Control Policy, Office of         21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
       States
Export-Import Bank of the United States           5, LII; 12, IV
Family Assistance, Office of                      45, II

[[Page 858]]

Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       11, I
Federal Emergency Management Agency               44, I
  Federal Acquisition Regulation                  48, 44
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority, and General    5, XIV; 22, XIV
     Counsel of the Federal Labor Relations 
     Authority
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Fishery Conservation and Management               50, VI
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II
General Accounting Office                         4, I
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102
  Federal Property Management Regulation          41, 101
  Federal Travel Regulation System                41, Subtitle F

[[Page 859]]

  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          5, XLV; 45, Subtitle A
  Centers for Medicare & Medicaid Services        42, IV
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Housing and Urban Development, Department of      5, LXV; 24, Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Human Development Services, Office of             45, XIII
Immigration and Naturalization Service            8, I
Independent Counsel, Office of                    28, VII
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
Industry and Security, Bureau of                  15, VII
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior Department
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V

[[Page 860]]

  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  Minerals Management Service                     30, II
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Reclamation, Bureau of                          43, I
  Secretary of the Interior, Office of            43, Subtitle A
  Surface Mining and Reclamation Appeals, Board   30, III
       of
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
International Fishing and Related Activities      50, III
International Investment, Office of               31, VIII
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice Department                                5, XXVIII; 28, I, XI; 40, 
                                                  IV
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration and Naturalization Service          8, I
  Offices of Independent Counsel                  28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  5, XLII
  Benefits Review Board                           20, VII
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Employment Standards Administration             20, VI
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Pension and Welfare Benefits Administration     29, XXV
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Library of Congress                               36, VII
  Copyright Office                                37, II
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II

[[Page 861]]

Micronesian Status Negotiations, Office for       32, XXVII
Mine Safety and Health Administration             30, I
Minerals Management Service                       30, II
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
National Aeronautics and Space Administration     5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   45, XII, XXV
National Archives and Records Administration      5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Bureau of Standards                      15, II
National Capital Planning Commission              1, IV
National Commission for Employment Policy         1, IV
National Commission on Libraries and Information  45, XVII
     Science
National Council on Disability                    34, XII
National Counterintelligence Center               32, XVIII
National Credit Union Administration              12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           21, III
National Foundation on the Arts and the           45, XI
     Humanities
National Highway Traffic Safety Administration    23, II, III; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute for Literacy                   34, XI
National Institute of Standards and Technology    15, II
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV, VI
National Mediation Board                          29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III
     Administration
National Transportation Safety Board              49, VIII
National Weather Service                          15, IX
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy Department                                   32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Offices of Independent Counsel                    28, VI
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
Panama Canal Commission                           48, 35
Panama Canal Regulations                          35, I
Patent and Trademark Office, United States        37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
   Certain Employees
[[Page 862]]

Peace Corps                                       22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension and Welfare Benefits Administration       29, XXV
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 45, VIII
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Postal Rate Commission                            5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Procurement and Property Management, Office of    7, XXXII
Productivity, Technology and Innovation,          37, IV
     Assistant Secretary
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Regional Action Planning Commissions              13, V
Relocation Allowances                             41, 302
Research and Special Programs Administration      49, I
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                17, II
Selective Service System                          32, XVI
Small Business Administration                     13, I
Smithsonian Institution                           36, V
Social Security Administration                    20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State Department                                  22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining and Reclamation Appeals, Board of  30, III
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Technology Administration                         15, XI
Technology Policy, Assistant Secretary for        37, IV
Technology, Under Secretary for                   37, V
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     5, L
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Commercial Space Transportation                 14, III
  Contract Appeals, Board of                      48, 63
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II

[[Page 863]]

  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 49, V
  Research and Special Programs Administration    49, I
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Surface Transportation Board                    49, X
  Transportation Security Administration          49, XII
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury Department                               5, XXI; 12, XV; 17, IV; 
                                                  31, IX
  Alcohol, Tobacco and Firearms, Bureau of        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs Service, United States                  19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Law Enforcement Training Center         31, VII
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  International Investment, Office of             31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training Service,        41, 61; 20, IX
     Office of the Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Vocational and Adult Education, Office of         34, IV
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I
World Agricultural Outlook Board                  7, XXXVIII

[[Page 865]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations which were 
made by documents published in the Federal Register since January 1, 
2001, are enumerated in the following list. Entries indicate the nature 
of the changes effected. Page numbers refer to Federal Register pages. 
The user should consult the entries for chapters and parts as well as 
sections for revisions.
For the period before January 1, 2001, see the ``List of CFR Sections 
Affected, 1949-1963, 1964-1972, 1973-1985, and 1986-2000'' published in 
11 separate volumes.

                                  2001

45 CFR
                                                                   66 FR
                                                                    Page
Chapter XIII
1310  Added; eff. 1-18-02...........................................5311
1310.2  (c) added...................................................5311
1310.11  Added; eff. 1-20-04........................................5312
1310.12  (a) added; eff. 1-18-06; (b) added.........................5312
1310.15  (c) added; eff. 1-20-04....................................5313
1310.22  (a) added; eff. 1-18-06....................................5314
1355.20  (a) amended; (b) designated...............................58675
1355.30  (n)(2) revised; (n)(3) removed; (n)(4) and (5) 
        redesignated as (n)(3) and (4).............................58675
1355.32  (d)(4) amended............................................58675
1355.33  (b)(2) revised; second (b)(1) and (2) redesignated as 
        (b)(5) and (6); (c)(6) and (d)(2) amended..................58675
1355.34  (b)(4) amended; (c)(2)(v) and (4)(v) revised..............58675
1355.35  (e)(1) revised............................................58675
1355.36  (b)(5)(i) revised.........................................58675
1355.38  (b)(1) amended; (b)(4), (f), (g)(1)(i), (4), (h) 
        introductory text and (2) revised..........................58676
1355.40  OMB number................................................58676
1356.20  (c) removed; (d) through (f) redesignated as (c) through 
        (e); OMB number............................................58676
1356.21  (b)(1)(i), (2)(i), (i)(1)(i)(A) and (k)(1)(i) revised; 
        (j) amended; OMB number....................................58676
1356.22  (a)(3) revised............................................58677
1356.50  (c) revised...............................................58677
1356.60  OMB number................................................58677
1356.71  (a)(3) revised; (j)(2) amended............................58677
1356.80  Removed...................................................58677
1357.15  OMB number................................................58677
1357.16  OMB number................................................58677
Chapter XVI
1611  Appendix A revised....................................16013, 17082
Chapter XXV
2525.20  Regulation at 65 FR 77821 eff. date delayed................9773

                                  2002

  (Regulations published from January 1, 2002, through October 1, 2002)

45 CFR
                                                                   67 FR
                                                                    Page
Chapter XVI
1611  Appendix A revised............................................8484
1626  Meetings.....................................................42198
1639.2  Revised....................................................19343
1639.4  Amended....................................................19343
Chapter XXV
2510.20  Amended...................................................45359
2520  Heading revised..............................................45359
2520.10  Revised...................................................45359
2520.20  Revised...................................................45359
2520.30  Revised...................................................45359
2521  Heading revised..............................................45360
2521.10  Heading and (a) revised...................................45360
2521.20  Heading and (a)(2)(ii) revised; (b)(2)(ii) amended; (c) 
        removed; (d) and (e) redesignated as (c) and (d)...........45360

[[Page 866]]

2521.30  Heading, introductory text, (b)(1) and footnote 1 
        revised; (b)(3) amended....................................45360
2522.100  Heading revised; Introductory text and (g)(1) amended....45360
2522.200  (b), (c) and (d) redesignated as (c), (d) and (e); new 
        (b) added; new (e) heading revised.........................45360
2524.10  (a) introductory text revised.............................45360
2525.20  Amended...................................................45360
2526.10  (c) and (d) redesignated as (d) and (e); new (c) added....45361
2528.10  (a)(2) revised............................................45361
2528.30  Heading, (a) introductory text, (2)(iii), (iv) and (v) 
        revised....................................................45361
2528.50  (a) revised...............................................45361
2528.60  (a)(2)(iii) revised.......................................45361
2528.70  (a) revised...............................................45361
2550.10  (c) revised...............................................45362
2550.20  (k) revised...............................................45362
2551.23  (c)(2)(iv) revised; eff. 10-28-02.........................60998
2551.42  (b) revised; eff. 10-28-02................................60998
2551.45  (f) added; eff. 10-28-02..................................60998
2551.51  Revised; eff. 10-28-02....................................60998
2551.61  Revised; eff. 10-28-02....................................60999
2551.71  Revised; eff. 10-28-02....................................60999
2551.72  Revised; eff. 10-28-02....................................60999
2552.23  (c)(2)(iv) revised; eff. 10-28-02.........................61000
2552.42  (b) revised; eff. 10-28-02................................61000
2552.51  Revised; eff. 10-28-02....................................61000
2552.61  Revised; eff. 10-28-02....................................61000
2553.23  (c)(2)(iv) revised.........................................6875
2553.72  (e) removed................................................6875
2553.73  (i) revised................................................6875

                                  2002

                  (Correction published Oct. 30, 2002)

45 CFR
                                                                   66 FR
                                                                    Page
Chapter XIII
1230 Appendix B revised............................................66061


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