[Title 34 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 2004 Edition]
[From the U.S. Government Printing Office]



[[Page i]]



          34


          Parts 1 to 299

                         Revised as of July 1, 2004


          Education
          
          


________________________

          Containing a codification of documents of general 
          applicability and future effect

          As of July 1, 2004
          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 : 2004



  For sale by the Superintendent of Documents, U.S. Government Printing 
                                  Office
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      Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001

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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 34:
          Subtitle A--Office of the Secretary, Department of 
          Education                                                  3
    Subtitle B--Regulations of the Offices of the Department 
      of Education
          Chapter I--Office for Civil Rights                       335
          Chapter II--Office of Elementary and Secondary 
          Education                                                437
  Finding Aids:
      Material Approved for Incorporation by Reference........     591
      Table of CFR Titles and Chapters........................     593
      Alphabetical List of Agencies Appearing in the CFR......     611
      List of CFR Sections Affected...........................     621

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

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  34 CFR 3.1 refers 
                       to title 34, part 3, 
                       section 1.

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

[[Page v]]



                               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, July 1, 2004), 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

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
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.

[[Page vi]]

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 
requirements.

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.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
effect of incorporation by reference is that the material is treated as 
if it were published in full in the Federal Register (5 U.S.C. 552(a)). 
This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    Properly approved incorporations by reference in this volume are 
listed in the Finding Aids at the end of this volume.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed in 
the Finding Aids of this volume as an approved incorporation by 
reference, please contact the agency that issued the regulation 
containing that incorporation. If, after contacting the agency, you find 
the material is not available, please notify the Director of the Federal 
Register, National Archives and Records Administration, Washington DC 
20408, or call (202) 741-6010.

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.

[[Page vii]]


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 
Archives and Records Administration, Washington, DC 20408 or e-mail 
[email protected].

SALES

    The Government Printing Office (GPO) processes all sales and 
distribution of the CFR. For payment by credit card, call toll free, 
866-512-1800 or DC area, 202-512-1800, M-F, 8 a.m. to 4 p.m. e.s.t. or 
fax your order to 202-512-2250, 24 hours a day. For payment by check, 
write to the Superintendent of Documents, Attn: New Orders, P.O. Box 
371954, Pittsburgh, PA 15250-7954. For GPO Customer Service call 202-
512-1803.

ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, The United States 
Government Manual, the Federal Register, Public Laws, Public Papers, 
Weekly Compilation of Presidential Documents and the Privacy Act 
Compilation are available in electronic format at www.gpoaccess.gov/nara 
(``GPO Access''). For more information, contact Electronic Information 
Dissemination Services, U.S. Government Printing Office. Phone 202-512-
1530, or 888-293-6498 (toll-free). E-mail, [email protected].
    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public law numbers, Federal Register finding aids, and related 
information. Connect to NARA's web site at www.archives.gov/federal--
register. The NARA site also contains links to GPO Access.

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

July 1, 2004.

[[Page ix]]



                               THIS TITLE

    Title 34--Education is presently composed of three volumes (parts 1 
to 299, parts 300 to 399, and part 400 to End). The contents of these 
volumes represent all regulations codified under this title of the CFR 
as of July 1, 2004.

    For this volume, Elmer Barksdale was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Frances D. McDonald, assisted by Alomha S. Morris.

[[Page x]]




[[Page 1]]



                           TITLE 34--EDUCATION




                   (This book contains parts 1 to 299)

  --------------------------------------------------------------------
                                                                    Part
SUBTITLE A--Office of the Secretary, Department of Education           3

  SUBTITLE B--Regulations of the Offices of the Department of Education

chapter I--Office for Civil Rights, Department of Education.         100

chapter II--Office of Elementary and Secondary Education, 
  Department of Education...................................         200

[[Page 3]]

      Subtitle A--Office of the Secretary, Department of Education

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

Part                                                                Page
3               Official seal...............................           5
4               Service of process..........................           6
5               Availability of information to the public 
                    pursuant to Pub. L. 90-23...............           6
5b              Privacy Act regulations.....................          15
6               Inventions and patents (general)............          26
7               Employee inventions.........................          27
8               Demands for testimony or records in legal 
                    proceedings.............................          28
12              Disposal and utilization of surplus Federal 
                    real property for educational purposes..          31
15              Uniform relocation assistance and real 
                    property acquisition for federal and 
                    federally assisted programs.............          39
21              Equal access to justice.....................          40
30              Debt collection.............................          49
31              Salary offset for Federal employees who are 
                    indebted to the United States under 
                    programs administered by the Secretary 
                    of Education............................          59
32              Salary offset to recover overpayments of pay 
                    or allowances from Department of 
                    Education employees.....................          66
33              Program Fraud Civil Remedies Act............          70
34              Administrative wage garnishment.............          87
35              Tort claims against the Government..........          95
36              Adjustment of civil monetary penalties for 
                    inflation...............................          98
60              Indemnification of Department of Education 
                    employees...............................          99
73              Standards of conduct........................         100

[[Page 4]]

74              Administration of grants and agreements with 
                    institutions of higher education, 
                    hospitals, and other non-profit 
                    organizations...........................         101
75              Direct grant programs.......................         129
76              State-administered programs.................         162
77              Definitions that apply to Department 
                    regulations.............................         193
79              Intergovernmental review of Department of 
                    Education programs and activities.......         195
80              Uniform administrative requirements for 
                    grants and cooperative agreements to 
                    state and local governments.............         199
81              General Education Provisions Act--
                    enforcement.............................         229
82              New restrictions on lobbying................         242
84              Governmentwide requirements for drug-free 
                    workplace (financial assistance)........         254
85              Governmentwide debarment and suspension 
                    (nonprocurement)........................         260
86              Drug and alcohol abuse prevention...........         290
97              Protection of human subjects................         299
98              Student rights in research, experimental 
                    programs, and testing...................         313
99              Family educational rights and privacy.......         316

[[Page 5]]



PART 3_OFFICIAL SEAL--Table of Contents




Sec.
3.1 Definitions.
3.2 Description.
3.3 Authority to affix seal.
3.4 Use of the seal.

    Authority: 20 U.S.C. 3472 and 3485, unless otherwise noted.

    Source: 45 FR 86491, Dec. 31, 1980, unless otherwise noted.



Sec. 3.1  Definitions.

    For the purposes of this part:
    (a) ED means all organizational units of the Department of 
Education.
    (b) Embossing Seal means a display of the form and content of the 
Official Seal made on a die so that the Seal can be embossed on paper or 
other media.
    (c) Official Seal means the original(s) of the Seal showing the 
exact form, content, and colors.
    (d) Replica means a copy of the Official Seal displaying the 
identical form, content, and colors.
    (e) Reproduction means a copy of the Official Seal displaying the 
form and content, reproduced in only one color.
    (f) Secretary means the Secretary of Education.



Sec. 3.2  Description.

    The Official Seal of the Department of Education is described as 
follows: Standing upon a mound, an oak tree with black trunk and limbs 
and green foliage in front of a gold rising sun, issuing gold rays on a 
light blue disc, enclosed by a dark blue border with gold edges bearing 
the inscription ``DEPARTMENT OF EDUCATION'' above a star at either side 
of the words ``UNITED STATES OF AMERICA'' in smaller letters in the 
base; letters and stars in white. The Offical Seal of the Department is 
modified when used in reproductions in black and white and when 
embossed. As so modified, it appears below.
[GRAPHIC] [TIFF OMITTED] TC21OC91.062



Sec. 3.3  Authority to affix seal.

    The Secretary and the Secretary's designees are authorized to affix 
the Official Seal, replicas, reproductions, and embossing seals to 
appropriate documents, certifications, and other material for all 
purposes as authorized by this section.

(Authority: 20 U.S.C. 3474)



Sec. 3.4  Use of the seal.

    (a) Use by any person or organization outside of the Department may 
be made only with the Department's prior written approval.
    (b) Requests by any person or organization outside of the Department 
for permission to use the Seal must be made in writing to Director of 
Public Affairs, U.S. Department of Education, 400 Maryland Avenue, SW., 
Washington, DC 20202, and must specify, in detail, the exact use to be 
made. Any permission granted applies only to the specific use for which 
it was granted and is not to be construed as permission for any other 
use.
    (c) In regard to internal use, replicas may be used only:
    (1) For display in or adjacent to ED facilities, in Departmental 
auditoriums, presentation rooms, hearing rooms, lobbies, and public 
document rooms;
    (2) In offices of senior officials;
    (3) For official awards, certificates, medals, and plaques;
    (4) For electronic media, motion picture film, video tape and other 
audiovisual media prepared by or for ED and attributed thereto;

[[Page 6]]

    (5) On official publications which represent the achievements or 
mission of ED;
    (6) In non-ED facilities in connection with events and displays 
sponsored by ED, and public appearances of the Secretary or other senior 
ED officials; and
    (7) For other internal purposes as determined by the Director for 
Management;
    (d) In regard to internal use, reproductions may be used only--
    (1) On ED letterhead stationery;
    (2) On official ED identification cards, security, and other 
approved credentials;
    (3) On business cards for ED employees;
    (4) On official ED signs;
    (5) On official publications or graphics issued by and attributed to 
ED, or joint statements of ED with one or more other Federal agencies, 
State or local governments, or foreign governments;
    (6) On official awards, certificates, and medals;
    (7) On electronic media, motion picture film, video tape, and other 
audiovisual media prepared by or for ED and attributed thereto; and
    (8) For other internal purposes as determined by the Director for 
Management.
    (e) Embossing seals may be used only internally--
    (1) On ED legal documents, including interagency or 
intergovernmental agreements, agreements with State or local 
governments, foreign patent applications, certification(s) of true 
copies, and similar documents;
    (2) On official awards and certificates; and
    (3) For other purposes as determined by the General Counsel or the 
Director for Management.
    (f) Falsely making, forging, counterfeiting, mutilating, or altering 
the Official Seal, replicas, reproductions, or embossing seals, or 
knowingly using or possessing with fraudulent intent and altered 
official seal, replica, reproduction or embossing seal is punishable 
under 18 U.S.C. 506.
    (g) Any person using the Official Seal, replicas, reproductions, or 
embossing seals in a manner inconsistent with the provisions of this 
part is subject to the provisions of 18 U.S.C. 1017, which states 
penalties for the wrongful use of an Official Seal, and to other 
provisions of law as applicable.

[45 FR 86491, Dec. 31, 1980, as amended at 53 FR 4620, Feb. 17, 1988; 56 
FR 65388, Dec. 16, 1991; 65 FR 57286, Sept. 22, 2000]



PART 4_SERVICE OF PROCESS--Table of Contents






Sec. 4.1  Service of process required to be served on or delivered to 
Secretary.

    Summons, complaints, subpoenas, and other process which are required 
to be served on or delivered to the Secretary of Education shall be 
delivered to the General Counsel or a Deputy General Counsel, by mail at 
400 Maryland Avenue SW., Washington, DC 20202 or by personal service at 
that address. The persons above designated are authorized to accept 
service of such process.

(Authority: 5 U.S.C. 301)

[47 FR 16780, Apr. 20, 1982]



PART 5_AVAILABILITY OF INFORMATION TO THE PUBLIC PURSUANT TO PUB. L. 90-23
--Table of Contents




                          Subpart A_Definitions

Sec.
5.1 Act.
5.2 Department.
5.5 Records.
5.6 Statutory definitions.

                  Subpart B_What Records Are Available

5.11 Purpose and scope.
5.12 General policy.
5.13 Records available.
5.14 Published documents.
5.15 Creation of records.
5.16 Deletion of identifying details.
5.17 Records in record centers.
5.18 Destroyed records.
5.19 Records of other departments and agencies.

                Subpart C_Freedom of Information Officer

5.32 Freedom of information officer.

          Subpart D_Procedures for Requesting Access to Records

5.51 Procedure.
5.52 Copies of records.
5.53 Denial of requests for records.

[[Page 7]]

                       Subpart E_Fees and Charges

5.60 Schedule of fees.
5.61 Notification of estimated fees.
5.62 Advance payment of fees.
5.63 Payment of fees and interest.
5.64 Waiver or reduction of fees.

               Subpart F_Availability of Specific Records

5.70 Policy.
5.71 Protection of personal privacy and proprietary information.
5.72 Records available.
5.73 Records not available.
5.74 Further disclosure.

                     Subpart G_Administrative Review

5.80 Review of denial of a record.
5.81 Time for initiation of request for review.
5.82 By whom review is made.
5.83 Contents of request for review.
5.84 Consideration on review.
5.85 Decisions on review.

Appendix to Part 5

    Authority: 5 U.S.C. 552.

    Source: 45 FR 30803, May 9, 1980, unless otherwise noted.



                          Subpart A_Definitions



Sec. 5.1  Act.

    As used in this part, Act means section 552 of title 5, United 
States Code, as amended by Pub. L. 90-23, codifying the Act of July 4, 
1966, sometimes referred to as the ``Freedom of Information Act''.



Sec. 5.2  Department.

    As used in this part, Department means the Department of Education.



Sec. 5.5  Records.

    As used in this part:
    (a) Record includes books, brochures, punch cards, magnetic tapes, 
paper tapes, sound recordings, maps, pamphlets, photographs, slides, 
motion pictures, or other documentary materials, regardless of physical 
form or characteristics, made or received by the Department pursuant to 
Federal law or in connection with the transaction of public business and 
preserved by the Department as evidence of the organization, functions, 
policies, decisions, procedures, operations, programs, or other 
activities.
    (b) Record does not include: Objects or articles such as tangible 
exhibits, models, equipment, or processing materials; or formulae, 
designs, drawings, or other items of valuable property; books, 
magazines, pamphlets, or other reference material in formally organized 
and officially designated libraries of the Department, which are 
available under the rules of the particular library concerned.



Sec. 5.6  Statutory definitions.

    The definitions in the Act and the Office of Management and Budget's 
``Uniform FOIA Fee Schedule and Guidelines,'' 52 FR 10012 (March 27, 
1987), apply to this part.

[52 FR 32525, Aug. 27, 1987]



                  Subpart B_What Records Are Available



Sec. 5.11  Purpose and scope.

    This part constitutes the regulation of the Department respecting 
the availability to the public, pursuant to the Act, of records of the 
Department. It informs the public what records are generally available.



Sec. 5.12  General policy.

    The Department's policy is one of the fullest responsible disclosure 
limited only by the obligations of confidentiality and the 
administrative necessities recognized by the Act. Unless otherwise 
exempted from disclosure pursuant to law, records of the Department 
shall be available for inspection and copying in accordance with this 
part.



Sec. 5.13  Records available.

    (a) Publication in the Federal Register. The following shall be 
published in the Federal Register:
    (1) Descriptions of the Department's central and field organization 
and the established places at which, the officers from whom, and the 
methods whereby, the public may secure information, make submittals or 
requests, or obtain decisions;
    (2) Statements of the general course and method by which the 
Department's

[[Page 8]]

functions are channeled and determined, including the nature and 
requirements of all formal and informal procedures available;
    (3) Rules of procedures, descriptions of forms available or the 
places at which forms may be obtained, and instructions as to the scope 
and contents of all papers, reports, or examinations;
    (4) Substantive rules of general applicability adopted as authorized 
by law, and statements of general policy or interpretations of general 
applicability formulated and adopted by the Department;
    (5) Every amendment, revision, or repeal of the foregoing.
    (b) Agency opinions and orders. The Department shall, in accordance 
with this part and applicable regulations, make available for public 
inspection and copying:
    (1) All final opinions (including concurring and dissenting 
opinions) and all orders made in the adjudication of cases (initial 
decisions and reconsiderations thereof in matters that are not the 
result of administrative proceedings such as hearings or formal appeals 
are not ``opinions and orders in the adjudication of cases'');
    (2) Those statements of policy and interpretations which have been 
adopted by the agency and are not published in the Federal Register;
    (3) Administrative staff manuals and instructions to staff that 
affect any member of the public;

unless such materials are promptly published and copies offered for 
sale.

The Department shall maintain and make available for public inspection 
and copying current indexes providing identifying information for the 
public as to any matter which is issued, adopted, or promulgated after 
July 4, 1967, and which is required by this paragraph (b) to be 
published or made available.
    (c) Availability of records on request. In addition to the records 
made available pursuant to paragraphs (a) and (b) of this section, the 
Department shall, upon request for identifiable records made in 
accordance with this part, make such records available to any person, 
unless it is determined that such records must be withheld from 
disclosure and are exempt under subsection (b) of the Act and subpart F 
of this part.



Sec. 5.14  Published documents.

    Published records of the Department, whether or not available for 
purchase, shall be made available for examination.



Sec. 5.15  Creation of records.

    Records are not required to be created by compiling selected items 
from the files, and records are not required to be created to provide 
the requester with such data as ratios, proportions, percentages, per 
capitas, frequency distributions, trends, correlations, and comparisons. 
If such data have been compiled and are available in the form of a 
record, the record shall be made available as provided in this part.



Sec. 5.16  Deletion of identifying details.

    Whenever any final opinion, order, or other materials required to be 
made available pursuant to subsection (a)(2) of the Act relates to a 
private party or parties and the release of the name or names or other 
identifying details will constitute a clearly unwarranted invasion of 
personal privacy, the record shall be published or made available with 
such identifying details left blank, or shall be published or made 
available with obviously fictitious substitutes and with a notification 
such as the following as a preamble:

    Names of parties and certain other identifying details have been 
removed [and fictitious names substituted] in order to prevent a clearly 
unwarranted invasion of the personal privacy of the individuals 
involved.



Sec. 5.17  Records in record centers.

    When a request is made for identifiable records of the Department 
which have been stored in the National Archives or other record centers 
of the General Services Administration, but would otherwise be available 
under this Act, such records shall be requested by the Department for 
the requester.



Sec. 5.18  Destroyed records.

    Records of specified form or character are destroyed after the lapse 
of time specified in the Records Disposal Act of 1943 (44 U.S.C. 366-
380), the Federal Property Management Regulations

[[Page 9]]

(41 CFR parts 101-111), and the Records Control Schedules.



Sec. 5.19  Records of other departments and agencies.

    Requests for records which originated in or concern matters which 
originated in another Department or Government agency may be forwarded 
to the Department or agency primarily concerned and the requester so 
notified.



                Subpart C_Freedom of Information Officer



Sec. 5.32  Freedom of information officer.

    The Freedom of Information Officer shall be responsible for 
determining whether records of the Department must be withheld from 
disclosure and shall have authority to deny requests for records of the 
Department.



          Subpart D_Procedures for Requesting Access to Records



Sec. 5.51  Procedure.

    (a) A request for any information or record may be made at any 
appropriate office of the Department.
    (b) If a request is made at any office of the Department and the 
information or record is not located where the request is made, the 
requester shall be referred to the proper office, or if the request is 
put in writing it may be forwarded to the proper office.
    (c) A request should reasonably identify the requested record by 
brief description. Requesters who have detailed information which would 
assist in identifying the records requested are urged to provide such 
information in order to expedite the handling of the request. Envelopes 
in which written requests are submitted should be clearly identified as 
a Freedom of Information request.
    (d) Determination of whether records will be released or withheld 
will be made within 10 working days from date of receipt in the office 
having custody of the records This time may be extended by written 
notice for no longer than an additional 10 working days, only in unusual 
circumstances. Unusual circumstances mean:
    (1) The need to search for and collect the requested records from 
field facilities or other establishments that are separate from the 
office processing the request;
    (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 a substantial interest in 
the determination of the request or among two or more components of the 
agency having substantial subject-matter interest therein.

If such extension is made, the requester will be notified in writing 
with an explanation of why the extension was necessary and the date on 
which a determination will be made.



Sec. 5.52  Copies of records.

    Copies of available records shall be produced as promptly as 
possible upon receipt of the fee therefor. Copying service shall be 
limited to not more than two copies of any single page, except that 
additional copies may be made where administrative considerations 
permit. Records which are published or available for sale need not be 
copied.



Sec. 5.53  Denial of requests for records.

    Written requests for inspection or copying of records shall be 
denied only by the Freedom of Information Officer. Denials of requests 
shall be in writing and shall contain the reasons for the denial and 
provide the requester with appropriate information on how to exercise 
the right of appeal under subpart G of this part. Such notification 
shall also set forth the names and titles or positions of each person 
responsible for the denial of such request if such person or persons is 
other than the Freedom of Information Officer.



                       Subpart E_Fees and Charges

    Source: 52 FR 32525, Aug. 27, 1987, unless otherwise noted.

[[Page 10]]



Sec. 5.60  Schedule of fees.

    (a) Fees and charges are charged under this part as follows:
    (1) Search for records--(i) General. Full search fees are charged 
for records requested by commercial use requesters. For records 
requested by representatives of the news media or educational or 
noncommercial scientific institutions whose purpose is scholarly or 
scientific research, no search fee is charged if the records requested 
are not for commercial use. For other requesters, if the records 
requested are not for commercial use, the first two hours of search time 
are provided without charge, except as limited in paragraph (a)(1)(iii) 
of this section. Search fees are recorded and assessed to the nearest 
quarter hour.
    (ii) Manual search. The charge for a manual search is calculated by 
determining the search time to the nearest quarter hour and multiplying 
that figure by the sum of the basic rate of pay per hour of the employee 
conducting the search plus 16 percent of that rate.
    (iii) Computer search. The charge for a computer search is 
calculated by determining the search time to the nearest quarter hour 
and multiplying that figure by the sum of the basic rate of pay per hour 
of the computer operator plus 16% of that rate plus $287 per hour for 
computer operation. Two hours of search time on a computer search is 
deemed to have been spent if the cost of the search equals the 
equivalent of two hours of the computer operator's basic rate of pay per 
hour plus 16 percent of that rate.
    (2) Review of records. Review fees are charged only for commercial 
use requests and only for the initial review. The review rate is 
calculated by determining the review time to the nearest quarter hour 
and multiplying that figure by the sum of the basic rate of pay per hour 
of the employee conducting the review plus 16% of that rate. If records 
requested under this part are stored elsewhere than the headquarters of 
the Department at Washington, DC, the mailing and handling costs of 
returning those records to the headquarters for review is added to the 
review costs.
    (3) Duplication of records. No duplication fee is charged for the 
first 100 pages, except for commercial use requests. Duplication charges 
for paper copy reproduction of documents on photocopy machines is $0.10 
per page.
    (4) Certification of records. The charge for certifying records is 
$5 per record certified.
    (5) Other. If no specific fee has been established for a service, or 
the request for a service does not fall under one of the categories in 
paragraphs (a)(1)-(4) of this section due to the amount or type of 
service, the Secretary is authorized to establish an appropriate fee, 
based on direct costs on a case-by-case basis as provided in the FOIA.
    (b) If the Secretary awards a contract for a search or duplication 
of records for a FOI request, the fees charged are the actual costs 
under the contract.
    (c) Fees are not charged if the total amount of the fee is less than 
$5. If the total amount of the fee is $5, or more, applicable search and 
review costs are charged even if no records are located or disclosed. 
The Secretary does not refund fees paid for services actually rendered.
    (d) If the FOI Officer reasonably believes that a requester or group 
of requesters acting in concert is attempting to break down a request 
into multiple requests for the purpose of avoiding fee assessment, those 
requests and fees are aggregated and charged accordingly.



Sec. 5.61  Notification of estimated fees.

    If the estimated fees under this section total more than $25, or 
more than the maximum amount specified in the request if that amount 
exceeds $25, the requester is:
    (a) Notified promptly of the amount of the estimated fee or that 
portion of the fee as can readily be estimated; and
    (b) Offered the opportunity to reformulate the request.



Sec. 5.62  Advance payment of fees.

    (a) If the estimated fee for processing a request exceeds $250, the 
FOI Officer:
    (1) Notifies the requester of the anticipated cost and obtains 
satisfactory assurance of full payment if the requester has a history of 
prompt payment of FOIA fees; or

[[Page 11]]

    (2) Requires an advance payment if the requester has no history of 
payment.
    (b) If a requester has previously failed to pay a fee in a timely 
fashion, the FOI Officer does not process any subsequent request until 
the requester pays the arrears in full, including interest, and makes an 
advance payment of the estimated fee for the new request.
    (c) Requests under this section are not deemed to have been received 
for purposes of Sec. 5.51(d) until the Department receives the 
satisfactory assurance or advance payment.



Sec. 5.63  Payment of fees and interest.

    (a) If a requester does not pay a fee under this subpart within 30 
days after the date the billing was sent, interest is assessed at the 
rate prescribed under 31 U.S.C. 3717. The Secretary may use the 
procedures authorized under the Debt Collection Act of 1982 to collect 
fees due under this subpart, including disclosure to consumer reporting 
or collection agencies.
    (b) Fee payments must be in the form either of a personal check or 
bank draft drawn on a bank in the United States, or a postal money 
order. Fee payments must be made payable to the U.S. Department of 
Education and mailed to the FOI Officer, Department of Education, 400 
Maryland Avenue, SW., Washington, DC 20202. A receipt for fees paid is 
given upon request.



Sec. 5.64  Waiver or reduction of fees.

    (a) The Secretary may, in accordance with the FOIA, waive or reduce 
all or part of any fee provided for in this section if the Secretary 
determines that it is:
    (1) In the public interest because furnishing the information can be 
considered as primarily benefiting the general public and is likely to 
contribute significantly to public understanding of the operations or 
activities of the government; and
    (2) Is not primarily in the commercial interest of the requester.
    (b) In making the determination to waive or reduce a fee under 
paragraph (a) of this section, the Secretary considers the following 
factors:
    (1) Whether the subject of the requested records concerns the 
operations or activities of the government.
    (2) Whether the disclosure is likely to contribute significantly to 
public understanding of government operations or activities.
    (3) Whether the requester has a commercial interest that would be 
furthered by the requested disclosure; and, if so, 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.



               Subpart F_Availability of Specific Records



Sec. 5.70  Policy.

    This subpart specifies the types of records which the Department 
shall, in keeping with its policy of fullest possible disclosure, make 
available for inspection and copying. For clarity and purposes of 
guidance, there are also set forth below the kinds or portions of 
records which generally will not be released, except as may be 
determined under Sec. 5.74. The appendix to this part contains some 
examples of the kinds of materials which, in accordance with Sec. 5.72, 
will generally be released and other materials which, in accordance with 
Sec. 5.73, are not normally available. In the event that any record 
contains both information which is disclosable and that which is not 
disclosable under this regulation, the nondisclosable information will 
be deleted and the balance of the record disclosed.



Sec. 5.71  Protection of personal privacy and proprietary information.

    As set forth with more particularity below, certain types of 
information in whatever record or document contained shall not be 
disclosed where disclosure would be inconsistent with individual rights 
of personal privacy or would violate obligations of confidentiality.
    (a) No disclosure will be made of information of a personal and 
private nature, such as information in personnel and medical files, in 
welfare and social

[[Page 12]]

security records and any other information of a private and personal 
nature.
    (b) Information having a commercial or financial value and in which 
the person providing the information has a proprietary interest will not 
be disclosed if it is in fact confidential. In determining whether such 
information is in fact confidential, consideration may be given to such 
factors as (1) the general custom or usage in the occupation or business 
to which the information relates that it be held confidential, (2) the 
number and situation of the individuals who have access to such 
information, (3) the type and degree of risk of financial injury to be 
expected if disclosure occurs, and (4) the length of time such 
information should be regarded as retaining the characteristics noted 
above.
    (c) Information obtained by the Department from any individual or 
organization, who furnishes it in reliance upon a provision for 
confidentiality authorized by applicable statute or regulation, will not 
be disclosed. This subpart does not itself authorize the giving of any 
pledge of confidentiality by any officer or employee of the Department.

This section does not preclude use of nondiscloseable records or 
information from such records for authorized program purposes, including 
law enforcement purposes and litigation. Release of information of the 
nature described in this section to the individual or the organization 
to whom the information pertains or to an authorized representative of 
either will not be deemed a disclosure within the meaning of this part.



Sec. 5.72  Records available.

    The following records of the Department shall, subject to the 
exceptions set forth in Sec. Sec. 5.71 and 5.73, be available upon 
request for inspection and copying.
    (a) Correspondence. Correspondence, relating to or resulting from 
the conduct of the official business of the Department, between the 
Department and individuals or organizations which are not agencies 
within the meaning of 5 U.S.C. 551(1) and 552(e).
    (b) Records pertaining to grants. (1) Portions of funded initial 
research grant applications and portions of continuation, renewal or 
supplemental grant applications, whether funded or not, including 
interim progress reports and other supporting documents submitted by 
applicants, which are not otherwise exempted from disclosure by this 
subpart.
    (2) Grant award documents.
    (3) All State plans, amendments, and supplements thereto, including 
applications for the waiver of any provision thereof whether acted upon 
by the Department or not.
    (c) Contracts. (1) Contract instruments.
    (2) Portions of offers reflecting final prices submitted in 
negotiated procurements.
    (d) Reports on grantee, contractor, or provider performance. Final 
reports of audits, surveys, reviews, or evaluations by, for, or on 
behalf of the Department, of performance by any grantee, contractor, or 
provider under any departmentally financed or supported program or 
activity, which reports have been transmitted to the grantee, 
contractor, or provider.
    (e) Research, development, and demonstration project records. The 
reports of a grantee or a contractor of the performance under any 
research, development, or demonstration project, records, other than 
reports, produced in such projects, such as films, computer software, 
other copyrightable materials and reports of inventions, will be 
available, except that considerations relating to obtaining copyright 
and patent protection may require delay in disclosure for such period as 
necessary to accomplish such protection. Disclosure of records which are 
copyrightable or which reflect patentable inventions shall not confer 
upon the requester any license under any copyright or patent without 
regard to the holder or owner thereof.



Sec. 5.73  Records not available.

    The following types of records or information contained in any 
record, in addition to those prohibited by law from disclosure, are not 
available for inspection or copying, any provision of Sec. 5.72 
notwithstanding:

[[Page 13]]

    (a) Intra-agency and inter-agency communications. Communications 
within the Department other than those described in Sec. 5.72(d) or 
between the Department or any other agency within the meaning of 5 
U.S.C. 551(1) and 552(e), to the extent they reflect the views or 
judgment of the writer or of other individuals. If disclosure of any 
factual portion of the communication would indicate the views or 
judgment being withheld from disclosure, then such factual portions will 
also be withheld.
    (b) Investigatory files. Investigatory files compiled for law 
enforcement purposes to the extent that production of such records 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. For the purpose of this section enforcement 
action means any authorized action intended to abate, prevent, 
counteract, deter, or terminate violations of law and includes action 
involving possible civil, criminal, or administrative sanctions whether 
such sanctions involve adversary proceedings or other procedures, such 
as termination of benefits, protective measures, etc.



Sec. 5.74  Further disclosure.

    (a) The Secretary may in particular instances, except where 
prohibited by law, disclose documents or portions of documents described 
in Sec. 5.73 if he determines that disclosure is in the public interest 
and is consistent with obligations of confidentiality and administrative 
necessity.
    (b) In making such a determination, consideration may be given to 
the Department's responsibilities under law for dissemination to the 
public of information relating to education.
    (c) When such determination has been made, the particular document 
or portion of document to which it relates shall thereafter be available 
upon request for inspection and copying: Provided however, That use of 
nondiscloseable records or information from such records for authorized 
program purposes, including law enforcement purposes and litigation is 
not a disclosure within the meaning of this section.



                     Subpart G_Administrative Review



Sec. 5.80  Review of denial of a record.

    This subpart provides for the review of a denial, pursuant to Sec. 
5.53, of a written request for inspection or copying of a record.



Sec. 5.81  Time for initiation of request for review.

    A person whose request has been denied may initiate a review by 
filing a request for review within (a) 30 days of receipt of the 
determination to deny or (b) within 30 days of receipt of records which 
are in partial response to his request if a portion of a request is 
granted and a portion denied, whatever is later.



Sec. 5.82  By whom review is made.

    (a) Requests for review of denials should be addressed to the 
Secretary.
    (b) [Reserved]



Sec. 5.83  Contents of request for review.

    The request for review shall include a copy of the written request 
and the denial.



Sec. 5.84  Consideration on review.

    Review shall be considered on the basis of the written record 
including any written argument submitted by the requester.



Sec. 5.85  Decisions on review.

    (a) Decisions on review shall be in writing within 20 working days 
from receipt of the request for review. Extension of the time limit may 
be granted to the extent that the maximum 10-day limit on extensions has 
not been exhausted on the initial determination.

[[Page 14]]

Such extension may only be granted for the reasons enumerated in Sec. 
5.51(d).
    (b) The decision, which constitutes final action of the Department, 
if adverse to the requester shall be in writing, stating the reasons for 
the decision, and advising the requester of the right to judicial review 
of such decision.
    (c) Failure to comply with time limits set forth in Sec. 5.51 or in 
this paragraph constitutes an exhaustion of the requester's 
administrative remedies.

                           Appendix to Part 5

[The following are some examples of specific records (or specific 
information relating to personnel, programs, or activities of this 
Department) listed according to whether or not they are available upon 
request for inspection and copying]

------------------------------------------------------------------------
       Generally available                Generally not available
------------------------------------------------------------------------
                                 grants
------------------------------------------------------------------------
Funded initial grant               Research protocol, design,
 applications, subject to           processing, and other technical
 provisions of Sec. 5.71.         information to the extent
Reports of grantee.                 proprietary or of a confidential
Final report of any review or       nature submitted with initial
 evaluation of grantee              applications not yet funded, or
 performance conducted or caused    where disclosure would adversely
 to be conducted by the             affect patent or other valuable
 Department.                        rights.
                                   Confidential financial information of
                                    grantee.
                                   Site visit reports.
Applications for continuation,     Initial research or research training
 renewal, or supplemental grants,   grant application on which award is
 subject to provisions of Sec. not made.
 5.71.
State plan material.
----------------------------------
                                contracts
------------------------------------------------------------------------
Name of contractor, subject        Trade secrets.
 matter, date, and amount of
 contract.
Contract performance review        Confidential pricing data contained
 report.                            in contract proposal if in the
                                    Department's judgment it is properly
                                    so designated by the offeror.
Deficiency report................  Proprietary technical data contained
                                    in a contract proposal if in the
                                    Department's judgment it is properly
                                    so designated by offeror.
Final report.....................  Confidential financial information of
                                    contractor
                                   Draft of proposed final report
                                    submitted for comment prior to
                                    acceptance.
                                   Research protocol, design,
                                    processing, and other technical
                                    information to the extent
                                    proprietary or of a confidential
                                    nature, including proprietary
                                    contents of unsolicited proposals.
                                   Proposals on which no award is made.
----------------------------------
                           advisory committees
------------------------------------------------------------------------
Name of committee................  Minutes or transcripts of committee
Final report.....................   meetings or portions thereof which
Minutes or transcripts of           are involved with matters exempt
 meetings open to the public and    from mandatory disclosure under
 not involved with matters exempt   Freedom of Information Act.
 from mandatory disclosure under
 Freedom of Information Act.
----------------------------------
                          personnel information
------------------------------------------------------------------------
Name of employee, title of         Home addresses of employees.
 position, and location of
 regular duty station.
Grade, position description, and
 salary of public employees.
----------------------------------
     affirmative action plan filed pursuant to executive order 11246
------------------------------------------------------------------------
Approved action plan, including
 analysis, proposed remedial or
 affirmative steps to be taken
 with goals and timetables,
 policies on recruitment, hiring,
 and promotion, and description
 of grievance procedures.
----------------------------------
                              miscellaneous
------------------------------------------------------------------------
                                   Names of individual beneficiaries of
                                    departmental programs or a list of
                                    the benefits they receive if release
                                    would be an unwarranted invasion of
                                    privacy.
                                   Office for Civil Rights investigatory
                                    files in open cases.
------------------------------------------------------------------------


[[Page 15]]



PART 5b_PRIVACY ACT REGULATIONS--Table of Contents




Sec.
5b.1 Definitions.
5b.2 Purpose and scope.
5b.3 Policy.
5b.4 Maintenance of records.
5b.5 Notification of or access to records.
5b.7 Procedures for correction or amendment of records.
5b.8 Appeals of refusals to correct or amend records.
5b.9 Disclosure of records.
5b.10 Parents and guardians.
5b.11 Exempt systems.
5b.12 Contractors.
5b.13 Fees.

Appendix A to Part 5b--Employee Standards of Conduct
Appendix B to Part 5b--Routine Uses Applicable to More Than One System 
          of Records Maintained by ED

    Authority: 5 U.S.C. 301, 5 U.S.C. 552a.

    Source: 45 FR 30808, May 9, 1980, unless otherwise noted.



Sec. 5b.1  Definitions.

    As used in this part:
    (a) Access means availability of a record to a subject individual.
    (b) Agency means the Department of Education.
    (c) Department means the Department of Education.
    (d) Disclosure means the availability or release of a record to 
anyone other than the subject individual.
    (e) Individual means a living person who is a citizen of the United 
States or an alien lawfully admitted for permanent residence. It does 
not include persons such as sole proprietorships, partnerships, or 
corporations. A business firm which is identified by the name of one or 
more persons is not an individual within the meaning of this part.
    (f) Maintain means to maintain, collect, use, or disseminate when 
used in connection with the term ``record''; and, to have control over 
or responsibility for a system of records when used in connection with 
the term ``system of records.''
    (g) Notification means communication to an individual whether he is 
a subject individual.
    (h) Record means any item, collection, or grouping of information 
about an individual that is maintained by the Department, including but 
not limited to the individual's education, financial transactions, 
medical history, and criminal or employment history and that contains 
his name, or an identifying number, symbol, or other identifying 
particular assigned to the individual, such as a finger or voice print 
or a photograph. When used in this part, record means only a record 
which is in a system of records.
    (i) Responsible Department official means that officer who is listed 
in a notice of a system of records as the system manager for a given 
system of records or another individual listed in the notice of a system 
of records to whom requests may be made, or the designee of either such 
officer or individual.
    (j) Routine use means the disclosure of a record outside the 
Department, without the consent of the subject individual, for a purpose 
which is compatible with the purpose for which the record was collected. 
It includes disclosures required to be made by statute other than the 
Freedom of Information Act, 5 U.S.C. 552. It does not include 
disclosures which are permitted to be made without the consent of the 
subject individual which are not compatible with the purpose for which 
it was collected such as disclosures to the Bureau of the Census, the 
General Accounting Office, or to Congress.
    (k) Secretary means the Secretary of Education.
    (l) Statistical record means a record maintained for statistical 
research or reporting purposes only and not maintained to make 
determinations about a particular subject individual.
    (m) Subject individual means that individual to whom a record 
pertains.
    (n) System of records means any group of records under the control 
of the Department from which a record is retrieved by personal 
identifier such as the name of the individual, number, symbol or other 
unique retriever assigned to the individual. Single records or groups of 
records which are not retrieved by a personal identifier are not part of 
a system of records. Papers maintained by individual employees of the 
Department which are prepared, maintained, or discarded at the 
discretion of the employee and which are not

[[Page 16]]

subject to the Federal Records Act, 44 U.S.C. 2901, are not part of a 
system of records; Provided, That such personal papers are not used by 
the employee or the Department to determine any rights, benefits, or 
privileges of individuals.

[45 FR 30808, May 9, 1980; 45 FR 37426, June 3, 1980]



Sec. 5b.2  Purpose and scope.

    (a) This part implements section 3 of the Privacy Act of 1974, 5 
U.S.C. 552a (hereinafter referred to as the Act), by establishing agency 
policies and procedures for the maintenance of records. This part also 
establishes agency policies and procedures under which a subject 
individual may be given notification of or access to a record pertaining 
to him and policies and procedures under which a subject individual may 
have his record corrected or amended if he believes that his record is 
not accurate, timely, complete, or relevant or necessary to accomplish a 
Department function.
    (b) All components of the Department are governed by the provisions 
of this part. Also governed by the provisions of this part are advisory 
committees and councils within the meaning of the Federal Advisory 
Committee Act which provide advice to (1) any official or component of 
the Department or (2) the President and for which the Department has 
been delegated responsibility for providing services.
    (c) Employees of the Department governed by this part include all 
regular and special government employees of the Department; experts and 
consultants whose temporary (not in excess of 1 year) or intermittent 
services have been procured by the Department by contract pursuant to 
3109 of title 5, United States Code; volunteers where acceptance of 
their services are authorized by law; those individuals performing 
gratuitous services as permitted under conditions prescribed by the 
Office of Personnel Management; and, participants in work-study or 
training programs.
    (d) This part does not:
    (1) Make available to a subject individual records which are not 
retrieved by that individual's name or other personal identifier.
    (2) Make available to the general public records which are retrieved 
by a subject individual's name or other personal identifier or make 
available to the general public records which would otherwise not be 
available to the general public under the Freedom of Information Act, 5 
U.S.C. 552, and part 5 of this title.
    (3) Govern the maintenance or disclosure of, notification of or 
access to, records in the possession of the Department which are subject 
to regulations of another agency, such as personnel records subject to 
the regulations of the Office of Personnel Management.
    (4) Apply to grantees, including State and local governments or 
subdivisions thereof, administering federally funded programs.
    (5) Make available records compiled by the Department in reasonable 
anticipation of court litigation or formal administrative proceedings. 
The availability of such records to the general public or to any subject 
individual or party to such litigation or proceedings shall be governed 
by applicable constitutional principles, rules of discovery, and 
applicable regulations of the Department.



Sec. 5b.3  Policy.

    It is the policy of the Department to protect the privacy of 
individuals to the fullest extent possible while nonetheless permitting 
the exchange of records required to fulfill the administrative and 
program responsibilities of the Department, and responsibilities of the 
Department for disclosing records which the general public is entitled 
to have under the Freedom of Information Act, 5 U.S.C. 552, and part 5 
of this title.



Sec. 5b.4  Maintenance of records.

    (a) No record will be maintained by the Department unless:
    (1) It is relevant and necessary to accomplish a Department function 
required to be accomplished by statute or Executive Order;
    (2) It is acquired to the greatest extent practicable from the 
subject individual when maintenance of the record may result in a 
determination about the subject individual's rights, benefits or 
privileges under Federal programs;

[[Page 17]]

    (3) The individual providing the record is informed of the authority 
for providing the record (including whether the providing of the record 
is mandatory or voluntary, the principal purpose for maintaining the 
record, the routine uses for the record, what effect his refusal to 
provide the record may have on him), and if the record is not required 
by statute or Executive Order to be provided by the individual, he 
agrees to provide the record.
    (b) No record will be maintained by the Department which describes 
how an individual exercises rights guaranteed by the First Amendment 
unless expressly authorized (1) by statute, or (2) by the subject 
individual, or (3) unless pertinent to and within the scope of an 
authorized law enforcement activity.



Sec. 5b.5  Notification of or access to records.

    (a) Times, places, and manner of requesting notification of or 
access to a record. (1) Any individual may request notification of a 
record. He may at the same time request access to any record pertaining 
to him. An individual may be accompanied by another individual of his 
choice when he requests access to a record in person; Provided, That he 
affirmatively authorizes the presence of such other individual during 
any discussion of a record to which access is requested.
    (2) An individual making a request for notification of or access to 
a record shall address his request to the responsible Department 
official and shall verify his identity when required in accordance with 
paragraph (b)(2) of this section. At the time the request is made, the 
individual shall specify which systems of records he wishes to have 
searched and the records to which he wishes to have access. He may also 
request that copies be made of all or any such records. An individual 
shall also provide the responsible Department official with sufficient 
particulars to enable such official to distinguish between records on 
subject individuals with the same name. The necessary particulars are 
set forth in the notices of systems of records.
    (3) An individual who makes a request in person may leave with any 
responsible Department official a request for notification of or access 
to a record under the control of another responsible Department 
official; Provided, That the request is addressed in writing to the 
appropriate responsible Department official.
    (b) Verification of identity--(1) When required. Unless an 
individual, who is making a request for notification of or access to a 
record in person, is personally known to the responsible Department 
official, he shall be required to verify his identity in accordance with 
paragraph (b)(2) of this section if:
    (i) He makes a request for notification of a record and the 
responsible Department official determines that the mere disclosure of 
the existence of the record would be a clearly unwarranted invasion of 
privacy if disclosed to someone other than the subject individual; or,
    (ii) He makes a request for access to a record which is not required 
to be disclosed to the general public under the Freedom of Information 
Act, 5 U.S.C. 552, and part 5 of this title.
    (2) Manner of verifying identity. (i) An individual who makes a 
request in person shall provide to the responsible Department official 
at least one piece of tangible identification such as a driver's 
license, passport, alien or voter registration card, or union card to 
verify his identity. If an individual does not have identification 
papers to verify his identity, he shall certify in writing that he is 
the individual who he claims to be and that he understands that the 
knowing and willful request for or acquisition of a record pertaining to 
an individual under false pretenses is a criminal offense under the Act 
subject to a $5,000 fine.
    (ii) Except as provided in paragraph (b)(2)(v) of this section, an 
individual who does not make a request in person shall submit a 
notarized request to the responsible Department official to verify his 
identity or shall certify in his request that he is the individual who 
he claims to be and that he understands that the knowing and willful 
request for or acquisition of a record pertaining to an individual under 
false pretenses is a criminal offense under the Act subject to a $5,000 
fine.

[[Page 18]]

    (iii) An individual who makes a request on behalf of a minor or 
legal incompetent as authorized under Sec. 5b.10 of this part shall 
verify his relationship to the minor or legal incompetent, in addition 
to verifying his own identity, by providing a copy of the minor's birth 
certificate, a court order, or other competent evidence of guardianship 
to the responsible Department official; except that, an individual is 
not required to verify his relationship to the minor or legal 
incompetent when he is not required to verify his own identity or when 
evidence of his relationship to the minor or legal incompetent has been 
previously given to the responsible Department official.
    (iv) An individual shall further verify his identity if he is 
requesting notification of or access to sensitive records. Any further 
verification shall parallel the record to which notification or access 
is being sought. Such further verification may include such particulars 
as the individual's years of attendance at a particular educational 
institution, rank attained in the uniformed services, date or place of 
birth, names of parents, or an occupation.
    (v) An individual who makes a request by telephone shall verify his 
identity by providing to the responsible Department official identifying 
particulars which parallel the record to which notification or access is 
being sought. If the responsible Department official determines that the 
particulars provided by telephone are insufficient, the requester will 
be required to submit the request in writing or in person. Telephone 
requests will not be accepted where an individual is requesting 
notification of or access to sensitive records.
    (c) Granting notification of or access to a record. (1) Subject to 
the provisions governing exempt systems in Sec. 5b.11 of this part, a 
responsible Department official, who receives a request for notification 
of or access to a record and, if required, verification of an 
individual's identity, will review the request and grant notification or 
access to a record, if the individual requesting access to the record is 
the subject individual.
    (2) If the responsible Department official determines that there 
will be a delay in responding to a request because of the number of 
requests being processed, a breakdown of equipment, shortage of 
personnel, storage of records in other locations, etc., he will so 
inform the individual and indicate when notification or access will be 
granted.
    (3) Prior to granting notification of or access to a record, the 
responsible Department official may at his discretion require an 
individual making a request in person to reduce his request to writing 
if the individual has not already done so at the time the request is 
made.



Sec. 5b.7  Procedures for correction or amendment of records.

    (a) Any subject individual may request that his record be corrected 
or amended if he believes that the record is not accurate, timely, 
complete, or relevant or necessary to accomplish a Department function. 
A subject individual making a request to amend or correct his record 
shall address his request to the responsible Department official in 
writing; except that, the request need not be in writing if the subject 
individual makes his request in person and the responsible Department 
official corrects or amends the record at that time. The subject 
individual shall specify in each request:
    (1) The system of records from which the record is retrieved;
    (2) The particular record which he is seeking to correct or amend;
    (3) Whether he is seeking an addition to or a deletion or 
substitution of the record; and,
    (4) His reasons for requesting correction or amendment of the 
record.
    (b) A request for correction or amendment of a record will be 
acknowledged within 10 working days of its receipt unless the request 
can be processed and the subject individual informed of the responsible 
Department official's decision on the request within that 10 day period.
    (c) If the responsible Department official 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

[[Page 19]]

not relevant or necessary to accomplish the Department function for 
which the record was provided or is maintained. In either case, the 
subject individual will be informed in writing of the correction, 
amendment, 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.
    (d) If the responsible Department official does not agree that the 
record should be corrected or amended, the subject individual will be 
informed in writing of the refusal to correct or amend the record. He 
will also be informed that he may appeal the refusal to correct or amend 
his record Sec. 5b.8 of this part.
    (e) Requests to correct or amend a record governed by the regulation 
of another government agency, e.g., Office of Personnel Management, 
Federal Bureau of Investigation, will be forwarded to such government 
agency for processing and the subject individual will be informed in 
writing of the referral.



Sec. 5b.8  Appeals of refusals to correct or amend records.

    (a) Processing the appeal. (1) A subject individual who disagrees 
with a refusal to correct or amend his record may appeal the refusal in 
writing. All appeals shall be made to the Secretary.
    (2) An appeal will be completed within 30 working days from its 
receipt by the appeal authority; except that, the appeal authority may 
for good cause extend this period for an additional 30 days. Should the 
appeal period be extended, the subject individual appealing the refusal 
to correct or amend the record will be informed in writing of the 
extension and the circumstances of the delay. The subject individual's 
request to amend or correct the record, the responsible Department 
official's refusal to correct or amend, and any other pertinent material 
relating to the appeal will be reviewed. No hearing will be held.
    (3) If the appeal authority agrees that the record subject to the 
appeal should be corrected or amended, the record will be amended and 
the subject individual will be informed in writing of the correction or 
amendment. 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.
    (4) If the appeal is denied, the subject individual will be informed 
in writing:
    (i) Of the denial and the reasons for the denial;
    (ii) That he has a right to seek judicial review of the denial; and,
    (iii) That he may submit to the responsible Department official a 
concise statement of disagreement to be associated with the disputed 
record and disclosed whenever the record is disclosed.
    (b) Notation and disclosure of disputed records. Whenever a subject 
individual submits a statement of disagreement to the responsible 
Department official in accordance with paragraph (a)(4)(iii) of this 
section, the record will be noted 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 responsible 
Department official deems it appropriate, a concise statement of the 
appeal authority's reasons for denying the subject individual's appeal 
may also be disclosed with the record. While the subject 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 subject individual's statement of 
disagreement, as well as the statement, if any, of the appeal 
authority's reasons for denying the subject individual's appeal.



Sec. 5b.9  Disclosure of records.

    (a) Consent to disclosure by a subject individual. (1) Except as 
provided in paragraph (b) of this section authorizing disclosures of 
records without consent, no disclosure of a record will be made without 
the consent of the subject individual. In each case the consent, whether 
obtained from the subject individual at the request of the Department or 
whether provided to the Department by the subject individual on his own 
initiative, shall be in writing. The consent shall specify the 
individual, organizational unit or class of individuals or 
organizational units to

[[Page 20]]

whom the record may be disclosed, which record may be disclosed and, 
where applicable, during which time frame the record may be disclosed 
(e.g., during the school year, while the subject individual is out of 
the country, whenever the subject individual is receiving specific 
services). A blanket consent to disclose all of a subject individual's 
records to unspecified individuals or organizational units will not be 
honored. The subject individual's identity and, where applicable (e.g., 
where a subject individual gives consent to disclosure of a record to a 
specific individual), the identity of the individual to whom the record 
is to be disclosed shall be verified.
    (2) A parent or guardian of any minor is not authorized to give 
consent to a disclosure of the minor's medical record.
    (b) Disclosures without the consent of the subject individual. The 
disclosures listed in this paragraph may be made without the consent of 
the subject individual. Such disclosures are:
    (1) To those officers and employees of the Department who have a 
need for the record in the performance of their duties. The responsible 
Department official may upon request of any officer or employee, or on 
his own initiative, determine what constitutes legitimate need.
    (2) Required to be disclosed under the Freedom of Information Act, 5 
U.S.C. 552, and part 5 of this title.
    (3) For a routine use as defined in paragraph (j) of Sec. 5b.1. 
Routine uses will be listed in any notice of a system of records. 
Routine uses published in Appendix B are applicable to more than one 
system of records. Where applicable, notices of systems of records may 
contain references to the routine uses listed in Appendix B. Appendix B 
will be published with any compendium of notices of systems of records.
    (4) 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 U.S.C.
    (5) To a recipient who has provided the agency with advance written 
assurance that the record will be used solely as a statistical research 
or reporting record; Provided, That, the record is transferred in a form 
that does not identify the subject individ- ual.
    (6) To the National Archives of the United States as a record which 
has sufficient historical or other value to warrant its continued 
preservation by the United States Government, or for evaluation by the 
Administrator of General Services or his designee to determine whether 
the record has such value.
    (7) To another government agency or to an instrumentality of any 
governmental jurisdiction within or under the control of the United 
States for a civil or criminal law enforcement activity if the activity 
is authorized by law, and if the head of such government agency or 
instrumentality has submitted a written request to the Department 
specifying the record desired and the law enforcement activity for which 
the record is sought.
    (8) To an individual pursuant to a showing of compelling 
circumstances affecting the health or safety of any individual if a 
notice of the disclosure is transmitted to the last known address of the 
subject individual.
    (9) 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.
    (10) To the Comptroller General, or any of the Comptroller General's 
authorized representatives, in the course of the performance of the 
duties of the General Accounting Office.
    (11) Pursuant to the order of a court of competent jurisdiction.
    (c) Accounting of disclosures. (1) An accounting of all disclosures 
of a record will be made and maintained by the Department for 5 years or 
for the life of the record, whichever is longer; except that, such an 
accounting will not be made:
    (i) For disclosures under paragraphs (b) (1) and (2) of this 
section; and,
    (ii) For disclosures made with the written consent of the subject 
individual.
    (2) The accounting will include:
    (i) The date, nature, and purpose of each disclosure; and

[[Page 21]]

    (ii) The name and address of the person or entity to whom the 
disclosure is made.
    (3) 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 the procedures in Sec. 5b.5 
of this part. A subject individual will be granted access to an 
accounting of the disclosures of a record in accordance with the 
procedures of this part which govern access to the related record. 
Access to an accounting of a disclosure of a record made under paragraph 
(b)(7) of this section may be granted at the discretion of the 
responsible Department official.



Sec. 5b.10  Parents and guardians.

    For the purpose of this part, a parent or guardian of any minor or 
the legal guardian or any individual who has been declared incompetent 
due to physical or mental incapacity or age by a court of competent 
jurisdiction is authorized to act on behalf of an individual or a 
subject individual. Except as provided in paragraph (b)(2) of Sec. 
5b.5, of this part governing procedures for verifying an individual's 
identity, an individual authorized to act on behalf of a minor or legal 
incompetent will be viewed as if he were the individual or subject 
individual.



Sec. 5b.11  Exempt systems.

    (a) General policy. The Act permits an agency to exempt certain 
types of systems of records from some of the Act's requirements. It is 
the policy of the Department to exercise authority to exempt systems of 
records only in compelling cases.
    (b) Specific systems of records exempted under (j)(2). The 
Department exempts the Investigative Files of the Inspector General ED/
OIG (18-10-01) and the Hotline Complaint Files of the Inspector General 
ED/OIG (18-10-04) systems of records from the following provisions of 5 
U.S.C. 552a and this part:
    (1) 5 U.S.C. 552a(c)(3) and Sec. 5b.9(a)(1) and (c)(3) of this 
part, regarding access to an accounting of disclosures of a record.
    (2) 5 U.S.C. 552a(c)(4) and Sec. Sec. 5b.7(c) and 5b.8(b) of this 
part, regarding notification to outside parties and agencies of 
correction or notation of dispute made in accordance with 5 U.S.C. 
552a(d).
    (3) 5 U.S.C. 552a(d) (1) through (4) and (f) and Sec. Sec. 
5b.5(a)(1) and (c), 5b.7, and 5b.8 of this part, regarding notification 
or access to records and correction or amendment of records.
    (4) 5 U.S.C. 552a(e)(1) and Sec. 5b.4(a)(1) of this part, regarding 
maintaining only relevant and necessary information.
    (5) 5 U.S.C. 552a(e)(2) and Sec. 5b.4(a)(2) of this part, regarding 
collection of information from the subject individual.
    (6) 5 U.S.C. 552a(e)(3) and Sec. 5b.4(a)(3) of this part, regarding 
notice to individuals asked to provide information to the Department.
    (7) 5 U.S.C. 552a(e)(4) (G), (H), and (I), regarding inclusion of 
information in the system notice about procedures for notification, 
access, correction, and source of records.
    (8) 5 U.S.C. 552a(e)(5), regarding maintaining records with 
requisite accuracy, relevance, timeliness, and completeness.
    (9) 5 U.S.C. 552a(e)(8), regarding service of notice on subject 
individual if a record is made available under compulsory legal process 
if that process becomes a matter of public record.
    (10) 5 U.S.C. 552a(g), regarding civil remedies for violation of the 
Privacy Act.
    (c) Specific systems of records exempted under (k)(2). (1) The 
Department exempts the Investigative Files of the Inspector General ED/
OIG (18-10-01) and the Hotline Complaint Files of the Inspector General 
ED/OIG (18-10-04) from the following provisions of 5 U.S.C. 552a and 
this part to the extent that these systems of records consist of 
investigatory material and complaints that may be included in 
investigatory material compiled for law enforcement purposes:
    (i) 5 U.S.C. 552a(c)(3) and Sec. 5b.9(c)(3) of this part, regarding 
access to an accounting of disclosures of records.
    (ii) 5 U.S.C. 552a(d) (1) through (4) and (f) and Sec. Sec. 
5b.5(a)(1) and (c), 5b.7, and 5b.8 of this part, regarding notification 
of and access to records and correction or amendment of records.
    (iii) 5 U.S.C. 552a(e)(1) and Sec. 5b.4(a)(1) of this part, 
regarding the requirement to maintain only relevant and necessary 
information.

[[Page 22]]

    (iv) 5 U.S.C. 552a(e)(4) (G), (H), and (I), regarding inclusion of 
information in the system notice about procedures for notification, 
access, correction, and source of records.
    (2) The Department exempts the Complaint Files and Log, Office for 
Civil Rights (18-08-01) from the following provisions of 5 U.S.C. 552a 
and this part:
    (i) 5 U.S.C. 552a(c)(3) and Sec. 5b.9(c)(3) of this part, regarding 
access to an accounting of disclosures of records.
    (ii) 5 U.S.C. 552a(d) (1) through (4) and (f) and Sec. Sec. 
5b.5(a)(1) and (c), 5b.7, and 5b.8 of this part, regarding notification 
of and access to records and correction or amendment of records.
    (iii) 5 U.S.C. 552a(e)(4) (G) and (H), regarding inclusion of 
information in the system notice about procedures for notification, 
access, and correction of records.
    (d) Specific systems of records exempted under (k)(5). The 
Department exempts the Investigatory Material Compiled for Personnel 
Security and Suitability Purposes (18-05-17) system of records from the 
following provisions of 5 U.S.C. 552a and this part:
    (1) 5 U.S.C. 552a(c)(3) and Sec. 5b.9(c)(3) of this part, regarding 
access to an accounting of disclosures of records.
    (2) 5 U.S.C. 552a(d) (1) through (4) and (f) and Sec. Sec. 
5b.5(a)(1) and (c), 5b.7, and 5b.8 of this part, regarding notification 
of and access to records and correction or amendment of records.
    (3) 5 U.S.C. 552a(e)(4) (G) and (H), regarding inclusion of 
information in the system notice about procedures for notification, 
access, and correction of records.
    (e) Basis for exemptions taken under (j)(2), (k)(2), and (k)(5). The 
reason the Department took each exemption described in this section is 
stated in the preamble for the final rulemaking document under which the 
exemption was promulgated. These final rulemaking documents were 
published in the Federal Register and may be obtained from the 
Department of Education by mailing a request to the following address: 
U.S. Department of Education, Privacy Act Officer, Office of the Chief 
Information Officer, Regulatory Information Management Group, 
Washington, DC 20202-4651.
    (f) Notification of or access to records in exempt systems of 
records. (1) If a system of records is exempt under this section, an 
individual may nonetheless request notification of or access to a record 
in that system. An individual shall make requests for notification of or 
access to a record in an exempt system or records in accordance with the 
procedures of Sec. 5b.5 of this part.
    (2) An individual will be granted notification of or access to a 
record in an exempt system but only to the extent that notification or 
access would not reveal the identity of a source who furnished the 
record to the Department under an express promise, and, prior to 
September 27, 1975, an implied promise, that his identity would be held 
in confidence if--
    (i) The record is in a system of records or that portion of a system 
of records that is exempt under subsection (k)(2), but not under 
subsection (j)(2), of the Act and the individual has been, as a result 
of the maintenance of the record, denied a right, privilege, or benefit 
to which he or she would otherwise be eligible; or
    (ii) The record is in a system of records that is exempt under 
subsection (k)(5) of the Act.
    (3) If an individual is not granted notification of or access to a 
record in a system of records exempt under subsections (k)(2) (but not 
under subsection (j)(2)) and (k)(5) of the Act in accordance with this 
paragraph, he or she will be informed that the identity of a 
confidential source would be revealed if notification of or access to 
the record were granted to the individual.
    (g) Discretionary actions by the responsible Department official. 
Unless disclosure of a record to the general public is otherwise 
prohibited by law, the responsible Department official may, in his or 
her discretion, grant notification of or access to a record in a system 
of records that is exempt under this section. Discretionary notification 
of or access to a record in accordance with this paragraph will not be a 
precedent for discretionary notification of or access to a similar or 
related record and will not obligate the responsible Department official 
to exercise his or her discretion to grant notification of or

[[Page 23]]

access to any other record in a system of records that is exempt under 
this section.

[58 FR 44424, Aug. 20, 1993, as amended at 64 FR 31066, June 9, 1999; 69 
FR 12246, Mar. 15, 2004]



Sec. 5b.12  Contractors.

    (a) All contracts entered into on or after September 27, 1975 which 
require a contractor to maintain or on behalf of the Department to 
maintain, a system of records to accomplish a Department function must 
contain a provision requiring the contractor to comply with the Act and 
this part.
    (b) All unexpired contracts entered into prior to September 27, 1975 
which require the contractor to maintain or on behalf of the Department 
to maintain, a system of records to accomplish a Department function 
will be amended as soon as practicable to include a provision requiring 
the contractor to comply with the Act and this part. All such contracts 
must be so amended by July 1, 1976 unless for good cause the appeal 
authority identified in Sec. 5b.8 of this part authorizes the 
continuation of the contract without amendment beyond that date.
    (c) A contractor and any employee of such contractor shall be 
considered employees of the Department only for the purposes of the 
criminal penalties of the Act, 5 U.S.C. 552a(i), and the employee 
standards of conduct listed in appendix A of this part where the 
contract contains a provision requiring the contractor to comply with 
the Act and this part.
    (d) This section does not apply to systems of records maintained by 
a contractor as a result of his management discretion, e.g., the 
contractor's personnel records.



Sec. 5b.13  Fees.

    (a) Policy. Where applicable, fees for copying records will be 
charged in accordance with the schedule set forth in this section. Fees 
may only be charged where an individual requests that a copy be made of 
the record to which he is granted access. No fee may be charged for 
making a search of the system of records whether the search is manual, 
mechanical, or electronic. 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) Fee schedule. The fee schedule for the Department is as follows:
    (1) Copying of records susceptible to photocopying--$.10 per page.
    (2) 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.
    (3) No charge will be made if the total amount of copying does not 
exceed $25.

          Appendix A to Part 5b--Employee Standards of Conduct

    (a) General. All employees are required to be aware of their 
responsibilities under the Privacy Act of 1974, 5 U.S.C. 552a. 
Regulations implementing the Act are set forth in 34 CFR 5b. Instruction 
on the requirements of the Act and regulation shall be provided to all 
new employees of the Department. In addition, supervisors shall be 
responsible for assuring that employees who are working with systems of 
records or who undertake new duties which require the use of systems of 
records are informed of their responsibilities. Supervisors shall also 
be responsible for assuring that all employees who work with such 
systems of records are periodically reminded of the requirements of the 
Act and are advised of any new provisions or interpretations of the Act.
    (b) Penalties. (1) All employees must guard against improper 
disclosure of records which are governed by the Act. Because of the 
serious consequences of improper invasions of personal privacy, 
employees may be subject to disciplinary action and criminal prosecution 
for knowing and willful violations of the Act and regulation. In 
addition, employees may also be subject to disciplinary action for 
unknowing or unwillful violations, where the employee had notice of the 
provisions of the Act and regulations and failed to inform himself 
sufficiently or to conduct himself in accordance with the requirements 
to avoid violations.
    (2) The Department may be subjected to civil liability for the 
following actions undertaken by its employees:
    (a) Making a determination under the Act and Sec. Sec. 5b.7 and 
5b.8 of the regulation not to amend an individual's record in accordance 
with his request, or failing to make such review in conformity with 
those provisions;
    (b) Refusing to comply with an individual's request for notification 
of or access to a record pertaining to him;

[[Page 24]]

    (c) Failing to maintain any record pertaining to any individual with 
such accuracy, relevance, timeliness, and completeness as is necessary 
to assure fairness in any determination relating to the qualifications, 
character, rights, or opportunities of, or benefits to the individual 
that may be made on the basis of such a record, and consequently a 
determination is made which is adverse to the individual; or
    (d) Failing to comply with any other provision of the Act or any 
rule promulgated thereunder, in such a way as to have an adverse effect 
on an individual.
    (3) ``An employee may be personally subject to criminal liability as 
set forth below and in 5 U.S.C. 552a (i):
    (a) Any officer or employee of an agency, who by virtue of his 
employment or official position, has possession of, or access to, agency 
records which contain individually identifiable information the 
disclosure of which is prohibited by the Act or by rules or regulations 
established thereunder, and who, knowing that disclosure of the specific 
material is so prohibited, willfully discloses the material in any 
manner to any person or agency not entitled to receive it, shall be 
guilty of a misdemeanor and fined not more than $5,000.''
    (b) ``Any officer or employee of any agency who willfully maintains 
a system of records without meeting the notice requirements [of the Act] 
shall be guilty of a misdemeanor and fined not more than $5,000.''
    (c) Rules Governing Employees Not Working With Systems of Records. 
Employees whose duties do not involve working with systems of records 
will not generally disclose to any one, without specific authorization 
from their supervisors, records pertaining to employees or other 
individuals which by reason of their official duties are available to 
them. Notwithstanding the above, the following records concerning 
Federal employees are a matter of public record and no further 
authorization is necessary for disclosure:
    (1) Name and title of individual.
    (2) Grade classification or equivalent and annual rate of salary.
    (3) Position description.
    (4) Location of duty station, including room number and telephone 
number.

In addition, employees shall disclose records which are listed in the 
Department's Freedom of Information Regulation as being available to the 
public. Requests for other records will be referred to the responsible 
Department official. This does not preclude employees from discussing 
matters which are known to them personally, and without resort to a 
record, to official investigators of Federal agencies for official 
purposes such as suitability checks, Equal Employment Opportunity 
investigations, adverse action proceedings, grievance proceedings, etc.
    (d) Rules governing employees whose duties require use or reference 
to systems of records. Employees whose official duties require that they 
refer to, maintain, service, or otherwise deal with systems of records 
(hereinafter referred to as ``Systems Employees'') are governed by the 
general provisions. In addition, extra precautions are required and 
systems employees are held to higher standards of conduct.
    (1) Systems Employees shall:
    (a) Be informed with respect to their responsibilities under the 
Act;
    (b) Be alert to possible misuses of the system and report to their 
supervisors any potential or actual use of the system which they believe 
is not in compliance with the Act and regulation;
    (c) Make a disclosure of records within the Department only to an 
employee who has a legitimate need to know the record in the course of 
his official duties;
    (d) Maintain records as accurately as practicable.
    (e) Consult with a supervisor prior to taking any action where they 
are in doubt whether such action is in conformance with the Act and 
regulation.
    (2) Systems Employees shall not:
    (a) Disclose in any form records from a system of records except (1) 
with the consent or at the request of the subject individual; or (2) 
where its disclosure is permitted under Sec. 5b.9 of the regulation.
    (b) Permit unauthorized individuals to be present in controlled 
areas. Any unauthorized individuals observed in controlled areas shall 
be reported to a supervisor or to the guard force.
    (c) Knowingly or willfully take action which might subject the 
Department to civil liability.
    (d) Make any arrangements for the design development, or operation 
of any system of records without making reasonable effort to provide 
that the system can be maintained in accordance with the Act and 
regulation.
    (e) Contracting officers. In addition to any applicable provisions 
set forth above, those employees whose official duties involve entering 
into contracts on behalf of the Department shall also be governed by the 
following provisions:
    (1) Contracts for design, or development of systems and equipment. 
No contract for the design or development of a system of records, or for 
equipment to store, service or maintain a system of records shall be 
entered into unless the contracting officer has made reasonable effort 
to ensure that the product to be purchased is capable of being used 
without violation of the Act or regulation. Special attention shall be 
given to provision of physical safeguards.

[[Page 25]]

    (2) Contracts for the operation of systems and equipment. No 
contract for the design or development of a system of whom he feels 
appropriate, of all proposed contracts providing for the operation of 
systems of records shall be made prior to execution of the contracts to 
determine whether operation of the system of records is for the purpose 
of accomplishing a Department function. If a determination is made that 
the operation of the system is to accomplish a Department function, the 
contracting officer shall be responsible for including in the contract 
appropriate provisions to apply the provisions of the Act and regulation 
to the system, including prohibitions against improper release by the 
contractor, his employees, agents, or subcontractors.
    (3) Other service contracts. Contracting officers entering into 
general service contracts shall be responsible for determining the 
appropriateness of including provisions in the contract to prevent 
potential misuse (inadvertent or otherwise) by employees, agents, or 
subcontractors of the contractor.
    (f) Rules Governing Responsible Department Officials. In addition to 
the requirements for Systems Employees, responsible Department officials 
shall:
    (1) Respond to all requests for notification of or access, 
disclosure, or amendment of records in a timely fashion in accordance 
with the Act and regulation;
    (2) Make any amendment of records accurately and in a timely 
fashion;
    (3) Inform all persons whom the accounting records show have 
received copies of the record prior to the amendments of the correction; 
and
    (4) Associate any statement of disagreement with the disputed 
record, and
    (a) Transmit a copy of the statement to all persons whom the 
accounting records show have received a copy of the disputed record, and
    (b) Transmit that statement with any future disclosure.

 Appendix B to Part 5b--Routine Uses Applicable to More Than One System 
                       of Records Maintained by ED

    (1) In the event that a system of records maintained by this agency 
to carry out its functions indicates a violation or potential violation 
of law, whether civil, criminal or regulatory in nature, and whether 
arising by general statute or particular program statute, or by 
regulation, rule or order issued pursuant thereto, the relevant records 
in the system of records may be referred, as a routine use, to the 
appropriate agency, whether federal, or foreign, charged with the 
responsibility of investigating or prosecuting such violation or charged 
with enforcing or implementing the statute, or rule, regulation or order 
issued pursuant thereto.
    (2) Referrals may be made of assignments of research investigators 
and project monitors to specific research projects to the Smithsonian 
Institution to contribute to the Smithsonian Science Information 
Exchange, Inc.
    (3) In the event the Department deems it desirable or necessary, in 
determining whether particular records are required to be disclosed 
under the Freedom of Information Act, disclosure may be made to the 
Department of Justice for the purpose of obtaining its advice.
    (4) A record from this system of records may be disclosed as a 
``routine use'' to a federal, state or local agency maintaining civil, 
criminal or other relevant enforcement records or other pertinent 
records, such as current licenses, if necessary to obtain a record 
relevant to an agency decision concerning the hiring or retention of an 
employee, the issuance of a security clearance, the letting of a 
contract, or the issuance of a license, grant or other benefit.

A record from this system of records may be disclosed to a federal 
agency, in response to its request, in connection with the hiring or 
retention of an employee, the issuance of a security clearance, the 
reporting of an investigation of an employee, the letting of a contract, 
or the issuance of a license, grant, or other benefit by the requesting 
agency, to the extent that the record is relevant and necessary to the 
requesting agency's decision on the matter.
    (5) In the event that a system of records maintained by this agency 
to carry out its function indicates a violation or potential violation 
of law, whether civil, criminal or regulatory in nature, and whether 
arising by general statute or particular program statute, or by 
regulation, rule or order issued pursuant thereto, the relevant records 
in the system of records may be referred, as a routine use, to the 
appropriate agency, whether state or local charged with the 
responsibility of investigating or prosecuting such violation or charged 
with enforcing or implementing the statute, or rule, regulation or order 
issued pursuant thereto.
    (6) Where federal agencies having the power to subpoena other 
federal agencies' records, such as the Internal Revenue Service or the 
Civil Rights Commission, issue a subpoena to the Department for records 
in this system of records, the Department will make such records 
available.
    (7) Where a contract between a component of the Department and a 
labor organization recognized under E.O. 11491 provides that the agency 
will disclose personal records relevant to the organization's mission, 
records in this system of records may be disclosed to such organization.

[[Page 26]]

    (8) Where the appropriate official of the Department, pursuant to 
the Department's Freedom of Information Regulation determines that it is 
in the public interest to disclose a record which is otherwise exempt 
from mandatory disclosure, disclosure may be made from this system of 
records.
    (9) The Department contemplates that it will contract with a private 
firm for the purpose of collating, analyzing, aggregating or otherwise 
refining records in this system. Relevant records will be disclosed to 
such a contractor. The contractor shall be required to maintain Privacy 
Act safeguards with respect to such records.
    (10) To individuals and organizations, deemed qualified by the 
Secretary to carry out specific research solely for the purpose of 
carrying out such research.
    (11) Disclosures in the course of employee discipline or competence 
determination proceedings.

[45 FR 30808, May 9, 1980; 45 FR 37426, June 3, 1980]



PART 6_INVENTIONS AND PATENTS (GENERAL)--Table of Contents




Sec.
6.0 General policy.
6.1 Publication or patenting of inventions.
6.3 Licensing of Government-owned patents.
6.4 Central records; confidentiality.

    Authority: 5 U.S.C. 301.

    Source: 45 FR 30814, May 9, 1980, unless otherwise noted.



Sec. 6.0  General policy.

    Inventions developed through the resources and activities of the 
Department are a potential resource of great value to the public. It is 
the policy of the Department:
    (a) To safeguard the public interest in inventions developed by 
Department employees, contractors and grantees with the aid of public 
funds and facilities;
    (b) To encourage and recognize individual and cooperative 
achievement in research and investigations; and
    (c) To establish a procedure, consistent with pertinent statutes, 
Executive orders and general Government regulations, for the 
determination of rights and obligations relating to the patenting of 
inventions.



Sec. 6.1  Publication or patenting of inventions.

    It is the general policy of the Department that the results of 
Department research should be made widely, promptly and freely available 
to other research workers and to the public. This availability can 
generally be adequately preserved by the dedication of a Government-
owned invention to the public. Determinations to file a domestic patent 
application on inventions in which the Department has an interest will 
be made where the circumstances indicate that this is desirable in the 
public interest, and if it is practicable to do so. Department 
determinations not to apply for a domestic patent on employee inventions 
are subject to review and approval by the Commissioner of Patents. 
Except where deemed necessary for protecting the patent claim, the fact 
that a patent application has been or may be filed will not require any 
departure from normal policy regarding the dissemination of the results 
of Department research.



Sec. 6.3  Licensing of Government-owned patents.

    (a) Licenses to practice inventions covered by patents and pending 
patent applications owned by the U.S. Government as represented by this 
Department will generally be royalty free, revocable and nonexclusive. 
They will normally be issued to all applicants and will generally 
contain no limitations or standards relating to the quality or testing 
of the products to be manufactured, sold, or distributed thereunder.
    (b) Where it appears however that the public interest will be served 
under the circumstances of the particular case by licenses which impose 
conditions, such as those relating to quality or testing of products, 
requirement of payment of royalties to the Government, etc., or by the 
issuance of limited exclusive licenses by the Secretary after notice and 
opportunity for hearing thereon, such licenses may be issued.



Sec. 6.4  Central records; confidentiality.

    Central files and records shall be maintained of all inventions, 
patents, and licenses in which the Department has an interest, together 
with a record

[[Page 27]]

of all licenses issued by the Department under such patents. Invention 
reports required from employees or others for the purpose of obtaining 
determinations of ownership, and documents and information obtained for 
the purpose of prosecuting patent applications shall be confidential and 
shall be disclosed only as required for official purposes or with the 
consent of the inventor.



PART 7_EMPLOYEE INVENTIONS--Table of Contents




Sec.
7.0 Who are employees.
7.1 Duty of employee to report inventions.
7.3 Determination as to domestic rights.
7.4 Option to acquire foreign rights.
7.7 Notice to employee of determination.
7.8 Employee's right of appeal.

    Authority: E.O. 10096, 15 FR 391; 3 CFR 1950 Supp.; E.O. 10930, 26 
FR 2583; 3 CFR 1961 Supp.

    Source: 45 FR 30814, May 9, 1980, unless otherwise noted.



Sec. 7.0  Who are employees.

    As used in this part, the term Government employee means any officer 
or employee, civilian or military, except such part-time employees or 
part-time consultants as may be excluded therefrom by a determination 
made in writing by the head of the employee's office or constituent 
organization, pursuant to an exemption approved by the Commissioner of 
Patents that to include him or them would be impracticable or 
inequitable, given the reasons therefor. A person shall not be 
considered to be a part-time employee or part-time consultant for this 
purpose unless the terms of his employment contemplate that he shall 
work for less than the minimum number of hours per day, or less than a 
minimum number of days per week, or less than the minimum number of 
weeks per year, regularly required of full-time employees of his class.



Sec. 7.1  Duty of employee to report inventions.

    Every Department employee is required to report to the Secretary in 
accordance with the procedures established therefor, every invention 
made by him (whether or not jointly with others) which bears any 
relation to his official duties or which was made in whole or in any 
part during working hours, or with any contribution of Government 
facilities, equipment, material, funds, or information, or of time or 
services of other Government employees on official duty.



Sec. 7.3  Determination as to domestic rights.

    The determination of the ownership of the domestic right, title, and 
interest in and to an invention which is or may be patentable, made by a 
Government employee while under the administrative jurisdiction of the 
Department, will be made in writing by the Secretary in accordance with 
the provisions of Executive Order 10096 and Government-wide regulations 
issued thereunder by the Commissioner of Patents as follows:
    (a) The Government as represented by the Secretary shall obtain the 
entire domestic right, title and interest in and to all inventions made 
by any Government employee (1) during working hours, or (2) with a 
contribution by the Government of facilities, equipment, materials, 
funds, or information, or of time or services of other Government 
employees on official duty, or (3) which bear a direct relation to or 
are made in consequence of the official duties of the inventor.
    (b) In any case where the contribution of the Government, as 
measured by any one or more of the criteria set forth in paragraph (a) 
of this section, to the invention is insufficient equitably to justify a 
requirement of assignment to the Government of the entire domestic 
right, title and interest in and to such invention, or in any case where 
the Government has insufficient interest in an invention to obtain the 
entire domestic right, title, and interest therein (although the 
Government could obtain same under paragraph (a) of this section), the 
Department, subject to the approval of the Commissioner, shall leave 
title to such invention in the employee, subject, however, to the 
reservation to the Government of a nonexclusive, irrevocable, royalty-
free license in the invention with power to grant licenses for all 
governmental purposes, such reservation to

[[Page 28]]

appear, where practicable, in any patent, domestic or foreign, which may 
issue on such invention.
    (c) In applying the provisions of paragraphs (a) and (b) of this 
section, to the facts and circumstances relating to the making of any 
particular invention, it shall be presumed that an invention made by an 
employee who is employed or assigned (1) to invent or improve or perfect 
any art, machine, manufacture, or composition of matter, (2) to conduct 
or perform research, development work, or both, (3) to supervise, 
direct, coordinate, or review Government financed or conducted research, 
development work, or both, or (4) to act in a liaison capacity among 
governmental or nongovernmental agencies or individuals engaged in such 
work, falls within the provisions of paragraph (a) of this section, and 
it shall be presumed that any invention made by any other employee falls 
within the provisions of paragraph (b) of this section. Either 
presumption may be rebutted by a showing of the facts and circumstances 
and shall not preclude a determination that these facts and 
circumstances justify leaving the entire right, title and interest in 
and to the invention in the Government employee, subject to law.
    (d) In any case wherein the Government neither (1) obtains the 
entire domestic right, title and interest in and to an invention 
pursuant to the provisions of paragraph (a) of this section, nor (2) 
reserves a nonexclusive, irrevocable, royalty-free license in the 
invention, with power to grant licenses for all governmental purposes, 
pursuant to the provisions of paragraph (b) of this section, the 
Government shall leave the entire right, title and interest in and to 
the invention in the Government employee, subject to law.



Sec. 7.4  Option to acquire foreign rights.

    In any case where it is determined that all domestic rights should 
be assigned to the Government, it shall further be determined, pursuant 
to Executive Order 9865 and Government-wide regulations issued 
thereunder, that the Government shall reserve an option to require the 
assignment of such rights in all or in any specified foreign countries. 
In case where the inventor is not required to assign the patent rights 
in any foreign country or countries to the Government or the Government 
fails to exercise its option within such period of time as may be 
provided by regulations issued by the Commissioner of Patents, any 
application for a patent which may be filed in such country or countries 
by the inventor or his assignee shall nevertheless be subject to a 
nonexclusive, irrevocable, royalty-free license to the Government for 
all governmental purposes, including the power to issue sublicenses for 
use in behalf of the Government and/or in furtherance of the foreign 
policies of the Government.



Sec. 7.7  Notice to employee of determination.

    The employee-inventor shall be notified in writing of the 
Department's determination of the rights to his invention and of his 
right of appeal, if any. Notice need not be given if the employee stated 
in writing that he would agree to the determination of ownership which 
was in fact made.



Sec. 7.8  Employee's right of appeal.

    An employee who is aggrieved by a determination of the Department 
may appeal to the Commissioner of Patents, pursuant to section 4(d) of 
Executive Order 10096, as amended by Executive Order 10930, and 
regulations issued thereunder, by filing a written appeal with the 
Commissioner, in duplicate, and a copy of the appeal with the Secretary 
within 30 days (or such longer period as the Commissioner may, for good 
cause, fix in any case) after receiving written notice of such 
determination.



PART 8_DEMANDS FOR TESTIMONY OR RECORDS IN LEGAL PROCEEDINGS
--Table of Contents




Sec.
8.1 What is the scope and applicability of this part?
8.2 What definitions apply?
8.3 What are the requirements for submitting a demand for testimony or 
          records?
8.4 What procedures are followed in response to a demand for testimony?
8.5 What procedures are followed in response to a demand for records?


[[Page 29]]


    Authority: 5 U.S.C. 301; 5 U.S.C. 552; 20 U.S.C. 3474, unless 
otherwise noted.

    Source: 57 FR 34646, Aug. 5, 1992, unless otherwise noted.



Sec. 8.1  What is the scope and applicability of this part?

    (a) Except as provided in paragraph (c) of this section, this part 
establishes the procedures to be followed if the Department or any 
departmental employee receives a demand for--
    (1) Testimony by an employee concerning--
    (i) Records contained in the files of the Department;
    (ii) Information relating to records contained in the files of the 
Department; or
    (iii) Information or records acquired or produced by the employee in 
the course of his or her official duties or because of the employee's 
official status; or
    (2) The production or disclosure of any information or records 
referred to in paragraph (a)(1) of this section.
    (b) This part does not create any right or benefit, substantive or 
procedural, enforceable by any person against the Department.
    (c) This part does not apply to--
    (1) Any proceeding in which the United States is a party before an 
adjudicative authority;
    (2) A demand for testimony or records made by either House of 
Congress or, to the extent of matter within its jurisdiction, any 
committee or subcommittee of Congress; or
    (3) An appearance by an employee in his or her private capacity in a 
legal proceeding in which the employee's testimony does not relate to 
the mission or functions of the Department.

(Authority: 5 U.S.C. 301; 20 U.S.C. 3474)



Sec. 8.2  What definitions apply?

    The following definitions apply to this part:
    Adjudicative authority includes, but is not limited to--
    (1) A court of law or other judicial forums; and
    (2) Mediation, arbitration, or other forums for dispute resolution.
    Demand includes a subpoena, subpoena duces tecum, request, order, or 
other notice for testimony or records arising in a legal proceeding.
    Department means the U.S. Department of Education.
    Employee means a current employee or official of the Department or 
of an advisory committee of the Department, including a special 
government employee, unless specifically provided otherwise in this 
part.
    Legal proceeding means--
    (1) A proceeding before an adjudicative authority;
    (2) A legislative proceeding, except for a proceeding before either 
House of Congress or before any committee or subcommittee of Congress, 
to the extent of matter within the committee's or subcommittee's 
jurisdiction; or
    (3) An administrative proceeding.
    Secretary means the Secretary of Education or an official or 
employee of the Department acting for the Secretary under a delegation 
of authority.
    Testimony means statements made in connection with a legal 
proceeding, including but not limited to statements in court or other 
forums, depositions, declarations, affidavits, or responses to 
interrogatories.
    United States means the Federal Government of the United States and 
any of its agencies or instrumentalities.

(Authority: 5 U.S.C. 301; 20 U.S.C. 3474)



Sec. 8.3  What are the requirements for submitting a demand for testimony 
or records?

    (a) A demand for testimony of an employee or former employee, or a 
demand for records issued pursuant to the rules governing the legal 
proceeding in which the demand arises--
    (1) Must be in writing; and
    (2) Must state the nature of the requested testimony or records and 
why the information sought is unavailable by any other means.
    (b) Service of a demand for testimony of an employee or former 
employee must be made on the employee or former employee whose testimony 
is demanded, with a copy simultaneously delivered to the General 
Counsel, U.S. Department of Education, Office of the General Counsel, 
400 Maryland Avenue, SW., room 4083, FOB-6, Washington, DC 20202-2100.

[[Page 30]]

    (c) Service of a demand for records, as described in Sec. 
8.5(a)(1), must be made on an employee or former employee who has 
custody of the records, with a copy simultaneously delivered to the 
General Counsel at the address listed in paragraph (b) of this section. 
For assistance in identifying the custodian of the specific records 
demanded, contact the Records Management Branch Chief, Office of 
Information Resources Management, U.S. Department of Education, 7th and 
D Streets, SW., ROB-3, Washington, DC 20202-4753.

(Authority: 5 U.S.C. 301; 20 U.S.C. 3474)

(Approved by the Office of Management and Budget under control number 
1801-0002)

[57 FR 34646, Aug. 5, 1992, as amended at 58 FR 7860, Feb. 9, 1993]



Sec. 8.4  What procedures are followed in response to a demand for 
testimony?

    (a) After an employee receives a demand for testimony, the employee 
shall immediately notify the Secretary and request instructions.
    (b) An employee may not give testimony without the prior written 
authorization of the Secretary.
    (c)(1) The Secretary may allow an employee to testify if the 
Secretary determines that the demand satisfies the requirements of Sec. 
8.3 and that granting permission--
    (i) Would be appropriate under the rules of procedure governing the 
matter in which the demand arises and other applicable laws, rules, and 
regulations; and
    (ii) Would not be contrary to an interest of the United States, 
which includes furthering a public interest of the Department and 
protecting the human and financial resources of the United States.
    (2) The Secretary may establish conditions under which the employee 
may testify.
    (d) If a response to a demand for testimony is required before the 
Secretary determines whether to allow an employee to testify, the 
employee or counsel for the employee shall--
    (1) Inform the court or other authority of the regulations in this 
part; and
    (2) Request that the demand be stayed pending the employee's receipt 
of the Secretary's instructions.
    (e) If the court or other authority declines the request for a stay, 
or rules that the employee must comply with the demand regardless of the 
Secretary's instructions, the employee or counsel for the employee shall 
respectfully decline to comply with the demand, citing United States ex 
rel. Touhy v. Ragen, 340 U.S. 462 (1951), and the regulations in this 
part.

(Authority: 5 U.S.C. 301; 20 U.S.C. 3474)



Sec. 8.5  What procedures are followed in response to a demand for 
records?

    (a)(1) After an employee receives a demand for records issued 
pursuant to the rules governing the legal proceeding in which the demand 
arises, the employee shall immediately notify the Secretary and request 
instructions.
    (2) If an employee receives any other demand for records, the 
Department--
    (i) Considers the demand to be a request for records under the 
Freedom of Information Act; and
    (ii) Handles the demand under rules governing public disclosure, as 
established in 34 CFR part 5.
    (b) An employee may not produce records in response to a demand as 
described in paragraph (a)(1) of this section without the prior written 
authorization of the Secretary.
    (c) The Secretary may make these records available if the Secretary 
determines that the demand satisfies the requirements of Sec. 8.3 and 
that disclosure--
    (1) Would be appropriate under the rules of procedure governing the 
matter in which the demand arises and other applicable laws, rules, and 
regulations; and
    (2) Would not be contrary to an interest of the United States, which 
includes furthering a public interest of the Department and protecting 
the human and financial resources of the United States.
    (d) If a response to a demand for records as described in paragraph 
(a)(1) of this section is required before the Secretary determines 
whether to allow an employee to produce those records, the employee or 
counsel for the employee shall--
    (1) Inform the court or other authority of the regulations in this 
part; and

[[Page 31]]

    (2) Request that the demand be stayed pending the employee's receipt 
of the Secretary's instructions.
    (e) If the court or other authority declines the request for a stay, 
or rules that the employee must comply with the demand regardless of the 
Secretary's instructions, the employee or counsel for the employee shall 
respectfully decline to comply with the demand, citing United States ex 
rel. Touhy v. Ragen, 340 U.S. 462 (1951), and the regulations in this 
part.

(Authority: 5 U.S.C. 301; 5 U.S.C. 552; 20 U.S.C. 3474)



PART 12_DISPOSAL AND UTILIZATION OF SURPLUS FEDERAL REAL PROPERTY FOR 
EDUCATIONAL PURPOSES--Table of Contents




                            Subpart A_General

Sec.
12.1 What is the scope of this part?
12.2 What definitions apply?
12.3 What other regulations apply to this program?

         Subpart B_Distribution of Surplus Federal Real Property

12.4 How does the Secretary provide notice of availability of surplus 
          Federal real property?
12.5 Who may apply for surplus Federal real property?
12.6 What must an application for surplus Federal real property contain?
12.7 How is surplus Federal real property disposed of when there is more 
          than one applicant?
12.8 What transfer or lease instruments does the Secretary use?
12.9 What warranties does the Secretary give?
12.10 How is a Public Benefit Allowance (PBA) calculated?

         Subpart C_Conditions Applicable to Transfers or Leases

12.11 What statutory provisions and Executive Orders apply to transfers 
          of surplus Federal real property?
12.12 What are the terms and conditions of transfers or leases of 
          surplus Federal real property?
12.13 When is use of the transferred surplus Federal real property by 
          entities other than the transferee or lessee permissible?

                          Subpart D_Enforcement

12.14 What are the sanctions for noncompliance with a term or condition 
          of a transfer or lease of surplus Federal real property?

                          Subpart E_Abrogation

12.15 What are the procedures for securing an abrogation of the 
          conditions and restrictions contained in the conveyance 
          instrument?

Appendix A to Part 12--Public Benefit Allowance for Transfer of Surplus 
          Federal Real Property for Educational Purposes

    Authority: 40 U.S.C. 471-488; 20 U.S.C. 3401 et seq.; 42 U.S.C. 
2000d (1) et seq.; 20 U.S.C. 1681 et seq.; 29 U.S.C. 794 et seq.; 42 
U.S.C. 4332.

    Source: 57 FR 60394, Dec. 18, 1992, unless otherwise noted.



                            Subpart A_General



Sec. 12.1  What is the scope of this part?

    This part is applicable to surplus Federal real property located 
within any State that is appropriate for assignment to, or that has been 
assigned to, the Secretary by the Administrator for transfer for 
educational purposes, as provided for in section 203(k) of the Federal 
Property and Administrative Services Act of 1949, as amended, 63 Stat. 
377 (40 U.S.C. 471 et seq.).

(Authority: 40 U.S.C. 484(k))



Sec. 12.2  What definitions apply?

    (a) Definitions in the Act. The following terms used in this part 
are defined in section 472 of the Act:

Administrator
Surplus property

    (b) Definitions in the Education Department General Administrative 
Regulations (EDGAR). The following terms used in this part are defined 
in 34 CFR 77.1:

Department
Secretary
State

    (c) Other definitions: The following definitions also apply to this 
part:
    Abrogation means the procedure the Secretary may use to release the 
transferee of surplus Federal real property from the covenants, 
conditions, reservations, and restrictions contained in

[[Page 32]]

the conveyance instrument before the term of the instrument expires.
    Act means the Federal Property and Administrative Services Act of 
1949, as amended, 63 Stat. 377 (40 U.S.C. 471 et seq.).
    Applicant means an eligible entity as described in Sec. 12.5 that 
formally applies to be a transferee or lessee of surplus Federal real 
property, using a public benefit allowance (PBA) under the Act.
    Lessee, except as used in Sec. 12.14(a)(5), means an entity that is 
given temporary possession, but not title, to surplus Federal real 
property by the Secretary for educational purposes.
    Nonprofit institution means any institution, organization, or 
association, whether incorporated or unincorporated--
    (1) The net earnings of which do not inure or may not lawfully inure 
to the benefit of any private shareholder or individual; and
    (2) That has been determined by the Internal Revenue Service to be 
tax-exempt under section 501(c)(3) of title 26.
    Off-site property means surplus buildings and improvements--
including any related personal property--that are capable of being 
removed from the underlying land and that are transferred by the 
Secretary without transferring the underlying real property.
    On-site property means surplus Federal real property, including any 
related personal property--other than off-site property.
    Period of restriction means that period during which the surplus 
Federal real property transferred for educational purposes must be used 
by the transferee or lessee in accordance with covenants, conditions, 
and any other restrictions contained in the conveyance instrument.
    Program and plan of use means the educational activities to be 
conducted by the transferee or lessee using the surplus Federal real 
property, as described in the application for that property.
    Public benefit allowance (``PBA'') means the credit, calculated in 
accordance with appendix A to this part, given to a transferee or lessee 
which is applied against the fair market value of the surplus Federal 
real property at the time of the transfer or lease of such property in 
exchange for the proposed educational use of the property by the 
transferee or lessee.
    Related personal property means any personal property--
    (1) That is located on and is an integral part of, or incidental to 
the operation of, the surplus Federal real property; or
    (2) That is determined by the Administrator to be otherwise related 
to the surplus Federal real property.
    Surplus Federal real property means the property assigned or 
suitable for assignment to the Secretary by the Administrator for 
disposal under the Act.
    Transfer means to sell and convey title to surplus Federal real 
property for educational purposes as described in this part.
    Transferee means that entity which has purchased and acquired title 
to the surplus Federal real property for educational purposes pursuant 
to section 203(k) of the Act.

(Authority: 40 U.S.C. 472 and 20 U.S.C. 3401 et seq.)



Sec. 12.3  What other regulations apply to this program?

    The following regulations apply to this program:
    (a) 34 CFR parts 100, 104, and 106.
    (b) 41 CFR part 101-47.
    (c) 34 CFR part 85.

(Authority: 40 U.S.C. 484(k); 42 U.S.C. 2000d-1 et seq.; 29 U.S.C. 794 
et seq.; 20 U.S.C. 1681 et seq.; Executive Order 12549; and 20 U.S.C. 
3474)



         Subpart B_Distribution of Surplus Federal Real Property



Sec. 12.4  How does the Secretary provide notice of availability of 
surplus Federal real property?

    The Secretary notifies potential applicants of the availability of 
surplus Federal real property for transfer for educational uses in 
accordance with 41 CFR 101-47.308-4.

(Authority: 40 U.S.C. 484(k)(1))



Sec. 12.5  Who may apply for surplus Federal real property?

    The following entities may apply for surplus Federal real property:
    (a) A State.

[[Page 33]]

    (b) A political subdivision or instrumentality of a State.
    (c) A tax-supported institution.
    (d) A nonprofit institution.
    (e) Any combination of these entities.

(Authority: 40 U.S.C. 484(k)(1)(A))



Sec. 12.6  What must an application for surplus Federal real property 
contain?

    An application for surplus Federal real property must--
    (a) Contain a program and plan of use;
    (b) Contain a certification from the applicant that the proposed 
program is not in conflict with State or local zoning restrictions, 
building codes, or similar limitations;
    (c) Demonstrate that the proposed program and plan of use of the 
surplus Federal real property is for a purpose that the applicant is 
authorized to carry out;
    (d) Demonstrate that the applicant is able, willing, and authorized 
to assume immediate custody, use, care, and maintenance of the surplus 
Federal real property;
    (e) Demonstrate that the applicant is able, willing, and authorized 
to pay the administrative expenses incident to the transfer or lease;
    (f) Demonstrate that the applicant has the necessary funds, or the 
ability to obtain those funds immediately upon transfer or lease, to 
carry out the proposed program and plan of use for the surplus Federal 
real property;
    (g) Demonstrate that the applicant has an immediate need and ability 
to use all of the surplus Federal real property for which it is 
applying;
    (h) Demonstrate that the surplus Federal real property is needed for 
educational purposes at the time of application and that it is so needed 
for the duration of the period of restriction;
    (i) Demonstrate that the surplus Federal real property is suitable 
or adaptable to the proposed program and plan of use; and
    (j) Provide information requested by the Secretary in the notice of 
availability, including information of the effect of the proposed 
program and plan of use on the environment.

(Approved by the Office of Management and Budget under control number 
1880-0524)

(Authority: 40 U.S.C. 484(k))



Sec. 12.7  How is surplus Federal real property disposed of when there 
is more than one applicant?

    (a) If there is more than one applicant for the same surplus Federal 
real property, the Secretary transfers or leases the property to the 
applicant whose proposed program and plan of use the Secretary 
determines provides the greatest public benefit, using the criteria 
contained in appendix A to this part that broadly address the weight 
given to each type of entity applying and its proposed program and plan 
of use. (See example in Sec. 12.10(d)).
    (b) If, after applying the criteria described in paragraph (a) of 
this section, two or more applicants are rated equally, the Secretary 
transfers or leases the property to one of the applicants after--
    (1) Determining the need for each applicant's proposed educational 
use at the site of the surplus Federal real property;
    (2) Considering the quality of each applicant's proposed program and 
plan of use; and
    (3) Considering each applicant's ability to carry out its proposed 
program and plan of use.
    (c) If the Secretary determines that the surplus Federal real 
property is capable of serving more than one applicant, the Secretary 
may apportion it to fit the needs of as many applicants as is 
practicable.
    (d)(1) The Secretary generally transfers surplus Federal real 
property to a selected applicant that meets the requirements of this 
part.
    (2) Alternatively, the Secretary may lease surplus Federal real 
property to a selected applicant that meets the requirements of this 
part if the Secretary determines that a lease will promote the most 
effective use of the property consistent with the purposes of this part 
or if having a lease is otherwise in the best interest of the United 
States, as determined by the Secretary.

(Authority: 40 U.S.C. 484(k))

[[Page 34]]



Sec. 12.8  What transfer or lease instruments does the Secretary use?

    (a) The Secretary transfers or leases surplus Federal real property 
using transfer or lease instruments that the Secretary prescribes.
    (b) The transfer or lease instrument contains the applicable terms 
and conditions described in this part and any other terms and conditions 
the Secretary or Administrator determines are appropriate or necessary.

(Authority: 40 U.S.C. 484(c))



Sec. 12.9  What warranties does the Secretary give?

    The Secretary transfers or leases surplus Federal real property on 
an ``as is, where is,'' basis without warranty of any kind.

(Authority: 40 U.S.C. 484(k)(1))



Sec. 12.10  How is a Public Benefit Allowance (PBA) calculated?

    (a) The Secretary calculates a PBA in accordance with the provisions 
of appendix A to this part taking into account the nature of the 
applicant, and the need for, impact of, and type of program and plan of 
use for the property, as described in that appendix.
    (b) The following are illustrative examples of how a PBA would be 
calculated and applied under appendix A:
    (1) Entity A is a specialized school that has had a building 
destroyed by fire, and that has existing facilities determined by the 
Secretary to be between 26 and 50% inadequate. It is proposing to use 
the surplus Federal real property to add a new physical education 
program. Entity A would receive a basic PBA of 70%, a 10% hardship 
organization allowance, a 20% allowance for inadequacy of existing 
school plant facilities, and a 10% utilization allowance for 
introduction of new instructional programs. Entity A would have a total 
PBA of 110%. If Entity A is awarded the surplus Federal real property, 
it would not be required to pay any cash for the surplus Federal real 
property, since the total PBA exceeds 100%.
    (2) Entity B proposes to use the surplus Federal real property for 
nature walks. Because this qualifies as an outdoor educational program, 
Entity B would receive a basic PBA of 40%. If Entity B is awarded the 
surplus Federal real property, it would be required to pay 60% of the 
fair market value of the surplus Federal real property in cash at the 
time of the transfer.
    (3) Entity C is an accredited university, has an ROTC unit, and 
proposes to use the surplus Federal real property for a school health 
clinic and for special education of the physically handicapped. Entity C 
would receive a basic PBA of 50% (as a college or university), a 20% 
accreditation organization allowance (accredited college or university), 
a 10% public service training organization allowance (ROTC), a 10% 
student health and welfare utilization allowance (school health clinic), 
and a 10% service to the handicapped utilization allowance (education of 
the physically handicapped). Entity C would have a total PBA of 100%. If 
Entity C is awarded the surplus Federal real property, it would not be 
required to pay any cash for the surplus Federal real property, since 
the total PBA is 100%.
    (4) Entities A, B, and C all submit applications for the same 
surplus Federal real property. Unless the Secretary decides to apportion 
it, the Secretary transfers or leases the surplus Federal real property 
to Entity A, since its proposed program and plan of use has the highest 
total PBA.

(Authority: 40 U.S.C. 484(k)(1)(c))



         Subpart C_Conditions Applicable to Transfers or Leases



Sec. 12.11  What statutory provisions and Executive Orders apply to 
transfers of surplus Federal real property?

    The Secretary directs the transferee or lessee to comply with 
applicable provisions of the following statutes and Executive Orders 
prior to, or immediately upon, transfer or lease, as applicable:
    (a) National Environmental Policy Act of 1969, 42 U.S.C. 4332.
    (b) National Historic Preservation Act of 1966, 16 U.S.C. 470.
    (c) National Flood Insurance Act of 1968, 42 U.S.C. 4001 et seq.
    (d) Floodplain Management, Exec. Order No. 11988, 42 FR 26951 (May 
25, 1977).

[[Page 35]]

    (e) Protection of Wetlands, Exec. Order No. 11990, 42 FR 26961 (May 
25, 1977).
    (f) Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000(d)(1) 
et seq.
    (g) Title IX of the Education Amendments of 1972, 20 U.S.C. 1681 et 
seq.
    (h) Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. 794 et 
seq.
    (i) Age Discrimination Act of 1975, 42 U.S.C. 1601 et seq.
    (j) Any other applicable Federal or State laws and Executive Orders.

(Authority: 40 U.S.C. 484(k))

(Approved by the Office of Management and Budget under control number 
1880-0524)



Sec. 12.12  What are the terms and conditions of transfers or leases of 
surplus Federal real property?

    (a) General terms and conditions for transfers and leases. The 
following general terms and conditions apply to transfers and leases of 
surplus Federal real property under this part:
    (1) For the period provided in the transfer or lease instrument, the 
transferee or lessee shall use all of the surplus Federal real property 
it receives solely and continuously for its approved program and plan of 
use, in accordance with the Act and these regulations, except that--
    (i) The transferee or lessee has twelve (12) months from the date of 
transfer to place this surplus Federal real property into use, if the 
Secretary did not, at the time of transfer, approve in writing 
construction of major new facilities or major renovation of the 
property;
    (ii) The transferee or lessee has thirty-six (36) months from the 
date of transfer to place the surplus Federal real property into use, if 
the transferee or lessee proposes construction of major new facilities 
or major renovation of the property and the Secretary approves it in 
writing at the time of transfer; and
    (iii) The Secretary may permit use of the surplus Federal real 
property at any time during the period of restriction by an entity other 
than the transferee or lessee in accordance with Sec. 12.13.
    (2) The transferee or lessee may not modify its approved program and 
plan of use without the prior written consent of the Secretary.
    (3) The transferee or lessee may not sell, lease or sublease, rent, 
mortgage, encumber, or otherwise dispose of all or a portion of the 
surplus Federal real property or any interest therein without the prior 
written consent of the Secretary.
    (4) A transferee or lessee shall pay all administrative costs 
incidental to the transfer or lease including, but not limited to--
    (i) Transfer taxes;
    (ii) Surveys;
    (iii) Appraisals;
    (iv) Inventory costs;
    (v) Legal fees;
    (vi) Title search;
    (vii) Certificate or abstract expenses;
    (viii) Decontamination costs;
    (ix) Moving costs;
    (x) Recordation expenses;
    (xi) Other closing costs; and
    (xii) Service charges, if any, provided for by an agreement between 
the Secretary and the applicable State agency for Federal Property 
Assistance.
    (5) The transferee or lessee shall protect the residual financial 
interest of the United States in the surplus Federal real property by 
insurance or such other means as the Secretary directs.
    (6) The transferee or lessee shall file with the Secretary reports 
on its maintenance and use of the surplus Federal real property and any 
other reports required by the Secretary in accordance with the transfer 
or lease instrument.
    (7) Any other term or condition that the Secretary determines 
appropriate or necessary.
    (b) Additional terms and conditions for on-site transfers. The terms 
and conditions in the transfer, including those in paragraph (a) of this 
section, apply for a period not to exceed thirty (30) years.
    (c) Additional terms and conditions for off-site transfers. (1) The 
terms and conditions in the transfer, including those in paragraph (a) 
of this section, apply for a period equivalent to the estimated economic 
life of the property conveyed for a transfer of off-site surplus Federal 
real property.
    (2) In addition to the terms and conditions contained in paragraph 
(c) of this section, the Secretary may also require the transferee of 
off-site surplus Federal real property--
    (i) To post performance bonds;

[[Page 36]]

    (ii) To post performance guarantee deposits; or
    (iii) To give such other assurances as may be required by the 
Secretary or the holding agency to ensure adequate site clearance.
    (d) Additional terms and conditions for leases. In addition to the 
terms and conditions contained in paragraph (a) of this section, the 
Secretary requires, for leases of surplus Federal real property, that 
all terms and conditions apply to the initial lease agreement, and any 
renewal periods, unless specifically excluded in writing by the 
Secretary.

(Authority: 40 U.S.C. 484(k)(1))

(Approved by the Office of Management and Budget under control number 
1880-0524)



Sec. 12.13  When is use of the transferred surplus Federal real property 
by entities other than the transferee or lessee permissible?

    (a) By eligible entities. A transferee or lessee may permit the use 
of all or a portion of the surplus Federal real property by another 
eligible entity as described in Sec. 12.5, only upon those terms and 
conditions the Secretary determines appropriate if--
    (1) The Secretary determines that the proposed use would not 
substantially limit the program and plan of use by the transferee or 
lessee and that the use will not unduly burden the Department;
    (2) The Secretary's written consent is obtained by the transferee or 
lessee in advance; and
    (3) The Secretary approves the use instrument in advance and in 
writing.
    (b) By ineligible entities. A transferee or lessee may permit the 
use of a portion of the surplus Federal real property by an ineligible 
entity, one not described in Sec. 12.5, only upon those terms and 
conditions the Secretary determines appropriate if--
    (1) In accordance with paragraph (a) of this section, the Secretary 
makes the required determination and approves both the use and the use 
instrument;
    (2) The use is confined to a portion of the surplus Federal real 
property;
    (3) The use does not interfere with the approved program and plan of 
use for which the surplus Federal real property was conveyed; and
    (4) Any rental fees or other compensation for use are either 
remitted directly to the Secretary or are applied to purposes expressly 
approved in writing in advance by the Secretary.

(Authority: 40 U.S.C. 484(k)(4))



                          Subpart D_Enforcement



Sec. 12.14  What are the sanctions for noncompliance with a term or 
condition of a transfer or lease of surplus Federal real property?

    (a) General sanctions for noncompliance. The Secretary imposes any 
or all of the following sanctions, as applicable, to all transfers or 
leases of surplus Federal real property:
    (1) If all or a portion of, or any interest in, the transferred or 
leased surplus Federal real property is not used or is sold, leased or 
subleased, encumbered, disposed of, or used for purposes other than 
those in the approved program and plan of use, without the prior written 
consent of the Secretary, the Secretary may require that--
    (i) All revenues and the reasonable value of other benefits received 
by the transferee or lessee directly or indirectly from that use, as 
determined by the Secretary, be held in trust by the transferee or 
lessee for the United States subject to the direction and control of the 
Secretary;
    (ii) Title or possession to the transferred or leased surplus 
Federal real property and the right to immediate possession revert to 
the United States;
    (iii) The surplus Federal real property be transferred or leased to 
another eligible entity as the Secretary directs;
    (iv) The transferee or lessee abrogate the conditions and 
restrictions in the transfer or lease instrument in accordance with the 
provisions of Sec. 12.15;
    (v) The transferee or lessee place the surplus Federal real property 
into immediate use for an approved purpose and extend the period of 
restriction in the transfer or lease instrument for a term equivalent to 
the period during which the property was not fully and solely used for 
an approved use; or
    (vi) The transferee or lessee comply with any combination of the 
sanctions

[[Page 37]]

described in paragraph (a)(1) or (a)(3) of this section.
    (2) If title or possession reverts to the United States for 
noncompliance or is voluntarily reconveyed, the Secretary may require 
the transferee or lessee--
    (i) To reimburse the United States for the decrease in value of the 
transferred or leased surplus Federal real property not due to--
    (A) Reasonable wear and tear;
    (B) Acts of God; or
    (C) Reasonable alterations made by the transferee or lessee to adapt 
the surplus Federal real property to the approved program and plan of 
use for which it was transferred or leased;
    (ii) To reimburse the United States for any costs incurred in 
reverting title or possession;
    (iii) To forfeit any cash payments made by the transferee or lessee 
against the purchase or lease price of surplus Federal real property 
transferred;
    (iv) To take any other action directed by the Secretary; or
    (v) To comply with any combination of the provisions of paragraph 
(a)(3) of this section.
    (3) If the transferee or lessee does not put the surplus Federal 
real property into use within the applicable time limitation in Sec. 
12.12(a), the Secretary may require the transferee or lessee to make 
cash payments to the Secretary equivalent to the current fair market 
rental value of the surplus Federal real property for each month during 
which the program and plan of use has not been implemented.

(Authority: 40 U.S.C. 484(k)(4))

    (4) If the Secretary determines that a lessee of a transferee or a 
sublessee of a lessee is not complying with a term or condition of the 
lease, or if the lessee voluntarily surrenders the premises, the 
Secretary may require termination of the lease.

(Authority: 40 U.S.C. 484(k)(4)(A))

    (b) Additional sanction for noncompliance with off-site transfer. In 
addition to the sanctions in paragraph (a) of this section, if the 
Secretary determines that a transferee is not complying with a term or 
condition of a transfer of off-site surplus Federal real property, the 
Secretary may require that the unearned PBA become immediately due and 
payable in cash to the United States.

(Authority: 40 U.S.C. 484(k)(4)(A))



                          Subpart E_Abrogation



Sec. 12.15  What are the procedures for securing an abrogation of the 
conditions and restrictions contained in the conveyance instrument?

    (a) The Secretary may, in the Secretary's sole discretion, abrogate 
the conditions and restrictions in the transfer or lease instrument if--
    (1) The transferee or lessee submits to the Secretary a written 
request that the Secretary abrogate the conditions and restrictions in 
the conveyance instrument as to all or any portion of the surplus 
Federal real property;
    (2) The Secretary determines that the proposed abrogation is in the 
best interests of the United States;
    (3) The Secretary determines the terms and conditions under which 
the Secretary will consent to the proposed abrogation; and
    (4) The Secretary transmits the abrogation to the Administrator and 
there is no disapproval by the Administrator within thirty (30) days 
after notice to the Administrator.
    (b) The Secretary abrogates the conditions and restrictions in the 
transfer or lease instrument upon a cash payment to the Secretary based 
on the formula contained in the transfer or lease instrument and any 
other terms and conditions the Secretary deems appropriate to protect 
the interest of the United States.

(Authority: 40 U.S.C. 484(k)(4)(A)(iii))

[[Page 38]]

Appendix A to Part 12--Public Benefit Allowance for Transfer of Surplus 
           Federal Real Property for Educational Purposes \1\
---------------------------------------------------------------------------

    \1\ This Appendix applies to transfers of both on-site and off-site 
surplus property.

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Percent allowed
                                                       -----------------------------------------------------------------------------------------------------------------------------------------
                                                                                         Organization allowances                                    Utilization allowances
                                                          Basic   --------------------------------------------------------------------------------------------------------------------  Maximum
                    Classification                        public                                                Inadequacy of existing   Introduction  Student                           public
                                                         benefit                  Federal   Public             school plant facilities      of new      health             Service to   benefit
                                                        allowance  Accreditation   impact   service  Hardship ------------------------- instructional    and    Research  handicapped  allowance
                                                                                           training            10-25%  26-50%  51-100%     programs    welfare                            \4\
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Elementary or high schools............................        70   .............       10       10        10       10      20       30          10          10       10          10         100
Colleges or Universities..............................        50           20     .......       10        10       10      20       30          10          10       10          10         100
Specialized schools...................................        70   .............  .......       10        10       10      20       30          10          10       10          10         100
Public libraries or educational museums...............   \2\ 100   .............  .......  ........  ........  ......  ......  .......  .............  .......  ........  ...........   \2\ 100
School outdoor education..............................        40   .............  .......  ........  ........  ......  ......  .......          10      \3\ 10       10   ...........        70
Central administrative and/or service centers.........        80   .............  .......  ........  ........  ......  ......  .......  .............  .......  ........  ...........        80
Non-profit educational research organizations.........        50           20     .......       10   ........  ......  ......  .......          10          10  ........         10         100
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\2\ Applicable when this is the primary use to be made of the property. The public benefit allowance for the overall program is applicable when such facilities are conveyed as a minor
  component of other facilities.
\3\ This 10% may include an approvable recreation program which will be accessible to the public and entirely compatible with, but subordinate to, the educational program.
\4\ This column establishes the maximum discount from the fair market value for payment due from the transferee at the time of the transfer. This column does not apply for purposes of ranking
  applicants to determine to which applicant the property will be transferred. Competitive rankings are based on the absolute total of public benefit allowance points and are not limited to
  the 100% ceiling.

               Description of Terms Used in This Appendix

    Elementary or High School means an elementary school (including a 
kindergarten), high school, junior high school, junior-senior high 
school or elementary or secondary school system, that provides 
elementary or secondary education as determined under State law. 
However, it does not include a nursery school even though it may operate 
as part of a school system.
    College or University means a non-profit or public university or 
college, including a junior college, that provides postsecondary 
education.
    Specialized School means a vocational school, area trade school, 
school for the blind, or similar school.
    Public Library means a public library or public library service 
system, not a school library or library operated by non-profit, private 
organizations or institutions that may be open to the general public. 
School libraries receive the public benefit allowance in the appropriate 
school classification.
    Educational Museum means a museum that conducts courses on a 
continuing, not ad hoc, basis for students who receive credits from 
accredited postsecondary education institutions or school systems.
    School Outdoor Education means a separate facility for outdoor 
education as distinguished from components of a basic school. Components 
of a school such as playgrounds and athletic fields receive the basic 
allowance applicable for that type of school. The

[[Page 39]]

outdoor education must be located reasonably near the school system and 
may be open to and used by the general public, but only if the 
educational program for which the property is conveyed is given priority 
of use. This category does not include components of the school such as 
playgrounds and athletic fields, that are utilized during the normal 
school year, and are available to all students.
    Central Administrative and/or Service Center means administrative 
office space, equipment storage areas, and similar facilities.

                        Description of Allowances

    Basic Public Benefit Allowance means an allowance that is earned by 
an applicant that satisfies the requirements of Sec. 12.10 of this 
part.

                         Organization Allowance

    Accreditation means an allowance that is earned by any postsecondary 
educational institution, including a vocational or trade school, that is 
accredited by an accrediting agency recognized by the Secretary under 34 
CFR part 602.
    Federal Impact means an allowance that is earned by any local 
educational agency (LEA) qualifying for Federal financial assistance as 
the result of the impact of certain Federal activities upon a community, 
such as the following under Public Law 81-874 and Public Law 81-815: to 
any LEA charged by law with responsibility for education of children who 
reside on, or whose parents are employed on, Federal property, or both; 
to any LEA to which the Federal Government has caused a substantial and 
continuing financial burden as the result of the acquisition of a 
certain amount of Federal property since 1938; or to any LEA that 
urgently needs minimum school facilities due to a substantial increase 
in school membership as the result of new or increased Federal 
activities.
    Public Services Training means an allowance that is earned if the 
applicant has cadet or ROTC units or other personnel training contracts 
for the Federal or State governments. This is given to a school system 
only if the particular school receiving the property furnishes that 
training.
    Hardship means an allowance earned by an applicant that has suffered 
a significant facility loss because of fire, storm, flood, other 
disaster, or condemnation. This allowance is also earned if unusual 
conditions exist such as isolation or economic factors that require 
special consideration.
    Inadequacies of Existing Facilities means an allowance that is 
earned on a percentage basis depending on the degree of inadequacy 
considering both public and nonpublic facilities. Overall plant 
requirements are determined based on the relationship between the 
maximum enrollment accommodated in the present facilities, excluding 
double and night sessions and the anticipated enrollment if the 
facilities are transferred. Inadequacies may be computed for a component 
school unit such as a school farm, athletic field, facility for home 
economics, round-out school site, cafeteria, auditorium, teacherages, 
faculty housing, etc., only if the component is required to meet State 
standards. In that event, the State Department of Education will be 
required to provide a certification of the need. Component school unit 
inadequacies may only be related to a particular school and not to the 
entire school system.

                         Utilization Allowances

    Introduction of New Instructional Programs means an allowance that 
is earned if the proposed use of the property indicates that new 
programs will be added at a particular school. Examples of these new 
programs include those for vocational education, physical education, 
libraries, and similar programs.
    Student Health and Welfare means an allowance that is earned if the 
proposed program and plan of use of the property provides for cafeteria, 
clinic, infirmary, bus loading shelters, or other uses providing for the 
well-being and health of students and eliminating safety and health 
hazards.
    Research means an allowance that is earned if the proposed use of 
the property will be predominantly for research by faculty or graduate 
students under school auspices, or other primary educational research.
    Service to Handicapped means an allowance that is earned if the 
proposed program and plan of use for the property will be for special 
education for the physically or mentally handicapped.



PART 15_UNIFORM RELOCATION ASSISTANCE AND REAL PROPERTY ACQUISITION FOR 
FEDERAL AND FEDERALLY ASSISTED PROGRAMS--Table of Contents




    Authority: Section 213, Uniform Relocation Assistance and Real 
Property Acquisition Policies Act of 1970, Pub. L. 91-646, 84 Stat. 1894 
(42 U.S.C. 4601) as amended by the Surface Transportation and Uniform 
Relocation Assistance Act of 1987, Title IV of Pub. L. 100-17, 101 Stat. 
246-256 (42 U.S.C. 4601 note).



Sec. 15.1  Uniform relocation assistance and real property acquisition.

    Regulations and procedures for complying with the Uniform Relocation 
Assistance Act of 1970 (Pub. L. 91-646, 84 Stat. 1894, 42 U.S.C. 4601) 
as amended

[[Page 40]]

by the SUrface Transportation and Uniform Relocation Assistance Act of 
1987 (Title IV of Pub. L. 100-17, 101 Stat. 264-255, 42 U.S.C. 4601 
note) are set forth in 49 CFR part 24.

[52 FR 48021, Dec. 17, 1987]



PART 21_EQUAL ACCESS TO JUSTICE--Table of Contents




                            Subpart A_General

Sec.
21.1 Equal Access to Justice Act.
21.2 Time period when the Act applies.
21.3 Definitions.

          Subpart B_Which Adversary Adjudications Are Covered?

21.10 Adversary adjudications covered by the Act.
21.11 Effect of judicial review of adversary adjudication.

                Subpart C_How Is Eligibility Determined?

21.20 Types of eligible applicants.
21.21 Determination of net worth and number of employees.
21.22 Applicants representing others.

               Subpart D_How Does One Apply for an Award?

21.30 Time for filing application.
21.31 Contents of application.
21.32 Confidentiality of information about net worth.
21.33 Allowable fees and expenses.

     Subpart E_What Procedures Are Used in Considering Applications?

21.40 Filing and service of documents.
21.41 Answer to application.
21.42 Reply.
21.43 Comments by other parties.
21.44 Further proceedings.

                  Subpart F_How Are Awards Determined?

21.50 Standards for awards.
21.51 Initial decision in applications not subject to the CRRA.
21.52 Initial decision by an adjudicative officer in applications 
          subject to CRRA jurisdiction.
21.53 Final decision of the CRRA.
21.54 Review by the Secretary.
21.55 Final decision if the Secretary does not review.
21.56 Judicial review.

                     Subpart G_How Are Awards Paid?

21.60 Payment of awards.
21.61 Release.

    Authority: 5 U.S.C. 504, unless otherwise noted.

    Source: 58 FR 47192, Sept. 7, 1993, unless otherwise noted.



                            Subpart A_General



Sec. 21.1  Equal Access to Justice Act.

    (a) The Equal Access to Justice Act (the Act) provides for the award 
of fees and other expenses to applicants that--
    (1) Are prevailing parties in adversary adjudications before the 
Department of Education; and
    (2) Meet all other conditions of eligibility contained in this part.
    (b) An eligible applicant, as described in paragraph (a) of this 
section, is entitled to receive an award unless--
    (1) The adjudicative officer, the Civil Rights Reviewing Authority 
(CRRA), or the Secretary on review, determines that--
    (i) The Department's position was substantially justified; or
    (ii) Special circumstances make an award unjust; or
    (2) The adversary adjudication is under judicial review, in which 
case the applicant may receive an award only as described in Sec. 
21.11.
    (c) The determination under paragraph (b)(1)(i) of this section is 
based on the administrative record, as a whole, made during the 
adversary adjudication for which fees and other expenses are sought.

(Authority: 5 U.S.C. 504(a)(1) and (c)(1))



Sec. 21.2  Time period when the Act applies.

    The Act applies to any adversary adjudication covered under this 
part pending or commenced before the Department on or after August 5, 
1985.

(Authority: 5 U.S.C. 504(note))



Sec. 21.3  Definitions.

    The following definitions apply to this part:
    Act means the Equal Access to Justice Act.
    Adjudicative officer means the Administrative Law Judge, hearing 
examiner,

[[Page 41]]

or other deciding official who presided at the underlying adversary 
adjudication.

(Authority: 5 U.S.C. 504(b)(1)(D))

    Adversary adjudication means a proceeding--
    (1) Conducted by the Department for the formulation of an order or 
decision arising from a hearing on the record under the Administrative 
Procedure Act (5 U.S.C. 554);
    (2) Listed in Sec. 21.10; and
    (3) In which the position of the Department was represented by 
counsel or other representative who entered an appearance and 
participated in the proceeding.

(Authority: 5 U.S.C. 504(b)(1)(C))

    Application subject to the jurisdiction of the CRRA means an 
application for fees and expenses based on an underlying proceeding 
conducted under 34 CFR parts 100, 101, 104, 106, or 110.

(Authority: 5 U.S.C. 504(b)(1)(C); 20 U.S.C. 1681; 29 U.S.C. 794; 42 
U.S.C. 2000d-1 et seq. and 6101 et seq.)

    CRRA means the Civil Rights Reviewing Authority, the reviewing 
authority established by the Secretary to consider applications under 34 
CFR parts 100, 101, 104, 106, and 110.

(Authority: 5 U.S.C. 504(b)(1)(C); 20 U.S.C. 1681; 29 U.S.C. 794; 42 
U.S.C. 2000d-1 et seq. and 6101 et seq.)

    Department means the U.S. Department of Education.
    Department's counsel means counsel for the Department of Education 
or another Federal agency.
    Employee means:
    (1) A person who regularly performs services for an applicant--
    (i) For remuneration; and
    (ii) Under the applicant's direction and control.
    (2) A part-time or seasonal employee who performs services for an 
applicant--
    (i) For renumeration; and
    (ii) Under the applicant's direction and control.

(Authority: 5 U.S.C. 504(c)(1))

    Fees and other expenses means an eligible applicant's reasonable 
fees and expenses--
    (1) Related to the issues on which it was the prevailing party in 
the adversary adjudication; and
    (2) Further described in Sec. Sec. 21.33 and 21.50.

(Authority: 5 U.S.C. 504 (a)(1), (b)(1)(A), and (c)(1))

    Party means a ``person'' or a ``party'' as those terms are defined 
in the Administrative Procedure Act (5 U.S.C. 551(3)), including an 
individual, partnership, corporation, association, unit of local 
government, or public or private organization that meets the 
requirements in Sec. 21.20. The term does not include an agency of the 
Federal Government.

(Authority: 5 U.S.C. 504(b)(1)(B))

    Position of the Department means, in addition to the position taken 
by the Department in the adversary adjudication, the action or failure 
to act by the Department upon which the adversary adjudication is based.

(Authority: 5 U.S.C. 504 (a)(1) and (b)(1)(E))

    Secretary means the Secretary of the U.S. Department of Education or 
an official or employee of the Department acting for the Secretary under 
a delegation of authority.

(Authority: 5 U.S.C. 504 (b)(2) and (c)(1))



          Subpart B_Which Adversary Adjudications Are Covered?



Sec. 21.10  Adversary adjudications covered by the Act.

    The Act covers adversary adjudications under section 554 of title 5 
of the United States Code. These include the following:
    (a) Compliance proceedings under title VI of the Civil Rights Act of 
1964 (42 U.S.C. 2000d et seq.).
    (b) Compliance and enforcement proceedings under the Age 
Discrimination Act of 1975 (42 U.S.C. 6101 et seq.).
    (c) Compliance proceedings under title IX of the Education 
Amendments of 1972 (20 U.S.C. 1681 et seq.).
    (d) Compliance proceedings under section 504 of the Rehabilitation 
Act of 1973 (29 U.S.C. 794).
    (e) Withholding proceedings under section 1001 of Pub. L. 100-297 
(Hawkins-Stafford) (20 U.S.C. 2833).

[[Page 42]]

    (f) Proceedings under any of the following:
    (1) Section 5(g) of Pub. L. 81-874 (Financial Assistance for Local 
Educational Agencies in Areas Affected by Federal Activity) (20 U.S.C. 
240(g)).
    (2) Sections 6(c) or 11(a) of Pub. L. 81-815 (an act relating to the 
construction of school facilities in areas affected by Federal 
activities and for other purposes) (20 U.S.C. 636(c) or 641(a)).
    (3) Section 6 of Pub. L. 95-563 (Contract Disputes Act of 1978) (41 
U.S.C. 605).
    (4) Part E of the General Education Provisions Act (20 U.S.C. 1234 
et seq.).
    (g) Other adversary adjudications that fall within the coverage of 
the Act.

(Authority: 5 U.S.C. 504(c) and 554; 20 U.S.C. 1234(f)(2))



Sec. 21.11  Effect of judicial review of adversary adjudication.

    If a court reviews the underlying decision of an adversary 
adjudication covered under this part, an award of fees and other 
expenses may be made only under 28 U.S.C. 2412 (awards in certain 
judicial proceedings).

(Authority: 5 U.S.C. 504(c)(1); 28 U.S.C. 2412(d)(3))



                Subpart C_How Is Eligibility Determined?



Sec. 21.20  Types of eligible applicants.

    The following types of parties that prevail in adversary 
adjudications are eligible to apply under the Act for an award of fees 
and other expenses:
    (a) An individual who has a net worth of not more than $2 million.
    (b) Any owner of an unincorporated business who has--
    (1) A net worth of not more than $7 million, including both personal 
and business interests; and
    (2) Not more than 500 employees.
    (c) A charitable or other tax-exempt organization--
    (1) As described in section 501(c)(3) of the Internal Revenue Code 
of 1954 (26 U.S.C. 501(c)(3)); and
    (2) Having not more than 500 employees.
    (d) A cooperative association--
    (1) As defined in section 15(a) of the Agricultural Marketing Act 
(12 U.S.C. 1141(a)); and
    (2) Having not more than 500 employees.
    (e) Any other partnership, corporation, association, unit of local 
government, or organization that has--
    (1) A net worth of not more than $7 million; and
    (2) Not more than 500 employees.

(Authority: 5 U.S.C. 504(b)(1)(B))



Sec. 21.21  Determination of net worth and number of employees.

    (a) The adjudicative officer shall determine an applicant's net 
worth and number of employees as of the date the adversary adjudication 
was initiated.
    (b) In determining eligibility, the adjudicative officer shall 
include the net worth and number of employees of the applicant and all 
of the affiliates of the applicant.
    (c) For the purposes of paragraph (b) of this section, the 
adjudicative officer shall consider the following as an affiliate:
    (1) Any individual, corporation, or other entity that directly or 
indirectly owns or controls a majority of the voting shares or other 
interest of the applicant;
    (2) Any corporation or other entity of which the applicant directly 
or indirectly owns or controls a majority of the voting shares or other 
interest; and
    (3) Any entity with a financial relationship to the applicant that, 
in the determination of the adjudicative officer, constitutes an 
affiliation for the purposes of paragraph (b) of this section.
    (d) In determining the number of employees of an applicant and its 
affiliates, the adjudicative officer shall count part-time employees on 
a proportional basis.

(Authority: 5 U.S.C. 504(c)(1))



Sec. 21.22  Applicants representing others.

    If an applicant is a party in an adversary adjudication primarily on 
behalf of one or more persons or entities that are ineligible under this 
part, then the applicant is not eligible for an award.

(Authority: 5 U.S.C. 504 (b)(1)(B) and (c)(1))

[[Page 43]]



               Subpart D_How Does One Apply for an Award?



Sec. 21.30  Time for filing application.

    (a) In order to be considered for an award under this part, an 
applicant may file its application when it prevails in an adversary 
adjudication--or in a significant and discrete substantive portion of an 
adversary adjudication--but no later than 30 days after the Department's 
final disposition of the adversary adjudication.
    (b) In the case of a review or reconsideration of a decision in 
which an applicant has prevailed or believes it has prevailed, the 
adjudicative officer shall stay the proceedings on the application 
pending final disposition of the underlying issue.
    (c) For purposes of this part, final disposition of the adversary 
adjudication means the latest of--
    (1) The date on which an initial decision or other recommended 
disposition of the merits of the proceeding by an adjudicative officer 
becomes administratively final;
    (2) The date of an order disposing of any petitions for 
reconsideration of the final order in the adversary adjudication;
    (3) If no petition for reconsideration is filed, the last date on 
which that type of petition could have been filed; or
    (4) The date of a final order or any other final resolution of a 
proceeding--such as a settlement or voluntary dismissal--that is not 
subject to a petition for reconsideration.

(Authority: 5 U.S.C. 504 (a)(2) and (c)(1))



Sec. 21.31  Contents of application.

    (a) In its application for an award of fees and other expenses, an 
applicant shall include the following:
    (1) Information adequate to show that the applicant is a prevailing 
party in an adversary adjudication or in a significant and discrete 
substantive portion of an adversary adjudication.
    (2) A statement that the adversary adjudication is covered by the 
Act according to Sec. 21.10.
    (3) An allegation that the position of the Department was not 
substantially justified, including a description of the specific 
position.
    (4) Unless the applicant is a qualified tax-exempt organization or a 
qualified agricultural cooperative association, information adequate to 
show that the applicant qualifies under the requirements of Sec. Sec. 
21.20 and 21.21 regarding net worth. The information, if applicable, 
shall include a detailed exhibit of the net worth of the applicant--and 
its affiliates as described in Sec. 21.21--as of the date the 
proceeding was initiated.
    (5)(i) The total amount of fees and expenses sought in the award; 
and
    (ii) An itemized statement of--
    (A) Each expense; and
    (B) Each fee, including the actual time expended for this fee and 
the rate at which the fee was computed.
    (6) A written verification under oath or affirmation or under 
penalty of perjury from each attorney representing the applicant 
stating--
    (i) The rate at which the fee submitted by the attorney was 
computed; and
    (ii) The actual time expended for the fee.
    (7) A written verification under oath, affirmation, or under penalty 
of perjury that the information contained in the application and any 
accompanying material is true and complete to the best of the 
applicant's information and belief.
    (b) The adjudicative officer may require the applicant to submit 
additional information.

(Authority: 5 U.S.C. 504 (a)(2) and (c)(1))



Sec. 21.32  Confidentiality of information about net worth.

    (a) In a proceeding on an application, the public record ordinarily 
includes the information showing the net worth of the applicant.
    (b) However, if an applicant objects to public disclosure of any 
portion of the information and believes there are legal grounds for 
withholding it from disclosure, the applicant may submit directly to the 
adjudicative officer--
    (1) The information the applicant wishes withheld in a sealed 
envelope labeled ``Confidential Financial Information;'' and
    (2) A motion to withhold the information from public disclosure.

[[Page 44]]

    (c) The motion must--
    (1) Describe the information the applicant is requesting be 
withheld; and
    (2) Explain in detail--
    (i) Why that information falls within one or more of the specific 
exemptions from mandatory disclosure under the Freedom of Information 
Act;
    (ii) Why public disclosure of the information would adversely affect 
the applicant; and
    (iii) Why disclosure is not required in the public interest.
    (d)(1) The applicant shall serve on Department's counsel a copy of 
the material referred to in paragraph (c) of this section.
    (2) The applicant is not required to give a copy of that material to 
any other party to the proceeding.
    (e)(1) If the adjudicative officer finds that the information should 
not be withheld from public disclosure, the information is placed in the 
public record of the proceeding.
    (2) If the adjudicative officer finds that the information should be 
withheld from public disclosure, any request to inspect or copy the 
information is treated in accordance with the Department's established 
procedures under the Freedom of Information Act (34 CFR part 5).

(Authority: 5 U.S.C. 504(c)(1))



Sec. 21.33  Allowable fees and expenses.

    (a) A prevailing party may apply for an award of fees and other 
expenses incurred by the party in connection with--
    (1) An adversary adjudication; or
    (2) A significant and discrete substantive portion of an adversary 
adjudication.
    (b) If a proceeding includes issues covered by the Act and issues 
excluded from coverage, the applicant may apply only for an award of 
fees and other expenses related to covered issues.
    (c) Allowable fees and expenses include the following, as 
applicable:
    (1) An award of fees based on rates customarily charged by 
attorneys, agents, and expert witnesses.
    (2) An award for the reasonable expenses of the attorney, agent, or 
expert witness as a separate item if the attorney, agent, or expert 
witness ordinarily charges clients separately for those expenses.
    (3) The cost of any study, analysis, engineering report, test, or 
project related to the preparation of the applicant's case in the 
adversary adjudication.
    (d) The calculation of fees and expenses as provided for under 
paragraph (c) of this section shall be in accordance with the standards 
for awards as described in Sec. 21.50(a) through (c).

(Authority: 5 U.S.C. 504(a)(1), (b)(1)(A) and (c)(1))



     Subpart E_What Procedures Are Used in Considering Applications?



Sec. 21.40  Filing and service of documents.

    (a) Except as provided in Sec. 21.32 and in applications subject to 
the jurisdiction of the CRRA, an applicant shall--
    (1) File with the adjudicative officer its application and any 
related documents; and
    (2) Serve on all parties to the adversary adjudication copies of its 
application and any related documents.
    (b)(1) In an application subject to the jurisdiction of the CRRA, 
the applicant shall--
    (i) File with the CRRA its application and any other related 
documents; and
    (ii) Serve on all parties to the adversary adjudication copies of 
its application and any related documents.
    (2) In applications subject to Sec. 21.40(b)(1), the CRRA shall 
direct the adjudicative officer to issue an initial decision within 30 
days of the completion of the proceedings on the application. The 
adjudicative officer shall conduct proceedings under the procedures of 
Sec. Sec. 21.41-21.44.

(Authority: 5 U.S.C. 504(a)(2) and (c)(1); 20 U.S.C. 1681; 29 U.S.C. 
794; 42 U.S.C. 2000d-1 et seq. and 6101 et seq.)



Sec. 21.41  Answer to application.

    (a)(1) Within 30 days after receiving an application for an award 
under this part, the Department's counsel may file an answer to the 
application.
    (2) The Department's counsel may request an extension of time for 
filing the Department's answer.

[[Page 45]]

    (3) The adjudicative officer shall grant the request for an 
extension if the Department's counsel shows good cause for the request.
    (b)(1) The Department's answer must--
    (i) Explain any objections to the award requested; and
    (ii) Identify the facts relied on in support of the position of the 
Department.
    (2) If the answer is based on any alleged facts not in the record of 
the adversary adjudication, the Department's counsel shall include with 
the answer either--
    (i) Supporting affidavits; or
    (ii) A request for further proceedings under Sec. 21.44.
    (c)(1) If the Department's counsel and the applicant believe that 
the issues in the application can be settled, they may jointly file a 
statement of their intent to negotiate a settlement.
    (2)(i) The filing of a statement of an intent to negotiate extends 
the time for filing an answer for 30 days.
    (ii) The adjudicative officer shall grant further extensions if the 
Department's counsel and the applicant jointly request those extensions.

(Authority: 5 U.S.C. 504(c)(1))



Sec. 21.42  Reply.

    (a) Within 15 days after receiving an answer, an applicant may file 
a reply.
    (b) If the applicant's reply is based on any alleged facts not in 
the record of the adversary adjudication, the applicant shall include 
with the reply either--
    (1) Supporting affidavits; or
    (2) A request for further proceedings under Sec. 21.44.

(Authority: 5 U.S.C. 504(c)(1))



Sec. 21.43  Comments by other parties.

    (a) Any party to a proceeding, other than an applicant or the 
Department's counsel, may file comments on--
    (1) The application within 30 days after the applicant files the 
application;
    (2) The answer within 30 days after the counsel files the answer; or
    (3) Both, if the comments are filed within the time period specified 
in paragraphs (a)(1) and (a)(2) of this section.
    (b) The commenting party may not participate further in proceedings 
on the application unless the adjudicative officer determines that 
further participation is necessary to permit full exploration of matters 
raised in the comments.

(Authority: 5 U.S.C. 504(c)(1))



Sec. 21.44  Further proceedings.

    (a) The adjudicative officer shall make the determination of an 
award on the basis of the written record.
    (b)(1) However, the adjudicative officer may order further 
proceedings on his or her own initiative or at the request of the 
applicant or the Department's counsel.
    (2) The adjudicative officer may order further proceedings only if 
he or she determines that those proceedings are necessary for full and 
fair resolution of issues arising from the application.
    (3) If further proceedings are ordered, the adjudicative officer 
shall determine the scope of those proceedings, which may include such 
proceedings as informal conferences, oral arguments, additional written 
submissions, discovery, or an evidentiary hearing.
    (4) An adjudicative officer may not order discovery or an 
evidentiary hearing for the issue of whether or not the Department's 
position was substantially justified.
    (c) If the applicant or the Department's counsel requests the 
adjudicative officer to order further proceedings, the request must--
    (1) Specify the information sought or the disputed issues; and
    (2) Explain why the additional proceedings are necessary to obtain 
that information or resolve those issues.

(Authority: 5 U.S.C. 504(a)(3) and (c)(1))



                  Subpart F_How Are Awards Determined?



Sec. 21.50  Standards for awards.

    (a) In determining the reasonableness of the amount sought as an 
award of fees and expenses for an attorney, agent, or expert witness, 
the adjudicative officer shall consider one or more of the following:

[[Page 46]]

    (1)(i) If the attorney, agent, or expert witness is in private 
practice, his or her customary fee for similar services; or
    (ii) If the attorney, agent, or expert witness is an employee of the 
applicant, the fully allocated cost of the services.
    (2) The prevailing rate for similar services in the community in 
which the attorney, agent, or expert witness ordinarily performs 
services.
    (3) The time the attorney, agent, or expert witness actually spent 
on the applicant's behalf with respect to the adversary adjudication.
    (4) The time the attorney, agent, or expert witness reasonably spent 
in light of the difficulty or complexity of the covered issues in the 
adversary adjudication.
    (5) Any other factors that may bear on the value of the services 
provided by the attorney, agent, or expert witness.
    (b) The adjudicative officer may not grant--
    (1) An award for the fee of an attorney or agent in excess of $75.00 
per hour; or
    (2) An award to compensate an expert witness in excess of the 
highest rate at which the Department pays expert witnesses.
    (c) The adjudicative officer may also determine whether--
    (1) Any study, analysis, engineering report, text, or project for 
which the applicant seeks an award was necessary for the preparation of 
the applicant's case in the adversary adjudication; and
    (2) The costs claimed by the applicant for this item or items are 
reasonable.
    (d) The adjudicative officer may not make an award to an eligible 
party if the adjudicative officer, the CRRA, or the Secretary on review 
finds that, based on a review of the administrative record as a whole--
    (1) The position of the Department, as defined in Sec. 21.3, was 
substantially justified; or
    (2) Special circumstances make an award unjust.
    (e) The adjudicative officer may reduce or deny an award to the 
extent that the applicant engaged in conduct that unduly or unreasonably 
protracted the adversary adjudication.
    (f) If an applicant is entitled to an award because the applicant 
prevailed over another agency of the United States that participated in 
a proceeding before the Department and that agency's position was not 
substantially justified, the adjudicative officer shall determine 
whether to make the award, or an appropriate portion of the award, 
against that agency. For the purpose of this determination, the 
requirements of this subpart apply.

(Authority: 5 U.S.C. 504(a), (b)(1)(A), and (b)(1)(E))



Sec. 21.51  Initial decision in applications not subject to the CRRA.

    (a) In applications not subject to the jurisdiction of the CRRA, the 
adjudicative officer shall issue an initial decision on an application 
within 30 days after completion of proceedings on the application.
    (b) The initial decision must include the following:
    (1) Written findings, including sufficient supporting explanation, 
on--
    (i) The applicant's status as a prevailing party;
    (ii) The applicant's eligibility;
    (iii) Whether the position of the Department was substantially 
justified;
    (iv) Whether special circumstances make an award unjust;
    (v) If applicable, whether the applicant engaged in conduct that 
unduly or unreasonably protracted the adversary adjudication; and
    (vi) Other factual issues raised in the adversary adjudication.
    (2) A statement of the amount awarded, including an explanation--
with supporting information--for any difference between the amount 
requested by the applicant and the amount awarded.
    (3) A statement of the applicant's right to request review by the 
Secretary under Sec. 21.54.
    (4) A statement of the applicant's right under Sec. 21.56 to seek 
judicial review of the final award determination.
    (c) The explanation referred to in paragraph (b)(2) of this section 
may include--
    (1) Whether the amount requested was reasonable; and

[[Page 47]]

    (2) The extent to which the applicant unduly or unreasonably 
protracted the adversary adjudication.

(Authority: 5 U.S.C. 504 (a)(3) and (c))



Sec. 21.52  Initial decision by an adjudicative officer in applications 
subject to CRRA jurisdiction.

    (a) If the application is subject to the jurisdiction of the CRRA, 
the adjudicative officer shall issue the initial decision within 30 days 
after completion of the proceedings.
    (b) The initial decision must include the information required under 
Sec. 21.51(b). However, instead of the information required under Sec. 
21.51(b)(3), the initial decision must inform the applicant of--
    (1) Its right to request review by the CRRA; and
    (2) Its right to request review by the Secretary of the CRRA's final 
decision.
    (c) If the applicant or the Department's counsel appeals the 
adjudicative officer's initial decision, the appeal must be submitted to 
the CRRA, in writing, within 30 days after the initial decision is 
issued.
    (d) If the applicant or the Department's counsel does not appeal the 
adjudicative officer's initial decision to the CRRA and the Secretary 
does not decide to review the initial decision under Sec. 21.54(a), the 
initial decision becomes the Department's final decision 60 days after 
it is issued by the officer.

(Authority: 5 U.S.C. 504(b)(1)(C); 20 U.S.C. 1681; 29 U.S.C. 794; 42 
U.S.C. 2000d-1 et seq. and 6101 et seq.)



Sec. 21.53  Final decision of the CRRA.

    (a) In an application subject to the jurisdiction of the CRRA, the 
CRRA shall, within 30 days after receipt of the written appeal--
    (1) Issue a final decision on the appeal of the adjudicative 
officer's initial decision; or
    (2) Remand the application to the adjudicative officer for further 
proceedings.
    (b) The CRRA shall review the initial decision on the basis of the 
written record of the proceedings on the application. This includes but 
is not limited to--
    (1) The written request; and
    (2) The adjudicative officer's findings as described in Sec. 
21.51(b).
    (c) The CRRA shall act on the review by either--
    (1) Issuing a final decision on the application; or
    (2) Remanding the application to the adjudicative officer for 
further proceedings.
    (d) If the CRRA issues a final decision, the CRRA's decision must 
include--
    (1) Written findings, including supporting explanation, on--
    (i) The applicant's status as a prevailing party;
    (ii) The applicant's eligibility;
    (iii) Whether the position of the Department was substantially 
justified;
    (iv) Whether special circumstances make an award unjust;
    (v) Whether the applicant engaged in conduct that unduly or 
unreasonably protracted the adversary adjudication; and
    (vi) Other factual issues raised in the adversary adjudication.
    (2) A statement of the amount awarded, including an explanation--
with supporting information--for any difference between the amount 
requested by the applicant and the amount awarded.
    (3) A statement of the applicant's right to request review by the 
Secretary under Sec. 21.54.
    (4) A statement of the applicant's right under Sec. 21.56 to seek 
judicial review of the final award determination.
    (e) The explanation referred to in paragraph (d)(2) of this section 
may include--
    (1) Whether the amount requested was reasonable; and
    (2) The extent to which the applicant unduly or unreasonably 
protracted the adversary adjudication.

(Authority: 5 U.S.C. 301, 557 (b) and (c); 20 U.S.C. 1681 and 3401 et 
seq.; 29 U.S.C. 794; 42 U.S.C. 2000d-1 et seq. and 6101 et seq.)



Sec. 21.54  Review by the Secretary.

    (a) The Secretary may decide to review--
    (1) An initial decision made by an adjudicative officer in a 
proceeding not subject to CRRA review;

[[Page 48]]

    (2) An initial decision made by an adjudicative officer in a 
proceeding subject to CRRA review that was not appealed to the CRRA; or
    (3) A final decision made by the CRRA under Sec. 21.53.
    (b)(1) The Secretary does not review a final decision made by an 
adjudicative officer of the General Services Administration Board of 
Contract Appeals.
    (2) The Secretary or a party to the proceedings may seek 
reconsideration of the final decision by an adjudicative officer of the 
General Services Administration Board of Contract Appeals on the fee 
application in accordance with 48 CFR 6101.32.
    (c) The Secretary decides to review a decision under Sec. 21.54(a) 
either--
    (1) Upon receipt of a written request for review by an applicant or 
Department's counsel; or
    (2) Upon the Secretary's own motion.
    (d) If the applicant or the Department's counsel seeks a review, the 
request must be submitted to the Secretary, in writing, within 30 days 
of--
    (1) An initial decision in a proceeding not subject to CRRA review; 
or
    (2) A final decision of the CRRA.
    (e) The Secretary decides whether to accept or reject a request for 
review of an initial decision made by the adjudicative officer in a 
proceeding not subject to CRRA review or a final decision of the CRRA 
within 30 days after receipt of a request for review.
    (f) The Secretary may decide on his own motion to review a decision 
made under Sec. 21.54(a) within 60 days of the initial decision by the 
adjudicative officer or a final decision of the CRRA.
    (g) If the Secretary decides to review the adjudicative officer's 
initial decision or the CRRA's final decision--
    (1) The Secretary reviews the adjudicative officer's initial 
decision or the CRRA's final decision on the basis of the written record 
of the proceedings on the application. This includes, but is not 
restricted to--
    (i) The written request for review;
    (ii) The adjudicative officer's findings as described in Sec. 
21.51(b); and
    (iii) If applicable, the final decision of the CRRA, if any; and
    (2) The Secretary either--
    (i) Issues a final decision; or
    (ii) Remands the application to the adjudicative officer or the CRRA 
for further proceedings.
    (h) If the Secretary issues a final decision, the Secretary's 
decision--
    (1) Is in writing;
    (2) States the reasons for the decision; and
    (3) If the decision is adverse to the applicant, advises the 
applicant of its right to petition for judicial review under Sec. 
21.56.

(Authority: 5 U.S.C. 557 (b) and (c))



Sec. 21.55  Final decision if the Secretary does not review.

    If the Secretary takes no action under Sec. 21.54--
    (a) The adjudicative officer's initial decision on the application 
becomes the Department's final decision 60 days after it is issued by 
the adjudicative officer; or
    (b) The CRRA's decision on the application becomes the Department's 
final decision 60 days after it is issued by the CRRA.

(Authority: 5 U.S.C. 301)



Sec. 21.56  Judicial review.

    If the applicant is dissatisfied with the award determination in the 
final decision under Sec. Sec. 21.52-21.55, the applicant may seek 
judicial review of that determination under 5 U.S.C. 504(c)(2) within 30 
days after that determination was made.

(Authority: 5 U.S.C. 504(c)(2))



                     Subpart G_How Are Awards Paid?



Sec. 21.60  Payment of awards.

    To receive payment, an applicant granted an award under the Act must 
submit to the Financial Management Service of the Department--
    (a) A request for payment signed by the applicant or its duly 
authorized agent;
    (b) A copy of the final decision granting the award; and
    (c) A statement that--
    (1) The applicant will not seek review of the decision in the United 
States courts; or

[[Page 49]]

    (2) The process for seeking review of the award has been completed.

(Authority: 5 U.S.C. 504(c)(1) and (d))



Sec. 21.61  Release.

    If an applicant, its agent, or its attorney accepts payment of any 
award or settlement in conjunction with an application under this part, 
that acceptance--
    (a) Is final and conclusive with respect to that application; and
    (b) Constitutes a complete release of any further claim against the 
United States with respect to that application.

(Authority: 5 U.S.C. 504(c)(1))



PART 30_DEBT COLLECTION--Table of Contents




                            Subpart A_General

Sec.
30.1 What administrative actions may the Secretary take to collect a 
          debt?
30.2 On what authority does the Secretary rely to collect a debt under 
          this part?

Subpart B [Reserved]

        Subpart C_What Provisions Apply to Administrative Offset?

                        General Offset Procedures

30.20 To what do Sec. Sec. 30.20-30.31 apply?
30.21 When may the Secretary offset a debt?
30.22 What notice does the debtor receive before the commencement of 
          offset?
30.23 How must a debtor request an opportunity to inspect and copy 
          records relating to a debt?
30.24 What opportunity does the debtor receive to obtain a review of the 
          existence or amount of a debt?
30.25 How may a debtor obtain an oral hearing?
30.26 What special rules apply to an oral hearing?
30.27 When does the Secretary enter into a repayment agreement rather 
          than offset?
30.28 When may the Secretary offset before completing the procedures 
          under Sec. Sec. 30.22-30.27?
30.29 What procedures apply when the Secretary offsets to collect a debt 
          owed another agency?
30.30 What procedures apply when the Secretary requests another agency 
          to offset a debt owed under a program or activity of the 
          Department?
30.31 How does the Secretary apply funds recovered by offset if multiple 
          debts are involved?

                    IRS Tax Refund Offset Procedures

30.33 What procedures does the Secretary follow for IRS tax refund 
          offsets?

      Procedures for Reporting Debts to Consumer Reporting Agencies

30.35 What procedures does the Secretary follow to report debts to 
          consumer reporting agencies?

Subpart D [Reserved]

    Subpart E_What Costs and Penalties Does the Secretary Impose on 
                           Delinquent Debtors?

30.60 What costs does the Secretary impose on delinquent debtors?
30.61 What penalties does the Secretary impose on delinquent debtors?
30.62 When does the Secretary forego interest, administrative costs, or 
          penalties?

  Subpart F_What Requirements Apply to the Compromise of a Debt or the 
             Suspension or Termination of Collection Action?

30.70 How does the Secretary exercise discretion to compromise a debt or 
          to suspend or terminate collection of a debt?

Subpart G [Reserved]

    Authority: 20 U.S.C. 1221e-3(a)(1), and 1226a-1, 31 U.S.C. 3711(e), 
31 U.S.C. 3716(b) and 3720A, unless otherwise noted.

    Source: 51 FR 24099, July 1, 1986, unless otherwise noted.



                            Subpart A_General



Sec. 30.1  What administrative actions may the Secretary take to collect 
a debt?

    (a) The Secretary may take one or more of the following actions to 
collect a debt owed to the United States:
    (1) Collect the debt under the procedures authorized in the 
regulations in this part.
    (2) Refer the debt to the General Accounting Office for collection.
    (3) Refer the debt to the Department of Justice for compromise, 
collection, or litigation.
    (4) Take any other action authorized by law.
    (b) In taking any of the actions listed in paragraph (a) of this 
section, the Secretary complies with the requirements of the Federal 
Claims Collection

[[Page 50]]

Standards (FCCS) at 4 CFR parts 101-105 that are not inconsistent with 
the requirements of this part.
    (c) The Secretary may--
    (1) Collect the debt under the offset procedures in subpart C of 
this part;
    (2) Report a debt to a consumer reporting agency under the 
procedures in subpart C of this part;
    (3) Charge interest on the debt as provided in the FCCS;
    (4) Impose upon a debtor a charge based on the costs of collection 
as determined under subpart E of this part;
    (5) Impose upon a debtor a penalty for failure to pay a debt when 
due under subpart E of this part;
    (6) Compromise a debt, or suspend or terminate collection of a debt, 
under subpart F of this part;
    (7) Take any other actions under the procedures of the FCCS in order 
to protect the United States Government's interests; or
    (8) Use any combination of the procedures listed in this paragraph 
(c) as may be appropriate in a particular case.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 1226a-1, 31 U.S.C. 3711(e))

[53 FR 33425, Aug. 30, 1988]



Sec. 30.2  On what authority does the Secretary rely to collect a debt 
under this part?

    (a)(1) The Secretary takes an action referred to under Sec. 30.1(a) 
in accordance with--
    (i) 31 U.S.C. chapter 37, subchapters I and II;
    (ii) Other applicable statutory authority; or
    (iii) The common law.
    (2) If collection of a debt in a particular case is not authorized 
under one of the authorities described in paragraph (a)(1) of this 
section, the Secretary may collect the debt under any other available 
authority under which collection is authorized.
    (b) The Secretary does not use a procedure listed in Sec. 30.1(c) 
to collect a debt, or a certain type of debt, if--
    (1) The procedure is specifically prohibited under a Federal 
statute; or
    (2) A separate procedure other than the procedure described under 
Sec. 30.1(c) is specifically required under--
    (i) A contract, grant, or other agreement;
    (ii) A statute other than 31 U.S.C. 3716; or
    (iii) Other regulations.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 1226a-1, 31 U.S.C. 3711(e))

[53 FR 33425, Aug. 30, 1988]

Subpart B [Reserved]



        Subpart C_What Provisions Apply to Administrative Offset?

                        General Offset Procedures



Sec. 30.20  To what do Sec. Sec. 30.20-30.31 apply?

    (a)(1)(i) Sections 30.20-30.31 establish the general procedures used 
by the Secretary to collect debts by administrative offset.
    (ii) The Secretary uses the procedures established under other 
regulations, including Sec. 30.33, What procedures does the Secretary 
follow for IRS tax refund offsets?, 34 CFR part 31, Salary Offset for 
Federal Employees Who Are Indebted to the United States Under Programs 
Administrated by the Secretary of Education, and 34 CFR part 32, Salary 
Offset to Recover Overpayments of Pay or Allowances from Department of 
Education Employees, if the conditions requiring application of those 
special procedures exists.
    (2) The word ``offset'' is used in this subpart to refer to the 
collection of a debt by administrative offset.
    (b) The Secretary does not rely on 31 U.S.C. 3716 as authority for 
offset if:
    (1) The debt is owed by a State or local government;
    (2) The debt, or the payment against which offset would be taken, 
arises under the Social Security Act;
    (3) The debt is owed under:
    (i) The Internal Revenue Code of 1954; or
    (ii) The tariff laws of the United States; or
    (4) The right to collect the debt first accrued more than ten years 
before initiation of the offset.
    (c)(1) The Secretary may rely on 31 U.S.C. 3716 as authority for 
offset of a debt to which paragraph (b)(4) of this section would 
otherwise apply if facts material to the Government's right to

[[Page 51]]

collect the debt were not known and could not reasonably have been known 
by the official or officials of the Government who are charged with the 
responsibility to discover and collect the debt.
    (2) If paragraph (c)(1) of this section applies, the Secretary may 
rely on 31 U.S.C. 3716 as authority for offset up to 10 years after the 
date that the official or officials described in that paragraph first 
knew or reasonably should have known of the right of the United States 
to collect the debt.
    (d) The Secretary determines when the right to collect a debt first 
accrued under the existing law regarding accrual of debts such as 28 
U.S.C. 2415.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 1226a-1, 31 U.S.C. 3716(b))

[51 FR 24099, July 1, 1986, as amended at 51 FR 35646, Oct. 7, 1986; 53 
FR 33425, Aug. 30, 1988; 54 FR 43583, Oct. 26, 1989]



Sec. 30.21  When may the Secretary offset a debt?

    (a) The Secretary may offset a debt if:
    (1) The debt is liquidated or certain in amount; and
    (2) Offset is feasible and not otherwise prohibited.
    (b)(1) Whether offset is feasible is determined by the Secretary in 
the exercise of sound discretion on a case-by-case basis, either:
    (i) For each individual debt or offset; or
    (ii) For each class of similar debts or offsets.
    (2) The Secretary considers the following factors in making this 
determination:
    (i) Whether offset can be practically and legally accomplished.
    (ii) Whether offset will further and protect the interests of the 
United States.
    (c) The Secretary may switch advance funded grantees to a 
reimbursement payment system before initiating an offset.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 1226a-1, 31 U.S.C. 3716(b))



Sec. 30.22  What notice does the debtor receive before the commencement 
of offset?

    (a)(1) Except as provided in Sec. Sec. 30.28 and 30.29, the 
Secretary provides a debtor with written notice of the Secretary's 
intent to offset before initiating the offset.
    (2) The Secretary mails the notice to the debtor at the current 
address of the debtor, as determined by the Secretary from information 
regarding the debt maintained by the Department.
    (b) The written notice informs the debtor regarding:
    (1) The nature and amount of the debt;
    (2) The Secretary's intent to collect the debt by offset;
    (3) The debtor's opportunity to:
    (i) Inspect and copy Department records pertaining to the debt;
    (ii) Obtain a review within the Department of the existence or 
amount of the debt; and
    (iii) Enter into a written agreement with the Secretary to repay the 
debt;
    (4) The date by which the debtor must request an opportunity set 
forth under paragraph (b)(3) of this section; and
    (5) The Secretary's decision, in appropriate cases, to switch the 
debtor from advance funding to a reimbursement payment system.
    (c)(1) In determining whether a debtor has requested an opportunity 
set forth under paragraph (b)(3) of this section in a timely manner, the 
Secretary relies on:
    (i) A legibly dated U.S. Postal Service postmark for the debtor's 
request; or
    (ii) A legibly stamped U.S. Postal service mail receipt for debtor's 
request.
    (2) The Secretary does not rely on either of the following as proof 
of mailing;
    (i) A private metered postmark.
    (ii) A mail receipt that is not dated by the U.S. Postal Service.
    Note: The U.S. Postal Service does not uniformly provide a dated 
postmark. Before relying on this method for proof of mailing, a debtor 
should check with its local post office.
    (d) If a debtor previously has been notified of the Secretary's 
intent to offset or offered an opportunity to take any

[[Page 52]]

of the actions set forth in paragraph (b)(3) of this section in 
connection with the same debt, the Secretary may offset without 
providing the debtor with an additional notice of intent or opportunity 
to take any of those actions under these offset procedures.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 1226a-1, 31 U.S.C. 3716(b))



Sec. 30.23  How must a debtor request an opportunity to inspect and copy 
records relating to a debt?

    (a) If a debtor wants to inspect and copy Department documents 
relating to the debt, the debtor must:
    (1) File a written request to inspect and copy the documents within 
20 days after the date of the notice provided under Sec. 30.22; and
    (2) File the request at the address specified in that notice.
    (b) A request filed under paragraph (a) of this section must 
contain:
    (1) All information provided to the debtor in the notice under Sec. 
30.22 or Sec. 30.33(b) that identifies the debtor and the debt, 
including the debtor's Social Security number and the program under 
which the debt arose, together with any corrections of that identifying 
information; and
    (2) A reasonably specific identification of the records the debtor 
wishes to have available for inspection and copying.
    (c) The Secretary may decline to provide an opportunity to inspect 
and copy records if the debtor fails to request inspection and copying 
in accordance with this section.

(Approved by the Office of Management and Budget under control number 
1880-0515)

(Authority: 20 U.S.C. 1221e-3(a)(1) and 1226a-1, 31 U.S.C. 3716(b))

[51 FR 24099, July 1, 1986, as amended at 51 FR 35646, Oct. 7, 1986]



Sec. 30.24  What opportunity does the debtor receive to obtain a review 
of the existence or amount of a debt?

    (a) If a debtor wants a review within the Department of the issues 
identified in the notice under Sec. 30.22(b)(3)(ii) or Sec. 
30.33(b)(3)(ii), the debtor must:
    (1) File a request for review within 20 days after the date of the 
notice provided under Sec. 30.22; and
    (2) File a request at the address specified in that notice.
    (b) A request filed under paragraph (a) of this section must 
contain:
    (1) All information provided to the debtor in the notice under Sec. 
30.22 or Sec. 30.33(b) that identifies the debtor and the particular 
debt, including the debtor's Social Security number and the program 
under which the debt arose, together with any corrections of that 
identifying information; and
    (2) An explanation of the reasons the debtor believes that the 
notice the debtor received under Sec. 30.22 or Sec. 30.33(b) 
inaccurately states any facts or conclusions relating to the debt.
    (c) The Secretary may decline to provide an opportunity for review 
of a debt if the debtor fails to request the review in accordance with 
this section.
    (d)(1) The debtor shall:
    (i) File copies of any documents relating to the issues identified 
in the notice under Sec. 30.22(b)(3)(ii) or Sec. 30.33(b)(3)(ii) that 
the debtor wishes the Secretary to consider in the review;
    (ii) File the documents at the address specified in that notice, and
    (iii) File the documents no later than:
    (A) 20 days after the date of the notice provided under Sec. 30.22; 
or
    (B) If the debtor has requested an opportunity to inspect and copy 
records under Sec. 30.23 within the time period specified in that 
section, 15 days after the date on which the Secretary makes available 
to the debtor the relevant, requested records.
    (2) The Secretary may decline to consider any reasons or documents 
that the debtor fails to provide in accordance with paragraphs (b) and 
(d) of this section.
    (e) If the Secretary bases the review on only the documentary 
evidence, the Secretary:
    (1) Reviews the documents submitted by the debtor and other relevant 
evidence; and
    (2) Notifies the debtor in writing of the Secretary's decision 
regarding the issues identified in the notice under Sec. 
30.22(b)(3)(ii) or Sec. 30.33(b)(3)(ii) and, if

[[Page 53]]

appropriate, the question of waiver of the debt.

(Approved by the Office of Management and Budget under control number 
1880-0515)

(Authority: 20 U.S.C. 1221e-3(a)(1) and 1226a-1, 31 U.S.C. 3716(b))

[51 FR 24099, July 1, 1986, as amended at 51 FR 35647, Oct. 7, 1986]



Sec. 30.25  How may a debtor obtain an oral hearing?

    (a) If a debtor wants the Secretary to conduct the review requested 
under Sec. 30.24 as an oral hearing, the debtor must file a written 
request for an oral hearing together with the request for review filed 
under Sec. 30.24(a).
    (b) A request filed under paragraph (a) of this section must contain 
the following in addition to the information filed under Sec. 30.24(b):
    (1) An explanation of reason(s) why the debtor believes the 
Secretary cannot resolve the issues identified in the notice under Sec. 
30.22(b)(3)(ii) or Sec. 30.33(b)(3)(ii) through a review of the 
documentary evidence.
    (2) An identification of:
    (i) The individuals that the debtor wishes to have testify at the 
oral hearing;
    (ii) The specific issues identified in the notice regarding which 
each individual is prepared to testify; and
    (iii) The reasons why each individual's testimony is necessary to 
resolve the issue.
    (c) The Secretary grants a debtor's request for an oral hearing 
regarding the issues identified in the notice under Sec. 
30.22(b)(3)(ii) or Sec. 30.33(b)(3)(ii) only if:
    (1)(i) A statute authorizes or requires the Secretary to consider 
waiver of the indebtedness involved;
    (ii) The debtor files a request for waiver of the indebtedness with 
the request for review filed under paragraph (a)(1) of this section; and
    (iii) The question of waiver of the indebtedness turns on an issue 
of credibility or veracity; or
    (2) The Secretary determines that the issues identified in the 
notice under Sec. 30.22(b)(3)(ii) or Sec. 30.33(b)(3)(ii) cannot be 
resolved by review of only the documentary evidence.
    (d) Notwithstanding paragraph (b) of this section, the Secretary may 
deny oral hearings for a class of similar debts if:
    (1) The issues identified in the notice under Sec. 30.22(b)(3)(ii) 
or 30.33(b)(3)(ii) for which an oral hearing was requested, or the issue 
of waiver, rarely involve issues of credibility or veracity; and
    (2) The Secretary determines that review of the documentary evidence 
is ordinarily an adequate means to correct mistakes.
    (e) The Secretary may decline to consider any reasons that the 
debtor fails to provide in accordance with paragraph (b)(1) of this 
section.

(Approved by the Office of Management and Budget under control number 
1880-0515)

(Authority: 20 U.S.C. 1221e-3(a)(1) and 1226a-1, 31 U.S.C. 3716(b))

[51 FR 24099, July 1, 1986, as amended at 51 FR 35647, Oct. 7, 1986]



Sec. 30.26  What special rules apply to an oral hearing?

    (a) The oral hearing under Sec. 30.25 is not a formal evidentiary 
hearing subject to 5 U.S.C. 554, unless required by law.
    (b) If the Secretary grants an oral hearing, the Secretary notifies 
the debtor in writing of:
    (1) The time and place for the hearing;
    (2) The debtor's right to representation; and
    (3) The debtor's right to present and cross examine witnesses.
    (c) If the Secretary grants an oral hearing, the Secretary 
designates an official to:
    (1) Govern the conduct of the hearing;
    (2) Take all necessary action to avoid unreasonable delay in the 
proceedings;
    (3) Review the evidence presented at the hearing, the documents 
submitted by the debtor, and other relevant evidence; and
    (4) After considering the evidence, notify the debtor in writing of 
the official's decision regarding the issues identified in the notice 
under Sec. 30.22(b)(3)(ii) or Sec. 30.33(b)(3)(ii) and, if 
appropriate, the question of waiver of the debt.

[[Page 54]]

    (d) The official designated under paragraph (c) of this section may 
decline to hear any witnesses or testimony not identified by the debtor 
in accordance with Sec. 30.25(b)(2).
    (e) The decision of the designated official under paragraph (c) of 
this section constitutes the final decision of the Secretary.

(Authority: 20 U.S.C. 1221-3(a)(1) and 1226a-1, 31 U.S.C. 3716(b))



Sec. 30.27  When does the Secretary enter into a repayment agreement 
rather than offset?

    (a) If a debtor wants an opportunity to enter into a written 
agreement to repay a debt on terms acceptable to the Secretary, the 
debtor must:
    (1) File a request to enter into such agreement within 20 days after 
the date of the notice provided under Sec. 30.22; and
    (2) File the request at the address specified in the notice.
    (b) A request filed under paragraph (a) of this section must contain 
all information provided to the debtor in the notice under Sec. 30.22 
or Sec. 30.33(b) that identifies the debtor and the debt, including the 
debtor's Social Security number and the program under which the debt 
arose, together with any corrections of that identifying information.
    (c) If the Secretary receives a request filed in accordance with 
this section, the Secretary may enter into a written agreement requiring 
repayment in accordance with 4 CFR 102.11, instead of offsetting the 
debt.
    (d) In deciding whether to enter into the agreement, the Secretary 
may consider:
    (1) The Government's interest in collecting the debt; and
    (2) Fairness to the debtor.
    (e)(1) A debtor that enters into a repayment agreement with the 
Secretary under this section waives any right to further review by the 
Secretary of the issues relating to the original debt identified in the 
notice under Sec. 30.22(b)(3)(ii) or Sec. 30.33(b)(3)(ii).
    (2) If a debtor breaches a repayment agreement, the Secretary may 
offset, or, under Sec. 30.30, refer to another agency for offset:
    (i) The amount owing under the agreement; or
    (ii) The entire original debt, to the extent not repaid.

(Authority: 20 U.S.C. 1221-3(a)(1) and 1226a-1, 31 U.S.C. 3716(b))

[51 FR 24099, July 1, 1986, as amended at 51 FR 35647, Oct. 7, 1986]



Sec. 30.28  When may the Secretary offset before completing the 
procedures under Sec. Sec. 30.22-30.27?

    (a) The Secretary may offset before completing the procedures 
otherwise required by Sec. Sec. 30.22-30.27 if:
    (1) Failure to offset would substantially prejudice the Government's 
ability to collect the debt; and
    (2) The amount of time remaining before the payment by the United 
States which is subject to offset does not reasonably permit completion 
of the procedures under Sec. Sec. 30.22-30.27.
    (b) If the Secretary offsets under paragraph (a) of this section, 
the Secretary:
    (1) Promptly completes the procedures under Sec. Sec. 30.22-30.27 
after initiating the offset; and
    (2) Refunds any amounts recovered under the offset that are later 
found not to be owed to the United States.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 1226a-1, 31 U.S.C. 3716(b))



Sec. 30.29  What procedures apply when the Secretary offsets to collect 
a debt owed another agency?

    The Secretary may initiate offset to collect a debt owed another 
Federal agency if:
    (a) An official of that agency certifies in writing:
    (1) That the debtor owes a debt to the United States;
    (2) The amount of the debt; and
    (3) That the agency has complied with 4 CFR 102.3; and
    (b) For offsets under 31 U.S.C. 3716, the Secretary makes an 
independent determination that the offset meets the standards under 
Sec. 30.21(a)(2).

(Authority: 20 U.S.C. 1221e-3(a)(1) and 1226a-1, 31 U.S.C. 3716(b))

[[Page 55]]



Sec. 30.30  What procedures apply when the Secretary requests another 
agency to offset a debt owed under a program or activity of the Department?

    (a) The Secretary may request another Federal agency to offset a 
debt owed under a program or activity of the Department if the Secretary 
certifies in writing to the other Federal agency:
    (1) That the debtor owes a debt to the United States;
    (2) The amount of the debt; and
    (3) That the Secretary has complied with 4 CFR 102.3.
    (b) Before providing the certification required under paragraph (a) 
of this section, the Secretary complies with the procedures in 
Sec. Sec. 30.20-30.27.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 1226a-1, 31 U.S.C. 3716(b))



Sec. 30.31  How does the Secretary apply funds recovered by offset if 
multiple debts are involved?

    If the Secretary collects more than one debt of a debtor by 
administrative offset, the Secretary applies the recovered funds to 
satisfy those debts based on the Secretary's determination of the best 
interests of the United States, determined by the facts and 
circumstances of the particular case.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 1226a-1, 31 U.S.C. 3716(b))

                    IRS Tax Refund Offset Procedures



Sec. 30.33  What procedures does the Secretary follow for IRS tax refund 
offsets?

    (a) If a named person owes a debt under a program or activity of the 
Department, the Secretary may refer the debt for offset to the Secretary 
of the Treasury after complying with the procedures in Sec. Sec. 30.20-
30.28, as modified by this section.
    (b) Notwithstanding Sec. 30.22(b), the notice sent to a debtor 
under Sec. 30.22 informs the debtor that:
    (1) The debt is past due;
    (2) The Secretary intends to refer the debt for offset to the 
Secretary of Treasury;
    (3) The debtor has an opportunity to:
    (i) Inspect and copy Department records regarding the existence, 
amount, enforceability, or past-due status of the debt;
    (ii) Obtain a review within the Department of the existence, amount, 
enforceability, or past-due status of the debt;
    (iii) Enter into a written agreement with the Secretary to repay the 
debt; and
    (4) The debtor must take an action set forth under paragraph (b)(3) 
by a date specified in the notice.
    (c) Notwithstanding Sec. 30.23(a), if a debtor wants to inspect and 
copy Department records regarding the existence, amount, enforceability, 
or past-due status of the debt, the debtor must:
    (1) File a written request to inspect and copy the records within 20 
days after the date of the notice provided under Sec. 30.22; and
    (2) File the request at the address specified in that notice.
    (d) Notwithstanding the time frame under Sec. 30.24(a), if a debtor 
wants a review under that paragraph, the debtor must file a request for 
review at the address specified in the notice by the later of:
    (1) Sixty-five days after the date of the notice provided under 
Sec. 30.22;
    (2) If the debtor has requested an opportunity to inspect and copy 
records within the time period specified in paragraph (c) of this 
section, 15 days after the date on which the Secretary makes available 
to the debtor the relevant, requested records; or
    (3) If the debtor has requested a review within the appropriate time 
frame under paragraph (d) (1) or (2) of this section and the Secretary 
has provided an initial review by a guarantee agency, seven days after 
the date of the initial determination by the guarantee agency.
    (e) Notwithstanding the time frames under Sec. 30.24(d), a debtor 
shall file the documents specified under that paragraph with the request 
for review.
    (f) Notwithstanding the time frame under Sec. 30.27(a), a debtor 
must agree to repay the debt under terms acceptable to the Secretary and 
make the first payment due under the agreement by the latest of:
    (1) The seventh day after the date of decision of the Secretary if 
the debtor requested a review under Sec. 30.24;

[[Page 56]]

    (2) The sixty-fifth day after the date of the notice under Sec. 
30.22(b), if the debtor did not request a review under Sec. 30.24, or 
an opportunity to inspect and copy records of the Department under Sec. 
30.23; or
    (3) The fifteenth day after the date on which the Secretary made 
available relevant records regarding the debt, if the debtor filed a 
timely request under Sec. 30.23(a).

(Authority: 20 U.S.C. 1221e-3(a)(1) and 1226a-1, 31 U.S.C. 3720A)

      Procedures for Reporting Debts to Consumer Reporting Agencies



Sec. 30.35  What procedures does the Secretary follow to report debts 
to consumer reporting agencies?

    (a)(1) The Secretary reports information regarding debts arising 
under a program or activity of the Department and held by the Department 
to consumer reporting agencies, in accordance with the procedures 
described in this section.
    (2) The term consumer reporting agency, as used in this section, has 
the same meaning as provided in 31 U.S.C. 3701(a)(3).
    (b) Before reporting information on a debt to a consumer reporting 
agency, the Secretary follows the procedures set forth in Sec. 30.33.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 1226a-1, 31 U.S.C. 3711, Sec. 
16023, 16029, Pub. L. 99-272)

Subpart D [Reserved]



    Subpart E_What Costs and Penalties Does the Secretary Impose on 
                           Delinquent Debtors?

    Source: 53 FR 33425, Aug. 30, 1988, unless otherwise noted.



Sec. 30.60  What costs does the Secretary impose on delinquent debtors?

    (a) The Secretary may charge a debtor for the costs associated with 
the collection of a particular debt. These costs include, but are not 
limited to--
    (1) Salaries of employees performing Federal loan servicing and debt 
collection activities;
    (2) Telephone and mailing costs;
    (3) Costs for reporting debts to credit bureaus;
    (4) Costs for purchase of credit bureau reports;
    (5) Costs associated with computer operations and other costs 
associated with the maintenance of records;
    (6) Bank charges;
    (7) Collection agency costs;
    (8) Court costs and attorney fees; and
    (9) Costs charged by other Governmental agencies.
    (b) Notwithstanding any provision of State law, if the Secretary 
uses a collection agency to collect a debt on a contingent fee basis, 
the Secretary charges the debtor, and collects through the agency, an 
amount sufficient to recover--
    (1) The entire amount of the debt; and
    (2) The amount that the Secretary is required to pay the agency for 
its collection services.
    (c)(1) The amount recovered under paragraph (b) of this section is 
the entire amount of the debt, multiplied by the following fraction:
[GRAPHIC] [TIFF OMITTED] TC15NO91.009

    (2) In paragraph (c)(1) of this section, cr equals the commission 
rate the Department pays to the collection agency.
    (d) If the Secretary uses more than one collection agency to collect 
similar debts, the commission rate (cr) described in paragraph (c)(2) of 
this section is calculated as a weighted average of the commission rates 
charged by all collection agencies collecting similar debts, computed 
for each fiscal year based on the formula
[GRAPHIC] [TIFF OMITTED] TC15NO91.010


where--

    (1) Xi equals the dollar amount of similar debts placed by the 
Department with an individual collection agency as of the end of the 
preceding fiscal year;
    (2) Yi equals the commission rate the Department pays to that 
collection agency for the collection of the similar debts;

[[Page 57]]

    (3) Z equals the dollar amount of similar debts placed by the 
Department with all collection agencies as of the end of the preceding 
fiscal year; and
    (4) N equals the number of collection agencies with which the 
Secretary has placed similar debts as of the end of the preceding fiscal 
year.
    (e) If a debtor has agreed under a repayment or settlement agreement 
with the Secretary to pay costs associated with the collection of a debt 
at a specified amount or rate, the Secretary collects those costs in 
accordance with the agreement.
    (f) The Secretary does not impose collection costs against State or 
local governments under paragraphs (a) through (d) of this section.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 1226a-1, 31 U.S.C. 3711(e), 
3717(e)(1), 3718))



Sec. 30.61  What penalties does the Secretary impose on delinquent 
debtors?

    (a) If a debtor does not make a payment on a debt, or portion of a 
debt, within 90 days after the date specified in the first demand for 
payment sent to the debtor, the Secretary imposes a penalty on the 
debtor.
    (b)(1) The amount of the penalty imposed under paragraph (a) of this 
section is 6 percent per year of the amount of the delinquent debt.
    (2) The penalty imposed under this section runs from the date 
specified in the first demand for payment to the date the debt 
(including the penalty) is paid.
    (c) If a debtor has agreed under a repayment or settlement agreement 
with the Secretary to pay a penalty for failure to pay a debt when due, 
or has such an agreement under a grant or contract under which the debt 
arose, the Secretary collects the penalty in accordance with the 
agreement, grant, or contract.
    (d) The Secretary does not impose a penalty against State or local 
governments under paragraphs (a) and (b) of this section.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 1226a-1, 31 U.S.C. 3711(e))



Sec. 30.62  When does the Secretary forego interest, administrative costs, 
or penalties?

    (a) For a debt of any amount based on a loan, the Secretary may 
refrain from collecting interest or charging administrative costs or 
penalties to the extent that compromise of these amounts is appropriate 
under the standards for compromise of a debt contained in 4 CFR part 
103.
    (b) For a debt not based on a loan the Secretary may waive, or 
partially waive, the charging of interest, or the collection of 
administrative costs or penalties, if--
    (1) Compromise of these amounts is appropriate under the standards 
for compromise of a debt contained in 4 CFR part 103; or
    (2) The Secretary determines that the charging of interest or the 
collection of administrative costs or penalties is--
    (i) Against equity and good conscience; or
    (ii) Not in the best interests of the United States.
    (c) The Secretary may exercise waiver under paragraph (b)(1) of this 
section without regard to the amount of the debt.
    (d) The Secretary may exercise waiver under paragraph (b)(2) of this 
section if--
    (1) The Secretary has accepted an installment plan under 4 CFR 
102.11;
    (2) There is no indication of fault or lack of good faith on the 
part of the debtor; and
    (3) The amount of interest, administrative costs, and penalties is 
such a large portion of the installments that the debt may never be 
repaid if that amount is collected.
    (e)(1) The Secretary does not charge interest on any portion of a 
debt, other than a loan, owed by a person subject to 31 U.S.C. 3717 if 
the debt is paid within 30 days after the date of the first demand for 
payment.
    (2) The Secretary may extend the period under paragraph (e)(1) of 
this section if the Secretary determines that the extension is 
appropriate.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 1226a-1, 31 U.S.C. 3711(e))

[[Page 58]]



  Subpart F_What Requirements Apply to the Compromise of a Debt or the 
             Suspension or Termination of Collection Action?



Sec. 30.70  How does the Secretary exercise discretion to compromise a 
debt or to suspend or terminate collection of a debt?

    (a) The Secretary uses the standards in the FCCS, 4 CFR part 103, to 
determine whether compromise of a debt is appropriate if--
    (1) The debt must be referred to the Department of Justice under 
this section; or
    (2) The amount of the debt is less than or equal to $20,000 and the 
Secretary does not follow the procedures in paragraph (e) of this 
section.
    (b) The Secretary refers a debt to the Department of Justice to 
decide whether to compromise a debt if--
    (1) The debt was incurred under a program or activity subject to 
section 452(f) of the General Education Provisions Act and the initial 
determination of the debt was more than $50,000; or
    (2) The debt was incurred under a program or activity not subject to 
section 452(f) of the General Education Provisions Act and the amount of 
the debt is more than $20,000.
    (c) The Secretary may compromise the debt under the procedures in 
paragraph (e) of this section if--
    (1) The debt was incurred under a program or activity subject to 
section 452(f) of the General Education Provisions Act; and
    (2) The initial determination of the debt was less than or equal to 
$50,000.
    (d) The Secretary may compromise a debt without following the 
procedure in paragraph (e) of this section if the amount of the debt is 
less than or equal to $20,000.
    (e) The Secretary may compromise the debt pursuant to paragraph (c) 
of this section if--
    (1) The Secretary determines that--
    (i) Collection of any or all of the debt would not be practical or 
in the public interest; and
    (ii) The practice that resulted in the debt has been corrected and 
will not recur;
    (2) At least 45 days before compromising the debt, the Secretary 
publishes a notice in the Federal Register stating--
    (i) The Secretary's intent to compromise the debt; and
    (ii) That interested persons may comment on the proposed compromise; 
and
    (3) The Secretary considers any comments received in response to the 
Federal Register notice before finally compromising the debt.
    (f)(1) The Secretary uses the standards in the FCCS, 4 CFR part 104, 
to determine whether suspension or termination of collection action is 
appropriate.
    (2) The Secretary--
    (i) Refers the debt to the Department of Justice to decide whether 
to suspend or terminate collection action if the amount of the debt at 
the time of the referral is more than $20,000; or
    (ii) May decide to suspend or terminate collection action if the 
amount of the debt at the time of the Secretary's decision is less than 
or equal to $20,000.
    (g) In determining the amount of a debt under paragraphs (a) through 
(f) of this section, the Secretary excludes interest, penalties, and 
administrative costs.
    (h) Notwithstanding paragraphs (b) through (f) of this section, the 
Secretary may compromise a debt, or suspend or terminate collection of a 
debt, in any amount if the debt arises under the Guaranteed Student Loan 
Program authorized under title IV, part B, of the Higher Education Act 
of 1965, as amended, or the Perkins Loan Program authorized under title 
IV, part E, of the Higher Education Act of 1965, as amended.
    (i) The Secretary refers a debt to the General Accounting Office 
(GAO) for review and approval before referring the debt to the 
Department of Justice for litigation if--
    (1) The debt arose from an audit exception taken by GAO to a payment 
made by the Department; and
    (2) The GAO has not granted an exception from the GAO referral 
requirement.
    (j) Nothing in this section precludes--
    (1) A contracting officer from exercising his authority under 
applicable

[[Page 59]]

statutes, regulations, or common law to settle disputed claims relating 
to a contract; or
    (2) The Secretary from redetermining a claim.

(Authority: 20 U.S.C. 1082(a) (5) and (6), 1087hh, 1221e-3(a)(1), 1226a-
1, and 1234a(f), 31 U.S.C. 3711(e))

[53 FR 33425, Aug. 30, 1988]

Subpart G [Reserved]



PART 31_SALARY OFFSET FOR FEDERAL EMPLOYEES WHO ARE INDEBTED TO THE UNITED 

STATES UNDER PROGRAMS ADMINISTERED BY THE SECRETARY OF EDUCATION
--Table of Contents




Sec.
31.1 Scope.
31.2 Definitions.
31.3 Pre-offset notice.
31.4 Request to inspect and copy documents relating to a debt.
31.5 Request for hearing on the debt or the proposed offset.
31.6 Location and timing of oral hearing.
31.7 Hearing procedures.
31.8 Rules of decision.
31.9 Decision of the hearing official.
31.10 Request for repayment agreement.
31.11 Offset process.

    Authority: 5 U.S.C. 5514; 31 U.S.C. 3716.

    Source: 54 FR 31821, Aug. 19, 1989, unless otherwise noted.



Sec. 31.1  Scope.

    (a) General. The Secretary establishes the standards and procedures 
in this part that apply to the offset from disposable pay of a current 
or former Federal employee or from amounts payable from the Federal 
retirement account of a former Federal employee to recover a debt owed 
the United States under a program adminstered by the Secretary of 
Education.
    (b) Exclusions. This part does not apply to--
    (1) Offsets under 34 CFR part 32 to recover for overpayments of pay 
or allowances to an employee of the Department;
    (2) Offsets under 34 CFR part 30; or
    (3) Offsets under section 124 of Pub. L. 97-276 to collect debts 
owed to the United States on judgments.
    (c) Reports to consumer reporting agency. The Secretary may report a 
debt to a consumer reporting agency after notifying the employee, in 
accordance with 34 CFR 30.35, of the intention to report the debt, and 
after providing the employee an opportunity to inspect documents, 
receive a hearing, and enter into a repayment agreement under this part.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3711; 31 U.S.C. 3716)



Sec. 31.2  Definitions.

    As used in this part:
    Agency means--
    (1) An Executive agency as defined in 5 U.S.C. 105, including the 
U.S. Postal Service and the U.S. Postal Rate Commission;
    (2) A military department as defined in 5 U.S.C. 102;
    (3) An agency or court in the judicial branch, including a court as 
defined in 28 U.S.C. 610, the District Court for the Northern Mariana 
Islands, and the Judicial Panel on Multidistrict Litigation;
    (4) An agency of the legislative branch, including the U.S. Senate 
and the U.S. House of Representatives; and
    (5) Any other independent establishment that is an entity of the 
Federal Government.
    Days refer to calendar days.
    Department means the Education Department.
    Disposable pay means the amount that remains from an employee's pay 
after required deductions for Federal, State, and local income taxes; 
Social Security taxes, including Medicare taxes; Federal retirement 
programs; premiums for basic life insurance and health insurance 
benefits; and such other deductions that are required by law to be 
withheld.
    Employee means a current or former employee of an agency. In the 
case of an offset proposed to collect a debt owed by a deceased 
employee, the references in this part to the employee shall be read to 
refer to the payee of benefits from the Federal retirement account or 
other pay of the employee.
    Federal retirement account means an account of an employee under the 
Civil Service Retirement System or the Federal Employee Retirement 
System.

[[Page 60]]

    Offset means a deduction from the pay of an employee, or a payment 
due from the Federal retirement account of an employee, to satisfy a 
debt.
    Pay means basic pay, special pay, incentive pay, retired pay, 
retainer pay, or, in the case of an individual not entitled to basic 
pay, other authorized pay, including severance pay or lump sum payments 
for accrued annual leave, and amounts payable from the Federal 
retirement account of an employee.
    Secretary means the Secretary of the Department of Education or an 
official or employee of the Department acting for the Secretary under a 
delegation of authority.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



Sec. 31.3  Pre-offset notice.

    (a) At least 65 days before initiating an offset against the pay of 
an employee, the Secretary sends a written notice to the employee 
stating--
    (1) The nature and amount of the debt;
    (2) A demand for payment of the debt;
    (3) The manner in which the Secretary charges interest, 
administrative costs, and penalties on the debt;
    (4) The Secretary's intention to collect the debt by offset 
against--
    (i) 15 percent of the employee's current disposable pay; and
    (ii) If the debt cannot be satisfied by offset against current 
disposable pay, a specified amount of severance pay, a lump sum annual 
leave payment, a final salary check, or payments from the Federal 
retirement account of the employee;
    (5) The amount, frequency, approximate beginning date and duration 
of the proposed offset;
    (6) The employee's opportunity to--
    (i) Inspect and copy Department records pertaining to the debt;
    (ii) Obtain a pre-offset hearing before a hearing official who is 
not under the control or supervision of the Secretary regarding the 
existence or amount of the debt, or the proposed offset schedule; and
    (iii) Enter into a written agreement with the Secretary to repay the 
debt;
    (7) The date by which the employee must request an opportunity set 
forth under paragraph (a)(6) of this section;
    (8) The grounds for objecting to collection of the debt by offset;
    (9) The applicable hearing procedures and requirements;
    (10) That the Secretary grants any request for access to records, 
for a hearing, or for a satisfactory repayment agreement made by an 
employee;
    (11) That the Secretary does not delay the start of the proposed 
offset, or suspend an offset already commenced, unless--
    (i) An employee makes the request for access to records or for a 
hearing, or enters into a repayment agreement that is acceptable to the 
Secretary, before the deadlines described in this part; or
    (ii) An employee requests a hearing after the deadlines established 
in Sec. 31.5(a), but submits evidence satisfactory to the Secretary 
that the request was not made in a timely manner because the employee 
did not have notice of the proposed offset, or was prevented from making 
the request by factors beyond his or her control, until after the 
deadlines had passed;
    (12) That a final decision on the hearing will be issued not later 
than 60 days after the date on which the employee files a request for a 
hearing under Sec. 31.5, unless a delay in the proceedings is granted 
at the request of the employee;
    (13) That submission by the employee of knowingly false statements, 
representations or evidence may subject the employee to applicable 
disciplinary procedures, or civil or criminal penalties; and
    (14) That any amounts paid or collected by offset on a debt later 
determined to be unenforceable or canceled will be refunded to the 
employee.
    (b)(1) In determining whether an employee has requested an 
opportunity set forth under paragraph (a)(6) of this section in a timely 
manner, the Secretary relies on--
    (i) A legibly dated U.S. Postal Service postmark for the employee's 
request; or
    (ii) A legibly stamped U.S. Postal Service mail receipt for the 
employee's request.

[[Page 61]]

    (2) The Secretary does not rely on either of the following as proof 
of mailing:
    (i) A private metered postmark.
    (ii) A mail receipt that is not dated by the U.S. Postal Service.
    (c) Payment by offset under this part of all or part of a debt does 
not constitute an acknowledgment of the debt or a waiver of rights 
available to the employee under this part or other applicable law if the 
employee has not agreed in writing to the offset.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



Sec. 31.4  Request to inspect and copy documents relating to a debt.

    (a) The Secretary makes available for inspection and copying before 
offset under this part those Department documents that relate to the 
debt, if the employee--
    (1) Files a written request to inspect and copy the documents within 
20 days of the date of the pre-offset notice under Sec. 31.3, and
    (2) Files the request at the address specified in that notice.
    (b) A request filed under paragraph (a)(1) of this section must 
contain--
    (1) All information provided to the employee in the pre-offset 
notice under Sec. 31.3 that identifies the employee and the debt, 
including the employee's Social Security number and the program under 
which the debt arose, together with any corrections of that identifying 
information; and
    (2) A reasonably specific identification of the documents that the 
employee wishes to have available for inspection and copying.
    (c) The Secretary makes available documents for inspection and 
copying upon request by the employee. However, the Secretary may 
initiate an offset before making the requested documents available if 
the employee fails to request inspection and copying in accordance with 
this section.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



Sec. 31.5  Request for hearing on the debt or the proposed offset.

    (a) Deadlines. (1) The Secretary provides a hearing before offset on 
the existence, amount, or enforceability of the debt described in the 
pre-offset notice provided under Sec. 31.3, or on the amount or 
frequency of the offsets as proposed in that notice, if the employee--
    (i) Files a request for the hearing within the later of--
    (A) 65 days after the date of the pre-offset notice provided under 
Sec. 31.3; or
    (B) 15 days after the date on which the Secretary makes available to 
the employee the relevant, requested documents if the employee had 
requested an opportunity to inspect and copy documents within 20 days of 
the date of the pre-offset notice provided under Sec. 31.3; and
    (ii) Files a request at the address specified in that notice.
    (2) The Secretary provides a hearing upon request by the employee. 
However, if the employee does not submit, within the deadlines in 
paragraph (a)(1) of this section, a request that meets the requirements 
of paragraphs (b) and (c) of this section, the Secretary does not delay 
the start of an offset, or suspend an offset already commenced, unless 
the employee submits evidence satisfactory to the Secretary that the 
request was not made in a timely manner because the employee did not 
have notice of the proposed offset, or was otherwise prevented from 
making the request by factors beyond his or her control, until after the 
deadlines had passed.
    (b) Contents of request for a hearing. A request for a hearing must 
contain--
    (1) All information provided to the employee in the pre-offset 
notice under Sec. 31.3 that identifies the employee and the particular 
debt, including the employee's Social Security number and the program 
under which the debt arose, together with any corrections needed with 
regard to that identifying information;
    (2) An explanation of the reasons why the employee believes that--
    (i) The debt as stated in the pre-offset notice is not owing or is 
not enforceable by offset; or
    (ii) The amount of the proposed offset described in the pre-offset 
notice will cause extreme financial hardship to the employee;
    (3) If the employee contends that the amount of the proposed offset 
will

[[Page 62]]

cause extreme financial hardship under the standards set forth in Sec. 
31.8(b)--
    (i) An alternative offset proposal;
    (ii) An explanation, in writing, showing why the offset proposed in 
the notice would cause an extreme financial hardship for the employee; 
and
    (iii) Documents that show for the employee and for the spouse and 
dependents of the employee, for the one-year period preceding the 
Secretary's notice and for the repayment period proposed by the employee 
in his or her offset schedule--
    (A) Income from all sources,
    (B) Assets,
    (C) Liabilities,
    (D) Number of dependents,
    (E) Expenses for food, housing, clothing, and transportation,
    (F) Medical expenses, and
    (G) Exceptional expenses, if any; and
    (4) Copies of all documents that the employee wishes to have 
considered to support the objections raised by the employee regarding 
the enforceability of the debt or the claim of extreme financial 
hardship.
    (c) Request for oral hearing. (1) If the employee wants the hearing 
to be conducted as an oral hearing, the employee must submit a request 
that contains the information listed in paragraph (b) and must include 
with the request--
    (i) An explanation of reasons why the employee believes that the 
issues raised regarding the enforceability of the debt or a claim of 
extreme financial hardship cannot be resolved adequately by a review of 
the written statements and documents provided with the request for a 
hearing;
    (ii) An identification of--
    (A) The individuals that the employee wishes to have testify at the 
oral hearing;
    (B) The specific issues about which each individual is prepared to 
testify; and
    (C) The reasons why each individual's testimony is necessary to 
resolve the issue.
    (2) The Secretary grants a request for an oral hearing if--
    (i) The employee files a request for an oral hearing that meets the 
requirements of paragraphs (b) and (c) of this section; and
    (ii) The Secretary determines that the issues raised by the employee 
require a determination of the credibility of testimony and cannot be 
adequately resolved by a review of the written statements and documents 
submitted by the employee and documents contained in the Department's 
records relating to the debt.
    (3) The Secretary may decline a request for an oral hearing if the 
Secretary accepts the employee's proffer of testimomy made in the 
request for an oral hearing under paragraph (c)(1) of this section, and 
considers the facts at issue to be established as stated by the employee 
in the request.
    (4) If the Secretary grants a request for an oral hearing, the 
Secretary--
    (i) Notifies the employee in writing of--
    (A) The date, time, and place of the hearing;
    (B) The name and address of the hearing official;
    (C) The employee's right to be represented at the hearing by counsel 
or other representatives;
    (D) The employee's right to present and cross-examine witnesses; and
    (E) The employee's right to waive the requested oral hearing and 
receive a hearing in the written record; and
    (ii) Provides the hearing official with a copy of all written 
statements submitted by the employee with the request for a hearing, and 
all documents pertaining to the debt or the amount of the offset 
contained in the Department's files on the debt or submitted with the 
request for a hearing.
    (d) Employee choice of oral hearing or hearing on written 
submissions. An employee who has been sent notice under paragraph (c)(4) 
that an oral hearing will be provided must, within 15 days of the date 
of that notice, state in writing to the hearing official and the 
Secretary--
    (1) Whether the employee intends to proceed with the oral hearing, 
or wishes a decision based on the written record; and
    (2) Any changes in the list of the witnesses the employee proposes 
to produce for the hearing, or the facts about which a witness will 
testify.
    (e) Dismissal of request for hearing. The Secretary considers the 
employee to

[[Page 63]]

have waived the request for a hearing of any kind--
    (1) If an employee does not provide the hearing official in a timely 
manner the written statement required under paragraph (d) of this 
section; or
    (2) If the employee does not appear for a scheduled oral hearing.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



Sec. 31.6  Location and timing of oral hearing.

    (a) If the Secretary grants a request for an oral hearing, the 
Secretary selects the time, date, and location of the hearing. The 
Secretary selects, to the extent feasible, the location that is most 
convenient for the employee.
    (b) For a current military employee, the Secretary selects the time, 
date, and location of the hearing after consultation with the Secretary 
of Defense.
    (c) For a current Coast Guard employee, the Secretary selects the 
time, date, and location of the hearing after consultation with the 
Secretary of Transportation.
    (d) For an employee not described in paragraph (a) or (b) of this 
section, the hearing will be held in Washington, DC, or in one of the 
following cities: Boston, Philadelphia, New York, Atlanta, Chicago, 
Dallas, Kansas City, Denver, San Francisco, or Seattle.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



Sec. 31.7  Hearing procedures.

    (a) Independence of hearing official. A hearing provided under this 
part is conducted by a hearing official who is neither an employee of 
the Department nor otherwise under the supervision or control of the 
Secretary.
    (b) Lack of subpoena authority or formal discovery. (1) Neither the 
hearing official nor the Secretary has authority to issue subpoenas to 
compel the production of documents or to compel the attendance of 
witnesses at an oral hearing under this part. The Secretary will attempt 
to make available during an oral hearing the testimony of a current 
official of the Department if--
    (i) The employee had identified the official in the request for a 
hearing under Sec. 31.5(b) and demonstrated that the testimony of the 
official is necessary to resolve adequately an issue of fact raised by 
the employee in the request for a hearing; and
    (ii) The Secretary determines that the responsibilities of the 
official permit his or her attendance at the hearing.
    (2) If the Secretary determines that the testimony of a Department 
official is necessary, but that the official cannot attend an oral 
hearing to testify, the Secretary attempts to make the official 
available for testimony at the hearing by means of a telephone 
conference call.
    (3) No discovery is available in a proceeding under this part except 
as provided in Sec. 31.4.
    (c) Hearing on written submissions. If a hearing is conducted on the 
written submissions, the hearing official reviews documents and 
responses submitted by the Secretary and the employee under Sec. 31.5.
    (d) Conduct of oral hearing. (1) The hearing official conducts an 
oral hearing as an informal proceeding. The official--
    (i) Administers oaths to witnesses;
    (ii) Regulates the course of the hearing;
    (iii) Considers the introduction of evidence without regard to the 
rules of evidence applicable to judicial proceedings; and
    (iv) May exclude evidence that is redundant, or that is not relevant 
to those issues raised by the employee in the request for hearing under 
Sec. 31.5 that remain in dispute.
    (2) An oral hearing is generally open to the public. However, the 
hearing official may close all or any portion of the hearing if doing so 
is in the best interest of the employee or the public.
    (3) The hearing official may conduct an oral hearing by telephone 
conference call--
    (i) If the employee is located in a city outside the Washington, DC 
Metropolitan area.
    (ii) At the request of the employee.
    (iii) At the discretion of the hearing official.
    (4) No written record is created or maintained of an oral hearing 
provided under this part.
    (e) Burden of proof. In any hearing under this part--

[[Page 64]]

    (1) The Secretary bears the burden of proving, by a preponderance of 
the evidence, the existence and amount of the debt, and the failure of 
the employee to repay the debt, as the debt is described in the pre-
offset notice provided under Sec. 31.3; and
    (2) The employee bears the burden of proving, by a preponderance of 
the evidence--
    (i) The existence of any fact that would establish that the debt 
described in the pre-offset notice is not enforceable by offset; and
    (ii) The existence of any fact that would establish that the amount 
of the proposed offset would cause an extreme financial hardship for the 
employee.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



Sec. 31.8  Rules of decision.

    (a) Enforceability of debt by offset. In deciding whether the 
Secretary has established that the debt described in the pre-offset 
under Sec. 31.3 is owed by the employee, or whether the employee has 
established that the debt is not enforceable by offset, the hearing 
official shall apply the principles in this paragraph.
    (1) The statutes and Department regulations authorizing and 
implementing the program under which the debt arose must be applied in 
accordance with official written interpretations by the Department.
    (2) The principles of res judicata and collateral estoppel apply to 
resolution of disputed facts in those instances in which the debt or 
material facts in dispute have been the subject of prior judicial 
decision.
    (3) The act or omission of an institution of higher education at 
which the employee was enrolled does not constitute a defense to 
repayment of an obligation with regard to a grant or loan under a 
program authorized under Title IV of the Higher Education Act or similar 
authority, except to the extent that--
    (i) The act or omission constitutes a defense to the debt under 
applicable Federal or State law;
    (ii) The institution owed the employee a refund under its refund 
policy and failed to pay that refund to the employee or to a lender 
holding a loan made to the employee; or
    (iii) The institution ceased teaching activity while the employee 
was in attendance and during the academic period for which the grant or 
loan was made, and failed to refund to the employee or holder of a loan 
to the employee a proportionate amount of the grant or loan funds used 
to pay tuition and other institutional charges for that academic period.
    (4)(i) A debt otherwise established as owed by the employee is 
enforceable by offset under this part if the Secretary sends the pre-
offset notice for the debt within the ten year period following the 
later of--
    (A) The date on which the Secretary acquired the debt by assignment 
or referral, or
    (B) The date of a subsequent partial payment reaffirming the debt.
    (ii) Periods during which the statute of limitations applicable to a 
lawsuit to collect the debt has been tolled under 11 U.S.C. 108, 28 
U.S.C. 2416, 50 U.S.C. App. 525, or other authority are excluded from 
the calculation of the ten year period described in paragraph (a)(4)(i) 
of this section.
    (b) Extreme financial hardship. (1) In deciding whether an employee 
has established that the amount of the proposed offset would cause 
extreme financial hardship to the employee, the hearing official shall 
determine whether the credible, relevant evidence submitted demonstrates 
that the proposed offset would prevent the employee from meeting the 
costs necessarily incurred for essential subsistence expenses of the 
employee and his or her spouse and dependents.
    (2) For purposes of this determination, essential subsistence 
expenses include costs incurred only for food, housing, clothing, 
essential transportation and medical care.
    (3) In making this determination, the hearing official shall 
consider--
    (i) The income from all sources of the employee, and his or her 
spouse and dependents;
    (ii) The extent to which the assets of the employee and his or her 
spouse and dependents are available to meet the offset and the essential 
subsistence expenses;

[[Page 65]]

    (iii) Whether these essential subsistence expenses have been 
minimized to the greatest extent possible;
    (iv) The extent to which the employee and his or her spouse and 
dependents can borrow to satisfy the debt to be collected by offset or 
to meet essential expenses; and
    (v) The extent to which the employee and his or her spouse and 
dependents have other exceptional expenses that should be taken into 
account, and whether these expenses have been minimized.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



Sec. 31.9  Decision of the hearing official.

    (a) The hearing official issues a written opinion within sixty days 
of the date on which the employee filed a request for a hearing under 
Sec. 31.5, unless a delay in the proceedings has been granted at the 
request of the employee. In the opinion, the hearing official states his 
or her decision and the findings of fact and conclusions of law on which 
the decision is based.
    (b) If the hearing official finds that a portion of the debt 
described in the pre-offset notice under Sec. 31.3 is not enforceable 
by offset, the official shall state in the opinion that portion which is 
enforceable by offset.
    (c) If the hearing official finds that the amount of the offset 
proposed in the pre-offset notice will cause an extreme financial 
hardship for the employee, the hearing official shall establish an 
offset schedule that will result in the repayment of the debt in the 
shortest period of time without producing an extreme financial hardship 
for the employee.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



Sec. 31.10  Request for repayment agreement.

    (a) The Secretary does not initiate an offset under this part if the 
employee agrees in writing to repay the debt under terms acceptable to 
the Secretary and makes the first payment due under the agreement on or 
before the latest of--
    (1) The seventh day after the date of the decision of the hearing 
official, if the employee timely requested a hearing under Sec. 31.5 
(a) and (d);
    (2) The sixty-fifth day after the date of the pre-offset notice 
under Sec. 31.3 if the employee did not timely request either a hearing 
in accordance with Sec. 31.5 (a) and (d) or an opportunity to inspect 
and copy documents related to the debt under Sec. 31.4; or
    (3) The fifteenth day after the date on which the Secretary made 
available documents related to the debt, if the employee filed a timely 
request for documents under Sec. 31.4.
    (b) In the agreement, the Secretary and the employee may agree to 
satisfaction of the debt from sources other than an offset under this 
part, or may modify the amount proposed to be offset in the pre-offset 
notice or estimated in the decision of the hearing official.
    (c) If the employee does not enter into a repayment agreement 
acceptable to the Secretary within the deadlines in this section, the 
Secretary may initiate an offset under this part. The Secretary 
continues to collect by offset until an employee enters in a 
satisfactory repayment agreement for the debt. The Secretary suspends an 
offset already commenced under circumstances described in Sec. 
31.5(a)(2).

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



Sec. 31.11  Offset process.

    (a) The Secretary attempts to collect debts under this part within 
the shortest time authorized under--
    (1) The offset schedule proposed in the pre-offset notice, unless 
modified by agreement or by the decision of a hearing official;
    (2) A written repayment agreement with the employee; or
    (3) The offset schedule established in the decision of the hearing 
official.
    (b) In proposing an offset schedule under Sec. 31.3 or establishing 
a repayment agreement under Sec. 31.10, the Secretary also considers 
the expected period of Federal employment of the employee.
    (c) Unless the Secretary determines, in his discretion, to delay or 
suspend collection, the Secretary effects an offset under this part--
    (1) According to the terms agreed to by the employee pursuant to a 
timely request under Sec. 31.10 to enter into a repayment agreement; 
or,

[[Page 66]]

    (2) After the deadlines in Sec. 31.10(b) for requesting a repayment 
agreement with the Secretary.
    (d) If the employee retires, resigns, or leaves Federal employment 
before the debt is satisfied, the Secretary collects the amount 
necessary to satisfy the debt by offset from subsequent payments of any 
kind, including a final salary payment or a lump sum annual leave 
payment, due the employee on the date of separation. If the debt cannot 
be satisfied by offset from any such final payment due the employee on 
the date of separation, the Secretary collects the debt from later 
payments of any kind due the employee in accordance with the provisions 
of 4 CFR 102.4.
    (e) The Secretary effects an offset under this part against payments 
owing to an employee of another Federal agency after completion of the 
requirements of this part, in accordance with the provisions of 5 CFR 
550.1108.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



PART 32_SALARY OFFSET TO RECOVER OVERPAYMENTS OF PAY OR ALLOWANCES 
FROM DEPARTMENT OF EDUCATION EMPLOYEES--Table of Contents




Sec.
32.1 Scope.
32.2 Definitions.
32.3 Pre-offset notice.
32.4 Employee response.
32.5 Pre-offset hearing--general.
32.6 Request for a pre-offset hearing.
32.7 Pre-offset oral hearing.
32.8 Pre-offset hearing on the written submissions.
32.9 Written decision.
32.10 Deductions process.

    Authority: 5 U.S.C. 5514; 31 U.S.C. 3716.

    Source: 52 FR 24957, July 1, 1987, unless otherwise noted.



Sec. 32.1  Scope.

    (a) The Secretary establishes the standards and procedures in this 
part that apply to the deductions through offset from disposable pay of 
a current or former employee of the Department of Education to recover 
overpayments of pay or allowances.
    (b) This part does not apply to--
    (1) Recovery through offset of an indebtedness to the United States 
by an employee of the Department under a program administered by the 
Secretary of Education covered under 34 CFR part 31;
    (2) The offset of an indebtedness to the United States by a Federal 
employee to satisfy a judgment obtained by the United States against 
that employee in a court of the United States;
    (3) The offset of any payment to an employee of the Department of 
Education which is expressly allowed under statutes other than 5 U.S.C. 
5514, except as to offsets of severance pay and/or lump sum annual leave 
payments as authorized under 31 U.S.C. 3716;
    (4) Offsets under 34 CFR part 30; or
    (5) An employee election of coverage or of a change of coverage 
under a Federal benefits program which requires periodic deductions from 
pay if the amount to be recovered was accumulated over four pay periods 
or less.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



Sec. 32.2  Definitions.

    The following definitions apply to this part:
    Department means the Department of Education.
    Disposable pay means the amount that remains from an employee's pay 
after required deductions for Federal, State, and local income taxes; 
Social Security taxes, including Medicare taxes; Federal retirement 
programs; premiums for health and basic life insurance benefits; and 
such other deductions that are required by law to be withheld.
    Employee means a current or former employee of the Department.
    Former employee means a former employee of the Department who is 
entitled to pay from the Department or another agency.
    Pay means basic pay, special pay, incentive pay, retired pay, 
retainer pay, or, in the case of an individual not entitled to basic 
pay, other authorized pay, including severance pay and/or lump sum 
payments for accrued annual leave.
    Paying agency means a Federal agency currently employing an 
individual and authorizing the payment of his or her current pay.
    Secretary means the Secretary of the Department of Education or an 
official

[[Page 67]]

or employee of the Department acting for the Secretary under a 
delegation of authority.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



Sec. 32.3  Pre-offset notice.

    At least 30 days before initiating a deduction from the disposable 
pay of an employee to recover an overpayment of pay or allowances, the 
Secretary sends a written notice to the employee stating--
    (a) The origin, nature and amount of the overpayment;
    (b) How interest is charged and administrative costs and penalties 
will be assessed, unless excused under 31 U.S.C. 3716;
    (c) A demand for repayment, providing for an opportunity for the 
employee to enter into a written repayment agreement with the 
Department;
    (d) Where a waiver of repayment is authorized by law, the employee's 
right to request a waiver;
    (e) The Department's intention to deduct 15 percent of the 
employee's disposable pay, or a specified amount if the disposable pay 
is severance pay and/or a lump sum annual leave payment, to recover the 
overpayment if a waiver is not granted by the Secretary and the employee 
fails to repay the overpayment or enter into a written repayment 
agreement;
    (f) The amount, frequency, approximate beginning date and duration 
of the intended deduction;
    (g) If Government records on which the determination of overpayment 
are not attached, how those records will be made available to the 
employee for inspection and copying;
    (h) The employee's right to request a pre-offset hearing concerning 
the existence or amount of the overpayment or an involuntary repayment 
schedule;
    (i) The applicable hearing procedures and requirements, including a 
statement that a timely petition for hearing will stay commencement of 
collection proceedings and that a final decision on the hearing will be 
issued not later than 60 days after the hearing petition is filed, 
unless a delay is requested and granted;
    (j) That any knowingly false or frivolous statements, 
representations or evidence may subject the employee to applicable 
disciplinary procedures, civil or criminal penalties; and
    (k) That where amounts paid or deducted are later waived or found 
not owed, unless otherwise provided by law, they will be promptly 
refunded to the employee.

(Authority: 5 U.S.C. 5514, 31 U.S.C. 3716)



Sec. 32.4  Employee response.

    (a) Voluntary repayment agreement. Within 7 days of receipt of the 
written notice under Sec. 32.3, the employee may submit a request to 
the Secretary to arrange for a voluntary repayment schedule. To arrange 
for a voluntary repayment schedule, the employee shall submit a 
financial statement and sign a written repayment agreement approved by 
the Secretary. An employee who arranges for a voluntary repayment 
schedule may nonetheless request a waiver of the overpayment under 
paragraph (b) of this section.
    (b) Waiver. An employee seeking a waiver of collection of the debt 
that is authorized by law must request the waiver in writing to the 
Secretary within 10 days of receipt of the written notice under Sec. 
32.3. The employee must state why he or she believes a waiver should be 
granted.
    (c) Involuntary repayment schedule. If the employee claims that the 
amount of the involuntary deduction will cause extreme financial 
hardship and should be reduced, he or she must submit a written 
explanation and a financial statement signed under oath or affirmation 
to the Secretary within 10 days of receipt of the written notice under 
Sec. 32.3. An employee who fails to submit this financial information 
in a timely manner waives the right to object to the involuntary 
repayment schedule at a hearing under Sec. 32.5. The Secretary notifies 
the employee, in writing, whether the Secretary will reduce the rate of 
the involuntary deduction.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



Sec. 32.5  Pre-offset hearing--general.

    (a) An employee who wishes a review of the existence or amount of 
the overpayment or an involuntary repayment schedule may request a pre-
offset hearing. The pre-offset hearing does not review:

[[Page 68]]

    (1) The denial of a waiver of repayment under 5 U.S.C. 5584;
    (2) The involuntary repayment schedule or financial hardship caused 
by the amount of the involuntary deduction from the employee's 
disposable pay, unless the employee has submitted the financial 
statement and written explanation required under Sec. 32.4(c); and
    (3) The determination under paragraph (b) of this section that the 
pre-offset hearing is on the written submissions.
    (b) Unless the Secretary determines that a matter reviewable under 
paragraph (a) of this section turns on an issue of credibility or 
veracity or cannot be resolved by a review of the documentary evidence, 
the pre-offset hearing is on the written submissions.
    (c) A pre-offset hearing is based on the written submissions for 
overpayments arising from:
    (1) A termination of a temporary promotion;
    (2) A cash award;
    (3) An erroneous salary rate;
    (4) Premature granting of a within-grade increase;
    (5) A lump sum payment for annual leave;
    (6) Unauthorized appointment to a position;
    (7) An error on time and attendance records; or
    (8) Other circumstances where the Secretary determines that an oral 
hearing is not required.
    (d) The hearing is conducted by a hearing official who is not an 
employee of the Department or under the supervision or control of the 
Secretary.
    (e) Formal discovery between the parties is not provided.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



Sec. 32.6  Request for a pre-offset hearing.

    (a) Except for an employee who has requested a waiver of collection 
of the debt under Sec. 32.4(b), an employee who wishes a pre-offset 
hearing must request the hearing within 15 days of receipt of the 
written notice given under Sec. 32.3. The Secretary waives the 15-day 
requirement if the employee shows that the delay was because of 
circumstances beyond his or her control or because of failure to receive 
notice and lack of knowledge of the time limit.
    (b) An employee who has requested a waiver under Sec. 32.4(b) may 
request a hearing within 10 days of receipt of a determination by the 
Secretary denying a waiver.
    (c) The request for a hearing must:
    (1) Be in writing;
    (2) State why the employee:
    (i) Contests the existence or amount of the overpayment; or
    (ii) Claims that the involuntary repayment schedule will cause 
extreme financial hardship;
    (3) Include all documents on which the employee is relying, other 
than those provided by the Secretary under Sec. 32.3; any document 
which is a statement of an individual must be in the form of an 
affidavit; and
    (4) Be submitted to the designated hearing official with a copy to 
the Secretary.
    (d) If the employee timely requests a pre-offset hearing or the 
timelines are waived under paragraph (a) of this section, the Secretary:
    (1) Notifies the employee whether the employee may elect an oral 
hearing; and
    (2) Provides the hearing official with a copy of all records on 
which the determination of the overpayment and any involuntary repayment 
schedule are based.
    (e) An employee who has been given the opportunity to elect an oral 
hearing and who does elect an oral hearing must notify the hearing 
official and the Secretary of his or her election in writing within 7 
days of receipt of the notice under paragraph (d)(1) of this section and 
must identify all proposed witnesses and all facts and evidence about 
which they will testify.
    (f) Where an employee requests an oral hearing, the hearing official 
notifies the Secretary and the employee of the date, time, and location 
of the hearing. However:
    (1) The employee subsequently may elect to have the hearing based 
only on the written submissions by notifying the hearing official and 
the Secretary at least 3 calendar days before the date of the oral 
hearing. The hearing official may waive the 3-day requirement

[[Page 69]]

for good cause when the employee notifies the hearing official before 
the date of the hearing; and
    (2) The request for a hearing of an employee who fails to appear at 
the oral hearing must be dismissed and the Secretary's decision 
affirmed.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



Sec. 32.7  Pre-offset oral hearing.

    (a) Oral hearings are informal in nature. The Secretary and the 
employee, through their representatives, and by reference to the 
documentation submitted, explain their case. The employee may testify on 
his or her own behalf, subject to cross examination. Other witnesses may 
be called to testify only where the hearing official determines that 
their testimony is relevant and not redundant.
    (b) The hearing official shall:
    (1) Conduct a fair and impartial hearing; and
    (2) Preside over the course of the hearing, maintain decorum, and 
avoid delay in the disposition of the hearing.
    (c) The employee may represent himself or herself or may be 
represented by another person at the hearing. The employee may not be 
represented by a person whose representation creates an actual or 
apparent conflict of interest.
    (d) Oral hearings are open to the public. However, the hearing 
official may close all or any portion of the hearing where to do so is 
in the best interests of the employee or the public.
    (e) Oral hearings may be conducted by conference call--
    (1) If the employee is located in a city outside the Washington, DC 
Metropolitan area;
    (2) At the request of the employee; or
    (3) At the discretion of the hearing official.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



Sec. 32.8  Pre-offset hearing on the written submissions.

    If a hearing is to be held on the written submissions, the hearing 
official reviews the records and responses submitted by the Secretary 
and the employee under Sec. 32.6.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



Sec. 32.9  Written decision.

    (a) The hearing official issues a written decision stating the facts 
supporting the nature and origin of the debt and the hearing official's 
analysis, findings and conclusions as to the amount of the debt and the 
repayment schedule within 60 days of filing of the employee's request 
for a pre-offset hearing, unless the employee requests, and the hearing 
official grants, a delay in the proceedings.
    (b) The hearing official decides whether the Secretary's 
determination of the existence and the amount of the overpayment or the 
extreme financial hardship caused by the involuntary repayment schedule 
is clearly erroneous. A determination is clearly erroneous if although 
there is evidence to support the determination, the hearing official, 
considering the record as a whole, is left with a definite and firm 
conviction that a mistake was made.
    (c) In making the decision, the hearing official is governed by 
applicable Federal statutes, rules and regulations.
    (d) The hearing official decides the issue of extreme financial 
hardship caused by the involuntary repayment schedule only where the 
employee has submitted the financial statement and written explanation 
required under Sec. 32.4(c). Where the hearing official determines that 
the involuntary repayment schedule creates extreme financial hardship, 
he or she must establish a schedule that alleviates the financial 
hardship but may not reduce the involuntary repayment schedule to a 
deduction of zero percent.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



Sec. 32.10  Deductions process.

    (a) Debts must be collected in one lump sum where possible. If the 
employee does not agree to a lump sum that exceeds 15 percent of 
disposable pay, the debt must be collected in installment deductions at 
officially established pay intervals in the amount established under:
    (1) A voluntary repayment agreement;
    (2) An involuntary repayment schedule where no hearing is requested; 
or
    (3) The schedule established under the written hearing decision.

[[Page 70]]

    (b) Installment deductions must be made over a period not greater 
than the anticipated period of employment, except as provided under 
paragraph (d) of this section. If possible, the installment payment must 
be sufficient in size and frequency to liquidate the debt in, at most, 
three years. Installment payments of less than $25 may be accepted only 
in the most unusual circumstances.
    (c) Deductions must begin:
    (1) After the employee has entered a voluntary repayment schedule;
    (2) If a waiver is requested under Sec. 32.4(b), after the employee 
has been denied a waiver by the Secretary; or
    (3) If a hearing is requested under Sec. 32.5, after a written 
decision.
    (d) If the employee retires or resigns or his or her employment ends 
before collection of the debt is completed, the amount necessary to 
liquidate the debt must be offset from subsequent payments of any nature 
(for example, final salary payment and/or lump sum annual leave payment) 
due the employee on the date of separation. If the debt cannot be 
liquidated by offset from any such final payment due the employee on the 
date of separation, the debt must be liquidated by administrative offset 
pursuant to 31 U.S.C. 3716 from later payments of any kind due the 
employee, where appropriate. After the Secretary has complied with the 
procedures in this part, the Secretary may refer the debt to a paying 
agency for collection by offset under 5 CFR 550.1108.
    (e) Interest, penalties and administrative costs on debts collected 
under this part must be assessed, in accordance with the provisions of 4 
CFR 102.13.
    (f) An employee's payment, whether voluntary or involuntary, of all 
or any portion of an alleged debt collected pursuant to this part may 
not be construed as a waiver of any rights which the employee may have 
under this part or any other provision of law, except as otherwise 
provided by law.
    (g) Amounts paid or deducted pursuant to this part by an employee 
for a debt that is waived or otherwise found not owing to the United 
States or which the Secretary is ordered to refund must be promptly 
refunded to the employee.

(Authority: 5 U.S.C. 5514; 31 U.S.C. 3716)



PART 33_PROGRAM FRAUD CIVIL REMEDIES ACT--Table of Contents




Sec.
33.1 Basis and purpose.
33.2 Definitions.
33.3 Basis for civil penalties and assessments.
33.4 Investigation.
33.5 Review by the reviewing official.
33.6 Prerequisites for issuing a complaint.
33.7 Complaint.
33.8 Service of complaint.
33.9 Answer.
33.10 Default upon failure to file an answer.
33.11 Referral of complaint and answer to the ALJ.
33.12 Notice of hearing.
33.13 Parties to the hearing.
33.14 Separation of functions.
33.15 Ex parte contacts.
33.16 Disqualification of reviewing official or ALJ.
33.17 Rights of parties.
33.18 Authority of the ALJ.
33.19 Prehearing conferences.
33.20 Disclosure of documents.
33.21 Discovery.
33.22 Exchange of witness lists, statements and exhibits.
33.23 Subpoenas for attendance at hearing.
33.24 Protective order.
33.25 Fees.
33.26 Form, filing and service of papers.
33.27 Computation of time.
33.28 Motions.
33.29 Sanctions.
33.30 The hearing and burden of proof.
33.31 Determining the amount of penalties and assessments.
33.32 Location of hearing.
33.33 Witnesses.
33.34 Evidence.
33.35 The record.
33.36 Post-hearing briefs.
33.37 Initial decision.
33.38 Reconsideration of initial decision.
33.39 Appeal to Department head.
33.40 Stays ordered by the Department of Justice.
33.41 Stay pending appeal.
33.42 Judicial review.
33.43 Collection of civil penalties and assessments.
33.44 Right to administrative offset.
33.45 Deposit in Treasury of United States.
33.46 Compromise or settlement.
33.47 Limitations.

    Authority: 31 U.S.C. 3801-3812.

[[Page 71]]


    Source: 53 FR 15675, May 3, 1988, unless otherwise noted.



Sec. 33.1  Basis and purpose.

    (a) Basis. This part implements the Program Fraud Civil Remedies Act 
of 1986, Pub. L. No. 99-509, 6101 through 6104, 100 Stat. 16674 (October 
21, 1986), to be codified at 31 U.S.C. 3801 through 3812. This law (31 
U.S.C. 3809) requires each Federal department head to promulgate 
regulations necessary to implement the provisions of the statute.

(Authority: 31 U.S.C. 3809)

    (b) Purpose. This part:
    (1) Establishes administrative procedures for imposing civil 
penalties and assessments against persons who make, submit, or present, 
or cause to be made, submitted, or presented, false, fictitious, or 
fraudulent claims or written statements to the Department or to its 
agents; and
    (2) Specifies the hearing and appeal rights of persons subject to 
allegations of liability for those penalties and assessments.

(Authority: 31 U.S.C. 3809)



Sec. 33.2  Definitions.

    As used in this part:
    ALJ means an Administrative Law Judge in the Department appointed 
pursuant to 5 U.S.C. 3105 or detailed to the Department pursuant to 5 
U.S.C. 3344.

(Authority: 31 U.S.C. 3801(a)(7)(A))

    Benefits, as used in the definition of ``statement,'' means anything 
of value, including but no limited to any advantage, preference, 
privilege, license, permit, favorable decision, ruling, status, or loan 
guarantee.

(Authority: 31 U.S.C. 3809)

    Claim means any request, demand, or submission:
    (a) Made to the Department for property, services, or money 
(including money representing grants, cooperative agreements, loans, 
insurance, or benefits);
    (b) Made to a recipient of property, services, or money from the 
Department or to a party to a contract or agreement with the Department:
    (1) For property or services if the United States:
    (i) Provided the property or services;
    (ii) Provided any portion of the funds for the purchase of the 
property or services; or
    (iii) Will reimburse the recipient or party for the purchase of the 
property or services; or
    (2) For the payment of money (including money representing grants, 
cooperative agreements, loans, insurance, or benefits) if the United 
States:
    (i) Provided any portion of the money requested or demanded;
    (ii) Will reimburse the recipient or party for any portion of the 
money paid on that request or demand; or
    (iii) Will guarantee or reinsure any portion of a loan made by the 
party; or
    (c) Made to the Department which has the effect of decreasing an 
obligation to pay or account for property, services, or money.

(Authority: 31 U.S.C. 3801(a)(3))

    Complaint means the administrative complaint served by the reviewing 
official on the defendant under Sec. 33.7.

(Authority: 31 U.S.C. 3809)

    Defendant means any person alleged in a complaint under Sec. 33.7 
to be liable for a civil penalty or assessment under Sec. 33.3.

(Authority: 31 U.S.C. 3809)

    Department means the United States Department of Education.

(Authority: 31 U.S.C. 3809)

    Department head means the Secretary or Under Secretary of the United 
States Department of Education.

(Authority: 31 U.S.C. 3801(a)(2))

    Government means the United States Government.

(Authority: 31 U.S.C. 3809)

    Individual means a natural person.

(Authority: 31 U.S.C. 3809)

    Initial decision means the written decision of the ALJ required by 
Sec. 33.10 or Sec. 33.37, and includes a revised initial decision 
issued following a remand or a motion for reconsideration.

(Authority: 31 U.S.C. 3803(h))


[[Page 72]]


    Investigating official means the Inspector General of the Department 
or an officer or employee of the Office of the Inspector General 
designated by the Inspector General and serving in a position for which 
the rate of basic pay is not less than the minimum rate of basic pay for 
grade GS-16 under the General Schedule.

(Authority: 31 U.S.C. 3801(4)(A)(i))

    Knows or has reason to know, means that a person, with respect to a 
claim or statement:
    (a) Has actual knowledge that the claim or statement is false, 
fictitious, or fraudulent;
    (b) Acts in deliberate ignorance of the truth or falsity of the 
claim or statement; or
    (c) Acts in reckless disregard of the truth or falsity of the claim 
or statement.

(Authority: 31 U.S.C. 3801(5))

    Makes includes the terms presents, submits, and causes to be made, 
presented, or submitted.

(Authority: 31 U.S.C. 3802(a))

    Person means any individual, partnership, corporation, association, 
or private organization.

(Authority: 31 U.S.C. 3801(a)(6))

    Representative means:
    (a) An attorney who is a member in good standing of the bar of any 
State, territory, possession of the United States, the District of 
Columbia, or the Commonwealth of Puerto Rico; or
    (b) Any other person designated by a party in writing, provided that 
the designation includes a certification that the party understands the 
nature and consequences of an administrative enforcement action under 
this part, and that he or she has the right to representation by counsel 
or to self-representation.

(Authority: 31 U.S.C. 3803(g)(2)(F))

    Reviewing official means the General Counsel of the Department or 
his or her designee who is:
    (a) Not subject to supervision by, or required to report to, the 
investigating official; and
    (b) Not employed in the organizational unit of the Department in 
which the investigating official is employed; and
    (c) Serving in a position for which the rate of basic pay is not 
less than the minimum rate of basic pay for grade GS-16 under the 
General Schedule.

(Authority: 31 U.S.C. 3801(8))

    Statement means any representation, certification, affirmation, 
document, record, or accounting or bookkeeping entry made:
    (a) With respect to a claim or to obtain the approval or payment of 
a claim (including relating to eligibility to make a claim); or
    (b) With respect to (including relating to eligibility for):
    (1) A contract with, or a bid or proposal for a contract with; or
    (2) A grant, cooperative agreement, loan, or benefit from;

The Department, or any State, political subdivision of a State, or other 
party, if the United States Government provides any portion of the money 
or property under the contract or for the grant, loan, cooperative 
agreement, or benefit, or if the Government will reimburse or reinsure 
the State, political subdivision, or party for any portion of the money 
or property under the contract or for the grant, cooperative agreement, 
loan, or benefit.

(Authority: 31 U.S.C. 3801(9))



Sec. 33.3  Basis for civil penalties and assessments.

    (a) Claims. (1) Any person who makes a claim that the person knows 
or has reason to know:
    (i) Is false, fictitious, or fraudulent;
    (ii) Includes or is supported by any written statement which asserts 
a material fact which is false, fictitious, or fraudulent;
    (iii) Includes or is supported by any written statement that:
    (A) Omits a material fact;
    (B) Is false, fictitious, or fraudulent as a result of such 
omission; and
    (C) Is a statement in which the person making such statement has a 
duty to include such material fact; or
    (iv) Is for payment for the provision of property or services which 
the person has not provided as claimed;

[[Page 73]]


shall be subject, in addition to any other remedy that may be prescribed 
by law, to a civil penalty of not more than $5,000 for each claim.
    (2) Each voucher, invoice, claim form, or other individual request 
or demand for property, services, or money constitutes a separate claim.
    (3) A claim is considered made to the Department, a recipient, or 
party when that claim is actually made to an agent, fiscal intermediary, 
or other entity, including any State or political subdivision thereof, 
acting for or on behalf of the Department, a recipient, or party.
    (4) Each claim for property, services, or money is subject to a 
civil penalty regardless of whether the property, services, or money is 
actually delivered or paid.
    (5) If the Government has made any payment (including transferred 
property or provided services) on a claim, a person subject to a civil 
penalty under paragraph (a)(1) of this section is also subject to an 
assessment of not more than twice the amount of that claim or that 
portion thereof that is determined to be in violation of paragraph 
(a)(1) of this section. The assessment is in lieu of damages sustained 
by the Government because of that claim.

(Authority: 31 U.S.C. 3802(a)(1))

    (b) Statements. (1) Any person who makes a written statement that:
    (i) The person knows or has reason to know:
    (A) Asserts a material fact which is false, fictitious, or 
fraudulent; or
    (B) Is false, fictitious, or fraudulent because it omits a material 
fact that the person making the statement has a duty to include in the 
statement; and
    (ii) Contains or is accompanied by an express certification or 
affirmation of the truthfulness and accuracy of the contents of the 
statement;

shall be subject, in addition to any other remedy that may be prescribed 
by law, to a civil penalty of not more than $5,000 for each statement.
    (2) Each written representation, certification, or affirmation 
constitutes a separate statement.
    (3) A statement is considered made to the Department when the 
statement is actually made to an agent, fiscal intermediary, or other 
entity, including any State or political subdivision thereof, acting for 
or on behalf of the Department.

(Authority: 31 U.S.C. 3802(a)(2))

    (c) No proof of specific intent to defraud is required to establish 
liability under this section.

(Authority: 31 U.S.C. 3801(5))

    (d) In any case in which it is determined that more than one person 
is liable for making a claim or statement under this section, each of 
those persons may be held liable for a civil penalty under this section.

(Authority: 31 U.S.C. 3802(a))

    (e) In any case in which it is determined that more than one person 
is liable for making a claim under this section of which the Government 
has made payment (including transferred property or provided services), 
an assessment may be imposed against any of those persons or jointly and 
severally against any combination of those persons.

(Authority: 31 U.S.C. 3802(a)(1); 3809)



Sec. 33.4  Investigation.

    (a) If an investigating official concludes that a subpoena pursuant 
to the authority conferred by 31 U.S.C. 3604(a) is warranted:
    (1) The subpoena so issued must notify the person to whom it is 
addressed of the authority under which the subpoena is issued and must 
identify the records or documents sought;
    (2) The investigating official may designate a person to act on his 
or her behalf to receive the documents sought; and
    (3) The person receiving the subpoena is required to tender to the 
investigating official or the person designated to receive the documents 
a certification that the documents sought have been produced, or that 
the documents are not available and the reasons therefore, or that the 
documents, suitably identified, have been withheld based upon the 
assertion of an identified privilege.

(Authority: 31 U.S.C. 3804(a))


[[Page 74]]


    (b) If the investigating official concludes that an action under the 
Program Fraud Civil Remedies Act may be warranted, the investigating 
official shall submit a report containing the findings and conclusions 
of the investigation to the reviewing official.

(Authority: 31 U.S.C. 3803(a)(1))

    (c) Nothing in this section precludes or limits an investigating 
official's discretion to refer allegations directly to the Department of 
Justice for suit under the False Claims Act or other civil relief, or to 
defer or postpone a report or referral to the reviewing official to 
avoid interference with a criminal investigation or prosecution.

(Authority: 31 U.S.C. 3809)

    (d) Nothing in this section modifies any responsibility of an 
investigating official to report violations of criminal law to the 
Attorney General.

(Authority: 31 U.S.C. 3803(a)(1))



Sec. 33.5  Review by the reviewing official.

    (a) If, based on the report of the investigating official under 
Sec. 33.4(b), the reviewing official determines that there is adequate 
evidence to believe that a person is liable under Sec. 33.3 of this 
part, the reviewing official transmits to the Attorney General a written 
notice of the reviewing official's intention to issue a complaint under 
Sec. 33.7.
    (b) The notice must include--
    (1) A statement of the reviewing official's reasons for issuing a 
complaint;
    (2) A statement specifying the evidence that supports the 
allegations of liability;
    (3) A description of the claims or statements upon which the 
allegations of liability are based;
    (4) An estimate of the amount of money or the value of property, 
services, or other benefits requested or demanded in violation of Sec. 
33.3;
    (5) A statement of any exculpatory or mitigating circumstances that 
may relate to the claims or statements known by the reviewing official 
or the investigating official; and
    (6) A statement that there is a reasonable prospect of collecting an 
appropriate amount of penalties and assessments. Such a statement may be 
based upon information then known or an absence of any information 
indicating that the person may be unable to pay such an amount.

(Authority: 31 U.S.C. 3803(a)(2); 3809(2))



Sec. 33.6  Prerequisites for issuing a complaint.

    (a) The reviewing official may issue a complaint under Sec. 33.7 
only if--
    (1) The Department of Justice approves the issuance of a complaint 
in a written statement described in 31 U.S.C. 3803(b)(1); and
    (2) In the case of allegations of liability under Sec. 33.3(a) with 
respect to a claim, the reviewing official determines that, with respect 
to that claim or a group of related claims submitted at the same time 
the claim is submitted (as defined in paragraph (b) of this section), 
the amount of money or the value of property or services demanded or 
requested in violation of Sec. 33.3(a) does not exceed $150,000.
    (b) For the purposes of this section, a related group of claims 
submitted at the same time includes only those claims arising from the 
same transaction (e.g., grant, cooperative agreement, loan, application, 
or contract) that are submitted simultaneously as part of a single 
request, demand, or submission.
    (c) Nothing in this section may be construed to limit the reviewing 
official's authority to join in a single complaint against a person 
claims that are unrelated or were not submitted simultaneously, 
regardless of the amount of money, or the value of property or services, 
demanded or requested.

(Authority: 31 U.S.C. 3803(b), (c))



Sec. 33.7  Complaint.

    (a) On or after the date the Department of Justice approves the 
issuance of a complaint in accordance with 31 U.S.C. 3803(b)(1), the 
reviewing official may serve a complaint on the defendant, as provided 
in Sec. 33.8.
    (b) The complaint must state:
    (1) The allegations of liability against the defendant, including 
the statutory basis for liability, an identification of the claims or 
statements

[[Page 75]]

that are the basis for the alleged liability, and the reasons why 
liability allegedly arises from those claims or statements;
    (2) The maximum amount of penalties and assessments for which the 
defendant may be held liable;
    (3) Instructions for filing an answer to request a hearing, 
including a specific statement of the defendant's right to request a 
hearing by filing an answer and to be represented by a representative; 
and
    (4) That failure to file an answer within 30 days of service of the 
complaint will result in the imposition of the maximum amount of 
penalties and assessments without right to appeal, as provided in Sec. 
33.10.
    (c) At the same time the reviewing official serves the complaint, he 
or she shall serve the defendant with a copy of the regulations in this 
part.

(Authority: 31 U.S.C. 3803(a))



Sec. 33.8  Service of complaint.

    (a) Service of a complaint must be made by certified or registered 
mail or by delivery in any manner authorized by Rule 4(d) of the Federal 
Rules of Civil Procedure. Service is complete upon receipt.
    (b) Proof of service, stating the name and address of the person on 
whom the complaint was served, and the manner and date of service, may 
be made by:
    (1) Affidavit of the individual serving the complaint by delivery;
    (2) An acknowledged United States Postal Service return receipt 
card; or
    (3) Written acknowledgment of receipt by the defendant or his 
representative.

(Authority: 31 U.S.C. 3802(d))



Sec. 33.9  Answer.

    (a) The defendant may request a hearing by filing an answer with the 
reviewing official within 30 days of service of the complaint. An answer 
is deemed to be a request for hearing.
    (b) In the answer, the defendant:
    (1) Shall admit or deny each of the allegations of liability made in 
the complaint;
    (2) Shall state any defense on which the defendant intends to rely;
    (3) May state any reasons why the defendant contends that the 
penalties and assessments should be less than the statutory maximum; and
    (4) Shall state the name, address, and telephone number of the 
person authorized by the defendant to act as defendant's representative, 
if any.
    (c) If the defendant is unable to file an answer meeting the 
requirements of paragraph (b) of this section within the time provided, 
the defendant may, before the expiration of 30 days from service of the 
complaint, file with the reviewing official a general answer denying 
liability and requesting a hearing, and a request for an extension of 
time within which to file an answer meeting the requirements of 
paragraph (b) of this section. The reviewing official shall file 
promptly with the ALJ the complaint, the general answer denying 
liability, and the request for an extension of time as provided in Sec. 
33.11 for good cause shown, the ALJ may grant the defendant up to 30 
additional days within which to file an answer meeting the requirements 
of paragraph (b) of this section.

(Authority: 31 U.S.C. 3803(d)(2), 3809)



Sec. 33.10  Default upon failure to file an answer.

    (a) If the defendant does not file an answer within the time 
prescribed in Sec. 33.9(a), the reviewing official may refer the 
complaint to the ALJ.
    (b) Upon the referral of the complaint, the ALJ shall promptly serve 
on defendant in the manner prescribed in Sec. 33.8, a notice that an 
initial decision will be issued under this section.
    (c) The ALJ shall assume the facts alleged in the complaint to be 
true and, if those facts establish liability under Sec. 33.3, the ALJ 
shall issue an initial decision imposing the maximum amount of penalties 
and assessments allowed under the statute.
    (d) Except as otherwise provided in this section, by failing to file 
a timely answer the defendant waives any right to further review of the 
penalties and assessments imposed under paragraph (c) of this section, 
and the initial decision becomes final and binding upon the parties 30 
days after it is issued.
    (e) If, before such an initial decision becomes final, the defendant 
files a

[[Page 76]]

motion with the ALJ seeking to reopen on the grounds that extraordinary 
circumstances prevented the defendant from filing an answer, the initial 
decision must be stayed pending the ALJ's decision on the motion.
    (f) If, on such a motion, the defendant can demonstrate 
extraordinary circumstances excusing the failure to file a timely 
answer, the ALJ shall withdraw the initial decision under paragraph (c) 
of this section, if such a decision has been issued, and shall grant the 
defendant an opportunity to answer the complaint.
    (g) A decision of the ALJ denying a defendant's motion under 
paragraph (e) of this section is not subject to reconsideration under 
Sec. 33.38.
    (h) The defendant may appeal to the Department head the decision 
denying a motion to reopen by filing a notice of appeal with the 
Department head within 15 days after the ALJ denies the motion. The 
timely filing of a notice of appeal stays the initial decision until the 
Department head decides the issue.
    (i) If the defendant files a timely notice of appeal with the 
Department head, the ALJ shall forward the record of the proceeding to 
the Department head.
    (j) The Department head decides expeditiously whether extraordinary 
circumstances excuse the defendant's failure to file a timely answer 
based solely on the record before the ALJ.
    (k) If the Department head decides that extraordinary circumstances 
excuse the defendant's failure to file a timely answer, the Department 
head remands the case to the ALJ with instructions to grant the 
defendant an opportunity to answer.
    (l) If the Department head decides that the defendant's failure to 
file a timely answer is not excused, the Department head reinstates the 
initial decision of the ALJ, which becomes final and binding upon the 
parties 30 days after the Department head issues that decision.

(Authority: 31 U.S.C. 3809)



Sec. 33.11  Referral of complaint and answer to the ALJ.

    Upon receipt of an answer, the reviewing official shall file the 
complaint and answer with the ALJ.

(Authority: 31 U.S.C. 3803(d)(2); 3809)



Sec. 33.12  Notice of hearing.

    (a) When the ALJ receives the complaint and answer, the ALJ shall 
promptly serve a notice of hearing upon the defendant in the manner 
prescribed by Sec. 33.8. At the same time, the ALJ shall send a copy of 
the notice to the representative for the Government.
    (b) The notice must include:
    (1) The tentative time and place, and the nature of the hearing;
    (2) The legal authority and jurisdiction under which the hearing is 
to be held;
    (3) The matters of fact and law to be asserted;
    (4) A description of the procedures for the conduct of the hearing;
    (5) The name, address, and telephone number of the representative of 
the Government and of the defendant, if any; and
    (6) Such other matters as the ALJ deems appropriate.

(Authority: 31 U.S.C. 3803(g)(2)(A))



Sec. 33.13  Parties to the hearing.

    (a) The parties to the hearing are the defendant and the Department.
    (b) Pursuant to 31 U.S.C. 3730(c)(5), a private plaintiff under the 
False Claims Act may participate in these proceedings to the extent 
authorized by the provisions of that Act.

(Authority: 31 U.S.C. 3803(g)(2))



Sec. 33.14  Separation of functions.

    (a) The investigating official, the reviewing official, and any 
employee or agent of the Department who takes part in investigating, 
preparing, or presenting a particular case may not, in that case or a 
factually related case:
    (1) Participate in the hearing as the ALJ;
    (2) Participate or advise in the initial decision or the review of 
the initial decision by the Department head, except as a witness or a 
representative in public proceedings; or

[[Page 77]]

    (3) Make the collection of penalties and assessments under 31 U.S.C. 
3806.
    (b) The ALJ may not be responsible to, or subject to the supervision 
or direction of, the investigating official or the reviewing official.
    (c) Except as provided in paragraph (a) of this section, the 
representative for the Government may be employed anywhere in the 
Department, including in the offices of either the investigating 
official or the reviewing official.

(Authority: 31 U.S.C. 3809(l)(2))



Sec. 33.15  Ex parte contacts.

    No party or person (except employees of the ALJ's office) may 
communicate in any way with the ALJ on any matter at issue in a case, 
unless on notice and opportunity for all parties to participate. This 
provision does not prohibit a person or party from inquiring about the 
status of a case or asking routine questions concerning administrative 
functions or procedures.

(Authority: 31 U.S.C. 3803(g)(1)(A))



Sec. 33.16  Disqualification of reviewing official or ALJ.

    (a) A reviewing official or ALJ in a particular case may disqualify 
himself or herself at any time.
    (b) A party may file with the ALJ a motion for disqualification of a 
reviewing official or an ALJ. That motion must be accompanied by an 
affidavit alleging personal bias or other reason for disqualification.
    (c) The motion and affidavit must be filed promptly upon the party's 
discovery of reasons requiring disqualification, or the objections are 
deemed waived.
    (d) The affidavit must state specific facts that support the party's 
belief that personal bias or other reason for disqualification exists 
and the time and circumstances of the party's discovery of those facts. 
It must be accompanied by a certificate of the representative of record 
that it is made in good faith.
    (e) Upon the filing of the motion and affidavit, the ALJ shall not 
proceed further in the case until he or she resolves the matter of 
disqualification in accordance with paragraph (f) of this section.
    (f)(1) If the ALJ determines that a reviewing official is 
disqualified, the ALJ shall dismiss the complaint without prejudice.
    (2) If the ALJ disqualifies himself or herself, the case must be 
reassigned promptly to another ALJ.
    (3) If the ALJ denies a motion to disqualify, the Department head 
may determine the matter only as part of his or her review of the 
initial decision upon appeal, if any.

(Authority: 31 U.S.C. 3803(g)(2)(G))



Sec. 33.17  Rights of parties.

    Except as otherwise limited by this part, all parties may:
    (a) Be accompanied, represented, and advised by a representative (as 
defined in Sec. 33.2);
    (b) Participate in any conference held by the ALJ:
    (c) Conduct discovery under Sec. 33.21;
    (d) Agree to stipulations of fact or law, which must be made part of 
the record;
    (e) Present evidence relevant to the issues at the hearing;
    (f) Present and cross-examine witnesses;
    (g) Present oral arguments at the hearing as permitted by the ALJ; 
and
    (h) Submit written briefs and proposed findings of fact and 
conclusions of law after the hearing.

(Authority: 31 U.S.C. 3803(g) (2) (E), (F), (3)(B)(ii))



Sec. 33.18  Authority of the ALJ.

    (a) The ALJ shall conduct a fair and impartial hearing, avoid delay, 
maintain order, and assure that a record of the proceeding is made.
    (b) The ALJ has the authority to:
    (1) Set and change the date, time, and place of the hearing upon 
reasonable notice to the parties;
    (2) Disqualify a non-attorney representative (designated as 
described in the Sec. 33.2 definitions of ``representative'') if the 
ALJ determines that the representative is incapable of rendering 
reasonably effective assistance;
    (3) Continue or recess the hearing in whole or in part for a 
reasonable period of time;

[[Page 78]]

    (4) Hold conferences to identify or simplify the issues, or to 
consider other matters that may aid in the expeditious disposition of 
the proceeding;
    (5) Administer oaths and affirmations;
    (6) Issue subpoenas requiring the attendance of witnesses and the 
production of documents at depositions or at hearings;
    (7) Rule on motions and other procedural matters;
    (8) Regulate the scope and timing of discovery;
    (9) Regulate the course of the hearing and the conduct of 
representatives and parties;
    (10) Examine witnesses;
    (11) Receive, rule on, exclude, or limit evidence;
    (12) Upon motion of a party, take official notice of facts;
    (13) Upon motion of a party, decide cases, in whole or in part, by 
summary judgment if there is no disputed issue of material fact;
    (14) Conduct any conference, argument, or hearing on motions in 
person or by telephone; and
    (15) Exercise such other authority as is necessary to carry out the 
responsibilities of the ALJ under this part.
    (c) The ALJ does not have the authority to find Federal statutes or 
regulations invalid.

(Authority: 31 U.S.C. 3803(g))



Sec. 33.19  Prehearing conferences.

    (a) The ALJ may schedule perhearing conferences as appropriate.
    (b) Upon the motion of any party, the ALJ shall schedule at least 
one perhearing conference at a reasonable time in advance of the 
hearing.
    (c) The ALJ may use prehearing conferences to discuss the following:
    (1) Simplification of the issues.
    (2) The necessity or desirability of amendments to the pleadings, 
including the need for a more definite statement.
    (3) Stipulations, admissions of fact or as to the contents and 
authenticity of documents.
    (4) Whether the parties can agree to submission of the case on a 
stipulated record.
    (5) Whether a party chooses to waive appearance at an oral hearing 
and to submit only documentary evidence (subject to the objection of 
other parties) and written argument.
    (6) Limitation of the number of witnesses.
    (7) Scheduling dates for the exchange of witness lists and of 
proposed exhibits.
    (8) Discovery.
    (9) The time and place for the hearing.
    (10) Such other matters as may tend to expedite the fair and just 
disposition of the proceedings.
    (d) The ALJ may issue an order containing all matters agreed upon by 
the parties or ordered by the ALJ at a prehearing conference.

(Authority: 31 U.S.C. 3803(g))



Sec. 33.20  Disclosure of documents.

    (a) Upon written request to the reviewing official, the defendant 
may review any relevant and material documents, transcripts, records, 
and other materials that relate to the allegations set out in the 
complaint and upon which the findings and conclusions of the 
investigating official under Sec. 33.4(b) are based, unless those 
documents are subject to a privilege under Federal law. Upon payment of 
fees for duplication, the defendant may obtain copies of the documents.
    (b) Upon written request to the reviewing official, the defendant 
also may obtain a copy of all exculpatory information in the possession 
of the reviewing official or investigating official relating to the 
allegations in the complaint, even if it is contained in a document that 
would otherwise be privileged. If the document would otherwise be 
privileged, only that portion containing exculpatory information must be 
disclosed.
    (c) The notice sent to the Attorney General from the reviewing 
official as described in Sec. 33.5 is not discoverable under any 
circumstances.
    (d) The defendant may file a motion to compel disclosure of the 
documents subject to the provisions of this section. Such a motion may 
only be filed with the ALJ following the filing of an answer pursuant to 
Sec. 33.9.

(Authority: 31 U.S.C. 3803(g)(3)(B)(ii), 3803(e))

[[Page 79]]



Sec. 33.21  Discovery.

    (a) The following types of discovery are authorized:
    (1) Requests for production of documents for inspection and copying.
    (2) Requests for admissions of the authenticity of any relevant 
document or of the truth of any relevant fact.
    (3) Written interrogatories.
    (4) Depositions.
    (b) For the purpose of this section and Sec. Sec. 33.22 and 33.23, 
the term ``documents'' includes information, documents, reports, 
answers, records, accounts, papers, and other data and documentary 
evidence. Nothing contained in this part may be interpreted to require 
the creation of a document.
    (c) Unless mutually agreed to by the parties, discovery is available 
only as ordered by the ALJ. The ALJ shall regulate the timing of 
discovery.
    (d) Motions for discovery. (1) A party seeking discovery may file a 
motion with the ALJ. Such a motion shall be accompanied by a copy of the 
requested discovery, or in the case of depositions, a summary of the 
scope of the proposed deposition.
    (2) Within ten days of service, a party may file an opposition to 
the motion or a motion for protective order, or both, as provided in 
Sec. 33.24.
    (3) The ALJ may grant a motion for discovery only if he finds that 
the discovery sought:
    (i) Is necessary for the expeditious, fair, and reasonable 
determination of the issues;
    (ii) Is not unduly costly or burdensome;
    (iii) Will not unduly delay the proceeding; and
    (iv) Does not seek privileged information.
    (4) The burden of showing that discovery should be allowed is on the 
party seeking discovery.
    (5) The ALJ may grant discovery subject to a protective order under 
Sec. 33.24.

(Authority: 31 U.S.C. 3803(a)(3)(B)(ii))

    (e) Depositions. (1) If a motion for deposition is granted, the ALJ 
shall issue a subpoena for the deponent, which may require the deponent 
to produce documents. The subpoena must specify the time and place at 
which the deposition will be held.
    (2) The party seeking to depose shall serve the subpoena in the 
manner prescribed in Sec. 33.8.
    (3) The deponent may file with the ALJ a motion to quash the 
subpoena or a motion for a protective order within ten days of service.
    (4) The party seeking to depose shall provide for the taking a 
verbatim transcript of the deposition, which the party shall make 
available to all other parties for inspection and copying.
    (f) Each party shall bear its own costs of discovery.

(Authority: 31 U.S.C. 3803(g)(3)(B)(ii))



Sec. 33.22  Exchange of witness lists, statements and exhibits.

    (a) At least 15 days before the hearing or at such other time as may 
be ordered by the ALJ, the parties shall exchange witness lists, copies 
of prior statements of proposed witnesses, and copies of proposed 
hearing exhibits, including copies of any written statements that the 
party intends to offer in lieu of live testimony in accordance with 
Sec. 33.33(b). At the time these documents are exchanged, any party 
that is permitted by the ALJ to rely on the transcript of deposition 
testimony in lieu of live testimony at the hearing, shall provide each 
other party with a copy of the specific pages of the transcript it 
intends to introduce.
    (b) If a party objects, the ALJ shall not admit into evidence the 
testimony of any witness whose name does not appear on the witness list 
or any exhibit not provided to the opposing party as provided in 
paragraph (a) of this Section unless the ALJ finds good cause for the 
failure or that there is no prejudice to the objecting party.
    (c) Unless another party objects within the time set by the ALJ, 
documents exchanged in accordance with paragraph (a) of this section are 
deemed to be authentic for the purpose of admissibility at the hearing.

(Authority: 31 U.S.C. 3803(g)(2))



Sec. 33.23  Subpoenas for attendance at hearing.

    (a) A party wishing to procure the appearance and testimony of any 
individual at the hearing may request that the ALJ issue a subpoena.

[[Page 80]]

    (b) A subpoena requiring the attendance and testimony of an 
individual may also require the individual to produce documents at the 
hearing.
    (c) A party seeking a subpoena shall file a written request therefor 
not less than 15 days before the date fixed for the hearing unless 
otherwise allowed by the ALJ for good cause shown. The request must 
specify any documents to be produced and must designate the witnesses 
and describe their address and location with sufficient particularity to 
permit the witnesses to be found.
    (d) The subpoena must specify the time and place at which a witness 
is to appear and any documents the witness is to produce.
    (e) The party seeking the subpoena shall serve it in the manner 
prescribed in Sec. 33.8. A subpoena on a party or upon an individual 
under the control of a party may be served by first class mail.
    (f) A party or the individual to whom the subpoena is directed may 
file with the ALJ a motion to quash the subpoena within ten days after 
service or on or before the time specified in the subpoena for 
compliance if is is less then ten days after service.

(Authority: 31 U.S.C. 3804(b))



Sec. 33.24  Protective order.

    (a) A party or a prospective witness or deponent may file a motion 
for a protective order with respect to discovery sought by an opposing 
party or with respect to the hearing, seeking to limit the availability 
or disclosure of evidence.
    (b) In issuing a protective order, the ALJ may take any order which 
justice requires to protect a party or person from annoyance, 
embarrassment, oppression, or undue burden or expense, including one or 
more of the following:
    (1) That the discovery not be had.
    (2) That the discovery may be had only on specified terms and 
conditions, including a designation of the time or place.
    (3) That the discovery may be had only through a method of discovery 
other than that requested.
    (4) That certain matters not be inquired into, or that the scope of 
discovery be limited to certain matters.
    (5) That the discovery be conducted with no one present except 
persons designated by the ALJ.
    (6) That the contents of discovery or evidence be sealed.
    (7) That a deposition after being sealed be opened only by order of 
the ALJ.
    (8) That a trade secret or other confidential research, development, 
commercial information, or facts pertaining to any criminal 
investigation, proceeding, or other administrative investigation not be 
disclosed or be disclosed only in a designated way.
    (9) That the parties simultaneously file specified documents or 
information enclosed in sealed envelopes to be opened as directed by the 
ALJ.

(Authority: 31 U.S.C. 3803(g)(3)(B)(ii))



Sec. 33.25  Fees.

    The party requesting a subpoena shall pay the cost of the fees and 
mileage of any witness subpoenaed in the amounts that would be payable 
to a witness in a proceeding in United States District Court. A check 
for witness fees and mileage must accompany the subpoena when served, 
except that if a subpoena is issued on behalf of the authority, a check 
for witness fees and mileage need not accompany the subpoena.

(Authority: 31 U.S.C. 3804(b))



Sec. 33.26  Form, filing and service of papers.

    (a) Form. (1) Documents filed with the ALJ must include an original 
and two copies.
    (2) Every pleading and paper filed in the proceeding must contain a 
caption setting for the title of the action, the case number assigned by 
the ALJ, and a designation of the paper (e.g., motion to quash 
subpoena).
    (3) Every pleading and paper must be signed by, and must contain the 
address and telephone number of the party or the person on whose behalf 
the paper was filed, or his or her representative.
    (4) Papers are considered filed when they are mailed. Date of 
mailing may be established by a certificate from the party or its 
representative or by proof

[[Page 81]]

that the document was sent by certified or registered mail.
    (b) Service. A party filing a document with the ALJ shall, at the 
time of filing, serve a copy of the document on every other party. 
Service upon any party of any document other than those required to be 
served as prescribed in Sec. 33.8 shall be made by delivering a copy, 
or by placing a copy of the document in the United States mail, postage 
prepaid and addressed, to the party's last known address. If a party is 
represented by a representative, service must be made upon the 
representative in lieu of the actual party.
    (c) Proof of service. A certificate of the individual serving the 
document by personal delivery or by mail, setting forth the manner of 
service, is proof of service.

(Authority: 31 U.S.C. 3803(b)(3)(A))



Sec. 33.27  Computation of time.

    (a) In computing any period of time under this part or in an order 
issued under this part, the time begins with the day following the act, 
event, or default, and includes the last day of the period, unless it is 
a Saturday, Sunday, or legal holiday observed by the Federal Government, 
in which event it includes the next business day.
    (b) If the period of time allowed is less than seven days, 
intermediate Saturdays, Sundays, and legal holidays observed by the 
Federal Government are excluded from the computation.
    (c) If a document has been served or issued by placing it in the 
mail, an additional five days is added to the time permitted for any 
response.

(Authority: 31 U.S.C. 3809)



Sec. 33.28  Motions.

    (a) Any application to the ALJ for an order or ruling must be by 
motion. Motions must state the relief sought, the authority relied upon, 
and the facts alleged, and must be filed with the ALJ and served on all 
other parties.
    (b) Except for motions made during a prehearing conference or at the 
hearing, all motions must be in writing. The ALJ may require that oral 
motions be reduced to writing.
    (c) Within 15 days after a written motion is served, or such other 
time as may be fixed by the ALJ, any party may file a response to the 
motion.
    (d) The ALJ may not grant a written motion before the time for 
filing responses to the motion has expired, except upon consent of the 
parties or following a hearing on the motion, but may overrule or deny 
the motion without awaiting a response.
    (e) The ALJ shall make a reasonable effort to dispose of all 
outstanding motions prior to the beginning of the hearing.

(Authority: 31 U.S.C. 3803(g)(3)(A))



Sec. 33.29  Sanctions.

    (a) The ALJ may sanction a person, including any party or 
representative for--
    (1) Failing to comply with an order, rule, or procedure governing 
the proceeding;
    (2) Failing to prosecute or defend an action; or
    (3) Engaging in other misconduct that interferes with the speedy, 
orderly, or fair conduct of the hearing.
    (b) Any sanction, including but not limited to those listed in 
paragraphs (c), (d), and (e) of this section must reasonably relate to 
the severity and nature of the failure or misconduct.
    (c) If a party fails to comply with an order, including an order for 
taking a deposition, the production of evidence within the party's 
control, or a request for admission, the ALJ may--
    (1) Draw an inference in favor of the requesting party with regard 
to the information sought;
    (2) In the case of requests for admission, deem each matter of which 
an admission is requested to be admitted;
    (3) Prohibit the party failing to comply with the order from 
introducing evidence concerning, or otherwise relying upon testimony 
relating to, the information sought; and
    (4) Strike any part of the pleadings or other submissions of the 
party failing to comply with the request.
    (d) If a party fails to prosecute or defend an action under this 
part commenced by service of a notice of hearing, the ALJ may dismiss 
the action or may issue an initial decision imposing penalties and 
assessments.

[[Page 82]]

    (e) The ALJ may refuse to consider any motion, request, response, 
brief, or other document that is not filed in a timely fashion.

(Authority: 31 U.S.C. 3803(g)(2))



Sec. 33.30  The hearing and burden of proof.

    (a) The ALJ shall conduct a hearing on the record in order to 
determine whether the defendant is liable for a civil penalty or 
assessment under Sec. 33.3 and, if so, the appropriate amount of the 
civil penalty or assessment considering any aggravating or mitigating 
factors.
    (b) The Department shall prove a defendant's liability and any 
aggravating factors by a preponderance of the evidence.
    (c) The defendant shall prove any affirmative defenses and any 
mitigating factors by a preponderance of the evidence.
    (d) The hearing must be open to the public unless otherwise ordered 
by the ALJ for good cause shown.

(Authority: 31 U.S.C. 3803 (f), (g)(2))



Sec. 33.31  Determining the amount of penalties and assessments.

    (a) In determining an appropriate amount of civil penalties and 
assessments, the ALJ and the Department head, upon appeal, evaluate any 
circumstances that mitigate or aggravate the violation and articulate in 
their opinions the reasons that support the penalties and assessments 
they impose. Because of the intangible costs of fraud, the expense of 
investigating fraudulent conduct, and the need to deter others who might 
be similarly tempted, ordinarily double damages and a significant civil 
penalty is imposed.
    (b) Although not exhaustive, the following factors are among those 
that may influence the ALJ and the Department head in determining the 
amount of penalties and assessments to impose with respect to the 
misconduct (i.e., the false, fictitious, or fraudulent claims or 
statements) charged in the complaint:
    (1) The number of false, fictitious, or fraudulent claims or 
statements.
    (2) The time period over which such claims or statements were made.
    (3) The degree of the defendent's culpability with respect to the 
misconduct.
    (4) The amount of money or the value of the property, services, or 
benefit falsely claimed.
    (5) The value of the Government's actual loss as a result of the 
misconduct, including foreseeable consequential damages and the costs of 
investigation.
    (6) The relationship of the amount imposed as civil penalties to the 
amount of the Government's loss.
    (7) The potential or actual impact of the misconduct upon national 
defense, public health or safety, or public confidence in the management 
of Government programs and operations, including particularly the impact 
on the intended beneficiaries of such programs.
    (8) Whether the defendant has engaged in a pattern of the same or 
similar misconduct.
    (9) Whether the defendant attempted to conceal the misconduct.
    (10) The degree to which the defendant has involved others in the 
misconduct or in concealing it.
    (11) If the misconduct of employees or agents is imputed to the 
defendant, the extent to which the defendant's practices fostered or 
attempted to preclude the misconduct.
    (12) Whether the defendant cooperated in or obstructed an 
investigation of the misconduct.
    (13) Whether the defendant assisted in identifying and prosecuting 
other wrongdoers.
    (14) The complexity of the program or transaction, and the degree of 
the defendant's sophistication with respect to it, including the extent 
of the defendant's prior participation in the program or in similar 
transactions.
    (15) Whether the defendant has been found, in any criminal, civil, 
or administrative proceeding to have engaged in similar misconduct or to 
have dealt dishonestly with the Government of the United States or of a 
State, directly or indirectly.
    (16) The need to deter the defendant and others from engaging in the 
same or similar misconduct.

[[Page 83]]

    (c) Nothing in this section may be construed to limit the ALJ or the 
Department head from considering any other factors that in any given 
case may mitigate or aggravate the offense for which penalties and 
assessments are imposed.

(Authority: 31 U.S.C. 3803(a)(2) (e), (f))



Sec. 33.32  Location of hearing.

    (a) The hearing may be held:
    (1) In any judicial district of the United States in which the 
defendant resides or transacts business;
    (2) In any judicial district of the United States in which the claim 
or statement in issue was made; or
    (3) In such other place as may be agreed upon by the defendant and 
the ALJ.
    (b) Each party must have the opportunity to present argument with 
respect to the location of the hearing.
    (c) The hearing must be held at the place and at the time ordered by 
the ALJ.

(Authority: 31 U.S.C. 3803(g)(4))



Sec. 33.33  Witnesses.

    (a) Except as provided in paragraph (b) of this section, testimony 
at the hearing must be given orally by witnesses under oath or 
affirmation.
    (b) At the discretion of the ALJ, testimony may be admitted in the 
form of a written statement or deposition. Any such written statement 
must be provided to all other parties along with the last known address 
of the witness, in a manner that allows sufficient time for other 
parties to subpoena the witness for cross-examination at the hearing. 
Prior written statements of witnesses proposed to testify at the hearing 
and deposition transcripts must be exchanged as provided in Sec. 
33.22(a).
    (c) The ALJ shall exercise reasonable control over the mode and 
order of interrogating witnesses and presenting evidence so as to:
    (1) Make the interrogation and presentation effective for the 
ascertainment of the truth;
    (2) Avoid needless consumption of time; and
    (3) Protect witnesses from harassment or undue embarrassment.
    (d) The ALJ shall permit the parties to conduct such cross-
examination as may be required for a full and true disclosure of the 
facts.
    (e) At the discretion of the ALJ, a witness may be cross-examined on 
matters relevant to the proceeding without regard to the scope of his or 
her direct examination. To the extent permitted by the ALJ, cross-
examination on matters outside the scope of direct examination must be 
conducted in the manner of direct examination and may proceed by leading 
questions only if the witness is a hostile witness, an adverse party, or 
a witness identified with an adverse party.
    (f) Upon motion of any party, the ALJ shall order witnesses excluded 
so that they cannot hear the testimony of other witnesses. This rule 
does not authorize exclusion of--
    (1) A party who is an individual;
    (2) In the case of a party that is not an individual, an officer or 
employee of the party appearing for the party pro se or designated by 
the party's representative; or
    (3) An individual whose presence is shown by a party to be essential 
to the presentation of its case, including an individual employed by the 
Government engaged in assisting the representative for the Government.

(Authority: 31 U.S.C. 3803(g)(2)(E); 3809))



Sec. 33.34  Evidence.

    (a) The ALJ shall determine the admissibility of evidence.
    (b) Except as provided in this part, the ALJ is not bound by the 
Federal Rules of Evidence. However, the ALJ may apply the Federal Rules 
of Evidence if appropriate, e.g., to exclude unreliable evidence.
    (c) The ALJ shall exclude irrelevant and immaterial evidence.
    (d) Although relevant, evidence may be excluded if its probative 
value is substantially outweighted by the danger of unfair prejudice, 
confusion of the issues, or by considerations of undue delay or needless 
presentation of cumulative evidence.
    (e) Although relevant, evidence may be excluded if it is privileged 
under Federal law.
    (f) Evidence concerning offers of compromise or settlement are 
inadmissible

[[Page 84]]

to the extend provided in Rule 408 of the Federal Rules of Evidence.
    (g) The ALJ shall permit the parties to introduce rebuttal witnesses 
and evidence.
    (h) All Documents and other evidence offered or taken for the record 
must be open to examination by all parties, unless otherwise ordered by 
the ALJ pursuant to Sec. 33.24.

(Authority: 31 U.S.C. 3803(f)(g)(2)(E))



Sec. 33.35  The record.

    (a) The hearing must be recorded and transcribed. Transcripts may be 
obtained following the hearing from the ALJ at a cost not to exceed the 
actual cost of duplication.

(Authority: 31 U.S.C. 3803 (f))

    (b) The transcript of testimony, exhibits and other evidence 
admitted at the hearing, and all papers and requests filed in the 
proceeding constitute the record for the decision by the ALJ and the 
Department head.
    (c) The record may be inspected and copied (upon payment of a 
reasonable fee) by anyone, unless otherwise ordered by the ALJ pursuant 
to Sec. 33.24.

(Authority: 5 U.S.C. App. 2, section 11)



Sec. 33.36  Post-hearing briefs.

    The ALJ may require the parties to file post-hearing briefs. In any 
event, any party may file a post-hearing brief. The ALJ shall fix the 
time for filing these briefs, not to exceed 60 days from the date the 
parties receive the transcript of the hearing or, if applicable, the 
stipulated record. The briefs may be accompanied by proposed findings of 
fact and conclusions of law. The ALJ may permit the parties to file 
reply briefs.

(Authority: 31 U.S.C. 3803 (g)(1)(2)(E))



Sec. 33.37  Initial decision.

    (a) The ALJ shall issue an initial decision, based only on the 
record, that contains findings of fact, conclusions of law, and the 
amount of any penalties and assessments imposed.
    (b) The findings of fact must include a finding on each of the 
following issues:
    (1) Whether the claims or statements identified in the complaint, or 
any portions of the complaint, violate Sec. 33.3.
    (2) If the person is liable for penalties or assessments, the 
appropriate amount of any such penalties or assessments considering any 
mitigating or aggravating factors that the ALJ finds in the case, such 
as those described in Sec. 33.31.
    (c) The ALJ shall promptly serve the initial decision on all parties 
within 90 days after the time for submission of post-hearing briefs and 
reply briefs (if permitted) has expired. The ALJ shall at the same time 
serve all parties with a statement describing the right of any defendant 
determined to be liable for a civil penalty or assessment to file a 
motion for reconsideration with the ALJ or a notice of appeal with the 
Department head. If the ALJ fails to meet the deadline contained in this 
paragraph, he or she shall notify the parties of the reasons for the 
delay and shall set a new deadline.
    (d) Unless the initial decision of the ALJ is timely appealed to the 
Department head, or a motion for reconsideration of the initial decision 
is timely filed, the initial decision shall constitute the final 
decision of the Department head and shall be final and binding on the 
parties 30 days after it is issued by the ALJ.

(Authority: 31 U.S.C. 3803(h)(i))



Sec. 33.38  Reconsideration of initial decision.

    (a) Except as provided in paragraph (d) of this section, any party 
may file a motion for reconsideration of the initial decision within 20 
days of receipt of the initial decision. If service was made by mail, 
receipt is presumed to be five days from the date of mailing in the 
absence of contrary proof.
    (b) Every motion under paragraph (a) of this section must set forth 
the matters claimed to have been erroneously decided and the nature of 
the alleged errors. The motion must be accompanied by a supporting 
brief.
    (c) Responses to the motion are allowed only upon request to the 
ALJ.
    (d) No party may file a motion for reconsideration of an initial 
decision that has been revised in response to a previous motion for 
reconsideration.

[[Page 85]]

    (e) The ALJ may dispose of a motion for reconsideration by denying 
it or by issuing a revised initial decision.
    (f) If the ALJ denies a motion for reconsideration, the initial 
decision shall constitute the final decision of the Department head and 
shall be final and binding on the parties 30 days after the ALJ denies 
the motion, unless the initial decision is timely appealed to the 
Department head in accordance with Sec. 33.39.
    (g) If the ALJ issues a revised initial decision, that decision 
shall constitute the final decision of the Department head and shall be 
final and binding on the parties 30 days after it is issued, unless it 
is timely appealed to the Department head in accordance with Sec. 
33.39.

(Authority: 31 U.S.C. 3809)



Sec. 33.39  Appeal to Department head.

    (a) Any defendant who has filed a timely answer and who is 
determined in an initial decision to be liable for a civil penalty or 
assessment may appeal the decision to the Department head by filing a 
notice of appeal with the Department head in accordance with this 
section.
    (b)(1) A notice of appeal may be filed at any time within 30 days 
after the ALJ issues a final decision. However, if another party files a 
motion for reconsideration under Sec. 33.38, consideration of the 
appeal shall be stayed automatically pending resolution of the motion 
for reconsideration.
    (2) If a motion for reconsideration is timely filed, a notice of 
appeal may be filed within 30 days after the ALJ denies the motion or 
issues a revised initial decision, whichever applies.
    (3) The Department head may extend the initial 30-day period for an 
additional 30 days if the defendant files with the Department head a 
request for an extension within the initial 30-day period and shows good 
cause.
    (c) If the defendant files a timely notice of appeal with the 
Department head, and the time for filing motions for reconsideration 
under Sec. 33.38 has expired, the ALJ shall forward the record of the 
proceeding to the Department head.
    (d) A notice of appeal must be accompanied by a written brief 
specifying exceptions to the initial decision and reasons supporting the 
exceptions.
    (e) The representative for the Government may file a brief in 
opposition to exceptions within 30 days of receiving the notice of 
appeal and accompanying brief.
    (f) There is no right to appear personally before the Department 
head.
    (g) There is no right to appeal any interlocutory ruling by the ALJ.
    (h) In reviewing the initial decision, the Department head does not 
consider any objection that was not raised before the ALJ unless a 
demonstration is made of extraordinary circumstances causing the failure 
to raise the objection.
    (i) If any party demonstrates to the satisfaction of the Department 
head that additional evidence not presented at such hearing is material 
and that there were reasonable grounds for the failure to present that 
evidence at the hearing, the Department head shall remand the matter to 
the ALJ for consideration of the additional evidence.
    (j) The Department head affirms, reduces, reverses, compromises, 
remands, or settles any penalty or assessment, determined by the ALJ in 
any initial decision.

(Authority: 31 U.S.C. 3803(i))

    (k) The Department head promptly serves each party to the appeal 
with a copy of the decision of the Department head and a statement 
describing the right of any person determined to be liable for a penalty 
or assessment to seek judicial review.

(Authority: 31 U.S.C. 3803(i)(2))

    (l) Unless a petition for review is filed as provided in 31 U.S.C. 
3805, after a defendant has exhausted all administrative remedies under 
this part and within 60 days after the date on which the Department head 
serves the defendant with a copy of the Department head's decision, a 
determination that a defendant is liable under Sec. 33.3 is final and 
is not subject to judicial review.

(Authority: 31 U.S.C. 3805(a)(2))

[[Page 86]]



Sec. 33.40  Stays ordered by the Department of Justice.

    If at any time the Attorney General or an Assistant Attorney General 
designated by the Attorney General transmits to the Department head a 
written finding that continuation of the administrative process 
described in this part with respect to a claim or statement may 
adversely affect any pending or potential criminal or civil action 
related to such claim or statement, the Department head stays the 
process immediately. The Department head orders the process resumed only 
upon receipt of the written authorization of the Attorney General.

(Authority: 31 U.S.C. 3803(b)(3))



Sec. 33.41  Stay pending appeal.

    (a) An initial decision is stayed automatically pending disposition 
of a motion for reconsideration or of an appeal to the Department head.
    (b) No administrative stay is available following a final decision 
of the Department head.

(Authority: 31 U.S.C. 3809)



Sec. 33.42  Judicial review.

    Section 3805 of title 31, United States Code, authorizes judicial 
review by an appropriate United States District Court of a final 
decision of the Department head imposing penalties or assessments under 
this part and specifies the procedures for the review.

(Authority: 31 U.S.C. 3805)



Sec. 33.43  Collection of civil penalties and assessments.

    Section 3806 and 3808(b) of title 31, United States Code, authorize 
actions for collection of civil penalties and assessments imposed under 
this part and specify the procedures for those actions.

(Authority: 31 U.S.C. 3808(b))



Sec. 33.44  Right to administrative offset.

    The amount of any penalty or assessment that has become final, or 
for which a judgment has been entered under Sec. 33.42 or Sec. 33.43, 
or any amount agreed upon in a compromise or settlement under Sec. 
33.46, may be collected by administrative offset under 31 U.S.C. 3716, 
except that an administrative offset may not be under this section 
against a refund of an overpayment of Federal taxes, then or later owing 
by the United States to the defendant.

(Authority: 31 U.S.C. 3806)



Sec. 33.45  Deposit in Treasury of United States.

    All amounts collected pursuant to this part are deposited as 
miscellaneous receipts in the Treasury of the United States, except as 
provided in 31 U.S.C. 3806(g).

(Authority: 31 U.S.C. 3807(b))



Sec. 33.46  Compromise or settlement.

    (a) Parties may make offers of compromise or settlement at any time.

(Authority: 31 U.S.C. 3809)

    (b) The reviewing official has the exclusive authority to compromise 
or settle a case under this part at any time after the date on which the 
reviewing official is permitted to issue a complaint and before the date 
on which the ALJ issues an initial decision.

(Authority: 31 U.S.C. 3803(j))

    (c) The Department head has exclusive authority to compromise or 
settle a case under this part at any time after the date on which the 
ALJ issues an initial decision, except during the pendency of any review 
under Sec. 33.42 or during the pendency of any action to collect 
penalties and assessments under Sec. 33.43.

(Authority: 31 U.S.C. 3803(i)(2)(C))

    (d) The Attorney General has exclusive authority to compromise or 
settle a case under this part during the pendency of any review under 
Sec. 33.42 or of any action to recover penalties and assessments under 
31 U.S.C. 3806.

(Authority: 31 U.S.C. 3806(f))

    (e) The investigating official may recommend settlement terms to the 
reviewing official, the Department head, or the Attorney General, as 
appropriate. The reviewing official may recommend settlement terms to 
the Department head, or the Attorney General, as appropriate.

(Authority: 31 U.S.C. 3809)


[[Page 87]]


    (f) Any compromise or settlement must be in writing.

(Authority: 31 U.S.C. 3809)



Sec. 33.47  Limitations.

    (a) The notice of hearing with respect to a claim or statement must 
be served in the manner specified in Sec. 33.8 within six years after 
the date on which the claim or statement is made.
    (b) If the defendant fails to file a timely answer, service of a 
notice under Sec. 33.10(b) is deemed a notice of hearing for purposes 
of this section.
    (c) The statute of limitations may be extended by agreement of the 
parties.

(Authority: 31 U.S.C. 3808)



PART 34_ADMINISTRATIVE WAGE GARNISHMENT--Table of Contents




Sec.
34.1 Purpose of this part.
34.2 Scope of this part.
34.3 Definitions.
34.4 Notice of proposed garnishment.
34.5 Contents of a notice of proposed garnishment.
34.6 Rights in connection with garnishment.
34.7 Consideration of objection to the rate or amount of withholding.
34.8 Providing a hearing.
34.9 Conditions for an oral hearing.
34.10 Conditions for a paper hearing.
34.11 Timely request for a hearing.
34.12 Request for reconsideration.
34.13 Conduct of a hearing.
34.14 Burden of proof.
34.15 Consequences of failure to appear for an oral hearing.
34.16 Issuance of the hearing decision.
34.17 Content of decision.
34.18 Issuance of the wage garnishment order.
34.19 Amounts to be withheld under a garnishment order.
34.20 Amount to be withheld under multiple garnishment orders.
34.21 Employer certification.
34.22 Employer responsibilities.
34.23 Exclusions from garnishment.
34.24 Claim of financial hardship by debtor subject to garnishment.
34.25 Determination of financial hardship.
34.26 Ending garnishment.
34.27 Actions by employer prohibited by law.
34.28 Refunds of amounts collected in error.
34.29 Enforcement action against employer for noncompliance with 
          garnishment order.
34.30 Application of payments and accrual of interest.

    Authority: 31 U.S.C. 3720D, unless otherwise noted.

    Source:  68 FR 8142, Feb, 19, 2003, unless otherwise noted.



Sec. 34.1  Purpose of this part.

    This part establishes procedures the Department of Education uses to 
collect money from a debtor's disposable pay by means of administrative 
wage garnishment to satisfy delinquent debt owed to the United States.

(Authority: 31 U.S.C. 3720D)



Sec. 34.2  Scope of this part.

    (a) This part applies to collection of any financial obligation owed 
to the United States that arises under a program we administer.
    (b) This part applies notwithstanding any provision of State law.
    (c) We may compromise or suspend collection by garnishment of a debt 
in accordance with applicable law.
    (d) We may use other debt collection remedies separately or in 
conjunction with administrative wage garnishment to collect a debt.
    (e) To collect by offset from the salary of a Federal employee, we 
use the procedures in 34 CFR part 31, not those in this part.

(Authority: 31 U.S.C. 3720D)



Sec. 34.3  Definitions.

    As used in this part, the following definitions apply:
    Administrative debt means a debt that does not arise from an 
individual's obligation to repay a loan or an overpayment of a grant 
received under a student financial assistance program authorized under 
Title IV of the Higher Education Act.
    Business day means a day Monday through Friday, unless that day is a 
Federal holiday.
    Certificate of service means a certificate signed by an authorized 
official of the U.S. Department of Education (the Department) that 
indicates the nature of the document to which it pertains, the date we 
mail the document, and to whom we are sending the document.
    Day means calendar day. For purposes of computation, the last day of 
a period will be included unless that day is a Saturday, a Sunday, or a 
Federal

[[Page 88]]

legal holiday; in that case, the last day of the period is the next 
business day after the end of the period.
    Debt or claim means any amount of money, funds, or property that an 
appropriate official of the Department has determined an individual owes 
to the United States under a program we administer.
    Debtor means an individual who owes a delinquent nontax debt to the 
United States under a program we administer.
    Disposable pay. This term--
    (a)(1) Means that part of a debtor's compensation for personal 
services, whether or not denominated as wages, from an employer that 
remains after the deduction of health insurance premiums and any amounts 
required by law to be withheld.
    (2) For purposes of this part, ``amounts required by law to be 
withheld'' include amounts for deductions such as social security taxes 
and withholding taxes, but do not include any amount withheld under a 
court order; and
    (b) Includes, but is not limited to, salary, bonuses, commissions, 
or vacation pay.
    Employer. This term--
    (a) Means a person or entity that employs the services of another 
and that pays the latter's wages or salary;
    (b) Includes, but is not limited to, State and local governments; 
and
    (c) Does not include an agency of the Federal Government.
    Financial hardship means an inability to meet basic living expenses 
for goods and services necessary for the survival of the debtor and his 
or her spouse and dependents.
    Garnishment means the process of withholding amounts from an 
employee's disposable pay and paying those amounts to a creditor in 
satisfaction of a withholding order.
    We means the United States Department of Education.
    Withholding order. (a) This term means any order for withholding or 
garnishment of pay issued by this Department, another Federal agency, a 
State or private non-profit guaranty agency, or a judicial or 
administrative body.
    (b) For purposes of this part, the terms ``wage garnishment order'' 
and ``garnishment order'' have the same meaning as ``withholding 
order.''
    You means the debtor.

(Authority: 31 U.S.C. 3720D)



Sec. 34.4  Notice of proposed garnishment.

    (a) We may start proceedings to garnish your wages whenever we 
determine that you are delinquent in paying a debt owed to the United 
States under a program we administer.
    (b) We start garnishment proceedings by sending you a written notice 
of the proposed garnishment.
    (c) At least 30 days before we start garnishment proceedings, we 
mail the notice by first class mail to your last known address.
    (d)(1) We keep a copy of a certificate of service indicating the 
date of mailing of the notice.
    (2) We may retain this certificate of service in electronic form.

(Authority: 31 U.S.C. 3720D)



Sec. 34.5  Contents of a notice of proposed garnishment.

    In a notice of proposed garnishment, we inform you of--
    (a) The nature and amount of the debt;
    (b) Our intention to collect the debt through deductions from pay 
until the debt and all accumulated interest, penalties, and collection 
costs are paid in full; and
    (c) An explanation of your rights, including those in Sec. 34.6, 
and the time frame within which you may exercise your rights.

(Authority: 31 U.S.C. 3720D)



Sec. 34.6  Rights in connection with garnishment.

    Before starting garnishment, we provide you the opportunity--
    (a) To inspect and copy our records related to the debt;
    (b) To enter into a written repayment agreement with us to repay the 
debt under terms we consider acceptable;
    (c) For a hearing in accordance with Sec. 34.8 concerning--
    (1) The existence, amount, or current enforceability of the debt;

[[Page 89]]

    (2) The rate at which the garnishment order will require your 
employer to withhold pay; and
    (3) Whether you have been continuously employed less than 12 months 
after you were involuntarily separated from employment.

(Authority: 31 U.S.C. 3720D)



Sec. 34.7  Consideration of objection to the rate or amount of withholding.

    (a) We consider objections to the rate or amount of withholding only 
if the objection rests on a claim that withholding at the proposed rate 
or amount would cause financial hardship to you and your dependents.
    (b) We do not provide a hearing on an objection to the rate or 
amount of withholding if the rate or amount we propose to be withheld 
does not exceed the rate or amount agreed to under a repayment agreement 
reached within the preceding six months after a previous notice of 
proposed garnishment.
    (c) We do not consider an objection to the rate or amount of 
withholding based on a claim that by virtue of 15 U.S.C. 1673, no amount 
of wages are available for withholding by the employer.

(Authority: 31 U.S.C. 3720D)



Sec. 34.8  Providing a hearing.

    (a) We provide a hearing if you submit a written request for a 
hearing concerning the existence, amount, or enforceability of the debt 
or the rate of wage withholding.
    (b) At our option the hearing may be an oral hearing under Sec. 
34.9 or a paper hearing under Sec. 34.10.

(Authority: 31 U.S.C. 3720D)



Sec. 34.9  Conditions for an oral hearing.

    (a) We provide an oral hearing if you--
    (1) Request an oral hearing; and
    (2) Show in the request a good reason to believe that we cannot 
resolve the issues in dispute by review of the documentary evidence, by 
demonstrating that the validity of the claim turns on the credibility or 
veracity of witness testimony.
    (b) If we determine that an oral hearing is appropriate, we notify 
you how to receive the oral hearing.
    (c)(1) At your option, an oral hearing may be conducted either in-
person or by telephone conference.
    (2) We provide an in-person oral hearing with regard to 
administrative debts only in Washington D.C.
    (3) We provide an in-person oral hearing with regard to debts based 
on student loan or grant obligations only at our regional service 
centers in Atlanta, Chicago, or San Francisco.
    (4) You must bear all travel expenses you incur in connection with 
an in-person hearing.
    (5) We bear the cost of any telephone calls we place in order to 
conduct an oral hearing by telephone.
    (d)(1) To arrange the time and location of the oral hearing, we 
ordinarily attempt to contact you first by telephone call to the number 
you provided to us.
    (2) If we are unable to contact you by telephone, we leave a message 
directing you to contact us within 5 business days to arrange the time 
and place of the hearing.
    (3) If we can neither contact you directly nor leave a message with 
you by telephone--
    (i) We notify you in writing to contact us to arrange the time and 
place of the hearing; or
    (ii) We select a time and place for the hearing, and notify you in 
writing of the time and place set for the hearing.
    (e) We consider you to have withdrawn the request for an oral 
hearing if--
    (1) Within 15 days of the date of a written notice to contact us, we 
receive no response to that notice; or
    (2) Within five business days of the date of a telephone message to 
contact us, we receive no response to that message.

(Authority: 31 U.S.C. 3720D)



Sec. 34.10  Conditions for a paper hearing.

    We provide a paper hearing--
    (a) If you request a paper hearing;
    (b) If you requested an oral hearing, but we determine under Sec. 
34.9(e) that you have withdrawn that request;
    (c) If you fail to appear for a scheduled oral hearing, as provided 
in Sec. 34.15; or
    (d) If we deny a request for an oral hearing because we conclude 
that, by a

[[Page 90]]

review of the written record, we can resolve the issues raised by your 
objections.

(Authority: 31 U.S.C. 3720D)



Sec. 34.11  Timely request for a hearing.

    (a) A hearing request is timely if--
    (1) You mail the request to the office designated in the garnishment 
notice and the request is postmarked not later than the 30th day 
following the date of the notice; or
    (2) The designated office receives the request not later than the 
30th day following the date of the garnishment notice.
    (b) If we receive a timely written request from you for a hearing, 
we will not issue a garnishment order before we--
    (1) Provide the requested hearing; and
    (2) Issue a written decision on the objections you raised.
    (c) If your written request for a hearing is not timely--
    (1) We provide you a hearing; and
    (2) We do not delay issuance of a garnishment order unless--
    (i) We determine from credible representations in the request that 
the delay in filing the request for hearing was caused by factors over 
which you had no control; or
    (ii) We have other good reason to delay issuing a garnishment order.
    (d) If we do not complete a hearing within 60 days of an untimely 
request, we suspend any garnishment order until we have issued a 
decision.

(Authority: 31 U.S.C. 3720D)



Sec. 34.12  Request for reconsideration.

    (a) If you have received a decision on an objection to garnishment 
you may file a request for reconsideration of that decision.
    (b) We do not suspend garnishment merely because you have filed a 
request for reconsideration.
    (c) We consider your request for reconsideration if we determine 
that--
    (1) You base your request on grounds of financial hardship, and your 
financial circumstances, as shown by evidence submitted with the 
request, have materially changed since we issued the decision so that we 
should reduce the amount to be garnished under the order; or
    (2)(i) You submitted with the request evidence that you did not 
previously submit; and
    (ii) This evidence demonstrates that we should reconsider your 
objection to the existence, amount, or enforceability of the debt.
    (d)(1) If we agree to reconsider the decision, we notify you.
    (2)(i) We may reconsider based on the request and supporting 
evidence you have presented with the request; or
    (ii) We may offer you an opportunity for a hearing to present 
evidence.

(Authority: 31 U.S.C. 3720D)



Sec. 34.13  Conduct of a hearing.

    (a)(1) A hearing official conducts any hearing under this part.
    (2) The hearing official may be any qualified employee of the 
Department whom the Department designates to conduct the hearing.
    (b)(1) The hearing official conducts any hearing as an informal 
proceeding.
    (2) A witness in an oral hearing must testify under oath or 
affirmation.
    (3) The hearing official maintains a summary record of any hearing.
    (c) Before the hearing official considers evidence we obtain that 
was not included in the debt records available for inspection when we 
sent notice of proposed garnishment, we notify you that additional 
evidence has become available, may be considered by the hearing 
official, and is available for inspection or copying.
    (d) The hearing official considers any objection you raise and 
evidence you submit--
    (1) In or with the request for a hearing;
    (2) During an oral hearing;
    (3) By the date that we consider, under Sec. 34.9(e), that a 
request for an oral hearing has been withdrawn; or
    (4) Within a period we set, ordinarily not to exceed seven business 
days, after--
    (i) We provide you access to our records regarding the debt, if you 
requested access to records within 20 days after the date of the notice 
under Sec. 34.4;

[[Page 91]]

    (ii) We notify you that we have obtained and intend to consider 
additional evidence;
    (iii) You request an extension of time in order to submit specific 
relevant evidence that you identify to us in the request; or
    (iv) We notify you that we deny your request for an oral hearing.

(Authority: 31 U.S.C. 3720D)



Sec. 34.14  Burden of proof.

    (a)(1) We have the burden of proving the existence and amount of a 
debt.
    (2) We meet this burden by including in the record and making 
available to the debtor on request records that show that--
    (i) The debt exists in the amount stated in the garnishment notice; 
and
    (ii) The debt is currently delinquent.
    (b) If you dispute the existence or amount of the debt, you must 
prove by a preponderance of the credible evidence that--
    (1) No debt exists;
    (2) The amount we claim to be owed on the debt is incorrect, or
    (3) You are not delinquent with respect to the debt.
    (c)(1) If you object that the proposed garnishment rate would cause 
financial hardship, you bear the burden of proving by a preponderance of 
the credible evidence that withholding the amount of wages proposed in 
the notice would leave you unable to meet the basic living expenses of 
you and your dependents.
    (2) The standards for proving financial hardship are those in Sec. 
34.24.
    (d)(1) If you object on the ground that applicable law bars us from 
collecting the debt by garnishment at this time, you bear the burden of 
proving the facts that would establish that claim.
    (2) Examples of applicable law that may prevent collection by 
garnishment include the automatic stay in bankruptcy (11 U.S.C. 362(a)), 
and the preclusion of garnishment action against a debtor who was 
involuntarily separated from employment and has been reemployed for less 
than a continuous period of 12 months (31 U.S.C. 3720D(b)(6)).
    (e) The fact that applicable law may limit the amount that an 
employer may withhold from your pay to less than the amount or rate we 
state in the garnishment order does not bar us from issuing the order.

(Authority: 31 U.S.C. 3720D)



Sec. 34.15  Consequences of failure to appear for an oral hearing.

    (a) If you do not appear for an in-person hearing you requested, or 
you do not answer a telephone call convening a telephone hearing, at the 
time set for the hearing, we consider you to have withdrawn your request 
for an oral hearing.
    (b) If you do not appear for an oral hearing but you demonstrate 
that there was good cause for not appearing, we may reschedule the oral 
hearing.
    (c) If you do not appear for an oral hearing you requested and we do 
not reschedule the hearing, we provide a paper hearing to review your 
objections, based on the evidence in your file and any evidence you have 
already provided.

(Authority: 31 U.S.C. 3720D)



Sec. 34.16  Issuance of the hearing decision.

    (a) Date of decision. The hearing official issues a written opinion 
stating his or her decision, as soon as practicable, but not later than 
60 days after the date on which we received the request for hearing.
    (b) If we do not provide you with a hearing and render a decision 
within 60 days after we receive your request for a hearing--
    (1) We do not issue a garnishment order until the hearing is held 
and a decision rendered; or
    (2) If we have already issued a garnishment order to your employer, 
we suspend the garnishment order beginning on the 61st day after we 
receive the hearing request until we provide a hearing and issue a 
decision.

(Authority: 31 U.S.C. 3720D)



Sec. 34.17  Content of decision.

    (a) The written decision is based on the evidence contained in the 
hearing record. The decision includes--
    (1) A description of the evidence considered by the hearing 
official;

[[Page 92]]

    (2) The hearing official's findings, analysis, and conclusions 
regarding objections raised to the existence or amount of the debt;
    (3) The rate of wage withholding under the order, if you objected 
that withholding the amount proposed in the garnishment notice would 
cause an extreme financial hardship; and
    (4) An explanation of your rights under this part for 
reconsideration of the decision.
    (b) The hearing official's decision is the final action of the 
Secretary for the purposes of judicial review under the Administrative 
Procedure Act (5 U.S.C. 701 et seq.).

(Authority: 31 U.S.C. 3720D)



Sec. 34.18  Issuance of the wage garnishment order.

    (a)(1) If you fail to make a timely request for a hearing, we issue 
a garnishment order to your employer within 30 days after the deadline 
for timely requesting a hearing.
    (2) If you make a timely request for a hearing, we issue a 
withholding order within 30 days after the hearing official issues a 
decision to proceed with garnishment.
    (b)(1) The garnishment order we issue to your employer is signed by 
an official of the Department designated by the Secretary.
    (2) The designated official's signature may be a computer-generated 
facsimile.
    (c)(1) The garnishment order contains only the information we 
consider necessary for your employer to comply with the order and for us 
to ensure proper credit for payments received from your employer.
    (2) The order includes your name, address, and social security 
number, as well as instructions for withholding and information as to 
where your employer must send the payments.
    (d)(1) We keep a copy of a certificate of service indicating the 
date of mailing of the order.
    (2) We may create and maintain the certificate of service as an 
electronic record.

(Authority: 31 U.S.C. 3720D)



Sec. 34.19  Amounts to be withheld under a garnishment order.

    (a)(1) After an employer receives a garnishment order we issue, the 
employer must deduct from all disposable pay of the debtor during each 
pay period the amount directed in the garnishment order unless this 
section or Sec. 34.20 requires a smaller amount to be withheld.
    (2) The amount specified in the garnishment order does not apply if 
other law, including this section, requires the employer to withhold a 
smaller amount.
    (b) The employer must comply with our garnishment order by 
withholding the lesser of--
    (1) The amount directed in the garnishment order; or--
    (2) The amount specified in 15 U.S.C. 1673(a)(2) (Restriction on 
Garnishment); that is, the amount by which a debtor's disposable pay 
exceeds an amount equal to 30 times the minimum wage. (See 29 CFR 
870.10.)

(Authority: 31 U.S.C. 3720D)



Sec. 34.20  Amount to be withheld under multiple garnishment orders.

    If a debtor's pay is subject to several garnishment orders, the 
employer must comply with our garnishment order as follows:
    (a) Unless other Federal law requires a different priority, the 
employer must pay us the amount calculated under Sec. 34.19(b) before 
the employer complies with any later garnishment orders, except a family 
support withholding order.
    (b) If an employer is withholding from a debtor's pay based on a 
garnishment order served on the employer before our order, or if a 
withholding order for family support is served on an employer at any 
time, the employer must comply with our garnishment order by withholding 
an amount that is the smaller of--
    (1) The amount calculated under Sec. 34.19(b); or
    (2) An amount equal to 25 percent of the debtor's disposable pay 
less the amount or amounts withheld under the garnishment order or 
orders with priority over our order.

[[Page 93]]

    (c)(1) If a debtor owes more than one debt arising from a program we 
administer, we may issue multiple garnishment orders.
    (2) The total amount withheld from the debtor's pay for orders we 
issue under paragraph (c)(1) of this section does not exceed the amounts 
specified in the orders, the amount specified in Sec. 34.19(b)(2), or 
15 percent of the debtor's disposable pay, whichever is smallest.
    (d) An employer may withhold and pay an amount greater than that 
amount in paragraphs (b) and (c) of this section if the debtor gives the 
employer written consent.

(Authority: 31 U.S.C. 3720D)



Sec. 34.21  Employer certification.

    (a) Along with a garnishment order, we send to an employer a 
certification in a form prescribed by the Secretary of the Treasury.
    (b) The employer must complete and return the certification to us 
within the time stated in the instructions for the form.
    (c) The employer must include in the certification information about 
the debtor's employment status, payment frequency, and disposable pay 
available for withholding.

(Authority: 31 U.S.C. 3720D)



Sec. 34.22  Employer responsibilities.

    (a)(1) Our garnishment order indicates a reasonable period of time 
within which an employer must start withholding under the order.
    (2) The employer must promptly pay to the Department all amounts the 
employer withholds according to the order.
    (b) The employer may follow its normal pay and disbursement cycles 
in complying with the garnishment order.
    (c) The employer must withhold the appropriate amount from the 
debtor's wages for each pay period until the employer receives our 
notification to discontinue wage garnishment.
    (d) The employer must disregard any assignment or allotment by an 
employee that would interfere with or prohibit the employer from 
complying with our garnishment order, unless that assignment or 
allotment was made for a family support judgment or order.

(Authority: 31 U.S.C. 3720D)



Sec. 34.23  Exclusions from garnishment.

    (a) We do not garnish your wages if we have credible evidence that 
you--
    (1) Were involuntarily separated from employment; and
    (2) Have not yet been reemployed continuously for at least 12 
months.
    (b) You have the burden of informing us of the circumstances 
surrounding an involuntary separation from employment.

(Authority: 31 U.S.C. 3720D)



Sec. 34.24  Claim of financial hardship by debtor subject to garnishment.

    (a) You may object to a proposed garnishment on the ground that 
withholding the amount or at the rate stated in the notice of 
garnishment would cause financial hardship to you and your dependents. 
(See Sec. 34.7)
    (b) You may, at any time, object that the amount or the rate of 
withholding which our order specifies your employer must withhold causes 
financial hardship.
    (c)(1) We consider an objection to an outstanding garnishment order 
and provide you an opportunity for a hearing on your objection only 
after the order has been outstanding for at least six months.
    (2) We may provide a hearing in extraordinary circumstances earlier 
than six months if you show in your request for review that your 
financial circumstances have substantially changed after the notice of 
proposed garnishment because of an event such as injury, divorce, or 
catastrophic illness.
    (d)(1) You bear the burden of proving a claim of financial hardship 
by a preponderance of the credible evidence.
    (2) You must prove by credible documentation--
    (i) The amount of the costs incurred by you, your spouse, and any 
dependents, for basic living expenses; and
    (ii) The income available from any source to meet those expenses.
    (e)(1) We consider your claim of financial hardship by comparing--

[[Page 94]]

    (i) The amounts that you prove are being incurred for basic living 
expenses; against
    (ii) The amounts spent for basic living expenses by families of the 
same size and similar income to yours.
    (2) We regard the standards published by the Internal Revenue 
Service under 26 U.S.C. 7122(c)(2) (the ``National Standards'') as 
establishing the average amounts spent for basic living expenses for 
families of the same size as, and with family incomes comparable to, 
your family.
    (3) We accept as reasonable the amount that you prove you incur for 
a type of basic living expense to the extent that the amount does not 
exceed the amount spent for that expense by families of the same size 
and similar income according to the National Standards.
    (4) If you claim for any basic living expense an amount that exceeds 
the amount in the National Standards, you must prove that the amount you 
claim is reasonable and necessary.

(Authority: 31 U.S.C. 3720D)



Sec. 34.25  Determination of financial hardship.

    (a)(1) If we conclude that garnishment at the amount or rate 
proposed in a notice would cause you financial hardship, we reduce the 
amount of the proposed garnishment to an amount that we determine will 
allow you to meet proven basic living expenses.
    (2) If a garnishment order is already in effect, we notify your 
employer of any change in the amount the employer must withhold or the 
rate of withholding under the order.
    (b) If we determine that financial hardship would result from 
garnishment based on a finding by a hearing official or under a 
repayment agreement we reached with you, this determination is effective 
for a period not longer than six months after the date of the finding or 
agreement.
    (c)(1) After the effective period referred to in paragraph (b) of 
this section, we may require you to submit current information regarding 
your family income and living expenses.
    (2) If we conclude from a review of that evidence that we should 
increase the rate of withholding or payment, we--
    (i) Notify you; and
    (ii) Provide you with an opportunity to contest the determination 
and obtain a hearing on the objection under the procedures in Sec. 
34.24.

(Authority: 31 U.S.C. 3720D)



Sec. 34.26  Ending garnishment.

    (a)(1) A garnishment order we issue is effective until we rescind 
the order.
    (2) If an employer is unable to honor a garnishment order because 
the amount available for garnishment is insufficient to pay any portion 
of the amount stated in the order, the employer must--
    (i) Notify us; and
    (ii) Comply with the order when sufficient disposable pay is 
available.
    (b) After we have fully recovered the amounts owed by the debtor, 
including interest, penalties, and collection costs, we send the 
debtor's employer notification to stop wage withholding.

(Authority: 31 U.S.C. 3720D)



Sec. 34.27  Actions by employer prohibited by law.

    An employer may not discharge, refuse to employ, or take 
disciplinary action against a debtor due to the issuance of a 
garnishment order under this part.

(Authority: 31 U.S.C. 3720D)



Sec. 34.28  Refunds of amounts collected in error.

    (a) If a hearing official determines under Sec. Sec. 34.16 and 
34.17 that a person does not owe the debt described in our notice or 
that an administrative wage garnishment under this part was barred by 
law at the time of the collection action, we promptly refund any amount 
collected by means of this garnishment.
    (b) Unless required by Federal law or contract, we do not pay 
interest on a refund.

(Authority: 31 U.S.C. 3720D)



Sec. 34.29  Enforcement action against employer for noncompliance with 
garnishment order.

    (a) If an employer fails to comply with Sec. 34.22 to withhold an 
appropriate

[[Page 95]]

amount from wages owed and payable to an employee, we may sue the 
employer for that amount.
    (b)(1) We do not file suit under paragraph (a) of this section 
before we terminate action to enforce the debt as a personal liability 
of the debtor.
    (2) However, the provision of paragraph (b)(1) of this section may 
not apply if earlier filing of a suit is necessary to avoid expiration 
of any applicable statute of limitations.
    (c)(1) For purposes of this section, termination of an action to 
enforce a debt occurs when we terminate collection action in accordance 
with the FCCS, other applicable standards, or paragraph (c)(2) of this 
section.
    (2) We regard termination of the collection action to have occurred 
if we have not received for one year any payments to satisfy the debt, 
in whole or in part, from the particular debtor whose wages were subject 
to garnishment.

(Authority: 31 U.S.C. 3720D)



Sec. 34.30  Application of payments and accrual of interest.

    We apply payments received through a garnishment in the following 
order--
    (a) To costs incurred to collect the debt;
    (b) To interest accrued on the debt at the rate established by--
    (1) The terms of the obligation under which it arises; or
    (2) Applicable law; and
    (c) To outstanding principal of the debt.

(Authority: 31 U.S.C. 3720D)



PART 35_TORT CLAIMS AGAINST THE GOVERNMENT--Table of Contents



                            Subpart A_General

Sec.
35.1 Scope of regulations.

                          Subpart B_Procedures

35.2 Administrative claim; when presented; place of filing.
35.3 Administrative claim; who may file.
35.4 Administrative claim; evidence and information to be submitted.
35.5 Investigation of claims.
35.6 Final denial of claim.
35.7 Payment of approved claims.
35.8 Release.
35.9 Penalties.
35.10 Limitation on Department's authority.

    Authority: Sec. 1(a), 80 Stat. 306; 28 U.S.C. 2672; 28 CFR, part 14.

    Source: 45 FR 30834, May 9, 1980, unless otherwise noted.



                            Subpart A_General



Sec. 35.1  Scope of regulations.

    The regulations in this part shall apply only to claims asserted 
under the Federal Tort Claims Act, as amended, 28 U.S.C. 2671-2680, for 
money damages against the United States for damage to or loss of 
property or personal injury or death caused by the negligent or wrongful 
act or omission of any employee of the Department of Education while 
acting within the scope of his office or employment.



                          Subpart B_Procedures



Sec. 35.2  Administrative claim; when presented; place of filing.

    (a) For purposes of the regulations in this part, a claim shall be 
deemed to have been presented when the Department of Education receives, 
at a place designated in paragraph (b) of this section, an executed 
Standard Form 95 or other written notification of an incident 
accompanied by a claim for money damages in a sum certain for damage to 
or loss of property, for personal injury, or for death, alleged to have 
occurred by reason of the incident. A claim which should have been 
presented to the Department but which was mistakenly addressed to or 
filed with another Federal agency, shall be deemed to be presented to 
the Department as of the date that the claim is received by the 
Department. A claim mistakenly addressed to or filed with the Department 
shall forthwith be transferred to the appropriate Federal agency, if 
ascertainable, or returned to the claimant.
    (b) A claim presented in compliance with paragraph (a) of this 
section may be amended by the claimant at any time prior to final action 
by the Secretary or prior to the exercise of the claimant's option to 
bring suit under 28 U.S.C. 2675(a). Amendments shall be

[[Page 96]]

submitted in writing and signed by the claimant or his duly authorized 
agent or legal representative. Upon the timely filing of an amendment to 
a pending claim, the Department shall have 6 months in which to make a 
final disposition of the claim as amended and the claimant's option 
under 28 U.S.C. 2675(a) shall not accrue until 6 months after the filing 
of an amendment.
    (c) Forms may be obtained and claims may be filed, with the 
Department of Education Claims Officer, Washington, DC 20202.



Sec. 35.3  Administrative claim; who may file.

    (a) A claim for injury to or loss of property may be presented by 
the owner of the property interest which is the subject of the claim, 
his duly authorized agent, or his legal representative.
    (b) A claim for personal injury may be presented by the injured 
person, his duly authorized agent, or his legal representative.
    (c) A claim based on death may be presented by the executor or 
administrator of the decedent's estate or by any other person legally 
entitled to assert such a claim under applicable state law.
    (d) A claim for loss wholly compensated by an insurer with the 
rights of a subrogee may be presented by the insurer. A claim for loss 
partially compensated by an insurer with the rights of a subrogee may be 
presented by the insurer or the insured individually, as their 
respective interests appear, or jointly. Whenever an insurer presents a 
claim asserting the rights of a subrogee, he shall present with his 
claim appropriate evidence that he has the rights of a subrogee.
    (e) A claim presented by an agent or legal representative shall be 
presented in the name of the claimant, be signed by the agent or legal 
representative, show the title or legal capacity of the person signing, 
and be accompanied by evidence of his authority to present a claim on 
behalf of the claimant as agent, executor, administrator, parent, 
guardian, or other representative.



Sec. 35.4  Administrative claim; evidence and information to be submitted.

    (a) Death. In support of a claim based on death, the claimant may be 
required to submit the following evidence or information:
    (1) An authenticated death certificate or other competent evidence 
showing cause of death, date of death, and age of the decedent.
    (2) Decedent's employment or occupation at time of death, including 
his monthly or yearly salary or earnings (if any), and the duration of 
his last employment or occupation.
    (3) Full names, addresses, birth dates, kinship, and marital status 
of the decedent's survivors, including identification of those survivors 
who were dependent for support upon the decedent at the time of his 
death.
    (4) Degree of support afforded by the decedent to each survivor 
dependent upon him for support at the time of his death.
    (5) Decedent's general physical and mental condition before death.
    (6) Itemized bills for medical and burial expenses incurred by 
reason of the incident causing death, or itemized receipts of payments 
for such expenses.
    (7) If damages for pain and suffering prior to death are claimed, a 
physician's detailed statement specifying the injuries suffered, 
duration of pain and suffering, any drugs administered for pain and the 
decedent's physical condition in the interval between injury and death.
    (8) Any other evidence or information which may have a bearing on 
either the responsibility of the United States for the death or the 
damages claimed.
    (b) Personal injury. In support of a claim for personal injury, 
including pain and suffering, the claimant may be required to submit the 
following evidence or information:
    (1) A written report by his attending physician or dentist setting 
forth the nature and extent of the injury, nature and extent of 
treatment, any degree of temporary or permanent disability, the 
prognosis, period of hospitalization, and any diminished earning 
capacity.

[[Page 97]]

In addition, the claimant may be required to submit to a physical or 
mental examination by a physician employed or designated by the 
Department. A copy of the report of the examining physician shall be 
made available to the claimant upon the claimant's written request 
provided that claimant has, upon request, furnished the report referred 
to in the first sentence of this paragraph and has made or agrees to 
make available to the Department any other physician's reports 
previously or thereafter made of the physical or mental condition which 
is the subject matter of his claim.
    (2) Itemized bills for medical, dental, and hospital expenses 
incurred, or itemized receipts of payment for such expenses.
    (3) If the prognosis reveals the necessity for future treatment, a 
statement of expected duration of and expenses for such treatment.
    (4) If a claim is made for loss of time from employment, a written 
statement from his employer showing actual time lost from employment, 
whether he is a full or part-time employee, and wages or salary actually 
lost.
    (5) If a claim is made for loss of income and the claimant is self-
employed, documentary evidence showing the amount of earnings actually 
lost.
    (6) Any other evidence or information which may have a bearing on 
either the responsibility of the United States for the personal injury 
or the damages claimed.
    (c) Property damage. In support of a claim for damage to or loss of 
property, real or personal, the claimant may be required to submit the 
following evidence or information:
    (1) Proof of ownership.
    (2) A detailed statement of the amount claimed with respect to each 
item of property.
    (3) An itemized receipt of payment for necessary repairs or itemized 
written estimates of the cost of such repairs.
    (4) A statement listing date of purchase, purchase price, market 
value of the property as of date of damage, and salvage value, where 
repair is not economical.
    (5) Any other evidence or information which may have a bearing 
either on the responsibility of the United States for the injury to or 
loss of property or the damages claimed.
    (d) Time limit. All evidence required to be submitted by this 
section shall be furnished by the claimant within a reasonable time. 
Failure of a claimant to furnish evidence necessary to a determination 
of his claim within three months after a request therefor has been 
mailed to his last known address may be deemed an abandonment of the 
claim. The claim may be thereupon disallowed.



Sec. 35.5  Investigation of claims.

    When a claim is received, the Department will make such 
investigation as may be necessary or appropriate for a determination of 
the validity of the claim.



Sec. 35.6  Final denial of claim.

    (a) Final denial of an administrative claim shall be in writing and 
sent to the claimant, his attorney, or legal representative by certified 
or registered mail. The notification of final denial may include a 
statement of the reasons for the denial and shall include a statement 
that, if the claimant is dissatisfied with the Department's action, he 
may file suit in an appropriate U.S. District Court not later than 6 
months after the date of mailing of the notification.
    (b) Prior to the commencement of suit and prior to the expiration of 
the 6-month period after the date of mailing, by certified or registered 
mail of notice of final denial of the claim as provided in 28 U.S.C. 
2401(b), a claimant, his duly authorized agent, or legal representative, 
may file a written request with the Department for reconsideration of a 
final denial of a claim under paragraph (a) of this section. Upon the 
timely filing of a request for reconsideration the Department shall have 
6 months from the date of filing in which to make a final disposition of 
the claim and the claimant's option under 28 U.S.C. 2675(a) to bring 
suit shall not accrue until 6 months after the filing of a request for 
reconsideration. Final Department action on a request for 
reconsideration shall be effected in accordance with the provisions of 
paragraph (a) of this section.

[[Page 98]]



Sec. 35.7  Payment of approved claims.

    (a) Upon allowance of his claim, claimant or his duly authorized 
agent shall sign the voucher for payment, Standard Form 1145, before 
payment is made.
    (b) When the claimant is represented by an attorney, the voucher for 
payment (SF 1145) shall designate both the claimant and his attorney as 
``payees.'' The check shall be delivered to the attorney whose address 
shall appear on the voucher.



Sec. 35.8  Release.

    Acceptance by the claimant, his agent or legal representative, of 
any award, compromise or settlement made hereunder, shall be final and 
conclusive on the claimant, his agent or legal representative and any 
other person on whose behalf or for whose benefit the claim has been 
presented, and shall constitute a complete release of any claim against 
the United States and against any employee of the Government whose act 
or omission gave rise to the claim, by reason of the same subject 
matter.



Sec. 35.9  Penalties.

    A person who files a false claim or makes a false or fraudulent 
statement in a claim against the United States may be liable to a fine 
of not more than $10,000 or to imprisonment of not more than 5 years, or 
both (18 U.S.C. 287.1001), and, in addition, to a forfeiture of $2,000 
and a penalty of double the loss or damage sustained by the United 
States (31 U.S.C. 231).



Sec. 35.10  Limitation on Department's authority.

    (a) An award, compromise or settlement of a claim hereunder in 
excess of $25,000 shall be effected only with the prior written approval 
of the Attorney General or his designee. For the purposes of this 
paragraph, a principal claim and any derivative or subrogated claim 
shall be treated as a single claim.
    (b) An administrative claim may be adjusted, determined, compromised 
or settled hereunder only after consultation with the Department of 
Justice when, in the opinion of the Department:
    (1) A new precedent or a new point of law is involved; or
    (2) A question of policy is or may be involved; or
    (3) The United States is or may be entitled to indemnity or 
contribution from a third party and the Department is unable to adjust 
the third party claim; or
    (4) The compromise of a particular claim, as a practical matter, 
will or may control the disposition of a related claim in which the 
amount to be paid may exceed $25,000.
    (c) An administrative claim may be adjusted, determined, compromised 
or settled only after consultation with the Department of Justice when 
it is learned that the United States or an employee, agent or cost plus 
contractor of the United States is involved in litigation based on a 
claim arising out of the same incident or transaction.



PART 36_ADJUSTMENT OF CIVIL MONETARY PENALTIES FOR INFLATION
--Table of Contents




Sec.
36.1 Purpose.
36.2 Penalty adjustment.

    Authority: 28 U.S.C. 2461 note and 31 U.S.C. 3701 note, unless 
otherwise noted.

    Source: 67 FR 69655, Nov. 18, 2002, unless otherwise noted.



Sec. 36.1  Purpose.

    The purpose of this part is to make inflation adjustments to the 
civil monetary penalties within the jurisdiction of the Department of 
Education. These penalties are subject to review and adjustment as 
necessary at least once every 4 years in accordance with the Federal 
Civil Penalties Inflation Adjustment Act of 1990, as amended.

(Authority: 28 U.S.C. 2461 note and 31 U.S.C. 3701 note)



Sec. 36.2  Penalty adjustment.

    The citations for the adjusted penalty provisions, a brief 
description of the penalty, and the adjusted maximum (and minimum, if 
applicable) penalty amounts are listed in Table I.

[[Page 99]]



   Table I, Section 36.2--Civil Monetary Penalty Inflation Adjustments
------------------------------------------------------------------------
                                                       New maximum (and
                                                         minimum, if
            Statute                 Description      applicable) penalty
                                                            amount
------------------------------------------------------------------------
20 U.S.C. 1082(g).............  Provides for a       $27,500.
                                 civil penalty of
                                 up to $25,000 for
                                 violations by
                                 lenders and
                                 guaranty agencies
                                 of Title IV-B of
                                 the Higher
                                 Education Act of
                                 1965, as amended
                                 (HEA), which
                                 authorizes the
                                 Federal Family
                                 Education Loan
                                 Program.
20 U.S.C. 1094(c)(3)(B).......  Provides for a       $27,500.
                                 civil penalty of
                                 up to $25,000 for
                                 an institution of
                                 higher education's
                                 violation of Title
                                 IV of the Higher
                                 Education Act of
                                 1965, as amended,
                                 which authorizes
                                 various programs
                                 of student
                                 financial
                                 assistance.
31 U.S.C. 1352(c)(1) and        Provides for a       $11,000 to
 (c)(2)(A).                      civil penalty of     $110,000.
                                 $10,000 to
                                 $100,000 for
                                 recipients of
                                 Government grants,
                                 contracts, etc.
                                 that lobby
                                 Congress or the
                                 Executive Branch
                                 with respect to
                                 the award of
                                 Government grants
                                 and contracts.
31 U.S.C. 3802(a)(1) and        Provides for a       $5,500.
 (a)(2).                         civil penalty of
                                 up to $5,000 for
                                 false claims and
                                 statements made to
                                 the Government.
------------------------------------------------------------------------


(Authority: 28 U.S.C. 2461 note and 31 U.S.C. 3701 note)



PART 60_INDEMNIFICATION OF DEPARTMENT OF EDUCATION EMPLOYEES
--Table of Contents




Sec.
60.1 What are the policies of the Department regarding indemnification?
60.2 What procedures apply to requests for indemnification?

    Authority: 20 U.S.C. 3411, 3461, 3471, and 3474.

    Source: 54 FR 7148, Feb. 16, 1989, unless otherwise noted.



Sec. 60.1  What are the policies of the Department regarding 
indemnification?

    (a)(1) The Department of Education may indemnify, in whole or in 
part, an employee for any verdict, judgment, or other monetary award 
rendered against the employee if--
    (i) The conduct giving rise to the verdict, judgment, or award 
occurred within the scope of his or her employment with the Department; 
and
    (ii) The indemnification is in the interest of the United States, as 
determined by the Secretary.
    (2) The regulations in this part apply to an action pending against 
an ED employee as of March 30, 1989, as well as to any action commenced 
after that date.
    (3) As used in this part, the term employee includes--
    (i) A present or former officer or employee of the Department or of 
an advisory committee to the Department, including a special Government 
employee;
    (ii) An employee of another Federal agency on detail to the 
Department; or
    (iii) A student volunteer under 5 U.S.C. 3111.
    (4) As used in this part the term Secretary means the Secretary of 
the Department of Education or an official or employee of the Department 
acting for the Secretary under a delegation of authority.
    (b)(1) The Department may pay, in whole or in part, to settle or 
compromise a personal damage claim against an employee if--
    (i) The alleged conduct giving rise to the personal damage claim 
occurred within the scope of employment; and
    (ii) The settlement or compromise is in the interest of the United 
States, as determined by the Secretary.
    (2) Payment under paragraph (b)(1) of this section may include 
reimbursement, in whole or in part, of an employee for prior payment 
made by the employee under a settlement or compromise that meets the 
requirements of this section.
    (c) The Department does not indemnify or settle a personal damage 
claim before entry of an adverse verdict, judgment, or monetary award 
unless the Secretary determines that exceptional circumstances justify 
the earlier indemnification or settlement.
    (d) Any payment under this part, either to indemnify a Department of

[[Page 100]]

Education employee or to settle a personal damage claim, is contingent 
upon the availability of appropriated funds.

(Authority: 20 U.S.C. 3411, 3461, 3471, and 3474)



Sec. 60.2  What procedures apply to requests for indemnification?

    (a) When an employee of the Department of Education becomes aware 
that an action has been filed against the employee in his or her 
individual capacity as a result of conduct taken within the scope of his 
or her employment, the employee shall immediately notify the head of his 
or her principal operating component and shall cooperate with 
appropriate officials of the Department in the defense of the action.
    (b) As part of the notification in paragraph (a) of this section or 
at a later time, the employee may request--
    (1) Indemnification to satisfy a verdict, judgment, or award entered 
against the employee; or
    (2) Payment to satisfy the requirements of a settlement proposal.
    (c)(1) The employee's request must be in writing to the head of his 
or her principal operating component and must be accompanied by copies 
of the complaint and other documents filed in the action, including the 
verdict, judgment, award, settlement, or settlement proposal, as 
appropriate.
    (2)(i) As used in this section, the term principal operating 
component means an office in the Department headed by an Assistant 
Secretary, a Deputy Under Secretary, or an equivalent departmental 
officer who reports directly to the Secretary.
    (ii) The term also includes the Office of the Secretary and the 
Office of the Under Secretary.
    (d) The head of the employee's principal operating component submits 
to the General Counsel, in a timely manner, the request, together with a 
recommended disposition of the request.
    (e) The General Counsel forwards to the Secretary for decision--
    (1) The employee's request;
    (2) The recommendation of the head of the employee's principal 
operating component; and
    (3) The General Counsel's recommendation.

(Authority: 20 U.S.C. 3411, 3461, 3471, and 3474)



PART 73_STANDARDS OF CONDUCT--Table of Contents




Sec.
73.1 Cross-reference to employee ethical conduct standards and financial 
          disclosure regulations.
73.2 Conflict of interest waiver.

Appendix to Part 73--Code of Ethics for Government Service

    Authority: 5 U.S.C. 301, 7301; 18 U.S.C. 208; and E.O. 12674, 3 CFR, 
1989 Comp., p. 215, as modified by E.O. 12731, 3 CFR, 1990 Comp., p. 
306.

    Source: 60 FR 5818, Jan. 30, 1995, unless otherwise noted.



Sec. 73.1  Cross-reference to employee ethical conduct standards and 
financial disclosure regulations.

    Employees of the Department of Education are subject to the 
executive branch-wide Standards of Ethical Conduct at 5 CFR part 2635 
and to the Department of Education regulation at 5 CFR part 6301 which 
supplements the executive branch-wide standards with a requirement for 
employees to obtain prior approval to participate in certain outside 
activities. In addition, employees are subject to the executive branch-
wide financial disclosure regulations at 5 CFR part 2634.



Sec. 73.2  Conflict of interest waiver.

    If a financial interest arises from ownership by an employee--or 
other person or enterprise referred to in 5 CFR 2635.402(b)(2)--of stock 
in a widely diversified mutual fund or other regulated investment 
company that in turn owns stock in another enterprise, that financial 
interest is exempt from the prohibition in 5 CFR 2635.402(a).

       Appendix to Part 73--Code of Ethics for Government Service

    Any person in Government service should:
    Put loyalty to the highest moral principles and to country above 
loyalty to persons, party, or Government department.
    Uphold the Constitution, laws, and regulations of the United States 
and of all governments therein and never be a party to their evasion.

[[Page 101]]

    Give a full day's labor for a full day's pay; giving earnest effort 
and best thought to the performance of duties.
    Seek to find and employ more efficient and economical ways of 
getting tasks accomplished.
    Never discriminate unfairly by the dispensing of special favors or 
privileges to anyone, whether for remuneration or not; and never accept, 
for himself or herself or for family members, favors or benefits under 
circumstances which might be construed by reasonable persons as 
influencing the performance of governmental duties.
    Make no private promises of any kind binding upon the duties of 
office, since a Government employee has no private word which can be 
binding on public duty.
    Engage in no business with the Government, either directly or 
indirectly, which is inconsistent with the conscientious performance of 
governmental duties.
    Never use any information gained confidentially in the performance 
of governmental duties as a means of making private profit.
    Expose corruption wherever discovered.
    Uphold these principles, ever conscious that public office is a 
public trust.

(This Code of Ethics was unanimously passed by the United States 
Congress on June 27, 1980, and signed into law as Public Law 96-303 by 
the President on July 3, 1980.)



PART 74_ADMINISTRATION OF GRANTS AND AGREEMENTS WITH INSTITUTIONS OF 

HIGHER EDUCATION, HOSPITALS, AND OTHER NON-PROFIT ORGANIZATIONS
--Table of Contents




                            Subpart A_General

Sec.
74.1 Purpose.
74.2 Definitions.
74.3 Effect on other issuances.
74.4 Deviations.
74.5 Subawards.

                    Subpart B_Pre-Award Requirements

74.10 Purpose.
74.11 Pre-award policies.
74.12 Forms for applying for Federal assistance.
74.13 Debarment and suspension.
74.14 Special award conditions.
74.15 Metric system of measurement.
74.16 Resource Conservation and Recovery Act.
74.17 Certifications and representations.

                    Subpart C_Post-Award Requirements

                    Financial and Program Management

74.20 Purpose of financial and program management.
74.21 Standards for financial management systems.
74.22 Payment.
74.23 Cost sharing or matching.
74.24 Program income.
74.25 Revision of budget and program plans.
74.26 Non-Federal audits.
74.27 Allowable costs.
74.28 Period of availability of funds.

                           Property Standards

74.30 Purpose of property standards.
74.31 Insurance coverage.
74.32 Real property.
74.33 Federally-owned and exempt property.
74.34 Equipment.
74.35 Supplies and other expendable property.
74.36 Intangible property.
74.37 Property trust relationship.

                          Procurement Standards

74.40 Purpose of procurement standards.
74.41 Recipient responsibilities.
74.42 Codes of conduct.
74.43 Competition.
74.44 Procurement procedures.
74.45 Cost and price analysis.
74.46 Procurement records.
74.47 Contract administration.
74.48 Contract provisions.

                           Reports and Records

74.50 Purpose of reports and records.
74.51 Monitoring and reporting program performance.
74.52 Financial reporting.
74.53 Retention and access requirements for records.

                       Termination and Enforcement

74.60 Purpose of termination and enforcement.
74.61 Termination.
74.62 Enforcement.

                 Subpart D_After-the-Award Requirements

74.70 Purpose.
74.71 Closeout procedures.
74.72 Subsequent adjustments and continuing responsibilities.
74.73 Collection of amounts due.

Appendix A to Part 74--Contract Provisions

    Authority: 20 U.S.C. 1221e-3 and 3474; OMB Circular A-110, unless 
otherwise noted.

    Source: 59 FR 34724, July 6, 1994, unless otherwise noted.

[[Page 102]]



                            Subpart A_General



Sec. 74.1  Purpose.

    (a) This part establishes uniform administrative requirements for 
Federal grants and agreements awarded to institutions of higher 
education, hospitals, and other non-profit organizations.
    (b) The Secretary does not impose additional or inconsistent 
requirements, except as provided in Sec. Sec. 74.4 and 74.14 or unless 
specifically required by Federal statute or executive order.
    (c) This part applies to all recipients other than State and local 
governments and Indian tribal organizations. Uniform requirements for 
State and local governments and tribal organizations are in 34 CFR Part 
80--Uniform Administrative Requirements for Grants and Cooperative 
Agreements to State and Local Governments.
    (d) Non-profit organizations that implement Federal programs for the 
States are also subject to State requirements.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.2  Definitions.

    The following definitions apply to this part:
    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.
    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.
    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.
    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.
    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--
    (1) Technical assistance, which provides services instead of money;
    (2) Other assistance in the form of loans, loan guarantees, interest 
subsidies, or insurance;
    (3) Direct payments of any kind to individuals; and
    (4) Contracts which are required to be entered into and administered 
under procurement laws and regulations.
    Cash contributions means the recipient's cash outlay, including the 
outlay of money contributed to the recipient by third parties.
    Closeout means the process by which the Secretary determines that 
all applicable administrative actions and all required work of the award 
have been completed by the recipient and Department of Education (ED).
    Contract means a procurement contract under an award or subaward, 
and a procurement subcontract under a recipient's or subrecipient's 
contract.
    Cost sharing or matching means that portion of project or program 
costs not borne by the Federal Government.
    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.

[[Page 103]]

    Disallowed costs means those charges to an award that the Secretary 
determines to be unallowable, in accordance with the applicable Federal 
cost principles or other terms and conditions contained in the award.
    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.
    Excess property means property under the control of ED that is no 
longer required for its needs or the discharge of its responsibilities.
    Exempt property means tangible personal property acquired in whole 
or in part with Federal funds, where the Secretary 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.
    Federal awarding agency means the Federal agency that provides an 
award to the recipient.
    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 ED regulations or ED 
implementing instructions.
    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.
    Funding period means the period of time when Federal funding is 
available for obligation by the recipient.
    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.
    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.
    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.
    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.
    Prior approval means written approval by an authorized official 
evidencing prior consent.
    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 Sec. 74.24(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 
ED regulations or the

[[Page 104]]

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.
    Project costs means all allowable costs, as established 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.
    Project period means the period established in the award document 
during which Federal sponsorship begins and ends.
    Property means, unless otherwise stated, real property, equipment, 
intangible property and debt instruments.
    Real property means land, including land improvements, structures 
and appurtenances thereto, but excludes movable machinery and equipment.
    Recipient means an organization receiving financial assistance 
directly from ED 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 Secretary. 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.
    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 these activities utilize the 
same facilities as other pesearch and development activities and where 
these activities are not included in the instruction function.
    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).
    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'' as defined in this section.
    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 Secretary.
    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 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.
    Suspension means an action by the Secretary that temporarily 
withdraws Federal sponsorship under an award, pending corrective action 
by the recipient or pending a decision to terminate the award by the 
Secretary. Suspension of an award is a separate action

[[Page 105]]

from suspension under 34 CFR Part 85 (Governmentwide Debarment and 
Suspension (Nonprocurement) and Governmentwide Requirements for Drug-
Free Workplace (Grants).
    Termination means the cancellation of Federal sponsorship, in whole 
or in part, under an agreement at any time prior to the date of 
completion.
    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.
    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.
    Unobligated balance means the portion of the funds authorized by the 
Secretary that has not been obligated by the recipient and is determined 
by deducting the cumulative obligations from the cumulative funds 
authorized.
    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.
    Working capital advance means a procedure whereby funds are advanced 
to the recipient to cover its estimated disbursement needs for a given 
initial period.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.3  Effect on other issuances.

    For awards subject to this part, all administrative requirements of 
codified program regulations, program manuals, handbooks, and other 
nonregulatory materials which are inconsistent with the requirements of 
this part are superseded, except to the extent they are required by 
statute, or authorized in accordance with the deviations provision in 
Sec. 74.4.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.4  Deviations.

    The Secretary, after consultation with the Office of Management and 
Budget (OMB), may grant exceptions for classes of grants or recipients 
subject to the requirements of this part when exceptions are not 
prohibited by statute. However, in the interest of maximum uniformity, 
exceptions from the requirements of this part are permitted only in 
unusual circumstances. The Secretary may apply more restrictive 
requirements to a class of recipients when approved by OMB. The 
Secretary 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 the Secretary.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.5  Subawards.

    Unless sections of this part specifically exclude subrecipients from 
coverage, the provisions of this part shall be applied to subrecipients 
performing work under awards if the subrecipients are institutions of 
higher education, hospitals, or other non-profit organizations. State 
and local government subrecipients are subject to the provisions of 34 
CFR Part 80--Uniform Administrative Requirements for Grants and 
Cooperative Agreements to State and Local Governments.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



                    Subpart B_Pre-Award Requirements



Sec. 74.10  Purpose.

    Sections 74.11 through 74.17 prescribes forms and instructions and 
other pre-award matters to be used in applying for awards.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

[[Page 106]]



Sec. 74.11  Pre-award policies.

    (a) Use of grants and cooperative agreements, and contracts. In each 
instance, the Secretary decides 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 ED and the 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. The Secretary notifies the 
public of intended funding priorities for discretionary grant programs, 
unless funding priorities are established by Federal statute.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.12  Forms for applying for Federal assistance.

    (a) The Secretary complies with the applicable report clearance 
requirements of 5 CFR Part 1320--Controlling Paperwork Burdens on the 
Public--with regard to all forms used by ED 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 Secretary.
    (c) For Federal programs covered by E.O. 12372--Intergovernmental 
Review of Federal Programs (implemented by the Secretary in 34 CFR Part 
79--Intergovernmental Review of Department of Education Programs and 
Activities)--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 Secretary or the Catalog of Federal Domestic 
Assistance (available from the Superintendent of Documents, Government 
Printing Office). The SPOC shall advise the applicant whether the 
program for which application is made has been selected by that State 
for review.
    (d) If ED does not use the SF-424 form, the Secretary may indicate 
whether the application is subject to review by the State under E.O. 
12372.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

[59 FR 34724, July 6, 1994, as amended at 60 FR 6660, Feb. 3, 1995]



Sec. 74.13  Debarment and suspension.

    The Secretary and recipients shall comply with the nonprocurement 
debarment and suspension common rule (implemented by the Secretary in 34 
CFR part 85). 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.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.14  Special award conditions.

    (a) The Secretary may impose special award conditions, if an 
applicant or recipient--
    (1) Has a history of poor performance;
    (2) Is not financially stable;
    (3) Has a management system that does not meet the standards 
prescribed in this part;
    (4) Has not conformed to the terms and conditions of a previous 
award; or
    (5) Is not otherwise responsible.
    (b) If special award conditions are established under paragraph (a) 
of this section, the Secretary notifies the applicant or recipient of--
    (1) The nature of the additional requirements;
    (2) The reason why the additional requirements are being imposed;
    (3) The nature of the corrective action needed;
    (4) The time allowed for completing the corrective actions; and

[[Page 107]]

    (5) The method for requesting reconsideration of the additional 
requirements imposed.
    (c) Any special conditions are promptly removed once the conditions 
that prompted them have been corrected.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.15  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. The Secretary follows the provisions of E.O. 12770--Metric 
Usage in Federal Government Programs.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.16  Resource Conservation and Recovery Act.

    Under the Resource Conservation and Recovery Act (RCRA) (Pub. L. 94-
580 codified at 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 of the RCRA. 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, recipients 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.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.17  Certifications and representations.

    Unless prohibited by statute or codified regulation, the Secretary 
allows 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 ED. Annual 
certifications and representations shall be signed by responsible 
officials with the authority to ensure recipients' compliance with the 
pertinent requirements.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



                    Subpart C_Post-Award Requirements

                    Financial and Program Management



Sec. 74.20  Purpose of financial and program management.

    Sections 74.21 through 74.28 prescribe standards for financial 
management systems, methods for making payments and rules for--
    (a) Satisfying cost sharing and matching requirements;
    (b) Accounting for program income;
    (c) Approving budget revisions;
    (d) Making audits;
    (e) Determining allowability of cost; and
    (f) Establishing fund availability.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.21  Standards for financial management systems.

    (a) Recipients shall 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 in accordance with the 
reporting requirements established in Sec. 74.52. If the Secretary 
requires reporting on an accrual basis from a recipient that maintains 
its records on other than an accrual

[[Page 108]]

basis, the recipient shall not be required to establish an accrual 
accounting system. These recipients may develop 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 awards, authorizations, obligations, 
unobligated balances, assets, outlays, income, and interest.
    (3) Effective control over and accountability for all funds, 
property, and other assets. Recipients shall adequately safeguard all 
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 Secretary 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 Secretary may require adequate fidelity bond coverage where 
the recipient lacks sufficient coverage to protect the Federal 
Government's interest.
    (e) Where bonds are required under paragraphs (a) and (b) of this 
section, 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.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

[59 FR 34724, July 6, 1994, as amended at 60 FR 6660, Feb. 3, 1995]



Sec. 74.22  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)(1) Recipients are paid in advance, provided they maintain or 
demonstrate the willingness to maintain--
    (i) Written procedures that minimize the time elapsing between the 
transfer of funds and disbursement by the recipient; and
    (ii) Financial management systems that meet the standards for fund 
control and accountability as established in Sec. 74.21.
    (2) Cash advances to a recipient organization are 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.
    (3) The timing and amount of cash advances are 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.

[[Page 109]]

    (c) Whenever possible, advances are consolidated to cover 
anticipated cash needs for all awards made by the Secretary.
    (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 are 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 automatically through the use 
of a predetermined payment schedule or if precluded by ED instructions 
for electronic funds transfer.
    (e) Reimbursement is the preferred method when the requirements in 
paragraph (b) of this section cannot be met. The Secretary 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 Secretary makes 
payment within 30 days after receipt of the billing, unless the billing 
is improper.
    (2) Recipients are 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 Secretary has determined that reimbursement is not feasible because 
the recipient lacks sufficient working capital, the Secretary may 
provide cash on a working capital advance basis. Under this procedure, 
the Secretary advances cash to the recipient to cover its estimated 
disbursement needs for an initial period generally geared to the 
awardee's disbursing cycle. Thereafter, the Secretary reimburses the 
recipient for its actual cash disbursements. The working capital advance 
method of payment is not 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 these funds before requesting 
additional cash payments.
    (h) Unless otherwise required by statute, the Secretary does 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 these conditions, the Secretary may, upon reasonable 
notice, inform the recipient that ED does not make payments for 
obligations incurred after a specified date until the conditions are 
corrected or the indebtedness to the Federal Government is liquidated.
    (i) The 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) of this 
section, the Secretary does 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).

[[Page 110]]

    (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; or
    (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 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 Secretary, it waives its right to 
recover the interest under CMIA.
    (m) Except as noted elsewhere in this part, only the following forms 
are authorized for the recipients in requesting advances and 
reimbursements. The Secretary does not require more than an original and 
two copies of the following:
    (1) SF-270--Request for Advance or Reimbursement. The Secretary 
adopts the SF-270 as a standard form for all nonconstruction programs 
when electronic funds transfer or predetermined advance methods are not 
used. The Secretary may, however, use 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. The Secretary adopts the SF-271 as the standard 
form to be used for requesting reimbursement for construction programs. 
However, the Secretary may substitute the SF-270 when the Secretary 
determines that it provides adequate information to meet Federal needs.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.23  Cost sharing or matching.

    (a) All contributions, including cash and third party in-kind, are 
accepted as part of the recipient's cost sharing or matching when 
contributions meet 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 
Secretary.
    (7) Conform to other provisions of this part, as applicable.
    (b) Unrecovered indirect costs may be included as part of cost 
sharing or matching only with the prior approval of the Secretary.
    (c) Values for recipient contributions of services and property 
shall be established in accordance with the applicable cost principles. 
If the Secretary 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, if there is sufficient 
justification, the Secretary 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

[[Page 111]]

integral and necessary part of an approved project or program. Rates for 
volunteer services must 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 must 
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 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.
    (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 Secretary has 
approved the charges.
    (h) The value of donated property must be determined in accordance 
with the usual accounting policies of the recipient, with the following 
qualifications:
    (1) The value of donated land and buildings may 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 may 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 may 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 must 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 must be documented.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.24  Program income.

    (a) The Secretary applies the standards contained 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) of this section, program 
income earned during the project period must be retained by the 
recipient and, in accordance with ED regulations or the terms and 
conditions of the award, must be used in one or more of the following 
ways:
    (1) Added to funds committed to the project by the Secretary and 
recipient and used to further eligible project or program objectives.
    (2) Used to finance the non-Federal share of the project or program.

[[Page 112]]

    (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 the Secretary authorizes the disposition of program income 
as described in paragraphs (b)(1) or (b)(2) of this section, program 
income in excess of any limits stipulated shall be used in accordance 
with paragraph (b)(3) of this section.
    (d) In the event that the Secretary does not specify in program 
regulations or the terms and conditions of the award how program income 
is to be used, paragraph (b)(3) of this section applies automatically to 
all projects or programs except research. For awards that support 
research, paragraph (b)(1) of this section applies automatically unless 
the Secretary indicates in the terms and conditions another alternative 
on the award or the recipient is subject to special award conditions, as 
indicated in Sec. 74.14.
    (e) Unless ED regulations or the terms and conditions of the award 
provide otherwise, recipients have no obligation to the Federal 
Government regarding program income earned after the end of the project 
period.
    (f) If authorized by ED 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. Sec. 74.30 through 74.37).
    (h) Unless ED regulations or the terms and condition of the award 
provide otherwise, recipients 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.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.25  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 
ED 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 ED 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 
Secretary.
    (6) The inclusion, unless waived by the Secretary, 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

[[Page 113]]

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 are 
imposed unless a deviation has been approved by OMB.
    (e) Except for requirements listed in paragraphs (c)(1) and (c)(4) 
of this section, the Secretary may waive cost-related and administrative 
prior written approvals required by this part and OMB Circulars A-21 and 
A-122. These waivers may authorize 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 Secretary. All pre-
award costs are incurred at the recipient's risk (i.e., the Secretary is 
under no obligation to reimburse these costs if for any reason the 
recipient does not receive an award or if the award is less than 
anticipated and inadequate to cover these costs).
    (2)(i) 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:
    (A) The terms and conditions of award prohibit the extension.
    (B) The extension requires additional Federal funds.
    (C) The extension involves any change in the approved objectives or 
scope of the project.
    (ii) For one-time extensions, the recipient shall notify the 
Secretary 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.
    (3) Carry forward unobligated balances to subsequent funding 
periods.
    (4) For awards that support research, unless the Secretary provides 
otherwise in the award or in ED's regulations, the prior approval 
requirements described in paragraph (e) of this section are 
automatically waived (i.e., recipients need not obtain prior approvals) 
unless one of the conditions included in paragraph (e)(2)(i) of this 
section applies.
    (f) The Secretary may 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 the transfers exceeds or is expected to exceed 10 
percent of the total budget as last approved by the Secretary. The 
Secretary does not 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) of this section, do not require prior 
approval.
    (h) For construction awards, recipients shall request prior written 
approval promptly from the Secretary for budget revisions whenever--
    (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; or
    (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 Sec. 74.27.
    (i) No other prior approval requirements for specific items may be 
imposed unless a deviation has been approved by OMB.
    (j) When the Secretary makes an award that provides support for both 
construction and nonconstruction work, the Secretary may require the 
recipient to request prior approval from the Secretary before making any 
fund or budget transfers between the two types of work supported.
    (k) For both construction and nonconstruction awards, recipients 
shall notify the Secretary 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.

[[Page 114]]

    (l) When requesting approval for budget revisions, recipients shall 
use the budget forms that were used in the application unless the 
Secretary indicates a letter of request suffices.
    (m) Within 30 calendar days from the date of receipt of the request 
for budget revisions, the Secretary 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 Secretary informs the recipient in writing of the date when the 
recipient may expect the decision.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

[59 FR 34724, July 6, 1994, as amended at 60 FR 6660, Feb. 3, 1995]



Sec. 74.26  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 are subject to the audit requirements 
established by the Secretary or the prime recipient as incorporated into 
the award document.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

[59 FR 34724, July 6, 1994, as amended at 62 FR 45939, 45943, Aug. 29, 
1997]



Sec. 74.27  Allowable costs.

    (a) For each kind of recipient, there is a set of cost principles 
for determining allowable costs. Allowability of costs are determined in 
accordance with the cost principles applicable to the entity incurring 
the costs, as specified in the following chart.

    Note: OMB circulars are available from the Office of Management and 
Budget, Publication Office, Room 2200, New Executive Office Building, 
Washington, DC 20503 (202) 395-7332.)

------------------------------------------------------------------------
        For the cost of a--                Use the principles in--
------------------------------------------------------------------------
Private nonprofit organization      OMB Circular A-122.
 other than (1) An institution of
 higher education; (2) a hospital;
 or (3) an organization named in
 OMB Circular A-122 as not subject
 to that circular.
Educational institution...........  OMB Circular A-21.
Hospital..........................  Appendix E to 45 CFR part 74.
Commercial for-profit organization  48 CFR part 31 Contract Cost
 other than a hospital and an        Principles and Procedures or
 educational institution.            uniform cost accounting standards
                                     that comply with cost principles
                                     acceptable to ED.
------------------------------------------------------------------------

    (b) The cost principles applicable to a State, a local government, 
or Federally recognized Indian tribal government are specified at 34 CFR 
Sec. 80.22.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.28  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 Secretary.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

                           Property Standards



Sec. 74.30  Purpose of property standards.

    Sections 74.31 through 74.37 establish uniform standards governing 
management and disposition of property furnished by ED whose cost was 
charged

[[Page 115]]

to a project supported by a Federal award. Recipients shall observe 
these standards under awards. The Secretary does 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. Sec. 74.31 through 74.37.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.31  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.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.32  Real property.

    The Secretary prescribes requirements for recipients concerning the 
use and disposition of real property acquired in whole or in part under 
awards. Unless otherwise provided by statute, the minimum requirements 
provide the following:
    (a) Title to real property must 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 Secretary.
    (b) The recipient shall obtain written approval by the Secretary 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) that have 
purposes consistent with those authorized for support by the Secretary.
    (c) When the real property is no longer needed as provided in 
paragraphs (a) and (b) of this section, the recipient shall request 
disposition instructions from ED or its successor Federal awarding 
agency. The Secretary observes 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 Secretary 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 must 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. The recipient 
is entitled to compensation for its attributable percentage of the 
current fair market value of the property.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.33  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 Secretary. Upon completion of the award or when the 
property is no longer needed, the recipient shall report the property to 
the Secretary for further ED utilization.
    (2) If ED has no further need for the property, it shall be declared 
excess and reported to the General Services Administration, unless the 
Secretary 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

[[Page 116]]

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 Secretary.
    (b) Exempt property. When statutory authority exists, the Secretary 
may vest title to property acquired with Federal funds in the recipient 
without further obligation to the Federal Government and under 
conditions the Secretary considers appropriate. This property is 
``exempt property.'' Should the Secretary not establish conditions, 
title to exempt property upon acquisition vests in the recipient without 
further obligation to the Federal Government.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.34  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 may 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 may not 
encumber the property without approval of the Secretary. 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; and 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 other use will not interfere with the 
work on the project or program for which the equipment was originally 
acquired. First preference for 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 Secretary.
    (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 ED for its share.
    (2) Equipment owned by the Federal Government must be identified to 
indicate Federal ownership.

[[Page 117]]

    (3) A physical inventory of equipment must 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 must 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 must 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 owned by the Federal Government, the recipient shall 
promptly notify the Secretary.
    (5) Adequate maintenance procedures must be implemented to keep the 
equipment in good condition.
    (6) Where the recipient is authorized or required to sell the 
equipment, proper sales procedures must 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:
    (1) For equipment with a current per unit fair market value of $5000 
or more, the recipient may retain the equipment for other uses provided 
that compensation is made to ED 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.
    (2) If the recipient has no need for the equipment, the recipient 
shall request disposition instructions from the Secretary. The Secretary 
shall determine whether the equipment can be used to meet ED 
requirements. If no requirement exists within ED, the availability of 
the equipment shall be reported to the General Services Administration 
by the Secretary to determine whether a requirement for the equipment 
exists in other Federal agencies. The Secretary issues instructions to 
the recipient no later than 120 calendar days after the recipient's 
request and the following procedures govern:
    (i) 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 ED 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.
    (ii) If the recipient is instructed to ship the equipment elsewhere, 
the recipient is reimbursed by ED 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.
    (iii) If the recipient is instructed to otherwise dispose of the 
equipment, the recipient is reimbursed by ED for costs incurred in its 
disposition.
    (iv) The Secretary may reserve the right to transfer the title to 
the Federal Government or to a third party named by the Federal 
Government when the third party is otherwise eligible under existing 
statutes. This transfer shall be subject to the following standards:
    (A) The equipment must be appropriately identified in the award or 
otherwise made known to the recipient in writing.
    (B) The Secretary issues disposition instructions within 120 
calendar days after receipt of a final inventory. The final inventory 
must list all equipment acquired with grant funds and federally-owned 
equipment. If the Secretary does not issue disposition instructions 
within the 120 calendar day period, the recipient shall apply the 
standards of this section, as appropriate.
    (C) When the Secretary exercises the right to take title, the 
equipment is

[[Page 118]]

subject to the provisions for federally-owned equipment.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

[59 FR 34724, July 6, 1994, as amended at 60 FR 6660, Feb. 3, 1995]



Sec. 74.35  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, 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 may 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.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.36  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. ED and any other Federal awarding agency 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, ED 
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 ED 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.

[[Page 119]]

    (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.
    (e) Title to intangible property and debt instruments acquired under 
an award or subaward vests upon acquisition in the recipient. The 
recipient shall use that property for the originally-authorized purpose, 
and the recipient shall not encumber the property without approval of 
the Secretary. When no longer needed for the originally authorized 
purpose, disposition of the intangible property shall occur in 
accordance with the provisions of Sec. 74.34(g).

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

[59 FR 34724, July 6, 1994, as amended at 65 FR 14407, 14416, Mar. 16, 
2000]



Sec. 74.37  Property trust relationship.

    Real property, equipment, intangible property, and debt instruments 
that are acquired or improved with Federal funds must 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. The Secretary 
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.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

                          Procurement Standards



Sec. 74.40  Purpose of procurement standards.

    Sections 74.41 through 74.48 contain 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 designed to ensure that these 
materials and services are obtained in an effective manner and in 
compliance with the provisions of applicable Federal statutes and 
executive orders. The Secretary does not impose additional procurement 
standards or requirements upon recipients, unless specifically required 
by Federal statute or executive order or as authorized in Sec. 74.4 or 
Sec. 74.14.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.41  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 
Secretary, 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 
Federal, State or local authority that may have proper jurisdiction.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.42  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. 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

[[Page 120]]

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 these 
standards by officers, employees, or agents of the recipient.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.43  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 or requests for 
proposals shall be excluded from competing for procurements. Awards must 
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 establish 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.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.44  Procurement procedures.

    (a) All recipients shall establish written procurement procedures. 
These procedures must 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; or
    (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, 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 these 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.

[[Page 121]]

    (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 
organizations such 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 must 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 must not 
be used.
    (d) Contracts are made only with responsible contractors who possess 
the potential ability to perform successfully under the terms and 
conditions of the proposed procurement. Consideration is given to 
matters as contractor integrity, record of past performance, financial 
and technical resources or accessibility to other necessary resources. 
In certain circumstances, contracts with certain parties are restricted 
by E.O. 12549 (implemented by the Secretary in 34 CFR Part 85) and E.O. 
12689--Debarment and Suspension.
    (e) Recipients shall, on request, make available for the Secretary, 
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 this part.
    (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.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

[59 FR 34724, July 6, 1994, as amended at 60 FR 6660, Feb. 3, 1995]

    Effective Date Note: At 69 FR 31710, June 4, 2004,Sec. 74.44 was 
amended by adding paragraph (f), effective July 6, 2004. For the 
convenience of the user, the added text is set forth as follows:

Sec. 74.44  Procurement procedures.

                                * * * * *

    (f)(1)(i) A faith-based organization is eligible to contract with 
recipients on the same basis as any other private organization, with 
respect to contracts for which such other organizations are eligible.
    (ii) In the selection of goods and services providers, recipients 
shall not discriminate for or against a private organization on the 
basis of the organization's religious character or affiliation.
    (2) The provisions of Sec. Sec. 75.532 and 76.532 applicable to 
grantees and subgrantees apply to a faith-based organization that 
contracts with a recipient, unless the faith-based organization is 
selected as a result of the genuine and independent private choices of 
individual beneficiaries of the program and provided the organization 
otherwise satisfies the requirements of the program.
    (3) A private organization that engages in inherently religious 
activities, such as religious worship, instruction, or proselytization, 
must offer those services separately in time or location from any 
programs or services supported by a contract with a recipient, and 
participation in any such inherently religious activities by 
beneficiaries of the programs supported by the contract must be 
voluntary, unless the organization is selected as a result of the 
genuine and independent private choices of individual beneficiaries of 
the program and provided the organization otherwise satisfies the 
requirements of the program.

[[Page 122]]

    (4)(i) A faith-based organization that contracts with a recipient 
may retain its independence, autonomy, right of expression, religious 
character, and authority over its governance.
    (ii) A faith-based organization may, among other things--
    (A) Retain religious terms in its name;
    (B) Continue to carry out its mission, including the definition, 
development, practice, and expression of its religious beliefs;
    (C) Use its facilities to provide services without removing or 
altering religious art, icons, scriptures, or other symbols from these 
facilities;
    (D) Select its board members and otherwise govern itself on a 
religious basis; and
    (E) Include religious references in its mission statement and other 
chartering or governing documents.
    (5) A private organization that contracts with a recipient shall not 
discriminate against a beneficiary or prospective beneficiary in the 
provision of program services on the basis of religion or religious 
belief.
    (6) A religious organization's exemption from the Federal 
prohibition on employment discrimination on the basis of religion, in 
section 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 2000e-1, is 
not forfeited when the organization contracts with a recipient.



Sec. 74.45  Cost and price analysis.

    Some form of cost or price analysis must 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.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

[59 FR 34724, July 6, 1994, as amended at 60 FR 6660, Feb. 3, 1995]



Sec. 74.46  Procurement records.

    Procurement records and files for purchases in excess of the small 
purchase threshold must 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;
    (c) Basis for award cost or price.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

[59 FR 34724, July 6, 1994, as amended at 60 FR 6660, Feb. 3, 1995]



Sec. 74.47  Contract administration.

    A system for contract administration must 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.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

[59 FR 34724, July 6, 1994, as amended at 60 FR 6660, Feb. 3, 1995]



Sec. 74.48  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 must 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 
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, contracts must 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

[[Page 123]]

construction or facility improvements must 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 Secretary may accept the bonding policy and requirements 
of the recipient, provided the Secretary has made a determination that 
the Federal Government's interest is adequately protected. If a 
determination has not been made, the minimum requirements are as 
follows:
    (1) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The ``bid guarantee'' must 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 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 a 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, the bonds must 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 must include a provision to 
the effect that the recipient, ED, the Comptroller General of the United 
States, or any of their duly authorized representatives, must 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 must contain the procurement provisions of 
appendix A to this part, as applicable.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

                           Reports and Records



Sec. 74.50  Purpose of reports and records.

    Sections 74.51 through 74.53 establish the procedures for monitoring 
and reporting on the recipient's financial and program performance and 
the necessary standard reporting forms. They also establish record 
retention requirements.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.51  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 in Sec. 74.26.
    (b) The Secretary prescribes the frequency with which the 
performance reports shall be submitted. Except as provided in Sec. 
74.51(f), performance reports are not required more frequently than 
quarterly or, less frequently than annually. Annual reports are due 90 
calendar days after the grant year; quarterly or semi-annual reports are 
due 30 days after the reporting period. The Secretary 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 is not 
required after completion of the project.
    (d) When required, performance reports must 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

[[Page 124]]

findings of the investigator, or both. Whenever appropriate and the 
output of programs or projects can be readily quantified, this 
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, and explanation of cost overruns or high unit costs.
    (e) Recipients are not required to submit more than the original and 
two copies of performance reports.
    (f) Recipients shall immediately notify the Secretary of 
developments that have a significant impact on the award-supported 
activities. Also, notification must 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 must include a 
statement of the action taken or contemplated, and any assistance needed 
to resolve the situation.
    (g) The Secretary may make site visits, as needed.
    (h) The Secretary complies with the clearance requirements of 5 CFR 
part 1320 when requesting performance data from recipients.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

[59 FR 34724, July 6, 1994, as amended at 60 FR 6660, Feb. 3, 1995]



Sec. 74.52  Financial reporting.

    (a) The following forms or 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) Recipients are 
required to use the SF-269 or SF-269A to report the status of funds for 
all nonconstruction projects or programs. The Secretary may not require 
the SF-269 or SF-269A when, the Secretary determines that SF-270--
Request for Advance or Reimbursement, or SF-272--Report of Federal Cash 
Transactions--provides adequate information to meet the Department's 
needs, except that a final SF-269 or SF-269A is required at the 
completion of the project when the SF-270 is used only for advances.
    (ii) The Secretary prescribes whether the report is on a cash or 
accrual basis. If the Secretary requires accrual information and the 
recipient's accounting records are not normally kept on the accrual 
basis, the recipient is not required to convert its accounting system, 
but shall develop accrual information through best estimates based on an 
analysis of the documentation on hand.
    (iii) The Secretary determines 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 is not 
required more frequently than quarterly or less frequently than 
annually. A final report is required at the completion of the agreement.
    (iv) The Secretary requires 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 Secretary upon 
request of the recipient.
    (2) SF-272--Report of Federal Cash Transactions. (i) When funds are 
advanced to recipients the Secretary requires each recipient to submit 
the SF-272 and, when necessary, its continuation sheet, SF-272a. The 
Secretary uses this report to monitor cash advanced to recipients and to 
obtain disbursement information for each agreement with the recipients.
    (ii) The Secretary may require forecasts of Federal cash 
requirements in the ``Remarks'' section of the report.
    (iii) When practical and deemed necessary, the Secretary 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 Secretary may require a monthly

[[Page 125]]

report from those recipients receiving advances totaling $1 million or 
more per year.
    (v) The Secretary may waive the requirement for submission of the 
SF-272 for any one of the following reasons:
    (A) When monthly advances do not exceed $25,000 per recipient, 
provided that advances are monitored through other forms contained in 
this section;
    (B) If, in the Secretary'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 Secretary needs additional information or more frequent 
reports, the following shall be observed:
    (1) When additional information is needed to comply with legislative 
requirements, the Secretary shall issue instructions to require 
recipients to submit information under the ``Remarks'' section of the 
reports.
    (2) When the Secretary determines that a recipient's accounting 
system does not meet the standards in Sec. 74.21, additional pertinent 
information to further monitor awards may be obtained upon written 
notice to the recipient until the system is brought up to standard. The 
Secretary, in obtaining this information, complies with the report 
clearance requirements of 5 CFR part 1320.
    (3) The Secretary may shade out any line item on any report if not 
necessary.
    (4) The Secretary may accept the identical information from the 
recipients in machine readable format or computer printouts or 
electronic outputs in lieu of prescribed formats.
    (5) The Secretary may provide computer or electronic outputs to 
recipients when these outputs expedite or contribute to the accuracy of 
reporting.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

[59 FR 34724, July 6, 1994, as amended at 60 FR 6660, Feb. 3, 1995]



Sec. 74.53  Retention and access requirements for records.

    (a) This section establishes requirements for record retention and 
access to records for awards to recipients. The Secretary does 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 Secretary. 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 Secretary, 
the 3-year retention requirement is not applicable to the recipient.
    (4) Indirect cost rate proposals, cost allocations plans, etc. as 
specified in Sec. 74.53(g).
    (c) Copies of original records may be substituted for the original 
records if authorized by the Secretary.
    (d) The Secretary requests 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 
recordkeeping, the Secretary may make arrangements for recipients to 
retain any records that are continuously needed for joint use.
    (e) The Secretary, 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,

[[Page 126]]

and copies of documents. This right also includes timely and reasonable 
access to a recipient's personnel for the purpose of interview and 
discussion related to these documents. The rights of access in this 
paragraph are not limited to the required retention period, but shall 
last as long as records are retained.
    (f) Unless required by statute, the Secretary does not place 
restrictions on recipients that limit public access to the records of 
recipients that are pertinent to an award, except when the Secretary can 
demonstrate that the records must 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 ED.
    (g) The starting date for retention of the following types of 
documents (including supporting records) is specified in paragraphs 
(g)(1) and (2) of this section: 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 
Secretary 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 submission.
    (2) If not submitted for negotiation. If the recipient is not 
required to submit to the Secretary 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.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3 and 3474; OMB Circular A-110)

[59 FR 34724, July 6, 1994, as amended at 60 FR 6660, Feb. 3, 1995; 60 
FR 46493, Sept. 6, 1995]

                       Termination and Enforcement



Sec. 74.60  Purpose of termination and enforcement.

    Sections 74.61 and 74.62 establish uniform suspension, termination, 
and enforcement procedures.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.61  Termination.

    (a) Awards may be terminated in whole or in part only--
    (1) By the Secretary, if a recipient materially fails to comply with 
the terms and conditions of an award;
    (2) By the Secretary 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.
    (3) By the recipient, upon sending to the Secretary written 
notification containing the reasons for the termination, the effective 
date, and, in the case of partial termination, the portion to be 
terminated. However, if the Secretary 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 paragraph (a)(1) or (2) of this 
section.
    (b) If costs are allowed under an award, the responsibilities of the 
recipient referred to in Sec. 74.71(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.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.62  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 Secretary may, in addition to imposing any of the special conditions 
outlined in Sec. 74.14, take one

[[Page 127]]

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 
Secretary.
    (2) Disallow (that is, deny both use of funds and any applicable 
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.
    (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 
Secretary provides 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 Secretary 
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 ED from initiating a debarment or 
suspension action against a recipient under 34 CFR part 85 (see Sec. 
74.13).

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



                 Subpart D_After-the-Award Requirements



Sec. 74.70  Purpose.

    Sections 74.71 through 74.73 contain closeout procedures and other 
procedures for subsequent disallowances and adjustments.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



Sec. 74.71  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 
Secretary may approve extensions when requested by the recipient.
    (b) Unless the Secretary 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 ED implementing 
instructions.
    (c) The Secretary makes 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 Secretary 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 
Secretary makes 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 Sec. Sec. 74.31 through 74.37.
    (g) In the event a final audit has not been performed prior to the 
closeout of an award, the Secretary shall retain the right to recover an 
appropriate

[[Page 128]]

amount after fully considering the recommendations on disallowed costs 
resulting from the final audit.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

[59 FR 34724, July 6, 1994, as amended at 60 FR 6660, Feb. 3, 1995]



Sec. 74.72  Subsequent adjustments and continuing responsibilities.

    (a) The closeout of an award does not affect any of the following:
    (1) The right of the Secretary to disallow costs and recover funds 
on the basis of a later audit or other review.
    (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 Sec. 74.26.
    (4) Property management requirements in Sec. Sec. 74.31 through 
74.37.
    (5) Records retention as required in Sec. 74.53.
    (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 Secretary and the recipient, provided the responsibilities of the 
recipient referred to in Sec. 74.73(a), including those for property 
management as applicable, are considered and provisions made for 
continuing responsibilities of the recipient, as appropriate.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

[59 FR 34724, July 6, 1994, as amended at 60 FR 6660, Feb. 3, 1995]



Sec. 74.73  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 
Secretary may reduce the debt by--
    (1) Making an administrative offset against other requests for 
reimbursements;
    (2) Withholding advance payments otherwise due to the recipient; or
    (3) Taking other action permitted by statute.
    (b) Except as otherwise provided by law, the Secretary charges 
interest on an overdue debt in accordance with 4 CFR Chapter II--Federal 
Claims Collection Standards.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

               Appendix A to Part 74--Contract Provisions

    All contracts, awarded by a recipient including small purchases, 
shall contain the following provisions as applicable:
    1. Equal Employment Opportunity--All contracts must 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.
    2. Copeland ``Anti-Kickback'' Act (18 U.S.C. 874 and 40 U.S.C. 
276c)--All contracts and subgrants in excess of $2,000 for construction 
or repair awarded by recipients and subrecipients must 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.
    3. Davis-Bacon Act, as amended (40 U.S.C. 276a to a-7)--When 
required by Federal program legislation, all construction contracts 
awarded by the recipients and subrecipients of more than $2,000 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

[[Page 129]]

once a week. The recipient shall place a copy of the current prevailing 
wage 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.
    4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327-
333)--Where applicable, all contracts awarded by recipients in excess of 
$2,000 for construction contracts and in excess of $2500 for other 
contracts that involve the employment of mechanics or laborers must 
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.
    5. Rights to Inventions Made Under a Contract or Agreement--
Contracts or agreements for the performance of experimental, 
developmental, or research work must 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.
    6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water 
Pollution Control Act (33 U.S.C. 1251 et seq.), as amended--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 ED and 
the Regional Office of the Environmental Protection Agency (EPA).
    7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)--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. 
The disclosures are forwarded from tier to tier up to the recipient.
    8. Debarment and Suspension (E.O. 12549 and E.O. 12689)--No contract 
may 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 12549 and E.O. 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 
must provide the required certification regarding its exclusion status 
and that of its principal employees.

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)



PART 75_DIRECT GRANT PROGRAMS--Table of Contents




                            Subpart A_General

             Regulations That Apply to Direct Grant Programs

Sec.
75.1 Programs to which part 75 applies.
75.2 Exceptions in program regulations to part 75.
75.4 Department contracts.

                         Eligibility for a Grant

75.50 How to find out whether you are eligible.
75.51 How to prove nonprofit status.
75.52 Eligibility of faith-based organizations for a grant.

       Ineligibility of Certain Individuals To Receive Assistance

75.60 Individuals ineligible to receive assistance.
75.61 Certification of eligibility; effect of ineligibility.
75.62 Requirements applicable to entities making certain awards.

Subpart B [Reserved]

[[Page 130]]

                   Subpart C_How To Apply for a Grant

                         The Application Notice

75.100 Publication of an application notice; content of the notice.
75.101 Information in the application notice that helps an applicant 
          apply.
75.102 Deadline date for applications.
75.103 Deadline date for preapplications.
75.104 Applicants must meet procedural rules.
75.105 Annual priorities.

                          Application Contents

75.109 Changes to application; number of copies.
75.112 Include a proposed project period and a timeline.
75.117 Information needed for a multi-year project.
75.118 Requirements for a continuation award.
75.119 Information needed if private school students participate.

               Separate Applications--Alternative Programs

75.125 Submit a separate application to each program.
75.126 Application must list all programs to which it is submitted.

                           Group Applications

75.127 Eligible parties may apply as a group.
75.128 Who acts as applicant; the group agreement.
75.129 Legal responsibilities of each member of the group.

                        State Comment Procedures

75.155 Review procedure if State may comment on applications: Purpose of 
          Sec. Sec. 75.156-75.158.
75.156 When an applicant under Sec. 75.155 must submit its application 
          to the State; proof of submission.
75.157 The State reviews each application.
75.158 Deadlines for State comments.
75.159 Effect of State comments or failure to comment.

           Development of Curricula or Instructional Materials

75.190 Consultation.
75.191 Consultation costs.
75.192 Dissemination.

                      Subpart D_How Grants Are Made

                        Selection of New Projects

75.200 How applications for new grants and cooperative agreements are 
          selected for funding; standards for use of cooperative 
          agreements.
75.201 How the selection criteria will be used.
75.202-75.206 [Reserved]
75.209 Selection criteria based on statutory provisions.
75.210 General selection criteria.
75.211 Selection criteria for unsolicited applications.

                          Selection Procedures

75.215 How the Department selects a new project: purpose of Sec. Sec. 
          75.216-75.222.
75.216 Applications not evaluated for funding.
75.217 How the Secretary selects applications for new grants.
75.218 Applications not evaluated or selected for funding.
75.219 Exceptions to the procedures under Sec. 75.217.
75.220 Procedures the Department uses under Sec. 75.219(a).
75.221 Procedures the Department uses under Sec. 75.219(b).
75.222 Procedures the Department uses under Sec. 75.219(c).
75.223 [Reserved]
75.224 What are the procedures for using a multiple tier review process 
          to evaluate applications?
75.225 What procedures does the Secretary use if the Secretary decides 
          to give special consideration to novice applications?

                       Procedures To Make a Grant

75.230 How the Department makes a grant; purpose of Sec. Sec. 75.231-
          75.236.
75.231 Additional information.
75.232 The cost analysis; basis for grant amount.
75.233 Setting the amount of the grant.
75.234 The conditions of the grant.
75.235 The notification of grant award.
75.236 Effect of the grant.

                     Approval of Multi-Year Projects

75.250 Project period can be up to 60 months.
75.251 The budget period.
75.253 Continuation of a multi-year project after the first budget 
          period.
75.254 [Reserved]

                              Miscellaneous

75.260 Allotments and reallotments.
75.261 Extension of a project period.
75.262 Conversion of a grant or a cooperative agreement.
75.263 Pre-award costs; waiver of approval.
75.264 Transfers among budget categories.

[[Page 131]]

           Subpart E_What Conditions Must Be Met by a Grantee?

                            Nondiscrimination

75.500 Federal statutes and regulations on nondiscrimination.

                              Project Staff

75.511 Waiver of requirement for a full-time project director.
75.515 Use of consultants.
75.516 Compensation of consultants--employees of institutions of higher 
          education.
75.517 Changes in key staff members.
75.519 Dual compensation of staff.

                          Conflict of Interest

75.524 Conflict of interest: Purpose of Sec. 75.525.
75.525 Conflict of interest: Participation in a project.

                             Allowable Costs

75.530 General cost principles.
75.531 Limit on total cost of a project.
75.532 Use of funds for religion prohibited.
75.533 Acquisition of real property; construction.
75.534 Training grants--automatic increases for additional dependents.

                           Indirect Cost Rates

75.560 General indirect cost rates; exceptions.
75.561 Approval of indirect cost rates.
75.562 Indirect cost rates for educational training projects.
75.563 Restricted indirect cost rate--programs covered.
75.564 Reimbursement of indirect costs.
75.580 Coordination with other activities.

                               Evaluation

75.590 Evaluation by the recipient.
75.591 Federal evaluation--cooperation by a grantee.
75.592 Federal evaluation--satisfying requirement for grantee 
          evaluation.

                              Construction

75.600 Use of a grant for construction: Purpose of Sec. Sec. 75.601-
          75.615.
75.601 Applicant's assessment of environmental impact.
75.602 Preservation of historic sites must be described in the 
          application.
75.603 Grantee's title to site.
75.604 Availability of cost-sharing funds.
75.605 Beginning the construction.
75.606 Completing the construction.
75.607 General considerations in designing facilities and carrying out 
          construction.
75.608 Areas in the facilities for cultural activities.
75.609 Comply with safety and health standards.
75.610 Access by the handicapped.
75.611 Avoidance of flood hazards.
75.612 Supervision and inspection by the grantee.
75.613 Relocation assistance by the grantee.
75.614 Grantee must have operational funds.
75.615 Operation and maintenance by the grantee.
75.616 Energy conservation.
75.617 Compliance with the Coastal Barrier Resources Act.

                         Equipment and Supplies

75.618 Charges for use of equipment or supplies.

                       Publications and Copyrights

75.620 General conditions on publication.
75.621 Copyright policy for grantees.
75.622 Definition of ``project materials.''

                         Inventions and Patents

75.626 Show Federal support; give papers to vest title.

                 Other Requirements for Certain Projects

75.650 Participation of students enrolled in private schools.
75.681 Protection of human research subjects.
75.682 Treatment of animals.
75.683 Health or safety standards for facilities.

  Subpart F_What Are the Administrative Responsibilities of a Grantee?

                 General Administrative Responsibilities

75.700 Compliance with statutes, regulations, and applications.
75.701 The grantee administers or supervises the project.
75.702 Fiscal control and fund accounting procedures.
75.703 Obligation of funds during the grant period.
75.707 When obligations are made.
75.708 Prohibition of subgrants.

                                 Reports

75.720 Financial and performance reports.
75.721 [Reserved]

                                 Records

75.730 Records related to grant funds.
75.731 Records related to compliance.
75.732 Records related to performance.
75.733 [Reserved]

                                 Privacy

75.740 Protection of and access to student records; student rights in 
          research, experimental programs, and testing.

[[Page 132]]

  Subpart G_What Procedures Does the Department Use To Get Compliance?

75.900 Waiver of regulations prohibited.
75.901 Suspension and termination.
75.902 [Reserved]
75.903 Effective date of termination.
75.910 Cooperation with audits.

    Authority: 20 U.S.C. 1221e-3 and 3474, unless otherwise noted.

    Source: 45 FR 22497, Apr. 3, 1980, unless otherwise noted. 
Redesignated at 45 FR 77368, Nov. 21, 1980.



                            Subpart A_General

             Regulations That Apply to Direct Grant Programs



Sec. 75.1  Programs to which part 75 applies.

    (a) The regulations in part 75 apply to each direct grant program of 
the Department of Education.
    (b) If a direct grant program does not have implementing 
regulations, the Secretary implements the program under the authorizing 
statute and, to the extent consistent with the authorizing statute, 
under the General Education Provisions Act and the regulations in this 
part. For the purposes of this part, the term ``direct grant program'' 
includes any grant program of the Department other than a program whose 
authorizing statute or implementing regulations provide a formula for 
allocating program funds among eligible States. With respect to Public 
Law 81-874 (the Impact Aid Program), the term ``direct grant program'' 
includes only the entitlement increase for children with disabilities 
under section 3(d)(2)(C) of Public Law 81-874 (20 U.S.C. 238(d)(2)(C) 
and disaster assistance under section 7 of that law (20 U.S.C. 241-1).
    Note: See part 76 for the general regulations that apply to programs 
that allocate funds among eligible States. For a description of the two 
kinds of direct grant programs see Sec. 75.200. Paragraph (b) of that 
section describes discretionary grant programs. Paragraph (c) of that 
section describes formula grant programs. Also see Sec. Sec. 75.201, 
75.209, and 75.210 for the selection criteria for discretionary grant 
programs that do not have implementing regulations or whose implementing 
regulations do not include selection criteria.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980, as amended at 45 FR 28669, Apr. 29, 1980. 
Redesignated at 45 FR 77368, Nov. 21, 1980, as amended at 45 FR 84059, 
Dec. 22, 1980, 50 FR 29330, July 18, 1985; 52 FR 27803, July 24, 1987; 
57 FR 30336, July 8, 1992; 60 FR 63873, Dec. 12, 1995]



Sec. 75.2  Exceptions in program regulations to part 75.

    If a program has regulations that are not consistent with part 75, 
the implementing regulations for that program identify the sections of 
part 75 that do not apply.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.4  Department contracts.

    (a) A Federal contract made by the Department is governed by--
    (1) Chapters 1 and 34 of title 48 of the Code of Federal Regulations 
(Federal Acquisition Regulation and Education Department Acquisition 
Regulation).
    (2) Any applicable program regulations; and
    (3) The request for proposals for the procurement, if any, 
referenced in Commerce Business Daily.
    (b) The regulations in part 75 do not apply to a contract of the 
Department unless regulations in part 75 or a program's regulations 
specifically provide otherwise.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 57 FR 30336, July 8, 1992]

                         Eligibility for a Grant



Sec. 75.50  How to find out whether you are eligible.

    Eligibility to apply for a grant under a program of the Department 
is governed by the authorizing statute and implementing regulations for 
that program.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 52 FR 27803, July 24, 1987]



Sec. 75.51  How to prove nonprofit status.

    (a) Under some programs, an applicant must show that it is a 
nonprofit

[[Page 133]]

organization. (See the definition of nonprofit in 34 CFR 77.1.)
    (b) An applicant may show that it is a nonprofit organization by any 
of the following means:
    (1) Proof that the Internal Revenue Service currently recognizes the 
applicant as an organization to which contributions are tax deductible 
under section 501(c)(3) of the Internal Revenue Code;
    (2) A statement from a State taxing body or the State attorney 
general certifying that:
    (i) The organization is a nonprofit organization operating within 
the State; and
    (ii) No part of its net earnings may lawfully benefit any private 
shareholder or individual;
    (3) A certified copy of the applicant's certificate of incorporation 
or similar document if it clearly establishes the nonprofit status of 
the applicant; or
    (4) Any item described in paragraphs (b) (1) through (3) of this 
section if that item applies to a State or national parent organization, 
together with a statement by the State or parent organization that the 
applicant is a local nonprofit affiliate.

(Authority: 20 U.S.C. 1221e-3 and 3474)

       Ineligibility of Certain Individuals To Receive Assistance

    Source: Sections 75.60--75.62 issued at 57 FR 30337, July 8, 1992, 
unless otherwise noted.



Sec. 75.52  Eligibility of faith-based organizations for a grant.

    (a)(1) A faith-based organization is eligible to apply for and to 
receive a grant under a program of the Department on the same basis as 
any other private organization, with respect to programs for which such 
other organizations are eligible.
    (2) In the selection of grantees, the Department shall not 
discriminate for or against a private organization on the basis of the 
organization's religious character or affiliation.
    (b) The provisions of Sec. 75.532 apply to a faith-based 
organization that receives a grant under a program of the Department.
    (c) A private organization that engages in inherently religious 
activities, such as religious worship, instruction, or proselytization, 
must offer those services separately in time or location from any 
programs or services supported by a grant from the Department, and 
participation in any such inherently religious activities by 
beneficiaries of the programs supported by the grant must be voluntary.
    (d)(1) A faith-based organization that applies for or receives a 
grant under a program of the Department may retain its independence, 
autonomy, right of expression, religious character, and authority over 
its governance.
    (2) A faith-based organization may, among other things--
    (i) Retain religious terms in its name;
    (ii) Continue to carry out its mission, including the definition, 
development, practice, and expression of its religious beliefs;
    (iii) Use its facilities to provide services without removing or 
altering religious art, icons, scriptures, or other symbols from these 
facilities;
    (iv) Select its board members and otherwise govern itself on a 
religious basis; and
    (v) Include religious references in its mission statement and other 
chartering or governing documents.
    (e) A private organization that receives a grant under a program of 
the Department shall not discriminate against a beneficiary or 
prospective beneficiary in the provision of program services on the 
basis of religion or religious belief.
    (f) If a grantee contributes its own funds in excess of those funds 
required by a matching or grant agreement to supplement federally funded 
activities, the grantee has the option to segregate those additional 
funds or commingle them with the funds required by the matching 
requirements or grant agreement. However, if the additional funds are 
commingled, this section applies to all of the commingled funds.
    (g) A religious organization's exemption from the Federal 
prohibition on employment discrimination on the basis of religion, in 
section 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 2000e-

[[Page 134]]

1, is not forfeited when the organization receives financial assistance 
from the Department.


(Authority: 20 U.S.C. 1221e-3 and 3474)

[69 FR 31710, June 4, 2004]

    Effective Date Note: At 69 FR 31710, June 4, 2004, Sec. thnsp;75.52 
was added, effective July 6, 2004.



Sec. 75.60  Individuals ineligible to receive assistance.

    (a) An individual is ineligible to receive a fellowship, 
scholarship, or discretionary grant funded by the Department if the 
individual--
    (1) Is not current in repaying a debt or is in default, as that term 
is used in 34 CFR part 668, on a debt--
    (i) Under a program listed in paragraph (b) of this section; or
    (ii) To the Federal Government under a nonprocurement transaction; 
and
    (2) Has not made satisfactory arrangements to repay the debt.
    (b) An individual who is not current in repaying a debt, or is in 
default, as that term is used in 34 CFR part 668, on a debt under a 
fellowship, scholarship, discretionary grant, or loan program, as 
included in the following list, and who has not made satisfactory 
arrangements to repay the debt, is ineligible under paragraph (a) of 
this section:
    (1) A grant awarded under the Pell Grant (20 U.S.C. 1070a, et seq.), 
National Early Intervention Scholarship and Partnership (NEISP) Program 
(20 U.S.C. 1070a-21, et seq.), Supplemental Educational Opportunity 
Grant (SEOG) (20 U.S.C. 1070b, et seq.), or State Student Incentive 
Grant (SSIG) (20 U.S.C. 1070c, et seq.) program, or a scholarship 
awarded under the Robert C. Byrd Honors Scholarship Program (20 U.S.C. 
1070d-31, et seq.), a fellowship awarded under the Jacob K. Javits 
Fellows Program (20 U.S.C. 1134h-1134k), or a fellowship awarded under 
the Patricia Roberts Harris Fellowship Program (20 U.S.C. 1134d-1134f).
    (2) A fellowship awarded under the Christa McAuliffe Fellowship 
Program (20 U.S.C. 1113-1113e), the Bilingual Education Fellowship 
Program (20 U.S.C. 3221-3262), or the Rehabilitation Long-Term Training 
Program (29 U.S.C. 774(b)).
    (3) A loan made under the Perkins Loan Program (20 U.S.C. 1087aa, et 
seq.), the Income Contingent Direct Loan Demonstration Project (20 
U.S.C. 1087a, et seq.), the Stafford Loan Program, Supplemental Loans 
for Students (SLS), PLUS, or Consolidation Loan Program (20 U.S.C. 1071, 
et seq.), or the Cuban Student Loan Program (22 U.S.C. 2601, et seq.).
    (4) A scholarship or repayment obligation incurred under the Paul 
Douglas Teacher Scholarship Program (20 U.S.C. 1111, et seq.).
    (5) A grant, or a loan, made under the Law Enforcement Education 
Program (42 U.S.C. 3775).
    (6) A stipend awarded under the Indian Fellowship Program (29 U.S.C. 
774(b)).
    (7) A scholarship awarded under the Teacher Quality Enhancement 
Grants Program (20 U.S.C. 1021 et seq.).

(Authority: 20 U.S.C. 1221e-3 and 3474)

[57 FR 30337, July 8, 1992, as amended at 59 FR 24870, May 12, 1994; 65 
FR 19609, Apr. 11, 2000]



Sec. 75.61  Certification of eligibility; effect of ineligibility.

    (a) An individual who applies for a fellowship, scholarship, or 
discretionary grant from the Department shall provide with his or her 
application a certification under the penalty of perjury--
    (1) That the individual is eligible under Sec. 75.60; and
    (2) That the individual has not been debarred or suspended by a 
judge under section 5301 of the Anti-Drug Abuse Act of 1988 (21 U.S.C. 
853a).
    (b) The Secretary specifies the form of the certification required 
under paragraph (a) of this section.
    (c) The Secretary does not award a fellowship, scholarship, or 
discretionary grant to an individual who--
    (1) Fails to provide the certification required under paragraph (a) 
of this section; or
    (2) Is ineligible, based on information available to the Secretary 
at the time the award is made.

[[Page 135]]

    (d) If a fellowship, scholarship, or discretionary grant is made to 
an individual who provided a false certification under paragraph (a) of 
this section, the individual is liable for recovery of the funds made 
available under the certification, for civil damages or penalties 
imposed for false representation, and for criminal prosecution under 18 
U.S.C. 1001.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.62  Requirements applicable to entities making certain awards.

    (a) An entity that provides a fellowship, scholarship, or 
discretionary grant to an individual under a grant from, or an agreement 
with, the Secretary shall require the individual who applies for such an 
award to provide with his or her application a certification under the 
penalty of perjury--
    (1) That the individual is eligible under Sec. 75.60; and
    (2) That the individual has not been debarred or suspended by a 
judge under section 5301 of the Anti-Drug Abuse Act of 1988 (21 U.S.C. 
853a).
    (b) An entity subject to this section may not award a fellowship, 
scholarship, or discretionary grant to an individual if--
    (1) The individual fails to provide the certification required under 
paragraph (a) of this section; or
    (2) The Secretary informs the entity that the individual is 
ineligible under Sec. 75.60.
    (c) If a fellowship, scholarship, or discretionary grant is made to 
an individual who provided a false certification under paragraph (a) of 
this section, the individual is liable for recovery of the funds made 
available under the certification, for civil damages or penalties 
imposed for false representation, and for criminal prosecution under 18 
U.S.C. 1001.
    (d) The Secretary may require an entity subject to this section to 
provide a list of the individuals to whom fellowship, scholarship, or 
discretionary grant awards have been made or are proposed to be made by 
the entity.

(Authority: 20 U.S.C. 1221e-3 and 3474)

Subpart B [Reserved]



                   Subpart C_How To Apply for a Grant

                         The Application Notice



Sec. 75.100  Publication of an application notice; content of the notice.

    (a) Each fiscal year the Secretary publishes application notices in 
the Federal Register that explain what kind of assistance is available 
for new grants under the programs that the Secretary administers.
    (b) The application notice for a program explains one or more of the 
following:
    (1) How to apply for a new grant.
    (2) If preapplications are used under the program, how to preapply 
for a new grant.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 45 FR 86297, Dec. 30, 1980; 51 FR 20824, June 9, 1986; 59 
FR 30261, June 10, 1994]



Sec. 75.101  Information in the application notice that helps an applicant 
apply.

    (a) The Secretary may include such information as the following in 
an application notice:
    (1) How an applicant can get an application package that contains:
    (i) Information about the program; and
    (ii) The application form that the applicant must use.
    (2) The amount of funds available for grants, the estimated number 
of those grants, the estimated amounts of those grants and, if 
appropriate, the maximum award amounts of those grants.
    (3) If the Secretary plans to approve multi-year projects, the 
project period that will be approved.
    (4) Any priorities established by the Secretary for the program for 
that year and the method the Secretary will use to implement the 
priorities. (See Sec. 75.105 Annual priorities.)
    (5) Where to find the regulations that apply to the program.
    (6) The statutory authority for the program.
    (7) The deadlines established under Sec. 75.102 (Deadline date for 
applications.) and 34 CFR 79.8 (How does the Secretary provide States an 
opportunity

[[Page 136]]

to comment on proposed Federal financial assistance?)
    (b) If the Secretary either requires or permits preapplications 
under a program, an application notice for the program explains how an 
applicant can get the preapplication form.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 45 FR 84059, Dec. 22, 1980; 46 FR 3205, Jan. 14, 1981; 51 
FR 20824, June 9, 1986; 51 FR 21164, June 11, 1986; 60 FR 63873, Dec. 
12, 1995; 61 FR 8455, Mar. 4, 1996]

    Cross reference: See 34 CFR 77.1--definitions of ``budget period'' 
and ``project period.''



Sec. 75.102  Deadline date for applications.

    (a) The application notice for a program sets a deadline date for 
applications to be mailed or hand delivered to the Department.
    (b) If an applicant wants a new grant, the applicant shall:
    (1) Mail the application to the address specified in the application 
notice on or before the deadline date; or
    (2) Hand deliver the application to the address specified in the 
application notice by 4:30 p.m. (Washington, D.C. time) on the deadline 
date.
    (c) [Reserved]
    (d) An applicant must show one of the following as proof of mailing:
    (1) A legibly dated U.S. Postal Service postmark.
    (2) A legible mail receipt with the date of mailing stamped by the 
U.S. Postal Service.
    (3) A dated shipping label, invoice, or receipt from a commercial 
carrier.
    (4) Any other proof of mailing acceptable to the Secretary.
    (e) If an application is mailed through the U.S. Postal Service, the 
Secretary does not accept either of the following as proof of mailing:
    (1) A private metered postmark.
    (2) A mail receipt that is not dated by the U.S. Postal Service.

(Authority: 20 U.S.C. 1221e-3 and 3474)

    Note: The U.S. Postal Service does not uniformly provide a dated 
postmark. Before relying on this method, an applicant should check with 
its local post office.

[45 FR 22497, Apr. 3, 1980, as amended at 51 FR 20824, June 9, 1986]



Sec. 75.103  Deadline date for preapplications.

    (a) If the Secretary invites or requires preapplications under a 
program, the application notice for the program sets a deadline date for 
preapplications.
    (b) An applicant shall submit its preapplication in accordance with 
the procedures for applications in Sec. 75.102(b) and (d).

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.104  Applicants must meet procedural rules.

    (a) The Secretary may make a grant only to an eligible party that 
submits an application.
    (b) If a maximum award amount is established in a notice published 
in the Federal Register, the Secretary may reject without consideration 
or evaluation any application that proposes a project funding level that 
exceeds the stated maximum award amount.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[61 FR 8455, Mar. 4, 1996]



Sec. 75.105  Annual priorities.

    (a) What programs are covered by this section? This section applies 
to any program for which the Secretary establishes priorities for 
selection of applications in a particular fiscal year.
    (b) How does the Secretary establish annual priorities? (1) The 
Secretary establishes final annual priorities by publishing the 
priorities in a notice in the Federal Register, usually in the 
application notice for that program.
    (2) The Secretary publishes proposed annual priorities for public 
comment, unless:
    (i) The final annual priorities will be implemented only by inviting 
applications that meet the priorities (Cross-reference: See 34 CFR 
75.105(c)(1));
    (ii) The final annual priorities are chosen from a list of 
priorities already established in the program's regulations;
    (iii) Publishing proposed annual priorities would seriously 
interfere with an orderly, responsible grant award process or would 
otherwise be impracticable, unnecessary, or contrary to the public 
interest;

[[Page 137]]

    (iv) The program statute requires or authorizes the Secretary to 
establish specified priorities; or
    (v) The annual priorities are chosen from allowable activities 
specified in the program statute.
    (c) How does the Secretary implement an annual priority? The 
Secretary may choose one or more of the following methods to implement 
an annual priority:
    (1) Invitations. The Secretary may simply invite applications that 
meet a priority. If the Secetary chooses this method, an application 
that meets the priority receives no competitive or absolute preference 
over applications that do not meet the priority.
    (2) Competitive preference. The Secretary may give one of the 
following kinds of competitive preference to applications that meet a 
priority.
    (i) The Secretary may award some or all bonus points to an 
application depending on the extent to which the application meets the 
priority. These points are in addition to any points the applicant earns 
under the selection criteria (see Sec. 75.200(b)). The notice states 
the maximum number of additional points that the Secretary may award to 
an application depending upon how well the application meets the 
priority.
    (ii) The Secretary may select an application that meets a priority 
over an application of comparable merit that does not meet the priority.
    (3) Absolute preference. The Secretary may give an absolute 
preference to applications that meet a priority. The Secretary 
establishes a separate competition for applications that meet the 
priority and reserves all or part of a program's funds solely for that 
competition. The Secretary may adjust the amount reserved for the 
priority after determining the number of high quality applications 
received.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[46 FR 3205, Jan. 14, 1981, as amended at 57 FR 30337, July 8, 1992; 60 
FR 63873, Dec. 12, 1995]

                          Application Contents

    Cross reference: See Sec. 75.200 for a description of discretionary 
and formula grant programs.



Sec. 75.109  Changes to application; number of copies.

    (a) Each applicant shall submit an original and two copies of its 
application to the Department, including any information that the 
applicant supplies voluntarily.
    (b) An applicant may make changes to its application on or before 
the deadline date for submitting applications under the program.

(Authority: 20 U.S.C. 1221e-3 and 3474)

    Cross reference: See Sec. 75.200 How applications for new grants 
are selected for funding.



Sec. 75.112  Include a proposed project period and a timeline.

    (a) An application must propose a project period for the project.
    (b) An application must include a narrative that describes how and 
when, in each budget period of the project, the applicant plans to meet 
each objective of the project.

(Approved by the Office of Management and Budget under control number 
1875-0102)

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 59 FR 30261, June 10, 1994]



Sec. 75.117  Information needed for a multi-year project.

    An applicant that proposes a multi-year project shall include in its 
application:
    (a) Information that shows why a multi-year project is needed;
    (b) A budget narrative accompanied by a budget form prescribed by 
the Secretary, that provides budget information for each budget period 
of the proposed project period.

(Approved by the Office of Management and Budget under control number 
1875-0102)

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 59 FR 30261, June 10, 1994]



Sec. 75.118  Requirements for a continuation award.

    (a) A recipient that wants to receive a continuation award shall 
submit a performance report that provides the

[[Page 138]]

most current performance and financial expenditure information, as 
directed by the Secretary, that is sufficient to meet the reporting 
requirements of 34 CFR 74.51, 75.590, 75.720, and 80.40.
    (b) If a recipient fails to submit a performance report that meets 
the requirements of paragraph (a) of this section, the Secretary denies 
continued funding for the grant.

(Approved by the Office of Management and Budget under control number 
1875-0102)

(Authority: 20 U.S.C. 1221e-3(a)(1) and 3474)

    Cross reference: See Sec. 75.117 Information needed for a multi-
year project, and Sec. Sec. 75.250 through 75.253 Approval of multi-
year projects, Sec. 75.590 Evaluation by the recipient, Sec. 75.720 
Financial and performance reports, Sec. 74.51 Monitoring and reporting 
program performance, and Sec. 80.40 Monitoring and reporting program 
performance.

[59 FR 30261, June 10, 1994, as amended at 64 FR 50391, Sept. 16, 1999]



Sec. 75.119  Information needed if private school students participate.

    If a program requires the applicant to provide an opportunity for 
participation of students enrolled in private schools, the application 
must include the information required of subgrantees under 34 CFR 
76.656.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 53 FR 49143, Dec. 6, 1988]

               Separate Applications--Alternative Programs



Sec. 75.125  Submit a separate application to each program.

    An applicant shall submit a separate application to each program 
under which it wants a grant.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 52 FR 27803, July 24, 1987; 60 FR 46493, Sept. 6, 1995]



Sec. 75.126  Application must list all programs to which it is submitted.

    If an applicant is submitting an application for the same project 
under more than one Federal program, the applicant shall list these 
programs in its application. The Secretary uses this information to 
avoid duplicate grants for the same project.

(Authority: 20 U.S.C. 1221e-3 and 3474)

                           Group Applications



Sec. 75.127  Eligible parties may apply as a group.

    (a) Eligible parties may apply as a group for a grant.
    (b) Depending on the program under which a group of eligible parties 
seeks assistance, the term used to refer to the group may vary. The list 
that follows contains some of the terms used to identify a group of 
eligible parties:
    (1) Combination of institutions of higher education.
    (2) Consortium.
    (3) Joint applicants.
    (4) Cooperative arrangements.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.128  Who acts as applicant; the group agreement.

    (a) If a group of eligible parties applies for a grant, the members 
of the group shall either:
    (1) Designate one member of the group to apply for the grant; or
    (2) Establish a separate, eligible legal entity to apply for the 
grant.
    (b) The members of the group shall enter into an agreement that:
    (1) Details the activities that each member of the group plans to 
perform; and
    (2) Binds each member of the group to every statement and assurance 
made by the applicant in the application.
    (c) The applicant shall submit the agreement with its application.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.129  Legal responsibilities of each member of the group.

    (a) If the Secretary makes a grant to a group of eligible 
applicants, the applicant for the group is the grantee and is legally 
responsible for:
    (1) The use of all grant funds;
    (2) Ensuring that the project is carried out by the group in 
accordance with Federal requirements; and

[[Page 139]]

    (3) Ensuring that indirect cost funds are determined as required 
under Sec. 75.564(e).
    (b) Each member of the group is legally responsible to:
    (1) Carry out the activities it agrees to perform; and
    (2) Use the funds that it receives under the agreement in accordance 
with Federal requirements that apply to the grant.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 59 FR 59581, Nov. 17, 1994]

                        State Comment Procedures



Sec. 75.155  Review procedures if State may comment on applications: 
Purpose of Sec. Sec. 75.156-75.158.

    If the authorizing statute for a program requires that a specific 
State agency be given an opportunity to comment on each application, the 
State and the applicant shall use the procedures in Sec. Sec. 75.156-
75.158 for that purpose.

(Authority: 20 U.S.C. 1221e-3 and 3474)

    Cross reference: See 34 CFR part 79 (Intergovernmental Review of 
Department of Education Programs and Activities) for the regulations 
implementing the application review procedures that States may use under 
E.O. 12372.

[57 FR 30338, July 8, 1992]



Sec. 75.156  When an applicant under Sec. 75.155 must submit its 
application to the State; proof of submission.

    (a) Each applicant under a program covered by Sec. 75.155 shall 
submit a copy of its application to the State on or before the deadline 
date for submitting its application to the Department.
    (b) The applicant shall attach to its application a copy of its 
letter that requests the State to comment on the application.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.157  The State reviews each application.

    A State that receives an application under Sec. 75.156 may review 
and comment on the application.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 3474)



Sec. 75.158  Deadlines for State comments.

    (a) The Secretary may establish a deadline date for receipt of State 
comments on applications.
    (b) The State shall make its comments in a written statement signed 
by an appropriate State official.
    (c) The appropriate State official shall submit comments to the 
Secretary by the deadline date for State comments. The procedures in 
Sec. 75.102 (b) and (d) (how to meet a deadline) of this part apply to 
this submission.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.159  Effect of State comments or failure to comment.

    (a) The Secretary considers those comments of the State that relate 
to:
    (1) Any selection criterion that applies under the program; or
    (2) Any other matter that affects the selection of projects for 
funding under the program.
    (b) If the State fails to comment on an application on or before the 
deadline date for the appropriate program, the State waives its right to 
comment.
    (c) If the applicant does not give the State an opportunity to 
comment, the Secretary does not select that project for a grant.

(Authority: 20 U.S.C. 1221e-3 and 3474)

           Development of Curricula or Instructional Materials



Sec. 75.190  Consultation.

    Each applicant that intends to develop curricula or instructional 
materials under a grant is encouraged to assure that the curricula or 
materials will be developed in a manner conducive to dissemination, 
through continuing consultations with publishers, personnel of State and 
local educational agencies, teachers, administrators, community 
representatives, and other individuals experienced in dissemination.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.191  Consultation costs.

    An applicant may budget reasonable consultation fees or planning 
costs in

[[Page 140]]

connection with the development of curricula or instructional materials.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.192  Dissemination.

    If an applicant proposes to publish and disseminate curricula or 
instructional materials under a grant, the applicant shall include an 
assurance in its application that the curricula or materials will reach 
the populations for which the curricula or materials were developed.

(Authority: 20 U.S.C. 1221e-3 and 3474)



                      Subpart D_How Grants Are Made

                        Selection of New Projects



Sec. 75.200  How applications for new grants and cooperative agreements 
are selected for funding; standards for use of cooperative agreements.

    (a) Direct grant programs. The Department administers two kinds of 
direct grant programs. A direct grant program is either a discretionary 
grant or a formula grant program.
    (b) Discretionary grant programs. (1) A discretionary grant program 
is one that permits the Secretary to use discretionary judgment in 
selecting applications for funding.

    Cross reference: See Sec. 75.219 Exceptions to the procedures under 
Sec. 75.217.

    (2) The Secretary uses selection criteria to evaluate the 
applications submitted for new grants under a discretionary grant 
program.
    (3) To evaluate the applications for new grants under the program 
the Secretary may use:
    (i) Selection criteria established under Sec. 75.209.
    (ii) Selection criteria in program-specific regulations.
    (iii) Selection criteria established under Sec. 75.210.
    (iv) Any combination of criteria from paragraphs (b)(3)(i), 
(b)(3)(ii), and (b)(3)(iii) of this section.
    (4) The Secretary may award a cooperative agreement instead of a 
grant if the Secretary determines that substantial involvement between 
the Department and the recipient is necessary to carry out a 
collaborative project.
    (5) The Secretary uses the selection procedures in this subpart to 
select recipients of cooperative agreements.
    (c) Formula grant programs. (1) A formula grant program is one that 
entitles certain applicants to receive grants if they meet the 
requirements of the program. Applicants do not compete with each other 
for the funds, and each grant is either for a set amount or for an 
amount determined under a formula.
    (2) The Secretary applies the program statute and regulations to 
fund projects under a formula grant program.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 52 FR 27803, July 24, 1987; 57 FR 30338, July 8, 1992; 60 
FR 63873, Dec. 12, 1995; 62 FR 10401, Mar. 6, 1997]



Sec. 75.201  How the selection criteria will be used.

    (a) In the application package or a notice published in the Federal 
Register, the Secretary informs applicants of--
    (1) The selection criteria chosen; and
    (2) The factors selected for considering the selection criteria, if 
any.
    (b) If points or weights are assigned to the selection criteria, the 
Secretary informs applicants in the application package or a notice 
published in the Federal Register of--
    (1) The total possible score for all of the criteria for a program; 
and
    (2) The assigned weight or the maximum possible score for each 
criterion or factor under that criterion.
    (c) If no points or weights are assigned to the selection criteria 
and selected factors, the Secretary evaluates each criterion equally 
and, within each criterion, each factor equally.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[62 FR 10401, Mar. 6, 1997]



Sec. Sec. 75.202-75.206  [Reserved]



Sec. 75.209  Selection criteria based on statutory provisions.

    (a) The Secretary may evaluate applications by--
    (1) Establishing selection criteria based on statutory provisions 
that

[[Page 141]]

apply to the authorized program, which may include, but are not limited 
to--
    (i) Specific statutory selection criteria;
    (ii) Allowable activities;
    (iii) Application content requirements; or
    (iv) Other pre-award and post-award conditions; and
    (2) Assigning the maximum possible score for each of the criteria 
established under paragraph (a)(1) of this section.
    (b) The Secretary evaluates an application by determining how well 
the project proposed by the applicant meets each statutory provision 
selected under paragraph (a)(1) of this section.

    Example: If a program statute requires that each application address 
how the applicant will serve the needs of limited English proficient 
children, under Sec. 75.209 the Secretary could establish a criterion 
and evaluate applications based on how well the applicant's proposed 
project meets that statutory provision. The Secretary might decide to 
award up to 10 points for this criterion. Applicants who have the best 
proposals to serve the needs of limited English proficient children 
would score highest under the criterion in this example.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[60 FR 63873, Dec. 12, 1995, as amended at 62 FR 10401, Mar. 6, 1997]



Sec. 75.210  General selection criteria.

    In determining the selection criteria to be used in each grant 
competition, the Secretary may select one or more of the following 
criteria and may select from among the list of optional factors under 
each criterion. However, paragraphs (d)(2) and (e)(2) of this section 
are mandatory factors under their respective criteria:
    (a) Need for project. (1) The Secretary considers the need for the 
proposed project.
    (2) In determining the need for the proposed project, the Secretary 
considers one or more of the following factors:
    (i) The magnitude or severity of the problem to be addressed by the 
proposed project.
    (ii) The magnitude of the need for the services to be provided or 
the activities to be carried out by the proposed project.
    (iii) The extent to which the proposed project will provide services 
or otherwise address the needs of students at risk of educational 
failure.
    (iv) The extent to which the proposed project will focus on serving 
or otherwise addressing the needs of disadvantaged individuals.
    (v) The extent to which specific gaps or weaknesses in services, 
infrastructure, or opportunities have been identified and will be 
addressed by the proposed project, including the nature and magnitude of 
those gaps or weaknesses.
    (vi) The extent to which the proposed project will prepare personnel 
for fields in which shortages have been demonstrated.
    (b) Significance. (1) The Secretary considers the significance of 
the proposed project.
    (2) In determining the significance of the proposed project, the 
Secretary considers one or more of the following factors:
    (i) The national significance of the proposed project.
    (ii) The significance of the problem or issue to be addressed by the 
proposed project.
    (iii) The potential contribution of the proposed project to 
increased knowledge or understanding of educational problems, issues, or 
effective strategies.
    (iv) The potential contribution of the proposed project to increased 
knowledge or understanding of rehabilitation problems, issues, or 
effective strategies.
    (v) The likelihood that the proposed project will result in system 
change or improvement.
    (vi) The potential contribution of the proposed project to the 
development and advancement of theory, knowledge, and practices in the 
field of study.
    (vii) The potential for generalizing from the findings or results of 
the proposed project.
    (viii) The extent to which the proposed project is likely to yield 
findings that may be utilized by other appropriate agencies and 
organizations.
    (ix) The extent to which the proposed project is likely to build 
local capacity to provide, improve, or expand services that address the 
needs of the target population.

[[Page 142]]

    (x) The extent to which the proposed project involves the 
development or demonstration of promising new strategies that build on, 
or are alternatives to, existing strategies.
    (xi) The likely utility of the products (such as information, 
materials, processes, or techniques) that will result from the proposed 
project, including the potential for their being used effectively in a 
variety of other settings.
    (xii) The extent to which the results of the proposed project are to 
be disseminated in ways that will enable others to use the information 
or strategies.
    (xiii) The potential replicability of the proposed project or 
strategies, including, as appropriate, the potential for implementation 
in a variety of settings.
    (xiv) The importance or magnitude of the results or outcomes likely 
to be attained by the proposed project, especially improvements in 
teaching and student achievement.
    (xv) The importance or magnitude of the results or outcomes likely 
to be attained by the proposed project, especially improvements in 
employment, independent living services, or both, as appropriate.
    (xvi) The importance or magnitude of the results or outcomes likely 
to be attained by the proposed project.
    (c) Quality of the project design. (1) The Secretary considers the 
quality of the design of the proposed project.
    (2) In determining the quality of the design of the proposed 
project, the Secretary considers one or more of the following factors:
    (i) The extent to which the goals, objectives, and outcomes to be 
achieved by the proposed project are clearly specified and measurable.
    (ii) The extent to which the design of the proposed project is 
appropriate to, and will successfully address, the needs of the target 
population or other identified needs.
    (iii) The extent to which there is a conceptual framework underlying 
the proposed research or demonstration activities and the quality of 
that framework.
    (iv) The extent to which the proposed activities constitute a 
coherent, sustained program of research and development in the field, 
including, as appropriate, a substantial addition to an ongoing line of 
inquiry.
    (v) The extent to which the proposed activities constitute a 
coherent, sustained program of training in the field.
    (vi) The extent to which the proposed project is based upon a 
specific research design, and the quality and appropriateness of that 
design, including the scientific rigor of the studies involved.
    (vii) The extent to which the proposed research design includes a 
thorough, high-quality review of the relevant literature, a high-quality 
plan for research activities, and the use of appropriate theoretical and 
methodological tools, including those of a variety of disciplines, if 
appropriate.
    (viii) The extent to which the design of the proposed project 
includes a thorough, high-quality review of the relevant literature, a 
high-quality plan for project implementation, and the use of appropriate 
methodological tools to ensure successful achievement of project 
objectives.
    (ix) The quality of the proposed demonstration design and procedures 
for documenting project activities and results.
    (x) The extent to which the design for implementing and evaluating 
the proposed project will result in information to guide possible 
replication of project activities or strategies, including information 
about the effectiveness of the approach or strategies employed by the 
project.
    (xi) The extent to which the proposed development efforts include 
adequate quality controls and, as appropriate, repeated testing of 
products.
    (xii) The extent to which the proposed project is designed to build 
capacity and yield results that will extend beyond the period of Federal 
financial assistance.
    (xiii) The extent to which the design of the proposed project 
reflects up-to-date knowledge from research and effective practice.
    (xiv) The extent to which the proposed project represents an 
exceptional approach for meeting statutory purposes and requirements.
    (xv) The extent to which the proposed project represents an 
exceptional

[[Page 143]]

approach to the priority or priorities established for the competition.
    (xvi) The extent to which the proposed project will be coordinated 
with similar or related efforts, and with other appropriate community, 
State, and Federal resources.
    (xvii) The extent to which the proposed project will establish 
linkages with other appropriate agencies and organizations providing 
services to the target population.
    (xviii) The extent to which the proposed project is part of a 
comprehensive effort to improve teaching and learning and support 
rigorous academic standards for students.
    (xix) The extent to which the proposed project encourages parental 
involvement.
    (xx) The extent to which the proposed project encourages consumer 
involvement.
    (xxi) The extent to which performance feedback and continuous 
improvement are integral to the design of the proposed project.
    (xxii) The quality of the methodology to be employed in the proposed 
project.
    (xxiii) The extent to which fellowship recipients or other project 
participants are to be selected on the basis of academic excellence.
    (d) Quality of project services. (1) The Secretary considers the 
quality of the services to be provided by the proposed project.
    (2) In determining the quality of the services to be provided by the 
proposed project, the Secretary considers the quality and sufficiency of 
strategies for ensuring equal access and treatment for eligible project 
participants who are members of groups that have traditionally been 
underrepresented based on race, color, national origin, gender, age, or 
disability.
    (3) In addition, the Secretary considers one or more of the 
following factors:
    (i) The extent to which the services to be provided by the proposed 
project are appropriate to the needs of the intended recipients or 
beneficiaries of those services.
    (ii) The extent to which entities that are to be served by the 
proposed technical assistance project demonstrate support for the 
project.
    (iii) The extent to which the services to be provided by the 
proposed project reflect up-to-date knowledge from research and 
effective practice.
    (iv) The likely impact of the services to be provided by the 
proposed project on the intended recipients of those services.
    (v) The extent to which the training or professional development 
services to be provided by the proposed project are of sufficient 
quality, intensity, and duration to lead to improvements in practice 
among the recipients of those services.
    (vi) The extent to which the training or professional development 
services to be provided by the proposed project are likely to alleviate 
the personnel shortages that have been identified or are the focus of 
the proposed project.
    (vii) The likelihood that the services to be provided by the 
proposed project will lead to improvements in the achievement of 
students as measured against rigorous academic standards.
    (viii) The likelihood that the services to be provided by the 
proposed project will lead to improvements in the skills necessary to 
gain employment or build capacity for independent living.
    (ix) The extent to which the services to be provided by the proposed 
project involve the collaboration of appropriate partners for maximizing 
the effectiveness of project services.
    (x) The extent to which the technical assistance services to be 
provided by the proposed project involve the use of efficient 
strategies, including the use of technology, as appropriate, and the 
leveraging of non-project resources.
    (xi) The extent to which the services to be provided by the proposed 
project are focused on those with greatest needs.
    (xii) The quality of plans for providing an opportunity for 
participation in the proposed project of students enrolled in private 
schools.
    (e) Quality of project personnel. (1) The Secretary considers the 
quality of the personnel who will carry out the proposed project.

[[Page 144]]

    (2) In determining the quality of project personnel, the Secretary 
considers the extent to which the applicant encourages applications for 
employment from persons who are members of groups that have 
traditionally been underrepresented based on race, color, national 
origin, gender, age, or disability.
    (3) In addition, the Secretary considers one or more of the 
following factors:
    (i) The qualifications, including relevant training and experience, 
of the project director or principal investigator.
    (ii) The qualifications, including relevant training and experience, 
of key project personnel.
    (iii) The qualifications, including relevant training and 
experience, of project consultants or subcontractors.
    (f) Adequacy of resources. (1) The Secretary considers the adequacy 
of resources for the proposed project.
    (2) In determining the adequacy of resources for the proposed 
project, the Secretary considers one or more of the following factors:
    (i) The adequacy of support, including facilities, equipment, 
supplies, and other resources, from the applicant organization or the 
lead applicant organization.
    (ii) The relevance and demonstrated commitment of each partner in 
the proposed project to the implementation and success of the project.
    (iii) The extent to which the budget is adequate to support the 
proposed project.
    (iv) The extent to which the costs are reasonable in relation to the 
objectives, design, and potential significance of the proposed project.
    (v) The extent to which the costs are reasonable in relation to the 
number of persons to be served and to the anticipated results and 
benefits.
    (vi) The potential for continued support of the project after 
Federal funding ends, including, as appropriate, the demonstrated 
commitment of appropriate entities to such support.
    (vii) The potential for the incorporation of project purposes, 
activities, or benefits into the ongoing program of the agency or 
organization at the end of Federal funding.
    (g) Quality of the management plan. (1) The Secretary considers the 
quality of the management plan for the proposed project.
    (2) In determining the quality of the management plan for the 
proposed project, the Secretary considers one or more of the following 
factors:
    (i) The adequacy of the management plan to achieve the objectives of 
the proposed project on time and within budget, including clearly 
defined responsibilities, timelines, and milestones for accomplishing 
project tasks.
    (ii) The adequacy of procedures for ensuring feedback and continuous 
improvement in the operation of the proposed project.
    (iii) The adequacy of mechanisms for ensuring high-quality products 
and services from the proposed project.
    (iv) The extent to which the time commitments of the project 
director and principal investigator and other key project personnel are 
appropriate and adequate to meet the objectives of the proposed project.
    (v) How the applicant will ensure that a diversity of perspectives 
are brought to bear in the operation of the proposed project, including 
those of parents, teachers, the business community, a variety of 
disciplinary and professional fields, recipients or beneficiaries of 
services, or others, as appropriate.
    (h) Quality of the project evaluation. (1) The Secretary considers 
the quality of the evaluation to be conducted of the proposed project.
    (2) In determining the quality of the evaluation, the Secretary 
considers one or more of the following factors:
    (i) The extent to which the methods of evaluation are thorough, 
feasible, and appropriate to the goals, objectives, and outcomes of the 
proposed project.
    (ii) The extent to which the methods of evaluation are appropriate 
to the context within which the project operates.
    (iii) The extent to which the methods of evaluation provide for 
examining the effectiveness of project implementation strategies.
    (iv) The extent to which the methods of evaluation include the use 
of objective performance measures that are

[[Page 145]]

clearly related to the intended outcomes of the project and will produce 
quantitative and qualitative data to the extent possible.
    (v) The extent to which the methods of evaluation will provide 
timely guidance for quality assurance.
    (vi) The extent to which the methods of evaluation will provide 
performance feedback and permit periodic assessment of progress toward 
achieving intended outcomes.
    (vii) The extent to which the evaluation will provide guidance about 
effective strategies suitable for replication or testing in other 
settings.

(Approved by the Office of Management and Budget under control number 
1875-0102)

(Authority: 20 U.S.C. 1221e-3 and 3474)

[62 FR 10401, Mar. 6, 1997]



Sec. 75.211  Selection criteria for unsolicited applications.

    (a) If the Secretary considers an unsolicited application under 34 
CFR 75.222(a)(2)(ii), the Secretary uses the selection criteria and 
factors, if any, used for the competition under which the application 
could have been funded.
    (b) If the Secretary considers an unsolicited application under 34 
CFR 75.222(a)(2)(iii), the Secretary selects from among the criteria in 
Sec. 75.210(b), and may select from among the specific factors listed 
under each criterion, the criteria that are most appropriate to evaluate 
the activities proposed in the application.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[62 FR 10403, Mar. 6, 1997]

                          Selection Procedures



Sec. 75.215  How the Department selects a new project: purpose of 
Sec. Sec. 75.216-75.222.

    Sections 75.216-75.222 describe the process the Secretary uses to 
select applications for new grants. All of these sections apply to a 
discretionary grant program. However, only Sec. 75.216 applies also to 
a formula grant program.

    Cross reference: See Sec. 75.200(b) Discretionary grant program, 
and (c) Formula grant program.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.216  Applications not evaluated for funding.

    The Secretary does not evaluate an application if--
    (a) The applicant is not eligible;
    (b) The applicant does not comply with all of the procedural rules 
that govern the submission of the application;
    (c) The application does not contain the information required under 
the program; or
    (d) The proposed project cannot be funded under the authorizing 
statute or implementing regulations for the program.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[57 FR 30338, July 8, 1992]



Sec. 75.217  How the Secretary selects applications for new grants.

    (a) The Secretary selects applications for new grants on the basis 
of the authorizing statute, the selection criteria, and any priorities 
or other requirements that have been published in the Federal Register 
and apply to the selection of those applications.
    (b)(1) The Secretary may use experts to evaluate the applications 
submitted under a program.
    (2) These experts may include persons who are not employees of the 
Federal Government.
    (c) The Secretary prepares a rank order of the applications based 
solely on the evaluation of their quality according to the selection 
criteria.
    (d) The Secretary then determines the order in which applications 
will be selected for grants. The Secretary considers the following in 
making these determinations:
    (1) The information in each application.
    (2) The rank ordering of the applications.
    (3) Any other information--
    (i) Relevant to a criterion, priority, or other requirement that 
applies to the selection of applications for new grants;
    (ii) Concerning the applicant's performance and use of funds under a 
previous award under any Department program; and
    (iii) Concerning the applicant's failure under any Department 
program to

[[Page 146]]

submit a performance report or its submission of a performance report of 
unacceptable quality.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[52 FR 27804, July 24, 1987, as amended at 62 FR 4167, Jan. 29, 1997]



Sec. 75.218  Applications not evaluated or selected for funding.

    (a) The Secretary informs an applicant if its application--
    (1) Is not evaluated; or
    (2) Is not selected for funding.
    (b) If an applicant requests an explanation of the reason its 
application was not evaluated or selected, the Secretary provides that 
explanation.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[57 FR 30338, July 8, 1992]



Sec. 75.219  Exceptions to the procedures under Sec. 75.217.

    The Secretary may select an application for funding without 
following the procedures in Sec. 75.217 if:
    (a) The objectives of the project cannot be achieved unless the 
Secretary makes the grant before the date grants can be made under the 
procedures in Sec. 75.217;
    (b)(1) The application was evaluated under the preceding competition 
of the program;
    (2) The application rated high enough to deserve selection under 
Sec. 75.217; and
    (3) The application was not selected for funding because the 
application was mishandled by the Department; or
    (c) The Secretary receives an unsolicited application that meets the 
requirements of Sec. 75.222.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 52 FR 27804, July 24, 1987; 60 FR 12096, Mar. 3, 1995]



Sec. 75.220  Procedures the Department uses under Sec. 75.219(a).

    If the special circumstances of Sec. 75.219(a) appear to exist for 
an application, the Secretary uses the following procedures:
    (a) The Secretary assembles a board to review the application.
    (b) The board consists of:
    (1) A program officer of the program under which the applicant wants 
a grant;
    (2) An employee from the Office of the Chief Financial Officer 
(OCFO) with responsibility for grant policy; and
    (3) A Department employee who is not a program officer of the 
program but who is qualified to evaluate the application.
    (c) The board reviews the application to decide if:
    (1) The special circumstances under Sec. 75.219(a) are satisfied;
    (2) The application rates high enough, based on the selection 
criteria, priorities, and other requirements that apply to the program, 
to deserve selection; and
    (3) Selection of the application will not have an adverse impact on 
the budget of the program.
    (d) The board forwards the results of its review to the Secretary.
    (e) If each of the conditions in paragraph (c) of this section is 
satisfied, the Secretary may select the application for funding.
    (f) Even if the Secretary does not select the application for 
funding, the applicant may submit its application under the procedures 
in Subpart C of this part.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 45 FR 86297, Dec. 30, 1980; 64 FR 50391, Sept. 16, 1999]



Sec. 75.221  Procedures the Department uses under Sec. 75.219(b).

    If the special circumstances of Sec. 75.219(b) appear to exist for 
an application, the Secretary may select the application for funding if:
    (a) The Secretary has documentary evidence that the special 
circumstances of Sec. 75.219(b) exist; and
    (b) The Secretary has a statement that explains the circumstances of 
the mishandling.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 52 FR 27804, July 24, 1987. Redesignated at 60 FR 12096, 
Mar. 3, 1995]

[[Page 147]]



Sec. 75.222  Procedures the Department uses under Sec. 75.219(c).

    If the Secretary receives an unsolicited application, the Secretary 
may consider the application under the following procedures unless the 
Secretary has published a notice in the Federal Register stating that 
the program that would fund the application would not consider 
unsolicited applications:
    (a)(1) The Secretary determines whether the application could be 
funded under a competition planned or conducted for the fiscal year 
under which funds would be used to fund the application.
    (2)(i) If the application could be funded under a competition 
described in paragraph (a)(1) of this section and the deadline for 
submission of applications has not passed, the Secretary refers the 
application to the appropriate competition for consideration under the 
procedures in Sec. 75.217.
    (ii)(A) If the application could have been funded under a 
competition described in paragraph (a)(1) of this section and the 
deadline for submission of applications has passed, the Secretary may 
consider the application only in exceptional circumstances, as 
determined by the Secretary.
    (B) If the Secretary considers an application under paragraph 
(a)(2)(ii) of this section, the Secretary considers the application 
under paragraphs (b) through (e) of this section.
    (iii) If the application could not be funded under a competition 
described in paragraph (a)(1) of this section, the Secretary considers 
the application under paragraphs (b) through (e) of this section.
    (b) If an application may be considered under paragraphs (a)(2)(ii) 
or (iii) of this section, the Secretary determines if--
    (1) There is a substantial likelihood that the application is of 
exceptional quality and national significance for a program administered 
by ED;
    (2) The application meets the requirements of all applicable 
statutes and codified regulations that apply to the program; and
    (3) Selection of the project will not have an adverse impact on the 
funds available for other awards planned for the program.
    (c) If the Secretary determines that the criteria in paragraph (b) 
of this section have been met, the Secretary assembles a panel of 
experts that does not include any employees of the Department to review 
the application.
    (d) The experts--
    (1) Evaluate the application based on the selection criteria; and
    (2) Determine whether the application is of such exceptional quality 
and national significance that it should be funded as an unsolicited 
application.
    (e) If the experts highly rate the application and determine that 
the application is of such exceptional quality and national significance 
that it should be funded as an unsolicited application, the Secretary 
may fund the application.
    Note to Sec. 75.222: To assure prompt consideration, applicants 
submitting unsolicited applications should send the application, marked 
``Unsolicited Application'' on the outside, to the Chief, Application 
Control Center, U.S. Department of Education, Washington, DC 20202-4725.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[60 FR 12096, Mar. 3, 1995]



Sec. 75.223  [Reserved]



Sec. 75.224  What are the procedures for using a multiple tier review 
process to evaluate applications?

    (a) The Secretary may use a multiple tier review process to evaluate 
applications.
    (b) The Secretary may refuse to review applications in any tier that 
do not meet a minimum cut-off score established for the prior tier.
    (c) The Secretary may establish the minimum cut-off score--
    (1) In the application notice published in the Federal Register; or
    (2) After reviewing the applications to determine the overall range 
in the quality of applications received.
    (d) The Secretary may, in any tier--
    (1) Use more than one group of experts to gain different 
perspectives on an application; and
    (2) Refuse to consider an application if the application is rejected 
under paragraph (b) of this section by any one of the groups used in the 
prior tier.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[66 FR 60138, Nov. 30, 2001]

[[Page 148]]



Sec. 75.225  What procedures does the Secretary use if the Secretary 
decides to give special consideration to novice applications?

    (a) As used in this section, ``novice applicant'' means--
    (1) Any applicant for a grant from ED that--
    (i) Has never received a grant or subgrant under the program from 
which it seeks funding;
    (ii) Has never been a member of a group application, submitted in 
accordance with Sec. Sec. 75.127-75.129, that received a grant under 
the program from which it seeks funding; and
    (iii) Has not had an active discretionary grant from the Federal 
Government in the five years before the deadline date for applications 
under the program.
    (2) In the case of a group application submitted in accordance with 
Sec. Sec. 75.127-75.129, a group that includes only parties that meet 
the requirements of paragraph (a)(1) of this section.
    (b) For the purposes of paragraph (a)(1)(iii) of this section, a 
grant is active until the end of the grant's project or funding period, 
including any extensions of those periods that extend the grantee's 
authority to obligate funds.
    (c) If the Secretary determines that special consideration of novice 
applications is appropriate, the Secretary may either--
    (1) Establish a separate competition for novice applicants; or
    (2) Give competitive preference to novice applicants under the 
procedures in 34 CFR 75.105(c)(2).
    (d) Before making a grant to a novice applicant, the Secretary 
imposes special conditions, if necessary, to ensure the grant is managed 
effectively and project objectives are achieved.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[66 FR 60138, Nov. 30, 2001; 67 FR 4316, Jan. 29, 2002]

                       Procedures To Make a Grant



Sec. 75.230  How the Department makes a grant; purpose of 
Sec. Sec. 75.231-75.236.

    If the Secretary selects an application under Sec. Sec. 75.217, 
75.220, or 75.222, the Secretary follows the procedures in Sec. Sec. 
75.231-75.236 to set the amount and determine the conditions of a grant. 
Sections 75.235-75.236 also apply to grants under formula grant 
programs.

    Cross reference: See Sec. 75.200 How applications for new grants 
are selected for funding.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.231  Additional information.

    After selecting an application for funding, the Secretary may 
require the applicant to submit additional information.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.232  The cost analysis; basis for grant amount.

    (a) Before the Secretary sets the amount of a new grant, the 
Secretary does a cost analysis of the project. The Secretary:
    (1) Verifies the cost data in the detailed budget for the project;
    (2) Evaluates specific elements of costs; and
    (3) Examines costs to determine if they are necessary, reasonable, 
and allowable under applicable statutes and regulations.
    (b) The Secretary uses the cost analysis as a basis for determining 
the amount of the grant to the applicant. The cost analysis shows 
whether the applicant can achieve the objectives of the project with 
reasonable efficiency and economy under the budget in the application.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 59 FR 30261, June 10, 1994]



Sec. 75.233  Setting the amount of the grant.

    (a) Subject to any applicable matching or cost-sharing requirements, 
the Secretary may fund up to 100 percent of the allowable costs in the 
applicant's budget.
    (b) In deciding what percentage of the allowable costs to fund, the 
Secretary may consider any other financial resources available to the 
applicant.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[57 FR 30338, July 8, 1992]

[[Page 149]]



Sec. 75.234  The conditions of the grant.

    (a) The Secretary makes a grant to an applicant only after 
determining--
    (1) The approved costs; and
    (2) Any special conditions.
    (b) In awarding a cooperative agreement, the Secretary includes 
conditions that state the explicit character and extent of anticipated 
collaboration between the Department and the recipient.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[57 FR 30338, July 8, 1992]



Sec. 75.235  The notification of grant award.

    (a) To make a grant, the Secretary issues a notification of grant 
award and sends it to the grantee.
    (b) The notification of grant award sets the amount of the grant 
award and establishes other specific conditions, if any.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 57 FR 30338, July 8, 1992]



Sec. 75.236  Effect of the grant.

    The grant obligates both the Federal Government and the grantee to 
the requirements that apply to the grant.

(Authority: 20 U.S.C. 1221e-3 and 3474)

    Cross reference: See 34 CFR part 74, Subpart L--Programmatic Changes 
and Budget Revisions.

                     Approval of Multi-Year Projects



Sec. 75.250  Project period can be up to 60 months.

    The Secretary may approve a project period of up to 60 months.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 52 FR 27804, July 24, 1987]



Sec. 75.251  The budget period.

    (a) The Secretary usually approves a budget period of not more than 
12 months, even if the project has a multi-year project period.
    (b) If the Secretary approves a multi-year project period, the 
Secretary:
    (1) Makes a grant to the project for the initial budget period; and
    (2) Indicates his or her intention to make contination awards to 
fund the remainder of the project period.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.253  Continuation of a multi-year proj ect after the first budget 
period.

    (a) The Secretary may make a continuation award for a budget period 
after the first budget period of an approved multi-year project if:
    (1) The Congress has appropriated sufficient funds under the 
program;
    (2) The recipient has either--
    (i) Made substantial progress toward meeting the objectives in its 
approved application; or
    (ii) Obtained the Secretary's approval of changes in the project 
that--
    (A) Do not increase the cost of the grant; and
    (B) Enable the recipient to meet those objectives in succeeding 
budget periods;
    (3) The recipient has submitted all reports as required by Sec. 
75.118, and
    (4) Continuation of the project is in the best interest of the 
Federal Government.
    (b) Subject to the criteria in paragraph (a) of this section, in 
selecting applications for funding under a program the Secretary gives 
priority to contination awards over new grants.
    (c)(1) Notwithstanding any regulatory requirements in 34 CFR part 
80, a grantee may expend funds that have not been obligated at the end 
of a budget period for obligations of the subsequent budget period if--
    (i) The obligation is for an allowable cost that falls within the 
scope and objectives of the project; and
    (ii) ED regulations other than 34 CFR part 80, statutes, or the 
conditions of the grant do not prohibit the obligation.

    Note: See 34 CFR 74.25(e)(2).

    (2) The Secretary may--
    (i) Require the grantee to send a written statement describing how 
the funds made available under this section will be used; and
    (ii) Determine the amount of new funds that the Department will make

[[Page 150]]

available for the subsequent budget period after considering the 
statement the grantee provides under paragraph (c)(2)(i) of this section 
or any other information available to the Secretary about the use of 
funds under the grant.
    (3) In determining the amount of new funds to make available to a 
grantee under this section, the Secretary considers whether the 
unobligated funds made available are needed to complete activities that 
were planned for completion in the prior budget period.
    (d)(1) If the Secretary decides, under this section, not to make a 
continuation award, the Secretary may authorize a no-cost extension of 
the last budget period of the grant in order to provide for the orderly 
closeout of the grant.
    (2) If the Secretary makes a continuation award under this section--
    (i) The Secretary makes the award under Sec. Sec. 75.231-75.236; 
and
    (ii) The new budget period begins on the day after the previous 
budget period ends.
    (e) Unless prohibited by program regulations, a recipient that is in 
the final budget period of a project period may seek continued 
assistance for the project under the procedures for selecting new 
projects.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 57 FR 30338, July 8, 1992; 59 FR 30261, June 10, 1994; 62 
FR 40424, July 28, 1997]

    Cross references: 1. See Subpart C--How to Apply for a Grant.

    2. See Sec. 75.117 Information needed for a multi-year project; and 
Sec. 75.118 Application for a continuation award.



Sec. 75.254  [Reserved]

                              Miscellaneous



Sec. 75.260  Allotments and reallotments.

    (a) Under some of the programs covered by this part, the Secretary 
allots funds under a statutory or regulatory formula.
    (b) Any reallotment to other grantees will be made by the Secretary 
in accordance with the authorizing statute for that program.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 52 FR 27804, July 24, 1987]



Sec. 75.261  Extension of a project period.

    (a) General rule. A grantee may, notwithstanding any regulatory 
requirement in 34 CFR part 80, extend the project period of an award one 
time for a period up to twelve months without the prior approval of the 
Secretary, if--
    (1) The grantee meets the requirements for extension of 34 CFR 
74.25(e)(2); and
    (2) ED regulations other than the regulations in 34 CFR part 80, 
statutes or the conditions of an award do not prohibit the extension.
    (b) Specific rule for certain programs of the National Institute on 
Disability and Rehabilitation Research. Notwithstanding paragraph (a) of 
this section, grantees under the following programs of NIDRR must 
request prior approval to extend their grants under paragraph (c) of 
this section:
    (1) The Knowledge Dissemination and Utilization Centers and 
Disability and Technical Assistance Centers authorized under 29 U.S.C. 
761a(b)(2), (4), (5), (6), and (11) and implemented at 34 CFR part 350, 
subpart B, Sec. Sec. 350.17-350.19.
    (2) The Rehabilitation Research and Training Centers program 
authorized under 29 U.S.C. 762(b) and implemented at 34 CFR part 350, 
subpart C.
    (3) The Rehabilitation Engineering Research Centers authorized under 
29 U.S.C. 762(b)(3) and implemented at 34 CFR part 350, subpart D.
    (4) The Special Projects and Demonstrations for Spinal Cord Injuries 
authorized under 29 U.S.C. 762(b)(4) and implemented at 34 CFR part 359.
    (c) Other regulations. If ED regulations, other than the regulations 
in 34 CFR part 80, or the conditions of the award require the grantee to 
get prior approval to extend the project period, the Secretary may 
permit the grantee to extend the project period if--
    (1) The extension does not violate any statute or regulations;
    (2) The extension does not involve the obligation of additional 
Federal funds;

[[Page 151]]

    (3) The extension is to carry out the activities in the approved 
application; and
    (4)(i) The Secretary determines that, due to special or unusual 
circumstances applicable to a class of grantees, the project periods for 
the grantees should be extended; or
    (ii)(A) The Secretary determines that special or unusual 
circumstances would delay completion of the project beyond the end of 
the project period;
    (B) The grantee requests an extension of the project at least 45 
calendar days before the end of the project period; and
    (C) The grantee provides a written statement before the end of the 
project period giving the reasons why the extension is appropriate under 
paragraph (c)(4)(ii)(A) of this section and the period for which the 
project needs extension.
    (d) Waiver. The Secretary may waive the requirement in paragraph 
(a)(4)(ii)(B) of this section if--
    (1) The grantee could not reasonably have known of the need for the 
extension on or before the start of the 45-day time period; or
    (2) The failure to give notice on or before the start of the 45-day 
time period was unavoidable.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[57 FR 30338, July 8, 1992, as amended at 62 FR 40424, July 28, 1997]



Sec. 75.262  Conversion of a grant or a cooperative agreement.

    (a)(1) The Secretary may convert a grant to a cooperative agreement 
or a cooperative agreement to a grant at the time a continuation award 
is made under Sec. 75.253.
    (2) In deciding whether to convert a grant to a cooperative 
agreement or a cooperative agreement to a grant, the Secretary considers 
the factors included in Sec. 75.200(b) (4) and (5).
    (b) The Secretary and a recipient may agree at any time to convert a 
grant to a cooperative agreement or a cooperative agreement to a grant, 
subject to the factors included in Sec. 75.200(b) (4) and (5).

(Authority: 20 U.S.C. 1221e-3 and 3474)

[57 FR 30339, July 8, 1992]



Sec. 75.263  Pre-award costs; waiver of approval.

    A grantee may, notwithstanding any requirement in 34 CFR part 80, 
incur pre-award costs as specified in 34 CFR 74.25(e)(1) unless--
    (a) ED regulations other than 34 CFR part 80 or a statute prohibit 
these costs; or
    (b) The conditions of the award prohibit these costs.

(Authority: 20 U.S.C. 1221e-3 and 3474; OMB Circulars A-21, A-87, and A-
122)

[62 FR 40425, July 28, 1997]



Sec. 75.264  Transfers among budget categories.

    A grantee may, notwithstanding any requirement in 34 CFR part 80, 
make transfers as specified in 34 CFR 74.25 unless--
    (a) ED regulations other than 34 CFR part 80 or a statute prohibit 
these transfers; or
    (b) The conditions of the grant prohibit these transfers.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[62 FR 40425, July 28, 1997]



           Subpart E_What Conditions Must Be Met by a Grantee?

                            Nondiscrimination



Sec. 75.500  Federal statutes and regulations on nondiscrimination.

    Each grantee shall comply with the following statutes and 
regulations:

------------------------------------------------------------------------
             Subject                    Statute           Regulations
------------------------------------------------------------------------
Discrimination on the basis of    Title VI of the     34 CFR part 100.
 race, color or national origin.   Civil Rights Act
                                   of 1964 (42
                                   U.S.C. 2000d
                                   through 2000d-4).
Discrimination on the basis of    Title IX of the     34 CFR part 106.
 sex.                              Education
                                   Amendments of
                                   1972 (20 U.S.C.
                                   1681-1683).
Discrimination on the basis of    Section 504 of the  34 CFR part 104.
 handicap.                         Rehabilitation
                                   Act of 1973 (29
                                   U.S.C. 794).
Discrimination on the basis of    The Age             45 CFR part 90.
 age.                              Discrimination
                                   Act (42 U.S.C.
                                   6101 et seq.).
------------------------------------------------------------------------


(Authority: 20 U.S.C. 1221e-3 and 3474)

[[Page 152]]

                              Project Staff



Sec. 75.511  Waiver of requirement for a full-time project director.

    (a) If regulations under a program require a full-time project 
director, the Secretary may waive that requirement under the following 
conditions:
    (1) The project will not be adversely affected by the waiver.
    (2)(i) The project director is needed to coordinate two or more 
related projects; or
    (ii) The project director must teach a minimum number of hours to 
retain faculty status.
    (b) The waiver either permits the grantee:
    (1) To use a part-time project director; or
    (2) Not to use any project director.
    (c)(1) An applicant or a grantee may request the waiver.
    (2) The request must be in writing and must demonstrate that a 
waiver is appropriate under this section.
    (3) The Secretary gives the waiver in writing. The waiver is 
effective on the date the Secretary signs the waiver.

(Authority: 20 U.S.C. 1221e-3 and 3474)

    Cross reference: See 34 CFR 74.25, Revision of budget and program 
plans; and 34 CFR 80.30, Changes.



Sec. 75.515  Use of consultants.

    (a) Subject to Federal statutes and regulations, a grantee shall use 
its general policies and practices when it hires, uses, and pays a 
consultant as part of the project staff.
    (b) The grantee may not use its grant to pay a consultant unless:
    (1) There is a need in the project for the services of that 
consultant; and
    (2) The grantee cannot meet that need by using an employee rather 
than a consultant.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.516  Compensation of consultants--employees of institutions of 
higher education.

    If an institution of higher education receives a grant for research 
or for educational services, it may pay a consultant's fee to one of its 
employees only in unusual circumstances and only if:
    (a) The work performed by the consultant is in addition to his or 
her regular departmental load; and
    (b)(1) The consultation is across departmental lines; or
    (2) The consultation involves a separate or remote operation.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.517  Changes in key staff members.

    A grantee shall comply with 34 CFR 74.25(c)(2) concerning 
replacement or lesser involvement of any key project staff, whether or 
not the grant is for research.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980, as amended at 64 FR 50391, Sept. 16, 1999]



Sec. 75.519  Dual compensation of staff.

    A grantee may not use its grantee to pay a project staff member for 
time or work for which that staff member is compensated from some other 
source of funds.

(Authority: 20 U.S.C. 1221e-3 and 3474)

                          Conflict of Interest



Sec. 75.524  Conflict of interest: Purpose of Sec. 75.525.

    (a) The conflict of interest regulations of the Department that 
apply to a grant are in Sec. 75.525.
    (b) These conflict of interest regulations do not apply to a 
``government'' as defined in 34 CFR 80.3.
    (c) The regulations in Sec. 75.525 do not apply to a grantee's 
procurement contracts. The conflict of interest regulations that cover 
those procurement contracts are in 34 CFR part 74.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980, as amended at 64 FR 50391, Sept. 16, 1999]



Sec. 75.525  Conflict of interest: Participation in a project.

    (a) A grantee may not permit a person to participate in an 
administrative decision regarding a project if:
    (1) The decision is likely to benefit that person or a member of his 
or her immediate family; and
    (2) The person:
    (i) Is a public official; or

[[Page 153]]

    (ii) Has a family or business relationship with the grantee.
    (b) A grantee may not permit any person participating in the project 
to use his or her position for a purpose that is--or gives the 
appearance of being--motivated by a desire for a private financial gain 
for that person or for others.

(Authority: 20 U.S.C. 1221e-3 and 3474)

                             Allowable Costs



Sec. 75.530  General cost principles.

    The general principles to be used in determining costs applicable to 
grants and cost-type contracts under grants are specified at 34 CFR 
74.27 (for administration of grants to institutions of higher education, 
and other non-profit organizations) and 34 CFR 80.22 (for uniform 
administrative requirements for grants and cooperative agreements to 
State and local governments).

(Authority: 20 U.S.C. 1221e-3 and 3474)

    Cross reference: See 34 CFR part 74, Subpart D--After-the-Award 
Requirements and 34 CFR part 80, Subpart C--Post-Award Requirements.

[64 FR 50391, Sept. 16, 1999]



Sec. 75.531  Limit on total cost of a project.

    A grantee shall insure that the total cost to the Federal Government 
is not more than the amount stated in the notification of grant award.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.532  Use of funds for religion prohibited.

    (a) No grantee may use its grant to pay for any of the following:
    (1) Religious worship, instruction, or proselytization.
    (2) Equipment or supplies to be used for any of those activities.
    (3) Construction, remodeling, repair, operation, or maintenance of 
any facility or part of a facility to be used for any of those 
activities.
    (4) An activity of a school or department of divinity.
    (b) As used in this section, school or department of divinity means 
an institution or a component of an institution whose program is 
specifically for the education of students to:
    (1) Prepare them to enter into a religious vocation; or
    (2) Prepare them to teach theological subjects.

(Authority: 20 U.S.C. 1221e-3 and 3474)

    Effective Date Note: At 69 FR 31711, June 4, 2004, Sec. thnsp;75.532 
was amended by revising paragraph (a)(2), removing paragraphs (a)(3) and 
(4) and removing and reserving paragraph (b), effective July 6, 2004. 
For the convenience of the user, the revised text is set forth as 
follows:

Sec. 75.532  Use of funds for religion prohibited.

    (a) * * *
    (2) Equipment or supplies to be used for any of the activities 
specified in paragraph (a)(1) of this section.
    (b) [Reserved]



Sec. 75.533  Acquisition of real property; construction.

    No grantee may use its grant for acquisition of real property or for 
construction unless specifically permitted by the authorizing statute or 
implementing regulations for the program.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.534  Training grants--automatic increases for additional 
dependents.

    The Secretary may increase a grant to cover the cost of additional 
dependents not specified in the notice of award under Sec. 75.235 if--
    (a) Allowances for dependents are authorized by the program statute 
and are allowable under the grant; and
    (b) Appropriations are available to cover the cost.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 57 FR 30339, July 8, 1992]

                           Indirect Cost Rates



Sec. 75.560  General indirect cost rates; exceptions.

    (a) The differences between direct and indirect costs and the 
principles for determining the general indirect cost rate that a grantee 
may use for grants under most programs are specified in the cost 
principles for--
    (1) Institutions of higher education, at 34 CFR 74.27;
    (2) Hospitals, at 34 CFR 74.27;

[[Page 154]]

    (3) Other nonprofit organizations, at 34 CFR 74.27;
    (4) Commercial (for-profit) organizations, at 34 CFR 74.27; and
    (5) State and local governments and federally-recognized Indian 
tribal organizations, at 34 CFR 80.22.
    (b) A grantee must have a current indirect cost rate agreement to 
charge indirect costs to a grant. To obtain an indirect cost rate, a 
grantee must submit an indirect cost proposal to its cognizant agency 
and negotiate an indirect cost rate agreement.
    (c) The Secretary may establish a temporary indirect cost rate for a 
grantee that does not have an indirect cost rate agreement with its 
cognizant agency.
    (d) The Secretary accepts an indirect cost rate negotiated by a 
grantee's cognizant agency, but may establish a restricted indirect cost 
rate for a grantee to satisfy the statutory requirements of certain 
programs administered by the Department.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 57 FR 30339, July 8, 1992; 59 FR 59582, Nov. 17, 1994]



Sec. 75.561  Approval of indirect cost rates.

    (a) If the Department of Education is the cognizant agency, the 
Secretary approves an indirect cost rate for a grantee other than a 
local educational agency. For the purposes of this section, the term 
local educational agency does not include a State agency.
    (b) Each State educational agency, on the basis of a plan approved 
by the Secretary, shall approve an indirect cost rate for each local 
educational agency that requests it to do so. These rates may be for 
periods longer than a year if rates are sufficiently stable to justify a 
longer period.
    (c) The Secretary generally approves indirect cost rate agreements 
annually. Indirect cost rate agreements may be approved for periods 
longer than a year if the Secretary determines that rates will be 
sufficiently stable to justify a longer rate period.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[59 FR 59583, Nov. 17, 1994]



Sec. 75.562  Indirect cost rates for educational training projects.

    (a) Educational training grants provide funding for training or 
other educational services. Examples of the work supported by training 
grants are summer institutes, training programs for selected 
participants, the introduction of new or expanded courses, and similar 
instructional undertakings that are separately budgeted and accounted 
for by the sponsoring institution. These grants do not usually support 
activities involving research, development, and dissemination of new 
educational materials and methods. Training grants largely implement 
previously developed materials and methods and require no significant 
adaptation of techniques or instructional services to fit different 
circumstances.
    (b) The Secretary uses the definition in paragraph (a) to determine 
which grants are educational training grants.
    (c) Indirect cost reimbursement on a training grant is limited to 
the recipient's actual indirect costs, as determined by its negotiated 
indirect cost rate agreement, or eight percent of a modified total 
direct cost base, whichever amount is less. For the purposes of this 
section, a modified total direct cost base is defined as total direct 
costs less stipends, tuition and related fees, and capital expenditures 
of $5,000 or more.
    (1) The eight percent limit also applies to cost-type contracts 
under grants, if these contracts are for training as defined in this 
section.
    (2) The eight percent limit does not apply to agencies of State or 
local governments, including federally recognized Indian tribal 
governments, as defined in 34 CFR 80.3.
    (3) Indirect costs in excess of the eight percent limit may not be 
charged directly, used to satisfy matching or cost-sharing requirements, 
or charged to another Federal award.
    (d) A grantee using the training rate of eight percent is required 
to have documentation available for audit that shows that its negotiated 
indirect cost rate is at least eight percent.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[59 FR 59582, Nov. 17, 1994]

[[Page 155]]



Sec. 75.563  Restricted indirect cost rate--programs covered.

    If a grantee decides to charge indirect costs to a program that has 
a statutory requirement prohibiting the use of Federal funds to supplant 
non-Federal funds, the grantee shall use a restricted indirect cost rate 
computed under 34 CFR 76.564 through 76.569.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[59 FR 59583, Nov. 17, 1994]



Sec. 75.564  Reimbursement of indirect costs.

    (a) Reimbursement of indirect costs is subject to the availability 
of funds and statutory or administrative restrictions.
    (b) The application of the rates and the determination of the direct 
cost base by a grantee must be in accordance with the indirect cost rate 
agreement approved by the grantee's cognizant agency.
    (c) Indirect cost reimbursement is not allowable under grants for--
    (1) Fellowships and similar awards if Federal financing is 
exclusively in the form of fixed amounts such as scholarships, stipend 
allowances, or the tuition and fees of an institution;
    (2) Construction grants;
    (3) Grants to individuals;
    (4) Grants to organizations located outside the territorial limits 
of the United States;
    (5) Grants to Federal organizations; and
    (6) Grants made exclusively to support conferences.
    (d) Indirect cost reimbursement on grants received under programs 
with statutory restrictions or other limitations on indirect costs must 
be made in accordance with the restrictions in 34 CFR 76.564 through 
76.569.
    (e) Indirect costs for a group of eligible parties (see Sec. Sec. 
75.127-75.129) are limited to the amount derived by applying the rate of 
the applicant, or a restricted rate when applicable, to the grant in 
keeping with the terms of the applicant's indirect cost rate agreement.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[59 FR 59583, Nov. 17, 1994]



Sec. 75.580  Coordination with other activities.

    A grantee shall, to the extent possible, coordinate its project with 
other activities that are in the same geographic area served by the 
project and that serve similar purposes and target groups.

(Authority: 20 U.S.C. 1221e-3, 2890, and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 57 FR 30339, July 8, 1992]

                               Evaluation



Sec. 75.590  Evaluation by the recipient.

    A recipient shall submit a performance report, or, for the last year 
of a project, a final report, that evaluates at least annually--
    (a) The recipient's progress in achieving the objectives in its 
approved application;
    (b) The effectiveness of the project in meeting the purposes of the 
program; and
    (c) The effect of the project on participants being served by the 
project.

(Approved by the Office of Management and Budget under control number 
1875-0102)

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 57 FR 30339, July 8, 1992; 59 FR 30262, June 10, 1994; 60 
FR 6660, Feb. 3, 1995]



Sec. 75.591  Federal evaluation--cooperation by a grantee.

    A grantee shall cooperate in any evaluation of the program by the 
Secretary.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 86297, Dec. 30, 1980]



Sec. 75.592  Federal evaluation--satisfying requirement for grantee 
evaluation.

    If a grantee cooperates in a Federal evaluation of a program, the 
Secretary may determine that the grantee meets the evaluation 
requirements of the program, including Sec. 75.590.

(Authority: 20 U.S.C. 1221e-3 and 3474)

                              Construction

    Cross reference: See 34 CFR part 74, Subpart P--Procurement 
Standards.

[[Page 156]]



Sec. 75.600  Use of a grant for construction: Purpose of 
Sec. Sec. 75.601-75.615.

    Sections 75.601-75.615 apply to:
    (a) An applicant that requests funds for construction; and
    (b) A grantee whose grant includes funds for construction.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.601  Applicant's assessment of environmental impact.

    An applicant shall include with its application its assessment of 
the impact of the proposed construction on the quality of the 
environment in accordance with section 102(2)(C) of the National 
Environmental Policy Act of 1969 and Executive Order 11514 (34 FR 4247).

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.602  Preservation of historic sites must be described in the 
application.

    (a) An applicant shall describe in its application the relationship 
of the proposed construction to and probable effect on any district, 
site, building, structure, or object that is:
    (1) Included in the National Register of Historic Places; or
    (2) Eligible under criteria established by the Secretary of Interior 
for inclusion in the National Register of Historic Places.

    Cross reference: See 36 CFR part 60 for these criteria.
    (b) In deciding whether to make a grant, the Secretary considers:
    (1) The information provided by the applicant under paragraph (a) of 
this section; and
    (2) Any comments by the Advisory Council on Historic Preservation.

    Cross reference: See 36 CFR part 800, which provides for comments 
from the Council.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.603  Grantee's title to site.

    A grantee must have or obtain a full title or other interest in the 
site, including right of access, that is sufficient to insure the 
grantee's undisturbed use and possession of the facilities for 50 years 
or the useful life of the facilities, whichever is longer.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.604  Availability of cost-sharing funds.

    A grantee shall ensure that sufficient funds are available to meet 
any non-Federal share of the cost of constructing the facility.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.605  Beginning the construction.

    (a) A grantee shall begin work on construction within a reasonable 
time after the grant for the construction is made.
    (b) Before construction is advertised or placed on the market for 
bidding, the grantee shall get approval by the Secretary of the final 
working drawings and specifications.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.606  Completing the construction.

    (a) A grantee shall complete its construction within a reasonable 
time.
    (b) The grantee shall complete the construction in accordance with 
the application and approved drawings and specifications.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.607  General considerations in designing facilities and carrying 
out construction.

    (a) A grantee shall insure that the construction is:
    (1) Functional;
    (2) Economical; and
    (3) Not elaborate in design or extravagant in the use of materials, 
compared with facilities of a similar type constructed in the State or 
other applicable geographic area.
    (b) The grantee shall, in developing plans for the facilities, 
consider excellence of architecture and design and inclusion of works of 
art. The grantee may not spend more than one percent of the cost of the 
project on inclusion of works of art.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[[Page 157]]



Sec. 75.608  Areas in the facilities for cultural activities.

    A grantee may make reasonable provision, consistent with the other 
uses to be made of the facilities, for areas in the facilities that are 
adaptable for artistic and other cultural activities.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[57 FR 30339, July 8, 1992]



Sec. 75.609  Comply with safety and health standards.

    In planning for and designing facilities, a grantee shall observe:
    (a) The standards under the Occupational Safety and Health Act of 
1970 (Pub. L. 91-576) (See 36 CFR part 1910); and
    (b) State and local codes, to the extent that they are more 
stringent.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.610  Access by the handicapped.

    A grantee shall comply with the Federal regulations on access by the 
handicapped that apply to construction and alteration of facilities. 
These regulations are:
    (a) For residential facilities--24 CFR part 40; and
    (b) For non-residential facilities--41 CFR subpart 101-19.6.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.611  Avoidance of flood hazards.

    In planning the construction, a grantee shall, in accordance with 
the provisions of Executive Order 11988 of February 10, 1978 (43 FR 
6030) and rules and regulations that may be issued by the Secretary to 
carry out those provisions:
    (a) Evaluate flood hazards in connection with the construction; and
    (b) As far as practicable, avoid uneconomic, hazardous, or 
unnecessary use of flood plains in connection with the construction.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.612  Supervision and inspection by the grantee.

    A grantee shall maintain competent architectural engineering 
supervision and inspection at the construction site to insure that the 
work conforms to the approved drawings and specifications.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.613  Relocation assistance by the grantee.

    A grantee is subject to the regulations on relocation assistance and 
real property acquisition in 34 CFR part 15.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.614  Grantee must have operational funds.

    A grantee shall insure that, when construction is completed, 
sufficient funds will be available for effective operation and 
maintenance of the facilities.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.615  Operation and maintenance by the grantee.

    A grantee shall operate and maintain the facilities in accordance 
with applicable Federal, State, and local requirements.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.616  Energy conservation.

    (a) To the extent feasible, a grantee shall design and construct 
facilities to maximize the efficient use of energy.
    (b) The following standards of the American Society of Heating, 
Refrigerating, and Air Conditioning Engineers (ASHRAE) are incorporated 
by reference in this section:
    (1) ASHRAE-90 A-1980 (Sections 1-9).
    (2) ASHRAE-90 B-1975 (Sections 10-11).
    (3) ASHRAE-90 C-1977 (Section 12).

Incorporation by reference of these provisions has been approved by the 
Director of the Office of the Federal Register pursuant to the 
Director's authority under 5 U.S.C. 552 (a) and 1 CFR part 51. The 
incorporated document is on file at the Department of Education, Grants 
and Contracts Service, rm. 3636 ROB-3, 400 Maryland Avenue, SW., 
Washington, DC 20202-4700 or at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call 202-741-6030, or go to: http://www.archives.gov/
federal--register/code--of--federal--regulations/

[[Page 158]]

ibr--locations.html.These standards may be obtained from the publication 
sales department at the American Society of Heating, Refrigerating, and 
Air Conditioning Engineers, Inc., 1791 Tullie Circle, NE., Atlanta, 
Georgia 30329.
    (c) A grantee shall comply with ASHRAE standards listed in paragraph 
(b) of this section in designing and constructing facilities built with 
project funds.

(Authority: 20 U.S.C. 1221e-3 and 3474, 42 U.S.C. 8373(b), and E.O. 
12185)

[57 FR 30339, July 8, 1992, as amended at 69 FR 18803, Apr. 9, 2004]



Sec. 75.617  Compliance with the Coastal Barrier Resources Act.

    A recipient may not use, within the Coastal Barrier Resources 
System, funds made available under a program administered by the 
Secretary for any purpose prohibited by 31 U.S.C. chapter 55 (sections 
3501-3510).

(Authority: 20 U.S.C. 1221e-3 and 3474, 31 U.S.C. 3504, 3505)

[57 FR 30339, July 8, 1992]

                         Equipment and Supplies

    Cross reference: See 34 CFR 74.32 Real property; 34 CFR 74.35 
Supplies and other expendable property; 34 CFR 74.36 Intangible 
property; 34 CFR 74.2 Definitions; 34 CFR 80.31 Real property; 34 CFR 
80.32 Equipment; 34 CFR 80.33 Supplies; and 34 CFR 80.34 Copyrights.



Sec. 75.618  Charges for use of equipment or supplies.

    A grantee may not charge students or school personnel for the 
ordinary use of equipment or supplies purchased with grant funds.

(Authority: 20 U.S.C. 1221e-3 and 3474)

                       Publications and Copyrights



Sec. 75.620  General conditions on publication.

    (a) Content of materials. Subject to any specific requirements that 
apply to its grant, a grantee may decide the format and content of 
project materials that it publishes or arranges to have published.
    (b) Required statement. The grantee shall ensure that any 
publication that contains project materials also contains the following 
statements:

    The contents of this (insert type of publication; e.g., book, 
report, film) were developed under a grant from the Department of 
Education. However, those contents do not necessarily represent the 
policy of the Department of Education, and you should not assume 
endorsement by the Federal Government.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 45 FR 86297, Dec. 30, 1980]



Sec. 75.621  Copyright policy for grantees.

    A grantee may copyright project materials in accordance with 34 CFR 
part 74 or 80, as appropriate.

(Authority: 20 U.S.C. 1221e-3 and 3474)

    Cross reference: See 34 CFR 74.22 Payment; 34 CFR 74.24 Program 
income; and 34 CFR 74.36 Intangible property; 34 CFR 80.25 Program 
income; and 34 CFR 80.34 Copyrights.

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 53 FR 19118, May 26, 1988; 57 FR 30339, July 8, 1992]



Sec. 75.622  Definition of ``project materials.''

    As used in Sec. Sec. 75.620-75.621, ``project materials'' means a 
copyrightable work developed with funds from a grant of the Department.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[57 FR 30339, July 8, 1992]

                         Inventions and Patents

    Cross reference: See 34 CFR 74.25, Program income and 34 CFR 80.25, 
Program income.



Sec. 75.626  Show Federal support; give papers to vest title.

    Any patent application filed by a grantee for an invention made 
under a grant must include the following statement in the first 
paragraph:

    The invention described in this application was made under a grant 
from the Department of Education.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 45 FR 86297, Dec. 30, 1980; 57 FR 30339, July 8, 1992]

[[Page 159]]

                 Other Requirements for Certain Projects

    Cross reference: See 34 CFR 74.21, Standards for financial 
management systems; 34 CFR 74.48, Contract provisions; 34 CFR 80.20, 
Standards for financial management and 34 CFR 80.36, Procurement.



Sec. 75.650  Participation of students enrolled in private schools.

    If the authorizing statute for a program requires a grantee to 
provide for participation by students enrolled in private schools, the 
grantee shall provide a genuine opportunity for equitable participation 
in accordance with the requirements that apply to subgrantees under 34 
CFR 76.650-76.662.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.681  Protection of human research subjects.

    If a grantee uses a human subject in a research project, the grantee 
shall protect the person from physical, psychological, or social injury 
resulting from the project.

(Authority: 20 U.S.C. 1221e-3 and 3474)

    Cross reference: See 34 CFR part 97--Protection of Human Subjects.



Sec. 75.682  Treatment of animals.

    If a grantee uses an animal in a project, the grantee shall provide 
the animal with proper care and humane treatment in accordance with the 
Animal Welfare Act of 1970.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.683  Health or safety standards for facilities.

    A grantee shall comply with any Federal health or safety 
requirements that apply to the facilities that the grantee uses for the 
project.

(Authority: 20 U.S.C. 1221e-3 and 3474)



  Subpart F_What Are the Administrative Responsibilities of a Grantee?

                 General Administrative Responsibilities



Sec. 75.700  Compliance with statutes, regulations, and applications.

    A grantee shall comply with applicable statutes, regulations, and 
approved applications, and shall use Federal funds in accordance with 
those statutes, regulations, and applications.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.701  The grantee administers or supervises the project.

    A grantee shall directly administer or supervise the administration 
of the project.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.702  Fiscal control and fund accounting procedures.

    A grantee shall use fiscal control and fund accounting procedures 
that insure proper disbursement of and accounting for Federal funds.

(Authority: 20 U.S.C. 1221e-3 and 3474)

    Cross reference: See 34 CFR part 74, Subpart C--Post-Award 
Requirements and Subpart D--After-the-Award Requirements and 34 CFR part 
80, Subpart C--Post-Award Requirements and Subpart D--After-the-Grant 
Requirements.



Sec. 75.703  Obligation of funds during the grant period.

    A grantee may use grant funds only for obligations it makes during 
the grant period.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.707  When obligations are made.

    The following table shows when a grantee makes obligations for 
various kinds of property and services.

------------------------------------------------------------------------
        If the obligation is for--            The obligation is made--
------------------------------------------------------------------------
(a) Acquisition of real or personal         On the date the grantee
 property.                                   makes a binding written
                                             commitment to acquire the
                                             property.
(b) Personal services by an employee of     When the services are
 the grantee.                                performed.

[[Page 160]]

 
(c) Personnal services by a contractor who  On the date on which the
 is not an employee of the grantee.          grantee makes a binding
                                             written commitment to
                                             obtain the services.
(d) Performance of work other than          On the date on which the
 personal services.                          grantee makes a binding
                                             written commitment to
                                             obtain the work.
(e) Public utility services...............  When the grantee receives
                                             the services.
(f) Travel................................  When the travel is taken.
(g) Rental of real or personal property...  When the grantee uses the
                                             property.
(h) A preagreement cost that was properly
 approved by the Secretary under the cost
 principles identified in 34 CFR 74.171 or
 80.22.
------------------------------------------------------------------------


(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 57 FR 30340, July 8, 1992]



Sec. 75.708  Prohibition of subgrants.

    (a) A grantee may not make a subgrant under a program covered by 
this part unless specifically authorized by statute.
    (b) A grantee may contract for supplies, equipment, construction, 
and other services, in accordance with 34 CFR part 74, Subpart C--Post-
Award Requirements (Procurement Standards Sec. Sec. 74.40-74.48) and 34 
CFR part 80, Subpart C--Post-Award Requirements (Sec. 80.36 
Procurement).

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 52 FR 27804, July 24, 1987; 64 FR 50392, Sept. 16, 1999]

                                 Reports

    Cross reference: See 34 CFR 74.51, Monitoring and reporting program 
performance; 34 CFR 74.52, Financial reporting; 34 CFR 80.40, Monitoring 
and reporting program performance; and 34 CFR 80.41 Financial reporting.



Sec. 75.720  Financial and performance reports.

    (a) This section applies to the reports required under--
    (1) 34 CFR 74.51 (Monitoring and reporting program performance) and 
34 CFR 74.52 (Financial reporting); and
    (2) 34 CFR 80.40 (Monitoring and reporting program performance) and 
34 CFR 80.41 (Financial reporting).
    (b) A grantee shall submit these reports annually, unless the 
Secretary allows less frequent reporting. However, the Secretary may 
require a grantee of a grant made under 34 CFR part 700, 706, 707, or 
708 (certain programs of the Office of Educational Research and 
Improvement) to submit performance reports more often than annually.
    (c) The Secretary may require a grantee to report more frequently 
than annually under 34 CFR 74.14 (Special award conditions), 34 CFR 
74.21 (Standards for financial management systems), 34 CFR 80.12 
(Special grant or subgrant conditions for ``high-risk'' grantees) or 34 
CFR 80.20 (Standards for financial management systems).

(Authority: 20 U.S.C. 1221e-3 and 3474)

[57 FR 30340, July 8, 1992, as amended at 64 FR 50392, Sept. 16, 1999]



Sec. 75.721  [Reserved]

                                 Records

    Cross reference: See 34 CFR 74.53, Retention and access requirements 
for records and 34 CFR 80.42, Retention and access requirements for 
records.



Sec. 75.730  Records related to grant funds.

    A grantee shall keep records that fully show:
    (a) The amount of funds under the grant;
    (b) How the grantee uses the funds;
    (c) The total cost of the project;
    (d) The share of that cost provided from other sources; and
    (e) Other records to facilitate an effective audit.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 53 FR 49143, Dec. 6, 1988]



Sec. 75.731  Records related to compliance.

    A grantee shall keep records to show its compliance with program 
requirements.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[[Page 161]]



Sec. 75.732  Records related to performance.

    (a) A grantee shall keep records of significant project experiences 
and results.
    (b) The grantee shall use the records under paragraph (a) to:
    (1) Determine progress in accomplishing project objectives; and
    (2) Revise those objectives, if necessary.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3 and 3474)

    Cross reference: See 34 CFR 74.25, Revision of budget and program 
plans.

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 53 FR 49143, Dec. 6, 1988]



Sec. 75.733  [Reserved]

                                 Privacy



Sec. 75.740  Protection of and access to student records; student rights 
in research, experimental programs, and testing.

    (a) Most records on present or past students are subject to the 
requirements of section 444 of GEPA and its implementing regulations in 
34 CFR part 99. (Section 444 is the Family Educational Rights and 
Privacy Act of 1974.)
    (b) Under most programs administered by the Secretary, research, 
experimentation, and testing are subject to the requirements of section 
445 of GEPA and its implementing regulations at 34 CFR part 98.

(Authority: 20 U.S.C. 1221e-3, 1232g, 1232h, and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 57 FR 30340, July 8, 1992; 60 FR 46493, Sept. 6, 1995]



  Subpart G_What Procedures Does the Department Use To Get Compliance?

    Cross reference: See 34 CFR part 74, Subpart M--Grant and Subgrant 
Closeout, Suspension, and Termination.



Sec. 75.900  Waiver of regulations prohibited.

    (a) No official, agent, or employee of ED may waive any regulation 
that applies to a Department program, unless the regulation specifically 
provides that it may be waived.
    (b) No act or failure to act by an official, agent, or employee of 
ED can affect the authority of the Secretary to enforce regulations.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 75.901  Suspension and termination.

    (a) [Reserved]
    (b) The Secretary may use the Education Appeal Board to resolve 
disputes that are not subject to other procedures. Cross reference: See 
the following sections in part 74:
    (1) Section 74.113 (Violation of terms).
    (2) Section 74.114 (Suspension).
    (3) Section 74.115 (Termination).
    (4) The last sentence of Sec. 74.73(c) (Financial reporting after a 
termination).
    (5) Section 74.112 (Amounts payable to the Federal Government).

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 86297, Dec. 30, 1980]



Sec. 75.902  [Reserved]



Sec. 75.903  Effective date of termination.

    Termination is effective on the latest of:
    (a) The date of delivery to the grantee of the notice of 
termination;
    (b) The termination date given in the notice of termination; or
    (c) The date of a final decision of the Secretary under part 78 of 
this title.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22497, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 45 FR 86298, Dec. 30, 1980]



Sec. 75.910  Cooperation with audits.

    A grantee shall cooperate with the Secretary and the Comptroller 
General of the United States or any of their authorized representatives 
in the conduct of audits authorized by Federal law. This cooperation 
includes access without unreasonable restrictions to records and 
personnel of the grantee

[[Page 162]]

for the purpose of obtaining relevant information.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[54 FR 21775, May 19, 1989]



PART 76_STATE-ADMINISTERED PROGRAMS--Table of Contents




                            Subpart A_General

          Regulations that Apply to State-Administered Programs

Sec.
76.1 Programs to which part 76 applies.
76.2 Exceptions in program regulations to part 76.

                   Eligibility for a Grant or Subgrant

76.50 Statutes determine eligibility and whether subgrants are made.
76.51 A State distributes funds by formula or competition.
76.52 Eligibility of faith-based organizations for a subgrant.

                Subpart B_How a State Applies for a Grant

                      State Plans and Applications

76.100 Effect of this subpart.
76.101 The general State application.
76.102 Definition of ``State plan'' for part 76.
76.103 Multi-year State plans.
76.104 A State shall include certain certifications in its State plan.
76.106 State documents are public information.

            Consolidated Grant Applications for Insular Areas

76.125 What is the purpose of these regulations?
76.126 What regulations apply to the consolidated grant applications for 
          insular areas?
76.127 What is the purpose of a consolidated grant?
76.128 What is a consolidated grant?
76.129 How does a consolidated grant work?
76.130 How are consolidated grants made?
76.131 How does an insular area apply for a consolidated grant?
76.132 What assurances must be in a consolidated grant application?
76.133 What is the reallocation authority?
76.134 What is the relationship between consolidated and non-
          consolidated grants?
76.135 Are there any requirements for matching funds?
76.136 Under what programs may consolidated grant funds be spent?
76.137 How may carryover funds be used under the consolidated grant 
          application?

                               Amendments

76.140 Amendments to a State plan.
76.141 An amendment requires the same procedures as the document being 
          amended.
76.142 An amendment is approved on the same basis as the document being 
          amended.

                Subpart C_How a Grant Is Made to a State

                Approval or Disapproval by the Secretary

76.201 A State plan must meet all statutory and regulatory requirements.
76.202 Opportunity for a hearing before a State plan is disapproved.
76.235 The notification of grant award.

               Allotments and Reallotments of Grant Funds

76.260 Allotments are made under program statute or regulations.
76.261 Realloted funds are part of a State's grant.

           Subpart D_How To Apply to the State for a Subgrant

76.300 Contact the State for procedures to follow.
76.301 Local educational agency general application.
76.302 The notice to the subgrantee.
76.303 Joint applications and projects.
76.304 Subgrantee shall make subgrant application available to the 
          public.

            Subpart E_How a Subgrant Is Made to an Applicant

76.400 State procedures for reviewing an application.
76.401 Disapproval of an application--opportunity for a hearing.

 Subpart F_What Conditions Must Be Met by the State and Its Subgrantees?

                            Nondiscrimination

76.500 Federal statutes and regulations on nondiscrimination.

                             Allowable costs

76.530 General cost principles.
76.532 Use of funds for religion prohibited.
76.533 Acquisition of real property; construction.
76.534 Use of tuition and fees restricted.

[[Page 163]]

                           Indirect Cost Rates

76.560 General indirect cost rates; exceptions.
76.561 Approval of indirect cost rates.
76.563 Restricted indirect cost rate--programs covered.
76.564 Restricted indirect cost rate--formula.
76.565 General management costs--restricted rate.
76.566 Fixed costs--restricted rate.
76.567 Other expenditures--restricted rate.
76.568 Occupancy and space maintenance costs--restricted rate.
76.569 Using the restricted indirect cost rate.
76.580 Coordination with other activities.

                               Evaluation

76.591 Federal evaluation--cooperation by a grantee.
76.592 Federal evaluation--satisfying requirement for State or 
          subgrantee evaluation.

                              Construction

76.600 Where to find construction regulations.

          Participation of Students Enrolled in Private Schools

76.650 Private schools; purpose of Sec. Sec. 76.651-76.662.
76.651 Responsibility of a State and a subgrantee.
76.652 Consultation with representatives of private school students.
76.653 Needs, number of students, and types of services.
76.654 Benefits for private school students.
76.655 Level of expenditures for students enrolled in private schools.
76.656 Information in an application for a subgrant.
76.657 Separate classes prohibited.
76.658 Funds not to benefit a private school.
76.659 Use of public school personnel.
76.660 Use of private school personnel.
76.661 Equipment and supplies.
76.662 Construction.

                          Procedures for Bypass

76.670 Applicability and filing requirements.
76.671 Notice by the Secretary.
76.672 Bypass procedures.
76.673 Appointment and functions of a hearing officer.
76.674 Hearing procedures.
76.675 Posthearing procedures.
76.676 Judicial review of a bypass action.
76.677 Continuation of a bypass.

                 Other Requirements for Certain Programs

76.681 Protection of human subjects.
76.682 Treatment of animals.
76.683 Health or safety standards for facilities.

Subpart G_What Are the Administrative Responsibilities of the State and 
                            Its Subgrantees?

                 General Administrative Responsibilities

76.700 Compliance with statutes, regulations, State plan, and 
          applications.
76.701 The State or subgrantee administers or supervises each project.
76.702 Fiscal control and fund accounting procedures.
76.703 When a State may begin to obligate funds.
76.704 New State plan requirements that must be addressed in a State 
          plan.
76.707 When obligations are made.
76.708 When certain subgrantees may begin to obligate funds.
76.709 Funds may be obligated during a ``carryover period.''
76.710 Obligations made during a carryover period are subject to current 
          statutes, regulations, and applications.
76.711 Requesting funds by CFDA number.

                                 Reports

76.720 Financial and performance reports by a State.
76.722 A subgrantee makes reports required by the State.

                                 Records

76.730 Records related to grant funds.
76.731 Records related to compliance.

                                 Privacy

76.740 Protection of and access to student records; student rights in 
          research, experimental programs, and testing.

                 Use of Funds by States and Subgrantees

76.760 More than one program may assist a single activity.
76.761 Federal funds may pay 100 percent of cost.

                  State Administrative Responsibilities

76.770 A State shall have procedures to ensure compliance.
76.783 State educational agency action--subgrantee's opportunity for a 
          hearing.

Subpart H_How Does a State or Local Educational Agency Allocate Funds to 
                            Charter Schools?

                                 General

76.785 What is the purpose of this subpart?
76.786 What entities are governed by this subpart?

[[Page 164]]

76.787 What definitions apply to this subpart?

               Responsibilities for Notice and Information

76.788 What are a charter school LEA's responsibilities under this 
          subpart?
76.789 What are an SEA's responsibilities under this subpart?

            Allocation of Funds by State Educational Agencies

76.791 On what basis does an SEA determine whether a charter school LEA 
          that opens or significantly expands its enrollment is eligible 
          to receive funds under a covered program?
76.792 How does an SEA allocate funds to eligible charter school LEAs 
          under a covered program in which the SEA awards subgrants on a 
          formula basis?
76.793 When is an SEA required to allocate funds to a charter school LEA 
          under this subpart?
76.794 How does an SEA allocate funds to charter school LEAs under a 
          covered program in which the SEA awards subgrants on a 
          discretionary basis?

                               Adjustments

76.796 What are the consequences of an SEA allocating more or fewer 
          funds to a charter school LEA under a covered program than the 
          amount for which the charter school LEA is eligible when the 
          charter school LEA actually opens or significantly expands its 
          enrollment?
76.797 When is an SEA required to make adjustments to allocations under 
          this subpart?

       Applicability of This Subpart to Local Educational Agencies

76.799 Do the requirements in this subpart apply to LEAs?

   Subpart I_What Procedures Does the Secretary Use To Get Compliance?

76.900 Waiver of regulations prohibited.
76.901 Office of Administrative Law Judges.
76.902 Judicial review.
76.910 Cooperation with audits.

    Authority: 20 U.S.C. 1221e-3, 3474, 6511(a), and 8065a, unless 
otherwise noted.

    Source: 45 FR 22517, Apr. 3, 1980, unless otherwise noted. 
Redesignated at 45 FR 77368, Nov. 21, 1980.



                            Subpart A_General

          Regulations That Apply to State-Administered Programs



Sec. 76.1  Programs to which part 76 applies.

    (a) The regulations in part 76 apply to each State-administered 
program of the Department.
    (b) If a State formula grant program does not have implementing 
regulations, the Secretary implements the program under the authorizing 
statute and, to the extent consistent with the authorizing statute, 
under the General Education Provisions Act and the regulations in this 
part. For the purposes of this part, the term State formula grant 
program means a program whose authorizing statute or implementing 
regulations provide a formula for allocating program funds among 
eligible States.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

[45 FR 22517, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 45 FR 84059, Dec. 22, 1980; 50 FR 29330, July 18, 1985; 52 
FR 27804, July 24, 1987; 54 FR 21776, May 19, 1989; 55 FR 14816, Apr. 
18, 1990]



Sec. 76.2  Exceptions in program regulations to part 76.

    If a program has regulations that are not consistent with part 76, 
the implementing regulations for that program identify the sections of 
part 76 that do not apply.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

[45 FR 22517, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 54 FR 21776, May 19, 1989]

                   Eligibility for a Grant or Subgrant



Sec. 76.50  Statutes determine eligibility and whether subgrants are made.

    (a) Under a program covered by this part, the Secretary makes a 
grant:
    (1) To the State agency designated by the authorizing statute for 
the program; or
    (2) To the State agency designated by the State in accordance with 
the authorizing statute.
    (b) The authorizing statute determines the extent to which a State 
may:

[[Page 165]]

    (1) Use grant funds directly; and
    (2) Make subgrants to eligible applicants.
    (c) The regulations in part 76 on subgrants apply to a program only 
if subgrants are authorized under that program.
    (d) The authorizing statute determines the eligibility of an 
applicant for a subgrant.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

[45 FR 22517, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 52 FR 27804, July 24, 1987; 54 FR 21776, May 19, 1989]



Sec. 76.51  A State distributes funds by formula or competition.

    If a program statute authorizes a State to make subgrants, the 
statute:
    (a) Requires the State to use a formula to distribute funds;
    (b) Gives the State discretion to select subgrantees through a 
competition among the applicants or through some other procedure; or
    (c) Allows some combination of these procedures.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

[45 FR 22517, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 54 FR 21776, May 19, 1989]



Sec. 76.52  Eligibility of faith-based organizations for a subgrant.

    (a)(1) A faith-based organization is eligible to apply for and to 
receive a subgrant under a program of the Department on the same basis 
as any other private organization, with respect to programs for which 
such other organizations are eligible.
    (2) In the selection of subgrantees, States shall not discriminate 
for or against a private organization on the basis of the organization's 
religious character or affiliation.
    (b) The provisions of Sec. 76.532 apply to a faith-based 
organization that receives a subgrant from a State under a State-
administered program of the Department.
    (c) A private organization that engages in inherently religious 
activities, such as religious worship, instruction, or proselytization, 
must offer those services separately in time or location from any 
programs or services supported by a subgrant from a State under a State-
administered program of the Department, and participation in any such 
inherently religious activities by beneficiaries of the programs 
supported by the subgrant must be voluntary.
    (d)(1) A faith-based organization that applies for or receives a 
subgrant from a State under a State-administered program of the 
Department may retain its independence, autonomy, right of expression, 
religious character, and authority over its governance.
    (2) A faith-based organization may, among other things--
    (i) Retain religious terms in its name;
    (ii) Continue to carry out its mission, including the definition, 
development, practice, and expression of its religious beliefs;
    (iii) Use its facilities to provide services without removing or 
altering religious art, icons, scriptures, or other symbols from these 
facilities;
    (iv) Select its board members and otherwise govern itself on a 
religious basis; and
    (v) Include religious references in its mission statement and other 
chartering or governing documents.
    (e) A private organization that receives a subgrant from a State 
under a State-administered program of the Department shall not 
discriminate against a beneficiary or prospective beneficiary in the 
provision of program services on the basis of religion or religious 
belief.
    (f) If a State or subgrantee contributes its own funds in excess of 
those funds required by a matching or grant agreement to supplement 
Federally funded activities, the State or subgrantee has the option to 
segregate those additional funds or commingle them with the funds 
required by the matching requirements or grant agreement. However, if 
the additional funds are commingled, this section applies to all of the 
commingled funds.
    (g) A religious organization's exemption from the Federal 
prohibition on employment discrimination on the basis of religion, in 
section 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 2000e-

[[Page 166]]

1, is not forfeited when the organization receives financial assistance 
from the Department.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

[69 FR 31711, June 4, 2004]

    Effective Date Note: At 69 FR 31711, June 4, 2004, Sec. thnsp;76.52 
was added, effective July 6, 2004.



                Subpart B_How a State Applies for a Grant

                      State Plans and Applications



Sec. 76.100  Effect of this subpart.

    This subpart establishes general requirements that a State must meet 
to apply for a grant under a program covered by this part. Additional 
requirements are in the authorizing statute and the implementing 
regulations for the program.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[52 FR 27804, July 24, 1987]



Sec. 76.101  The general State application.

    A State that makes subgrants to local educational agencies under a 
program subject to this part shall have on file with the Secretary a 
general application that meets the requirements of section 441 of the 
General Education Provisions Act.

(Authority: 20 U.S.C. 1221e-3, 1232d, and 3474)

[52 FR 27804, July 24, 1987, as amended at 60 FR 46493, Sept. 6, 1995]



Sec. 76.102  Definition of ``State plan'' for part 76.

    As used in this part, State plan means any of the following 
documents:

----------------------------------------------------------------------------------------------------------------
               Document                          Program             Authorizing statute       Principal Office
----------------------------------------------------------------------------------------------------------------
State plan............................  Assistance to States for  Part B (except section     OSERS
                                         Education of              619), Individuals with
                                         Handicapped Children.     Disabilities Education
                                                                   Act (20 U.S.C. 1411-
                                                                   1420).
Application...........................  Preschool Grants........  Section 619, Individuals   OSERS
                                                                   with Disabilities
                                                                   Education Act (20 U.S.C.
                                                                   1419).
Application...........................  Handicapped Infants and   Part H, Individuals with   OSERS
                                         Toddlers.                 Disabilities Education
                                                                   Act (20 U.S.C. 1471-
                                                                   1485).
Application or written request for      Client Assistance         Section 112,               OSERS
 assistance.                             Program.                  Rehabilitation Act of
                                                                   1973 (29 U.S.C. 732).
Application...........................  Removal of Architectural  Section 607, Individuals   OSERS
                                         Barriers to the           with Disabilities
                                         Handicapped Program.      Education Act (20 U.S.C.
                                                                   1406).
State plan............................  State Vocational          Title I, Parts A-C,        OSERS
                                         Rehabilitation Services   Rehabilitation Act of
                                         Program.                  1973 (29 U.S.C. 720-741).
State plan supplement.................  State Supported           Title VI, Part C,          OSERS
                                         Employment Services       Rehabilitation Act of
                                         Program.                  1973 (29 U.S.C. 795j-
                                                                   795r).
State plan............................  State Independent Living  Title VII, Part A,         OSERS
                                         Services Program.         Rehabilitation Act of
                                                                   1973 (29 U.S.C. 796-
                                                                   796d).
State plan............................  State Vocational          Title I, Part B, Carl D.   OVAE
                                         Education Program.        Perkins Vocational
                                                                   Education Act (20 U.S.C.
                                                                   2321-2325).
State plan and application............  State-Administered Adult  Section 341, Adult         OVAE
                                         Education Program.        Education Act (20 U.S.C.
                                                                   1206).
State plan............................  Even Start Family         Title I, Chapter 1, Part   OESE
                                         Literacy Program.         B of the Elementary and
                                                                   Secondary Education Act
                                                                   of 1965 (20 U.S.C. 2741-
                                                                   2749).
State application.....................  State Grants for          Title II, Part A,          OESE
                                         Strengthening             Elementary and Secondary
                                         Instruction in            Education Act of 1965,
                                         Mathematics and Science.  as amended (20 U.S.C.
                                                                   2981-2993).
State application.....................  Federal, State and Local  Title I, Chapter 2,        OESE
                                         Partnership for           Elementary and Secondary
                                         Educational Improvement.  Education Act of 1965,
                                                                   as amended (20 U.S.C.
                                                                   2911-2952 and 2971-2976).
State plan or application.............  Migrant Education         Sections 1201, 1202,       OESE
                                         Program.                  Chapter 1, Title I,
                                                                   Elementary and Secondary
                                                                   Education Act of 1965,
                                                                   as amended (20 U.S.C.
                                                                   2781 and 2782).
Application...........................  State Student Incentive   Section 415C, Higher       OPE
                                         Grant Program.            Education Act of 1965
                                                                   (20 U.S.C. 1070c-2).
Application...........................  Paul Douglas Teacher      Section 553, Higher        OPE
                                         Scholarship Program.      Education Act of 1965
                                                                   (20 U.S.C. 1111b).

[[Page 167]]

 
Basic State plan, long-range program,   The Library Services and  Library Services and       OERI
 and annual program.                     Construction Act State-   Construction Act (20
                                         Administered Program.     U.S.C. 351-355e-3).
Application...........................  Emergency Immigrant       Emergency Immigrant        OBEMLA
                                         Education Program.        Education Act (20 U.S.C.
                                                                   3121-3130).
Application...........................  Transition Program for    Section 412(d)             OBEMLA
                                         Refugee Children.         Immigration and
                                                                   Naturalization Act (8
                                                                   U.S.C. 1522 (d)).
Any document that the authorizing       Any State-administered    Section 408(a)(1),         Dept-wide
 statute for a State-administered        program without           General Education
 program requires a State to submit to   implementing              Provisions Act and
 receive funds.                          regulations.              Section 414, Department
                                                                   of Education
                                                                   Organization Act (20
                                                                   U.S.C. 1221e-3(a)(1) and
                                                                   3474).
----------------------------------------------------------------------------------------------------------------


(Authority: 20 U.S.C. 1221e-3 and 3474)

[57 FR 30340, July 8, 1992]



Sec. 76.103  Multi-year State plans.

    (a) Beginning with fiscal year 1996, each State plan will be 
effective for a period of more than one fiscal year, to be determined by 
the Secretary or by regulations.
    (b) If the Secretary determines that the multi-year State plans 
under a program should be submitted by the States on a staggered 
schedule, the Secretary may require groups of States to submit or 
resubmit their plans in different years.
    (c) This section does not apply to:
    (1) The annual accountability report under part A of title I of the 
Vocational Education Act;
    (2) The annual programs under the Library Services and Construction 
Act;
    (3) The application under sections 141-143 of the Elementary and 
Secondary Education Act; and
    (4) The State application under section 209 of title II of the 
Education for Economic Security Act.
    (d) A State may submit an annual State plan under the Vocational 
Education Act. If a State submits an annual plan under that program, 
this section does not apply to that plan.
    Note: This section is based on a provision in the General Education 
Provisions Act (GEPA). Section 427 of the Department of Education 
Organization Act (DEOA), 20 U.S.C. 3487, provides that except to the 
extent inconsistent with the DEOA, the GEPA ``shall apply to functions 
transferred by this Act to the extent applicable on the day preceding 
the effective date of this Act.'' Although standardized nomenclature is 
used in this section to reflect the creation of the Department of 
Education, there is no intent to extend the coverage of the GEPA beyond 
that authorized under section 427 or other applicable law.

(Authority: 20 U.S.C. 1231g(a))

[45 FR 22517, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 45 FR 86296, Dec. 30, 1980; 50 FR 43545, Oct. 25, 1985; 60 
FR 46493, Sept. 6, 1995]



Sec. 76.104  A State shall include certain certifications in its State 
plan.

    (a) A State shall include the following certifications in each State 
plan:
    (1) That the plan is submitted by the State agency that is eligible 
to submit the plan.
    (2) That the State agency has authority under State law to perform 
the functions of the State under the program.
    (3) That the State legally may carry out each provision of the plan.
    (4) That all provisions of the plan are consistent with State law.
    (5) That a State officer, specified by title in the certification, 
has authority under State law to receive, hold, and disburse Federal 
funds made available under the plan.
    (6) That the State officer who submits the plan, specified by title 
in the certification, has authority to submit the plan.
    (7) That the agency that submits the plan has adopted or otherwise 
formally approved the plan.
    (8) That the plan is the basis for State operation and 
administration of the program.
    (b) [Reserved]

(Authority: 20 U.S.C. 1221e-3 and 3474)

[[Page 168]]



Sec. 76.106  State documents are public information.

    A State shall make the following documents available for public 
inspection:
    (a) All State plans and related official materials.
    (b) All approved subgrant applications.
    (c) All documents that the Secretary transmits to the State 
regarding a program.

(Authority: 20 U.S.C. 1221e-3 and 3474)

            Consolidated Grant Applications for Insular Areas

    Authority: Title V, Pub. L. 95-134, 91 Stat. 1159 (48 U.S.C. 1469a).



Sec. 76.125  What is the purpose of these regulations?

    (a) Sections 76.125 through 76.137 of this part contain requirements 
for the submission of an application by an Insular Area for the 
consolidation of two or more grants under the programs described in 
paragraph (c) of this section.
    (b) For the purpose of Sec. Sec. 76.125-76.137 of this part the 
term Insular Area means the Virgin Islands, Guam, American Samoa, the 
Trust Territory of the Pacific Islands, or the Commonwealth of the 
Northern Mariana Islands.
    (c) The Secretary may make an annual consolidated grant to assist an 
Insular Area in carrying out one or more State-administered formula 
grant programs of the Department.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[47 FR 17421, Apr. 22, 1982, as amended at 54 FR 21776, May 19, 1989; 57 
FR 30341, July 8, 1992]



Sec. 76.126  What regulations apply to the consolidated grant applications 
for insular areas?

    The following regulations apply to those programs included in a 
consolidated grant:
    (a) The regulations in Sec. Sec. 76.125 through 76.137; and
    (b) The regulations that apply to each specific program included in 
a consolidated grant for which funds are used.

(Authority: 48 U.S.C. 1469a)

[47 FR 17421, Apr. 22, 1982]



Sec. 76.127  What is the purpose of a consolidated grant?

    An Insular Area may apply for a consolidated grant for two or more 
of the programs listed in Sec. 76.125(c). This procedure is intended 
to:
    (a) Simplify the application and reporting procedures that would 
otherwise apply for each of the programs included in the consolidated 
grant; and
    (b) Provide the Insular Area with flexibility in allocating the 
funds under the consolidated grant to achieve any of the purposes to be 
served by the programs that are consolidated.

(Authority: 48 U.S.C. 1469a)

[47 FR 17421, Apr. 22, 1982]



Sec. 76.128  What is a consolidated grant?

    A consolidated grant is a grant to an Insular Area for any two or 
more of the programs listed in Sec. 76.125(c). The amount of the 
consolidated grant is the sum of the allocations the Insular Area 
receives under each of the programs included in the consolidated grant 
if there had been no consolidation.

    Example. Assume the Virgin Islands applies for a consolidated grant 
that includes programs under the Adult Education Act, Vocational 
Education Act, and Chapter 1 of the Education Consolidation and 
Improvement Act. If the Virgin Islands' allocation under the formula for 
each of these three programs is $150,000; the total consolidated grant 
to the Virgin Islands would be $450,000.

(Authority: 48 U.S.C. 1469a)

[47 FR 17421, Apr. 22, 1982]



Sec. 76.129  How does a consolidated grant work?

    (a) An Insular Area shall use the funds it receives under a 
consolidated grant to carry out, in its jurisdiction, one or more of the 
programs included in the grant.

    Example. Assume that Guam applies for a consolidated grant under the 
Vocational Education Act, the Handicapped Preschool and School Programs-
Incentive Grants, and the Adult Education Act and that the sum of the 
allocations under these programs is $700,000. Guam may choose to 
allocate this $700,000 among all of the programs authorized under the 
three programs. Alternatively, it may choose to allocate the entire 
$700,000 to one or two of the programs;

[[Page 169]]

for example, the Adult Education Act Program.

    (b) An Insular Area shall comply with the statutory and regulatory 
requirements that apply to each program under which funds from the 
consolidated grant are expended.

    Example. Assume that American Samoa uses part of the funds under a 
consolidated grant for the State program under the Adult Education Act. 
American Samoa need not submit to the Secretary a State plan that 
requires policies and procedures to assure all students equal access to 
adult education programs. However, in carrying out the program, American 
Samoa must meet and be able to demonstrate compliance with this equal 
access requirement.

(Authority: 48 U.S.C. 1469a)

[47 FR 17421, Apr. 22, 1982]



Sec. 76.130  How are consolidated grants made?

    (a) The Secretary annually makes a single consolidated grant to each 
Insular Area that meets the requirements of Sec. Sec. 76.125 through 
76.137 and each program under which the grant funds are to be used and 
administered.
    (b) The Secretary may decide that one or more programs cannot be 
included in the consolidated grant if the Secretary determines that the 
Insular Area failed to meet the program objectives stated in its plan 
for the previous fiscal year in which it carried out the programs.
    (c) Under a consolidated grant, an Insular Area may use a single 
advisory council for any or all of the programs that require an advisory 
council.
    (d) Although Pub. L. 95-134 authorizies the Secretary to consolidate 
grant funds that the Department awards to an Insular Area, it does not 
confer eligibility for any grant funds. The eligibility of a particular 
Insular Area to receive grant funds under a Federal education program is 
determined under the statute and regulations for that program.

(Authority: 48 U.S.C. 1469a)

[47 FR 17421, Apr. 22, 1982]



Sec. 76.131  How does an insular area apply for a consolidated grant?

    (a) An Insular Area that desires to apply for a grant consolidating 
two or more programs listed in Sec. 76.125(c) shall submit to the 
Secretary an application that:
    (1) Contains the assurances in Sec. 76.132; and
    (2) Meets the application requirements in paragraph (c) of this 
section.
    (b) The submission of an application that contains these 
requirements and assurances takes the place of a separate State plan or 
other similar document required by this part or by the authorizing 
statutes and regulations for programs included in the consolidated 
grant.
    (c) An Insular Area shall include in its consolidated grant 
application a program plan that:
    (1) Contains a list of the programs in Sec. 76.125(c) to be 
included in the consolidated grant;
    (2) Describes the program or programs in Sec. 76.125(c) under which 
the consolidated grant funds will be used and administered;
    (3) Describes the goals, objectives, activities, and the means of 
evaluating program outcomes for the programs for which the Insular Area 
will use the funds received under the consolidated grant during the 
fiscal year for which it submits the application, including needs of the 
population that will be met by the consolidation of funds; and
    (4) Contains a budget that includes a description of the allocation 
of funds--including any anticipated carryover funds of the program in 
the consolidated grant from the preceding year--among the programs to be 
included in the consolidated grant.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 48 U.S.C. 1469a)

[47 FR 17421, Apr. 22, 1982, as amended at 53 FR 49143, Dec. 6, 1988]



Sec. 76.132  What assurances must be in a consolidated grant application?

    (a) An Insular Area shall include in its consolidated grant 
application assurances to the Secretary that it will:
    (1) Follow policies and use administrative practices that will 
insure that non-Federal funds will not be supplanted by Federal funds 
made available under the authority of the programs in the consolidated 
grant;

[[Page 170]]

    (2) Comply with the requirements (except those relating to the 
submission of State plans or similar documents) in the authorizing 
statutes and implementing regulations for the programs under which funds 
are to be used and administered, (except requirements for matching 
funds);
    (3) Provide for proper and efficient administration of funds in 
accordance with the authorizing statutes and implementing regulations 
for those programs under which funds are to be used and administered;
    (4) Provide for fiscal control and fund accounting procedures to 
assure proper disbursement of, and accounting for, Federal funds 
received under the consolidated grant;
    (5) Submit an annual report to the Secretary containing information 
covering the program or programs for which the grant is used and 
administered, including the financial and program performance 
information required under 34 CFR 74.51-74.52 and 34 CFR 80.40-80.41.
    (6) Provide that funds received under the consolidated grant will be 
under control of, and that title to property acquired with these funds 
will be in, a public agency, institution, or organization. The public 
agency shall administer these funds and property;
    (7) Keep records, including a copy of the State Plan or application 
document under which funds are to be spent, which show how the funds 
received under the consolidated grant have been spent.
    (8) Adopt and use methods of monitoring and providing technical 
assistance to any agencies, organizations, or institutions that carry 
out the programs under the consolidated grant and enforce any 
obligations imposed on them under the applicable statutes and 
regulations.
    (9) Evaluate the effectiveness of these programs in meeting the 
purposes and objectives in the authorizing statutes under which program 
funds are used and administered;
    (10) Conduct evaluations of these programs at intervals and in 
accordance with procedures the Secretary may prescribe; and
    (11) Provide appropriate opportunities for participation by local 
agencies, representatives of the groups affected by the programs, and 
other interested institutions, organizations, and individuals in 
planning and operating the programs.
    (b) These assurances remain in effect for the duration of the 
programs they cover.

(Authority: 48 U.S.C. 1469a)

[47 FR 17421, Apr. 22, 1982, as amended at 64 FR 50392, Sept. 16, 1999]



Sec. 76.133  What is the reallocation authority?

    (a) After an Insular Area receives a consolidated grant, it may 
reallocate the funds in a manner different from the allocation described 
in its consolidated grant application. However, the funds cannot be used 
for purposes that are not authorized under the programs in the 
consolidated grant under which funds are to be used and administered.
    (b) If an Insular Area decides to reallocate the funds it receives 
under a consolidated grant, it shall notify the Secretary by amending 
its original application to include an update of the information 
required under Sec. 76.131.

(Authority: 48 U.S.C. 1469a)

[47 FR 17421, Apr. 22, 1982]



Sec. 76.134  What is the relationship between consolidated and 
non-consolidated grants?

    (a) An Insular Area may request that any number of programs in Sec. 
76.125(c) be included in its consolidated grant and may apply separately 
for assistance under any other programs listed in Sec. 76.125(c) for 
which it is eligible.
    (b) Those programs that an Insular Area decides to exclude from 
consolidation--for which it must submit separate plans or applications--
are implemented in accordance with the applicable program statutes and 
regulations. The excluded programs are not subject to the provisions for 
allocation of funds among programs in a consolidated grant.

(Authority: 48 U.S.C. 1469a)

[47 FR 17421, Apr. 22, 1982]

[[Page 171]]



Sec. 76.135  Are there any requirements for matching funds?

    The Secretary waives all requirements for matching funds for those 
programs that are consolidated by an Insular Area in a consolidated 
grant application.

(Authority: 48 U.S.C. 1469a)

[47 FR 17421, Apr. 22, 1982]



Sec. 76.136  Under what programs may consolidated grant funds be spent?

    Insular Areas may only use and administer funds under programs 
described in Sec. 76.125(c) during a fiscal year for which the Insular 
Area is entitled to receive funds under an appropriation for that 
program.

(Authority: 48 U.S.C. 1469a)

[47 FR 17421, Apr. 22, 1982, as amended at 57 FR 30341, July 8, 1992]



Sec. 76.137  How may carryover funds be used under the consolidated 
grant application?

    Any funds under any applicable program which are available for 
obligation and expenditure in the year succeeding the fiscal year for 
which they are appropriated must be obligated and expended in accordance 
with the consolidated grant application submitted by the Insular Area 
for that program for the succeeding fiscal year.

(Authority: 20 U.S.C. 1225(b); 48 U.S.C. 1469a)

                               Amendments



Sec. 76.140  Amendments to a State plan.

    (a) If the Secretary determines that an amendment to a State plan is 
essential during the effective period of the plan, the State shall make 
the amendment.
    (b) A State shall also amend a State plan if there is a significant 
and relevant change in:
    (1) The information or the assurances in the plan;
    (2) The administration or operation of the plan; or
    (3) The organization, policies, or operations of the State agency 
that received the grant, if the change materially affects the 
information or assurances in the plan.

(Authority: 20 U.S.C. 1221e-3, 1231g(a), and 3474)



Sec. 76.141  An amendment requires the same procedures as the document 
being amended.

    If a State amends a State plan under Sec. 76.140, the State shall 
use the same procedures as those it must use to prepare and submit a 
State plan.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 76.142  An amendment is approved on the same basis as the document 
being amended.

    The Secretary uses the same procedures to approve an amendment to a 
State plan--or any other document a State submits--as the Secretary uses 
to approve the original document.

(Authority: 20 U.S.C. 1221e-3 and 3474)



                Subpart C_How a Grant Is Made to a State

                Approval or Disapproval by the Secretary



Sec. 76.201  A State plan must meet all statutory and regulatory 
requirements.

    The Secretary approves a State plan if it meets the requirements of 
the Federal statutes and regulations that apply to the plan.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 76.202  Opportunity for a hearing before a State plan is disapproved.

    The Secretary may disapprove a State plan only after:
    (a) Notifying the State;
    (b) Offering the State a reasonable opportunity for a hearing; and
    (c) Holding the hearing, if requested by the State.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 76.235  The notification of grant award.

    (a) To make a grant to a State, the Secretary issues and sends to 
the State a notification of grant award.

[[Page 172]]

    (b) The notification of grant award tells the amount of the grant 
and provides other information about the grant.

(Authority: 20 U.S.C. 1221e-3 and 3474)

               Allotments and Reallotments of Grant Funds



Sec. 76.260  Allotments are made under program statute or regulations.

    (a) The Secretary allots program funds to a State in accordance with 
the authorizing statute or implementing regulations for the program.
    (b) Any reallotment to other States will be made by the Secretary in 
accordance with the authorizing statute or implementing regulations for 
that program.

(Authority: 20 U.S.C. 3474(a))

[50 FR 29330, July 18, 1985]



Sec. 76.261  Reallotted funds are part of a State's grant.

    Funds that a State receives as a result of a reallotment are part of 
the State's grant for the appropriate fiscal year. However, the 
Secretary does not consider a reallotment in determining the maximum or 
minimum amount to which a State is entitled for a following fiscal year.

(Authority: 20 U.S.C. 1221e-3 and 3474)



           Subpart D_How To Apply to the State for a Subgrant



Sec. 76.300  Contact the State for procedures to follow.

    An applicant for a subgrant can find out the procedures it must 
follow by contacting the State agency that administers the program.

(Authority: 20 U.S.C. 1221e-3 and 3474)

    Cross reference: See subparts E and G of this part for the general 
responsibilities of the State regarding applications for subgrants.



Sec. 76.301  Local educational agency general application.

    A local educational agency that applies for a subgrant under a 
program subject to this part shall have on file with the State a general 
application that meets the requirements of Section 442 of the General 
Education Provisions Act.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3, 1232d, and 3474)

[52 FR 27804, July 24, 1987, as amended at 53 FR 49143, Dec. 6, 1988; 60 
FR 46493, Sept. 6, 1995]



Sec. 76.302  The notice to the subgrantee.

    A State shall notify a subgrantee in writing of:
    (a) The amount of the subgrant;
    (b) The period during which the subgrantee may obligate the funds; 
and
    (c) The Federal requirements that apply to the subgrant.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3 and 3474)

[45 FR 22517, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 53 FR 49143, Dec. 6, 1988]



Sec. 76.303  Joint applications and projects.

    (a) Two or more eligible parties may submit a joint application for 
a subgrant.
    (b) If the State must use a formula to distribute subgrant funds 
(see Sec. 76.51), the State may not make a subgrant that exceeds the 
sum of the entitlements of the separate subgrantees.
    (c) If the State funds the application, each subgrantee shall:
    (1) Carry out the activities that the subgrantee agreed to carry 
out; and
    (2) Use the funds in accordance with Federal requirements.
    (d) Each subgrantee shall use an accounting system that permits 
identification of the costs paid for under its subgrant.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 76.304  Subgrantee shall make subgrant application available 
to the public.

    A subgrantee shall make any application, evaluation, periodic 
program plan, or report relating to each program available for public 
inspection.

(Authority: 20 U.S.C. 1221e-3, 1232e, and 3474)

[[Page 173]]



            Subpart E_How a Subgrant Is Made to an Applicant



Sec. 76.400  State procedures for reviewing an application.

    A State that receives an application for a subgrant shall take the 
following steps:
    (a) Review. The State shall review the application.
    (b) Approval--entitlement programs. The State shall approve an 
application if:
    (1) The application is submitted by an applicant that is entitled to 
receive a subgrant under the program; and
    (2) The applicant meets the requirements of the Federal statutes and 
regulations that apply to the program.
    (c) Approval--discretionary programs. The State may approve an 
application if:
    (1) The application is submitted by an eligible applicant under a 
program in which the State has the discretion to select subgrantees;
    (2) The applicant meets the requirements of the Federal statutes and 
regulations that apply to the program; and
    (3) The State determines that the project should be funded under the 
authorizing statute and implementing regulations for the program.
    (d) Disapproval--entitlement and discretionary programs. If an 
application does not meet the requirements of the Federal statutes and 
regulations that apply to a program, the State shall not approve the 
application.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 76.401  Disapproval of an application--opportunity for a hearing.

    (a) State agency hearing before disapproval. Under the programs 
listed in the chart below, the State agency that administers the program 
shall provide an applicant with notice and an opportunity for a hearing 
before it may disapprove the application.

------------------------------------------------------------------------
                                                            Implementing
                                                             regulations
              Program                 Authorizing statute   Title 34 CFR
                                                                Part
------------------------------------------------------------------------
Chapter 1, Program in Local         Title I, Chapter 1,              200
 Educational Agencies.               Elementary and
                                     Secondary Education
                                     Act of 1965, as
                                     amended (20 U.S.C.
                                     2701-2731, 2821-2838,
                                     2851-2854, and 2891-
                                     2901).
Chapter 1, Program for Neglected    Title 1, Chapter 1,              203
 and Delinquent Children.            Elementary and
                                     Secondary Education
                                     Act of 1965, as
                                     amended (20 U.S.C.
                                     2801-2804).
State Grants for Strengthening      Title II, Part A,                208
 Instruction in Mathematics and      Elementary and
 Science.                            Secondary Education
                                     Act of 1965, as
                                     amended (20 U.S.C.
                                     2981-2993).
Federal, State, and Local           Title I, Chapter 2,              298
 Partnership for Educational         Elementary and
 Improvement.                        Secondary Education
                                     Act of 1965, as
                                     amended (20 U.S.C.
                                     2911-2952 and 2971-
                                     2976).
Assistance to States for Education  Part B, Individuals              300
 of Handicapped Children.            with Disabilities
                                     Education Act (except
                                     Section 619) (20
                                     U.S.C. 1411-1420).
Preschool Grants..................  Section 619,                     301
                                     Individuals with
                                     Disabilities
                                     Education Act (20
                                     U.S.C. 1419).
Chapter 1, State-Operated or        Title 1, Chapter 1,              302
 Supported Programs for              Elementary and
 Handicapped Children.               Secondary Education
                                     Act of 1965, as
                                     amended (20 U.S.C.
                                     2791-2795).
Transition Program for Refugee      Section 412(d),                  538
 Children.                           Immigration and
                                     Naturalization Act (8
                                     U.S.C. 1522(d)).
Emergency Immigrant Education       Emergency Immigrant              581
 Program.                            Education Act (20
                                     U.S.C. 3121-3130).
Financial Assistance for            Section 711, Higher              617
 Construction, Reconstruction, or    Education Act of 1965
 Renovation of Higher Education      (20 U.S.C. 1132b).
 Facilities.
------------------------------------------------------------------------

    (b) Other programs--hearings not required. Under other programs 
covered by this part, a State agency--other than a State educational 
agency--is not required to provide an opportunity for a hearing 
regarding the agency's disapproval of an application.

[[Page 174]]

    (c) If an applicant for a subgrant alleges that any of the following 
actions of a State educational agency violates a State or Federal 
statute or regulation, the State educational agency and the applicant 
shall use the procedures in paragraph (d) of this section:
    (1) Disapproval of or failure to approve the application or project 
in whole or in part.
    (2) Failure to provide funds in amounts in accordance with the 
requirements of statutes and regulations.
    (d) State educational agency hearing procedures. (1) If the 
applicant applied under a program listed in paragraph (a) of this 
section, the State educational agency shall provide an opportunity for a 
hearing before the agency disapproves the application.
    (2) If the applicant applied under a program not listed in paragraph 
(a) of this section, the State educational agency shall provide an 
opportunity for a hearing either before or after the agency disapproves 
the application.
    (3) The applicant shall request the hearing within 30 days of the 
action of the State educational agency.
    (4)(i) Within 30 days after it receives a request, the State 
educational agency shall hold a hearing on the record and shall review 
its action.
    (ii) No later than 10 days after the hearing the agency shall issue 
its written ruling, including findings of fact and reasons for the 
ruling.
    (iii) If the agency determines that its action was contrary to State 
or Federal statutes or regulations that govern the applicable program, 
the agency shall rescind its action.
    (5) If the State educational agency does not rescind its final 
action after a review under this paragraph, the applicant may appeal to 
the Secretary. The applicant shall file a notice of the appeal with the 
Secretary within 20 days after the applicant has been notified by the 
State educational agency of the results of the agency's review. If 
supported by substantial evidence, findings of fact of the State 
educational agency are final.
    (6)(i) The Secretary may also issue interim orders to State 
educational agencies as he or she may decide are necessary and 
appropriate pending appeal or review.
    (ii) If the Secretary determines that the action of the State 
educational agency was contrary to Federal statutes or regulations that 
govern the applicable program, the Secretary issues an order that 
requires the State educational agency to take appropriate action.
    (7) Each State educational agency shall make available at reasonable 
times and places to each applicant all records of the agency pertaining 
to any review or appeal the applicant is conducting under this section, 
including records of other applicants.
    (8) If a State educational agency does not comply with any provision 
of this section, or with any order of the Secretary under this section, 
the Secretary terminates all assistance to the State educational agency 
under the applicable program or issues such other orders as the 
Secretary deems appropriate to achieve compliance.
    (e) Other State agency hearing procedures. State agencies that are 
required to provide a hearing under paragraph (a) of this section--other 
than State educational agencies--are not required to use the procedures 
in paragraph (d) of this section.
    Note: This section is based on a provision in the General Education 
Provisions Act (GEPA). Section 427 of the Department of Education 
Organization Act (DEOA), 20 U.S.C. 3487, provides that except to the 
extent inconsistent with the DEOA, the GEPA ``shall apply to functions 
transferred by this Act to the extent applicable on the day preceding 
the effective date of this Act.'' Although standardized nomenclature is 
used in this section to reflect the creation of the Department of 
Education, there is no intent to extend the coverage of the GEPA beyond 
that authorized under Section 427 or other applicable law.

(Authority: 20 U.S.C. 1221e-3, 1231b-2, 3474, and 6511(a))

[45 FR 22517, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 45 FR 86296, Dec. 30, 1980; 50 FR 43545, Oct. 25, 1985; 52 
FR 27805, July 24, 1987; 54 FR 21775, May 19, 1989; 55 FR 14816, Apr. 
18, 1990; 57 FR 30341, July 8, 1992; 60 FR 46493, Sept. 6, 1995]

[[Page 175]]



 Subpart F_What Conditions Must Be Met by the State and Its Subgrantees?

                            Nondiscrimination



Sec. 76.500  Federal statutes and regulations on nondiscrimination.

    A State and a subgrantee shall comply with the following statutes 
and regulations:

------------------------------------------------------------------------
             Subject                    Statute           Regulation
------------------------------------------------------------------------
Discrimination on the basis of    Title VI of the     34 CFR part 100.
 race, color, or national origin.  Civil Rights Act
                                   of 1964 (45
                                   U.S.C. 2000d
                                   through 2000d-4).
Discrimination on the basis of    Title IX of the     34 CFR part 106.
 sex.                              Education
                                   Amendments of
                                   1972 (20 U.S.C.
                                   1681-1683).
Discrimination on the basis of    Section 504 of the  34 CFR part 104.
 handicap.                         Rehabilitation
                                   Act of 1973 (29
                                   U.S.C. 794).
Discrimination on the basis of    The Age             45 CFR part 90.
 age.                              Discrimination
                                   Act (42 U.S.C.
                                   6101 et seq.).
------------------------------------------------------------------------


(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

                             Allowable Costs



Sec. 76.530  General cost principles.

    Both 34 CFR 74.27 and 34 CFR 80.22 reference the general cost 
principles that apply to grants, subgrants and cost type contracts under 
grants and subgrants.

(Authority: 20 U.S.C. 1221e-3, 3474 and 6511(a))

[64 FR 50392, Sept. 16, 1999]



Sec. 76.532  Use of funds for religion prohibited.

    (a) No State or subgrantee may use its grant or subgrant to pay for 
any of the following:
    (1) Religious worship, instruction, or proselytization.
    (2) Equipment or supplies to be used for any of the activities 
specified in paragraph (a)(1) of this section.
    (3) Construction, remodeling, repair, operation, or maintenance of 
any facility or part of a facility to be used for any of the activities 
specified in paragraph (a)(1) of this section.
    (4) An activity of a school or department of divinity.
    (b) As used in this section, school or department of divinity means 
an institution or a component of an institution whose program is 
specifically for the education of students to:
    (1) Prepare them to enter into a religious vocation; or
    (2) Prepare them to teach theological subjects.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

    Effective Date Note: At 69 FR 31711, June 4, 2004, Sec. thnsp;76.532 
was amended by removing paragraphs (a)(3) and (a)(4); and removing and 
reserving paragraph (b), effective July 6, 2004.



Sec. 76.533  Acquistion of real property; construction.

    No State or subgrantee may use its grant or subgrant for acquisition 
of real property or for construction unless specifically permitted by 
the authorizing statute or implementing regulations for the program.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))



Sec. 76.534  Use of tuition and fees restricted.

    No State or subgrantee may count tuition and fees collected from 
students toward meeting matching, cost sharing, or maintenance of effort 
requirements of a program.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

                           Indirect Cost Rates



Sec. 76.560  General indirect cost rates; exceptions.

    (a) The differences between direct and indirect costs and the 
principles for determining the general indirect cost rate that a grantee 
may use for grants under most programs are specified in the cost 
principles for--
    (1) Institutions of higher education, at 34 CFR 74.27;
    (2) Hospitals, at 34 CFR 74.27;
    (3) Other nonprofit organizations, at 34 CFR 74.27;
    (4) Commercial (for-profit) organizations, at 34 CFR 74.27; and
    (5) State and local governments and federally-recognized Indian 
tribal organizations, at 34 CFR 80.22.

[[Page 176]]

    (b) A grantee must have a current indirect cost rate agreement to 
charge indirect costs to a grant. To obtain an indirect cost rate, a 
grantee must submit an indirect cost proposal to its cognizant agency 
and negotiate an indirect cost rate agreement.
    (c) The Secretary may establish a temporary indirect cost rate for a 
grantee that does not have an indirect cost rate agreement with its 
cognizant agency.
    (d) The Secretary accepts an indirect cost rate negotiated by a 
grantee's cognizant agency, but may establish a restricted indirect cost 
rate for a grantee to satisfy the statutory requirements of certain 
programs administered by the Department.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

[57 FR 30341, July 8, 1992, as amended at 59 FR 59582, Nov. 17, 1994]



Sec. 76.561  Approval of indirect cost rates.

    (a) If the Department of Education is the cognizant agency, the 
Secretary approves an indirect cost rate for a State agency and for a 
subgrantee other than a local educational agency. For the purposes of 
this section, the term local educational agency does not include a State 
agency.
    (b) Each State educational agency, on the basis of a plan approved 
by the Secretary, shall approve an indirect cost rate for each local 
educational agency that requests it to do so. These rates may be for 
periods longer than a year if rates are sufficiently stable to justify a 
longer period.
    (c) The Secretary generally approves indirect cost rate agreements 
annually. Indirect cost rate agreements may be approved for periods 
longer than a year if the Secretary determines that rates will be 
sufficiently stable to justify a longer rate period.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

[59 FR 59583, Nov. 17, 1994]



Sec. 76.563  Restricted indirect cost rate--programs covered.

    Sections 76.564 through 76.569 apply to agencies of State and local 
governments that are grantees under programs with a statutory 
requirement prohibiting the use of Federal funds to supplant non-Federal 
funds, and to their subgrantees under these programs.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

[59 FR 59583, Nov. 17, 1994]



Sec. 76.564  Restricted indirect cost rate--formula.

    (a) An indirect cost rate for a grant covered by Sec. 76.563 or 34 
CFR 75.563 is determined by the following formula:

Restricted indirect cost rate = (General management costs + Fixed costs) 
    / (Other expenditures)

    (b) General management costs, fixed costs, and other expenditures 
must be determined under Sec. Sec. 76.565 through 76.567.
    (c) Under the programs covered by Sec. 76.563, a subgrantee of an 
agency of a State or a local government (as those terms are defined in 
34 CFR 80.3) or a grantee subject to 34 CFR 75.563 that is not a State 
or local government agency may use--
    (1) An indirect cost rate computed under paragraph (a) of this 
section; or
    (2) An indirect cost rate of eight percent unless the Secretary 
determines that the subgrantee or grantee would have a lower rate under 
paragraph (a) of this section.
    (d) Indirect costs that are unrecovered as a result of these 
restrictions may not be charged directly, used to satisfy matching or 
cost-sharing requirements, or charged to another Federal award.

(Authority: 20 U.S.C. 1221e-3(a)(1), 2831(a), 2974(b), and 3474)

[59 FR 59583, Nov. 17, 1994]



Sec. 76.565  General management costs--restricted rate.

    (a) As used in Sec. 76.564, general management costs means the 
costs of activities that are for the direction and control of the 
grantee's affairs that are organization-wide. An activity is not 
organization-wide if it is limited to one activity, one component of the 
grantee, one subject, one phase of operations, or other single 
responsibility.

[[Page 177]]

    (b) General management costs include the costs of performing a 
service function, such as accounting, payroll preparation, or personnel 
management, that is normally at the grantee's level even if the function 
is physically located elsewhere for convenience or better management. 
The term also includes certain occupancy and space maintenance costs as 
determined under Sec. 76.568.
    (c) The term does not include expenditures for--
    (1) Divisional administration that is limited to one component of 
the grantee;
    (2) The governing body of the grantee;
    (3) Compensation of the chief executive officer of the grantee;
    (4) Compensation of the chief executive officer of any component of 
the grantee; and
    (5) Operation of the immediate offices of these officers.
    (d) For purposes of this section--
    (1) The chief executive officer of the grantee is the individual who 
is the head of the executive office of the grantee and exercises overall 
responsibility for the operation and management of the organization. The 
chief executive officer's immediate office includes any deputy chief 
executive officer or similar officer along with immediate support staff 
of these individuals. The term does not include the governing body of 
the grantee, such as a board or a similar elected or appointed governing 
body; and
    (2) Components of the grantee are those organizational units 
supervised directly or indirectly by the chief executive officer. These 
organizational units generally exist one management level below the 
executive office of the grantee. The term does not include the office of 
the chief executive officer or a deputy chief executive officer or 
similar position.

(Authority: 20 U.S.C. 1221e-3(a)(1), 2831(a), 2974(b), and 3474)

[59 FR 59583, Nov. 17, 1994]



Sec. 76.566  Fixed costs--restricted rate.

    As used in Sec. 76.564, fixed costs means contributions of the 
grantee to fringe benefits and similar costs, but only those associated 
with salaries and wages that are charged as indirect costs, including--
    (a) Retirement, including State, county, or local retirement funds, 
Social Security, and pension payments;
    (b) Unemployment compensation payments; and
    (c) Property, employee, health, and liability insurance.

(Authority: 20 U.S.C. 1221e-3(a)(1), 2831(a), 2974(b), and 3474)

[59 FR 59583, Nov. 17, 1994]



Sec. 76.567  Other expenditures--restricted rate.

    (a) As used in Sec. 76.564, other expenditures means the grantee's 
total expenditures for its federally- and non-federally-funded 
activities in the most recent year for which data are available. The 
term also includes direct occupancy and space maintenance costs as 
determined under Sec. 76.568 and costs related to the chief executive 
officers of the grantee and components of the grantee and their offices 
(see Sec. 76.565(c) and (d)).
    (b) The term does not include--
    (1) General management costs determined under Sec. 76.565;
    (2) Fixed costs determined under Sec. 76.566;
    (3) Subgrants;
    (4) Capital outlay;
    (5) Debt service;
    (6) Fines and penalties;
    (7) Contingencies; and
    (8) Election expenses. However, the term does include election 
expenses that result from elections required by an applicable Federal 
statute.

(Authority: 20 U.S.C. 1221e-3(a)(1), 2831(a), 2974(b), and 3474)

[59 FR 59583, Nov. 17, 1994]



Sec. 76.568  Occupancy and space maintenance costs--restricted rate.

    (a) As used in the calculation of a restricted indirect cost rate, 
occupancy and space maintenance costs means such costs as--
    (1) Building costs whether owned or rented;
    (2) Janitorial services and supplies;
    (3) Building, grounds, and parking lot maintenance;
    (4) Guard services;
    (5) Light, heat, and power;

[[Page 178]]

    (6) Depreciation, use allowances, and amortization; and
    (7) All other related space costs.
    (b) Occupancy and space maintenance costs associated with 
organization-wide service functions (accounting, payroll, personnel) may 
be included as general management costs if a space allocation or use 
study supports the allocation.
    (c) Occupancy and space maintenance costs associated with functions 
that are not organization-wide must be included with other expenditures 
in the indirect cost formula. These costs may be charged directly to 
affected programs only to the extent that statutory supplanting 
prohibitions are not violated. This reimbursement must be approved in 
advance by the Secretary.

(Authority: 20 U.S.C. 1221e-3(a)(1), 2831(a), 2974(b), and 3474)

[59 FR 59584, Nov. 17, 1994]



Sec. 76.569  Using the restricted indirect cost rate.

    (a) Under the programs referenced in Sec. 76.563, the maximum 
amount of indirect costs under a grant is determined by the following 
formula:

Indirect costs=(Restricted indirect cost rate)x(Total direct costs of 
    the grant minus capital outlays, subgrants, and other distorting or 
    unallowable items as specified in the grantee's indirect cost rate 
    agreement)

    (b) If a grantee uses a restricted indirect cost rate, the general 
management and fixed costs covered by that rate must be excluded by the 
grantee from the direct costs it charges to the grant.

(Authority: 20 U.S.C. 1221e-3(a)(1), 2831(a), 2974(b), and 3474)

[59 FR 59584, Nov. 17, 1994]



Sec. 76.580  Coordination with other activities.

    A State and a subgrantee shall, to the extent possible, coordinate 
each of its projects with other activities that are in the same 
geographic area served by the project and that serve similar purposes 
and target groups.

(Authority: 20 U.S.C. 1221e-3, 2890, and 3474)

[45 FR 22517, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 57 FR 30341, July 8, 1992]

                               Evaluation



Sec. 76.591  Federal evaluation--cooperation by a grantee.

    A grantee shall cooperate in any evaluation of the program by the 
Secretary.

(Authority: 20 U.S.C. 1221e-3, 1226c, 1231a, 3474, and 6511(a))

[45 FR 86298, Dec. 30, 1980, as amended at 57 FR 30341, July 8, 1992]



Sec. 76.592  Federal evaluation--satisfying requirement for State or 
subgrantee evaluation.

    If a State or a subgrantee cooperates in a Federal evaluation of a 
program, the Secretary may determine that the State or subgrantee meets 
the evaluation requirements of the program.

(Authority: 20 U.S.C. 1226c; 1231a)

                              Construction



Sec. 76.600  Where to find construction regulations.

    (a) A State or a subgrantee that requests program funds for 
construction, or whose grant or subgrant includes funds for 
construction, shall comply with the rules on construction that apply to 
applicants and grantees under 34 CFR 75.600-75.617.
    (b) The State shall perform the functions that the Secretary 
performs under Sec. Sec. 75.602 (Preservation of historic sites) and 
75.605 (Approval of drawings and specifications) of this title.
    (c) The State shall provide to the Secretary the information 
required under 34 CFR 75.602(a) (Preservation of historic sites).

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

[45 FR 22517, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 45 FR 86298, Dec. 30, 1980; 57 FR 30341, July 8, 1992]

[[Page 179]]

          Participation of Students Enrolled in Private Schools



Sec. 76.650  Private schools; purpose of Sec. Sec. 76.651-76.662.

    (a) Under some programs, the authorizing statute requires that a 
State and its subgrantees provide for participation by students enrolled 
in private schools. Sections 76.651-76.662 apply to those programs and 
provide rules for that participation. These sections do not affect the 
authority of the State or a subgrantee to enter into a contract with a 
private party.
    (b) If any other rules for participation of students enrolled in 
private schools apply under a particular program, they are in the 
authorizing statute or implementing regulations for that program.

(Authority: 20 U.S.C. 1221e-3 and 3474)

    Note: Some program statutes authorize the Secretary--under certain 
circumstances--to provide benefits directly to private school students. 
These ``bypass'' provisions--where they apply--are implemented in the 
individual program regulations.



Sec. 76.651  Responsibility of a State and a subgrantee.

    (a)(1) A subgrantee shall provide students enrolled in private 
schools with a genuine opportunity for equitable participation in 
accordance with the requirements in Sec. Sec. 76.652-76.662 and in the 
authorizing statute and implementing regulations for a program.
    (2) The subgrantee shall provide that opportunity to participate in 
a manner that is consistent with the number of eligible private school 
students and their needs.
    (3) The subgrantee shall maintain continuing administrative 
direction and control over funds and property that benefit students 
enrolled in private schools.
    (b)(1) A State shall ensure that each subgrantee complies with the 
requirements in Sec. Sec. 76.651-76.662.
    (2) If a State carries out a project directly, it shall comply with 
these requirements as if it were a subgrantee.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 76.652  Consultation with representatives of private school students.

    (a) An applicant for a subgrant shall consult with appropriate 
representatives of students enrolled in private schools during all 
phases of the development and design of the project covered by the 
application, including consideration of:
    (1) Which children will receive benefits under the project;
    (2) How the children's needs will be identified;
    (3) What benefits will be provided;
    (4) How the benefits will be provided; and
    (5) How the project will be evaluated.
    (b) A subgrantee shall consult with appropriate representatives of 
students enrolled in private schools before the subgrantee makes any 
decision that affects the opportunities of those students to participate 
in the project.
    (c) The applicant or subgrantee shall give the appropriate 
representatives a genuine opportunity to express their views regarding 
each matter subject to the consultation requirements in this section.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 76.653  Needs, number of students, and types of services.

    A subgrantee shall determine the following matters on a basis 
comparable to that used by the subgrantee in providing for participation 
of public school students:
    (a) The needs of students enrolled in private schools.
    (b) The number of those students who will participate in a project.
    (c) The benefits that the subgrantee will provide under the program 
to those students.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 76.654  Benefits for private school students.

    (a) Comparable benefits. The program benefits that a subgrantee 
provides for students enrolled in private schools must be comparable in 
quality, scope, and opportunity for participation to the program 
benefits that the subgrantee provides for students enrolled in public 
schools.

[[Page 180]]

    (b) Same benefits. If a subgrantee uses funds under a program for 
public school students in a particular attendance area, or grade or age 
level, the subgrantee shall insure equitable opportunities for 
participation by students enrolled in private schools who:
    (1) Have the same needs as the public school students to be served; 
and
    (2) Are in that group, attendance area, or age or grade level.
    (c) Different benefits. If the needs of students enrolled in private 
schools are different from the needs of students enrolled in public 
schools, a subgrantee shall provide program benefits for the private 
school students that are different from the benefits the subgrantee 
provides for the public school students.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 76.655  Level of expenditures for students enrolled in private 
schools.

    (a) Subject to paragraph (b) of this section, a subgrantee shall 
spend the same average amount of program funds on:
    (1) A student enrolled in a private school who receives benefits 
under the program; and
    (2) A student enrolled in a public school who receives benefits 
under the program.
    (b) The subgrantee shall spend a different average amount on program 
benefits for students enrolled in private schools if the average cost of 
meeting the needs of those students is different from the average cost 
of meeting the needs of students enrolled in public schools.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 76.656  Information in an application for a subgrant.

    An applicant for a subgrant shall include the following information 
in its application:
    (a) A description of how the applicant will meet the Federal 
requirements for participation of students enrolled in private schools.
    (b) The number of students enrolled in private schools who have been 
identified as eligible to benefits under the program.
    (c) The number of students enrolled in private schools who will 
receive benefits under the program.
    (d) The basis the applicant used to select the students.
    (e) The manner and extent to which the applicant complied with Sec. 
76.652 (consultation).
    (f) The places and times that the students will receive benefits 
under the program.
    (g) The differences, if any, between the program benefits the 
applicant will provide to public and private school students, and the 
reasons for the differences.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 76.657  Separate classes prohibited.

    A subgrantee may not use program funds for classes that are 
organized separately on the basis of school enrollment or religion of 
the students if:
    (a) The classes are at the same site; and
    (b) The classes include students enrolled in public schools and 
students enrolled in private schools.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 76.658  Funds not to benefit a private school.

    (a) A subgrantee may not use program funds to finance the existing 
level of instruction in a private school or to otherwise benefit the 
private school.
    (b) The subgrantee shall use program funds to meet the specific 
needs of students enrolled in private schools, rather than:
    (1) The needs of a private school; or
    (2) The general needs of the students enrolled in a private school.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 76.659  Use of public school personnel.

    A subgrantee may use program funds to make public personnel 
available in other than public facilities:
    (a) To the extent necessary to provide equitable program benefits 
designed for students enrolled in a private school; and

[[Page 181]]

    (b) If those benefits are not normally provided by the private 
school.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 76.660  Use of private school personnel.

    A subgrantee may use program funds to pay for the services of an 
employee of a private school if:
    (a) The employee performs the services outside of his or her regular 
hours of duty; and
    (b) The employee performs the services under public supervision and 
control.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 76.661  Equipment and supplies.

    (a) Under some program statutes, a public agency must keep title to 
and exercise continuing administrative control of all equipment and 
supplies that the subgrantee acquires with program funds. This public 
agency is usually the subgrantee.
    (b) The subgrantee may place equipment and supplies in a private 
school for the period of time needed for the project.
    (c) The subgrantee shall insure that the equipment or supplies 
placed in a private school:
    (1) Are used only for the purposes of the project; and
    (2) Can be removed from the private school without remodeling the 
private school facilities.
    (d) The subgrantee shall remove equipment or supplies from a private 
school if:
    (1) The equipment or supplies are no longer needed for the purposes 
of the project; or
    (2) Removal is necessary to avoid use of the equipment of supplies 
for other than project purposes.

(Authority: 20 U.S.C. 1221e-3 and 3474)



Sec. 76.662  Construction.

    A subgrantee shall insure that program funds are not used for the 
construction of private school facilities.

(Authority: 20 U.S.C. 1221e-3 and 3474)

                          Procedures for Bypass



Sec. 76.670  Applicability and filing requirements.

    (a) The regulations in Sec. Sec. 76.671 through 76.677 apply to the 
following programs under which the Secretary is authorized to waive the 
requirements for providing services to private school children and to 
implement a bypass:

----------------------------------------------------------------------------------------------------------------
                                                                                                    Implementing
                                                                                                     regulations
         CFDA number and name of program                         Authorizing statute                title 34 CFR
                                                                                                        part
----------------------------------------------------------------------------------------------------------------
84.010 Chapter 1 Program in Local Educational     Chapter 1, Title I, Elementary and Secondary               200
 Agencies.                                         Education Act of 1965, as amended (20 U.S.C.
                                                   2701 et seq.).
84.151 Federal, State, and Local Partnership for  Chapter 2, Title I, Elementary and Secondary               298
 Educational Improvement.                          Education Act of 1965, as amended (20 U.S.C.
                                                   2911-2952, 2971-2976).
84.164 Mathematics and Science Education........  Title II, Part A, Elementary and Secondary                 208
                                                   Education Act of 1965, as amended (20 U.S.C.
                                                   2981-2993).
84.186 State and Local Programs.................  Part B, Drug Free Schools and Communities Act of          None
                                                   1986 (20 U.S.C. 3191-3197).
----------------------------------------------------------------------------------------------------------------

    (b) Filing requirements. (1) Any written submission under Sec. Sec. 
76.671 through 76.675 must be filed by hand-delivery, by mail, or by 
facsimile transmission. The Secretary discourages the use of facsimile 
transmission for documents longer than five pages.
    (2) If agreed upon by the parties, service of a document may be made 
upon the other party by facsimile transmission.
    (3) The filing date for a written submission is the date the 
document is--
    (i) Hand-delivered;
    (ii) Mailed; or
    (iii) Sent by facsimile transmission.
    (4) A party filing by facsimile transmission is responsible for 
confirming that a complete and legible copy of the document was received 
by the Department.

[[Page 182]]

    (5) If a document is filed by facsimile transmission, the Secretary 
or the hearing officer, as applicable, may require the filing of a 
follow-up hard copy by hand-delivery or by mail within a reasonable 
period of time.

(Authority: 20 U.S.C. 2727(b), 2972(d)-(e), 2990(c), 3223(c))

[54 FR 21775, May 19, 1989, as amended at 57 FR 56795, Nov. 30, 1992]



Sec. 76.671  Notice by the Secretary.

    (a) Before taking any final action to implement a bypass under a 
program listed in Sec. 76.670, the Secretary provides the affected 
grantee and subgrantee, if appropriate, with written notice.
    (b) In the written notice, the Secretary--
    (1) States the reasons for the proposed bypass in sufficient detail 
to allow the grantee and subgrantee to respond;
    (2) Cites the requirement that is the basis for the alleged failure 
to comply; and
    (3) Advises the grantee and subgrantee that they--
    (i) Have at least 45 days after receiving the written notice to 
submit written objections to the proposed bypass; and
    (ii) May request in writing the opportunity for a hearing to show 
cause why the bypass should not be implemented.
    (c) The Secretary sends the notice to the grantee and subgrantee by 
certified mail with return receipt requested.

(Authority: 20 U.S.C. 2727(b)(4)(A), 2972(h)(1), 2990(c), 3223(c))

[54 FR 21775, May 19, 1989]



Sec. 76.672  Bypass procedures.

    Sections 76.673 through 76.675 contain the procedures that the 
Secretary uses in conducting a show cause hearing. The hearing officer 
may modify the procedures for a particular case if all parties agree the 
modification is appropriate.

(Authority: 20 U.S.C. 2727(b)(4)(A), 2972(h)(1), 2990(c), 3223(c))

[54 FR 21776, May 19, 1989]



Sec. 76.673  Appointment and functions of a hearing officer.

    (a) If a grantee or subgrantee requests a hearing to show cause why 
the Secretary should not implement a bypass, the Secretary appoints a 
hearing officer and notifies appropriate representatives of the affected 
private school children that they may participate in the hearing.
    (b) The hearing officer has no authority to require or conduct 
discovery or to rule on the validity of any statute or regulation.
    (c) The hearing officer notifies the grantee, subgrantee, and 
representatives of the private school children of the time and place of 
the hearing.

(Authority: 20 U.S.C. 2727(b)(4)(A), 2972(h)(1), 2990(c), 3223(c))

[54 FR 21776, May 19, 1989]



Sec. 76.674  Hearing procedures.

    (a) The following procedures apply to a show cause hearing regarding 
implementation of a bypass:
    (1) The hearing officer arranges for a transcript to be taken.
    (2) The grantee, subgrantee, and representatives of the private 
school children each may--
    (i) Be represented by legal counsel; and
    (ii) Submit oral or written evidence and arguments at the hearing.
    (b) Within 10 days after the hearing, the hearing officer--
    (1) Indicates that a decision will be issued on the basis of the 
existing record; or
    (2) Requests further information from the grantee, subgrantee, 
representatives of the private school children, or Department officials.

(Authority: 20 U.S.C. 2727(b)(4)(A), 2972(h)(1), 2990(c), 3223(c))

[54 FR 21776, May 19, 1989]



Sec. 76.675  Posthearing procedures.

    (a)(1) Within 120 days after the record of a show cause hearing is 
closed, the hearing officer issues a written decision on whether a 
bypass should be implemented.

[[Page 183]]

    (2) The hearing officer sends copies of the decision to the grantee, 
subgrantee, representatives of the private school children, and the 
Secretary.
    (b) Within 30 days after receiving the hearing officer's decision, 
the grantee, subgrantee, and representatives of the private school 
children may each submit to the Secretary written comments on the 
decision.
    (c) The Secretary may adopt, reverse, modify, or remand the hearing 
officer's decision.

(Authority: 20 U.S.C. 2727(b)(4)(A), 2972(h)(1), 2990(c), 3223(c))

[54 FR 21776, May 19, 1989]



Sec. 76.676  Judicial review of a bypass action.

    If a grantee or subgrantee is dissatisfied with the Secretary's 
final action after a proceeding under Sec. Sec. 76.672 through 76.675, 
it may, within 60 days after receiving notice of that action, file a 
petition for review with the United States Court of Appeals for the 
circuit in which the State is located.

(Authority: 20 U.S.C. 2727(b)(4)(B)-(D), 2972(h)(2)-(4), 2990(c), 
3223(c))

[54 FR 21776, May 19, 1989]



Sec. 76.677  Continuation of a bypass.

    The Secretary continues a bypass until the Secretary determines that 
the grantee or subgrantee will meet the requirements for providing 
services to private school children.

(Authority: 20 U.S.C. 1221e-3, 2727(b)(3)(D), 2972(f), and 3474)

[54 FR 21776, May 19, 1989]

                 Other Requirements for Certain Programs



Sec. 76.681  Protection of human subjects.

    If a State or a subgrantee uses a human subject in a research 
project, the State or subgrantee shall protect the person from physical, 
psychological, or social injury resulting from the project.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

[45 FR 22517, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 57 FR 30341, July 8, 1992]



Sec. 76.682  Treatment of animals.

    If a State or a subgrantee uses an animal in a project, the State or 
subgrantee shall provide the animal with proper care and humane 
treatment in accordance with the Animal Welfare Act of 1970.

(Authority: Pub. L. 89-544, as amended)



Sec. 76.683  Health or safety standards for facilities.

    A State and a subgrantee shall comply with any Federal health or 
safety requirements that apply to the facilities that the State or 
subgrantee uses for a project.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))



Subpart G_What Are the Administrative Responsibilities of the State and 
                            Its Subgrantees?

                 General Administrative Responsibilities



Sec. 76.700  Compliance with statutes, regulations, State plan, and 
applications.

    A State and a subgrantee shall comply with the State plan and 
applicable statutes, regulations, and approved applications, and shall 
use Federal funds in accordance with those statutes, regulations, plan, 
and applications.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))



Sec. 76.701  The State or subgrantee administers or supervises each 
project.

    A State or a subgrantee shall directly administer or supervise the 
administration of each project.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))



Sec. 76.702  Fiscal control and fund accounting procedures.

    A State and a subgrantee shall use fiscal control and fund 
accounting procedures that insure proper disbursement of and accounting 
for Federal funds.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

[[Page 184]]



Sec. 76.703  When a State may begin to obligate funds.

    (a)(1) The Secretary may establish, for a program subject to this 
part, a date by which a State must submit for review by the Department a 
State plan and any other documents required to be submitted under 
guidance provided by the Department under paragraph (b)(3) of this 
section.
    (2) If the Secretary does not establish a date for the submission of 
State plans and any other documents required under guidance provided by 
the Department, the date for submission is three months before the date 
the Secretary may begin to obligate funds under the program.
    (b)(1) This paragraph (b) describes the circumstances under which 
the submission date for a State plan may be deferred.
    (2) If a State asks the Secretary in writing to defer the submission 
date for a State plan because of a Presidentially declared disaster that 
has occurred in that State, the Secretary may defer the submission date 
for the State plan and any other document required under guidance 
provided by the Department if the Secretary determines that the disaster 
significantly impairs the ability of the State to submit a timely State 
plan or other document required under guidance provided by the 
Department.
    (3)(i) The Secretary establishes, for a program subject to this 
part, a date by which the program office must deliver guidance to the 
States regarding the contents of the State plan under that program.
    (ii) The Secretary may only establish a date for the delivery of 
guidance to the States so that there are at least as many days between 
that date and the date that State plans must be submitted to the 
Department as there are days between the date that State plans must be 
submitted to the Department and the date that funds are available for 
obligation by the Secretary on July 1, or October 1, as appropriate.
    (iii) If a State does not receive the guidance by the date 
established under paragraph (b)(3)(i) of this section, the submission 
date for the State plan under the program is deferred one day for each 
day that the guidance is late in being received by the State.
    Note: The following examples describe how the regulations in Sec. 
76.703(b)(3) would act to defer the date that a State would have to 
submit its State plan.

    Example 1. The Secretary decides that State plans under a forward-
funded program must be submitted to the Department by May first. The 
Secretary must provide guidance to the States under this program by 
March first, so that the States have at least as many days between the 
guidance date and the submission date (60) as the Department has between 
the submission date and the date that funds are available for obligation 
(60). If the program transmits guidance to the States on February 15, 
specifying that State plans must be submitted by May first, States 
generally would have to submit State plans by that date. However, if, 
for example, a State did not receive the guidance until March third, 
that State would have until May third to submit its State plan because 
the submission date of its State plan would be deferred one day for each 
day that the guidance to the State was late.
    Example 2. If a program publishes the guidance in the Federal 
Register on March third, the States would be considered to have received 
the guidance on that day. Thus, the guidance could not specify a date 
for the submission of State plans before May second, giving the States 
59 days between the date the guidance is published and the submission 
date and giving the Department 58 days between the submission date and 
the date that funds are available for obligation.

    (c)(1) For the purposes of this section, the submission date of a 
State plan or other document is the date that the Secretary receives the 
plan or document.
    (2) The Secretary does not determine whether a State plan is 
substantially approvable until the plan and any documents required under 
guidance provided by the Department have been submitted.
    (3) The Secretary notifies a State when the Department has received 
the State plan and all documents required under guidance provided by the 
Department.
    (d) If a State submits a State plan in substantially approvable form 
(or an amendment to the State plan that makes it substantially 
approvable), and submits any other document required under guidance 
provided by the Department, on or before the date the State plan must be 
submitted to the

[[Page 185]]

Department, the State may begin to obligate funds on the date that the 
funds are first available for obligation by the Secretary.
    (e) If a State submits a State plan in substantially approvable form 
(or an amendment to the State plan that makes it substantially 
approvable) or any other documents required under guidance provided by 
the Department after the date the State plan must be submitted to the 
Department, and--
    (1) The Department determines that the State plan is substantially 
approvable on or before the date that the funds are first available for 
obligation by the Secretary, the State may begin to obligate funds on 
the date that the funds are first available for obligation by the 
Secretary; or
    (2) The Department determines that the State plan is substantially 
approvable after the date that the funds are first available for 
obligation by the Secretary, the State may begin to obligate funds on 
the earlier of the two following dates:
    (i) The date that the Secretary determines that the State plan is 
substantially approvable.
    (ii) The date that is determined by adding to the date that funds 
are first available for obligation by the Secretary--
    (A) The number of days after the date the State plan must be 
submitted to the Department that the State plan or other document 
required under guidance provided by the Department is submitted; and
    (B) If applicable, the number of days after the State receives 
notice that the State plan is not substantially approvable that the 
State submits additional information that makes the plan substantially 
approvable.
    (f) Additional information submitted under paragraph (e)(2)(ii)(B) 
of this section must be signed by the person who submitted the original 
State plan (or an authorized delegate of that officer).
    (g)(1) If the Department does not complete its review of a State 
plan during the period established for that review, the Secretary will 
grant pre-award costs for the period after funds become available for 
obligation by the Secretary and before the State plan is found 
substantially approvable.
    (2) The period established for the Department's review of a plan 
does not include any day after the State has received notice that its 
plan is not substantially approvable.
    Note: The following examples describe how the regulations in Sec. 
76.703 would be applied in certain circumstances. For the purpose of 
these examples, assume that the grant program established an April 1 due 
date for the submission of the State plan and that funds are first 
available for obligation by the Secretary on July 1.

    Example 1. Paragraph (d): A State submits a plan in substantially 
approvable form by April 1. The State may begin to obligate funds on 
July 1.
    Example 2. Paragraph (e)(1): A State submits a plan in substantially 
approvable form on May 15, and the Department notifies the State that 
the plan is substantially approvable on June 20. The State may begin to 
obligate funds on July 1.
    Example 3. Paragraph (e)(2)(i): A State submits a plan in 
substantially approvable form on May 15, and the Department notifies the 
State that the plan is substantially approvable on July 15. The State 
may begin to obligate funds on July 15.
    Example 4. Paragraph (e)(2)(ii)(A): A State submits a plan in 
substantially approvable form on May 15, and the Department notifies the 
State that the plan is substantially approvable on August 21. The State 
may begin to obligate funds on August 14. (In this example, the plan is 
45 days late. By adding 45 days to July 1, we reach August 14, which is 
earlier than the date, August 21, that the Department notifies the State 
that the plan is substantially approvable. Therefore, if the State chose 
to begin drawing funds from the Department on August 14, obligations 
made on or after that date would generally be allowable.)
    Example 5. Paragraph (e)(2)(i): A State submits a plan on May 15, 
and the Department notifies the State that the plan is not substantially 
approvable on July 10. The State submits changes that make the plan 
substantially approvable on July 20 and the Department notifies the 
State that the plan is substantially approvable on July 25. The State 
may begin to obligate funds on July 25. (In this example, the original 
submission is 45 days late. In addition, the Department notifies the 
State that the plan is not substantially approvable and the time from 
that notification until the State submits changes that make the plan 
substantially approvable is an additional 10 days. By adding 55 days to 
July 1, we reach August 24. However, since the Department notified the 
State that the plan was substantially approvable on July 25, that is the 
date that the State may begin to obligate funds.)

[[Page 186]]

    Example 6. Paragraph (e)(2)(ii)(B): A State submits a plan on May 
15, and the Department notifies the State that the plan is not 
substantially approvable on August 1. The State submits changes that 
make the plan substantially approvable on August 20, and the Department 
notifies the State that the plan is substantially approvable on 
September 5. The State may choose to begin drawing funds from the 
Department on September 2, and obligations made on or after that date 
would generally be allowable. (In this example, the original submission 
is 45 days late. In addition, the Department notifies the State that the 
plan is not substantially approvable and the time from that notification 
until the State submits changes that make the plan substantially 
approvable is an additional 19 days. By adding 64 days to July 1, we 
reach September 2, which is earlier than September 5, the date that the 
Department notifies the State that the plan is substantially 
approvable.)
    Example 7. Paragraph (g): A State submits a plan on April 15 and the 
Department notifies the State that the plan is not substantially 
approvable on July 16. The State makes changes to the plan and submits a 
substantially approvable plan on July 30. The Department had until July 
15 to decide whether the plan was substantially approvable because the 
State was 15 days late in submitting the plan. The date the State may 
begin to obligate funds under the regulatory deferral is July 29 (based 
on the 15 day deferral for late submission plus a 14 day deferral for 
the time it took to submit a substantially approvable plan after having 
received notice). However, because the Department was one day late in 
completing its review of the plan, the State would get pre-award costs 
to cover the period of July 1 through July 29.

    (h) After determining that a State plan is in substantially 
approvable form, the Secretary informs the State of the date on which it 
could begin to obligate funds. Reimbursement for those obligations is 
subject to final approval of the State plan.

(Authority: 20 U.S.C. 1221e-3, 3474, 6511(a) and 31 U.S.C. 6503)

[45 FR 22517, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 60 FR 41294, Aug. 11, 1995; 61 FR 14484, Apr. 2, 1996]



Sec. 76.704  New State plan requirements that must be addressed in a 
State plan.

    (a) This section specifies the State plan requirements that must be 
addressed in a State plan if the State plan requirements established in 
statutes or regulations change on a date close to the date that State 
plans are due for submission to the Department.
    (b)(1) A State plan must meet the following requirements:
    (i) Every State plan requirement in effect three months before the 
date the State plan is due to be submitted to the Department under 34 
CFR 76.703; and
    (ii) Every State plan requirement included in statutes or 
regulations that will be effective on or before the date that funds 
become available for obligation by the Secretary and that have been 
signed into law or published in the Federal Register as final 
regulations three months before the date the State plan is due to be 
submitted to the Department under 34 CFR 76.703.
    (2) If a State plan does not have to meet a new State plan 
requirement under paragraph (b)(1) of this section, the Secretary takes 
one of the following actions:
    (i) Require the State to submit assurances and appropriate 
documentation to show that the new requirements are being followed under 
the program.
    (ii) Extend the date for submission of State plans and approve pre-
award costs as necessary to hold the State harmless.
    (3) If the Secretary requires a State to submit assurances under 
paragraph (b)(2) of this section, the State shall incorporate changes to 
the State plan as soon as possible to comply with the new requirements. 
The State shall submit the necessary changes before the start of the 
next obligation period.

(Authority: 20 U.S.C. 1221e-3, 3474, 6511(a) and 31 U.S.C. 6503)

[60 FR 41296, Aug. 11, 1995]



Sec. 76.707  When obligations are made.

    The following table shows when a State or a subgrantee makes 
obligations for various kinds of property and services.

------------------------------------------------------------------------
        If the obligation is for--            The obligation is made--
------------------------------------------------------------------------
(a) Acquisition of real or personal         On the date on which the
 property.                                   State or subgrantee makes a
                                             binding written commitment
                                             to acquire the property.
(b) Personal services by an employee of     When the services are
 the State or subgrantee.                    performed.

[[Page 187]]

 
(c) Personal services by a contractor who   On the date on which the
 is not an employee of the State or          State or subgrantee makes a
 subgrantee.                                 binding written commitment
                                             to obtain the services.
(d) Performance of work other than          On the date on which the
 personal services.                          State or subgrantee makes a
                                             binding written commitment
                                             to obtain the work.
(e) Public utility services...............  When the State or subgrantee
                                             receives the services.
(f) Travel................................  When the travel is taken.
(g) Rental of real or personal property...  When the State or subgrantee
                                             uses the property.
(h) A preagreement cost that was properly
 approved by the State under the cost
 principals identified in 34 CFR 74.171
 and 80.22..
------------------------------------------------------------------------


(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

[45 FR 22517, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 55 FR 14817, Apr. 18, 1990; 57 FR 30342, July 8, 1992]



Sec. 76.708  When certain subgrantees may begin to obligate funds.

    (a) If the authorizing statute for a program requires a State to 
make subgrants on the basis of a formula (see Sec. 76.5), the State may 
not authorize an applicant for a subgrant to obligate funds until the 
later of the following two dates:
    (1) The date that the State may begin to obligate funds under Sec. 
76.703; or
    (2) The date that the applicant submits its application to the State 
in substantially approvable form.
    (b) Reimbursement for obligations under paragraph (a) of this 
section is subject to final approval of the application.
    (c) If the authorizing statute for a program gives the State 
discretion to select subgrantees, the State may not authorize an 
applicant for a subgrant to obligate funds until the subgrant is made. 
However, the State may approve pre-agreement costs in accordance with 
the cost principles that are appended to 34 CFR part 74 (Appendices C-
F).

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

[45 FR 22517, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980. 
Further redesignated at 60 FR 41295, Aug. 11, 1995]



Sec. 76.709  Funds may be obligated during a ``carryover period.''

    (a) If a State or a subgrantee does not obligate all of its grant or 
subgrant funds by the end of the fiscal year for which Congress 
appropriated the funds, it may obligate the remaining funds during a 
carryover period of one additional fiscal year.
    (b) The State shall return to the Federal Government any carryover 
funds not obligated by the end of the carryover period by the State and 
its subgrantees.
    Note: This section is based on a provision in the General Education 
Provisions Act (GEPA). Section 427 of the Department of Education 
Organization Act (DEOA), 20 U.S.C. 3487, provides that except to the 
extent inconsistent with the DEOA, the GEPA ``shall apply to functions 
transferred by this Act to the extent applicable on the day preceding 
the effective date of this Act.'' Although standardized nomenclature is 
used in this section to reflect the creation of the Department of 
Education, there is no intent to extend the coverage of the GEPA beyond 
that authorized under section 427 or other applicable law.

(Authority: U.S.C. 1221e-3, 1225(b), and 3474)

[45 FR 22517, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 45 FR 86296, Dec. 30, 1980. Redesignated at 60 FR 41295, 
Aug. 11, 1995]



Sec. 76.710  Obligations made during a carryover period are subject 
to current statutes, regulations, and applications.

    A State and a subgrantee shall use carryover funds in accordance 
with:
    (a) The Federal statutes and regulations that apply to the program 
and are in effect for the carryover period; and
    (b) Any State plan, or application for a subgrant, that the State or 
subgrantee is required to submit for the carryover period.
    Note: This section is based on a provision in the General Education 
Provisions Act (GEPA). Section 427 of the Department of Education 
Organization Act (DEOA), 20 U.S.C. 3487, provides that except to the 
extent inconsistent with the DEOA, the GEPA ``shall apply to functions 
transferred by this Act to the extent applicable on the day preceding 
the effective date of this Act.'' Although standardized nomenclature is 
used in this section to reflect the creation of the Department of 
Education, there is no intent to extend the coverage of the GEPA beyond

[[Page 188]]

that authorized under section 427 or other applicable law.

(Authority: U.S.C. 1221e-3, 1225(b), and 3474)

[45 FR 22517, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 45 FR 86296, Dec. 30, 1980. Redesignated at 60 FR 41295, 
Aug. 11, 1995]



Sec. 76.711  Requesting funds by CFDA number.

    If a program is listed in the Catalog of Federal Domestic Assistance 
(CFDA), a State, when requesting funds under the program, shall identify 
that program by the CFDA number.

(Authority: 20 U.S.C. 1221e-3, 6511(a), 3474, 31 U.S.C. 6503)

[60 FR 41296, Aug. 11, 1995]

                                 Reports



Sec. 76.720  Financial and performance reports by a State.

    (a) This section applies to a State's reports required under 34 CFR 
80.41 (Financial reporting) and 34 CFR 80.40 (Monitoring and reporting 
of program performance).
    (b) A State shall submit these reports annually, unless the 
Secretary allows less frequent reporting.
    (c) However, the Secretary may, under 34 CFR 80.12 (Special grant or 
subgrant conditions for ``high-risk'' grantees) or 34 CFR 80.20 
(Standards for financial management systems) require a State to report 
more frequently than annually.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

[57 FR 30342, July 8, 1992]



Sec. 76.722  A subgrantee makes reports required by the State.

    A State may require a subgrantee to furnish reports that the State 
needs to carry out its responsibilities under the program.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

                                 Records



Sec. 76.730  Records related to grant funds.

    A State and a subgrantee shall keep records that fully show:
    (a) The amount of funds under the grant or subgrant;
    (b) How the State or subgrantee uses the funds;
    (c) The total cost of the project;
    (d) The share of that cost provided from other sources; and
    (e) Other records to facilitate an effective audit.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1232f)

[45 FR 22517, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 53 FR 49143, Dec. 6, 1988]



Sec. 76.731  Records related to compliance.

    A State and a subgrantee shall keep records to show its compliance 
with program requirements.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

                                 Privacy



Sec. 76.740  Protection of and access to student records; student rights 
in research, experimental programs, and testing.

    (a) Most records on present or past students are subject to the 
requirements of section 438 of GEPA and its implementing regulations 
under 34 CFR part 99. (Section 438 is the Family Educational Rights and 
Privacy Act of 1974.)
    (b) Under most programs administered by the Secretary, research, 
experimentation, and testing are subject to the requirements of section 
439 of GEPA and its implementing regulations at 34 CFR part 98.

(Authority: 20 U.S.C. 1221e-3, 1232g, 1232h, 3474, and 6511(a))

[45 FR 22517, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 57 FR 30342, July 8, 1992]

                 Use of Funds by States and Subgrantees



Sec. 76.760  More than one program may assist a single activity.

    A State or a subgrantee may use funds under more than one program to 
support different parts of the same

[[Page 189]]

project if the State or subgrantee meets the following conditions:
    (a) The State or subgrantee complies with the requirements of each 
program with respect to the part of the project assisted with funds 
under that program.
    (b) The State or subgrantee has an accounting system that permits 
identification of the costs paid for under each program.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))



Sec. 76.761  Federal funds may pay 100 percent of cost.

    A State or a subgrantee may use program funds to pay up to 100 
percent of the cost of a project if:
    (a) The State or subgrantee is not required to match the funds; and
    (b) The project can be assisted under the authorizing statute and 
implementing regulations for the program.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))

                  State Administrative Responsibilities



Sec. 76.770  A State shall have procedures to ensure compliance.

    Each State shall have procedures for reviewing and approving 
applications for subgrants and amendments to those applications, for 
providing technical assistance, for evaluating projects, and for 
performing other administrative responsibilities the State has 
determined are necessary to ensure compliance with applicable statutes 
and regulations.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[57 FR 30342, July 8, 1992]



Sec. 76.783  State educational agency action--subgrantee's opportunity 
for a hearing.

    (a) A subgrantee may request a hearing if it alleges that any of the 
following actions by the State educational agency violated a State or 
Federal statute or regulation:
    (1) Ordering, in accordance with a final State audit resolution 
determination, the repayment of misspent or misapplied Federal funds; or
    (2) Terminating further assistance for an approved project.
    (b) The procedures in Sec. 76.401(d)(2)-(7) apply to any request 
for a hearing under this section.
    Note: This section is based on a provision in the General Education 
Provisions Act (GEPA). Section 427 of the Department of Education 
Organization Act (DEOA), 20 U.S.C. 3487, provides that except to the 
extent inconsistent with the DEOA, the GEPA ``shall apply to functions 
transferred by this Act to the extent applicable on the day preceding 
the effective date of this Act.'' Although standardized nomenclature is 
used in this section to reflect the creation of the Department of 
Education, there is no intent to extend the coverage of the GEPA beyond 
that authorized under section 427 or other applicable law.

(Authority: 20 U.S.C. 1231b-2)

[45 FR 22517, Apr. 3, 1980. Redesignated at 45 FR 77368, Nov. 21, 1980, 
as amended at 45 FR 86296, Dec. 30, 1980; 57 FR 30342, July 8, 1992]



Subpart H_How Does a State or Local Educational Agency Allocate Funds to 
                            Charter Schools?

    Source: 64 FR 71965, Dec. 22, 1999, unless otherwise noted.

                                 General



Sec. 76.785  What is the purpose of this subpart?

    The regulations in this subpart implement section 10306 of the 
Elementary and Secondary Education Act of 1965 (ESEA), which requires 
States to take measures to ensure that each charter school in the State 
receives the funds for which it is eligible under a covered program 
during its first year of operation and during subsequent years in which 
the charter school expands its enrollment.

(Authority: 20 U.S.C. 8065a)



Sec. 76.786  What entities are governed by this subpart?

    The regulations in this subpart apply to--
    (a) State educational agencies (SEAs) and local educational agencies 
(LEAs) that fund charter schools under a covered program, including SEAs 
and

[[Page 190]]

LEAs located in States that do not participate in the Department's 
Public Charter Schools Program;
    (b) State agencies that are not SEAs, if they are responsible for 
administering a covered program. State agencies that are not SEAs must 
comply with the provisions in this subpart that are applicable to SEAs; 
and
    (c) Charter schools that are scheduled to open or significantly 
expand their enrollment during the academic year and wish to participate 
in a covered program.

(Authority: 20 U.S.C. 8065a)



Sec. 76.787  What definitions apply to this subpart?

    For purposes of this subpart--
    Academic year means the regular school year (as defined by State 
law, policy, or practice) and for which the State allocates funds under 
a covered program.
    Charter school has the same meaning as provided in title X, part C 
of the ESEA.
    Charter school LEA means a charter school that is treated as a local 
educational agency for purposes of the applicable covered program.
    Covered program means an elementary or secondary education program 
administered by the Department under which the Secretary allocates funds 
to States on a formula basis, except that the term does not include a 
program or portion of a program under which an SEA awards subgrants on a 
discretionary, noncompetitive basis.
    Local educational agency has the same meaning for each covered 
program as provided in the authorizing statute for the program.
    Significant expansion of enrollment means a substantial increase in 
the number of students attending a charter school due to a significant 
event that is unlikely to occur on a regular basis, such as the addition 
of one or more grades or educational programs in major curriculum areas. 
The term also includes any other expansion of enrollment that the SEA 
determines to be significant.

(Authority: 20 U.S.C. 8065a)

               Reponsibilities for Notice and Information



Sec. 76.788  What are a charter school LEA's responsibilities under this 
subpart?

    (a) Notice. At least 120 days before the date a charter school LEA 
is scheduled to open or significantly expand its enrollment, the charter 
school LEA or its authorized public chartering agency must provide its 
SEA with written notification of that date.
    (b) Information. (1) In order to receive funds, a charter school LEA 
must provide to the SEA any available data or information that the SEA 
may reasonably require to assist the SEA in estimating the amount of 
funds the charter school LEA may be eligible to receive under a covered 
program.
    (2)(i) Once a charter school LEA has opened or significantly 
expanded its enrollment, the charter school LEA must provide actual 
enrollment and eligibility data to the SEA at a time the SEA may 
reasonably require.
    (ii) An SEA is not required to provide funds to a charter school LEA 
until the charter school LEA provides the SEA with the required actual 
enrollment and eligibility data.
    (c) Compliance. Except as provided in Sec. 76.791(a), or the 
authorizing statute or implementing regulations for the applicable 
covered program, a charter school LEA must establish its eligibility and 
comply with all applicable program requirements on the same basis as 
other LEAs.

(Approved by the Office of Management and Budget under control number 
1810-0623)

(Authority: 20 U.S.C. 8065a)



Sec. 76.789  What are an SEA's responsibilities under this subpart?

    (a) Information. Upon receiving notice under Sec. 76.788(a) of the 
date a charter school LEA is scheduled to open or significantly expand 
its enrollment, an SEA must provide the charter school LEA with timely 
and meaningful information about each covered program in which the 
charter school LEA may be eligible to participate, including notice of 
any upcoming competitions under the program.
    (b) Allocation of Funds. (1) An SEA must allocate funds under a 
covered

[[Page 191]]

program in accordance with this subpart to any charter school LEA that--
    (i) Opens for the first time or significantly expands its enrollment 
during an academic year for which the State awards funds by formula or 
through a competition under the program;
    (ii) In accordance with Sec. 76.791(a), establishes its eligibility 
and complies with all applicable program requirements; and
    (iii) Meets the requirements of Sec. 76.788(a).
    (2) In order to meet the requirements of this subpart, an SEA may 
allocate funds to, or reserve funds for, an eligible charter school LEA 
based on reasonable estimates of projected enrollment at the charter 
school LEA.
    (3)(i) The failure of an eligible charter school LEA or its 
authorized public chartering agency to provide notice to its SEA in 
accordance with Sec. 76.788(a) relieves the SEA of any obligation to 
allocate funds to the charter school within five months.
    (ii) Except as provided in Sec. 76.792(c), an SEA that receives 
less than 120 days' actual notice of the date an eligible charter school 
LEA is scheduled to open or significantly expand its enrollment must 
allocate funds to the charter school LEA on or before the date the SEA 
allocates funds to LEAs under the applicable covered program for the 
succeeding academic year.
    (iii) The SEA may provide funds to the charter school LEA from the 
SEA's allocation under the applicable covered program for the academic 
year in which the charter school LEA opened or significantly expanded 
its enrollment, or from the SEA's allocation under the program for the 
succeeding academic year.

(Approved by the Office of Management and Budget under control number 
1810-0623)

(Authority: 20 U.S.C. 8065a)

            Allocation of Funds by State Educational Agencies



Sec. 76.791  On what basis does an SEA determine whether a charter school 

LEA that opens or significantly expands its enrollment is eligible to 
receive funds under a covered program?

    (a) For purposes of this subpart, an SEA must determine whether a 
charter school LEA is eligible to receive funds under a covered program 
based on actual enrollment or other eligibility data for the charter 
school LEA on or after the date the charter school LEA opens or 
significantly expands its enrollment.
    (b) For the year the charter school LEA opens or significantly 
expands its enrollment, the eligibility determination may not be based 
on enrollment or eligibility data from a prior year, even if the SEA 
makes eligibility determinations for other LEAs under the program based 
on enrollment or eligibility data from a prior year.

(Authority: 20 U.S.C. 8065a)



Sec. 76.792  How does an SEA allocate funds to eligible charter school 

LEAs under a covered program in which the SEA awards subgrants on a 
formula basis?

    (a) For each eligible charter school LEA that opens or significantly 
expands its enrollment on or before November 1 of an academic year, the 
SEA must implement procedures that ensure that the charter school LEA 
receives the proportionate amount of funds for which the charter school 
LEA is eligible under each covered program.
    (b) For each eligible charter school LEA that opens or significantly 
expands its enrollment after November 1 but before February 1 of an 
academic year, the SEA must implement procedures that ensure that the 
charter school LEA receives at least a pro rata portion of the 
proportionate amount of funds for which the charter school LEA is 
eligible under each covered program. The pro rata amount must be based 
on the number of months or days during the academic year the charter 
school LEA will participate in the program as compared to the total 
number of months or days in the academic year.

[[Page 192]]

    (c) For each eligible charter school LEA that opens or significantly 
expands its enrollment on or after February 1 of an academic year, the 
SEA may implement procedures to provide the charter school LEA with a 
pro rata portion of the proportionate amount of funds for which the 
charter school LEA is eligible under each covered program.

(Authority: 20 U.S.C. 8065a)



Sec. 76.793  When is an SEA required to allocate funds to a charter 
school LEA under this subpart?

    Except as provided in Sec. Sec. 76.788(b) and 76.789(b)(3):
    (a) For each eligible charter school LEA that opens or significantly 
expands its enrollment on or before November 1 of an academic year, the 
SEA must allocate funds to the charter school LEA within five months of 
the date the charter school LEA opens or significantly expands its 
enrollment; and
    (b)(1) For each eligible charter school LEA that opens or 
significantly expands its enrollment after November 1, but before 
February 1 of an academic year, the SEA must allocate funds to the 
charter school LEA on or before the date the SEA allocates funds to LEAs 
under the applicable covered program for the succeeding academic year.
    (2) The SEA may provide funds to the charter school LEA from the 
SEA's allocation under the program for the academic year in which the 
charter school LEA opened or significantly expanded its enrollment, or 
from the SEA's allocation under the program for the succeeding academic 
year.

(Authority: 20 U.S.C. 8065a)



Sec. 76.794  How does an SEA allocate funds to charter school LEAs under a 
covered program in which the SEA awards subgrants on a discretionary basis?

    (a) Competitive programs. (1) For covered programs in which the SEA 
awards subgrants on a competitive basis, the SEA must provide each 
eligible charter school LEA in the State that is scheduled to open on or 
before the closing date of any competition under the program a full and 
fair opportunity to apply to participate in the program.
    (2) An SEA is not required to delay the competitive process in order 
to allow a charter school LEA that has not yet opened or significantly 
expanded its enrollment to compete for funds under a covered program.
    (b) Noncompetitive discretionary programs. The requirements in this 
subpart do not apply to discretionary programs or portions of programs 
under which the SEA does not award subgrants through a competition.

(Authority: 20 U.S.C. 8065a)

                               Adjustments



Sec. 76.796  What are the consequences of an SEA allocating more or fewer 

funds to a charter school LEA under a covered program than the amount for 
which the 
          charter school LEA is eligible when the charter school LEA 
          actually opens or significantly expands its enrollment?

    (a) An SEA that allocates more or fewer funds to a charter school 
LEA than the amount for which the charter school LEA is eligible, based 
on actual enrollment or eligibility data when the charter school LEA 
opens or significantly expands its enrollment, must make appropriate 
adjustments to the amount of funds allocated to the charter school LEA 
as well as to other LEAs under the applicable program.
    (b) Any adjustments to allocations to charter school LEAs under this 
subpart must be based on actual enrollment or other eligibility data for 
the charter school LEA on or after the date the charter school LEA first 
opens or significantly expands its enrollment, even if allocations or 
adjustments to allocations to other LEAs in the State are based on 
enrollment or eligibility data from a prior year.

(Authority: 20 U.S.C. 8065a)



Sec. 76.797  When is an SEA required to make adjustments to allocations 
under this subpart?

    (a) The SEA must make any necessary adjustments to allocations under 
a covered program on or before the date the SEA allocates funds to LEAs 
under the program for the succeeding academic year.

[[Page 193]]

    (b) In allocating funds to a charter school LEA based on adjustments 
made in accordance with paragraph (a) of this section, the SEA may use 
funds from the SEA's allocation under the applicable covered program for 
the academic year in which the charter school LEA opened or 
significantly expanded its enrollment, or from the SEA's allocation 
under the program for the succeeding academic year.

(Authority: 20 U.S.C. 8065a)

       Applicability of This Subpart to Local Educational Agencies



Sec. 76.799  Do the requirements in this subpart apply to LEAs?

    (a) Each LEA that is responsible for funding a charter school under 
a covered program must comply with the requirements in this subpart on 
the same basis as SEAs are required to comply with the requirements in 
this subpart.
    (b) In applying the requirements in this subpart (except for 
Sec. Sec. 76.785, 76.786, and 76.787) to LEAs, references to SEA (or 
State), charter school LEA, and LEA must be read as references to LEA, 
charter school, and public school, respectively.

(Authority: 20 U.S.C. 8065a)



   Subpart I_What Procedures Does the Secretary Use To Get Compliance?

    Source: 45 FR 22517, Apr. 3, 1980, unless otherwise noted. 
Redesignated at 45 FR 77368, Nov. 21, 1980, and further redesignated at 
64 FR 71965, Dec. 22, 1999.



Sec. 76.900  Waiver of regulations prohibited.

    (a) No official, agent, or employee of ED may waive any regulation 
that applies to a Department program unless the regulation specifically 
provide that it may be waived.
    (b) No act or failure to act by an official, agent, or employee of 
ED can affect the authority of the Secretary to enforce regulations.

(Authority: 43 Dec. Comp. Gen. 31(1963))



Sec. 76.901  Office of Administrative Law Judges.

    (a) The Office of Administrative Law Judges, established under Part 
E of GEPA, has the following functions:
    (1) Recovery of funds hearings under section 452 of GEPA.
    (2) Withholding hearings under section 455 of GEPA.
    (3) Cease and desist hearings under section 456 of GEPA.
    (4) Any other proceeding designated by the Secretary under section 
451 of GEPA.
    (b) The regulations of the Office of Administrative Law Judges are 
at 34 CFR part 81.

(Authority: 20 U.S.C. 1234)

[57 FR 30342, July 8, 1992]



Sec. 76.902  Judicial review.

    After a hearing by the Secretary, a State is usually entitled--
generally by the statute that required the hearing--to judicial review 
of the Secretary's decision.

(Authority: 20 U.S.C. 1221e-3, 3474, and 6511(a))



Sec. 76.910  Cooperation with audits.

    A grantee or subgrantee shall cooperate with the Secretary and the 
Comptroller General of the United States or any of their authorized 
representatives in the conduct of audits authorized by Federal law. This 
cooperation includes access without unreasonable restrictions to records 
and personnel of the grantee or subgrantee for the purpose of obtaining 
relevant information.

(Authority: 5 U.S.C. appendix 3, sections 4(a)(1), 4(b)(1)(A), and 
6(a)(1); 20 U.S.C. 1221e-3(a)(1), 1232f)

[54 FR 21776, May 19, 1989]



PART 77_DEFINITIONS THAT APPLY TO DEPARTMENT REGULATIONS--Table of Contents






Sec. 77.1  Definitions that apply to all Department programs.

    (a) [Reserved]
    (b) Unless a statute or regulation provides otherwise, the following 
definitions in part 74 or 80 of this title apply to the regulations in 
title 34 of the Code of Federal Regulations. The

[[Page 194]]

section of part 74 or 80 that contains the definition is given in 
parentheses.

Award (Sec. 74.2)
Contract (includes definition of ``Subcontract'') (Sec. 74.2) (Sec. 
80.3)
Equipment (Sec. 74.2) (Sec. 80.3)
Grant (Sec. 80.3)
Personal property (Sec. 74.2)
Project period (Sec. 74.2)
Real property (Sec. 74.2) (Sec. 80.3)
Recipient (Sec. 74.2)
Supplies (Sec. 74.2) (Sec. 80.3)

    (c) Unless a statute or regulation provides otherwise, the following 
definitions also apply to the regulations in this title:
    Acquisition means taking ownership of property, receiving the 
property as a gift, entering into a lease-purchase arrangement, or 
leasing the property. The term includes processing, delivery, and 
installation of property.
    Applicant means a party requesting a grant or subgrant under a 
program of the Department.
    Application means a request for a grant or subgrant under a program 
of the Department.
    Budget means that recipient's financial plan for carrying out the 
project or program.
    Budget period means an interval of time into which a project period 
is divided for budgetary purposes.
    Department means the U.S. Department of Education.
    Director of the Institute of Musuem Services means the Director of 
the Institute of Museum Services or an officer or employee of the 
Institute of Museum Services acting for the Director under a delegation 
of authority.
    Director of the National Institute of Education means the Director 
of the National Institute of Education or an officer or employee of the 
National Institute of Education acting for the Director under a 
delegation of authority.
    ED means the U.S. Department of Education.
    EDGAR means the Education Department General Administrative 
Regulations (34 CFR parts 74, 75, 76, 77, 79, 80, 81, 82, 85, 86, 97, 
98, and 99.)
    Elementary school means a day or residential school that provides 
elementary education, as determined under State law.
    Facilities means one or more structures in one or more locations.
    Fiscal year means the Federal fiscal year--a period beginning on 
October 1 and ending on the following September 30.
    GEPA means The General Education Provisions Act.
    Grant period means the period for which funds have been awarded.
    Grantee means the legal entity other than a Government subject to 34 
CFR part 80 to which a grant is awarded and which is accountable to the 
Federal Government 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 award document. For example, a grant award document 
may name as the grantee one school or campus of a university. In this 
case, the granting agency usually intends, or actually intends, that the 
named component assume primary or sole responsibility for administering 
the grant-assisted project or program. Nevertheless, the naming of a 
component of a legal entity as the grantee in a grant award document 
shall not be construed as relieving the whole legal entity from 
accountability to the Federal Government for the use of the funds 
provided. (This definition is not intended to affect the eligibility 
provision of grant programs in which eligibility is limited to 
organizations which may be only components of a legal entity.) The term 
``grantee'' does not include any secondary recipients such as 
subgrantees, contractors, etc., who may receive funds from a grantee 
pursuant to a grant. The definition of ``grantee'' for State, local, and 
tribal governments is contained in 34 CFR 80.3.
    Local educational agency means:
    (a) A public board of education or other public authority legally 
constituted within a State for either administrative control of or 
direction of, or to perform service functions for, public elementary or 
secondary schools in:
    (1) A city, county, township, school district, or other political 
subdivision of a State; or
    (2) Such combination of school districts or counties a State 
recognizes as an administrative agency for its public elementary or 
secondary schools; or

[[Page 195]]

    (b) Any other public institution or agency that has administrative 
control and direction of a public elementary or secondary school.
    (c) As used in 34 CFR parts 400, 408, 525, 526 and 527 (vocational 
education programs), the term also includes any other public institution 
or agency that has administrative control and direction of a vocational 
education program.
    Minor remodeling means minor alterations in a previously completed 
building. The term also includes the extension of utility lines, such as 
water and electricity, from points beyond the confines of the space in 
which the minor remodeling is undertaken but within the confines of the 
previously completed building. The term does not include building 
construction, stuctural alterations to buildings, building maintenance, 
or repairs.
    Nonprofit, as applied to an agency, organization, or institution, 
means that it is owned and operated by one or more corporations or 
associations whose net earnings do not benefit, and cannot lawfully 
benefit, any private shareholder or entity.
    Nonpublic, as applied to an agency, organization, or institution, 
means that the agency, organization, or institution is nonprofit and is 
not under Federal or public supervision or control.
    Preschool means the educational level from a child's birth to the 
time at which the State provides elementary education.
    Private, as applied to an agency, organization, or institution, 
means that it is not under Federal or public supervision or control.
    Project means the activity described in an application.
    Public, as applied to an agency, organization, or institution, means 
that the agency, organization, or institution is under the 
administrative supervision or control of a government other than the 
Federal Government.
    Secondary school means a day or residential school that provides 
secondary education as determined under State law. In the absence of 
State law, the Secretary may determine, with respect to that State, 
whether the term includes education beyond the twelfth grade.
    Secretary means the Secretary of the Department of Education or an 
official or employee of the Department acting for the Secretary under a 
delegation of authority.
    Service function, with respect to a local educational agency:
    (a) Means an educational service that is performed by a legal 
entity--such as an intermediate agency:
    (1)(i) Whose jurisdiction does not extend to the whole State; and
    (ii) That is authorized to provide consultative, advisory, or 
educational services to public elementary or secondary schools; or
    (2) That has regulatory functions over agencies having 
administrative control or direction of public elementary or secondary 
schools.
    (b) The term does not include a service that is performed by a 
cultural or educational resource.
    State means any of the 50 States, the Commonwealth of Puerto Rico, 
the District of Columbia, Guam, American Samoa, the Virgin Islands, the 
Northern Mariana Islands, or the Trust Territory of the Pacific Islands.
    State educational agency means the State board of education or other 
agency or officer primarily responsible for the supervision of public 
elementary and secondary schools in a State. In the absence of this 
officer or agency, it is an officer or agency designated by the Governor 
or State law.
    Work of art means an item that is incorporated into facilities 
primarily because of its aesthetic value.

(Authority: 20 U.S.C. 1221e-3(a)(1), 2831(a), 2974(b), and 3474)

[45 FR 22529, Apr. 3, 1980, as amended at 45 FR 37442, June 3, 1980. 
Redesignated at 45 FR 77368, Nov. 21, 1980, as amended at 45 FR 86298, 
Dec. 30, 1980; 54 FR 21776, May 19, 1989; 57 FR 30342, July 8, 1992; 59 
FR 34739, July 6, 1994; 64 FR 50392, Sept. 16, 1999]



PART 79_INTERGOVERNMENTAL REVIEW OF DEPARTMENT OF EDUCATION PROGRAMS AND 
ACTIVITIES--Table of Contents




Sec.
79.1 What is the purpose of these regulations?

[[Page 196]]

79.2 What definitions apply to these regulations?
79.3 What programs and activities of the Department are subject to these 
          regulations?
79.4 What are the Secretary's general responsibilities under the Order?
79.5 What is the Secretary's obligation with respect to Federal 
          interagency coordinations?
79.6 What procedures apply to the selection of programs and activities 
          under these regulations?
79.7 How does the Secretary communicate with State and local officials 
          concerning the Department's programs and activities?
79.8 How does the Secretary provide States an opportunity to comment on 
          proposed Federal financial assistance?
79.9 How does the Secretary receive and respond to comments?
79.10 How does the Secretary make efforts to accommodate 
          intergovernmental concerns?
79.11 What are the Secretary's obligations in interstate situations?
79.12 How may a State simplify, consolidate, or substitute federally 
          required State plans?
79.13 [Reserved]

    Authority: 31 U.S.C. 6506; 42 U.S.C. 3334; and E.O. 12372, unless 
otherwise noted.

    Source: 48 FR 29166, June 24, 1983, unless otherwise noted.



Sec. 79.1  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 and Section 204 of the Demonstration Cities and 
Metropolitan Development Act of 1966.
    (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 Department, and are not intended to create any right or benefit 
enforceable at law by a party against the Department or its officers.

(Authority: E.O. 12372)



Sec. 79.2  What definitions apply to these regulations?

    Department means the U.S. Department of Education.
    Order means Executive Order 12372, issued July 14, 1982, amended 
April 8, 1983, and titled ``Intergovernmental Review of Federal 
Programs.''
    Secretary means the Secretary of the U.S. Department of Education or 
an official or employee of the Department acting for the Secretary 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.

(Authority: E.O. 12372)



Sec. 79.3  What programs and activities of the Department are subject 
to these regulations?

    (a) The Secretary publishes in the Federal Register a list of the 
Department's programs and activities that are subject to these 
regulations and identifies which of these are subject to the 
requirements of section 204 of the Demonstration Cities and Metropolitan 
Development Act.
    (b) If a program or activity of the Department that provides Federal 
financial assistance does not have implementing regulations, the 
regulations in this part apply to that program or activity.
    (c) The following programs and activities are excluded from coverage 
under this part:
    (1) Proposed legislation.
    (2) Regulation and budget formulation.
    (3) National security matters.
    (4) Procurement.
    (5) Direct payments to individuals.
    (6) Financial transfers for which the Department has no funding 
discretion or direct authority to approve specific sites or projects 
(e.g., block grants under Chapter 2 of the Education Consolidation and 
Improvement Act of 1981).
    (7) Research and development national in scope.
    (8) Assistance to federally recognized Indian tribes.

[[Page 197]]

    (d) In addition to the programs and activities excluded in paragraph 
(c) of this section, the Secretary may only exclude a Federal financial 
assistance program or activity from coverage under this part if the 
program or activity does not directly affect State or local governments.

(Authority: E.O. 12372)

[48 FR 29166, June 24, 1983, as amended at 51 FR 20824, June 9, 1986]



Sec. 79.4  What are the Secretary's general responsibilities under the 
Order?

    (a) The Secretary 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 Department.
    (b) If a state adopts a process under the Order to review and 
coordinate proposed federal financial assistance, the Secretary, to the 
extent permitted by law:
    (1) Uses the state process to determine official views of state and 
local elected officials;
    (2) Communicates with state and local elected officials as early in 
a program planning cycle as is reasonably feasible to explain specific 
plans and actions;
    (3) Makes efforts to accommodate state and local elected official's 
concerns with proposed federal financial assistance that are 
communicated through the state process;
    (4) Allows the states to simplify and consolidate existing federally 
required state plan submissions;
    (5) Where state planning and budgeting systems are sufficient and 
where permitted by law, encourages the substitution of state plans for 
federally required state plans;
    (6) Seeks the coordination of views of affected state and local 
elected officials in one state with those of another state when proposed 
federal financial assistance has an impact on interstate metropolitan 
urban centers or other interstate areas; and
    (7) Supports state and local governments by discouraging the 
reauthorization or creation of any planning organization which is 
federally funded, which has a limited purpose, and which is not 
adequately representative of, or accountable to, state or local elected 
officials.

(Authority: E.O. 12372, Sec. 2)



Sec. 79.5  What is the Secretary's obligation with respect to Federal 
interagency coordination?

    The Secretary, to the maximum 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 the Department regarding programs and activities covered 
under these regulations.

(Authority: E.O. 12372)



Sec. 79.6  What procedures apply to the selection of programs and 
activities under these regulations?

    (a) A state may select any program or activity published in the 
Federal Register in accordance with Sec. 79.3 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 Secretary of 
the Department's programs and activities selected for that process.
    (c) A state may notify the Secretary of changes in its selections at 
any time. For each change, the state shall submit to the Secretary an 
assurance that the state has consulted with local elected officials 
regarding the change. The Department may establish deadlines by which 
states are required to inform the Secretary of changes in their program 
selections.
    (d) The Secretary uses a state's process as soon as feasible, 
depending on individual programs and activities, after the Secretary is 
notified of its selections.

(Authority: E.O. 12372, sec. 2)



Sec. 79.7  How does the Secretary communicate with State and local 
officials concerning the Department's programs and activities?

    (a) [Reserved]

[[Page 198]]

    (b)(1) The Secretary provides notice to directly affected state, 
areawide, regional, and local entities in a state of proposed federal 
financial assistance if:
    (i) The state has not adopted a process under the Order; or
    (ii) The assistance involves a program or activity not selected for 
the state process.
    (2) This notice may be made by publication in the Federal Register 
or other means which the Secretary determine appropriate.

(Authority: E.O. 12372, Sec. 2)



Sec. 79.8  How does the Secretary provide States an opportunity to 
comment on proposed Federal financial assistance?

    (a) Except in unusual circumstances, the Secretary gives State 
processes or directly affected State, areawide, regional, and local 
officials and entities--
    (1) At least 30 days to comment on proposed Federal financial 
assistance in the form of noncompeting continuation awards; and
    (2) At least 60 days to comment on proposed Federal financial 
assistance other than noncompeting continuation awards.
    (b) The Secretary establishes a date for mailing or hand-delivering 
comments under paragraph (a) of this section using one of the following 
two procedures:
    (1) If the comments relate to continuation award applications, the 
Secretary notifies each applicant and each State Single Point of Contact 
(SPOC) of the date by which SPOC comments should be submitted.
    (2) If the comments relate to applications for new grants, the 
Secretary establishes the date in a notice published in the Federal 
Register.
    (c) This section also applies to comments in cases in which the 
review, coordination, and communication with the Department have been 
delegated.
    (d) Applicants for programs and activities subject to Section 204 of 
the Demonstration Cities and Metropolitan Act shall allow areawide 
agencies a 60-day opportunity for review and comment.

(Authority: E.O. 12372, Sec. 2)

[48 FR 29166, June 24, 1983, as amended at 51 FR 20825, June 9, 1986]



Sec. 79.9  How does the Secretary receive and respond to comments?

    (a) The Secretary follows the procedure in Sec. 79.10 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, and identifies it as such, for a program selected under 
Sec. 79.6.
    (b)(1) The single point of contact is not obligated to transmit 
comments from state, areawide, regional, or local officials and entities 
if 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 to the Department.
    (d) If a program or activity is not selected for a state process, 
state, areawide, regional, and local officials and entities may submit 
comments to the Department. In addition, if a state process 
recommendation for a nonselected program or activity is transmitted to 
the Department by the single point of contact, the Secretary follows the 
procedures of Sec. 79.10.
    (e) The Secretary considers comments which do not constitute a state 
process recommendation submitted under these regulations and for which 
the Secretary is not required to apply the procedures of Sec. 79.10 of 
this part, if those comments are provided by a single point of contact, 
or directly to the Department by a commenting party.

(Authority: E.O. 12372, Sec. 2)

[48 FR 29166, June 24, 1983, as amended at 51 FR 20825, June 9, 1986]

[[Page 199]]



Sec. 79.10  How does the Secretary make efforts to accommodate 
intergovernmental concerns?

    (a) If a state process provides a state process recommendation to 
the Department through its single point of contact, the Secretary 
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 decision in such form as the Secretary deems appropriate. The 
Secretary 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 
Secretary informs the single point of contact that:
    (1) The Department will not implement its decision for at least ten 
days after the single point of contact receives the explanation; or
    (2) The Secretary has reviewed the decision and determined that, 
because of unusual circumstances, the waiting period of at least ten 
days is not feasible.
    (c) For purposes 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 the 
notification.

(Authority: E.O. 12372, Sec. 2)



Sec. 79.11  What are the Secretary's obligations in interstate situations?

    (a) The Secretary is responsible for:
    (1) Identifying proposed federal financial assistance that has an 
impact on interstate areas;
    (2) Notifying appropriate officials and entities in states which 
have adopted a process and which select the Department's program or 
activity.
    (3) Making efforts to identify and notify the affected state, 
areawide, regional, and local officials and entities in those states 
that have not adopted a process under the Order or do not select the 
Department's program or activity;
    (4) Responding under Sec. 79.10 if the Secretary receives a 
recommendation from a designated areawide agency transmitted by a single 
point of contact, in cases in which the review, coordination, and 
communication with the Department have been delegated.
    (b) In an interstate situation subject to this section, the 
Secretary uses the procedures in Sec. 79.10 if a state process provides 
a state process recommendation to the Department through a single point 
of contact.

(Authority: E.O. 12372, Sec. 2(e))



Sec. 79.12  How may a State simplify, consolidate, or substitute federally 
required State plans?

    (a) As used in this section:
    (1) Simplify means that a state may develop its own format, choose 
its own submission date, and select the planning period for a state 
plan.
    (2) Consolidate means that a state may meet statutory and regulatory 
requirements by combining two or more plans into one document and that 
the state can select the format, submission date, and planning period 
for the consolidated plan.
    (3) Substitute means that a state may use a plan or other document 
that it has developed for its own purposes to meet Federal requirements.
    (b) If not inconsistent with law, a state may decide to try to 
simplify, consolidate, or substitute federally required state plans 
without prior approval by the Secretary.
    (c) The Secretary reviews each state plan that a state has 
simplified, consolidated, or substituted and accepts the plan only if 
its contents meet federal requirements.

(Authority: E.O. 12372, sec. 2)



Sec. 79.13  [Reserved]



PART 80_UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE 
AGREEMENTS TO STATE AND LOCAL GOVERNMENTS--Table of Contents




                            Subpart A_General

Sec.
80.1 Purpose and scope of this part.
80.2 Scope of subpart.
80.3 Definitions.
80.4 Applicability.

[[Page 200]]

80.5 Effect on other issuances.
80.6 Additions and exceptions.

                    Subpart B_Pre-Award Requirements

80.10 Forms for applying for grants.
80.11 State plans.
80.12 Special grant or subgrant conditions for ``high-risk'' grantees.

                    Subpart C_Post-Award Requirements

                        Financial Administration

80.20 Standards for financial management systems.
80.21 Payment.
80.22 Allowable costs.
80.23 Period of availability of funds.
80.24 Matching or cost sharing.
80.25 Program income.
80.26 Non-Federal audit.

                    Changes, Property, and Subawards

80.30 Changes.
80.31 Real property.
80.32 Equipment.
80.33 Supplies.
80.34 Copyrights.
80.35 Subawards to debarred and suspended parties.
80.36 Procurement.
80.37 Subgrants.

               Reports, Records Retention, and Enforcement

80.40 Monitoring and reporting program performance.
80.41 Financial reporting.
80.42 Retention and access requirements for records.
80.43 Enforcement.
80.44 Termination for convenience.

                 Subpart D_After-the-Grant Requirements

80.50 Closeout.
80.51 Later disallowances and adjustments.
80.52 Collections of amounts due.

Subpart E--Entitlement [Reserved]

    Authority: 20 U.S.C. 1221e-3(a)(1) and 3474, OMB Circular A-102, 
unless otherwise noted.

    Effective Date Note: At 69 FR 31711, June 4, 2004, the authority 
citation for part 80 was revised, effective July 6, 2004. For the 
convenience of the user, the revised text is set forth as follows:
    Authority: 20 U.S.C. 1221e-3(a)(1) and 3474, OMB Circular A-102, 
unless otherwise noted.

    Source: 53 FR 8071 and 8087, Mar. 11, 1988, unless otherwise noted.



                            Subpart A_General



Sec. 80.1  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.

(Authority: 20 U.S.C. 3474; OMB Circular A-102)



Sec. 80.2  Scope of subpart.

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

(Authority: 20 U.S.C. 3474; OMB Circular A-102)



Sec. 80.3  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.

[[Page 201]]

    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.
    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.

[[Page 202]]

    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.
    (1) The definition of State in this section is used for the purpose 
of determining the scope of part 80 regulations. Some program 
regulations contain different definitions for State based on program 
statute eligibility requirements.
    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 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;

[[Page 203]]

    (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.

(Authority: 20 U.S.C. 3474; OMB Circular A-102)

[53 FR 8071 and 8087, Mar. 11, 1988, as amended at 53 FR 8072, Mar. 11, 
1988]



Sec. 80.4  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. 80.6, 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);
    (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

[[Page 204]]

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. 80.4(a) (3) through (8) are subject to Subpart E.

(Authority: 20 U.S.C. 3474; OMB Circular A-102)



Sec. 80.5  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. 80.6.

(Authority: 20 U.S.C. 3474; OMB Circular A-102)



Sec. 80.6  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 the Secretary after consultation with OMB.
    (c) Exceptions on a case-by-case basis and for subgrantees may be 
authorized by the affected Federal agencies.

(Authority: 20 U.S.C. 3474; OMB Circular A-102)

[53 FR 8071 and 8087, Mar. 11, 1988, as amended at 53 FR 8072, Mar. 11, 
1988]



                    Subpart B_Pre-Award Requirements



Sec. 80.10  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 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

[[Page 205]]

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.

(Approved by the Office of Management and Budget under control number 
1880-0517)

(Authority: 20 U.S.C. 3474; OMB Circular A-102)

[53 FR 8071 and 8087, Mar. 11, 1988, as amended at 53 FR 49143, Dec. 6, 
1988]



Sec. 80.11  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.

(Authority: 20 U.S.C. 3474; OMB Circular A-102)



Sec. 80.12  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 and the time allowed for completing the corrective actions and
    (4) The method of requesting reconsideration of the conditions/
restrictions imposed.

(Authority: 20 U.S.C. 3474; OMB Circular A-102)

[[Page 206]]



                    Subpart C_Post-Award Requirements

                        Financial Administration



Sec. 80.20  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.

(Approved by the Office of Management and Budget under control number 
1880-0517)

(Authority: 20 U.S.C. 3474; OMB Circular A-102)

[53 FR 8071 and 8087, Mar. 11, 1988, as amended at 53 FR 49143, Dec. 6, 
1988]



Sec. 80.21  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

[[Page 207]]

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 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. 80.43(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

[[Page 208]]

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.

(Authority: 20 U.S.C. 3474; OMB Circular A-102)



Sec. 80.22  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) For each kind of organization, there is a set of Federal 
principles for determining allowable costs. For the costs of a State, 
local, or Indian tribal government, the Secretary applies the cost 
principles in OMB Circular A-87, as amended on June 9, 1987.

------------------------------------------------------------------------
           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.
------------------------------------------------------------------------


(Authority: 20 U.S.C. 3474; OMB Circular A-102)

[53 FR 8071 and 8087, Mar. 11, 1988, as amended at 53 FR 8072, Mar. 11, 
1988]



Sec. 80.23  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.

(Authority: 20 U.S.C. 3474; OMB Circular A-102)



Sec. 80.24  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

[[Page 209]]

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. 80.25, 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. 80.25(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.

[[Page 210]]

    (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. 80.22, 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.

(Approved by the Office of Management and Budget under control number 
1880-0517)

(Authority: 20 U.S.C. 3474; OMB Circular A-102)

[53 FR 8071 and 8087, Mar. 11, 1988, as amended at 53 FR 49143, Dec. 6, 
1988]



Sec. 80.25  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.

[[Page 211]]

    (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. 80.34.)
    (f) Property. Proceeds from the sale of real property or equipment 
will be handled in accordance with the requirements of Sec. Sec. 80.31 
and 80.32.
    (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.

(Authority: 20 U.S.C. 3474; OMB Circular A-102)



Sec. 80.26  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 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

[[Page 212]]

governments should use their own procedures to ensure that the 
contractors has complied with laws and regulations affecting the 
expenditures 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, OMB Circular A-133, 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. 80.36 
shall be followed.

(Authority: 20 U.S.C. 1221e-3(a)(1) and 3474, OMB Circulars A-102, A-128 
and A-133)

    Note: The requirements for non-Federal audits are contained in the 
appendix to part 80--Audit Requirements for State and Local Governments.

[53 FR 8071 and 8087, Mar. 11, 1988, as amended at 53 FR 8072, Mar. 11, 
1988; 56 FR 1698, Jan. 16, 1991; 62 FR 45939, 45943, Aug. 29, 1997]

                    Changes, Property, and Subawards



Sec. 80.30  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. 80.22) 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.

[[Page 213]]

    (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. 80.36 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. 80.22) 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.

(Approved by the Office of Management and Budget under control number 
1880-0517)

(Authority: 20 U.S.C. 3474; OMB Circular A-102)

[53 FR 8071 and 8087, Mar. 11, 1988, as amended at 53 FR 49143, Dec. 6, 
1988]



Sec. 80.31  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.
    (d) The provisions of paragraph (c) of this section do not apply to 
disaster assistance under 20 U.S.C. 241-1(b)-(c) and

[[Page 214]]

the construction provisions of the Impact Aid Program, 20 U.S.C. 631-
647.

(Authority: 20 U.S.C. 3474; OMB Circular A-102)

[53 FR 8071 and 8087, Mar. 11, 1988, as amended at 53 FR 8072, Mar. 11, 
1988]



Sec. 80.32  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.
    (3) Notwithstanding the encouragement in Sec. 80.25(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.

[[Page 215]]

    (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. 80.32(e).
    (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.
    (h) The provisions of paragraphs (c), (d), (e), and (g) of this 
section do not apply to disaster assistance under 20 U.S.C. 241-1(b)-(c) 
and the construction provisions of the Impact Aid Program, 20 U.S.C. 
631-647.

(Approved by the Office of Management and Budget under control number 
1880-0517)

(Authority: 20 U.S.C. 3474; OMB Circular A-102)

[53 FR 8071 and 8087, Mar. 11, 1988, as amended at 53 FR 8072, Mar. 11, 
1988; 53 FR 49143, Dec. 6, 1988]



Sec. 80.33  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.

(Authority: 20 U.S.C. 3474; OMB Circular A-102)



Sec. 80.34  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.

(Authority: 20 U.S.C. 3474; OMB Circular A-102)



Sec. 80.35  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.''

(Authority: 20 U.S.C. 3474; OMB Circular A-102)



Sec. 80.36  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

[[Page 216]]

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.
    (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

[[Page 217]]

    (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. 80.36. 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,
    (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

[[Page 218]]

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 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. 80.36(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

[[Page 219]]

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 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 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.

[[Page 220]]

    (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. 80.22). 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 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

[[Page 221]]

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 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).

(Approved by the Office of Management and Budget under control number 
1880-0517)

(Authority: 20 U.S.C. 3474; OMB Circular A-102)

[53 FR 8071 and 8087, Mar. 11, 1988, as amended at 53 FR 49143, Dec. 6, 
1988; 60 FR 19639, 19643, Apr. 19, 1995]

[[Page 222]]


    Effective Date Note: At 69 FR 31711, June 4, 2004, Sec. thnsp;80.36 
was amended by adding new paragraph (j), effective July 6, 2004. For the 
convenience of the user, the added text is set forth as follows:

Sec. 80.36  Procurement.

                                * * * * *

    (j) Contracting with faith-based organizations. (1)(i) A faith-based 
organization is eligible to contract with grantees and subgrantees, 
including States, on the same basis as any other private organization, 
with respect to contracts for which such other organizations are 
eligible.
    (ii) In the selection of goods and services providers, grantees and 
subgrantees, including States, shall not discriminate for or against a 
private organization on the basis of the organization's religious 
character or affiliation.
    (2) The provisions of Sec. Sec. 75.532 and 76.532 applicable to 
grantees and subgrantees apply to a faith-based organization that 
contracts with a grantee or subgrantee, including a State, unless the 
faith-based organization is selected as a result of the genuine and 
independent private choices of individual beneficiaries of the program 
and provided the organization otherwise satisfies the requirements of 
the program.
    (3) A private organization that engages in inherently religious 
activities, such as religious worship, instruction, or proselytization, 
must offer those services separately in time or location from any 
programs or services supported by a contract with a grantee or 
subgrantee, including a State, and participation in any such inherently 
religious activities by beneficiaries of the programs supported by the 
contract must be voluntary, unless the organization is selected as a 
result of the genuine and independent private choices of individual 
beneficiaries of the program and provided the organization otherwise 
satisfies the requirements of the program.
    (4)(i) A faith-based organization that contracts with a grantee or 
subgrantee, including a State, may retain its independence, autonomy, 
right of expression, religious character, and authority over its 
governance.
    (ii) A faith-based organization may, among other things--
    (A) Retain religious terms in its name;
    (B) Continue to carry out its mission, including the definition, 
development, practice, and expression of its religious beliefs;
    (C) Use its facilities to provide services without removing or 
altering religious art, icons, scriptures, or other symbols from these 
facilities;
    (D) Select its board members and otherwise govern itself on a 
religious basis; and
    (E) Include religious references in its mission statement and other 
chartering or governing documents.
    (5) A private organization that contracts with a grantee or 
subgrantee, including a State, shall not discriminate against a 
beneficiary or prospective beneficiary in the provision of program 
services on the basis of religion or religious belief.
    (6) A religious organization's exemption from the Federal 
prohibition on employment discrimination on the basis of religion, in 
section 702(a) of the Civil Rights Act of 1964, 42 U.S.C. 2000e-1, is 
not forfeited when the organization contracts with a grantee or 
subgrantee.



Sec. 80.37  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. 80.42 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.

[[Page 223]]

    (c) Exceptions. By their own terms, certain provisions of this part 
do not apply to the award and administration of subgrants:
    (1) Section 80.10;
    (2) Section 80.11;
    (3) The letter-of-credit procedures specified in Treasury 
Regulations at 31 CFR part 205, cited in Sec. 80.21; and
    (4) Section 80.50.

(Authority: 20 U.S.C. 3474; OMB Circular A-102)

               Reports, Records Retention, and Enforcement



Sec. 80.40  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 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

[[Page 224]]

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.

(Approved by the Office of Management and Budget under control number 
1880-0517)

(Authority: 20 U.S.C. 3474; OMB Circular A-102)

[53 FR 8071 and 8087, Mar. 11, 1988, as amended at 53 FR 49143, Dec. 6, 
1988]



Sec. 80.41  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, 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. 80.41(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.

[[Page 225]]

    (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 
Sec. 80.41(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. 80.41(d), instead of this form.
    (ii) The frequency for submitting reimbursement requests is treated 
in Sec. 80.41(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. 80.41(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. 80.41(d).
    (iii) The Federal agency may substitute the Financial Status Report 
specified in Sec. 80.41(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. 80.41(b)(2).

(Approved by the Office of Management and Budget under control number 
1880-0517)

(Authority: 20 U.S.C. 3474; OMB Circular A-102)

[53 FR 8071 and 8087, Mar. 11, 1988, as amended at 53 FR 49143, Dec. 6, 
1988]



Sec. 80.42  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:

[[Page 226]]

    (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. 80.36(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.
    (4) A recipient that receives funds under a program subject to 20 
U.S.C. 1232f (section 437 of the General Education Provisions Act) shall 
retain records for a minimum of three years after the starting date 
specified in paragraph (c) of this section.
    (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 
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

[[Page 227]]

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.

(Approved by the Office of Management and Budget under control number 
1880-0517)

(Authority: 20 U.S.C. 3474; OMB Circular A-102)

[53 FR 8071 and 8087, Mar. 11, 1988, as amended at 53 FR 8072, Mar. 11, 
1988; 53 FR 49143, Dec. 6, 1988; 64 FR 50392, Sept. 16, 1999]



Sec. 80.43  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 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. 80.35).

(Authority: 20 U.S.C. 3474; OMB Circular A-102)



Sec. 80.44  Termination for convenience.

    Except as provided in Sec. 80.43 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.

[[Page 228]]

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. 80.43 or 
paragraph (a) of this section.

(Authority: 20 U.S.C. 3474; OMB Circular A-102)



                 Subpart D_After-the-Grant Requirements



Sec. 80.50  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. 
80.32(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.

(Approved by the Office of Management and Budget under control number 
1880-0517)

(Authority: 20 U.S.C. 3474; OMB Circular A-102)

[53 FR 8071 and 8087, Mar. 11, 1988, as amended at 53 FR 49143, Dec. 6, 
1988]



Sec. 80.51  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. 80.42;
    (d) Property management requirements in Sec. Sec. 80.31 and 80.32; 
and
    (e) Audit requirements in Sec. 80.26.

(Authority: 20 U.S.C. 3474; OMB Circular A-102)



Sec. 80.52  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]

[[Page 229]]



PART 81_GENERAL EDUCATION PROVISIONS ACT_ENFORCEMENT--Table of Contents




                      Subpart A_General Provisions

Sec.
81.1 Purpose.
81.2 Definitions.
81.3 Jurisdiction of the Office of Administrative Law Judges.
81.4 Membership and assignment to cases.
81.5 Authority and responsibility of an Administrative Law Judge.
81.6 Hearing on the record.
81.7 Non-party participation.
81.8 Representation.
81.9 Location of proceedings.
81.10 Ex parte communications.
81.11 Motions.
81.12 Filing requirements.
81.13 Mediation.
81.14 Settlement negotiations.
81.15 Evidence.
81.16 Discovery.
81.17 Privileges.
81.18 The record.
81.19 Costs and fees of parties.
81.20 Interlocutory appeals to the Secretary from rulings of an ALJ.

                Subpart B_Hearings for Recovery of Funds

81.30 Basis for recovery of funds.
81.31 Measure of recovery.
81.32 Proportionality.
81.33 Mitigating circumstances.
81.34 Notice of a disallowance decision.
81.35 Reduction of claims.
81.36 Compromise of claims under General Education Provisions Act.
81.37 Application for review of a disallowance decision.
81.38 Consideration of an application for review.
81.39 Submission of evidence.
81.40 Burden of proof.
81.41 Initial decision.
81.42 Petition for review of initial decision.
81.43 Review by the Secretary.
81.44 Final decision of the Department.
81.45 Collection of claims.

Appendix to Part 81--Illustrations of Proportionality

    Authority: 20 U.S.C. 1221e-3, 1234-1234i, and 3474(a), unless 
otherwise noted.

    Source: 54 FR 19512, May 5, 1989, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 81.1  Purpose.

    The regulations in this part govern the enforcement of legal 
requirements under applicable programs administered by the Department of 
Education and implement Part E of the General Education Provisions Act 
(GEPA).

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), and 3474(a))



Sec. 81.2  Definitions.

    The following definitions apply to the terms used in this part:
    Administrative Law Judge (ALJ) means a judge appointed by the 
Secretary in accordance with section 451 (b) and (c) of GEPA.
    Applicable program means any program for which the Secretary of 
Education has administrative responsibility, except a program authorized 
by--
    (a) The Higher Education Act of 1965, as amended;
    (b) The Act of September 30, 1950 (Pub. L. 874, 81st Congress), as 
amended; or
    (c) The Act of September 23, 1950 (Pub. L. 815, 81st Congress), as 
amended.
    Department means the United States Department of Education.
    Disallowance decision means the decision of an authorized 
Departmental official that a recipient must return funds because it made 
an expenditure of funds that was not allowable or otherwise failed to 
discharge its obligation to account properly for funds. Such a decision, 
referred to as a ``preliminary departmental decision'' in section 452 of 
GEPA, is subject to review by the Office of Administrative Law Judges.
    Party means either of the following:
    (a) A recipient that appeals a decision.
    (b) An authorized Departmental official who issues a decision that 
is appealed.
    Recipient means the recipient of a grant or cooperative agreement 
under an applicable program.
    Secretary means the Secretary of the Department of Education or an 
official or employee of the Department acting for the Secretary under a 
delegation of authority.

(Authority: 20 U.S.C. 1221e-3, 1234 (b), (c), and (f)(1), 1234a(a)(1), 
1234i, and 3474(a))

[54 FR 19512, May 5, 1989, as amended at 58 FR 43473, Aug. 16, 1993]

[[Page 230]]



Sec. 81.3  Jurisdiction of the Office of Administrative Law Judges.

    (a) The Office of Administrative Law Judges (OALJ) established under 
section 451(a) of GEPA has jurisdiction to conduct the following 
proceedings concerning an applicable program:
    (1) Hearings for recovery of funds.
    (2) Withholding hearings.
    (3) Cease and desist hearings.
    (b) The OALJ also has jurisdiction to conduct other proceedings 
designated by the Secretary. If a proceeding or class of proceedings is 
so designated, the Department publishes a notice of the designation in 
the Federal Register.

(Authority: 5 U.S.C. 554, 20 U.S.C. 1234(a))



Sec. 81.4  Membership and assignment to cases.

    (a) The Secretary appoints Administrative Law Judges as members of 
the OALJ.
    (b) The Secretary appoints one of the members of the OALJ to be the 
chief judge. The chief judge is responsible for the efficient and 
effective administration of the OALJ.
    (c) The chief judge assigns an ALJ to each case or class of cases 
within the jurisdiction of the OALJ.

(Authority: 20 U.S.C. 1221e-3, 1234 (b) and (c), and 3474(a))



Sec. 81.5  Authority and responsibility of an Administrative Law Judge.

    (a) An ALJ assigned to a case conducts a hearing on the record. The 
ALJ regulates the course of the proceedings and the conduct of the 
parties to ensure a fair, expeditious, and economical resolution of the 
case in accordance with applicable law.
    (b) An ALJ is bound by all applicable statutes and regulations and 
may neither waive them nor rule them invalid.
    (c) An ALJ is disqualified in any case in which the ALJ has a 
substantial interest, has been of counsel, is or has been a material 
witness, or is so related to or connected with any party or the party's 
attorney as to make it improper for the ALJ to be assigned to the case.
    (d)(1) An ALJ may disqualify himself or herself at any time on the 
basis of the standards in paragraph (c) of this section.
    (2) A party may file a motion to disqualify an ALJ under the 
standards in paragraph (c) of this section. A motion to disqualify must 
be accompanied by an affidavit that meets the requirements of 5 U.S.C. 
556(b). Upon the filing of such a motion and affidavit, the ALJ decides 
the disqualification matter before proceeding further with the case.

(Authority: 5 U.S.C. 556(b); 20 U.S.C. 1221e-3, 1234 (d), (f)(1) and 
(g)(1), and 3474(a))



Sec. 81.6  Hearing on the record.

    (a) A hearing on the record is a process for the orderly 
presentation of evidence and arguments by the parties.
    (b) Except as otherwise provided in this part or in a notice of 
designation under Sec. 81.3(b), an ALJ conducts the hearing entirely on 
the basis of briefs and other written submissions unless--
    (1) The ALJ determines, after reviewing all appropriate submissions, 
that an evidentiary hearing is needed to resolve a material factual 
issue in dispute; or
    (2) The ALJ determines, after reviewing all appropriate submissions, 
that oral argument is needed to clarify the issues in the case.
    (c) At a party's request, the ALJ shall confer with the parties in 
person or by conference telephone call before determining whether an 
evidentiary hearing or an oral argument is needed.

Authority: 5 U.S.C. 556(d); 20 U.S.C. 1221e-3, 1234(f)(1), and 3474)



Sec. 81.7  Non-party participation.

    (a) A person or organization, other than a party, that wishes to 
participate in a case shall file an application to participate with the 
ALJ assigned to the case. The application must--
    (1) Identify the case in which participation is sought;
    (2) State how the applicant's interest relates to the case;
    (3) State how the applicant's participation would aid in the 
disposition of the case; and
    (4) State how the applicant seeks to participate.
    (b) The ALJ may permit an applicant to participate if the ALJ 
determines that the applicant's participation--

[[Page 231]]

    (1) Will aid in the disposition of the case;
    (2) Will not unduly delay the proceedings; and
    (3) Will not prejudice the adjudication of the parties' rights.
    (c) If the ALJ permits an applicant to participate, the ALJ permits 
the applicant to file briefs.
    (d)(1) In addition to the participation described in paragraph (c) 
of this section, the ALJ may permit the applicant to participate in any 
or all of the following ways:
    (i) Submit documentary evidence.
    (ii) Participate in an evidentiary hearing afforded the parties.
    (iii) Participate in an oral argument afforded the parties.
    (2) The ALJ may place appropriate limits on an applicant's 
participation to ensure the efficient conduct of the proceedings.
    (e) A non-party participant shall comply with the requirements for 
parties in Sec. 81.11 and Sec. 81.12.

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), and 3474(a))



Sec. 81.8  Representation.

    A party to, or other participant in, a case may be represented by 
counsel.

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), and 3474(a))



Sec. 81.9  Location of proceedings.

    (a) An ALJ may hold conferences of the parties in person or by 
conference telephone call.
    (b) Any conference, hearing, argument, or other proceeding at which 
the parties are required to appear in person is held in the Washington, 
DC metropolitan area unless the ALJ determines that the convenience and 
necessity of the parties or their representatives requires that it be 
held elsewhere.

(Authority: 5 U.S.C. 554(b); 20 U.S.C. 1221e-3, 1234(f)(1), and 3474(a))



Sec. 81.10  Ex parte communications.

    A party to, or other participant in, a case may not communicate with 
an ALJ on any fact in issue in the case or on any matter relevant to the 
merits of the case unless the parties are given notice and an 
opportunity to participate.

(Authority: 5 U.S.C. 554(d)(1), 557(d)(1)(A); 20 U.S.C. 1221e-3, 
1234(f)(1), and 3474(a))



Sec. 81.11  Motions.

    (a) To obtain an order or a ruling from an ALJ, a party shall make a 
motion to the ALJ.
    (b) Except for a request for an extension of time, a motion must be 
made in writing unless the parties appear in person or participate in a 
conference telephone call. The ALJ may require a party to reduce an oral 
motion to writing.
    (c) If a party files a motion, the party shall serve a copy of the 
motion on the other party on the filing date by hand-delivery or by 
mail. If agreed upon by the parties, service of the motion may be made 
upon the other party by facsimile transmission.
    (d) Except for a request for an extension of time, the ALJ may not 
grant a party's written motion without the consent of the other party 
unless the other party has had at least 21 days from the date of service 
of the motion to respond. However, the ALJ may deny a motion without 
awaiting a response.
    (e) The date of service of a motion is determined by the standards 
for determining a filing date in Sec. 81.12(d).

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), and 3474(a))

[54 FR 19512, May 5, 1989, as amended at 57 FR 56795, Nov. 30, 1992]



Sec. 81.12  Filing requirements.

    (a) Any written submission to an ALJ or the OALJ under this part 
must be filed by hand-delivery, by mail, or by facsimile transmission. 
The Secretary discourages the use of facsimile transmission for 
documents longer than five pages.
    (b) If a party files a brief or other document with an ALJ or the 
OALJ, the party shall serve a copy of the filed material on the other 
party on the filing date by hand-delivery or by mail. If agreed upon by 
the parties, service of a document may be made upon the other party by 
facsimile transmission.
    (c) Any written submission to an ALJ or the OALJ must be accompanied 
by a

[[Page 232]]

statement certifying the date that the filed material was filed and 
served on the other party.
    (d)(1) The filing date for a written submission to an ALJ or the 
OALJ is the date the document is--
    (i) Hand-delivered;
    (ii) Mailed; or
    (iii) Sent by facsimile transmission.
    (2) If a scheduled filing date falls on a Saturday, Sunday, or 
Federal holiday, the filing deadline is the next business day.
    (e) A party filing by facsimile transmission is responsible for 
confirming that a complete and legible copy of the document was received 
by the Department.
    (f) If a document is filed by facsimile transmission, a follow-up 
hard copy must be filed by hand-delivery or by mail within a reasonable 
period of time.

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), and 3474(a))

[54 FR 19512, May 5, 1989, as amended at 57 FR 56795, Nov. 30, 1992]



Sec. 81.13  Mediation.

    (a) Voluntary mediation is available for proceedings that are 
pending before the OALJ.
    (b) A mediator must be independent of, and agreed to by, the parties 
to the case.
    (c) A party may request mediation by filing a motion with the ALJ 
assigned to the case. The OALJ arranges for a mediator if the parties to 
the case agree to mediation.
    (d) A party may terminate mediation at any time. Mediation is 
limited to 120 days unless the mediator informs the ALJ that--
    (1) The parties are likely to resolve some or all of the dispute; 
and
    (2) An extension of time will facilitate an agreement.
    (e) The ALJ stays the proceedings during mediation.
    (f)(1) Evidence of conduct or statements made during mediation is 
not admissible in any proceeding under this part. However, evidence that 
is otherwise discoverable may not be excluded merely because it was 
presented during mediation.
    (2) A mediator may not disclose, in any proceeding under this part, 
information acquired as a part of his or her official mediation duties 
that relates to any fact in issue in the case or any matter relevant to 
the merits of the case.

(Authority: 20 U.S.C. 1221e-3, 1234 (f)(1) and (h), and 3474(a))



Sec. 81.14  Settlement negotiations.

    (a) If the parties to a case file a joint motion requesting a stay 
of the proceedings for settlement negotiations, or for approval of a 
settlement agreement, the ALJ may grant a stay of the proceedings upon a 
finding of good cause.
    (b) Evidence of conduct or statements made during settlement 
negotiations is not admissible in any proceeding under this part. 
However, evidence that is otherwise discoverable may not be excluded 
merely because it was presented during settlement negotiations.
    (c) The parties may not disclose the contents of settlement 
negotiations to the ALJ. If the parties enter into a settlement 
agreement and file a joint motion to dismiss the case, the ALJ grants 
the motion.

(Authority: 20 U.S.C. 554(c)(1), 1221e-3, 1234(f)(1), and 3474(a))

[54 FR 19512, May 5, 1989, as amended at 58 FR 43473, Aug. 16, 1993]



Sec. 81.15  Evidence.

    (a) The Federal Rules of Evidence do not apply to proceedings under 
this part. However, the ALJ accepts only evidence that is--
    (1) Relevant;
    (2) Material;
    (3) Not unduly repetitious; and
    (4) Not inadmissible under Sec. 81.13 or Sec. 81.14.
    (b) The ALJ may take official notice of facts that are generally 
known or capable of accurate and ready determination by resort to 
sources whose accuracy cannot reasonably be questioned.

(Authority: 5 U.S.C. 556 (d) and (e); 20 U.S.C. 1221e-3, 1234(f)(1), and 
3474(a))



Sec. 81.16  Discovery.

    (a) The parties to a case are encouraged to exchange relevant 
documents and information voluntarily.

[[Page 233]]

    (b) The ALJ, at a party's request, may order compulsory discovery 
described in paragraph (c) of this section if the ALJ determines that--
    (1) The order is necessary to secure a fair, expeditious, and 
economical resolution of the case;
    (2) The discovery requested is likely to elicit relevant information 
with respect to an issue in the case;
    (3) The discovery request was not made primarily for the purposes of 
delay or harassment; and
    (4) The order would serve the ends of justice.
    (c) If a compulsory discovery is permissible under paragraph (b) of 
this section, the ALJ may order a party to do one or more of the 
following:
    (1) Make relevant documents available for inspection and copying by 
the party making the request.
    (2) Answer written interrogatories that inquire into relevant 
matters.
    (3) Have depositions taken.
    (d) The ALJ may issue a subpoena to enforce an order described in 
this section and may apply to the appropriate court of the United States 
to enforce the subpoena.
    (e) The ALJ may not compel the discovery of information that is 
legally privileged.
    (f)(1) The ALJ limits the period for discovery to not more than 90 
days but may grant an extension for good cause.
    (2) At a party's request, the ALJ may set a specific schedule for 
discovery.

(Authority: 20 U.S.C. 1234(f)(1) and (g))



Sec. 81.17  Privileges.

    The privilege of a person or governmental organization not to 
produce documents or provide information in a proceeding under this part 
is governed by the principles of common law as interpreted by the courts 
of the United States.

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), and 3474(a))



Sec. 81.18  The record.

    (a) The ALJ arranges for any evidentiary hearing or oral argument to 
be recorded and transcribed and makes the transcript available to the 
parties. Transcripts are made available to non-Departmental parties at a 
cost not to exceed the actual cost of duplication.
    (b) The record of a hearing on the record consists of--
    (1) All papers filed in the proceeding;
    (2) Documentary evidence admitted by the ALJ;
    (3) The transcript of any evidentiary hearing or oral argument; and
    (4) Rulings, orders, and subpoenas issued by the ALJ.

(Authority: 5 U.S.C. 556(e), 557(c); 20 U.S.C. 1221e-3(a)(1), 
1234(f)(1), 3474(a))

[54 FR 19512, May 5, 1989, as amended at 58 FR 43473, Aug. 16, 1993]



Sec. 81.19  Costs and fees of parties.

    The Equal Access to Justice Act, 5 U.S.C. 504, applies by its terms 
to proceedings under this part. Regulations under that statute are in 34 
CFR part 21.

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), and 3474(a))



Sec. 81.20  Interlocutory appeals to the Secretary from rulings of an ALJ.

    (a) A ruling by an ALJ may not be appealed to the Secretary until 
the issuance of an initial decision, except that the Secretary may, at 
any time prior to the issuance of an initial decision, grant review of a 
ruling upon either an ALJ's certification of the ruling to the Secretary 
for review, or the filing of a petition seeking review of an interim 
ruling by one or both of the parties, if--
    (1) That ruling involves a controlling question of substantive or 
procedural law; and
    (2) The immediate resolution of the question will materially advance 
the final disposition of the proceeding or subsequent review will be an 
inadequate remedy.
    (b)(1) A petition for interlocutory review of an interim ruling must 
include the following:
    (i) A brief statement of the facts necessary to an understanding of 
the issue on which review is sought.
    (ii) A statement of the issue.

[[Page 234]]

    (iii) A statement of the reasons showing that the ruling complained 
of involves a controlling question of substantive or procedural law and 
why immediate review of the ruling will materially advance the 
disposition of the case, or why subsequent review will be an inadequate 
remedy.
    (2) A petition may not exceed ten pages, double-spaced, and must be 
accompanied by a copy of the ruling and any findings and opinions 
relating to the ruling. The petition must be filed with the Office of 
Hearings and Appeals, which immediately forwards the petition to the 
Office of the Secretary.
    (c) A copy of the petition must be provided to the ALJ at the time 
the petition is filed under paragraph (b)(2) of this section, and a copy 
of a petition or any certification must be served upon the parties by 
certified mail, return receipt requested. The petition or certification 
must reflect that service.
    (d) If a party files a petition under this section, the ALJ may 
state to the Secretary a view as to whether review is appropriate or 
inappropriate by submitting a brief statement addressing the party's 
petition within 10 days of the ALJ's receipt of the petition for 
interlocutory review. A copy of the statement must be served on all 
parties by certified mail, return receipt requested.
    (e)(1) A party's response, if any, to a petition or certification 
for interlocutory review must be filed within seven days after service 
of the petition or certification, and may not exceed ten pages, double-
spaced, in length. A copy of the response must be filed with the ALJ by 
hand delivery, by regular mail, or by facsimile transmission.
    (2) A party shall serve a copy of its response on all parties on the 
filing date by hand-delivery or regular mail. If agreed upon by the 
parties, service of a copy of the response may be made upon the other 
parties by facsimile transmission.
    (f) The filing of a request for interlocutory review does not 
automatically stay the proceedings. Rather, a stay during consideration 
of a petition for review may be granted by the ALJ if the ALJ has 
certified or stated to the Secretary that review of the ruling is 
appropriate. The Secretary may order a stay of proceedings at any time 
after the filing of a request for interlocutory review.
    (g) The Secretary notifies the parties if a petition or 
certification for interlocutory review is accepted, and may provide the 
parties a reasonable time within which to submit written argument or 
other existing material in the administrative record with regard to the 
merit of the petition or certification.
    (h) If the Secretary takes no action on a request for interlocutory 
review within 15 days of receipt of it, the request is deemed to be 
denied.
    (i) The Secretary may affirm, modify, set aside, or remand the ALJ's 
ruling.

(Authority: 5 U.S.C. 557(b); 20 U.S.C. 1234(f)(1))

[58 FR 43473, Aug. 16, 1993]



                Subpart B_Hearings for Recovery of Funds



Sec. 81.30  Basis for recovery of funds.

    (a) Subject to the provisions of Sec. 81.31, an authorized 
Departmental official requires a recipient to return funds to the 
Department if--
    (1) The recipient made an unallowable expenditure of funds under a 
grant or cooperative agreement; or
    (2) The recipient otherwise failed to discharge its obligation to 
account properly for funds under a grant or cooperative agreement.
    (b) An authorized Departmental offcial may base a decision to 
require a recipient to return funds upon an audit report, an 
investigative report, a monitoring report, or any other evidence.

(Authority: 20 U.S.C. 1234a(a) (1) and (2))

[54 FR 19512, May 5, 1989. Redesignated and amended at 58 FR 43473, Aug. 
16, 1993]



Sec. 81.31  Measure of recovery.

    A recipient that made an unallowable expenditure or otherwise failed 
to discharge its obligation to account properly for funds shall return 
an amount that--
    (a) Meets the standards for proportionality in Sec. 81.32;
    (b) In the case of a State or local educational agency, excludes any 
amount

[[Page 235]]

attributable to mitigating circumstances under the standards in Sec. 
81.23; and
    (c) Excludes any amount expended in a manner not authorized by law 
more than five years before the recipient received the notice of a 
disallowance decision under Sec. 81.34.

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), 1234a(k), 1234b (a) and (b), 
and 3474(a))

[54 FR 19512, May 5, 1989; 54 FR 21622, May 19, 1989. Redesignated and 
amended at 58 FR 43473, Aug. 16, 1993]



Sec. 81.32  Proportionality.

    (a)(1) A recipient that made an unallowable expenditure or otherwise 
failed to account properly for funds shall return an amount that is 
proportional to the extent of the harm its violation caused to an 
identifiable Federal interest associated with the program under which it 
received the grant or cooperative agreement.
    (2) An identifiable Federal interest under paragraph (a)(1) of this 
section includes, but is not limited to, the following:
    (i) Serving only eligible beneficiaries.
    (ii) Providing only authorized services or benefits.
    (iii) Complying with expenditure requirements and conditions, such 
as set-aside, excess cost, maintenance of effort, comparability, 
supplement-not-supplant, and matching requirements.
    (iv) Preserving the integrity of planning, application, 
recordkeeping, and reporting requirements.
    (v) Maintaining accountability for the use of funds.
    (b) The appendix to this part contains examples that illustrate how 
the standards for proportionality apply. The examples present 
hypothetical cases and do not represent interpretations of any actual 
program statute or regulation.

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), 1234b(a), and 3474(a))

[54 FR 19512, May 5, 1989. Redesignated at 58 FR 43473, Aug. 16, 1993]



Sec. 81.33  Mitigating circumstances.

    (a) A recipient that is a State or local educational agency and that 
has made an unallowable expenditure or otherwise failed to account 
properly for funds is not required to return any amount that is 
attributable to the mitigating circumstances described in paragraph (b), 
(c), or (d) of this section.
    (b) Mitigating circumstances exist if it would be unjust to compel 
the recovery of funds because the recipient's violation was caused by 
erroneous written guidance from the department. To prove mitigating 
circumstances under this paragraph, the recipient shall prove that--
    (1) The guidance was provided in response to a specific written 
request from the recipient that was submitted to the Department at the 
address provided by notice published in the Federal Register under this 
section;
    (2) The guidance was provided by a Departmental official authorized 
to provide the guidance, as described by that notice;
    (3) The recipient actually relied on the guidance as the basis for 
the conduct that constituted the violation; and
    (4) The recipient's reliance on the guidance was reasonable.
    (c) Mitigating circumstances exist if it would be unjust to compel 
the recovery of funds because the recipient's violation was caused by 
the Department's failure to provide timely guidance. To prove mitigating 
circumstances under this paragraph, the recipient shall prove that--
    (1) The recipient in good faith submitted a written request for 
guidance with respect to the legality of a proposed expenditure or 
practice;
    (2) The request was submitted to the Department at the address 
provided by notice published in the Federal Register under this section;
    (3) The request--
    (i) Accurately described the proposed expenditure or practice; and
    (ii) Included the facts necessary for the Department's determination 
of its legality;
    (4) The request contained the certification of the chief legal 
officer of the appropriate State educational agency that the officer--
    (i) Examined the proposed expenditure or practice; and
    (ii) Believed it was permissible under State and Federal law 
applicable at the time of the certification;

[[Page 236]]

    (5) The recipient reasonably believed the proposed expenditure or 
practice was permissible under State and Federal law applicable at the 
time it submitted the request to the Department;
    (6) No Departmental official authorized to provide the requested 
guidance responded to the request within 90 days of its receipt by the 
Department; and
    (7) The recipient made the proposed expenditure or engaged in the 
proposed practice after the expiration of the 90-day period.
    (d) Mitigating circumstances exist if it would be unjust to compel 
the recovery of funds because the recipient's violation was caused by 
the recipient's compliance with a judicial decree from a court of 
competent jurisdiction. To prove mitigating circumstances under this 
paragraph, the recipient shall prove that--
    (1) The recipient was legally bound by the decree;
    (2) The recipient actually relied on the decree when it engaged in 
the conduct that constituted the violation; and
    (3) The recipient's reliance on the decree was reasonable.
    (e) If a Departmental official authorized to provide the requested 
guidance responds to a request described in paragraph (c) of this 
section more than 90 days after its receipt, the recipient that made the 
request shall comply with the guidance at the earliest practicable time.

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), 1234b(b), and 3474(a))

[54 FR 19512, May 5, 1989. Redesignated at 58 FR 43473, Aug. 16, 1993]



Sec. 81.34  Notice of a disallowance decision.

    (a) If an authorized Departmental official decides that a recipient 
must return funds under Sec. 81.30, the official gives the recipient 
written notice of a disallowance decision. The official sends the notice 
by certified mail, return receipt requested, or other means that ensure 
proof of receipt.
    (b)(1) The notice must establish a prima facie case for the recovery 
of funds, including an analysis reflecting the value of the program 
services actually obtained in a determination of harm to the Federal 
interest.
    (2) For the purpose of this section, a prima facie case is a 
statement of the law and the facts that, unless rebutted, is sufficient 
to sustain the conclusion drawn in the notice. The facts may be set out 
in the notice or in a document that is identified in the notice and 
available to the recipient.
    (3) A statement that the recipient failed to maintain records 
required by law or failed to allow an authorized representative of the 
Secretary access to those records constitutes a prima facie case for the 
recovery of the funds affected.
    (i) If the recipient failed to maintain records, the statement must 
briefly describe the types of records that were not maintained and 
identify the recordkeeping requirement that was violated.
    (ii) If the recipient failed to allow access to records, the 
statement must briefly describe the recipient's actions that constituted 
the failure and identify the access requirement that was violated.
    (c) The notice must inform the recipient that it may--
    (1) Obtain a review of the disallowance decision by the OALJ; and
    (2) Request mediation under Sec. 81.13.
    (d) The notice must describe--
    (1) The time available to apply for a review of the disallowance 
decision; and
    (2) The procedure for filing an application for review.

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), 1234a(a), and 3474(a))

[54 FR 19512, May 5, 1989. Redesignated and amended at 58 FR 43473, Aug. 
16, 1993; 60 FR 46494, Sept. 6, 1995; 61 FR 14484, Apr. 2, 1996]



Sec. 81.35  Reduction of claims.

    The Secretary or an authorized Departmental official as appropriate 
may, after the issuance of a disallowance decision, reduce the amount of 
a claim established under this subpart by--
    (a) Redetermining the claim on the basis of the proper application 
of the law, including the standards for the measure of recovery under 
Sec. 81.31, to the facts;
    (b) Compromising the claim under the Federal Claims Collection 
Standards in 4 CFR part 103; or

[[Page 237]]

    (c) Compromising the claim under Sec. 81.36, if applicable.

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), 1234a(j), and 3474(a); 31 
U.S.C. 3711)

[54 FR 19512, May 5, 1989. Redesignated and amended at 58 FR 43473, Aug. 
16, 1993]



Sec. 81.36  Compromise of claims under General Education Provisions Act.

    (a) The Secretary or an authorized Departmental official as 
appropriate may compromise a claim established under this subpart 
without following the procedures in 4 CFR part 103 if--
    (1)(i) The amount of the claim does not exceed $200,000; or
    (ii) The difference between the amount of the claim and the amount 
agreed to be returned does not exceed $200,000; and
    (2) The Secretary or the official determines that--
    (i) The collection of the amount by which the claim is reduced under 
the compromise would not be practical or in the public interest; and
    (ii) The practice that resulted in the disallowance decision has 
been corrected and will not recur.
    (b) Not less than 45 days before compromising a claim under this 
section, the Department publishes a notice in the Federal Register 
stating--
    (1) The intention to compromise the claim; and
    (2) That interested persons may comment on the proposed compromise.

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), 1234a (j), and 3474(a))

[54 FR 19512, May 5, 1989. Redesignated at 58 FR 43473, Aug. 16, 1993]



Sec. 81.37  Application for review of a disallowance decision.

    (a) If a recipient wishes to obtain review of a disallowance 
decision, the recipient shall file a written application for review with 
the Office of Administrative Law Judges, c/o Docket Clerk, Office of 
Hearings and Appeals, and, as required by Sec. 81.12(b), shall serve a 
copy on the applicable Departmental official who made the disallowance 
decision.
    (b) A recipient shall file an application for review not later than 
60 days after the date it receives the notice of a disallowance 
decision.
    (c) Within 10 days after receipt of a copy of the application for 
review, the authorized Departmental official who made the disallowance 
decision shall provide the ALJ with a copy of any document identified in 
the notice pursuant to Sec. 81.34(b)(2).
    (d) An application for review must contain--
    (1) A copy of the disallowance decision of which review is sought;
    (2) A statement certifying the date the recipient received the 
notice of that decision;
    (3) A short and plain statement of the disputed issues of law and 
fact, the recipient's position with respect to these issues, and the 
disallowed funds the recipient contends need not be returned; and
    (4) A statement of the facts and the reasons that support the 
recipient's position.
    (e) The ALJ who considers a timely application for review that 
substantially complies with the requirements of paragraph (c) of this 
section may permit the recipient to supplement or amend the application 
with respect to issues that were timely raised. Any requirement to 
return funds that is not timely appealed becomes the final decision of 
the Department.

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), 1234a(b)(1), and 3474(a))

[54 FR 19512, May 5, 1989. Redesignated and amended at 58 FR 43473, 
43474, Aug. 16, 1993; 58 FR 51013, Sept. 30, 1993; 60 FR 46494, Sept. 6, 
1995]



Sec. 81.38  Consideration of an application for review.

    (a) The ALJ assigned to the case under Sec. 81.4 considers an 
application for review of a disallowance decision.
    (b) The ALJ decides whether the notice of a disallowance decision 
meets the requirements of Sec. 81.34, as provided by section 451(e) of 
GEPA.
    (1) If the notice does not meet those requirements, the ALJ--
    (i) Returns the notice, as expeditiously as possible, to the 
authorized Departmental official who made the disallowance decision;
    (ii) Gives the official the reasons why the notice does not meet the 
requirements of Sec. 81.34; and

[[Page 238]]

    (iii) Informs the recipient of the ALJ's decision by certified mail, 
return receipt requested.
    (2) An authorized Departmental official may modify and reissue a 
notice that an ALJ returns.
    (c) If the notice of a disallowance decision meets the requirements 
of Sec. 81.34, the ALJ decides whether the application for review meets 
the requirements of Sec. 81.37.
    (1) If the application, including any supplements or amendments 
under Sec. 81.37(d), does not meet those requirements, the disallowance 
decision becomes the final decision of the Department.
    (2) If the application meets those requirements, the ALJ--
    (i) Informs the recipient and the authorized Departmental official 
that the OALJ has accepted jurisdiction of the case; and
    (ii) Schedules a hearing on the record.
    (3) The ALJ informs the recipient of the disposition of its 
application for review by certified mail, return receipt requested. If 
the ALJ decides that the application does not meet the requirements of 
Sec. 81.37, the ALJ informs the recipient of the reasons for the 
decision.

(Authority: 20 U.S.C. 1221e-3, 1234 (e) and (f)(1), 1234a(b), and 
3474(a))

[54 FR 19512, May 5, 1989. Redesignated and amended at 58 FR 43473, Aug. 
16, 1993]



Sec. 81.39  Submission of evidence.

    (a) The ALJ schedules the submission of the evidence, whether oral 
or documentary, to occur within 90 days of the OALJ's receipt of an 
acceptable application for review under Sec. 81.37.
    (b) The ALJ may waive the 90-day requirement for good cause.

(Authority: 5 U.S.C. 556(d); 20 U.S.C. 1221e-3, 1234(f)(1), 1234a(c), 
and 3474(a))

[54 FR 19512, May 5, 1989. Redesignated and amended at 58 FR 43473, Aug. 
16, 1993]



Sec. 81.40  Burden of proof.

    If the OALJ accepts jurisdiction of a case under Sec. 81.38, the 
recipient shall present its case first and shall have the burden of 
proving that the recipient is not required to return the amount of funds 
that the disallowance decision requires to be returned because--
    (a) An expenditure identified in the disallowance decision as 
unallowable was allowable;
    (b) The recipient discharged its obligation to account properly for 
the funds;
    (c) The amount required to be returned does not meet the standards 
for proportionality in Sec. 81.32;
    (d) The amount required to be returned includes an amount 
attributable to mitigating circumstances under the standards in Sec. 
81.33; or
    (e) The amount required to be returned includes an amount expended 
in a manner not authorized by law more than five years before the 
recipient received the notice of the disallowance decision.

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), 1234a(b)(3), 1234b(b)(1), and 
3474(a))

[54 FR 19512, May 5, 1989. Redesignated and amended at 58 FR 43473, Aug. 
16, 1993]



Sec. 81.41  Initial decision.

    (a) The ALJ makes an initial decision based on the record.
    (b) The initial decision includes the ALJ's findings of fact, 
conclusions of law, and reasoning on all material issues.
    (c) The initial decision is transmitted to the Secretary by hand-
delivery or Department mail, and to the parties by certified mail, 
return receipt requested, by the Office of Administrative Law Judges.
    (d) For the purpose of this part, ``initial decision'' includes an 
ALJ's modified decision after the Secretary's remand of a case.

(Authority: 5 U.S.C. 557(c); 20 U.S.C 1221e-3, 1234(f)(1), and 3474(a))

[54 FR 19512, May 5, 1989. Redesignated and amended at 58 FR 43473, 
43474, Aug. 16, 1993]



Sec. 81.42  Petition for review of initial decision.

    (a) If a party seeks to obtain the Secretary's review of the initial 
decision of an ALJ, the party shall file a petition for review with the 
Office of Hearings and Appeals, which immediately forwards the petition 
to the Office of the Secretary.

[[Page 239]]

    (b) A party shall file a petition for review not later than 30 days 
after the date it receives the initial decision.
    (c) If a party files a petition for review, the party shall serve a 
copy of the petition on the other party on the filing date by hand 
delivery or by ``overnight or express'' mail. If agreed upon by the 
parties, service of a copy of the petition may be made upon the other 
party by facsimile transmission.
    (d) Any written submission to the Secretary under this section must 
be accompanied by a statement certifying the date that the filed 
material was served on the other party.
    (e) A petition for review of an initial decision must contain--
    (1) The identity of the initial decision for which review is sought; 
and
    (2) A statement of the reasons asserted by the party for affirming, 
modifying, setting aside, or remanding the initial decision in whole or 
in part.
    (f)(1) A party may respond to a petition for review of an initial 
decision by filing a statement of its views on the issues raised in the 
petition with the Secretary, as provided for in this section, not later 
than 15 days after the date it receives the petition.
    (2) A party shall serve a copy of its statement of views on the 
other party by hand delivery or mail, and shall certify that it has done 
so pursuant to the provisions of paragraph (d) of this section. If 
agreed upon by the parties, service of a copy of the statement of views 
may be made upon the other party by facsimile transmission.
    (g)(1) The filing date for written submissions under this section is 
the date the document is--
    (i) Hand delivered;
    (ii) Mailed; or
    (iii) Sent by facsimile transmission.
    (2) If a scheduled filing date falls on a Saturday, Sunday or a 
Federal holiday, the filing deadline is the next business day.

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), 1234a(e), and 3474(a))

[58 FR 43474, Aug. 16, 1993]



Sec. 81.43  Review by the Secretary.

    (a)(1) The Secretary's review of an initial decision is based on the 
record of the case, the initial decision, and any proper submissions of 
the parties or other participants in the case.
    (2) During the Secretary's review of the initial decision there 
shall not be any ex parte contact between the Secretary and individuals 
representing the Department or the recipient.
    (b) The ALJ's findings of fact, if supported by substantial 
evidence, are conclusive.
    (c) The Secretary may affirm, modify, set aside, or remand the ALJ's 
initial decision.
    (1) If the Secretary modifies, sets aside, or remands an initial 
decision, in whole or in part, the Secretary's decision includes a 
statement of reasons that supports the Secretary's decision.
    (2)(i) The Secretary may remand the case to the ALJ with 
instructions to make additional findings of fact or conclusions of law, 
or both, based on the evidence of record. The Secretary may also remand 
the case to the ALJ for further briefing or for clarification or 
revision of the initial decision.
    (ii) If a case is remanded, the ALJ shall make new or modified 
findings of fact or conclusions of law or otherwise modify the initial 
decision in accordance with the Secretary's remand order.
    (iii) A party may appeal a modified decision of the ALJ under the 
provisions of Sec. Sec. 81.42 through 81.45. However, upon that review, 
the ALJ's new or modified findings, if supported by substantial 
evidence, are conclusive.
    (3) The Secretary, for good cause shown, may remand the case to the 
ALJ to take further evidence, and the ALJ may make new or modified 
findings of fact and may modify the initial decision based on that new 
evidence. These new or modified findings of fact are likewise conclusive 
if supported by substantial evidence.

(Authority: 5 U.S.C. 557(b); 20 U.S.C. 1221e-3, 1234(f)(1), 1234a(d), 
and 3474(a))

[58 FR 43474, Aug. 16, 1993, as amended at 60 FR 46494, Sept. 6, 1995]



Sec. 81.44  Final decision of the Department.

    (a) The ALJ's initial decision becomes the final decision of the 
Department 60 days after the recipient receives the ALJ's decision 
unless the

[[Page 240]]

Secretary modifies, sets aside, or remands the decision during the 60-
day period.
    (b) If the Secretary modifies or sets aside the ALJ's initial 
decision, a copy of the Secretary's decision is sent by the Office of 
Hearings and Appeals to the parties by certified mail, return receipt 
requested. The Secretary's decision becomes the final decision of the 
Department on the date the recipient receives the Secretary's decision.

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), 1234a(g), and 3474(a))

[54 FR 19512, May 5, 1989. Redesignated and amended at 58 FR 43473, 
43474, Aug. 16, 1993]



Sec. 81.45  Collection of claims.

    (a) An authorized Departmental official collects a claim established 
under this subpart by using the standards and procedures in 34 CFR part 
30.
    (b) A claim established under this subpart may be collected--
    (1) 30 days after a recipient receives notice of a disallowance 
decision if the recipient fails to file an acceptable application for 
review under Sec. 81.37; or
    (2) On the date of the final decision of the Department under Sec. 
81.44 if the recipient obtains review of a disallowance decision.
    (c) The Department takes no collection action pending judicial 
review of a final decision of the Department under section 458 of GEPA.
    (d) If a recipient obtains review of a disallowance decision under 
Sec. 81.38, the Department does not collect interest on the claim for 
the period between the date of the disallowance decision and the date of 
the final decision of the Department under Sec. 81.44.

(Authority: 20 U.S.C. 1234(f)(1); 1234a(f)(1) and (2), (i), and (1))

[54 FR 19512, May 5, 1989. Redesignated and amended at 58 FR 43473, Aug. 
16, 1993]

          Appendix to Part 81--Illustrations of Proportionality

    (1) Ineligible beneficiaries. A State uses 15 percent of its grant 
to meet the special educational needs of children who were migratory, 
but who have not migrated for more than five years as a Federal program 
statute requires for eligibility to participate in the program. Result: 
Recovery of 15 percent of the grant--all program funds spent for the 
benefit of those children. Although the services were authorized, the 
children were not eligible to receive them.
    (2) Ineligible beneficiaries. A Federal program designed to meet the 
special educational needs of gifted and talented children requires that 
at least 80 percent of the children served in any project must be 
identified as gifted or talented. A local educational agency (LEA) 
conducts a project in which 76 students are identified as gifted or 
talented and 24 are not. The project was designed and implemented to 
meet the special educational needs of gifted and talented students. 
Result: The LEA must return five percent of the project costs. The LEA 
provided authorized services for a project in which the 76 target 
students had to constitute at least 80 percent of the total. Thus, the 
maximum number of non-target students permitted was 19. Project costs 
relating to the remaining five students must be returned.
    (3) Ineligible beneficiaries. Same as the example in paragraph (2), 
except that only 15 percent of the children were identified as gifted or 
talented. On the basis of the low percentage of these children and other 
evidence, the authorized Departmental official finds that the project as 
a whole did not address their special educational needs and was outside 
the purpose of the statute. Result: The LEA must return its entire 
award. The difference between the required percentage of gifted and 
talented children and the percentage actually enrolled is so substantial 
that, if consistent with other evidence, the official may reasonably 
conclude the entire grant was misused.
    (4) Ineligible beneficiaries. Same as the example in paragraph (2), 
except that 60 percent of the children were identified as gifted or 
talented, and it is not clear whether the project was designed or 
implemented to meet the special educational needs of these children. 
Result: If it is determined that the project was designed and 
implemented to serve their special educational needs, the LEA must 
return 25 percent of the project costs. A project that included 60 
target children would meet the requirement that 80 percent of the 
children served be gifted and talented if it included no more than 15 
other children. Thus, while the LEA provided authorized services, only 
75 percent of the beneficiaries were authorized to participate in the 
project (60 target children and 15 others). If the authorized 
Departmental official, after examining all the relevant facts, 
determines that the project was not designed and implemented to serve 
the special educational needs of gifted or talented students, the LEA 
must return its entire award because it did not provide services 
authorized by the statute.
    (5) Unauthorized activities. An LEA uses ten percent of its grant 
under a Federal program that authorizes activities only to meet the 
special educational needs of educationally

[[Page 241]]

deprived children to pay for health services that are available to all 
children in the LEA. All the children who use the Federally funded 
health services happen to be educationally deprived, and thus eligible 
to receive program services. Result: Recovery of ten percent of the 
grant--all program funds spent for the health services. Although the 
children were eligible to receive program services, the health services 
were unrelated to a special educational need and, therefore, not 
authorized by law.
    (6) Set-aside requirement. A State uses 22 percent of its grant for 
one fiscal year under a Federal adult education program to provide 
programs of equivalency to a certificate of graduation from a secondary 
school. The adult education program statute restricts those programs to 
no more than 20 percent of the State's grant. Result: Two percent of the 
State's grant must be returned. Although all 22 percent of the funds 
supported adult education, the State had no authority to spend more than 
20 percent on secondary school equivalency programs.
    (7) Set-aside requirement. A State uses eight percent of its basic 
State grant under a Federal vocational education program to pay for the 
excess cost of vocational education services and activities for 
handicapped individuals. The program statute requires a State to use ten 
percent of its basic State grant for this purpose. Result: The State 
must return two percent of its basic State grant, regardless of how it 
was used. Because the State was required to spend that two percent on 
services and activities for handicapped individuals and did not do so, 
it diverted those funds from their intended purposes, and the Federal 
interest was harmed to that extent.
    (8) Excess cost requirement. An LEA uses funds reserved for the 
disadvantaged under a Federal vocational education program to pay for 
the cost of the same vocational education services it provides to non-
disadvantaged individuals. The program statute requires that funds 
reserved for the disadvantaged must be used to pay only for the 
supplemental or additional costs of vocational education services that 
are not provided to other individuals and that are required for 
disadvantaged individuals to participate in vocational education. 
Result: All the funds spent on the disadvantaged must be returned. 
Although the funds were spent to serve the disadvantaged, the funds were 
available to pay for only the supplemental or additional costs of 
providing services to the disadvantaged.
    (9) Maintenance-of-effort requirement. An LEA participates in a 
Federal program in fiscal year 1988 that requires it to maintain its 
expenditures from non-Federal sources for program purposes to receive 
its full allotment. The program statute requires that non-Federal funds 
expended in the first preceding fiscal year must be at least 90 percent 
of non-Federal funds expended in the second preceding fiscal year and 
provides for a reduction in grant amount proportional to the shortfall 
in expenditures. No waiver of the requirement is authorized. In fiscal 
year 1986 the LEA spent $100,000 from non-Federal sources for program 
purposes; in fiscal year 1987, only $87,000. Result: The LEA must return 
1/30 of its fiscal year 1988 grant--the amount of its grant that equals 
the proportion of its shortfall ($3,000) to the required level of 
expenditures ($90,000). If, instead, the statute made maintenance of 
expenditures a clear condition of the LEA's eligibility to receive funds 
and did not provide for a proportional reduction in the grant award, the 
LEA would be required to return its entire grant.
    (10) Supplanting prohibition. An LEA uses funds under a Federal drug 
education program to provide drug abuse prevention counseling to 
students in the eighth grade. The LEA is required to provide that same 
counseling under State law. Funds under the Federal program statute are 
subject to a supplement-not-supplant requirement. Result: All the funds 
used to provide the required counseling to the eighth-grade students 
must be returned. The Federal funds did not increase the total amount of 
spending for program purposes because the counseling would have been 
provided with non-Federal funds if the Federal funds were not available.
    (11) Matching requirement. A State receives an allotment of $90,000 
for fiscal year 1988 under a Federal adult education program. It expends 
its full allotment and $8,000 from its own resources for adult 
education. Under the Federal statute, the Federal share of expenditures 
for the State's program is 90 percent. Result: The State must return the 
unmatched Federal funds, or $18,000. Expenditure of a $90,000 Federal 
allotment required $10,000 in matching State expenditures, $2,000 more 
than the State's actual expenditures. At a ratio of one State dollar for 
every nine Federal dollars, $18,000 in Federal funds were unmatched.
    (12) Application requirements. In order to receive funds under a 
Federal program that supports a wide range of activities designed to 
improve the quality of elementary and secondary education, an LEA 
submits an application to its State educational agency (SEA) for a 
subgrant to carry out school-level basic skills development programs. 
The LEA submits its application after conducting an assessment of the 
needs of its students in consultation with parents, teachers, community 
leaders, and interested members of the general public. The Federal 
program statute requires the application and consultation processes. The 
SEA reviews the LEA's application, determines that the proposed programs 
are sound and the application is in compliance with Federal law, and 
approves the application. After the LEA receives the subgrant, it 
unilaterally decides to use 20 percent of the funds for gifted and

[[Page 242]]

talented elementary school students--an authorized activity under the 
Federal statute. However, the LEA does not consult with interested 
parties and does not amend its application. Result: 20 percent of the 
LEA's subgrant must be returned. The LEA had no legal authority to use 
Federal funds for programs or activities other than those described in 
its approved application, and its actions with respect to 20 percent of 
the subgrant not only impaired the integrity of the application process, 
but caused significant harm to other Federal interests associated with 
the program as follows: the required planning process was circumvented 
because the LEA did not consult with the specified local interests; 
program accountability was impaired because neither the SEA nor the 
various local interests that were to be consulted had an opportunity to 
review and comment on the merits of the gifted and talented program 
activities, and the LEA never had to justify those activities to them; 
and fiscal accountability was impaired because the SEA and those various 
local interests were, in effect, misled by the LEA's unamended 
application regarding the expenditure of Federal funds.
    (13) Harmless violation. Under a Federal program, a grantee is 
required to establish a 15-member advisory council of affected teachers, 
school administrators, parents, and students to assist in program 
design, monitoring, and evaluation. Although the law requires at least 
three student members of the council, a grantee's council contains only 
two. The project is carried out, and no damage to the project 
attributable to the lack of a third student member can be identified. 
Result: No financial recovery is required, although the grantee must 
take other appropriate steps to come into compliance with the law. The 
grantee's violation has not measurably harmed a Federal interest 
associated with the program.

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), 1234b(a), and 3474(a))

[54 FR 19512, May 5, 1989; 54 FR 21622, May 19, 1989]



PART 82_NEW RESTRICTIONS ON LOBBYING--Table of Contents




                            Subpart A_General

Sec.
82.100 Conditions on use of funds.
82.105 Definitions.
82.110 Certification and disclosure.

                  Subpart B_Activities by Own Employees

82.200 Agency and legislative liaison.
82.205 Professional and technical services.
82.210 Reporting.

            Subpart C_Activities by Other Than Own Employees

82.300 Professional and technical services.

                   Subpart D_Penalties and Enforcement

82.400 Penalties.
82.405 Penalty procedures.
82.410 Enforcement.

                          Subpart E_Exemptions

82.500 Secretary of Defense.

                        Subpart F_Agency Reports

82.600 Semi-annual compilation.
82.605 Inspector General report.

Appendix A to Part 82--Certification Regarding Lobbying
Appendix B to Part 82--Disclosure Form to Report Lobbying

    Authority: Section 319, Pub. L. 101-121 (31 U.S.C. 1352); 20 U.S.C. 
3474.

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

    Source: 55 FR 6737, 6752, Feb. 26, 1990, unless otherwise noted.



                            Subpart A_General



Sec. 82.100  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.

[[Page 243]]

    (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. 82.105  Definitions.

    For purposes of this part:
    (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

[[Page 244]]

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 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. 82.110  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

[[Page 245]]

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 
paragraphs (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,

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 paragraphs 
(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. 82.200  Agency and legislative liaison.

    (a) The prohibition on the use of appropriated funds, in Sec. 
82.100(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

[[Page 246]]

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. 82.205  Professional and technical services.

    (a) The prohibition on the use of appropriated funds, in Sec. 
82.100(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, 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. 82.210  Reporting.

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

[[Page 247]]



            Subpart C_Activities by Other Than Own Employees



Sec. 82.300  Professional and technical services.

    (a) The prohibition on the use of appropriated funds, in Sec. 
82.100(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. 82.110(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 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. 82.400  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.

[[Page 248]]

    (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 paragraphs (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. 82.405  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. 82.410  Enforcement.

    The head of each agency shall take such actions as are necessary to 
ensure that the provisions herein are vigorously implemented and 
enforced in that agency.



                          Subpart E_Exemptions



Sec. 82.500  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. 82.600  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

[[Page 249]]

(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. 82.605  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.
    (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 82--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.

[[Page 250]]

    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.

[[Page 251]]

        Appendix B to Part 82--Disclosure Form to Report Lobbying
[GRAPHIC] [TIFF OMITTED] TC21OC91.056


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[GRAPHIC] [TIFF OMITTED] TC21OC91.057


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[GRAPHIC] [TIFF OMITTED] TC21OC91.058


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PART 84_GOVERNMENTWIDE REQUIREMENTS FOR DRUG-FREE WORKPLACE (FINANCIAL 
ASSISTANCE)--Table of Contents




                     Subpart A_Purpose and Coverage

Sec.
84.100 What does this part do?
84.105 Does this part apply to me?
84.110 Are any of my Federal assistance awards exempt from this part?
84.115 Does this part affect the Federal contracts that I receive?

      Subpart B_Requirements for Recipients Other Than Individuals

84.200 What must I do to comply with this part?
84.205 What must I include in my drug-free workplace statement?
84.210 To whom must I distribute my drug-free workplace statement?
84.215 What must I include in my drug-free awareness program?
84.220 By when must I publish my drug-free workplace statement and 
          establish my drug-free awareness program?
84.225 What actions must I take concerning employees who are convicted 
          of drug violations in the workplace?
84.230 How and when must I identify workplaces?

        Subpart C_Requirements for Recipients Who Are Individuals

84.300 What must I do to comply with this part if I am an individual 
          recipient?
84.301 [Reserved]

           Subpart D_Responsibilities of ED Awarding Officials

84.400 What are my responsibilities as an ED awarding official?

           Subpart E_Violations of This Part and Consequences

84.500 How are violations of this part determined for recipients other 
          than individuals?
84.505 How are violations of this part determined for recipients who are 
          individuals?
84.510 What actions will the Federal Government take against a recipient 
          determined to have violated this part?
84.515 Are there any exceptions to those actions?

                          Subpart F_Definitions

84.605 Award.
84.610 Controlled substance.
84.615 Conviction.
84.620 Cooperative agreement.
84.625 Criminal drug statute.
84.630 Debarment.
84.635 Drug-free workplace.
84.640 Employee.
84.645 Federal agency or agency.
84.650 Grant.
84.655 Individual.
84.660 Recipient.
84.665 State.
84.670 Suspension.

    Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327, unless 
otherwise noted.

    Source:  68 FR 66557, 66610, Nov. 26, 2003, unless otherwise noted.



                     Subpart A_Purpose and Coverage



Sec. 84.100  What does this part do?

    This part carries out the portion of the Drug-Free Workplace Act of 
1988 (41 U.S.C. 701 et seq., as amended) that applies to grants. It also 
applies the provisions of the Act to cooperative agreements and other 
financial assistance awards, as a matter of Federal Government policy.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.105  Does this part apply to me?

    (a) Portions of this part apply to you if you are either--
    (1) A recipient of an assistance award from the Department of 
Education; or
    (2) A(n) ED awarding official. (See definitions of award and 
recipient in Sec. Sec. 84.605 and 84.660, respectively.)
    (b) The following table shows the subparts that apply to you:

------------------------------------------------------------------------
            If you are . . .                    see subparts . . .
------------------------------------------------------------------------
(1) A recipient who is not an            A, B and E.
 individual.
(2) A recipient who is an individual...  A, C and E.
(3) A(n) ED awarding official..........  A, D and E.
------------------------------------------------------------------------


[[Page 255]]


Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.110  Are any of my Federal assistance awards exempt from this 
part?

    This part does not apply to any award that the ED Deciding Official 
determines that the application of this part would be inconsistent with 
the international obligations of the United States or the laws or 
regulations of a foreign government.

Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.115  Does this part affect the Federal contracts that I receive?

    It will affect future contract awards indirectly if you are debarred 
or suspended for a violation of the requirements of this part, as 
described in Sec. 84. 510(c). However, this part does not apply 
directly to procurement contracts. The portion of the Drug-Free 
Workplace Act of 1988 that applies to Federal procurement contracts is 
carried out through the Federal Acquisition Regulation in chapter 1 of 
Title 48 of the Code of Federal Regulations (the drug-free workplace 
coverage currently is in 48 CFR part 23, subpart 23.5).

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



      Subpart B_Requirements for Recipients Other Than Individuals



Sec. 84.200  What must I do to comply with this part?

    There are two general requirements if you are a recipient other than 
an individual.
    (a) First, you must make a good faith effort, on a continuing basis, 
to maintain a drug-free workplace. You must agree to do so as a 
condition for receiving any award covered by this part. The specific 
measures that you must take in this regard are described in more detail 
in subsequent sections of this subpart. Briefly, those measures are to--
    (1) Publish a drug-free workplace statement and establish a drug-
free awareness program for your employees (see Sec. Sec. 84.205 through 
84.220); and
    (2) Take actions concerning employees who are convicted of violating 
drug statutes in the workplace (see Sec. 84.225).
    (b) Second, you must identify all known workplaces under your 
Federal awards (see Sec. 84.230).

Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.205  What must I include in my drug-free workplace statement?

    You must publish a statement that--
    (a) Tells your employees that the unlawful manufacture, 
distribution, dispensing, possession, or use of a controlled substance 
is prohibited in your workplace;
    (b) Specifies the actions that you will take against employees for 
violating that prohibition; and
    (c) Lets each employee know that, as a condition of employment under 
any award, he or she:
    (1) Will abide by the terms of the statement; and
    (2) Must notify you in writing if he or she is convicted for a 
violation of a criminal drug statute occurring in the workplace and must 
do so no more than five calendar days after the conviction.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.210  To whom must I distribute my drug-free workplace statement?

    You must require that a copy of the statement described in Sec. 
84.205 be given to each employee who will be engaged in the performance 
of any Federal award.

Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.215  What must I include in my drug-free awareness program?

    You must establish an ongoing drug-free awareness program to inform 
employees about--

[[Page 256]]

    (a) The dangers of drug abuse in the workplace;
    (b) Your policy of maintaining a drug-free workplace;
    (c) Any available drug counseling, rehabilitation, and employee 
assistance programs; and
    (d) The penalties that you may impose upon them for drug abuse 
violations occurring in the workplace.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.220  By when must I publish my drug-free workplace statement 
and establish my drug-free awareness program?

    If you are a new recipient that does not already have a policy 
statement as described in Sec. 84.205 and an ongoing awareness program 
as described in Sec. 84.215, you must publish the statement and 
establish the program by the time given in the following table:

------------------------------------------------------------------------
                If . . .                          then you . . .
------------------------------------------------------------------------
(a) The performance period of the award  must have the policy statement
 is less than 30 days.                    and program in place as soon
                                          as possible, but before the
                                          date on which performance is
                                          expected to be completed.
(b) The performance period of the award  must have the policy statement
 is 30 days or more.                      and program in place within 30
                                          days after award.
(c) You believe there are extraordinary  may ask the ED awarding
 circumstances that will require more     official to give you more time
 than 30 days for you to publish the      to do so. The amount of
 policy statement and establish the       additional time, if any, to be
 awareness program.                       given is at the discretion of
                                          the awarding official.
------------------------------------------------------------------------


(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.225  What actions must I take concerning employees who are 
convicted of drug violations in the workplace?

    There are two actions you must take if an employee is convicted of a 
drug violation in the workplace:
    (a) First, you must notify Federal agencies if an employee who is 
engaged in the performance of an award informs you about a conviction, 
as required by Sec. 84.205(c)(2), or you otherwise learn of the 
conviction. Your notification to the Federal agencies must--
    (1) Be in writing;
    (2) Include the employee's position title;
    (3) Include the identification number(s) of each affected award;
    (4) Be sent within ten calendar days after you learn of the 
conviction; and
    (5) Be sent to every Federal agency on whose award the convicted 
employee was working. It must be sent to every awarding official or his 
or her official designee, unless the Federal agency has specified a 
central point for the receipt of the notices.
    (b) Second, within 30 calendar days of learning about an employee's 
conviction, you must either--
    (1) Take appropriate personnel action against the employee, up to 
and including termination, consistent with the requirements of the 
Rehabilitation Act of 1973 (29 U.S.C. 794), as amended; or
    (2) Require the employee to participate satisfactorily in a drug 
abuse assistance or rehabilitation program approved for these purposes 
by a Federal, State or local health, law enforcement, or other 
appropriate agency.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.230  How and when must I identify workplaces?

    (a) You must identify all known workplaces under each ED award. A 
failure to do so is a violation of your drug-free workplace 
requirements. You may identify the workplaces--
    (1) To the ED official that is making the award, either at the time 
of application or upon award; or
    (2) In documents that you keep on file in your offices during the 
performance of the award, in which case you must make the information 
available for inspection upon request by ED officials or their 
designated representatives.

[[Page 257]]

    (b) Your workplace identification for an award must include the 
actual address of buildings (or parts of buildings) or other sites where 
work under the award 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).
    (c) If you identified workplaces to the ED awarding official at the 
time of application or award, as described in paragraph (a)(1) of this 
section, and any workplace that you identified changes during the 
performance of the award, you must inform the ED awarding official.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



        Subpart C_Requirements for Recipients Who Are Individuals



Sec. 84.300  What must I do to comply with this part if I am an 
individual recipient?

    As a condition of receiving a(n) ED award, if you are an individual 
recipient, you must agree that--
    (a) You will not engage in the unlawful manufacture, distribution, 
dispensing, possession, or use of a controlled substance in conducting 
any activity related to the award; and
    (b) If you are convicted of a criminal drug offense resulting from a 
violation occurring during the conduct of any award activity, you will 
report the conviction:
    (1) In writing.
    (2) Within 10 calendar days of the conviction.
    (3) To the ED awarding official or other designee for each award 
that you currently have, unless Sec. 84.301 or the award document 
designates a central point for the receipt of the notices. When notice 
is made to a central point, it must include the identification number(s) 
of each affected award.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.301  [Reserved]



           Subpart D_Responsibilities of ED Awarding Officials



Sec. 84.400   What are my responsibilities as a(n) ED awarding official?

    As a(n) ED awarding official, you must obtain each recipient's 
agreement, as a condition of the award, to comply with the requirements 
in--
    (a) Subpart B of this part, if the recipient is not an individual; 
or
    (b) Subpart C of this part, if the recipient is an individual.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



           Subpart E_Violations of this Part and Consequences



Sec. 84.500  How are violations of this part determined for recipients 
other than individuals?

    A recipient other than an individual is in violation of the 
requirements of this part if the ED Deciding Official determines, in 
writing, that--
    (a) The recipient has violated the requirements of subpart B of this 
part; or
    (b) The number of convictions of the recipient's employees for 
violating criminal drug statutes in the workplace is large enough to 
indicate that the recipient has failed to make a good faith effort to 
provide a drug-free workplace.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.505  How are violations of this part determined for recipients 
who are individuals?

    An individual recipient is in violation of the requirements of this 
part if the ED Deciding Official determines, in writing, that--
    (a) The recipient has violated the requirements of subpart C of this 
part; or
    (b) The recipient is convicted of a criminal drug offense resulting 
from a violation occurring during the conduct of any award activity.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)

[[Page 258]]



Sec. 84.510  What actions will the Federal Government take against a 
recipient determined to have violated this part?

    If a recipient is determined to have violated this part, as 
described in Sec. 84.500 or Sec. 84.505, the Department of Education 
may take one or more of the following actions--
    (a) Suspension of payments under the award;
    (b) Suspension or termination of the award; and
    (c) Suspension or debarment of the recipient under 34 CFR Part 85, 
for a period not to exceed five years.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.515  Are there any exceptions to those actions?

    The ED Deciding Official may waive with respect to a particular 
award, in writing, a suspension of payments under an award, suspension 
or termination of an award, or suspension or debarment of a recipient if 
the ED Deciding Official determines that such a waiver would be in the 
public interest. This exception authority cannot be delegated to any 
other official.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



                          Subpart F_Definitions



Sec. 84.605  Award.

    Award means an award of financial assistance by the Department of 
Education or other Federal agency directly to a recipient.
    (a) The term award includes:
    (1) A Federal grant or cooperative agreement, in the form of money 
or property in lieu of money.
    (2) A block grant or a grant in an entitlement program, whether or 
not the grant is exempted from coverage under the Governmentwide rule 34 
CFR Part 85 that implements OMB Circular A-102 (for availability, see 5 
CFR 1310.3) and specifies uniform administrative requirements.
    (b) The term award does not include:
    (1) Technical assistance that provides services instead of money.
    (2) Loans.
    (3) Loan guarantees.
    (4) Interest subsidies.
    (5) Insurance.
    (6) Direct appropriations.
    (7) 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).

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.610  Controlled substance.

    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.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.615  Conviction.

    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.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.620  Cooperative agreement.

    Cooperative agreement means an award of financial assistance that, 
consistent with 31 U.S.C. 6305, is used to enter into the same kind of 
relationship as a grant (see definition of grant in Sec. 84.650), 
except that substantial involvement is expected between the Federal 
agency and the recipient when carrying out the activity contemplated by 
the award. The term does not include cooperative research and 
development agreements as defined in 15 U.S.C. 3710a.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)

[[Page 259]]



Sec. 84.625  Criminal drug statute.

    Criminal drug statute means a Federal or non-Federal criminal 
statute involving the manufacture, distribution, dispensing, use, or 
possession of any controlled substance.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.630  Debarment.

    Debarment means an action taken by a Federal agency to prohibit a 
recipient from participating in Federal Government procurement contracts 
and covered nonprocurement transactions. A recipient so prohibited is 
debarred, in accordance with the Federal Acquisition Regulation for 
procurement contracts (48 CFR part 9, subpart 9.4) and the common rule, 
Government-wide Debarment and Suspension (Nonprocurement), that 
implements Executive Order 12549 and Executive Order 12689.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.635  Drug-free workplace.

    Drug-free workplace means a site for the performance of work done in 
connection with a specific award at which employees of the recipient are 
prohibited from engaging in the unlawful manufacture, distribution, 
dispensing, possession, or use of a controlled substance.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.640  Employee.

    (a) Employee means the employee of a recipient directly engaged in 
the performance of work under the award, including--
    (1) All direct charge employees;
    (2) All indirect charge employees, unless their impact or 
involvement in the performance of work under the award is insignificant 
to the performance of the award; and
    (3) Temporary personnel and consultants who are directly engaged in 
the performance of work under the award and who are on the recipient's 
payroll.
    (b) This definition does not include workers not on the payroll of 
the recipient (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).

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.645  Federal agency or agency.

    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.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.650  Grant.

    Grant means an award of financial assistance that, consistent with 
31 U.S.C. 6304, is used to enter into a relationship--
    (a) The principal purpose of which is to transfer a thing of value 
to the recipient to carry out a public purpose of support or stimulation 
authorized by a law of the United States, rather than to acquire 
property or services for the Federal Government's direct benefit or use; 
and
    (b) In which substantial involvement is not expected between the 
Federal agency and the recipient when carrying out the activity 
contemplated by the award.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.655  Individual.

    Individual means a natural person.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.660  Recipient.

    Recipient means any individual, corporation, partnership, 
association, unit of government (except a Federal agency) or legal 
entity, however organized,

[[Page 260]]

that receives an award directly from a Federal agency.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.665  State.

    State means any of the States of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, or any territory or 
possession of the United States.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



Sec. 84.670  Suspension.

    Suspension means an action taken by a Federal agency that 
immediately prohibits a recipient from participating in Federal 
Government procurement contracts and covered nonprocurement transactions 
for a temporary period, pending completion of an investigation and any 
judicial or administrative proceedings that may ensue. A recipient so 
prohibited is suspended, in accordance with the Federal Acquisition 
Regulation for procurement contracts (48 CFR part 9, subpart 9.4) and 
the common rule, Government-wide Debarment and Suspension 
(Nonprocurement), that implements Executive Order 12549 and Executive 
Order 12689. Suspension of a recipient is a distinct and separate action 
from suspension of an award or suspension of payments under an award.

(Authority: E.O.s 12549 and 12689; 20 U.S.C. 1082, 1094, 1221e-3 and 
3474; and Sec. 2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.)



PART 85_GOVERNMENTWIDE DEBARMENT AND SUSPENSION (NONPROCUREMENT)
--Table of Contents




Sec.
85.25 How is this part organized?
85.50 How is this part written?
85.75 Do terms in this part have special meanings?

                            Subpart A_General

85.100 What does this part do?
85.105 Does this part apply to me?
85.110 What is the purpose of the nonprocurement debarment and 
          suspension system?
85.115 How does an exclusion restrict a person's involvement in covered 
          transactions?
85.120 May we grant an exception to let an excluded person participate 
          in a covered transaction?
85.125 Does an exclusion under the nonprocurement system affect a 
          person's eligibility for Federal procurement contracts?
85.130 Does exclusion under the Federal procurement system affect a 
          person's eligibility to participate in nonprocurement 
          transactions?
85.135 May the Department of Education exclude a person who is not 
          currently participating in a nonprocurement transaction?
85.140 How do I know if a person is excluded?
85.145 Does this part address persons who are disqualified, as well as 
          those who are excluded from nonprocurement transactions?

                     Subpart B_Covered Transactions

85.200 What is a covered transaction?
85.205 Why is it important to know if a particular transaction is a 
          covered transaction?
85.210 Which nonprocurement transactions are covered transactions?
85.215 Which nonprocurement transactions are not covered transactions?
85.220 Are any procurement contracts included as covered transactions?
85.225 How do I know if a transaction in which I may participate is a 
          covered transaction?

    Subpart C_Responsibilities of Participants Regarding Transactions

                    Doing Business With Other Persons

85.300 What must I do before I enter into a covered transaction with 
          another person at the next lower tier?
85.305 May I enter into a covered transaction with an excluded or 
          disqualified person?
85.310 What must I do if a Federal agency excludes a person with whom I 
          am already doing business in a covered transaction?
85.315 May I use the services of an excluded person as a principal under 
          a covered transaction?
85.320 Must I verify that principals of my covered transactions are 
          eligible to participate?
85.325 What happens if I do business with an excluded person in a 
          covered transaction?
85.330 What requirements must I pass down to persons at lower tiers with 
          whom I intend to do business?

[[Page 261]]

            Disclosing Information--Primary Tier Participants

85.335 What information must I provide before entering into a covered 
          transaction with the Department of Education?
85.340 If I disclose unfavorable information required under Sec. 
          85.335, will I be prevented from participating in the 
          transaction?
85.345 What happens if I fail to disclose the information required under 
          Sec. 85.335?
85.350 What must I do if I learn of the information required under Sec. 
          85.335 after entering into a covered transaction with the 
          Department of Education?

             Disclosing Information--Lower Tier Participants

85.355 What information must I provide to a higher tier participant 
          before entering into a covered transaction with that 
          participant?
85.360 What happens if I fail to disclose the information required under 
          Sec. 85.355?
85.365 What must I do if I learn of information required under Sec. 
          85.355 after entering into a covered transaction with a higher 
          tier participant?

    Subpart D_Responsibilities of ED Officials Regarding Transactions

85.400 May I enter into a transaction with an excluded or disqualified 
          person?
85.405 May I enter into a covered transaction with a participant if a 
          principal of the transaction is excluded?
85.410 May I approve a participant's use of the services of an excluded 
          person?
85.415 What must I do if a Federal agency excludes the participant or a 
          principal after I enter into a covered transaction?
85.420 May I approve a transaction with an excluded or disqualified 
          person at a lower tier?
85.425 When do I check to see if a person is excluded or disqualified?
85.430 How do I check to see if a person is excluded or disqualified?
85.435 What must I require of a primary tier participant?
85.440 What method do I use to communicate those requirements to 
          participants?
85.445 What action may I take if a primary tier participant knowingly 
          does business with an excluded or disqualified person?
85.450 What action may I take if a primary tier participant fails to 
          disclose the information required under Sec. 85.335?
85.455 What may I do if a lower tier participant fails to disclose the 
          information required under Sec. 85.355 to the next higher 
          tier?

                 Subpart E_Excluded Parties List System

85.500 What is the purpose of the Excluded Parties List System (EPLS)?
85.505 Who uses the EPLS?
85.510 Who maintains the EPLS?
85.515 What specific information is in the EPLS?
85.520 Who places the information into the EPLS?
85.525 Whom do I ask if I have questions about a person in the EPLS?
85.530 Where can I find the EPLS?

   Subpart F_General Principles Relating to Suspension and Debarment 
                                 Actions

85.600 How do suspension and debarment actions start?
85.605 How does suspension differ from debarment?
85.610 What procedures does the Department of Education use in 
          suspension and debarment actions?
85.611 What procedures do we use for a suspension or debarment action 
          involving title IV, HEA transaction?
85.612 When does an exclusion by another agency affect the ability of 
          the excluded person to participate in title IV, HEA 
          transaction?
85.615 How does the Department of Education notify a person of a 
          suspension and debarment action?
85.620 Do Federal agencies coordinate suspension and debarment actions?
85.625 What is the scope of a suspension or debarment action?
85.630 May the Department of Education impute the conduct of one person 
          to another?
85.635 May the Department of Education settle a debarment or suspension 
          action?
85.640 May a settlement include a voluntary exclusion?
85.645 Do other Federal agencies know if the Department of Education 
          agrees to a voluntary exclusion?

                          Subpart G_Suspension

85.700 When may the suspending official issue a suspension?
85.705 What does the suspending official consider in issuing a 
          suspension?
85.710 When does a suspension take effect?
85.711 When does a suspension affect title IV, HEA transactions?
85.715 What notice does the suspending official give me if I am 
          suspended?
85.720 How may I contest a suspension?
85.725 How much time do I have to contest a suspension?
85.730 What information must I provide to the suspending official if I 
          contest a suspension?

[[Page 262]]

85.735 Under what conditions do I get an additional opportunity to 
          challenge the facts on which the suspension is based?
85.740 Are suspension proceedings formal?
85.745 How is fact-finding conducted?
85.750 What does the suspending official consider in deciding whether to 
          continue or terminate my suspension?
85.755 When will I know whether the suspension is continued or 
          terminated?
85.760 How long may my suspension last?

                           Subpart H_Debarment

85.800 What are the causes for debarment?
85.805 What notice does the debarring official give me if I am proposed 
          for debarment?
85.810 When does a debarment take effect?
85.811 When does a debarment affect title IV, HEA transactions?
85.815 How may I contest a proposed debarment?
85.820 How much time do I have to contest a proposed debarment?
85.825 What information must I provide to the debarring official if I 
          contest a proposed debarment?
85.830 Under what conditions do I get an additional opportunity to 
          challenge the facts on which the proposed debarment is based?
85.835 Are debarment proceedings formal?
85.840 How is fact-finding conducted?
85.845 What does the debarring official consider in deciding whether to 
          debar me?
85.850 What is the standard of proof in a debarment action?
85.855 Who has the burden of proof in a debarment action?
85.860 What factors may influence the debarring official's decision?
85.865 How long may my debarment last?
85.870 When do I know if the debarring official debars me?
85.875 May I ask the debarring official to reconsider a decision to 
          debar me?
85.880 What factors may influence the debarring official during 
          reconsideration?
85.885 May the debarring official extend a debarment?

                          Subpart I_Definitions

85.900 Adequate evidence.
85.905 Affiliate.
85.910 Agency.
85.915 Agent or representative.
85.920 Civil judgment.
85.925 Conviction.
85.930 Debarment.
85.935 Debarring official.
85.940 Disqualified.
85.942 ED Deciding Official.
85.945 Excluded or exclusion.
85.950 Excluded Parties List System.
85.952 HEA.
85.955 Indictment.
85.960 Ineligible or ineligibility.
85.965 Legal proceedings.
85.970 Nonprocurement transaction.
85.975 Notice.
85.980 Participant.
85.985 Person.
85.990 Preponderance of the evidence.
85.995 Principal.
85.1000 Respondent.
85.1005 State.
85.1010 Suspending official.
85.1015 Suspension.
85.1016 Title IV, HEA participant.
85.1017 Title IV, HEA program.
85.1018 Title IV, HEA transaction.
85.1020 Voluntary exclusion or voluntarily excluded.

Subpart J [Reserved]

Appendix to Part 85--Covered Transactions

    Authority: E.O. 12549 (3 CFR 1986 Comp., p.189); E.O. 12698 (3 CFR 
1989 Comp., p.235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474, unless 
otherwise noted.

    Source:  68 FR 66544, 66611, 66612, 66613, 66614, Nov. 26, 2003, 
unless otherwise noted.



Sec. 85.25  How is this part organized?

    (a) This part is subdivided into ten subparts. Each subpart contains 
information related to a broad topic or specific audience with special 
responsibilities, as shown in the following table:

------------------------------------------------------------------------
       In subpart . . .        You will find provisions related to . . .
------------------------------------------------------------------------
A............................  general information about this rule.
B............................  the types of ED transactions that are
                                covered by the Governmentwide
                                nonprocurement suspension and debarment
                                system.
C............................  the responsibilities of persons who
                                participate in covered transactions.
D............................  the responsibilities of ED officials who
                                are authorized to enter into covered
                                transactions.
E............................  the responsibilities of Federal agencies
                                for the Excluded Parties List System
                                (Disseminated by the General Services
                                Administration).
F............................  the general principles governing
                                suspension, debarment, voluntary
                                exclusion and settlement.
G............................  suspension actions.
H............................  debarment actions.
I............................  definitions of terms used in this part.

[[Page 263]]

 
J............................  [Reserved]
------------------------------------------------------------------------

    (b) The following table shows which subparts may be of special 
interest to you, depending on who you are:

------------------------------------------------------------------------
             If you are . . .                   See subpart(s) . . .
------------------------------------------------------------------------
(1) a participant or principal in a         A, B, C, and I.
 nonprocurement transaction.
(2) a respondent in a suspension action...  A, B, F, G and I.
(3) a respondent in a debarment action....  A, B, F, H and I.
(4) a suspending official.................  A, B, D, E, F, G and I.
(5) a debarring official..................  A, B, D, E, F, H and I.
(6) a (n) ED official authorized to enter   A, B, D, E and I.
 into a covered transaction.
(7) Reserved..............................  J.
------------------------------------------------------------------------


Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.50  How is this part written?

    (a) This part uses a ``plain language'' format to make it easier for 
the general public and business community to use. The section headings 
and text, often in the form of questions and answers, must be read 
together.
    (b) Pronouns used within this part, such as ``I'' and ``you,'' 
change from subpart to subpart depending on the audience being 
addressed. The pronoun ``we'' always is the Department of Education.
    (c) The ``Covered Transactions'' diagram in the appendix to this 
part shows the levels or ``tiers'' at which the Department of Education 
enforces an exclusion under this part.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.75  Do terms in this part have special meanings?

    This part uses terms throughout the text that have special meaning. 
Those terms are defined in Subpart I of this part. For example, three 
important terms are--
    (a) Exclusion or excluded, which refers only to discretionary 
actions taken by a suspending or debarring official under this part or 
the Federal Acquisition Regulation (48 CFR part 9, subpart 9.4);
    (b) Disqualification or disqualified, which refers to prohibitions 
under specific statutes, executive orders (other than Executive Order 
12549 and Executive Order 12689), or other authorities. 
Disqualifications frequently are not subject to the discretion of an 
agency official, may have a different scope than exclusions, or have 
special conditions that apply to the disqualification; and
    (c) Ineligibility or ineligible, which generally refers to a person 
who is either excluded or disqualified.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



                            Subpart A_General



Sec. 85.100  What does this part do?

    This part adopts a governmentwide system of debarment and suspension 
for ED nonprocurement activities. It also provides for reciprocal 
exclusion of persons who have been excluded under the Federal 
Acquisition Regulation, and provides for the consolidated listing of all 
persons who are excluded, or disqualified by statute, executive order, 
or other legal authority. This part satisfies the requirements in 
section 3 of Executive Order 12549, ``Debarment and Suspension'' (3 CFR 
1986 Comp., p. 189), Executive Order 12689, ``Debarment and Suspension'' 
(3 CFR 1989 Comp., p. 235) and 31 U.S.C. 6101 note (Section 2455, Public 
Law 103-355, 108 Stat. 3327).

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.

[[Page 264]]



Sec. 85.105  Does this part apply to me?

    Portions of this part (see table at Sec. 85.25(b)) apply to you if 
you are a(n)--
    (a) Person who has been, is, or may reasonably be expected to be, a 
participant or principal in a covered transaction;
    (b) Respondent (a person against whom the Department of Education 
has initiated a debarment or suspension action);
    (c) ED debarring or suspending official; or
    (d) ED official who is authorized to enter into covered transactions 
with non-Federal parties.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.110  What is the purpose of the nonprocurement debarment and 
suspension system?

    (a) To protect the public interest, the Federal Government ensures 
the integrity of Federal programs by conducting business only with 
responsible persons.
    (b) A Federal agency uses the nonprocurement debarment and 
suspension system to exclude from Federal programs persons who are not 
presently responsible.
    (c) An exclusion is a serious action that a Federal agency may take 
only to protect the public interest. A Federal agency may not exclude a 
person or commodity for the purposes of punishment.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.115  How does an exclusion restrict a person's involvement in 
covered transactions?

    With the exceptions stated in Sec. Sec. 85.120, 85.315, and 85.420, 
a person who is excluded by the Department of Education or any other 
Federal agency may not:
    (a) Be a participant in a(n) ED transaction that is a covered 
transaction under subpart B of this part;
    (b) Be a participant in a transaction of any other Federal agency 
that is a covered transaction under that agency's regulation for 
debarment and suspension; or
    (c) Act as a principal of a person participating in one of those 
covered transactions.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.120  May we grant an exception to let an excluded person 
participate in a covered transaction?

    (a) The ED Deciding Official may grant an exception permitting an 
excluded person to participate in a particular covered transaction. If 
the ED Deciding Official grants an exception, the exception must be in 
writing and state the reason(s) for deviating from the governmentwide 
policy in Executive Order 12549.
    (b) An exception granted by one agency for an excluded person does 
not extend to the covered transactions of another agency.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.125  Does an exclusion under the nonprocurement system affect 
a person's eligibility for Federal procurement contracts?

    If any Federal agency excludes a person under its nonprocurement 
common rule on or after August 25, 1995, the excluded person is also 
ineligible to participate in Federal procurement transactions under the 
FAR. Therefore, an exclusion under this part has reciprocal effect in 
Federal procurement transactions.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.130  Does exclusion under the Federal procurement system affect a 
person's eligibility to participate in nonprocurement transactions?

    If any Federal agency excludes a person under the FAR on or after 
August 25, 1995, the excluded person is also ineligible to participate 
in nonprocurement covered transactions under this part. Therefore, an 
exclusion under the

[[Page 265]]

FAR has reciprocal effect in Federal nonprocurement transactions.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.135  May the Department of Education exclude a person who is 
not currently participating in a nonprocurement transaction?

    Given a cause that justifies an exclusion under this part, we may 
exclude any person who has been involved, is currently involved, or may 
reasonably be expected to be involved in a covered transaction.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.140  How do I know if a person is excluded?

    Check the Excluded Parties List System (EPLS) to determine whether a 
person is excluded. The General Services Administration (GSA) maintains 
the EPLS and makes it available, as detailed in subpart E of this part. 
When a Federal agency takes an action to exclude a person under the 
nonprocurement or procurement debarment and suspension system, the 
agency enters the information about the excluded person into the EPLS.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.145  Does this part address persons who are disqualified, as 
well as those who are excluded from nonprocurement transactions?

    Except if provided for in Subpart J of this part, this part--
    (a) Addresses disqualified persons only to--
    (1) Provide for their inclusion in the EPLS; and
    (2) State responsibilities of Federal agencies and participants to 
check for disqualified persons before entering into covered 
transactions.
    (b) Does not specify the--
    (1) ED transactions for which a disqualified person is ineligible. 
Those transactions vary on a case-by-case basis, because they depend on 
the language of the specific statute, Executive order, or regulation 
that caused the disqualification;
    (2) Entities to which the disqualification applies; or
    (3) Process that the agency uses to disqualify a person. Unlike 
exclusion, disqualification is frequently not a discretionary action 
that a Federal agency takes.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



                     Subpart B_Covered Transactions



Sec. 85.200  What is a covered transaction?

    A covered transaction is a nonprocurement or procurement transaction 
that is subject to the prohibitions of this part. It may be a 
transaction at--
    (a) The primary tier, between a Federal agency and a person (see 
appendix to this part); or
    (b) A lower tier, between a participant in a covered transaction and 
another person.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.205  Why is it important if a particular transaction is a covered 
transaction?

    The importance of a covered transaction depends upon who you are.
    (a) As a participant in the transaction, you have the 
responsibilities laid out in Subpart C of this part. Those include 
responsibilities to the person or Federal agency at the next higher tier 
from whom you received the transaction, if any. They also include 
responsibilities if you subsequently enter into other covered 
transactions with persons at the next lower tier.
    (b) As a Federal official who enters into a primary tier 
transaction, you have the responsibilities laid out in subpart D of this 
part.
    (c) As an excluded person, you may not be a participant or principal 
in the transaction unless--

[[Page 266]]

    (1) The person who entered into the transaction with you allows you 
to continue your involvement in a transaction that predates your 
exclusion, as permitted under Sec. 85.310 or Sec. 85.415; or
    (2) A(n) ED official obtains an exception from the ED Deciding 
Official to allow you to be involved in the transaction, as permitted 
under Sec. 85.120.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.210  Which nonprocurement transactions are covered transactions?

    All nonprocurement transactions, as defined in Sec. 85.970, are 
covered transactions unless listed in Sec. 85.215. (See appendix to 
this part.)

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.215  Which nonprocurement transactions are not covered transactions?

    The following types of nonprocurement transactions are not covered 
transactions:
    (a) A direct award to--
    (1) A foreign government or foreign governmental entity;
    (2) A public international organization;
    (3) An entity owned (in whole or in part) or controlled by a foreign 
government; or
    (4) Any other entity consisting wholly or partially of one or more 
foreign governments or foreign governmental entities.
    (b) A benefit 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). For example, if 
a person receives social security benefits under the Supplemental 
Security Income provisions of the Social Security Act, 42 U.S.C. 1301 et 
seq., those benefits are not covered transactions and, therefore, are 
not affected if the person is excluded.
    (c) Federal employment.
    (d) A transaction that the Department of Education needs to respond 
to a national or agency-recognized emergency or disaster.
    (e) A permit, license, certificate, or similar instrument issued as 
a means to regulate public health, safety, or the environment, unless 
the Department of Education specifically designates it to be a covered 
transaction.
    (f) An incidental benefit that results from ordinary governmental 
operations.
    (g) Any other transaction if the application of an exclusion to the 
transaction is prohibited by law.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.220  Are any procurement contracts included as covered transactions?

    (a) Covered transactions under this part--
    (1) Do not include any procurement contracts awarded directly by a 
Federal agency; but
    (2) Do include some procurement contracts awarded by non-Federal 
participants in nonprocurement covered transactions (see appendix to 
this part).
    (b) Specifically, a contract for goods or services is a covered 
transaction if any of the following applies:
    (1) The contract is awarded by a participant in a nonprocurement 
transaction that is covered under Sec. 85.210, and the amount of the 
contract is expected to equal or exceed $25,000.
    (2) The contract requires the consent of a(n) ED official. In that 
case, the contract, regardless of the amount, always is a covered 
transaction, and it does not matter who awarded it. For example, it 
could be a subcontract awarded by a contractor at a tier below a 
nonprocurement transaction, as shown in the appendix to this part.
    (3) The contract is for federally-required audit services.
    (c) The contract is awarded by any contractor, subcontractor, 
supplier, consultant or its agent or representative in any transaction, 
regardless of tier, that is funded or authorized under ED programs and 
is expected to equal or exceed $25,000.

[[Page 267]]

    (d) The contract is to perform services as a third party servicer in 
connection with a title IV, HEA program.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.225  How do I know if a transaction in which I may participate 
is a covered transaction?

    As a participant in a transaction, you will know that it is a 
covered transaction because the agency regulations governing the 
transaction, the appropriate agency official, or participant at the next 
higher tier who enters into the transaction with you, will tell you that 
you must comply with applicable portions of this part.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



    Subpart C_Responsibilities of Participants Regarding Transactions

                    Doing Business With Other Persons



Sec. 85.300  What must I do before I enter into a covered transaction 
with another person at the next lower tier?

    When you enter into a covered transaction with another person at the 
next lower tier, you must verify that the person with whom you intend to 
do business is not excluded or disqualified. You do this by:
    (a) Checking the EPLS; or
    (b) Collecting a certification from that person if allowed by this 
rule; or
    (c) Adding a clause or condition to the covered transaction with 
that person.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.305  May I enter into a covered transaction with an excluded 
or disqualified person?

    (a) You as a participant may not enter into a covered transaction 
with an excluded person, unless the Department of Education grants an 
exception under Sec. 85.120.
    (b) You may not enter into any transaction with a person who is 
disqualified from that transaction, unless you have obtained an 
exception under the disqualifying statute, Executive order, or 
regulation.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.310  What must I do if a Federal agency excludes a person with 
whom I am already doing business in a covered transaction?

    (a) You as a participant may continue covered transactions with an 
excluded person if the transactions were in existence when the agency 
excluded the person. However, you are not required to continue the 
transactions, and you may consider termination. You should make a 
decision about whether to terminate and the type of termination action, 
if any, only after a thorough review to ensure that the action is proper 
and appropriate.
    (b) You may not renew or extend covered transactions (other than no-
cost time extensions) with any excluded person, unless the Department of 
Education grants an exception under Sec. 85.120.
    (c) If you are a title IV, HEA participant, you may not continue a 
title IV, HEA transaction with an excluded person after the effective 
date of the exclusion unless permitted by 34 CFR 668.26, 682.702, or 
668.94, as applicable

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.315  May I use the services of an excluded person as a principal 
under a covered transaction?

    (a) You as a participant may continue to use the services of an 
excluded person as a principal under a covered transaction if you were 
using the services of that person in the transaction before the person 
was excluded. However, you are not required to continue using that 
person's services as a principal. You should make a decision

[[Page 268]]

about whether to discontinue that person's services only after a 
thorough review to ensure that the action is proper and appropriate.
    (b) You may not begin to use the services of an excluded person as a 
principal under a covered transaction unless the Department of Education 
grants an exception under Sec. 85.120.
    (c) Title IV, HEA transactions. If you are a title IV, HEA 
participant--
    (1) You may not renew or extend the term of any contract or 
agreement for the services of an excluded person as a principal with 
respect to a title IV, HEA transaction; and
    (2) You may not continue to use the services of that excluded person 
as a principal under this kind of an agreement or arrangement more than 
90 days after you learn of the exclusion or after the close of the 
Federal fiscal year in which the exclusion takes effect, whichever is 
later.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.320  Must I verify that principals of my covered transactions are 
eligible to participate?

    Yes, you as a participant are responsible for determining whether 
any of your principals of your covered transactions is excluded or 
disqualified from participating in the transaction. You may decide the 
method and frequency by which you do so. You may, but you are not 
required to, check the EPLS.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.325  What happens if I do business with an excluded person in a 
covered transaction?

    If as a participant you knowingly do business with an excluded 
person, we may disallow costs, annul or terminate the transaction, issue 
a stop work order, debar or suspend you, or take other remedies as 
appropriate.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.330  What requirements must I pass down to persons at lower 
tiers with whom I intend to do business?

    Before entering into a covered transaction with a participant at the 
next lower tier, you must require that participant to--
    (a) Comply with this subpart as a condition of participation in the 
transaction. You may do so using any method(s), unless Sec. 85.440 
requires you to use specific methods.
    (b) Pass the requirement to comply with this subpart to each person 
with whom the participant enters into a covered transaction at the next 
lower tier.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.

            Disclosing Information--Primary Tier Participants



Sec. 85.335  What information must I provide before entering into a 
covered transaction with the Department of Education?

    Before you enter into a covered transaction at the primary tier, you 
as the participant must notify the ED office that is entering into the 
transaction with you, if you know that you or any of the principals for 
that covered transaction:
    (a) Are presently excluded or disqualified;
    (b) Have been convicted within the preceding three years of any of 
the offenses listed in Sec. 85.800(a) or had a civil judgment rendered 
against you for one of those offenses within that time period;
    (c) Are presently indicted for or otherwise criminally or civilly 
charged by a governmental entity (Federal, State or local) with 
commission of any of the offenses listed in Sec. 85.800(a); or
    (d) Have had one or more public transactions (Federal, State, or 
local) terminated within the preceding three years for cause or default.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.

[[Page 269]]



Sec. 85.340  If I disclose unfavorable information required under 
Sec. 85.335, will I be prevented from participating in the transaction?

    As a primary tier participant, your disclosure of unfavorable 
information about yourself or a principal under Sec. 85.335 will not 
necessarily cause us to deny your participation in the covered 
transaction. We will consider the information when we determine whether 
to enter into the covered transaction. We also will consider any 
additional information or explanation that you elect to submit with the 
disclosed information.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.345  What happens if I fail to disclose information required 
under Sec. 85.335?

    If we later determine that you failed to disclose information under 
Sec. 85.335 that you knew at the time you entered into the covered 
transaction, we may--
    (a) Terminate the transaction for material failure to comply with 
the terms and conditions of the transaction; or
    (b) Pursue any other available remedies, including suspension and 
debarment.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.350  What must I do if I learn of information required under 

Sec. 85.335 after entering into a covered transaction with the 
Department of Education?

    At any time after you enter into a covered transaction, you must 
give immediate written notice to the ED office with which you entered 
into the transaction if you learn either that--
    (a) You failed to disclose information earlier, as required by Sec. 
85.335; or
    (b) Due to changed circumstances, you or any of the principals for 
the transaction now meet any of the criteria in Sec. 85.335.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.

             Disclosing Information--Lower Tier Participants



Sec. 85.355  What information must I provide to a higher tier participant 
before entering into a covered transaction with that participant?

    Before you enter into a covered transaction with a person at the 
next higher tier, you as a lower tier participant must notify that 
person if you know that you or any of the principals are presently 
excluded or disqualified.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.360  What happens if I fail to disclose the information required 
under Sec. 85.355?

    If we later determine that you failed to tell the person at the 
higher tier that you were excluded or disqualified at the time you 
entered into the covered transaction with that person, we may pursue any 
available remedies, including suspension and debarment.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.365  What must I do if I learn of information required under 

Sec. 85.355 after entering into a covered transaction with a higher 
tier participant?

    At any time after you enter into a lower tier covered transaction 
with a person at a higher tier, you must provide immediate written 
notice to that person if you learn either that--
    (a) You failed to disclose information earlier, as required by Sec. 
85.355; or
    (b) Due to changed circumstances, you or any of the principals for 
the transaction now meet any of the criteria in Sec. 85.355.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.

[[Page 270]]



    Subpart D_Responsibilities of ED Officials Regarding Transactions



Sec. 85.400  May I enter into a transaction with an excluded or 
disqualified person?

    (a) You as an agency official may not enter into a covered 
transaction with an excluded person unless you obtain an exception under 
Sec. 85.120.
    (b) You may not enter into any transaction with a person who is 
disqualified from that transaction, unless you obtain a waiver or 
exception under the statute, Executive order, or regulation that is the 
basis for the person's disqualification.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.405  May I enter into a covered transaction with a participant if 
a principal of the transaction is excluded?

    As an agency official, you may not enter into a covered transaction 
with a participant if you know that a principal of the transaction is 
excluded, unless you obtain an exception under Sec. 85.120.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.410  May I approve a participant's use of the services of an 
excluded person?

    After entering into a covered transaction with a participant, you as 
an agency official may not approve a participant's use of an excluded 
person as a principal under that transaction, unless you obtain an 
exception under Sec. 85.120.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.415  What must I do if a Federal agency excludes the participant 
or a principal after I enter into a covered transaction?

    (a) You as an agency official may continue covered transactions with 
an excluded person, or under which an excluded person is a principal, if 
the transactions were in existence when the person was excluded. You are 
not required to continue the transactions, however, and you may consider 
termination. You should make a decision about whether to terminate and 
the type of termination action, if any, only after a thorough review to 
ensure that the action is proper.
    (b) You may not renew or extend covered transactions (other than no-
cost time extensions) with any excluded person, or under which an 
excluded person is a principal, unless you obtain an exception under 
Sec. 85.120.
    (c) Title IV, HEA transactions. If you are a title IV, HEA 
participant--
    (1) You may not renew or extend the term of any contract or 
agreement for the services of an excluded person as a principal with 
respect to a title IV, HEA transaction; and
    (2) You may not continue to use the services of that excluded person 
as a principal under this kind of an agreement or arrangement more than 
90 days after you learn of the exclusion or after the close of the 
Federal fiscal year in which the exclusion takes effect, whichever is 
later.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.420  May I approve a transaction with an excluded or disqualified 
person at a lower tier?

    If a transaction at a lower tier is subject to your approval, you as 
an agency official may not approve--
    (a) A covered transaction with a person who is currently excluded, 
unless you obtain an exception under Sec. 85.120; or
    (b) A transaction with a person who is disqualified from that 
transaction, unless you obtain a waiver or exception under the statute, 
Executive order, or regulation that is the basis for the person's 
disqualification.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.

[[Page 271]]



Sec. 85.425  When do I check to see if a person is excluded or disqualified?

    As an agency official, you must check to see if a person is excluded 
or disqualified before you--
    (a) Enter into a primary tier covered transaction;
    (b) Approve a principal in a primary tier covered transaction;
    (c) Approve a lower tier participant if agency approval of the lower 
tier participant is required; or
    (d) Approve a principal in connection with a lower tier transaction 
if agency approval of the principal is required.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.430  How do I check to see if a person is excluded or disqualified?

    You check to see if a person is excluded or disqualified in two 
ways:
    (a) You as an agency official must check the EPLS when you take any 
action listed in Sec. 85.425.
    (b) You must review information that a participant gives you, as 
required by Sec. 85.335, about its status or the status of the 
principals of a transaction.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.435  What must I require of a primary tier participant?

    You as an agency official must require each participant in a primary 
tier covered transaction to--
    (a) Comply with subpart C of this part as a condition of 
participation in the transaction; and
    (b) Communicate the requirement to comply with Subpart C of this 
part to persons at the next lower tier with whom the primary tier 
participant enters into covered transactions.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.440  What method do I use to communicate those requirements to 
participants?

    (a) To communicate those requirements, you must include a term or 
condition in the transaction requiring each participant's compliance 
with subpart C of this part and requiring the participant to include a 
similar term or condition in lower-tier covered transactions.
    (b) The failure of a participant to include a requirement to comply 
with Subpart C of this part in the agreement with a lower tier 
participant does not affect the lower tier participant's 
responsibilities under this part.

Authority: E.O. 12549 (3 CFR, 1985 Comp., p. 189); E.O. 12689 (3 CFR 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455 of Pub. L. 103-355, 108 Stat. 3243 at 3327.

[68 FR 66612, Nov. 26, 2003]



Sec. 85.445  What action may I take if a primary tier participant 
knowingly does business with an excluded or disqualified person?

    If a participant knowingly does business with an excluded or 
disqualified person, you as an agency official may refer the matter for 
suspension and debarment consideration. You may also disallow costs, 
annul or terminate the transaction, issue a stop work order, or take any 
other appropriate remedy.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.450  What action may I take if a primary tier participant fails 
to disclose the information required under Sec. 85.335?

    If you as an agency official determine that a participant failed to 
disclose information, as required by Sec. 85.335, at the time it 
entered into a covered transaction with you, you may--
    (a) Terminate the transaction for material failure to comply with 
the terms and conditions of the transaction; or
    (b) Pursue any other available remedies, including suspension and 
debarment.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.

[[Page 272]]



Sec. 85.455  What may I do if a lower tier participant fails to disclose 
the information required under Sec. 85.355 to the next higher tier?

    If you as an agency official determine that a lower tier participant 
failed to disclose information, as required by Sec. 85.355, at the time 
it entered into a covered transaction with a participant at the next 
higher tier, you may pursue any remedies available to you, including the 
initiation of a suspension or debarment action.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



                 Subpart E_Excluded Parties List System



Sec. 85.500  What is the purpose of the Excluded Parties List System (EPLS)?

    The EPLS is a widely available source of the most current 
information about persons who are excluded or disqualified from covered 
transactions.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.505  Who uses the EPLS?

    (a) Federal agency officials use the EPLS to determine whether to 
enter into a transaction with a person, as required under Sec. 85.430.
    (b) Participants also may, but are not required to, use the EPLS to 
determine if--
    (1) Principals of their transactions are excluded or disqualified, 
as required under Sec. 85.320; or
    (2) Persons with whom they are entering into covered transactions at 
the next lower tier are excluded or disqualified.
    (c) The EPLS is available to the general public.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.510  Who maintains the EPLS?

    In accordance with the OMB guidelines, the General Services 
Administration (GSA) maintains the EPLS. When a Federal agency takes an 
action to exclude a person under the nonprocurement or procurement 
debarment and suspension system, the agency enters the information about 
the excluded person into the EPLS.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.515  What specific information is in the EPLS?

    (a) At a minimum, the EPLS indicates--
    (1) The full name (where available) and address of each excluded or 
disqualified person, in alphabetical order, with cross references if 
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 the action;
    (6) The agency and name and telephone number of the agency point of 
contact for the action; and
    (7) The Dun and Bradstreet Number (DUNS), or other similar code 
approved by the GSA, of the excluded or disqualified person, if 
available.
    (b)(1) The database for the EPLS includes a field for the Taxpayer 
Identification Number (TIN) (the social security number (SSN) for an 
individual) of an excluded or disqualified person.
    (2) Agencies disclose the SSN of an individual to verify the 
identity of an individual, only if permitted under the Privacy Act of 
1974 and, if appropriate, the Computer Matching and Privacy Protection 
Act of 1988, as codified in 5 U.S.C. 552(a).

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.520  Who places the information into the EPLS?

    Federal officials who take actions to exclude persons under this 
part or officials who are responsible for identifying disqualified 
persons must enter the following information about those persons into 
the EPLS:
    (a) Information required by Sec. 85.515(a);

[[Page 273]]

    (b) The Taxpayer Identification Number (TIN) of the excluded or 
disqualified person, including the social security number (SSN) for an 
individual, if the number is available and may be disclosed under law;
    (c) Information about an excluded or disqualified person, generally 
within five working days, after--
    (1) Taking an exclusion action;
    (2) Modifying or rescinding an exclusion action;
    (3) Finding that a person is disqualified; or
    (4) Finding that there has been a change in the status of a person 
who is listed as disqualified.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.525  Whom do I ask if I have questions about a person in the EPLS?

    If you have questions about a person in the EPLS, ask the point of 
contact for the Federal agency that placed the person's name into the 
EPLS. You may find the agency point of contact from the EPLS.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.530  Where can I find the EPLS?

    (a) You may access the EPLS through the Internet, currently at 
http://epls.arnet.gov.
    (b) As of November 26, 2003, you may also subscribe to a printed 
version. However, we anticipate discontinuing the printed version. Until 
it is discontinued, you may obtain the printed version by purchasing a 
yearly subscription from the Superintendent of Documents, U.S. 
Government Printing Office, Washington, DC 20402, or by calling the 
Government Printing Office Inquiry and Order Desk at (202) 783-3238.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



   Subpart F_General Principles Relating to Suspension and Debarment 
                                 Actions



Sec. 85.600  How do suspension and debarment actions start?

    When we receive information from any source concerning a cause for 
suspension or debarment, we will promptly report and investigate it. We 
refer the question of whether to suspend or debar you to our suspending 
or debarring official for consideration, if appropriate.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.605  How does suspension differ from debarment?

    Suspension differs from debarment in that--

------------------------------------------------------------------------
      A suspending official . . .           A debarring official . . .
------------------------------------------------------------------------
(a) Imposes suspension as a temporary    Imposes debarment for a
 status of ineligibility for              specified period as a final
 procurement and nonprocurement           determination that a person is
 transactions, pending completion of an   not presently responsible.
 investigation or legal proceedings.
(b) Must--.............................  Must conclude, based on a
(1) Have adequate evidence that there     preponderance of the evidence,
 may be a cause for debarment of a        that the person has engaged in
 person; and.                             conduct that warrants
(2) Conclude that immediate action is     debarment.
 necessary to protect the Federal
 interest.
(c) Usually imposes the suspension       Imposes debarment after giving
 first, and then promptly notifies the    the respondent notice of the
 suspended person, giving the person an   action and an opportunity to
 opportunity to contest the suspension    contest the proposed
 and have it lifted.                      debarment.
------------------------------------------------------------------------


Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.

[[Page 274]]



Sec. 85.610  What procedures does the Department of Education use in 
suspension and debarment actions?

    In deciding whether to suspend or debar you, we handle the actions 
as informally as practicable, consistent with principles of fundamental 
fairness.
    (a) For suspension actions, we use the procedures in this subpart 
and subpart G of this part.
    (b) For debarment actions, we use the procedures in this subpart and 
subpart H of this part.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.611  What procedures do we use for a suspension or debarment 
action involving a title IV, HEA transaction?

    (a) If we suspend a title IV, HEA participant under Executive Order 
12549, we use the following procedures to ensure that the suspension 
prevents participation in title IV, HEA transactions:
    (1) The notification procedures in Sec. 85.715.
    (2) Instead of the procedures in Sec. 85.720 through Sec. 85.760, 
the procedures in 34 CFR part 668, subpart G or 34 CFR part 682, subpart 
D or G as applicable.
    (3) In addition to the findings and conclusions required by 34 CFR 
part 668, subpart G or 34 CFR part 682, subpart D or G, the suspending 
official, and, on appeal, the Secretary determines whether there is 
sufficient cause for suspension as explained in Sec. 85.700.
    (b) If we debar a title IV, HEA participant under E.O. 12549, we use 
the following procedures to ensure that the debarment also precludes 
participation in title IV, HEA transactions:
    (1) The notification procedures in Sec. 85.805 and Sec. 85.870.
    (2) Instead of the procedures in Sec. 85.810 through Sec. 85.885, 
the procedures in 34 CFR part 668, subpart G or 34 CFR part 682, subpart 
D or G, as applicable.
    (3) On appeal from a decision debarring a title IV, HEA participant, 
we issue a final decision after we receive any written materials from 
the parties.
    (4) In addition to the findings and conclusions required by 34 CFR 
part 668, subpart G or 34 CFR part 682, subpart D or G, the debarring 
official, and, on appeal, the Secretary determines whether there is 
sufficient cause for debarment as explained in Sec. 85.800.

Authority: E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 CFR 
Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 2455 of 
Pub. L. 103-355, 108 Stat. 3243 at 3327.

[68 FR 66612, Nov. 26, 2003]



Sec. 85.612  When does an exclusion by another agency affect the ability 
of the excluded person to participate in a title IV, HEA transaction?

    (a) If a title IV, HEA participant is debarred by another agency 
under E.O. 12549, using procedures described in paragraph (d) of this 
section, that party is not eligible to enter into title IV, HEA 
transactions for the duration of the debarment.
    (b)(1) If a title IV, HEA participant is suspended by another agency 
under E.O. 12549 or under a proposed debarment under the Federal 
Acquisition Regulation (FAR) (48 CFR part 9, subpart 9.4), using 
procedures described in paragraph (d) of this section, that party is not 
eligible to enter into title IV, HEA transactions for the duration of 
the suspension.
    (2)(i) The suspension of title IV, HEA eligibility as a result of 
suspension by another agency lasts for at least 60 days.
    (ii) If the excluded party does not object to the suspension, the 
60-day period begins on the 35th day after that agency issues the notice 
of suspension.
    (iii) If the excluded party objects to the suspension, the 60-day 
period begins on the date of the decision of the suspending official.
    (3) The suspension of title IV, HEA eligibility does not end on the 
60th day if--
    (i) The excluded party agrees to an extension; or
    (ii) Before the 60th day we begin a limitation or termination 
proceeding against the excluded party under 34 CFR part 668, subpart G 
or part 682, subpart D or G.
    (c)(1) If a title IV, HEA participant is debarred or suspended by 
another Federal agency--
    (i) We notify the participant whether the debarment or suspension 
prohibits

[[Page 275]]

participation in title IV, HEA transactions; and
    (ii) If participation is prohibited, we state the effective date and 
duration of the prohibition.
    (2) If a debarment or suspension by another agency prohibits 
participation in title IV, HEA transactions, that prohibition takes 
effect 20 days after we mail notice of our action.
    (3) If ED or another Federal agency suspends a title IV, HEA 
participant, we determine whether grounds exist for an emergency action 
against the participant under 34 CFR part 668, subpart G or part 682, 
subpart D or G, as applicable.
    (4) We use the procedures in Sec. 85.611 to exclude a title IV, HEA 
participant excluded by another Federal agency using procedures that did 
not meet the standards in paragraph (d) of this section.
    (d) If a title IV, HEA participant is excluded by another agency, we 
debar, terminate, or suspend the participant--as provided under this 
part, 34 CFR part 668, or 34 CFR part 682, as applicable--if that agency 
followed procedures that gave the excluded party--
    (1) Notice of the proposed action;
    (2) An opportunity to submit and have considered evidence and 
argument to oppose the proposed action;
    (3) An opportunity to present its objection at a hearing--
    (i) At which the agency has the burden of persuasion by a 
preponderance of the evidence that there is cause for the exclusion; and
    (ii) Conducted by an impartial person who does not also exercise 
prosecutorial or investigative responsibilities with respect to the 
exclusion action;
    (4) An opportunity to present witness testimony, unless the hearing 
official finds that there is no genuine dispute about a material fact;
    (5) An opportunity to have agency witnesses with personal knowledge 
of material facts in genuine dispute testify about those facts, if the 
hearing official determines their testimony to be needed, in light of 
other available evidence and witnesses; and
    (6) A written decision stating findings of fact and conclusions of 
law on which the decision is rendered.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189), E.O. 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455 of Pub. L. 103-355, 108 Stat. 3243 at 3327.

[68 FR 66613, Nov. 26, 2003]



Sec. 85.615  How does the Department of Education notify a person of 
a suspension or debarment action?

    (a) The suspending or debarring official sends a written notice to 
the last known street address, facsimile number, or e-mail address of--
    (1) You or your identified counsel; or
    (2) Your agent for service of process, or any of your partners, 
officers, directors, owners, or joint venturers.
    (b) The notice is effective if sent to any of these persons.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.620  Do Federal agencies coordinate suspension and debarment 
actions?

    Yes, when more than one Federal agency has an interest in a 
suspension or debarment, the agencies may consider designating one 
agency as the lead agency for making the decision. Agencies are 
encouraged to establish methods and procedures for coordinating their 
suspension and debarment actions.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.625  What is the scope of a suspension or debarment?

    If you are suspended or debarred, the suspension or debarment is 
effective as follows:
    (a) Your suspension or debarment constitutes suspension or debarment 
of all of your divisions and other organizational elements from all 
covered transactions, unless the suspension or debarment decision is 
limited--
    (1) By its terms to one or more specifically identified individuals, 
divisions, or other organizational elements; or

[[Page 276]]

    (2) To specific types of transactions.
    (b) Any affiliate of a participant may be included in a suspension 
or debarment action if the suspending or debarring official--
    (1) Officially names the affiliate in the notice; and
    (2) Gives the affiliate an opportunity to contest the action.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.630  May the Department of Education impute conduct of one person 
to another?

    For purposes of actions taken under this rule, we may impute conduct 
as follows:
    (a) Conduct imputed from an individual to an organization. We may 
impute the fraudulent, criminal, or other improper conduct of any 
officer, director, shareholder, partner, employee, or other individual 
associated with an organization, to that organization when the improper 
conduct occurred in connection with the individual's performance of 
duties for or on behalf of that organization, or with the organization's 
knowledge, approval or acquiescence. The organization's acceptance of 
the benefits derived from the conduct is evidence of knowledge, approval 
or acquiescence.
    (b) Conduct imputed from an organization to an individual, or 
between individuals. We may impute the fraudulent, criminal, or other 
improper conduct of any organization to an individual, or from one 
individual to another individual, if the individual to whom the improper 
conduct is imputed either participated in, had knowledge of, or reason 
to know of the improper conduct.
    (c) Conduct imputed from one organization to another organization. 
We may impute the fraudulent, criminal, or other improper conduct of one 
organization to another organization when the improper conduct occurred 
in connection with a partnership, joint venture, joint application, 
association or similar arrangement, or when the organization to whom the 
improper conduct is imputed has the power to direct, manage, control or 
influence the activities of the organization responsible for the 
improper conduct. Acceptance of the benefits derived from the conduct is 
evidence of knowledge, approval or acquiescence.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.635  May the Department of Education settle a debarment or 
suspension action?

    Yes, we may settle a debarment or suspension action at any time if 
it is in the best interest of the Federal Government.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.640  May a settlement include a voluntary exclusion?

    Yes, if we enter into a settlement with you in which you agree to be 
excluded, it is called a voluntary exclusion and has governmentwide 
effect.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.645  Do other Federal agencies know if the Department of Education 
agrees to a voluntary exclusion?

    (a) Yes, we enter information regarding a voluntary exclusion into 
the EPLS.
    (b) Also, any agency or person may contact us to find out the 
details of a voluntary exclusion.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



                          Subpart G_Suspension



Sec. 85.700  When may the suspending official issue a suspension?

    Suspension is a serious action. Using the procedures of this subpart 
and subpart F of this part, the suspending official may impose 
suspension only when that official determines that--
    (a) There exists an indictment for, or other adequate evidence to 
suspect, an offense listed under Sec. 85.800(a), or

[[Page 277]]

    (b) There exists adequate evidence to suspect any other cause for 
debarment listed under Sec. 85.800(b) through (d); and
    (c) Immediate action is necessary to protect the public interest.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.705  What does the suspending official consider in issuing a 
suspension?

    (a) In determining the adequacy of the evidence to support the 
suspension, the suspending official considers 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. During this assessment, the suspending 
official may examine the basic documents, including grants, cooperative 
agreements, loan authorizations, contracts, and other relevant 
documents.
    (b) An indictment, conviction, civil judgment, or other official 
findings by Federal, State, or local bodies that determine factual and/
or legal matters, constitutes adequate evidence for purposes of 
suspension actions.
    (c) In deciding whether immediate action is needed to protect the 
public interest, the suspending official has wide discretion. For 
example, the suspending official may infer the necessity for immediate 
action to protect the public interest either from the nature of the 
circumstances giving rise to a cause for suspension or from potential 
business relationships or involvement with a program of the Federal 
Government.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.710  When does a suspension take effect?

    A suspension is effective when the suspending official signs the 
decision to suspend.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.711  When does a suspension affect title IV, HEA transactions?

    (a) A suspension under Sec. 85.611(a) takes effect immediately if 
the Secretary takes an emergency action under 34 CFR part 668, subpart G 
or 34 CFR part 682, subpart D or G at the same time the Secretary issues 
the suspension.
    (b)(1) Except as provided under paragraph (a) of this section, a 
suspension under Sec. 85.611(a) takes effect 20 days after those 
procedures are complete.
    (2) If the respondent appeals the suspension to the Secretary before 
the expiration of the 20 days under paragraph (b)(1) of this section, 
the suspension takes effect when the respondent receives the Secretary's 
decision.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189), E.O. 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455 of Pub. L. 103-355, 108 Stat. 3243 at 3327.

[68 FR 66613, Nov. 26, 2003]



Sec. 85.715  What notice does the suspending official give me if I am 
suspended?

    After deciding to suspend you, the suspending official promptly 
sends you a Notice of Suspension advising you--
    (a) That you have been suspended;
    (b) That your suspension is based on--
    (1) An indictment;
    (2) A conviction;
    (3) Other adequate evidence that you have committed irregularities 
which seriously reflect on the propriety of further Federal Government 
dealings with you; or
    (4) Conduct of another person that has been imputed to you, or your 
affiliation with a suspended or debarred person;
    (c) Of any other irregularities in terms sufficient to put you on 
notice without disclosing the Federal Government's evidence;
    (d) Of the cause(s) upon which we relied under Sec. 85.700 for 
imposing suspension;
    (e) That your suspension is for a temporary period pending the 
completion of an investigation or resulting legal or debarment 
proceedings;
    (f) Of the applicable provisions of this subpart, Subpart F of this 
part, and

[[Page 278]]

any other ED procedures governing suspension decision making; and
    (g) Of the governmentwide effect of your suspension from procurement 
and nonprocurement programs and activities.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.720  How may I contest a suspension?

    If you as a respondent wish to contest a suspension, you or your 
representative must provide the suspending official with information in 
opposition to the suspension. You may do this orally or in writing, but 
any information provided orally that you consider important must also be 
submitted in writing for the official record.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.725  How much time do I have to contest a suspension?

    (a) As a respondent you or your representative must either send, or 
make rrangements to appear and present, the information and argument to 
the suspending official within 30 days after you receive the Notice of 
Suspension.
    (b) We consider the notice to be received by you--
    (1) When delivered, if we mail the notice to the last known street 
address, or five days after we send it if the letter is undeliverable;
    (2) When sent, if we send the notice by facsimile or five days after 
we send it if the facsimile is undeliverable; or
    (3) When delivered, if we send the notice by e-mail or five days 
after we send it if the e-mail is undeliverable.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.730  What information must I provide to the suspending official 
if I contest a suspension?

    (a) In addition to any information and argument in opposition, as a 
respondent your submission to the suspending official must identify--
    (1) Specific facts that contradict the statements contained in the 
Notice of Suspension. A general denial is insufficient to raise a 
genuine dispute over facts material to the suspension;
    (2) All existing, proposed, or prior exclusions under regulations 
implementing E.O. 12549 and all similar actions taken by Federal, state, 
or local agencies, including administrative agreements that affect only 
those agencies;
    (3) All criminal and civil proceedings not included in the Notice of 
Suspension that grew out of facts relevant to the cause(s) stated in the 
notice; and
    (4) All of your affiliates.
    (b) If you fail to disclose this information, or provide false 
information, the Department of Education may seek further criminal, 
civil or administrative action against you, as appropriate.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.735  Under what conditions do I get an additional opportunity to 
challenge the facts on which the suspension is based?

    (a) You as a respondent will not have an additional opportunity to 
challenge the facts if the suspending official determines that--
    (1) Your suspension is based upon an indictment, conviction, civil 
judgment, or other finding by a Federal, State, or local body for which 
an opportunity to contest the facts was provided;
    (2) Your presentation in opposition contains only general denials to 
information contained in the Notice of Suspension;
    (3) The issues raised in your presentation in opposition to the 
suspension are not factual in nature, or are not material to the 
suspending official's initial decision to suspend, or the official's 
decision whether to continue the suspension; or
    (4) On the basis of advice from the Department of Justice, an office 
of the United States Attorney, a State attorney general's office, or a 
State or local prosecutor's office, that substantial interests of the 
government in pending or

[[Page 279]]

contemplated legal proceedings based on the same facts as the suspension 
would be prejudiced by conducting fact-finding.
    (b) You will have an opportunity to challenge the facts if the 
suspending official determines that--
    (1) The conditions in paragraph (a) of this section do not exist; 
and
    (2) Your presentation in opposition raises a genuine dispute over 
facts material to the suspension.
    (c) If you have an opportunity to challenge disputed material facts 
under this section, the suspending official or designee must conduct 
additional proceedings to resolve those facts.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.740  Are suspension proceedings formal?

    (a) Suspension proceedings are conducted in a fair and informal 
manner. The suspending official may use flexible procedures to allow you 
to present matters in opposition. In so doing, the suspending official 
is not required to follow formal rules of evidence or procedure in 
creating an official record upon which the official will base a final 
suspension decision.
    (b) You as a respondent or your representative must submit any 
documentary evidence you want the suspending official to consider.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.745  How is fact-finding conducted?

    (a) If fact-finding is conducted--
    (1) You may present witnesses and other evidence, and confront any 
witness presented; and
    (2) The fact-finder must prepare written findings of fact for the 
record.
    (b) A transcribed record of fact-finding proceedings must be made, 
unless you as a respondent and the Department of Education agree to 
waive it in advance. If you want a copy of the transcribed record, you 
may purchase it.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.750  What does the suspending official consider in deciding 
whether to continue or terminate my suspension?

    (a) The suspending official bases the decision on all information 
contained in the official record. The record includes--
    (1) All information in support of the suspending official's initial 
decision to suspend you;
    (2) Any further information and argument presented in support of, or 
opposition to, the suspension; and
    (3) Any transcribed record of fact-finding proceedings.
    (b) The suspending official may refer disputed material facts to 
another official for findings of fact. The suspending official may 
reject any resulting findings, in whole or in part, only after 
specifically determining them to be arbitrary, capricious, or clearly 
erroneous.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.755  When will I know whether the suspension is continued or 
terminated?

    The suspending official must make a written decision whether to 
continue, modify, or terminate your suspension within 45 days of closing 
the official record. The official record closes upon the suspending 
official's receipt of final submissions, information and findings of 
fact, if any. The suspending official may extend that period for good 
cause.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.760  How long may my suspension last?

    (a) If legal or debarment proceedings are initiated at the time of, 
or during your suspension, the suspension may continue until the 
conclusion of those

[[Page 280]]

proceedings. However, if proceedings are not initiated, a suspension may 
not exceed 12 months.
    (b) The suspending official may extend the 12 month limit under 
paragraph (a) of this section for an additional 6 months if an office of 
a U.S. Assistant Attorney General, U.S. Attorney, or other responsible 
prosecuting official requests an extension in writing. In no event may a 
suspension exceed 18 months without initiating proceedings under 
paragraph (a) of this section.
    (c) The suspending official must notify the appropriate officials 
under paragraph (b) of this section of an impending termination of a 
suspension at least 30 days before the 12 month period expires to allow 
the officials an opportunity to request an extension.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



                           Subpart H_Debarment



Sec. 85.800  What are the causes for debarment?

    We may debar a person 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, tax 
evasion, 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 your 
present responsibility;
    (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, or a procurement debarment by any Federal agency taken 
pursuant to 48 CFR part 9, subpart 9.4, before August 25, 1995;
    (2) Knowingly doing business with an ineligible person, except as 
permitted under Sec. 85.120;
    (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. 85.640 or of any settlement of a 
debarment or suspension action; or
    (5) Violation of the provisions of the Drug-Free Workplace Act of 
1988 (41 U.S.C. 701); or
    (d) Any other cause of so serious or compelling a nature that it 
affects your present responsibility.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.805  What notice does the debarring official give me if I am 
proposed for debarment?

    After consideration of the causes in Sec. 85.800 of this subpart, 
if the debarring official proposes to debar you, the official sends you 
a Notice of Proposed Debarment, pursuant to Sec. 85.615, advising you--
    (a) That the debarring official is considering debarring you;

[[Page 281]]

    (b) Of the reasons for proposing to debar you in terms sufficient to 
put you on notice of the conduct or transactions upon which the proposed 
debarment is based;
    (c) Of the cause(s) under Sec. 85.800 upon which the debarring 
official relied for proposing your debarment;
    (d) Of the applicable provisions of this subpart, Subpart F of this 
part, and any other ED procedures governing debarment; and
    (e) Of the governmentwide effect of a debarment from procurement and 
nonprocurement programs and activities.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.810  When does a debarment take effect?

    A debarment is not effective until the debarring official issues a 
decision. The debarring official does not issue a decision until the 
respondent has had an opportunity to contest the proposed debarment.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.811  When does a debarment affect title IV, HEA transactions?

    (a) A debarment under Sec. 85.611(b) takes effect 30 days after 
those procedures are complete.
    (b) If the respondent appeals the debarment to the Secretary before 
the expiration of the 30 days under paragraph (a) of this section, the 
debarment takes effect when the respondent receives the Secretary's 
decision.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189) E.O. 12689 ( 3 CFR, 
Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 2455 of 
Pub. L. 103-355, 108 Stat. 3243 at 3327.

[68 FR 66613, Nov. 26, 2003]



Sec. 85.815  How may I contest a proposed debarment?

    If you as a respondent wish to contest a proposed debarment, you or 
your representative must provide the debarring official with information 
in opposition to the proposed debarment. You may do this orally or in 
writing, but any information provided orally that you consider important 
must also be submitted in writing for the official record.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.820  How much time do I have to contest a proposed debarment?

    (a) As a respondent you or your representative must either send, or 
make arrangements to appear and present, the information and argument to 
the debarring official within 30 days after you receive the Notice of 
Proposed Debarment.
    (b) We consider the Notice of Proposed Debarment to be received by 
you--
    (1) When delivered, if we mail the notice to the last known street 
address, or five days after we send it if the letter is undeliverable;
    (2) When sent, if we send the notice by facsimile or five days after 
we send it if the facsimile is undeliverable; or
    (3) When delivered, if we send the notice by e-mail or five days 
after we send it if the e-mail is undeliverable.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.825  What information must I provide to the debarring official 
if I contest a proposed debarment?

    (a) In addition to any information and argument in opposition, as a 
respondent your submission to the debarring official must identify--
    (1) Specific facts that contradict the statements contained in the 
Notice of Proposed Debarment. Include any information about any of the 
factors listed in Sec. 85.860. A general denial is insufficient to 
raise a genuine dispute over facts material to the debarment;
    (2) All existing, proposed, or prior exclusions under regulations 
implementing E.O. 12549 and all similar actions taken by Federal, State, 
or local agencies, including administrative agreements that affect only 
those agencies;
    (3) All criminal and civil proceedings not included in the Notice of 
Proposed

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Debarment that grew out of facts relevant to the cause(s) stated in the 
notice; and
    (4) All of your affiliates.
    (b) If you fail to disclose this information, or provide false 
information, the Department of Education may seek further criminal, 
civil or administrative action against you, as appropriate.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.830  Under what conditions do I get an additional opportunity 
to challenge the facts on which a proposed debarment is based?

    (a) You as a respondent will not have an additional opportunity to 
challenge the facts if the debarring official determines that--
    (1) Your debarment is based upon a conviction or civil judgment;
    (2) Your presentation in opposition contains only general denials to 
information contained in the Notice of Proposed Debarment; or
    (3) The issues raised in your presentation in opposition to the 
proposed debarment are not factual in nature, or are not material to the 
debarring official's decision whether to debar.
    (b) You will have an additional opportunity to challenge the facts 
if the debarring official determines that--
    (1) The conditions in paragraph (a) of this section do not exist; 
and
    (2) Your presentation in opposition raises a genuine dispute over 
facts material to the proposed debarment.
    (c) If you have an opportunity to challenge disputed material facts 
under this section, the debarring official or designee must conduct 
additional proceedings to resolve those facts.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.835  Are debarment proceedings formal?

    (a) Debarment proceedings are conducted in a fair and informal 
manner. The debarring official may use flexible procedures to allow you 
as a respondent to present matters in opposition. In so doing, the 
debarring official is not required to follow formal rules of evidence or 
procedure in creating an official record upon which the official will 
base the decision whether to debar.
    (b) You or your representative must submit any documentary evidence 
you want the debarring official to consider.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.840  How is fact-finding conducted?

    (a) If fact-finding is conducted--
    (1) You may present witnesses and other evidence, and confront any 
witness presented; and
    (2) The fact-finder must prepare written findings of fact for the 
record.
    (b) A transcribed record of fact-finding proceedings must be made, 
unless you as a respondent and the Department of Education agree to 
waive it in advance. If you want a copy of the transcribed record, you 
may purchase it.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.845  What does the debarring official consider in deciding whether 
to debar me?

    (a) The debarring official may debar you for any of the causes in 
Sec. 85.800. However, the official need not debar you even if a cause 
for debarment exists. The official may consider the seriousness of your 
acts or omissions and the mitigating or aggravating factors set forth at 
Sec. 85.860.
    (b) The debarring official bases the decision on all information 
contained in the official record. The record includes--
    (1) All information in support of the debarring official's proposed 
debarment;
    (2) Any further information and argument presented in support of, or 
in opposition to, the proposed debarment; and
    (3) Any transcribed record of fact-finding proceedings.

[[Page 283]]

    (c) The debarring official may refer disputed material facts to 
another official for findings of fact. The debarring official may reject 
any resultant findings, in whole or in part, only after specifically 
determining them to be arbitrary, capricious, or clearly erroneous.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.850  What is the standard of proof in a debarment action?

    (a) In any debarment action, we must establish the cause for 
debarment by a preponderance of the evidence.
    (b) If the proposed debarment is based upon a conviction or civil 
judgment, the standard of proof is met.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.855  Who has the burden of proof in a debarment action?

    (a) We have the burden to prove that a cause for debarment exists.
    (b) Once a cause for debarment is established, you as a respondent 
have the burden of demonstrating to the satisfaction of the debarring 
official that you are presently responsible and that debarment is not 
necessary.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.860  What factors may influence the debarring official's decision?

    This section lists the mitigating and aggravating factors that the 
debarring official may consider in determining whether to debar you and 
the length of your debarment period. The debarring official may consider 
other factors if appropriate in light of the circumstances of a 
particular case. The existence or nonexistence of any factor, such as 
one of those set forth in this section, is not necessarily determinative 
of your present responsibility. In making a debarment decision, the 
debarring official may consider the following factors:
    (a) The actual or potential harm or impact that results or may 
result from the wrongdoing.
    (b) The frequency of incidents and/or duration of the wrongdoing.
    (c) Whether there is a pattern or prior history of wrongdoing. For 
example, if you have been found by another Federal agency or a State 
agency to have engaged in wrongdoing similar to that found in the 
debarment action, the existence of this fact may be used by the 
debarring official in determining that you have a pattern or prior 
history of wrongdoing.
    (d) Whether you are or have been excluded or disqualified by an 
agency of the Federal Government or have not been allowed to participate 
in State or local contracts or assistance agreements on a basis of 
conduct similar to one or more of the causes for debarment specified in 
this part.
    (e) Whether you have entered into an administrative agreement with a 
Federal agency or a State or local government that is not governmentwide 
but is based on conduct similar to one or more of the causes for 
debarment specified in this part.
    (f) Whether and to what extent you planned, initiated, or carried 
out the wrongdoing.
    (g) Whether you have accepted responsibility for the wrongdoing and 
recognize the seriousness of the misconduct that led to the cause for 
debarment.
    (h) Whether you have paid or agreed to pay all criminal, civil and 
administrative liabilities for the improper activity, including any 
investigative or administrative costs incurred by the government, and 
have made or agreed to make full restitution.
    (i) Whether you have cooperated fully with the government agencies 
during the investigation and any court or administrative action. In 
determining the extent of cooperation, the debarring official may 
consider when the cooperation began and whether you disclosed all 
pertinent information known to you.
    (j) Whether the wrongdoing was pervasive within your organization.
    (k) The kind of positions held by the individuals involved in the 
wrongdoing.

[[Page 284]]

    (l) Whether your organization took appropriate corrective action or 
remedial measures, such as establishing ethics training and implementing 
programs to prevent recurrence.
    (m) Whether your principals tolerated the offense.
    (n) Whether you brought the activity cited as a basis for the 
debarment to the attention of the appropriate government agency in a 
timely manner.
    (o) Whether you have fully investigated the circumstances 
surrounding the cause for debarment and, if so, made the result of the 
investigation available to the debarring official.
    (p) Whether you had effective standards of conduct and internal 
control systems in place at the time the questioned conduct occurred.
    (q) Whether you have taken appropriate disciplinary action against 
the individuals responsible for the activity which constitutes the cause 
for debarment.
    (r) Whether you have had adequate time to eliminate the 
circumstances within your organization that led to the cause for the 
debarment.
    (s) Other factors that are appropriate to the circumstances of a 
particular case.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.865  How long may my debarment last?

    (a) If the debarring official decides to debar you, your period of 
debarment will be based on the seriousness of the cause(s) upon which 
your debarment is based. Generally, debarment should not exceed three 
years. However, if circumstances warrant, the debarring official may 
impose a longer period of debarment.
    (b) In determining the period of debarment, the debarring official 
may consider the factors in Sec. 85.860. If a suspension has preceded 
your debarment, the debarring official must consider the time you were 
suspended.
    (c) If the debarment is for a violation of the provisions of the 
Drug-Free Workplace Act of 1988, your period of debarment may not exceed 
five years.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.870  When do I know if the debarring official debars me?

    (a) The debarring official must make a written decision whether to 
debar within 45 days of closing the official record. The official record 
closes upon the debarring official's receipt of final submissions, 
information and findings of fact, if any. The debarring official may 
extend that period for good cause.
    (b) The debarring official sends you written notice, pursuant to 
Sec. 85.615 that the official decided, either--
    (1) Not to debar you; or
    (2) To debar you. In this event, the notice:
    (i) Refers to the Notice of Proposed Debarment;
    (ii) Specifies the reasons for your debarment;
    (iii) States the period of your debarment, including the effective 
dates; and
    (iv) Advises you that your debarment is effective for covered 
transactions and contracts that are subject to the Federal Acquisition 
Regulation (48 CFR chapter 1), throughout the executive branch of the 
Federal Government unless an agency head or an authorized designee 
grants an exception.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.875  May I ask the debarring official to reconsider a decision 
to debar me?

    Yes, as a debarred person you may ask the debarring official to 
reconsider the debarment decision or to reduce the time period or scope 
of the debarment. However, you must put your request in writing and 
support it with documentation.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.

[[Page 285]]



Sec. 85.880  What factors may influence the debarring official during 
reconsideration?

    The debarring official may reduce or terminate your debarment based 
on--
    (a) Newly discovered material evidence;
    (b) A reversal of the conviction or civil judgment upon which your 
debarment was based;
    (c) A bona fide change in ownership or management;
    (d) Elimination of other causes for which the debarment was imposed; 
or
    (e) Other reasons the debarring official finds appropriate.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.885  May the debarring official extend a debarment?

    (a) Yes, the debarring official may extend a debarment for an 
additional period, if that official determines that an extension is 
necessary to protect the public interest.
    (b) However, the debarring official may not extend a debarment 
solely on the basis of the facts and circumstances upon which the 
initial debarment action was based.
    (c) If the debarring official decides that a debarment for an 
additional period is necessary, the debarring official must follow the 
applicable procedures in this subpart, and subpart F of this part, to 
extend the debarment.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



                          Subpart I_Definitions



Sec. 85.900  Adequate evidence.

    Adequate evidence means information sufficient to support the 
reasonable belief that a particular act or omission has occurred.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.905  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. The ways we use to 
determine control include, but are not limited to--
    (a) Interlocking management or ownership;
    (b) Identity of interests among family members;
    (c) Shared facilities and equipment;
    (d) Common use of employees; or
    (e) A business entity which has been organized following the 
exclusion of a person which has the same or similar management, 
ownership, or principal employees as the excluded person.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.910  Agency.

    Agency means any United States executive department, military 
department, defense agency, or any other agency of the executive branch. 
Other agencies of the Federal government are not considered ``agencies'' 
for the purposes of this part unless they issue regulations adopting the 
governmentwide Debarment and Suspension system under Executive orders 
12549 and 12689.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.915  Agent or representative.

    Agent or representative means any person who acts on behalf of, or 
who is authorized to commit, a participant in a covered transaction.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.920  Civil judgment.

    Civil judgment means the disposition of a civil action by any court 
of competent jurisdiction, whether by verdict, decision, settlement, 
stipulation, other disposition which creates a civil liability for the 
complained of wrongful

[[Page 286]]

acts, or a final determination of liability under the Program Fraud 
Civil Remedies Act of 1988 (31 U.S.C. 3801-3812).

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.925  Conviction.

    Conviction means--
    (a) A judgment or any other determination of guilt of a criminal 
offense by any court of competent jurisdiction, whether entered upon a 
verdict or plea, including a plea of nolo contendere; or
    (b) Any other resolution that is the functional equivalent of a 
judgment, including probation before judgment and deferred prosecution. 
A disposition without the participation of the court is the functional 
equivalent of a judgment only if it includes an admission of guilt.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.930  Debarment.

    Debarment means an action taken by a debarring official under 
subpart H of this part to exclude a person from participating in covered 
transactions and transactions covered under the Federal Acquisition 
Regulation (48 CFR chapter 1). A person so excluded is debarred.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.935  Debarring official.

    (a) Debarring official means an agency official who is authorized to 
impose debarment. A debarring official is either--
    (1) The agency head; or
    (2) An official designated by the agency head.
    (b) [Reserved]

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.940  Disqualified.

    Disqualified means that a person is prohibited from participating in 
specified Federal procurement or nonprocurement transactions as required 
under a statute, Executive order (other than Executive Orders 12549 and 
12689) or other authority. Examples of disqualifications include persons 
prohibited under--
    (a) The Davis-Bacon Act (40 U.S.C. 276(a));
    (b) The equal employment opportunity acts and Executive orders; or
    (c) The Clean Air Act (42 U.S.C. 7606), Clean Water Act (33 U.S.C. 
1368) and Executive Order 11738 (3 CFR, 1973 Comp., p. 799).

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.942  ED Deciding Official.

    The ED Deciding Official is an ED officer who has delegated 
authority under the procedures of the Department of Education to decide 
whether to affirm a suspension or enter a debarment.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189), E.O. 12689 ( 3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455 of Pub. L. 103-355, 108 Stat. 3243 at 3327.

[68 FR 66614, Nov. 26, 2003]



Sec. 85.945  Excluded or exclusion.

    Excluded or exclusion means--
    (a) That a person or commodity is prohibited from being a 
participant in covered transactions, whether the person has been 
suspended; debarred; proposed for debarment under 48 CFR part 9, subpart 
9.4; voluntarily excluded; or
    (b) The act of excluding a person.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.950  Excluded Parties List System

    Excluded Parties List System (EPLS) means the list maintained and 
disseminated by the General Services Administration (GSA) containing the 
names and other information about persons who are ineligible. The EPLS 
system includes the printed version entitled,

[[Page 287]]

``List of Parties Excluded or Disqualified from Federal Procurement and 
Nonprocurement Programs,'' so long as published.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.952  HEA.

    HEA means the Higher Education Act of 1965, as amended.

[68 FR 66614, Nov. 26, 2003]



Sec. 85.955  Indictment.

    Indictment means an indictment for a criminal offense. A 
presentment, information, or other filing by a competent authority 
charging a criminal offense shall be given the same effect as an 
indictment.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.960  Ineligible or ineligibility.

    Ineligible or ineligibility means that a person or commodity is 
prohibited from covered transactions because of an exclusion or 
disqualification.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.965  Legal proceedings.

    Legal proceedings means any criminal proceeding or any civil 
judicial proceeding, including a proceeding under the Program Fraud 
Civil Remedies Act (31 U.S.C. 3801-3812), to which the Federal 
Government or a State or local government or quasi-governmental 
authority is a party. The term also includes appeals from those 
proceedings.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.970  Nonprocurement transaction.

    (a) Nonprocurement transaction means any transaction, regardless of 
type (except procurement contracts), including, but not limited to the 
following:
    (1) Grants.
    (2) Cooperative agreements.
    (3) Scholarships.
    (4) Fellowships.
    (5) Contracts of assistance.
    (6) Loans.
    (7) Loan guarantees.
    (8) Subsidies.
    (9) Insurances.
    (10) Payments for specified uses.
    (11) Donation agreements.
    (b) A nonprocurement transaction at any tier does not require the 
transfer of Federal funds.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.975  Notice.

    Notice means a written communication served in person, sent by 
certified mail or its equivalent, or sent electronically by e-mail or 
facsimile. (See Sec. 85. 615.)

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.980  Participant.

    Participant means any person who submits a proposal for or who 
enters into a covered transaction, including an agent or representative 
of a participant.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.985  Person.

    Person means any individual, corporation, partnership, association, 
unit of government, or legal entity, however organized.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.990  Preponderance of the evidence.

    Preponderance of the evidence means proof by information that, 
compared with information opposing it, leads to

[[Page 288]]

the conclusion that the fact at issue is more probably true than not.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.995  Principal.

    Principal means--
    (a) An officer, director, owner, partner, principal investigator, or 
other person within a participant with management or supervisory 
responsibilities related to a covered transaction; or
    (b) A consultant or other person, whether or not employed by the 
participant or paid with Federal funds, who--
    (1) Is in a position to handle Federal funds;
    (2) Is in a position to influence or control the use of those funds; 
or,
    (3) Occupies a technical or professional position capable of 
substantially influencing the development or outcome of an activity 
required to perform the covered transaction.
    (c) For the purposes of Department of Education title IV, HEA 
transactions--
    (1) A third-party servicer, as defined in 34 CFR 668.2 or 682.200; 
or
    (2) Any person who provides services described in 34 CFR 668.2 or 
682.200 to a title IV, HEA participant, whether or not that person is 
retained or paid directly by the title IV, HEA participant.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.1000  Respondent.

    Respondent means a person against whom an agency has initiated a 
debarment or suspension action.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.1005  State.

    (a) State means--
    (1) Any of the states of the United States;
    (2) The District of Columbia;
    (3) The Commonwealth of Puerto Rico;
    (4) Any territory or possession of the United States; or
    (5) Any agency or instrumentality of a state.
    (b) For purposes of this part, State does not include institutions 
of higher education, hospitals, or units of local government.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.1010  Suspending official.

    (a) Suspending official means an agency official who is authorized 
to impose suspension. The suspending official is either:
    (1) The agency head; or
    (2) An official designated by the agency head.
    (b) [Reserved]

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.1015  Suspension.

    Suspension is an action taken by a suspending official under subpart 
G of this part that immediately prohibits a person from participating in 
covered transactions and transactions covered under the Federal 
Acquisition Regulation (48 CFR chapter 1) for a temporary period, 
pending completion of an agency investigation and any judicial or 
administrative proceedings that may ensue. A person so excluded is 
suspended.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455, Pub. L. 103-355, 108 Stat. 3243 at 3327.



Sec. 85.1016  Title IV, HEA participant.

    A title IV, HEA participant is--
    (a) An institution described in 34 CFR 600.4, 600.5, or 600.6 that 
provides postsecondary education; or
    (b) A lender, third-party servicer, or guaranty agency, as those 
terms are defined in 34 CFR 668.2 or 682.200.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189); E.O. 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455 of Pub. L. 103-355, 108 Stat. 3243 at 3327.

[68 FR 66614, Nov. 26, 2003]

[[Page 289]]



Sec. 85.1017  Title IV, HEA program.

    A title IV, HEA program includes any program listed in 34 CFR 
668.1(c).

Authority: E.O. 12549 (3 CFR, 1986 Comp., p.1890: E.O. 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455 of Pub. L. 103-355, 108 Stat. 3243 at 3327.

[68 FR 66614, Nov. 26, 2003]



Sec. 85.1018  Title IV, HEA transaction.

    A title IV, HEA transaction includes:
    (a) A disbursement or delivery of funds provided under a title IV, 
HEA program to a student or borrower;
    (b) A certification by an educational institution of eligibility for 
a loan under a title IV, HEA program;
    (c) Guaranteeing a loan made under a title IV, HEA program; and
    (d) The acquisition or exercise of any servicing responsibility for 
a grant, loan, or work study assistance under a title IV, HEA program.

Authority: E.O. 12549 (3 CFR, 1986 Comp., p. 189) E.O. 12689 (3 CFR, 
1989 Comp., p. 235); 20 U.S.C. 1082, 1094, 1221e-3 and 3474; and Sec. 
2455 of Pub. L. 103-355, 108 Stat. 3243 at 3327.

[68 FR 66614, Nov. 26, 2003]



Sec. 85.1020  Voluntary exclusion or voluntarily excluded.

    (a) Voluntary exclusion means a person's agreement to be excluded 
under the terms of a settlement between the person and one or more 
agencies. Voluntary exclusion must have governmentwide effect.
    (b) Voluntarily excluded means the status of a person who has agreed 
to a voluntary exclusion.

Subpart J [Reserved]

[[Page 290]]

                Appendix to Part 85--Covered Transactions
[GRAPHIC] [TIFF OMITTED] TR26NO03.001


[68 FR 66614, Nov. 26, 2003]



PART 86_DRUG AND ALCOHOL ABUSE PREVENTION--Table of Contents




                            Subpart A_General

Sec.
86.1 What is the purpose of the Drug and Alcohol Abuse Prevention 
          regulations?
86.2 What Federal programs are covered by this part?
86.3 What actions shall an IHE take to comply with the requirements of 
          this part?
86.4 What are the procedures for submitting a drug prevention program 
          certification?
86.5 What are the consequences if an IHE fails to submit a drug 
          prevention program certification?
86.6 When must an IHE submit a drug prevention program certification?
86.7 What definitions apply to this part?

               Subpart B_Institutions of Higher Education

86.100 What must the IHE's drug prevention program include?
86.101 What review of IHE drug prevention programs does the Secretary 
          conduct?
86.102 What is required of an IHE that the Secretary selects for annual 
          review?
86.103 What records and information must an IHE make available to the 
          Secretary and the public concerning its drug prevention 
          program?

[[Page 291]]

Subpart C [Reserved]

Subpart D_Responses and Sanctions Issued or Imposed by the Secretary for 
                          Violations by an IHE

86.300 What constitutes a violation of this part by an IHE?
86.301 What actions may the Secretary take if an IHE violates this part?
86.302 What are the procedures used by the Secretary for providing 
          information or technical assistance?
86.303 What are the procedures used by the Secretary for issuing a 
          response other than the formulation of a compliance agreement 
          or the provision of information or technical assistance?
86.304 What are the procedures used by the Secretary to demand repayment 
          of Federal financial assistance or terminate an IHE's 
          eligibility for any or all forms of Federal financial 
          assistance?

                       Subpart E_Appeal Procedures

86.400 What is the scope of this subpart?
86.401 What are the authority and responsibility of the ALJ?
86.402 Who may be a party in a hearing under this subpart?
86.403 May a party be represented by counsel?
86.404 How may a party communicate with an ALJ?
86.405 What are the requirements for filing written submissions?
86.406 What must the ALJ do if the parties enter settlement 
          negotiations?
86.407 What are the procedures for scheduling a hearing?
86.408 What are the procedures for conducting a pre-hearing conference?
86.409 What are the procedures for conducting a hearing on the record?
86.410 What are the procedures for issuance of a decision?
86.411 What are the procedures for requesting reinstatement of 
          eligibility?

    Authority: 20 U.S.C. 1145g, unless otherwise noted.

    Source: 55 FR 33581, Aug. 16, 1990, unless otherwise noted.



                            Subpart A_General



Sec. 86.1  What is the purpose of the Drug and Alcohol Abuse Prevention 
regulations?

    The purpose of the Drug and Alcohol Abuse Prevention regulations is 
to implement section 22 of the Drug-Free Schools and Communities Act 
Amendments of 1989, which added section 1213 to the Higher Education 
Act. These amendments require that, as a condition of receiving funds or 
any other form of financial assistance under any Federal program, an 
institution of higher education (IHE) must certify that it has adopted 
and implemented a drug prevention program as described in this part.

(Authority: 20 U.S.C. 1145g)

[61 FR 66225, Dec. 17, 1996]



Sec. 86.2  What Federal programs are covered by this part?

    The Federal programs covered by this part include--
    (a) All programs administered by the Department of Education under 
which an IHE may receive funds or any other form of Federal financial 
assistance; and
    (b) All programs administered by any other Federal agency under 
which an IHE may receive funds or any other form of Federal financial 
assistance.

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]



Sec. 86.3  What actions shall an IHE take to comply with the requirements 
of this part?

    (a) An IHE shall adopt and implement a drug prevention program as 
described in Sec. 86.100 to prevent the unlawful possession, use, or 
distribution of illicit drugs and alcohol by all students and employees 
on school premises or as part of any of its activities.
    (b) An IHE shall provide a written certification that it has adopted 
and implemented the drug prevention program described in Sec. 86.100.

(Approved by the Office of Management and Budget under control number 
1880-0522)

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, 66226, Dec. 17, 
1996]

[[Page 292]]



Sec. 86.4  What are the procedures for submitting a drug prevention 
program certification?

    An IHE shall submit to the Secretary the drug prevention program 
certification required by Sec. 86.3(b).

(Approved by the Office of Management and Budget under control number 
1880-0522)

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66226, Dec. 17, 1996]



Sec. 86.5  What are the consequences if an IHE fails to submit a drug 
prevention program certification?

    (a) An IHE that fails to submit a drug prevention program 
certification is not eligible to receive funds or any other form of 
financial assistance under any Federal program.
    (b) The effect of loss of eligibility to receive funds or any other 
form of Federal financial assistance is determined by the statute and 
regulations governing the Federal programs under which an IHE receives 
or desires to receive assistance.

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]



Sec. 86.6  When must an IHE submit a drug prevention program certification?

    (a) After October 1, 1990, except as provided in paragraph (b) of 
this section, an IHE is not eligible to receive funds or any other form 
of financial assistance under any Federal program until the IHE has 
submitted a drug prevention program certification.
    (b)(1) The Secretary may allow an IHE until not later than April 1, 
1991, to submit the drug prevention program certification, only if the 
IHE establishes that it has a need, other than administrative 
convenience, for more time to adopt and implement its drug prevention 
program.
    (2) An IHE that wants to receive an extension of time to submit its 
drug prevention program certification shall submit a written 
justification to the Secretary that--
    (i) Describes each part of its drug prevention program, whether in 
effect or planned;
    (ii) Provides a schedule to complete and implement its drug 
prevention program; and
    (iii) Explains why it has a need, other than administrative 
convenience, for more time to adopt and implement its drug prevention 
program.
    (3) An IHE shall submit a request for an extension to the Secretary.

(Approved by the Office of Management and Budget under control number 
1880-0522)

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66226, Dec. 17, 1996]



Sec. 86.7  What definitions apply to this part?

    (a) Definitions in EDGAR. The following terms used in this part are 
defined in 34 CFR part 77:

Department
EDGAR
Secretary
    (b) Other definitions. The following terms used in this part are 
defined as follows:
    Compliance agreement means an agreement between the Secretary and an 
IHE that is not in full compliance with its drug prevention program 
certification. The agreement specifies the steps the IHE will take to 
comply fully with its drug prevention program certification, and 
provides a schedule for the accomplishment of those steps. A compliance 
agreement does not excuse or remedy past violations of this part.
    Institution of higher education means--
    (1) An institution of higher education, as defined in 34 CFR 600.4;
    (2) A proprietary institution of higher education, as defined in 34 
CFR 600.5;
    (3) A postsecondary vocational institution, as defined in 34 CFR 
600.6; and
    (4) A vocational school, as defined in 34 CFR 600.7.

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66226, Dec. 17, 1996]

[[Page 293]]



               Subpart B_Institutions of Higher Education



Sec. 86.100  What must the IHE's drug prevention program include?

    The IHE's drug prevention program must, at a minimum, include the 
following:
    (a) The annual distribution in writing to each employee, and to each 
student who is taking one or more classes for any type of academic 
credit except for continuing education units, regardless of the length 
of the student's program of study, of--
    (1) Standards of conduct that clearly prohibit, at a minimum, the 
unlawful possession, use, or distribution of illicit drugs and alcohol 
by students and employees on its property or as part of any of its 
activities;
    (2) A description of the applicable legal sanctions under local, 
State, or Federal law for the unlawful possession or distribution of 
illicit drugs and alcohol;
    (3) A description of the health risks associated with the use of 
illicit drugs and the abuse of alcohol;
    (4) A description of any drug or alcohol counseling, treatment, or 
rehabilitation or re-entry programs that are available to employees or 
students; and
    (5) A clear statement that the IHE will impose disciplinary 
sanctions on students and employees (consistent with local, State, and 
Federal law), and a description of those sanctions, up to and including 
expulsion or termination of employment and referral for prosecution, for 
violations of the standards of conduct required by paragraph (a)(1) of 
this section. For the purpose of this section, a disciplinary sanction 
may include the completion of an appropriate rehabilitation program.
    (b) A biennial review by the IHE of its program to--
    (1) Determine its effectiveness and implement changes to the program 
if they are needed; and
    (2) Ensure that the disciplinary sanctions described in paragraph 
(a)(5) of this section are consistently enforced.

(Approved by the Office of Management and Budget under control number 
1880-0522)

(Authority: 20 U.S.C. 1145g)



Sec. 86.101  What review of IHE drug prevention programs does the Secretary 
conduct?

    The Secretary annually reviews a representative sample of IHE drug 
prevention programs.

(Authority: 20 U.S.C. 1145g)



Sec. 86.102  What is required of an IHE that the Secretary selects for 
annual review?

    If the Secretary selects an IHE for review under Sec. 86.101, the 
IHE shall provide the Secretary access to personnel, records, documents 
and any other necessary information requested by the Secretary to review 
the IHE's adoption and implementation of its drug prevention program.

(Approved by the Office of Management and Budget under control number 
1880-0522)

(Authority: 20 U.S.C. 1145g)



Sec. 86.103  What records and information must an IHE make available to 
the Secretary and the public concerning its drug prevention program?

    (a) Each IHE that provides the drug prevention program certification 
required by Sec. 86.3(b) shall, upon request, make available to the 
Secretary and the public a copy of each item required by Sec. 86.100(a) 
as well as the results of the biennial review required by Sec. 
86.100(b).
    (b)(1) An IHE shall retain the following records for three years 
after the fiscal year in which the record was created:
    (i) The items described in paragraph (a) of this section.
    (ii) Any other records reasonably related to the IHE's compliance 
with the drug prevention program certification.
    (2) If any litigation, claim, negotiation, audit, review, or other 
action involving the records has been started before expiration of the 
three-year period, the IHE shall retain the records until completion of 
the action and resolution of all issues that arise from it, or until the 
end of the regular three-year period, whichever is later.

(Approved by the Office of Management and Budget under control number 
1880-0522)

(Authority: 20 U.S.C. 1145g)

[[Page 294]]

Subpart C [Reserved]



Subpart D_Responses and Sanctions Issued or Imposed by the Secretary for 
                          Violations by an IHE



Sec. 86.300  What constitutes a violation of this part by an IHE?

    An IHE violates this part by--
    (a) Receiving any form of Federal financial assistance after 
becoming ineligible to receive that assistance because of failure to 
submit a certification in accordance with Sec. 86.3(b); or
    (b) Violating its certification. Violation of a certification 
includes failure of an IHE to--
    (1) Adopt or implement its drug prevention program; or
    (2) Consistently enforce its disciplinary sanctions for violations 
by students and employees of the standards of conduct adopted by an IHE 
under Sec. 86.100(a)(1).

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66226, Dec. 17, 1996]



Sec. 86.301  What actions may the Secretary take if an IHE violates this 
part?

    (a) If an IHE violates its certification, the Secretary may issue a 
response to the IHE. A response may include, but is not limited to--
    (1) Provision of information and technical assistance; and
    (2) Formulation of a compliance agreement designed to bring the IHE 
into full compliance with this part as soon as feasible.
    (b) If an IHE receives any form of Federal financial assistance 
without having submitted a certification or violates its certification, 
the Secretary may impose one or more sanctions on the IHE, including--
    (1) Repayment of any or all forms of Federal financial assistance 
received by the IHE when it was in violation of this part; and
    (2) The termination of any or all forms of Federal financial 
assistance that--
    (i)(A) Except as specified in paragraph (b)(2)(ii) of this section, 
ends an IHE's eligibility to receive any or all forms of Federal 
financial assistance. The Secretary specifies which forms of Federal 
financial assistance would be affected; and
    (B) Prohibits an IHE from making any new obligations against Federal 
funds; and
    (ii) For purposes of an IHE's participation in the student financial 
assistance programs authorized by title IV of the Higher Education Act 
of 1965 as amended, has the same effect as a termination under 34 CFR 
668.94.

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]



Sec. 86.302  What are the procedures used by the Secretary for providing 
information or technical assistance?

    (a) The Secretary provides information or technical assistance to an 
IHE in writing, through site visits, or by other means.
    (b) The IHE shall inform the Secretary of any corrective action it 
has taken within a period specified by the Secretary.

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]



Sec. 86.303  What are the procedures used by the Secretary for issuing a 

response other than the formulation of a compliance agreement or the 
provision of information or technical assistance?

    (a) If the Secretary intends to issue a response other than the 
formulation of a compliance agreement or the provision of information or 
technical assistance, the Secretary notifies the IHE in writing of--
    (1) The Secretary's determination that there are grounds to issue a 
response other than the formulation of a compliance agreement or 
providing information or technical assistance; and
    (2) The response the Secretary intends to issue.
    (b) An IHE may submit written comments to the Secretary on the 
determination under paragraph (a)(1) of this section and the intended 
response under paragraph (a)(2) of this section within 30 days after the 
date the IHE receives the notification of the Secretary's intent to 
issue a response.

[[Page 295]]

    (c) Based on the initial notification and the written comments of 
the IHE the Secretary makes a final determination and, if appropriate, 
issues a final response.
    (d) The IHE shall inform the Secretary of the corrective action it 
has taken in order to comply with the terms of the Secretary's response 
within a period specified by the Secretary.
    (e) If an IHE does not comply with the terms of a response issued by 
the Secretary, the Secretary may issue an additional response or impose 
a sanction on the IHE in accordance with the procedures in Sec. 86.304.

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]



Sec. 86.304  What are the procedures used by the Secretary to demand 

repayment of Federal financial assistance or terminate an IHE's 
eligibility for any or all forms of Federal financial assistance?

    (a) A designated Department official begins a proceeding for 
repayment of Federal financial assistance or termination, or both, of an 
IHE's eligibility for any or all forms of Federal financial assistance 
by sending the IHE a notice by certified mail with return receipt 
requested. This notice--
    (1) Informs the IHE of the Secretary's intent to demand repayment of 
Federal financial assistance or to terminate, describes the consequences 
of that action, and identifies the alleged violations that constitute 
the basis for the action;
    (2) Specifies, as appropriate--
    (i) The amount of Federal financial assistance that must be repaid 
and the date by which the IHE must repay the funds; and
    (ii) The proposed effective date of the termination, which must be 
at least 30 days after the date of receipt of the notice of intent; and
    (3) Informs the IHE that the repayment of Federal financial 
assistance will not be required or that the termination will not be 
effective on the date specified in the notice if the designated 
Department official receives, within a 30-day period beginning on the 
date the IHE receives the notice of intent described in this paragraph--
    (i) Written material indicating why the repayment of Federal 
financial assistance or termination should not take place; or
    (ii) A request for a hearing that contains a concise statement of 
disputed issues of law and fact, the IHE's position with respect to 
these issues, and, if appropriate, a description of which Federal 
financial assistance the IHE contends need not be repaid.
    (b) If the IHE does not request a hearing but submits written 
material--
    (1) The IHE receives no additional opportunity to request or receive 
a hearing; and
    (2) The designated Department official, after considering the 
written material, notifies the IHE in writing whether--
    (i) Any or all of the Federal financial assistance must be repaid; 
or
    (ii) The proposed termination is dismissed or imposed as of a 
specified date.

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]



                       Subpart E_Appeal Procedures



Sec. 86.400  What is the scope of this subpart?

    (a) The procedures in this subpart are the exclusive procedures 
governing appeals of decisions by a designated Department official to 
demand the repayment of Federal financial assistance or terminate the 
eligibility of an IHE to receive some or all forms of Federal financial 
assistance for violations of this part.
    (b) An Administrative Law Judge (ALJ) hears appeals under this 
subpart.

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]



Sec. 86.401  What are the authority and responsibility of the ALJ?

    (a) The ALJ regulates the course of the proceeding and conduct of 
the parties during the hearing and takes all steps necessary to conduct 
a fair and impartial proceeding.
    (b) The ALJ is not authorized to issue subpoenas.

[[Page 296]]

    (c) The ALJ takes whatever measures are appropriate to expedite the 
proceeding. These measures may include, but are not limited to--
    (1) Scheduling of conferences;
    (2) Setting time limits for hearings and submission of written 
documents; and
    (3) Terminating the hearing and issuing a decision against a party 
if that party does not meet those time limits.
    (d) The scope of the ALJ's review is limited to determining 
whether--
    (1) The IHE received any form of Federal financial assistance after 
becoming ineligible to receive that assistance because of failure to 
submit a certification; or
    (2) The IHE violated its certification.

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]



Sec. 86.402  Who may be a party in a hearing under this subpart?

    (a) Only the designated Department official and the IHE that is the 
subject of the proposed termination or recovery of Federal financial 
assistance may be parties in a hearing under this subpart.
    (b) Except as provided in this subpart, no person or organization 
other than a party may participate in a hearing under this subpart.

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]



Sec. 86.403  May a party be represented by counsel?

    A party may be represented by counsel.

(Authority: 20 U.S.C. 1145g)



Sec. 86.404  How may a party communicate with an ALJ?

    (a) A party may not communicate with an ALJ on any fact at issue in 
the case or on any matter relevant to the merits of the case unless the 
other party is given notice and an opportunity to participate.
    (b)(1) To obtain an order or ruling from an ALJ, a party shall make 
a motion to the ALJ.
    (2) Except for a request for an extension of time, a motion must be 
made in writing unless the parties appear in person or participate in a 
conference telephone call. The ALJ may require a party to reduce an oral 
motion to writing.
    (3) If a party files a written motion, the party shall do so in 
accordance with Sec. 86.405.
    (4) Except for a request for an extension of time, the ALJ may not 
grant a party's written motion without the consent of the other party 
unless the other party has had at least 21 days from the date of service 
of the motion to respond. However, the ALJ may deny a motion without 
awaiting a response.
    (5) The date of service of a motion is determined by the standards 
for determining a filing date in Sec. 86.405(d).

(Authority: 20 U.S.C. 1145g)



Sec. 86.405  What are the requirements for filing written submissions?

    (a) Any written submission under this subpart must be filed by hand-
delivery, by mail, or by facsimile transmission. The Secretary 
discourages the use of facsimile transmission for documents longer than 
five pages.
    (b) If a party files a brief or other document, the party shall 
serve a copy of the filed material on the other party on the filing date 
by hand-delivery or by mail. If agreed upon by the parties, service of a 
document may be made upon the other party by facsimile transmission.
    (c) Any written submission must be accompanied by a statement 
certifying the date that the filed material was filed and served on the 
other party.
    (d)(1) The filing date for a written submission is the date the 
document is--
    (i) Hand-delivered;
    (ii) Mailed; or
    (iii) Sent by facsimile transmission.
    (2) If a scheduled filing date falls on a Saturday, Sunday, or 
Federal holiday, the filing deadline is the next Federal business day.
    (e) A party filing by facsimile transmission is responsible for 
confirming that a complete and legible copy of the document was received 
by the Department.

[[Page 297]]

    (f) If a document is filed by facsimile transmission, the Secretary 
or the designated Department official, as applicable, may require the 
filing of a follow-up hard copy by hand-delivery or by mail within a 
reasonable period of time.

(Authority: 20 U.S.C. 1145g)

[57 FR 56795, Nov. 30, 1992]



Sec. 86.406  What must the ALJ do if the parties enter settlement 
negotiations?

    (a) If the parties to a case file a joint motion requesting a stay 
of the proceedings for settlement negotiations or for the parties to 
obtain approval of a settlement agreement, the ALJ grants the stay.
    (b) The following are not admissible in any proceeding under this 
part:
    (1) Evidence of conduct during settlement negotiations.
    (2) Statements made during settlement negotiations.
    (3) Terms of settlement offers.
    (c) The parties may not disclose the contents of settlement 
negotiations to the ALJ. If the parties enter into a settlement 
agreement and file a joint motion to dismiss the case, the ALJ grants 
the motion.

(Authority: 20 U.S.C. 1145g)



Sec. 86.407  What are the procedures for scheduling a hearing?

    (a) If the IHE requests a hearing by the time specified in Sec. 
86.304(a)(3), the designated Department official sets the date and the 
place.
    (b)(1) The date is at least 15 days after the designated Department 
official receives the request and no later than 45 days after the 
request for hearing is received by the Department.
    (2) On the motion of either or both parties, the ALJ may extend the 
period before the hearing is scheduled beyond the 45 days specified in 
paragraph (b)(1) of this section.
    (c) No termination takes effect until after a hearing is held and a 
decision is issued by the Department.
    (d) With the approval of the ALJ and the consent of the designated 
Department official and the IHE, any time schedule specified in this 
section may be shortened.

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]



Sec. 86.408  What are the procedures for conducting a pre-hearing 
conference?

    (a)(1) A pre-hearing conference may be convened by the ALJ if the 
ALJ thinks that such a conference would be useful, or if requested by--
    (i) The designated Department official; or
    (ii) The IHE.
    (2) The purpose of a pre-hearing conference is to allow the parties 
to settle, narrow, or clarify the dispute.
    (b) A pre-hearing conference may consist of--
    (1) A conference telephone call;
    (2) An informal meeting; or
    (3) The submission and exchange of written material.

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]



Sec. 86.409  What are the procedures for conducting a hearing on the record?

    (a) A hearing on the record is an orderly presentation of arguments 
and evidence conducted by an ALJ.
    (b) An ALJ conducts the hearing entirely on the basis of briefs and 
other written submissions unless--
    (1) The ALJ determines, after reviewing all appropriate submissions, 
that an evidentiary hearing is needed to resolve a material factual 
issue in dispute; or
    (2) The ALJ determines, after reviewing all appropriate submissions, 
that oral argument is needed to clarify the issues in the case.
    (c) The hearing process may be expedited as agreed by the ALJ, the 
designated Department official, and the IHE. Procedures to expedite may 
include, but are not limited to, the following:
    (1) A restriction on the number or length of submissions.
    (2) The conduct of the hearing by telephone conference call.

[[Page 298]]

    (3) A review limited to the written record.
    (4) A certification by the parties to facts and legal authorities 
not in dispute.
    (d)(1) The formal rules of evidence and procedures applicable to 
proceedings in a court of law are not applicable.
    (2) The designated Department official has the burden of persuasion 
in any proceeding under this subpart.
    (3)(i) The parties may agree to exchange relevant documents and 
information.
    (ii) The ALJ may not order discovery, as provided for under the 
Federal Rules of Civil Procedure, or any other exchange between the 
parties of documents or information.
    (4) The ALJ accepts only evidence that is relevant and material to 
the proceeding and is not unduly repetitious.
    (e) The ALJ makes a transcribed record of any evidentiary hearing or 
oral argument that is held, and makes the record available to--
    (1) The designated Department official; and
    (2) The IHE on its request and upon payment of a fee comparable to 
that prescribed under the Department of Education Freedom of Information 
Act regulations (34 CFR part 5).

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]



Sec. 86.410  What are the procedures for issuance of a decision?

    (a)(1) The ALJ issues a written decision to the IHE, the designated 
Department official, and the Secretary by certified mail, return receipt 
requested, within 30 days after--
    (i) The last brief is filed;
    (ii) The last day of the hearing if one is held; or
    (iii) The date on which the ALJ terminates the hearing in accordance 
with Sec. 86.401(c)(3).
    (2) The ALJ's decision states whether the violation or violations 
contained in the Secretary's notification occurred, and articulates the 
reasons for the ALJ's finding.
    (3) The ALJ bases findings of fact only on evidence in the hearing 
record and on matters given judicial notice.
    (b)(1) The ALJ's decision is the final decision of the agency. 
However, the Secretary reviews the decision on request of either party, 
and may review the decision on his or her own initiative.
    (2) If the Secretary decides to review the decision on his or her 
own initiative, the Secretary informs the parties of his or her 
intention to review by written notice sent within 15 days of the 
Secretary's receipt of the ALJ's decision.
    (c)(1) Either party may request review by the Secretary by 
submitting a brief or written materials to the Secretary within 20 days 
of the party's receipt of the ALJ's decision. The submission must 
explain why the decision of the ALJ should be modified, reversed, or 
remanded. The other party shall respond within 20 days of receipt of the 
brief or written materials filed by the opposing party.
    (2) Neither party may introduce new evidence on review.
    (d) The decision of the ALJ ordering the repayment of Federal 
financial assistance or terminating the eligibility of an IHE does not 
take effect pending the Secretary's review.
    (e)(1) The Secretary reviews the ALJ's decision considering only 
evidence introduced into the record.
    (2) The Secretary's decision may affirm, modify, reverse or remand 
the ALJ's decision and includes a statement of reasons for the decision.

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]



Sec. 86.411  What are the procedures for requesting reinstatement of 
eligibility?

    (a)(1) An IHE whose eligibility to receive any or all forms of 
Federal financial assistance has been terminated may file with the 
Department a request for reinstatement as an eligible entity no earlier 
than 18 months after the effective date of the termination.
    (2) In order to be reinstated, the IHE must demonstrate that it has 
corrected the violation or violations on which the termination was 
based, and that it

[[Page 299]]

has met any repayment obligation imposed upon it under Sec. 
86.301(b)(1) of this part.
    (b) In addition to the requirements of paragraph (a) of this 
section, the IHE shall comply with the requirements and procedures for 
reinstatement of eligibility applicable to any Federal program under 
which it desires to receive Federal financial assistance.

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]



PART 97_PROTECTION OF HUMAN SUBJECTS--Table of Contents




Subpart A_Federal Policy for the Protection of Human Subjects (Basic ED 
            Policy for Protection of Human Research Subjects)

Sec.
97.101 To what does this policy apply?
97.102 Definitions.
97.103 Assuring compliance with this policy--research conducted or 
          supported by any Federal Department or Agency.
97.104-97.106 [Reserved]
97.107 IRB membership.
97.108 IRB functions and operations.
97.109 IRB review of research.
97.110 Expedited review procedures for certain kinds of research 
          involving no more than minimal risk, and for minor changes in 
          approved research.
97.111 Criteria for IRB approval of research.
97.112 Review by institution.
97.113 Suspension or termination of IRB approval of research.
97.114 Cooperative research.
97.115 IRB records.
97.116 General requirements for informed consent.
97.117 Documentation of informed consent.
97.118 Applications and proposals lacking definite plans for involvement 
          of human subjects.
97.119 Research undertaken without the intention of involving human 
          subjects.
97.120 Evaluation and disposition of applications and proposals for 
          research to be conducted or supported by a Federal Department 
          or Agency.
97.121 [Reserved]
97.122 Use of Federal funds.
97.123 Early termination of research support: Evaluation of applications 
          and proposals.
97.124 Conditions.

Subparts B-C [Reserved]

  Subpart D_Additional ED Protections for Children Who are Subjects in 
                                Research

97.401 To what do these regulations apply?
97.402 Definitions.
97.403 IRB duties.
97.404 Research not involving greater than minimal risk.
97.405 Research involving greater than minimal risk but presenting the 
          prospect of direct benefit to the individual subjects.
97.406 Research involving greater than minimal risk and no prospect of 
          direct benefit to individual subjects, but likely to yield 
          generalizable knowledge about the subject's disorder or 
          condition.
97.407 Research not otherwise approvable which presents an opportunity 
          to understand, prevent, or alleviate a serious problem 
          affecting the health or welfare of children.
97.408 Requirements for permission by parents or guardians and for 
          assent by children.
97.409 Wards.

    Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; 42 U.S.C. 300v-
1(b).

    Source: 56 FR 28012, 28021, June 18, 1991, unless otherwise noted.



Subpart A_Federal Policy for the Protection of Human Subjects (Basic ED 
            Policy for Protection of Human Research Subjects)



Sec. 97.101  To what does this policy apply?

    (a) Except as provided in paragraph (b) of this section, this policy 
applies to all research involving human subjects conducted, supported or 
otherwise subject to regulation by any federal department or agency 
which takes appropriate administrative action to make the policy 
applicable to such research. This includes research conducted by federal 
civilian employees or military personnel, except that each department or 
agency head may adopt such procedural modifications as may be 
appropriate from an administrative standpoint. It also includes research 
conducted, supported, or otherwise subject to regulation by the federal 
government outside the United States.
    (1) Research that is conducted or supported by a federal department 
or agency, whether or not it is regulated

[[Page 300]]

as defined in Sec. 97.102(e), must comply with all sections of this 
policy.
    (2) Research that is neither conducted nor supported by a federal 
department or agency but is subject to regulation as defined in Sec. 
97.102(e) must be reviewed and approved, in compliance with Sec. Sec. 
97.101, 97.102, and Sec. Sec. 97.107 through 97.117 of this policy, by 
an institutional review board (IRB) that operates in accordance with the 
pertinent requirements of this policy.
    (b) Unless otherwise required by department or agency heads, 
research activities in which the only involvement of human subjects will 
be in one or more of the following categories are exempt from this 
policy:
    (1) Research conducted in established or commonly accepted 
educational settings, involving normal educational practices, such as 
(i) research on regular and special education instructional strategies, 
or (ii) research on the effectiveness of or the comparison among 
instructional techniques, curricula, or classroom management methods.
    (2) Research involving the use of educational tests (cognitive, 
diagnostic, aptitude, achievement), survey procedures, interview 
procedures or observation of public behavior, unless:
    (i) Information obtained is recorded in such a manner that human 
subjects can be identified, directly or through identifiers linked to 
the subjects; and
    (ii) Any disclosure of the human subjects' responses outside the 
research could reasonably place the subjects at risk of criminal or 
civil liability or be damaging to the subjects' financial standing, 
employability, or reputation.
    (3) Research involving the use of educational tests (cognitive, 
diagnostic, aptitude, achievement), survey procedures, interview 
procedures, or observation of public behavior that is not exempt under 
paragraph (b)(2) of this section, if:
    (i) The human subjects are elected or appointed public officials or 
candidates for public office; or
    (ii) Federal statute(s) require(s) without exception that the 
confidentiality of the personally identifiable information will be 
maintained throughout the research and thereafter.
    (4) Research, involving the collection or study of existing data, 
documents, records, pathological specimens, or diagnostic specimens, if 
these sources are publicly available or if the information is recorded 
by the investigator in such a manner that subjects cannot be identified, 
directly or through identifiers linked to the subjects.
    (5) Research and demonstration projects which are conducted by or 
subject to the approval of department or agency heads, and which are 
designed to study, evaluate, or otherwise examine:
    (i) Public benefit or service programs;
    (ii) Procedures for obtaining benefits or services under those 
programs;
    (iii) Possible changes in or alternatives to those programs or 
procedures; or
    (iv) Possible changes in methods or levels of payment for benefits 
or services under those programs.
    (6) Taste and food quality evaluation and consumer acceptance 
studies,
    (i) If wholesome foods without additives are consumed or
    (ii) If a food is consumed that contains a food ingredient at or 
below the level and for a use found to be safe, or agricultural chemical 
or environmental contaminant at or below the level found to be safe, by 
the Food and Drug Administration or approved by the Environmental 
Protection Agency or the Food Safety and Inspection Service of the U.S. 
Department of Agriculture.
    (c) Department or agency heads retain final judgment as to whether a 
particular activity is covered by this policy.
    (d) Department or agency heads may require that specific research 
activities or classes of research activities conducted, supported, or 
otherwise subject to regulation by the department or agency but not 
otherwise covered by this policy, comply with some or all of the 
requirements of this policy.
    (e) Compliance with this policy requires compliance with pertinent 
federal laws or regulations which provide additional protections for 
human subjects.
    (f) This policy does not affect any state or local laws or 
regulations which

[[Page 301]]

may otherwise be applicable and which provide additional protections for 
human subjects.
    (g) This policy does not affect any foreign laws or regulations 
which may otherwise be applicable and which provide additional 
protections to human subjects of research.
    (h) When research covered by this policy takes place in foreign 
countries, procedures normally followed in the foreign countries to 
protect human subjects may differ from those set forth in this policy. 
(An example is a foreign institution which complies with guidelines 
consistent with the World Medical Assembly Declaration (Declaration of 
Helsinki amended 1989) issued either by sovereign states or by an 
organization whose function for the protection of human research 
subjects is internationally recognized.) In these circumstances, if a 
department or agency head determines that the procedures prescribed by 
the institution afford protections that are at least equivalent to those 
provided in this policy, the department or agency head may approve the 
substitution of the foreign procedures in lieu of the procedural 
requirements provided in this policy. Except when otherwise required by 
statute, Executive Order, or the department or agency head, notices of 
these actions as they occur will be published in the Federal Register or 
will be otherwise published as provided in department or agency 
procedures.
    (i) Unless otherwise required by law, department or agency heads may 
waive the applicability of some or all of the provisions of this policy 
to specific research activities or classes of research activities 
otherwise covered by this policy. Except when otherwise required by 
statute or Executive Order, the department or agency head shall forward 
advance notices of these actions to the Office for Protection from 
Research Risks, Department of Health and Human Services (HHS), and shall 
also publish them in the Federal Register or in such other manner as 
provided in department or agency procedures.\1\
---------------------------------------------------------------------------

    \1\ Institutions with HHS-approved assurances on file will abide by 
provisions of title 45 CFR part 46 subparts A-D. Some of the other 
Departments and Agencies have incorporated all provisions of title 45 
CFR part 46 into their policies and procedures as well. However, the 
exemptions at 45 CFR 46.101(b) do not apply to research involving 
prisoners, fetuses, pregnant women, or human in vitro fertilization, 
subparts B and C. The exemption at 45 CFR 46.101(b)(2), for research 
involving survey or interview procedures or observation of public 
behavior, does not apply to research with children, subpart D, except 
for research involving observations of public behavior when the 
investigator(s) do not participate in the activities being observed.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
---------------------------------------------------------------------------
1(b))

[56 FR 28012, 28021, June 18, 1991; 56 FR 29756, June 28, 1991]



Sec. 97.102  Definitions.

    (a) Department or agency head means the head of any federal 
department or agency and any other officer or employee of any department 
or agency to whom authority has been delegated.
    (b) Institution means any public or private entity or agency 
(including federal, state, and other agencies).
    (c) Legally authorized representative means an individual or 
judicial or other body authorized under applicable law to consent on 
behalf of a prospective subject to the subject's participation in the 
procedure(s) involved in the research.
    (d) Research means a systematic investigation, including research 
development, testing and evaluation, designed to develop or contribute 
to generalizable knowledge. Activities which meet this definition 
constitute research for purposes of this policy, whether or not they are 
conducted or supported under a program which is considered research for 
other purposes. For example, some demonstration and service programs may 
include research activities.
    (e) Research subject to regulation, and similar terms are intended 
to encompass those research activities for which a federal department or 
agency has specific responsibility for regulating as

[[Page 302]]

a research activity, (for example, Investigational New Drug requirements 
administered by the Food and Drug Administration). It does not include 
research activities which are incidentally regulated by a federal 
department or agency solely as part of the department's or agency's 
broader responsibility to regulate certain types of activities whether 
research or non-research in nature (for example, Wage and Hour 
requirements administered by the Department of Labor).
    (f) Human subject means a living individual about whom an 
investigator (whether professional or student) conducting research 
obtains
    (1) Data through intervention or interaction with the individual, or
    (2) Identifiable private information.

Intervention includes both physical procedures by which data are 
gathered (for example, venipuncture) and manipulations of the subject or 
the subject's environment that are performed for research purposes. 
Interaction includes communication or interpersonal contact between 
investigator and subject. ``Private information'' includes information 
about behavior that occurs in a context in which an individual can 
reasonably expect that no observation or recording is taking place, and 
information which has been provided for specific purposes by an 
individual and which the individual can reasonably expect will not be 
made public (for example, a medical record). Private information must be 
individually identifiable (i.e., the identity of the subject is or may 
readily be ascertained by the investigator or associated with the 
information) in order for obtaining the information to constitute 
research involving human subjects.
    (g) IRB means an institutional review board established in accord 
with and for the purposes expressed in this policy.
    (h) IRB approval means the determination of the IRB that the 
research has been reviewed and may be conducted at an institution within 
the constraints set forth by the IRB and by other institutional and 
federal requirements.
    (i) Minimal risk means that the probability and magnitude of harm or 
discomfort anticipated in the research are not greater in and of 
themselves than those ordinarily encountered in daily life or during the 
performance of routine physical or psychological examinations or tests.
    (j) Certification means the official notification by the institution 
to the supporting department or agency, in accordance with the 
requirements of this policy, that a research project or activity 
involving human subjects has been reviewed and approved by an IRB in 
accordance with an approved assurance.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.103  Assuring compliance with this policy--research conducted 
or supported by any Federal Department or Agency.

    (a) Each institution engaged in research which is covered by this 
policy and which is conducted or supported by a federal department or 
agency shall provide written assurance satisfactory to the department or 
agency head that it will comply with the requirements set forth in this 
policy. In lieu of requiring submission of an assurance, individual 
department or agency heads shall accept the existence of a current 
assurance, appropriate for the research in question, on file with the 
Office for Protection from Research Risks, HHS, and approved for 
federalwide use by that office. When the existence of an HHS-approved 
assurance is accepted in lieu of requiring submission of an assurance, 
reports (except certification) required by this policy to be made to 
department and agency heads shall also be made to the Office for 
Protection from Research Risks, HHS.
    (b) Departments and agencies will conduct or support research 
covered by this policy only if the institution has an assurance approved 
as provided in this section, and only if the institution has certified 
to the department or agency head that the research has been reviewed and 
approved by an IRB provided for in the assurance, and will be subject to 
continuing review by the IRB. Assurances applicable to federally 
supported or conducted research shall at a minimum include:
    (1) A statement of principles governing the institution in the 
discharge of its responsibilities for protecting the

[[Page 303]]

rights and welfare of human subjects of research conducted at or 
sponsored by the institution, regardless of whether the research is 
subject to federal regulation. This may include an appropriate existing 
code, declaration, or statement of ethical principles, or a statement 
formulated by the institution itself. This requirement does not preempt 
provisions of this policy applicable to department- or agency-supported 
or regulated research and need not be applicable to any research 
exempted or waived under Sec. 97.101 (b) or (i).
    (2) Designation of one or more IRBs established in accordance with 
the requirements of this policy, and for which provisions are made for 
meeting space and sufficient staff to support the IRB's review and 
recordkeeping duties.
    (3) A list of IRB members identified by name; earned degrees; 
representative capacity; indications of experience such as board 
certifications, licenses, etc., sufficient to describe each member's 
chief anticipated contributions to IRB deliberations; and any employment 
or other relationship between each member and the institution; for 
example: full-time employee, part-time employee, member of governing 
panel or board, stockholder, paid or unpaid consultant. Changes in IRB 
membership shall be reported to the department or agency head, unless in 
accord with Sec. 97.103(a) of this policy, the existence of an HHS-
approved assurance is accepted. In this case, change in IRB membership 
shall be reported to the Office for Protection from Research Risks, HHS.
    (4) Written procedures which the IRB will follow (i) for conducting 
its initial and continuing review of research and for reporting its 
findings and actions to the investigator and the institution; (ii) for 
determining which projects require review more often than annually and 
which projects need verification from sources other than the 
investigators that no material changes have occurred since previous IRB 
review; and (iii) for ensuring prompt reporting to the IRB of proposed 
changes in a research activity, and for ensuring that such changes in 
approved research, during the period for which IRB approval has already 
been given, may not be initiated without IRB review and approval except 
when necessary to eliminate apparent immediate hazards to the subject.
    (5) Written procedures for ensuring prompt reporting to the IRB, 
appropriate institutional officials, and the department or agency head 
of (i) any unanticipated problems involving risks to subjects or others 
or any serious or continuing noncompliance with this policy or the 
requirements or determinations of the IRB and (ii) any suspension or 
termination of IRB approval.
    (c) The assurance shall be executed by an individual authorized to 
act for the institution and to assume on behalf of the institution the 
obligations imposed by this policy and shall be filed in such form and 
manner as the department or agency head prescribes.
    (d) The department or agency head will evaluate all assurances 
submitted in accordance with this policy through such officers and 
employees of the department or agency and such experts or consultants 
engaged for this purpose as the department or agency head determines to 
be appropriate. The department or agency head's evaluation will take 
into consideration the adequacy of the proposed IRB in light of the 
anticipated scope of the institution's research activities and the types 
of subject populations likely to be involved, the appropriateness of the 
proposed initial and continuing review procedures in light of the 
probable risks, and the size and complexity of the institution.
    (e) On the basis of this evaluation, the department or agency head 
may approve or disapprove the assurance, or enter into negotiations to 
develop an approvable one. The department or agency head may limit the 
period during which any particular approved assurance or class of 
approved assurances shall remain effective or otherwise condition or 
restrict approval.
    (f) Certification is required when the research is supported by a 
federal department or agency and not otherwise exempted or waived under 
Sec. 97.101 (b) or (i). An institution with an approved assurance shall 
certify that each application or proposal for research covered by the 
assurance and by Sec. 97.103 of this

[[Page 304]]

Policy has been reviewed and approved by the IRB. Such certification 
must be submitted with the application or proposal or by such later date 
as may be prescribed by the department or agency to which the 
application or proposal is submitted. Under no condition shall research 
covered by Sec. 97.103 of the Policy be supported prior to receipt of 
the certification that the research has been reviewed and approved by 
the IRB. Institutions without an approved assurance covering the 
research shall certify within 30 days after receipt of a request for 
such a certification from the department or agency, that the application 
or proposal has been approved by the IRB. If the certification is not 
submitted within these time limits, the application or proposal may be 
returned to the institution.

(Approved by the Office of Management and Budget under control number 
9999-0020)

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))

[56 FR 28012, 28021, June 18, 1991; 56 FR 29756, June 28, 1991]



Sec. Sec. 97.104-97.106  [Reserved]



Sec. 97.107  IRB membership.

    (a) Each IRB shall have at least five members, with varying 
backgrounds to promote complete and adequate review of research 
activities commonly conducted by the institution. The IRB shall be 
sufficiently qualified through the experience and expertise of its 
members, and the diversity of the members, including consideration of 
race, gender, and cultural backgrounds and sensitivity to such issues as 
community attitudes, to promote respect for its advice and counsel in 
safeguarding the rights and welfare of human subjects. In addition to 
possessing the professional competence necessary to review specific 
research activities, the IRB shall be able to ascertain the 
acceptability of proposed research in terms of institutional commitments 
and regulations, applicable law, and standards of professional conduct 
and practice. The IRB shall therefore include persons knowledgeable in 
these areas. If an IRB regularly reviews research that involves a 
vulnerable category of subjects, such as children, prisoners, pregnant 
women, or handicapped or mentally disabled persons, consideration shall 
be given to the inclusion of one or more individuals who are 
knowledgeable about and experienced in working with these subjects.
    (b) Every nondiscriminatory effort will be made to ensure that no 
IRB consists entirely of men or entirely of women, including the 
institution's consideration of qualified persons of both sexes, so long 
as no selection is made to the IRB on the basis of gender. No IRB may 
consist entirely of members of one profession.
    (c) Each IRB shall include at least one member whose primary 
concerns are in scientific areas and at least one member whose primary 
concerns are in nonscientific areas.
    (d) Each IRB shall include at least one member who is not otherwise 
affiliated with the institution and who is not part of the immediate 
family of a person who is affiliated with the institution.
    (e) No IRB may have a member participate in the IRB's initial or 
continuing review of any project in which the member has a conflicting 
interest, except to provide information requested by the IRB.
    (f) An IRB may, in its discretion, invite individuals with 
competence in special areas to assist in the review of issues which 
require expertise beyond or in addition to that available on the IRB. 
These individuals may not vote with the IRB.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.108  IRB functions and operations.

    In order to fulfill the requirements of this policy each IRB shall:
    (a) Follow written procedures in the same detail as described in 
Sec. 97.103(b)(4) and, to the extent required by, Sec. 97.103(b)(5).
    (b) Except when an expedited review procedure is used (see Sec. 
97.110), review proposed research at convened meetings at which a 
majority of the members of the IRB are present, including at least one 
member whose primary concerns are in nonscientific areas. In order for 
the research to be approved,

[[Page 305]]

it shall receive the approval of a majority of those members present at 
the meeting.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.109  IRB review of research.

    (a) An IRB shall review and have authority to approve, require 
modifications in (to secure approval), or disapprove all research 
activities covered by this policy.
    (b) An IRB shall require that information given to subjects as part 
of informed consent is in accordance with Sec. 97.116. The IRB may 
require that information, in addition to that specifically mentioned in 
Sec. 97.116, be given to the subjects when in the IRB's judgment the 
information would meaningfully add to the protection of the rights and 
welfare of subjects.
    (c) An IRB shall require documentation of informed consent or may 
waive documentation in accordance with Sec. 97.117.
    (d) An IRB shall notify investigators and the institution in writing 
of its decision to approve or disapprove the proposed research activity, 
or of modifications required to secure IRB approval of the research 
activity. If the IRB decides to disapprove a research activity, it shall 
include in its written notification a statement of the reasons for its 
decision and give the investigator an opportunity to respond in person 
or in writing.
    (e) An IRB shall conduct continuing review of research covered by 
this policy at intervals appropriate to the degree of risk, but not less 
than once per year, and shall have authority to observe or have a third 
party observe the consent process and the research.

(Approved by the Office of Management and Budget under control number 
9999-0020)

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.110  Expedited review procedures for certain kinds of research 

involving no more than minimal risk, and for minor changes in approved 
research.

    (a) The Secretary, HHS, has established, and published as a Notice 
in the Federal Register, a list of categories of research that may be 
reviewed by the IRB through an expedited review procedure. The list will 
be amended, as appropriate after consultation with other departments and 
agencies, through periodic republication by the Secretary, HHS, in the 
Federal Register. A copy of the list is available from the Office for 
Protection from Research Risks, National Institutes of Health, HHS, 
Bethesda, Maryland 20892.
    (b) An IRB may use the expedited review procedure to review either 
or both of the following:
    (1) Some or all of the research appearing on the list and found by 
the reviewer(s) to involve no more than minimal risk,
    (2) Minor changes in previously approved research during the period 
(of one year or less) for which approval is authorized.

Under an expedited review procedure, the review may be carried out by 
the IRB chairperson or by one or more experienced reviewers designated 
by the chairperson from among members of the IRB. In reviewing the 
research, the reviewers may exercise all of the authorities of the IRB 
except that the reviewers may not disapprove the research. A research 
activity may be disapproved only after review in accordance with the 
non-expedited procedure set forth in Sec. 97.108(b).
    (c) Each IRB which uses an expedited review procedure shall adopt a 
method for keeping all members advised of research proposals which have 
been approved under the procedure.
    (d) The department or agency head may restrict, suspend, terminate, 
or choose not to authorize an institution's or IRB's use of the 
expedited review procedure.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.111  Criteria for IRB approval of research.

    (a) In order to approve research covered by this policy the IRB 
shall determine that all of the following requirements are satisfied:
    (1) Risks to subjects are minimized:
    (i) By using procedures which are consistent with sound research 
design and which do not unnecessarily expose subjects to risk, and

[[Page 306]]

    (ii) Whenever appropriate, by using procedures already being 
performed on the subjects for diagnostic or treatment purposes.
    (2) Risks to subjects are reasonable in relation to anticipated 
benefits, if any, to subjects, and the importance of the knowledge that 
may reasonably be expected to result. In evaluating risks and benefits, 
the IRB should consider only those risks and benefits that may result 
from the research (as distinguished from risks and benefits of therapies 
subjects would receive even if not participating in the research). The 
IRB should not consider possible long-range effects of applying 
knowledge gained in the research (for example, the possible effects of 
the research on public policy) as among those research risks that fall 
within the purview of its responsibility.
    (3) Selection of subjects is equitable. In making this assessment 
the IRB should take into account the purposes of the research and the 
setting in which the research will be conducted and should be 
particularly cognizant of the special problems of research involving 
vulnerable populations, such as children, prisoners, pregnant women, 
mentally disabled persons, or economically or educationally 
disadvantaged persons.
    (4) Informed consent will be sought from each prospective subject or 
the subject's legally authorized representative, in accordance with, and 
to the extent required by Sec. 97.116.
    (5) Informed consent will be appropriately documented, in accordance 
with, and to the extent required by Sec. 97.117.
    (6) When appropriate, the research plan makes adequate provision for 
monitoring the data collected to ensure the safety of subjects.
    (7) When appropriate, there are adequate provisions to protect the 
privacy of subjects and to maintain the confidentiality of data.
    (b) When some or all of the subjects are likely to be vulnerable to 
coercion or undue influence, such as children, prisoners, pregnant 
women, mentally disabled persons, or economically or educationally 
disadvantaged persons, additional safeguards have been included in the 
study to protect the rights and welfare of these subjects.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.112  Review by institution.

    Research covered by this policy that has been approved by an IRB may 
be subject to further appropriate review and approval or disapproval by 
officials of the institution. However, those officials may not approve 
the research if it has not been approved by an IRB.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.113  Suspension or termination of IRB approval of research.

    An IRB shall have authority to suspend or terminate approval of 
research that is not being conducted in accordance with the IRB's 
requirements or that has been associated with unexpected serious harm to 
subjects. Any suspension or termination of approval shall include a 
statement of the reasons for the IRB's action and shall be reported 
promptly to the investigator, appropriate institutional officials, and 
the department or agency head.

(Approved by the Office of Management and Budget under control number 
9999-0020)

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.114  Cooperative research.

    Cooperative research projects are those projects covered by this 
policy which involve more than one institution. In the conduct of 
cooperative research projects, each institution is responsible for 
safeguarding the rights and welfare of human subjects and for complying 
with this policy. With the approval of the department or agency head, an 
institution participating in a cooperative project may enter into a 
joint review arrangement, rely upon the review of another qualified IRB, 
or make similar arrangements for avoiding duplication of effort.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))

[[Page 307]]



Sec. 97.115  IRB records.

    (a) An institution, or when appropriate an IRB, shall prepare and 
maintain adequate documentation of IRB activities, including the 
following:
    (1) Copies of all research proposals reviewed, scientific 
evaluations, if any, that accompany the proposals, approved sample 
consent documents, progress reports submitted by investigators, and 
reports of injuries to subjects.
    (2) Minutes of IRB meetings which shall be in sufficient detail to 
show attendance at the meetings; actions taken by the IRB; the vote on 
these actions including the number of members voting for, against, and 
abstaining; the basis for requiring changes in or disapproving research; 
and a written summary of the discussion of controverted issues and their 
resolution.
    (3) Records of continuing review activities.
    (4) Copies of all correspondence between the IRB and the 
investigators.
    (5) A list of IRB members in the same detail as described is Sec. 
97.103(b)(3).
    (6) Written procedures for the IRB in the same detail as described 
in Sec. 97.103(b)(4) and Sec. 97.103(b)(5).
    (7) Statements of significant new findings provided to subjects, as 
required by Sec. 97.116(b)(5).
    (b) The records required by this policy shall be retained for at 
least 3 years, and records relating to research which is conducted shall 
be retained for at least 3 years after completion of the research. All 
records shall be accessible for inspection and copying by authorized 
representatives of the department or agency at reasonable times and in a 
reasonable manner.

(Approved by the Office of Management and Budget under control number 
9999-0020)

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.116  General requirements for informed consent.

    Except as provided elsewhere in this policy, no investigator may 
involve a human being as a subject in research covered by this policy 
unless the investigator has obtained the legally effective informed 
consent of the subject or the subject's legally authorized 
representative. An investigator shall seek such consent only under 
circumstances that provide the prospective subject or the representative 
sufficient opportunity to consider whether or not to participate and 
that minimize the possibility of coercion or undue influence. The 
information that is given to the subject or the representative shall be 
in language understandable to the subject or the representative. No 
informed consent, whether oral or written, may include any exculpatory 
language through which the subject or the representative is made to 
waive or appear to waive any of the subject's legal rights, or releases 
or appears to release the investigator, the sponsor, the institution or 
its agents from liability for negligence.
    (a) Basic elements of informed consent. Except as provided in 
paragraph (c) or (d) of this section, in seeking informed consent the 
following information shall be provided to each subject:
    (1) A statement that the study involves research, an explanation of 
the purposes of the research and the expected duration of the subject's 
participation, a description of the procedures to be followed, and 
identification of any procedures which are experimental;
    (2) A description of any reasonably foreseeable risks or discomforts 
to the subject;
    (3) A description of any benefits to the subject or to others which 
may reasonably be expected from the research;
    (4) A disclosure of appropriate alternative procedures or courses of 
treatment, if any, that might be advantageous to the subject;
    (5) A statement describing the extent, if any, to which 
confidentiality of records identifying the subject will be maintained;
    (6) For research involving more than minimal risk, an explanation as 
to whether any compensation and an explanation as to whether any medical 
treatments are available if injury occurs and, if so, what they consist 
of, or where further information may be obtained;
    (7) An explanation of whom to contact for answers to pertinent 
questions about the research and research subjects' rights, and whom to 
contact in

[[Page 308]]

the event of a research-related injury to the subject; and
    (8) A statement that participation is voluntary, refusal to 
participate will involve no penalty or loss of benefits to which the 
subject is otherwise entitled, and the subject may discontinue 
participation at any time without penalty or loss of benefits to which 
the subject is otherwise entitled.
    (b) Additional elements of informed consent. When appropriate, one 
or more of the following elements of information shall also be provided 
to each subject:
    (1) A statement that the particular treatment or procedure may 
involve risks to the subject (or to the embryo or fetus, if the subject 
is or may become pregnant) which are currently unforeseeable;
    (2) Anticipated circumstances under which the subject's 
participation may be terminated by the investigator without regard to 
the subject's consent;
    (3) Any additional costs to the subject that may result from 
participation in the research;
    (4) The consequences of a subject's decision to withdraw from the 
research and procedures for orderly termination of participation by the 
subject;
    (5) A statement that significant new findings developed during the 
course of the research which may relate to the subject's willingness to 
continue participation will be provided to the subject; and
    (6) The approximate number of subjects involved in the study.
    (c) An IRB may approve a consent procedure which does not include, 
or which alters, some or all of the elements of informed consent set 
forth above, or waive the requirement to obtain informed consent 
provided the IRB finds and documents that:
    (1) The research or demonstration project is to be conducted by or 
subject to the approval of state or local government officials and is 
designed to study, evaluate, or otherwise examine:
    (i) Public benefit of service programs;
    (ii) Procedures for obtaining benefits or services under those 
programs;
    (iii) Possible changes in or alternatives to those programs or 
procedures; or
    (iv) Possible changes in methods or levels of payment for benefits 
or services under those programs; and
    (2) The research could not practicably be carried out without the 
waiver or alteration.
    (d) An IRB may approve a consent procedure which does not include, 
or which alters, some or all of the elements of informed consent set 
forth in this section, or waive the requirements to obtain informed 
consent provided the IRB finds and documents that:
    (1) The research involves no more than minimal risk to the subjects;
    (2) The waiver or alteration will not adversely affect the rights 
and welfare of the subjects;
    (3) The research could not practicably be carried out without the 
waiver or alteration; and
    (4) Whenever appropriate, the subjects will be provided with 
additional pertinent information after participation.
    (e) The informed consent requirements in this policy are not 
intended to preempt any applicable federal, state, or local laws which 
require additional information to be disclosed in order for informed 
consent to be legally effective.
    (f) Nothing in this policy is intended to limit the authority of a 
physician to provide emergency medical care, to the extent the physician 
is permitted to do so under applicable federal, state, or local law.

(Approved by the Office of Management and Budget under control number 
9999-0020)

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.117  Documentation of informed consent.

    (a) Except as provided in paragraph (c) of this section, informed 
consent shall be documented by the use of a written consent form 
approved by the IRB and signed by the subject or the subject's legally 
authorized representative. A copy shall be given to the person signing 
the form.
    (b) Except as provided in paragraph (c) of this section, the consent 
form may be either of the following:
    (1) A written consent document that embodies the elements of 
informed consent required by Sec. 97.116. This form

[[Page 309]]

may be read to the subject or the subject's legally authorized 
representative, but in any event, the investigator shall give either the 
subject or the representative adequate opportunity to read it before it 
is signed; or
    (2) A short form written consent document stating that the elements 
of informed consent required by Sec. 97.116 have been presented orally 
to the subject or the subject's legally authorized representative. When 
this method is used, there shall be a witness to the oral presentation. 
Also, the IRB shall approve a written summary of what is to be said to 
the subject or the representative. Only the short form itself is to be 
signed by the subject or the representative. However, the witness shall 
sign both the short form and a copy of the summary, and the person 
actually obtaining consent shall sign a copy of the summary. A copy of 
the summary shall be given to the subject or the representative, in 
addition to a copy of the short form.
    (c) An IRB may waive the requirement for the investigator to obtain 
a signed consent form for some or all subjects if it finds either:
    (1) That the only record linking the subject and the research would 
be the consent document and the principal risk would be potential harm 
resulting from a breach of confidentiality. Each subject will be asked 
whether the subject wants documentation linking the subject with the 
research, and the subject's wishes will govern; or
    (2) That the research presents no more than minimal risk of harm to 
subjects and involves no procedures for which written consent is 
normally required outside of the research context.

In cases in which the documentation requirement is waived, the IRB may 
require the investigator to provide subjects with a written statement 
regarding the research.

(Approved by the Office of Management and Budget under control number 
9999-0020)

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.118  Applications and proposals lacking definite plans for 
involvement of human subjects.

    Certain types of applications for grants, cooperative agreements, or 
contracts are submitted to departments or agencies with the knowledge 
that subjects may be involved within the period of support, but definite 
plans would not normally be set forth in the application or proposal. 
These include activities such as institutional type grants when 
selection of specific projects is the institution's responsibility; 
research training grants in which the activities involving subjects 
remain to be selected; and projects in which human subject's involvement 
will depend upon completion of instruments, prior animal studies, or 
purification of compounds. These applications need not be reviewed by an 
IRB before an award may be made. However, except for research exempted 
or waived under Sec. 97.101 (b) or (i), no human subjects may be 
involved in any project supported by these awards until the project has 
been reviewed and approved by the IRB, as provided in this policy, and 
certification submitted, by the institution, to the department or 
agency.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.119  Research undertaken without the intention of involving 
human subjects.

    In the event research is undertaken without the intention of 
involving human subjects, but it is later proposed to involve human 
subjects in the research, the research shall first be reviewed and 
approved by an IRB, as provided in this policy, a certification 
submitted, by the institution, to the department or agency, and final 
approval given to the proposed change by the department or agency.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.120  Evaluation and disposition of applications and proposals for 
research to be conducted or supported by a Federal Department or Agency.

    (a) The department or agency head will evaluate all applications and 
proposals involving human subjects submitted to the department or agency 
through such officers and employees of the department or agency and such 
experts and consultants as the department or agency head determines to 
be

[[Page 310]]

appropriate. This evaluation will take into consideration the risks to 
the subjects, the adequacy of protection against these risks, the 
potential benefits of the research to the subjects and others, and the 
importance of the knowledge gained or to be gained.
    (b) On the basis of this evaluation, the department or agency head 
may approve or disapprove the application or proposal, or enter into 
negotiations to develop an approvable one.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.121  [Reserved]



Sec. 97.122  Use of Federal funds.

    Federal funds administered by a department or agency may not be 
expended for research involving human subjects unless the requirements 
of this policy have been satisfied.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.123  Early termination of research support: Evaluation of 
applications and proposals.

    (a) The department or agency head may require that department or 
agency support for any project be terminated or suspended in the manner 
prescribed in applicable program requirements, when the department or 
agency head finds an institution has materially failed to comply with 
the terms of this policy.
    (b) In making decisions about supporting or approving applications 
or proposals covered by this policy the department or agency head may 
take into account, in addition to all other eligibility requirements and 
program criteria, factors such as whether the applicant has been subject 
to a termination or suspension under paragarph (a) of this section and 
whether the applicant or the person or persons who would direct or has 
have directed the scientific and technical aspects of an activity has 
have, in the judgment of the department or agency head, materially 
failed to discharge responsibility for the protection of the rights and 
welfare of human subjects (whether or not the research was subject to 
federal regulation).

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.124  Conditions.

    With respect to any research project or any class of research 
projects the department or agency head may impose additional conditions 
prior to or at the time of approval when in the judgment of the 
department or agency head additional conditions are necessary for the 
protection of human subjects.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))

Subparts B-C [Reserved]



  Subpart D_Additional ED Protections for Children Who Are Subjects in 
                                Research

    Source: 62 FR 63221, Nov. 26, 1997, unless otherwise noted.



Sec. 97.401  To what do these regulations apply?

    (a) This subpart applies to all research involving children as 
subjects conducted or supported by the Department of Education.
    (1) This subpart applies to research conducted by Department 
employees.
    (2) This subpart applies to research conducted or supported by the 
Department of Education outside the United States, but in appropriate 
circumstances the Secretary may, under Sec. 97.101(i), waive the 
applicability of some or all of the requirements of the regulations in 
this subpart for that research.
    (b) Exemptions in Sec. 97.101(b)(1) and (b)(3) through (b)(6) are 
applicable to this subpart. The exemption in Sec. 97.101(b)(2) 
regarding educational tests is also applicable to this subpart. The 
exemption in Sec. 97.101(b)(2) for research involving survey or 
interview procedures or observations of public behavior does not apply 
to research covered by this subpart, except for research involving 
observation of public behavior when the investigator or investigators do 
not participate in the activities being observed.

[[Page 311]]

    (c) The exceptions, additions, and provisions for waiver as they 
appear in Sec. 97.101(c) through (i) are applicable to this subpart.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b)).



Sec. 97.402  Definitions.

    The definitions in Sec. 97.102 apply to this subpart. In addition, 
the following definitions also apply to this subpart:
    (a) Children are persons who have not attained the legal age for 
consent to treatments or procedures involved in the research, under the 
applicable law of the jurisdiction in which the research will be 
conducted.
    (b) Assent means a child's affirmative agreement to participate in 
research. Mere failure to object should not, absent affirmative 
agreement, be construed as assent.
    (c) Permission means the agreement of parent(s) or guardian to the 
participation of their child or ward in research.
    (d) Parent means a child's biological or adoptive parent.
    (e) Guardian means an individual who is authorized under applicable 
State or local law to consent on behalf of a child to general medical 
care.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b)).



Sec. 97.403  IRB duties.

    In addition to other responsibilities assigned to IRBs under this 
part, each IRB shall review research covered by this subpart and approve 
only research that satisfies the conditions of all applicable sections 
of this subpart.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b)).



Sec. 97.404  Research not involving greater than minimal risk.

    ED conducts or funds research in which the IRB finds that no greater 
than minimal risk to children is presented, only if the IRB finds that 
adequate provisions are made for soliciting the assent of the children 
and the permission of their parents or guardians, as set forth in Sec. 
97.408.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.405  Research involving greater than minimal risk but presenting 
the prospect of direct benefit to the individual subjects.

    ED conducts or funds research in which the IRB finds that more than 
minimal risk to children is presented by an intervention or procedure 
that holds out the prospect of direct benefit for the individual 
subject, or by a monitoring procedure that is likely to contribute to 
the subject's well-being, only if the IRB finds that--
    (a) The risk is justified by the anticipated benefit to the 
subjects;
    (b) The relation of the anticipated benefit to the risk is at least 
as favorable to the subjects as that presented by available alternative 
approaches; and
    (c) Adequate provisions are made for soliciting the assent of the 
children and permission of their parents or guardians, as set forth in 
Sec. 97.408.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.406  Research involving greater than minimal risk and no prospect 

of direct benefit to individual subjects, but likely to yield generalizable 
knowledge about the subject's disorder or condition.

    ED conducts or funds research in which the IRB finds that more than 
minimal risk to children is presented by an intervention or procedure 
that does not hold out the prospect of direct benefit for the individual 
subject, or by a monitoring procedure which is not likely to contribute 
to the well-being of the subject, only if the IRB finds that--
    (a) The risk represents a minor increase over minimal risk;
    (b) The intervention or procedure presents experiences to subjects 
that are reasonably commensurate with those inherent in their actual or 
expected medical, dental, psychological, social, or educational 
situations;
    (c) The intervention or procedure is likely to yield generalizable 
knowledge about the subjects' disorder or condition that is of vital 
importance for the understanding or amelioration of the subjects' 
disorder or condition; and
    (d) Adequate provisions are made for soliciting assent of the 
children and

[[Page 312]]

permission of their parents or guardians, as set forth in Sec. 97.408.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.407  Research not otherwise approvable which presents an opportunity 

to understand, prevent, or alleviate a serious problem affecting the health 
or welfare of children.

    ED conducts or funds research that the IRB does not believe meets 
the requirements of Sec. 97.404, Sec. 97.405, or Sec. 97.406 only 
if--
    (a) The IRB finds that the research presents a reasonable 
opportunity to further the understanding, prevention, or alleviation of 
a serious problem affecting the health or welfare of children; and
    (b) The Secretary, after consultation with a panel of experts in 
pertinent disciplines (for example: science, medicine, education, 
ethics, law) and following opportunity for public review and comment, 
has determined either that--
    (1) The research in fact satisfies the conditions of Sec. 97.404, 
Sec. 97.405, or Sec. 97.406, as applicable; or
    (2)(i) The research presents a reasonable opportunity to further the 
understanding, prevention, or alleviation of a serious problem affecting 
the health or welfare of children;
    (ii) The research will be conducted in accordance with sound ethical 
principles; and
    (iii) Adequate provisions are made for soliciting the assent of 
children and the permission of their parents or guardians, as set forth 
in Sec. 97.408.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.408  Requirements for permission by parents or guardians and for 
assent by children.

    (a) In addition to the determinations required under other 
applicable sections of this subpart, the IRB shall determine that 
adequate provisions are made for soliciting the assent of the children, 
if in the judgment of the IRB the children are capable of providing 
assent. In determining whether children are capable of assenting, the 
IRB shall take into account the ages, maturity, and psychological state 
of the children involved. This judgment may be made for all children to 
be involved in research under a particular protocol, or for each child, 
as the IRB deems appropriate. If the IRB determines that the capability 
of some or all of the children is so limited that they cannot reasonably 
be consulted or that the intervention or procedure involved in the 
research holds out a prospect of direct benefit that is important to the 
health or well-being of the children and is available only in the 
context of the research, the assent of the children is not a necessary 
condition for proceeding with the research. Even if the IRB determines 
that the subjects are capable of assenting, the IRB may still waive the 
assent requirement under circumstances in which consent may be waived in 
accord with Sec. 97.116.
    (b) In addition to the determinations required under other 
applicable sections of this subpart, the IRB shall determine, in 
accordance with and to the extent that consent is required by Sec. 
97.116, that adequate provisions are made for soliciting the permission 
of each child's parent(s) or guardian(s). If parental permission is to 
be obtained, the IRB may find that the permission of one parent is 
sufficient for research to be conducted under Sec. 97.404 or Sec. 
97.405. If research is covered by Sec. Sec. 97.406 and 97.407 and 
permission is to be obtained from parents, both parents must give their 
permission unless one parent is deceased, unknown, incompetent, or not 
reasonably available, or if only one parent has legal responsibility for 
the care and custody of the child.
    (c) In addition to the provisions for waiver contained in Sec. 
97.116, if the IRB determines that a research protocol is designed for 
conditions or for a subject population for which parental or guardian 
permission is not a reasonable requirement to protect the subjects (for 
example, neglected or abused children), it may waive the consent 
requirements in subpart A of this part and paragraph (b) of this 
section, provided an appropriate mechanism for protecting the children 
who will participate as subjects in the research is substituted, and 
provided further that the waiver is not inconsistent with Federal, 
State, or local law. The choice of an appropriate mechanism depends upon 
the nature

[[Page 313]]

and purpose of the activities described in the protocol, the risk and 
anticipated benefit to the research subjects, and their age, maturity, 
status, and condition.
    (d) Permission by parents or guardians must be documented in 
accordance with and to the extent required by Sec. 97.117.
    (e) If the IRB determines that assent is required, it shall also 
determine whether and how assent must be documented.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



Sec. 97.409  Wards.

    (a) Children who are wards of the State or any other agency, 
institution, or entity may be included in research approved under Sec. 
97.406 or Sec. 97.407 only if that research is--
    (1) Related to their status as wards; or
    (2) Conducted in schools, camps, hospitals, institutions, or similar 
settings in which the majority of children involved as subjects are not 
wards.
    (b) If research is approved under paragraph (a) of this section, the 
IRB shall require appointment of an advocate for each child who is a 
ward, in addition to any other individual acting on behalf of the child 
as guardian or in loco parentis. One individual may serve as advocate 
for more than one child. The advocate must be an individual who has the 
background and experience to act in, and agrees to act in, the best 
interest of the child for the duration of the child's participation in 
the research and who is not associated in any way (except in the role as 
advocate or member of the IRB) with the research, the investigator or 
investigators, or the guardian organization.

(Authority: 5 U.S.C. 301; 20 U.S.C. 1221e-3, 3474; and 42 U.S.C. 300v-
1(b))



PART 98_STUDENT RIGHTS IN RESEARCH, EXPERIMENTAL PROGRAMS, AND TESTING
--Table of Contents




Sec.
98.1 Applicability of part.
98.2 Definitions.
98.3 Access to instructional material used in a research or 
          experimentation program.
98.4 Protection of students' privacy in examination, testing, or 
          treatment.
98.5 Information and investigation office.
98.6 Reports.
98.7 Filing a complaint.
98.8 Notice of the complaint.
98.9 Investigation and findings.
98.10 Enforcement of the findings.

    Authority: Sec. 514(a) of Pub. L. 93-380, 88 Stat. 574 (20 U.S.C. 
1232h(a)); sec. 1250 of Pub. L. 95-561, 92 Stat. 2355-2356 (20 U.S.C. 
1232h(b)); and sec. 408(a)(1) of Pub. L. 90-247, 88 Stat. 559-560, as 
amended (20 U.S.C. 1221e-3(a)(1)); sec. 414(a) of Pub. L. 96-88, 93 
Stat. 685 (20 U.S.C. 3474(a)), unless otherwise noted.

    Source: 49 FR 35321, Sept. 6, 1984, unless otherwise noted.



Sec. 98.1  Applicability of part.

    This part applies to any program administered by the Secretary of 
Education that:
    (a)(1) Was transferred to the Department by the Department of 
Education Organization Act (DEOA); and
    (2) Was administered by the Education Division of the Department of 
Health, Education, and Welfare on the day before the effective date of 
the DEOA; or
    (b) Was enacted after the effective date of the DEOA, unless the law 
enacting the new Federal program has the effect of making section 439 of 
the General Education Provisions Act inapplicable.
    (c) The following chart lists the funded programs to which part 98 
does not apply as of February 16, 1984.

------------------------------------------------------------------------
                                      Authorizing        Implementing
         Name of program                statute           regulations
------------------------------------------------------------------------
1. High School Equivalency        Section 418A of     part 206.
 Program and College Assistance    the Higher
 Migrant Program.                  Education Act of
                                   1965 as amended
                                   by the Education
                                   Amendments of
                                   1980 (Pub. L. 96-
                                   374) 20 U.S.C.
                                   1070d-2).
2. Programs administered by the   The Rehabilitation  parts 351-356,
 Commissioner of the               Act of 1973 as      361, 362, 365,
 Rehabilitative Services           amended by Pub.     366, 369-375,
 Administration.                   L. 95-602 (29       378, 379, 385-
                                   U.S.C. 700, et      390, and 395.
                                   seq.).
3. College housing..............  Title IV of the     part 614.
                                   Housing Act of
                                   1950 as amended
                                   (12 U.S.C. 1749,
                                   et seq.).
------------------------------------------------------------------------


[[Page 314]]


(Authority: 20 U.S.C. 1221e-3(a)(1), 1230, 1232h, 3487, 3507)



Sec. 98.2  Definitions.

    (a) The following terms used in this part are defined in 34 CFR part 
77; ``Department,'' ``Recipient,'' ``Secretary.''
    (b) The following definitions apply to this part:
    Act means the General Education Provisions Act.
    Office means the information and investigation office specified in 
Sec. 98.5.

(Authority: 20 U.S.C. 1221e-3(a)(1))



Sec. 98.3  Access to instructional material used in a research or 
experimentation program.

    (a) All instructional material--including teachers' manuals, films, 
tapes, or other supplementary instructional material--which will be used 
in connection with any research or experimentation program or project 
shall be available for inspection by the parents or guardians of the 
children engaged in such program or project.
    (b) For the purpose of this part research or experimentation program 
or project means any program or project in any program under Sec. 98.1 
(a) or (b) that is designed to explore or develop new or unproven 
teaching methods or techniques.
    (c) For the purpose of the section children means persons not above 
age 21 who are enrolled in a program under Sec. 98.1 (a) or (b) not 
above the elementary or secondary education level, as determined under 
State law.

(Authority: 20 U.S.C. 1221e-3(a)(1), 1232h(a))



Sec. 98.4  Protection of students' privacy in examination, testing, or 
treatment.

    (a) No student shall be required, as part of any program specified 
in Sec. 98.1 (a) or (b), to submit without prior consent to psychiatric 
examination, testing, or treatment, or psychological examination, 
testing, or treatment, in which the primary purpose is to reveal 
information concerning one or more of the following:
    (1) Political affiliations;
    (2) Mental and psychological problems potentially embarrassing to 
the student or his or her family;
    (3) Sex behavior and attitudes;
    (4) Illegal, anti-social, self-incriminating and demeaning behavior;
    (5) Critical appraisals of other individuals with whom the student 
has close family relationships;
    (6) Legally recognized privileged and analogous relationships, such 
as those of lawyers, physicians, and ministers; or
    (7) Income, other than that required by law to determine eligibility 
for participation in a program or for receiving financial assistance 
under a program.
    (b) As used in paragraph (a) of this section, prior consent means:
    (1) Prior consent of the student, if the student is an adult or 
emancipated minor; or
    (2) Prior written consent of the parent or guardian, if the student 
is an unemancipated minor.
    (c) As used in paragraph (a) of this section:
    (1) Psychiatric or psychological examination or test means a method 
of obtaining information, including a group activity, that is not 
directly related to academic instruction and that is designed to elicit 
information about attitudes, habits, traits, opinions, beliefs or 
feelings; and
    (2) Psychiatric or psychological treatment means an activity 
involving the planned, systematic use of methods or techniques that are 
not directly related to academic instruction and that is designed to 
affect behavioral, emotional, or attitudinal characteristics of an 
individual or group.

(Authority: 20 U.S.C. 1232h(b))



Sec. 98.5  Information and investigation office.

    (a) The Secretary has designated an office to provide information 
about the requirements of section 439 of the Act, and to investigate, 
process, and review complaints that may be filed concerning alleged 
violations of the provisions of the section.
    (b) The following is the name and address of the office designated 
under paragraph (a) of this section: Family Educational Rights and 
Privacy Act Office, U.S. Department of Education, 400 Maryland Avenue, 
SW., Washington, DC 20202.

(Authority: 20 U.S.C. 1231e-3(a)(1), 1232h)

[[Page 315]]



Sec. 98.6  Reports.

    The Secretary may require the recipient to submit reports containing 
information necessary to resolve complaints under section 439 of the Act 
and the regulations in this part.

(Authority: 20 U.S.C. 1221e-3(a)(1), 1232h)



Sec. 98.7  Filing a complaint.

    (a) Only a student or a parent or guardian of a student directly 
affected by a violation under Section 439 of the Act may file a 
complaint under this part. The complaint must be submitted in writing to 
the Office.
    (b) The complaint filed under paragraph (a) of this section must--
    (1) Contain specific allegations of fact giving reasonable cause to 
believe that a violation of either Sec. 98.3 or Sec. 98.4 exists; and
    (2) Include evidence of attempted resolution of the complaint at the 
local level (and at the State level if a State complaint resolution 
process exists), including the names of local and State officials 
contacted and significant dates in the attempted resolution process.
    (c) The Office investigates each complaint which the Office receives 
that meets the requirements of this section to determine whether the 
recipient or contractor failed to comply with the provisions of section 
439 of the Act.

(Approved by the Office of Management and Budget under control number 
1880-0507)

(Authority: 20 U.S.C. 1221e-3(a)(1), 1232h)



Sec. 98.8  Notice of the complaint.

    (a) If the Office receives a complaint that meets the requirements 
of Sec. 98.7, it provides written notification to the complainant and 
the recipient or contractor against which the violation has been alleged 
that the complaint has been received.
    (b) The notice to the recipient or contractor under paragraph (a) of 
this section must:
    (1) Include the substance of the alleged violation; and
    (2) Inform the recipient or contractor that the Office will 
investigate the complaint and that the recipient or contractor may 
submit a written response to the complaint.

(Authority: 20 U.S.C. 1221e-3(A)(1), 1232h)



Sec. 98.9  Investigation and findings.

    (a) The Office may permit the parties to submit further written or 
oral arguments or information.
    (b) Following its investigations, the Office provides to the 
complainant and recipient or contractor written notice of its findings 
and the basis for its findings.
    (c) If the Office finds that the recipient or contractor has not 
complied with section 439 of the Act, the Office includes in its notice 
under paragraph (b) of this section:
    (1) A statement of the specific steps that the Secretary recommends 
the recipient or contractor take to comply; and
    (2) Provides a reasonable period of time, given all of the 
circumstances of the case, during which the recipient or contractor may 
comply voluntarily.

(Authority: 20 U.S.C. 1221e-3(a)(1), 1232h)



Sec. 98.10  Enforcement of the findings.

    (a) If the recipient or contractor does not comply during the period 
of time set under Sec. 98.9(c), the Secretary may either:
    (1) For a recipient, take an action authorized under 34 CFR part 78, 
including:
    (i) Issuing a notice of intent to terminate funds under 34 CFR 
78.21;
    (ii) Issuing a notice to withhold funds under 34 CFR 78.21, 
200.94(b), or 298.45(b), depending upon the applicable program under 
which the notice is issued; or
    (iii) Issuing a notice to cease and desist under 34 CFR 78.31, 
200.94(c) or 298.45(c), depending upon the program under which the 
notice is issued; or
    (2) For a contractor, direct the contracting officer to take an 
appropriate action authorized under the Federal Acquisition Regulations, 
including either:
    (i) Issuing a notice to suspend operations under 48 CFR 12.5; or
    (ii) Issuing a notice to terminate for default, either in whole or 
in part under 48 CFR 49.102.

[[Page 316]]

    (b) If, after an investigation under Sec. 98.9, the Secretary finds 
that a recipient or contractor has complied voluntarily with section 439 
of the Act, the Secretary provides the complainant and the recipient or 
contractor written notice of the decision and the basis for the 
decision.

(Authority: 20 U.S.C. 1221e-3(a)(1), 1232h)



PART 99_FAMILY EDUCATIONAL RIGHTS AND PRIVACY--Table of Contents




                            Subpart A_General

Sec.
99.1 To which educational agencies or institutions do these regulations 
          apply?
99.2 What is the purpose of these regulations?
99.3 What definitions apply to these regulations?
99.4 What are the rights of parents?
99.5 What are the rights of students?
99.6 [Reserved]
99.7 What must an educational agency or institution include in its 
          annual notification?
99.8 What provisions apply to records of a law enforcement unit?

  Subpart B_What Are the Rights of Inspection and Review of Education 
                                Records?

99.10 What rights exist for a parent or eligible student to inspect and 
          review education records?
99.11 May an educational agency or institution charge a fee for copies 
          of education records?
99.12 What limitations exist on the right to inspect and review records?

    Subpart C_What Are the Procedures for Amending Education Records?

99.20 How can a parent or eligible student request amendment of the 
          student's education records?
99.21 Under what conditions does a parent or eligible student have the 
          right to a hearing?
99.22 What minimum requirements exist for the conduct of a hearing?

 Subpart D_May an Educational Agency or Institution Disclose Personally 
            Identifiable Information From Education Records?

99.30 Under what conditions is prior consent required to disclose 
          information?
99.31 Under what conditions is prior consent not required to disclose 
          information?
99.32 What recordkeeping requirements exist concerning requests and 
          disclosures?
99.33 What limitations apply to the redisclosure of information?
99.34 What conditions apply to disclosure of information to other 
          educational agencies or institutions?
99.35 What conditions apply to disclosure of information for Federal or 
          State program purposes?
99.36 What conditions apply to disclosure of information in health and 
          safety emergencies?
99.37 What conditions apply to disclosing directory information?
99.38 What conditions apply to disclosure of information as permitted by 
          State statute adopted after November 19, 1974, concerning the 
          juvenile justice system?
99.39 What definitions apply to the nonconsensual disclosure of records 
          by postsecondary educational institutions in connection with 
          disciplinary proceedings concerning crimes of violence or non-
          forcible sex offenses?

             Subpart E_What Are the Enforcement Procedures?

99.60 What functions has the Secretary delegated to the Office and to 
          the Office of Administrative Law Judges?
99.61 What responsibility does an educational agency or institution have 
          concerning conflict with State or local laws?
99.62 What information must an educational agency or institution submit 
          to the Office?
99.63 Where are complaints filed?
99.64 What is the complaint procedure?
99.65 What is the content of the notice of complaint issued by the 
          Office?
99.66 What are the responsibilities of the Office in the enforcement 
          process?
99.67 How does the Secretary enforce decisions?

Appendix A to Part 99--Crimes of Violence Definitions

    Authority: 20 U.S.C. 1232g, unless otherwise noted.

    Source: 53 FR 11943, Apr. 11, 1988, unless otherwise noted.



                            Subpart A_General



Sec. 99.1  To which educational agencies or institutions do these 
regulations apply?

    (a) Except as otherwise noted in Sec. 99.10, this part applies to 
an educational agency or institution to which funds have been made 
available under

[[Page 317]]

any program administered by the Secretary, if--
    (1) The educational institution provides educational services or 
instruction, or both, to students; or
    (2) The educational agency is authorized to direct and control 
public elementary or secondary, or postsecondary educational 
institutions.
    (b) This part does not apply to an educational agency or institution 
solely because students attending that agency or institution receive 
non-monetary benefits under a program referenced in paragraph (a) of 
this section, if no funds under that program are made available to the 
agency or institution.
    (c) The Secretary considers funds to be made available to an 
educational agency or institution of funds under one or more of the 
programs referenced in paragraph (a) of this section--
    (1) Are provided to the agency or institution by grant, cooperative 
agreement, contract, subgrant, or subcontract; or
    (2) Are provided to students attending the agency or institution and 
the funds may be paid to the agency or institution by those students for 
educational purposes, such as under the Pell Grant Program and the 
Guaranteed Student Loan Program (titles IV-A-1 and IV-B, respectively, 
of the Higher Education Act of 1965, as amended).
    (d) If an educational agency or institution receives funds under one 
or more of the programs covered by this section, the regulations in this 
part apply to the recipient as a whole, including each of its components 
(such as a department within a university).

(Authority: 20 U.S.C. 1232g)

[53 FR 11943, Apr. 11, 1988, as amended at 61 FR 59295, Nov. 21, 1996; 
65 FR 41852, July 6, 2000]



Sec. 99.2  What is the purpose of these regulations?

    The purpose of this part is to set out requirements for the 
protection of privacy of parents and students under section 444 of the 
General Education Provisions Act, as amended.

(Authority: 20 U.S.C. 1232g)
    Note: 34 CFR 300.560-300.576 contain requirements regarding 
confidentiality of information relating to handicapped children who 
receive benefits under the Education of the Handicapped Act.

[53 FR 11943, Apr. 11, 1988, as amended at 61 FR 59295, Nov. 21, 1996]



Sec. 99.3  What definitions apply to these regulations?

    The following definitions apply to this part:
    Act means the Family Educational Rights and Privacy Act of 1974, as 
amended, enacted as section 444 of the General Education Provisions Act.

(Authority: 20 U.S.C. 1232g)
    Attendance includes, but is not limited to:
    (a) Attendance in person or by correspondence; and
    (b) The period during which a person is working under a work-study 
program.

(Authority: 20 U.S.C. 1232g)

    Dates of attendance. (a) The term means the period of time during 
which a student attends or attended an educational agency or 
institution. Examples of dates of attendance include an academic year, a 
spring semester, or a first quarter.
    (b) The term does not include specific daily records of a student's 
attendance at an educational agency or institution.

(Authority: 20 U.S.C. 1232g(a)(5)(A))

    Directory information means information contained in an education 
record of a student that would not generally be considered harmful or an 
invasion of privacy if disclosed. It includes, but is not limited to, 
the student's name, address, telephone listing, electronic mail address, 
photograph, date and place of birth, major field of study, dates of 
attendance, grade level, enrollment status (e.g., undergraduate or 
graduate; full-time or part-time), participation in officially 
recognized activities and sports, weight and height of members of 
athletic teams, degrees, honors and awards received, and the most recent 
educational agency or institution attended.

(Authority: 20 U.S.C. 1232g(a)(5)(A))

    Disciplinary action or proceeding means the investigation, 
adjudication,

[[Page 318]]

or imposition of sanctions by an educational agency or institution with 
respect to an infraction or violation of the internal rules of conduct 
applicable to students of the agency or institution.
    Disclosure means to permit access to or the release, transfer, or 
other communication of personally identifiable information contained in 
education records to any party, by any means, including oral, written, 
or electronic means.

(Authority: 20 U.S.C. 1232g(b)(1))

    Educational agency or institution means any public or private agency 
or institution to which this part applies under Sec. 99.1(a).

(Authority: 20 U.S.C. 1232g(a)(3))

    Education records. (a) The term means those records that are:
    (1) Directly related to a student; and
    (2) Maintained by an educational agency or institution or by a party 
acting for the agency or institution.
    (b) The term does not include:
    (1) Records that are kept in the sole possession of the maker, are 
used only as a personal memory aid, and are not accessible or revealed 
to any other person except a temporary substitute for the maker of the 
record.
    (2) Records of the law enforcement unit of an educational agency or 
institution, subject to the provisions of Sec. 99.8.
    (3)(i) Records relating to an individual who is employed by an 
educational agency or institution, that:
    (A) Are made and maintained in the normal course of business;
    (B) Relate exclusively to the individual in that individual's 
capacity as an employee; and
    (C) Are not available for use for any other purpose.
    (ii) Records relating to an individual in attendance at the agency 
or institution who is employed as a result of his or her status as a 
student are education records and not excepted under paragraph (b)(3)(i) 
of this definition.
    (4) Records on a student who is 18 years of age or older, or is 
attending an institution of postsecondary education, that are:
    (i) Made or maintained by a physician, psychiatrist, psychologist, 
or other recognized professional or paraprofessional acting in his or 
her professional capacity or assisting in a paraprofessional capacity;
    (ii) Made, maintained, or used only in connection with treatment of 
the student; and
    (iii) Disclosed only to individuals providing the treatment. For the 
purpose of this definition, ``treatment'' does not include remedial 
educational activities or activities that are part of the program of 
instruction at the agency or institution; and
    (5) Records that only contain information about an individual after 
he or she is no longer a student at that agency or institution.

(Authority: 20 U.S.C. 1232g(a)(4))

    Eligible student means a student who has reached 18 years of age or 
is attending an institution of postsecondary education.

(Authority: 20 U.S.C. 1232g(d))
    Institution of postsecondary education means an institution that 
provides education to students beyond the secondary school level; 
``secondary school level'' means the educational level (not beyond grade 
12) at which secondary education is provided as determined under State 
law.

(Authority: 20 U.S.C. 1232g(d))

    Parent means a parent of a student and includes a natural parent, a 
guardian, or an individual acting as a parent in the absence of a parent 
or a guardian.

(Authority: 20 U.S.C. 1232g)

    Party means an individual, agency, institution, or organization.

(Authority: 20 U.S.C. 1232g(b)(4)(A))

    Personally identifiable information includes, but is not limited to:
    (a) The student's name;
    (b) The name of the student's parent or other family member;
    (c) The address of the student or student's family;
    (d) A personal identifier, such as the student's social security 
number or student number;
    (e) A list of personal characteristics that would make the student's 
identity easily traceable; or

[[Page 319]]

    (f) Other information that would make the student's identity easily 
traceable.

(Authority: 20 U.S.C. 1232g)

    Record means any information recorded in any way, including, but not 
limited to, handwriting, print, computer media, video or audio tape, 
film, microfilm, and microfiche.

(Authority: 20 U.S.C. 1232g)

    Secretary means the Secretary of the U.S. Department of Education or 
an official or employee of the Department of Education acting for the 
Secretary under a delegation of authority.

(Authority: 20 U.S.C. 1232g)

    Student, except as otherwise specifically provided in this part, 
means any individual who is or has been in attendance at an educational 
agency or institution and regarding whom the agency or institution 
maintains education records.

(Authority: 20 U.S.C. 1232g(a)(6))

[53 FR 11943, Apr. 11, 1988, as amended at 60 FR 3468, Jan. 17, 1995; 61 
FR 59295, Nov. 21, 1996; 65 FR 41852, July 6, 2000]



Sec. 99.4  What are the rights of parents?

    An educational agency or institution shall give full rights under 
the Act to either parent, unless the agency or institution has been 
provided with evidence that there is a court order, State statute, or 
legally binding document relating to such matters as divorce, 
separation, or custody that specifically revokes these rights.

(Authority: 20 U.S.C. 1232g)



Sec. 99.5  What are the rights of students?

    (a) When a student becomes an eligible student, the rights accorded 
to, and consent required of, parents under this part transfer from the 
parents to the student.
    (b) The Act and this part do not prevent educational agencies or 
institutions from giving students rights in addition to those given to 
parents.
    (c) An individual who is or has been a student at an educational 
institution and who applies for admission at another component of that 
institution does not have rights under this part with respect to records 
maintained by that other component, including records maintained in 
connection with the student's application for admission, unless the 
student is accepted and attends that other component of the institution.

(Authority: 20 U.S.C. 1232g(d))

[53 FR 11943, Apr. 11, 1988, as amended at 58 FR 3188, Jan. 7, 1993; 65 
FR 41853, July 6, 2000]



Sec. 99.6  [Reserved]



Sec. 99.7  What must an educational agency or institution include in its 
annual notification?

    (a)(1) Each educational agency or institution shall annually notify 
parents of students currently in attendance, or eligible students 
currently in attendance, of their rights under the Act and this part.
    (2) The notice must inform parents or eligible students that they 
have the right to--
    (i) Inspect and review the student's education records;
    (ii) Seek amendment of the student's education records that the 
parent or eligible student believes to be inaccurate, misleading, or 
otherwise in violation of the student's privacy rights;
    (iii) Consent to disclosures of personally identifiable information 
contained in the student's education records, except to the extent that 
the Act and Sec. 99.31 authorize disclosure without consent; and
    (iv) File with the Department a complaint under Sec. Sec. 99.63 and 
99.64 concerning alleged failures by the educational agency or 
institution to comply with the requirements of the Act and this part.
    (3) The notice must include all of the following:
    (i) The procedure for exercising the right to inspect and review 
education records.
    (ii) The procedure for requesting amendment of records under Sec. 
99.20.
    (iii) If the educational agency or institution has a policy of 
disclosing education records under Sec. 99.31(a)(1), a specification of 
criteria for determining who constitutes a school official and what 
constitutes a legitimate educational interest.

[[Page 320]]

    (b) An educational agency or institution may provide this notice by 
any means that are reasonably likely to inform the parents or eligible 
students of their rights.
    (1) An educational agency or institution shall effectively notify 
parents or eligible students who are disabled.
    (2) An agency or institution of elementary or secondary education 
shall effectively notify parents who have a primary or home language 
other than English.

(Approved by the Office of Management and Budget under control number 
1880-0508)

(Authority: 20 U.S.C. 1232g (e) and (f))

[61 FR 59295, Nov. 21, 1996]



Sec. 99.8  What provisions apply to records of a law enforcement unit?

    (a)(1) Law enforcement unit means any individual, office, 
department, division, or other component of an educational agency or 
institution, such as a unit of commissioned police officers or non-
commissioned security guards, that is officially authorized or 
designated by that agency or institution to--
    (i) Enforce any local, State, or Federal law, or refer to 
appropriate authorities a matter for enforcement of any local, State, or 
Federal law against any individual or organization other than the agency 
or institution itself; or
    (ii) Maintain the physical security and safety of the agency or 
institution.
    (2) A component of an educational agency or institution does not 
lose its status as a law enforcement unit if it also performs other, 
non-law enforcement functions for the agency or institution, including 
investigation of incidents or conduct that constitutes or leads to a 
disciplinary action or proceedings against the student.
    (b)(1) Records of a law enforcement unit means those records, files, 
documents, and other materials that are--
    (i) Created by a law enforcement unit;
    (ii) Created for a law enforcement purpose; and
    (iii) Maintained by the law enforcement unit.
    (2) Records of a law enforcement unit does not mean--
    (i) Records created by a law enforcement unit for a law enforcement 
purpose that are maintained by a component of the educational agency or 
institution other than the law enforcement unit; or
    (ii) Records created and maintained by a law enforcement unit 
exclusively for a non-law enforcement purpose, such as a disciplinary 
action or proceeding conducted by the educational agency or institution.
    (c)(1) Nothing in the Act prohibits an educational agency or 
institution from contacting its law enforcement unit, orally or in 
writing, for the purpose of asking that unit to investigate a possible 
violation of, or to enforce, any local, State, or Federal law.
    (2) Education records, and personally identifiable information 
contained in education records, do not lose their status as education 
records and remain subject to the Act, including the disclosure 
provisions of Sec. 99.30, while in the possession of the law 
enforcement unit.
    (d) The Act neither requires nor prohibits the disclosure by an 
educational agency or institution of its law enforcement unit records.

(Authority: 20 U.S.C. 1232g(a)(4)(B)(ii))

[60 FR 3469, Jan. 17, 1995]



  Subpart B_What Are the Rights of Inspection and Review of Education 
                                Records?



Sec. 99.10  What rights exist for a parent or eligible student to 
inspect and review education records?

    (a) Except as limited under Sec. 99.12, a parent or eligible 
student must be given the opportunity to inspect and review the 
student's education records. This provision applies to--
    (1) Any educational agency or institution; and
    (2) Any State educational agency (SEA) and its components.
    (i) For the purposes of subpart B of this part, an SEA and its 
components constitute an educational agency or institution.
    (ii) An SEA and its components are subject to subpart B of this part 
if the SEA maintains education records on

[[Page 321]]

students who are or have been in attendance at any school of an 
educational agency or institution subject to the Act and this part.
    (b) The educational agency or institution, or SEA or its component, 
shall comply with a request for access to records within a reasonable 
period of time, but not more than 45 days after it has received the 
request.
    (c) The educational agency or institution, or SEA or its component 
shall respond to reasonable requests for explanations and 
interpretations of the records.
    (d) If circumstances effectively prevent the parent or eligible 
student from exercising the right to inspect and review the student's 
education records, the educational agency or institution, or SEA or its 
component, shall--
    (1) Provide the parent or eligible student with a copy of the 
records requested; or
    (2) Make other arrangements for the parent or eligible student to 
inspect and review the requested records.
    (e) The educational agency or institution, or SEA or its component 
shall not destroy any education records if there is an outstanding 
request to inspect and review the records under this section.
    (f) While an education agency or institution is not required to give 
an eligible student access to treatment records under paragraph (b)(4) 
of the definition of Education records in Sec. 99.3, the student may 
have those records reviewed by a physician or other appropriate 
professional of the student's choice.

(Authority: 20 U.S.C. 1232g(a)(1) (A) and (B))

[53 FR 11943, Apr. 11, 1988, as amended at 61 FR 59296, Nov. 21, 1996]



Sec. 99.11  May an educational agency or institution charge a fee for 
copies of education records?

    (a) Unless the imposition of a fee effectively prevents a parent or 
eligible student from exercising the right to inspect and review the 
student's education records, an educational agency or institution may 
charge a fee for a copy of an education record which is made for the 
parent or eligible student.
    (b) An educational agency or institution may not charge a fee to 
search for or to retrieve the education records of a student.

(Authority: 20 U.S.C. 1232g(a)(1))



Sec. 99.12  What limitations exist on the right to inspect and review 
records?

    (a) If the education records of a student contain information on 
more than one student, the parent or eligible student may inspect and 
review or be informed of only the specific information about that 
student.
    (b) A postsecondary institution does not have to permit a student to 
inspect and review education records that are:
    (1) Financial records, including any information those records 
contain, of his or her parents;
    (2) Confidential letters and confidential statements of 
recommendation placed in the education records of the student before 
January 1, 1975, as long as the statements are used only for the 
purposes for which they were specifically intended; and
    (3) Confidential letters and confidential statements of 
recommendation placed in the student's education records after January 
1, 1975, if:
    (i) The student has waived his or her right to inspect and review 
those letters and statements; and
    (ii) Those letters and statements are related to the student's:
    (A) Admission to an educational institution;
    (B) Application for employment; or
    (C) Receipt of an honor or honorary recognition.
    (c)(1) A waiver under paragraph (b)(3)(i) of this section is valid 
only if:
    (i) The educational agency or institution does not require the 
waiver as a condition for admission to or receipt of a service or 
benefit from the agency or institution; and
    (ii) The waiver is made in writing and signed by the student, 
regardless of age.
    (2) If a student has waived his or her rights under paragraph 
(b)(3)(i) of this section, the educational institution shall:
    (i) Give the student, on request, the names of the individuals who 
provided

[[Page 322]]

the letters and statements of recommendation; and
    (ii) Use the letters and statements of recommendation only for the 
purpose for which they were intended.
    (3)(i) A waiver under paragraph (b)(3)(i) of this section may be 
revoked with respect to any actions occurring after the revocation.
    (ii) A revocation under paragraph (c)(3)(i) of this section must be 
in writing.

(Authority: 20 U.S.C. 1232g(a)(1) (A), (B), (C), and (D))

[53 FR 11943, Apr. 11, 1988, as amended at 61 FR 59296, Nov. 21, 1996]



    Subpart C_What Are the Procedures for Amending Education Records?



Sec. 99.20  How can a parent or eligible student request amendment of 
the student's education records?

    (a) If a parent or eligible student believes the education records 
relating to the student contain information that is inaccurate, 
misleading, or in violation of the student's rights of privacy, he or 
she may ask the educational agency or institution to amend the record.
    (b) The educational agency or institution shall decide whether to 
amend the record as requested within a reasonable time after the agency 
or institution receives the request.
    (c) If the educational agency or institution decides not to amend 
the record as requested, it shall inform the parent or eligible student 
of its decision and of his or her right to a hearing under Sec. 99.21.

(Authority: 20 U.S.C. 1232g(a)(2))

[53 FR 11943, Apr. 11, 1988; 53 FR 19368, May 27, 1988, as amended at 61 
FR 59296, Nov. 21, 1996]



Sec. 99.21  Under what conditions does a parent or eligible student have 
the right to a hearing?

    (a) An educational agency or institution shall give a parent or 
eligible student, on request, an opportunity for a hearing to challenge 
the content of the student's education records on the grounds that the 
information contained in the education records is inaccurate, 
misleading, or in violation of the privacy rights of the student.
    (b)(1) If, as a result of the hearing, the educational agency or 
institution decides that the information is inaccurate, misleading, or 
otherwise in violation of the privacy rights of the student, it shall:
    (i) Amend the record accordingly; and
    (ii) Inform the parent or eligible student of the amendment in 
writing.
    (2) If, as a result of the hearing, the educational agency or 
institution decides that the information in the education record is not 
inaccurate, misleading, or otherwise in violation of the privacy rights 
of the student, it shall inform the parent or eligible student of the 
right to place a statement in the record commenting on the contested 
information in the record or stating why he or she disagrees with the 
decision of the agency or institution, or both.
    (c) If an educational agency or institution places a statement in 
the education records of a student under paragraph (b)(2) of this 
section, the agency or institution shall:
    (1) Maintain the statement with the contested part of the record for 
as long as the record is maintained; and
    (2) Disclose the statement whenever it discloses the portion of the 
record to which the statement relates.

(Authority: 20 U.S.C. 1232g(a)(2))

[53 FR 11943, Apr. 11, 1988, as amended at 61 FR 59296, Nov. 21, 1996]



Sec. 99.22  What minimum requirements exist for the conduct of a hearing?

    The hearing required by Sec. 99.21 must meet, at a minimum, the 
following requirements:
    (a) The educational agency or institution shall hold the hearing 
within a reasonable time after it has received the request for the 
hearing from the parent or eligible student.
    (b) The educational agency or institution shall give the parent or 
eligible student notice of the date, time, and place, reasonably in 
advance of the hearing.
    (c) The hearing may be conducted by any individual, including an 
official of the educational agency or institution,

[[Page 323]]

who does not have a direct interest in the outcome of the hearing.
    (d) The educational agency or institution shall give the parent or 
eligible student a full and fair opportunity to present evidence 
relevant to the issues raised under Sec. 99.21. The parent or eligible 
student may, at their own expense, be assisted or represented by one or 
more individuals of his or her own choice, including an attorney.
    (e) The educational agency or institution shall make its decision in 
writing within a reasonable period of time after the hearing.
    (f) The decision must be based solely on the evidence presented at 
the hearing, and must include a summary of the evidence and the reasons 
for the decision.

(Authority: 20 U.S.C. 1232g(a)(2))



 Subpart D_May an Educational Agency or Institution Disclose Personally 
            Identifiable Information From Education Records?



Sec. 99.30  Under what conditions is prior consent required to disclose 
information?

    (a) The parent or eligible student shall provide a signed and dated 
written consent before an educational agency or institution discloses 
personally identifiable information from the student's education 
records, except as provided in Sec. 99.31.
    (b) The written consent must:
    (1) Specify the records that may be disclosed;
    (2) State the purpose of the disclosure; and
    (3) Identify the party or class of parties to whom the disclosure 
may be made.
    (c) When a disclosure is made under paragraph (a) of this section:
    (1) If a parent or eligible student so requests, the educational 
agency or institution shall provide him or her with a copy of the 
records disclosed; and
    (2) If the parent of a student who is not an eligible student so 
requests, the agency or institution shall provide the student with a 
copy of the records disclosed.
    (d) ``Signed and dated written consent'' under this part may include 
a record and signature in electronic form that--
    (1) Identifies and authenticates a particular person as the source 
of the electronic consent; and
    (2) Indicates such person's approval of the information contained in 
the electronic consent.

(Authority: 20 U.S.C. 1232g (b)(1) and (b)(2)(A))

[53 FR 11943, Apr. 11, 1988, as amended at 58 FR 3189, Jan. 7, 1993; 69 
FR 21671, Apr. 21, 2004]



Sec. 99.31  Under what conditions is prior consent not required to 
disclose information?

    (a) An educational agency or institution may disclose personally 
identifiable information from an education record of a student without 
the consent required by Sec. 99.30 if the disclosure meets one or more 
of the following conditions:
    (1) The disclosure is to other school officials, including teachers, 
within the agency or institution whom the agency or institution has 
determined to have legitimate educational interests.
    (2) The disclosure is, subject to the requirements of Sec. 99.34, 
to officials of another school, school system, or institution of 
postsecondary education where the student seeks or intends to enroll.
    (3) The disclosure is, subject to the requirements of Sec. 99.35, 
to authorized representatives of--
    (i) The Comptroller General of the United States;
    (ii) The Attorney General of the United States;
    (iii) The Secretary; or
    (iv) State and local educational authorities.
    (4)(i) The disclosure is in connection with financial aid for which 
the student has applied or which the student has received, if the 
information is necessary for such purposes as to:
    (A) Determine eligibility for the aid;
    (B) Determine the amount of the aid;
    (C) Determine the conditions for the aid; or
    (D) Enforce the terms and conditions of the aid.

[[Page 324]]

    (ii) As used in paragraph (a)(4)(i) of this section, financial aid 
means a payment of funds provided to an individual (or a payment in kind 
of tangible or intangible property to the individual) that is 
conditioned on the individual's attendance at an educational agency or 
institution.

(Authority: 20 U.S.C. 1232g(b)(1)(D))

    (5)(i) The disclosure is to State and local officials or authorities 
to whom this information is specifically--
    (A) Allowed to be reported or disclosed pursuant to State statute 
adopted before November 19, 1974, if the allowed reporting or disclosure 
concerns the juvenile justice system and the system's ability to 
effectively serve the student whose records are released; or
    (B) Allowed to be reported or disclosed pursuant to State statute 
adopted after November 19, 1974, subject to the requirements of Sec. 
99.38.
    (ii) Paragraph (a)(5)(i) of this section does not prevent a State 
from further limiting the number or type of State or local officials to 
whom disclosures may be made under that paragraph.
    (6)(i) The disclosure is to organizations conducting studies for, or 
on behalf of, educational agencies or institutions to:
    (A) Develop, validate, or administer predictive tests;
    (B) Administer student aid programs; or
    (C) Improve instruction.
    (ii) The agency or institution may disclose information under 
paragraph (a)(6)(i) of this section only if:
    (A) The study is conducted in a manner that does not permit personal 
identification of parents and students by individuals other than 
representatives of the organization; and
    (B) The information is destroyed when no longer needed for the 
purposes for which the study was conducted.
    (iii) If this Office determines that a third party outside the 
educational agency or institution to whom information is disclosed under 
this paragraph (a)(6) violates paragraph (a)(6)(ii)(B) of this section, 
the educational agency or institution may not allow that third party 
access to personally identifiable information from education records for 
at least five years.
    (iv) For the purposes of paragraph (a)(6) of this section, the term 
organization includes, but is not limited to, Federal, State, and local 
agencies, and independent organizations.
    (7) The disclosure is to accrediting organizations to carry out 
their accrediting functions.
    (8) The disclosure is to parents, as defined in Sec. 99.3, of a 
dependent student, as defined in section 152 of the Internal Revenue 
Code of 1986.
    (9)(i) The disclosure is to comply with a judicial order or lawfully 
issued subpoena.
    (ii) The educational agency or institution may disclose information 
under paragraph (a)(9)(i) of this section only if the agency or 
institution makes a reasonable effort to notify the parent or eligible 
student of the order or subpoena in advance of compliance, so that the 
parent or eligible student may seek protective action, unless the 
disclosure is in compliance with--
    (A) A Federal grand jury subpoena and the court has ordered that the 
existence or the contents of the subpoena or the information furnished 
in response to the subpoena not be disclosed; or
    (B) Any other subpoena issued for a law enforcement purpose and the 
court or other issuing agency has ordered that the existence or the 
contents of the subpoena or the information furnished in response to the 
subpoena not be disclosed.
    (iii)(A) If an educational agency or institution initiates legal 
action against a parent or student, the educational agency or 
institution may disclose to the court, without a court order or 
subpoena, the education records of the student that are relevant for the 
educational agency or institution to proceed with the legal action as 
plaintiff.
    (B) If a parent or eligible student initiates legal action against 
an educational agency or institution, the educational agency or 
institution may disclose to the court, without a court order or 
subpoena, the student's education records that are relevant for the 
educational agency or institution to defend itself.
    (10) The disclosure is in connection with a health or safety 
emergency,

[[Page 325]]

under the conditions described in Sec. 99.36.
    (11) The disclosure is information the educational agency or 
institution has designated as ``directory information'', under the 
conditions described in Sec. 99.37.
    (12) The disclosure is to the parent of a student who is not an 
eligible student or to the student.
    (13) The disclosure, subject to the requirements in Sec. 99.39, is 
to a victim of an alleged perpetrator of a crime of violence or a non-
forcible sex offense. The disclosure may only include the final results 
of the disciplinary proceeding conducted by the institution of 
postsecondary education with respect to that alleged crime or offense. 
The institution may disclose the final results of the disciplinary 
proceeding, regardless of whether the institution concluded a violation 
was committed.
    (14)(i) The disclosure, subject to the requirements in Sec. 99.39, 
is in connection with a disciplinary proceeding at an institution of 
postsecondary education. The institution must not disclose the final 
results of the disciplinary proceeding unless it determines that--
    (A) The student is an alleged perpetrator of a crime of violence or 
non-forcible sex offense; and
    (B) With respect to the allegation made against him or her, the 
student has committed a violation of the institution's rules or 
policies.
    (ii) The institution may not disclose the name of any other student, 
including a victim or witness, without the prior written consent of the 
other student.
    (iii) This section applies only to disciplinary proceedings in which 
the final results were reached on or after October 7, 1998.
    (15)(i) The disclosure is to a parent of a student at an institution 
of postsecondary education regarding the student's violation of any 
Federal, State, or local law, or of any rule or policy of the 
institution, governing the use or possession of alcohol or a controlled 
substance if--
    (A) The institution determines that the student has committed a 
disciplinary violation with respect to that use or possession; and
    (B) The student is under the age of 21 at the time of the disclosure 
to the parent.
    (ii) Paragraph (a)(15) of this section does not supersede any 
provision of State law that prohibits an institution of postsecondary 
education from disclosing information.
    (b) Paragraph (a) of this section does not forbid an educational 
agency or institution from disclosing, nor does it require an 
educational agency or institution to disclose, personally identifiable 
information from the education records of a student to any parties under 
paragraphs (a)(1) through (11), (13), (14), and (15) of this section.

(Authority: 20 U.S.C. 1232g(a)(5)(A), (b)(1), (b)(2)(B), (b)(6), (h), 
and (i))

[53 FR 11943, Apr. 11, 1988; 53 FR 19368, May 27, 1988, as amended at 58 
FR 3189, Jan. 7, 1993; 61 FR 59296, Nov. 21, 1996; 65 FR 41853, July 6, 
2000]



Sec. 99.32  What recordkeeping requirements exist concerning requests 
and disclosures?

    (a)(1) An educational agency or institution shall maintain a record 
of each request for access to and each disclosure of personally 
identifiable information from the education records of each student.
    (2) The agency or institution shall maintain the record with the 
education records of the student as long as the records are maintained.
    (3) For each request or disclosure the record must include:
    (i) The parties who have requested or received personally 
identifiable information from the education records; and
    (ii) The legitimate interests the parties had in requesting or 
obtaining the information.
    (b) If an educational agency or institution discloses personally 
identifiable information from an education record with the understanding 
authorized under Sec. 99.33(b), the record of the disclosure required 
under this section must include:
    (1) The names of the additional parties to which the receiving party 
may disclose the information on behalf of the educational agency or 
institution; and

[[Page 326]]

    (2) The legitimate interests under Sec. 99.31 which each of the 
additional parties has in requesting or obtaining the information.
    (c) The following parties may inspect the record relating to each 
student:
    (1) The parent or eligible student.
    (2) The school official or his or her assistants who are responsible 
for the custody of the records.
    (3) Those parties authorized in Sec. 99.31(a) (1) and (3) for the 
purposes of auditing the recordkeeping procedures of the educational 
agency or institution.
    (d) Paragraph (a) of this section does not apply if the request was 
from, or the disclosure was to:
    (1) The parent or eligible student;
    (2) A school official under Sec. 99.31(a)(1);
    (3) A party with written consent from the parent or eligible 
student;
    (4) A party seeking directory information; or
    (5) A party seeking or receiving the records as directed by a 
Federal grand jury or other law enforcement subpoena and the issuing 
court or other issuing agency has ordered that the existence or the 
contents of the subpoena or the information furnished in response to the 
subpoena not be disclosed.

(Approved by the Office of Management and Budget under control number 
1880-0508)

(Authority: 20 U.S.C. 1232g(b)(1) and (b)(4)(A))

[53 FR 11943, Apr. 11, 1988, as amended at 61 FR 59297, Nov. 21, 1996]



Sec. 99.33  What limitations apply to the redisclosure of information?

    (a)(1) An educational agency or institution may disclose personally 
identifiable information from an education record only on the condition 
that the party to whom the information is disclosed will not disclose 
the information to any other party without the prior consent of the 
parent or eligible student.
    (2) The officers, employees, and agents of a party that receives 
information under paragraph (a)(1) of this section may use the 
information, but only for the purposes for which the disclosure was 
made.
    (b) Paragraph (a) of this section does not prevent an educational 
agency or institution from disclosing personally identifiable 
information with the understanding that the party receiving the 
information may make further disclosures of the information on behalf of 
the educational agency or institution if:
    (1) The disclosures meet the requirements of Sec. 99.31; and
    (2) The educational agency or institution has complied with the 
requirements of Sec. 99.32(b).
    (c) Paragraph (a) of this section does not apply to disclosures made 
to parents of dependent students under Sec. 99.31(a)(8), to disclosures 
made pursuant to court orders, lawfully issued subpoenas, or litigation 
under Sec. 99.31(a)(9), to disclosures of directory information under 
Sec. 99.31(a)(11), to disclosures made to a parent or student under 
Sec. 99.31(a)(12), to disclosures made in connection with a 
disciplinary proceeding under Sec. 99.31(a)(14), or to disclosures made 
to parents under Sec. 99.31(a)(15).
    (d) Except for disclosures under Sec. 99.31(a) (9), (11), and (12), 
an educational agency or institution shall inform a party to whom 
disclosure is made of the requirements of this section.
    (e) If this Office determines that a third party improperly 
rediscloses personally identifiable information from education records 
in violation of Sec. 99.33(a) of this section, the educational agency 
or institution may not allow that third party access to personally 
identifiable information from education records for at least five years.

(Authority: 20 U.S.C. 1232g(b)(4)(B))

[53 FR 11943, Apr. 11, 1988, as amended at 61 FR 59297, Nov. 21, 1996; 
65 FR 41853, July 6, 2000]



Sec. 99.34  What conditions apply to disclosure of information to other 
educational agencies or institutions?

    (a) An educational agency or institution that discloses an education 
record under Sec. 99.31(a)(2) shall:
    (1) Make a reasonable attempt to notify the parent or eligible 
student at the last known address of the parent or eligible student, 
unless:
    (i) The disclosure is initiated by the parent or eligible student; 
or

[[Page 327]]

    (ii) The annual notification of the agency or institution under 
Sec. 99.6 includes a notice that the agency or institution forwards 
education records to other agencies or institutions that have requested 
the records and in which the student seeks or intends to enroll;
    (2) Give the parent or eligible student, upon request, a copy of the 
record that was disclosed; and
    (3) Give the parent or eligible student, upon request, an 
opportunity for a hearing under subpart C.
    (b) An educational agency or institution may disclose an education 
record of a student in attendance to another educational agency or 
institution if:
    (1) The student is enrolled in or receives services from the other 
agency or institution; and
    (2) The disclosure meets the requirements of paragraph (a) of this 
section.

(Authority: 20 U.S.C. 1232g(b)(1)(B))

[53 FR 11943, Apr. 11, 1988, as amended at 61 FR 59297, Nov. 21, 1996]



Sec. 99.35  What conditions apply to disclosure of information for 
Federal or State program purposes?

    (a) The officials listed in Sec. 99.31(a)(3) may have access to 
education records in connection with an audit or evaluation of Federal 
or State supported education programs, or for the enforcement of or 
compliance with Federal legal requirements which relate to those 
programs.
    (b) Information that is collected under paragraph (a) of this 
section must:
    (1) Be protected in a manner that does not permit personal 
identification of individuals by anyone except the officials referred to 
in paragraph (a) of this section; and
    (2) Be destroyed when no longer needed for the purposes listed in 
paragraph (a) of this section.
    (c) Paragraph (b) of this section does not apply if:
    (1) The parent or eligible student has given written consent for the 
disclosure under Sec. 99.30; or
    (2) The collection of personally identifiable information is 
specifically authorized by Federal law.

(Authority: 20 U.S.C. 1232g(b)(3))



Sec. 99.36  What conditions apply to disclosure of information in health 
and safety emergencies?

    (a) An educational agency or institution may disclose personally 
identifiable information from an education record to appropriate parties 
in connection with an emergency if knowledge of the information is 
necessary to protect the health or safety of the student or other 
individuals.
    (b) Nothing in this Act or this part shall prevent an educational 
agency or institution from--
    (1) Including in the education records of a student appropriate 
information concerning disciplinary action taken against the student for 
conduct that posed a significant risk to the safety or well-being of 
that student, other students, or other members of the school community;
    (2) Disclosing appropriate information maintained under paragraph 
(b)(1) of this section to teachers and school officials within the 
agency or institution who the agency or institution has determined have 
legitimate educational interests in the behavior of the student; or
    (3) Disclosing appropriate information maintained under paragraph 
(b)(1) of this section to teachers and school officials in other schools 
who have been determined to have legitimate educational interests in the 
behavior of the student.
    (c) Paragraphs (a) and (b) of this section will be strictly 
construed.

(Authority: 20 U.S.C. 1232g (b)(1)(I) and (h))

[53 FR 11943, Apr. 11, 1988; 53 FR 19368, May 27, 1988, as amended at 61 
FR 59297, Nov. 21, 1996]



Sec. 99.37  What conditions apply to disclosing directory information?

    (a) An educational agency or institution may disclose directory 
information if it has given public notice to parents of students in 
attendance and eligible students in attendance at the agency or 
institution of:
    (1) The types of personally identifiable information that the agency 
or institution has designated as directory information;

[[Page 328]]

    (2) A parent's or eligible student's right to refuse to let the 
agency or institution designate any or all of those types of information 
about the student as directory information; and
    (3) The period of time within which a parent or eligible student has 
to notify the agency or institution in writing that he or she does not 
want any or all of those types of information about the student 
designated as directory information.
    (b) An educational agency or institution may disclose directory 
information about former students without meeting the conditions in 
paragraph (a) of this section.

(Authority: 20 U.S.C. 1232g(a)(5) (A) and (B))



Sec. 99.38  What conditions apply to disclosure of information as permitted 

by State statute adopted after November 19, 1974, concerning the juvenile 
justice system?

    (a) If reporting or disclosure allowed by State statute concerns the 
juvenile justice system and the system's ability to effectively serve, 
prior to adjudication, the student whose records are released, an 
educational agency or institution may disclose education records under 
Sec. 99.31(a)(5)(i)(B).
    (b) The officials and authorities to whom the records are disclosed 
shall certify in writing to the educational agency or institution that 
the information will not be disclosed to any other party, except as 
provided under State law, without the prior written consent of the 
parent of the student.

(Authority: 20 U.S.C. 1232g(b)(1)(J))

[61 FR 59297, Nov. 21, 1996]



Sec. 99.39  What definitions apply to the nonconsensual disclosure of 

records by postsecondary educational institutions in connection with 
disciplinary 
          proceedings concerning crimes of violence or non-forcible sex 
          offenses?

    As used in this part:
    Alleged perpetrator of a crime of violence is a student who is 
alleged to have committed acts that would, if proven, constitute any of 
the following offenses or attempts to commit the following offenses that 
are defined in appendix A to this part:

Arson
Assault offenses
Burglary
Criminal homicide--manslaughter by negligence
Criminal homicide--murder and nonnegligent manslaughter
Destruction/damage/vandalism of property
Kidnapping/abduction
Robbery
Forcible sex offenses.

    Alleged perpetrator of a nonforcible sex offense means a student who 
is alleged to have committed acts that, if proven, would constitute 
statutory rape or incest. These offenses are defined in appendix A to 
this part.
    Final results means a decision or determination, made by an honor 
court or council, committee, commission, or other entity authorized to 
resolve disciplinary matters within the institution. The disclosure of 
final results must include only the name of the student, the violation 
committed, and any sanction imposed by the institution against the 
student.
    Sanction imposed means a description of the disciplinary action 
taken by the institution, the date of its imposition, and its duration.
    Violation committed means the institutional rules or code sections 
that were violated and any essential findings supporting the 
institution's conclusion that the violation was committed.

(Authority: 20 U.S.C. 1232g(b)(6))

[65 FR 41853, July 6, 2000]



             Subpart E_What Are the Enforcement Procedures?



Sec. 99.60  What functions has the Secretary delegated to the Office and 
to the Office of Administrative Law Judges?

    (a) For the purposes of this subpart, Office means the Family Policy 
Compliance Office, U.S. Department of Education.
    (b) The Secretary designates the Office to:
    (1) Investigate, process, and review complaints and violations under 
the Act and this part; and
    (2) Provide technical assistance to ensure compliance with the Act 
and this part.

[[Page 329]]

    (c) The Secretary designates the Office of Administrative Law Judges 
to act as the Review Board required under the Act to enforce the Act 
with respect to all applicable programs. The term applicable program is 
defined in section 400 of the General Education Provisions Act.

(Authority: 20 U.S.C. 1232g (f) and (g), 1234)

[53 FR 11943, Apr. 11, 1988, as amended at 58 FR 3189, Jan. 7, 1993]



Sec. 99.61  What responsibility does an educational agency or institution 
have concerning conflict with State or local laws?

    If an educational agency or institution determines that it cannot 
comply with the Act or this part due to a conflict with State or local 
law, it shall notify the Office within 45 days, giving the text and 
citation of the conflicting law.

(Authority: 20 U.S.C. 1232g(f))



Sec. 99.62  What information must an educational agency or institution 
submit to the Office?

    The Office may require an educational agency or institution to 
submit reports containing information necessary to resolve complaints 
under the Act and the regulations in this part.

(Authority: 20 U.S.C. 1232g (f) and (g))



Sec. 99.63  Where are complaints filed?

    A parent or eligible student may file a written complaint with the 
Office regarding an alleged violation under the Act and this part. The 
Office's address is: Family Policy Compliance Office, U.S. Department of 
Education, 400 Maryland Avenue, SW., Washington, DC 20202-4605.

(Authority: 20 U.S.C. 1232g(g))

[65 FR 41854, July 6, 2000]



Sec. 99.64  What is the complaint procedure?

    (a) A complaint filed under Sec. 99.63 must contain specific 
allegations of fact giving reasonable cause to believe that a violation 
of the Act or this part has occurred.
    (b) The Office investigates each timely complaint to determine 
whether the educational agency or institution has failed to comply with 
the provisions of the Act or this part.
    (c) A timely complaint is defined as an allegation of a violation of 
the Act that is submitted to the Office within 180 days of the date of 
the alleged violation or of the date that the complainant knew or 
reasonably should have known of the alleged violation.
    (d) The Office may extend the time limit in this section for good 
cause shown.

(Authority: 20 U.S.C. 1232g(f))

[53 FR 11943, Apr. 11, 1988, as amended at 58 FR 3189, Jan. 7, 1993; 65 
FR 41854, July 6, 2000]



Sec. 99.65  What is the content of the notice of complaint issued by the 
Office?

    (a) The Office notifies the complainant and the educational agency 
or institution in writing if it initiates an investigation of a 
complaint under Sec. 99.64(b). The notice to the educational agency or 
institution--
    (1) Includes the substance of the alleged violation; and
    (2) Asks the agency or institution to submit a written response to 
the complaint.
    (b) The Office notifies the complainant if it does not initiate an 
investigation of a complaint because the complaint fails to meet the 
requirements of Sec. 99.64.

(Authority: 20 U.S.C. 1232g(g))

[58 FR 3189, Jan. 7, 1993]



Sec. 99.66  What are the responsibilities of the Office in the enforcement 
process?

    (a) The Office reviews the complaint and response and may permit the 
parties to submit further written or oral arguments or information.
    (b) Following its investigation, the Office provides to the 
complainant and the educational agency or institution written notice of 
its findings and the basis for its findings.
    (c) If the Office finds that the educational agency or institution 
has not complied with the Act or this part, the notice under paragraph 
(b) of this section:

[[Page 330]]

    (1) Includes a statement of the specific steps that the agency or 
institution must take to comply; and
    (2) Provides a reasonable period of time, given all of the 
circumstances of the case, during which the educational agency or 
institution may comply voluntarily.

(Authority: 20 U.S.C. 1232g(f))



Sec. 99.67  How does the Secretary enforce decisions?

    (a) If the educational agency or institution does not comply during 
the period of time set under Sec. 99.66(c), the Secretary may, in 
accordance with part E of the General Education Provisions Act--
    (1) Withhold further payments under any applicable program;
    (2) Issue a compliant to compel compliance through a cease-and-
desist order; or
    (3) Terminate eligibility to receive funding under any applicable 
program.
    (b) If, after an investigation under Sec. 99.66, the Secretary 
finds that an educational agency or institution has complied voluntarily 
with the Act or this part, the Secretary provides the complainant and 
the agency or institution written notice of the decision and the basis 
for the decision.
    (Note: 34 CFR part 78 contains the regulations of the Education 
Appeal Board)

(Authority: 20 U.S.C. 1232g(f); 20 U.S.C. 1234)

[53 FR 11943, Apr. 11, 1988; 53 FR 19368, May 27, 1988, as amended at 58 
FR 3189, Jan. 7, 1993]

          Appendix A to Part 99--Crimes of Violence Definitions

                                  Arson

    Any willful or malicious burning or attempt to burn, with or without 
intent to defraud, a dwelling house, public building, motor vehicle or 
aircraft, personal property of another, etc.

                            Assault Offenses

    An unlawful attack by one person upon another.
    Note: By definition there can be no ``attempted'' assaults, only 
``completed'' assaults.
    (a) Aggravated Assault. An unlawful attack by one person upon 
another for the purpose of inflicting severe or aggravated bodily 
injury. This type of assault usually is accompanied by the use of a 
weapon or by means likely to produce death or great bodily harm. (It is 
not necessary that injury result from an aggravated assault when a gun, 
knife, or other weapon is used which could and probably would result in 
serious injury if the crime were successfully completed.)
    (b) Simple Assault. An unlawful physical attack by one person upon 
another where neither the offender displays a weapon, nor the victim 
suffers obvious severe or aggravated bodily injury involving apparent 
broken bones, loss of teeth, possible internal injury, severe 
laceration, or loss of consciousness.
    (c) Intimidation. To unlawfully place another person in reasonable 
fear of bodily harm through the use of threatening words or other 
conduct, or both, but without displaying a weapon or subjecting the 
victim to actual physical attack.

    Note: This offense includes stalking.

                                Burglary

    The unlawful entry into a building or other structure with the 
intent to commit a felony or a theft.

              Criminal Homicide--Manslaughter by Negligence

    The killing of another person through gross negligence.

         Criminal Homicide--Murder and Nonnegligent Manslaughter

    The willful (nonnegligent) killing of one human being by another.

                Destruction/Damage/Vandalism of Property

    To willfully or maliciously destroy, damage, deface, or otherwise 
injure real or personal property without the consent of the owner or the 
person having custody or control of it.

                          Kidnapping/Abduction

    The unlawful seizure, transportation, or detention of a person, or 
any combination of these actions, against his or her will, or of a minor 
without the consent of his or her custodial parent(s) or legal guardian.

    Note: Kidnapping/Abduction includes hostage taking.

                                 Robbery

    The taking of, or attempting to take, anything of value under 
confrontational circumstances from the control, custody, or care of a 
person or persons by force or threat of force or violence or by putting 
the victim in fear.

    Note: Carjackings are robbery offenses where a motor vehicle is 
taken through force or threat of force.

[[Page 331]]

                         Sex Offenses, Forcible

    Any sexual act directed against another person, forcibly or against 
that person's will, or both; or not forcibly or against the person's 
will where the victim is incapable of giving consent.
    (a) Forcible Rape (Except ``Statutory Rape''). The carnal knowledge 
of a person, forcibly or against that person's will, or both; or not 
forcibly or against the person's will where the victim is incapable of 
giving consent because of his or her temporary or permanent mental or 
physical incapacity (or because of his or her youth).
    (b) Forcible Sodomy. Oral or anal sexual intercourse with another 
person, forcibly or against that person's will, or both; or not forcibly 
or against the person's will where the victim is incapable of giving 
consent because of his or her youth or because of his or her temporary 
or permanent mental or physical incapacity.
    (c) Sexual Assault With An Object. To use an object or instrument to 
unlawfully penetrate, however slightly, the genital or anal opening of 
the body of another person, forcibly or against that person's will, or 
both; or not forcibly or against the person's will where the victim is 
incapable of giving consent because of his or her youth or because of 
his or her temporary or permanent mental or physical incapacity.

    Note: An ``object'' or ``instrument'' is anything used by the 
offender other than the offender's genitalia. Examples are a finger, 
bottle, handgun, stick, etc.

    (d) Forcible Fondling. The touching of the private body parts of 
another person for the purpose of sexual gratification, forcibly or 
against that person's will, or both; or not forcibly or against the 
person's will where the victim is incapable of giving consent because of 
his or her youth or because of his or her temporary or permanent mental 
or physical incapacity.

    Note: Forcible Fondling includes ``Indecent Liberties'' and ``Child 
Molesting.''

       Nonforcible Sex Offenses (Except ``Prostitution Offenses'')

    Unlawful, nonforcible sexual intercourse.
    (a) Incest. Nonforcible sexual intercourse between persons who are 
related to each other within the degrees wherein marriage is prohibited 
by law.
    (b) Statutory Rape. Nonforcible sexual intercourse with a person who 
is under the statutory age of consent.

(Authority: 20 U.S.C. 1232g(b)(6) and 18 U.S.C. 16)

[65 FR 41854, July 6, 2000]

[[Page 333]]

  Subtitle B--Regulations of the Offices of the Department of Education

[[Page 335]]



       CHAPTER I--OFFICE FOR CIVIL RIGHTS, DEPARTMENT OF EDUCATION




  --------------------------------------------------------------------
Part                                                                Page
100             Nondiscrimination under programs receiving 
                    Federal assistance through the 
                    Department of Education effectuation of 
                    title VI of the Civil Rights Act of 1964         337
101             Practice and procedure for hearings under 
                    part 100 of this title..................         358
104             Nondiscrimination on the basis of handicap 
                    in programs or activities receiving 
                    Federal financial assistance............         369
105             Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by the Department 
                    of Education............................         402
106             Nondiscrimination on the basis of sex in 
                    education programs or activities 
                    receiving Federal financial assistance..         408
110             Nondiscrimination on the basis of age in 
                    programs or activities receiving Federal 
                    financial assistance....................         427

[[Page 337]]



PART 100_NONDISCRIMINATION UNDER PROGRAMS RECEIVING FEDERAL ASSISTANCE 

THROUGH THE DEPARTMENT OF EDUCATION EFFECTUATION OF TITLE VI OF THE CIVIL 
RIGHTS ACT OF 1964--Table of Contents




Sec.
100.1 Purpose.
100.2 Application of this regulation.
100.3 Discrimination prohibited.
100.4 Assurances required.
100.5 Illustrative application.
100.6 Compliance information.
100.7 Conduct of investigations.
100.8 Procedure for effecting compliance.
100.9 Hearings.
100.10 Decisions and notices.
100.11 Judicial review.
100.12 Effect on other regulations; forms and instructions.
100.13 Definitions.

Appendix A to Part 100--Federal Financial Assistance to Which These 
          Regulations Apply
Appendix B to Part 100--Guidelines for Eliminating Discrimination and 
          Denial of Services on the Basis of Race, Color, National 
          Origin, Sex, and Handicap in Vocational Education Programs

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

    Source: 45 FR 30918, May 9, 1980, unless otherwise noted.



Sec. 100.1  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 the ``Act'') 
to the end that no person in the United States shall; on the ground of 
race, color, or national origin, be excluded from participation in, be 
denied the benefits of, or be otherwise subjected to discrimination 
under any program or activity receiving Federal financial assistance 
from the Department of Education.

(Authority: Sec. 601, Civil Rights Act of 1964; 78 Stat. 252; 42 U.S.C. 
2000d)



Sec. 100.2  Application of this regulation.

    This regulation applies to any program to which Federal financial 
assistance is authorized to be extended to a recipient under a law 
administered by the Department, including the Federal financial 
assistance listed in appendix A of this regulation. It applies to money 
paid, property transferred, or other Federal financial assistance 
extended after the effective date of the regulation pursuant to an 
application approved prior to such effective date. This regulation does 
not apply to (a) any Federal financial assistance by way of insurance or 
guaranty contracts, (b) money paid, property transferred, or other 
assistance extended before the effective date of this regulation, (c) 
the use of any assistance by any individual who is the ultimate 
beneficiary, or (d) any employment practice, or any employer, employment 
agency, or labor organization, except to the extent described in Sec. 
100.3. The fact that a type of Federal assistance is not listed in 
appendix A shall not mean, if title VI of the Act is otherwise 
applicable, that a program is not covered. Federal financial assistance 
under statutes now in force or hereinafter enacted may be added to this 
list by notice published in the Federal Register.

(Authority: Secs. 602, 604, Civil Rights Act of 1964; 78 Stat. 252, 253; 
42 U.S.C. 2000d-1, 2000d-3)

[45 FR 30918, May 9, 1980, as amended at 65 FR 68053, Nov. 13, 2000]



Sec. 100.3  Discrimination prohibited.

    (a) General. No person in the United States shall, on the ground of 
race, color, or national origin be excluded from participation in, be 
denied the benefits of, or be otherwise subjected to discrimination 
under any program to which this part applies.
    (b) Specific discriminatory actions prohibited. (1) A recipient 
under any program to which this part applies may not, directly or 
through contractual or other arrangements, on ground of race, color, or 
national origin:
    (i) Deny an individual any service, financial aid, or other benefit 
provided under the program;
    (ii) Provide any service, financial aid, or other benefit to an 
individual which is different, or is provided in a different manner, 
from that provided to others under the program;
    (iii) Subject an individual to segregation or separate treatment in 
any matter related to his receipt of any service, financial aid, or 
other benefit under the program;

[[Page 338]]

    (iv) Restrict an individual in any way in the enjoyment of any 
advantage or privilege enjoyed by others receiving any service, 
financial aid, or other benefit under the program;
    (v) Treat an individual differently from others in determining 
whether he satisfies any admission, enrollment, quota, eligibility, 
membership or other requirement or condition which individuals must meet 
in order to be provided any service, financial aid, or other benefit 
provided under the program;
    (vi) Deny an individual an opportunity to participate in the program 
through the provision of services or otherwise or afford him an 
opportunity to do so which is different from that afforded others under 
the program (including the opportunity to participate in the program as 
an employee but only to the extent set forth in paragraph (c) of this 
section).
    (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 any 
such program, or the class of individuals to whom, or the situations in 
which, such services, financial aid, other benefits, or facilities will 
be provided under any such program, or the class of individuals to be 
afforded an opportunity to participate in any such program, may not, 
directly or through contractual or other arrangements, utilize criteria 
or methods of administration which have the effect of subjecting 
individuals 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 as respect individuals 
of a particular race, color, or national origin.
    (3) In determining the site or location of a facilities, an 
applicant or recipient may not make selections with the effect of 
excluding individuals from, denying them the benefits of, or subjecting 
them to discrimination under any programs to which this regulation 
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 the Act or this regulation.
    (4) As used in this section, the services, financial aid, or other 
benefits provided under a program receiving Federal financial assistance 
shall be deemed to include any service, financial aid, or other benefits 
provided in or through a facility provided with the aid of Federal 
financial assistance.
    (5) The enumeration of specific forms of prohibited discrimination 
in this paragraph and paragraph (c) of this section does not limit the 
generality of the prohibition in paragraph (a) of this section.
    (6)(i) In administering a program regarding which the recipient has 
previously discriminated against persons on the ground of race, color, 
or national origin, the recipient must take affirmative action to 
overcome the effects of prior discrimination.
    (ii) Even in the absence of such prior discrimination, a recipient 
in administering a program may take affirmative action to overcome the 
effects of conditions which resulted in limiting participation by 
persons of a particular race, color, or national origin.
    (c) Employment practices. (1) Where a primary objective of the 
Federal financial assistance to a program to which this regulation 
applies is to provide employment, a recipient may not (directly or 
through contractual or other arrangements) subject an individual to 
discrimination on the ground of race, color, or national origin in its 
employment practices under such program (including recruitment or 
recruitment advertising, employment, layoff or termination, upgrading, 
demotion, or transfer, rates of pay or other forms of compensation, and 
use of facilities), including programs where a primary objective of the 
Federal financial assistance is (i) to reduce the employment of such 
individuals or to help them through employment to meet subsistence 
needs, (ii) to assist such individuals through employment to meet 
expenses incident to the commencement or continuation of their education 
or training, (iii) to provide work experience which contributes to the 
education or training of

[[Page 339]]

such individuals, or (iv) to provide remunerative activity to such 
individuals who because of handicaps cannot be readily absorbed in the 
competitive labor market. The following, under existing laws, have one 
of the above objectives as a primary objective:
    (A) Projects under the Public Works Acceleration Act, Pub. L. 87-
658, 42 U.S.C. 2641-2643.
    (B) Work-study under the Vocational Education Act of 1963, as 
amended, 20 U.S.C. 1371-1374.
    (C) Programs assisted under laws listed in appendix A as respects 
employment opportunities provided thereunder, or in facilities provided 
thereunder, which are limited, or for which preference is given, to 
students, fellows, or other persons in training for the same or related 
employments.
    (D) Assistance to rehabilitation facilities under the Vocational 
Rehabilitation Act, 29 U.S.C. 32-34, 41a and 41b.
    (2) The requirements applicable to construction employment under any 
such program shall be those specified in or pursuant to Part III of 
Executive Order 11246 or any Executive order which supersedes it.
    (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 
or other persons subject to the regulation tends, on the ground of race, 
color, or national origin, to exclude individuals from participation in, 
to deny them the benefits of, or to subject them to discrimination under 
any program to which this regulation applies, the foregoing provisions 
of this paragraph (c) shall apply to the employment practices of the 
recipient or other persons subject to the regulation, to the extent 
necessary to assure equality of opportunity to, and nondiscriminatory 
treatment of, beneficiaries.
    (d) Indian health and Cuban refugee services. An individual shall 
not be deemed subjected to discrimination by reason of his exclusion 
from benefits limited by Federal law to individuals of a particular 
race, color, or national origin different from his.
    (e) Medical emergencies. Notwithstanding the foregoing provisions of 
this section, a recipient of Federal financial assistance shall not be 
deemed to have failed to comply with paragraph (a) of this section if 
immediate provision of a service or other benefit to an individual is 
necessary to prevent his death or serious impairment of his health, and 
such service or other benefit cannot be provided except by or through a 
medical institution which refuses or fails to comply with paragraph (a) 
of this section.

(Authority: Sec. 601, 602, 604, Civil Rights Act of 1964; 78 Stat. 252, 
253, 42 U.S.C. 2000d, 2000d-1, 2000d-3)

[45 FR 30918, May 9, 1980, as amended at 65 FR 68053, Nov. 13, 2000]



Sec. 100.4  Assurances required.

    (a) General. (1) Every application for Federal financial assistance 
to which this part applies, except an application to which paragraph (b) 
of this section applies, and every application for Federal financial 
assistance to provide a facility shall, as a condition to its approval 
and the extension of any Federal financial assistance pursuant to the 
application, contain or be accompanied by an assurance that the program 
will be conducted or the facility operated in compliance with all 
requirements imposed by or pursuant to this part. In the case of an 
application for Federal financial assistance to provide real property or 
structures thereon, the 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 for a purpose for which 
the Federal financial assistance is extended or for another purpose 
involving the provision of similar services or benefits. In the case of 
personal property the assurance shall obligate the recipient for the 
period during which he retains ownership or possession of the property. 
In all other cases the assurance shall obligate the recipient for the 
period during which Federal financial assistance is extended pursuant to 
the application. The responsible Department official shall specify the 
form of the foregoing assurances, and the extent to which like 
assurances will be required of subgrantees, contractors and 
subcontractors, transferees, successors in interest, and other

[[Page 340]]

participants. Any such assurance shall include provisions which give the 
United States a right to seek its judicial enforcement.
    (2) Where Federal financial assistance is provided in the form of a 
transfer of real property or interest therein from the Federal 
Government the instrument effecting or recording the transfer shall 
contain a covenant running with the land to assure nondiscrimination for 
the period during which the real 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. Where 
no transfer of property is involved but property is improved with 
Federal financial assistance, the recipient shall agree to include such 
a covenant to any subsequent transfer of the property. Where the 
property is obtained from the Federal Government, such covenant may also 
include a condition coupled with a right to be reserved by the 
Department to revert title to the property in the event of a breach of 
the covenant where, in the discretion of the responsible Department 
official, such a condition and right of reverter is appropriate to the 
statute 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 such property for the purposes for which the property was 
transferred, the responsible Department official may agree, upon request 
of the transferee and if necessary to accomplish such financing, and 
upon such conditions as he deems appropriate, to forbear the exercise of 
such right to revert title for so long as the lien of such mortgage or 
other encumbrance remains effective.
    (b) Continuing Federal financial assistance. Every application by a 
State or a State agency for continuing Federal financial assistance to 
which this regulation applies (including the Federal financial 
assistance listed in part 2 of appendix A) shall as a condition to its 
approval and the extension of any 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 all requirements imposed by or pursuant to this 
regulation, and (2) provide or be accompanied by provision for such 
methods of administration for the program as are found by the 
responsible Department official to give reasonable assurance that the 
applicant and all recipients of Federal financial assistance under such 
program will comply with all requirements imposed by or pursuant to this 
regulation.
    (c) Elementary and secondary schools. The requirements of paragraph 
(a) or (b) of this section with respect to any elementary or secondary 
school or school system shall be deemed to be satisfied if such school 
or school system (1) is subject to a final order of a court of the 
United States for the desegregation of such school or school system, and 
provides an assurance that it will comply with such order, including any 
future modification of such order, or (2) submits a plan for the 
desegregation of such school or school system which the responsible 
Department official determines is adequate to accomplish the purposes of 
the Act and this part, at the earliest practicable time, and provides 
reasonable assurance that it will carry out such plan; in any case of 
continuing Federal financial assistance the responsible Department 
official may reserve the right to redetermine, after such period as may 
be specified by him, the adequacy of the plan to accomplish the purposes 
of the Act and the regulations in this part. In any case in which a 
final order of a court of the United States for the desegregation of 
such school or school system is entered after submission of such a plan, 
such plan shall be revised to conform to such final order, including any 
future modification of such order.
    (d) Assurance from institutions. (1) In the case of any application 
for Federal financial assistance to an institution of higher education 
(including assistance for construction, for research, for special 
training project, for student loans

[[Page 341]]

or for any other purpose), the assurance required by this section shall 
extend to admission practices and to all other practices relating to the 
treatment of students.
    (2) The assurance required with respect to an institution of higher 
education, hospital, or any other institution, insofar as the assurance 
relates to the institution's practices with respect to admission or 
other treatment of individuals as students, patients, or clients of the 
institution or to the opportunity to participate in the provision of 
services or other benefits to such individuals, shall be applicable to 
the entire institution.

(Authority: Sec. 601, 602, Civil Rights Act of 1964; 78 Stat. 252; 42 
U.S.C. 2000d, 2000d-1. Sec. 182; 80 Stat. 1209; 42 U.S.C. 2000d-5)

[45 FR 30918, May 9, 1980, as amended at 65 FR 68053, Nov. 13, 2000]



Sec. 100.5  Illustrative application.

    The following examples will illustrate the programs aided by Federal 
financial assistance of the Department. (In all cases the discrimination 
prohibited is discrimination on the ground of race, color, or national 
origin prohibited by title VI of the Act and this regulation, as a 
condition of the receipt of Federal financial assistance).
    (a) In federally-affected area assistance (Pub. L. 815 and Pub. L. 
874) for construction aid and for general support of the operation of 
elementary or secondary schools, or in more limited support to such 
schools such as for the acquisition of equipment, the provision of 
vocational education, or the provision of guidance and counseling 
services, discrimination by the recipient school district in any of its 
elementary or secondary schools in the admission of students, or in the 
treatment of its students in any aspect of the educational process, is 
prohibited. In this and the following illustrations the prohibition of 
discrimination in the treatment of students or other trainees includes 
the prohibition of discrimination among the students or trainees in the 
availability or use of any academic, dormitory, eating, recreational, or 
other facilities of the grantee or other recipient.
    (b) In a research, training, demonstration, or other grant to a 
university for activities to be conducted in a graduate school, 
discrimination in the admission and treatment of students in the 
graduate school is prohibited, and the prohibition extends to the entire 
university.
    (c) In a training grant to a hospital or other nonacademic 
institution, discrimination is prohibited in the selection of 
individuals to be trained and in their treatment by the grantee during 
their training. In a research or demonstration grant to such an 
institution discrimination is prohibited with respect to any educational 
activity and any provision of medical or other services and any 
financial aid to individuals incident to the program.
    (d) In grants to assist in the construction of facilities for the 
provision of health, educational or welfare services, assurances will be 
required that services will be provided without discrimination, to the 
same extent that discrimination would be prohibited as a condition of 
Federal operating grants for the support of such services. Thus, as a 
condition of grants for the construction of academic, research, or other 
facilities at institutions of higher education, assurances will be 
required that there will be no discrimination in the admission or 
treatment of students.
    (e) Upon transfers of real or personal surplus property for 
educational uses, discrimination is prohibited to the same extent as in 
the case of grants for the construction of facilities or the provision 
of equipment for like purposes.
    (f) Each applicant for a grant for the construction of educational 
television facilities is required to provide an assurance that it will, 
in its broadcast services, give due consideration to the interests of 
all significant racial or ethnic groups within the population to be 
served by the applicant.
    (g) A recipient may not take action that is calculated to bring 
about indirectly what this regulation forbids it to accomplish directly. 
Thus, a State, in selecting or approving projects or sites for the 
construction of public libraries which will receive Federal financial 
assistance, may not base its selections or approvals on criteria which

[[Page 342]]

have the effect of defeating or of substantially impairing 
accomplishments of the objectives of the Federal assistance as respects 
individuals of a particular race, color or national origin.
    (h) In some situations, even though past discriminatory practices 
attributable to a recipient or applicant have been abandoned, the 
consequences of such practices continue to impede the full availability 
of a benefit. If the efforts required of the applicant or recipient 
under Sec. 100.6(d), to provide information as to the availability of 
the program or activity and the rights of beneficiaries under this 
regulation, have failed to overcome these consequences, it will become 
necessary under the requirement stated in paragraph (i) of Sec. 
100.3(b)(6) for such applicant or recipient to take additional steps to 
make the benefits fully available to racial and nationality groups 
previously subject to discrimination. This action might take the form, 
for example, of special arrangements for obtaining referrals or making 
selections which will insure that groups previously subjected to 
discrimination are adequately served.
    (i) Even though an applicant or recipient has never used 
discriminatory policies, the services and benefits of the program or 
activity it administers may not in fact be equally available to some 
racial or nationality groups. In such circumstances, an applicant or 
recipient may properly give special consideration to race, color, or 
national origin to make the benefits of its program more widely 
available to such groups, not then being adequately served. For example, 
where a university is not adequately serving members of a particular 
racial or nationality group, it may establish special recruitment 
policies to make its program better known and more readily available to 
such group, and take other steps to provide that group with more 
adequate service.

(Authority: Sec. 601, 602, Civil Rights Act of 1964; 78 Stat. 252; 42 
U.S.C. 2000d, 2000d-1)

[45 FR 30918, May 9, 1980, as amended at 65 FR 68053, Nov. 13, 2000]



Sec. 100.6  Compliance information.

    (a) Cooperation and assistance. The responsible Department official 
shall to the fullest extent practicable 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 such records and 
submit to the responsible Department official or his designee timely, 
complete and accurate compliance reports at such times, and in such form 
and containing such information, as the responsible Department official 
or his designee may determine to be necessary to enable him to ascertain 
whether the recipient has complied or is complying with this part. For 
example, recipients should have available for the Department racial and 
ethnic data showing the extent to which members of minority groups are 
beneficiaries of and participants in federally-assisted programs. In the 
case in which a primary recipient extends Federal financial assistance 
to any other recipient, such other recipient shall also submit such 
compliance reports to the primary recipient as may be necessary to 
enable the primary recipient to carry out its obligations under this 
part.
    (c) Access to sources of information. Each recipient shall permit 
access by the responsible Department official or his designee during 
normal business hours to such of its books, records, accounts, and other 
sources of information, and its facilities as may be pertinent to 
ascertain compliance with this part. Where any information required of a 
recipient is in the exclusive possession of any other agency, 
institution or person and this agency, institution or person shall fail 
or refuse 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. Asserted considerations of privacy or confidentiality may 
not operate to bar the Department from evaluating or seeking to enforce 
compliance with this part. Information of a confidential nature obtained 
in connection with compliance evaluation or enforcement shall not be 
disclosed except where necessary in formal enforcement proceedings or 
where otherwise required by law.

[[Page 343]]

    (d) Information to beneficiaries and participants. Each recipient 
shall make available to participants, beneficiaries, and other 
interested persons such information regarding the provisions of this 
regulation and its applicability to the program for which the recipient 
receives Federal financial assistance, and make such information 
available to them in such manner, as the responsible Department official 
finds necessary to apprise such persons of the protections against 
discrimination assured them by the Act and this regulation.

(Approved by the Office of Management and Budget under control number 
1870-0500)

(Authority: Sec. 601, 602, Civil Rights Act of 1964; 78 Stat. 252; 42 
U.S.C. 2000d, 2000d-1)

[45 FR 30918, May 9, 1980, as amended at 53 FR 49143, Dec. 6, 1988; 65 
FR 68053, Nov. 13, 2000]



Sec. 100.7  Conduct of investigations.

    (a) Periodic compliance reviews. The responsible Department official 
or his designee shall 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 individuals to be subjected to discrimination prohibited by 
this part may by himself or by a representative file with the 
responsible Department official or his designee a written complaint. A 
complaint must be filed not later than 180 days from the date of the 
alleged discrimination, unless the time for filing is extended by the 
responsible Department official or his designee.
    (c) Investigations. The responsible Department official or his 
designee will make a prompt investigation whenever a compliance review, 
report, complaint, or any other information indicates a possible failure 
to comply with this part. The investigation should include, where 
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, the responsible Department official or his designee will so inform 
the recipient and the matter will be resolved by informal means whenever 
possible. If it has been determined that the matter cannot be resolved 
by informal means, action will be taken as provided for in Sec. 100.8.
    (2) If an investigation does not warrant action pursuant to 
paragraph (1) of this paragraph (d) the responsible Department official 
or his designee will so inform the recipient and the complainant, if 
any, in writing.
    (e) Intimidatory or retaliatory acts prohibited. No recipient or 
other person shall intimidate, threaten, coerce, or discriminate against 
any individual for the purpose of interfering with any right or 
privilege secured by section 601 of the Act or 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 any investigation, hearing, or judicial proceeding arising 
thereunder.

(Authority: Sec. 601, 602, Civil Rights Act of 1964; 78 Stat. 252; 42 
U.S.C. 2000d, 2000d-1)



Sec. 100.8  Procedure for effecting compliance.

    (a) General. If there appears to be a failure or threatened failure 
to comply with this regulation, 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 any other 
means authorized by law. Such other means may include, but are not 
limited to, (1) a reference to the Department of Justice with a 
recommendation that appropriate proceedings be brought to enforce any 
rights of the United States under any law of the United States 
(including other titles of the Act), or any assurance or other 
contractual undertaking,

[[Page 344]]

and (2) any applicable proceeding under State or local law.
    (b) Noncompliance with Sec. 100.4. If an applicant fails or refuses 
to furnish an assurance required under Sec. 100.4 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. The Department shall 
not be required to provide assistance in such a case during the pendency 
of the administrative proceedings under such paragraph except that the 
Department shall continue assistance during the pendency of such 
proceedings where such assistance is due and payable pursuant to an 
application therefor approved prior to the effective date of this part.
    (c) Termination of or refusal to grant or to continue Federal 
financial assistance. No order suspending, terminating or refusing to 
grant or continue Federal financial assistance shall become effective 
until (1) the responsible Department official has advised the applicant 
or recipient of his failure to comply and has determined that compliance 
cannot be secured by 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 expiration of 30 days after the Secretary 
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 such action. Any 
action to suspend or terminate or to 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 such a finding has been made and shall be limited in its effect to 
the particular program, or part thereof, in which such noncompliance has 
been so found.
    (d) Other means authorized by law. No action to effect compliance by 
any other means authorized by law shall be taken until (1) the 
responsible Department official 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 such notice to the recipient or other 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 
such corrective action as may be appropriate.

(Authority: Sec. 601, 602, Civil Rights Act of 1964; 78 Stat. 252; 42 
U.S.C. 2000d, 2000d-1. Sec. 182, 80 Stat. 1209; 42 U.S.C. 2000d-5)



Sec. 100.9  Hearings.

    (a) Opportunity for hearing. Whenever an opportunity for a hearing 
is required by Sec. 100.8(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 such notice 
within which the applicant or recipient may request of the responsible 
Department official 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 place and time. The time and place so 
fixed shall be reasonable and shall be 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 for which a date has been 
set shall be deemed to be a waiver of the right to a hearing under 
section 602 of the Act and Sec. 100.8(c) of this regulation and consent 
to the making of a decision on the basis of such information as may be 
filed as the record.
    (b) Time and place of hearing. Hearings shall be held at the offices 
of the Department in Washington, DC, at a time fixed by the responsible 
Department official unless he determines that

[[Page 345]]

the convenience of the applicant or recipient or of the Department 
requires that another place be selected. Hearings shall be held before a 
hearing examiner designated in accordance with 5 U.S.C. 3105 and 3344 
(section 11 of the Administrative Procedure Act).
    (c) Right to counsel. In all proceedings under this section, the 
applicant or recipient and the Department shall have the right to be 
represented by counsel.
    (d) Procedures, evidence, and record. (1) The hearing, decision, and 
any administrative review thereof shall be conducted in conformity with 
sections 5-8 of the Administrative Procedure Act, and in accordance with 
such 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 for in paragraph (a) of this section, 
taking of testimony, exhibits, arguments and briefs, requests for 
findings, and other related matters. Both the Department and the 
applicant or recipient shall be entitled to introduce all 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. Any person (other than a Government employee 
considered to be on official business) who, having been invited or 
requested to appear and testify as a witness on the Government's behalf, 
attends at a time and place scheduled for a hearing provided for by this 
part, may be reimbursed for his travel and actual expenses of attendance 
in an amount not to exceed the amount payable under the standardized 
travel regulations to a Government employee traveling on official 
business.
    (2) Technical rules of evidence shall 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 reasonably 
necessary by the officer conducting the hearing. The hearing officer may 
exclude irrelevant, immaterial, or unduly repetitious evidence. All 
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. All decisions shall be 
based upon 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 
regulation with respect to two or more Federal assistance statutes 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 of the Act, the responsible Department official may, by 
agreement with such other departments or agencies where applicable, 
provide for the conduct of consolidated or joint hearings, and for the 
application to such hearings of rules of procedures not inconsistent 
with this part. Final decisions in such cases, insofar as this 
regulation is concerned, shall be made in accordance with Sec. 100.10.

(Authority: Sec. 602, Civil Rights Act of 1964; 78 Stat. 252; 42 U.S.C. 
2000d-1)

[45 FR 30918, May 9, 1980, as amended at 65 FR 68054, Nov. 13, 2000]



Sec. 100.10  Decisions and notices.

    (a) Decisions by hearing examiners. After a hearing is held by a 
hearing examiner such 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 reviewing authority 
for a final decision, and a copy of such initial decision or 
certification shall be mailed to the applicant or recipient and to the 
complainant, if any. Where the initial decision referred to in this 
paragraph or in paragraph (c) of this section is made by the hearing 
examiner, the applicant or recipient or the counsel for the Department 
may, within the period provided for in the rules of procedure issued by 
the responsible Department official, file with the reviewing authority 
exceptions to the initial decision, with his reasons therefor. Upon the 
filing of such exceptions the reviewing authority shall review the 
initial decision and issue its own decision thereof including the 
reasons therefor. In the absence of exceptions

[[Page 346]]

the initial decision shall constitute the final decision, subject to the 
provisions of paragraph (e) of this section.
    (b) Decisions on record or review by the reviewing authority. 
Whenever a record is certified to the reviewing authority for decision 
or it reviews the decision of a hearing examiner pursuant to paragraph 
(a) or (c) of this section, the applicant or recipient shall be given 
reasonable opportunity to file with it briefs or other written 
statements of its contentions, and a copy of the final decision of the 
reviewing authority shall be given in writing to the applicant or 
recipient and to the complainant, if any.
    (c) Decisions on record where a hearing is waived. Whenever a 
hearing is waived pursuant to Sec. 100.9(a) the reviewing authority 
shall make its final decision on the record or refer the matter to a 
hearing examiner for an initial decision to be made on the record. A 
copy of such decision shall be given in writing to the applicant or 
recipient, and to the complainant, if any.
    (d) Rulings required. Each decision of a hearing examiner or 
reviewing authority 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) Review in certain cases by the Secretary. If the Secretary has 
not personally made the final decision referred to in paragraphs (a), 
(b), or (c) of this section, a recipient or applicant or the counsel for 
the Department may request the Secretary to review a decision of the 
Reviewing Authority in accordance with rules of procedure issued by the 
responsible Department official. Such review is not a matter of right 
and shall be granted only where the Secretary determines there are 
special and important reasons therefor. The Secretary may grant or deny 
such request, in whole or in part. He may also review such a decision 
upon his own motion in accordance with rules of procedure issued by the 
responsible Department official. In the absence of a review under this 
paragraph, a final decision referred to in paragraphs (a), (b), (c) of 
this section shall become the final decision of the Department when the 
Secretary transmits it as such to Congressional committees with the 
report required under section 602 of the Act. Failure of an applicant or 
recipient to file an exception with the Reviewing Authority or to 
request review under this paragraph shall not be deemed a failure to 
exhaust administrative remedies for the purpose of obtaining judicial 
review.
    (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, to which this regulation applies, and 
may contain such terms, conditions, and other provisions as are 
consistent with and will effectuate the purposes of the Act and this 
regulation, including provisions designed to assure that no Federal 
financial assistance to which this regulation applies will thereafter be 
extended under such law or laws to the applicant or recipient determined 
by such decision to be in default in its performance of an assurance 
given by it pursuant to this regulation, or to have otherwise failed to 
comply with this regulation unless and until it corrects its 
noncompliance and satisfies the responsible Department official that it 
will fully comply with this regulation.
    (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 that 
order for such eligibility or if it brings itself into compliance with 
this part and provides reasonable assurance that it will fully comply 
with this part. An elementary or secondary school or school system which 
is unable to file an assurance of compliance with Sec. 100.3 shall be 
restored to full eligibility to receive Federal financial assistance, if 
it files a court order or a plan for desegregation which meets the 
requirements of Sec. 100.4(c), and provides reasonable assurance that 
it will comply with the court order or plan.
    (2) Any applicant or recipient adversely affected by an order 
entered

[[Page 347]]

pursuant to paragraph (f) of this section may at any time request the 
responsible Department official to restore fully its eligibility to 
receive Federal financial assistance. Any such request shall be 
supported by information showing that the applicant or recipient has met 
the requirements of paragraph (g)(1) of this section. If the responsible 
Department official determines that those requirements have been 
satisfied, he shall restore such eligibility.
    (3) If the responsible Department official denies any such request, 
the applicant or recipient may submit a request for a hearing in 
writing, specifying why it believes such official to have been in error. 
It shall thereupon be given an expeditious hearing, with a decision on 
the record, in accordance with rules of procedure issued by the 
responsible Department official. The applicant or recipient will be 
restored to such eligibility if it proves at such 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 shall remain in 
effect.

(Authority: Sec. 602, Civil Rights Act of 1964; 78 Stat. 252; 42 U.S.C. 
2000d-1)



Sec. 100.11  Judicial review.

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

(Authority: Sec. 603, 78 Stat. 253; 42 U.S.C. 2000d-2)



Sec. 100.12  Effect on other regulations; forms and instructions.

    (a) Effect on other regulations. All regulations, orders, or like 
directions heretofore issued by any officer of the Department which 
impose requirements designed to prohibit any discrimination against 
individuals on the ground of race, color, or national origin under any 
program to which this regulation applies, and which authorize the 
suspension or termination of or refusal to grant or to continue Federal 
financial assistance to any applicant for or recipient of assistance for 
failure to comply with such requirements, are hereby superseded to the 
extent that such discrimination is prohibited by this regulation, except 
that nothing in this regulation shall be deemed to relieve any person of 
any obligation assumed or imposed under any such superseded regulation, 
order, instruction, or like direction prior to the effective date of 
this regulation. Nothing in this regulation, however, shall be deemed to 
supersede any of the following (including future amendments thereof):
    (1) Executive Order 11063 and regulations issued thereunder, or any 
other regulations or instructions, insofar as such Order, regulations, 
or instructions prohibit discrimination on the ground of race, color, or 
national origin in any program or situation to which this regulation is 
inapplicable, or prohibit discrimination on any other ground; or
    (2) Requirements for Emergency School Assistance as published in 35 
FR 13442 and codified as 34 CFR part 280.
    (b) Forms and instructions. The responsible Department official 
shall issue and promptly make available to interested persons forms and 
detailed instructions and procedures for effectuating this part.
    (c) Supervision and coordination. The responsible Department 
official may from time to time assign to officials of the Department, or 
to officials of other departments or agencies of the Government with the 
consent of such departments or agencies, responsibilities in connection 
with the effectuation of the purposes of title VI of the Act and this 
regulation (other than responsibility for review as provided in Sec. 
100.10(e)), including the achievements of effective coordination and 
maximum uniformity within the Department and within the Executive Branch 
of the Government in the application of title VI and this regulation to 
similar programs and in similar situations. Any action taken, 
determination made, or requirement imposed by an official of another 
Department or Agency acting pursuant to an assignment of responsibility 
under this section shall have the same effect as though such action had 
been taken by the responsible official of this Department.

(Authority: Sec. 602, Civil Rights Act of 1964; 78 Stat. 252; 42 U.S.C. 
2000d-1)

[[Page 348]]



Sec. 100.13  Definitions.

    As used in this part:
    (a) The term Department means the Department of Education.
    (b) The term Secretary means the Secretary of Education.
    (c) The term responsible Department official means the Secretary or, 
to the extent of any delegation by the Secretary of authority to act in 
his stead under any one or more provisions of this part, any person or 
persons to whom the Secretary has heretofore delegated, or to whom the 
Secretary may hereafter delegate such authority.
    (d) The term reviewing authority means the Secretary, or any person 
or persons (including a board or other body specially created for that 
purpose and also including the responsible Department official) acting 
pursuant to authority delegated by the Secretary to carry out 
responsibilities under Sec. 100.10(a)-(d).
    (e) The term United States means the States of the United States, 
the District of Columbia, Puerto Rico, the Virgin Islands, American 
Samoa, Guam, Wake Island, the Canal Zone, and the territories and 
possessions of the United States, and the term ``State'' means any one 
of the foregoing.
    (f) The term 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, (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 such 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 such 
sale or lease to the recipient, and (5) any Federal agreement, 
arrangement, or other contract which has as one of its purposes the 
provision of assistance.
    (g) The term program or activity and the term program mean all of 
the operations of--
    (1)(i) A department, agency, special purpose district, or other 
instrumentality of a State or of a local government; or
    (ii) The entity of such State or local government that distributes 
such assistance and each such department or agency (and each other State 
or local government entity) to which the assistance is extended, in the 
case of assistance to a State or local government;
    (2)(i) A college, university, or other postsecondary institution, or 
a public system of higher education; or
    (ii) A local educational agency (as defined in 20 U.S.C. 8801), 
system of vocational education, or other school system;
    (3)(i) An entire corporation, partnership, or other private 
organization, or an entire sole proprietorship--
    (A) If assistance is extended to such corporation, partnership, 
private organization, or sole proprietorship as a whole; or
    (B) Which is principally engaged in the business of providing 
education, health care, housing, social services, or parks and 
recreation; or
    (ii) 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
    (4) Any other entity that is established by two or more of the 
entities described in paragraph (g)(1), (2), or (3) of this section; any 
part of which is extended Federal financial assistance.

(Authority: 42 U.S.C. 2000d-4)

    (h) The term facility includes all or any portion 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.
    (i) The term recipient means any State, political subdivision of any 
State, or instrumentality of any State or political subdivision, any 
public or private agency, institution, or organization, or other entity, 
or any individual, in any State, to whom Federal financial assistance is 
extended, directly or through another recipient, including any 
successor, assign, or transferee thereof, but such term does not include 
any ultimate beneficiary.

[[Page 349]]

    (j) The term primary recipient means any recipient which is 
authorized or required to extend Federal financial assistance to another 
recipient.
    (k) The term applicant means one who submits an application, 
request, or plan required to be approved by a Department official, or by 
a primary recipient, as a condition to eligibility for Federal financial 
assistance, and the term application means such an application, request, 
or plan.

(Authority: Sec. 602, Civil Rights Act of 1964; 78 Stat. 252; 42 U.S.C. 
2000d-1)

[45 FR 30918, May 9, 1980, as amended at 65 FR 68054, Nov. 13, 2000]

  Appendix A to Part 100--Federal Financial Assistance to Which These 
                            Regulations Apply

      Part 1--Assistance Other Than Continuing Assistance to States

    1. Loans for acquisition of equipment for academic subjects, and for 
minor remodeling (20 U.S.C. 445).
    2. Construction of facilities for institutions of higher education 
(20 U.S.C. 701-758).
    3. School Construction in federally-affected and in major disaster 
areas (20 U.S.C. 631-647).
    4. Construction of educational broadcast facilities (47 U.S.C. 390-
399).
    5. Loan service of captioned films and educational media; research 
on, and production and distribution of, educational media for the 
handicapped, and training of persons in the use of such media for the 
handicapped (20 U.S.C. 1452).
    6. Demonstration residential vocational education schools (20 U.S.C. 
1321).
    7. Research and related activities in education of handicapped 
children (20 U.S.C. 1441).
    8. Educational research, dissemination and demonstration projects; 
research training; and construction under the Cooperation Research Act 
(20 U.S.C. 331-332(b)).
    9. Research in teaching modern foreign languages (20 U.S.C. 512).
    10. Training projects for manpower development and training (42 
U.S.C. 2601, 2602, 2610a-2610c).
    11. Research and training projects in Vocational Education (20 
U.S.C. 1281(a), 1282-1284).
    12. Allowances to institutions training NDEA graduate fellows (20 
U.S.C. 461-465).
    13. Grants for training in librarianship (20 U.S.C. 1031-1033).
    14. Grants for training personnel for the education of handicapped 
children (20 U.S.C. 1431).
    15. Allowances for institutions training teachers and related 
educational personnel in elementary and secondary education, or post-
secondary vocational education (20 U.S.C. 1111-1118).
    16. Recruitment, enrollment, training and assignment of Teacher 
Corps personnel (20 U.S.C. 1101-1107a).
    17. Operation and maintenance of schools in Federally-affected and 
in major disaster areas (20 U.S.C. 236-241; 241-1; 242-244).
    18. Grants or contracts for the operation of training institutes for 
elementary or secondary school personnel to deal with special 
educational problems occasioned by desegregation (42 U.S.C. 2000c-3).
    19. Grants for in-service training of teachers and other schools 
personnel and employment of specialists in desegregation problems (42 
U.S.C. 2000c-4).
    20. Higher education students loan program (Title II, National 
Defense Education Act, 20 U.S.C. 421-429).
    21. Educational Opportunity grants and assistance for State and 
private programs of low-interest insured loans and State loans to 
students in institutions of higher education (Title IV, Higher Education 
Act of 1965, 20 U.S.C. 1061-1087).
    22. Grants and contracts for the conduct of Talent Search, Upward 
Bound, and Special Services Programs (20 U.S.C. 1068).
    23. Land-grant college aid (7 U.S.C. 301-308; 321-326; 328-331).
    24. Language and area centers (Title VI, National Defense Education 
Act, 20 U.S.C. 511).
    25. American Printing House for the Blind (20 U.S.C. 101-105).
    26. Future Farmers of America (36 U.S.C. 271-391) and similar 
programs.
    27. Science clubs (Pub. L. 85-875, 20 U.S.C. 2, note).
    28. Howard University (20 U.S.C. 121-129).
    29. Gallaudet College (31 D.C. Code, Chapter 10).
    30. Establishment and operation of a model secondary school for the 
deaf by Gallaudet College (31 D.C. Code 1051-1053; 80 Stat. 1027-1028).
    31. Faculty development programs, workshops and institutes (20 
U.S.C. 1131-1132).
    32. National Technical Institute for the Deaf (20 U.S.C. 681-685).
    33. Institutes and other programs for training educational personnel 
(parts D, E, and F, Title V, Higher Education Act of 1965) (20 U.S.C. 
1119-1119c-4).
    34. Grants and contracts for research and demonstration projects in 
librarianship (20 U.S.C. 1034).
    35. Acquisition of college library resources (20 U.S.C. 1021-1028).
    36. Grants for strengthening developing institutions of higher 
education (20 U.S.C. 1051-1054); National Fellowships for teaching at 
developing institutions (20 U.S.C. 1055), and grants to retired 
professors to teach at developing institutions (20 U.S.C. 1056).

[[Page 350]]

    37. College Work-Study Program (42 U.S.C. 2751-2757).
    38. Financial assistance for acquisition of higher education 
equipment, and minor remodeling (20 U.S.C. 1121-1129).
    39. Grants for special experimental demonstration projects and 
teacher training in adult education (20 U.S.C. 1208).
    40. Grant programs for advanced and undergraduate international 
studies (20 U.S.C. 1171-1176; 22 U.S.C. 2452(b)).
    41. Experimental projects for developing State leadership or 
establishment of special services (20 U.S.C. 865).
    42. Grants to and arrangements with State educational and other 
agencies to meet special educational needs of migratory children of 
migratory agricultural workers (20 U.S.C. 241e(c)).
    43. Grants by the Secretary to local educational agencies for 
supplementary educational centers and services; guidance, counseling, 
and testing (20 U.S.C. 841-844; 844b).
    44. Resource centers for improvement of education of handicapped 
children (20 U.S.C. 1421) and centers and services for deaf-blind 
children (20 U.S.C. 1422).
    45. Recruitment of personnel and dissemination of information on 
education of handicapped (20 U.S.C. 1433).
    46. Grants for research and demonstrations relating to physical 
education or recreation for handicapped children (20 U.S.C. 1442) and 
training of physical educators and recreation personnel (20 U.S.C. 
1434).
    47. Dropout prevention projects (20 U.S.C. 887).
    48. Bilingual education programs (20 U.S.C. 880b-880b-6).
    49. Grants to agencies and organizations for Cuban refugees (22 
U.S.C. 2601(b)(4)).
    50. Grants and contracts for special programs for children with 
specific learning disabilities including research and related 
activities, training and operating model centers (20 U.S.C. 1461).
    51. Curriculum development in vocational and technical education (20 
U.S.C. 1391).
    52. Establishment, including construction, and operation of a 
National Center on Educational Media and Materials for the Handicapped 
(20 U.S.C. 1453).
    53. Grants and contracts for the development and operation of 
experimental preschool and early education programs for handicapped (20 
U.S.C. 1423).
    54. Grants to public or private non-profit agencies to carry on the 
Follow Through Program in kindergarten and elementary schools (42 U.S.C. 
2809 (a)(2)).
    55. Grants for programs of cooperative education and grants and 
contracts for training and research in cooperative education (20 U.S.C. 
1087a-1087c).
    56. Grants and contracts to encourage the sharing of college 
facilities and resources (network for knowledge) (20 U.S.C. 1133- 
1133b).
    57. Grants, contracts, and fellowships to improve programs preparing 
persons for public service and to attract students to public service (20 
U.S.C. 1134-1134b).
    58. Grants for the improvement of graduate programs (20 U.S.C. 1135-
1135c).
    59. Contracts for expanding and improving law school clinical 
experience programs (20 U.S.C. 1136-1136b).
    60. Exemplary programs and projects in vocational education (20 
U.S.C. 1301-1305).
    61. Grants to reduce borrowing cost for construction of residential 
schools and dormitories (20 U.S.C. 1323).
    62. Surplus real and related personal property disposal for 
educational purposes (40 U.S.C. 484(k)).

                 Part 2--Continuing Assistance to States

    1. Grants to States for public library service and construction, 
interlibrary cooperation and specialized State library services for 
certain State institutions and the physically handicapped (20 U.S.C. 
351-355).
    2. Grants to States for strengthening instruction in academic 
subjects (20 U.S.C. 441-444).
    3. Grants to States for vocational education (20 U.S.C. 1241-1264).
    4. Arrangements with State education agencies for training under the 
Manpower Development and Training Act (42 U.S.C. 2601-2602, 2610a).
    5. Grants to States to assist in the elementary and secondary 
education of children of low-income families (20 U.S.C. 241a-242m).
    6. Grants to States to provide for school library resources, 
textbooks and other instructional materials for pupils and teachers in 
elementary and secondary schools (20 U.S.C. 821-827).
    7. Grants to States to strengthen State departments of education (20 
U.S.C. 861-870).
    8. Grants to States for community service programs (20 U.S.C. 1001-
1011).
    9. Grants to States for adult basic education and related research, 
teacher training and special projects (20 U.S.C. 1201-1211).
    10. Grants to States educational agencies for supplementary 
educational centers and services, and guidance, counseling and testing 
(20 U.S.C. 841-847).
    11. Grants to States for research and training in vocational 
education (20 U.S.C. 1281(b)).
    12. Grants to States for exemplary programs and projects in 
vocational education (20 U.S.C. 1301-1305).
    13. Grants to States for residential vocational education schools 
(20 U.S.C. 1321).
    14. Grants to States for consumer and homemaking education (20 
U.S.C. 1341).
    15. Grants to States for cooperative vocational educational program 
(20 U.S.C. 1351-1355).

[[Page 351]]

    16. Grants to States for vocational work-study programs (20 U.S.C. 
1371-1374).
    17. Grants to States to attract and qualify teachers to meet 
critical teaching shortages (20 U.S.C. 1108-1110c).
    18. Grants to States for education of handicapped children (20 
U.S.C. 1411-1414).
    19. Grants for administration of State plans and for comprehensive 
planning to determine construction needs of institutions of higher 
education (20 U.S.C. 715(b)).

[45 FR 30918, May 9, 1980, as amended at 65 FR 68054, Nov. 13, 2000]

 Appendix B to Part 100--Guidelines for Eliminating Discrimination and 
 Denial of Services on the Basis of Race, Color, National Origin, Sex, 
              and Handicap in Vocational Education Programs

                          I. Scope and Coverage

                      A. Application of Guidelines

    These Guidelines apply to recipients of any Federal financial 
assistance from the Department of Education that offer or administer 
programs of vocational education or training. This includes State agency 
recipients.

                       B. Definition of Recipient

    The definition of recipient of Federal financial assistance is 
established by Department regulations implementing Title VI, Title IX, 
and Section 504 (34 CFR 100.13(i), 106.2(h), 104.3(f).
    For the purposes of Title VI:
    The term recipient means any State, political subdivision of any 
State, or instrumentality of any State or political subdivision, any 
public or private agency, institution, or organization, or other entity, 
or any individual, in any State, to whom Federal financial assistance is 
extended, directly or through another recipient, for any program, 
including any successor, assignee, or transferee thereof, but such terms 
does not include any ultimate beneficiary [e.g., students] under any 
such program. (34 CFR 100.13(i)).
    For the purposes of Title IX:
    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 which operates an education program or 
activity which receives or benefits from such assistance, including any 
subunit, successor, assignee, or transferee thereof. (34 CFR 106.2(h)).
    For the purposes of Section 504:
    Recipient means any State or its political subdivision any 
instrumentality of a State or its political subdivision, any public or 
private agency, institution, or 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. (34 CFR 104.3(f)).

          C. Examples of Recipients Covered by These Guidelines

    The following education agencies, when they provide vocational 
education, are examples of recipients covered by these Guidelines:
    1. The board of education of a public school district and its 
administrative agency.
    2. The administrative board of a specialized vocational high school 
serving students from more than one school district.
    3. The administrative board of a technical or vocational school that 
is used exclusively or principally for the provision of vocational 
education to persons who have completed or left high school (including 
persons seeking a certificate or an associate degree through a 
vocational program offered by the school) and who are available for 
study in preparation for entering the labor market.
    4. The administrative board of a postsecondary institution, such as 
a technical institute, skill center, junior college, community college, 
or four year college that has a department or division that provides 
vocational education to students seeking immediate employment, a 
certificate or an associate degree.
    5. The administrative board of a proprietary (private) vocational 
education school.
    6. A State agency recipient itself operating a vocational education 
facility.

         D. Examples of Schools to Which These Guidelines Apply

    The following are examples of the types of schools to which these 
Guidelines apply.
    1. A junior high school, middle school, or those grades of a 
comprehensive high school that offers instruction to inform, orient, or 
prepare students for vocational education at the secondary level.
    2. A vocational education facility operated by a State agency.
    3. A comprehensive high school that has a department exclusively or 
principally used for providing vocational education; or that offers at 
least one vocational program to secondary level students who are 
available for study in preparation for entering the labor market; or 
that offers adult vocational education to persons who have completed or 
left high school and who are available for study in preparation for 
entering the labor market.

[[Page 352]]

    4. A comprehensive high school, offering the activities described 
above, that recieves students on a contract basis from other school 
districts for the purpose of providing vocational education.
    5. A specialized high school used exclusively or principally for the 
provision of vocational education, that enrolls students form one or 
more school districts for the purpose of providing vocational education.
    6. A technical or vocational school that primarily provides 
vocational education to persons who have completed or left high school 
and who are available for study in preparation for entering the labor 
market, including students seeking an associate degree or certificate 
through a course of vocational instruction offered by the school.
    7. A junior college, a community college, or four-year college that 
has a department or division that provides vocational education to 
students seeking immediate employment, an associate degree or a 
certificate through a course of vocational instruction offered by the 
school.
    8. A proprietary school, licensed by the State that offers 
vocational education.

    Note: Subsequent sections of these Guidelines may use the term 
secondary vocational education center in referring to the institutions 
described in paragraphs 3, 4 and 5 above or the term postsecondary 
vocational education center in referring to institutions described in 
paragraphs 6 and 7 above or the term vocational education center in 
referring to any or all institutions described above.

      II. Responsibilities Assigned Only to State Agency Recipients

           A. Responsibilities of All State Agency Recipients

    State agency recipients, in addition to complying with all other 
provisions of the Guidelines relevant to them, may not require, approve 
of, or engage in any discrimination or denial of services on the basis 
of race, color, national origin, sex, or handicap in performing any of 
the following activities:
    1. Establishment of criteria or formulas for distribution of Federal 
or State funds to vocational education programs in the State;
    2. Establishment of requirements for admission to or requirements 
for the administration of vocational education programs;
    3. Approval of action by local entities providing vocational 
education. (For example, a State agency must ensure compliance with 
Section IV of these Guidelines if and when it reviews a vocational 
education agency decision to create or change a geographic service 
area.);
    4. Conducting its own programs. (For example, in employing its staff 
it may not discriminate on the basis of sex or handicap.)

         B. State Agencies Performing Oversight Responsibilities

    The State agency responsible for the administration of vocational 
education programs must adopt a compliance program to prevent, identify 
and remedy discrimination on the basis of race, color, national origin, 
sex or handicap by its subrecipients. (A ``subrecipient,'' in this 
context, is a local agency or vocational education center that receives 
financial assistance through a State agency.) This compliance program 
must include:
    1. Collecting and analyzing civil rights related data and 
information that subrecipients compile for their own purposes or that 
are submitted to State and Federal officials under existing authorities;
    2. Conducting periodic compliance reviews of selected subrecipients 
(i.e., an investigation of a subrecipient to determine whether it 
engages in unlawful discrimination in any aspect of its program); upon 
finding unlawful discrimination, notifying the subrecipient of steps it 
must take to attain compliance and attempting to obtain voluntary 
compliance;
    3. Providing technical assistance upon request to subrecipients. 
This will include assisting subrecipients to identify unlawful 
discrimination and instructing them in remedies for and prevention of 
such discrimination;
    4. Periodically reporting its activities and findings under the 
foregoing paragraphs, including findings of unlawful discrimination 
under paragraph 2, immediately above, to the Office for Civil Rights.
    State agencies are not required to terminate or defer assistance to 
any subrecipient. Nor are they required to conduct hearings. The 
responsibilities of the Office for Civil Rights to collect and analyze 
data, to conduct compliance reviews, to investigate complaints and to 
provide technical assistance are not diminished or attenuated by the 
requirements of Section II of the Guidelines.

                C. Statement of Procedures and Practices

    Within one year from the publication of these Guidelines in final 
form, each State agency recipient performing oversight responsibilities 
must submit to the Office for Civil Rights the methods of administration 
and related procedures it will follow to comply with the requirements 
described in paragraphs A and B immediately above. The Department will 
review each submission and will promptly either approve it, or return it 
to State officials for revision.

[[Page 353]]

 III. Distribution of Federal Financial Assistance and Other Funds for 
                          Vocational Education

                       A. Agency Responsibilities

    Recipients that administer grants for vocational education must 
distribute Federal, State, or local vocational education funds so that 
no student or group of students is unlawfully denied an equal 
opportunity to benefit from vocational education on the basis of race, 
color, national origin, sex, or handicap.

                        B. Distribution of Funds

    Recipients may not adopt a formula or other method for the 
allocation of Federal, State, or local vocational education funds that 
has the effect of discriminating on the basis of race, color, national 
origin, sex, or handicap. However, a recipient may adopt a formula or 
other method of allocation that uses as a factor race, color, national 
origin, sex, or handicap [or an index or proxy for race, color, national 
origin, sex, or handicap e.g., number of persons receiving Aid to 
Families with Dependent Children or with limited English speaking 
ability] if the factor is included to compensate for past discrimination 
or to comply with those provisions of the Vocational Education 
Amendments of 1976 designed to assist specified protected groups.

       C. Example of a Pattern Suggesting Unlawful Discrimination

    In each State it is likely that some local recipients will enroll 
greater proportions of minority students in vocational education than 
the State-wide proportion of minority students in vocational education. 
A funding formula or other method of allocation that results in such 
local recipients receiving per-pupil allocations of Federal or State 
vocational education funds lower than the State-wide average per-pupil 
allocation will be presumed unlawfully discriminatory.

         D. Distribution Through Competitive Grants or Contracts

    Each State agency that establishes criteria for awarding competitive 
vocational education grants or contracts must establish and apply the 
criteria without regard to the race, color, national origin, sex, or 
handicap of any or all of a recipient's students, except to compensate 
for past discrimination.

    E. Application Processes for Competitive or Discretionary Grants

    State agencies must disseminate information needed to satisfy the 
requirements of any application process for competitive or discretionary 
grants so that all recipients, including those having a high percentage 
of minority or handicapped students, are informed of and able to seek 
funds. State agencies that provide technical assistance for the 
completion of the application process must provide such assistance 
without discrimination against any one recipient or class of recipients.

     F. Alteration of Fund Distribution to Provide Equal Opportunity

    If the Office for Civil Rights finds that a recipient's system for 
distributing vocational education funds unlawfully discriminates on the 
basis of race, color, national origin, sex, or handicap, it will require 
the recipient to adopt an alternative nondiscriminatory method of 
distribution. The Office for Civil Rights may also require the recipient 
to compensate for the effects of its past unlawful discrimination in the 
distribution of funds.

  IV. Access and Admission of Students To Vocational Education Programs

                      A. Recipient Responsibilities

    Criteria controlling student eligibility for admission to vocational 
education schools, facilities and programs may not unlawfully 
discriminate on the basis of race, color, national origin, sex, or 
handicap. A recipient may not develop, impose, maintain, approve, or 
implement such discriminatory admissions criteria.

                B. Site Selection for Vocational Schools

    State and local recipients may not select or approve a site for a 
vocational education facility for the purpose or with the effect of 
excluding, segregating, or otherwise discriminating against students on 
the basis of race, color, or national origin. Recipients must locate 
vocational education facilities at sites that are readily accessible to 
both nonminority and minority communities, and that do not tend to 
identify the facility or program as intended for nonminority or minority 
students.

 C. Eligibility for Admission to Vocational Education Centers Based on 
                                Residence

    Recipients may not establish, approve or maintain geographic 
boundaries for a vocational education center service area or attendance 
zone, (hereinafter ``service area''), that unlawfully exclude students 
on the basis of race, color, or national origin. The Office for Civil 
Rights will presume, subject to rebuttal, that any one or combination of 
the following circumstances indicates that the boundaries of a given 
service area are unlawfully constituted:
    1. A school system or service area contiguous to the given service 
area, contains minority or nonminority students in substantially greater 
proportion than the given service area;

[[Page 354]]

    2. A substantial number of minority students who reside outside the 
given vocational education center service area, and who are not eligible 
for the center reside, nonetheless, as close to the center as a 
substantial number of non-minority students who are eligible for the 
center;
    3. The over-all vocational education program of the given service 
area in comparison to the over-all vocational education program of a 
contiguous school system or service area enrolling a substantially 
greater proportion of minority students:
    (a) Provides its students with a broader range of curricular 
offerings, facilities and equipment; or (b) provides its graduates 
greater opportunity for employment in jobs:
    (i) For which there is a demonstrated need in the community or 
region; (ii) that pay higher entry level salaries or wages; or (iii) 
that are generally acknowledged to offer greater prestige or status.

D. Additions and Renovations to Existing Vocational Education Facilities

    A recipient may not add to, modify, or renovate the physical plant 
of a vocational education facility in a manner that creates, maintains, 
or increases student segregation on the basis of race, color, national 
origin, sex, or handicap.

E. Remedies for Violations of Site Selection and Geographic Service Area 
                              Requirements

    If the conditions specified in paragraphs IV, A, B, C, or D, 
immediately above, are found and not rebutted by proof of 
nondiscrimination, the Office for Civil Rights will require the 
recipient(s) to submit a plan to remedy the discrimination. The 
following are examples of steps that may be included in the plan, where 
necessary to overcome the discrimination:
    (1) Redrawing of the boundaries of the vocational education center's 
service area to include areas unlawfully excluded and/or to exclude 
areas unlawfully included; (2) provision of transportation to students 
residing in areas unlawfully excluded; (3) provision of additional 
programs and services to students who would have been eligible for 
attendance at the vocational education center but for the discriminatory 
service area or site selection; (4) reassignment of students; and (5) 
construction of new facilities or expansion of existing facilities.

 F. Eligibility for Admission to Secondary Vocational Education Centers 
          Based on Numerical Limits Imposed on Sending Schools

    A recipient may not adopt or maintain a system for admission to a 
secondary vocational education center or program that limits admission 
to a fixed number of students from each sending school included in the 
center's service area if such a system disproportionately excludes 
students from the center on the basis of race, sex, national origin or 
handicap. (Example: Assume 25 percent of a school district's high school 
students are black and that most of those black students are enrolled in 
one high school; the white students, 75 percent of the district's total 
enrollment, are generally enrolled in the five remaining high schools. 
This paragraph prohibits a system of admission to the secondary 
vocational education center that limits eligibility to a fixed and equal 
number of students from each of the district's six high schools.)

   G. Remedies for Violation of Eligibility Based on Numerical Limits 
                              Requirements

    If the Office for Civil Rights finds a violation of paragraph F, 
above, the recipient must implement an alternative system of admissions 
that does not disproportionately exclude students on the basis of race, 
color, national origin, sex, or handicap.

 H. Eligibility for Admission to Vocational Education Centers, Branches 
                  or Annexes Based Upon Student Option

    A vocational education center, branch or annex, open to all students 
in a service area and predominantly enrolling minority students or 
students of one race, national origin or sex, will be presumed 
unlawfully segregated if:
    (1) It was established by a recipient for members of one race, 
national origin or sex; or (2) it has since its construction been 
attended primarily by members of one race, national origin or sex; or 
(3) most of its program offerings have traditionally been selected 
predominantly by members of one race, national origin or sex.

     I. Remedies for Facility Segregation Under Student Option Plans

    If the conditions specified in paragraph IV-H are found and not 
rebutted by proof of nondiscrimination, the Office for Civil Rights will 
require the recipient(s) to submit a plan to remedy the segregation. The 
following are examples of steps that may be included in the plan, where 
necessary to overcome the discrimination:
    (1) Elimination of program duplication in the segregated facility 
and other proximate vocational facilities; (2) relocation or 
``clustering'' of programs or courses; (3) adding programs and courses 
that traditionally have been identified as intended for members of a 
particular race, national origin or sex to schools that have 
traditionally served members of the other sex or traditionally served 
persons of a different race or national origin; (4) merger of programs 
into one facility through school closings or new construction;

[[Page 355]]

(5) intensive outreach recruitment and counseling; (6) providing free 
transportation to students whose enrollment would promote desegregation.

                              J. [Reserved]

 K. Eligibility Based on Evaluation of Each Applicant Under Admissions 
                                Criteria

    Recipients may not judge candidates for admission to vocational 
education programs on the basis of criteria that have the effect of 
disproportionately excluding persons of a particular race, color, 
national origin, sex, or handicap. However, if a recipient can 
demonstrate that such criteria have been validated as essential to 
participation in a given program and that alternative equally valid 
criteria that do not have such a disproportionate adverse effect are 
unavailable, the criteria will be judged nondiscriminatory. Examples of 
admissions criteria that must meet this test are past academic 
performance, record of disciplinary infractions, counselors' approval, 
teachers' recommendations, interest inventories, high school diplomas 
and standardized tests, such as the Test of Adult Basic Education 
(TABE).
    An introductory, preliminary, or exploratory course may not be 
established as a prerequisite for admission to a program unless the 
course has been and is available without regard to race, color, national 
origin, sex, and handicap. However, a course that was formerly only 
available on a discriminatory basis may be made a prerequisite for 
admission to a program if the recipient can demonstrate that:
    (a) The course is essential to participation in the program; and (b) 
the course is presently available to those seeking enrollment for the 
first time and to those formerly excluded.

L. Eligibility of National Origin Minority Persons With Limited English 
                             Language Skills

    Recipients may not restrict an applicant's admission to vocational 
education programs because the applicant, as a member of a national 
origin minority with limited English language skills, cannot participate 
in and benefit from vocational instruction to the same extent as a 
student whose primary language is English. It is the responsibility of 
the recipient to identify such applicants and assess their ability to 
participate in vocational instruction.
    Acceptable methods of identification include: (1) Identification by 
administrative staff, teachers, or parents of secondary level students; 
(2) identification by the student in postsecondary or adult programs; 
and (3) appropriate diagnostic procedures, if necessary.
    Recipients must take steps to open all vocational programs to these 
national origin minority students. A recipient must demonstrate that a 
concentration of students with limited English language skills in one or 
a few programs is not the result of discriminatory limitations upon the 
opportunities available to such students.

 M. Remedial Action in Behalf of Persons With Limited English Language 
                                 Skills

    If the Office for Civil Rights finds that a recipient has denied 
national origin minority persons admission to a vocational school or 
program because of their limited English language skills or has assigned 
students to vocational programs solely on the basis of their limited 
English language skills, the recipient will be required to submit a 
remedial plan that insures national origin minority students equal 
access to vocational education programs.

                N. Equal Access for Handicapped Students

    Recipients may not deny handicapped students access to vocational 
education programs or courses because of architectural or equipment 
barriers, or because of the need for related aids and services or 
auxiliary aids. If necessary, recipients must:
    (1) Modify instructional equipment; (2) modify or adapt the manner 
in which the courses are offered; (3) house the program in facilities 
that are readily accessible to mobility impaired students or alter 
facilities to make them readily accessible to mobility impaired 
students; and (4) provide auxiliary aids that effectively make lectures 
and necessary materials available to postsecondary handicapped students; 
(5) provide related aids or services that assure secondary students an 
appropriate education.
    Academic requirements that the recipient can demonstrate are 
essential to a program of instruction or to any directly related 
licensing requirement will not be regarded as discriminatory. However, 
where possible, a recipient must adjust those requirements to the needs 
of individual handicapped students.
    Access to vocational programs or courses may not be denied 
handicapped students on the ground that employment opportunities in any 
occupation or profession may be more limited for handicapped persons 
than for non-handicapped persons.

                         O. Public Notification

    Prior to the beginning of each school year, recipients must advise 
students, parents, employees and the general public that all vocational 
opportunities will be offered without regard to race, color, national 
origin, sex, or handicap. Announcement of this policy of

[[Page 356]]

non-discrimination may be made, for example, in local newspapers, 
recipient publications and/or other media that reach the general public, 
program beneficiaries, minorities (including national origin minorities 
with limited English language skills), women, and handicapped persons. A 
brief summary of program offerings and admission criteria should be 
included in the announcement; also the name, address and telephone 
number of the person designated to coordinate Title IX and Section 504 
compliance activity.
    If a recipient's service area contains a community of national 
origin minority persons with limited English language skills, public 
notification materials must be disseminated to that community in its 
language and must state that recipients will take steps to assure that 
the lack of English language skills will not be a barrier to admission 
and participation in vocational education programs.

                V. Counseling and Prevocational Programs

                      A. Recipient Responsibilities

    Recipients must insure that their counseling materials and 
activities (including student program selection and career/employment 
selection), promotional, and recruitment efforts do not discriminate on 
the basis of race, color, national origin, sex, or handicap.

                 B. Counseling and Prospects for Success

    Recipients that operate vocational education programs must insure 
that counselors do not direct or urge any student to enroll in a 
particular career or program, or measure or predict a student's 
prospects for success in any career or program based upon the student's 
race, color, national origin, sex, or handicap. Recipients may not 
counsel handicapped students toward more restrictive career objectives 
than nonhandicapped students with similar abilities and interests. If a 
vocational program disproportionately enrolls male or female students, 
minority or nonminority students, or handicapped students, recipients 
must take steps to insure that the disproportion does not result from 
unlawful discrimination in counseling activities.

                    C. Student Recruitment Activities

    Recipients must conduct their student recruitment activities so as 
not to exclude or limit opportunities on the basis of race, color, 
national origin, sex, or handicap. Where recruitment activities involve 
the presentation or portrayal of vocational and career opportunities, 
the curricula and programs described should cover a broad range of 
occupational opportunities and not be limited on the basis of the race, 
color, national origin, sex, or handicap of the students or potential 
students to whom the presentation is made. Also, to the extent possible, 
recruiting teams should include persons of different races, national 
origins, sexes, and handicaps.

   D. Counseling of Students With Limited English-Speaking Ability or 
                           Hearing Impairments

    Recipients must insure that counselors can effectively communicate 
with national origin minority students with limited English language 
skills and with students who have hearing impairments. This requirement 
may be satisfied by having interpreters available.

                        E. Promotional Activities

    Recipients may not undertake promotional efforts (including 
activities of school officials, counselors, and vocational staff) in a 
manner that creates or perpetuates stereotypes or limitations based on 
race, color, national origin, sex or handicap. Examples of promotional 
efforts are career days, parents' night, shop demonstrations, 
visitations by groups of prospective students and by representatives 
from business and industry. Materials that are part of promotional 
efforts may not create or perpetuate stereotypes through text or 
illustration. To the extent possible they should portray males or 
females, minorities or handicapped persons in programs and occupations 
in which these groups traditionally have not been represented. If a 
recipient's service area contains a community of national origin 
minority persons with limited English language skills, promotional 
literature must be distributed to that community in its language.

 VI. Equal Opportunity in the Vocational Education Instructional Setting

               A. Accommodations For Handicapped Students

    Recipients must place secondary level handicapped students in the 
regular educational environment of any vocational education program to 
the maximum extent appropriate to the needs of the student unless it can 
be demonstrated that the education of the handicapped person in the 
regular environment with the use of supplementary aids and services 
cannot be achieved satisfactorily. Handicapped students may be placed in 
a program only after the recipient satisfies the provisions of the 
Department's Regulation, 34 CFR, part 104, relating to evaluation, 
placement, and procedural safeguards. If a separate class or facility is 
identifiable as being for handicapped persons, the facility, the 
programs, and the services must be comparable to the facilities, 
programs, and services offered to nonhandicapped students.

[[Page 357]]

                     B. Student Financial Assistance

    Recipients may not award financial assistance in the form of loans, 
grants, scholarships, special funds, subsidies, compensation for work, 
or prizes to vocational education students on the basis of race, color, 
national origin, sex, or handicap, except to overcome the effects of 
past discrimination. Recipients may administer sex restricted financial 
assistance where the assistance and restriction are established by will, 
trust, bequest, or any similar legal instrument, if the overall effect 
of all financial assistance awarded does not discriminate on the basis 
of sex. Materials and information used to notify students of 
opportunities for financial assistance may not contain language or 
examples that would lead applicants to believe the assistance is 
provided on a discriminatory basis. If a recipient's service area 
contains a community of national origin minority persons with limited 
English language skills, such information must be disseminated to that 
community in its language.

  C. Housing In Residential Postsecondary Vocational Education Centers

    Recipients must extend housing opportunities without discrimination 
based on race, color, national origin, sex, or handicap. This obligation 
extends to recipients that provide on-campus housing and/or that have 
agreements with providers of off-campus housing. In particular, a 
recipient postsecondary vocational education program that provides on-
campus or off-campus housing to its nonhandicapped students must 
provide, at the same cost and under the same conditions, comparable 
convenient and accessible housing to handicapped students.

                        D. Comparable Facilities

    Recipients must provide changing rooms, showers, and other 
facilities for students of one sex that are comparable to those provided 
to students of the other sex. This may be accomplished by alternating 
use of the same facilities or by providing separate, comparable 
facilities.
    Such facilities must be adapted or modified to the extent necessary 
to make the vocational education program readily accessible to 
handicapped persons.

 VII. Work Study, Cooperative Vocational Education, Job Placement, and 
                           Apprentice Training

 A. Responsibilities in Cooperative Vocational Education Programs, Work-
               Study Programs, and Job Placement Programs

    A recipient must insure that: (a) It does not discriminate against 
its students on the basis of race, color, national origin, sex, or 
handicap in making available opportunities in cooperative education, 
work study and job placement programs; and (b) students participating in 
cooperative education, work study and job placement programs are not 
discriminated against by employers or pro spective employers on the 
basis of race, color, national origin, sex, or handicap in recruitment, 
hiring, placement, assignment to work tasks, hours of employment, levels 
of responsibility, and in pay.
    If a recipient enters into a written agreement for the referral or 
assignment of students to an employer, the agreement must contain an 
assurance from the employer that students will be accepted and assigned 
to jobs and otherwise treated without regard to race, color, national 
origin, sex, or handicap.
    Recipients may not honor any employer's request for students who are 
free of handicaps or for students of a particular race, color, national 
origin, or sex. In the event an employer or prospective employer is or 
has been subject to court action involving discrimination in employment, 
school officials should rely on the court's findings if the decision 
resolves the issue of whether the employer has engaged in unlawful 
discrimination.

                     B. Apprentice Training Programs

    A recipient may not enter into any agreement for the provision or 
support of apprentice training for students or union members with any 
labor union or other sponsor that discriminates against its members or 
applicants for membership on the basis of race, color, national origin, 
sex, or handicap. If a recipient enters into a written agreement with a 
labor union or other sponsor providing for apprentice training, the 
agreement must contain an assurance from the union or other sponsor:
    (1) That it does not engage in such discrimination against its 
membership or applicants for membership; and (2) that apprentice 
training will be offered and conducted for its membership free of such 
discrimination.

                  VIII. Employment of Faculty and Staff

                         A. Employment Generally

    Recipients may not engage in any employment practice that 
discriminates against any employee or applicant for employment on the 
basis of sex or handicap. Recipients may not engage in any employment 
practice that discriminates on the basis of race, color, or national 
origin if such discrimination tends to result in segregation, exclusion 
or other discrimination against students.

                             B. Recruitment

    Recipients may not limit their recruitment for employees to schools, 
communities, or companies disproportionately composed of

[[Page 358]]

persons of a particular race, color, national origin, sex, or handicap 
except for the purpose of overcoming the effects of past discrimination. 
Every source of faculty must be notified that the recipient does not 
discriminate in employment on the basis of race, color, national origin, 
sex, or handicap.

                      C. Patterns Of Discrimination

    Whenever the Office for Civil Rights finds that in light of the 
representation of protected groups in the relevant labor market there is 
a significant underrepresentation or overrepresentation of protected 
group persons on the staff of a vocational education school or program, 
it will presume that the disproportion results from unlawful 
discrimination. This presumption can be overcome by proof that qualified 
persons of the particular race, color, national origin, or sex, or that 
qualified handicapped persons are not in fact available in the relevant 
labor market.

                           D. Salary Policies

    Recipients must establish and maintain faculty salary scales and 
policy based upon the conditions and responsibilities of employment, 
without regard to race, color, national origin, sex or handicap.

         E. Employment Opportunities For Handicapped Applicants

    Recipients must provide equal employment opportunities for teaching 
and administrative positions to handicapped applicants who can perform 
the essential functions of the position in question. Recipients must 
make reasonable accommodation for the physical or mental limitations of 
handicapped applicants who are otherwise qualified unless recipients can 
demonstrate that the accommodation would impose an undue hardship.

                  F. The Effects Of Past Discrimination

    Recipients must take steps to overcome the effects of past 
discrimination in the recruitment, hiring, and assignment of faculty. 
Such steps may include the recruitment or reassignment of qualified 
persons of a particular race, national origin, or sex, or who are 
handicapped.

       G. Staff Of State Advisory Councils Of Vocational Education

    State Advisory Councils of Vocational Education are recipients of 
Federal financial assistance and therefore must comply with Section VIII 
of the Guidelines.

  H. Employment at State Operated Vocational Education Centers Through 
                     State Civil-Service Authorities

    Where recruitment and hiring of staff for State operated vocational 
education centers is conducted by a State civil service employment 
authority, the State education agency operating the program must insure 
that recruitment and hiring of staff for the vocational education center 
is conducted in accordance with the requirements of these Guidelines.

              IX. Proprietary Vocational Education Schools

                      A. Recipient Responsibilities

    Proprietary vocational education schools that are recipients of 
Federal financial assistance through Federal student assistance programs 
or otherwise are subject to all of the requirements of the Department's 
regulations and these Guidelines.

                        B. Enforcement Authority

    Enforcement of the provisions of Title IX of the Education 
Amendments of 1972 and Section 504 of the Rehabilitation Act of 1973 is 
the responsibility of the Department of Education. However, authority to 
enforce Title VI of the Civil rights Act of 1964 for proprietary 
vocational education schools has been delegated to the Veterans 
Administration.
    When the Office for Civil Rights receives a Title VI complaint 
alleging discrimination by a proprietary vocational education school it 
will forward the complaint to the Veterans Administration and cite the 
applicable requirements of the Department's regulations and these 
Guidelines. The complainant will be notified of such action.

[45 FR 30918, May 9, 1980; 45 FR 37426, June 3, 1980]



PART 101_PRACTICE AND PROCEDURE FOR HEARINGS UNDER PART 100 OF THIS TITLE
--Table of Contents




                      Subpart A_General Information

Sec.
101.1 Scope of rules.
101.2 Records to be public.
101.3 Use of gender and number.
101.4 Suspension of rules.

                    Subpart B_Appearance and Practice

101.11 Appearance.
101.12 Authority for representation.
101.13 Exclusion from hearing for misconduct.

                            Subpart C_Parties

101.21 Parties.
101.22 Amici curiae.
101.23 Complainants not parties.

[[Page 359]]

       Subpart D_Form, Execution, Service and Filing of Documents

101.31 Form of documents to be filed.
101.32 Signature of documents.
101.33 Filing and service.
101.34 Service--how made.
101.35 Date of service.
101.36 Certificate of service.

                             Subpart E_Time

101.41 Computation.
101.42 Extension of time or postponement.
101.43 Reduction of time to file documents.

                 Subpart F_Proceedings Prior to Hearing

101.51 Notice of hearing or opportunity for hearing.
101.52 Answer to notice.
101.53 Amendment of notice or answer.
101.54 Request for hearing.
101.55 Consolidation.
101.56 Motions.
101.57 Responses to motions and petitions.
101.58 Disposition of motions and petitions.

       Subpart G_Responsibilities and Duties of Presiding Officer

101.61 Who presides.
101.62 Designation of hearing examiner.
101.63 Authority of presiding officer.

                      Subpart H_Hearing Procedures

101.71 Statement of position and trial briefs.
101.72 Evidentiary purpose.
101.73 Testimony.
101.74 Exhibits.
101.75 Affidavits.
101.76 Depositions.
101.77 Admissions as to facts and documents.
101.78 Evidence.
101.79 Cross-examination.
101.80 Unsponsored written material.
101.81 Objections.
101.82 Exceptions to rulings of presiding officer unnecessary.
101.83 Official notice.
101.84 Public document items.
101.85 Offer of proof.
101.86 Appeals from ruling of presiding officer.

                          Subpart I_The Record

101.91 Official transcript.
101.92 Record for decision.

               Subpart J_Posthearing Procedures, Decisions

101.101 Posthearing briefs: proposed findings and conclusions.
101.102 Decisions following hearing.
101.103 Exceptions to initial or recommended decisions.
101.104 Final decisions.
101.105 Oral argument to the reviewing authority.
101.106 Review by the Secretary.
101.107 Service on amici curiae.

                Subpart K_Judicial Standards of Practice

101.111 Conduct.
101.112 Improper conduct.
101.113 Ex parte communications.
101.114 Expeditious treatment.
101.115 Matters not prohibited.
101.116 Filing of ex parte communications.

                  Subpart L_Posttermination Proceedings

101.121 Posttermination proceedings.

                          Subpart M_Definitions

101.131 Definitions.

    Authority: 5 U.S.C. 301.

    Source: 45 FR 30931, May 9, 1980, unless otherwise noted.



                      Subpart A_General Information



Sec. 101.1  Scope of rules.

    The rules of procedure in this part supplement Sec. Sec. 100.9 and 
100.10 of this subtitle and govern the practice for hearings, decisions, 
and administrative review conducted by the Department of Education, 
pursuant to Title VI of the Civil Rights Act of 1964 (section 602, 78 
Stat. 252) and part 100 of this subtitle.



Sec. 101.2  Records to be public.

    All pleadings, correspondence, exhibits, transcripts, of testimony, 
exceptions, briefs, decisions, and other documents filed in the docket 
in any proceeding may be inspected and copied in the office of the Civil 
Rights hearing clerk. Inquiries may be made at the Department of 
Education, 400 Maryland Avenue SW., Washington, DC 20202.



Sec. 101.3  Use of gender and number.

    As used in this part, words importing the singular number may extend 
and be applied to several persons or things, and vice versa. Words 
importing the masculine gender may be applied to females or 
organizations.

[[Page 360]]



Sec. 101.4  Suspension of rules.

    Upon notice to all parties, the reviewing authority or the presiding 
officer, with respect to matters pending before them, may modify or 
waive any rule in this part upon determination that no party will be 
unduly prejudiced and the ends of justice will thereby be served.



                    Subpart B_Appearance and Practice



Sec. 101.11  Appearance.

    A party may appear in person or by counsel and participate fully in 
any proceeding. A State agency or a corporation may appear by any of its 
officers or by any employee it authorizes to appear on its behalf. 
Counsel must be members in good standing of the bar of a State, 
Territory, or possession of the United States or of the District of 
Columbia or the Commonwealth of Puerto Rico.



Sec. 101.12  Authority for representation.

    Any individual acting in a representative capacity in any proceeding 
may be required to show his authority to act in such capacity.



Sec. 101.13  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 any hearing before a presiding officer shall 
constitute grounds for immediate exclusion of such person from the 
hearing by the presiding officer.



                            Subpart C_Parties



Sec. 101.21  Parties.

    (a) The term party shall include an applicant or recipient or other 
person to whom a notice of hearing or opportunity for hearing has been 
mailed naming him a respondent.
    (b) The Assistant Secretary for Civil Rights of the Department of 
Education, shall be deemed a party to all proceedings.



Sec. 101.22  Amici curiae.

    (a) Any interested person or organization may file a petition to 
participate in a proceeding as an amicus curiae. Such petition shall be 
filed prior to the prehearing conference, or if none is held, before the 
commencement of the hearing, unless the petitioner shows good cause for 
filing the petition later. The presiding officer may grant the petition 
if he 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 thereof. An 
amicus curiae is not a party and may not introduce evidence at a 
hearing.
    (b) An amicus curiae may submit a statement of position to the 
presiding officer prior to the beginning of a hearing, and shall serve a 
copy on each party. The amicus curiae may submit a brief on each 
occasion a decision is to be made or a prior decision is subject to 
review. His brief shall be filed and served on each party within the 
time limits applicable to the party whose position he deems himself to 
support; or if he does not deem himself to support the position of any 
party, within the longest time limit applicable to any party at that 
particular stage of the proceedings.
    (c) When all parties have completed their initial examination of a 
witness, any amicus curiae may request the presiding officer to propound 
specific questions to the witness. The presiding officer, in his 
discretion, may grant any such request if he believes the proposed 
additional testimony may assist materially in elucidating factual 
matters at issue between the parties and will not expand the issues.



Sec. 101.23  Complainants not parties.

    A person submitting a complaint pursuant to Sec. 100.7(b) of this 
title is not a party to the proceedings governed by this part, but may 
petition, after proceedings are initiated, to become an amicus curiae.

[[Page 361]]



       Subpart D_Form, Execution, Service and Filing of Documents



Sec. 101.31  Form of documents to be filed.

    Documents to be filed under the rules in this part shall be dated, 
the original signed in ink, shall show the docket description and title 
of the proceeding, and shall show the title, if any, and address of the 
signatory. Copies need not be signed but the name of the person signing 
the original shall be reproduced. Documents shall be legible and shall 
not be more than 8\1/2\ inches wide and 12 inches long.



Sec. 101.32  Signature of documents.

    The signature of a party, authorized officer, employee or attorney 
constitutes a certificate that he has read the document, that to the 
best of his knowledge, information, and belief there is good ground to 
support it, and that it is not interposed for delay. If a document is 
not signed or is signed with intent to defeat the purpose of this 
section, it may be stricken as sham and false and the proceeding may 
proceed as though the document had not been filed. Similar action may be 
taken if scandalous or indecent matter is inserted.



Sec. 101.33  Filing and service.

    All notices by a Department official, and all written motions, 
requests, petitions, memoranda, pleadings, exceptions, briefs, 
decisions, and correspondence to a Department official from a party, or 
vice versa, relating to a proceeding after its commencement shall be 
filed and served on all parties. Parties shall supply the original and 
two copies of documents submitted for filing. Filings shall be made with 
the Civil Rights hearing clerk at the address stated in the notice of 
hearing or notice of opportunity for hearing, during regular business 
hours. Regular business hours are every Monday through Friday (legal 
holidays in the District of Columbia excepted) from 9 a.m. to 5:30 p.m., 
eastern standard or daylight saving time, whichever is effective in the 
District of Columbia at the time. Originals only on exhibits and 
transcripts of testimony need be filed. For requirements of service on 
amici curiae, see Sec. 101.107.



Sec. 101.34  Service--how made.

    Service shall be made by personal delivery of one copy to each 
person to be served or by mailing by first-class mail, properly 
addressed with postage prepaid. When a party or amicus has appeared by 
attorney or other representative, service upon such attorney or 
representative will be deemed service upon the party or amicus. 
Documents served by mail preferably should be mailed in sufficient time 
to reach the addressee by the date on which the original is due to be 
filed, and should be air mailed if the addressee is more than 300 miles 
distant.



Sec. 101.35  Date of service.

    The date of service shall be the day when the matter is deposited in 
the U.S. mail or is delivered in person, except that the date of service 
of the initial notice of hearing or opportunity for hearing shall be the 
date of its delivery, or of its attempted delivery if refused.



Sec. 101.36  Certificate of service.

    The original of every document filed and required to be served upon 
parties to a proceeding shall be endorsed with a certificate of service 
signed by the party making service or by his attorney or representative, 
stating that such service has been made, the date of service, and the 
manner of service, whether by mail or personal delivery.



                             Subpart E_Time



Sec. 101.41  Computation.

    In computing any period of time under the rules in this part or in 
an order issued hereunder, the time begins with the day following the 
act, event, or default, and includes the last day of the period, unless 
it is a Saturday, Sunday, or legal holiday observed in the District of 
Columbia, in which event it includes the next following business day. 
When the period of time prescribed or allowed is less than 7 days, 
intermediate Saturdays, Sundays, and legal holidays shall be excluded 
from the computation.

[[Page 362]]



Sec. 101.42  Extension of time or postponement.

    Requests for extension of time should be served on all parties and 
should set forth the reasons for the application. Applications may be 
granted upon a showing of good cause by the applicant. From the 
designation of a presiding officer until the issuance of his decision 
such requests should be addressed to him. Answers to such requests are 
permitted, if made promptly.



Sec. 101.43  Reduction of time to file documents.

    For good cause, the reviewing authority or the presiding officer, 
with respect to matters pending before them, may reduce any time limit 
prescribed by the rules in this part, except as provided by law or in 
part 80 of this title.



                 Subpart F_Proceedings Prior to Hearing



Sec. 101.51  Notice of hearing or opportunity for hearing.

    Proceedings are commenced by mailing a notice of hearing or 
opportunity for hearing to an affected applicant or recipient, pursuant 
to Sec. 100.9 of this title.



Sec. 101.52  Answer to notice.

    The respondent, applicant or recipient may file an answer to the 
notice within 20 days after service thereof. Answers shall admit or deny 
specifically and in detail each allegation of the notice, unless the 
respondent party is without knowledge, in which case his answer should 
so state, and the statement will be deemed a denial. Allegations of fact 
in the notice not denied or controverted by answer shall be deemed 
admitted. Matters alleged as affirmative defenses shall be separately 
stated and numbered. Failure of the respondent to file an answer within 
the 20-day period following service of the notice may be deemed an 
admission of all matters of fact recited in the notice.



Sec. 101.53  Amendment of notice or answer.

    The Assistant Secretary for Civil Rights may amend the notice of 
hearing or opportunity for hearing once as a matter of course before an 
answer thereto is served, and each respondent may amend his answer once 
as a matter of course not later than 10 days before the date fixed for 
hearing but in no event later than 20 days from the date of service of 
his original answer. Otherwise a notice or answer may be amended only by 
leave of the presiding officer. A respondent shall file his answer to an 
amended notice within the time remaining for filing the answer to the 
original notice or within 10 days after service of the amended notice, 
whichever period may be the longer, unless the presiding officer 
otherwise orders.



Sec. 101.54  Request for hearing.

    Within 20 days after service of a notice of opportunity for hearing 
which does not fix a date for hearing the respondent, either in his 
answer or in a separate document, may request a hearing. Failure of the 
respondent to request a hearing shall be deemed a waiver of the right to 
a hearing and to constitute his consent to the making of a decision on 
the basis of such information as is available.



Sec. 101.55  Consolidation.

    The responsible Department official may provide for proceedings in 
the Department to be joined or consolidated for hearing with proceedings 
in other Federal departments or agencies, by agreement with such other 
departments or agencies. All parties to any proceeding consolidated 
subsequently to service of the notice of hearing or opportunity for 
hearing shall be promptly served with notice of such consolidation.



Sec. 101.56  Motions.

    Motions and petitions shall state the relief sought, the authority 
relied upon, and the facts alleged. If made before or after the hearing, 
these matters shall be in writing. If made at the hearing, they may be 
stated orally; but the presiding officer may require that they be 
reduced to writing and filed and

[[Page 363]]

served on all parties in the same manner as a formal motion. Motions, 
answers, and replies shall be addressed to the presiding officer, if the 
case is pending before him. A repetitious motion will not be 
entertained.



Sec. 101.57  Responses to motions and petitions.

    Within 8 days after a written motion or petition is served, or such 
other period as the reviewing authority or the presiding officer may 
fix, any party may file a response thereto. An immediate oral response 
may be made to an oral motion.



Sec. 101.58  Disposition of motions and petitions.

    The reviewing authority or the presiding officer may not sustain or 
grant a written motion or petition prior to expiration of the time for 
filing responses thereto, but may overrule or deny such motion or 
petition without awaiting response: Provided, however, That prehearing 
conferences, hearings and decisions need not be delayed pending 
disposition of motions or petitions. Oral motions and petitions may be 
ruled on immediately. Motions and petitions submitted to the reviewing 
authority or the presiding officer, respectively, and not disposed of in 
separate rulings or in their respective decisions will be deemed denied. 
Oral arguments shall not be held or written motions or petitions unless 
the presiding officer in his discretion expressly so orders.



       Subpart G_Responsibilities and Duties of Presiding Officer



Sec. 101.61  Who presides.

    A hearing examiner assigned under 5 U.S.C. 3105 or 3344 (formerly 
section 11 of the Administrative Procedure Act) shall preside over the 
taking of evidence in any hearing to which these rules of procedure 
apply.



Sec. 101.62  Designation of hearing examiner.

    The designation of the hearing examiner as presiding officer shall 
be in writing, and shall specify whether the examiner is to make an 
initial decision or to certify the entire record including his 
recommended findings and proposed decision to the reviewing authority, 
and may also fix the time and place of hearing. A copy of such order 
shall be served on all parties. After service of an order designating a 
hearing examiner to preside, and until such examiner makes his decision, 
motions and petitions shall be submitted to him. In the case of the 
death, illness, disqualification or unavailability of the designated 
hearing examiner, another hearing examiner may be designated to take his 
place.



Sec. 101.63  Authority of presiding officer.

    The presiding officer shall have the duty to conduct a fair hearing, 
to take all necessary action to avoid delay, and to maintain order. He 
shall have all powers necessary to these ends, including (but not 
limited to) the power to:
    (a) Arrange and issue notice of the date, time, and place of 
hearings, or, upon due notice to the parties, to change the date, time, 
and place of hearings previously set.
    (b) Hold conferences to settle, simplify, or fix the issues in a 
proceeding, or to consider other matters that may aid in the expeditious 
disposition of the proceeding.
    (c) Require parties and amici curiae to state their position with 
respect to the various issues in the proceeding.
    (d) Administer oaths and affirmations.
    (e) Rule on motions, and other procedural items on matters pending 
before him.
    (f) Regulate the course of the hearing and conduct of counsel 
therein.
    (g) Examine witnesses and direct witnesses to testify.
    (h) Receive, rule on, exclude or limit evidence.
    (i) Fix the time for filing motions, petitions, briefs, or other 
items in matters pending before him.
    (j) Issue initial or recommended decisions.
    (k) Take any action authorized by the rules in this part or in 
conformance with the provisions of 5 U.S.C. 551-559 (the Administrative 
Procedure Act).

[[Page 364]]



                      Subpart H_Hearing Procedures



Sec. 101.71  Statement of position and trial briefs.

    The presiding officer may require parties and amici curiae to file 
written statements of position prior to the beginning of a hearing. The 
presiding officer may also require the parties to submit trial briefs.



Sec. 101.72  Evidentiary purpose.

    (a) 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 should be presented in 
statements, memoranda, or briefs, as determined by the presiding 
officer. Brief opening statements, which shall be limited to statement 
of the party's position and what he intends to prove, may be made at 
hearings.
    (b) Hearings for the reception of evidence will be held only in 
cases where issues of fact must be resolved in order to determine 
whether the respondent has failed to comply with one or more applicable 
requirements of part 100 of this title. In any case where it appears 
from the respondent's answer to the notice of hearing or opportunity for 
hearing, from his failure timely to answer, or from his admissions or 
stipulations in the record, that there are no matters of material fact 
in dispute, the reviewing authority or presiding officer may enter an 
order so finding, vacating the hearing date if one has been set, and 
fixing the time for filing briefs under Sec. 101.101. Thereafter the 
proceedings shall go to conclusion in accordance with subpart J of this 
part. The presiding officer may allow an appeal from such order in 
accordance with Sec. 101.86.



Sec. 101.73  Testimony.

    Testimony shall be given orally under oath or affirmation by 
witnesses at the hearing; but the presiding officer, in his discretion, 
may require or permit that the direct testimony of any witness be 
prepared in writing and served on all parties in advance of the hearing. 
Such testimony may be adopted by the witness at the hearing, and filed 
as part of the record thereof. Unless authorized by the presiding 
officer, witnesses will not be permitted to read prepared testimony into 
the record. Except as provided in Sec. Sec. 101.75 and 101.76, 
witnesses shall be available at the hearing for cross-examination.



Sec. 101.74  Exhibits.

    Proposed exhibits shall be exchanged at the prehearing conference, 
or otherwise prior to the hearing if the presiding officer so requires. 
Proposed exhibits not so exchanged may be denied admission as evidence. 
The authenticity of all proposed exhibits exchanged prior to hearing 
will be deemed admitted unless written objection thereto is filed prior 
to the hearing or unless good cause is shown at the hearing for failure 
to file such written objection.



Sec. 101.75  Affidavits.

    An affidavit is; not inadmissible as such. Unless the presiding 
officer fixes other time periods affidavits shall be filed and served on 
the parties not later than 15 days prior to the hearing; and not less 
than 7 days prior to hearing a party may file and serve written 
objection to any affidavit on the ground that he believes it necessary 
to test the truth of assertions therein at hearing. In such event the 
assertions objected to will not be received in evidence unless the 
affiant is made available for cross-examination, or the presiding 
officer determines that cross-examination is not necessary for the full 
and true disclosure of facts referred to in such assertions. 
Notwithstanding any objection, however, affidavits may be considered in 
the case of any respondent who waives a hearing.



Sec. 101.76  Depositions.

    Upon such terms as may be just, for the convenience of the parties 
or of the Department, the presiding officer may authorize or direct the 
testimony of any witness to be taken by deposition.



Sec. 101.77  Admissions as to facts and documents.

    Not later than 15 days prior to the scheduled date of the hearing 
except for good cause shown, or prior to such earlier date as the 
presiding officer may order, any party may serve upon

[[Page 365]]

an opposing party a written request for the admission of the genuineness 
and authenticity of any relevant documents described in and exhibited 
with the request, or for the admission of the truth of any relevant 
matters of fact stated in the request. Each of the matters of which an 
admission is requested shall be deemed admitted, unless within a period 
designated in the request (not less than 10 days after service thereof, 
or within such further time as the presiding officer or the reviewing 
authority if no presiding officer has yet been designated may allow upon 
motion and notice) the party to whom the request is directed serves upon 
the requesting party a sworn statement either denying specifically the 
matters of which an admission is requested or setting forth in detail 
the reasons why he cannot truthfully either admit or deny such matters. 
Copies of requests for admission and answers thereto shall be served on 
all parties. Any admission made by a party to such request is only for 
the purposes of the pending proceeding, or any proceeding or action 
instituted for the enforcement of any order entered therein, and shall 
not constitute and admission by him for any other purpose or be used 
against him in any other proceeding or action.



Sec. 101.78  Evidence.

    Irrelevant, immaterial, unreliable, and unduly repetitious evidence 
will be excluded.



Sec. 101.79  Cross-examination.

    A witness may be cross-examined on any matter material to the 
proceeding without regard to the scope of his direct examination.



Sec. 101.80  Unsponsored written material.

    Letters expressing views or urging action and other unsponsored 
written material regarding matters in issue in a hearing will be placed 
in the correspondence section of the docket of the proceeding. These 
data are not deemed part of the evidence or record in the hearing.



Sec. 101.81  Objections.

    Objections to evidence shall be timely and briefly state the ground 
relied upon.



Sec. 101.82  Exceptions to rulings of presiding officer unnecessary.

    Exceptions to rulings of the presiding officer are unnecessary. It 
is sufficient that a party, at the time the ruling of the presiding 
officer is sought, makes known the action which he desires the presiding 
officer to take, or his objection to an action taken, and his grounds 
therefor.



Sec. 101.83  Official notice.

    Where official notice is taken or is to be taken of a material fact 
not appearing in the evidence of record, any party, on timely request, 
shall be afforded an opportunity to show the contrary.



Sec. 101.84  Public document items.

    Whenever there is offered (in whole or in part) a public document, 
such as an official report, decision, opinion, or published scientific 
or economic statistical data issued by any of the executive departments 
(or their subdivisions), legislative agencies or committees, or 
administrative agencies of the Federal Government (including Government-
owned corporations), or a similar document issued by a State or its 
agencies, and such document (or part thereof) has been shown by the 
offeror to be reasonably available to the public, such document need not 
be produced or marked for identification, but may be offered for 
official notice, as a public document item by specifying the document or 
relevant part thereof.



Sec. 101.85  Offer of proof.

    An offer of proof made in connection with an objection taken to any 
ruling of the presiding officer rejecting or excluding proffered oral 
testimony shall consist of a statement of the substance of the evidence 
which counsel contends would be adduced by such testimony; and, if the 
excluded evidence consists of evidence in documentary or written form or 
of reference to documents or records, a copy of such evidence shall be 
marked for identification and shall

[[Page 366]]

accompany the record as the offer of proof.



Sec. 101.86  Appeals from ruling of presiding officer.

    Rulings of the presiding officer may not be appealed to the 
reviewing authority prior to his consideration of the entire proceeding 
except with the consent of the presiding officer and where he certifies 
on the record or in writing that the allowance of an interlocutory 
appeal is clearly necessary to prevent exceptional delay, expense, or 
prejudice to any party, or substantial detriment to the public interest. 
If an appeal is allowed, any party may file a brief with the reviewing 
authority within such period as the presiding officer directs. No oral 
argument will be heard unless the reviewing authority directs otherwise. 
At any time prior to submission of the proceeding to it for decisions, 
the reviewing authority may direct the presiding officer to certify any 
question or the entire record to it for decision. Where the entire 
record is so certified, the presiding officer shall recommend a 
decision.



                          Subpart I_The Record



Sec. 101.91  Official transcript.

    The Department will designate the official reporter for all 
hearings. The official transcripts of testimony taken, together with any 
exhibits, briefs, or memoranda of law filed therewith shall be 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.



Sec. 101.92  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 shall 
constitute the exclusive record for decision.



               Subpart J_Posthearing Procedures, Decisions



Sec. 101.101  Posthearing briefs: proposed findings and conclusions.

    (a) The presiding officer shall fix the time for filing posthearing 
briefs, which may contain proposed findings of fact and conclusions of 
law, and, if permitted, reply briefs.
    (b) Briefs should include a summary of the evidence relied upon 
together with references to exhibit numbers and pages of the transcript, 
with citations of the authorities relied upon.



Sec. 101.102  Decisions following hearing.

    When the time for submission of posthearing briefs has expired, the 
presiding officer shall certify the entire record, including his 
recommended findings and proposed decision, to the responsible 
Department official; or if so authorized he shall make an initial 
decision. A copy of the recommended findings and proposed decision, or 
of the initial decision, shall be served upon all parties, and amici, if 
any.



Sec. 101.103  Exceptions to initial or recommended decisions.

    Within 20 days after the mailing of an initial or recommended 
decision, any party may file exceptions to the decision, stating reasons 
therefor, with the reviewing authority. Any other party may file a 
response thereto within 30 days after the mailing of the decision. Upon 
the filing of such exceptions, the reviewing authority shall review the 
decision and issue its own decision thereon.



Sec. 101.104  Final decisions.

    (a) Where the hearing is conducted by a hearing examiner who makes 
an initial decision, if no exceptions thereto are filed within the 20-
day period specified in Sec. 101.103, such decision shall become the 
final decision of the Department, and shall constitute ``final agency 
action'' within the meaning of 5 U.S.C. 704 (formerly section 10(c) of 
the Administrative Procedure Act), subject to the provisions of Sec. 
101.106.
    (b) Where the hearing is conducted by a hearing examiner who makes a 
recommended decision, or upon the filing of exceptions to a hearing 
examiner's

[[Page 367]]

initial decision, the reviewing authority shall review the recommended 
or initial decision and shall issue its own decision thereon, which 
shall become the final decision of the Department, and shall constitute 
``final agency action'' within the meaning of 5 U.S.C. 704 (formerly 
section 10(c) of the Administrative Procedure Act), subject to the 
provisions of Sec. 101.106.
    (c) All final decisions shall be promptly served on all parties, and 
amici, if any.



Sec. 101.105  Oral argument to the reviewing authority.

    (a) If any party desires to argue a case orally on exceptions or 
replies to exceptions to an initial or recommended decision, he shall 
make such request in writing. The reviewing authority may grant or deny 
such requests in its discretion. If granted, it will serve notice of 
oral argument on all parties. The notice will set forth the order of 
presentation, the amount of time allotted, and the time and place for 
argument. The names of persons who will argue should be filed with the 
Department hearing clerk not later than 7 days before the date set for 
oral argument.
    (b) The purpose of oral argument is to emphasize and clarify the 
written argument in the briefs. Reading at length from the brief or 
other texts is not favored. Participants should confine their arguments 
to points of controlling importance and to points upon which exceptions 
have been filed. Consolidations of appearances at oral argument by 
parties taking the same side will permit the parties' interests to be 
presented more effectively in the time allotted.
    (c) Pamphlets, charts, and other written material may be presented 
at oral argument only if such material is limited to facts already in 
the record and is served on all parties and filed with the Department 
hearing clerk at least 7 days before the argument.



Sec. 101.106  Review by the Secretary.

    Within 20 days after an initial decision becomes a final decision 
pursuant to Sec. 101.104(a) or within 20 days of the mailing of a final 
decision referred to in Sec. 101.104(b), as the case may be, a party 
may request the Secretary to review the final decision. The Secretary 
may grant or deny such request, in whole or in part, or serve notice of 
his intent to review the decision in whole or in part upon his own 
motion. If the Secretary grants the requested review, or if he serves 
notice of intent to review upon his own motion, each party to the 
decision shall have 20 days following notice of the Secretary's proposed 
action within which to file exceptions to the decision and supporting 
briefs and memoranda, or briefs and memoranda in support of the 
decision. Failure of a party to request review under this paragraph 
shall not be deemed a failure to exhaust administrative remedies for the 
purpose of obtaining judicial review.



Sec. 101.107  Service on amici curiae.

    All briefs, exceptions, memoranda, requests, and decisions referred 
to in this subpart J shall be served upon amici curiae at the same times 
and in the same manner required for service on parties. Any written 
statements of position and trial briefs required of parties under Sec. 
101.71 shall be served on amici.



                Subpart K_Judicial Standards of Practice



Sec. 101.111  Conduct.

    Parties and their representatives are expected to conduct themselves 
with honor and dignity and observe judicial standards of practice and 
ethics in all proceedings. They should not indulge in offensive 
personalities, unseemly wrangling, or intemperate accusations or 
characterizations. A representative of any party whether or not a lawyer 
shall observe the traditional responsibilities of lawyers as officers of 
the court and use his best efforts to restrain his client from 
improprieties in connection with a proceeding.



Sec. 101.112  Improper conduct.

    With respect to any proceeding it is improper for any interested 
person to attempt to sway the judgement of the reviewing authority by 
undertaking to bring pressure or influence to bear upon any officer 
having a responsibility for a decision in the proceeding,

[[Page 368]]

or his decisional staff. It is improper that such interested persons or 
any members of the Department's staff or the presiding officer give 
statements to communications media, by paid advertisement or otherwise, 
designed to influence the judgement of any officer having a 
responsibility for a decision in the proceeding, or his decisional 
staff. It is improper for any person to solicit communications to any 
such officer, or his decisional staff, other than proper communications 
by parties or amici curiae.



Sec. 101.113  Ex parte communications.

    Only persons employed by or assigned to work with the reviewing 
authority who perform no investigative or prosecuting function in 
connection with a proceeding shall communicate ex parte with the 
reviewing authority, or the presiding officer, or any employee or person 
involved in the decisional process in such proceedings with respect to 
the merits of that or a factually related proceeding. The reviewing 
authority, the presiding officer, or any employee or person involved in 
the decisional process of a proceeding shall communicate ex parte with 
respect to the merits of that or a factually related proceeding only 
with persons employed by or assigned to work with them and who perform 
no investigative or prosecuting function in connection with the 
proceeding.



Sec. 101.114  Expeditious treatment.

    Requests for expeditious treatment of matters pending before the 
responsible Department official or the presiding officer are deemed 
communications on the merits, and are improper except when forwarded 
from parties to a proceeding and served upon all other parties thereto. 
Such communications should be in the form of a motion.



Sec. 101.115  Matters not prohibited.

    A request for information which merely inquires about the status of 
a proceeding without discussing issues or expressing points of view is 
not deemed an ex parte communication. Such requests should be directed 
to the Civil Rights hearing clerk. Communications with respect to minor 
procedural matters or inquiries or emergency requests for extensions of 
time are not deemed ex parte communications prohibited by Sec. 101.113. 
Where feasible, however, such communications should be by letter with 
copies to all parties. Ex parte communications between a respondent and 
the responsible Department official or the Secretary with respect to 
securing such respondent's voluntary compliance with any requirement of 
part 100 of this title are not prohibited.



Sec. 101.116  Filing of ex parte communications.

    A prohibited communication in writing received by the Secretary, the 
reviewing authority, or by the presiding officer, shall be made public 
by placing it in the correspondence file of the docket in the case and 
will not be considered as part of the record for decision. If the 
prohibited communication is received orally a memorandum setting forth 
its substance shall be made and filed in the correspondence section of 
the docket in the case. A person referred to in such memorandum may file 
a comment for inclusion in the docket if he considers the memorandum to 
be incorrect.



                  Subpart L_Posttermination Proceedings



Sec. 101.121  Posttermination proceedings.

    (a) An applicant or recipient adversely affected by the order 
terminating, discontinuing, or refusing Federal financial assistance in 
consequence of proceedings pursuant to this title may request the 
responsible Department official for an order authorizing payment, or 
permitting resumption, of Federal financial assistance. Such request 
shall be in writing and shall affirmatively show that since entry of the 
order, it has brought its program or activity into compliance with the 
requirements of the Act, and with the Regulation thereunder, and shall 
set forth specifically, and in detail, the steps which it has taken to 
achieve such compliance. If the responsible Department official denies 
such request the applicant or recipient shall be given an expeditious 
hearing if it so requests in writing and specifies why it

[[Page 369]]

believes the responsible Department official to have been in error. The 
request for such a hearing shall be addressed to the responsible 
Department official and shall be made within 30 days after the applicant 
or recipient is informed that the responsible Department official has 
refused to authorize payment or permit resumption of Federal financial 
assistance.
    (b) In the event that a hearing shall be requested pursuant to 
paragraph (a) of this section, the hearing procedures established by 
this part shall be applicable to the proceedings, except as otherwise 
provided in this section.



                          Subpart M_Definitions



Sec. 101.131  Definitions.

    The definitions contained in Sec. 100.13 of this subtitle apply to 
this part, unless the context otherwise requires, and the term 
``reviewing authority'' as used herein includes the Secretary of 
Education, with respect to action by that official under Sec. 101.106.

Transition provisions: (a) The amendments herein shall become effective 
upon publication in the Federal Register.
    (b) These rules shall apply to any proceeding or part thereof to 
which part 100 of this title applies. In the case of any proceeding or 
part thereof governed by the provisions of 34 CFR, part 100 (Title VI 
regulations of the Department of Education) as that part existed prior 
to the amendments published in the Federal Register on Oct. 19, 1967 
(effective on that date), the rules in this part 101 shall apply as if 
those amendments were not in effect.



PART 104_NONDISCRIMINATION ON THE BASIS OF HANDICAP IN PROGRAMS OR 
ACTIVITIES RECEIVING FEDERAL FINANCIAL ASSISTANCE--Table of Contents




                      Subpart A_General Provisions

Sec.
104.1 Purpose.
104.2 Application.
104.3 Definitions.
104.4 Discrimination prohibited.
104.5 Assurances required.
104.6 Remedial action, voluntary action, and self-evaluation.
104.7 Designation of responsible employee and adoption of grievance 
          procedures.
104.8 Notice.
104.9 Administrative requirements for small recipients.
104.10 Effect of state or local law or other requirements and effect of 
          employment opportunities.

                     Subpart B_Employment Practices

104.11 Discrimination prohibited.
104.12 Reasonable accommodation.
104.13 Employment criteria.
104.14 Preemployment inquiries.

                         Subpart C_Accessibility

104.21 Discrimination prohibited.
104.22 Existing facilities.
104.23 New construction.

        Subpart D_Preschool, Elementary, and Secondary Education

104.31 Application of this subpart.
104.32 Location and notification.
104.33 Free appropriate public education.
104.34 Educational setting.
104.35 Evaluation and placement.
104.36 Procedural safeguards.
104.37 Nonacademic services.
104.38 Preschool and adult education.
104.39 Private education.

                    Subpart E_Postsecondary Education

104.41 Application of this subpart.
104.42 Admissions and recruitment.
104.43 Treatment of students; general.
104.44 Academic adjustments.
104.45 Housing.
104.46 Financial and employment assistance to students.
104.47 Nonacademic services.

             Subpart F_Health, Welfare, and Social Services

104.51 Application of this subpart.
104.52 Health, welfare, and other social services.
104.53 Drug and alcohol addicts.
104.54 Education of institutionalized persons.

                          Subpart G_Procedures

104.61 Procedures.

Appendix A to Part 104--Analysis of Final Regulation
Appendix B to Part 104--Guidelines for Eliminating Discrimination and 
          Denial of Services on the Basis of Race,

[[Page 370]]

          Color, National Origin, Sex, and Handicap in Vocational 
          Education Programs [Note]

    Authority: 20 U.S.C. 1405; 29 U.S.C. 794.

    Source: 45 FR 30936, May 9, 1980, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 104.1  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. 104.2  Application.

    This part applies to each recipient of Federal financial assistance 
from the Department of Education and to the program or activity that 
receives such assistance.

[65 FR 30936, May 9, 1980, as amended at 65 FR 68054, Nov. 13, 2000]



Sec. 104.3  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, 29 
U.S.C. 794.
    (b) Section 504 means section 504 of the Act.
    (c) Education of the Handicapped Act means that statute as amended 
by the Education for all Handicapped Children Act of 1975, Pub. L. 94-
142, 20 U.S.C. 1401 et seq.
    (d) Department means the Department of Education.
    (e) Assistant Secretary means the Assistant Secretary for Civil 
Rights of the Department of Education.
    (f) 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.
    (g) Applicant for assistance means one who submits an application, 
request, or plan required to be approved by a Department official or by 
a recipient as a condition to becoming a recipient.
    (h) Federal financial assistance means any grant, loan, contract 
(other than a procurement contract or a contract of insurance or 
guaranty), or any other arrangement by which the Department provides or 
otherwise makes available assistance in the form of:
    (1) Funds;
    (2) Services of Federal personnel; or
    (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.
    (i) 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.
    (j) Handicapped person--(1) Handicapped persons 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 (j)(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, genito-urinary; 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.
    (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

[[Page 371]]

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 that 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 (j)(2)(i) of this section but is treated by a recipient as 
having such an impairment.
    (k) Program or activity means all of the operations of--
    (1)(i) A department, agency, special purpose district, or other 
instrumentality of a State or of a local government; or
    (ii) The entity of such State or local government that distributes 
such assistance and each such department or agency (and each other State 
or local government entity) to which the assistance is extended, in the 
case of assistance to a State or local government;
    (2)(i) A college, university, or other postsecondary institution, or 
a public system of higher education; or
    (ii) A local educational agency (as defined in 20 U.S.C. 8801), 
system of vocational education, or other school system;
    (3)(i) An entire corporation, partnership, or other private 
organization, or an entire sole proprietorship--
    (A) If assistance is extended to such corporation, partnership, 
private organization, or sole proprietorship as a whole; or
    (B) Which is principally engaged in the business of providing 
education, health care, housing, social services, or parks and 
recreation; or
    (ii) 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
    (4) Any other entity which is established by two or more of the 
entities described in paragraph (k)(1), (2), or (3) of this section; any 
part of which is extended Federal financial assistance.

(Authority: 29 U.S.C. 794(b))

    (l) 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 public preschool elementary, secondary, or adult 
educational services, a handicappped person (i) of an age during which 
nonhandicapped persons are provided such services, (ii) of any age 
during which it is mandatory under state law to provide such services to 
handicapped persons, or (iii) to whom a state is required to provide a 
free appropriate public education under section 612 of the Education of 
the Handicapped Act; and
    (3) With respect to postsecondary and vocational education services, 
a handicapped person who meets the academic and technical standards 
requisite to admission or participation in the recipient's education 
program or activity;
    (4) With respect to other services, a handicapped person who meets 
the essential eligibility requirements for the receipt of such services.
    (m) Handicap means any condition or characteristic that renders a 
person a handicapped person as defined in paragraph (j) of this section.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68054, Nov. 13, 2000]



Sec. 104.4  Discrimination prohibited.

    (a) General. 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 
activitiy which receives Federal financial assistance.
    (b) Discriminatory actions prohibited. (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

[[Page 372]]

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 as that provided to others;
    (iv) Provide different or separate aid, benefits, or services to 
handicapped persons or to any class of handicapped persons 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 recipients program or 
activity;
    (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 an aid, benefit, or service.
    (2) For purposes of this part, aids, benefits, and services, to be 
equally effective, are not required to produce the identical result or 
level of achievement for handicapped and nonhandicapped persons, but 
must afford handicapped persons equal opportunity to obtain the same 
result, to gain the same benefit, or to reach the same level of 
achievement, in the most integrated setting appropriate to the person's 
needs.
    (3) Despite the existence of separate or different aid, benefits, or 
services provided in accordance with this part, a recipient may not deny 
a qualified handicapped person the opportunity to participate in such 
aid, benefits, or services that are not separate or different.
    (4) 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 or activity 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.
    (5) In determining the site or location of a facility, an applicant 
for assistance or a recipient may not 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 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.
    (6) As used in this section, the aid, benefit, or service provided 
under a program or activity receiving Federal financial assistance 
includes any aid, benefit, or service provided in or through a facility 
that has been constructed, expanded, altered, leased or rented, or 
otherwise acquired, in whole or in part, with Federal financial 
assistance.
    (c) Aid, benefits, or services limited by Federal law. The exclusion 
of nonhandicapped persons from aid, benefits, or services limited by 
Federal statute or executive order to handicapped persons or the 
exclusion of a specific class of handicapped persons from aid, benefits, 
or services limited by Federal statute or executive order to a different 
class of handicapped persons is not prohibited by this part.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68054, Nov. 13, 2000]



Sec. 104.5  Assurances required.

    (a) Assurances. An applicant for Federal financial assistance to 
which this part applies shall submit an assurance, on a form specified 
by the Assistant Secretary, that the program or activity will be 
operated in compliance with

[[Page 373]]

this part. An applicant may incorporate these assurances by reference in 
subsequent applications to the Department.
    (b) Duration of obligation. (1) In the case of Federal financial 
assistance extended in the form of real property or to provide real 
property or structures on the property, the assurance will 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 for the 
purpose for which Federal financial assistance is extended or for 
another purpose involving the provision of similar services or benefits.
    (2) 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.
    (3) In all other cases the assurance will obligate the recipient for 
the period during which Federal financial assistance is extended.
    (c) Covenants. (1) Where Federal financial assistance is provided in 
the form of real property or interest in the property from the 
Department, the instrument effecting or recording this transfer shall 
contain a covenant running with the land to assure nondiscrimination for 
the period during which the real 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.
    (2) Where no transfer of property is involved but property is 
purchased or improved with Federal financial assistance, the recipient 
shall agree to include the covenant described in paragraph (b)(2) of 
this section in the instrument effecting or recording any subsequent 
transfer of the property.
    (3) Where Federal financial assistance is provided in the form of 
real property or interest in the property from the Department, the 
covenant shall also include a condition coupled with a right to be 
reserved by the Department to revert title to the property in the event 
of a breach of the covenant. If 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 
the property for the purposes for which the property was transferred, 
the Assistant Secretary may, upon request of the transferee and if 
necessary to accomplish such financing and upon such conditions as he or 
she deems appropriate, agree to forbear the exercise of such right to 
revert title for so long as the lien of such mortgage or other 
encumbrance remains effective.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68054, Nov. 13, 2000]



Sec. 104.6  Remedial action, voluntary action, and self-evaluation.

    (a) Remedial action. (1) If the Assistant Secretary 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 Assistant Secretary 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 Assistant Secretary, where appropriate, may require 
either or both recipients to take remedial action.
    (3) The Assistant Secretary 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 or activity but who were participants in the program or activity 
when such discrimination occurred or (ii) with respect to handicapped 
persons who would have been participants in the program or activity had 
the discrimination not occurred.
    (b) Voluntary action. A 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) A recipient shall, within one year of the 
effective date of this part:

[[Page 374]]

    (i) Evaluate, with the assistance of interested persons, including 
handicapped persons or organizations representing handicapped persons, 
its current policies and practices and the effects thereof that do not 
or may not meet the requirements of this part;
    (ii) Modify, after consultation with interested persons, including 
handicapped persons or organizations representing handicapped persons, 
any policies and practices that do not meet the requirements of this 
part; and
    (iii) Take, after consultation with interested persons, including 
handicapped persons or organizations representing handicapped persons, 
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 Assistant Secretary upon request:
    (i) A list of the interested persons consulted,
    (ii) A description of areas examined and any problems identified, 
and
    (iii) A description of any modifications made and of any remedial 
steps taken.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68054, Nov. 13, 2000]



Sec. 104.7  Designation of responsible employee and adoption of grievance 
procedures.

    (a) Designation of responsible employee. A recipient that employs 
fifteen or more persons shall designate at least one person to 
coordinate its efforts to comply with this part.
    (b) Adoption of grievance procedures. A recipient that employs 
fifteen or more persons shall adopt grievance procedures that 
incorporate appropriate due process standards and that provide for the 
prompt and equitable resolution of complaints alleging any action 
prohibited by this part. Such procedures need not be established with 
respect to complaints from applicants for employment or from applicants 
for admission to postsecondary educational institutions.



Sec. 104.8  Notice.

    (a) A recipient that employs fifteen or more persons shall take 
appropriate initial and continuing steps to notify participants, 
beneficiaries, applicants, and employees, including those with impaired 
vision or hearing, and unions or professional organizations holding 
collective bargaining or professional agreements with the recipient that 
it does not discriminate on the basis of handicap in violation of 
section 504 and this part. The notification shall state, where 
appropriate, that the recipient does not discriminate in admission or 
access to, or treatment or employment in, its program or activity. The 
notification shall also include an identification of the responsible 
employee designated pursuant to Sec. 104.7(a). A recipient shall make 
the initial notification required by this paragraph within 90 days of 
the effective date of this part. Methods of initial and continuing 
notification may include the posting of notices, publication in 
newspapers and magazines, placement of notices in recipients' 
publication, and distribution of memoranda or other written 
communications.
    (b) If a recipient publishes or uses recruitment materials or 
publications containing general information that it makes available to 
participants, beneficiaries, applicants, or employees, it shall include 
in those materials or publications a statement of the policy described 
in paragraph (a) of this section. A recipient may meet the requirement 
of this paragraph either by including appropriate inserts in existing 
materials and publications or by revising and reprinting the materials 
and publications.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68054, Nov. 13, 2000]



Sec. 104.9  Administrative requirements for small recipients.

    The Assistant Secretary may require any recipient with fewer than 
fifteen employees, or any class of such recipients, to comply with 
Sec. Sec. 104.7 and 104.8, in whole or in part, when the Assistant 
Secretary finds a violation of this part or finds that such compliance 
will not

[[Page 375]]

significantly impair the ability of the recipient or class of recipients 
to provide benefits or services.



Sec. 104.10  Effect of state or local law or other requirements and 
effect of employment opportunities.

    (a) 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.
    (b) The obligation to comply with this part is not obviated or 
alleviated because employment opportunities in any occupation or 
profession are or may be more limited for handicapped persons than for 
nonhandicapped persons.



                     Subpart B_Employment Practices



Sec. 104.11  Discrimination prohibited.

    (a) General. (1) No qualified handicapped person shall, on the basis 
of handicap, be subjected to discrimination in employment under any 
program or activity to which this part applies.
    (2) A recipient that receives assistance under the Education of the 
Handicapped Act shall take positive steps to employ and advance in 
employment qualified handicapped persons in programs or activities 
assisted under that Act.
    (3) A recipient shall make all decisions concerning employment 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 in any way 
that adversely affects their opportunities or status because of 
handicap.
    (4) A recipient may not participate in a contractual or other 
relationship that has the effect of subjecting qualified handicapped 
applicants 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 
apprenticeships.
    (b) Specific activities. The provisions of this subpart apply to:
    (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 absense, sick leave, or any other leave;
    (6) Fringe benefits available by virtue of employment, 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 those that are social 
or recreational; and
    (9) Any other term, condition, or privilege of employment.
    (c) 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.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68055, Nov. 13, 2000]



Sec. 104.12  Reasonable accommodation.

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

[[Page 376]]

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 or activity, factors to be considered include:
    (1) The overall size of the recipient's program or activity with 
respect to number of employees, 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; and
    (3) The nature and cost of the accommodation needed.
    (d) A recipient may not deny any employment opportunity to a 
qualified handicapped employee or applicant if the basis for the denial 
is the need to make reasonable accommodation to the physical or mental 
limitations of the employee or applicant.

[45 FR 30936, May 9, 2000, as amended at 65 FR 68054, Nov. 13, 2000]



Sec. 104.13  Employment criteria.

    (a) A recipient may not make use of any employment test or other 
selection criterion that screens out or tends to screen out handicapped 
persons or any class of handicapped persons unless:
    (1) The test score or other selection criterion, as used by the 
recipient, is shown to be job-related for the position in question, and
    (2) Alternative job-related tests or criteria that do not screen out 
or tend to screen out as many handicapped persons are not shown by the 
Director to be available.
    (b) A recipient shall select and administer tests concerning 
employment so as best to ensure that, when administered to an applicant 
or employee who has a handicap that impairs sensory, manual, or speaking 
skills, the test results accurately reflect the applicant's or 
employee's job skills, aptitude, or whatever other factor the test 
purports to measure, rather than reflecting the applicant's or 
employee's impaired sensory, manual, or speaking skills (except where 
those skills are the factors that the test purports to measure).



Sec. 104.14  Preemployment inquiries.

    (a) Except as provided in paragraphs (b) and (c) of this section, a 
recipient may not conduct a preemployment medical examination or may not 
make preemployment inquiry of an applicant as to whether the applicant 
is a handicapped person or as to the nature or severity of a handicap. A 
recipient may, however, make preemployment inquiry into an applicant's 
ability to perform job-related functions.
    (b) When a recipient is taking remedial action to correct the 
effects of past discrimination pursuant to Sec. 104.6 (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. 104.6(b), or when a 
recipient is taking affirmative action pursuant to section 503 of the 
Act, the recipient may invite applicants for employment 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 on the results of a medical 
examination conducted prior to the employee's entrance on duty, 
Provided, That:
    (1) All entering 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

[[Page 377]]

on separate forms that shall be accorded confidentiality as medical rec 
ords, 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 officials investigating compliance with the Act shall 
be provided relevant information upon request.



                         Subpart C_Accessibility



Sec. 104.21  Discrimination prohibited.

    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 to which 
this part applies.



Sec. 104.22  Existing facilities.

    (a)  Accessibility. A recipient shall operate its program or 
activity so that when each part is viewed in its entirety, it is readily 
accessible to 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) Methods. A recipient may comply with the requirements of 
paragraph (a) of this section through such means as redesign of 
equipment, reassignment of classes or other services to accessible 
buildings, assignment of aides to beneficiaries, home visits, delivery 
of health, welfare, or other social services at alternate accessible 
sites, alteration of existing facilities and construction of new 
facilities in conformance with the requirements of Sec. 104.23, or any 
other methods that result in making its program or activity accessible 
to handicapped persons. A recipient is not required to make structural 
changes in existing facilities where other methods are effective in 
achieving compliance with paragraph (a) of this section. In choosing 
among available methods for meeting the requirement of paragraph (a) of 
this section, a recipient shall give priority to those methods that 
serve handicapped persons in the most integrated setting appropriate.
    (c) Small health, welfare, or other social service providers. If a 
recipient with fewer than fifteen employees that provides health, 
welfare, or other social services finds, after consultation with a 
handicapped person seeking its services, that there is no method of 
complying with paragraph (a) of this section other than making a 
significant alteration in its existing facilities, the recipient may, as 
an alternative, refer the handicapped person to other providers of those 
services that are accessible.
    (d) Time period. A recipient shall comply with the requirement of 
paragraph (a) of this section within sixty days of the effective date of 
this part except that where structural changes in facilities are 
necessary, such changes shall be made within three years of the 
effective date of this part, but in any event as expeditiously as 
possible.
    (e) Transition plan. 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 setting forth the steps 
necessary to complete such changes. The plan shall be developed with the 
assistance of interested persons, including handicapped persons or 
organizations representing handicapped persons. 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 recipient's facilities that 
limit the accessibility of its program or activity to handicappped 
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 
full accessibility in order to comply with paagraph (a) of this section 
and, if the time period of the transition plan is longer than one year, 
identify the steps of that will be taken during each year of the 
transition period; and

[[Page 378]]

    (4) Indicate the person responsible for implementation of the plan.
    (f) Notice. The recipient shall adopt and implement procedures to 
ensure that interested persons, including persons with impaired vision 
or hearing, can obtain information as to the existence and location of 
services, activities, and facilities that are accessible to and usuable 
by handicapped persons.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68055, Nov. 13, 2000]



Sec. 104.23  New construction.

    (a) Design and construction. Each facility or part of a facility 
constructed by, on behalf of, or for the use of a recipient shall be 
designed and constructed in such manner that the facility or part of the 
facility is readily accessible to and usable by handicapped persons, if 
the construction was commenced after the effective date of this part.
    (b) Alteration. Each facility or part of a facility which is altered 
by, on behalf of, or for the use of a recipient after the effective date 
of this part in a manner that affects or could affect the usability of 
the facility or part of the facility shall, to the maximum extent 
feasible, be altered in such manner that the altered portion of the 
facility is readily accessible to and usable by handicapped persons.
    (c) 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 (UFAS) (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 phusical 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.

[45 FR 30936, May 9, 1980; 45 FR 37426, June 3, 1980, as amended at 55 
FR 52138, 52141, Dec. 19, 1990]



        Subpart D_Preschool, Elementary, and Secondary Education



Sec. 104.31  Application of this subpart.

    Subpart D applies to preschool, elementary, secondary, and adult 
education programs or activities that receive Federal financial 
assistance and to recipients that operate, or that receive Federal 
financial assistance for the operation of, such programs or activities.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68055, Nov. 13, 2000]



Sec. 104.32  Location and notification.

    A recipient that operates a public elementary or secondary education 
program or activity shall annually:
    (a) Undertake to identify and locate every qualified handicapped 
person residing in the recipient's jurisdiction who is not receiving a 
public education; and
    (b) Take appropriate steps to notify handicapped persons and their 
parents or guardians of the recipient's duty under this subpart.

[45 FR 30936, May 9, 2000, as amended at 65 FR 68054, Nov. 13, 2000]



Sec. 104.33  Free appropriate public education.

    (a) General. A recipient that operates a public elementary or 
secondary education program or activity shall provide a free appropriate 
public education to each qualified handicapped person who is in the 
recipient's jurisdiction, regardless of the nature or severity of the 
person's handicap.
    (b) Appropriate education. (1) For the purpose of this subpart, the 
provision of an appropriate education is the provision of regular or 
special education and related aids and services that (i)

[[Page 379]]

are designed to meet individual educational needs of handicapped persons 
as adequately as the needs of nonhandicapped persons are met and (ii) 
are based upon adherence to procedures that satisfy the requirements of 
Sec. Sec. 104.34, 104.35, and 104.36.
    (2) Implementation of an Individualized Education Program developed 
in accordance with the Education of the Handicapped Act is one means of 
meeting the standard established in paragraph (b)(1)(i) of this section.
    (3) A recipient may place a handicapped person or refer such a 
person for aid, benefits, or services other than those that it operates 
or provides as its means of carrying out the requirements of this 
subpart. If so, the recipient remains responsible for ensuring that the 
requirements of this subpart are met with respect to any handicapped 
person so placed or referred.
    (c) Free education--(1) General. For the purpose of this section, 
the provision of a free education is the provision of educational and 
related services without cost to the handicapped person or to his or her 
parents or guardian, except for those fees that are imposed on non-
handicapped persons or their parents or guardian. It may consist either 
of the provision of free services or, if a recipient places a 
handicapped person or refers such person for aid, benefits, or services 
not operated or provided by the recipient as its means of carrying out 
the requirements of this subpart, of payment for the costs of the aid, 
benefits, or services. Funds available from any public or private agency 
may be used to meet the requirements of this subpart. Nothing in this 
section shall be construed to relieve an insurer or similar third party 
from an otherwise valid obligation to provide or pay for services 
provided to a handicapped person.
    (2) Transportation. If a recipient places a handicapped person or 
refers such person for aid, benefits, or services not operated or 
provided by the recipient as its means of carrying out the requirements 
of this subpart, the recipient shall ensure that adequate transportation 
to and from the aid, benefits, or services is provided at no greater 
cost than would be incurred by the person or his or her parents or 
guardian if the person were placed in the aid, benefits, or services 
operated by the recipient.
    (3) Residential placement. If a public or private residential 
placement is necessary to provide a free appropriate public education to 
a handicapped person because of his or her handicap, the placement, 
including non-medical care and room and board, shall be provided at no 
cost to the person or his or her parents or guardian.
    (4) Placement of handicapped persons by parents. If a recipient has 
made available, in conformance with the requirements of this section and 
Sec. 104.34, a free appropriate public education to a handicapped 
person and the person's parents or guardian choose to place the person 
in a private school, the recipient is not required to pay for the 
person's education in the private school. Disagreements between a parent 
or guardian and a recipient regarding whether the recipient has made a 
free appropriate public education available or otherwise regarding the 
question of financial responsibility are subject to the due process 
procedures of Sec. 104.36.
    (d) Compliance. A recipient may not exclude any qualified 
handicapped person from a public elementary or secondary education after 
the effective date of this part. A recipient that is not, on the 
effective date of this regulation, in full compliance with the other 
requirements of the preceding paragraphs of this section shall meet such 
requirements at the earliest practicable time and in no event later than 
September 1, 1978.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68055, Nov. 13, 2000]



Sec. 104.34  Educational setting.

    (a) Academic setting. A recipient to which this subpart applies 
shall educate, or shall provide for the education of, each qualified 
handicapped person in its jurisdiction with persons who are not 
handicapped to the maximum extent appropriate to the needs of the 
handicapped person. A recipient shall place a handicapped person in the 
regular educational environment operated by the recipient unless it is 
demonstrated by the recipient that the education of the person in the 
regular

[[Page 380]]

environment with the use of supplementary aids and services cannot be 
achieved satisfactorily. Whenever a recipient places a person in a 
setting other than the regular educational environment pursuant to this 
paragraph, it shall take into account the proximity of the alternate 
setting to the person's home.
    (b) Nonacademic settings. In providing or arranging for the 
provision of nonacademic and extracurricular services and activities, 
including meals, recess periods, and the services and activities set 
forth in Sec. 104.37(a)(2), a recipient shall ensure that handicapped 
persons participate with nonhandicapped persons in such activities and 
services to the maximum extent appropriate to the needs of the 
handicapped person in question.
    (c) Comparable facilities. If a recipient, in compliance with 
paragraph (a) of this section, operates a facility that is identifiable 
as being for handicapped persons, the recipient shall ensure that the 
facility and the services and activities provided therein are comparable 
to the other facilities, services, and activities of the recipient.



Sec. 104.35  Evaluation and placement.

    (a) Preplacement evaluation. A recipient that operates a public 
elementary or secondary education program or activity shall conduct an 
evaluation in accordance with the requirements of paragraph (b) of this 
section of any person who, because of handicap, needs or is belived to 
need special education or related services before taking any action with 
respect to the initial placement of the person in regular or special 
education and any subsequent significant change in placement.
    (b) Evaluation procedures. A recipient to which this subpart applies 
shall establish standards and procedures for the evaluation and 
placement of persons who, because of handicap, need or are believed to 
need special education or related services which ensure that:
    (1) Tests and other evaluation materials have been validated for the 
specific purpose for which they are used and are administered by trained 
personnel in conformance with the instructions provided by their 
producer;
    (2) Tests and other evaluation materials include those tailored to 
assess specific areas of educational need and not merely those which are 
designed to provide a single general intelligence quotient; and
    (3) Tests are selected and administered so as best to ensure that, 
when a test is administered to a student with impaired sensory, manual, 
or speaking skills, the test results accurately reflect the student's 
aptitude or achievement level or whatever other factor the test purports 
to measure, rather than reflecting the student's impaired sensory, 
manual, or speaking skills (except where those skills are the factors 
that the test purports to measure).
    (c) Placement procedures. In interpreting evaluation data and in 
making placement decisions, a recipient shall (1) draw upon information 
from a variety of sources, including aptitude and achievement tests, 
teacher recommendations, physical condition, social or cultural 
background, and adaptive behavior, (2) establish procedures to ensure 
that information obtained from all such sources is documented and 
carefully considered, (3) ensure that the placement decision is made by 
a group of persons, including persons knowledgeable about the child, the 
meaning of the evaluation data, and the placement options, and (4) 
ensure that the placement decision is made in conformity with Sec. 
104.34.
    (d) Reevaluation. A recipient to which this section applies shall 
establish procedures, in accordance with paragraph (b) of this section, 
for periodic reevaluation of students who have been provided special 
education and related services. A reevaluation procedure consistent with 
the Education for the Handicapped Act is one means of meeting this 
requirement.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68055, Nov. 13, 2000]



Sec. 104.36  Procedural safeguards.

    A recipient that operates a public elementary or secondary education 
program or activity shall establish and implement, with respect to 
actions regarding the identification, evaluation, or educational 
placement of persons who, because of handicap, need or are believed to 
need special instruction or

[[Page 381]]

related services, a system of procedural safeguards that includes 
notice, an opportunity for the parents or guardian of the person to 
examine relevant rec ords, an impartial hearing with opportunity for 
participation by the person's parents or guardian and representation by 
counsel, and a review procedure. Compliance with the procedural 
safeguards of section 615 of the Education of the Handicapped Act is one 
means of meeting this requirement.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68054, Nov. 13, 2000]



Sec. 104.37  Nonacademic services.

    (a) General. (1) A recipient to which this subpart applies shall 
provide non-academic and extracurricular services and activities in such 
manner as is necessary to afford handicapped students an equal 
opportunity for participation in such services and activities.
    (2) Nonacademic and extracurricular services and activities may 
include counseling services, physical recreational athletics, 
transportation, health services, recreational activities, special 
interest groups or clubs sponsored by the recipients, referrals to 
agencies which provide assistance to handicapped persons, and employment 
of students, including both employment by the recipient and assistance 
in making available outside employment.
    (b) Counseling services. A recipient to which this subpart applies 
that provides personal, academic, or vocational counseling, guidance, or 
placement services to its students shall provide these services without 
discrimination on the basis of handicap. The recipient shall ensure that 
qualified handicapped students are not counseled toward more restrictive 
career objectives than are nonhandicapped students with similar 
interests and abilities.
    (c) Physical education and athletics. (1) In providing physical 
education courses and athletics and similar aid, benefits, or services 
to any of its students, a recipient to which this subpart applies may 
not discriminate on the basis of handicap. A recipient that offers 
physical education courses or that operates or sponsors interscholastic, 
club, or intramural athletics shall provide to qualified handicapped 
students an equal opportunity for participation.
    (2) A recipient may offer to handicapped students physical education 
and athletic activities that are separate or different from those 
offered to nonhandicapped students only if separation or differentiation 
is consistent with the requirements of Sec. 104.34 and only if no 
qualified handicapped student is denied the opportunity to compete for 
teams or to participate in courses that are not separate or different.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68055, Nov. 13, 2000]



Sec. 104.38  Preschool and adult education.

    A recipient to which this subpart applies that provides preschool 
education or day care or adult education may not, on the basis of 
handicap, exclude qualified handicapped persons and shall take into 
account the needs of such persons in determining the aid, benefits or 
services to be provided.

[65 FR 68055, Nov. 13, 2000]



Sec. 104.39  Private education.

    (a) A recipient that provides private elementary or secondary 
education may not, on the basis of handicap, exclude a qualified 
handicapped person if the person can, with minor adjustments, be 
provided an appropriate education, as defined in Sec. 104.33(b)(1), 
within that recipient's program or activity.
    (b) A recipient to which this section applies may not charge more 
for the provision of an appropriate education to handicapped persons 
than to nonhandicapped persons except to the extent that any additional 
charge is justified by a substantial increase in cost to the recipient.
    (c) A recipient to which this section applies that provides special 
education shall do so in accordance with the provisions of Sec. Sec. 
104.35 and 104.36. Each recipient to which this section applies is 
subject to the provisions of Sec. Sec. 104.34, 104.37, and 104.38.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68055, Nov. 13, 2000]

[[Page 382]]



                    Subpart E_Postsecondary Education



Sec. 104.41  Application of this subpart.

    Subpart E applies to postsecondary education programs or activities, 
including postsecondary vocational education programs or activities, 
that receive Federal financial assistance and to recipients that 
operate, or that receive Federal financial assistance for the operation 
of, such programs or activities.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68055, Nov. 13, 2000]



Sec. 104.42  Admissions and recruitment.

    (a) General. Qualified handicapped persons may not, on the basis of 
handicap, be denied admission or be subjected to discrimination in 
admission or recruitment by a recipient to which this subpart applies.
    (b) Admissions. In administering its admission policies, a recipient 
to which this subpart applies:
    (1) May not apply limitations upon the number or proportion of 
handicapped persons who may be admitted;
    (2) May not make use of any test or criterion for admission that has 
a disproportionate, adverse effect on handicapped persons or any class 
of handicapped persons unless (i) the test or criterion, as used by the 
recipient, has been validated as a predictor of success in the education 
program or activity in question and (ii) alternate tests or criteria 
that have a less disproportionate, adverse effect are not shown by the 
Assistant Secretary to be available.
    (3) Shall assure itself that (i) admissions tests are selected and 
administered so as best to ensure that, when a test is administered to 
an applicant who has a handicap that impairs sensory, manual, or 
speaking skills, the test results accurately reflect the applicant's 
aptitude or achievement level or whatever other factor the test purports 
to measure, rather than reflecting the applicant's impaired sensory, 
manual, or speaking skills (except where those skills are the factors 
that the test purports to measure); (ii) admissions tests that are 
designed for persons with impaired sensory, manual, or speaking skills 
are offered as often and in as timely a manner as are other admissions 
tests; and (iii) admissions tests are administered in facilities that, 
on the whole, are accessible to handicapped persons; and
    (4) Except as provided in paragraph (c) of this section, may not 
make preadmission inquiry as to whether an applicant for admission is a 
handicapped person but, after admission, may make inquiries on a 
confidential basis as to handicaps that may require accommodation.
    (c) Preadmission inquiry exception. When a recipient is taking 
remedial action to correct the effects of past discrimination pursuant 
to Sec. 104.6(a) or 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. 104.6(b), the recipient may invite applicants for admission 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 action 
efforts; and
    (2) The recipient states clearly that the information is being 
requested on a voluntary basis, that it will be kept confidential, that 
refusal to provide it will not subject the applicant to any adverse 
treatment, and that it will be used only in accordance with this part.
    (d) Validity studies. For the purpose of paragraph (b)(2) of this 
section, a recipient may base prediction equations on first year grades, 
but shall conduct periodic validity studies against the criterion of 
overall success in the education program or activity in question in 
order to monitor the general validity of the test scores.



Sec. 104.43  Treatment of students; general.

    (a) No qualified handicapped student shall, on the basis of 
handicap, be excluded from participation in, be denied the benefits of, 
or otherwise be subjected to discrimination under any academic, 
research, occupational training,

[[Page 383]]

housing, health insurance, counseling, financial aid, physical 
education, athletics, recreation, transportation, other extracurricular, 
or other postsecondary education aid, benefits, or services to which 
this subpart applies.
    (b) A recipient to which this subpart applies that considers 
participation by students in education programs or activities not 
operated wholly by the recipient as part of, or equivalent to, and 
education program or activity operated by the recipient shall assure 
itself that the other education program or activity, as a whole, 
provides an equal opportunity for the participation of qualified 
handicapped persons.
    (c) A recipient to which this subpart applies may not, on the basis 
of handicap, exclude any qualified handicapped student from any course, 
course of study, or other part of its education program or activity.
    (d) A recipient to which this subpart applies shall operate its 
program or activity in the most integrated setting appropriate.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68055, Nov. 13, 2000]



Sec. 104.44  Academic adjustments.

    (a) Academic requirements. A recipient to which this subpart applies 
shall make such modifications to its academic requirements as are 
necessary to ensure that such requirements do not discriminate or have 
the effect of discriminating, on the basis of handicap, against a 
qualified handicapped applicant or student. Academic requirements that 
the recipient can demonstrate are essential to the instruction being 
pursued by such student or to any directly related licensing requirement 
will not be regarded as discriminatory within the meaning of this 
section. Modifications may include changes in the length of time 
permitted for the completion of degree requirements, substitution of 
specific courses required for the completion of degree requirements, and 
adaptation of the manner in which specific courses are conducted.
    (b) Other rules. A recipient to which this subpart applies may not 
impose upon handicapped students other rules, such as the prohibition of 
tape recorders in classrooms or of dog guides in campus buildings, that 
have the effect of limiting the participation of handicapped students in 
the recipient's education program or activity.
    (c) Course examinations. In its course examinations or other 
procedures for evaluating students' academic achievement, a recipient to 
which this subpart applies shall provide such methods for evaluating the 
achievement of students who have a handicap that impairs sensory, 
manual, or speaking skills as will best ensure that the results of the 
evaluation represents the student's achievement in the course, rather 
than reflecting the student's impaired sensory, manual, or speaking 
skills (except where such skills are the factors that the test purports 
to measure).
    (d) Auxiliary aids. (1) A recipient to which this subpart applies 
shall take such steps as are necessary to ensure that no handicapped 
student is denied the benefits of, excluded from participation in, or 
otherwise subjected to discrimination because of the absence of 
educational auxiliary aids for students with impaired sensory, manual, 
or speaking skills.
    (2) Auxiliary aids may include taped texts, interpreters or other 
effective methods of making orally delivered materials available to 
students with hearing impairments, readers in libraries for students 
with visual impairments, classroom equipment adapted for use by students 
with manual impairments, and other similar services and actions. 
Recipients need not provide attendants, individually prescribed devices, 
readers for personal use or study, or other devices or services of a 
personal nature.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68055, Nov. 13, 2000]



Sec. 104.45  Housing.

    (a) Housing provided by the recipient. A recipient that provides 
housing to its nonhandicapped students shall provide comparable, 
convenient, and accessible housing to handicapped students at the same 
cost as to others. At the end of the transition period provided for in 
subpart C, such housing shall be available in sufficient quantity and 
variety so that the scope of handicapped students' choice of living 
accommodations

[[Page 384]]

is, as a whole, comparable to that of nonhandicapped students.
    (b) Other housing. A recipient that assists any agency, 
organization, or person in making housing available to any of its 
students shall take such action as may be necessary to assure itself 
that such housing is, as a whole, made available in a manner that does 
not result in discrimination on the basis of handicap.



Sec. 104.46  Financial and employment assistance to students.

    (a) Provision of financial assistance. (1) In providing financial 
assistance to qualified handicapped persons, a recipient to which this 
subpart applies may not,
    (i) On the basis of handicap, provide less assistance than is 
provided to nonhandicapped persons, limit eligibility for assistance, or 
otherwise discriminate or
    (ii) Assist any entity or person that provides assistance to any of 
the recipient's students in a manner that discriminates against 
qualified handicapped persons on the basis of handicap.
    (2) A recipient may administer or assist in the administration of 
scholarships, fellowships, or other forms of financial assistance 
established under wills, trusts, bequests, or similar legal instruments 
that require awards to be made on the basis of factors that discriminate 
or have the effect of discrim inating on the basis of handicap only if 
the overall effect of the award of scholarships, fellowships, and other 
forms of financial assistance is not discriminatory on the basis of 
handicap.
    (b) Assistance in making available outside employment. A recipient 
that assists any agency, organization, or person in providing employment 
opportunities to any of its students shall assure itself that such 
employment opportunities, as a whole, are made available in a manner 
that would not violate subpart B if they were provided by the recipient.
    (c) Employment of students by recipients. A recipient that employs 
any of its students may not do so in a manner that violates subpart B.



Sec. 104.47  Nonacademic services.

    (a) Physical education and athletics. (1) In providing physical 
education courses and athletics and similar aid, benefits, or services 
to any of its students, a recipient to which this subpart applies may 
not discriminate on the basis of handicap. A recipient that offers 
physical education courses or that operates or sponsors intercollegiate, 
club, or intramural athletics shall provide to qualified handicapped 
students an equal opportunity for participation in these activities.
    (2) A recipient may offer to handicapped students physical education 
and athletic activities that are separate or different only if 
separation or differentiation is consistent with the requirements of 
Sec. 104.43(d) and only if no qualified handicapped student is denied 
the opportunity to compete for teams or to participate in courses that 
are not separate or different.
    (b) Counseling and placement services. A recipient to which this 
subpart applies that provides personal, academic, or vocational 
counseling, guidance, or placement services to its students shall 
provide these services without discrimination on the basis of handicap. 
The recipient shall ensure that qualified handicapped students are not 
counseled toward more restrictive career objectives than are 
nonhandicapped students with similar interests and abilities. This 
requirement does not preclude a recipient from providing factual 
information about licensing and certification requirements that may 
present obstacles to handicapped persons in their pursuit of particular 
careers.
    (c) Social organizations. A recipient that provides significant 
assistance to fraternities, sororities, or similar organizations shall 
assure itself that the membership practices of such organizations do not 
permit discrimination otherwise prohibited by this subpart.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68055, Nov. 13, 2000]

[[Page 385]]



             Subpart F_Health, Welfare, and Social Services



Sec. 104.51  Application of this subpart.

    Subpart F applies to health, welfare, and other social service 
programs or activities that receive Federal financial assistance and to 
recipients that operate, or that receive Federal financial assistance 
for the operation of, such programs or activities.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68055, Nov. 13, 2000]



Sec. 104.52  Health, welfare, and other social services.

    (a) General. In providing health, welfare, or other social services 
or benefits, a recipient may not, on the basis of handicap:
    (1) Deny a qualified handicapped person these benefits or services;
    (2) Afford a qualified handicapped person an opportunity to receive 
benefits or services that is not equal to that offered nonhandicapped 
persons;
    (3) Provide a qualified handicapped person with benefits or services 
that are not as effective (as defined in Sec. 104.4(b)) as the benefits 
or services provided to others;
    (4) Provide benefits or services in a manner that limits or has the 
effect of limiting the participation of qualified handicapped persons; 
or
    (5) Provide different or separate benefits or services to 
handicapped persons except where necessary to provide qualified 
handicapped persons with benefits and services that are as effective as 
those provided to others.
    (b) Notice. A recipient that provides notice concerning benefits or 
services or written material concerning waivers of rights or consent to 
treatment shall take such steps as are necessary to ensure that 
qualified handicapped persons, including those with impaired sensory or 
speaking skills, are not denied effective notice because of their 
handicap.
    (c) Emergency treatment for the hearing impaired. A recipient 
hospital that provides health services or benefits shall establish a 
procedure for effective communication with persons with impaired hearing 
for the purpose of providing emergency health care.
    (d) Auxiliary aids. (1) A recipient to which this subpart applies 
that employs fifteen or more persons shall provide appropriate auxiliary 
aids to persons with impaired sensory, manual, or speaking skills, where 
necessary to afford such persons an equal opportunity to benefit from 
the service in question.
    (2) The Assistant Secretary may require recipients with fewer than 
fifteen employees to provide auxiliary aids where the provision of aids 
would not significantly impair the ability of the recipient to provide 
its benefits or services.
    (3) For the purpose of this paragraph, auxiliary aids may include 
brailled and taped material, interpreters, and other aids for persons 
with impaired hearing or vision.



Sec. 104.53  Drug and alcohol addicts.

    A recipient to which this subpart applies that operates a general 
hospital or outpatient facility may not discriminate in admission or 
treatment against a drug or alcohol abuser or alcoholic who is suffering 
from a medical condition, because of the person's drug or alcohol abuse 
or alcoholism.



Sec. 104.54  Education of institutionalized persons.

    A recipient to which this subpart applies and that operates or 
supervises a program or activity that provides aid, benefits or services 
for persons who are institutionalized because of handicap shall ensure 
that each qualified handicapped person, as defined in Sec. 104.3(k)(2), 
in its program or activity is provided an appropriate education, as 
defined in Sec. 104.33(b). Nothing in this section shall be interpreted 
as altering in any way the obligations of recipients under subpart D.

[45 FR 30936, May 9, 1980, as amended at 65 FR 68055, Nov. 13, 2000]



                          Subpart G_Procedures



Sec. 104.61  Procedures.

    The procedural provisions applicable to title VI of the Civil Rights 
Act of 1964 apply to this part. These procedures are found in Sec. Sec. 
100.6-100.10 and part 101 of this title.

[[Page 386]]

          Appendix A to Part 104--Analysis of Final Regulation

                      Subpart A--General Provisions

    Definitions--1. Recipient. Section 104.23 contains definitions used 
throughout the regulation.
    One comment requested that the regulation specify that nonpublic 
elementary and secondary schools that are not otherwise recipients do 
not become recipients by virtue of the fact their students participate 
in certain federally funded programs. The Secretary believes it 
unnecessary to amend the regulation in this regard, because almost 
identical language in the Department's regulations implementing title VI 
and title IX of the Education Amendments of 1972 has consistently been 
interpreted so as not to render such schools recipients. These schools, 
however, are indirectly subject to the substantive requirements of this 
regulation through the application of Sec. 104.4(b)(iv), which 
prohibits recipients from assisting agencies that discriminate on the 
basis of handicap in providing services to beneficiaries of the 
recipients' programs.
    2. Federal financial assistance. In Sec. 104.3(h), defining federal 
financial assistance, a clarifying change has been made: procurement 
contracts are specifically excluded. They are covered, however, by the 
Department of Labor's regulation under section 503. The Department has 
never considered such contracts to be contracts of assistance; the 
explicit exemption has been added only to avoid possible confusion.
    The proposed regulation's exemption of contracts of insurance or 
guaranty has been retained. A number of comments argued for its deletion 
on the ground that section 504, unlike title VI and title IX, contains 
no statutory exemption for such contracts. There is no indication, 
however, in the legislative history of the Rehabilitation Act of 1973 or 
of the amendments to that Act in 1974, that Congress intended section 
504 to have a broader application, in terms of federal financial 
assistance, than other civil rights statutes. Indeed, Congress directed 
that section 504 be implemented in the same manner as titles VI and IX. 
In view of the long established exemption of contracts of insurance or 
guaranty under title VI, we think it unlikely that Congress intended 
section 504 to apply to such contracts.
    3. Handicapped person. Section 104.3(j), which defines the class of 
persons protected under the regulation, has not been substantially 
changed. The definition of handicapped person in paragraph (j)(1) 
conforms to the statutory definition of handicapped person that is 
applicable to section 504, as set forth in section 111(a) of the 
Rehabilitation Act Amendments of 1974, Pub. L. 93-516.
    The first of the three parts of the statutory and regulatory 
definition includes any person who has a physical or mental impairment 
that substantially limits one or more major life activities. Paragraph 
(j)(2)(i) further defines physical or mental impairments. The definition 
does not set forth a list of specific diseases and conditions that 
constitute physical or mental impairments because of the difficulty of 
ensuring the comprehensiveness of any such list. The term includes, 
however, 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, as discussed below, drug addiction and 
alcoholism.
    It should be emphasized that a physical or mental impairment does 
not constitute a handicap for purposes of section 504 unless its 
severity is such that it results in a substantial limitation of one or 
more major life activities. Several comments observed the lack of any 
definition in the proposed regulation of the phrase ``substantially 
limits.'' The Department does not believe that a definition of this term 
is possible at this time.
    A related issue raised by several comments is whether the definition 
of handicapped person is unreasonably broad. Comments suggested 
narrowing the definition in various ways. The most common recommendation 
was that only ``traditional'' handicaps be covered. The Department 
continues to believe, however, that it has no flexibility within the 
statutory definition to limit the term to persons who have those severe, 
permanent, or progressive conditions that are most commonly regarded as 
handicaps. The Department intends, however, to give particular attention 
in its enforcement of section 504 to eliminating discrimination against 
persons with the severe handicaps that were the focus of concern in the 
Rehabilitation Act of 1973.
    The definition of handicapped person also includes specific 
limitations on what persons are classified as handicapped under the 
regulation. The first of the three parts of the definition specifies 
that only physical and mental handicaps are included. Thus, 
environmental, cultural, and economic disadvantage are not in themselves 
covered; nor are prison records, age, or homosexuality. Of course, if a 
person who has any of these characteristics also has a physical or 
mental handicap, the person is included within the definition of 
handicapped person.
    In paragraph (j)(2)(i), physical or mental impairment is defined to 
include, among other impairments, specific learning disabilities. The 
Department will interpret the term as it is used in section 602 of the 
Education of the Handicapped Act, as amended. Paragraph (15) of section 
602 uses the term ``specific learning disabilities'' to describe

[[Page 387]]

such conditions as perceptual handicaps, brain injury, minimal brain 
dysfunction, dyslexia, and developmental aphasia.
    Paragraph (j)(2)(i) has been shortened, but not substantively 
changed, by the deletion of clause (C), which made explicit the 
inclusion of any condition which is mental or physical but whose precise 
nature is not at present known. Clauses (A) and (B) clearly comprehend 
such conditions.
    The second part of the statutory and regulatory definition of 
handicapped person includes any person who has a record of a physical or 
mental impairment that substantially limits a major life activity. Under 
the definition of ``record'' in paragraph (j)(2)(iii), persons who have 
a history of a handicapping condition but no longer have the condition, 
as well as persons who have been incorrectly classified as having such a 
condition, are protected from discrimination under section 504. 
Frequently occurring examples of the first group are persons with 
histories of mental or emotional illness, heart disease, or cancer; of 
the second group, persons who have been misclassified as mentally 
retarded.
    The third part of the statutory and regulatory definition of 
handicapped person includes any person who is regarded as having a 
physical or mental impairment that substantially limits one or more 
major life activities. It includes many persons who are ordinarily 
considered to be handicapped but who do not technically fall within the 
first two parts of the statutory definition, such as persons with a 
limp. This part of the definition also includes some persons who might 
not ordinarily be considered handicapped, such as persons with 
disfiguring scars, as well as persons who have no physical or mental 
impairment but are treated by a recipient as if they were handicapped.
    4. Drug addicts and alcoholics. As was the case during the first 
comment period, the issue of whether to include drug addicts and 
alcoholics within the definition of handicapped person was of major 
concern to many commenters. The arguments presented on each side of the 
issue were similar during the two comment periods, as was the preference 
of commenters for exclusion of this group of persons. While some 
comments reflected misconceptions about the implications of including 
alcoholics and drug addicts within the scope of the regulation, the 
Secretary understands the concerns that underlie the comments on this 
question and recognizes that application of section 504 to active 
alcoholics and drug addicts presents sensitive and difficult questions 
that must be taken into account in interpretation and enforcement.
    The Secretary has carefully examined the issue and has obtained a 
legal opinion from the Attorney General. That opinion concludes that 
drug addiction and alcoholism are ``physical or mental impairments'' 
within the meaning of section 7(6) of the Rehabilitation Act of 1973, as 
amended, and that drug addicts and alcoholics are therefore handicapped 
for purposes of section 504 if their impairment substantially limits one 
of their major life activities. The Secretary therefore believes that he 
is without authority to exclude these conditions from the definition. 
There is a medical and legal consensus that alcoholism and drug 
addiction are diseases, although there is disagreement as to whether 
they are primarily mental or physical. In addition, while Congress did 
not focus specifically on the problems of drug addiction and alcoholism 
in enacting section 504, the committees that considered the 
Rehabilitation Act of 1973 were made aware of the Department's long-
standing practice of treating addicts and alcoholics as handicapped 
individuals eligible for rehabilitation services under the Vocational 
Rehabilitation Act.
    The Secretary wishes to reassure recipients that inclusion of 
addicts and alcoholics within the scope of the regulation will not lead 
to the consequences feared by many commenters. It cannot be emphasized 
too strongly that the statute and the regulation apply only to 
discrimination against qualified handicapped persons solely by reason of 
their handicap. The fact that drug addiction and alcoholism may be 
handicaps does not mean that these conditions must be ignored in 
determining whether an individual is qualified for services or 
employment opportunities. On the contrary, a recipient may hold a drug 
addict or alcoholic to the same standard of performance and behavior to 
which it holds others, even if any unsatisfactory performance or 
behavior is related to the person's drug addiction or alcoholism. In 
other words, while an alcoholic or drug addict may not be denied 
services or disqualified from employment solely because of his or her 
condition, the behavioral manifestations of the condition may be taken 
into account in determining whether he or she is qualified.
    With respect to the employment of a drug addict or alcoholic, if it 
can be shown that the addiction or alcoholism prevents successful 
performance of the job, the person need not be provided the employment 
opportunity in question. For example, in making employment decisions, a 
recipient may judge addicts and alcoholics on the same basis it judges 
all other applicants and employees. Thus, a recipient may consider--for 
all applicants including drug addicts and alcoholics--past personnel 
records, absenteeism, disruptive, abusive, or dangerous behavior, 
violations of rules and unsatisfactory work performance. Moreover, 
employers may enforce rules prohibiting the possession or use of alcohol 
or drugs in the work-place, provided that such rules are enforced 
against all employees.

[[Page 388]]

    With respect to other services, the implications of coverage, of 
alcoholics and drug addicts are two-fold: first, no person may be 
excluded from services solely by reason of the presence or history of 
these conditions; second, to the extent that the manifestations of the 
condition prevent the person from meeting the basic eligibility 
requirements of the program or cause substantial interference with the 
operation of the program, the condition may be taken into consideration. 
Thus, a college may not exclude an addict or alcoholic as a student, on 
the basis of addiction or alcoholism, if the person can successfully 
participate in the education program and complies with the rules of the 
college and if his or her behavior does not impede the performance of 
other students.
    Of great concern to many commenters was the question of what effect 
the inclusion of drug addicts and alcoholics as handicapped persons 
would have on school disciplinary rules prohibiting the use or 
possession of drugs or alcohol by students. Neither such rules nor their 
application to drug addicts or alcoholics is prohibited by this 
regulation, provided that the rules are enforced evenly with respect to 
all students.
    5. Qualified handicapped person. Paragraph (k) of Sec. 104.3 
defines the term ``qualified handicapped person.'' Throughout the 
regulation, this term is used instead of the statutory term ``otherwise 
qualified handicapped person.'' The Department believes that the 
omission of the word ``otherwise'' is necessary in order to comport with 
the intent of the statute because, read literally, ``otherwise'' 
qualified handicapped persons include persons who are qualified except 
for their handicap, rather than in spite of their handicap. Under such a 
literal reading, a blind person possessing all the qualifications for 
driving a bus except sight could be said to be ``otherwise qualified'' 
for the job of driving. Clearly, such a result was not intended by 
Congress. In all other respects, the terms ``qualified'' and ``otherwise 
qualified'' are intended to be interchangeable.
    Section 104.3(k)(1) defines a qualified handicapped person with 
respect to employment as a handicapped person who can, with reasonable 
accommodation, perform the essential functions of the job in question. 
The term ``essential functions'' does not appear in the corresponding 
provision of the Department of Labor's section 503 regulation, and a few 
commenters objected to its inclusion on the ground that a handicapped 
person should be able to perform all job tasks. However, the Department 
believes that inclusion of the phrase is useful in emphasizing that 
handicapped persons should not be disqualified simply because they may 
have difficulty in performing tasks that bear only a marginal 
relationship to a particular job. Further, we are convinced that 
inclusion of the phrase is not inconsistent with the Department of 
Labor's application of its definition.
    Certain commenters urged that the definition of qualified 
handicapped person be amended so as explicitly to place upon the 
employer the burden of showing that a particular mental or physical 
characteristic is essential. Because the same result is achieved by the 
requirement contained in paragraph (a) of Sec. 104.13, which requires 
an employer to establish that any selection criterion that tends to 
screen out handicapped persons is job-related, that recommendation has 
not been followed.
    Section 104.3(k)(2) defines qualified handicapped person, with 
respect to preschool, elementary, and secondary programs, in terms of 
age. Several commenters recommended that eligibility for the services be 
based upon the standard of substantial benefit, rather than age, because 
of the need of many handicapped children for early or extended services 
if they are to have an equal opportunity to benefit from education 
programs. No change has been made in this provision, again because of 
the extreme difficulties in administration that would result from the 
choice of the former standard. Under the remedial action provisions of 
Sec. 104.6(a)(3), however, persons beyond the age limits prescribed in 
Sec. 104.3(k)(2) may in appropriate cases be required to be provided 
services that they were formerly denied because of a recipient's 
violation of section 504.
    Section 104.3(k)(2) states that a handicapped person is qualified 
for preschool, elementary, or secondary services if the person is of an 
age at which nonhandicapped persons are eligible for such services or at 
which State law mandates the provision of educational services to 
handicapped persons. In addition, the extended age ranges for which 
recipients must provide full educational opportunity to all handicapped 
persons in order to be eligible for assistance under the Education of 
the Handicapped Act--generally, 3-18 as of September 1978, and 3-21 as 
of September 1980 are incorporated by reference in this paragraph.
    Section 104.3(k)(3) defines qualified handicapped person with 
respect to postsecondary educational programs. As revised, the paragraph 
means that both academic and technical standards must be met by 
applicants to these programs. The term technical standards refers to all 
nonacademic admissions criteria that are essential to participation in 
the program in question.
    6. General prohibitions against discrimination. Section 104.4 
contains general prohibitions against discrimination applicable to all 
recipients of assistance from this Department.
    Paragraph (b)(1(i) prohibits the exclusion of qualified handicapped 
persons from aids, benefits, or services, and paragraph (ii) requires 
that equal opportunity to participate

[[Page 389]]

or benefit be provided. Paragraph (iii) requires that services provided 
to handicapped persons be as effective as those provided to the 
nonhandicapped. In paragraph (iv), different or separate services are 
prohibited except when necessary to provide equally effective benefits.
    In this context, the term equally effective, defined in paragraph 
(b)(2), is intended to encompass the concept of equivalent, as opposed 
to identical, services and to acknowledge the fact that in order to meet 
the individual needs of handicapped persons to the same extent that the 
corresponding needs of nonhandicapped persons are met, adjustments to 
regular programs or the provision of different programs may sometimes be 
necessary. This standard parallels the one established under title VI of 
Civil Rights Act of 1964 with respect to the provision of educational 
services to students whose primary language is not English. See Lau v. 
Nichols, 414 U.S. 563 (1974). To be equally effective, however, an aid, 
benefit, or service need not produce equal results; it merely must 
afford an equal opportunity to achieve equal results.
    It must be emphasized that, although separate services must be 
required in some instances, the provision of unnecessarily separate or 
different services is discriminatory. The addition to paragraph (b)(2) 
of the phrase ``in the most integrated setting appropriated to the 
person's needs'' is intended to reinforce this general concept. A new 
paragraph (b)(3) has also been added to Sec. 104.4, requiring 
recipients to give qualified handicapped persons the option of 
participating in regular programs despite the existence of permissibly 
separate or different programs. The requirement has been reiterated in 
Sec. Sec. 104.38 and 104.47 in connection with physical education and 
athletics programs.
    Section 104.4(b)(1)(v) prohibits a recipient from supporting another 
entity or person that subjects participants or employees in the 
recipient's program to discrimination on the basis of handicap. This 
section would, for example, prohibit financial support by a recipient to 
a community recreational group or to a professional or social 
organization that discriminates against handicapped persons. Among the 
criteria to be considered in each case are the substantiality of the 
relationship between the recipient and the other entity, including 
financial support by the recipient, and whether the other entity's 
activities relate so closely to the recipient's program or activity that 
they fairly should be considered activities of the recipient itself. 
Paragraph (b)(1)(vi) was added in response to comment in order to make 
explicit the prohibition against denying qualified handicapped persons 
the opportunity to serve on planning and advisory boards responsible for 
guiding federally assisted programs or activities.
    Several comments appeared to interpret Sec. 104.4(b)(5), which 
proscribes discriminatory site selection, to prohibit a recipient that 
is located on hilly terrain from erecting any new buildings at its 
present site. That, of course, is not the case. This paragraph is not 
intended to apply to construction of additional buildings at an existing 
site. Of course, any such facilities must be made accessible in 
accordance with the requirements of Sec. 104.23.
    7. Assurances of compliance. Section 104.5(a) requires a recipient 
to submit to the Assistant Secretary an assurance that each of its 
programs and activities receiving or benefiting from Federal financial 
assistance from this Department will be conducted in compliance with 
this regulation. Many commenters also sought relief from the paperwork 
requirements imposed by the Department's enforcement of its various 
civil rights responsibilities by requesting the Department to issue one 
form incorporating title VI, title IX, and section 504 assurances. The 
Secretary is sympathetic to this request. While it is not feasible to 
adopt a single civil rights assurance form at this time, the Office for 
Civil Rights will work toward that goal.
    8. Private rights of action. Several comments urged that the 
regulation incorporate provision granting beneficiaries a private right 
of action against recipients under section 504. To confer such a right 
is beyond the authority of the executive branch of Government. There is, 
however, case law holding that such a right exists. Lloyd v. Regional 
Transportation Authority, 548 F. 2d 1277 (7th Cir. 1977); see Hairston 
v. Drosick, Civil No. 75-0691 (S.D. W. Va., Jan. 14, 1976); Gurmankin v. 
Castanzo, 411 F. Supp. 982 (E.D. Pa. 1976); cf. Lau v. Nichols, supra.
    9. Remedial action. Where there has been a finding of 
discrimination, Sec. 104.6 requires a recipient to take remedial action 
to overcome the effects of the discrimination. Actions that might be 
required under paragraph (a)(1) include provision of services to persons 
previously discriminated against, reinstatement of employees and 
development of a remedial action plan. Should a recipient fail to take 
required remedial action, the ultimate sanctions of court action or 
termination of Federal financial assistance may be imposed.
    Paragraph (a)(2) extends the responsibility for taking remedial 
action to a recipient that exercises control over a noncomplying 
recipient. Paragraph (a)(3) also makes clear that handicapped persons 
who are not in the program at the time that remedial action is required 
to be taken may also be the subject of such remedial action. This 
paragraph has been revised in response to comments in order to include 
persons who would have been in the program if discriminatory practices 
had not existed. Paragraphs (a) (1), (2), and (3) have also been amended 
in response

[[Page 390]]

to comments to make plain that, in appropriate cases, remedial action 
might be required to redress clear violations of the statute itself that 
occurred before the effective date of this regulation.
    10. Voluntary action. In Sec. 104.6(b), the term ``voluntary 
action'' has been substituted for the term ``affirmative action'' 
because the use of the latter term led to some confusion. We believe the 
term ``voluntary action'' more accurately reflects the purpose of the 
paragraph. This provision allows action, beyond that required by the 
regulation, to overcome conditions that led to limited participation by 
handicapped persons, whether or not the limited participation was caused 
by any discriminatory actions on the part of the recipient. Several 
commenters urged that paragraphs (a) and (b) be revised to require 
remedial action to overcome effects of prior discriminatory practices 
regardless of whether there has been an express finding of 
discrimination. The self-evaluation requirement in paragraph (c) 
accomplishes much the same purpose.
    11. Self-evaluation. Paragraph (c) requires recipients to conduct a 
self-evaluation in order to determine whether their policies or 
practices may discriminate against handicapped persons and to take steps 
to modify any discriminatory policies and practices and their effects. 
The Department received many comments approving of the addition to 
paragraph (c) of a requirement that recipients seek the assistance of 
handicapped persons in the self-evaluation process. This paragraph has 
been further amended to require consultation with handicapped persons or 
organizations representing them before recipients undertake the policy 
modifications and remedial steps prescribed in paragraphs (c) (ii) and 
(iii).
    Paragraph (c)(2), which sets forth the recordkeeping requirements 
concerning self-evaluation, now applies only to recipients with fifteen 
or more employees. This change was made as part of an effort to reduce 
unnecessary or counterproductive administrative obligations on small 
recipients. For those recipients required to keep records, the 
requirements have been made more specific; records must include a list 
of persons consulted and a description of areas examined, problems 
identified, and corrective steps taken. Moreover, the records must be 
made available for public inspection.
    12. Grievance procedure. Section 104.7 requires recipients with 
fifteen or more employees to designate an individual responsible for 
coordinating its compliance efforts and to adopt a grievance procedure. 
Two changes were made in the section in response to comment. A general 
requirement that appropriate due process procedures be followed has been 
added. It was decided that the details of such procedures could not at 
this time be specified because of the varied nature of the persons and 
entities who must establish the procedures and of the programs to which 
they apply. A sentence was also added to make clear that grievance 
procedures are not required to be made available to unsuccessful 
applicants for employment or to applicants for admission to colleges and 
universities.
    The regulation does not require that grievance procedures be 
exhausted before recourse is sought from the Department. However, the 
Secretary believes that it is desirable and efficient in many cases for 
complainants to seek resolution of their complaints and disputes at the 
local level and therefore encourages them to use available grievance 
procedures.
    A number of comments asked whether compliance with this section or 
the notice requirements of Sec. 104.8 could be coordinated with 
comparable action required by the title IX regulation. The Department 
encourages such efforts.
    13. Notice. Section 104.8 (formerly Sec. 84.9) sets forth 
requirements for dissemination of statements of nondicrimination policy 
by recipients.
    It is important that both handicapped persons and the public at 
large be aware of the obligations of recipients under section 504. Both 
the Department and recipients have responsibilities in this regard. 
Indeed the Department intends to undertake a major public information 
effort to inform persons of their rights under section 504 and this 
regulation. In Sec. 104.8 the Department has sought to impose a clear 
obligation on major recipients to notify beneficiaries and employees of 
the requirements of section 504, without dictating the precise way in 
which this notice must be given. At the same time, we have avoided 
imposing requirements on small recipients (those with fewer than fifteen 
employees) that would create unnecessary and counterproductive paper 
work burdens on them and unduly stretch the enforcement resources of the 
Department.
    Section 104.8(a), as simplified, requires recipients with fifteen or 
more employees to take appropriate steps to notify beneficiaries and 
employees of the recipient's obligations under section 504. The last 
sentence of Sec. 104.8(a) has been revised to list possible, rather 
than required, means of notification. Section 104.8(b) requires 
recipients to include a notification of their policy of 
nondiscrimination in recruitment and other general information 
materials.
    In response to a number of comments, Sec. 104.8 has been revised to 
delete the requirements of publication in local newspapers, which has 
proved to be both troublesome and ineffective. Several commenters 
suggested that notification on separate forms be allowed until present 
stocks of publications and forms are depleted. The final regulation 
explicitly allows this method of compliance.

[[Page 391]]

The separate form should, however, be included with each significant 
publication or form that is distributed.
    Section 104 which prohibited the use of materials that might give 
the impression that a recipient excludes qualified handicapped persons 
from its program, has been deleted. The Department is convinced by the 
comments that this provision is unnecessary and difficult to apply. The 
Department encourages recipients, however, to include in their 
recruitment and other general information materials photographs of 
handicapped persons and ramps and other features of accessible 
buildings.
    Under new Sec. 104.9 the Assistant Secretary may, under certain 
circumstances, require recipients with fewer than fifteen employees to 
comply with one or more of these requirements. Thus, if experience shows 
a need for imposing notice or other requirements on particular 
recipients or classes of small recipients, the Department is prepared to 
expand the coverage of these sections.
    14. Inconsistent State laws. Section 104.10(a) states that 
compliance with the regulation is not excused by State or local laws 
limiting the eligibility of qualified handicapped persons to receive 
services or to practice an occupation. The provision thus applies only 
with respect to state or local laws that unjustifiably differentiate on 
the basis of handicap.
    Paragraph (b) further points out that the presence of limited 
employment opportunities in a particular profession, does not excuse a 
recipient from complying with the regulation. Thus, a law school could 
not deny admission to a blind applicant because blind laywers may find 
it more difficult to find jobs than do nonhandicapped lawyers.

                     Subpart B--Employment Practices

    Subpart B prescribes requirements for nondiscrimination in the 
employment practices of recipients of Federal financial assistance 
administered by the Department. This subpart is consistent with the 
employment provisions of the Department's regulation implementing title 
IX of the Education Amendments of 1972 (34 CFR, part 106) and the 
regulation of the Department of Labor under section 503 of the 
Rehabilitation Act, which requries certain Federal contractors to take 
affirmative action in the employment and advancement of qualified 
handicapped persons. All recipients subject to title IX are also subject 
to this regulation. In addition, many recipients subject to this 
regulation receive Federal procurement contracts in excess of $2,500 and 
are therefore also subject to section 503.
    15. Discriminatory practices. Section 104.11 sets forth general 
provisions with respect to discrimination in employment. A new paragraph 
(a)(2) has been added to clarify the employment obligations of 
recipients that receive Federal funds under Part B of the Education of 
the Handicapped Act, as amended (EHA). Section 606 of the EHA obligates 
elementary or secondary school systems that receive EHA funds to take 
positive steps to employ and advance in employment qualified handicapped 
persons. This obligation is similar to the nondiscrimination requirement 
of section 504 but requires recipients to take additional steps to hire 
and promote handicapped persons. In enacting section 606 Congress chose 
the words ``positive steps'' instead of ``affirmative action'' advisedly 
and did not intend section 606 to incorporate the types of activities 
required under Executive Order 11246 (affirmative action on the basis of 
race, color, sex, or national origin) or under sections 501 and 503 of 
the Rehabilitation Act of 1973.
    Paragraph (b) of Sec. 104.11 sets forth the specific aspects of 
employment covered by the regulation. Paragraph (c) provides that 
inconsistent provisions of collective bargaining agreements do not 
excuse noncompliance.
    16. Reasonable accommodation. The reasonable accommodation 
requirement of Sec. 104.12 generated a substantial number of comments. 
The Department remains convinced that its approach is both fair and 
effective. Moreover, the Department of Labor reports that it has 
experienced little difficulty in administering the requirements of 
reasonable accommodation. The provision therefore remains basically 
unchanged from the proposed regulation.
    Section 104.12 requires a recipient to make reasonable accommodation 
to the known physical or mental limitations of a handicapped applicant 
or employee unless the recipient can demonstrate that the accommodation 
would impose an undue hardship on the operation of its program. Where a 
handicapped person is not qualified to perform a particular job, where 
reasonable accommodation does not overcome the effects of a person's 
handicap, or where reasonable accommodation causes undue hardship to the 
employer, failure to hire or promote the handicapped person will not be 
considered discrimination.
    Section 104.12(b) lists some of the actions that constitute 
reasonable accommodation. The list is neither all-inclusive nor meant to 
suggest that employers must follow all of the actions listed.
    Reasonable accommodation includes modification of work schedules, 
including part-time employment, and job restructuring. Job restructuring 
may entail shifting nonessential duties to other employees. In other 
cases, reasonable accommodation may include physical modifications or 
relocation of particular offices or jobs so that they are in facilities 
or parts of facilities that are accessible to and usable by handicapped 
persons. If such accommodations would cause undue

[[Page 392]]

hardship to the employer, they need not be made.
    Paragraph (c) of this section sets forth the factors that the Office 
for Civil Rights will consider in determining whether an accommodation 
necessary to enable an applicant or employee to perform the duties of a 
job would impose an undue hardship. The weight given to each of these 
factors in making the determination as to whether an accommodation 
constitutes undue hardship will vary depending on the facts of a 
particular situation. Thus, a small day-care center might not be 
required to expend more than a nominal sum, such as that necessary to 
equip a telephone for use by a secretary with impaired hearing, but a 
large school district might be required to make available a teacher's 
aide to a blind applicant for a teaching job. The reasonable 
accommodation standard in Sec. 104.12 is similar to the obligation 
imposed upon Federal contractors in the regulation implementing section 
503 of the Rehabilitation Act of 1973, administered by the Department of 
Labor. Although the wording of the reasonable accommodation provisions 
of the two regulations is not identical, the obligation that the two 
regulations impose is the same, and the Federal Government's policy in 
implementing the two sections will be uniform. The Department adopted 
the factors listed in paragraph (c) instead of the ``business 
necessity'' standard of the Labor regulation because that term seemed 
inappropriate to the nature of the programs operated by the majority of 
institutions subject to this regulation, e.g., public school systems, 
colleges and universities. The factors listed in paragraph (c) are 
intended to make the rationale underlying the business necessity 
standard applicable to an understandable by recipients of ED funds.
    17. Tests and selection criteria. Revised Sec. 104.13(a) prohibits 
employers from using test or other selection criteria that screen out or 
tend to screen out handicapped persons unless the test or criterion is 
shown to be job-related and alternative tests or criteria that do not 
screen out or tend to screen out as many handicapped persons are not 
shown by the Assistant Secretary to be available. This paragraph is an 
application of the principle established under title VII of the Civil 
Rights Act of 1964 in Griggs v. Duke Power Company, 401 U.S. 424 (1971).
    Under the proposed section, a statistical showing of adverse impact 
on handicapped persons was required to trigger an employer's obligation 
to show that employment criteria and qualifications relating to handicap 
were necessary. This requirement was changed because the small number of 
handicapped persons taking tests would make statistical showings of 
``disproportionate, adverse effect'' difficult and burdensome. Under the 
altered, more workable provision, once it is shown that an employment 
test substantially limits the opportunities of handicapped persons, the 
employer must show the test to be job-related. A recipient is no longer 
limited to using predictive validity studies as the method for 
demonstrating that a test or other selection criterion is in fact job-
related. Nor, in all cases, are predictive validity studies sufficient 
to demonstrate that a test or criterion is job-related. In addition, 
Sec. 104.13(a) has been revised to place the burden on the Assistant 
Secretary, rather than the recipient, to identify alternate tests.
    Section 104.13(b) requires that a recipient take into account that 
some tests and criteria depend upon sensory, manual, or speaking skills 
that may not themselves be necessary to the job in question but that may 
make the handicapped person unable to pass the test. The recipient must 
select and administer tests so as best to ensure that the test will 
measure the handicapped person's ability to perform on the job rather 
than the person's ability to see, hear, speak, or perform manual tasks, 
except, of course, where such skills are the factors that the test 
purports to measure. For example, a person with a speech impediment may 
be perfectly qualified for jobs that do not or need not, with reasonable 
accommodation, require ability to speak clearly. Yet, if given an oral 
test, the person will be unable to perform in a satisfactory manner. The 
test results will not, therefore, predict job performance but instead 
will reflect impaired speech.
    18. Preemployment inquiries. Section 104.14, concerning 
preemployment inquiries, generated a large number of comments. 
Commenters representing handicapped persons strongly favored a ban on 
preemployment inquiries on the ground that such inquiries are often used 
to discriminate against handicapped persons and are not necessary to 
serve any legitimate interests of employers. Some recipients, on the 
other hand, argued that preemployment inquiries are necessary to 
determine qualifications of the applicant, safety hazards caused by a 
particular handicapping condition, and accommodations that might be 
required.
    The Secretary has concluded that a general prohibition of 
preemployment inquiries is appropriate. However, a sentence has been 
added to paragraph (a) to make clear that an employer may inquire into 
an applicant's ability to perform job-related tasks but may not ask if 
the person has a handicap. For example, an employer may not ask on an 
employment form if an applicant is visually impaired but may ask if the 
person has a current driver's license (if that is a necessary 
qualification for the position in question). Similarly, employers may 
make inquiries about an applicant's ability to perform a job safely. 
Thus, an employer may not ask if an

[[Page 393]]

applicant is an epileptic but may ask whether the person can perform a 
particular job without endangering other employees.
    Section 104.14(b) allows preemployment inquiries only if they are 
made in conjunction with required remedial action to correct past 
discrimination, with voluntary action to overcome past conditions that 
have limited the participation of handicapped persons, or with 
obligations under section 503 of the Rehabilitation Act of 1973. In 
these instances, paragraph (b) specifies certain safeguards that must be 
followed by the employer.
    Finally, the revised provision allows an employer to condition 
offers of employment to handicapped persons on the results of medical 
examinations, so long as the examinations are administered to all 
employees in a nondiscriminatory manner and the results are treated on a 
confidential basis.
    19. Specific acts of Discrimination. Sections 104.15 (recruitment), 
104.16 (compensation), 104.17 (job classification and structure) and 
104.18 (fringe benefits) have been deleted from the regulation as 
unnecessarily duplicative of Sec. 104.11 (discrimination prohibited). 
The deletion of these sections in no way changes the substantive 
obligations of employers subject to this regulation from those set forth 
in the July 16 proposed regulation. These deletions bring the regulation 
closer in form to the Department of Labor's section 503 regulation.
    A proposed section, concerning fringe benefits, had allowed for 
differences in benefits or contributions between handicapped and 
nonhandicapped persons in situations only where such differences could 
be justified on an actuarial basis. Section 104.11 simply bars 
discrimination in providing fringe benefits and does not address the 
issue of actuarial differences. The Department believes that currently 
available data and experience do not demonstrate a basis for 
promulgating a regulation specifically allowing for differences in 
benefits or contributions.

                    Subpart C--Program Accessibility

    In general, Subpart C prohibits the exclusion of qualified 
handicapped persons from federally assisted programs or activities 
because a recipient's facilities are inaccessible or unusable.
    20. Existing facilities. Section 104.22 maintains the same standard 
for nondiscrimination in regard to existing facilities as was included 
in the proposed regulation. The section states that a recipients program 
or activity, when viewed in its entirety, must be readily accessible to 
and usable by handicapped persons. Paragraphs (a) and (b) make clear 
that a recipient is not required to make each of its existing facilities 
accessible to handicapped persons if its program as a whole is 
accessible. Accessibility to the recipient's program or activity may be 
achieved by a number of means, including redesign of equipment, 
reassignment of classes or other services to accessible buildings, and 
making aides available to beneficiaries. In choosing among methods of 
compliance, recipients are required to give priority consideration to 
methods that will be consistent with provision of services in the most 
appropriate integrated setting. Structural changes in existing 
facilities are required only where there is no other feasible way to 
make the recipient's program accessible.
    Under Sec. 104.22, a university does not have to make all of its 
existing classroom buildings accessible to handicapped students if some 
of its buildings are already accessible and if it is possible to 
reschedule or relocate enough classes so as to offer all required 
courses and a reasonable selection of elective courses in accessible 
facilities. If sufficient relocation of classes is not possible using 
existing facilities, enough alterations to ensure program accessibility 
are required. A university may not exclude a handicapped student from a 
specifically requested course offering because it is not offered in an 
accessible location, but it need not make every section of that course 
accessible.
    Commenters representing several institutions of higher education 
have suggested that it would be appropriate for one postsecondary 
institution in a geographical area to be made accessible to handicapped 
persons and for other colleges and universities in that area to 
participate in that school's program, thereby developing an educational 
consortium for the postsecondary education of handicapped students. The 
Department believes that such a consortium, when developed and applied 
only to handicapped persons, would not constitute compliance with Sec. 
104.22, but would discriminate against qualified handicapped persons by 
restricting their choice in selecting institutions of higher education 
and would, therefore, be inconsistent with the basic objectives of the 
statute.
    Nothing in this regulation, however, should be read as prohibiting 
institutions from forming consortia for the benefit of all students. 
Thus, if three colleges decide that it would be cost-efficient for one 
college to offer biology, the second physics, and the third chemistry to 
all students at the three colleges, the arrangement would not violate 
section 504. On the other hand, it would violate the regulation if the 
same institutions set up a consortium under which one college undertook 
to make its biology lab accessible, another its physics lab, and a third 
its chemistry lab, and under which mobility-impaired handicapped 
students (but not other students) were required to attend the particular 
college that is accessible for the desired courses.
    Similarly, while a public school district need not make each of its 
buildings completely accessible, it may not make only one

[[Page 394]]

facility or part of a facility accessible if the result is to segregate 
handicapped students in a single setting.
    All recipients that provide health, welfare, or other social 
services may also comply with Sec. 104.22 by delivering services at 
alternate accessible sites or making home visits. Thus, for example, a 
pharmacist might arrange to make home deliveries of drugs. Under revised 
Sec. 104.22(c), small providers of health, welfare, and social services 
(those with fewer than fifteen employees) may refer a beneficiary to an 
accessible provider of the desired service, but only if no means of 
meeting the program accessibility requirement other than a significant 
alteration in existing facilities is available. The referring recipient 
has the responsibility of determining that the other provider is in fact 
accessible and willing to provide the service.
    A recent change in the tax law may assist some recipients in meeting 
their obligations under this section. Under section 2122 of the Tax 
Reform Act of 1976, recipients that pay federal income tax are eligible 
to claim a tax deduction of up to $25,000 for architectural and 
transportation modifications made to improve accessibility for 
handicapped persons. See 42 FR 17870 (April 4, 1977), adopting 26 CFR 
7.190.
    Several commenters expressed concern about the feasibility of 
compliance with the program accessibility standard. The Secretary 
believes that the standard is flexible enough to permit recipients to 
devise ways to make their programs accessible short of extremely 
expensive or impractical physical changes in facilities. Accordingly, 
the section does not allow for waivers. The Department is ready at all 
times to provide technical assistance to recipients in meeting their 
program accessibility responsibilities. For this purpose, the Department 
is establishing a special technical assistance unit. Recipients are 
encouraged to call upon the unit staff for advice and guidance both on 
structural modifications and on other ways of meeting the program 
accessibility requirement.
    Paragraph (d) has been amended to require recipients to make all 
nonstructural adjustments necessary for meeting the program 
accessibility standard within sixty days. Only where structural changes 
in facilities are necessary will a recipient be permitted up to three 
years to accomplish program accessibility. It should be emphasized that 
the three-year time period is not a waiting period and that all changes 
must be accomplished as expeditiously as possible. Further, it is the 
Department's belief, after consultation with experts in the field, that 
outside ramps to buildings can be constructed quickly and at relatively 
low cost. Therefore, it will be expected that such structural additions 
will be made promptly to comply with Sec. 104.22(d).
    The regulation continues to provide, as did the proposed version, 
that a recipient planning to achieve program accessibility by making 
structural changes must develop a transition plan for such changes 
within six months of the effective date of the regulation. A number of 
commenters suggested extending that period to one year. The secretary 
believes that such an extension is unnecessary and unwise. Planning for 
any necessary structural changes should be undertaken promptly to ensure 
that they can be completed within the three-year period. The elements of 
the transition plan as required by the regulation remain virtually 
unchanged from the proposal but Sec. 104.22(d) now includes a 
requirement that the recipient make the plan available for public 
inspection.
    Several commenters expressed concern that the program accessibility 
standard would result in the segregation of handicapped persons in 
educational institutions. The regulation will not be applied to permit 
such a result. See Sec. 104.4(c)(2)(iv), prohibiting unnecessarily 
separate treatment; Sec. 104.35, requiring that students in elementary 
and secondary schools be educated in the most integrated setting 
appropriate to their needs; and new Sec. 104.43(d), applying the same 
standard to postsecondary education.
    We have received some comments from organizations of handicapped 
persons on the subject of requiring, over an extended period of time, a 
barrier-free environment--that is, requiring the removal of all 
architectural barriers in existing facilities. The Department has 
considered these comments but has decided to take no further action at 
this time concerning these suggestions, believing that such action 
should only be considered in light of experience in implementing the 
program accessibility standard.
    21. New construction. Section 104.23 requires that all new 
facilities, as well as alterations that could affect access to and use 
of existing facilities, be designed and constructed in a manner so as to 
make the facility accessible to and usable by handicapped persons. 
Section 104.23(a) has been amended so that it applies to each newly 
constructed facility if the construction was commenced after the 
effective date of the regulation. The words ``if construction has 
commenced'' will be considered to mean ``if groundbreaking has taken 
place.'' Thus, a recipient will not be required to alter the design of a 
facility that has progressed beyond groundbreaking prior to the 
effective date of the regulation.
    Paragraph (b) requires certain alterations to conform to the 
requirement of physical accessibility in paragraph (a). If an alteration 
is undertaken to a portion of a building the accessibility of which 
could be improved by the manner in which the alteration is carried out, 
the alteration must be made in that manner. Thus, if a doorway or

[[Page 395]]

wall is being altered, the door or other wall opening must be made wide 
enough to accommodate wheelchairs. On the other hand, if the alteration 
consists of altering ceilings, the provisions of this section are not 
applicable because this alteration cannot be done in a way that affects 
the accessibility of that portion of the building. The phrase ``to the 
maximum extent feasible'' has been added to allow for the occasional 
case in which the nature of an existing facility is such as to make it 
impractical or prohibitively expensive to renovate the building in a 
manner that results in its being entirely barrier-free. In all such 
cases, however, the alteration should provide the maximum amount of 
physical accessibility feasible.
    Section 104.23(d) of the proposed regulation, providing for a 
limited deferral of action concerning facilities that are subject to 
section 502 as well as section 504 of the Act, has been deleted. The 
Secretary believes that the provision is unnecessary and inappropriate 
to this regulation. The Department will, however, seek to coordinate 
enforcement activities under this regulation with those of the 
Architectural and Transportation Barriers Compliance Board.

        Subpart D--Preschool, Elementary, and Secondary Education

    Subpart D sets forth requirements for nondiscrimination in 
preschool, elementary, secondary, and adult education programs and 
activities, including secondary vocational education programs. In this 
context, the term ``adult education'' refers only to those educational 
programs and activities for adults that are operated by elementary and 
secondary schools.
    The provisions of Subpart D apply to state and local educational 
agencies. Although the subpart applies, in general, to both public and 
private education programs and activities that are federally assisted, 
Sec. Sec. 104.32 and 104.33 apply only to public programs and Sec. 
104.39 applies only to private programs; Sec. Sec. 104.35 and 104.36 
apply both to public programs and to those private programs that include 
special services for handicapped students.
    Subpart B generally conforms to the standards established for the 
education of handicapped persons in Mills v. Board of Education of the 
District of Columbia, 348 F. Supp. 866 (D.D.C. 1972), Pennsylvania 
Association for Retarded Children v. Commonwealth of Pennsylvania, 344 
F. Supp. 1257 (E.D. 1971), 343 F. Supp. 279 (E.D. Pa. 1972), and Lebanks 
v. Spears, 60, F.R.D. 135 (E.D. La. 1973), as well as in the Education 
of the Handicapped Act, as amended by Pub. L. 94-142 (the EHA).
    The basic requirements common to those cases, to the EHA, and to 
this regulation are (1) that handicapped persons, regardless of the 
nature or severity of their handicap, be provided a free appropriate 
public education, (2) that handicapped students be educated with 
nonhandicapped students to the maximum extent appropriate to their 
needs, (3) that educational agencies undertake to identify and locate 
all unserved handicapped children, (4) that evaluation procedures be 
improved in order to avoid the inappropriate education that results from 
the misclassification of students, and (5) that procedural safeguard be 
established to enable parents and guardians to influence decisions 
regarding the evaluation and placement of their children. These 
requirements are designed to ensure that no handicapped child is 
excluded from school on the basis of handicap and, if a recipient 
demonstrates that placement in a regular educational setting cannot be 
achieved satisfactorily, that the student is provided with adequate 
alternative services suited to the student's needs without additional 
cost to the student's parents or guardian. Thus, a recipient that 
operates a public school system must either educate handicapped children 
in its regular program or provide such children with an appropriate 
alternative education at public expense.
    It is not the intention of the Department, except in extraordinary 
circumstances, to review the result of individual placement and other 
educational decisions, so long as the school district complies with the 
``process'' requirements of this subpart (concerning identification and 
location, evaluation, and due process procedures). However, the 
Department will place a high priority on investigating cases which may 
involve exclusion of a child from the education system or a pattern or 
practice of discriminatory placements or education.
    22. Location and notification. Section 104.32 requires public 
schools to take steps annually to identify and locate handicapped 
children who are not receiving an education and to publicize to 
handicapped children and their parents the rights and duties established 
by section 504 and this regulation. This section has been shortened 
without substantive change.
    23. Free appropriate public education. Under Sec. 104.33(a), a 
recipient is responsible for providing a free appropriate public 
education to each qualified handicapped person who is in the recipient's 
jurisdiction. The word ``in'' encompasses the concepts of both domicile 
and actual residence. If a recipient places a child in a program other 
than its own, it remains financially responsible for the child, whether 
or not the other program is operated by another recipient or educational 
agency. Moreover, a recipient may not place a child in a program that is 
inappropriate or that otherwise violates the requirements of Subpart D.

[[Page 396]]

And in no case may a recipient refuse to provide services to a 
handicapped child in its jurisdiction because of another person's or 
entity's failure to assume financial responsibility.
    Section 104.33(b) concerns the provision of appropriate educational 
services to handicapped children. To be appropriate, such services must 
be designed to meet handicapped children's individual educational needs 
to the same extent that those of nonhandicapped children are met. An 
appropriate education could consist of education in regular classes, 
education in regular classes with the use of supplementary services, or 
special education and related services. Special education may include 
specially designed instruction in classrooms, at home, or in private or 
public institutions and may be accompanied by such related services as 
developmental, corrective, and other supportive services (including 
psychological, counseling, and medical diagnostic services). The 
placement of the child must however, be consistent with the requirements 
of Sec. 104.34 and be suited to his or her educational needs.
    The quality of the educational services provided to handicapped 
students must equal that of the services provided to nonhandicapped 
students; thus, handicapped student's teachers must be trained in the 
instruction of persons with the handicap in question and appropriate 
materials and equipment must be available. The Department is aware that 
the supply of adequately trained teachers may, at least at the outset of 
the imposition of this requirement, be insufficient to meet the demand 
of all recipients. This factor will be considered in determining the 
appropriateness of the remedy for noncompliance with this section. A new 
Sec. 104.33(b)(2) has been added, which allows this requirement to be 
met through the full implementation of an individualized education 
program developed in accordance with the standards of the EHA.
    Paragraph (c) of Sec. 104.33 sets forth the specific financial 
obligations of a recipient. If a recipient does not itself provide 
handicapped persons with the requisite services, it must assume the cost 
of any alternate placement. If, however, a recipient offers adequate 
services and if alternate placement is chosen by a student's parent or 
guardian, the recipient need not assume the cost of the outside 
services. (If the parent or guardian believes that his or her child 
cannot be suitably educated in the recipient's program, he or she may 
make use of the procedures established in Sec. 104.36.) Under this 
paragraph, a recipient's obligation extends beyond the provision of 
tuition payments in the case of placement outside the regular program. 
Adequate transportation must also be provided. Recipients must also pay 
for psychological services and those medical services necessary for 
diagnostic and evaluative purposes.
    If the recipient places a student, because of his or her handicap, 
in a program that necessitates his or her being away from home, the 
payments must also cover room and board and nonmedical care (including 
custodial and supervisory care). When residential care is necessitated 
not by the student's handicap but by factors such as the student's home 
conditions, the recipient is not required to pay the cost of room and 
board.
    Two new sentences have been added to paragraph (c)(1) to make clear 
that a recipient's financial obligations need not be met solely through 
its own funds. Recipients may rely on funds from any public or private 
source including insurers and similar third parties.
    The EHA requires a free appropriate education to be provided to 
handicapped children ``no later than September 1, 1978,'' but section 
504 contains no authority for delaying enforcement. To resolve this 
problem, a new paragraph (d) has been added to Sec. 104.33. Section 
104.33(d) requires recipients to achieve full compliance with the free 
appropriate public education requirements of Sec. 104.33 as 
expeditiously as possible, but in no event later than September 1, 1978. 
The provision also makes clear that, as of the effective date of this 
regulation, no recipient may exclude a qualified handicapped child from 
its educational program. This provision against exclusion is consistent 
with the order of providing services set forth in section 612(3) of the 
EHA, which places the highest priority on providing services to 
handicapped children who are not receiving an education.
    24. Educational setting. Section 104.34 prescribes standards for 
educating handicapped persons with nonhandicapped persons to the maximum 
extent appropriate to the needs of the handicapped person in question. A 
handicapped student may be removed from the regular educational setting 
only where the recipient can show that the needs of the student would, 
on balance, be served by placement in another setting.
    Although under Sec. 104.34, the needs of the handicapped person are 
determinative as to proper placement, it should be stressed that, where 
a handicapped student is so disruptive in a regular classroom that the 
education of other students is significantly impaired, the needs of the 
handicapped child cannot be met in that environment. Therefore, regular 
placement would not be appropriate to his or her needs and would not be 
required by Sec. 104.34.
    Among the factors to be considered in placing a child is the need to 
place the child as close to home as possible. A new sentence has been 
added to paragraph (a) requiring recipients to take this factor into 
account. As

[[Page 397]]

pointed out in several comments, the parents' right under Sec. 104.36 
to challenge the placement of their child extends not only to placement 
in special classes or separate schools but also to placement in a 
distant school and, in particular, to residential placement. An equally 
appropriate educational program may exist closer to home; this issue may 
be raised by the parent or guardian under Sec. Sec. 104.34 and 104.36.
    New paragraph (b) specified that handicapped children must also be 
provided nonacademic services in as integrated a setting as possible. 
This requirement is especially important for children whose educational 
needs necessitate their being solely with other handicapped children 
during most of each day. To the maximum extent appropriate, children in 
residential settings are also to be provided opportunities for 
participation with other children.
    Section 104.34(c) requires that any facilities that are identifiable 
as being for handicapped students be comparable in quality to other 
facilities of the recipient. A number of comments objected to this 
section on the basis that it encourages the creation and maintenance of 
such facilities. This is not the intent of the provision. A separate 
facility violates section 504 unless it is indeed necessary to the 
provision of an appropriate education to certain handicapped students. 
In those instances in which such facilities are necessary (as might be 
the case, for example, for severely retarded persons), this provision 
requires that the educational services provided be comparable to those 
provided in the facilities of the recipient that are not identifiable as 
being for handicapped persons.
    25. Evaluation and placement. Because the failure to provide 
handicapped persons with an appropriate education is so frequently the 
result of misclassification or misplacement, Sec. 104.33(b)(1) makes 
compliance with its provisions contingent upon adherence to certain 
procedures designed to ensure appropriate classification and placement. 
These procedures, delineated in Sec. Sec. 104.35 and 104.36, are 
concerned with testing and other evaluation methods and with procedural 
due process rights.
    Section 104.35(a) requires that an individual evaluation be 
conducted before any action is taken with respect either to the initial 
placement of a handicapped child in a regular or special education 
program or to any subsequent significant change in that placement. Thus, 
a full reevaluation is not required every time an adjustment in 
placement is made. ``Any action'' includes denials of placement.
    Paragraphs (b) and (c) of Sec. 104.35 establishes procedures 
designed to ensure that children are not misclassified, unnecessarily 
labeled as being handicapped, or incorrectly placed because of 
inappropriate selection, administration, or interpretation of evaluation 
materials. This problem has been extensively documented in ``Issues in 
the Classification of Children,'' a report by the Project on 
Classification of Exceptional Children, in which the HEW Interagency 
Task Force participated. The provisions of these paragraphs are aimed 
primarily at abuses in the placement process that result from misuse of, 
or undue or misplaced reliance on, standardized scholastic aptitude 
tests.
    Paragraph (b) has been shortened but not substantively changed. The 
requirement in former subparagraph (1) that recipients provide and 
administer evaluation materials in the native language of the student 
has been deleted as unnecessary, since the same requirement already 
exists under title VI and is more appropriately covered under that 
statute. Paragraphs (1) and (2) are, in general, intended to prevent 
misinterpretation and similar misuse of test scores and, in particular, 
to avoid undue reliance on general intelligence tests. Subparagraph (3) 
requires a recipient to administer tests to a student with impaired 
sensory, manual, or speaking skills in whatever manner is necessary to 
avoid distortion of the test results by the impairment. Former 
subparagraph (4) has been deleted as unnecessarily repetitive of the 
other provisions of this paragraph.
    Paragraph (c) requires a recipient to draw upon a variety of sources 
in the evaluation process so that the possibility of error in 
classification is minimized. In particular, it requires that all 
significant factors relating to the learning process, including adaptive 
behavior, be considered. (Adaptive behavior is the effectiveness with 
which the individual meets the standards of personal independence and 
social responsibility expected of his or her age and cultural group.) 
Information from all sources must be documented and considered by a 
group of persons, and the procedure must ensure that the child is placed 
in the most integrated setting appropriate.
    The proposed regulation would have required a complete individual 
reevaluation of the student each year. The Department has concluded that 
it is inappropriate in the section 504 regulation to require full 
reevaluations on such a rigid schedule. Accordingly, Sec. 104.35(c) 
requires periodic reevaluations and specifies that reevaluations in 
accordance with the EHA will constitute compliance. The proposed 
regulation implementing the EHA allows reevaluation at three-year 
intervals except under certain specified circumstances.
    Under Sec. 104.36, a recipient must establish a system of due 
process procedures to be afforded to parents or guardians before the 
recipient takes any action regarding the identification, evaluation, or 
educational placement of a person who, because of handicap, needs or is 
believed to need special education

[[Page 398]]

or related services. This section has been revised. Because the due 
process procedures of the EHA, incorporated by reference in the proposed 
section 504 regulation, are inappropriate for some recipients not 
subject to that Act, the section now specifies minimum necessary 
procedures: notice, a right to inspect records, an impartial hearing 
with a right to representation by counsel, and a review procedure. The 
EHA procedures remain one means of meeting the regulation's due process 
requirements, however, and are recommended to recipients as a model.
    26. Nonacademic services. Section 104.37 requires a recipient to 
provide nonacademic and extracurricular services and activities in such 
manner as is necessary to afford handicapped students an equal 
opportunity for participation. Because these services and activities are 
part of a recipient's education program, they must, in accordance with 
the provisions of Sec. 104.34, be provided in the most integrated 
setting appropriate.
    Revised paragraph (c)(2) does permit separation or differentiation 
with respect to the provision of physical education and athletics 
activities, but only if qualified handicapped students are also allowed 
the opportunity to compete for regular teams or participate in regular 
activities. Most handicapped students are able to participate in one or 
more regular physical education and athletics activities. For example, a 
student in a wheelchair can participate in regular archery course, as 
can a deaf student in a wrestling course.
    Finally, the one-year transition period provided in a proposed 
section was deleted in response to the almost unanimous objection of 
commenters to that provision.
    27. Preschool and adult education. Section 104.38 prohibits 
discrimination on the basis of handicap in preschool and adult education 
programs. Former paragraph (b), which emphasized that compensatory 
programs for disadvantaged children are subject to section 504, has been 
deleted as unnecessary, since it is comprehended by paragraph (a).
    28. Private education. Section 104.39 sets forth the requirements 
applicable to recipients that operate private education programs and 
activities. The obligations of these recipients have been changed in two 
significant respects: first, private schools are subject to the 
evaluation and due process provisions of the subpart only if they 
operate special education programs; second, under Sec. 104.39(b), they 
may charge more for providing services to handicapped students than to 
nonhandicapped students to the extent that additional charges can be 
justified by increased costs.
    Paragraph (a) of Sec. 104.39 is intended to make clear that 
recipients that operate private education programs and activities are 
not required to provide an appropriate education to handicapped students 
with special educational needs if the recipient does not offer programs 
designed to meet those needs. Thus, a private school that has no program 
for mentally retarded persons is neither required to admit such a person 
into its program nor to arrange or pay for the provision of the person's 
education in another program. A private recipient without a special 
program for blind students, however, would not be permitted to exclude, 
on the basis of blindness, a blind applicant who is able to participate 
in the regular program with minor adjustments in the manner in which the 
program is normally offered.

                   Subpart E--Postsecondary Education

    Subpart E prescribes requirements for nondiscrimination in 
recruitment, admission, and treatment of students in postsecondary 
education programs and activities, including vocational education.
    29. Admission and recruitment. In addition to a general prohibition 
of discrimination on the basis of handicap in Sec. 104.42(a), the 
regulation delineates, in Sec. 104.42(b), specific prohibitions 
concerning the establishment of limitations on admission of handicapped 
students, the use of tests or selection criteria, and preadmission 
inquiry. Several changes have been made in this provision.
    Section 104.42(b) provides that postsecondary educational 
institutions may not use any test or criterion for admission that has a 
disproportionate, adverse effect on handicapped persons unless it has 
been validated as a predictor of academic success and alternate tests or 
criteria with a less disproportionate, adverse effect are shown by the 
Department to be available. There are two significant changes in this 
approach from the July 16 proposed regulation.
    First, many commenters expressed concern that Sec. 104.42(b)(2)(ii) 
could be interpreted to require a ``global search'' for alternate tests 
that do not have a disproportionate, adverse impact on handicapped 
persons. This was not the intent of the provision and, therefore, it has 
been amended to place the burden on the Assistant Secretary for Civil 
Rights, rather than on the recipient, to identify alternate tests.
    Second, a new paragraph (d), concerning validity studies, has been 
added. Under the proposed regulation, overall success in an education 
program, not just first-year grades, was the criterion against which 
admissions tests were to be validated. This approach has been changed to 
reflect the comment of professional testing services that use of first 
year grades would be less disruptive of present practice and that 
periodic validity studies against overall success in the education 
program would be sufficient check on the reliability of first-year 
grades.
    Section 104.42(b)(3) also requires a recipient to assure itself that 
admissions tests are selected and administered to applicants with

[[Page 399]]

impaired sensory, manual, or speaking skills in such manner as is 
necessary to avoid unfair distortion of test results. Methods have been 
developed for testing the aptitude and achievement of persons who are 
not able to take written tests or even to make the marks required for 
mechanically scored objective tests; in addition, methods for testing 
persons with visual or hearing impairments are available. A recipient, 
under this paragraph, must assure itself that such methods are used with 
respect to the selection and administration of any admissions tests that 
it uses.
    Section 104.42(b)(3)(iii) has been amended to require that 
admissions tests be administered in facilities that, on the whole, are 
accessible. In this context, ``on the whole'' means that not all of the 
facilities need be accessibile so long as a sufficient number of 
facilities are available to handicapped persons.
    Revised Sec. 104.42(b)(4) generally prohibits preadmission 
inquiries as to whether an applicant has a handicap. The considerations 
that led to this revision are similar to those underlying the comparable 
revision of Sec. 104.14 on preemployment inquiries. The regulation 
does, however, allow inquiries to be made, after admission but before 
enrollment, as to handicaps that may require accommodation.
    New paragraph (c) parallels the section on preemployment inquiries 
and allows postsecondary institutions to inquire about applicants' 
handicaps before admission, subject to certain safeguards, if the 
purpose of the inquiry is to take remedial action to correct past 
discrimination or to take voluntary action to overcome the limited 
participation of handicapped persons in postsecondary educational 
institutions.
    Proposed Sec. 104.42(c), which would have allowed different 
admissions criteria in certain cases for handicapped persons, was widely 
misinterpreted in comments from both handicapped persons and recipients. 
We have concluded that the section is unnecessary, and it has been 
deleted.
    30. Treatment of students. Section 104.43 contains general 
provisions prohibiting the discriminatory treatment of qualified 
handicapped applicants. Paragraph (b) requires recipients to ensure that 
equal opportunities are provided to its handicapped students in 
education programs and activities that are not operated by the 
recipient. The recipient must be satisfied that the outside education 
program or activity as a whole is nondiscriminatory. For example, a 
college must ensure that discrimination on the basis of handicap does 
not occur in connection with teaching assignments of student teachers in 
elementary or secondary schools not operated by the college. Under the 
``as a whole'' wording, the college could continue to use elementary or 
secondary school systems that discriminate if, and only if, the 
college's student teaching program, when viewed in its entirety, offered 
handicapped student teachers the same range and quality of choice in 
student teaching assignments afforded nonhandicapped students.
    Paragraph (c) of this section prohibits a recipient from excluding 
qualified handicapped students from any course, course of study, or 
other part of its education program or activity. This paragraph is 
designed to eliminate the practice of excluding handicapped persons from 
specific courses and from areas of concentration because of factors such 
as ambulatory difficulties of the student or assumptions by the 
recipient that no job would be available in the area in question for a 
person with that handicap.
    New paragraph (d) requires postsecondary institutions to operate 
their programs and activities so that handicapped students are provided 
services in the most integrated setting appropriate. Thus, if a college 
had several elementary physics classes and had moved one such class to 
the first floor of the science building to accommodate students in 
wheelchairs, it would be a violation of this paragraph for the college 
to concentrate handicapped students with no mobility impairments in the 
same class.
    31. Academic adjustments. Paragraph (a) of Sec. 104.44 requires 
that a recipient make certain adjustments to academic requirements and 
practices that discriminate or have the effect of discriminating on the 
basis of handicap. This requirement, like its predecessor in the 
proposed regulation, does not obligate an institution to waive course or 
other academic requirements. But such institutions must accommodate 
those requirements to the needs of individual handicapped students. For 
example, an institution might permit an otherwise qualified handicapped 
student who is deaf to substitute an art appreciation or music history 
course for a required course in music appreciation or could modify the 
manner in which the music appreciation course is conducted for the deaf 
student. It shoud be stressed that academic requirements that can be 
demonstrated by the recipient to be essential to its program of 
instruction or to particular degrees need not be changed.
    Paragraph (b) provides that postsecondary institutions may not 
impose rules that have the effect of limiting the participation of 
handicapped students in the education program. Such rules include 
prohibition of tape recorders or braillers in classrooms and dog guides 
in campus buildings. Several recipients expressed concern about allowing 
students to tape record lectures because the professor may later want to 
copyright the lectures. This problem may be solved by requiring students 
to sign agreements that they will not release the tape recording or 
transcription or otherwise hinder the professor's ability to obtain a 
copyright.

[[Page 400]]

    Paragraph (c) of this section, concerning the administration of 
course examinations to students with impaired sensory, manual, or 
speaking skills, parallels the regulation's provisions on admissions 
testing (Sec. 104.42(b)) and will be similarly interpreted.
    Under Sec. 104.44(d), a recipient must ensure that no handicapped 
student is subject to discrimination in the recipient's program because 
of the absence of necessary auxiliary educational aids. Colleges and 
universities expressed concern about the costs of compliance with this 
provision.
    The Department emphasizes that recipients can usually meet this 
obligation by assisting students in using existing resources for 
auxiliary aids such as state vocational rehabilitation agencies and 
private charitable organizations. Indeed, the Department anticipates 
that the bulk of auxiliary aids will be paid for by state and private 
agencies, not by colleges or universities. In those circumstances where 
the recipient institution must provide the educational auxiliary aid, 
the institution has flexibility in choosing the methods by which the 
aids will be supplied. For example, some universities have used students 
to work with the institution's handicapped students. Other institutions 
have used existing private agencies that tape texts for handicapped 
students free of charge in order to reduce the number of readers needed 
for visually impaired students.
    As long as no handicapped person is excluded from a program because 
of the lack of an appropriate aid, the recipient need not have all such 
aids on hand at all times. Thus, readers need not be available in the 
recipient's library at all times so long as the schedule of times when a 
reader is available is established, is adhered to, and is sufficient. Of 
course, recipients are not required to maintain a complete braille 
library.
    32. Housing. Section 104.45(a) requires postsecondary institutions 
to provide housing to handicapped students at the same cost as they 
provide it to other students and in a convenient, accessible, and 
comparable manner. Commenters, particularly blind persons pointed out 
that some handicapped persons can live in any college housing and need 
not wait to the end of the transition period in subpart C to be offered 
the same variety and scope of housing accommodations given to 
nonhandicapped persons. The Department concurs with this position and 
will interpret this section accordingly.
    A number of colleges and universities reacted negatively to 
paragraph (b) of this section. It provides that, if a recipient assists 
in making off-campus housing available to its students, it should 
develop and implement procedures to assure itself that off-campus 
housing, as a whole, is available to handicapped students. Since 
postsecondary institutions are presently required to assure themselves 
that off-campus housing is provided in a manner that does not 
discriminate on the basis of sex (Sec. 106.32 of the title IX 
regulation), they may use the procedures developed under title IX in 
order to comply with Sec. 104.45(b). It should be emphasized that not 
every off-campus living accommodation need be made accessible to 
handicapped persons.
    33. Health and insurance. A proposed section, providing that 
recipients may not discriminate on the basis of handicap in the 
provision of health related services, has been deleted as duplicative of 
the general provisions of Sec. 104.43. This deletion represents no 
change in the obligation of recipients to provide nondiscriminatory 
health and insurance plans. The Department will continue to require that 
nondiscriminatory health services be provided to handicapped students. 
Recipients are not required, however, to provide specialized services 
and aids to handicapped persons in health programs. If, for example, a 
college infirmary treats only simple disorders such as cuts, bruises, 
and colds, its obligation to handicapped persons is to treat such 
disorders for them.
    34. Financial assistance. Section 104.46(a), prohibiting 
discrimination in providing financial assistance, remains substantively 
the same. It provides that recipients may not provide less assistance to 
or limit the eligibility of qualified handicapped persons for such 
assistance, whether the assistance is provided directly by the recipient 
or by another entity through the recipient's sponsorship. Awards that 
are made under wills, trusts, or similar legal instruments in a 
discriminatory manner are permissible, but only if the overall effect of 
the recipient's provision of financial assistance is not discriminatory 
on the basis of handicap.
    It will not be considered discriminatory to deny, on the basis of 
handicap, an athletic scholarship to a handicapped person if the 
handicap renders the person unable to qualify for the award. For 
example, a student who has a neurological disorder might be denied a 
varsity football scholarship on the basis of his inability to play 
football, but a deaf person could not, on the basis of handicap, be 
denied a scholarship for the school's diving team. The deaf person 
could, however, be denied a scholarship on the basis of comparative 
diving ability.
    Commenters on Sec. 104.46(b), which applies to assistance in 
obtaining outside employment for students, expressed similar concerns to 
those raised under Sec. 104.43(b), concerning cooperative programs. 
This paragraph has been changed in the same manner as Sec. 104.43(b) to 
include the ``as a whole'' concept and will be interpreted in the same 
manner as Sec. 104.43(b).
    35. Nonacademic services. Section 104.47 establishes 
nondiscrimination standards for physical education and athletics 
counseling and placement services, and social organizations. This 
section sets the same standards

[[Page 401]]

as does Sec. 104.38 of subpart D, discussed above, and will be 
interpreted in a similar fashion.

             Subpart F--Health, Welfare, and Social Services

    Subpart F applies to recipients that operate health, welfare, and 
social service programs. The Department received fewer comments on this 
subpart than on others.
    Although many commented that subpart F lacked specificity, these 
commenters provided neither concrete suggestions nor additions. 
Nevertheless, some changes have been made, pursuant to comment, to 
clarify the obligations of recipients in specific areas. In addition, in 
an effort to reduce duplication in the regulation, the section governing 
recipients providing health services has been consolidated with the 
section regulating providers of welfare and social services. Since the 
separate provisions that appeared in the proposed regulation were almost 
identical, no substantive change should be inferred from their 
consolidation.
    Several commenters asked whether subpart F applies to vocational 
rehabilitation agencies whose purpose is to assist in the rehabilitation 
of handicapped persons. To the extent that such agencies receive 
financial assistance from the Department, they are covered by subpart F 
and all other relevant subparts of the regulation. Nothing in this 
regulation, however, precludes such agencies from servicing only 
handicapped persons. Indeed, Sec. 104.4(c) permits recipients to offer 
services or benefits that are limited by federal law to handicapped 
persons or classes of handicapped persons.
    Many comments suggested requiring state social service agencies to 
take an active role in the enforcement of section 504 with regard to 
local social service providers. The Department believes that the 
possibility for federal-state cooperation in the administration and 
enforcement of section 504 warrants further consideration.
    A number of comments also discussed whether section 504 should be 
read to require payment of compensation to institutionalized handicapped 
patients who perform services for the institution in which they reside. 
The Department of Labor has recently issued a proposed regulation under 
the Fair Labor Standards Act (FLSA) that covers the question of 
compensation for institutionalized persons. 42 FR 15224 (March 18, 
1977). This Department will seek information and comment from the 
Department of Labor concerning that agency's experience administering 
the FLSA regulation.
    36. Health, welfare, and other social service providers. Section 
104.52(a) has been expanded in several respects. The addition of new 
paragraph (a)(2) is intended to make clear the basic requirement of 
equal opportunity to receive benefits or services in the health, 
welfare, and social service areas. The paragraph parallels Sec. Sec. 
104.4(b)(ii) and 104.43(b). New paragaph (a)(3) requires the provision 
of effective benefits or services, as defined in Sec. 104.4(b)(2) 
(i.e., benefits or services which ``afford handicapped persons equal 
opportunity to obtain the same result (or) to gain the same benefit * * 
*'').
    Section 104.52(a) also includes provisions concerning the limitation 
of benefits or services to handicapped persons and the subjection of 
handicapped persons to different eligibility standards. One common 
misconception about the regulation is that it would require specialized 
hospitals and other health care providers to treat all handicapped 
persons. The regulation makes no such requirement. Thus, a burn 
treatment center need not provide other types of medical treatment to 
handicapped persons unless it provides such medical services to 
nonhandicapped persons. It could not, however, refuse to treat the burns 
of a deaf person because of his or her deafness.
    Commenters had raised the question of whether the prohibition 
against different standards of eligibility might preclude recipients 
from providing special services to handicapped persons or classes of 
handicapped persons. The regulation will not be so interpreted, and the 
specific section in question has been eliminated. Section 104.4(c) makes 
clear that special programs for handicapped persons are permitted.
    A new paragraph (a)(5) concerning the provision of different or 
separate services or benefits has been added. This provision prohibits 
such treatment unless necessary to provide qualified handicapped persons 
with benefits and services that are as effective as those provided to 
others.
    Section 104.52(b) has been amended to cover written material 
concerning waivers of rights or consent to treatment as well as general 
notices concerning health benefits or services. The section requires the 
recipient to ensure that qualified handicapped persons are not denied 
effective notice because of their handicap. For example, recipients 
could use several different types of notice in order to reach persons 
with impaired vision or hearing, such as brailled messages, radio spots, 
and tacticle devices on cards or envelopes to inform blind persons of 
the need to call the recipient for further information.
    Section 104.52(c) is a new section requiring recipient hospitals to 
establish a procedure for effective communication with persons with 
impaired hearing for the purpose of providing emergency health care. 
Although it would be appropriate for a hospital to fulfill its 
responsibilities under this section by having a full-time interpreter 
for the deaf on staff, there may be other means of accomplishing the 
desired result of assuring that some means of communication is 
immediately available for deaf persons needing emergency treatment.

[[Page 402]]

    Section 104.52(c), also a new provision, requires recipients with 
fifteen or more employees to provide appropriate auxiliary aids for 
persons with impaired sensory, manual, or speaking skills. Further, the 
Assistant Secretary may require a small provider to furnish auxiliary 
aids where the provision of aids would not adversely affect the ability 
of the recipient to provide its health benefits or service.
    37. Treatment of Drug Addicts and Alcoholics. Section 104.53 is a 
new section that prohibits discrimination in the treatment and admission 
of drug and alcohol addicts to hospitals and outpatient facilities. 
Section 104.53 prohibits discrimination against drug abusers by 
operators of outpatient facilities, despite the fact that section 407 
pertains only to hospitals, because of the broader application of 
section 504. This provision does not mean that all hospitals and 
outpatient facilities must treat drug addiction and alcoholism. It 
simply means, for example, that a cancer clinic may not refuse to treat 
cancer patients simply because they are also alcoholics.
    38. Education of institutionalized persons. The regulation retains 
Sec. 104.54 of the proposed regulation that requires that an 
appropriate education be provided to qualified handicapped persons who 
are confined to residential institutions or day care centers.

                          Subpart G--Procedures

    In Sec. 104.61, the Secretary has adopted the title VI complaint 
and enforcement procedures for use in implementing section 504 until 
such time as they are superseded by the issuance of a consolidated 
procedureal regulation applicable to all of the civil rights statutes 
and executive orders administered by the Department.

[45 FR 30936, May 9, 1980, as amended at 55 FR 52141, Dec. 19, 1990]

 Appendix B to Part 104--Guidelines for Eliminating Discrimination and 
 Denial of Services on the Basis of Race, Color, National Origin, Sex, 
              and Handicap in Vocational Education Programs

    Editorial Note: For the text of these guidelines, see 34 CFR part 
100, appendix B.



PART 105_ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF HANDICAP IN 

PROGRAMS OR ACTIVITIES CONDUCTED BY THE DEPARTMENT OF EDUCATION
--Table of Contents




Sec.
105.1 Purpose.
105.2 Application.
105.3 Definitions.
105.4-105.9 [Reserved]
105.10 Self-evaluation.
105.11 Notice.
105.12-105.19 [Reserved]
105.20 General prohibitions against discrimination.
105.21-105.29 [Reserved]
105.30 Employment.
105.31 Program accessibility: Discrimination prohibited.
105.32 Program accessibility: Existing facilities.
105.33 Program accessibility: New construction and alterations.
105.34-105.39 [Reserved]
105.40 Communications.
105.41 Compliance procedures.
105.42 Effective date.

    Authority: 29 U.S.C. 794, unless otherwise noted.

    Source: 55 FR 37168, Sept. 7, 1990, unless otherwise noted.



Sec. 105.1  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. 105.2  Application.

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



Sec. 105.3  Definitions.

    For purposes of this part, the following definitions apply:
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking

[[Page 403]]

skills to have an equal opportunity to participate in, and enjoy the 
benefits of, programs or activities conducted by the Department. For 
example, auxiliary aids useful for persons with impaired vision include 
readers, materials in braille, 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 (TDDs), 
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 Department's alleged 
discriminatory action in sufficient detail to inform the Department of 
the nature and date of the alleged violation of section 504. It must 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 must 
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 
Department 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, 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; and
    (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 Department 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 
the impairment; or
    (iii) Has none of the impairments defined in paragraph (1) of this 
definition but is treated by the Department as having such an 
impairment.
    Qualified individual with handicaps means--
    (1) With respect to preschool, elementary, or secondary education 
services provided by the Department, an individual with handicaps who is 
a member of a class of persons otherwise entitled by statute, 
regulation, or Department policy to receive education services from the 
Department;
    (2) With respect to any other Department program or activity under 
which a person is required to perform services or to achieve a level of 
accomplishment, an individual with handicaps

[[Page 404]]

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 Department can demonstrate would result in a 
fundamental alteration in its nature;
    (3) With respect to any other Department 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. 105.30
    Secretary means the Secretary of the Department of Education or an 
official or employee of the Department acting for the Secretary under a 
delegation of authority.
    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); 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 applies only to programs or 
activities conducted by the Department 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.



Sec. Sec. 105.4-105.9  [Reserved]



Sec. 105.10  Self-evaluation.

    (a) The Department 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 of those policies and practices is 
required, the Department shall proceed to make the necessary 
modifications.
    (b) The Department 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 Department shall, for at least 3 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. 105.11  Notice.

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



Sec. Sec. 105.12-105.19  [Reserved]



Sec. 105.20  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 Department.
    (b)(1) The Department, 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

[[Page 405]]

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 
individuals with handicaps or to any class of individuals with handicaps 
than is provided to others unless that 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 Department 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 Department may not, directly or through contractual or other 
arrangements, use 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 Department 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 Department; or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program or activity with respect to individuals with 
handicaps.
    (5) The Department, 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 Department 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 Department 
establish requirements for the program 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 Department 
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 Department shall administer programs and activities in the 
most integrated setting appropriate to the needs of qualified 
individuals with handicaps.



Sec. Sec. 105.21-105.29  [Reserved]



Sec. 105.30  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 Department. As provided in Sec. 105.41(b), 
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. 105.31  Program accessibility: Discrimination prohibited.

    Except as otherwise provided in Sec. 105.32, no qualified 
individual with handicaps shall, because the Department's facilities are 
inaccessible to or

[[Page 406]]

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 
Department.



Sec. 105.32  Program accessibility: Existing facilities.

    (a) General. The Department shall operate each program or activity 
so that the program or activity, viewed in its entirety, is readily 
accessible to and usable by individuals with handicaps. This paragraph 
does not--
    (1) Necessarily require the Department 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 
Department to take any action that would result in a substantial 
impairment of significant historic features of an historic property; or
    (3)(i) Require the Department 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.
    (ii) The Department has the burden of proving that compliance with 
Sec. 105.32(a) would result in that alteration or those burdens.
    (iii) The decision that compliance would result in that alteration 
or those burdens must be made by the Secretary after considering all of 
the Department's 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.
    (iv) If an action would result in that alteration or those burdens, 
the Department shall take any other action that would not result in the 
alteration or burdens but would nevertheless ensure that individuals 
with handicaps receive the benefits and services of the program or 
activity.
    (b) Methods--(1) General. (i) The Department may comply with the 
requirements of this section through such means as redesign of 
equipment, reassignment of services to accessible buildings, assignments 
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.
    (ii) The Department is not required to make structural changes in 
existing facilities if other methods are effective in achieving 
compliance with this section.
    (iii) The Department, 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 that Act.
    (iv) In choosing among available methods for meeting the 
requirements of this section, the Department 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. 105.32(a) in historic preservation programs, the Department shall 
give priority to methods that provide physical access to individuals 
with handicaps. In cases were a physical alteration to an historic 
property is not required because of Sec. 105.32 (a)(2) or (a)(3), 
alternative methods of achieving program accessibility include--
    (i) Using audiovisual 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 Department shall comply with the 
obligations established under this section within 60 days of the 
effective date of this part except that if structural changes in 
facilities are undertaken, the changes shall be made within 3 years of 
the effective date of this part, but in any event as expeditiously as 
possible.

[[Page 407]]

    (d) Transition plan. (1) In the event that structural changes to 
facilities will be undertaken to achieve program accessibility, the 
Department shall develop, within six months of the effective date of 
this part, a transition plan setting forth the steps necessary to 
complete those changes.
    (2) The Department 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 must be made available for 
public inspection.
    (3) The plan must, at a minimum--
    (i) Identify physical obstacles in the Department's facilities that 
limit the accessibility of its programs or activities to individuals 
with handicaps;
    (ii) Describe in detail the methods that will be used to make the 
facilities accessible;
    (iii) 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
    (iv) Indicate the official responsible for implementation of the 
plan.



Sec. 105.33  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 Department must 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. Sec. 105.34-105.39  [Reserved]



Sec. 105.40  Communications.

    (a) The Department shall take appropriate steps to ensure effective 
communication with applicants, participants, personnel of other Federal 
entities, and members of the public, as follows:
    (1)(i) The Department shall furnish appropriate auxiliary aids if 
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 Department.
    (ii) In determining what type of auxiliary aid is necessary, the 
Department shall give primary consideration to the request of the 
individual with handicaps.
    (iii) The Department need not provide individually prescribed 
devices, readers for personal use or study, or other devices of a 
personal nature.
    (2) If the Department communicates with applicants and beneficiaries 
by telephone, telecommunication devices for deaf persons (TDDs) or 
equally effective telecommunication systems must be used.
    (b) The Department 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 Department shall provide signs 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 must be used at each primary 
entrance of an accessible facility.
    (d)(1) This section does not require the Department 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.
    (2) The Department has the burden of proving that compliance with 
Sec. 105.40 would result in that alteration or those burdens.
    (3) The decision that compliance would result in that alteration or 
those burdens must be made by the Secretary after considering all 
Department 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.
    (4) If an action required to comply with this section would result 
in that alteration or those burdens, the Department shall take any other 
action that would not result in the alteration

[[Page 408]]

or burdens but would nevertheless ensure that, to the maximum extent 
possible, individuals with handicaps receive the benefits and services 
of the program or activity.



Sec. 105.41  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 Department.
    (b) As provided in Sec. 105.30, the Department 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 Under Secretary for Management is responsible for 
coordinating implementation of this section. Complaints may be sent to 
the U.S. Department of Education, Office of Management, Federal Building 
No. 6, 400 Maryland Avenue SW., Washington, DC 20202.
    (d) The Department 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 
Department may extend this time period for good cause.
    (e) If the Department 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 Department 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 Department 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 Department of the letter required by Sec. 105.41(g). The Department 
may extend this time for good cause.
    (i) Timely appeals shall be accepted and processed by the Secretary.
    (j) If the Secretary determines that additional information is 
needed for the complainant, he or she shall notify the complainant of 
the additional information needed to make his or her determination on 
the appeal.
    (k) The Secretary shall notify the complainant of the results of the 
appeal.
    (l) The time limit in paragraph (g) of this section may be extended 
by the Secretary.
    (m) The Secretary may delegate the authority for conducting 
complaint investigations to other Federal agencies, except that the 
authority for making the final determination may not be delegated.



Sec. 105.42  Effective date.

    The effective date of this part is October 9, 1990.



PART 106_NONDISCRIMINATION ON THE BASIS OF SEX IN EDUCATION PROGRAMS OR 
ACTIVITIES RECEIVING FEDERAL FINANCIAL ASSISTANCE--Table of Contents




                         Subpart A_Introduction

Sec.
106.1 Purpose and effective date.
106.2 Definitions.
106.3 Remedial and affirmative action and self-evaluation.
106.4 Assurance required.
106.5 Transfers of property.
106.6 Effect of other requirements.
106.7 Effect of employment opportunities.
106.8 Designation of responsible employee and adoption of grievance 
          procedures.
106.9 Dissemination of policy.

                           Subpart B_Coverage

106.11 Application.
106.12 Educational institutions controlled by religious organizations.

[[Page 409]]

106.13 Military and merchant marine educational institutions.
106.14 Membership practices of certain organizations.
106.15 Admissions.
106.16 Educational institutions eligible to submit transition plans.
106.17 Transition plans.

     Subpart C_Discrimination on the Basis of Sex in Admission and 
                         Recruitment Prohibited

106.21 Admission.
106.22 Preference in admission.
106.23 Recruitment.

 Subpart D_Discrimination on the Basis of Sex in Education Programs or 
                          Activities Prohibited

106.31 Education programs or activities.
106.32 Housing.
106.33 Comparable facilities.
106.34 Access to course offerings.
106.35 Access to schools operated by LEAs.
106.36 Counseling and use of appraisal and counseling materials.
106.37 Financial assistance.
106.38 Employment assistance to students.
106.39 Health and insurance benefits and services.
106.40 Marital or parental status.
106.41 Athletics.
106.42 Textbooks and curricular material.

Subpart E_Discrimination on the Basis of Sex in Employment in Education 
                    Programs or Activities Prohibited

106.51 Employment.
106.52 Employment criteria.
106.53 Recruitment.
106.54 Compensation.
106.55 Job classification and structure.
106.56 Fringe benefits.
106.57 Marital or parental status.
106.58 Effect of State or local law or other requirements.
106.59 Advertising.
106.60 Pre-employment inquiries.
106.61 Sex as a bona-fide occupational qualification.

                     Subpart F_Procedures [Interim]

106.71 Procedures.

Subject Index to Title IX Preamble and Regulation
Appendix A to Part 106--Guidelines for Eliminating Discrimination and 
          Denial of Services on the Basis of Race, Color, National 
          Origin, Sex, and Handicap in Vocational Education Programs 
          [Note]

    Authority: 20 U.S.C. 1681 et seq., unless otherwise noted.

    Source: 45 FR 30955, May 9, 1980, unless otherwise noted.



                         Subpart A_Introduction



Sec. 106.1  Purpose and effective date.

    The purpose of this part is to effectuate title IX of the Education 
Amendments of 1972, as amended by Pub. L. 93-568, 88 Stat. 1855 (except 
sections 904 and 906 of those Amendments) 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 this part. This part is also 
intended to effectuate section 844 of the Education Amendments of 1974, 
Pub. L. 93-380, 88 Stat. 484. The effective date of this part shall be 
July 21, 1975.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682, as amended by Pub. L. 93-568, 88 Stat. 1855, 
and sec. 844, Education Amendments of 1974, 88 Stat. 484, Pub. L. 93-
380)



Sec. 106.2  Definitions.

    As used in this part, the term:
    (a) Title IX means title IX of the Education Amendments of 1972, 
Pub. L. 92-318, as amended by section 3 of Pub. L. 93-568, 88 Stat. 
1855, except sections 904 and 906 thereof; 20 U.S.C. 1681, 1682, 1683, 
1685, 1686.
    (b) Department means the Department of Education.
    (c) Secretary means the Secretary of Education.
    (d) Assistant Secretary means the Assistant Secretary for Civil 
Rights of the Department.
    (e) Reviewing Authority means that component of the Department 
delegated authority by the Secretary to appoint, and to review the 
decisions of, administrative law judges in cases arising under this 
part.
    (f) Administrative law judge means a person appointed by the 
reviewing authority to preside over a hearing held under this part.
    (g) Federal financial assistance means any of the following, when 
authorized or extended under a law administered by the Department:

[[Page 410]]

    (1) A grant or loan of Federal financial assistance, including funds 
made available for:
    (i) The acquisition, construction, renovation, restoration, or 
repair of a 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 which has as one 
of its purposes the provision of assistance to any education program or 
activity, except a contract of insurance or guaranty.
    (h) Program or activity and program means all of the operations of--
    (1)(i) A department, agency, special purpose district, or other 
instrumentality of a State or local government; or
    (ii) The entity of a State or local government that distributes such 
assistance and each such department or agency (and each other State or 
local government entity) to which the assistance is extended, in the 
case of assistance to a State or local government;
    (2)(i) A college, university, or other postsecondary institution, or 
a public system of higher education; or
    (ii) A local educational agency (as defined in 20 U.S.C. 8801), 
system of vocational education, or other school system;
    (3)(i) An entire corporation, partnership, other private 
organization, or an entire sole proprietorship--
    (A) If assistance is extended to such corporation, partnership, 
private organization, or sole proprietorship as a whole; or
    (B) Which is principally engaged in the business of providing 
education, health care, housing, social services, or parks and 
recreation; or
    (ii) 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
    (4) Any other entity that is established by two or more of the 
entities described in paragraph (h)(1), (2), or (3) of this section; any 
part of which is extended Federal financial assistance.

(Authority: 20 U.S.C. 1687)

    (i) 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 which operates an education program or 
activity which receives such assistance, including any subunit, 
successor, assignee, or transferee thereof.
    (j) Applicant means one who submits an application, request, or plan 
required to be approved by a Department official, or by a recipient, as 
a condition to becoming a recipient.
    (k) Educational institution means a local educational agency (LEA) 
as defined by section 1001(f) of the Elementary and Secondary Education 
Act of 1965 (20 U.S.C. 3381), a preschool, a private elementary or 
secondary school, or an applicant or recipient of the type defined by 
paragraph (l), (m), (n), or (o) of this section.
    (l) Institution of graduate higher education means an institution 
which:
    (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; or

[[Page 411]]

    (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.
    (m) 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 which certifies credentials or offers degrees, 
but which may or may not offer academic study.
    (n) Institution of professional education means an institution 
(except any institution of undergraduate higher education) which 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.
    (o) Institution of vocational education means a school or 
institution (except an institution of professional or graduate or 
undergraduate higher education) which 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 fulltime study.
    (p) 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.
    (q) 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.
    (r) Student means a person who has gained admission.
    (s) Transition plan means a plan subject to the approval of the 
Secretary pursuant to section 901(a)(2) of the Education Amendments of 
1972, under which an educational institution operates in making the 
transition from being an educational institution which admits only 
students of one sex to being one which admits students of both sexes 
without discrimination.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)

[45 FR 30955, May 9, 1980; 45 FR 37426, June 3, 1980, as amended at 65 
FR 68056, Nov. 13, 2000]



Sec. 106.3  Remedial and affirmative action and self-evaluation.

    (a) Remedial action. If the Assistant Secretary 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 Assistant Secretary 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 to overcome the effects of 
conditions which resulted in limited participation therein by persons of 
a particular sex. Nothing herein shall be interpreted to alter any 
affirmative action obligations which a recipient may have under 
Executive Order 11246.
    (c) Self-evaluation. Each recipient education institution shall, 
within one year of the effective date of this part:
    (1) Evaluate, in terms of the requirements of this part, 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 which do not or may 
not meet the requirements of this part; and
    (3) Take appropriate remedial steps to eliminate the effects of any 
discrimination which resulted or may

[[Page 412]]

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 Assistant Secretary upon request, a 
description of any modifications made pursuant to paragraph (c)(ii) of 
this section and of any remedial steps taken pursuant to paragraph 
(c)(iii) of this section.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.4  Assurance required.

    (a) General. Every application for Federal financial assistance 
shall as condition of its approval contain or be accompanied by an 
assurance from the applicant or recipient, satisfactory to the Assistant 
Secretary, that the education program or activity operated by the 
applicant or recipient and to which this part applies will be operated 
in compliance with this part. An assurance of compliance with this part 
shall not be satisfactory to the Assistant Secretary 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. 106.3(a) 
to eliminate existing discrimination on the basis of sex or to eliminate 
the effects of past discrimination whether occurring prior or subsequent 
to the submission to the Assistant Secretary 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.
    (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. The Director will specify the form of the assurances 
required by paragraph (a) of this section and the extent to which such 
assurances will be required of the applicant's or recipient's 
subgrantees, contractors, subcontractors, transferees, or successors in 
interest.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)

[45 FR 30955, May 9, 1980, as amended at 45 FR 86298, Dec. 30, 1980; 65 
FR 68056, Nov. 13, 2000]



Sec. 106.5  Transfers of property.

    If a recipient sells or otherwise transfers property financed in 
whole or in part with Federal financial assistance to a transferee which 
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 subpart B of this part.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.6  Effect of other requirements.

    (a) Effect of other Federal provisions. The obligations imposed by 
this part are independent of, and do not alter, obligations not to 
discriminate on the basis of sex imposed by Executive Order 11246, as 
amended; sections 704 and 855 of the Public Health Service Act (42 
U.S.C. 292d and 298b-2); Title VII of the Civil Rights Act of 1964 (42 
U.S.C. 2000e et seq.); the Equal Pay Act (29 U.S.C. 206 and 206(d)); and 
any other Act of Congress or Federal regulation.

(Authority: Secs. 901, 902, 905, Education Amendments of 1972, 86 Stat. 
373, 374, 375; 20 U.S.C. 1681, 1682, 1685)

    (b) Effect of State or local law or other requirements. The 
obligation to comply with this part is not obviated or alleviated by any 
State or local law or other requirement which would render any applicant 
or student ineligible, or limit

[[Page 413]]

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 this part is not obviated or alleviated by any 
rule or regulation of any organization, club, athletic or other league, 
or association which 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 which receives Federal financial assistance.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)

[45 FR 30955, May 9, 1980, as amended at 65 FR 68056, Nov. 13, 2000]



Sec. 106.7  Effect of employment opportunities.

    The obligation to comply with this part 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.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.8  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 this part, including any 
investigation of any complaint communicated to such recipient alleging 
its noncompliance with this part or alleging any actions which would be 
prohibited by this part. The recipient shall notify all its students and 
employees of the name, office address and telephone number of 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 which 
would be prohibited by this part.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.9  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 
program or activity which it operates, and that it is required by title 
IX and this part not to discriminate in such a manner. Such notification 
shall contain such information, and be made in such manner, as the 
Assistant Secretary finds necessary to apprise such persons of the 
protections against discrimination assured them by title IX and this 
part, but shall state at least that the requirement not to discriminate 
in the education program or activity extends to employment therein, and 
to admission thereto unless Subpart C does not apply to the recipient, 
and that inquiries concerning the application of title IX and this part 
to such recipient may be referred to the employee designated pursuant to 
Sec. 106.8, or to the Assistant Secretary.
    (2) Each recipient shall make the initial notification required by 
paragraph (a)(1) of this section within 90 days of the effective date of 
this part or of the date this part first applies to such recipient, 
whichever comes later, which notification shall include publication in:
    (i) Local newspapers;
    (ii) Newspapers and magazines operated by such recipient or by 
student, alumnae, or alumni groups for or in connection with such 
recipient; and
    (iii) Memoranda or other written communications distributed to every 
student and employee of such recipient.
    (b) Publications. (1) Each recipient shall prominently include a 
statement

[[Page 414]]

of the policy described in paragraph (a) of this section in each 
announcement, bulletin, catalog, or application form which 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 this paragraph which 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 this part.
    (c) Distribution. Each recipient shall distribute without 
discrimination on the basis of sex each publication described in 
paragraph (b) 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 
require such representatives to adhere to such policy.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)

[45 FR 30955, May 9, 1980, as amended at 65 FR 68056, Nov. 13, 2000]



                           Subpart B_Coverage



Sec. 106.11  Application.

    Except as provided in this subpart, this part 106 applies to every 
recipient and to the education program or activity operated by such 
recipient which receives Federal financial assistance.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)

[45 FR 86298, Dec. 30, 1980, as amended at 65 FR 68056, Nov. 13, 2000]



Sec. 106.12  Educational institutions controlled by religious organizations.

    (a) Application. This part does not apply to an educational 
institution which is controlled by a religious organization to the 
extent application of this part would not be consistent with the 
religious tenets of such organization.
    (b) Exemption. An educational institution which wishes to claim the 
exemption set forth in paragraph (a) of this section, shall do so by 
submitting in writing to the Assistant Secretary a statement by the 
highest ranking official of the institution, identifying the provisions 
of this part which conflict with a specific tenet of the religious 
organization.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.13  Military and merchant marine educational institutions.

    This part does 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.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.14  Membership practices of certain organizations.

    (a) Social fraternities and sororities. This part does not apply to 
the membership practices of social fraternities and sororities which are 
exempt from taxation under section 501(a) of the Internal Revenue Code 
of 1954, 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. This 
part does not apply to the membership practices of the Young Men's 
Christian Association, the Young Women's Christian Association, the Girl 
Scouts, the Boy Scouts and Camp Fire Girls.
    (c) Voluntary youth service organizations. This part does not apply 
to the membership practices of voluntary youth service organizations 
which are exempt from taxation under section 501(a) of the Internal 
Revenue Code of 1954 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.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682; sec. 3(a) of P.L. 93-568, 88 Stat. 1862 
amending Sec. 901)

[[Page 415]]



Sec. 106.15  Admissions.

    (a) Admissions to educational institutions prior to June 24, 1973, 
are not covered by this part.
    (b) Administratively separate units. For the purposes only of this 
section, Sec. Sec. 106.16 and 106.17, and subpart C, each 
administratively separate unit shall be deemed to be an educational 
institution.
    (c) Application of subpart C. Except as provided in paragraphs (d) 
and (e) of this section, subpart C applies to each recipient. A 
recipient to which subpart C applies shall not discriminate on the basis 
of sex in admission or recruitment in violation of that subpart.
    (d) Educational institutions. Except as provided in paragraph (e) of 
this section as to recipients which are educational institutions, 
subpart C applies 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. Subpart C 
does not apply to any public institution of undergraduate higher 
education which traditionally and continually from its establishment has 
had a policy of admitting only students of one sex.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)

[45 FR 30955, May 9, 1980, as amended at 45 FR 86298, Dec. 30, 1980]



Sec. 106.16  Educational institutions eligible to submit transition plans.

    (a) Application. This section applies to each educational 
institution to which subpart C applies which:
    (1) Admitted only students of one sex as regular students as of June 
23, 1972; or
    (2) Admitted only students of 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 subpart C unless it is carrying 
out a transition plan approved by the Secretary as described in Sec. 
106.17, which plan provides for the elimination of such discrimination 
by the earliest practicable date but in no event later than June 23, 
1979.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.17  Transition plans.

    (a) Submission of plans. An institution to which Sec. 106.16 
applies and which 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 a 
transition plan shall:
    (1) State the name, address, and Federal Interagency Committee on 
Education (FICE) 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. 106.16

[[Page 416]]

applies shall result in treatment of applicants to or students of such 
recipient in violation of subpart C 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. 106.16 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 which emphasizes the 
institution's commitment to enrolling students of the sex previously 
excluded.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)

[45 FR 30955, May 9, 1980, as amended at 65 FR 68056, Nov. 13, 2000]



     Subpart C_Discrimination on the Basis of Sex in Admission and 
                         Recruitment Prohibited



Sec. 106.21  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 this subpart applies, except as provided in 
Sec. Sec. 106.16 and 106.17.
    (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 this subpart applies 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 which 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 or criteria which 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 
this subpart applies:
    (1) Shall not apply any rule concerning the actual or potential 
parental, family, or marital status of a student or applicant which 
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 which so 
discriminates or excludes;
    (3) 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 admision, 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 this part.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.22  Preference in admission.

    A recipient to which this subpart applies shall not give preference 
to applicants for admission, on the basis of attendance at any 
educational institution or other school or entity which admits as 
students only or predominantly members of one sex, if the giving of

[[Page 417]]

such preference has the effect of discriminating on the basis of sex in 
violation of this subpart.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.23  Recruitment.

    (a) Nondiscriminatory recruitment. A recipient to which this subpart 
applies 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. 106.3(a), and may choose to undertake such efforts as 
affirmative action pursuant to Sec. 106.3(b).
    (b) Recruitment at certain institutions. A recipient to which this 
subpart applies shall not recruit primarily or exclusively at 
educational institutions, schools or entities which 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 this 
subpart.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



 Subpart D_Discrimination on the Basis of Sex in Education Programs or 
                          Activities Prohibited



Sec. 106.31  Education programs or activities.

    (a) General. Except as provided elsewhere in this part, 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 which receives Federal 
financial assistance. This subpart does not apply to actions of a 
recipient in connection with admission of its students to an education 
program or activity of (1) a recipient to which subpart C does not 
apply, or (2) an entity, not a recipient, to which subpart C would not 
apply if the entity were a recipient.
    (b) Specific prohibitions. Except as provided in this subpart, 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;
    (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 which 
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, which are designed to provide 
opportunities to study abroad, and which are awarded to students who are 
already matriculating at or who are graduates of the recipient 
institution; Provided, a recipient educational institution which 
administers or assists in the administration of such scholarships, 
fellowships, or other awards which 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) Aid, benefits or services not provided by recipient. (1) This 
paragraph applies to any recipient which requires participation by any 
applicant, student, or employee in any education program or

[[Page 418]]

activity not operated wholly by such recipient, or which 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 which this part would prohibit such recipient from 
taking; and
    (ii) Shall not facilitate, require, permit, or consider such 
participation if such action occurs.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)

[45 FR 30955, May 9, 1980, as amended at 47 FR 32527, July 28, 1982; 65 
FR 68056, Nov. 13, 2000]



Sec. 106.32  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 provided by such recipient.
    (2) 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:
    (i) Proportionate in quantity and
    (ii) Comparable in quality and cost to the student.

A recipient may render such assistance to any agency, organization, or 
person which provides all or part of such housing to students only of 
one sex.

(Authority: Secs. 901, 902, 907, Education Amendments of 1972, 86 Stat. 
373, 374, 375; 20 U.S.C. 1681, 1682, 1686)



Sec. 106.33  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.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374)



Sec. 106.34  Access to course offerings.

    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.
    (a) 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 the effective date of this regulation. 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 
the effective date of this regulation.
    (b) 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.

[[Page 419]]

    (c) 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.
    (d) 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 which do not have such 
effect.
    (e) Portions of classes in elementary and secondary schools which 
deal exclusively with human sexuality may be conducted in separate 
sessions for boys and girls.
    (f) Recipients may make requirements based on vocal range or quality 
which may result in a chorus or choruses of one or predominantly one 
sex.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.35  Access to schools operated by LEAs.

    A recipient which 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.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.36  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 which 
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 which 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 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.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.37  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 amount or types of such 
assistance, limit eligibility for such assistance which 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 which provides assistance to any of such recipient's students 
in a manner which discriminates on the basis of sex; or
    (3) Apply any rule or assist in application of any rule concerning 
eligibility for such assistance which treats persons of one sex 
differently from persons of the other sex with regard to marital or 
parental status.

[[Page 420]]

    (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 which 
requires 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) Separate athletic scholarships or grants-in-aid for members of 
each sex may be provided as part of separate athletic teams for members 
of each sex to the extent consistent with this paragraph and Sec. 
106.41.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682; and Sec. 844, Education Amendments of 1974, 
Pub. L. 93-380, 88 Stat. 484)



Sec. 106.38  Employment assistance to students.

    (a) Assistance by recipient in making available outside employment. 
A recipient which 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 which discriminates on the basis of sex in its employment 
practices.
    (b) Employment of students by recipients. A recipient which employs 
any of its students shall not do so in a manner which violates subpart E 
of this part.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.39  Health and insurance benefits and services.

    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 which would violate Subpart E of 
this part if it were provided to employees of the recipient. This 
section shall not prohibit a recipient from providing any benefit or 
service which may be used by a different proportion of students of one 
sex than of the other, including family planning services. However, any 
recipient which provides full coverage health service shall provide 
gynecological care.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.40  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 which 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

[[Page 421]]

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 so 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 which 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) 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 which 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 which 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 so 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 which she held when the leave began.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)

[45 FR 30955, May 9, 1980, as amended at 65 FR 68056, Nov. 13, 2000]



Sec. 106.41  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 this part, 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. A recipient which 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 Director will 
consider, among other factors:
    (1) Whether the selection of sports and levels of competition 
effectively accommodate the interests and abilities of members of both 
sexes;
    (2) The provision of equipment and supplies;
    (3) Scheduling of games and practice time;
    (4) Travel and per diem allowance;
    (5) Opportunity to receive coaching and academic tutoring;
    (6) Assignment and compensation of coaches and tutors;
    (7) Provision of locker rooms, practice and competitive facilities;
    (8) Provision of medical and training facilities and services;
    (9) Provision of housing and dining facilities and services;
    (10) Publicity.

[[Page 422]]


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 Assistant Secretary 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 which 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 the 
effective date of this regulation. A recipient which operates or 
sponsors interscholastic, intercollegiate, club or intramural athletics 
at the secondary or post-secondary school level shall comply fully with 
this section as expeditiously as possible but in no event later than 
three years from the effective date of this regulation.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682; and Sec. 844, Education Amendments of 1974, 
Pub. L. 93-380, 88 Stat. 484)



Sec. 106.42  Textbooks and curricular material.

    Nothing in this regulation shall be interpreted as requiring or 
prohibiting or abridging in any way the use of particular textbooks or 
curricular materials.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Subpart E_Discrimination on the Basis of Sex in Employment in Education 
                    Programs or Activities Prohibited



Sec. 106.51  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 which 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 which 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 this subpart, 
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 which 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 this part.
    (b) Application. The provisions of this subpart apply to:
    (1) Recruitment, advertising, and the process of application for 
employment;
    (2) Hiring, upgrading, promotion, consideration for and award of 
tenure, 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;

[[Page 423]]

    (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 those that are social 
or recreational; and
    (10) Any other term, condition, or privilege of employment.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)

[45 FR 30955, May 9, 1980, as amended at 65 FR 68056, Nov. 13, 2000]



Sec. 106.52  Employment criteria.

    A recipient shall not administer or operate any test or other 
criterion for any employment opportunity which 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.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.53  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 in the past so discriminated, 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 which 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 this subpart.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.54  Compensation.

    A recipient shall not make or enforce any policy or practice which, 
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 which are performed under similar working 
conditions.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.55  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 which 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. 106.61.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.56  Fringe benefits.

    (a) Fringe benefits defined. For purposes of this part, 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. 106.54.
    (b) Prohibitions. A recipient shall not:
    (1) Discriminate on the basis of sex with regard to making fringe 
benefits

[[Page 424]]

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 which does not provide either for equal periodic benefits for 
members of each sex, or 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 which establishes different optional or compulsory 
retirement ages based on sex or which otherwise discriminates in 
benefits on the basis of sex.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.57  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 which 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. A recipient shall treat 
pregnancy, childbirth, false pregnancy, termination of pregnancy, and 
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 which 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 which 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.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.58  Effect of State or local law or other requirements.

    (a) Prohibitory requirements. The obligation to comply with this 
subpart is not obviated or alleviated by the existence of any State or 
local law or other requirement which imposes prohibitions or limits upon 
employment of members of one sex which are not imposed upon members of 
the other sex.
    (b) Benefits. A recipient which 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.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.59  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.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.60  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.''

[[Page 425]]

    (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 this part.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)



Sec. 106.61  Sex as a bona-fide occupational qualification.

    A recipient may take action otherwise prohibited by this subpart 
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 
which 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.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682



                     Subpart F_Procedures [Interim]



Sec. 106.71  Procedures.

    The procedural provisions applicable to title VI of the Civil Rights 
Act of 1964 are hereby adopted and incorporated herein by reference. 
These procedures may be found at 34 CFR 100.6-100.11 and 34 CFR, part 
101.

(Authority: Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 
374; 20 U.S.C. 1681, 1682)

          Subject Index to Title IX Preamble and Regulation \1\
---------------------------------------------------------------------------

    \1\ Preamble paragraph numbers are in brackets [ ].
---------------------------------------------------------------------------

                                    A

Access to Course Offerings [43, 55, 56, 57, 58]; 106.34
Access to Schools Operated by LEA's, [44]; 106.35
Admissions, [5, 6, 30]; 106.15, 106.21
    Affirmative and remedial action, [16, 17, 24]; 106.3(a); (b)
    Administratively separate units, [30]; 106.15(b) 106.2(o)
    Educational Institutions, [30], 106.15(d), 106.2(n)
    General, 106.21(a), 106.2(p),
    Prohibitions relating to marital and parental status, [32, 36]; 
106.21(c)
    Professional schools, [30], 106.2(m)
    Public institutions of undergraduate higher education, 106.15(e)
    Recruitment, [34, 35]; 106.23
    Specific prohibitions, 106.21(b)
    Tests, [31]; 106.21(b) (2)
    Preference in admission, [35]; 106.22
Advertising, 106.59
Affirmative Action, see ``Remedial and Affirmative Actions''
Assistance to ``outside'' discriminatory organizations, [40, 53]; 
          106.31(b) (7), (c)
Assurances, [18]; 106.4
    Duration of obligation, 106.4(b)
    Form, 106.4(c)
Athletics, [69 to 78]; 106.41
    Adjustment period, [78]; 106.41(d)
    Contact sport defined, 106.41(d)
    Equal opportunity, [76, 77]; 106.41(d)
    Determining factors, 106.41(c) (i) to (x)
    Equipment, 106.41(c)
    Expenditures, 106.41(c)
    Facilities, 106.41(c)
    Travel, 106.41(c)
    Scholarships, [64, 65]; 106.37(d)
    General, [69, 70, 71, 72, 73, 74, 75]; 106.41(a)
    Separate teams, [75]; 106.41(b)

                                    B

BFOQ, [96]; 106.61

                                    C

Comparable facilities

    Housing, [42, 54]; 106.32
    Other, 106.33, 106.35(b)
Compensation, [84, 87, 92]; 106.54
Counseling
    Disproportionate classes, [45, 59]; 106.36(c)
    General, [45, 59]; 106.36(a)
    Materials, [45, 59]; 106.36(b)
Course Offerings
    Adjustment period, [55]; 106.34(a) (i)
    General, [7, 43]; 106.34
    Music classes, [43]; 106.34(f)

[[Page 426]]

    Physical education, [43, 56, 58];
    Sex education, [43, 57]; 106.34(e)
Coverage, [5]; 106.11 to 106.17
    Exemptions
Curricular materials, [52]; 106.42(a)

                                    D

Definitions, [14, 15]; 106.2 (a) to (r)
Designation of responsible employee, [20, 22]; 106.8(a), (b)
Dissemination of policy, [21]; 106.9
    Distribution, 106.9(c)
    Notification of policy, [21]; 106.9(a)
    Publications, 106.9(b)
Dress codes 106.31(b) (4)

                                    E

Education Institutions
    Controlled by religious organizations, 106.12
    Application, [28, 29]; 106.12(a)
    Exemption, [26]; 106.12(b)
Education Program and Activities
    Benefiting from Federal financial assistance, [10, 11]; 106.11
    General, [10, 11, 53]; 106.31(a)
    Programs not operated by recipient, [41, 54]; 106.31(c)
    Specific prohibitions, [38, 39, 40, 53]; 106.31 (b)
Effective Date, [3]
    Employee responsible for Title IX, see ``Designation of Responsible 
Employee''
Employment
    Advertising, 106.59
    Application, 106.51(b)
    Compensation, [84, 92]; 106.54
    Employment criteria, 106.52
    Fringe benefits, [88, 89]; 106.56
    General, [81, 82, 87]; 106.51
    Job Classification and Structure, 106.55
    Marital and Parental Status, 106.57
    Pregnancy, [85, 93]; 106.57(b)
    Pregnancy as Temporary Disability, [85, 93]; 106.57(c)
    Pregnancy Leave, [85, 93, 94]; 106.57(d)
Pre-Employment Inquiry
    Recruitment, [83, 90, 91, 95]
    Sex as a BFOQ, [96]; 106.61
    Student Employment, [66]; 106.38
    Tenure, 106.51(b) (2)
Exemptions, [5, 27, 28, 29, 30, 53]; 106.12(b), 106.13, 106.14, 
          106.15(a), 106.15(d), 106.16

                                    F

Federal Financial Assistance, 106.2(a)
Financial Assistance to students, [46, 60, 61]; 106.37
    Athletic Scholarships, [46, 64, 65]; 106.37(d)
    Foreign institutions, study at [63]; 106.31(c)
    General, 106.37
    Non-need scholarships, [62]; 106.37(b)
    Pooling of sex-restrictive, [46, 61, 62]; 106.37(b)
    Sex-restrictive assistance through foreign or domestic wills [46, 
61, 62]; 106.37(b)
Foreign Scholarships, see ``Financial assistance'' 106.37 and 
          ``Assistance to `outside' discriminatory organizations'', 
          106.31(c)
Fraternities/Sororities
    Social, [53, 27, 28]; 106.14(a)
    Business/professional, [40, 53, 27, 28]; 106.31 (b) (7)
    Honor societies, [40, 53]; 106.31(b) (7)
Fringe benefits, [67, 88, 89]; 106.56, 106.39
    Part-time employees, [89]

                                    G

Grievance Procedure, see ``Designation of responsible employee'', 
          106.8(a), (b)

                                    H

Health and Insurance Benefits and Services, [67, 88, 93]; 106.39, 106.56
Honor societies, [40, 53]; 106.31(b) (7)
Housing, 106.32
    Generally, [42]; 106.32(b)
    Provided by recipient, 106.32(b)
    Other housing, [54]; 106.32(c)

                                    J

Job Classification and Structure, 106.55

                                    L

LEA's, [44]; 106.35

                                    M

Marital and Parental Status
    Employment
    General, [85, 93, 94]; 106.57
    Pregnancy, [85, 93, 94]; 106.57(b)
    Pregnancy as a temporary disability, [85, 93, 94]; 106.57(c)
    Pregnancy leave, [85, 93, 94]; 106.57(d)
    Students
    General, [49]; 106.40(a), (b)
    Pregnancy and related conditions, [50]; 106.40(b) (1) (2) (3) (4) 
(5)
    Class participation, [50]; 106.40(b) (1)
    Physician certification, [50]; 106.40(b) (2)
    Special classes, [50]; 106.40(b) (3)
    Temporary leave, [50]; 106.40(b) (4), (5)
Membership Practices of Social fraternities and sororities, [27, 28, 
          53]; 106.14(a)
    Voluntary youth service organizations, [27, 28, 53]; 106.14(c)
    YMCA, YWCA and others, [27, 28, 53]; 106.14(b)
Military and Merchant Marine Educational Institutions, [29]; 106.13

                                    P

Pooling, see ``Financial Assistance'', 106.37
Pre-employment Inquiries
    Marital status, [86, 95]; 106.60(a)
    Sex, 106.60(b)
Preference in Admissions, [35]; 106.22
    See also ``Remedial and Affirmative Action''
Pregnancy, Employment
    General, [85, 93, 94]; 106.57

[[Page 427]]

    Pregnancy, [85, 93, 94]; 106.57(b)
    Pregnancy as temporary disability, [85, 93, 94]; 106.57(c)
    Pregnancy leave, [85, 93, 94]; 106.57(d)
    Students
    General, [49, 50]; 106.40 (a) and (b)
    Pregnancy and related conditions; [50]; 106.40(b) (1) to (5)
    Class Participation, [50, 55, 58]; 106.40(b) (1)
    Physical certification, [50]; 106.40(b) (2)
    Special class, [50]; 106.40 (b) (3)
    Temporary leave, [50]; 106.40(b) (4), (5)
Private Undergraduate Professional Schools, [30]; 106.15(d)
Purpose of Regulation, [13]; 106.1

                                    R

Real Property, 106.2(g)
Recruitment
    Employment
    Nondiscrimination, [83, 91]; 106.53(a)
    Patterns, 106.53(b)
Student
    Nondiscrimination, [34, 35]; 106.23(a)
    Recruitment at certain institutions, 106.23 (b)
Religious Organizations
    Application, [29, 28]; 106.12(a)
    Exemption, [26]; 106.12(b)
Remedial and Affirmative Actions, [16, 17, 24]; 106.3

                                    S

Scholarships, see ``Financial Assistance'', 106.37
Self-evaluation, [16, 22]; 106.3(c), (d)
Surplus Property (see Transfer of Property 106.5)
    Duration of obligation 106.4(b)
    Real Property 106.4(b) (1)

                                    T

Textbooks and curricular materials, [52, 79, 80]; 106.42
Termination of funds, [10, 11]
Transfer of property, 106.5
Transition Plans
    Content of plans, 106.17(b)
    Different from Adjustment period, [78]; 106.41(d)
Submission of plans, 106.17(a)

 Appendix A to Part 106--Guidelines for Eliminating Discrimination and 
 Denial of Services on the Basis of Race, Color, National Origin, Sex, 
              and Handicap in Vocational Education Programs

    Editorial Note: For the text of these guidelines, see 34 CFR part 
100, appendix B.

[44 FR 17168, Mar. 21, 1979]



PART 110_NONDISCRIMINATION ON THE BASIS OF AGE IN PROGRAMS OR ACTIVITIES 
RECEIVING FEDERAL FINANCIAL ASSISTANCE--Table of Contents




                            Subpart A_General

Sec.
110.1 What is the purpose of ED's age discrimination regulations?
110.2 To what programs or activities do these regulations apply?
110.3 What definitions apply?

         Subpart B_Standards for Determining Age Discrimination

110.10 Rules against age discrimination.
110.11 Definitions of ``normal operation'' and ``statutory objective.''
110.12 Exceptions to the rules against age discrimination: Normal 
          operation or statutory objective of any program or activity.
110.13 Exceptions to the rules against age discrimination: Reasonable 
          factors other than age.
110.14 Burden of proof.
110.15 Affirmative action by recipients.
110.16 Special benefits for children and the elderly.
110.17 Age distinctions contained in ED's regulations.

                    Subpart C_Duties of ED Recipients

110.20 General responsibilities.
110.21 Notice to subrecipients.
110.22 Information requirements.
110.23 Assurances required.
110.24 Recipient assessment of age distinctions.
110.25 Designation of responsible employee, notice, and grievance 
          procedures.

    Subpart D_Investigation, Conciliation, and Enforcement Procedures

110.30 Compliance reviews.
110.31 Complaints.
110.32 Mediation.
110.33 Investigation.
110.34 Prohibition against intimidation or retaliation.
110.35 Compliance procedure.
110.36 Hearings, decisions, and post-termination proceedings.
110.37 Procedure for disbursal of funds to an alternate recipient.
110.38 Remedial action by recipients.
110.39 Exhaustion of administrative remedies.

    Authority: 42 U.S.C. 6101 et seq., unless otherwise noted.

[[Page 428]]


    Source: 58 FR 40197, July 27, 1993, unless otherwise noted.



                            Subpart A_General



Sec. 110.1  What is the purpose of ED's age discrimination regulations?

    The purpose of these regulations is to set out ED's rules for 
implementing the Age Discrimination Act of 1975. The Act prohibits 
discrimination on the basis of age in programs or activities receiving 
Federal financial assistance. The Act permits federally assisted 
programs or activities, and recipients of Federal funds, to continue to 
use age distinctions and factors other than age that meet the 
requirements of the Act.

(Authority: 42 U.S.C. 6101-6103)

[58 FR 40197, July 27, 1993, as amended at 65 FR 68056, Nov. 13, 2000]



Sec. 110.2  To what programs or activities do these regulations apply?

    (a) These regulations apply to any program or activity receiving 
Federal financial assistance from ED.
    (b) These regulations do not apply to--
    (1) An age distinction contained in that part of a Federal, State, 
or local statute or ordinance adopted by an elected, general purpose 
legislative body that--
    (i) Provides any benefits or assistance to persons based on age;
    (ii) Establishes criteria for participation in age-related terms; or
    (iii) Describes intended beneficiaries or target groups in age-
related terms; or
    (2) Any employment practice of any employer, employment agency, 
labor organization, or any labor-management joint apprenticeship 
training program, except any program or activity receiving Federal 
financial assistance for employment under the Job Training Partnership 
Act (29 U.S.C. 1501 et seq.).

(Authority: 42 U.S.C. 6103)



Sec. 110.3  What definitions apply?

    The following definitions apply to these regulations: Act means the 
Age Discrimination Act of 1975, as amended (Title III of Pub. L. 94-
135).
    Action means any act, activity, policy, rule, standard, or method of 
administration, or the use of any policy, rule, standard, or method of 
administration.
    Age means how old a person is, or the number of years from the date 
of a person's birth.
    Age distinction means any action using age or an age-related term.
    Age-related term means a word or words that necessarily imply a 
particular age or range of ages (e.g., ``children,'' ``adult,'' ``older 
persons,'' but not ``student'' or ``grade'').
    Agency means a Federal department or agency that is empowered to 
extend financial assistance.
    Applicant for Federal financial assistance means one who submits an 
application, request, or plan required to be approved by a Department 
official or by a recipient as a condition to becoming a recipient or 
subrecipient.
    Department means the United States Department of Education.
    ED means the United States Department of Education.
    Federal financial assistance means any grant, entitlement, loan, 
cooperative agreement, contract (other than a procurement contract or a 
contract of insurance or guaranty), or any other arrangement by which ED 
provides or otherwise makes available assistance in the form of--
    (a) Funds;
    (b) Services of Federal personnel; or
    (c) Real and personal property or any interest in or use of 
property, including--
    (1) Transfers or leases of property for less than fair market value 
or for reduced consideration; and
    (2) Proceeds from a subsequent transfer or lease of property if the 
Federal share of its fair market value is not returned to the Federal 
Government.
    Program or activity means all of the operations of--
    (a)(1) A department, agency, special purpose district, or other 
instrumentality of a State or local government; or
    (2) The entity of a State or local government that distributes such 
assistance and each such department or agency (and each other State or 
local

[[Page 429]]

government entity) to which the assistance is extended, in the case of 
assistance to a State or local government;
    (b)(1) A college, university, or other postsecondary institution, or 
a public system of higher education; or
    (2) A local educational agency (as defined in 20 U.S.C. 8801), 
system of vocational education, or other school system;
    (c)(1) An entire corporation, partnership, other private 
organization, or an entire sole proprietorship--
    (i) If assistance is extended to such corporation, partnership, 
private organization, or sole proprietorship as a whole; or
    (ii) Which is principally engaged in the business of providing 
education, health care, housing, social services, or parks and 
recreation; or
    (2) 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
    (d) Any other entity that is established by two or more of the 
entities described in paragraph (a), (b), or (c) of this section; any 
part of which is extended Federal financial assistance.

(Authority: 42 U.S.C. 6107)
    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 from ED is extended, 
directly or through another recipient. ``Recipient'' includes any 
successor, assignee, or transferee of a recipient, but excludes the 
ultimate beneficiary of the assistance.
    Secretary means the Secretary of Education, or his or her designee.
    Subrecipient means any of the entities in the definition of 
``recipient'' to which a recipient extends or passes on Federal 
financial assistance. A subrecipient is generally regarded as a 
recipient of Federal financial assistance and has all the duties of a 
recipient in these regulations.
    United States means the fifty States, the Commonwealth of Puerto 
Rico, the District of Columbia, Guam, the Virgin Islands, American 
Samoa, Wake Island, the Trust Territory of the Pacific Islands, the 
Commonwealth of the Northern Mariana Islands, and the territories and 
possessions of the United States.

(Authority: 42 U.S.C. 6103)

[58 FR 40197, July 27, 1993, as amended at 65 FR 68056, Nov. 13, 2000]



         Subpart B_Standards for Determining Age Discrimination



Sec. 110.10  Rules against age discrimination.

    The rules stated in this section are subject to the exceptions 
contained in Sec. Sec. 110.12 and 110.13 of these regulations.
    (a) General rule. No person in the United States shall, on the basis 
of age, be excluded from participation in, be denied the benefits of, or 
be subjected to discrimination under any program or activity receiving 
Federal financial assistance.
    (b) Specific rules. A recipient may not, in any program or activity 
receiving Federal financial assistance, directly or through contractual, 
licensing, or other arrangements, use age distinctions or take any other 
actions that have the effect, on the basis of age, of--
    (1) Excluding individuals from, denying them the benefits of, or 
subjecting them to discrimination under a program or activity receiving 
Federal financial assistance; or
    (2) Denying or limiting individuals in their opportunity to 
participate in any program or activity receiving Federal financial 
assistance.
    (c) Other forms of discrimination. The specific forms of age 
discrimination listed in paragraph (b) of this section do not 
necessarily constitute a complete list.

(Authority: 42 U.S.C. 6101-6103)



Sec. 110.11  Definitions of ``normal operation'' and ``statutory objective.''

    For purposes of these regulations, the terms normal operation and 
statutory objective have the following meanings:
    (a) Normal operation means the operation of a program or activity 
without significant changes that would impair its ability to meet its 
objectives.

[[Page 430]]

    (b) Statutory objective means any purpose of a program or activity 
expressly stated in any Federal statute, State statute, or local statute 
or ordinance adopted by an elected, general purpose legislative body.

(Authority: 42 U.S.C. 6103)



Sec. 110.12  Exceptions to the rules against age discrimination: Normal 
operation or statutory objective of any program or activity.

    A recipient is permitted to take an action otherwise prohibited by 
Sec. 110.10 if the action reasonably takes into account age as a factor 
necessary to the normal operation or the achievement of any statutory 
objective of a program or activity. An action reasonably takes into 
account age as a factor necessary to the normal operation or the 
achievement of any statutory objective of a program or activity, if--
    (a) Age is used as a measure or approximation of one or more other 
characteristics;
    (b) The other characteristic or characteristics must be measured or 
approximated in order for the normal operation of the program or 
activity to continue, or to achieve any statutory objective of the 
program or activity;
    (c) The other characteristic or characteristics can be reasonably 
measured or approximated by the use of age; and
    (d) The other characteristic or characteristics are impractical to 
measure directly on an individual basis.

(Authority: 42 U.S.C. 6103)



Sec. 110.13  Exceptions to the rules against age discrimination: Reasonable 
factors other than age.

    A recipient is permitted to take an action otherwise prohibited by 
Sec. 110.10 that is based on a factor other than age, even though that 
action may have a disproportionate effect on persons of different ages. 
An action may be based on a factor other than age only if the factor 
bears a direct and substantial relationship to the normal operation of 
the program or activity or to the achievement of a statutory objective.

(Authority: 42 U.S.C. 6103)



Sec. 110.14  Burden of proof.

    The burden of proving that an age distinction or other action falls 
within the exceptions outlined in Sec. Sec. 110.12 and 110.13 is on the 
recipient of Federal financial assistance.

(Authority: 42 U.S.C. 6104)



Sec. 110.15  Affirmative action by recipients.

    Even in the absence of a finding of discrimination, a recipient may 
take affirmative action to overcome the effects of conditions that 
resulted in limited participation in the recipient's program or activity 
on the basis of age.

(Authority: 42 U.S.C. 6103)



Sec. 110.16  Special benefits for children and the elderly.

    If a recipient operating a program or activity provides special 
benefits to the elderly or to children, the use of age distinctions is 
presumed to be necessary to the normal operation of the program or 
activity, notwithstanding the provisions of Sec. 110.12.

(Authority: 42 U.S.C. 6103)

[58 FR 40197, July 27, 1993, as amended at 65 FR 68057, Nov. 13, 2000]



Sec. 110.17  Age distinctions contained in ED's regulations.

    Any age distinction contained in regulations issued by ED is 
presumed to be necessary to the achievement of a statutory objective of 
the program or activity to which the regulations apply, notwithstanding 
the provisions of Sec. 110.12.

(Authority: 42 U.S.C. 6103)

[58 FR 40197, July 27, 1993, as amended at 65 FR 68057, Nov. 13, 2000]



                    Subpart C_Duties of ED Recipients



Sec. 110.20  General responsibilities.

    Each ED recipient has primary responsibility for ensuring that its 
program or activity is in compliance with the Act and these regulations 
and shall take steps to eliminate violations of the Act. A recipient 
also has responsibility to maintain records, provide information, and to 
afford ED access to

[[Page 431]]

its records to the extent required for ED to determine whether the 
recipient is in compliance with the Act and these regulations.

(Authority: 42 U.S.C. 6103)

[58 FR 40197, July 27, 1993, as amended at 65 FR 68057, Nov. 13, 2000]



Sec. 110.21  Notice to subrecipients.

    If the recipient initially receiving funds makes the funds available 
to a subrecipient, the recipient shall notify the subrecipient of its 
obligations under the Act and these regulations.

(Authority: 42 U.S.C. 6103)



Sec. 110.22  Information requirements.

    Each recipient shall--
    (a) Provide ED with information that ED determines is necessary to 
ascertain whether the recipient is in compliance with the Act and these 
regulations; and
    (b) Permit reasonable access by ED to the books, records, accounts, 
reports, and other recipient facilities and sources of information to 
the extent ED determines is necessary to ascertain whether a recipient 
is in compliance with the Act and these regulations.

(Authority: 42 U.S.C. 6103)



Sec. 110.23  Assurances required.

    (a) Assurances. An applicant for Federal financial assistance to 
which these regulations apply shall sign a written assurance, on a form 
specified by ED, that the program or activity will be operated in 
compliance with these regulations. An applicant may incorporate this 
assurance by reference in subsequent applications to ED.
    (b) Duration of obligation. (1) In the case of Federal financial 
assistance extended in the form of real property or to provide real 
property or structures on the property, the assurance will 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 for the 
purpose for which Federal financial assistance is extended or for 
another purpose involving the provision of similar services or benefits.
    (2) 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.
    (3) In all other cases the assurance will obligate the recipient for 
the period during which Federal financial assistance is extended.
    (c) Covenants. (1) If Federal financial assistance is provided in 
the form of real property or interest in the property from ED, the 
instrument effecting or recording this transfer must contain a covenant 
running with the land to assure nondiscrimination for the period during 
which the real 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.
    (2) If no transfer of property is involved but property is purchased 
or improved with Federal financial assistance, the recipient shall agree 
to include the covenant described in paragraph (b)(2) of this section in 
the instrument effecting or recording any subsequent transfer of the 
property.
    (3) If Federal financial assistance is provided in the form of real 
property or interest in the property from ED, the covenant must also 
include a condition coupled with a right to be reserved by ED to revert 
title to the property in the event of a breach of the covenant. If 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 the property for the purposes for 
which the property was transferred, ED may, upon request of the 
transferee and if necessary to accomplish that financing and upon 
conditions that ED deems appropriate, agree to forbear the exercise of 
the right to revert title for as long as the lien of the mortgage or 
other encumbrance remains effective.

(Authority: 42 U.S.C. 6103)

[58 FR 40197, July 27, 1993, as amended at 65 FR 68057, Nov. 13, 2000]

[[Page 432]]



Sec. 110.24  Recipient assessment of age distinctions.

    (a) As part of a compliance review under Sec. 110.30 or a complaint 
investigation under Sec. 110.31, ED may require a recipient employing 
the equivalent of 15 or more full-time employees to complete a written 
self-evaluation, in a manner specified by ED, of any age distinction 
imposed in its program or activity receiving Federal financial 
assistance from ED to assess the recipient's compliance with the Act.
    (b) Whenever an assessment indicates a violation of the Act or these 
regulations, the recipient shall take corrective action.

(Authority: 42 U.S.C. 6103)



Sec. 110.25  Designation of responsible employee, notice, and 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 the Act and these regulations, 
including investigation of any complaints that the recipient receives 
alleging any actions that are prohibited by the Act and these 
regulations.
    (b) Notice. A recipient shall notify its beneficiaries, in a 
continuing manner, of information regarding the provisions of the Act 
and these regulations. The notification must also identify the 
responsible employee by name or title, address, and telephone number.
    (c) Grievance procedures. A recipient shall adopt and publish 
grievance procedures providing for prompt and equitable resolution of 
complaints alleging any action that would be prohibited by the Act or 
these regulations.

(Authority: 42 U.S.C. 6103)

[58 FR 40197, July 27, 1993, as amended at 65 FR 68057, Nov. 13, 2000]



    Subpart D_Investigation, Conciliation, and Enforcement Procedures



Sec. 110.30  Compliance reviews.

    (a) ED may conduct compliance reviews, pre-award reviews, and other 
similar procedures that permit ED to investigate and correct violations 
of the Act and of these regulations. ED may conduct these reviews in the 
absence of a complaint against a recipient. The review may be as 
comprehensive as necessary to determine whether a violation of these 
regulations occurred.
    (b) If a compliance review or pre-award review indicates a violation 
of the Act or these regulations, ED attempts to achieve voluntary 
compliance with the Act. If voluntary compliance cannot be achieved, ED 
arranges for enforcement as described in Sec. 110.35.

(Authority: 42 U.S.C. 6103)



Sec. 110.31  Complaints.

    (a) Any person, individually or as a member of a class or on behalf 
of others, may file a complaint with ED alleging discrimination 
prohibited by the Act or by these regulations based on an action 
occurring on or after July 1, 1979. A complainant shall file a complaint 
within 180 days from the date the complainant first had knowledge of the 
alleged discrimination. However, for good cause shown, ED may extend 
this time limit.
    (b) ED attempts to facilitate the filing of complaints, if possible, 
by--
    (1) Accepting as a complete complaint any written statement that 
identifies the parties involved and the date the complainant first had 
knowledge of the alleged violation, describes generally the action or 
practice complained of, and is signed by the complainant;
    (2) Freely permitting a complainant to add information to the 
complaint to meet the requirements of a complete complaint;
    (3) Widely disseminating information regarding the obligations of 
recipients under the Act and these regulations;
    (4) Notifying the complainant and the recipient of their rights and 
obligations under the complaint procedure, including the right to have a 
representative at all stages of the complaint procedure; and
    (5) Notifying the complainant and the recipient (or their 
representatives) of their right to contact ED for information and 
assistance regarding the complaint resolution process.

[[Page 433]]

    (c) A complaint is considered to be complete on the date that ED 
receives all the information necessary to process it, as described in 
paragraph (b)(1) of this section.
    (d) ED returns to the complainant any complaint outside the 
jurisdiction of these regulations and states the reason or reasons why 
it is outside the jurisdiction of the regulations.

(Authority: 42 U.S.C. 6103)



Sec. 110.32  Mediation.

    (a) ED promptly refers to the Federal Mediation and Conciliation 
Service or to the mediation agency designated by the Secretary of Health 
and Human Services, all complaints that--
    (1) Fall within the jurisdiction of the Act and these regulations, 
unless the age distinction complained of is clearly within an exemption 
under Sec. 110.2(b); and
    (2) Contain all information necessary for further processing.
    (b) Both the complainant and the recipient shall participate in the 
mediation process to the extent necessary to reach an agreement or to 
make an informed judgment that an agreement is not possible. The 
recipient and the complainant need not meet with the mediator at the 
same time, and the meeting may be conducted by telephone or other means 
of effective dialogue if a personal meeting between the party and the 
mediator is impractical.
    (c) If the complainant and the recipient reach an agreement, the 
mediator shall prepare a written statement of the agreement and have the 
complainant and recipient sign it. The mediator shall send a copy of the 
agreement to ED. ED takes no further action on the complaint unless 
informed that the complainant or the recipient fails to comply with the 
agreement, at which time ED reinstates the complaint.
    (d) The mediator shall protect the confidentiality of all 
information obtained in the course of the mediation process. No mediator 
shall testify in any adjudicative proceeding, produce any document, or 
otherwise disclose any information obtained in the course of the 
mediation process without prior approval of the head of the mediation 
agency.
    (e) The mediation will proceed for a maximum of 60 days after a 
complaint is filed with ED. Mediation ends if--
    (1) 60 days elapse from the time the complaint is received;
    (2) Prior to the end of the 60-day period, an agreement is reached; 
or
    (3) Prior to the end of the 60-day period, the mediator determines 
that agreement cannot be reached.
    (f) The mediator shall return unresolved complaints to ED.

(Authority: 42 U.S.C. 6103)



Sec. 110.33  Investigation.

    (a) Initial investigation. ED investigates complaints that are 
unresolved after mediation or reopened because of a violation of the 
mediation agreement. ED uses methods during the investigation to 
encourage voluntary resolution of the complaint, including discussions 
with the complainant and recipient to establish the facts and, if 
possible, resolve the complaint to the mutual satisfaction of the 
parties. ED may seek the assistance of any involved State, local, or 
other Federal agency.
    (b) Formal investigation, conciliation, and hearing. If ED cannot 
resolve the complaint during the early stages of the investigation, ED 
completes the investigation of the complaint and makes formal findings. 
If the investigation indicates a violation of the Act or these 
regulations, ED attempts to achieve voluntary compliance. If ED cannot 
obtain voluntary compliance, ED begins enforcement as described in Sec. 
110.35.

(Authority: 42 U.S.C. 6103)

[58 FR 40197, July 27, 1993, as amended at 65 FR 68057, Nov. 13, 2000]



Sec. 110.34  Prohibition against intimidation or retaliation.

    A recipient may not engage in acts of intimidation or retaliation 
against any person who--
    (a) Attempts to assert a right protected by the Act or these 
regulations; or
    (b) Cooperates in any mediation, investigation, hearing, or other 
part of ED's investigation, conciliation, and enforcement process.

(Authority: 42 U.S.C. 6103)

[[Page 434]]



Sec. 110.35  Compliance procedure.

    (a) ED may enforce the Act and these regulations under Sec. 
110.35(a) (1) or (2) through--
    (1) Termination of, or refusal to grant or continue, a recipient's 
Federal financial assistance from ED for a program or activity in which 
the recipient has violated the Act or these regulations. The 
determination of the recipient's violation may be made only after a 
recipient has had an opportunity for a hearing on the record before an 
administrative law judge.
    (2) Any other means authorized by law, including, but not limited 
to--
    (i) Referral to the Department of Justice for proceedings to enforce 
any rights of the United States or obligations of the recipient created 
by the Act or these regulations; or
    (ii) Use of any requirement of or referral to any Federal, State, or 
local government agency that will have the effect of correcting a 
violation of the Act or of these regulations.
    (b) ED limits any termination or refusal under Sec. 110.35(a)(1) to 
the particular recipient and to the particular program or activity ED 
finds in violation of the Act or these regulations. ED will not base any 
part of a termination on a finding with respect to any program or 
activity that does not receive Federal financial assistance from ED.
    (c) ED takes no action under paragraph (a) of this section until--
    (1) ED has advised the recipient of its failure to comply with the 
Act or with these regulations and has determined that voluntary 
compliance cannot be obtained; and
    (2) Thirty days have elapsed after the Secretary has sent a written 
report of the circumstances and grounds of the action to the committees 
of the Congress having legislative jurisdiction over the program or 
activity involved. The Secretary files a report if any action is taken 
under Sec. 110.35(a)(1).
    (d) The Secretary also may defer granting new Federal financial 
assistance from ED to a recipient if termination proceedings in Sec. 
110.35(a)(1) are initiated.
    (1) New Federal financial assistance from ED includes all assistance 
for which ED requires an application or approval, including renewal or 
continuation of existing activities, or authorization of new activities, 
during the deferral period. New Federal financial assistance from ED 
does not include increases in funding as a result of changed computation 
of formula awards or assistance approved prior to the initiation of 
termination proceedings.
    (2) ED does not begin a deferral until the recipient has received a 
notice of an opportunity for a hearing under Sec. 110.35(a)(1). A 
deferral may not continue for more than 60 days unless a hearing has 
begun within that time or the time for beginning the hearing has been 
extended by mutual consent of the recipient and ED. A deferral may not 
continue for more than 30 days after the close of the hearing, unless 
the hearing results in a finding against the recipient.

(Authority: 42 U.S.C. 6104)

[58 FR 40197, July 27, 1993, as amended at 65 FR 68057, Nov. 13, 2000]



Sec. 110.36  Hearings, decisions, and post-termination proceedings.

    (a) The following ED procedural provisions applicable to Title VI of 
the Civil Rights Act of 1964 also apply to ED's enforcement of these 
regulations: 34 CFR 100.9 and 100.10 and 34 CFR part 101.
    (b) Action taken under section 305 of the Act is subject to judicial 
review as provided by section 306 of the Act.

(Authority: 42 U.S.C. 6104-6105)



Sec. 110.37  Procedure for disbursal of funds to an alternate recipient.

    (a) If the Secretary withholds funds from a recipient under these 
regulations, the Secretary may disburse the funds withheld directly to 
an alternate recipient: any public or nonprofit private organization or 
agency, or State or political subdivision of the State.
    (b) The Secretary requires any alternate recipient to demonstrate--
    (1) The ability to comply with the Act and these regulations; and

[[Page 435]]

    (2) The ability to achieve the goals of the Federal statute 
authorizing the Federal financial assistance.

(Authority: 42 U.S.C. 6104)

[58 FR 40197, July 27, 1993, as amended at 65 FR 68057, Nov. 13, 2000]



Sec. 110.38  Remedial action by recipients.

    If ED finds that a recipient has discriminated on the basis of age, 
the recipient shall take any remedial action that ED may require to 
overcome the effects of the discrimination. If another recipient 
exercises control over the recipient that has discriminated or if the 
entity that has discriminated is a subrecipient, both recipients or 
recipient and subrecipient may be required to take remedial action.

(Authority: 42 U.S.C. 6103)



Sec. 110.39  Exhaustion of administrative remedies.

    (a) A complainant may file a civil action following the exhaustion 
of administrative remedies under the Act. Administrative remedies are 
exhausted if--
    (1) One hundred eighty days have elapsed since the complainant filed 
the complaint with ED, and ED has made no finding with regard to the 
complaint; or
    (2) ED issues any finding in favor of the recipient.
    (b) If ED fails to make a finding within 180 days or issues a 
finding in favor of the recipient, ED promptly--
    (1) Advises the complainant of this fact;
    (2) Advises the complainant of his or her right to bring a civil 
action for injunctive relief; and
    (3) Informs the complainant--
    (i) That a civil action can be brought only in a United States 
district court for the district in which the recipient is found or 
transacts business;
    (ii) That a complainant prevailing in a civil action has the right 
to be awarded the costs of the action, including reasonable attorney's 
fees, but that these costs must be demanded in the complaint filed with 
the court;
    (iii) That before commencing the action, the complainant shall give 
30 days notice by registered mail to the Secretary, the Secretary of 
Health and Human Services, the Attorney General of the United States, 
and the recipient;
    (iv) That the notice shall state the alleged violation of the Act, 
the relief requested, the court in which the action will be brought, and 
whether or not attorney's fees are demanded in the event the complainant 
prevails; and
    (v) That the complainant may not bring an action if the same alleged 
violation of the Act by the same recipient is the subject of a pending 
action in any court of the United States.

(Authority: 42 U.S.C. 6104)

[[Page 437]]



                  CHAPTER II--OFFICE OF ELEMENTARY AND
              SECONDARY EDUCATION, DEPARTMENT OF EDUCATION




  --------------------------------------------------------------------
Part                                                                Page
200             Title I--Improving the academic achievement 
                    of the disadvantaged....................         439
206             Special educational programs for students 
                    whose families are engaged in migrant 
                    and other seasonal farmwork--High school 
                    equivalency program and college 
                    assistance migrant program..............         490
222             Impact aid programs.........................         495
237             Christa McAuliffe Fellowship Program........         557
263             Indian Education Discretionary Grant 
                    Programs................................         560
270             Desegregation of public education...........         568
271             State Educational Agency Desegregation 
                    Program.................................         570
272             Desegregation Assistance Center Program.....         572
280             Magnet Schools Assistance Program...........         576
299             General provisions..........................         583

[[Page 439]]



PART 200_TITLE I_IMPROVING THE ACADEMIC ACHIEVEMENT OF THE DISADVANTAGED
--Table of Contents




    Subpart A_Improving Basic Programs Operated by Local Educational 
                                Agencies

                        Standards and Assessments

Sec.
200.1 State responsibilities for developing challenging academic 
          standards.
200.2 State responsibilities for assessment.
200.3 Designing State Academic Assessment Systems.
200.4 State law exception.
200.5 Timeline for assessments.
200.6 Inclusion of all students.
200.7 Disaggregation of data.
200.8 Assessment reports.
200.9 Deferral of assessments.
200.10 Applicability of a State's academic assessments to private 
          schools and private school students.

   Participation in National Assessment of Educational Progress (NAEP)

200.11 Participation in NAEP.

                       State Accountability System

200.12 Single State accountability system.

                     Adequate Yearly Progress (AYP)

200.13 Adequate yearly progress in general.
200.14 Components of Adequate Yearly Progress.
200.15 Timeline.
200.16 Starting points.
200.17 Intermediate goals.
200.18 Annual measurable objectives.
200.19 Other academic indicators.
200.20 Making adequate yearly progress.
200.21 Adequate yearly progress of a State.
200.22-200.24 [Reserved]

                           Schoolwide programs

200.25 Schoolwide programs in general.
200.26 Core elements of a schoolwide program.
200.27 Development of a schoolwide program plan.
200.28 Schoolwide program components.
200.29 Consolidation of funds in a schoolwide program.

                       LEA and School Improvement

200.30 Local review.
200.31 Opportunity to review school-level data.
200.32 Identification for school improvement.
200.33 Identification for corrective action.
200.34 Identification for restructuring.
200.35 Delay and removal.
200.36 Communication with parents.
200.37 Notice of identification for improvement, corrective action, or 
          restructuring.
200.38 Information about action taken.
200.39 Responsibilities resulting from identification for school 
          improvement.
200.40 Technical assistance.
200.41 School improvement plan.
200.42 Corrective action.
200.43 Restructuring.
200.44 Public school choice.
200.45 Supplemental educational services.
200.46 LEA responsibilities for supplemental educational services.
200.47 SEA responsibilities for supplemental educational services.
200.48 Funding for choice-related transportation and supplemental 
          educational services.
200.49 SEA responsibilities for school improvement, corrective action, 
          and restructuring.
200.50 SEA review of LEA progress.
200.51 Notice of SEA action.
200.52 LEA improvement.
200.53 LEA corrective action.
200.54 [Reserved]

            Qualifications Of Teachers And Paraprofessionals

200.55 Qualifications of teachers.
200.56 Definition of ``highly qualified teacher.''
200.57 Plans to increase teacher quality.
200.58 Qualifications of paraprofessionals.
200.59 Duties of paraprofessionals.
200.60 Expenditures for professional development.
200.61 Parents' right to know.

          Participation of Eligible Children in Private Schools

200.62 Responsibilities for providing services to private school 
          children.
200.63 Consultation.
200.64 Factors for determining equitable participation of private school 
          children.
200.65 Determining equitable participation of teachers and families of 
          participating private school children.
200.66 Requirements to ensure that funds do not benefit a private 
          school.
200.67 Requirements concerning property, equipment, and supplies for the 
          benefit of private school children.
200.68-200.69 [Reserved]

                           Allocations To LEAS

200.70 Allocation of funds to LEAs in general.
200.71 LEA eligibility.
200.72 Procedures for adjusting allocations determined by the Secretary 
          to account for eligible LEAs not on the Census list.
200.73 Applicable hold-harmless provisions.

[[Page 440]]

200.74 Use of an alternative method to distribute grants to LEAs with 
          fewer than 20,000 total residents.
200.75 Special procedures for allocating concentration grant funds in 
          small States.
200.76 [Reserved]

   Procedures for the Within-District Allocation of LEA Program Funds

200.77 Reservation of funds by an LEA.
200.78 Allocation of funds to school attendance areas and schools.

                           Fiscal Requirements

200.79 Exclusion of supplemental State and local funds from supplement, 
          not supplant and comparability determinations.

              Subpart B_Even Start Family Literacy Programs

200.80 Migrant Education Even Start Program definition.

                   Subpart C_Migrant Education Program

200.81 Program definitions.
200.82 Use of program funds for unique program function costs.
200.83 Responsibilities of SEAs to implement projects through a 
          comprehensive needs assessment and a comprehensive State plan 
          for service delivery.
200.84 Responsibilities of SEAs for evaluating the effectiveness of the 
          MEP.
200.85 Responsibilities of SEAs and operating agencies for improving 
          services to migratory children.
200.86 Use of MEP funds in schoolwide projects.
200.87 Responsibilities for participation of children in private 
          schools.
200.88 Exclusion of supplemental State and local funds from supplement, 
          not supplant and comparability determinations.
200.89 [Reserved]

 Subpart D_Prevention and Intervention Programs for Children and Youth 
        Who are Neglected, Delinquent, or At-Risk of Dropping Out

200.90 Program definitions.
200.91 SEA counts of eligible children.
200.92-200.99 [Reserved]

                      Subpart E_General Provisions

200.100 Reservation of funds for school improvement, State 
          administration, and the State academic achievement awards 
          program.
200.101-200.102 [Reserved]
200.103 Definitions.
200.104-200.109 [Reserved]

    Authority: 20 U.S.C. 6301 through 6578, unless otherwise noted.

    Source: 60 FR 34802, July 3, 1995, unless otherwise noted.



    Subpart A_Improving Basic Programs Operated by Local Educational 
                                Agencies

                        Standards and Assessments



Sec. 200.1  State responsibilities for developing challenging academic 
standards.

    (a) Academic standards in general. A State must develop challenging 
academic content and student academic achievement standards that will be 
used by the State, its local educational agencies (LEAs), and its 
schools to carry out subpart A of this part. These academic standards 
must--
    (1) Be the same academic standards that the State applies to all 
public schools and public school students in the State, including the 
public schools and public school students served under subpart A of this 
part, except as provided in paragraph (d) of this section;
    (2) Include the same knowledge, skills, and levels of achievement 
expected of all students; and
    (3) Include at least mathematics, reading/language arts, and, 
beginning in the 2005-2006 school year, science, and may include other 
subjects determined by the State.
    (b) Academic content standards. (1) The challenging academic content 
standards required under paragraph (a) of this section must--
    (i) Specify what all students are expected to know and be able to 
do;
    (ii) Contain coherent and rigorous content; and
    (iii) Encourage the teaching of advanced skills.
    (2) A State's academic content standards may--
    (i) Be grade specific; or,
    (ii) Cover more than one grade if grade-level content expectations 
are provided for each of grades 3 through 8.
    (3) At the high school level, the academic content standards must 
define the knowledge and skills that all high school students are 
expected to know and be able to do in at least reading/

[[Page 441]]

language arts, mathematics, and, beginning in the 2005-06 school year, 
science, irrespective of course titles or years completed.
    (c) Academic achievement standards. (1) The challenging student 
academic achievement standards required under paragraph (a) of this 
section must--
    (i) Be aligned with the State's academic content standards; and
    (ii) Include the following components for each content area:
    (A) Achievement levels that describe at least--
    (1) Two levels of high achievement--proficient and advanced--that 
determine how well students are mastering the material in the State's 
academic content standards; and
    (2) A third level of achievement--basic--to provide complete 
information about the progress of lower-achieving students toward 
mastering the proficient and advanced levels of achievement.
    (B) Descriptions of the competencies associated with each 
achievement level.
    (C) Assessment scores (``cut scores'') that differentiate among the 
achievement levels as specified in paragraph (c)(1)(ii)(A) of this 
section, and a description of the rationale and procedures used to 
determine each achievement level.
    (2) A State must develop academic achievement standards for every 
grade and subject assessed, even if the State's academic content 
standards cover more than one grade.
    (3) With respect to academic achievement standards in science, a 
State must develop--
    (i) Achievement levels and descriptions no later than the 2005-06 
school year; and
    (ii) Assessment scores (``cut scores'') after the State has 
developed its science assessments but no later than the 2007-08 school 
year.
    (d) Alternate academic achievement standards. For students under 
section 602(3) of the Individuals with Disabilities Education Act with 
the most significant cognitive disabilities who take an alternate 
assessment, a State may, through a documented and validated standards-
setting process, define alternate academic achievement standards, 
provided those standards--
    (1) Are aligned with the State's academic content standards;
    (2) Promote access to the general curriculum; and
    (3) Reflect professional judgment of the highest achievement 
standards possible.
    (e) Subjects without standards. If an LEA serves students under 
subpart A of this part in subjects for which a State has not developed 
academic standards, the State must describe in its State plan a strategy 
for ensuring that those students are taught the same knowledge and 
skills and held to the same expectations in those subjects as are all 
other students.
    (f) Other subjects with standards. If a State has developed 
standards in other subjects for all students, the State must apply those 
standards to students participating under subpart A of this part.

(Authority: 20 U.S.C. 6311(b)(1))

(Approved by the Office of Management and Budget under control number 
1810-0576)

[67 FR 45039, July 5, 2002, as amended at 68 FR 68702, Dec. 9, 2003]



Sec. 200.2  State responsibilities for assessment.

    (a)(1) Each State, in consultation with its LEAs, must implement a 
system of high-quality, yearly student academic assessments that 
includes, at a minimum, academic assessments in mathematics, reading/
language arts and, beginning in the 2007-08 school year, science.
    (2)(i) The State may also measure the achievement of students in 
other academic subjects in which the State has adopted challenging 
academic content and student academic achievement standards.
    (ii) If a State has developed assessments in other subjects for all 
students, the State must include students participating under subpart A 
of this part in those assessments.
    (b) The assessment system required under this section must meet the 
following requirements:
    (1) Be the same assessment system used to measure the achievement of 
all

[[Page 442]]

students in accordance with Sec. 200.3 or Sec. 200.4.
    (2) Be designed to be valid and accessible for use by the widest 
possible range of students, including students with disabilities and 
students with limited English proficiency.
    (3)(i) Be aligned with the State's challenging academic content and 
student academic achievement standards; and
    (ii) Provide coherent information about student attainment of those 
standards.
    (4)(i) Be valid and reliable for the purposes for which the 
assessment system is used; and
    (ii) Be consistent with relevant, nationally recognized professional 
and technical standards.
    (5) Be supported by evidence (which the Secretary will provide, upon 
request, consistent with applicable federal laws governing the 
disclosure of information) from test publishers or other relevant 
sources that the assessment system is--
    (i) Of adequate technical quality for each purpose required under 
the Act; and
    (ii) Consistent with the requirements of this section.
    (6) Be administered in accordance with the timeline in Sec. 200.5.
    (7) Involve multiple up-to-date measures of student academic 
achievement, including measures that assess higher-order thinking skills 
and understanding of challenging content.
    (8) Objectively measure academic achievement, knowledge, and skills 
without evaluating or assessing personal or family beliefs and 
attitudes, except that this provision does not preclude the use of 
items--
    (i) Such as constructed-response, short answer, or essay questions; 
or
    (ii) That require a student to analyze a passage of text or to 
express opinions.
    (9) Provide for participation in the assessment system of all 
students in the grades being assessed consistent with Sec. 200.6.
    (10) Except as provided in Sec. 200.7, enable results to be 
disaggregated within each State, LEA, and school by--
    (i) Gender;
    (ii) Each major racial and ethnic group;
    (iii) English proficiency status;
    (iv) Migrant status as defined in Title I, part C of the Elementary 
and Secondary Education Act (hereinafter ``the Act'');
    (v) Students with disabilities as defined under section 602(3) of 
the Individuals with Disabilities Education Act (IDEA) as compared to 
all other students; and
    (vi) Economically disadvantaged students as compared to students who 
are not economically disadvantaged.
    (11) Produce individual student reports consistent with Sec. 
200.8(a).
    (12) Enable itemized score analyses to be produced and reported to 
LEAs and schools consistent with Sec. 200.8(b).
    (c) The State assessment system may include academic assessments 
that do not meet the requirements in paragraph (b) of this section as 
additional measures. Those additional assessments--
    (1) May not reduce the number, or change the identity, of schools 
that would otherwise be subject to school improvement, corrective 
action, or restructuring under section 1116 of Title I of the Act, if 
those assessments were not used; but
    (2) May identify additional schools for school improvement, 
corrective action, or restructuring.

(Authority: 20 U.S.C. 6311(b)(3))

[67 FR 45040, July 5, 2002]



Sec. 200.3  Designing State Academic Assessment Systems.

    (a)(1) For each grade and subject assessed, a State's academic 
assessment system must--
    (i) Address the depth and breadth of the State's academic content 
standards under Sec. 200.1(b);
    (ii) Be valid, reliable, and of high technical quality;
    (iii) Express student results in terms of the State's student 
academic achievement standards; and
    (iv) Be designed to provide a coherent system across grades and 
subjects.
    (2) A State may include in its academic assessment system under 
Sec. 200.2 either or both--
    (i) Criterion-referenced assessments; and

[[Page 443]]

    (ii) Assessments that yield national norms, provided that, if the 
State uses only assessments referenced against national norms at a 
particular grade, those assessments--
    (A) Are augmented with additional items as necessary to measure 
accurately the depth and breadth of the State's academic content 
standards; and
    (B) Express student results in terms of the State's student academic 
achievement standards.
    (b) A State that includes a combination of assessments as described 
in paragraph (a)(2) of this section, or a combination of State and local 
assessments, in its State assessment system must demonstrate in its 
State plan that the system has a rational and coherent design that--
    (1) Identifies the assessments to be used;
    (2) Indicates the relative contribution of each assessment towards--
    (i) Ensuring alignment with the State's academic content standards; 
and
    (ii) Determining the adequate yearly progress of each school and 
LEA; and
    (3) Provides information regarding the progress of students relative 
to the State's academic standards in order to inform instruction.
    (c) A State that includes local assessments in the system described 
in Sec. 200.2(b) must--
    (1) Establish technical criteria to ensure that each local 
assessment meets the requirements of paragraphs (a)(1) and (c)(2) of 
this section;
    (2) Demonstrate in its State plan that all local assessments used 
for this purpose--
    (i) Are equivalent to one another and to State assessments, where 
they exist, in their content coverage, difficulty, and quality;
    (ii) Have comparable validity and reliability with respect to groups 
of students described in section 1111(b)(2)(C)(v) of the Act; and
    (iii) Provide unbiased, rational, and consistent determinations of 
the annual progress of schools and LEAs within the State;
    (3) Review and approve each local assessment to ensure that it meets 
or exceeds the State's technical criteria in paragraph (c)(1) of this 
section and the requirements in paragraph (c)(2) of this section; and
    (4) Be able to aggregate, with confidence, data from local 
assessments to determine whether the State has made adequate yearly 
progress.
    (d) A State's academic assessment system may rely exclusively on 
local assessments only if it meets the requirements of Sec. 200.4.

(Authority: 20 U.S.C. 6311(b)(3))

[67 FR 45040, July 5, 2002]



Sec. 200.4  State law exception.

    (a) If a State provides satisfactory evidence to the Secretary that 
neither the State educational agency (SEA) nor any other State 
government official, agency, or entity has sufficient authority under 
State law to adopt academic content standards, student academic 
achievement standards, and academic assessments applicable to all 
students enrolled in the State's public schools, the State may meet the 
requirements under Sec. Sec. 200.1 and 200.2 by--
    (1) Adopting academic standards and academic assessments that meet 
the requirements of Sec. Sec. 200.1 and 200.2 on a Statewide basis and 
limiting their applicability to students served under subpart A of this 
part; or
    (2) Adopting and implementing policies that ensure that each LEA in 
the State that receives funds under subpart A of this part will adopt 
academic standards and academic assessments aligned with those standards 
that--
    (i) Meet the requirements in Sec. Sec. 200.1 and 200.2; and
    (ii) Are applicable to all students served by the LEA.
    (b) A State that qualifies under paragraph (a) of this section 
must--
    (1) Establish technical criteria for evaluating whether each LEA's--
    (i) Academic content and student academic achievement standards meet 
the requirements in Sec. 200.1; and
    (ii) Academic assessments meet the requirements in Sec. 200.2, 
particularly regarding validity and reliability, technical quality, 
alignment with the LEA's academic standards, and inclusion of all 
students in the grades assessed;

[[Page 444]]

    (2) Review and approve each LEA's academic standards and academic 
assessments to ensure that they--
    (i) Meet or exceed the State's technical criteria; and
    (ii) For purposes of this section--
    (A) Are equivalent to one another in their content coverage, 
difficulty, and quality;
    (B) Have comparable validity and reliability with respect to groups 
of students described in section 1111(b)(2)(C)(v) of the Act; and
    (C) Provide unbiased, rational, and consistent determinations of the 
annual progress of LEAs and schools within the State; and
    (3) Be able to aggregate, with confidence, data from local 
assessments to determine whether the State has made adequate yearly 
progress.

(Authority: 20 U.S.C. 6311(b)(5))

[67 FR 45041, July 5, 2002]



Sec. 200.5  Timeline for assessments.

    (a) Reading/language arts and mathematics. (1) Through the 2004-2005 
school year, a State must administer the assessments required under 
Sec. 200.2 at least once during--
    (i) Grades 3 through 5;
    (ii) Grades 6 through 9; and
    (iii) Grades 10 through 12.
    (2) Except as provided in paragraph (a)(3) of this section, 
beginning no later than the 2005-2006 school year, a State must 
administer both the reading/language arts and mathematics assessments 
required under Sec. 200.2--
    (i) In each of grades 3 through 8; and
    (ii) At least once in grades 10 through 12.
    (3) The Secretary may extend, for one additional year, the timeline 
in paragraph (a)(2) of this section if a State demonstrates that--
    (i) Full implementation is not possible due to exceptional or 
uncontrollable circumstances such as--
    (A) A natural disaster; or
    (B) A precipitous and unforeseen decline in the financial resources 
of the State; and
    (ii) The State can complete implementation within the additional 
one-year period.
    (b) Science. Beginning no later than the 2007-2008 school year, the 
science assessments required under Sec. 200.2 must be administered at 
least once during--
    (1) Grades 3 through 5;
    (2) Grades 6 through 9; and
    (3) Grades 10 through 12.
    (c) Timing of results. Beginning with the 2002-2003 school year, a 
State must promptly provide the results of its assessments no later than 
before the beginning of the next school year to LEAs, schools, and 
teachers in a manner that is clear and easy to understand.

(Authority: 20 U.S.C. 6311(b)(3))

[67 FR 45041, July 5, 2002]



Sec. 200.6  Inclusion of all students.

    A State's academic assessment system required under Sec. 200.2 must 
provide for the participation of all students in the grades assessed.
    (a) Students eligible under IDEA and Section 504--(1) Appropriate 
accommodations. A State's academic assessment system must provide--
    (i) For each student with disabilities, as defined under section 
602(3) of the IDEA, appropriate accommodations that each student's IEP 
team determines are necessary to measure the academic achievement of the 
student relative to the State's academic content and achievement 
standards for the grade in which the student is enrolled, consistent 
with Sec. 200.1(b)(2), (b)(3), and (c); and
    (ii) For each student covered under section 504 of the 
Rehabilitation Act of 1973 (Section 504), appropriate accommodations 
that each student's placement team determines are necessary to measure 
the academic achievement of the student relative to the State's academic 
content and achievement standards for the grades in which the student is 
enrolled, consistent with Sec. 200.1(b)(2), (b)(3), and (c).
    (2) Alternate assessments. (i) The State's academic assessment 
system must provide for one or more alternate assessments for a child 
with a disability as defined under section 602(3) of the Individuals 
with Disabilities Education Act (IDEA) whom the child's IEP team 
determines cannot participate in all or part of the State assessments 
under paragraph (a)(1) of this

[[Page 445]]

section, even with appropriate accommodations.
    (ii)(A) Alternate assessments must yield results for the grade in 
which the student is enrolled in at least reading/language arts, 
mathematics, and, beginning in the 2007-2008 school year, science, 
except as provided in the following paragraph.
    (B) For students with the most significant cognitive disabilities, 
alternate assessments may yield results that measure the achievement of 
those students relative to the alternate academic achievement standards 
the State has defined under Sec. 200.1(d).
    (iii) If a State permits the use of alternate assessments that yield 
results based on alternate academic achievement standards, the State 
must--
    (A)(1) Establish and ensure implementation of clear and appropriate 
guidelines for Individualized Educational Program (IEP) teams to apply 
in determining when a child's significant cognitive disability justifies 
assessment based on alternate academic achievement standards; and
    (2) Ensure that parents of those students are informed that their 
child's achievement will be based on alternate achievement standards; 
and
    (B) Report separately, under section 1111(h)(4) of the ESEA, the 
number and percentage of students with disabilities taking--
    (1) Alternate assessments based on the alternate academic 
achievement standards defined under Sec. 200.1(d);
    (2) Alternate assessments based on the academic achievement 
standards defined under Sec. 200.1(c); and
    (3) Regular assessments, including those administered with 
appropriate accommodations.
    (C) Document that students with the most significant cognitive 
disabilities are, to the extent possible, included in the general 
curriculum and in assessments aligned with that curriculum;
    (D) Develop, disseminate information on, and promote use of 
appropriate accommodations to increase the number of students with the 
most significant cognitive disabilities who are tested against grade-
level academic achievement standards; and
    (E) Ensure that regular and special education teachers and other 
appropriate staff know how to administer assessments, including making 
appropriate use of accommodations, for students with the most 
significant cognitive disabilities.
    (b) Limited English proficient students. A State must include 
limited English proficient students in its academic assessment system as 
follows:
    (1) In general. (i) Consistent with paragraph (b)(2) of this 
section, the State must assess limited English proficient students in a 
valid and reliable manner that includes--
    (A) Reasonable accommodations; and
    (B) To the extent practicable, assessments in the language and form 
most likely to yield accurate and reliable information on what those 
students know and can do to determine the students' mastery of skills in 
subjects other than English until the students have achieved English 
language proficiency.
    (ii) In its State plan, the State must--
    (A) Identify the languages other than English that are present in 
the student population served by the SEA; and
    (B) Indicate the languages for which yearly student academic 
assessments are not available and are needed.
    (iii) The State--
    (A) Must make every effort to develop such assessments; and
    (B) May request assistance from the Secretary in identifying 
linguistically accessible academic assessments that are needed.
    (2) Assessing reading/language arts in English. (i) Unless an 
extension of time is warranted under paragraph (b)(2)(ii) of this 
section, a State must assess, using assessments written in English, the 
achievement of any limited English proficient student in meeting the 
State's reading/language arts academic standards if the student has 
attended schools in the United States, excluding Puerto Rico, for three 
or more consecutive years.
    (ii) An LEA may continue, for no more than two additional 
consecutive years, to assess a limited English proficient student under 
paragraph (b)(1) of this section if the LEA determines, on a case-by-
case individual basis, that the student has not reached a level of 
English language proficiency sufficient

[[Page 446]]

to yield valid and reliable information on what the student knows and 
can do on reading/language arts assessments written in English.
    (iii) The requirements in paragraph (b)(2)(i) and (ii) of this 
section do not permit an exemption from participating in the State 
assessment system for limited English proficient students.
    (3) Assessing English proficiency. (i) Unless a State receives an 
extension under paragraph (b)(3)(ii) of this section, the State must 
require each LEA, beginning no later than the 2002-2003 school year, to 
assess annually the English proficiency, including reading, writing, 
speaking, and listening skills, of all students with limited English 
proficiency in schools in the LEA.
    (ii) The Secretary may extend, for one additional year, the deadline 
in paragraph (b)(3)(i) of this section if the State demonstrates that--
    (A) Full implementation is not possible due to exceptional or 
uncontrollable circumstances such as--
    (1) A natural disaster; or
    (2) A precipitous and unforeseen decline in the financial resources 
of the State; and
    (B) The State can complete implementation within the additional one-
year period.
    (c) Migratory and other mobile students. A State must include 
migratory students, as defined in Title I, part C, of the Act, and other 
mobile students in its academic assessment system, even if those 
students are not included for accountability purposes under section 
1111(b)(3)(C)(xi) of the Act.
    (d) Students experiencing homelessness.
    (1) A State must include homeless students, as defined in section 
725(2) of Title VII, Subtitle B of the McKinney-Vento Act, in its 
academic assessment, reporting, and accountability systems, consistent 
with section 1111(b)(3)(C)(xi) of the Act.
    (2) The State is not required to disaggregate, as a separate 
category under Sec. 200.2(b)(10), the assessment results of the 
students referred to in paragraph (d)(1) of this section.

(Authority: 20 U.S.C. 6311(b)(3))

(Approved by the Office of Management and Budget under control number 
1810-0576)

[67 FR 45041, July 5, 2002, as amended at 67 FR 71715, Dec. 2, 2002; 68 
FR 68702, Dec. 9, 2003]



Sec. 200.7  Disaggregation of data.

    (a) Statistically reliable information. (1) A State may not use 
disaggregated data for one or more subgroups under Sec. 200.2(b)(10) to 
report achievement results under section 1111(h) of the Act or to 
identify schools in need of improvement, corrective action, or 
restructuring under section 1116 of the Act if the number of students in 
those subgroups is insufficient to yield statistically reliable 
information.
    (2) Based on sound statistical methodology, a State must determine 
and justify in its State plan the minimum number of students sufficient 
to yield statistically reliable information for each purpose for which 
disaggregated data are used.
    (b) Personally identifiable information. (1) A State may not use 
disaggregated data for one or more subgroups under Sec. 200.2(b)(10) to 
report achievement results under section 1111(h) of the Act if the 
results would reveal personally identifiable information about an 
individual student.
    (2) To determine whether disaggregated results would reveal 
personally identifiable information about an individual student, a State 
must apply the requirements under section 444(b) of the General 
Education Provisions Act (the Family Educational Rights and Privacy Act 
of 1974).
    (3) Nothing in paragraph (b)(1) or (b)(2) of this section shall be 
construed to abrogate the responsibility of States to implement the 
requirements of section 1116(a) of the Act for determining whether 
States, LEAs, and schools are making adequate yearly progress on the 
basis of the performance of each subgroup under section 1111(b)(2)(C)(v) 
of the Act.
    (4) Each State shall include in its State plan, and each State and 
LEA

[[Page 447]]

shall implement, appropriate strategies to protect the privacy of 
individual students in reporting achievement results under section 
1111(h) of the Act and in determining whether schools and LEAs are 
making adequate yearly progress on the basis of disaggregated subgroups.
    (c) Inclusion of subgroups in assessments. If a subgroup under Sec. 
200.2(b)(10) is not of sufficient size to produce statistically reliable 
results, the State must still include students in that subgroup in its 
State assessments under Sec. 200.2.
    (d) Disaggregation at the LEA and State. If the number of students 
in a subgroup is not statistically reliable at the school level, the 
State must include those students in disaggregations at each level for 
which the number of students is statistically reliable--e.g., the LEA or 
State level.

(Approved by the Office of Management and Budget under control number 
1810-0576)

(Authority: 20 U.S.C. 6311(b)(3); 1232g)

[67 FR 45042, July 5, 2002, as amended at 67 FR 71715, Dec. 2, 2002]



Sec. 200.8  Assessment reports.

    (a) Student reports. A State's academic assessment system must 
produce individual student interpretive, descriptive, and diagnostic 
reports that--
    (1)(i) Include information regarding achievement on the academic 
assessments under Sec. 200.2 measured against the State's student 
academic achievement standards; and
    (ii) Help parents, teachers, and principals to understand and 
address the specific academic needs of students; and
    (2) Are provided to parents, teachers, and principals--
    (i) As soon as is practicable after the assessment is given;
    (ii) In an understandable and uniform format, including an 
alternative format (e.g., Braille or large print) upon request; and
    (iii) To the extent practicable, in a language that parents can 
understand.
    (b) Itemized score analyses for LEAs and schools. (1) A State's 
academic assessment system must produce and report to LEAs and schools 
itemized score analyses, consistent with Sec. 200.2(b)(4), so that 
parents, teachers, principals, and administrators can interpret and 
address the specific academic needs of students.
    (2) The requirement to report itemized score analyses in paragraph 
(b)(1) of this section does not require the release of test items.

(Authority: 20 U.S.C. 6311(b)(3))

[67 FR 45042, July 5, 2002]



Sec. 200.9  Deferral of assessments.

    (a) A State may defer the start or suspend the administration of the 
assessments required under Sec. 200.2 that were not required prior to 
January 8, 2002 for one year for each year for which the amount 
appropriated for State assessment grants under section 6113(a)(2) of the 
Act is less than the trigger amount in section 1111(b)(3)(D) of the Act.
    (b) A State may not cease the development of the assessments 
referred to in paragraph (a) of this section even if sufficient funds 
are not appropriated under section 6113(a)(2) of the Act.

(Authority: 20 U.S.C. 6311(b)(3); 7301b(a)(2))

[67 FR 45043, July 5, 2002]



Sec. 200.10  Applicability of a State's academic assessments to private 
schools and private school students.

    (a) Nothing in Sec. 200.1 or Sec. 200.2 requires a private school, 
including a private school whose students receive services under subpart 
A of this part, to participate in a State's academic assessment system.
    (b)(1) If an LEA provides services to eligible private school 
students under subpart A of this part, the LEA must, through timely 
consultation with appropriate private school officials, determine how 
services to eligible private school students will be academically 
assessed and how the results of that assessment will be used to improve 
those services.
    (2) The assessments referred to in paragraph (b)(1) of this section 
may be the State's academic assessments under Sec. 200.2 or other 
appropriate academic assessments.

(Authority: 20 U.S.C. 6320, 7886(a))

[67 FR 45043, July 5, 2002]

[[Page 448]]

   Participation in National Assessment of Educational Progress (NAEP)



Sec. 200.11  Participation in NAEP.

    (a) State participation. Beginning in the 2002-2003 school year, 
each State that receives funds under subpart A of this part must 
participate in biennial State academic assessments of fourth and eighth 
grade reading and mathematics under the State National Assessment of 
Educational Progress (NAEP), if the Department pays the costs of 
administering those assessments.
    (b) Local participation. In accordance with section 1112(b)(1)(F) of 
the Elementary and Secondary Education Act of 1965 (ESEA), and 
notwithstanding section 411(d)(1) of the National Education Statistics 
Act of 1994, an LEA that receives funds under subpart A of this part 
must participate, if selected, in the State-NAEP assessments referred to 
in paragraph (a) of this section.

(Authority: 20 U.S.C. 6311(c)(2); 6312(b)(1)(F), 9010(d)(1))

[67 FR 71715, Dec. 2, 2002]

                       State Accountability System



Sec. 200.12  Single State accountability system.

    (a)(1) Each State must demonstrate in its State plan that the State 
has developed and is implementing, beginning with the 2002-2003 school 
year, a single, statewide accountability system.
    (2) The State's accountability system must be effective in ensuring 
that all public elementary and secondary schools and LEAs in the State 
make adequate yearly progress (AYP) as defined in Sec. Sec. 200.13 
through 200.20.
    (b) The State's accountability system must--
    (1) Be based on the State's academic standards under Sec. 200.1, 
academic assessments under Sec. 200.2, and other academic indicators 
under Sec. 200.19;
    (2) Take into account the achievement of all public elementary and 
secondary school students;
    (3) Be the same accountability system the State uses for all public 
elementary and secondary schools and all LEAs in the State; and
    (4) Include sanctions and rewards that the State will use to hold 
public elementary and secondary schools and LEAs accountable for student 
achievement and for making AYP, except that the State is not required to 
subject schools and LEAs not participating under subpart A of this part 
to the requirements of section 1116 of the ESEA. (Approved by the Office 
of Management and Budget under control number 1810-0576)

(Authority: 20 U.S.C. 6311(b)(2)(A))

[67 FR 71715, Dec. 2, 2002]

                     Adequate Yearly Progress (AYP)



Sec. 200.13  Adequate yearly progress in general.

    (a) Each State must demonstrate in its State plan what constitutes 
AYP of the State and of all public schools and LEAs in the State--
    (1) Toward enabling all public school students to meet the State's 
student academic achievement standards; while
    (2) Working toward the goal of narrowing the achievement gaps in the 
State, its LEAs, and its public schools.
    (b) A State must define adequate yearly progress, in accordance with 
Sec. Sec. 200.14 through 200.20, in a manner that--
    (1) Applies the same high standards of academic achievement to all 
public school students in the State, except as provided in paragraph (c) 
of this section;
    (2) Is statistically valid and reliable;
    (3) Results in continuous and substantial academic improvement for 
all students;
    (4) Measures the progress of all public schools, LEAs, and the State 
based primarily on the State's academic assessment system under Sec. 
200.2;
    (5) Measures progress separately for reading/language arts and for 
mathematics;
    (6) Is the same for all public schools and LEAs in the State; and
    (7) Consistent with Sec. 200.7, applies the same annual measurable 
objectives under Sec. 200.18 separately to each of the following:
    (i) All public school students.

[[Page 449]]

    (ii) Students in each of the following subgroups:
    (A) Economically disadvantaged students.
    (B) Students from major racial and ethnic groups.
    (C) Students with disabilities, as defined in section 9101(5) of the 
ESEA.
    (D) Students with limited English proficiency, as defined in section 
9101(25) of the ESEA.
    (c)(1) In calculating adequate yearly progress for schools, LEAs, 
and the State, a State--
    (i) Must, consistent with Sec. 200.7(a), include the scores of all 
students with disabilities, even those with the most significant 
cognitive disabilities; but
    (ii) May include the proficient and advanced scores of students with 
the most significant cognitive disabilities based on the alternate 
academic achievement standards in Sec. 200.1(d), provided that the 
number of those students who score at the proficient or advanced level 
on those alternate achievement standards at the LEA and at the State 
levels, separately, does not exceed 1.0 percent of all students in the 
grades assessed in reading/language arts and in mathematics.
    (2) An SEA may request from the Secretary an exception permitting it 
to exceed the 1.0 percent cap. The Secretary will consider granting, for 
a specified period of time, an exception to a State if the following 
conditions are met:
    (i) The SEA documents that the incidence of students with the most 
significant cognitive disabilities exceeds 1.0 percent of all students 
in the grades assessed.
    (ii) The SEA explains why the incidence of such students exceeds 1.0 
percent of all students in the combined grades assessed, such as school, 
community, or health programs in the State that have drawn large numbers 
of families of students with the most significant cognitive 
disabilities, or such a small overall student population that it would 
take only a very few students with such disabilities to exceed the 1.0 
percent cap.
    (iii) The SEA documents that it is fully and effectively addressing 
the requirements of Sec. 200.6(a)(2)(iii).
    (3)(i) A State may grant an exception to an LEA permitting it to 
exceed the 1.0 percent cap in paragraph (c)(1) of this section only if 
the State evaluates the LEA's request using conditions consistent with 
paragraph (c)(2) of this section.
    (ii) The State must review regularly whether an LEA's exception to 
the 1.0 percent cap is still warranted.
    (4) In calculating adequate yearly progress, if the percentage of 
proficient and advanced scores based on alternate academic achievement 
standards under Sec. 200.1(d) exceeds the caps in paragraph (c)(1) 
through (3) of this section at the State or LEA level, the State must do 
the following:
    (i) Consistent with Sec. 200.7(a), include all scores of students 
with the most significant cognitive disabilities.
    (ii) Count as non-proficient the proficient and advanced scores 
above the caps in paragraph (c)(1) through (3) of this section.
    (iii) Determine which proficient scores to count as non-proficient 
in schools and LEAs responsible for students who take an alternate 
assessment based on alternate achievement standards.
    (iv) Include those non-proficient scores in each applicable subgroup 
at the school, LEA and State level.
    (v) Ensure that parents are informed of the actual academic 
achievement levels of their students with the most significant cognitive 
disabilities.
    (d) The State must establish a way to hold accountable schools in 
which no grade level is assessed under the State's academic assessment 
system (e.g., K-2 schools), although the State is not required to 
administer a formal assessment to meet this requirement.

(Approved by the Office of Management and Budget under control number 
1810-0576)

(Authority: 20 U.S.C. 6311(b)(2))

[67 FR 71716, Dec. 2, 2002; 68 FR 1008, Jan. 8, 2003, as amended at 68 
FR 68703, Dec. 9, 2003]



Sec. 200.14  Components of Adequate Yearly Progress.

    A State's definition of AYP must include all of the following:
    (a) A timeline in accordance with Sec. 200.15.

[[Page 450]]

    (b) Starting points in accordance with Sec. 200.16.
    (c) Intermediate goals in accordance with Sec. 200.17.
    (d) Annual measurable objectives in accordance with Sec. 200.18.
    (e) Other academic indicators in accordance with Sec. 200.19.

(Authority: 20 U.S.C. 6311(b)(2))

[67 FR 71716, Dec. 2, 2002]



Sec. 200.15  Timeline.

    (a) Each State must establish a timeline for making AYP that ensures 
that, not later than the 2013-2014 school year, all students in each 
group described in Sec. 200.13(b)(7) will meet or exceed the State's 
proficient level of academic achievement.
    (b) Notwithstanding subsequent changes a State may make to its 
academic assessment system or its definition of AYP under Sec. Sec. 
200.13 through 200.20, the State may not extend its timeline for all 
students to reach proficiency beyond the 2013-2014 school year.

(Authority: 20 U.S.C. 6311(b)(2))

[67 FR 71716, Dec. 2, 2002]



Sec. 200.16  Starting points.

    (a) Using data from the 2001-2002 school year, each State must 
establish starting points in reading/language arts and in mathematics 
for measuring the percentage of students meeting or exceeding the 
State's proficient level of academic achievement.
    (b) Each starting point must be based, at a minimum, on the higher 
of the following percentages of students at the proficient level:
    (1) The percentage in the State of proficient students in the 
lowest-achieving subgroup of students under Sec. 200.13(b)(7)(ii).
    (2) The percentage of proficient students in the school that 
represents 20 percent of the State's total enrollment among all schools 
ranked by the percentage of students at the proficient level. The State 
must determine this percentage as follows:
    (i) Rank each school in the State according to the percentage of 
proficient students in the school.
    (ii) Determine 20 percent of the total enrollment in all schools in 
the State.
    (iii) Beginning with the lowest-ranked school, add the number of 
students enrolled in each school until reaching the school that 
represents 20 percent of the State's total enrollment among all schools.
    (iv) Identify the percentage of proficient students in the school 
identified in paragraph (iii).
    (c)(1) Except as permitted under paragraph (c)(2) of this section, 
each starting point must be the same throughout the State for each 
school, each LEA, and each group of students under Sec. 200.13(b)(7).
    (2) A State may use the procedures under paragraph (b) of this 
section to establish separate starting points by grade span.

(Authority: 20 U.S.C. 6311(b)(2))

[67 FR 71716, Dec. 2, 2002]



Sec. 200.17  Intermediate goals.

    Each State must establish intermediate goals that increase in equal 
increments over the period covered by the timeline under Sec. 200.15 as 
follows:
    (a) The first incremental increase must take effect not later than 
the 2004-2005 school year.
    (b) Each following incremental increase must occur in not more than 
three years.

(Authority: 20 U.S.C. 6311(b)(2))

[67 FR 71716, Dec. 2, 2002]



Sec. 200.18  Annual measurable objectives.

    (a) Each State must establish annual measurable objectives that--
    (1) Identify for each year a minimum percentage of students that 
must meet or exceed the proficient level of academic achievement on the 
State's academic assessments; and
    (2) Ensure that all students meet or exceed the State's proficient 
level of academic achievement within the timeline under Sec. 200.15.
    (b) The State's annual measurable objectives--
    (1) Must be the same throughout the State for each school, each LEA, 
and each group of students under Sec. 200.13(b)(7); and

[[Page 451]]

    (2) May be the same for more than one year, consistent with the 
State's intermediate goals under Sec. 200.17.

(Authority: 20 U.S.C. 6311(b)(2))

[67 FR 71716, Dec. 2, 2002]



Sec. 200.19  Other academic indicators.

    (a) Each State must use the following other academic indicators to 
determine AYP:
    (1) High schools. (i) The graduation rate for public high schools, 
which means--
    (A) The percentage of students, measured from the beginning of high 
school, who graduate from high school with a regular diploma (not 
including an alternative degree that is not fully aligned with the 
State's academic standards, such as a certificate or a GED) in the 
standard number of years; or
    (B) Another definition, developed by the State and approved by the 
Secretary in the State plan, that more accurately measures the rate of 
students who graduate from high school with a regular diploma as defined 
in paragraph (a)(1)(i)(A) of this section.
    (ii) In defining graduation rate, the State must avoid counting a 
dropout as a transfer.
    (2) Elementary and middle schools. At least one academic indicator 
for public elementary schools and at least one academic indicator for 
public middle schools, such as those under paragraph (b) of this 
section.
    (b) The State may include additional academic indicators determined 
by the State, including, but not limited to, the following:
    (1) Additional State or locally administered assessments not 
included in the State assessment system under Sec. 200.2.
    (2) Grade-to-grade retention rates.
    (3) Attendance rates.
    (4) Percentages of students completing gifted and talented, advanced 
placement, and college preparatory courses.
    (c) A State must ensure that its other academic indicators are--
    (1) Valid and reliable;
    (2) Consistent with relevant, nationally recognized professional and 
technical standards, if any; and
    (3) Consistent throughout the State within each grade span.
    (d)(1) A State may, but is not required to, increase the goals of 
its other academic indicators over the course of the timeline under 
Sec. 200.15.
    (2) The State--
    (i) Must disaggregate its other academic indicators by each group in 
Sec. 200.13(b)(7) for purposes of Sec. 200.20(b)(2) and section 
1111(h) of the ESEA; but
    (ii) Need not disaggregate those indicators for determining AYP 
except as required under section 1111(b)(2)(C)(vii) of the ESEA.
    (e) Except as provided in Sec. 200.20(b)(2), a State--
    (1) May not use the indicators in paragraphs (a) and (b) of this 
section to reduce the number, or change the identity, of schools that 
would otherwise be subject to school improvement, corrective action, or 
restructuring if those indicators were not used; but
    (2) May use the indicators to identify additional schools for school 
improvement, corrective action, or restructuring.

(Authority: 20 U.S.C. 6311(b)(2), (h))

[67 FR 71717, Dec. 2, 2002]



Sec. 200.20  Making adequate yearly progress.

    A school or LEA makes AYP if it complies with paragraph (c) and with 
either paragraph (a) or (b) of this section separately in reading/
language arts and in mathematics.
    (a)(1) A school or LEA makes AYP if--
    (i) Each group of students under Sec. 200.13(b)(7) meets or exceeds 
the State's annual measurable objectives under Sec. 200.18; and
    (ii) The school or LEA, respectively, meets or exceeds the State's 
other academic indicators under Sec. 200.19.
    (2) For a group under Sec. 200.13(b)(7) to be included in the 
determination of AYP for a school or LEA, the number of students in the 
group must be sufficient to yield statistically reliable information 
under Sec. 200.7(a).
    (b) If students in any group under Sec. 200.13(b)(7) in a school or 
LEA do not meet the State's annual measurable objectives under Sec. 
200.18, the school or LEA makes AYP if--

[[Page 452]]

    (1) The percentage of students in that group below the State's 
proficient achievement level decreased by at least 10 percent from the 
preceding year; and
    (2) That group made progress on one or more of the State's academic 
indicators under Sec. 200.19 or the LEA's academic indicators under 
Sec. 200.30(c).
    (c)(1) A school or LEA makes AYP if--
    (i) Not less than 95 percent of the students enrolled in each group 
under Sec. 200.13(b)(7) takes the State assessments under Sec. 200.2; 
and
    (ii) The group is of sufficient size to produce statistically 
reliable results under Sec. 200.7(a).
    (2) The requirement in paragraph (c)(1) of this section does not 
authorize a State, LEA, or school to systematically exclude 5 percent of 
the students in any group under Sec. 200.13(b)(7).
    (3) If a student takes the State assessments for a particular 
subject or grade level more than once, the State must use the student's 
results from the first administration to determine AYP.
    (d) For the purpose of determining whether a school or LEA has made 
AYP, a State may establish a uniform procedure for averaging data that 
includes one or more of the following:
    (1) Averaging data across school years. (i) A State may average data 
from the school year for which the determination is made with data from 
one or two school years immediately preceding that school year.
    (ii) If a State averages data across school years, the State must--
    (A) Implement, on schedule, the assessments in reading/language arts 
and mathematics in grades 3 through 8 and once in grades 10 through 12 
required under Sec. 200.5(a)(2);
    (B) Report data resulting from the assessments under Sec. 
200.5(a)(2);
    (C) Determine AYP under Sec. Sec. 200.13 through 200.20, although 
the State may base that determination on data only from the reading/
language arts and mathematics assessments in the three grade spans 
required under Sec. 200.5(a)(1); and
    (D) Implement the requirements in section 1116 of the ESEA.
    (iii) A State that averages data across years must determine AYP on 
the basis of the assessments under Sec. 200.5(a)(2) as soon as it has 
data from two or three years to average. Until that time, the State may 
use data from the reading/language arts and mathematics assessments 
required under Sec. 200.5(a)(1) to determine adequate yearly progress.
    (2) Combining data across grades. Within each subject area and 
subgroup, the State may combine data across grades in a school or LEA.
    (e)(1) In determining the AYP of an LEA, a State must include all 
students who were enrolled in schools in the LEA for a full academic 
year, as defined by the State.
    (2) In determining the AYP of a school, the State may not include 
students who were not enrolled in that school for a full academic year, 
as defined by the State.

(Authority: 20 U.S.C. 6311(b)(2), (b)(3)(C)(xi))

[67 FR 71717, Dec. 2, 2002]



Sec. 200.21  Adequate yearly progress of a State.

    For each State that receives funds under subpart A of this part and 
under subpart 1 of part A of Title III of the ESEA, the Secretary must, 
beginning with the 2004-2005 school year, annually review whether the 
State has--
    (a)(1) Made AYP as defined by the State in accordance with 
Sec. Sec. 200.13 through 200.20 for each group of students in Sec. 
200.13(b)(7); and
    (2) Met its annual measurable achievement objectives under section 
3122(a) of the ESEA relating to the development and attainment of 
English proficiency by limited English proficient students.
    (b) A State must include all students who were enrolled in schools 
in the State for a full academic year in reporting on the yearly 
progress of the State.

(Authority: 20 U.S.C. 7325)

[67 FR 71717, Dec. 2, 2002]

[[Page 453]]



Sec. 200.22-200.24  [Reserved]

                           Schoolwide Programs



Sec. 200.25  Schoolwide programs in general.

    (a) Purpose. (1) The purpose of a schoolwide program is to improve 
academic achievement throughout a school so that all students, 
particularly the lowest-achieving students, demonstrate proficiency 
related to the State's academic standards under Sec. 200.1.
    (2) The improved achievement is to result from improving the entire 
educational program of the school.
    (b) Eligibility. (1) A school may operate a schoolwide program if--
    (i) The school's LEA determines that the school serves an eligible 
attendance area or is a participating school under section 1113 of the 
ESEA; and
    (ii) For the initial year of the schoolwide program--
    (A) The school serves a school attendance area in which not less 
than 40 percent of the children are from low-income families; or
    (B) Not less than 40 percent of the children enrolled in the school 
are from low-income families.
    (2) In determining the percentage of children from low-income 
families under paragraph (b)(1)(ii) of this section, the LEA may use a 
measure of poverty that is different from the measure or measures of 
poverty used by the LEA to identify and rank school attendance areas for 
eligibility and participation under subpart A of this part.
    (c) Participating students and services. A school operating a 
schoolwide program is not required to--
    (1) Identify particular children as eligible to participate; or
    (2) As required under section 1120A(b) of the ESEA, provide services 
that supplement, and do not supplant, the services participating 
children would otherwise receive if they were not participating in a 
program under subpart A of this part.
    (d) Supplemental funds. A school operating a schoolwide program must 
use funds available under subpart A of this part and under any other 
Federal program included under paragraph (e) of this section and Sec. 
200.29 only to supplement the total amount of funds that would, in the 
absence of the Federal funds, be made available from non-Federal sources 
for that school, including funds needed to provide services that are 
required by law for children with disabilities and children with limited 
English proficiency.
    (e) Consolidation of funds. An eligible school may, consistent with 
Sec. 200.29, consolidate and use funds or services under subpart A of 
this part, together with other Federal, State, and local funds that the 
school receives, to operate a schoolwide program in accordance with 
Sec. Sec. 200.25 through 200.29.
    (f) Prekindergarten program. A school operating a schoolwide program 
may use funds made available under subpart A of this part to establish 
or enhance prekindergarten programs for children below the age of 6, 
such as Even Start programs or Early Reading First programs.

(Authority: 20 U.S.C. 6314)

[67 FR 71718, Dec. 2, 2002]



Sec. 200.26  Core elements of a schoolwide program.

    (a) Comprehensive needs assessment. (1) A school operating a 
schoolwide program must conduct a comprehensive needs assessment of the 
entire school that--
    (i) Is based on academic achievement information about all students 
in the school, including all groups under Sec. 200.13(b)(7) and 
migratory children as defined in section 1309(2) of the ESEA, relative 
to the State's academic standards under Sec. 200.1 to--
    (A) Help the school understand the subjects and skills for which 
teaching and learning need to be improved; and
    (B) Identify the specific academic needs of students and groups of 
students who are not yet achieving the State's academic standards; and
    (ii) Assesses the needs of the school relative to each of the 
components of the schoolwide program under Sec. 200.28.
    (2) The comprehensive needs assessment must be developed with the 
participation of individuals who will carry out the schoolwide program 
plan.
    (3) The school must document how it conducted the needs assessment, 
the

[[Page 454]]

results it obtained, and the conclusions it drew from those results.
    (b) Comprehensive plan. Using data from the comprehensive needs 
assessment under paragraph (a) of this section, a school that wishes to 
operate a schoolwide program must develop a comprehensive plan, in 
accordance with Sec. 200.27, that describes how the school will improve 
academic achievement throughout the school, but particularly for those 
students furthest away from demonstrating proficiency, so that all 
students demonstrate at least proficiency on the State's academic 
standards.
    (c) Evaluation. A school operating a schoolwide program must--
    (1) Annually evaluate the implementation of, and results achieved 
by, the schoolwide program, using data from the State's annual 
assessments and other indicators of academic achievement;
    (2) Determine whether the schoolwide program has been effective in 
increasing the achievement of students in meeting the State's academic 
standards, particularly for those students who had been furthest from 
achieving the standards; and
    (3) Revise the plan, as necessary, based on the results of the 
evaluation, to ensure continuous improvement of students in the 
schoolwide program.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6314)

[67 FR 71718, Dec. 2, 2002]



Sec. 200.27  Development of a schoolwide program plan.

    (a)(1) A school operating a schoolwide program must develop a 
comprehensive plan to improve teaching and learning throughout the 
school.
    (2) The school must develop the comprehensive plan in consultation 
with the LEA and its school support team or other technical assistance 
provider under section 1117 of the ESEA.
    (3) The comprehensive plan must--
    (i) Describe how the school will carry out each of the components 
under Sec. 200.28;
    (ii) Describe how the school will use resources under subpart A of 
this part and from other sources to carry out the components under Sec. 
200.28; and
    (iii) Include a list of State and local programs and other Federal 
programs under Sec. 200.29 that the school will consolidate in the 
schoolwide program.
    (b)(1) The school must develop the comprehensive plan, including the 
comprehensive needs assessment, over a one-year period unless--
    (i) The LEA, after considering the recommendations of its technical 
assistance providers under section 1117 of the ESEA, determines that 
less time is needed to develop and implement the schoolwide program; or
    (ii) The school was operating a schoolwide program on or before 
January 7, 2002, in which case the school may continue to operate its 
program, but must amend its existing plan to reflect the provisions of 
Sec. Sec. 200.25 through 200.29 during the 2002-2003 school year.
    (2) The school must develop the comprehensive plan with the 
involvement of parents, consistent with the requirements of section 1118 
of the ESEA, and other members of the community to be served and 
individuals who will carry out the plan, including--
    (i) Teachers, principals, and administrators, including 
administrators of programs described in other parts of Title I of the 
ESEA;
    (ii) If appropriate, pupil services personnel, technical assistance 
providers, and other school staff; and
    (iii) If the plan relates to a secondary school, students from the 
school.
    (3) If appropriate, the school must develop the comprehensive plan 
in coordination with other programs, including those carried out under 
Reading First, Early Reading First, Even Start, the Carl D. Perkins 
Vocational and Technical Education Act of 1998, and the Head Start Act.
    (4) The comprehensive plan remains in effect for the duration of the 
school's participation under Sec. Sec. 200.25 through 200.29.
    (c)(1) The schoolwide program plan must be available to the LEA, 
parents, and the public.
    (2) Information in the plan must be--
    (i) In an understandable and uniform format, including alternative 
formats upon request; and

[[Page 455]]

    (ii) To the extent practicable, provided in a language that the 
parents can understand.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6314)

[67 FR 71719, Dec. 2, 2002]



Sec. 200.28  Schoolwide program components.

    A schoolwide program must include the following components:
    (a) Schoolwide reform strategies. The schoolwide program must 
incorporate reform strategies in the overall instructional program. 
Those strategies must--
    (1) Provide opportunities for all students to meet the State's 
proficient and advanced levels of student academic achievement;
    (2)(i) Address the needs of all students in the school, particularly 
the needs of low-achieving students and those at risk of not meeting the 
State's student academic achievement standards who are members of the 
target population of any program included in the schoolwide program; and
    (ii) Address how the school will determine if those needs have been 
met;
    (3) Use effective methods and instructional practices that are based 
on scientifically based research, as defined in section 9101 of the 
ESEA, and that--
    (i) Strengthen the core academic program;
    (ii) Provide an enriched and accelerated curriculum;
    (iii) Increase the amount and quality of learning time, such as 
providing an extended school year and before- and after-school and 
summer programs and opportunities;
    (iv) Include strategies for meeting the educational needs of 
historically underserved populations; and
    (v) Are consistent with, and are designed to implement, State and 
local improvement plans, if any.
    (b) Instruction by highly qualified teachers. A schoolwide program 
must ensure instruction by highly qualified teachers and provide ongoing 
professional development. The schoolwide program must--
    (1) Include strategies to attract highly qualified teachers, as 
defined in Sec. 200.56;
    (2)(i) Provide high-quality and ongoing professional development in 
accordance with sections 1119 and 9101(34) of the ESEA for teachers, 
principals, paraprofessionals and, if appropriate, pupil services 
personnel, parents, and other staff, to enable all students in the 
school to meet the State's student academic standards; and
    (ii) Align professional development with the State's academic 
standards;
    (3) Devote sufficient resources to carry out effectively the 
professional development activities described in paragraph (b)(2) of 
this section; and
    (4) Include teachers in professional development activities 
regarding the use of academic assessments described in Sec. 200.2 to 
enable them to provide information on, and to improve, the achievement 
of individual students and the overall instructional program.
    (c) Parental involvement. (1) A schoolwide program must involve 
parents in the planning, review, and improvement of the schoolwide 
program plan.
    (2) A schoolwide program must have a parental involvement policy, 
consistent with section 1118(b) of the ESEA, that--
    (i) Includes strategies, such as family literacy services, to 
increase parental involvement in accordance with sections 1118(c) 
through (f) and 9101(32) of the ESEA; and
    (ii) Describes how the school will provide individual student 
academic assessment results, including an interpretation of those 
results, to the parents of students who participate in the academic 
assessments required by Sec. 200.2.
    (d) Additional support. A schoolwide program school must include 
activities to ensure that students who experience difficulty attaining 
the proficient or advanced levels of academic achievement standards 
required by Sec. 200.1 will be provided with effective, timely 
additional support, including measures to--
    (1) Ensure that those students' difficulties are identified on a 
timely basis; and

[[Page 456]]

    (2) Provide sufficient information on which to base effective 
assistance to those students.
    (e) Transition. A schoolwide program in an elementary school must 
include plans for assisting preschool students in the successful 
transition from early childhood programs, such as Head Start, Even 
Start, Early Reading First, or a preschool program under IDEA or a 
State-run preschool program, to the schoolwide program.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6314)

[67 FR 71719, Dec. 2, 2002]



Sec. 200.29  Consolidation of funds in a schoolwide program.

    (a)(1) In addition to funds under subpart A of this part, a school 
may consolidate and use in its schoolwide program Federal funds from any 
program administered by the Secretary that is included in the most 
recent notice published for this purpose in the Federal Register.
    (2) For purposes of Sec. Sec. 200.25 through 200.29, the authority 
to consolidate funds from other Federal programs also applies to 
services provided to the school with those funds.
    (b)(1) Except as provided in paragraphs (b)(2) and (c) of this 
section, a school that consolidates and uses in a schoolwide program 
funds from any other Federal program administered by the Secretary--
    (i) Is not required to meet the statutory or regulatory requirements 
of that program applicable at the school level; but
    (ii) Must meet the intent and purposes of that program to ensure 
that the needs of the intended beneficiaries of that program are 
addressed.
    (2) A school that chooses to consolidate funds from other Federal 
programs must meet the requirements of those programs relating to--
    (i) Health;
    (ii) Safety;
    (iii) Civil rights;
    (iv) Student and parental participation and involvement;
    (v) Services to private school children;
    (vi) Maintenance of effort;
    (vii) Comparability of services;
    (viii) Use of Federal funds to supplement, not supplant non-Federal 
funds in accordance with Sec. 200.25(d); and
    (ix) Distribution of funds to SEAs or LEAs.
    (c) A school must meet the following requirements if the school 
consolidates and uses funds from these programs in its schoolwide 
program:
    (1) Migrant education. Before the school chooses to consolidate in 
its schoolwide program funds received under part C of Title I of the 
ESEA, the school must--
    (i) Use these funds, in consultation with parents of migratory 
children or organizations representing those parents, or both, first to 
meet the unique educational needs of migratory students that result from 
the effects of their migratory lifestyle, and those other needs that are 
necessary to permit these students to participate effectively in school, 
as identified through the comprehensive Statewide needs assessment under 
Sec. 200.83; and
    (ii) Document that these needs have been met.
    (2) Indian education. The school may consolidate funds received 
under subpart 1 of part A of Title VII of the ESEA if the parent 
committee established by the LEA under section 7114(c)(4) of the ESEA 
approves the inclusion of these funds.
    (3) Special education. (i) The school may consolidate funds received 
under part B of the IDEA.
    (ii) However, the amount of funds consolidated may not exceed the 
amount received by the LEA under part B of IDEA for that fiscal year, 
divided by the number of children with disabilities in the jurisdiction 
of the LEA, and multiplied by the number of children with disabilities 
participating in the schoolwide program.
    (iii) The school may also consolidate funds received under section 
8003(d) of the ESEA (Impact Aid) for children with disabilities in a 
schoolwide program.
    (iv) A school that consolidates funds under part B of IDEA or 
section 8003(d) of the ESEA may use those funds for any activities under 
its schoolwide program plan but must comply with all other requirements 
of part B of IDEA,

[[Page 457]]

to the same extent it would if it did not consolidate funds under part B 
of IDEA or section 8003(d) of the ESEA in the schoolwide program.
    (d) A school that consolidates and uses in a schoolwide program 
funds under subpart A of this part or from any other Federal program 
administered by the Secretary--
    (1) Is not required to maintain separate fiscal accounting records, 
by program, that identify the specific activities supported by those 
particular funds; but
    (2) Must maintain records that demonstrate that the schoolwide 
program, as a whole, addresses the intent and purposes of each of the 
Federal programs whose funds were consolidated to support the schoolwide 
program.
    (e) Each State must--
    (1) Encourage schools to consolidate funds from other Federal, 
State, and local sources in their schoolwide programs; and
    (2) Modify or eliminate State fiscal and accounting barriers so that 
schools can easily consolidate funds from other Federal, State, and 
local sources in their schoolwide programs.

(Authority: 20 U.S.C. 6314, 1413(a)(s)(D), 6396(b), 7703(d), 7815(c))

[67 FR 71720, Dec. 2, 2002; 68 FR 1008, Jan. 8, 2003]

                       LEA and School Improvement



Sec. 200.30  Local review.

    (a) Each LEA receiving funds under subpart A of this part must use 
the results of the State assessment system described in Sec. 200.2 to 
review annually the progress of each school served under subpart A of 
this part to determine whether the school is making AYP in accordance 
with Sec. 200.20.
    (b)(1) In reviewing the progress of an elementary or secondary 
school operating a targeted assistance program, an LEA may choose to 
review the progress of only the students in the school who are served, 
or are eligible for services, under subpart A of this part.
    (2) The LEA may exercise the option under paragraph (b)(1) of this 
section so long as the students selected for services under the targeted 
assistance program are those with the greatest need for special 
assistance, consistent with the requirements of section 1115 of the 
ESEA.
    (c)(1) To determine whether schools served under subpart A of this 
part are making AYP, an LEA also may use any additional academic 
assessments or any other academic indicators described in the LEA's 
plan.
    (2)(i) The LEA may use these assessments and indicators--
    (A) To identify additional schools for school improvement or in need 
of corrective action or restructuring; and
    (B) To permit a school to make AYP if, in accordance with Sec. 
200.20(b), the school also reduces the percentage of a student group not 
meeting the State's proficient level of academic achievement by at least 
10 percent.
    (ii) The LEA may not, with the exception described in paragraph 
(c)(2)(i)(B) of this section, use these assessments and indicators to 
reduce the number of, or change the identity of, the schools that would 
otherwise be identified for school improvement, corrective action, or 
restructuring if the LEA did not use these additional indicators.
    (d) The LEA must publicize and disseminate the results of its annual 
progress review to parents, teachers, principals, schools, and the 
community.
    (e) The LEA must review the effectiveness of actions and activities 
that schools are carrying out under subpart A of this part with respect 
to parental involvement, professional development, and other activities 
assisted under subpart A of this part.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6316(a) and (b))

[67 FR 71720, Dec. 2 2002]



Sec. 200.31  Opportunity to review school-level data.

    (a) Before identifying a school for school improvement, corrective 
action, or restructuring, an LEA must provide the school with an 
opportunity to review the school-level data, including academic 
assessment data, on which the proposed identification is based.
    (b)(1) If the principal of a school that an LEA proposes to identify 
for school

[[Page 458]]

improvement, corrective action, or restructuring believes, or a majority 
of the parents of the students enrolled in the school believe, that the 
proposed identification is in error for statistical or other substantive 
reasons, the principal may provide supporting evidence to the LEA.
    (2) The LEA must consider the evidence referred to in paragraph 
(b)(1) of this section before making a final determination.
    (c) The LEA must make public a final determination of the status of 
the school with respect to identification not later than 30 days after 
it provides the school with the opportunity to review the data on which 
the proposed identification is based.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6316(b)(2))

[67 FR 71721, Dec. 2, 2002]



Sec. 200.32  Identification for school improvement.

    (a)(1) An LEA must identify for school improvement any elementary or 
secondary school served under subpart A of this part that fails, for two 
consecutive years, to make AYP as defined under Sec. Sec. 200.13 
through 200.20.
    (2) The LEA must make the identification described in paragraph 
(a)(1) of this section before the beginning of the school year following 
the year in which the LEA administered the assessments that resulted in 
the school's failure to make AYP for a second consecutive year.
    (b)(1) An LEA must treat any school that was in the first year of 
school improvement status on January 7, 2002 as a school that is in the 
first year of school improvement under Sec. 200.39 for the 2002-2003 
school year.
    (2) Not later than the first day of the 2002-2003 school year, the 
LEA must, in accordance with Sec. 200.44, provide public school choice 
to all students in the school.
    (c)(1) An LEA must treat any school that was identified for school 
improvement for two or more consecutive years on January 7, 2002 as a 
school that is in its second year of school improvement under Sec. 
200.39 for the 2002-2003 school year.
    (2) Not later than the first day of the 2002-2003 school year, the 
LEA must--
    (i) In accordance with Sec. 200.44, provide public school choice to 
all students in the school; and
    (ii) In accordance with Sec. 200.45, make available supplemental 
educational services to eligible students who remain in the school.
    (d) An LEA may remove from improvement status a school otherwise 
subject to the requirements of paragraphs (b) or (c) of this section if, 
on the basis of assessments the LEA administers during the 2001-2002 
school year, the school makes AYP for a second consecutive year.
    (e)(1) An LEA may, but is not required to, identify a school for 
improvement if, on the basis of assessments the LEA administers during 
the 2001-2002 school year, the school fails to make AYP for a second 
consecutive year.
    (2) An LEA that does not identify such a school for improvement, 
however, must count the 2001-2002 school year as the first year of not 
making AYP for the purpose of subsequent identification decisions under 
paragraph (a) of this section.
    (f) If an LEA identifies a school for improvement after the 
beginning of the school year following the year in which the LEA 
administered the assessments that resulted in the school's failure to 
make AYP for a second consecutive year--
    (1) The school is subject to the requirements of school improvement 
under Sec. 200.39 immediately upon identification, including the 
provision of public school choice; and
    (2) The LEA must count that school year as a full school year for 
the purposes of subjecting the school to additional improvement measures 
if the school continues to fail to make AYP.

(Authority: 20 U.S.C. 6316)

[67 FR 71721, Dec. 2, 2002]



Sec. 200.33  Identification for corrective action.

    (a) If a school served by an LEA under subpart A of this part fails 
to make AYP by the end of the second full school year after the LEA has 
identified the school for improvement under

[[Page 459]]

Sec. 200.32(a) or (b), or by the end of the first full school year 
after the LEA has identified the school for improvement under Sec. 
200.32(c), the LEA must identify the school for corrective action under 
Sec. 200.42.
    (b) If a school was subject to corrective action on January 7, 2002, 
the LEA must--
    (1) Treat the school as a school identified for corrective action 
under Sec. 200.42 for the 2002-2003 school year; and
    (2) Not later than the first day of the 2002-2003 school year--
    (i) In accordance with Sec. 200.44, provide public school choice to 
all students in the school;
    (ii) In accordance with Sec. 200.45, make available supplemental 
educational services to eligible students who remain in the school; and
    (iii) Take corrective action under Sec. 200.42.
    (c) An LEA may remove from corrective action a school otherwise 
subject to the requirements of paragraphs (a) or (b) of this section if, 
on the basis of assessments administered by the LEA during the 2001-2002 
school year, the school makes AYP for a second consecutive year.

(Approved by the Office of Management and Budget under control number 
1810-0576)

(Authority: 20 U.S.C. 6316)

[67 FR 71721, Dec. 2, 2002]



Sec. 200.34  Identification for restructuring.

    (a) If a school continues to fail to make AYP after one full school 
year of corrective action under Sec. 200.42, the LEA must prepare a 
restructuring plan for the school and make arrangements to implement the 
plan.
    (b) If the school continues to fail to make AYP, the LEA must 
implement the restructuring plan no later than the beginning of the 
school year following the year in which the LEA developed the 
restructuring plan under paragraph (a) of this section.

(Approved by the Office of Management and Budget under control number 
1810-0576)

(Authority: 20 U.S.C. 6316(b)(8))

[67 FR 71721, Dec. 2, 2002]



Sec. 200.35  Delay and removal.

    (a) Delay. (1) An LEA may delay, for a period not to exceed one 
year, implementation of requirements under the second year of school 
improvement, under corrective action, or under restructuring if--
    (i) The school makes AYP for one year; or
    (ii) The school's failure to make AYP is due to exceptional or 
uncontrollable circumstances, such as a natural disaster or a 
precipitous and unforeseen decline in the financial resources of the LEA 
or school.
    (2) The LEA may not take into account a period of delay under 
paragraph (a) of this section in determining the number of consecutive 
years of the school's failure to make AYP.
    (3) Except as provided in paragraph (b) of this section, the LEA 
must subject the school to further actions as if the delay never 
occurred.
    (b) Removal. If any school identified for school improvement, 
corrective action, or restructuring makes AYP for two consecutive school 
years, the LEA may not, for the succeeding school year--
    (1) Subject the school to the requirements of school improvement, 
corrective action, or restructuring; or
    (2) Identify the school for improvement.

(Authority: 20 U.S.C. 6316(b))

[67 FR 71721, Dec. 2, 2002]



Sec. 200.36  Communication with parents.

    (a) Throughout the school improvement process, the State, LEA, or 
school must communicate with the parents of each child attending the 
school.
    (b) The State, LEA, or school must ensure that, regardless of the 
method or media used, it provides the information required by Sec. Sec. 
200.37 and 200.38 to parents--
    (1) In an understandable and uniform format, including alternative 
formats upon request; and
    (2) To the extent practicable, in a language that parents can 
understand.
    (c) The State, LEA, or school must provide information to parents--
    (1) Directly, through such means as regular mail or e-mail, except 
that if a

[[Page 460]]

State does not have access to individual student addresses, it may 
provide information to the LEA or school for distribution to parents; 
and
    (2) Through broader means of dissemination such as the Internet, the 
media, and public agencies serving the student population and their 
families.
    (d) All communications must respect the privacy of students and 
their families.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6316)

[67 FR 71721, Dec. 2, 2002]



Sec. 200.37  Notice of identification for improvement, corrective action, 
or restructuring.

    (a) If an LEA identifies a school for improvement or subjects the 
school to corrective action or restructuring, the LEA must, consistent 
with the requirements of Sec. 200.36, promptly notify the parent or 
parents of each child enrolled in the school of this identification.
    (b) The notice referred to in paragraph (a) of this section must 
include the following:
    (1) An explanation of what the identification means, and how the 
school compares in terms of academic achievement to other elementary and 
secondary schools served by the LEA and the SEA involved.
    (2) The reasons for the identification.
    (3) An explanation of how parents can become involved in addressing 
the academic issues that led to identification.
    (4)(i) An explanation of the parents' option to transfer their child 
to another public school, including the provision of transportation to 
the new school, in accordance with Sec. 200.44.
    (ii) The explanation of the parents' option to transfer must 
include, at a minimum, information on the academic achievement of the 
school or schools to which the child may transfer.
    (iii) The explanation may include other information on the school or 
schools to which the child may transfer, such as--
    (A) A description of any special academic programs or facilities;
    (B) The availability of before- and after-school programs;
    (C) The professional qualifications of teachers in the core academic 
subjects; and
    (D) A description of parental involvement opportunities.
    (5)(i) If the school is in its second year of improvement or subject 
to corrective action or restructuring, a notice explaining how parents 
can obtain supplemental educational services for their child in 
accordance with Sec. 200.45.
    (ii) The annual notice of the availability of supplemental 
educational services must include, at a minimum, the following:
    (A) The identity of approved providers of those services available 
within the LEA, including providers of technology-based or distance-
learning supplemental educational services, and providers that make 
services reasonably available in neighboring LEAs.
    (B) A brief description of the services, qualifications, and 
demonstrated effectiveness of the providers referred to in paragraph 
(b)(5)(ii)(A) of this section.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6316)

[67 FR 71721, Dec. 2, 2002]



Sec. 200.38  Information about action taken.

    (a) An LEA must publish and disseminate to the parents of each 
student enrolled in the school, consistent with the requirements of 
Sec. 200.36, and to the public information regarding any action taken 
by a school and the LEA to address the problems that led to the LEA's 
identification of the school for improvement, corrective action, or 
restructuring.
    (b) The information referred to in paragraph (a) of this section 
must include the following:
    (1) An explanation of what the school is doing to address the 
problem of low achievement.
    (2) An explanation of what the LEA or SEA is doing to help the 
school address the problem of low achievement.

[[Page 461]]

    (3) If applicable, a description of specific corrective actions or 
restructuring plans.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6316(b))

[67 FR 71721, Dec. 2, 2002]



Sec. 200.39  Responsibilities resulting from identification for school 
improvement.

    (a) If an LEA identifies a school for school improvement under Sec. 
200.32--
    (1) The LEA must--
    (i) Not later than the first day of the school year following 
identification, with the exception described in Sec. 200.32(f), provide 
all students enrolled in the school with the option to transfer, in 
accordance with Sec. 200.44, to another public school served by the 
LEA; and
    (ii) Ensure that the school receives technical assistance in 
accordance with Sec. 200.40; and
    (2) The school must develop or revise a school improvement plan in 
accordance with Sec. 200.41.
    (b) If a school fails to make AYP by the end of the first full 
school year after the LEA has identified it for improvement under Sec. 
200.32, the LEA must--
    (1) Continue to provide all students enrolled in the school with the 
option to transfer, in accordance with Sec. 200.44, to another public 
school served by the LEA;
    (2) Continue to ensure that the school receives technical assistance 
in accordance with Sec. 200.40; and
    (3) Make available supplemental educational services in accordance 
with Sec. 200.45.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6316(b))

[67 FR 71721, Dec. 2, 2002]



Sec. 200.40  Technical assistance.

    (a) An LEA that identifies a school for improvement under Sec. 
200.32 must ensure that the school receives technical assistance as the 
school develops and implements its improvement plan under Sec. 200.41 
and throughout the plan's duration.
    (b) The LEA may arrange for the technical assistance to be provided 
by one or more of the following:
    (1) The LEA through the statewide system of school support and 
recognition described under section 1117 of the ESEA.
    (2) The SEA.
    (3) An institution of higher education that is in full compliance 
with all of the reporting provisions of Title II of the Higher Education 
Act of 1965.
    (4) A private not-for-profit organization, a private for-profit 
organization, an educational service agency, or another entity with 
experience in helping schools improve academic achievement.
    (c) The technical assistance must include the following:
    (1) Assistance in analyzing data from the State assessment system, 
and other examples of student work, to identify and develop solutions to 
problems in--
    (i) Instruction;
    (ii) Implementing the requirements for parental involvement and 
professional development under this subpart; and
    (iii) Implementing the school plan, including LEA- and school-level 
responsibilities under the plan.
    (2) Assistance in identifying and implementing professional 
development and instructional strategies and methods that have proved 
effective, through scientifically based research, in addressing the 
specific instructional issues that caused the LEA to identify the school 
for improvement.
    (3) Assistance in analyzing and revising the school's budget so that 
the school allocates its resources more effectively to the activities 
most likely to--
    (i) Increase student academic achievement; and
    (ii) Remove the school from school improvement status.
    (d) Technical assistance provided under this section must be based 
on scientifically based research.

(Authority: 20 U.S.C. 6316(b)(4))

[67 FR 71723, Dec. 2, 2002]

[[Page 462]]



Sec. 200.41  School improvement plan.

    (a)(1) Not later than three months after an LEA has identified a 
school for improvement under Sec. 200.32, the school must develop or 
revise a school improvement plan for approval by the LEA.
    (2) The school must consult with parents, school staff, the LEA, and 
outside experts in developing or revising its school improvement plan.
    (b) The school improvement plan must cover a 2-year period.
    (c) The school improvement plan must--
    (1) Specify the responsibilities of the school, the LEA, and the SEA 
serving the school under the plan, including the technical assistance to 
be provided by the LEA under Sec. 200.40;
    (2)(i) Incorporate strategies, grounded in scientifically based 
research, that will strengthen instruction in the core academic subjects 
at the school and address the specific academic issues that caused the 
LEA to identify the school for improvement; and
    (ii) May include a strategy for implementing a comprehensive school 
reform model described in section 1606 of the ESEA;
    (3) With regard to the school's core academic subjects, adopt 
policies and practices most likely to ensure that all groups of students 
described in Sec. 200.13(b)(7) and enrolled in the school will meet the 
State's proficient level of achievement, as measured by the State's 
assessment system, not later than the 2013-2014 school year;
    (4) Establish measurable goals that--
    (i) Address the specific reasons for the school's failure to make 
adequate progress; and
    (ii) Promote, for each group of students described in Sec. 
200.13(b)(7) and enrolled in the school, continuous and substantial 
progress that ensures that all these groups meet the State's annual 
measurable objectives described in Sec. 200.18;
    (5) Provide an assurance that the school will spend not less than 10 
percent of the allocation it receives under subpart A of this part for 
each year that the school is in school improvement status, for the 
purpose of providing high-quality professional development to the 
school's teachers, principal, and, as appropriate, other instructional 
staff, consistent with section 9101(34) of the ESEA, that--
    (i) Directly addresses the academic achievement problem that caused 
the school to be identified for improvement;
    (ii) Is provided in a manner that affords increased opportunity for 
participating in that professional development; and
    (iii) Incorporates teacher mentoring activities or programs;
    (6) Specify how the funds described in paragraph (c)(5) of this 
section will be used to remove the school from school improvement 
status;
    (7) Describe how the school will provide written notice about the 
identification to parents of each student enrolled in the school;
    (8) Include strategies to promote effective parental involvement at 
the school; and
    (9) As appropriate, incorporate activities before school, after 
school, during the summer, and during any extension of the school year.
    (d)(1) Within 45 days of receiving a school improvement plan, the 
LEA must--
    (i) Establish a peer-review process to assist with review of the 
plan;
    (ii) Promptly review the plan;
    (iii) Work with the school to make any necessary revisions; and
    (iv) Approve the plan if it meets the requirements of this section.
    (2) The LEA may condition approval of the school improvement plan 
on--
    (i) Inclusion of one or more of the corrective actions specified in 
Sec. 200.42; or
    (ii) Feedback on the plan from parents and community leaders.
    (e) A school must implement its school improvement plan immediately 
on approval of the plan by the LEA.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6316(b)(3))

[67 FR 71723, Dec. 2, 2002]



Sec. 200.42  Corrective action.

    (a) Definition. ``Corrective action'' means action by an LEA that--
    (1) Substantially and directly responds to--

[[Page 463]]

    (i) The consistent academic failure of a school that led the LEA to 
identify the school for corrective action; and
    (ii) Any underlying staffing, curriculum, or other problems in the 
school;
    (2) Is designed to increase substantially the likelihood that each 
group of students described in Sec. 200.13(b)(7) and enrolled in the 
school will meet or exceed the State's proficient levels of achievement 
as measured by the State assessment system; and
    (3) Is consistent with State law.
    (b) Requirements. If an LEA identifies a school for corrective 
action, in accordance with Sec. 200.33, the LEA must do the following:
    (1) Continue to provide all students enrolled in the school with the 
option to transfer to another public school in accordance with Sec. 
200.44.
    (2) Continue to ensure that the school receives technical assistance 
consistent with the requirements of Sec. 200.40.
    (3) Make available supplemental educational services in accordance 
with Sec. 200.45.
    (4) Take at least one of the following corrective actions:
    (i) Replace the school staff who are relevant to the school's 
failure to make AYP.
    (ii) Institute and fully implement a new curriculum, including the 
provision of appropriate professional development for all relevant 
staff, that--
    (A) Is grounded in scientifically based research; and
    (B) Offers substantial promise of improving educational achievement 
for low-achieving students and of enabling the school to make AYP.
    (iii) Significantly decrease management authority at the school 
level.
    (iv) Appoint one or more outside experts to advise the school on--
    (A) Revising the school improvement plan developed under Sec. 
200.41 to address the specific issues underlying the school's continued 
failure to make AYP and resulting in identification for corrective 
action; and
    (B) Implementing the revised improvement plan.
    (v) Extend for that school the length of the school year or school 
day.
    (vi) Restructure the internal organization of the school.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6316(b)(7))

[67 FR 71723, Dec. 2, 2002]



Sec. 200.43  Restructuring.

    (a) Definition. ``Restructuring'' means a major reorganization of a 
school's governance arrangement by an LEA that--
    (1) Makes fundamental reforms, such as significant changes in the 
school's staffing and governance, to improve student academic 
achievement in the school;
    (2) Has substantial promise of enabling the school to make AYP as 
defined under Sec. Sec. 200.13 through 200.20; and
    (3) Is consistent with State law.
    (b) Requirements. If the LEA identifies a school for restructuring 
in accordance with Sec. 200.34, the LEA must do the following:
    (1) Continue to provide all students enrolled in the school with the 
option to transfer to another public school in accordance with Sec. 
200.44.
    (2) Make available supplemental educational services in accordance 
with Sec. 200.45.
    (3) Prepare a plan to carry out one of the following alternative 
governance arrangements:
    (i) Reopen the school as a public charter school.
    (ii) Replace all or most of the school staff, which may include the 
principal, who are relevant to the school's failure to make AYP.
    (iii) Enter into a contract with an entity, such as a private 
management company, with a demonstrated record of effectiveness, to 
operate the school as a public school.
    (iv) Turn the operation of the school over to the SEA, if permitted 
under State law and agreed to by the State.
    (v) Any other major restructuring of a school's governance 
arrangement consistent with this section.
    (4) Provide to parents and teachers--
    (i) Prompt notice that the LEA has identified the school for 
restructuring; and
    (ii) An opportunity for parents and teachers to--

[[Page 464]]

    (A) Comment before the LEA takes any action under a restructuring 
plan; and
    (B) Participate in the development of any restructuring plan.
    (c) Implementation. (1) If a school continues to fail to make AYP, 
the LEA must--
    (i) Implement the restructuring plan no later than the beginning of 
the school year following the year in which the LEA developed the 
restructuring plan under paragraph (b)(3) of this section; and
    (ii) Continue to offer public school choice and supplemental 
educational services in accordance with Sec. Sec. 200.44 and 200.45.
    (2) An LEA is no longer required to carry out the requirements of 
paragraph (c)(1) of this section if the restructured school makes AYP 
for two consecutive school years.
    (d) Rural schools. On request, the Secretary will provide technical 
assistance for developing and carrying out a restructuring plan to any 
rural LEA--
    (1) That has fewer than 600 students in average daily attendance at 
all of its schools; and
    (2) In which all of the schools have a School Locale Code of 7 or 8, 
as determined by the National Center for Education Statistics.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6316(b)(8))

[67 FR 71723, Dec. 2, 2002]



Sec. 200.44  Public school choice.

    (a) Requirements. (1) In the case of a school identified for school 
improvement under Sec. 200.32, for corrective action under Sec. 
200.33, or for restructuring under Sec. 200.34, the LEA must provide 
all students enrolled in the school with the option to transfer to 
another public school served by the LEA.
    (2) The LEA must offer this option not later than the first day of 
the school year following the year in which the LEA administered the 
assessments that resulted in its identification of the school for 
improvement, corrective action, or restructuring.
    (3) The schools to which students may transfer under paragraph 
(a)(1) of this section--
    (i) May not include schools that--
    (A) The LEA has identified for improvement under Sec. 200.32, 
corrective action under Sec. 200.33, or restructuring under Sec. 
200.34; or
    (B) Are persistently dangerous as determined by the State; and
    (ii) May include one or more public charter schools.
    (4) If more than one school meets the requirements of paragraph 
(a)(3) of this section, the LEA must--
    (i) Provide to parents of students eligible to transfer under 
paragraph (a)(1) of this section a choice of more than one such school; 
and
    (ii) Take into account the parents' preferences among the choices 
offered under paragraph (a)(4)(i) of this section.
    (5) The LEA must offer the option to transfer described in this 
section unless it is prohibited by State law in accordance with 
paragraph (b) of this section.
    (6) Except as described in Sec. Sec. 200.32(d) and 200.33(c), if a 
school was in school improvement or subject to corrective action before 
January 8, 2002, the State must ensure that the LEA provides a public 
school choice option in accordance with paragraph (a)(1) of this section 
not later than the first day of the 2002-2003 school year.
    (b) Limitation on State law prohibition. An LEA may invoke the State 
law prohibition on choice described in paragraph (a)(5) of this section 
only if the State law prohibits choice through restrictions on public 
school assignments or the transfer of students from one public school to 
another public school.
    (c) Desegregation plans. (1) If an LEA is subject to a desegregation 
plan, whether that plan is voluntary, court-ordered, or required by a 
Federal or State administrative agency, the LEA is not exempt from the 
requirement in paragraph (a)(1) of this section.
    (2) In determining how to provide students with the option to 
transfer to another school, the LEA may take into account the 
requirements of the desegregation plan.
    (3) If the desegregation plan forbids the LEA from offering the 
transfer option required under paragraph (a)(1) of this section, the LEA 
must secure appropriate changes to the plan to permit

[[Page 465]]

compliance with paragraph (a)(1) of this section.
    (d) Capacity. An LEA may not use lack of capacity to deny students 
the option to transfer under paragraph (a)(1) of this section.
    (e) Priority. (1) In providing students the option to transfer to 
another public school in accordance with paragraph (a)(1) of this 
section, the LEA must give priority to the lowest-achieving students 
from low-income families.
    (2) The LEA must determine family income on the same basis that the 
LEA uses to make allocations to schools under subpart A of this part.
    (f) Status. Any public school to which a student transfers under 
paragraph (a)(1) of this section must ensure that the student is 
enrolled in classes and other activities in the school in the same 
manner as all other students in the school.
    (g) Duration of transfer. (1) If a student exercises the option 
under paragraph (a)(1) of this section to transfer to another public 
school, the LEA must permit the student to remain in that school until 
the student has completed the highest grade in the school.
    (2) The LEA's obligation to provide transportation for the student 
may be limited under the circumstances described in paragraph (i) of 
this section and in Sec. 200.48.
    (h) No eligible schools within an LEA. If all public schools to 
which a student may transfer within an LEA are identified for school 
improvement, corrective action, or restructuring, the LEA--
    (1) Must, to the extent practicable, establish a cooperative 
agreement for a transfer with one or more other LEAs in the area; and
    (2) May offer supplemental educational services to eligible students 
under Sec. 200.45 in schools in their first year of school improvement 
under Sec. 200.39.
    (i) Transportation. (1) If a student exercises the option under 
paragraph (a)(1) of this section to transfer to another public school, 
the LEA must, consistent with Sec. 200.48, provide or pay for the 
student's transportation to the school.
    (2) The limitation on funding in Sec. 200.48 applies only to the 
provision of choice-related transportation, and does not affect in any 
way the basic obligation to provide an option to transfer as required by 
paragraph (a) of this section.
    (3) The LEA's obligation to provide transportation for the student 
ends at the end of the school year in which the school from which the 
student transferred is no longer identified by the LEA for school 
improvement, corrective action, or restructuring.
    (j) Students with disabilities and students covered under Section 
504 of the Rehabilitation Act of 1973 (Section 504). For students with 
disabilities under the IDEA and students covered under Section 504, the 
public school choice option must provide a free appropriate public 
education as that term is defined in section 602(8) of the IDEA or 34 
CFR 104.33, respectively.

(Authority: 20 U.S.C. 6316)

[67 FR 71723, Dec. 2, 2002]



Sec. 200.45  Supplemental educational services.

    (a) Definition. ``Supplemental educational services'' means tutoring 
and other supplemental academic enrichment services that are--
    (1) In addition to instruction provided during the school day;
    (2) Specifically designed to--
    (i) Increase the academic achievement of eligible students as 
measured by the State's assessment system; and
    (ii) Enable these children to attain proficiency in meeting State 
academic achievement standards; and
    (3) Of high quality and research-based.
    (b) Eligibility. (1) Only students from low-income families are 
eligible for supplemental educational services.
    (2) The LEA must determine family income on the same basis that the 
LEA uses to make allocations to schools under subpart A of this part.
    (c) Requirement. (1) If an LEA identifies a school for a second year 
of improvement under Sec. 200.32, corrective action under Sec. 200.33, 
or restructuring under Sec. 200.34, the LEA must arrange, consistent 
with paragraph (d) of this section, for each eligible student in the 
school to receive supplemental educational services from a State-
approved provider selected by the student's parents.

[[Page 466]]

    (2) Except as described in Sec. Sec. 200.32(d) and 200.33(c), if a 
school was in school improvement status for two or more consecutive 
school years or subject to corrective action on January 7, 2002, the 
State must ensure that the LEA makes available, consistent with 
paragraph (d) of this section, supplemental educational services to all 
eligible students not later than the first day of the 2002-2003 school 
year.
    (3) The LEA must, consistent with Sec. 200.48, continue to make 
available supplemental educational services to eligible students until 
the end of the school year in which the LEA is making those services 
available.
    (4)(i) At the request of an LEA, the SEA may waive, in whole or in 
part, the requirement that the LEA make available supplemental 
educational services if the SEA determines that--
    (A) None of the providers of those services on the list approved by 
the SEA under Sec. 200.47 makes those services available in the area 
served by the LEA or within a reasonable distance of that area; and
    (B) The LEA provides evidence that it is not otherwise able to make 
those services available.
    (ii) The SEA must notify the LEA, within 30 days of receiving the 
LEA's request for a waiver under paragraph (c)(4)(i) of this section, 
whether it approves or disapproves the request and, if it disapproves, 
the reasons for the disapproval, in writing.
    (iii) An LEA that receives a waiver must renew its request for that 
waiver on an annual basis.
    (d) Priority. If the amount of funds available for supplemental 
educational services is insufficient to provide services to each student 
whose parents request these services, the LEA must give priority to the 
lowest-achieving students.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6316)

[67 FR 71723, Dec. 2, 2002]



Sec. 200.46  LEA responsibilities for supplemental educational services.

    (a) If an LEA is required to make available supplemental educational 
services under Sec. 200.39(b)(3), Sec. 200.42(b)(3), or Sec. 
200.43(b)(2), the LEA must do the following:
    (1) Provide the annual notice to parents described in Sec. 
200.37(b)(5).
    (2) If requested, assist parents in choosing a provider from the 
list of approved providers maintained by the SEA.
    (3) Apply fair and equitable procedures for serving students if the 
number of spaces at approved providers is not sufficient to serve all 
eligible students whose parents request services consistent with Sec. 
200.45.
    (4) Ensure that eligible students with disabilities under IDEA and 
students covered under Section 504 receive appropriate supplemental 
educational services and accommodations in the provision of those 
services.
    (5) Ensure that eligible students who have limited English 
proficiency receive appropriate supplemental educational services and 
language assistance in the provision of those services.
    (6) Not disclose to the public, without the written permission of 
the student's parents, the identity of any student who is eligible for, 
or receiving, supplemental educational services.
    (b)(1) In addition to meeting the requirements in paragraph (a) of 
this section, the LEA must enter into an agreement with each provider 
selected by a parent or parents.
    (2) The agreement must--
    (i) Require the LEA to develop, in consultation with the parents and 
the provider, a statement that includes--
    (A) Specific achievement goals for the student;
    (B) A description of how the student's progress will be measured; 
and
    (C) A timetable for improving achievement;
    (ii) Describe procedures for regularly informing the student's 
parents and teachers of the student's progress;
    (iii) Provide for the termination of the agreement if the provider 
is unable to meet the goals and timetables specified in the agreement;
    (iv) Specify how the LEA will pay the provider; and
    (v) Prohibit the provider from disclosing to the public, without the 
written permission of the student's parents, the identity of any student 
who is

[[Page 467]]

eligible for, or receiving, supplemental educational services.
    (3) In the case of a student with disabilities under IDEA or a 
student covered under Section 504, the provisions of the agreement 
referred to in paragraph (b)(2)(i) of this section must be consistent 
with the student's individualized education program under section 614(d) 
of the IDEA or the student's individualized services under Section 504.
    (4) The LEA may not pay the provider for religious worship or 
instruction.
    (c) If State law prohibits an SEA from carrying out one or more of 
its responsibilities under Sec. 200.47 with respect to those who 
provide, or seek approval to provide, supplemental educational services, 
each LEA must carry out those responsibilities with respect to its 
students who are eligible for those services.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6316(e))

[67 FR 71725, Dec. 2, 2002]



Sec. 200.47  SEA responsibilities for supplemental educational services.

    (a) If one or more LEAs in a State are required to make available 
supplemental educational services under Sec. 200.39(b)(3), Sec. 
200.42(b)(3), or Sec. 200.43(b)(2), the SEA for that State must do the 
following:
    (1)(i) In consultation with affected LEAs, parents, teachers, and 
other interested members of the public, promote participation by as many 
providers as possible.
    (ii) This promotion must include annual notice to potential 
providers of--
    (A) The opportunity to provide supplemental educational services; 
and
    (B) Procedures for obtaining the SEA's approval to be a provider of 
those services.
    (2) Consistent with paragraph (b) of this section, develop and apply 
to potential providers objective criteria.
    (3) Maintain by LEA an updated list of approved providers, including 
any technology-based or distance-learning providers, from which parents 
may select.
    (4) Develop, implement, and publicly report on standards and 
techniques for--
    (i) Monitoring the quality and effectiveness of the services offered 
by each approved provider; and
    (ii) Withdrawing approval from a provider that fails, for two 
consecutive years, to contribute to increasing the academic proficiency 
of students receiving supplemental educational services from that 
provider.
    (5) Ensure that eligible students with disabilities under IDEA and 
students covered under Section 504 receive appropriate supplemental 
educational services and accommodations in the provision of those 
services.
    (6) Ensure that eligible students who have limited English 
proficiency receive appropriate supplemental educational services and 
language assistance in the provision of those services.
    (b) Standards for approving providers. (1) As used in this section 
and in Sec. 200.46, ``provider'' means a non-profit entity, a for-
profit entity, an LEA, an educational service agency, a public school, 
including a public charter school, or a private school that--
    (i) Has a demonstrated record of effectiveness in increasing the 
academic achievement of students in subjects relevant to meeting the 
State's academic content and student achievement standards described 
under Sec. 200.1;
    (ii) Is capable of providing supplemental educational services that 
are consistent with the instructional program of the LEA and with the 
State academic content standards and State student achievement standards 
described under Sec. 200.1;
    (iii) Is financially sound; and
    (iv) In the case of--
    (A) A public school, has not been identified under Sec. Sec. 
200.32, 200.33, or 200.34; or
    (B) An LEA, has not been identified under Sec. 200.50(d) or (e).
    (2) In order for the SEA to include a provider on the State list, 
the provider must agree to--
    (i)(A) Provide parents of each student receiving supplemental 
educational services and the appropriate LEA with information on the 
progress of the student in increasing achievement; and

[[Page 468]]

    (B) This information must be in an understandable and uniform 
format, including alternative formats upon request, and, to the extent 
practicable, in a language that the parents can understand;
    (ii) Ensure that the instruction the provider gives and the content 
the provider uses--
    (A) Are consistent with the instruction provided and the content 
used by the LEA and the SEA;
    (B) Are aligned with State student academic achievement standards; 
and
    (C) Are secular, neutral, and nonideological; and
    (iii) Meet all applicable Federal, State, and local health, safety, 
and civil rights laws.
    (3) As a condition of approval, a State may not require a provider 
to hire only staff who meet the requirements under Sec. Sec. 200.55 and 
200.56.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6316(e))

[67 FR 71725, Dec. 2, 2002]



Sec. 200.48  Funding for choice-related transportation and supplemental 
educational services.

    (a) Amounts required. (1) To pay for choice-related transportation 
and supplemental educational services required under section 1116 of the 
ESEA, an LEA may use--
    (i) Funds allocated under subpart A of this part;
    (ii) Funds, where allowable, from other Federal education programs; 
and
    (iii) State, local, or private resources.
    (2) Unless a lesser amount is needed, the LEA must spend an amount 
equal to 20 percent of its allocation under subpart A of this part to--
    (i) Provide, or pay for, transportation of students exercising a 
choice option under Sec. 200.44;
    (ii) Satisfy all requests for supplemental educational services 
under Sec. 200.45; or
    (iii) Pay for both paragraph (a)(2)(i) and (ii) of this section, 
except that--
    (A) The LEA must spend a minimum of an amount equal to 5 percent of 
its allocation under subpart A of this part on transportation under 
paragraph (a)(2)(i) of this section and an amount equal to 5 percent of 
its allocation under subpart A of this part for supplemental educational 
services under paragraph (a)(2)(ii) of this section, unless lesser 
amounts are needed to meet the requirements of Sec. Sec. 200.44 and 
200.45; and
    (B) The LEA may not include costs for administration or 
transportation incurred in providing supplemental educational services, 
or administrative costs associated with the provision of public school 
choice options under Sec. 200.44, in the amounts required under 
paragraph (a)(2) of this section.
    (3) If the amount specified in paragraph (a)(2) of this section is 
insufficient to pay all choice-related transportation costs, or to meet 
the demand for supplemental educational services, the LEA may make 
available any additional needed funds from Federal, State, or local 
sources.
    (4) To assist an LEA that does not have sufficient funds to make 
available supplemental educational services to all students requesting 
these services, an SEA may use funds that it reserves under part A of 
Title I and part A of Title V of the ESEA.
    (b) Cap on school-level reduction. (1) An LEA may not, in applying 
paragraph (a) of this section, reduce by more than 15 percent the total 
amount it makes available under subpart A of this part to a school it 
has identified for corrective action or restructuring.
    (2) [Reserved]
    (c) Per-child funding for supplemental educational services. For 
each student receiving supplemental educational services under Sec. 
200.45, the LEA must make available the lesser of--
    (1) The amount of its allocation under subpart A of this part, 
divided by the number of students from families below the poverty level, 
as counted under section 1124(c)(1)(A) of the ESEA; or
    (2) The actual costs of the supplemental educational services 
received by the student.

(Authority: 20 U.S.C. 6316)

[67 FR 71725, Dec. 2, 2002]

[[Page 469]]



Sec. 200.49  SEA responsibilities for school improvement, corrective 
action, and restructuring.

    (a) Transition requirements for public school choice and 
supplemental educational services. (1) Except as described in Sec. Sec. 
200.32(d) and 200.33(c), if a school was in school improvement or 
subject to corrective action on January 7, 2002, the SEA must ensure 
that the LEA for that school provides public school choice in accordance 
with Sec. 200.44 not later than the first day of the 2002-2003 school 
year.
    (2) Except as described in Sec. Sec. 200.32(d) and 200.33(c), if a 
school was in school improvement status for two or more consecutive 
school years or subject to corrective action on January 7, 2002, the SEA 
must ensure that the LEA for that school makes available supplemental 
educational services in accordance with Sec. 200.45 not later than the 
first day of the 2002-2003 school year.
    (b) State reservation of funds for school improvement. (1) In 
accordance with Sec. 200.100(a), an SEA must reserve 2 percent of the 
amount it receives under this part for fiscal years 2002 and 2003, and 4 
percent of the amount it receives under this part for fiscal years 2004 
through 2007, to--
    (i) Support local school improvement activities;
    (ii) Provide technical assistance to schools identified for 
improvement, corrective action, or restructuring; and
    (iii) Provide technical assistance to LEAs that the SEA has 
identified for improvement or corrective action in accordance with Sec. 
200.50.
    (2) Of the amount it reserves under paragraph (b)(1) of this 
section, the SEA must--
    (i) Allocate not less than 95 percent directly to LEAs serving 
schools identified for improvement, corrective action, and restructuring 
to support improvement activities; or
    (ii) With the approval of the LEA, directly provide for these 
improvement activities or arrange to provide them through such entities 
as school support teams or educational service agencies.
    (3) In providing assistance to LEAs under paragraph (b)(2) of this 
section, the SEA must give priority to LEAs that--
    (i) Serve the lowest-achieving schools;
    (ii) Demonstrate the greatest need for this assistance; and
    (iii) Demonstrate the strongest commitment to ensuring that this 
assistance will be used to enable the lowest-achieving schools to meet 
the progress goals in the school improvement plans under Sec. 200.41.
    (c) Technical assistance. The SEA must make technical assistance 
available, through the statewide system of support and improvement 
required by section 1117 of the ESEA, to schools that LEAs have 
identified for improvement, corrective action, or restructuring.
    (d) LEA failure. If the SEA determines that an LEA has failed to 
carry out its responsibilities with respect to school improvement, 
corrective action, or restructuring, the SEA must take the actions it 
determines to be appropriate and in compliance with State law.
    (e) Assessment results. (1) The SEA must ensure that the results of 
academic assessments administered as part of the State assessment system 
in a given school year are available to LEAs before the beginning of the 
next school year and in such time as to allow for the identification 
described in Sec. 200.32(a)(2).
    (2) The SEA must provide the results described in paragraph (e)(1) 
of this section to a school before an LEA may identify the school for 
school improvement under Sec. 200.32, corrective action under Sec. 
200.33, or restructuring under Sec. 200.34.
    (f) Accountability for charter schools. The accountability 
provisions under section 1116 of the ESEA must be overseen for charter 
schools in accordance with State charter school law.
    (g) Factors affecting student achievement. The SEA must notify the 
Secretary of Education of major factors that have been brought to the 
SEA's attention under section 1111(b)(9) of the ESEA that have 
significantly affected student academic achievement in

[[Page 470]]

schools and LEAs identified for improvement within the State.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6311 and 6316)

[67 FR 71725, Dec. 2, 2002]



Sec. 200.50  SEA review of LEA progress.

    (a) State review. (1) An SEA must annually review the progress of 
each LEA in its State that receives funds under subpart A of this part 
to determine whether--
    (i) The LEA's schools served under this part are making AYP, as 
defined under Sec. Sec. 200.13 through 200.20, toward meeting the 
State's student academic achievement standards; and
    (ii) The LEA is carrying out its responsibilities under this part 
with respect to school improvement, technical assistance, parental 
involvement, and professional development.
    (2) In reviewing the progress of an LEA, the SEA may, in the case of 
targeted assistance schools served by the LEA, consider the progress 
only of the students served or eligible for services under this subpart, 
provided the students selected for services in such schools are those 
with the greatest need for special assistance, consistent with the 
requirements of section 1115 of the ESEA.
    (b) Rewards. If an LEA has exceeded AYP as defined under Sec. Sec. 
200.13 through 200.20 for two consecutive years, the SEA may--
    (1) Reserve funds in accordance with Sec. 200.100(c); and
    (2) Make rewards of the kinds described under section 1117 of the 
ESEA.
    (c) Opportunity for review of LEA-level data. (1) Before identifying 
an LEA for improvement or corrective action, the SEA must provide the 
LEA with an opportunity to review the data, including academic 
assessment data, on which the SEA has based the proposed identification.
    (2)(i) If the LEA believes that the proposed identification is in 
error for statistical or other substantive reasons, the LEA may provide 
supporting evidence to the SEA.
    (ii) The SEA must consider the evidence before making a final 
determination not later than 30 days after it has provided the LEA with 
the opportunity to review the data under paragraph (c)(1) of this 
section.
    (d) Identification for improvement. (1) The SEA must identify for 
improvement an LEA that, for two consecutive years, including the period 
immediately before January 8, 2002, fails to make AYP as defined in the 
SEA's plan under section 1111(b)(2) of the ESEA.
    (2) The SEA must identify for improvement an LEA that was in 
improvement status on January 7, 2002.
    (3)(i) The SEA may identify an LEA for improvement if, on the basis 
of assessments the LEA administers during the 2001-2002 school year, the 
LEA fails to make AYP for a second consecutive year.
    (ii) An SEA that does not identify such an LEA for improvement, 
however, must count the 2001-2002 school year as the first year of not 
making AYP for the purpose of subsequent identification decisions under 
paragraph (d)(1) of this section.
    (4) The SEA may remove an LEA from improvement status if, on the 
basis of assessments the LEA administers during the 2001-2002 school 
year, the LEA makes AYP for a second consecutive year.
    (e) Identification for corrective action. After providing technical 
assistance under Sec. 200.52(b), the SEA--
    (1) May take corrective action at any time with respect to an LEA 
that the SEA has identified for improvement under paragraph (d) of this 
section;
    (2) Must take corrective action--
    (i) With respect to an LEA that fails to make AYP, as defined under 
Sec. Sec. 200.13 through 200.20, by the end of the second full school 
year following the year in which the LEA administered the assessments 
that resulted in the LEA's failure to make AYP for a second consecutive 
year and led to the SEA's identification of the LEA for improvement 
under paragraph (d) of this section; and
    (ii) With respect to an LEA that was in corrective action status on 
January 7, 2002; and
    (3) May remove an LEA from corrective action if, on the basis of 
assessments administered by the LEA during the 2001-2002 school year, it 
makes AYP for a second consecutive year.

[[Page 471]]

    (f) Delay of corrective action. (1) The SEA may delay implementation 
of corrective action under Sec. 200.53 for a period not to exceed one 
year if--
    (i) The LEA makes AYP for one year; or
    (ii) The LEA's failure to make AYP is due to exceptional or 
uncontrollable circumstances, such as a natural disaster or a 
precipitous and unforeseen decline in the LEA's financial resources.
    (2)(i) The SEA may not take into account the period of delay 
referred to in paragraph (f)(1) of this section in determining the 
number of consecutive years the LEA has failed to make AYP; and
    (ii) The SEA must subject the LEA to further actions following the 
period of delay as if the delay never occurred.
    (g) Continuation of public school choice and supplemental 
educational services. An SEA must ensure that an LEA identified under 
paragraph (d) or (e) of this section continues to offer public school 
choice in accordance with Sec. 200.44 and supplemental educational 
services in accordance with Sec. 200.45.
    (h) Removal from improvement or corrective action status. If an LEA 
makes AYP for two consecutive years following identification for 
improvement under paragraph (d) or corrective action under paragraph (e) 
of this section, the SEA need no longer--
    (1) Identify the LEA for improvement; or
    (2) Subject the LEA to corrective action for the succeeding school 
year.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6316(c))

[67 FR 71727, Dec. 2, 2002]



Sec. 200.51  Notice of SEA action.

    (a) In general. (1) An SEA must--
    (i) Communicate with parents throughout the review of an LEA under 
Sec. 200.50; and
    (ii) Ensure that, regardless of the method or media used, it 
provides information to parents--
    (A) In an understandable and uniform format, including alternative 
formats upon request; and
    (B) To the extent practicable, in a language that parents can 
understand.
    (2) The SEA must provide information to the parents of each student 
enrolled in a school served by the LEA--
    (i) Directly, through such means as regular mail or e-mail, except 
that if an SEA does not have access to individual student addresses, it 
may provide information to the LEA or school for distribution to 
parents; and
    (ii) Through broader means of dissemination such as the Internet, 
the media, and public agencies serving the student population and their 
families.
    (3) All communications must respect the privacy of students and 
their families.
    (b) Results of review. The SEA must promptly publicize and 
disseminate to the LEAs, teachers and other staff, the parents of each 
student enrolled in a school served by the LEA, students, and the 
community the results of its review under Sec. 200.50, including 
statistically sound disaggregated results in accordance with Sec. Sec. 
200.2 and 200.7.
    (c) Identification for improvement or corrective action. If the SEA 
identifies an LEA for improvement or subjects the LEA to corrective 
action, the SEA must promptly provide to the parents of each student 
enrolled in a school served by the LEA--
    (1) The reasons for the identification; and
    (2) An explanation of how parents can participate in improving the 
LEA.
    (d) Information about action taken. (1) The SEA must publish, and 
disseminate to the parents of each student enrolled in a school served 
by the LEA and to the public, information on any corrective action the 
SEA takes under Sec. 200.53.
    (2) The SEA must provide this information--
    (i) In a uniform and understandable format, including alternative 
formats upon request; and
    (ii) To the extent practicable, in a language that parents can 
understand.
    (3) The SEA must disseminate the information through such means as 
the Internet, the media, and public agencies.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6316(c))

[67 FR 71727, Dec. 2, 2002]

[[Page 472]]



Sec. 200.52  LEA improvement.

    (a) Improvement plan. (1) Not later than 3 months after an SEA has 
identified an LEA for improvement under Sec. 200.50(d), the LEA must 
develop or revise an LEA improvement plan.
    (2) The LEA must consult with parents, school staff, and others in 
developing or revising its improvement plan.
    (3) The LEA improvement plan must--
    (i) Incorporate strategies, grounded in scientifically based 
research, that will strengthen instruction in core academic subjects in 
schools served by the LEA;
    (ii) Identify actions that have the greatest likelihood of improving 
the achievement of participating children in meeting the State's student 
academic achievement standards;
    (iii) Address the professional development needs of the 
instructional staff serving the LEA by committing to spend for 
professional development not less than 10 percent of the funds received 
by the LEA under subpart A of this part for each fiscal year in which 
the SEA identifies the LEA for improvement. These funds--
    (A) May include funds reserved by schools for professional 
development under Sec. 200.41(c)(5); but
    (B) May not include funds reserved for professional development 
under section 1119 of the ESEA;
    (iv) Include specific measurable achievement goals and targets--
    (A) For each of the groups of students under Sec. 200.13(b)(7); and
    (B) That are consistent with AYP as defined under Sec. Sec. 200.13 
through 200.20;
    (v) Address--
    (A) The fundamental teaching and learning needs in the schools of 
the LEA; and
    (B) The specific academic problems of low-achieving students, 
including a determination of why the LEA's previous plan failed to bring 
about increased student academic achievement;
    (vi) As appropriate, incorporate activities before school, after 
school, during the summer, and during any extension of the school year;
    (vii) Specify the responsibilities of the SEA and LEA under the 
plan, including the technical assistance the SEA must provide under 
paragraph (b) of this section and the LEA's responsibilities under 
section 1120A of the ESEA; and
    (viii) Include strategies to promote effective parental involvement 
in the schools served by the LEA.
    (4) The LEA must implement the improvement plan--including any 
revised plan--expeditiously, but not later than the beginning of the 
school year following the year in which the LEA administered the 
assessments that resulted in the LEA's failure to make AYP for a second 
consecutive year and led to the SEA's identification of the LEA for 
improvement under Sec. 200.50(d).
    (b) SEA technical assistance. (1) An SEA that identifies an LEA for 
improvement under Sec. 200.50(d) must, if requested, provide or arrange 
for the provision of technical or other assistance to the LEA, as 
authorized under section 1117 of the ESEA.
    (2) The purpose of the technical assistance is to better enable the 
LEA to--
    (i) Develop and implement its improvement plan; and
    (ii) Work with schools needing improvement.
    (3) The technical assistance provided by the SEA or an entity 
authorized by the SEA must--
    (i) Be supported by effective methods and instructional strategies 
grounded in scientifically based research; and
    (ii) Address problems, if any, in implementing the parental 
involvement and professional development activities described in 
sections 1118 and 1119, respectively, of the ESEA.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6316(c))

[67 FR 71728, Dec. 2, 2002]



Sec. 200.53  LEA corrective action.

    (a) Definition. For the purposes of this section, the term 
``corrective action'' means action by an SEA that--
    (1) Substantially and directly responds to--
    (i) The consistent academic failure that caused the SEA to identify 
an LEA for corrective action; and
    (ii) Any underlying staffing, curriculum, or other problems in the 
LEA;

[[Page 473]]

    (2) Is designed to meet the goal that each group of students 
described in Sec. 200.13(b)(7) and enrolled in the LEA's schools will 
meet or exceed the State's proficient levels of achievement as measured 
by the State assessment system; and
    (3) Is consistent with State law.
    (b) Notice and hearing. Before implementing any corrective action 
under paragraph (c) of this section, the SEA must provide notice and a 
hearing to the affected LEA--if State law provides for this notice and 
hearing--not later than 45 days following the decision to take 
corrective action.
    (c) Requirements. If the SEA identifies an LEA for corrective 
action, the SEA must do the following:
    (1) Continue to make available technical assistance to the LEA.
    (2) Take at least one of the following corrective actions:
    (i) Defer programmatic funds or reduce administrative funds.
    (ii) Institute and fully implement a new curriculum based on State 
and local content and academic achievement standards, including the 
provision of appropriate professional development for all relevant staff 
that--
    (A) Is grounded in scientifically based research; and
    (B) Offers substantial promise of improving educational achievement 
for low-achieving students.
    (iii) Replace the LEA personnel who are relevant to the failure to 
make AYP.
    (iv) Remove particular schools from the jurisdiction of the LEA and 
establish alternative arrangements for public governance and supervision 
of these schools.
    (v) Appoint a receiver or trustee to administer the affairs of the 
LEA in place of the superintendent and school board.
    (vi) Abolish or restructure the LEA.
    (vii) In conjunction with at least one other action in paragraph 
(c)(2) of this section--
    (A) Authorize students to transfer from a school operated by the LEA 
to a higher-performing public school operated by another LEA in 
accordance with Sec. 200.44, and
    (B) Provide to these students transportation, or the costs of 
transportation, to the other school consistent with Sec. 200.44(h).

(Approved by the Office of Management and Budget under control number 
1810-0516)

(Authority: 20 U.S.C. 6316(c)(10))

[67 FR 71728, Dec. 2, 2002]



Sec. 200.54  [Reserved]

            Qualifications Of Teachers And Paraprofessionals



Sec. 200.55  Qualifications of teachers.

    (a) Newly hired teachers in Title I programs. (1) An LEA must ensure 
that all teachers hired after the first day of the 2002-2003 school year 
who teach core academic subjects in a program supported with funds under 
subpart A of this part are highly qualified as defined in Sec. 200.56.
    (2) For the purpose of paragraph (a)(1) of this section, a teacher 
teaching in a program supported with funds under subpart A of this part 
is--
    (i) A teacher in a targeted assisted school who is paid with funds 
under subpart A of this part;
    (ii) A teacher in a schoolwide program school; or
    (iii) A teacher employed by an LEA with funds under subpart A of 
this part to provide services to eligible private school students under 
Sec. 200.62.
    (b) All teachers of core academic subjects. (1) Not later than the 
end of the 2005-2006 school year, each State that receives funds under 
subpart A of this part, and each LEA in that State, must ensure that all 
public elementary and secondary school teachers in the State who teach 
core academic subjects, including teachers employed by an LEA to provide 
services to eligible private school students under Sec. 200.62, are 
highly qualified as defined in Sec. 200.56.
    (2) A teacher who does not teach a core academic subject--such as 
some vocational education teachers--is not required to meet the 
requirements in Sec. 200.56.
    (c) Definition. The term ``core academic subjects'' means English, 
reading or language arts, mathematics, science, foreign languages, 
civics and government, economics, arts, history, and geography.
    (d) Private school teachers. The requirements in this section do not 
apply

[[Page 474]]

to teachers hired by private elementary and secondary schools.

(Authority: 20 U.S.C. 6319; 7801(11))

[67 FR 71729, Dec. 2, 2002]



Sec. 200.56  Definition of ``highly qualified teacher.''

    To be a ``highly qualified teacher,'' a teacher covered under Sec. 
200.55 must meet the requirements in paragraph (a) and either paragraph 
(b) or (c) of this section.
    (a) In general. (1) Except as provided in paragraph (a)(3) of this 
section, a teacher covered under Sec. 200.55 must--
    (i) Have obtained full State certification as a teacher, which may 
include certification obtained through alternative routes to 
certification; or
    (ii)(A) Have passed the State teacher licensing examination; and
    (B) Hold a license to teach in the State.
    (2) A teacher meets the requirement in paragraph (a)(1) of this 
section if the teacher--
    (i) Has fulfilled the State's certification and licensure 
requirements applicable to the years of experience the teacher 
possesses; or
    (ii) Is participating in an alternative route to certification 
program under which--
    (A) The teacher--
    (1) Receives high-quality professional development that is 
sustained, intensive, and classroom-focused in order to have a positive 
and lasting impact on classroom instruction, before and while teaching;
    (2) Participates in a program of intensive supervision that consists 
of structured guidance and regular ongoing support for teachers or a 
teacher mentoring program;
    (3) Assumes functions as a teacher only for a specified period of 
time not to exceed three years; and
    (4) Demonstrates satisfactory progress toward full certification as 
prescribed by the State; and
    (B) The State ensures, through its certification and licensure 
process, that the provisions in paragraph (a)(2)(ii) of this section are 
met.
    (3) A teacher teaching in a public charter school in a State must 
meet the certification and licensure requirements, if any, contained in 
the State's charter school law.
    (4) If a teacher has had certification or licensure requirements 
waived on an emergency, temporary, or provisional basis, the teacher is 
not highly qualified.
    (b) Teachers new to the profession. A teacher covered under Sec. 
200.55 who is new to the profession also must--
    (1) Hold at least a bachelor's degree; and
    (2) At the public elementary school level, demonstrate, by passing a 
rigorous State test (which may consist of passing a State certification 
or licensing test), subject knowledge and teaching skills in reading/
language arts, writing, mathematics, and other areas of the basic 
elementary school curriculum; or
    (3) At the public middle and high school levels, demonstrate a high 
level of competency by--
    (i) Passing a rigorous State test in each academic subject in which 
the teacher teaches (which may consist of passing a State certification 
or licensing test in each of these subjects); or
    (ii) Successfully completing in each academic subject in which the 
teacher teaches--
    (A) An undergraduate major;
    (B) A graduate degree;
    (C) Coursework equivalent to an undergraduate major; or
    (D) Advanced certification or credentialing.
    (c) Teachers not new to the profession. A teacher covered under 
Sec. 200.55 who is not new to the profession also must--
    (1) Hold at least a bachelor's degree; and
    (2)(i) Meet the applicable requirements in paragraph (b)(2) or (3) 
of this section; or
    (ii) Based on a high, objective, uniform State standard of 
evaluation in accordance with section 9101(23)(C)(ii) of the ESEA, 
demonstrate competency in each academic subject in which the teacher 
teaches.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 7801(23))

[67 FR 71729, Dec. 2, 2002]

[[Page 475]]



Sec. 200.57  Plans to increase teacher quality.

    (a) State plan. (1) A State that receives funds under subpart A of 
this part must develop, as part of its State plan under section 1111 of 
the ESEA, a plan to ensure that all public elementary and secondary 
school teachers in the State who teach core academic subjects are highly 
qualified not later than the end of the 2005-2006 school year.
    (2) The State's plan must--
    (i) Establish annual measurable objectives for each LEA and school 
that include, at a minimum, an annual increase in the percentage of--
    (A) Highly qualified teachers at each LEA and school; and
    (B) Teachers who are receiving high-quality professional development 
to enable them to become highly qualified and effective classroom 
teachers;
    (ii) Describe the strategies the State will use to--
    (A) Help LEAs and schools meet the requirements in paragraph (a)(1) 
of this section; and
    (B) Monitor the progress of LEAs and schools in meeting these 
requirements; and
    (iii) Until the SEA fully complies with paragraph (a)(1) of this 
section, describe the specific steps the SEA will take to--
    (A) Ensure that Title I schools provide instruction by highly 
qualified teachers, including steps that the SEA will take to ensure 
that minority children and children from low-income families are not 
taught at higher rates than other children by inexperienced, 
unqualified, or out-of-field teachers; and
    (B) Evaluate and publicly report the progress of the SEA with 
respect to these steps.
    (3) The State's plan may include other measures that the State 
determines are appropriate to increase teacher qualifications.
    (b) Local plan. An LEA that receives funds under subpart A of this 
part must develop, as part of its local plan under section 1112 of the 
ESEA, a plan to ensure that--
    (1) All public elementary and secondary school teachers in the LEA 
who teach core academic subjects, including teachers employed by the LEA 
to provide services to eligible private school students under Sec. 
200.62, are highly qualified not later than the end of the 2005-2006 
school year; and
    (2) Through incentives for voluntary transfers, professional 
development, recruitment programs, or other effective strategies, 
minority students and students from low-income families are not taught 
at higher rates than other students by unqualified, out-of-field, or 
inexperienced teachers.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6311(b)(8)(C), 6312(c)(1)(I), (L); 6319(a)(2)-(3); 
7801(34))

[67 FR 71729, Dec. 2, 2002]



Sec. 200.58  Qualifications of paraprofessionals.

    (a) Applicability. (1) An LEA must ensure that each paraprofessional 
who is hired by the LEA and who works in a program supported with funds 
under subpart A of this part meets the requirements in paragraph (b) of 
this section and, except as provided in paragraph (e) of this section, 
the requirements in either paragraph (c) or (d) of this section.
    (2) For the purpose of this section, the term ``paraprofessional''--
    (i) Means an individual who provides instructional support 
consistent with Sec. 200.59; and
    (ii) Does not include individuals who have only non-instructional 
duties (such as providing technical support for computers, providing 
personal care services, or performing clerical duties).
    (3) For the purpose of paragraph (a) of this section, a 
paraprofessional working in ``a program supported with funds under 
subpart A of this part'' is--
    (i) A paraprofessional in a targeted assisted school who is paid 
with funds under subpart A of this part;
    (ii) A paraprofessional in a schoolwide program school; or
    (iii) A paraprofessional employed by an LEA with funds under subpart 
A of this part to provide instructional support to a public school 
teacher covered under Sec. 200.55 who provides equitable services to 
eligible private school students under Sec. 200.62.

[[Page 476]]

    (b) All paraprofessionals. A paraprofessional covered under 
paragraph (a) of this section, regardless of the paraprofessional's 
hiring date, must have earned a secondary school diploma or its 
recognized equivalent.
    (c) New paraprofessionals. A paraprofessional covered under 
paragraph (a) of this section who is hired after January 8, 2002 must 
have--
    (1) Completed at least two years of study at an institution of 
higher education;
    (2) Obtained an associate's or higher degree; or
    (3)(i) Met a rigorous standard of quality, and can demonstrate--
through a formal State or local academic assessment--knowledge of, and 
the ability to assist in instructing, as appropriate--
    (A) Reading/language arts, writing, and mathematics; or
    (B) Reading readiness, writing readiness, and mathematics readiness.
    (ii) A secondary school diploma or its recognized equivalent is 
necessary, but not sufficient, to meet the requirement in paragraph 
(c)(3)(i) of this section.
    (d) Existing paraprofessionals. Each paraprofessional who was hired 
on or before January 8, 2002 must meet the requirements in paragraph (c) 
of this section no later than January 8, 2006.
    (e) Exceptions. A paraprofessional does not need to meet the 
requirements in paragraph (c) or (d) of this section if the 
paraprofessional--
    (1)(i) Is proficient in English and a language other than English; 
and
    (ii) Acts as a translator to enhance the participation of limited 
English proficient children under subpart A of this part; or
    (2) Has instructional-support duties that consist solely of 
conducting parental involvement activities.

(Authority: 20 U.S.C. 6319(c)-(f))

[67 FR 71729, Dec. 2, 2002]



Sec. 200.59  Duties of paraprofessionals.

    (a) A paraprofessional covered under Sec. 200.58 may not be 
assigned a duty inconsistent with paragraph (b) of this section.
    (b) A paraprofessional covered under Sec. 200.58 may perform the 
following instructional support duties:
    (1) One-on-one tutoring for eligible students if the tutoring is 
scheduled at a time when a student would not otherwise receive 
instruction from a teacher.
    (2) Assisting in classroom management.
    (3) Assisting in computer instruction.
    (4) Conducting parent involvement activities.
    (5) Providing instructional support in a library or media center.
    (6) Acting as a translator.
    (7) Providing instructional support services.
    (c)(1) A paraprofessional may not provide instructional support to a 
student unless the paraprofessional is working under the direct 
supervision of a teacher who meets the requirements in Sec. 200.56.
    (2) A paraprofessional works under the direct supervision of a 
teacher if--
    (i) The teacher plans the instructional activities that the 
paraprofessional carries out;
    (ii) The teacher evaluates the achievement of the students with whom 
the paraprofessional is working; and
    (iii) The paraprofessional works in close and frequent physical 
proximity to the teacher.
    (d) A paraprofessional may assume limited duties that are assigned 
to similar personnel who are not working in a program supported with 
funds under subpart A of this part--including non-instructional duties 
and duties that do not benefit participating students--if the amount of 
time the paraprofessional spends on those duties is the same proportion 
of total work time as the time spent by similar personnel at the same 
school.

(Authority: 20 U.S.C. 6319(g))

[67 FR 71729, Dec. 2, 2002]



Sec. 200.60  Expenditures for professional development.

    (a)(1) Except as provided in paragraph (a)(2) of this section, an 
LEA must use funds it receives under subpart A of this part as follows 
for professional development activities to ensure that teachers and 
paraprofessionals meet the requirements of Sec. Sec. 200.56 and 200.58:

[[Page 477]]

    (i) For each of fiscal years 2002 and 2003, the LEA must use not 
less than 5 percent or more than 10 percent of the funds it receives 
under subpart A of this part.
    (ii) For each fiscal year after 2003, the LEA must use not less than 
5 percent of the funds it receives under subpart A of this part.
    (2) An LEA is not required to spend the amount required in paragraph 
(a)(1) of this section for a given fiscal year if a lesser amount is 
sufficient to ensure that the LEA's teachers and paraprofessionals meet 
the requirements in Sec. Sec. 200.56 and 200.58, respectively.
    (b) The LEA may use additional funds under subpart A of this part to 
support ongoing training and professional development, as defined in 
section 9101(34) of the ESEA, to assist teachers and paraprofessionals 
in carrying out activities under subpart A of this part.

(Authority: 20 U.S.C. 6319(h), (l); 7801(34))

[67 FR 71731, Dec. 2, 2002]



Sec. 200.61  Parents' right to know.

    (a) At the beginning of each school year, an LEA that receives funds 
under subpart A of this part must notify the parents of each student 
attending a Title I school that the parents may request, and the LEA 
will provide the parents on request, information regarding the 
professional qualifications of the student's classroom teachers, 
including, at a minimum, the following:
    (1) Whether the teacher has met State qualification and licensing 
criteria for the grade levels and subject areas in which the teacher 
provides instruction.
    (2) Whether the teacher is teaching under emergency or other 
provisional status through which State qualification or licensing 
criteria have been waived.
    (3) The baccalaureate degree major of the teacher and any other 
graduate certification or degree held by the teacher, and the field of 
discipline of the certification or degree.
    (4) Whether the child is provided services by paraprofessionals and, 
if so, their qualifications.
    (b) A school that participates under subpart A of this part must 
provide to each parent--
    (1) Information on the level of achievement of the parent's child in 
each of the State academic assessments required under Sec. 200.2;
    (2) Timely notice that the parent's child has been assigned, or has 
been taught for four or more consecutive weeks by, a teacher of a core 
academic subject who is not highly qualified.
    (c) An LEA and school must provide the notice and information 
required under this section--
    (1) In a uniform and understandable format, including alternative 
formats upon request; and
    (2) To the extent practicable, in a language that parents can 
understand.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6311(h)(6))

[67 FR 71731, Dec. 2, 2002]

          Participation of Eligible Children in Private Schools



Sec. 200.62  Responsibilities for providing services to private school 
children.

    (a) After timely and meaningful consultation with appropriate 
officials of private schools, an LEA must--
    (1) In accordance with Sec. Sec. 200.62 through 200.67 and section 
1120 of the ESEA, provide special educational services or other benefits 
under subpart A of this part, on an equitable basis and in a timely 
manner, to eligible children who are enrolled in private elementary and 
secondary schools; and
    (2) Ensure that teachers and families of participating private 
school children participate on a basis equitable to the participation of 
teachers and families of public school children receiving these services 
in accordance with Sec. 200.65.
    (b)(1) Eligible private school children are children who--
    (i) Reside in participating public school attendance areas of the 
LEA, regardless of whether the private school they attend is located in 
the LEA; and
    (ii) Meet the criteria in section 1115(b) of the ESEA.
    (2) Among the eligible private school children, the LEA must select 
children to participate, consistent with Sec. 200.64.

[[Page 478]]

    (c) The services and other benefits an LEA provides under this 
section must be secular, neutral and nonideological.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6315(b); 6320(a))

[67 FR 71732, Dec. 2, 2002]



Sec. 200.63  Consultation.

    (a) In order to have timely and meaningful consultation, an LEA must 
consult with appropriate officials of private schools during the design 
and development of the LEA's program for eligible private school 
children.
    (b) At a minimum, the LEA must consult on the following:
    (1) How the LEA will identify the needs of eligible private school 
children.
    (2) What services the LEA will offer to eligible private school 
children.
    (3) How and when the LEA will make decisions about the delivery of 
services.
    (4) How, where, and by whom the LEA will provide services to 
eligible private school children.
    (5) How the LEA will assess academically the services to eligible 
private school children in accordance with Sec. 200.10, and how the LEA 
will use the results of that assessment to improve Title I services.
    (6) The size and scope of the equitable services that the LEA will 
provide to eligible private school children, and, consistent with Sec. 
200.64, the proportion of funds that the LEA will allocate for these 
services.
    (7) The method or sources of data that the LEA will use under Sec. 
200.78 to determine the number of private school children from low-
income families residing in participating public school attendance 
areas, including whether the LEA will extrapolate data if a survey is 
used.
    (8) The equitable services the LEA will provide to teachers and 
families of participating private school children.
    (c)(1) Consultation by the LEA must--
    (i) Include meetings of the LEA and appropriate officials of the 
private schools; and
    (ii) Occur before the LEA makes any decision that affects the 
opportunity of eligible private school children to participate in Title 
I programs.
    (2) The LEA must meet with officials of the private schools 
throughout the implementation and assessment of the Title I services.
    (d)(1) Consultation must include--
    (i) A discussion of service delivery mechanisms the LEA can use to 
provide equitable services to eligible private school children; and
    (ii) A thorough consideration and analysis of the views of the 
officials of the private schools on the provision of services through a 
contract with a third-party provider.
    (2) If the LEA disagrees with the views of the officials of the 
private schools on the provision of services through a contract, the LEA 
must provide in writing to the officials of the private schools the 
reasons why the LEA chooses not to use a contractor.
    (e)(1) The LEA must maintain in its records and provide to the SEA a 
written affirmation, signed by officials of each private school with 
participating children or appropriate private school representatives, 
that the required consultation has occurred.
    (2) If the officials of the private schools do not provide the 
affirmations within a reasonable period of time, the LEA must submit to 
the SEA documentation that the required consultation occurred.
    (f) An official of a private school has the right to complain to the 
SEA that the LEA did not--
    (1) Engage in timely and meaningful consultation; or
    (2) Consider the views of the official of the private school.

(Approved by the Office of Management and Budget under control number 
1810-0581)

(Authority: 20 U.S.C. 6320(b))

[67 FR 71732, Dec. 2, 2002]



Sec. 200.64  Factors for determining equitable participation of private 
school children.

    (a) Equal expenditures. (1) Funds expended by an LEA under subpart A 
of this part for services for eligible private school children in the 
aggregate must be equal to the amount of funds generated by private 
school children

[[Page 479]]

from low-income families under paragraph (a)(2) of this section.
    (2) An LEA must meet this requirement as follows:
    (i)(A) If the LEA reserves funds under Sec. 200.77 to provide 
instructional and related activities for public elementary or secondary 
school students at the district level, the LEA must also provide from 
those funds, as applicable, equitable services to eligible private 
school children.
    (B) The amount of funds available to provide equitable services from 
the applicable reserved funds must be proportionate to the number of 
private school children from low-income families residing in 
participating public school attendance areas.
    (ii) The LEA must reserve the funds generated by private school 
children under Sec. 200.78 and, in consultation with appropriate 
officials of the private schools, may--
    (A) Combine those amounts, along with funds under paragraph 
(a)(2)(i) of this section, if appropriate, to create a pool of funds 
from which the LEA provides equitable services to eligible private 
school children, in the aggregate, in greatest need of those services; 
or
    (B) Provide equitable services to eligible children in each private 
school with the funds generated by children from low-income families 
under Sec. 200.78 who attend that private school.
    (b) Services on an equitable basis. (1) The services that an LEA 
provides to eligible private school children must be equitable in 
comparison to the services and other benefits that the LEA provides to 
public school children participating under subpart A of this part.
    (2) Services are equitable if the LEA--
    (i) Addresses and assesses the specific needs and educational 
progress of eligible private school children on a comparable basis as 
public school children;
    (ii) Meets the equal expenditure requirements under paragraph (a) of 
section; and
    (iii) Provides private school children with an opportunity to 
participate that--
    (A) Is equitable to the opportunity provided to public school 
children; and
    (B) Provides reasonable promise of the private school children 
achieving the high levels called for by the State's student academic 
achievement standards or equivalent standards applicable to the private 
school children.
    (3)(i) The LEA may provide services to eligible private school 
children either directly or through arrangements with another LEA or a 
third-party provider.
    (ii) If the LEA contracts with a third-party provider--
    (A) The provider must be independent of the private school and of 
any religious organization; and
    (B) The contract must be under the control and supervision of the 
LEA.
    (4) After timely and meaningful consultation under Sec. 200.63, the 
LEA must make the final decisions with respect to the services it will 
provide to eligible private school children.

(Authority: 20 U.S.C. 6320)

[67 FR 71732, Dec. 2, 2002]



Sec. 200.65  Determining equitable participation of teachers and families 
of participating private school children.

    (a)(1) From applicable funds reserved for parent involvement and 
professional development under Sec. 200.77, an LEA shall ensure that 
teachers and families of participating private school children 
participate on an equitable basis in professional development and parent 
involvement activities, respectively.
    (2) The amount of funds available to provide equitable services from 
the applicable reserved funds must be proportionate to the number of 
private school children from low-income families residing in 
participating public school attendance areas.
    (b) After consultation with appropriate officials of the private 
schools, the LEA must conduct professional development and parent 
involvement activities for the teachers and families of participating 
private school children either--
    (1) In conjunction with the LEA's professional development and 
parent involvement activities; or
    (2) Independently.

[[Page 480]]

    (c) Private school teachers are not covered by the requirements in 
Sec. 200.56.

(Authority: 20 U.S.C. 6320(a))

[67 FR 71733, Dec. 2, 2002]



Sec. 200.66  Requirements to ensure that funds do not benefit a private 
school.

    (a) An LEA must use funds under subpart A of this part to provide 
services that supplement, and in no case supplant, the services that 
would, in the absence of Title I services, be available to participating 
private school children.
    (b)(1) The LEA must use funds under subpart A of this part to meet 
the special educational needs of participating private school children.
    (2) The LEA may not use funds under subpart A of this part for--
    (i) The needs of the private school; or
    (ii) The general needs of children in the private school.

(Authority: 20 U.S.C. 6320(a), 6321(b))

[67 FR 71733, Dec. 2, 2002]



Sec. 200.67  Requirements concerning property, equipment, and supplies 
for the benefit of private school children.

    (a) The LEA must keep title to and exercise continuing 
administrative control of all property, equipment, and supplies that the 
LEA acquires with funds under subpart A of this part for the benefit of 
eligible private school children.
    (b) The LEA may place equipment and supplies in a private school for 
the period of time needed for the program.
    (c) The LEA must ensure that the equipment and supplies placed in a 
private school--
    (1) Are used only for Title I purposes; and
    (2) Can be removed from the private school without remodeling the 
private school facility.
    (d) The LEA must remove equipment and supplies from a private school 
if--
    (1) The LEA no longer needs the equipment and supplies to provide 
Title I services; or
    (2) Removal is necessary to avoid unauthorized use of the equipment 
or supplies for other than Title I purposes.
    (e) The LEA may not use funds under subpart A of this part for 
repairs, minor remodeling, or construction of private school facilities.

(Authority: 20 U.S.C. 6320(d))

[67 FR 71733, Dec. 2, 2002]



Sec. Sec. 200.68-200.69  [Reserved]

                           Allocations To LEAS



Sec. 200.70  Allocation of funds to LEAs in general.

    (a) The Secretary allocates basic grants, concentration grants, 
targeted grants, and education finance incentive grants, through SEAs, 
to each eligible LEA for which the Bureau of the Census has provided 
data on the number of children from low-income families residing in the 
school attendance areas of the LEA (hereinafter referred to as the 
``Census list'').
    (b) In establishing eligibility and allocating funds under paragraph 
(a) of this section, the Secretary counts children ages 5 to 17, 
inclusive (hereinafter referred to as ``formula children'')--
    (1) From families below the poverty level based on the most recent 
satisfactory data available from the Bureau of the Census;
    (2) From families above the poverty level receiving assistance under 
the Temporary Assistance for Needy Families program under Title IV of 
the Social Security Act;
    (3) Being supported in foster homes with public funds; and
    (4) Residing in local institutions for neglected children.
    (c) Except as provided in Sec. Sec. 200.72, 200.75, and 200.100, an 
SEA may not change the Secretary's allocation to any LEA that serves an 
area with a total census population of at least 20,000 persons.
    (d) In accordance with Sec. 200.74, an SEA may use an alternative 
method, approved by the Secretary, to distribute the State's share of 
basic grants, concentration grants, targeted grants, and education 
finance incentive grants to LEAs that serve an area with

[[Page 481]]

a total census population of less than 20,000 persons.

(Approved by the Office of Management and Budget under control numbers 
1810-0620 and 1810-0622)

(Authority: 20 U.S.C. 6333-6337)

[67 FR 71733, Dec. 2, 2002]



Sec. 200.71  LEA eligibility.

    (a) Basic grants. An LEA is eligible for a basic grant if the number 
of formula children is--
    (1) At least 10; and
    (2) Greater than two percent of the LEA's total population ages 5 to 
17 years, inclusive.
    (b) Concentration grants. An LEA is eligible for a concentration 
grant if--
    (1) The LEA is eligible for a basic grant under paragraph (a) of 
this section; and
    (2) The number of formula children exceeds--
    (i) 6,500; or
    (ii) 15 percent of the LEA's total population ages 5 to 17 years, 
inclusive.
    (c) Targeted grants. An LEA is eligible for a targeted grant if the 
number of formula children is--
    (1) At least 10; and
    (2) At least five percent of the LEA's total population ages 5 to 17 
years, inclusive.
    (d) Education finance incentive grants. An LEA is eligible for an 
education finance incentive grant if the number of formula children is--
    (1) At least 10; and
    (2) At least five percent of the LEA's total population ages 5 to 17 
years, inclusive.

(Approved by the Office of Management and Budget under control numbers 
1810-0620 and 1810-0622)

(Authority: 20 U.S.C. 6333-6337)

[67 FR 71733, Dec. 2, 2002]



Sec. 200.72  Procedures for adjusting allocations determined by the 
Secretary to account for eligible LEAs not on the Census list.

    (a) General. For each LEA not on the Census list (hereinafter 
referred to as a ``new'' LEA), an SEA must determine the number of 
formula children and the number of children ages 5 to 17, inclusive, in 
that LEA.
    (b) Determining LEA eligibility. An SEA must determine basic grant, 
concentration grant, targeted grant, and education finance incentive 
grant eligibility for each new LEA and re-determine eligibility for the 
LEAs on the Census list, as appropriate, based on the number of formula 
children and children ages 5 to 17, inclusive, determined in paragraph 
(a) of this section.
    (c) Adjusting LEA allocations. An SEA must adjust the LEA 
allocations calculated by the Secretary to determine allocations for 
eligible new LEAs based on the number of formula children determined in 
paragraph (a) of this section.

(Approved by the Office of Management and Budget under control numbers 
1810-0620 and 1810-0622)

(Authority: 20 U.S.C. 6333-6337)

[67 FR 71733, Dec. 2, 2002]



Sec. 200.73  Applicable hold-harmless provisions.

    (a) General. (1) Except as authorized under paragraph (c) of this 
section and Sec. 200.100(d)(2), an SEA may not reduce the allocation of 
an eligible LEA below the hold-harmless amounts established under 
paragraph (a)(4) of this section.
    (2) The hold-harmless protection limits the maximum reduction of an 
LEA's allocation compared to the LEA's allocation for the preceding 
year.
    (3) Except as provided in Sec. 200.100(d), an SEA must apply the 
hold-harmless requirement separately for basic grants, concentration 
grants, targeted grants, and education finance incentive grants as 
described in paragraph (a)(4) of this section.
    (4) Under section 1122(c) of the ESEA, the hold-harmless percentage 
varies based on the LEA's proportion of formula children, as shown in 
the following table:

[[Page 482]]



------------------------------------------------------------------------
    LEA's number of formula
     children ages 5 to 17,
 inclusive, as a percentage of    Hold-harmless      Applicable grant
    its total population of         percentage           formulas
     children ages 5 to 17,
           inclusive
------------------------------------------------------------------------
(i) 30% or more................              95   Basic Grants,
(ii) 15% or more but less than               90    Concentration Grants,
 30%.                                        85    Targeted Grants, and
(iii) Less than 15%............                    Education Finance
                                                   Incentive Grants.
------------------------------------------------------------------------

    (b) Targeted grants and education finance incentive grants. The 
number of formula children used to determine the hold-harmless 
percentage is the number before applying the weights described in 
section 1125 and section 1125A of the ESEA.
    (c) Adjustment for insufficient funds. If the amounts made available 
to the State are insufficient to pay the full amount that each LEA is 
eligible to receive under paragraph (a)(4) of this section, the SEA must 
ratably reduce the allocations for all LEAs in the State to the amount 
available.
    (d) Eligibility for hold-harmless protection. (1) An LEA must meet 
the eligibility requirements for a basic grant, targeted grant, or 
education finance incentive grant under Sec. 200.71 in order for the 
applicable hold-harmless provision to apply.
    (2) An LEA not meeting the eligibility requirements for a 
concentration grant under Sec. 200.71 must be paid its hold-harmless 
amount for four consecutive years.

(Approved by the Office of Management and Budget under control numbers 
1810-0620 and 1810-0622)

(Authority: 20 U.S.C. 6332(c))

[67 FR 71733, Dec. 2, 2002]



Sec. 200.74  Use of an alternative method to distribute grants to LEAs 
with fewer than 20,000 total residents.

    (a) For eligible LEAs serving an area with a total census population 
of less than 20,000 persons (hereinafter referred to as ``small LEAs''), 
an SEA may apply to the Secretary to use an alternative method to 
distribute basic grant, concentration grant, targeted grant, and 
education finance incentive grant funds.
    (b) In its application, the SEA must--
    (1) Identify the alternative data it proposes to use; and
    (2) Assure that it has established a procedure through which a small 
LEA that is dissatisfied with the determination of its grant may appeal 
directly to the Secretary.
    (c) The SEA must base its alternative method on population data that 
best reflect the current distribution of children from low-income 
families among the State's small LEAs and use the same poverty measure 
consistently for small LEAs across the State for all Title I, part A 
programs.
    (d) Based on the alternative poverty data selected, the SEA must--
    (1) Re-determine eligibility of its small LEAs for basic grants, 
concentration grants, targeted grants, and education finance incentive 
grants in accordance with Sec. 200.71;
    (2) Calculate allocations for small LEAs in accordance with the 
provisions of sections 1124, 1124A, 1125, and 1125A of the ESEA, as 
applicable; and
    (3) Ensure that each LEA receives the hold-harmless amount to which 
it is entitled under Sec. 200.73.
    (e) The amount of funds available for redistribution under each 
formula is the separate amount determined by the Secretary under 
sections 1124, 1124A, 1125, and 1125A of the ESEA for eligible small 
LEAs after the SEA has made the adjustments required under Sec. 
200.72(c).
    (f) If the amount available for redistribution to small LEAs under 
an alternative method is not sufficient to satisfy applicable hold-
harmless requirements, the SEA must ratably reduce all eligible small 
LEAs to the amount available.

(Approved by the Office of Management and Budget under control numbers 
1810-0620 and 1810-0622)

(Authority: 20 U.S.C. 6333-6337)

[67 FR 71733, Dec. 2, 2002]



Sec. 200.75  Special procedures for allocating concentration grant funds 
in small States.

    (a) In a State in which the number of formula children is less than 
0.25 percent of the national total on January 8,

[[Page 483]]

2002 (hereinafter referred to as a ``small State''), an SEA may either--
    (1) Allocate concentration grants among eligible LEAs in the State 
in accordance with Sec. Sec. 200.72 through 200.74, as applicable; or
    (2) Without regard to the allocations determined by the Secretary--
    (i) Identify those LEAs in which the number or percentage of formula 
children exceeds the statewide average number or percentage of those 
children; and
    (ii) Allocate concentration grant funds, consistent with Sec. 
200.73, among the LEAs identified in paragraph (a)(2)(i) of this section 
based on the number of formula children in each of those LEAs.
    (b) If the SEA in a small State uses an alternative method under 
Sec. 200.74, the SEA must use the poverty data approved under the 
alternative method to identify those LEAs with numbers or percentages of 
formula children that exceed the statewide average number or percentage 
of those children for the State as a whole.

(Approved by the Office of Management and Budget under control numbers 
1810-0620 and 1810-0622)

(Authority: 20 U.S.C. 6334(b))

[67 FR 71733, Dec. 2, 2002]



Sec. 200.76  [Reserved]

   Procedures for the Within-District Allocation of LEA Program Funds



Sec. 200.77  Reservation of funds by an LEA.

    Before allocating funds in accordance with Sec. 200.78, an LEA must 
reserve funds as are reasonable and necessary to--
    (a) Provide services comparable to those provided to children in 
participating school attendance areas and schools to serve--
    (1) Homeless children who do not attend participating schools, 
including providing educationally related support services to children 
in shelters and other locations where homeless children may live;
    (2) Children in local institutions for neglected children; and
    (3) If appropriate--
    (i) Children in local institutions for delinquent children; and
    (ii) Neglected and delinquent children in community-day school 
programs;
    (b) Provide, where appropriate under section 1113(c)(4) of the ESEA, 
financial incentives and rewards to teachers who serve students in Title 
I schools identified for school improvement, corrective action, and 
restructuring for the purpose of attracting and retaining qualified and 
effective teachers;
    (c) Meet the requirements for choice-related transportation and 
supplemental educational services in Sec. 200.48, unless the LEA meets 
these requirements with non-Title I funds;
    (d) Address the professional development needs of instructional 
staff, including--
    (1) Professional development requirements under Sec. 
200.52(a)(3)(iii) if the LEA has been identified for improvement or 
corrective action; and
    (2) Professional development expenditure requirements under Sec. 
200.60;
    (e) Meet the requirements for parental involvement in section 
1118(a)(3) of the ESEA;
    (f) Administer programs for public and private school children under 
this part, including special capital expenses, if any, incurred in 
providing services to eligible private school children, such as--
    (1) The purchase and lease of real and personal property (including 
mobile educational units and neutral sites);
    (2) Insurance and maintenance costs;
    (3) Transportation; and
    (4) Other comparable goods and services, including non-instructional 
computer technicians; and
    (g) Conduct other authorized activities, such as school improvement 
and coordinated services.

(Authority: 20 U.S.C. 6313(c)(3) and (4), 6316(b)(10), (c)(7)(iii), 
6318(a)(3), 6319(l), 6320, 7279d)

[67 FR 71735, Dec. 2, 2002]



Sec. 200.78  Allocation of funds to school attendance areas and schools.

    (a)(1) An LEA must allocate funds under subpart A of this part to 
school attendance areas and schools, identified as eligible and selected 
to participate under section 1113(a) or (b) of the

[[Page 484]]

ESEA, in rank order on the basis of the total number of children from 
low-income families in each area or school.
    (2)(i) In calculating the total number of children from low-income 
families, the LEA must include children from low-income families who 
attend private schools.
    (ii) To obtain a count of private school children, the LEA may--
    (A) Use the same poverty data the LEA uses to count public school 
children;
    (B)(1) Use comparable poverty data from a survey of families of 
private school students that, to the extent possible, protects the 
families' identity; and
    (2) Extrapolate data from the survey based on a representative 
sample if complete actual data are unavailable;
    (C) Use comparable poverty data from a different source, such as 
scholarship applications;
    (D) Apply the low-income percentage of each participating public 
school attendance area to the number of private school children who 
reside in that school attendance area; or
    (E) Use an equated measure of low income correlated with the measure 
of low income used to count public school children.
    (iii) An LEA may count private school children from low-income 
families every year or every two years.
    (iv) After timely and meaningful consultation in accordance with 
Sec. 200.63, the LEA shall have the final authority in determining the 
method used to calculate the number of private school children from low-
income families;
    (3) If an LEA ranks its school attendance areas and schools by grade 
span groupings, the LEA may determine the percentage of children from 
low-income families in the LEA as a whole or for each grade span 
grouping.
    (b)(1) Except as provided in paragraphs (b)(2) and (d) of this 
section, an LEA must allocate to each participating school attendance 
area or school an amount for each low-income child that is at least 125 
percent of the per-pupil amount of funds the LEA received for that year 
under part A, subpart 2 of Title I. The LEA must calculate this per-
pupil amount before it reserves funds under Sec. 200.77, using the 
poverty measure selected by the LEA under section 1113(a)(5) of the 
ESEA.
    (2) If an LEA is serving only school attendance areas or schools in 
which the percentage of children from low-income families is 35 percent 
or more, the LEA is not required to allocate a per-pupil amount of at 
least 125 percent.
    (c) An LEA is not required to allocate the same per-pupil amount to 
each participating school attendance area or school provided the LEA 
allocates higher per-pupil amounts to areas or schools with higher 
concentrations of poverty than to areas or schools with lower 
concentrations of poverty.
    (d) An LEA may reduce the amount of funds allocated under this 
section to a school attendance area or school if the area or school is 
spending supplemental State or local funds for programs that meet the 
requirements in Sec. 200.79(b).
    (e) If an LEA contains two or more counties in their entirety, the 
LEA must distribute to schools within each county a share of the LEA's 
total grant that is no less than the county's share of the child count 
used to calculate the LEA's grant.

(Authority: 20 U.S.C. 6313(c), 6320(a) and (c)(1), 6333(c)(2))

[67 FR 71735, Dec. 2, 2002]

                           Fiscal Requirements



Sec. 200.79  Exclusion of supplemental State and local funds from 
supplement, not supplant and comparability determinations.

    (a) For the purpose of determining compliance with the supplement 
not supplant requirement in section 1120A(b) and the comparability 
requirement in section 1120A(c) of the ESEA, a grantee or subgrantee 
under subpart A of this part may exclude supplemental State and local 
funds spent in any school attendance area or school for programs that 
meet the intent and purposes of Title I.
    (b) A program meets the intent and purposes of Title I if the 
program either--
    (1)(i) Is implemented in a school in which the percentage of 
children from low-income families is at least 40 percent;

[[Page 485]]

    (ii) Is designed to promote schoolwide reform and upgrade the entire 
educational operation of the school to support students in their 
achievement toward meeting the State's challenging academic achievement 
standards that all students are expected to meet;
    (iii) Is designed to meet the educational needs of all students in 
the school, particularly the needs of students who are failing, or most 
at risk of failing, to meet the State's challenging student academic 
achievement standards; and
    (iv) Uses the State's assessment system under Sec. 200.2 to review 
the effectiveness of the program; or
    (2)(i) Serves only students who are failing, or most at risk of 
failing, to meet the State's challenging student academic achievement 
standards;
    (ii) Provides supplementary services designed to meet the special 
educational needs of the students who are participating in the program 
to support their achievement toward meeting the State's student academic 
achievement standards; and
    (iii) Uses the State's assessment system under Sec. 200.2 to review 
the effectiveness of the program.
    (c) The conditions in paragraph (b) of this section also apply to 
supplemental State and local funds expended under section 1113(b)(1)(D) 
and 1113(c)(2)(B) of the ESEA.

(Authority: 20 U.S.C. 6321(b)-(d))

[67 FR 71736, Dec. 2, 2002]



              Subpart B_Even Start Family Literacy Program



Sec. 200.80  Migrant Education Even Start Program definition.

    Eligible participants under the Migrant Education Even Start Program 
(MEES) must meet the definitions of a migratory child, a migratory 
agricultural worker, or a migratory fisher in Sec. 200.81.

(Authority: 20 U.S.C. 6381a and 20 U.S.C. 6399)

[67 FR 71736, Dec. 2, 2002]



                   Subpart C_Migrant Education Program

    Source: 67 FR 71736, Dec. 2, 2002, unless otherwise noted.



Sec. 200.81  Program definitions.

    The following definitions apply to programs and projects operated 
under subpart C of this part:
    (a) Agricultural activity means--
    (1) Any activity directly related to the production or processing of 
crops, dairy products, poultry or livestock for initial commercial sale 
or personal subsistence;
    (2) Any activity directly related to the cultivation or harvesting 
of trees; or
    (3) Any activity directly related to fish farms.
    (b) Fishing activity means any activity directly related to the 
catching or processing of fish or shellfish for initial commercial sale 
or personal subsistence.
    (c) Migratory agricultural worker means a person who, in the 
preceding 36 months, has moved from one school district to another, or 
from one administrative area to another within a State that is comprised 
of a single school district, in order to obtain temporary or seasonal 
employment in agricultural activities (including dairy work) as a 
principal means of livelihood.
    (d) Migratory child means a child who is, or whose parent, spouse, 
or guardian is, a migratory agricultural worker, including a migratory 
dairy worker, or a migratory fisher, and who, in the preceding 36 
months, in order to obtain, or accompany such parent, spouse, guardian 
in order to obtain, temporary or seasonal employment in agricultural or 
fishing work--
    (1) Has moved from one school district to another;
    (2) In a State that is comprised of a single school district, has 
moved from one administrative area to another within such district; or
    (3) Resides in a school district of more than 15,000 square miles, 
and migrates a distance of 20 miles or more to a temporary residence to 
engage in a fishing activity.

[[Page 486]]

    (e) Migratory fisher means a person who, in the preceding 36 months, 
has moved from one school district to another, or from one 
administrative area to another within a State that is comprised of a 
single school district, in order to obtain temporary or seasonal 
employment in fishing activities as a principal means of livelihood. 
This definition also includes a person who, in the preceding 36 months, 
resided in a school district of more than 15,000 square miles, and moved 
a distance of 20 miles or more to a temporary residence to engage in a 
fishing activity as a principal means of livelihood.
    (f) Principal means of livelihood means that temporary or seasonal 
agricultural or fishing activity plays an important part in providing a 
living for the worker and his or her family.

(Authority: 20 U.S.C. 6391-6399, 6571)



Sec. 200.82  Use of program funds for unique program function costs.

    An SEA may use the funds available from its State Migrant Education 
Program (MEP) to carry out other administrative activities, beyond those 
allowable under Sec. 200.100(b)(4), that are unique to the MEP, 
including those that are the same or similar to administrative 
activities performed by LEAs in the State under subpart A of this part. 
These activities include but are not limited to--
    (a) Statewide identification and recruitment of eligible migratory 
children;
    (b) Interstate and intrastate coordination of the State MEP and its 
local projects with other relevant programs and local projects in the 
State and in other States;
    (c) Procedures for providing for educational continuity for 
migratory children through the timely transfer of educational and health 
records, beyond that required generally by State and local agencies;
    (d) Collecting and using information for accurate distribution of 
subgrant funds;
    (e) Development of a statewide needs assessment and a comprehensive 
State plan for MEP service delivery;
    (f) Supervision of instructional and support staff;
    (g) Establishment and implementation of a State parent advisory 
council; and
    (h) Conducting an evaluation of the effectiveness of the State MEP.

(Authority: 20 U.S.C. 6392, 6571)

[67 FR 71736, Dec. 2, 2002; 68 FR 19152, Apr. 18, 2003]



Sec. 200.83  Responsibilities of SEAs to implement projects through a 

comprehensive needs assessment and a comprehensive State plan for 
service delivery.

    (a) An SEA that receives a grant of MEP funds must develop and 
update a written comprehensive State plan (based on a current statewide 
needs assessment) that, at a minimum, has the following components:
    (1) Performance targets. The plan must specify--
    (i) Performance targets that the State has adopted for all children 
in reading and mathematics achievement, high school graduation, and the 
number of school dropouts, as well as the State's performance targets, 
if any, for school readiness; and
    (ii) Any other performance targets that the State has identified for 
migratory children.
    (2) Needs assessment. The plan must include an identification and 
assessment of--
    (i) The unique educational needs of migratory children that result 
from the children's migratory lifestyle; and
    (ii) Other needs of migratory students that must be met in order for 
migratory children to participate effectively in school.
    (3) Service delivery. The plan must describe the strategies that the 
SEA will pursue on a statewide basis to achieve the performance targets 
in paragraph (a)(1) of this section by addressing--
    (i) The unique educational needs of migratory children consistent 
with paragraph (a)(2)(i) of this section; and
    (ii) Other needs of migratory children consistent with paragraph 
(a)(2)(ii) of this section.
    (4) Evaluation. The plan must describe how the State will evaluate 
the effectiveness of its program.
    (b) The SEA must develop its comprehensive State plan in 
consultation with the State parent advisory council

[[Page 487]]

or, for SEAs not operating programs for one school year in duration, in 
consultation with the parents of migratory children. This consultation 
must be in a format and language that the parents understand.
    (c) Each SEA receiving MEP funds must ensure that its local 
operating agencies comply with the comprehensive State plan.

(Approved by the Office of Management and Budget under control number 
1810-0662)

(Authority: 20 U.S.C. 6396)

[67 FR 71736, Dec. 2, 2002; 68 FR 19152, Apr. 18, 2003]



Sec. 200.84  Responsibilities of SEAs for evaluating the effectiveness 
of the MEP.

    Each SEA must determine the effectiveness of its program through a 
written evaluation that measures the implementation and results achieved 
by the program against the State's performance targets in Sec. 
200.83(a)(1), particularly for those students who have priority for 
service as defined in section 1304(d) of the ESEA.

(Approved by the Office of Management and Budget under control number 
1810-0662)

(Authority: 20 U.S.C. 6394)

[67 FR 71736, Dec. 2, 2002; 68 FR 19152, Apr. 18, 2003]



Sec. 200.85  Responsibilities of SEAs and operating agencies for improving 
services to migratory children.

    While the specific school improvement requirements of section 1116 
of the ESEA do not apply to the MEP, SEAs and local operating agencies 
receiving MEP funds must use the results of the evaluation carried out 
under Sec. 200.84 to improve the services provided to migratory 
children.

(Authority: 20 U.S.C. 6394)



Sec. 200.86  Use of MEP funds in schoolwide projects.

    Funds available under part C of Title I of the ESEA may be used in a 
schoolwide program subject to the requirements of Sec. 200.29(c)(1).

(Authority: 20 U.S.C. 6396)

[67 FR 71736, Dec. 2, 2002; 68 FR 19152, Apr. 18, 2003]



Sec. 200.87  Responsibilities for participation of children in private 
schools.

    An SEA and its operating agencies must conduct programs and projects 
under subpart C of this part in a manner consistent with the basic 
requirements of section 9501 of the ESEA.

(Authority: 20 U.S.C. 6394)



Sec. 200.88  Exclusion of supplemental State and local funds from 
supplement, not supplant and comparability determinations.

    (a) For purposes of determining compliance with the comparability 
requirement in section 1120A(c) and the supplement, not supplant 
requirement in section 1120A(b) of the ESEA, a grantee or subgrantee 
under part C of Title I may exclude supplemental State and local funds 
expended in any school attendance area or school for carrying out 
special programs that meet the intent and purposes of part C of Title I.
    (b) Before funds for a State and local program may be excluded for 
purposes of these requirements, the SEA must make an advance written 
determination that the program meets the intent and purposes of part C 
of Title I.
    (c) A program meets the intent and purposes of part C of Title I if 
it meets the following requirements:
    (1) The program is specifically designed to meet the unique 
educational needs of migratory children, as defined in section 1309 of 
the ESEA.
    (2) The program is based on performance targets related to 
educational achievement that are similar to those used in programs 
funded under part C of Title I of the ESEA, and is evaluated in a manner 
consistent with those program targets.
    (3) The grantee or subgrantee keeps, and provides access to, records 
that ensure the correctness and verification of these requirements.
    (4) The grantee monitors program performance to ensure that these 
requirements are met.

(Approved by the Office of Management and Budget under control number 
1810-0662)

(Authority 20 U.S.C. 6321(d))

[67 FR 71736, Dec. 2, 2002; 68 FR 19152, Apr. 18, 2003]

[[Page 488]]



Sec. 200.89  [Reserved]



 Subpart D_Prevention and Intervention Programs for Children and Youth 
        Who are Neglected, Delinquent, or At-Risk of Dropping Out

    Source: 67 FR 71736, Dec. 2, 2002, unless otherwise noted.



Sec. 200.90  Program definitions.

    (a) The following definitions apply to the programs authorized in 
part D, subparts 1 and 2 of Title I of the ESEA:
    Children and youth means the same as ``children'' as that term is 
defined in Sec. 200.103(a).
    (b) The following definitions apply to the programs authorized in 
part D, subpart 1 of Title I of the ESEA:
    Institution for delinquent children and youth means, as determined 
by the SEA, a public or private residential facility that is operated 
primarily for the care of children and youth who--
    (1) Have been adjudicated to be delinquent or in need of 
supervision; and
    (2) Have had an average length of stay in the institution of at 
least 30 days.
    Institution for neglected children and youth means, as determined by 
the SEA, a public or private residential facility, other than a foster 
home, that is operated primarily for the care of children and youth 
who--
    (1) Have been committed to the institution or voluntarily placed in 
the institution under applicable State law due to abandonment, neglect, 
or death of their parents or guardians; and
    (2) Have had an average length of stay in the institution of at 
least 30 days.
    Regular program of instruction means an educational program (not 
beyond grade 12) in an institution or a community day program for 
neglected or delinquent children that consists of classroom instruction 
in basic school subjects such as reading, mathematics, and vocationally 
oriented subjects, and that is supported by non-Federal funds. Neither 
the manufacture of goods within the institution nor activities related 
to institutional maintenance are considered classroom instruction.
    (c) The following definitions apply to the local agency program 
authorized in part D, subpart 2 of Title I of the ESEA:
    Immigrant children and youth and limited English proficiency have 
the same meanings as the term ``immigrant children'' is defined in 
section 3301 of the ESEA and the term ``limited English proficient'' is 
defined in section 9101 of the ESEA, except that the terms 
``individual'' and ``children and youth'' used in those definitions mean 
``children and youth'' as defined in this section.
    Locally operated correctional facility means a facility in which 
persons are confined as a result of a conviction for a criminal offense, 
including persons under 21 years of age. The term also includes a local 
public or private institution and community day program or school not 
operated by the State that serves delinquent children and youth.
    Migrant youth means the same as ``migratory child'' as that term is 
defined in Sec. 200.81(d).

(Authority: 20 U.S.C. 6432, 6454, 6472, 7801)



Sec. 200.91  SEA counts of eligible children.

    To receive an allocation under part D, subpart 1 of Title I of the 
ESEA, an SEA must provide the Secretary with a count of children and 
youth under the age of 21 enrolled in a regular program of instruction 
operated or supported by State agencies in institutions or community day 
programs for neglected or delinquent children and youth and adult 
correctional institutions as specified in paragraphs (a) and (b) of this 
section.
    (a) Enrollment. (1) To be counted, a child or youth must be enrolled 
in a regular program of instruction for at least--
    (i) 20 hours per week if in an institution or community day program 
for neglected or delinquent children; or
    (ii) 15 hours per week if in an adult correctional institution.
    (2) The State agency must specify the date on which the enrollment 
of neglected or delinquent children is determined under paragraph (a)(1) 
of this section, except that the date specified must be--

[[Page 489]]

    (i) Consistent for all institutions or community day programs 
operated by the State agency; and
    (ii) Represent a school day in the calendar year preceding the year 
in which funds become available.
    (b) Adjustment of enrollment. The SEA must adjust the enrollment for 
each institution or community day program served by a State agency by--
    (1) Multiplying the number determined in paragraph (a) of this 
section by the number of days per year the regular program of 
instruction operates; and
    (2) Dividing the result of paragraph (b)(1) of this section by 180.
    (c) Date of submission. The SEA must annually submit the data in 
paragraph (b) of this section no later than January 31.

(Approved by the Office of Management and Budget under control number 
1810-0060)

(Authority: 20 U.S.C. 6432)



Sec. Sec. 200.92-200.99  [Reserved]



                      Subpart E_General Provisions

    Source: 67 FR 71738, Dec. 2, 2002, unless otherwise noted.



Sec. 200.100  Reservation of funds for school improvement, State 
administration, and the State academic achievement awards program.

    A State must reserve funds for school improvement, State 
administration, and State academic achievement awards as follows:
    (a) School improvement. (1) To carry out school improvement 
activities authorized under sections 1116 and 1117 of the ESEA, an SEA 
must first reserve--
    (i) Two percent from the sum of the amounts allocated to the State 
under section 1002(a) of the ESEA for fiscal years 2002 and 2003; and
    (ii) Four percent from the sum of the amounts allocated to the State 
under section 1002(a) of the ESEA for fiscal year 2004 and succeeding 
years.
    (2) In reserving funds under paragraph (a)(1) of this section, a 
State may not reduce the sum of the allocations an LEA receives under 
section 1002(a) of the ESEA below the sum of the allocations the LEA 
received under section 1002(a) for the preceding fiscal year.
    (3) If funds under section 1002(a) are insufficient in a given 
fiscal year to implement both paragraphs (a)(1) and (2) of this section, 
a State is not required to reserve the full amount required under 
paragraph (a)(1) of this section.
    (b) State administration. (1) An SEA may reserve for State 
administrative activities authorized in sections 1004 and 1903 of the 
ESEA no more than the greater of--
    (i) One percent from each of the amounts allocated to the State or 
Outlying Area under section 1002(a), (c), and (d) of the ESEA; or
    (ii) $400,000 ($50,000 for the Outlying Areas).
    (2)(i) An SEA reserving $400,000 under paragraph (b)(1)(ii) of this 
section must reserve proportionate amounts from each of the amounts 
allocated to the State or Outlying Area under section 1002(a), but is 
not required to reserve proportionate amounts from section 1002(a), (c), 
and (d) of the ESEA.
    (ii) If an SEA reserves funds from the amounts allocated to the 
State or Outlying Area under section 1002(c) or (d) of the ESEA, the SEA 
may not reserve from those allocations more than the amount the SEA 
would have reserved if it had reserved proportionate amounts from 
section 1002(a), (c), and (d) of the ESEA.
    (3) If the sum of the amounts allocated to all the States under 
section 1002(a), (c), and (d) of the ESEA is greater than 
$14,000,000,000, an SEA may not reserve more than one percent of the 
amount the State would receive if $14,000,000,000 had been allocated 
among the States under section 1002(a), (c), and (d) of the ESEA.
    (4) An SEA may use the funds it has reserved under paragraph (b) of 
this section to perform general administrative activities necessary to 
carry out, at the State level, any of the programs authorized under 
Title I, parts A, C, and D of the ESEA.
    (c) State academic achievement awards program. To operate the State 
academic achievement awards program authorized under section 1117(b)(1) 
and (c)(2)(A) of the ESEA, an SEA may reserve up to five percent of the 
excess

[[Page 490]]

amount the State receives under section 1002(a) of the ESEA when 
compared to the amount the State received under section 1002(a) of the 
ESEA in the preceding fiscal year.
    (d) Reservations and hold-harmless. In reserving funds under 
paragraphs (b) and (c) of this section, an SEA may--
    (1) Proportionately reduce each LEA's total allocation received 
under section 1002(a) of the ESEA while ensuring that no LEA receives in 
total less than the hold-harmless percentage under Sec. 200.73(a)(4), 
except that, when the amount remaining is insufficient to pay all LEAs 
the hold-harmless amount provided in Sec. 200.73, the SEA shall ratably 
reduce each LEA's hold-harmless allocation to the amount available; or
    (2) Proportionately reduce each LEA's total allocation received 
under section 1002(a) of the ESEA even if an LEA's total allocation 
falls below its hold-harmless percentage under Sec. 200.74(a)(3).

(Approved by the Office of Management and Budget under control numbers 
1810-0620 and 1810-0622)

(Authority: 20 U.S.C. 6303, 6304, 6317(c)(2)(A))



Sec. Sec. 200.101-200.102  [Reserved]



Sec. 200.103  Definitions.

    The following definitions apply to programs operated under this 
part:
    (a) Children means--
    (1) Persons up through age 21 who are entitled to a free public 
education through grade 12; and
    (2) Preschool children below the age and grade level at which the 
agency provides free public education.
    (b) Fiscal year means the Federal fiscal year--a period beginning on 
October 1 and ending on the following September 30--or another 12-month 
period normally used by the SEA for record-keeping.

(Authority: 20 U.S.C. 6315, 6571)



Sec. Sec. 200.104-200.109  [Reserved]



PART 206_SPECIAL EDUCATIONAL PROGRAMS FOR STUDENTS WHOSE FAMILIES ARE 

ENGAGED IN MIGRANT AND OTHER SEASONAL FARMWORK_HIGH SCHOOL EQUIVALENCY 
PROGRAM AND COLLEGE ASSISTANCE MIGRANT PROGRAM--Table of Contents




                            Subpart A_General

Sec.
206.1 What are the special educational programs for students whose 
          families are engaged in migrant and other seasonal farmwork?
206.2 Who is eligible to participate as a grantee?
206.3 Who is eligible to participate in a project?
206.4 What regulations apply to these programs?
206.5 What definitions apply to these programs?

Subpart B_What Kinds of Activities Does the Secretary Assist Under These 
                                Programs?

206.10 What types of services may be provided?
206.11 What types of CAMP services must be provided?

                Subpart C_How Does One Apply for a Grant?

206.20 What must be included in an application?

     Subpart D_How Does the Secretary Make a Grant to an Applicant?

206.30 How does the Secretary evaluate an application?

           Subpart E_What Conditions Must Be Met by a Grantee?

206.40 What restrictions are there on expenditures?

    Authority: 20 U.S.C. 1070d-2, unless otherwise noted.

    Source: 46 FR 35075, July 6, 1981, unless otherwise noted.

[[Page 491]]



                            Subpart A_General



Sec. 206.1  What are the special educational programs for students whose 
families are engaged in migrant and other seasonal farmwork?

    (a) High School Equivalency Program. The High School Equivalency 
Program (HEP) is designed to assist persons who are eligible under Sec. 
206.3--to obtain the equivalent of a secondary school diploma and 
subsequently to gain employment or be placed in an institution of higher 
education (IHE) or other postsecondary education or training.
    (b) College Assistance Migrant Program. The College Assistance 
Migrant Program (CAMP) is designed to assist persons who are eligible 
under Sec. 206.3--who are enrolled or are admitted for enrollment on a 
full-time basis in the first academic year at an IHE.

(Authority: 20 U.S.C. 1070d-2(a))

[46 FR 35075, July 6, 1981, as amended at 52 FR 24920, July 1, 1987; 57 
FR 60407, Dec. 18, 1992]



Sec. 206.2  Who is eligible to participate as a grantee?

    (a) Eligibility. An IHE or a private nonprofit organization may 
apply for a grant to operate a HEP or CAMP project.
    (b) Cooperative planning. If a private nonprofit organization other 
than an IHE applies for a HEP or a CAMP grant, that agency must plan the 
project in cooperation with an IHE and must propose to operate the 
project, or in the case of a HEP grant, some aspects of the project, 
with the facilities of that IHE.

(Authority: 20 U.S.C. 1070d-2(a))

[46 FR 35075, July 6, 1981, as amended at 52 FR 24920, July 1, 1987]



Sec. 206.3  Who is eligible to participate in a project?

    (a) General. To be eligible to participate in a HEP or a CAMP 
project--
    (1) A person, or his or her parent, must have spent a minimum of 75 
days during the past 24 months as a migrant or seasonal farmworker; or
    (2) The person must have participated (with respect to HEP within 
the last 24 months), or be eligible to participate, in programs under 34 
CFR part 201 (Chapter 1-Migrant Education Program) or 20 CFR part 633 
(Employment and Training Administration, Department of Labor--Migrant 
and Seasonal Farmworker Programs).
    (b) Special HEP qualifications. To be eligible to participate in a 
HEP project, a person also must--
    (1) Not have earned a secondary school diploma or its equivalent;
    (2) Not be currently enrolled in an elementary or secondary school;
    (3) Be 16 years of age or over, or beyond the age of compulsory 
school attendance in the State in which he or she resides; and
    (4) Be determined by the grantee to need the academic and supporting 
services and financial assistance provided by the project in order to 
attain the equivalent of a secondary school diploma and to gain 
employment or be placed in an IHE or other postsecondary education or 
training.
    (c) Special CAMP qualifications. To be eligible to participate in a 
CAMP project, a person also must--
    (1) Be enrolled or be admitted for enrollment as a full-time student 
at the participating IHE;
    (2) Not be beyond the first academic year of a program of study at 
the IHE, as determined under the standards of the IHE; and
    (3) Be determined by the grantee to need the academic and supporting 
services and financial assistance provided by the project in order to 
complete an academic program of study at the IHE.

(Authority: 20 U.S.C. 1070d-2(a))

[46 FR 35075, July 6, 1981, as amended at 52 FR 24920, July 1, 1987; 57 
FR 60407, Dec. 18, 1992]



Sec. 206.4  What regulations apply to these programs?

    The following regulations apply to HEP and CAMP:
    (a) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (1) 34 CFR part 74 (Administration of Grants to Institutions of 
Higher Education, Hospitals, and Nonprofit Organizations).
    (2) 34 CFR part 75 (Direct Grant Programs).

[[Page 492]]

    (3) 34 CFR part 77 (Definitions That Apply to Department 
Regulations).
    (4) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (5) 34 CFR part 82 (New Restrictions on Lobbying).
    (6) 34 CFR part 85 (Governmentwide Debarment and Suspension 
(Nonprocurement) and Governmentwide Requirements for Drug-Free Workplace 
(Grants)).
    (7) 34 CFR part 86 (Drug-Free Schools and Campuses).
    (b) The regulations in this part 206.

(Authority: 20 U.S.C. 1070d-2(a))

[46 FR 35075, July 6, 1981, as amended at 52 FR 24920, July 1, 1987; 57 
FR 60407, Dec. 18, 1992; 58 FR 11539, Feb. 26, 1993]



Sec. 206.5  What definitions apply to these programs?

    (a) Definitions in EDGAR. The following terms used in this part are 
defined in 34 CFR 77.1(c) (EDGAR, Definitions):
    Applicant
    Application
    Elementary school
    EDGAR
    Facilities
    Minor remodeling
    Nonprofit
    Private
    Project
    Public
    Secondary school
    Secretary
    State
    (b) Definitions in the grants administration regulations. The 
following terms used in this part are defined in 34 CFR part 74 
(Administration of Grants):
    Budget
    Equipment
    Grant
    Grantee
    Supplies
    (c) Program definitions. The following additional definitions apply 
specifically to HEP and CAMP:
    (1) Act means the Higher Education Act of 1965, as amended.
    (2) Agricultural activity means:
    (i) Any activity directly related to the production of crops, dairy 
products, poultry, or livestock;
    (ii) Any activity directly related to the cultivation or harvesting 
of trees; or
    (iii) Any activity directly related to fish farms.
    (3) Farmwork means any agricultural activity, performed for either 
wages or personal subsistence, on a farm, ranch, or similar 
establishment.
    (4) Full-time, with respect to an individual, means a student who is 
carrying a full-time academic workload, as defined in 34 CFR part 690 
(regulations for the Pell Grant Program).
    (5) Institution of higher education means an educational institution 
that:
    (i) Is in a State;
    (ii) Is authorized by that State to provide a program of education 
beyond secondary school;
    (iii) Is a public or nonprofit institution;
    (iv) Admits as a regular student only a person who:
    (A) Has a secondary school diploma;
    (B) Has the recognized equivalent of a secondary school diploma; or
    (C) Is beyond the age of compulsory school attendance in that State 
and has the ability to benefit from the training offered by the 
institution;
    (v) Provides:
    (A) An educational program for which it awards a bachelor's degree; 
or
    (B) At least a two-year program that is acceptable for full credit 
toward a bachelor's degree;
    (vi)(A) Is accredited by a nationally recognized accrediting agency 
or association;
    (B) Has satisfactorily assured the Secretary that it will meet the 
accreditation standards of a nationally recognized accrediting agency or 
association within a reasonable time considering the resources available 
to the institution, the period of time, if any, it has operated, and its 
effort to meet accreditation standards; or
    (C) Has its credits accepted on transfer by at least three 
accredited institutions on the same basis as those institutions accept 
transfer credits from fully accredited institutions.
    (6) Migrant farmworker means a seasonal farmworker--as defined in 
paragraph (c)(7) of this section--whose employment required travel that 
precluded the farmworker from returning

[[Page 493]]

to his or her domicile (permanent place of residence) within the same 
day.
    (7) Seasonal farmworker means a person who, within the past 24 
months, was employed for at least 75 days in farmwork, and whose primary 
employment was in farmwork on a temporary or seasonal basis (that is, 
not a constant year-round activity).
    (d) Other definitions. For purposes of determining program 
eligibility under Sec. 206.3(a)(2), the definitions in 34 CFR 201.3 
(Chapter 1--Migrant Education Program) and 20 CFR 633.104 (Employment 
and Training Administration, Department of Labor--Migrant and Seasonal 
Farmworker Programs) apply.

(Authority: 20 U.S.C. 1070d-2(a))

[46 FR 35075, July 6, 1981, as amended at 52 FR 24920, July 1, 1987; 57 
FR 60407, Dec. 18, 1992]



Subpart B_What Kinds of Activities Does the Secretary Assist Under These 
                                Programs?



Sec. 206.10  What types of services may be provided?

    (a) General. A grantee may use funds under HEP or CAMP to support 
approved projects designed to provide academic and supporting services 
and financial assistance to eligible participants as described in Sec. 
206.3.
    (b) Types of services--(1) HEP projects. A HEP project may provide 
the following types of services to assist participants in obtaining the 
equivalent of a secondary school diploma, and as needed, to assure the 
success of the participants in meeting the project's objectives and in 
succeeding at the secondary school level and beyond:
    (i) Recruitment services to reach persons who are eligible under 
Sec. 206.3 (a) and (b).
    (ii) Educational services that provide instruction designed to help 
students pass an examination and obtain a certificate that meets the 
guidelines for high school equivalency established by the State in which 
the project is located.
    (iii) Supportive services that include the following:
    (A) Personal, vocational, and academic counseling;
    (B) Placement services designed to place students in a university, 
college, or junior college program, or in military services or career 
positions; and
    (C) Health services.
    (iv) Information concerning and assistance in obtaining available 
student financial aid.
    (v) Weekly stipends for high school equivalency program 
participants.
    (vi) Housing for those enrolled in residential programs.
    (vii) Exposure to cultural events, academic programs, and other 
educational and cultural activities usually not available to migrant 
youth.
    (viii) Other essential supportive services, as needed, to ensure the 
success of eligible students.
    (2) CAMP projects. A CAMP project may provide the following types of 
services to assist the participants in meeting the project's objectives 
and in succeeding in an academic program of study at the IHE:
    (i) Outreach and recruitment services to reach persons who are 
eligible under Sec. 206.3 (a) and (c).
    (ii) Supportive and instructional services, including:
    (A) Personal, academic, and career counseling as an ongoing part of 
the program;
    (B) Tutoring and academic-skillbuilding instruction and assistance;
    (C) Assistance with special admissions;
    (D) Health services; and
    (E) Other services as necessary to assist students in completing 
program requirements.
    (iii) Assistance in obtaining student financial aid that includes, 
but is not limited to, the following:
    (A) Stipends.
    (B) Scholarships.
    (C) Student travel.
    (D) Career-oriented work-study.
    (E) Books and supplies.
    (F) Tuition and fees.
    (G) Room and board.
    (H) Other assistance necessary to assist students in completing 
their first year of college or university.
    (iv) Housing support for student living in institutional facilities 
and commuting students.

[[Page 494]]

    (v) Exposure to cultural events, academic programs, and other 
activities not usually available to migrant youth.
    (vi) Other support services as necessary to ensure the success of 
eligible students.
    (c) The health services, and other financial support services 
provided to participating students must:
    (1) Be necessary to ensure their participation in the HEP or CAMP; 
and
    (2) Not detract, because of the amount, from the basic educational 
services provided under those programs.

(Authority: 20 U.S.C. 1070d-2(b) and (c))

[46 FR 35075, July 6, 1981, as amended at 52 FR 24920, July 1, 1987; 57 
FR 60407, Dec. 18, 1992]



Sec. 206.11  What types of CAMP services must be provided?

    (a) In addition to the services provided in Sec. 206.10(b)(2), CAMP 
projects must provide follow-up services for project participants after 
they have completed their first year of college.
    (b) Follow-up services may include--
    (1) Monitoring and reporting the academic progress of students who 
participated in the project during their first year of college and their 
subsequent years in college; and
    (2) Referring these students to on- or off-campus providers of 
counseling services, academic assistance, or financial aid.
    (c) Grantees may not use more than 10 percent of funds awarded to 
them for follow-up services.

(Authority: 20 U.S.C. 1070d-2(c))

[57 FR 60407, Dec. 18, 1992]



                Subpart C_How Does One Apply for a Grant?



Sec. 206.20  What must be included in an application?

    In applying for a grant, an applicant shall:
    (a) Follow the procedures and meet the requirements stated in 
subpart C of 34 CFR part 75 (EDGAR-Direct Grant Programs);
    (b) Submit a grant application that:
    (1) Covers a period of five years unless extraordinary circumstances 
warrant a shorter period; and
    (2) Includes an annual budget of not less than $150,000;
    (c) Include a management plan that contains:
    (1) Assurances that the staff has a demonstrated knowledge of and 
will be sensitive to the unique characteristics and needs of the migrant 
and seasonal farmworker population; and
    (2) Provisions for:
    (i) Staff inservice training;
    (ii) Training and technical assistance;
    (iii) Staff travel;
    (iv) Student travel;
    (v) Interagency coordination; and
    (vi) Project evaluation; and
    (d) Provide the following assurances:
    (1) The grantee will develop and implement a plan for identifying, 
informing, and recruiting eligible participants who are most in need of 
the academic and supporting services and financial assistance provided 
by the project.
    (2) The grantee will develop and implement a plan for identifying 
and using the resources of the participating IHE and the community to 
supplement and enhance the services provided by the project.

(Authority: 20 U.S.C. 1070d-2(a) and (d)-(f))

(Approved by the Office of Management and Budget under control number 
1810-0055)

[46 FR 35075, July 6, 1981, as amended at 52 FR 24920, July 1, 1987; 57 
FR 60407, Dec. 18, 1992]



     Subpart D_How Does the Secretary Make a Grant to an Applicant?



Sec. 206.30  How does the Secretary evaluate an application?

    The Secretary evaluates an application under the procedures in 34 
CFR part 75.

(Authority: 20 U.S.C. 1070d-2(a) and (e))

[62 FR 10403, Mar. 6, 1997]

[[Page 495]]



           Subpart E_What Conditions Must Be Met by a Grantee?



Sec. 206.40  What restrictions are there on expenditures?

    Funds provided under HEP or CAMP may not be used for construction 
activities, other than minor construction-related activities such as the 
repair or minor remodeling or alteration of facilities.

(Authority: Sec. 418A(a); 20 U.S.C. 1070d-2)



PART 222_IMPACT AID PROGRAMS--Table of Contents




                            Subpart A_General

Sec.
222.1 What is the scope of this part?
222.2 What definitions apply to this part?
222.3 How does a local educational agency apply for assistance under 
          section 8002 or 8003 of the Act?
222.4 How does the Secretary determine when an application is timely 
          filed?
222.5 When may a local educational agency amend its application?
222.6 Which applications does the Secretary accept?
222.7 What information may a local educational agency submit after the 
          application deadline?
222.8 What action must an applicant take upon a change in its boundary, 
          classification, control, governing authority, or identity?
222.9 What records must a local educational agency maintain?
222.10 How long must a local educational agency retain records?
222.11 How does the Secretary recover overpayments?
222.12 What overpayments are eligible for forgiveness under section 8012 
          of the Act?
222.13 What overpayments are not eligible for forgiveness under section 
          8012 of the Act?
222.14 What requirements must a local educational agency meet for an 
          eligible overpayment to be forgiven in whole or part?
222.15 How are the filing deadlines affected by requests for other forms 
          of relief?
222.16 What information and documentation must an LEA submit for an 
          eligible overpayment to be considered for forgiveness?
222.17 How does the Secretary determine undue financial hardship and 
          serious harm to a local educational agency's educational 
          program?
222.18 What amount does the Secretary forgive?
222.19 What other statutes and regulations apply to this part?

  Subpart B_Payments for Federal Property Under Section 8002 of the Act

222.20 What definitions apply to this subpart?
222.21 What requirements must a local educational agency meet concerning 
          Federal acquisition of real property within the local 
          educational agency?
222.22 How does the Secretary treat compensation from Federal activities 
          for purposes of determining eligibility and payments?
222.23 How does a local official determine the aggregate assessed value 
          of eligible Federal property for the purpose of a local 
          educational agency's section 8002 payment?
222.24-222.29 [Reserved]

   Subpart C_Payments for Federally Connected Children Under Section 
                       8003(b) and (e) of the Act

222.30 What is ``free public education''?
222.31 To which local educational agencies does the Secretary make basic 
          support payments under section 8003(b) of the Act?
222.32 Upon what information is a local educational agency's basic 
          support payment based?
222.33 When must an applicant make its first or only membership count?
222.34 If an applicant makes a second membership count, when must that 
          count be made?
222.35 How does a local educational agency count the membership of its 
          federally connected children?
222.36 What minimum number of federally connected children must a local 
          educational agency have to receive a payment on behalf of 
          those children under section 8003(b) and (e)?
222.37 How does the Secretary calculate the average daily attendance of 
          federally connected children?
222.38 What is the maximum basic support payment that a local 
          educational agency may receive under section 8003(b)?
222.39 How does a State educational agency identify generally comparable 
          local educational agencies for local contribution rate 
          purposes?
222.40 How does a local educational agency select a local contribution 
          rate based on generally comparable local educational agencies?
222.41 How does a State educational agency compute local contribution 
          rates based upon generally comparable local educational 
          agencies?

[[Page 496]]

222.42-222.49 [Reserved]

     Subpart D_Payments Under Section 8003(d) of the Act for Local 
       Educational Agencies That Serve Children With Disabilities

222.50 What definitions apply to this subpart?
222.51 Which children may a local educational agency count for payment 
          under section 8003(d) of the Act?
222.52 What requirements must a local educational agency meet to receive 
          a payment under section 8003(d)?
222.53 What restrictions and requirements apply to the use of funds 
          provided under section 8003(d)?
222.54 What supplement-not-supplant requirement applies to this subpart?
222.55 What other statutes and regulations are applicable to this 
          subpart?
222.56-222.59 [Reserved]

 Subpart E_Additional Assistance for Heavily Impacted Local Educational 
                Agencies Under Section 8003(f) of the Act

222.60 What are the scope and purpose of these regulations?
222.61 What data are used to determine a local educational agency's 
          eligibility and payment under section 8003(f) of the Act?
222.62 Which local educational agencies are eligible to apply for an 
          additional payment under section 8003(f)?
222.63 What other requirements must a local educational agency meet in 
          order to be eligible for financial assistance under section 
          8003(f)(2)(A)?
222.64 What other requirements must a local educational agency meet in 
          order to be eligible for financial assistance under section 
          8003(f)(2)(B)?
222.65 How may a State aid program affect a local educational agency's 
          eligibility for assistance under section 8003(f)?
222.66 How does the Secretary determine whether a fiscally independent 
          local educational agency is making a reasonable tax effort?
222.67 What tax rates does the Secretary use if real property is 
          assessed at different percentages of true value?
222.68 What tax rates does the Secretary use if two or more different 
          classifications of real property are taxed at different rates?
222.69 What tax rates may the Secretary use if substantial local 
          revenues are derived from local tax sources other than real 
          property taxes?
222.70 How does the Secretary determine whether a fiscally dependent 
          local educational agency is making a reasonable tax effort?
222.71 What information must be provided by the State educational 
          agency?
222.72 How does the Secretary determine a maximum payment for local 
          educational agencies that are eligible for financial 
          assistance under section 8003(f)(2)(A) and Sec. 222.63?
222.73 How does the Secretary determine a maximum payment for local 
          educational agencies that are eligible for financial 
          assistance under section 8003(f)(2)(B) and Sec. 222.64?
222.74 How does the Secretary identify generally comparable local 
          educational agencies for purposes of section 8003(f)?
222.75 How does the Secretary compute the average per pupil expenditure 
          of generally comparable local educational agencies under this 
          subpart?
222.76 What does the Secretary do if appropriation levels are 
          insufficient to pay in full the amounts calculated under 
          Sec. Sec. 222.72 and 222.73?
222.77-222.79 [Reserved]

   Subpart F_Payments to Local Educational Agencies for Children With 
          Severe Disabilities Under Section 8003(g) of the Act

222.80 What definitions apply to this subpart?
222.81 What requirements must a local educational agency meet to be 
          eligible for a payment under section 8003(g) of the Act?
222.82 How does the Secretary calculate the total amount of funds 
          available for payments under section 8003(g)?
222.83 How does an eligible local educational agency apply for a payment 
          under section 8003(g)?
222.84 How does the Secretary calculate payments under section 8003(g) 
          for eligible local educational agencies?
222.85 How may a local educational agency use funds that it receives 
          under section 8003(g)?

 Subpart G_Special Provisions for Local Educational Agencies That Claim 
                    Children Residing on Indian Lands

                                 General

222.90 What definitions apply to this subpart?
222.91 What requirements must a local educational agency meet to receive 
          a payment under section 8003 of the Act for children residing 
          on Indian lands?
222.92 What additional statutes and regulations apply to this subpart?
222.93 [Reserved]

                     Indian Policies and Procedures

222.94 What provisions must be included in a local educational agency's 
          Indian policies and procedures?

[[Page 497]]

222.95 How are Indian policies and procedures reviewed to ensure 
          compliance with the requirements in section 8004(a) of the 
          Act?
222.96-222.101 [Reserved]

     Indian Policies and Procedures Complaint and Hearing Procedures

222.102 Who may file a complaint about a local educational agency's 
          Indian policies and procedures?
222.103 What must be included in a complaint?
222.104 When does the Assistant Secretary consider a complaint received?
222.105-222.107 [Reserved]
222.108 What actions must be taken upon receipt of a complaint?
222.109 When may a local educational agency reply to a complaint?
222.110 What are the procedures for conducting a hearing on a local 
          educational agency's Indian policies and procedures?
222.111 What is the authority of the hearing examiner in conducting a 
          hearing?
222.112 What procedures are followed after the hearing?
222.113 What are the responsibilities of the Assistant Secretary after 
          the hearing?

  Withholding and Related Procedures for Indian Policies and Procedures

222.114 How does the Assistant Secretary implement the provisions of 
          this subpart?
222.115 When does the Assistant Secretary withhold payments from a local 
          educational agency under this subpart?
222.116 How are withholding procedures initiated under this subpart?
222.117 What procedures are followed after the Assistant Secretary 
          issues a notice of intent to withhold payments?
222.118 How are withholding hearings conducted in this subpart?
222.119 What is the effect of withholding under this subpart?
222.120 When is a local educational agency exempt from withholding of 
          payments?
222.121 How does the affected Indian tribe or tribes request that 
          payments to a local educational agency not be withheld?
222.122 What procedures are followed if it is determined that the local 
          educational agency's funds will not be withheld under this 
          subpart?
222.123-222.129 [Reserved]

Subpart H [Reserved]

Subpart I_Facilities Assistance and Transfers Under Section 8008 of the 
                                   Act

222.140 What definitions apply to this subpart?
222.141 For what types of projects may the Secretary provide assistance 
          under section 8008 of the Act?
222.142 What terms and conditions apply to minimum school facilities 
          operated under section 8008 by another agency?
222.143 What terms and conditions apply to the transfer of minimum 
          school facilities?
222.144-222.149 [Reserved]

 Subpart J_Impact Aid Administrative Hearings and Judicial Review Under 
                         Section 8011 of the Act

222.150 What is the scope of this subpart?
222.151 When is an administrative hearing provided to a local 
          educational agency?
222.152 When may a local educational agency request reconsideration of a 
          determination?
222.153 How must a local educational agency request an administrative 
          hearing?
222.154 How must written submissions under this subpart be filed?
222.155 When and where is an administrative hearing held?
222.156 How is an administrative hearing conducted?
222.157 What procedures apply for issuing or appealing an administrative 
          law judge's decision?
222.158 What procedures apply to the Secretary's review of an initial 
          decision?
222.159 When and where does a party seek judicial review?

         Subpart K_Determinations Under Section 8009 of the Act

222.160 What are the scope and purpose of this subpart?
222.161 How is State aid treated under section 8009 of the Act?
222.162 What disparity standard must a State meet in order to be 
          certified and how are disparities in current expenditures or 
          revenues per pupil measured?
222.163 What proportion of Impact Aid funds may a State take into 
          consideration upon certification?
222.164 What procedures does the Secretary follow in making a 
          determination under section 8009?
222.165 What procedures does the Secretary follow after making a 
          determination under section 8009?
222.166-222.169 [Reserved]

Appendix to Subpart K--Determinations Under Section 8009 of the Act--
          Methods of Calculations for Treatment of

[[Page 498]]

          Impact Aid Payments Under State Equalization Programs

  Subpart L_Impact Aid Discretionary Construction Grant Program Under 
                       Section 8007(b) of the Act

                                 General

222.170 What is the purpose of the Impact Aid Discretionary Construction 
          grant program (Section 8007(b) of the Act)?
222.171 What LEAs may be eligible for Discretionary Construction grants?
222.172 What activities may an LEA conduct with funds received under 
          this program?
222.173 What activities will not receive funding under a Discretionary 
          Construction grant?
222.174 What prohibitions apply to these funds?
222.175 What regulations apply to recipients of funds under this 
          program?
222.176 What definitions apply to this program?

                               Eligibility

222.177 What eligibility requirements must an LEA meet to apply for an 
          emergency grant under the first priority?
222.178 What eligibility requirements must an LEA meet to apply for an 
          emergency grant under the second priority?
222.179 Under what circumstances may an ineligible LEA apply on behalf 
          of a school for an emergency grant under the second priority?
222.180 What eligibility requirements must an LEA meet to apply for a 
          modernization grant under the third priority?
222.181 What eligibility requirements must an LEA meet to apply for a 
          modernization grant under the fourth priority?
222.182 Under what circumstances may an ineligible LEA apply on behalf 
          of a school for a modernization grant under the fourth 
          priority?

                        How To Apply for a Grant

222.183 How does an LEA apply for a grant?
222.184 What information must an application contain?
222.185 What additional information must be included in an emergency 
          grant application?
222.186 What additional information must be included in a modernization 
          grant application?
222.187 Which year's data must an SEA or LEA provide?

                           How Grants Are Made

222.188 What priorities may the Secretary establish?
222.189 What funding priority does the Secretary give to applications?
222.190 How does the Secretary rank and select applicants?
222.191 What is the maximum award amount?
222.192 What local funds may be considered as available for this 
          project?
222.193 What other limitations on grant amounts apply?
222.194 Are ``in-kind'' contributions permissible?

             Conditions and Requirements Grantees Must Meet

222.195 How does the Secretary make funds available to grantees?
222.196 What additional construction and legal requirements apply?

    Authority: 20 U.S.C. 7701-7714, unless otherwise noted.

    Source: 60 FR 50778, Sept. 29, 1995, unless otherwise noted.



                            Subpart A_General



Sec. 222.1  What is the scope of this part?

    The regulations in this part govern the provision of financial 
assistance under title VIII of the Elementary and Secondary Education 
Act of 1965 (ESEA) to local educational agencies (LEAs) in areas 
affected by Federal activities.

(Authority: 20 U.S.C. 7701-7714)



Sec. 222.2  What definitions apply to this part?

    (a)(1) The following terms defined in section 8013 of the Act apply 
to this part:

Armed forces
Average per-pupil expenditure
Construction
Current expenditures
Indian lands
Local contribution percentage
Low-rent housing
School facilities

    (2) The following term defined in Sec. 222.30 applies to this part:

Free public education

    (b) The following terms defined in section 14101 of the ESEA 
(General Provisions) also apply to this part:

Average daily attendance (ADA)
Child
County
Department
Outlying area
Parent

[[Page 499]]

Secretary
State
State educational agency (SEA)

    (c) In addition, the following definitions apply to this part:
    Act means title VIII of the Elementary and Secondary Education Act 
of 1965 (ESEA), as amended.
    Applicant means any LEA that files an application for financial 
assistance under section 8002, 8003, or 8006 of the Act and the 
regulations in this part implementing those provisions. Except as 
provided in section 8005(d)(4) of the Act, an SEA may be an applicant 
for assistance under section 8003 only if the SEA directly operates and 
maintains facilities for providing free public education for the 
children it claims in its application.

(Authority: 20 U.S.C. 7705 and 7713(9))

    Application means a complete and signed application in the form 
approved by the Secretary, filed by an applicant.

(Authority: 20 U.S.C. 7705)

    Federally connected children means children described in sections 
8003(a)(1) and 8010(c)(2) of the Act.

(Authority: 20 U.S.C. 7703(a)(1) and 7710(c)(2))

    Federal property. (1) The term means--
    (i) Federal property described in section 8013; and
    (ii) Ships that are owned by the United States and whose home ports 
are located upon Federal property described in this definition.
    (2) Notwithstanding paragraph (1) of this definition, for the 
purpose of section 8002 the term does not include--
    (i) Any real property that the United States does not own in fee 
simple, except for Indian lands described in section 8013(7), and 
transferred property described in section 8002(d); and
    (ii) Real property described in section 8002(c) (real property with 
respect to which payments are being made under section 13 of the 
Tennessee Valley Authority Act of 1933).

(Authority: 20 U.S.C. 7702(c) and (d), and 7713(5) and (7))

    Fiscally dependent LEA means an LEA that does not have the final 
authority to determine the amount of revenue to be raised from local 
sources for current expenditure purposes.

(Authority: 20 U.S.C. 7702(b)(2) and 7703(f))

    Fiscally independent LEA means an LEA that has the final authority 
to determine the amount of revenue to be raised from local sources for 
current expenditure purposes within the limits established by State law.

(Authority: 20 U.S.C. 7702(b)(2) and 7703(f))

    Local educational agency (LEA) is defined in section 8013(9). Except 
for an SEA qualifying under section 8005(d)(4), the term includes an SEA 
only so long as--
    (1) The SEA directly operates and maintains the facilities for 
providing free public education for the children it claims in its 
application;
    (2) The children claimed by the SEA actually are attending those 
State-operated facilities; and
    (3) The SEA does not, through a tuition arrangement, contract, or by 
any other means, pay another entity to operate and maintain facilities 
for those children.

(Authority: 20 U.S.C. 7705(d)(4) and 7713(9))

    Local real property tax rate for current expenditure purposes. (1) 
For a fiscally independent LEA, the term means the entire tax levied on 
real property within the LEA, if all but a de minimus amount of the 
total proceeds from the tax levy are available to that LEA for current 
expenditures (as defined in section 8013).
    (2) For a fiscally dependent LEA, the term means the following:
    (i) The entire tax levied by the general government on real property 
if all but a de minimus amount of the total proceeds from that tax levy 
are available to the LEA for current expenditures (as defined in section 
8013);
    (ii) That portion of a local real property tax rate designated by 
the general government for current expenditure purposes (as defined in 
section 8013); or
    (iii) If no real property tax levied by the general government meets 
the criteria in paragraphs (2)(i) or (ii) of this definition, an imputed 
tax rate that the Secretary determines by--
    (A) Dividing the total local real property tax revenue available for 
current

[[Page 500]]

expenditures of the general government by the total revenue from all 
local sources available for current expenditures of the general 
government;
    (B) Multiplying the figure obtained in paragraph (2)(iii)(A) of this 
definition by the revenue received by the LEA for current expenditures 
(as defined in section 8013) from the general government; and
    (C) Dividing the figure obtained in paragraph (2)(iii)(B) of this 
definition by the total current actual assessed value of all real 
property in the district.
    (3) The term does not include any portion of a tax or revenue that 
is restricted to or dedicated for any specific purpose other than 
current expenditures (as defined in section 8013).

(Authority: 20 U.S.C. 7702(b)(2) and 7703(f))

    Membership means the following:
    (1)(i) The definition given to the term by State law; or
    (ii) If State law does not define the term, the number of children 
listed on an LEA's current enrollment records on its survey date(s).
    (2) The term includes children for whom the applicant is responsible 
for providing a free public education, but who are attending schools 
other than those operated by the applicant under a tuition arrangement 
described in paragraph (4) of the definition of ``free public 
education'' in Sec. 222.30.
    (3) The term does not include children who--
    (i) Have never attended classes in schools of the LEA or of another 
educational entity with which the LEA has a tuition arrangement;
    (ii) Have permanently left the LEA;
    (iii) Otherwise have become ineligible to attend classes there; or
    (iv) Attend the schools of the applicant LEA under a tuition 
arrangement with another LEA that is responsible for providing them a 
free public education.

(Authority: 20 U.S.C. 7703 and 8801(1))

    Parent employed on Federal property. (1) The term means the 
following:
    (i) An employee of the Federal Government who reports to work on, or 
whose place of work is located on, Federal property.
    (ii) A person not employed by the Federal Government but who spends 
more than 50 percent of his or her working time on Federal property 
(whether as an employee or self-employed) when engaged in farming, 
grazing, lumbering, mining, or other operations that are authorized by 
the Federal Government, through a lease or other arrangement, to be 
carried out entirely or partly on Federal property.
    (iii) A proportion, to be determined by the Secretary, based on 
persons working on commingled Federal and non-Federal properties other 
than those persons covered under paragraph (1)(ii) of this definition.
    (2) The term does not include a person who reports to work at a work 
station not on Federal property but spends more than 50 percent of his 
working time on Federal property providing services to operations or 
activities authorized to be carried out on Federal property.

(Authority: 20 U.S.C. 7701 and 7703)

    Real property. (1) The term means--
    (i) Land; and
    (ii) Improvements (such as buildings and appurtenances to those 
buildings, railroad lines, utility lines, pipelines, and other permanent 
fixtures), except as provided in paragraph (2).
    (2) The term does not include--
    (i) Improvements that are classified as personal property under 
State law; or
    (ii) Equipment and movable machinery, such as motor vehicles, 
movable house trailers, farm machinery, rolling railroad stock, and 
floating dry docks, unless that equipment or movable machinery is 
classified as real property or subject to local real property taxation 
under State law.

(Authority: 20 U.S.C. 7702 and 7713(5))

    Revenues derived from local sources. (1) The term means--
    (i) Tax funds derived from real estate; and
    (ii) Other taxes or receipts that are received from the county, and 
any other local tax or miscellaneous receipts.
    (2)(i) For the purpose of paragraph (1)(i) of this definition, the 
term tax funds derived from real estate means--

[[Page 501]]

    (A) Locally received funds that are derived from local taxation of 
real property;
    (B) Tax funds that are received on account of Wherry-Spence housing 
projects (12 U.S.C. 1702 et seq.) located on private property; and
    (C) All local real property tax funds that are received from either 
the county or the State, serving as a collecting agency, and that are 
returned to the LEA for expenditure by that agency.
    (ii) The term does not include--
    (A) Any payments under this Act or the Johnson-O'Malley Act (25 
U.S.C. 452);
    (B) Tax payments that are received on account of Wherry-Spence 
housing projects located on federally owned property; or
    (C) Local real property tax funds that are received by the State and 
distributed to LEAs on a per-pupil or formula basis.

(Authority: 20 U.S.C. 7713(11))

    State aid means any contribution, no repayment of which is expected, 
made by a State to or on behalf of an LEA within the State for the 
support of free public education.

(Authority: 20 U.S.C. 7703)

    Uniformed services means the United States Army, Navy, Air Force, 
Marine Corps, Coast Guard, National Oceanic and Atmospheric 
Administration, and Public Health Service.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7703(a)(1); 37 U.S.C. 101)



Sec. 222.3  How does a local educational agency apply for assistance 
under section 8002 or 8003 of the Act?

    An LEA must meet the following application requirements to be 
considered for a payment under section 8002 or 8003:
    (a) Except as provided in paragraphs (b) and (d) of this section, on 
or before January 31 of the fiscal year for which the LEA seeks 
assistance under section 8002, or the fiscal year preceding the fiscal 
year for which the LEA seeks assistance under section 8003, the LEA 
must--
    (1) File with the Secretary a complete and signed application for 
payment under section 8002 or 8003; and
    (2) Certify to the Secretary that it will file, and file, a copy of 
the application referred to in paragraph (a) of this section with its 
SEA.
    (b)(1) If any of the following events that give rise to eligibility 
for payment occur after the filing deadline in paragraph (a)(1) of this 
section, an LEA must file a complete and signed application within the 
time limits required by paragraph (b)(2) of this section:
    (i) The United States Government initiates or reactivates a Federal 
activity, or acquires real property.
    (ii) The United States Congress enacts new legislation.
    (iii) A reorganization of school districts takes place.
    (iv) Property, previously determined by the Secretary not to be 
Federal property, is determined in writing by the Secretary to be 
Federal property.
    (2) Except as provided in paragraph (d) of this section, within 60 
days after the applicable event occurs but not later than September 30 
of the fiscal year for which the LEA seeks assistance under section 
8002, or of the fiscal year preceding the fiscal year for which the LEA 
seeks assistance under section 8003, the LEA must--
    (i) File an application, as permitted by paragraph (b)(1) of this 
section, with the Secretary; and
    (ii) File a copy of that application with its SEA.
    (c)(1) If the SEA wishes to notify the Secretary of any 
inconsistencies or other concerns with an LEA's application, the SEA 
must do so--
    (i) For an application subject to the filing deadlines in paragraph 
(a)(1) of this section, on or before February 15 of the fiscal year for 
which the LEA seeks assistance under section 8002, or of the fiscal year 
preceding the fiscal year for which the LEA seeks assistance under 
section 8003; and
    (ii) On or before fifteen days following the date by which an 
application subject to the filing deadlines in paragraph (b) of this 
section must be filed.
    (2) The Secretary does not process for payment a timely filed 
application until any concerns timely raised by the

[[Page 502]]

SEA are resolved. If the Secretary does not receive comments or 
notification from the SEA by the applicable deadline set forth in 
paragraph (c)(1) of this section, the Secretary assumes that the data 
and statements in the application are, to the best of the SEA's 
knowledge, true, complete, and correct.
    (d) If a filing date in this section falls on a Saturday, Sunday, or 
Federal holiday, the deadline for filing is the next succeeding business 
day.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7705)



Sec. 222.4  How does the Secretary determine when an application is timely 
filed?

    (a) To be timely filed under Sec. 222.3, an application must be 
received by the Secretary, or mailed, on or before the applicable filing 
date.
    (b) An applicant must show one of the following as proof of mailing:
    (1) A legibly dated U.S. Postal Service postmark.
    (2) A legible mail receipt with the date of mailing stamped by the 
U.S. Postal Service.
    (3) A dated shipping label, invoice, or receipt from a commercial 
carrier.
    (4) Any other proof of mailing acceptable to the Secretary.
    (c) If an application is mailed through the U.S. Postal Service, the 
Secretary does not accept either of the following as proof of mailing:
    (1) A private metered postmark.
    (2) A mail receipt that is not dated by the U.S. Postal Service.

(Authority: 20 U.S.C. 7705)

    Note to paragraph (b)(1): The U.S. Postal Service does not uniformly 
provide a dated postmark. Before relying on this method, an applicant 
should check with its local post office.

[62 FR 35412, July 1, 1997]



Sec. 222.5  When may a local educational agency amend its application?

    (a) An LEA may amend its application following any of the events 
described in Sec. 222.3(b)(1) by submitting a written request to the 
Secretary and a copy to its SEA no later than the earlier of the 
following events:
    (1) The 60th day following the applicable event.
    (2) By the end of the Federal fiscal year--
    (i) For which assistance is sought under section 8002; or
    (ii) Preceding the fiscal year for which the LEA seeks assistance 
under section 8003.
    (b) The LEA also may amend its application no later than the end of 
the Federal fiscal year for which assistance is sought under section 
8002 or of the fiscal year preceding the fiscal year for which the LEA 
seeks assistance under section 8003--
    (1) For an adjustment to its payment based on data obtained from a 
second membership count; or
    (2) For an adjustment to its payment based on actual satisfactory 
data regarding eligible Federal properties or federally connected 
children if those data were not available at the time the LEA filed its 
application.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7705)



Sec. 222.6  Which applications does the Secretary accept?

    (a) The Secretary accepts or approves for payment any otherwise 
approvable application under section 8002 or 8003 that is timely filed 
with the Secretary in accordance with Sec. Sec. 222.3, 222.4, and 
222.5, as applicable.
    (b)(1) Except as provided in paragraph (b)(2) of this section, the 
Secretary does not accept or approve for payment any application under 
section 8002 or 8003 that is not timely filed with the Secretary.
    (2) The Secretary accepts and approves for payment any otherwise 
approvable application filed within 60 days of the applicable filing 
date established in Sec. 222.3, but reduces the payment based on the 
application by 10 percent of the amount that would have been paid if the 
application had been filed by the applicable filing date established in 
that section.

(Authority: 20 U.S.C. 7705)

[[Page 503]]



Sec. 222.7  What information may a local educational agency submit after 
the application deadline?

    (a) General. Except as indicated in paragraph (b) of this section, 
the Secretary does not consider information submitted by an applicant 
after the deadlines prescribed in this subpart for submission of 
applications and amendments to applications.
    (b) Information solicited by the Secretary. The Secretary may 
solicit from an applicant at any time additional information to process 
an application.

(Authority: 20 U.S.C. 7702, 7703, 7705, 7706)



Sec. 222.8  What action must an applicant take upon a change in its 
boundary, classification, control, governing authority, or identity?

    (a) Any applicant that is a party to an annexation, consolidation, 
deconsolidation, merger, or other similar action affecting its 
boundaries, classification, control, governing authority, or identity 
must provide the following information to the Secretary as soon as 
practicable:
    (1) A description of the character and extent of the change.
    (2) The effective date of the change.
    (3) Full identification of all predecessor and successor LEAs.
    (4) Full information regarding the disposition of the assets and 
liabilities of all predecessor LEAs.
    (5) Identification of the governing body of all successor LEAs.
    (6) The name and address of each authorized representative 
officially designated by the governing body of each successor LEA for 
purposes of the Act.
    (b) If a payment is made under section 8002 or 8003 to an LEA that 
has ceased to be a legally constituted entity during the regular school 
term due to an action described in paragraph (a) of this section, the 
LEA may retain that payment if--
    (1) An adjustment is made in the payment of a successor LEA to 
account for the payment to the predecessor LEA; or
    (2)(i) The payment amount does not exceed the amount the predecessor 
LEA would have been eligible to receive if the change in boundaries or 
organization had not taken place; and
    (ii) A successor LEA is not an eligible applicant.
    (c) A predecessor LEA receiving any portion of a payment under 
section 8002 or 8003 that exceeds the amount allowed by paragraph 
(b)(2)(i) of this section must return the excessive portion to the 
Secretary, unless the Secretary determines otherwise under section 8012 
of the Act.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7702 and 7703)



Sec. 222.9  What records must a local educational agency maintain?

    Except as otherwise provided in Sec. 222.10--
    (a) An LEA must maintain adequate written records to support the 
amount of payment it received under the Act for any fiscal year;
    (b) On request, the LEA must make its records available to the 
Secretary for the purpose of examination or audit; and
    (c) Each applicant must submit such reports and information as the 
Secretary may require to determine the amount that the applicant may be 
paid under the Act.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 1232f, 7702, 7703, 7704, 7706)



Sec. 222.10  How long must a local educational agency retain records?

    An LEA must retain the records described in Sec. 222.9 until the 
later of--
    (a) Three years after the last payment for a fiscal year; or
    (b) If the records have been questioned on Federal audit or review, 
until the question is finally resolved and any necessary adjustments to 
payments have been made.

(Authority: 20 U.S.C. 1232f, 7702, 7703, 7704, 7706)



Sec. 222.11  How does the Secretary recover overpayments?

    Except as otherwise provided in Sec. Sec. 222.12-222.18, the 
Secretary adjusts for and recovers overpayments as follows:

[[Page 504]]

    (a) If the Secretary determines that an LEA has received a payment 
in excess of what it should have received under the Act and this part, 
the Secretary deducts the amount of the overpayment from subsequent 
payments for which the LEA is eligible under the Act.
    (b)(1) If the LEA is not eligible for subsequent payments under the 
Act, the LEA must promptly refund the amount of the overpayment to the 
Secretary.
    (2) If the LEA does not promptly repay the amount of the overpayment 
or promptly enter into a repayment agreement with the Secretary, the 
Secretary may use the procedures in 34 CFR part 30 to offset that amount 
against payments from other Department programs or, under the 
circumstances permitted in part 30, to request that another agency 
offset the debt.

(Authority: 20 U.S.C. 1226a-1, 7702, 7703, 7706, 7712)

[60 FR 50778, Sept. 29, 1995, as amended at 62 FR 35412, July 1, 1997]



Sec. 222.12  What overpayments are eligible for forgiveness under 
section 8012 of the Act?

    (a) The Secretary considers as eligible for forgiveness under 
section 8012 of the Act (``eligible overpayment'') any overpayment 
amount that is more than an LEA was eligible to receive for a particular 
fiscal year under Public Law 81-874, Public Law 81-815, or the Act 
(except for the types of overpayments listed in Sec. 222.13), and 
that--
    (1) Remains owing on or after July 31, 1997;
    (2) Is the subject of a written request for forgiveness filed by the 
LEA before July 31, 1997; or
    (3) Is the subject of a pending, timely written request for an 
administrative hearing or reconsideration, and has not previously been 
reviewed under Sec. Sec. 222.12--222.18.
    (b) The Secretary applies Sec. Sec. 222.14--222.18 in forgiving, in 
whole or part, an LEA's obligation to repay an eligible overpayment that 
resulted from error either by the LEA or the Secretary.

(Authority: 20 U.S.C. 7712)

[62 FR 35412, July 1, 1997]



Sec. 222.13  What overpayments are not eligible for forgiveness under 
section 8012 of the Act?

    The Secretary does not consider the following overpayments to be 
eligible for forgiveness under section 8012 of the Act:
    (a) Any overpayment under section 7 of Public Law 81-874 or section 
16 of Public Law 81-815.
    (b) An amount received by an LEA, as determined under section 
8003(g) of the Act (payments to LEAs for certain federally connected 
children with severe disabilities, implemented in subpart F of this 
part), that exceeds the LEA's maximum basic support payment under 
section 8003(b) of the Act.
    (c) Any overpayment caused by an LEA's failure to expend or account 
for funds properly in accordance with the following laws and 
regulations:
    (1) Section 8003(d) of the Act (implemented in subpart D of this 
part) or section 3(d)(2)(C) of Public Law 81-874 for certain federally 
connected children with disabilities.
    (2) Section 8003(g) of the Act.

(Authority: 20 U.S.C. 7712)

[62 FR 35413, July 1, 1997]



Sec. 222.14  What requirements must a local educational agency meet for 
an eligible overpayment to be forgiven in whole or part?

    The Secretary forgives an eligible overpayment, in whole or part as 
described in Sec. 222.18, if--
    (a) An LEA submits to the Department's Impact Aid Program office a 
written request for forgiveness by the later of--
    (1) Thirty days from the LEA's initial receipt of a written notice 
of the overpayment; or
    (2) September 2, 1997;
    (b) The LEA submits to the Department's Impact Aid Program office 
the information and documentation described in Sec. 222.16 by the 
deadlines described in paragraph (a) of this section, or other time 
limit established in writing by the Secretary due to lack of 
availability of the information and documentation; and
    (c) The Secretary determines under Sec. 222.17 that--
    (1) In the case either of an LEA's or the Department's error, 
repayment of

[[Page 505]]

the LEA's total eligible overpayments will result in an undue financial 
hardship on the LEA and seriously harm the LEA's educational program; or
    (2) In the case of the Department's error, determined on a case-by-
case basis, repayment would be manifestly unjust (``manifestly unjust 
repayment exception'').

[62 FR 35413, July 1, 1997]



Sec. 222.15  How are the filing deadlines affected by requests for other 
forms of relief?

    Unless the Secretary (or the Secretary's delegatee) extends the 
applicable time limit in writing--
    (a) A request for forgiveness of an overpayment under Sec. 222.14 
does not extend the time within which an applicant must file a request 
for an administrative hearing under Sec. 222.151; and
    (b) A request for an administrative hearing under Sec. 222.151, or 
for reconsideration under Sec. 222.152, does not extend the time within 
which an applicant must file a request for forgiveness under Sec. 
222.14.

(Authority: 20 U.S.C. 7712)

[62 FR 35413, July 1, 1997]



Sec. 222.16  What information and documentation must an LEA submit for an 
eligible overpayment to be considered for forgiveness?

    (a) Every LEA requesting forgiveness must submit, within the time 
limits established under Sec. 222.14(b), the following information and 
documentation for the fiscal year immediately preceding the date of the 
forgiveness request (``preceding fiscal year''):
    (1) A copy of the LEA's annual financial report to the State.
    (2) The LEA's local real property tax rate for current expenditure 
purposes, as described in Sec. 222.17(b).
    (3) The average local real property tax rate of all LEAs in the 
State.
    (4) The average per pupil expenditure (APPE) of the LEA, calculated 
by dividing the LEA's aggregate current expenditures by the total number 
of children in average daily attendance for whom the LEA provided a free 
public education.
    (5) The APPE of the State, as defined in section 8013 of the ESEA.
    (b) An LEA requesting forgiveness under Sec. 222.14(c)(2) 
(manifestly unjust repayment exception), or Sec. 222.17(a)(3) (no 
present or prospective ability to repay), also must submit written 
information and documentation in specific support of its forgiveness 
request under those provisions within the time limits established under 
Sec. 222.14(b).

(Authority: 20 U.S.C. 7712)

[62 FR 35413, July 1, 1997]



Sec. 222.17  How does the Secretary determine undue financial hardship 
and serious harm to a local educational agency's educational program?

    (a) The Secretary determines that repayment of an eligible 
overpayment will result in undue financial hardship on an LEA and 
seriously harm its educational program if the LEA meets the requirements 
in paragraph (a)(1), (2), or (3) of this section.
    (1) An LEA other than an LEA described in paragraphs (a)(2) and (3) 
of this section meets the requirements of paragraph (a) of this section 
if--
    (i) The LEA's eligible overpayments on the date of its request total 
at least $10,000;
    (ii) The LEA's local real property tax rate for current expenditure 
purposes, for the preceding fiscal year, is equal to or higher than the 
State average local real property tax rate for that preceding fiscal 
year; and
    (iii) The LEA's average per pupil expenditure (APPE) (as described 
in Sec. 222.16(a)(4)) for the preceding fiscal year is lower than the 
State APPE (as described in Sec. 222.16(a)(5)) for that preceding 
fiscal year.
    (2) The following LEAs qualify under paragraph (a) of this section 
if they meet the requirements in paragraph (a)(1)(i) of this section and 
their APPE (as described in Sec. 222.16(a)(4)) for the preceding fiscal 
year does not exceed 125 percent of the State APPE (as described in 
Sec. 222.16(a)(5)) for that preceding fiscal year:
    (i) An LEA with boundaries that are the same as a Federal military 
installation.
    (ii) Other LEAs with no local real property tax revenues, or with 
minimal local real property tax revenues per pupil due to substantial 
amounts of

[[Page 506]]

Federal property in the LEA as compared with the average amount of those 
revenues per pupil for all LEAs in the State.
    (3) An LEA qualifies under paragraph (a) of this section if neither 
the successor nor the predecessor LEA has the present or prospective 
ability to repay the eligible overpayment.
    (b) The Secretary uses the following methods to determine a tax rate 
for the purposes of paragraph (a)(1)(ii) of this section:
    (1) If an LEA is fiscally independent, the Secretary uses actual tax 
rates if all the real property in the taxing jurisdiction of the LEA is 
assessed at the same percentage of true value. In the alternative, the 
Secretary computes a tax rate for fiscally independent LEAs by using the 
methods described in Sec. Sec. 222.67--222.69.
    (2) If an LEA is fiscally dependent, the Secretary imputes a tax 
rate using the method described in Sec. 222.70(b).

(Authority: 20 U.S.C. 7712)

[62 FR 35413, July 1, 1997]



Sec. 222.18  What amount does the Secretary forgive?

    For an LEA that meets the requirements of Sec. 222.14(a) (timely 
filed forgiveness request) and Sec. 222.14(b) (timely filed information 
and documentation), the Secretary forgives an eligible overpayment as 
follows:
    (a) Forgiveness in whole. The Secretary forgives the eligible 
overpayment in whole if the Secretary determines that the LEA meets--
    (1) The requirements of Sec. 222.17 (undue financial hardship), and 
the LEA's current expenditure closing balance for the LEA's fiscal year 
immediately preceding the date of its forgiveness request (``preceding 
fiscal year'') is ten percent or less of its total current expenditures 
(TCE) for that year; or
    (2) The manifestly unjust repayment exception in Sec. 222.14(c)(2).
    (b) Forgiveness in part. (1) The Secretary forgives the eligible 
overpayment in part if the Secretary determines that the LEA meets the 
requirements of Sec. 222.17 (undue financial hardship), and the LEA's 
preceding fiscal year's current expenditure closing balance is more than 
ten percent of its TCE for that year.
    (2) For an eligible overpayment that is forgiven in part, the 
Secretary--
    (i) Requires the LEA to repay the amount by which the LEA's 
preceding fiscal year's current expenditure closing balance exceeded ten 
percent of its preceding fiscal year's TCE (``calculated repayment 
amount''); and
    (ii) Forgives the difference between the calculated repayment amount 
and the LEA's total overpayments.
    (3) For the purposes of this section, ``current expenditure closing 
balance'' means an LEA's closing balance before any revocable transfers 
to non-current expenditure accounts, such as capital outlay or debt 
service accounts.

    Example: An LEA that timely requests forgiveness has two 
overpayments of which portions remain owing on the date of its request--
one of $200,000 and one of $300,000. Its preceding fiscal year's closing 
balance is $250,000 (before a revocable transfer to a capital outlay or 
debt service account); and 10 percent of its TCE for the preceding 
fiscal year is $150,000.
    The Secretary calculates the amount that the LEA must repay by 
determining the amount by which the preceding fiscal year's closing 
balance exceeds 10 percent of the preceding year's TCE. This calculation 
is made by subtracting 10 percent of the LEA's TCE ($150,000) from the 
closing balance ($250,000), resulting in a difference of $100,000 that 
the LEA must repay. The Secretary then totals the eligible overpayment 
amounts ($200,000 + $300,000), resulting in a total amount of $500,000. 
The Secretary subtracts the calculated repayment amount ($100,000) from 
the total of the two overpayment balances ($500,000), resulting in 
$400,000 that the Secretary forgives.

(Authority: 20 U.S.C. 7712)

[62 FR 35414, July 1, 1997]



Sec. 222.19  What other statutes and regulations apply to this part?

    (a) The following Federal statutes and regulations on 
nondiscrimination apply to assistance under this part:
    (1) The provisions of title VI of the Civil Rights Act of 1964 (Pub. 
L. 88-352) (prohibition of discrimination on the basis of race, color or 
national origin), and the implementing regulations (34 CFR part 100).

(Authority: 42 U.S.C. 2000d--2000d-4)


[[Page 507]]


    (2) The provisions of title IX of the Education Amendments of 1972 
(Pub. L. 92-318) (prohibition of discrimination on the basis of sex), 
and the implementing regulations (34 CFR part 106).

(Authority: 20 U.S.C. 1681-1683)

    (3) The provisions of section 504 of the Rehabilitation Act of 1973 
(Pub. L. 93-112) (prohibition of discrimination on the basis of 
disability), and the implementing regulations (34 CFR part 104).

(Authority: 29 U.S.C. 794)

    (4) The provisions of title II of the Americans with Disabilities 
Act of 1990 (Pub. L. 101-336) (prohibition of discrimination on basis of 
disability), and any implementing regulations.

(Authority: 42 U.S.C. 12101-12213)

    (5) The provisions of the Age Discrimination Act of 1975 (Pub. L. 
94-135) (prohibition of age discrimination), and any implementing 
regulations.

(Authority: 42 U.S.C. 6101)

    (b) The following Education Department General Administrative 
Regulations (EDGAR):
    (1) Subparts A, E, F, and Sec. Sec. 75.900 and 75.910 of 34 CFR 
part 75 (Direct Grant Programs) for payments under sections 8003(d) 
(payments for federally connected children with disabilities), 8007 
(construction), and 8008 (school facilities), except for the following:
    (i) Section 75.603 does not apply to payments under section 8007 
(construction) or section 8008 (school facilities).
    (ii) Section 75.605 does not apply to payments under section 8007 
(construction).
    (iii) Sections 75.600-602, 75.604, and 75.606-617 apply to payments 
under section 8007 (construction) only to the extent that funds received 
under that section are used for major renovations or to construct new 
school facilities.
    (2) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (3) 34 CFR part 80 (Uniform Administrative Requirements for Grants 
and Cooperative Agreements to State and Local Governments), for payments 
under sections 8003(d) (payments for federally connected children with 
disabilities), 8007 (construction), and 8008 (school facilities).
    (4) 34 CFR part 82 (New Restrictions on Lobbying).
    (5) 34 CFR part 85 (Governmentwide Debarment and Suspension 
(Nonprocurement) and Governmentwide Requirements for Drug-free Workplace 
(Grants)).

(Authority: 20 U.S.C. 1221e-3)

[60 FR 50778, Sept. 29, 1995. Redesignated at 62 FR 35412, July 1, 1997]



  Subpart B_Payments for Federal Property Under Section 8002 of the Act



Sec. 222.20  What definitions apply to this subpart?

    In addition to the terms referenced or defined in Sec. 222.2, the 
following definitions apply to this subpart:
    Acquisition or acquired by the United States. (1) The term means--
    (i) The receipt or taking by the United States of ownership in fee 
simple of real property by condemnation, exchange, gift, purchase, 
transfer, or other arrangement;
    (ii) The receipt by the United States of real property as trustee 
for the benefit of individual Indians or Indian tribes; or
    (iii) The imposition by the United States of restrictions on sale, 
transfer, or exchange of real property held by individual Indians or 
Indian tribes.
    (2) The definition of ``acquisition'' in 34 CFR 77.1(c) (Definitions 
that Apply to Department Regulations) of this title does not apply to 
this subpart.

(Authority: 20 U.S.C. 7702)

    Assessed value. For the purpose of determining eligibility under 
section 8002(a)(1) and Sec. 222.21, the following definition applies:
    (1) The term means the value that is assigned to real property, for 
the purpose of generating local real property tax revenues for current 
expenditures (as defined in section 8013 of the Act), by a State or 
local official who is legally authorized to determine that assessed 
value.
    (2) The term does not include--
    (i) A value assigned to tax-exempt real property;
    (ii) A value assigned to real property for the purpose of generating 
other

[[Page 508]]

types of revenues, such as payments in lieu of taxes (PILOTs);
    (iii) Fair market value, or a percentage of fair market value, of 
real property unless that value was actually used to generate local real 
property tax revenues for current expenditures (as defined in section 
8013); or
    (iv) A value assigned to real property in a condemnation or other 
court proceeding, or a percentage of that value, unless that value was 
actually used to generate local real property tax revenues for current 
expenditures (as defined in section 8013).

(Authority: 20 U.S.C. 7702(a)(1))

    Eligible Federal property. (1) The term means ``Federal property'' 
as defined in Sec. 222.2(c) for section 8002, which meets the following 
additional requirements:
    (i) The United States has acquired the Federal property since 1938; 
and
    (ii) The Federal property was not acquired by exchange for other 
Federal property that the United States owned within the school district 
before 1939.
    (2) In addition, for local educational agencies (LEAs) that are 
eligible under Sec. 222.21(a)(2), the term also means land acquired by 
the United States Forest Service between 1915 and 1990.

(Authority: 20 U.S.C. 7702)



Sec. 222.21  What requirements must a local educational agency meet 

concerning Federal acquisition of real property within the local 
educational agency?

    (a) For an LEA with an otherwise approvable application to be 
eligible to receive financial assistance under section 8002, the LEA 
must meet the requirements in subpart A of these regulations and Sec. 
222.22, and, unless otherwise provided by statute as meeting the 
requirements in section 8002(a)(1)(C), document--
    (1) That the United States owns or has acquired ``eligible Federal 
property'' within the LEA, that has an aggregate assessed value of 10 
percent or more of the assessed value of--
    (i) All real property in that LEA, based upon the assessed values of 
the eligible Federal property and of all real property (including that 
Federal property) on the date or dates of acquisition of the eligible 
Federal property; or
    (ii) All real property in the LEA as assessed in the first year 
preceding or succeeding acquisition, whichever is greater, only if--
    (A) The assessment of all real property in the LEA is not made at 
the same time or times that the Federal property was so acquired and 
assessed; and
    (B) State law requires an assessment be made of property so 
acquired; or
    (2)(i) That, as demonstrated by written evidence from the United 
States Forest Service satisfactory to the Secretary, the LEA contains 
between 20,000 and 60,000 acres of land that has been acquired by the 
United States Forest Service between 1915 and 1990; and
    (ii) That the LEA serves a county chartered by State law in 1875 or 
1890.
    (b) ``Federal property'' described in section 8002(d) (certain 
transferred property) is considered to be owned by the United States for 
the purpose of paragraph (a) of this section.
    (c) If, during any fiscal year, the United States sells, transfers, 
is otherwise divested of ownership of, or relinquishes an interest in or 
restriction on, eligible Federal property, the Secretary redetermines 
the LEA's eligibility for the following fiscal year, based upon the 
remaining eligible Federal property, in accordance with paragraph (a) of 
this section. This paragraph does not apply to a transfer of real 
property by the United States described in section 8002(d).
    (d) Except as provided under paragraph (a)(2) of this section, the 
Secretary's determinations and redeterminations of eligibility under 
this section are based on the following documents:
    (1) For a new section 8002 applicant or newly acquired eligible 
Federal property, only upon--
    (i) Original records as of the time(s) of Federal acquisition of 
real property, prepared by a legally authorized official, documenting 
the assessed value of that real property; or
    (ii) Facsimiles of those records such as microfilm or other 
reproduced copies.
    (2) For a redetermination of an LEA's eligibility under section 
8002(a)(1), only upon--

[[Page 509]]

    (i) Records described in paragraph (d)(1) of this section; or
    (ii) Department records.
    (e) The Secretary does not base the determination or redetermination 
of an LEA's eligibility under this section upon secondary documentation 
such as estimates, certifications, or appraisals.

(Authority: 20 U.S.C. 7702(a)(1))



Sec. 222.22  How does the Secretary treat compensation from Federal 
activities for purposes of determining eligibility and payments?

    (a) An LEA with an otherwise approvable application is eligible to 
receive assistance under section 8002 for a fiscal year only if the LEA 
meets the requirements in subpart A of these regulations and Sec. 
222.21, and is not substantially compensated, for the loss in revenue 
resulting from Federal ownership of real property by increases in 
revenue accruing to the LEA during the previous fiscal year from Federal 
activities with respect to the eligible Federal property in the LEA.
    (b) The Secretary considers that an LEA is substantially compensated 
by increases in revenue from Federal activities with respect to the 
eligible Federal property if--
    (1) The LEA received new or increased revenue during the preceding 
fiscal year that is generated directly from the eligible Federal 
property or activities in or on that property; and
    (2) The revenue described in paragraph (b)(1) of this section equals 
or exceeds the maximum payment amount under section 8002(b) for the 
fiscal year for which the LEA seeks assistance.
    (c) If an LEA described in paragraph (a) of this section received 
revenue described in paragraph (b)(1) of this section during the 
preceding fiscal year that is less than the maximum payment amount 
calculated under section 8002(b)(2) for the fiscal year for which the 
LEA seeks assistance, the Secretary reduces that maximum payment amount 
by the amount of that revenue received by the LEA.
    (d) For purposes of this section, the amount of revenue that an LEA 
receives during the previous fiscal year from activities conducted on 
Federal property does not include the following:
    (1) Payments received by the agency from the Secretary of Defense to 
support--
    (i) The operation of a domestic dependent elementary or secondary 
school; or
    (ii) The provision of a free public education to dependents of 
members of the Armed Forces residing on or near a military installation.
    (2) Federal payments-in-lieu-of-taxes (PILOTs or PILTs), including 
PILTs for Federal entitlement lands authorized by Public Law 97-258, 31 
U.S.C. 6901--6906.

(Authority: 20 U.S.C. 7702(a)(2) and (b)(1)(A))

[60 FR 50778, Sept. 29, 1995, as amended at 62 FR 35414, July 1, 1997]



Sec. 222.23  How does a local official determine the aggregate assessed 

value of eligible Federal property for the purpose of a local educational 
agency's section 8002 payment?

    (a) The aggregate assessed value of eligible Federal property for 
the purpose of an LEA's section 8002 payment must be determined, by a 
local official responsible for assessing the value of real property 
located in the jurisdiction of the LEA for the purpose of levying a 
property tax, as follows:
    (1) The local official first determines a fair market value (FMV) 
for the eligible Federal property in each Federal installation or other 
federally owned property (e.g., Federal forest), based on the highest 
and best use of taxable properties adjacent to the eligible Federal 
property.
    (2) The local official then determines a section 8002 assessed value 
for each Federal installation or federally owned property by adjusting 
the FMV established in paragraph (a)(1) of this section by any 
percentage, ratio, index, or other factor that the official would use, 
if the eligible Federal property were taxable, to determine its assessed 
value for the purpose of generating local real property tax revenues for 
current expenditures. In making this adjustment, the official may assume 
that there was a transfer of ownership of the eligible Federal property 
for the year for which the section 8002 assessed value is being 
determined.

[[Page 510]]

    (3) The local official then calculates the aggregate section 8002 
assessed value for all eligible Federal property in the LEA by adding 
the section 8002 assessed values for each different Federal installation 
or federally owned property determined in paragraph (a)(2) of this 
section.

    Example: Two different Federal properties are located within an 
LEA--a Federal forest, and a naval facility. Based upon the highest and 
best use of taxable properties adjacent to the eligible Federal 
property, the local assessor establishes a FMV for the Federal forest of 
$1 million (woodland), and a FMV for the naval facility of $3 million 
(50 percent residential and 50 percent commercial/industrial). Assessed 
values in that taxing jurisdiction are determined by multiplying the FMV 
of property by an assessment ratio--the assessment ratio for woodland 
property is 30 percent of FMV, for residential 60 percent of FMV, and 
for commercial 75 percent of FMV.
    To determine the section 8002 assessed value of the Federal forest, 
the assessor multiplies the FMV for that property ($1,000,000) by 30 
percent (the assessment ratio for woodland property), resulting in a 
section 8002 assessed value of $300,000.
    To determine the section 8002 assessed value for the naval facility, 
the assessor first must determine the portion of the total FMV 
attributable to each property type if that portion has not already been 
established. To make this determination for the residential portion, the 
assessor could multiply the total FMV ($3,000,000) for the naval 
facility by 50 percent (the portion of residential property), resulting 
in a $1.5 million FMV for the residential property. To determine a 
section 8002 assessed value for this residential portion, the assessor 
then would multiply the $1.5 million by 60 percent (assessment ratio for 
residential property), resulting in $900,000.
    Similarly, to determine the portion of the FMV for the naval 
facility attributable to the commercial/industrial property, the 
assessor could multiply the total FMV ($3,000,000) by 50 percent (the 
portion of commercial/industrial property), resulting in $1.5 million. 
To determine the section 8002 assessed value for this commercial/
industrial portion, the official then would multiply the $1.5 million by 
75 percent (the assessment ratio for commercial/industrial property), 
resulting in $1,025,000. The assessor then must add the section 8002 
assessed value figures for the residential portion ($900,000) and for 
the commercial/industrial portion ($1,025,000), resulting in a total 
section 8002 assessed value for the entire naval facility of $1,925,000.
    Finally, the assessor determines the aggregate section 8002 assessed 
value for the LEA by adding the section 8002 assessed value for the 
Federal forest ($300,000), and the section 8002 assessed value for the 
naval facility ($1,925,000), resulting in an aggregate assessed value of 
$2,325,000.

    (b) For the purpose of this section, the terms listed below have the 
following meanings:
    (1) Adjacent means next to or close to the eligible Federal 
property. In most cases, this will be the closest taxable parcels.
    (2)(i) Highest and best use of a parcel of adjacent property means 
the FMV of that parcel determined based upon a ``highest and best use'' 
standard in accordance with State or local law or guidelines if 
available. To the extent that State or local law or guidelines are not 
available, ``highest and best use'' generally will be a reasonable fair 
market value based upon the current use of those properties. However, 
the local official may also consider the most developed and profitable 
use for which the adjacent taxable property is physically adaptable and 
for which there is a need or demand for that use in the near future.
    (ii) A local official may not base the ``highest and best use'' 
value of adjacent taxable property upon potential uses that are 
speculative or remote.
    (iii) If the taxable properties adjacent to the eligible Federal 
property have different highest and best uses, these different uses must 
enter into the local official's determination of the FMV of the eligible 
Federal property under paragraph (a)(1) of this section.

    Example: If a portion of a Federal installation to be valued has 
road or highway frontage with adjacent properties that are used for 
residential and commercial purposes, but the rest of the Federal 
installation is rural and vacant with adjacent properties that are 
agricultural, the local official must take into consideration the 
various uses of the adjacent properties (residential, commercial, and 
agricultural) in determining the FMV of the Federal property under 
paragraph (a)(1) of this section.

(Authority: 20 U.S.C. 7702)

[62 FR 35414, July 1, 1997]

[[Page 511]]



Sec. Sec. 222.24-222.29  [Reserved]



   Subpart C_Payments for Federally Connected Children Under Section 
                       8003(b) and (e) of the Act



Sec. 222.30  What is ``free public education''?

    In addition to the terms defined in Sec. 222.2, the following 
definition applies to this part:
    Free public education. (1) The term means education that is 
provided--
    (i) At public expense;
    (ii)(A) As the complete elementary or secondary educational program 
as determined under State law through grade 12; and
    (B) Preschool education, whether or not included as elementary 
education by State law;
    (iii) In a school of the local educational agency (LEA) or under a 
tuition arrangement with another LEA or other educational entity; and
    (iv) Under public supervision and direction, except with respect to 
children with disabilities.
    (2) For the purpose of paragraph (1)(i) of this definition, 
education is provided at public expense if--
    (i) There is no tuition charge to the child or the child's parents; 
and
    (ii) Federal funds, other than funds under the Act, do not provide a 
substantial portion of the educational program.
    (3) For the purpose of paragraph (1)(ii) of this definition, the 
complete elementary or secondary educational program is the program 
recognized by the State as meeting all requirements for elementary or 
secondary education for the children claimed and, except for preschool 
education, does not include a program that provides only--
    (i) Supplementary services or instruction; or
    (ii) A portion of the required educational program.
    (4) For the purpose of paragraph (1)(iii) of this definition, a 
tuition arrangement must--
    (i) Satisfy all applicable legal requirements in the State; and
    (ii) Genuinely reflect the applicant LEA's responsibility to provide 
a free public education to the children claimed under section 8003.
    (5) For the purpose of paragraph (1)(iv) of this definition, 
education provided under public supervision and direction means 
education that is provided--
    (i) In a school of the applicant LEA or another LEA; or
    (ii) By another educational entity, over which the applicant LEA, or 
other public agency, exercises authority with respect to the significant 
aspects of the educational program for the children claimed. The 
Secretary considers significant aspects of the educational program to 
include administrative decisions relating to teachers, instruction, and 
curriculum.

(Authority: 20 U.S.C. 7703, 7709, 7713(6))



Sec. 222.31  To which local educational agencies does the Secretary make 
basic support payments under section 8003(b) of the Act?

    The Secretary makes payments to an LEA with an otherwise approvable 
application for children claimed under section 8003(b) of the Act if--
    (a) The LEA meets the requirements in subpart A of these regulations 
and this subpart; and
    (b)(1) The LEA is responsible under applicable State or Federal law 
for providing a free public education to those children;
    (2) The LEA is providing a free public education to those children; 
and
    (3) The State provides funds for the education of those children on 
the same basis as all other public school children in the State, unless 
permitted otherwise under section 8009 of the Act.

(Authority: 20 U.S.C. 7703 and 7709)



Sec. 222.32  Upon what information is a local educational agency's basic 
support payment based?

    (a) The Secretary determines an LEA's payment under section 8003(b) 
on the basis of information in the LEA's application, including 
information regarding the membership of federally connected children.
    (b) The LEA must supply information in its application regarding its 
federally connected membership on the

[[Page 512]]

basis of any count described in Sec. Sec. 222.33 through 222.35.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7703 and 7705)



Sec. 222.33  When must an applicant make its first or only membership 
count?

    (a)(1) An applicant must select a day in the current school year as 
the survey date for making the first membership count, which must be no 
earlier than the fourth day of the regular school year and on or before 
January 31.
    (2) The applicant must use the same survey date for all schools in 
the LEA.
    (b) As of the survey date, the applicant must--
    (1) Count the membership of its federally connected children; and
    (2) Count the total membership of its children--both federally 
connected and non-federally connected.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7703, 7705, 7706)



Sec. 222.34  If an applicant makes a second membership count, when must 
that count be made?

    (a)(1) The applicant may, but is not required to, make a second 
count of membership.
    (2) If the applicant chooses to make a second count of membership, 
the applicant must select a day after January 31, but no later than May 
14, as the survey date for making the second membership count, and make 
that count in accordance with Sec. 222.33(b).
    (3) The applicant must use the same survey date for the second 
membership count for all schools in the LEA.
    (b) The applicant may use the information obtained from a second 
membership count to amend its application for assistance as described in 
Sec. 222.5(b)(1).

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7703 and 7705)



Sec. 222.35  How does a local educational agency count the membership of 
its federally connected children?

    An applicant counts the membership of its federally connected 
children by using one or both of the following methods:
    (a) Parent-pupil survey. An applicant may conduct a parent-pupil 
survey to count the membership of its federally connected children, 
which must be counted as of the survey date.
    (1) The applicant shall conduct a parent-pupil survey by providing a 
form to a parent of each pupil enrolled in the LEA to substantiate the 
pupil's place of residence and the parent's place of employment. A 
parent-pupil survey form must include the following:
    (i) Pupil enrollment information (this information may also be 
obtained from school records), including--
    (A) Name of pupil;
    (B) Date of birth of the pupil; and
    (C) Name of public school and grade of the pupil.
    (ii) Pupil residence and parent employment information, including--
    (A) Address of the pupil's residence (or other location information 
for that residence, such as legal description), including the name of 
the Federal facility if the pupil's residence is on Federal property; 
and
    (B) Name (as it appears on the employer's payroll record) of the 
parent (mother, father, legal guardian or other person standing in loco 
parentis) who is employed on Federal property and with whom the pupil 
resides (unless the parent is a member of the uniformed services on 
active duty);
    (C) Name and address of the Federal property on which the parent is 
employed (or other location information, such as legal description), 
unless the parent is a member of the uniformed services on active duty;
    (D) If the parent is a member of the uniformed services on active 
duty, the name, rank, and branch of service of that parent;
    (E) If the parent is a civilian employed on a Federal vessel, the 
name of the vessel, hull number, and name of the controlling agency;
    (F) The signature of the parent supplying the information and the 
date of such signature; and
    (G) The name of the parent's employer and the employer's address (or 
other location information, such as legal description), unless a parent 
is a

[[Page 513]]

member of the uniformed services on active duty.
    (2) An LEA may accept a parent-pupil survey form, or a parent-pupil 
survey form that is signed by a person other than a parent, only under 
unusual circumstances. In those instances, the parent-pupil survey form 
must show why the parent did not sign the survey form, and when, how, 
and from whom the residence and employment information was obtained.
    (b) Source check. (1) An applicant may count the membership of its 
federally connected children by using a source check to substantiate a 
pupil's place of residence or parent's place of employment on the survey 
date.
    (2) A source check is a form provided--
    (i) To a parent's employer, on which the employer certifies as to 
the place of employment of a parent of a pupil claimed;
    (ii) To a housing official, on which the official certifies as to 
the residence of each pupil claimed; or
    (iii) To a tribal official, on which the official certifies as to 
the residence of each pupil claimed residing on Indian lands over which 
that tribal official has jurisdiction.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7703 and 7706)



Sec. 222.36  What minimum number of federally connected children must a 

local educational agency have to receive a payment on behalf of those 
children under section 8003(b) and (e)?

    (a) Except as provided in paragraph (d) of this section, an LEA is 
eligible to receive a payment under section 8003(b) (basic support and 
learning opportunity threshold) and (e) (hold harmless) for a fiscal 
year only if the total number of its eligible federally connected 
children for whom it provided a free public education for the preceding 
fiscal year was--
    (1) At least 400 who were in average daily attendance (ADA); or
    (2) At least 3 percent of the total number of children in ADA.
    (b) Except as provided in paragraph (d) of this section, an 
applicant LEA is eligible to receive a payment under section 8003 for a 
fiscal year on behalf of federally connected children described in 
section 8003(a)(1)(F) or (G) only if the total number of those children 
for whom it provided a free public education for the preceding fiscal 
year was at least--
    (1) 1,000 in ADA; or
    (2) 10 percent of the total number of children in ADA.
    (c) Children described in paragraph (b) of this section are counted 
for the purposes of paragraph (a) of this section only if the applicant 
LEA is eligible to receive a payment on behalf of those children under 
section 8003.
    (d) This section does not apply to hold harmless payments under 
section 8003(e) for fiscal year 1995.

(Authority: 20 U.S.C. 7703(a)(3) and (b)(1)(B))

[60 FR 50778, Sept. 29, 1995, as amended at 62 FR 35415, July 1, 1997]



Sec. 222.37  How does the Secretary calculate the average daily attendance 
of federally connected children?

    (a) This section describes how the Secretary computes the ADA of 
federally connected children for each category in section 8003 to 
determine an applicant's payment.
    (b) If an LEA is in a State that collects actual ADA data for 
purposes of distributing State aid for education, the Secretary 
calculates the ADA of that LEA's federally connected children for the 
current fiscal year payment as follows:
    (1) Except as provided in paragraph (b)(3) of this section--
    (i) By dividing the ADA of all the LEA's children for the second 
preceding fiscal year by the LEA's total membership on its survey date 
for the second preceding fiscal year (or, in the case of an LEA that 
conducted two membership counts in the second preceding fiscal year, by 
the average of the LEA's total membership on the two survey dates); and
    (ii) By multiplying the figure determined in paragraph (b)(1)(i) of 
this section by the LEA's total membership of federally connected 
children in each subcategory described in section 8003 and claimed in 
the LEA's application for the current fiscal year payment (or, in the 
case of an LEA that conducts two membership counts, by the average

[[Page 514]]

of the LEA's total membership of federally connected children in each 
subcategory on the two survey dates).
    (2)(i) For purposes of this section, actual ADA means raw ADA data 
that have not been weighted or adjusted to reflect higher costs for 
specific types of students for purposes of distributing State aid for 
education.
    (ii) If an LEA provides a program of free public summer school, 
attendance data for the summer session are included in the LEA's ADA 
figure in accordance with State law or practice.
    (iii) An LEA's ADA count includes attendance data for children for 
whom it makes tuition arrangements with other educational entities.
    (3) Attendance data are not counted for any child--
    (i) Who is not physically present at school for the daily minimum 
time period required by the State, unless the child is--
    (A) Participating via telecommunication or correspondence course 
programs that meet State standards; or
    (B) Being served by a State-approved homebound instruction program 
for the daily minimum time period appropriate for the child; or
    (ii) Attending the applicant's schools under a tuition arrangement 
with another LEA.
    (c) If an LEA is in a State that does not collect ADA data for 
purposes of distributing State aid for education, the LEA or SEA shall 
submit data necessary for the Secretary to calculate the ADA of the 
LEA's federally connected children as follows:
    (1) If an LEA is in a State that formerly collected ADA data for 
purposes of distributing State aid for education, the SEA may submit the 
total ADA and total membership data for the State for each of the last 
three fiscal years that ADA data were collected. The Secretary uses 
these data to calculate the ADA of the LEA's federally connected 
children by--
    (i) Dividing the total ADA data by the total membership data for 
each of the three fiscal years and averaging the results; and
    (ii) Multiplying the average determined in paragraph (c)(1)(i) of 
this section by the LEA's total membership of federally connected 
children as described in paragraph (b)(1)(ii) of this section.
    (2) An LEA may submit attendance data based on sampling conducted 
during the previous fiscal year. The sampling must include attendance 
data for all children for at least 30 school days. The data must be 
collected during at least three periods evenly distributed throughout 
the school year. Each collection period must consist of at least five 
consecutive school days. The Secretary uses these data to calculate the 
ADA of the LEA's federally connected children by--
    (i) Determining the ADA of all children in the sample;
    (ii) Dividing the figure obtained in paragraph (c)(2)(i) of this 
section by the LEA's total membership for the previous fiscal year; and
    (iii) Multiplying the figure determined in paragraph (c)(2)(ii) of 
this section by the LEA's total membership of federally connected 
children for the current fiscal year, as described in paragraph 
(b)(1)(ii) of this section.
    (3) If an LEA is in a State that distributes State aid for education 
based on data similar to attendance data, the SEA may request that the 
Secretary use those data to calculate the ADA of the LEA's federally 
connected children. If the Secretary determines that those data are, in 
effect, equivalent to attendance data, the Secretary allows use of the 
requested data and determines the method by which the ADA of the LEA's 
federally connected children will be calculated.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7703, 7706, 7713)



Sec. 222.38  What is the maximum basic support payment that a local 
educational agency may receive under section 8003(b)?

    The maximum basic support payment that an LEA may receive under 
section 8003(b) for any fiscal year is the sum of its total weighted 
student units under section 8003(a)(2) for the federally connected 
children eligible to be counted as the basis for payment, multiplied by 
the greater of one of the following:
    (a) One-half of the State average per pupil expenditure for the 
third fiscal

[[Page 515]]

year preceding the fiscal year for which the LEA seeks assistance.
    (b) One-half of the national average per pupil expenditure for the 
third fiscal year preceding the fiscal year for which the LEA seeks 
assistance.
    (c) The comparable local contribution rate (LCR) determined in 
accordance with Sec. Sec. 222.39-222.41.
    (d) The State average per pupil expenditure multiplied by the local 
contribution percentage as defined in section 8013(8) of the Act.

(Authority: 20 U.S.C. 7703 (a), (b) and (c))



Sec. 222.39  How does a State educational agency identify generally 
comparable local educational agencies for local contribution rate purposes?

    (a) To identify generally comparable LEAs within its State for LCR 
purposes, the State educational agency (SEA) for that State shall use 
data from the third fiscal year preceding the fiscal year for which the 
LCR is being computed to group all of its LEAs, including all applicant 
LEAs, as follows:
    (1) Grouping by grade span/legal classification alone. Divide all 
LEAs into groups that serve the same grade span and then subdivide the 
grade span groups by legal classification, if the Secretary considers 
this classification relevant and sufficiently different from grade span 
within the State. As an alternative grade-span division, after 
consultation with the applicant LEAs in the State, divide all LEAs into 
elementary, secondary, or unified grade-span groups, as appropriate, 
within the State.
    (2) Grouping by grade span/legal classification and size. (i) Divide 
all LEAs into groups by grade span (or the alternative grade-span groups 
described in paragraph (a)(1)) of this section and legal classification, 
if relevant and sufficiently different from grade span and size.
    (ii) List all LEAs within each group in descending order by size as 
measured by ADA, placing the LEA with the largest ADA at the top of the 
list. A State that does not tabulate actual annual ADA shall use the 
same formula for establishing ADA for the purpose of ranking LEAs by 
size as the Department has approved for the purpose of calculating 
payments under section 8003 for applicant LEAs in the State.
    (iii) After consultation with the applicant LEAs in the State, 
divide each group into either two subgroups or three subgroups.
    (iv) To determine the subgroups, divide each list at the point(s) 
that will result in as nearly equal numbers of LEAs in each subgroup as 
possible, so that no group is more than one LEA larger than any other 
group.
    (3) Grouping by grade span/legal classification and location. Divide 
all LEAs into groups by grade span (or the alternative grade-span groups 
described in paragraph (a)(1) of this section) and, if relevant and 
sufficiently different from grade span and location, legal 
classification; then subdivide these groups by location, as determined 
by placement inside or outside a metropolitan statistical area (MSA) as 
defined by the U.S. Bureau of the Census. The Department will supply 
SEAs with lists of MSA classifications for their LEAs, and only the 
classifications on those lists will be recognized by the Department for 
the purposes of these regulations.
    (4) Grouping by grade span/legal classification, size, and location. 
(i) Divide all LEAs into groups by grade span (or the alternative grade-
span groups described in paragraph (a)(1) of this section) and, if 
relevant and sufficiently different from grade span, size, and location, 
legal classification; then subdivide these groups by size (into two or 
three subgroups for each grade span, as described in paragraph (a)(2) of 
this section); and further subdivide these groups by location (inside or 
outside an MSA).
    (ii) In using both the size and location factors, the SEA shall 
subdivide according to the size factor before the location factor.
    (b) After applying the following restrictions, the SEA shall compute 
an LCR according to the provisions of Sec. 222.41 for each group of 
generally comparable LEAs identified under paragraph (a) of this 
section, as follows:
    (1) The SEA shall not, when computing an LCR, include the following 
``significantly impacted'' LEAs in any group of generally comparable 
LEAs:

[[Page 516]]

    (i) Any LEA having--in the third fiscal year preceding the fiscal 
year for which the LCR is being computed--20 percent or more of its ADA 
composed of children identified under section 8003(a)(1)(A)-(C).
    (ii) Any LEA having--in the third fiscal year preceding the fiscal 
year for which the LCR is being computed--50 percent or more of its ADA 
composed of children identified under section 8003(a)(1)(A)-(G) who were 
eligible under Sec. 222.36 to be counted as the basis for payment under 
section 8003.
    (2) The SEA may not compute an LCR for any group that contains fewer 
than 10 LEAs.
    (c)(1) For an applicant LEA that satisfies the requirements 
contained in paragraph (c)(3) of this section, the SEA, in consultation 
with the LEA, may select a subgroup of 10 or more generally comparable 
LEAs from the group identified under paragraph (a)(2) of this section 
that includes the applicant LEA.
    (2) An LEA that otherwise meets either of the requirements of 
paragraph (c)(3) of this section but serves a different span of grades 
from all other LEAs in its State (and therefore cannot match any group 
of generally comparable LEAs under paragraph (a)(2) of this section) 
must be matched, for purposes of this paragraph (c) only, to a group 
using legal classification and size as measured by ADA. The group 
identified using legal classification and size will be the applicant's 
group under paragraph (a)(2) of this section for purposes of this 
paragraph (c) only.
    (3) In order to qualify under paragraph (c) (1) or (2) of this 
section, an applicant LEA must either--
    (i)(A) Be located entirely on Federal land; and
    (B) Be raising either no local revenues or an amount of local 
revenues the Secretary determines to be minimal; or
    (ii)(A) Be located in a State where State aid makes up no more than 
40 percent of the State average per pupil expenditure in the third 
fiscal year preceding the fiscal year for which the LCR is being 
computed;
    (B) In its application, have federally connected children identified 
under section 8003(a)(1)(A)-(C) equal to at least 20 percent of its 
total ADA; and
    (C) In its application, have federally connected children identified 
under section 8003(a)(1)(A)-(G) who were eligible under Sec. 222.36 to 
be counted as the basis for payment under section 8003 equal to at least 
50 percent of its total ADA.
    (4) In the case of an applicant LEA that meets either of the 
requirements contained in paragraph (c)(3) of this section, the SEA, in 
consultation with the LEA, may select 10 or more generally comparable 
LEAs that share one or more common factors of general comparability with 
the eligible applicant LEA, as follows:
    (i)(A) The SEA must consider one or more generally accepted, 
objectively defined factors that affect the applicant's cost of 
educating its children. Examples of such cost-related factors include 
location inside or outside an MSA, sparsity of population, an unusually 
large geographical area, economically depressed area, low-income 
families, children with disabilities, neglected or delinquent children, 
low-achieving children, children with limited English proficiency, and 
minority children.
    (B) The SEA may not consider cost-related factors that can be varied 
at the discretion of the applicant LEA or its generally comparable LEAs 
or factors dependent on the wealth of the applicant LEA or its generally 
comparable LEAs. Examples of factors that may not be considered include 
special alternative curricular programs, pupil-teacher ratio, and per 
pupil expenditures.
    (ii) The SEA must apply the factor or factors of general 
comparability recommended under paragraph (c)(4)(i)(A) of this section 
in one of the following ways in order to identify 10 or more generally 
comparable LEAs for the eligible applicant LEA, none of which may be 
significantly impacted LEAs:
    (A) The SEA identifies all of the LEAs in the group to which the 
eligible applicant LEA belongs under paragraph (a)(2) of this section 
that share the recommended factor or factors. If the subgroup containing 
the eligible applicant LEA includes at least 10 other LEAs (excluding 
significantly

[[Page 517]]

impacted LEAs), it will be the eligible applicant LEA's new group of 
generally comparable LEAs. The LCR for the eligible applicant LEA shall 
be computed using the data for all of the LEAs in the subgroup except 
the eligible applicant LEA.

    Example. An eligible applicant LEA contains a designated 
economically depressed area, and the SEA recommends ``economically 
depressed area'' as an additional factor of general comparability. From 
the group of LEAs under paragraph (a)(2) of this section that includes 
the eligible applicant LEA, the SEA identifies two subgroups, those LEAs 
that contain a designated economically depressed area and those that do 
not. The entire subgroup identified by the SEA that includes the 
eligible applicant LEA is that LEA's new group of generally comparable 
LEAs if it contains at least 10 LEAs.

    (B) After the SEA identifies all of the LEAs in the group that the 
eligible applicant LEA belongs to under paragraph (a)(2) of this section 
that share the recommended factor or factors, the SEA then 
systematically orders all of the LEAs in the group that includes the 
eligible applicant LEA. The SEA may further divide the ordered LEAs into 
subgroups by using logical division points (e.g., the median, quartiles, 
or standard deviations) or a continuous interval of the ordered LEAs 
(e.g., a percentage or a numerical range). If the subgroup containing 
the eligible applicant LEA includes at least 10 other LEAs (excluding 
significantly impacted LEAs), it will be the eligible applicant LEA's 
new group of generally comparable LEAs. The LCR for the eligible 
applicant LEA shall be computed using the data for all of the LEAs in 
the subgroup except the eligible applicant LEA.

    Example 1. An eligible applicant LEA serves an unusually high 
percentage of children with disabilities, and the SEA recommends 
``proportion of children with disabilities'' as an additional 
comparability factor. From the group of LEAs under paragraph (a)(2) of 
this section that includes the eligible applicant LEA, the SEA lists the 
LEAs in descending order according to the percentage of children with 
disabilities enrolled in each of the LEAs. The SEA divides the list of 
LEAs into four groups containing equal numbers of LEAs. The group 
containing the eligible applicant LEA is that LEA's new group of 
generally comparable LEAs if it contains at least 10 LEAs.
    Example 2. An eligible applicant LEA serves an unusually high 
percentage of minority children, and the SEA recommends ``proportion of 
minority children'' as an additional comparability factor. From the 
group of LEAs under paragraph (a)(2) of this section that includes the 
eligible applicant LEA, the SEA lists the LEAs in descending order 
according to the percentage of minority children enrolled in each of the 
LEAs. The SEA chooses from the list of LEAs the 15 LEAs whose 
percentages of minority children are closest to the eligible applicant 
LEA's. These 15 LEAs will be the eligible applicant LEA's new group of 
generally comparable LEAs.

    (C) The SEA may recommend and apply more than one factor of general 
comparability in selecting a new group of 10 or more generally 
comparable LEAs for the eligible applicant LEA. If the subgroup 
containing the eligible applicant LEA includes at least 10 other LEAs 
(excluding significantly impacted LEAs), it will be the eligible 
applicant LEA's new group of generally comparable LEAs. The LCR for the 
eligible applicant LEA shall be computed using the data from all of the 
LEAs in the subgroup except the eligible applicant LEA.

    Example. An eligible applicant LEA is very sparsely populated and 
serves an unusually high percentage of children with limited English 
proficiency. The SEA recommends ``sparsity of population'' and 
``proportion of children with limited English proficiency'' as 
additional comparability factors. From the group of LEAs under paragraph 
(a)(2) of this section that includes the eligible applicant LEA, the SEA 
identifies all LEAs that are sparsely populated. The SEA further 
subdivides the sparsely populated LEAs into two groups, those that serve 
an unusually high percentage of children with limited English 
proficiency and those that do not. The subgroup of at least 10 sparsely 
populated LEAs that serve a high percentage of children with limited 
English proficiency is the eligible applicant LEA's new group of 
generally comparable LEAs.

    (4)(i) Using the new group of generally comparable LEAs selected 
under paragraph (c)(4) of this section, the SEA shall compute the LCR 
for the eligible applicant LEA according to the provisions of Sec. 
222.41.
    (ii) The SEA shall submit the resulting LCR to the Secretary and 
provide the Secretary a description of the additional factor or factors 
of general comparability and the data used to identify

[[Page 518]]

the new group of generally comparable LEAs.
    (iii) The Secretary reviews the data submitted by the SEA, and 
accepts the LCR for the purpose of use under section 8003(b)(1)(C)(iii) 
in determining the LEA's maximum payment under section 8003 if the 
Secretary determines that it meets the purposes and requirements of the 
Act and this part.
    (d) This section does not apply to applicant LEAs located in--
    (1) Puerto Rico;
    (2) Wake Island;
    (3) Guam;
    (4) American Samoa;
    (5) Any outlying area; and
    (6) Any State in which there is only one LEA.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7703(b)(1)(C)(iii))



Sec. 222.40  How does a local educational agency select a local 

contribution rate based on generally comparable local educational 
agencies?

    (a) In selecting an LCR based upon generally comparable LEAs, an LEA 
shall use the following steps:
    (1) Step 1. The LEA shall select the factor or factors in Sec. 
222.39 the LEA wishes to use as the basis for general comparability.
    (2) Step 2. Using State-supplied data, the LEA shall identify within 
the State the entire group of LEAs (containing at least 10 LEAs 
exclusive of significantly impacted LEAs described in Sec. 
222.39(b)(1)) that matches the factor or factors selected in Step 1 and 
that contains the applicant LEA or would contain the applicant LEA if it 
were not significantly impacted.
    (3) Step 3. The LEA shall recommend to the Secretary the LCR, which 
the SEA has computed according to the provisions of Sec. 222.39, based 
on the group identified in Step 2.
    (b) A significantly impacted LEA described in Sec. 222.39(b)(1) 
may--
    (1) Apply for assistance under this program; and
    (2) Under the generally comparable LEA method, recommend for itself 
the LCR of any group in which it would be included based on grade span/
legal classification, size, location, or a combination of these factors, 
if it were not excluded as significantly impacted in Sec. 222.39(b)(1).

    Example. An LEA applies for assistance under section 8003 and wishes 
to recommend to the Secretary an LCR based on generally comparable LEAs 
within its State.

                   1. Characteristics of Applicant LEA

    The grade span of the applicant LEA is kindergarten through grade 8 
(K-8). In the applicant's State, legal classification of LEAs is based 
on grade span, and thus does not act to further subdivide groups of 
LEAs.
    The ADA of the applicant LEA is above the median ADA of LEAs serving 
only K-8 in the State.
    The applicant LEA is located outside an MSA.

        2. Characteristics of Other LEAs Serving Same Grade Span

    The SEA of the applicant's State groups all LEAs in its State 
according to the factors in Sec. 222.39.
    (a) The SEA identifies the following groups:
    (i) One hundred and one LEAs serve only K-8. The SEA has identified 
a group of 50 LEAs having an ADA above the median ADA for the group of 
101, one LEA having an ADA at the median, and a group of 50 LEAs having 
an ADA below the median ADA; and according to Sec. 222.39(a)(2)(i), the 
SEA considers 51 LEAs to have an ADA below the median ADA.
    (ii) Of the 101 LEAs in the group, the SEA has identified a group of 
64 LEAs as being inside an MSA and a group of 37 LEAs as being outside 
an MSA.
    (iii) Among the group of 50 LEAs having an ADA above the median, the 
SEA has identified a group of 35 LEAs as being inside an MSA and a group 
of 15 LEAs as being outside an MSA.
    (iv) Among the group of 51 LEAs having an ADA at or below the 
median, the SEA has identified a group of 29 LEAs as being inside an MSA 
and 22 LEAs as being outside an MSA.
    (v) One LEA has 20 percent of its ADA composed of children 
identified under section 8003(a)(1)(A)-(C) and, therefore, must be 
excluded from any group it falls within before the SEA computes an LCR 
for the group. The LEA has an ADA below the median ADA and is located 
outside an MSA.
    (b) On the basis of Sec. 222.41, the SEA computes the LCR for each 
group of generally comparable LEAs that the SEA has identified.

                3. Selection of Generally Comparable LEAs

    The applicant LEA selects the group of generally comparable LEAs 
matching the factor or factors it wishes to use as the basis

[[Page 519]]

for general comparability. Under the requirements of Sec. 222.39, the 
applicant LEA must begin with the group that includes all LEAs with its 
grade span, and, if relevant and sufficiently different, legal 
classification. In this case, grade span and legal classification happen 
to be the same. Thus, the group would include 100 LEAs, after excluding 
the one significantly impacted LEA. The applicant LEA then has several 
options:
    (a) Option 1. The applicant LEA may select as its group of generally 
comparable LEAs on which to base its recommended LCR the entire group of 
100 LEAs serving K-8, after excluding the one significantly impacted 
LEA. The applicant LEA then recommends to the Secretary as its LCR the 
rate computed for this group by the SEA.
    (b) Option 2. Instead of selecting the group of 100, the applicant 
LEA may select as its generally comparable group only those LEAs within 
the 101 (the significantly impacted LEA must be included initially for 
the purpose of determining the median ADA) that have an ADA above the 
median ADA, that is, the group of 50. The applicant LEA then recommends 
to the Secretary as its LCR the rate computed for the group by the SEA.
    (c) Option 3. Instead of selecting either of the groups described in 
Options 1 and 2, the applicant LEA may select as its generally 
comparable group only those LEAs within the 100 that are outside an MSA; 
that is, the group of 36, after excluding the one significantly impacted 
LEA. The applicant LEA then recommends to the Secretary as its LCR the 
rate computed for this group by the SEA.
    (d) Option 4. Instead of selecting any of the groups described in 
Options 1, 2, and 3, the applicant LEA may select as its generally 
comparable group only those LEAs that both have an ADA above the median 
ADA for the 101 and are outside an MSA; that is, the group of 15. The 
applicant LEA then recommends to the Secretary as its LCR the rate 
computed for this group by the SEA. However, as provided in Sec. 
222.39(b)(2), if the SEA were to have identified fewer than 10 LEAs 
under any factor or combination of factors, the SEA would not have 
computed a rate for such a group. Therefore, an applicant LEA included 
in such a group would not be able to use this factor or combination of 
factors in recommending its LCR to the Secretary. The significantly 
impacted LEA described in Sec. 222.39(b)(1), while included for 
determining the median ADA, is excluded from the computation of any 
group's LCR. However, the significantly impacted LEA may recommend for 
itself the LCR of any group it matches in grade span/legal 
classification, size, location, or a combination of these factors, (that 
is, in the case of the significantly impacted LEA referred to in this 
example, below the median ADA and outside an MSA), provided the group 
contains at least 10 LEAs that are not significantly impacted.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7703(b)(1)(C)(iii) and 7703(f)(3)(A)(i)(II) and 
(III))



Sec. 222.41  How does a State educational agency compute local contribution 
rates based upon generally comparable local educational agencies?

    Except as otherwise specified in the Act, the SEA, subject to the 
Secretary's review and approval, shall compute an LCR for each group of 
generally comparable LEAs within its State that was identified using the 
factors in Sec. 222.39, as follows:
    (a)(1) The SEA shall compile the aggregate local current 
expenditures of the comparable LEAs in each group for the third fiscal 
year preceding the fiscal year for which the LCR is being computed.
    (2) For purposes of this section, the SEA shall consider only those 
aggregate current expenditures made by the generally comparable LEAs 
from revenues derived from local sources. No State or Federal funds may 
be included.
    (b) The SEA shall compile the aggregate number of children in ADA to 
whom the generally comparable LEAs in each group provided a free public 
education during the third fiscal year preceding the fiscal year for 
which the LCR is being computed.
    (c) The SEA shall divide--
    (1) The aggregate current expenditures determined under paragraph 
(a) of this section by;
    (2) The aggregate number of children determined under paragraph (b) 
of this section.
    (d) The SEA shall submit the resulting figure as the ``comparable 
LCR'' to be used by the Secretary under section 8003(b)(1)(C)(iii) in 
determining the LEA's maximum payment amount under section 8003.

(Authority: 20 U.S.C. 7703(b)(1)(C)(iii))

[[Page 520]]



Sec. Sec. 222.42-222.49  [Reserved]



     Subpart D_Payments Under Section 8003(d) of the Act for Local 
       Educational Agencies That Serve Children With Disabilities



Sec. 222.50  What definitions apply to this subpart?

    In addition to the terms referenced or defined in Sec. 222.2, the 
following definitions in 20 U.S.C. 1401 or 34 CFR Sec. 77.1 apply to 
this subpart:
    Children with disabilities means children--
    (1)(i) 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
    (ii) Who, by reason thereof, need special education and related 
services.
    (2) The term children with disabilities for children aged 3 to 5, 
inclusive, may, at a State's discretion, include children--
    (i) 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
    (ii) Who, by reason thereof, need special education and related 
services.
    Children with specific learning disabilities means children who have 
a disorder in one or more of the basic psychological processes involved 
in understanding or in using language, spoken or written, which disorder 
may manifest itself in imperfect ability to listen, think, speak, read, 
write, spell, or do mathematical calculations. These disorders include 
conditions such as perceptual disabilities, brain injury, minimal brain 
dysfunction, dyslexia, and developmental aphasia. This term does not 
include children who have learning problems which are primarily the 
result of visual, hearing, or motor disabilities, of mental retardation, 
of emotional disturbance, or of environmental, cultural, or economic 
disadvantage.
    Free appropriate public education means special education and 
related services that--
    (1) Have been provided at public expense, under public supervision 
and direction, and without charge;
    (2) Meet the standards of the State educational agency;
    (3) Include an appropriate preschool, elementary, or secondary 
school education in the State involved; and
    (4) Are provided in conformity with the individualized education 
program (IEP) required under section 1414(a)(5) of the Individuals with 
Disabilities Education Act.
    Individualized education program (IEP) means--
    (1) A written statement for each child with a disability developed 
in any meeting by a representative of the LEA or an intermediate 
educational unit who shall be qualified to provide, or supervise the 
provision of, specially designed instruction to meet the unique needs of 
children with disabilities, the teacher, the parents or guardian of the 
child, and whenever appropriate, the child, which statement must 
include--
    (i) A statement of the present levels of educational performance of 
the child;
    (ii) A statement of annual goals, including short-term instructional 
objectives;
    (iii) A statement of the specific educational services to be 
provided to the child, and the extent to which the child will be able to 
participate in regular educational programs;
    (iv) A statement of the needed transition services for students 
beginning no later than age 16 and annually thereafter (and, when 
determined appropriate for the individual, beginning at age 14 or 
younger), including, when appropriate, a statement of the interagency 
responsibilities or linkages (or both) before the student leaves the 
school setting;
    (v) The projected date for initiation and anticipated duration of 
these services; and

[[Page 521]]

    (vi) Appropriate objective criteria and evaluation procedures and 
schedules for determining, on at least an annual basis, whether 
instructional objectives are being achieved.
    (2) In the case where a participating agency, other than the 
educational agency, fails to provide agreed upon services, the 
educational agency shall reconvene the IEP team to identify alternative 
strategies to meet the transition objectives.
    Intermediate educational unit means any public authority, other than 
an LEA, that is under the general supervision of a State educational 
agency, that is established by State law for the purpose or providing 
free public education on a regional basis, and that provides special 
education and related services to children with disabilities within that 
State.
    Preschool means the educational level from a child's birth to the 
time at which the State provides elementary education.
    Related services means transportation and those developmental, 
corrective, and other supportive services (including speech pathology 
and audiology, psychological services, physical and occupational 
therapy, recreation, including therapeutic recreation, social work 
services, counseling services, including rehabilitation counseling, and 
medical services, except that medical services must be for diagnostic 
and evaluation purposes only) as may be required to assist a child with 
a disability to benefit from special education, and includes the early 
identification and assessment of disabling conditions in children.
    Special education means specially designed instruction, at no cost 
to parents or guardians, to meet the unique needs of a child with a 
disability, including--
    (1) Instruction conducted in the classroom, in the home, in 
hospitals and institutions, and in other settings; and
    (2) Instruction in physical education.

(Authority: 20 U.S.C. 1401, 7703, 7705, 7713; 37 U.S.C. 101)



Sec. 222.51  Which children may a local educational agency count for 
payment under section 8003(d) of the Act?

    (a) Except as provided in paragraph (b)(2) of this section, the 
children described in sections 8003(a)(1)(A)(ii), (a)(1)(B), (a)(1)(C), 
and (a)(1)(D) of the Act who are eligible for services under the 
provisions of the Individuals with Disabilities Education Act (20 U.S.C. 
1400 et seq.) may be counted by the local educational agency (LEA) for 
the purpose of computing a payment under section 8003(d).
    (b)(1) An LEA may count a child or children described in paragraph 
(a) of this section who attend private schools or residential programs 
if the LEA has placed or referred the child or children in accordance 
with the provisions of section 613 of the Individuals with Disabilities 
Education Act, 20 U.S.C. 1400 et seq. and 34 CFR part 300, subparts C 
and D.
    (2) Children who are placed in private schools by their parents may 
not be counted under section 8003(d), but may participate in public 
school programs that use section 8003(d) funds.

(Authority: 20 U.S.C. 1400 et seq. and 7703(d))



Sec. 222.52  What requirements must a local educational agency meet to 
receive a payment under section 8003(d)?

    To receive a payment under section 8003(d), an eligible LEA shall--
    (a) State in its application the number of federally connected 
children with disabilities it claims for a payment under section 
8003(d);
    (b) Have in effect a written IEP for each federally connected child 
with disabilities claimed for a payment under section 8003(d); and
    (c) Meet the requirements of subparts A and C of the regulations in 
this part.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 1400 et seq. and 7703)



Sec. 222.53  What restrictions and requirements apply to the use of funds 
provided under section 8003(d)?

    (a) An LEA shall use funds provided under section 8003(d) in 
accordance

[[Page 522]]

with the provisions of section 8003(d)(2) and 34 CFR part 300.
    (b) Obligations and expenditures of section 8003(d) funds may be 
incurred in either of the two following ways:
    (1) An LEA may obligate or expend section 8003(d) funds for the 
fiscal year for which the funds were appropriated.
    (2) An LEA may reimburse itself for obligations or expenditures of 
local and general State aid funds for the fiscal year for which the 
section 8003(d) funds were appropriated.
    (c) An LEA shall use its section 8003(d) funds for the following 
types of expenditures:
    (1) Expenditures that are reasonably related to the conduct of 
programs or projects for the free appropriate public education of 
federally connected children with disabilities. These expenditures may 
include program planning and evaluation but may not include construction 
of school facilities.
    (2) Acquisition cost (net invoice price) of equipment required for 
the free appropriate public education of federally connected children 
with disabilities.
    (i) If section 8003(d) funds are used for the acquisition of any 
equipment described in this paragraph (c)(2) of this section, the fair 
market value of any financial advantage realized through rebates, 
discounts, bonuses, free pieces of equipment used in a program or 
project for the free appropriate public education of federally connected 
children with disabilities, or other circumstances, is not an allowable 
expenditure and may not be credited as an expenditure of those funds.
    (ii) Funds awarded under the provisions of section 8003(d) may be 
used to acquire equipment for the free appropriate public education of 
the federally connected children with disabilities only if title to the 
equipment would be in the applicant agency.
    (d) An LEA shall account for the use of section 8003(d) funds as 
follows:
    (1) By recording, for each fiscal year, the receipt (or credit) of 
section 8003(d) funds separately from other funds received under the 
Act, i.e., on a line item basis in the general fund account or in a 
separate account; and
    (2) By demonstrating that, for each fiscal year, the amount of 
expenditures for special education and related services provided to the 
federally connected children with disabilities is at least equal to the 
amount of section 8003(d) funds received or credited for that fiscal 
year. This is done as follows:
    (i) For each fiscal year determine the amount of an LEA's 
expenditures for special education and related services provided to all 
children with disabilities.
    (ii) The amount determined in paragraph (d)(2)(i) of this section is 
divided by the average daily attendance (ADA) of the total number of 
children with disabilities the LEA served during that fiscal year.
    (iii) The amount determined in paragraph (d)(2)(ii) of this section 
is then multiplied by the total ADA of the LEA's federally connected 
children with disabilities claimed by the LEA for that fiscal year.
    (3) If the amount of section 8003(d) funds the LEA received (or was 
credited) for the fiscal year exceeds the amount obtained in paragraph 
(d)(2)(iii) of this section, an overpayment equal to the excess section 
8003(d) funds is established. This overpayment may be reduced or 
eliminated to the extent that the LEA can demonstrate that the average 
per pupil expenditure for special education and related services 
provided to federally connected children with disabilities exceeded its 
average per pupil expenditure for serving non-federally connected 
children with disabilities.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7703(d))



Sec. 222.54  What supplement-not-supplant requirement applies to this 
subpart?

    Funds provided under section 8003(d) may not supplant any State 
funds that were or would have been available to the LEA for the free 
appropriate public education of children counted under section 8003(d).
    (a) No section 8003(d) funds may be paid to an LEA whose per pupil 
State aid for federally connected children with disabilities, either 
general State aid or special education State aid, has been or would be 
reduced as a result of

[[Page 523]]

eligibility for or receipt of section 8003(d) funds, whether or not a 
State has a program of State aid that meets the requirements of section 
8009 of the Act and subpart K of the regulations in this part.
    (1) A reduction in the per pupil amount of State aid for children 
with disabilities, including children counted under section 8003(d), 
from that received in a previous year raises a presumption that 
supplanting has occurred.
    (2) The LEA may rebut this presumption by demonstrating that the 
reduction was unrelated to the receipt of section 8003(d) funds.
    (b) In any State in which there is only one LEA, all funds for 
programs for children with disabilities other than funds from Federal 
sources are considered by the Secretary to be local funds.

(Authority: 20 U.S.C. 7703(d))



Sec. 222.55  What other statutes and regulations are applicable to this 
subpart?

    Local educational agencies receiving funds under section 8003(d) are 
subject to the requirements of the Individuals with Disabilities 
Education Act, and related regulations (20 U.S.C. 1401 et seq. and 34 
CFR part 300).

(Authority: 20 U.S.C. 1401 et seq., 6314, and 7703(d))



Sec. Sec. 222.56-222.59  [Reserved]



 Subpart E_Additional Assistance for Heavily Impacted Local Educational 
                Agencies Under Section 8003(f) of the Act



Sec. 222.60  What are the scope and purpose of these regulations?

    The regulations in this subpart implement section 8003(f) of the 
Act, which provides financial assistance, in addition to payments under 
sections 8003(b) and 8003(d) of the Act, to certain heavily impacted 
local educational agencies (LEAs) that meet all relevant eligibility 
requirements.

(Authority: 20 U.S.C. 7703(f))



Sec. 222.61  What data are used to determine a local educational agency's 
eligibility and payment under section 8003(f) of the Act?

    (a) Computations and determinations made with regard to an LEA's 
eligibility (Sec. Sec. 222.61-222.71) and payment (Sec. Sec. 222.72-
222.73) under section 8003(f) are based on the LEA's final student and 
financial data for the fiscal year for which it seeks assistance and, in 
certain cases, final financial data for the preceding and second 
preceding fiscal years of the LEAs determined under Sec. Sec. 222.39-
222.41 or Sec. 222.74 to be generally comparable to the applicant LEA 
(``generally comparable LEAs'').
    (b) For purposes of this subpart, level of education means average 
per pupil expenditure amount.

(Authority: 20 U.S.C. 7703(f))



Sec. 222.62  Which local educational agencies are eligible to apply for 
an additional payment under section 8003(f)?

    Local educational agencies that are eligible to apply for additional 
assistance under section 8003(f) include those that have--
    (a)(1) A tax effort equal to at least 95 percent of the average tax 
rate of generally comparable LEAs identified under Sec. Sec. 222.39-
222.41 or 222.74; and
    (2)(i) Federally connected children equal to at least 50 percent of 
the total number of children in average daily attendance (ADA) if a 
section 8003(b) payment is received on behalf of children described in 
section 8003(a)(1)(F)-(G); or
    (ii) Federally connected children equal to at least 40 percent of 
the total number of children in ADA if a section 8003(b) payment is not 
received on behalf of children described in section 8003(a)(1)(F)-(G);
    (b)(1) A tax effort equal to at least 125 percent of the average tax 
rate of generally comparable LEAs identified under Sec. Sec. 222.39-
222.41; and
    (2) Federally connected children equal to at least 35 percent of the 
total number of children in ADA;
    (c) The same boundaries as those of a Federal military installation; 
or
    (d) Current expenditures that are not reasonably comparable to those 
of generally comparable LEAs identified under Sec. Sec. 222.39-222.41 
because unusual

[[Page 524]]

geographical factors affect the applicant LEAs' current expenditures 
necessary to maintain a level of education equivalent to that of 
generally comparable LEAs.

(Authority: 20 U.S.C. 7703(f))



Sec. 222.63  What other requirements must a local educational agency meet in 
order to be eligible for financial assistance under section 8003(f)(2)(A)?

    Subject to Sec. 222.65, an LEA described in Sec. 222.62(a), (b), 
or (c) is eligible for financial assistance under section 8003(f)(2)(A) 
if the Secretary determines that the LEA meets all of the following 
requirements:
    (a) The LEA is eligible for a basic support payment under section 
8003(b).
    (b) The LEA timely applies for assistance under section 8003(f) and 
meets all of the other application and eligibility requirements of 
subparts A and C of these regulations.
    (c) The LEA is exercising due diligence in availing itself of 
revenues derived from State and other sources and, except for an LEA 
described in Sec. 222.62(c), is making a reasonable tax effort in 
accordance with the requirements of Sec. Sec. 222.66-222.71.
    (d) The eligibility of the LEA for State aid and the amount of State 
aid are determined on a basis no less favorable than that for other LEAs 
in the State.

(Authority: 20 U.S.C. 7703(f))



Sec. 222.64  What other requirements must a local educational agency meet in 
order to be eligible for financial assistance under section 8003(f)(2)(B)?

    Subject to Sec. 222.65, an LEA described in Sec. 222.62(d) is 
eligible for financial assistance under section 8003(f)(2)(B) if the 
Secretary determines that the LEA meets all of the following 
requirements--
    (a) The LEA complies with the requirements of Sec. 222.63(a)-(d).
    (b)(1) As part of its section 8003(f) application, the LEA provides 
the Secretary with documentation that demonstrates that the LEA is 
unable to provide a level of education equivalent to that provided by 
its generally comparable LEAs because--
    (i) The applicant's current expenditures are affected by unusual 
geographical factors; and
    (ii) As a result, those current expenditures are not reasonably 
comparable to the current expenditures of its generally comparable LEAs.
    (2) The LEA's application must include--
    (i) A specific description of the unusual geographical factors on 
which the applicant is basing its request for compensation under this 
section and objective data demonstrating that the applicant is more 
severely affected by these factors than any other LEA in its State;
    (ii) Objective data demonstrating the specific ways in which the 
unusual geographical factors affect the applicant's current expenditures 
so that they are not reasonably comparable to the current expenditures 
of its generally comparable LEAs;
    (iii) Objective data demonstrating the specific ways in which the 
unusual geographical factors prevent the applicant from providing a 
level of education equivalent to that provided by its generally 
comparable LEAs; and
    (iv) Any other information that the Secretary may require to make an 
eligibility determination under this section.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7703(f))



Sec. 222.65  How may a State aid program affect a local educational 
agency's eligibility for assistance under section 8003(f)?

    The Secretary determines that an LEA is not eligible for financial 
assistance under section 8003(f) if--
    (a) The LEA is in a State that has an equalized program of State aid 
that meets the requirements of section 8009; and
    (b) The State, in determining the LEA's eligibility for or amount of 
State aid, takes into consideration the LEA's payment under section 
8003(f).

(Authority: 20 U.S.C. 7703(f))

[[Page 525]]



Sec. 222.66  How does the Secretary determine whether a fiscally 
independent local educational agency is making a reasonable tax effort?

    (a) To determine whether a fiscally independent LEA, as defined in 
Sec. 222.2(c), is making a reasonable tax effort as required by Sec. 
222.63 or Sec. 222.64, the Secretary compares the LEA's local real 
property tax rates for current expenditure purposes (referred to in this 
part as ``tax rates''), as defined in Sec. 222.2(c), with the tax rates 
of its generally comparable LEAs.
    (b) For purposes of this section, the Secretary uses--
    (1) Actual tax rates if all the real property in the LEA and its 
generally comparable LEAs is assessed at the same percentage of true 
value; or
    (2) Tax rates computed under Sec. Sec. 222.67-222.69.
    (c) The Secretary determines that an LEA described in Sec. 
222.62(a) or (d) is making a reasonable tax effort if--
    (1) The LEA's tax rate is equal to at least 95 percent of the 
average tax rate of its generally comparable LEAs;
    (2) Each of the LEA's tax rates for each classification of real 
property is equal to at least 95 percent of each of the average tax 
rates of its generally comparable LEAs for the same classification of 
property;
    (3) The LEA taxes all of its real property at the maximum rates 
allowed by the State, if those maximum rates apply uniformly to all LEAs 
in the State; or
    (4) The LEA has no taxable real property.
    (d) The Secretary determines that an LEA described in Sec. 
222.62(b) is making a reasonable tax effort if--
    (1) The LEA's tax rate is equal to at least 125 percent of the 
average tax rate of its generally comparable LEAs;
    (2) Each of the LEA's tax rates for each classification of real 
property is equal to at least 125 percent of each of the average tax 
rates of its generally comparable LEAs for the same classification of 
property;
    (3) The LEA taxes all of its real property at the maximum rates 
allowed by the State, if those maximum rates apply uniformly to all LEAs 
in the State; or
    (4) The LEA has no taxable real property.

(Authority: 20 U.S.C. 7703(f))



Sec. 222.67  What tax rates does the Secretary use if real property is 
assessed at different percentages of true value?

    If the real property of an LEA and its generally comparable LEAs 
consists of one classification of property but the property is assessed 
at different percentages of true value in the different LEAs, the 
Secretary determines whether the LEA is making a reasonable tax effort 
under Sec. 222.66(c)(1) or (d)(1) by using tax rates computed by--
    (a) Multiplying the LEA's actual tax rate for real property by the 
percentage of true value assigned to that property for tax purposes; and
    (b) Performing the computation in paragraph (a) of this section for 
each of its generally comparable LEAs and determining the average of 
those computed tax rates.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7703(f))



Sec. 222.68  What tax rates does the Secretary use if two or more different 
classifications of real property are taxed at different rates?

    If the real property of an LEA and its generally comparable LEAs 
consists of two or more classifications of real property taxed at 
different rates, the Secretary determines whether the LEA is making a 
reasonable tax effort under Sec. 222.66(c)(1) or (2) or Sec. 
222.66(d)(1) or (2) by using one of the following:
    (a) Actual tax rates for each of the classifications of real 
property.
    (b) Tax rates computed in accordance with Sec. 222.67 for each of 
the classifications of real property.
    (c) Tax rates computed by--
    (1) Determining the total true value of all real property in the LEA 
by dividing the assessed value of each classification of real property 
in the LEA by the percentage of true value assigned to that property for 
tax purposes and aggregating the results;
    (2) Determining the LEA's total revenues derived from local real 
property taxes for current expenditures (as defined in section 8013);

[[Page 526]]

    (3) Dividing the amount determined in paragraph (c)(2) of this 
section by the amount determined in paragraph (c)(1) of this section; 
and
    (4) Performing the computations in paragraphs (c)(1), (2), and (3) 
of this section for each of the generally comparable LEAs and 
determining the average of their computed tax rates.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7703(f))



Sec. 222.69  What tax rates may the Secretary use if substantial local 
revenues are derived from local tax sources other than real property taxes?

    (a) In a State in which a substantial portion of revenues for 
current expenditures for educational purposes is derived from local tax 
sources other than real property taxes, the State educational agency 
(SEA) may request that the Secretary take those revenues into account in 
determining whether an LEA in that State is making a reasonable tax 
effort under Sec. 222.66.
    (b) If, based upon the request of an SEA, the Secretary determines 
that it is appropriate to take the revenues described in paragraph (a) 
of this section into account in determining whether an LEA in that State 
is making a reasonable tax effort under Sec. 222.66, the Secretary uses 
tax rates computed by--
    (1) Dividing the assessed value of each classification of real 
property in the LEA by the percentage of true value assigned to that 
property for tax purposes and aggregating the results;
    (2) Determining the LEA's total revenues derived from local tax 
sources for current expenditures (as defined in section 8013);
    (3) Dividing the amount determined in paragraph (b)(2) of this 
section by the amount determined in paragraph (b)(1) of this section; 
and
    (4) Performing the computations in paragraphs (b)(1), (2), and (3) 
of this section for each of the generally comparable LEAs and 
determining the average of those computed tax rates.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7703(f))



Sec. 222.70  How does the Secretary determine whether a fiscally dependent 
local educational agency is making a reasonable tax effort?

    (a) If an LEA is fiscally dependent, as defined in Sec. 222.2(c), 
the Secretary compares the LEA's imputed local tax rate, calculated 
under paragraph (b) of this section, with the average tax rate of its 
generally comparable LEAs, calculated under paragraph (c) of this 
section, to determine whether the LEA is making a reasonable tax effort.
    (b) The Secretary imputes a local tax rate for a fiscally dependent 
LEA by--
    (1) Dividing the assessed value of each classification of real 
property within the boundaries of the general government by the 
percentage of true value assigned to that property for tax purposes and 
aggregating the results;
    (2) Determining the amount of locally derived revenues made 
available by the general government for the LEA's current expenditures 
(as defined in section 8013); and
    (3) Dividing the amount determined in paragraph (b)(2) of this 
section by the amount determined in paragraph (b)(1) of this section.
    (c) The Secretary performs the computations in paragraph (b) of this 
section for each of the fiscally dependent generally comparable LEAs and 
the computations in Sec. Sec. 222.67-222.69, whichever is applicable, 
for each of the fiscally independent generally comparable LEAs and 
determines the average of all those tax rates.
    (d) The Secretary determines that a fiscally dependent LEA described 
in Sec. 222.62 (a) or (d) is making a reasonable tax effort if its 
imputed local tax rate is equal to at least 95 percent of the average 
tax rate of its generally comparable LEAs.
    (e) The Secretary determines that a fiscally dependent LEA described 
in Sec. 222.62(b) is making a reasonable tax effort if its imputed 
local tax rate is equal to at least 125 percent of the average tax rate 
of its generally comparable LEAs.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7703(f))

[[Page 527]]



Sec. 222.71  What information must be provided by the State educational 
agency?

    The SEA of any State with an LEA applying for assistance under 
section 8003(f) shall provide the Secretary with relevant information 
necessary to determine whether the LEA is making a reasonable tax effort 
under Sec. Sec. 222.67-222.70, whichever is applicable.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7703(f))



Sec. 222.72  How does the Secretary determine a maximum payment for local 

educational agencies that are eligible for financial assistance under 
section 8003(f)(2)(A) and Sec. 222.63?

    (a) Except as otherwise provided in paragraphs (b) through (c) of 
this section or Sec. 222.76, the Secretary determines a maximum payment 
under section 8003(f)(2)(A) for an eligible LEA by--
    (1) First calculating the greater of--
    (i) The State average per pupil expenditure (APPE) or the national 
APPE;
    (ii) The APPE of generally comparable LEAs identified under 
Sec. Sec. 222.39-222.41; or
    (iii) The APPE of three generally comparable LEAs identified under 
Sec. 222.74;
    (2) Next subtracting from the amount calculated in paragraph (a)(1) 
of this section the average State aid per pupil amount received by the 
LEA;
    (3) Multiplying the amount calculated in paragraph (a)(2) of this 
section by the total number of federally connected students in ADA who 
are eligible for basic support payments under section 8003(b);
    (4) In the case of an LEA whose tax rate is at least 95 percent but 
less than 100 percent of the average tax rate of its generally 
comparable LEAs, reducing the amount calculated in paragraph (a)(3) of 
this section by the percentage that the average tax rate of its 
generally comparable LEAs exceeds the tax rate of the LEA; and
    (5) Subtracting from the amount calculated in paragraph (a)(3), or 
paragraph (a)(4) of this section, the total amount of payments received 
by the eligible LEA under sections 8003 (b) and (d) for the fiscal year 
for which a payment is being determined under section 8003(f).
    (b) For the first step of the computations described in paragraph 
(a) of this section, the Secretary calculates a maximum payment under 
section 8003(f)(2)(A) for an eligible LEA described in Sec. 222.62 (b) 
or (c) by multiplying the national APPE by .70, except that the 
resulting amount may not exceed 125 percent of the State APPE.
    (c) For the fourth step of the computations described in paragraph 
(a) of this section, generally comparable LEAs for reasonable tax effort 
purposes are the LEAs whose APPE is identified in Sec. 222.72(a)(1) 
except that for applicant LEAs for whom the national APPE is identified, 
all LEAs in the applicant's State will be used as generally comparable 
LEAs for reasonable tax effort purposes.

(Authority: 20 U.S.C. 7703(f))



Sec. 222.73  How does the Secretary determine a maximum payment for local 

educational agencies that are eligible for financial assistance under 
section 8003(f)(2)(B) and Sec. 222.64?

    Except as otherwise provided in paragraphs (b) and (c) of this 
section and Sec. 222.76, the Secretary determines a maximum payment 
under section 8003(f)(2)(B) for an eligible LEA as follows:
    (a) The Secretary increases the eligible LEA's local contribution 
rate (LCR) for section 8003(b) payment purposes up to the amount the 
Secretary determines will compensate the applicant for the increase in 
its current expenditures necessitated by the unusual geographical 
factors identified under Sec. 222.64(b)(2), but no more than is 
necessary to allow the applicant to provide a level of education 
equivalent to that provided by its generally comparable LEAs.
    (b) The increase in the LCR referred to in paragraph (a) of this 
section may not exceed the per pupil share (computed with regard to all 
children in ADA), as determined by the Secretary, of the increased 
current expenditures necessitated by the unusual geographical factors 
identified under Sec. 222.64(b)(2).

[[Page 528]]

    (c) In the case of an LEA whose tax rate is at least 95 percent but 
less than 100 percent of the average tax rate of its generally 
comparable LEAs, reducing the amount calculated in paragraph (a) of this 
section by the percentage that the average tax rate of its generally 
comparable LEAs exceeds the tax rate of the LEA.

(Authority: 20 U.S.C. 7703(f))



Sec. 222.74  How does the Secretary identify generally comparable local 
educational agencies for purposes of section 8003(f)?

    (a) Except as otherwise provided in paragraph (b) of this section, 
the Secretary identifies generally comparable LEAs for purposes of this 
subpart in accordance with the LCR procedures described in Sec. Sec. 
222.39-222.41.
    (b) For applicant LEAs described in Sec. 222.62(a), to identify the 
three generally comparable LEAs referred to in Sec. 222.72(a)(1)(iii), 
the Secretary uses the following procedures:
    (1) The Secretary asks the SEA of the applicant LEA to identify 
generally comparable LEAs in the State by first following the directions 
in Sec. 222.39(a)(4), using data from the preceding fiscal year. The 
SEA then removes from the resulting list any LEAs that are significantly 
impacted, as described in Sec. 222.39(b)(1), except the applicant LEA.
    (2) If the remaining LEAs are not in rank order by total ADA, the 
SEA shall list them in that order.
    (3) The LEA may then select as its generally comparable LEAs, for 
purposes of section 8003(f) only, three LEAs from the list that are 
closest to it in size as determined by total ADA (e.g., the next three 
larger LEAs, the next three smaller, the next two larger and the next 
one smaller, or the next one larger and the next two smaller).

(Authority: 20 U.S.C. 7703(f))



Sec. 222.75  How does the Secretary compute the average per pupil 

expenditure of generally comparable local educational agencies under 
this subpart?

    The Secretary computes APPE under this subpart by--
    (a) Dividing the sum of the total current expenditures for the 
preceding fiscal year for the identified generally comparable LEAs by 
the sum of the total ADA of those LEAs for the same fiscal year and 
performing this calculation again using data for the second preceding 
year; and
    (b) Increasing or decreasing the APPE for the preceding fiscal year 
by the percentage the APPE of the generally comparable LEAs increased or 
decreased from the second preceding fiscal year to the preceding fiscal 
year.

(Authority: 20 U.S.C. 7703(f))



Sec. 222.76  What does the Secretary do if appropriation levels are 

insufficient to pay in full the amounts calculated under Sec. Sec. 222.72 
and 222.73?

    Payments under section 8003(f) for eligible LEAs will be ratably 
reduced if the funds available for assistance under that section are 
insufficient to pay the full amounts determined under Sec. Sec. 222.72 
and 222.73.

(Authority: 20 U.S.C. 7703(f))



Sec. Sec. 222.77-222.79  [Reserved]



   Subpart F_Payments to Local Educational Agencies for Children With 
          Severe Disabilities Under Section 8003(g) of the Act

    Source: 62 FR 35415, July 1, 1997, unless otherwise noted.



Sec. 222.80  What definitions apply to this subpart?

    (a) The definitions in Sec. Sec. 222.2 and 222.50 apply to this 
subpart.
    (b) In addition, the following term applies to this subpart:
    Children with severe disabilities means children with disabilities 
who because of the intensity of their physical, mental, or emotional 
problems need highly specialized education, social, psychological, and 
medical services in order to maximize their full potential for useful 
and meaningful participation in society and for self-fulfillment. The 
term includes those children with disabilities with severe emotional 
disturbance (including schizophrenia), autism, severe and profound 
mental retardation, and those who have two or more

[[Page 529]]

serious disabilities such as deaf-blindness, mental retardation and 
blindness, and cerebral-palsy and deafness.

(Authority: 20 U.S.C. 1400 et seq., 7703(g))



Sec. 222.81  What requirements must a local educational agency meet to 
be eligible for a payment under section 8003(g) of the Act?

    An LEA is eligible for a payment under section 8003(g) of the Act if 
it--
    (a) Is eligible for and receives a payment under section 8003(d) of 
the Act for children identified in paragraph (b) of this section and 
meets the requirements of Sec. Sec. 222.52 and 222.83(b) and (c); and
    (b) Incurs costs of providing a free appropriate public education to 
at least two children with severe disabilities whose educational program 
is being provided by an entity outside the schools of the LEA, and who 
each have a parent on active duty in the uniformed services.

(Authority: 20 U.S.C. 1400 et seq., 7703(a), (d), (g))



Sec. 222.82  How does the Secretary calculate the total amount of funds 
available for payments under section 8003(g)?

    (a) In any fiscal year in which Federal funds other than funds 
available under the Act are provided to an LEA to meet the purposes of 
the Act, the Secretary--
    (1) Calculates the sum of the amount of other Federal funds provided 
to an LEA to meet the purposes of the Act and the amount of the payment 
that the LEA received for that fiscal year under section 8003(b) of the 
Act; and
    (2) Determines whether the sum calculated under paragraph (a)(1) of 
this section exceeds the maximum basic support payment for which the LEA 
is eligible under section 8003(b), and, if so, subtracts from the amount 
of any payment received under section 8003(b), any amount in excess of 
the maximum basic support payment for which the LEA is eligible.
    (b) The sum of all excess amounts determined in paragraph (a)(2) of 
this section is available for payments under section 8003(g) to eligible 
LEAs.

(Authority: 20 U.S.C. 7703(b), (g))



Sec. 222.83  How does an eligible local educational agency apply for a 
payment under section 8003(g)?

    (a) In fiscal years in which funds are available for payments under 
section 8003(g) of the Act, the Secretary provides notice to all 
potentially eligible LEAs that funds will be available.
    (b) An LEA applies for a payment under section 8003(g) by submitting 
to the Secretary documentation detailing the total costs to the LEA of 
providing a free appropriate public education to the children identified 
in Sec. 222.81, during the LEA's preceding fiscal year, including the 
following:
    (1) For the costs of the outside entity providing the educational 
program for those children, copies of all invoices, vouchers, tuition 
contracts, and other similar documents showing the signature of an 
official or authorized employee of the outside entity; and
    (2) For any additional costs (such as transportation) of the LEA 
related to providing an educational program for those children in an 
outside entity, copies of invoices, check receipts, contracts, and other 
similar documents showing the signature of an official or authorized 
employee of the LEA.
    (c) An LEA applying for a payment must submit to the Secretary the 
information required under paragraph (b) of this section within 60 days 
of the date of the notice that funds will be available.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7703(g)(2))



Sec. 222.84  How does the Secretary calculate payments under section 
8003(g) for eligible local educational agencies?

    For any fiscal year in which the Secretary has determined, under 
Sec. 222.82, that funds are available for payments under section 
8003(g) of the Act, the Secretary calculates payments to eligible LEAs 
under section 8003(g) as follows:
    (a) For each eligible LEA, the Secretary subtracts an amount equal 
to that portion of the payment the LEA received under section 8003(d) of 
the Act for that fiscal year, attributable to children described in 
Sec. 222.81, from the LEA's total costs of providing a free

[[Page 530]]

appropriate public education to those children, as submitted to the 
Secretary pursuant to Sec. 222.83(b). The remainder is the amount that 
the LEA is eligible to receive under section 8003(g).
    (b) If the total of the amounts for all eligible LEAs determined in 
paragraph (a) of this section is equal to or less than the amount of 
funds available for payment as determined in Sec. 222.82, the Secretary 
provides each eligible LEA with the entire amount that it is eligible to 
receive, as determined in paragraph (a) of this section.
    (c) If the total of the amounts for all eligible LEAs determined in 
paragraph (a) of this section exceeds the amount of funds available for 
payment as determined in Sec. 222.82, the Secretary ratably reduces 
payments under section 8003(g) to eligible LEAs.
    (d) If the total of the amounts for all eligible LEAs determined in 
paragraph (a) of this section is less than the amount of funds available 
for payment as determined in Sec. 222.82, the Secretary pays the 
remaining amount to LEAs under section 8003(d). An LEA that receives 
such a payment shall use the funds for expenditures in accordance with 
the requirements of section 8003(d) and subpart D of this part.

(Authority: 20 U.S.C. 7703 (d) and (g))



Sec. 222.85  How may a local educational agency use funds that it receives 
under section 8003(g)?

    An LEA that receives a payment under section 8003(g) of the Act 
shall use the funds for reimbursement of costs reported in the 
application that it submitted to the Secretary under Sec. 222.83(b).

(Authority: 20 U.S.C. 7703(g)(2))



 Subpart G_Special Provisions for Local Educational Agencies That Claim 
                    Children Residing on Indian Lands

                                 General



Sec. 222.90  What definitions apply to this subpart?

    In addition to the definitions in Sec. 222.2, the following 
definitions apply to this subpart:
    Indian children means children residing on Indian lands who are 
recognized by an Indian tribe as being affiliated with that tribe.
    Indian tribe means any Indian tribe, band, nation, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established under 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.

(Authority: 20 U.S.C. 7713, 7881, 7938, 8801)



Sec. 222.91  What requirements must a local educational agency meet to 

receive a payment under section 8003 of the Act for children residing 
on Indian lands?

    To receive a payment under section 8003 of the Act for children 
residing on Indian lands, a local educational agency (LEA) must--
    (a) Meet the application and eligibility requirements in section 
8003 and subparts A and C of these regulations;
    (b) Develop and implement policies and procedures in accordance with 
the provisions of section 8004(a) of the Act; and
    (c) Include in its application for payments under section 8003--
    (1) An assurance that the LEA established these policies and 
procedures in consultation with and based on information from tribal 
officials and parents of those children residing on Indian lands who are 
Indian children; and
    (2) A copy of the policies and procedures or documentation that the 
LEA has received a waiver in accordance with the provisions of section 
8004(c).

(Authority: 20 U.S.C. 7703(a), 7704(a), (c), and (d)(2))



Sec. 222.92  What additional statutes and regulations apply to this 
subpart?

    (a) The following statutes and regulations apply to LEAs that claim 
children residing on Indian lands for payments under section 8003:
    (1) The General Education Provisions Act (GEPA) in 20 U.S.C. 1221 et 
seq., unless otherwise noted.
    (2) Other relevant regulations in this part.

[[Page 531]]

    (b) The following statutes, rules, and regulations do not apply to 
any hearing proceedings under this subpart:
    (1) Administrative Procedure Act.
    (2) Federal Rules of Civil Procedure.
    (3) Federal Rules of Evidence.
    (4) GEPA, part E.
    (5) 34 CFR part 81.

(Authority: 20 U.S.C. 1221 et seq. unless otherwise noted, 7703, and 
7704)



Sec. 222.93  [Reserved]

                     Indian Policies and Procedures



Sec. 222.94  What provisions must be included in a local educational 
agency's Indian policies and procedures?

    (a) An LEA's Indian policies and procedures (IPPs) must include a 
description of the specific procedures for how the LEA will--
    (1) Give the tribal officials and parents of Indian children an 
opportunity to comment on whether Indian children participate on an 
equal basis with non-Indian children in the education programs and 
activities provided by the LEA;
    (2) Assess the extent to which Indian children participate on an 
equal basis with non-Indian children served by the LEA;
    (3) Modify, if necessary, its education program to ensure that 
Indian children participate on an equal basis with non-Indian children 
served by the LEA;
    (4) Disseminate relevant applications, evaluations, program plans 
and information related to the education programs of the LEA in 
sufficient time to allow the tribes and parents of Indian children an 
opportunity to review the materials and make recommendations on the 
needs of the Indian children and how the LEA may help those children 
realize the benefits of the LEA's education programs and activities;
    (5) Gather information concerning Indian views, including those 
regarding the frequency, location, and time of meetings;
    (6) Notify the Indian parents and tribes of the locations and times 
of meetings;
    (7) Consult and involve tribal officials and parents of Indian 
children in the planning and development of the LEA's education programs 
and activities; and
    (8) Modify the IPPs if necessary, based upon the results of any 
assessment described in paragraph (b) of this section.
    (b) Tribes and parents of Indian children may assess the 
effectiveness of their input regarding the participation of Indian 
children in the LEA's education programs and activities and the 
development and implementation of the IPPs, and share the results of 
that assessment with the LEA.

(Authority: 20 U.S.C. 7704)



Sec. 222.95  How are Indian policies and procedures reviewed to ensure 
compliance with the requirements in section 8004(a) of the Act?

    (a) The Director of the Impact Aid Program (Director) periodically 
reviews applicant LEAs' IPPs to ensure that they comply with the 
provisions of section 8004(a) and Sec. 222.94.
    (b) If the Director determines either that the LEA's IPPs do not 
comply with the minimum standards of section 8004(a), or that the IPPs 
have not been implemented in accordance with Sec. 222.94, the Director 
provides the LEA with written notification of the deficiencies related 
to its IPPs and requires that the LEA take appropriate action.
    (c) An LEA shall make the necessary changes within 60 days of 
receipt of written notification from the Director.
    (d) If the LEA fails to make the necessary adjustments or changes 
within the prescribed period of time, the Director may withhold all 
payments that the LEA is eligible to receive under section 8003.
    (e) Each LEA that has developed IPPs shall review those IPPs 
annually to ensure that they--
    (1) Comply with the provisions in section 8004(a); and
    (2) Are implemented by the LEA in accordance with Sec. 222.94.
    (f) If an LEA determines that its IPPs do not meet the requirements 
in paragraphs (e) (1) and (2) of this section, the LEA shall amend its 
IPPs to conform with those requirements within 60 days of its 
determination.

[[Page 532]]

    (g) An LEA that amends its IPPs shall, within 30 days, send a copy 
of the amended IPPs to--
    (1) The Director for approval; and
    (2) The affected tribe or tribes.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7704 (a) and (d)(2))

[60 FR 50778, Sept. 29, 1995, as amended at 62 FR 35416, July 1, 1997]



Sec. Sec. 222.96-222.101  [Reserved]

     Indian Policies and Procedures Complaint and Hearing Procedures



Sec. 222.102  Who may file a complaint about a local educational agency's 
Indian policies and procedures?

    (a) Only a tribal chairman or an authorized designee for a tribe 
that has students attending an LEA's schools may file a written 
complaint with the Assistant Secretary for Elementary and Secondary 
Education (Assistant Secretary) regarding any action of the LEA pursuant 
to, or relevant to, section 8004(a) and Sec. 222.94.
    (b) If a tribe files a complaint through a designee, the tribe shall 
acknowledge in writing in the complaint that the designee is authorized 
to act on its behalf.

(Authority: 20 U.S.C. 7704(e)(1))



Sec. 222.103  What must be included in a complaint?

    For purposes of this subpart, a complaint is a signed statement that 
includes--
    (a) An allegation that an LEA has failed to develop and implement 
IPPs in accordance with section 8004(a);
    (b) Information that supports the allegation;
    (c) A specific request for relief; and
    (d) A statement describing what steps the tribe has taken to resolve 
with the LEA the matters on which the complaint is based.

(Authority: 20 U.S.C. 7704(e)(1))



Sec. 222.104  When does the Assistant Secretary consider a complaint 
received?

    (a) The Assistant Secretary considers a complaint to have been 
received only after the Assistant Secretary determines that the 
complaint--
    (1) Satisfies the requirements in Sec. Sec. 222.102 and 222.103; 
and
    (2) Is in writing and signed by the tribal chairman or the tribe's 
authorized designee.
    (b) If the Assistant Secretary determines that a complaint fails to 
meet the requirements in Sec. Sec. 222.102-222.103, the Assistant 
Secretary notifies the tribe or its designee in writing that the 
complaint has been dismissed for purposes of invoking the hearing 
procedures in Sec. Sec. 222.102-222.113.
    (c) Any notification that a complaint has been dismissed includes 
the reasons why the Assistant Secretary determined that the complaint 
did not meet the requirements in Sec. Sec. 222.102 and 222.103.
    (d) Notification that a complaint has been dismissed does not 
preclude other efforts to investigate or resolve the issues raised in 
the complaint, including the filing of an amended complaint.

(Authority: 20 U.S.C. 7704(e)(1))



Sec. 222.105-222.107  [Reserved]



Sec. 222.108  What actions must be taken upon receipt of a complaint?

    Within 10 working days of receipt of a complaint, the Secretary or 
his designee--
    (a) Designates a hearing examiner to conduct a hearing;
    (b) Designates a time for the hearing that is no more than 30 days 
after the designation of a hearing examiner;
    (c) Designates a place for the hearing that, to the extent possible, 
is--
    (1) Near the LEA; or
    (2) At another location convenient to the tribe and the LEA, if it 
is determined that there is good cause to designate another location;
    (d) Notifies the tribe and the LEA of the time, place, and nature of 
the hearing; and
    (e) Transmits copies of the complaint to the LEA and the affected 
tribe or tribes.

(Authority: 20 U.S.C. 7704(e))

[[Page 533]]



Sec. 222.109  When may a local educational agency reply to a complaint?

    An LEA's reply to the charges in the complaint must be filed with 
the hearing examiner within 15 days of the date the LEA receives a copy 
of the notice and complaint described in Sec. 222.108 (d) and (e) from 
the hearing examiner.

(Authority: 20 U.S.C. 7704(e))



Sec. 222.110  What are the procedures for conducting a hearing on a 
local educational agency's Indian policies and procedures?

    Hearings on IPP complaints filed by an Indian tribe or tribes 
against an LEA are conducted as follows:
    (a) The hearing must be open to the public.
    (b) Parties may be represented by counsel.
    (c)(1) Each party may submit oral and written testimony that is 
relevant to the issues in the proceeding and make recommendations 
concerning appropriate remedial actions.
    (2) A party may object to evidence it considers to be irrelevant or 
unduly repetitious.
    (d) No party shall communicate orally or in writing with the hearing 
examiner or the Assistant Secretary on matters under review, except 
minor procedural matters, unless all parties to the complaint are 
given--
    (1) Timely and adequate notice of the communication; and
    (2) Reasonable opportunity to respond.
    (e) For each document that a party submits, the party shall--
    (1) File one copy for inclusion in the record of the proceeding; and
    (2) Provide a copy to each of the other parties to the proceeding.
    (f) Each party shall bear only its own costs in the proceeding.

(Authority: 20 U.S.C. 7704(e))



Sec. 222.111  What is the authority of the hearing examiner in conducting 
a hearing?

    The hearing examiner is authorized to conduct a hearing under 
section 8004(e) and Sec. Sec. 222.109-222.113 as follows:
    (a) The hearing examiner may--
    (1) Clarify, simplify, or define the issues or consider other 
matters that may aid in the disposition of the complaint;
    (2) Direct the parties to exchange relevant documents or 
information; and
    (3) Examine witnesses.
    (b) The hearing examiner--
    (1) Regulates the course of proceedings and conduct of the parties;
    (2) Arranges for the preparation of a transcript of each hearing and 
provides one copy to each party;
    (3) Schedules the submission of oral and documentary evidence;
    (4) Receives, rules on, excludes, or limits evidence;
    (5) Establishes and maintains a record of the proceeding, including 
any transcripts referenced above;
    (6) Establishes reasonable rules governing public attendance at the 
proceeding; and
    (7) Is bound by all applicable statutes and regulations and may 
neither waive them nor rule them invalid.

(Authority: 20 U.S.C. 7704(e))



Sec. 222.112  What procedures are followed after the hearing?

    (a) Each party may submit to the hearing examiner additional 
evidence that is relevant to the issues raised at the hearing, within 
the time period and in the manner specified by the hearing examiner.
    (b) Within 30 days after the hearing, the hearing examiner--
    (1) Makes, on the basis of the record, written findings of fact and 
recommendations concerning any appropriate remedial action that should 
be taken;
    (2) Submits those findings and recommendations, along with the 
hearing record, to the Assistant Secretary; and
    (3) Sends a copy of those findings and recommendations to each 
party.
    (c)(1) Each party may file with the Assistant Secretary comments on 
the hearing examiner's findings and recommendations.
    (2) The comments must be received by the Assistant Secretary within 
10 days after the party receives a copy of the hearing examiner's 
findings and recommendations.

(Authority: 20 U.S.C. 7704(e))

[[Page 534]]



Sec. 222.113  What are the responsibilities of the Assistant Secretary 
after the hearing?

    (a) Within 30 days after receiving the entire hearing record and the 
hearing examiner's findings and recommendations, the Assistant Secretary 
makes, on the basis of the record, a written determination that 
includes--
    (1) Any appropriate remedial action that the LEA must take;
    (2) A schedule for completing any remedial action; and
    (3) The reasons for the Assistant Secretary's decision.
    (b) After completing the final determination required by paragraph 
(a) of this section, the Assistant Secretary sends the parties a copy of 
that determination.
    (c) The Assistant Secretary's final determination under paragraph 
(a) of this section is the final action of the Department concerning the 
complaint and is subject to judicial review.

(Authority: 20 U.S.C. 7704(e))

  Withholding and Related Procedures for Indian Policies and Procedures

    Source: 62 FR 35416, July 1, 1997, unless otherwise noted.



Sec. 222.114  How does the Assistant Secretary implement the provisions 
of this subpart?

    The Assistant Secretary implements section 8004 of the Act and this 
subpart through such actions as the Assistant Secretary determines to be 
appropriate, including the withholding of funds in accordance with 
Sec. Sec. 222.115-222.122, after affording the affected LEA, parents, 
and Indian tribe or tribes an opportunity to present their views.

(Authority: 20 U.S.C. 7704 (d)(2), (e) (8)-(9))



Sec. 222.115  When does the Assistant Secretary withhold payments from a 
local educational agency under this subpart?

    Except as provided in Sec. 222.120, the Assistant Secretary 
withholds payments to an LEA if--
    (a) The Assistant Secretary determines it is necessary to enforce 
the requirements of section 8004 of the Act or this subpart; or
    (b) After a hearing has been conducted under section 8004(e) of the 
Act and Sec. Sec. 222.102-222.113 (IPP hearing)--
    (1) The LEA rejects the final determination of the Assistant 
Secretary; or
    (2) The LEA fails to implement the required remedy within the time 
established and the Assistant Secretary determines that the required 
remedy will not be undertaken by the LEA even if the LEA is granted a 
reasonable extension of time.

(Authority: 20 U.S.C. 7704 (a), (b), (d)(2), (e)(8)-(9))



Sec. 222.116  How are withholding procedures initiated under this subpart?

    (a) If the Assistant Secretary decides to withhold an LEA's funds, 
the Assistant Secretary issues a written notice of intent to withhold 
the LEA's payments.
    (b) In the written notice, the Assistant Secretary--
    (1) Describes how the LEA failed to comply with the requirements at 
issue; and
    (2)(i) Advises an LEA that has participated in an IPP hearing that 
it may request, in accordance with Sec. 222.117(c), that its payments 
not be withheld; or
    (ii) Advises an LEA that has not participated in an IPP hearing that 
it may request a withholding hearing in accordance with Sec. 
222.117(d).
    (c) The Assistant Secretary sends a copy of the written notice of 
intent to withhold payments to the LEA and the affected Indian tribe or 
tribes by certified mail with return receipt requested.

(Authority: 20 U.S.C. 7704 (a), (b), (d)(2), and (e) (8)-(9))



Sec. 222.117  What procedures are followed after the Assistant Secretary 
issues a notice of intent to withhold payments?

    (a) The withholding of payments authorized by section 8004 of the 
Act is conducted in accordance with section 8004 (d)(2) or (e)(8)-(9) of 
the Act and the regulations in this subpart.
    (b) An LEA that receives a notice of intent to withhold payments 
from the Assistant Secretary is not entitled to

[[Page 535]]

an Impact Aid hearing under the provisions of section 8011 of the Act 
and subpart J of this part.
    (c) After an IPP hearing. (1) An LEA that rejects or fails to 
implement the final determination of the Assistant Secretary after an 
IPP hearing has 10 days from the date of the LEA's receipt of the 
written notice of intent to withhold funds to provide the Assistant 
Secretary with a written explanation and documentation in support of the 
reasons why its payments should not be withheld. The Assistant Secretary 
provides the affected Indian tribe or tribes with an opportunity to 
respond to the LEA's submission.
    (2) If after reviewing an LEA's written explanation and supporting 
documentation, and any response from the Indian tribe or tribes, the 
Assistant Secretary determines to withhold an LEA's payments, the 
Assistant Secretary notifies the LEA and the affected Indian tribe or 
tribes of the withholding determination in writing by certified mail 
with return receipt requested prior to withholding the payments.
    (3) In the withholding determination, the Assistant Secretary states 
the facts supporting the determination that the LEA failed to comply 
with the legal requirements at issue, and why the provisions of Sec. 
222.120 (provisions governing circumstances when an LEA is exempt from 
the withholding of payments) are inapplicable. This determination is the 
final decision of the Department.
    (d) An LEA that has not participated in an IPP hearing. (1) An LEA 
that has not participated in an IPP hearing has 30 days from the date of 
its receipt of the Assistant Secretary's notice of intent to withhold 
funds to file a written request for a withholding hearing with the 
Assistant Secretary. The written request for a withholding hearing 
must--
    (i) Identify the issues of law and facts in dispute; and
    (ii) State the LEA's position, together with the pertinent facts and 
reasons supporting that position.
    (2) If the LEA's request for a withholding hearing is accepted, the 
Assistant Secretary sends written notification of acceptance to the LEA 
and the affected Indian tribe or tribes and forwards to the hearing 
examiner a copy of the Assistant Secretary's written notice, the LEA's 
request for a withholding hearing, and any other relevant documents.
    (3) If the LEA's request for a withholding hearing is rejected, the 
Assistant Secretary notifies the LEA in writing that its request for a 
hearing has been rejected and provides the LEA with the reasons for the 
rejection.
    (4) The Assistant Secretary rejects requests for withholding 
hearings that are not filed in accordance with the time for filing 
requirements described in paragraph (d)(1) of this section. An LEA that 
files a timely request for a withholding hearing, but fails to meet the 
other filing requirements set forth in paragraph (d)(1) of this section, 
has 30 days from the date of receipt of the Assistant Secretary's 
notification of rejection to submit an acceptable amended request for a 
withholding hearing.
    (e) If an LEA fails to file a written explanation in accordance with 
paragraph (c) of this section, or a request for a withholding hearing or 
an amended request for a withholding hearing in accordance with 
paragraph (d) of this section, the Secretary proceeds to take 
appropriate administrative action to withhold funds without further 
notification to the LEA.

(Authority: 20 U.S.C. 7704 (a), (b), (d)(2), and (e) (8)-(9))



Sec. 222.118  How are withholding hearings conducted in this subpart?

    (a) Appointment of hearing examiner. Upon receipt of a request for a 
withholding hearing that meets the requirements of Sec. 222.117(d), the 
Assistant Secretary requests the appointment of a hearing examiner.
    (b) Time and place of the hearing. Withholding hearings under this 
subpart are held at the offices of the Department in Washington, DC, at 
a time fixed by the hearing examiner, unless the hearing examiner 
selects another place based upon the convenience of the parties.
    (c) Proceeding. (1) The parties to the withholding hearing are the 
Assistant Secretary and the affected LEA. An affected Indian tribe is 
not a party, but,

[[Page 536]]

at the discretion of the hearing examiner, may participate in the 
hearing and present its views on the issues relevant to the withholding 
determination.
    (2) The parties may introduce all relevant evidence on the issues 
stated in the LEA's request for withholding hearing or other issues 
determined by the hearing examiner during the proceeding. The Assistant 
Secretary's notice of intent to withhold, the LEA's request for a 
withholding hearing, and all amendments and exhibits to those documents, 
must be made part of the hearing record.
    (3) Technical rules of evidence, including the Federal Rules of 
Evidence, do not apply to hearings conducted under this subpart, but the 
hearing examiner may apply rules designed to assure production of the 
most credible evidence available, including allowing the cross-
examination of witnesses.
    (4) Each party may examine all documents and other evidence offered 
or accepted for the record, and may have the opportunity to refute facts 
and arguments advanced on either side of the issues.
    (5) A transcript must be made of the oral evidence unless the 
parties agree otherwise.
    (6) Each party may be represented by counsel.
    (7) The hearing examiner is bound by all applicable statutes and 
regulations and may neither waive them nor rule them invalid.
    (d) Filing requirements. (1) All written submissions must be filed 
with the hearing examiner by hand-delivery, mail, or facsimile 
transmission. The Secretary discourages the use of facsimile 
transmission for documents longer than five pages.
    (2) If agreed upon by the parties, a party may serve a document upon 
the other party by facsimile transmission.
    (3) The filing date for a written submission under this subpart is 
the date the document is--
    (i) Hand-delivered;
    (ii) Mailed; or
    (iii) Sent by facsimile transmission.
    (4) A party filing by facsimile transmission is responsible for 
confirming that a complete and legible copy of the document was timely 
received by the hearing examiner.
    (5) Any party filing a document by facsimile transmission must file 
a follow-up hard copy by hand-delivery or mail within a reasonable 
period of time.
    (e) Procedural rules. (1) If the hearing examiner determines that no 
dispute exists as to a material fact or that the resolution of any 
disputes as to material facts would not be materially assisted by oral 
testimony, the hearing examiner shall afford each party an opportunity 
to present its case--
    (i) In whole or in part in writing; or
    (ii) In an informal conference after affording each party sufficient 
notice of the issues to be considered.
    (2) With respect to withholding hearings involving a dispute as to a 
material fact the resolution of which would be materially assisted by 
oral testimony, the hearing examiner shall afford to each party--
    (i) Sufficient notice of the issues to be considered at the hearing;
    (ii) An opportunity to present witnesses on the party's behalf; and
    (iii) An opportunity to cross-examine other witnesses either orally 
or through written interrogatories.
    (f) Decision of the hearing examiner. (1) The hearing examiner--
    (i) Makes written findings and an initial withholding decision based 
upon the hearing record; and
    (ii) Forwards to the Secretary, and mails to each party and to the 
affected Indian tribe or tribes, a copy of the written findings and 
initial withholding decision.
    (2) A hearing examiner's initial withholding decision constitutes 
the Secretary's final withholding decision without any further 
proceedings unless--
    (i) Either party to the withholding hearing, within 30 days of the 
date of its receipt of the initial withholding decision, requests the 
Secretary to review the decision and that request is granted; or
    (ii) The Secretary otherwise determines, within the time limits 
stated in paragraph (g)(2)(ii) of this section, to review the initial 
withholding decision.

[[Page 537]]

    (3) When an initial withholding decision becomes the Secretary's 
final decision without any further proceedings, the Department notifies 
the parties and the affected Indian tribe or tribes of the finality of 
the decision.
    (g) Administrative appeal of an initial decision. (1)(i) Any party 
may request the Secretary to review an initial withholding decision.
    (ii) A party must file this request for review within 30 days of the 
party's receipt of the initial withholding decision.
    (2) The Secretary may--
    (i) Grant or deny a timely request for review of an initial 
withholding decision; or
    (ii) Otherwise determine to review the decision, so long as that 
determination is made within 45 days of the date of receipt of the 
initial decision by the Secretary.
    (3) The Secretary mails to each party and the affected Indian tribe 
or tribes, by certified mail with return receipt requested, written 
notice of--
    (i) The Secretary's action granting or denying a request for review 
of an initial decision; or
    (ii) The Secretary's determination to review an initial decision.
    (h) Secretary's review of an initial withholding decision. (1) When 
the Secretary reviews an initial withholding decision, the Secretary 
notifies each party and the affected Indian tribe or tribes in writing, 
by certified mail with return receipt requested, that it may file a 
written statement or comments; and
    (2) Mails to each party and to the affected Indian tribe or tribes, 
by certified mail with return receipt requested, written notice of the 
Secretary's final withholding decision.

(Authority: 20 U.S.C. 7704)



Sec. 222.119  What is the effect of withholding under this subpart?

    (a) The withholding provisions in this subpart apply to all payments 
that an LEA is otherwise eligible to receive under section 8003 of the 
Act for any fiscal year.
    (b) The Assistant Secretary withholds funds after completion of any 
administrative proceedings under Sec. Sec. 222.116-222.118 until the 
LEA documents either compliance or exemption from compliance with the 
requirements in section 8004 of the Act and this subpart.

(Authority: 20 U.S.C. 7704 (a), (b), (d)(2), (e) (8)-(9))



Sec. 222.120  When is a local educational agency exempt from withholding 
of payments?

    Except as provided in paragraph (d)(2) of this section, the 
Assistant Secretary does not withhold payments to an LEA under the 
following circumstances:
    (a) The LEA documents that it has received a written statement from 
the affected Indian tribe or tribes that the LEA need not comply with 
section 8004 (a) and (b) of the Act, because the affected Indian tribe 
or tribes is satisfied with the provision of educational services by the 
LEA to the children claimed on the LEA's application for assistance 
under section 8003 of the Act.
    (b) The Assistant Secretary receives from the affected Indian tribe 
or tribes a written request that meets the requirements of Sec. 222.121 
not to withhold payments from an LEA.
    (c) The Assistant Secretary, on the basis of documentation provided 
by the LEA, determines that withholding payments during the course of 
the school year would substantially disrupt the educational programs of 
the LEA.
    (d)(1) The affected Indian tribe or tribes elects to have 
educational services provided by the Bureau of Indian Affairs under 
section 1101(d) of the Education Amendments of 1978.
    (2) For an LEA described in paragraph (d)(1) of this section, the 
Secretary recalculates the section 8003 payment that the LEA is 
otherwise eligible to receive to reflect the number of students who 
remain in attendance at the LEA.

(Authority: 20 U.S.C. 7703(a), 7704(c), (d)(2) and (e)(8))



Sec. 222.121  How does the affected Indian tribe or tribes request that 
payments to a local educational agency not be withheld?

    (a) The affected Indian tribe or tribes may submit to the Assistant 
Secretary a formal request not to withhold payments from an LEA.

[[Page 538]]

    (b) The formal request must be in writing and signed by the tribal 
chairman or authorized designee.

(Authority: 20 U.S.C. 7704 (d)(2) and (e)(8))



Sec. 222.122  What procedures are followed if it is determined that the 
local educational agency's funds will not be withheld under this subpart?

    If the Secretary determines that an LEA's payments will not be 
withheld under this subpart, the Assistant Secretary notifies the LEA 
and the affected Indian tribe or tribes, in writing, by certified mail 
with return receipt requested, of the reasons why the payments will not 
be withheld.

(Authority: 20 U.S.C. 7704 (d)-(e))



222.123-222.129  [Reserved]

Subpart H [Reserved]



Subpart I_Facilities Assistance and Transfers Under Section 8008 of the 
                                   Act



Sec. 222.140  What definitions apply to this subpart?

    In addition to the terms referenced or defined in Sec. 222.2, the 
following definitions apply to this subpart:
    Minimum school facilities means those school facilities for which 
the Secretary may provide assistance under this part as follows:
    (1) The Secretary, after consultation with the State educational 
agency and the local educational agency (LEA), considers these 
facilities necessary to support an educational program--
    (i) For the membership of students residing on Federal property to 
be served at normal capacity; and
    (ii) In accordance with applicable Federal and State laws and, if 
necessary or appropriate, common practice in the State.
    (2) The term includes, but is not restricted to--
    (i) Classrooms and related facilities; and
    (ii) Machinery, utilities, and initial equipment, to the extent that 
these are necessary or appropriate for school purposes.
    Providing assistance means constructing, leasing, renovating, 
remodeling, rehabilitating, or otherwise providing minimum school 
facilities.

(Authority: 20 U.S.C. 7708)



Sec. 222.141  For what types of projects may the Secretary provide 
assistance under section 8008 of the Act?

    The types of projects for which the Secretary may provide assistance 
under section 8008 of the Act during any given year include, but are not 
restricted to, one or more of the following:
    (a)(1) Emergency repairs to existing facilities for which the 
Secretary is responsible under section 8008.
    (2) As used in this section, the term emergency repairs means those 
repairs necessary--
    (i) For the health and safety of persons using the facilities;
    (ii) For the removal of architectural barriers to the disabled; or
    (iii) For the prevention of further deterioration of the facilities.
    (b) Renovation of facilities for which the Secretary is responsible 
under section 8008 to meet the standards of minimum school facilities in 
exchange for an LEA or another appropriate entity accepting transfer of 
the Secretary's interest in them under Sec. 222.143.
    (c) Provision of temporary facilities on Federal property pending 
emergency repairs.
    (d) Construction of replacement minimum school facilities when more 
cost-effective than renovation and when the replacement facilities are 
to be transferred to local ownership under Sec. 222.143.

(Authority: 20 U.S.C. 7708)



Sec. 222.142  What terms and conditions apply to minimum school facilities 
operated under section 8008 by another agency?

    When minimum school facilities are provided under section 8008, the 
Secretary may--
    (a) Arrange for the operation of the facilities by an agency other 
than the Department;
    (b) Establish terms and conditions for the operation of the 
facilities; and
    (c) Require the operating agency to submit assurances and enter into 
other

[[Page 539]]

arrangements that the Secretary specifies.

(Authority: 20 U.S.C. 7708)



Sec. 222.143  What terms and conditions apply to the transfer of minimum 
school facilities?

    When the Secretary transfers to an LEA or other appropriate entity 
(transferee) facilities that have been used to carry out the purposes of 
section 10 of Pub. L. 81-815 or section 8008, the Secretary establishes 
appropriate terms and conditions for the transfer including that it be--
    (a) Without charge; and
    (b) Consented to by the transferee.

(Authority: 20 U.S.C. 7708)



Sec. Sec. 222.144-222.149  [Reserved]



 Subpart J_Impact Aid Administrative Hearings and Judicial Review Under 
                         Section 8011 of the Act



Sec. 222.150  What is the scope of this subpart?

    (a) Except as provided in paragraph (b) of this section, the 
regulations in this subpart govern all Impact Aid administrative 
hearings under section 8011(a) of the Act and requests for 
reconsideration.
    (b) Except as otherwise indicated in this part, the regulations in 
this subpart do not govern the following administrative hearings:
    (1) Subpart G, Sec. Sec. 222.90--222.122 (Indian policies and 
procedures tribal complaint and withholding hearings.
    (2) Subpart K, Sec. 222.165 (hearings concerning determinations 
under section 8009 of the Act).

(Authority: 20 U.S.C. 7711(a))

[60 FR 50778, Sept. 29, 1995, as amended at 62 FR 35418, July 1, 1997]



Sec. 222.151  When is an administrative hearing provided to a local 
educational agency?

    (a) Any local educational agency (LEA) that is adversely affected by 
the Secretary's (or the Secretary's delegatee's) action or failure to 
act upon the LEA's application under the Act or Pub. L. 81-874 is 
entitled to an administrative hearing in accordance with this subpart.
    (b) An applicant is entitled to an administrative hearing under this 
subpart only if--
    (1) The applicant files a written request for an administrative 
hearing within 30 days of its receipt of written notice of the adverse 
action; and
    (2) The issues of fact or law specified in the hearing request are 
material to the determination of the applicant's rights and are not 
committed wholly to the discretion of the Secretary.

(Authority: 20 U.S.C. 7711(a))

[60 FR 50778, Sept. 29, 1995, as amended at 62 FR 35418, July 1, 1997]



Sec. 222.152  When may a local educational agency request reconsideration 
of a determination?

    (a)(1) An LEA may request reconsideration of any determination made 
by the Secretary (or the Secretary's delegatee) under the Act or Pub. L. 
81-874, either in addition to or instead of requesting an administrative 
hearing under Sec. 222.151.
    (2) A request for reconsideration, or actual reconsideration by the 
Secretary (or the Secretary's delegatee), does not extend the time 
within which an applicant must file a request for an administrative 
hearing under Sec. 222.151, unless the Secretary (or the Secretary's 
delegatee) extends that time limit in writing.
    (b) The Secretary's (or the Secretary's delegatee's) consideration 
of a request for reconsideration is not prejudiced by a pending request 
for an administrative hearing on the same matter, or the fact that a 
matter has been scheduled for a hearing. The Secretary (or the 
Secretary's delegatee) may, but is not required to, postpone the 
administrative hearing due to a request for reconsideration.
    (c) The Secretary (or the Secretary's delegatee) may reconsider any 
determination under the Act or Pub. L. 81-874 concerning a particular 
party unless the determination has been the subject of an administrative 
hearing

[[Page 540]]

under this part with respect to that party.

(Authority: 20 U.S.C. 7711(a))

[60 FR 50778, Sept. 29, 1995, as amended at 62 FR 35418, July 1, 1997]



Sec. 222.153  How must a local educational agency request an administrative 
hearing?

    An applicant requesting a hearing in accordance with this subpart 
must--
    (a)(1) If it mails the hearing request, address it to the Secretary, 
c/o Director, Impact Aid Program, 600 Independence Ave., SW, Portals 
4200, Washington, DC 20202-6244; or
    (2) If it hand-delivers the hearing request, deliver it to the 
Director, Impact Aid Program, Portals Building, Room 4200, 1250 Maryland 
Avenue, SW, Washington DC;
    (b) Clearly specify in its written hearing request the issues of 
fact and law to be considered; and
    (c) Furnish a copy of its hearing request to its State educational 
agency (SEA) (unless the applicant is an SEA).

(Authority: 20 U.S.C. 7711(a))



Sec. 222.154  How must written submissions under this subpart be filed?

    (a) All written submissions under this subpart must be filed by 
hand-delivery, mail, or facsimile transmission. The Secretary 
discourages the use of facsimile transmission for documents longer than 
five pages.
    (b) If agreed upon by the parties, a party may serve a document upon 
the other party or parties by facsimile transmission.
    (c) The filing date for a written submission under this subpart is 
the date the document is--
    (1) Hand-delivered;
    (2) Mailed; or
    (3) Sent by facsimile transmission.
    (d) A party other than the Department filing by facsimile 
transmission is responsible for confirming that a complete and legible 
copy of the document was received by the Department, including by the 
administrative law judge (ALJ).
    (e) Any party filing a document by facsimile transmission must file 
a follow-up hard copy by hand-delivery or mail within a reasonable 
period of time.

(Authority: 20 U.S.C. 7711(a))

[60 FR 50778, Sept. 29, 1995, as amended at 62 FR 35419, July 1, 1997]



Sec. 222.155  When and where is an administrative hearing held?

    Administrative hearings under this subpart are held at the offices 
of the Department in Washington, DC, at a time fixed by the ALJ, unless 
the ALJ selects another place based upon the convenience of the parties.

(Authority: 20 U.S.C. 7711(a))



Sec. 222.156  How is an administrative hearing conducted?

    Administrative hearings under this subpart are conducted as follows:
    (a) The administrative hearing is conducted by an ALJ appointed 
under 5 U.S.C. 3105, who issues rules of procedure that are proper and 
not inconsistent with this subpart.
    (b) The parties may introduce all relevant evidence on the issues 
stated in the applicant's request for hearing or on other issues 
determined by the ALJ during the proceeding. The application in question 
and all amendments and exhibits must be made part of the hearing record.
    (c) Technical rules of evidence, including the Federal Rules of 
Evidence, do not apply to hearings conducted under this subpart, but the 
ALJ may apply rules designed to assure production of the most credible 
evidence available, including allowing the cross-examination of 
witnesses.
    (d) Each party may examine all documents and other evidence offered 
or accepted for the record, and may have the opportunity to refute facts 
and arguments advanced on either side of the issues.
    (e) A transcript must be made of the oral evidence unless the 
parties agree otherwise.
    (f) Each party may be represented by counsel.
    (g) The ALJ is bound by all applicable statutes and regulations and 
may

[[Page 541]]

neither waive them nor rule them invalid.

(Authority: 5 U.S.C. 556 and 3105; 20 U.S.C. 7711(a))

[60 FR 50778, Sept. 29, 1995, as amended at 62 FR 35419, July 1, 1997]



Sec. 222.157  What procedures apply for issuing or appealing an 
administrative law judge's decision?

    (a) Decision. (1) The ALJ--
    (i) Makes written findings and an initial decision based upon the 
hearing record; and
    (ii) Forwards to the Secretary, and mails to each party, a copy of 
the written findings and initial decision.
    (2) An ALJ's initial decision constitutes the Secretary's final 
decision without any further proceedings unless--
    (i) A party, within the time limits stated in paragraph (b)(1)(ii) 
of this section, requests the Secretary to review the decision and that 
request is granted; or
    (ii) The Secretary otherwise determines, within the time limits 
stated in paragraph (b)(2)(ii) of this section, to review the initial 
decision.
    (3) When an initial decision becomes the Secretary's final decision 
without any further proceedings, the Department's Office of Hearings and 
Appeals notifies the parties of the finality of the decision.
    (b) Administrative appeal of an initial decision. (1)(i) Any party 
may request the Secretary to review an initial decision.
    (ii) A party must file such a request for review within 30 days of 
the party's receipt of the initial decision.
    (2) The Secretary may--
    (i) Grant or deny a timely request for review of an initial 
decision; or
    (ii) Otherwise determine to review the decision, so long as that 
determination is made within 45 days of the date of receipt of the 
initial decision.
    (3) The Secretary mails to each party written notice of--
    (i) The Secretary's action granting or denying a request for review 
of an initial decision; or
    (ii) The Secretary's determination to review an initial decision.

(Authority: 20 U.S.C. 7711(a))

[60 FR 50778, Sept. 29, 1995, as amended at 62 FR 35419, July 1, 1997]



Sec. 222.158  What procedures apply to the Secretary's review of an 
initial decision?

    When the Secretary reviews an initial decision, the Secretary--
    (a) Notifies the applicant in writing that it may file a written 
statement or comments; and
    (b) Mails to each party written notice of the Secretary's final 
decision.

(Authority: 20 U.S.C. 7711(a))

[60 FR 50778, Sept. 29, 1995, as amended at 62 FR 35419, July 1, 1997]



Sec. 222.159  When and where does a party seek judicial review?

    If an LEA or a State that is aggrieved by the Secretary's final 
decision following an administrative hearing proceeding under this 
subpart wishes to seek judicial review, the LEA or State must, within 60 
days after receiving notice of the Secretary's final decision, file with 
the United States Court of Appeals for the circuit in which that LEA or 
State is located a petition for review of the final agency action, in 
accordance with section 8011(b) of the Act.

(Authority: 20 U.S.C. 7711(b))



         Subpart K_Determinations Under Section 8009 of the Act



Sec. 222.160  What are the scope and purpose of this subpart?

    (a) Scope. This subpart applies to determinations made by the 
Secretary under section 8009 of the Act.
    (b) Purpose. The sole purpose of the regulations in this subpart is 
to implement the provisions of section 8009. The definitions and 
standards contained in this subpart apply only with respect to section 
8009 and do not establish definitions and standards for any other 
purpose.

(Authority: 20 U.S.C. 7709)

[[Page 542]]



Sec. 222.161  How is State aid treated under section 8009 of the Act?

    (a) General rules. (1) A State may take into consideration payments 
under sections 8002 and 8003(b) of the Act (including hold harmless 
payments calculated under section 8003(e)) in allocating State aid if 
that State has a State aid program that qualifies under Sec. 222.162, 
except as follows:
    (i) Those payments may be taken into consideration for each affected 
local educational agency (LEA) only in the proportion described in Sec. 
222.163.
    (ii) A State may not take into consideration that portion of an 
LEA's payment that is generated by the portion of a weight in excess of 
one under section 8003(a)(2)(B) of the Act (children residing on Indian 
lands) or payments under section 8003(d) of the Act (children with 
disabilities), section 8003(f) of the Act (heavily impacted LEAs) and 
section 8003(g) of the Act (LEAs with high concentrations of children 
with severe disabilities).
    (iii) A State may not take into consideration increases in payment 
under the following subsections of section 3(d) of Pub. L. 81-874:
    (A) Section 3(d)(2)(B) (increase for heavily impacted LEAs).
    (B) Section 3(d)(2)(C) (increase for children with disabilities and 
children with specific learning disabilities).
    (C) Section 3(d)(2)(D) (increase for children residing on Indian 
lands).
    (D) Section 3(d)(3)(B)(ii) (increase for unusual geographical 
factors).
    (2) No State aid program may qualify under this subpart if a court 
of that State has determined by final order, not under appeal, that the 
program fails to equalize expenditures for free public education among 
LEAs within the State or otherwise violates law, and if the court's 
order provides that the program is no longer in effect.
    (3) No State, whether or not it has an equalization program that 
qualifies under Sec. 222.162, may, in allocating State aid, take into 
consideration an LEA's eligibility for payments under the Act if that 
LEA does not apply for and receive those payments.
    (4) Any State that takes into consideration payments under the Act 
in accordance with the provisions of section 8009 in allocating State 
aid to LEAs must reimburse any LEA for any amounts taken into 
consideration for any fiscal year to the extent that the LEA did not in 
fact receive payments in those amounts during that fiscal year.
    (5) A State may not take into consideration payments under the Act 
or under Public Law 874 before the State's State aid program has been 
certified by the Secretary.
    (b) Data for determinations. (1) Except as provided in paragraph 
(b)(2) of this section, determinations under this subpart requiring the 
submission of financial or school population data must be made on the 
basis of final data for the second fiscal year preceding the fiscal year 
for which the determination is made if substantially the same program 
was then in effect.
    (2)(i) If the Secretary determines that the State has substantially 
revised its State aid program, the Secretary may certify that program 
for any fiscal year only if--
    (A) The Secretary determines, on the basis of projected data, that 
the State's program will meet the disparity standard described in Sec. 
222.162 for the fiscal year for which the determination is made; and
    (B) The State provides an assurance to the Secretary that, if final 
data do not demonstrate that the State's program met that standard for 
the fiscal year for which the determination is made, the State will pay 
to each affected LEA the amount by which the State reduced State aid to 
the LEA.
    (ii) Data projections submitted by a State must set forth the 
assumptions upon which the data projections are founded, be accompanied 
by an assurance as to their accuracy, and be adjusted by actual data for 
the fiscal year of determination that must be submitted to the Secretary 
as soon as these data are available.
    (c) Definitions. The following definitions apply to this subpart:
    Current expenditures means the total charges incurred for the 
benefit of the school year in an elementary (including pre-kindergarten) 
or secondary school program. ``Current expenditures'' does not include--
    (1) Expenditures for capital outlay;

[[Page 543]]

    (2) Expenditures for debt service for capital outlay;
    (3) Expenditures from State sources for special cost differentials 
of the type specified in Sec. 222.162(c)(2);
    (4) Expenditures of revenues from local or intermediate sources that 
are designated for special cost differentials of the type specified in 
Sec. 222.162(c)(2);
    (5) Expenditures of funds received by the agency under sections 8002 
and 8003(b) (including hold harmless payments calculated under section 
8003(e)) or under Pub. L. 81-874 that are not taken into consideration 
under the State aid program and exceed the proportion of those funds 
that the State would be allowed to take into consideration under Sec. 
222.163; or
    (6) Expenditures of funds received by the agency under Pub. L. 81-
874 that were not taken into consideration under the State aid program 
and exceed the proportion of funds the State was permitted to take into 
consideration under that law.
    Equalize expenditures means to meet the standard set forth in Sec. 
222.162.
    Local tax revenues means compulsory charges levied by an LEA or by 
an intermediate school district or other local governmental entity on 
behalf of an LEA for current expenditures for educational services. 
``Local tax revenues'' include the proceeds of ad valorem taxes, sales 
and use taxes, income taxes and other taxes. Where a State funding 
formula requires a local contribution equivalent to a specified mill tax 
levy on taxable real or personal property or both, ``local tax 
revenues'' include any revenues recognized by the State as satisfying 
that local contribution requirement.
    Local tax revenues covered under a State equalization program means 
``local tax revenues'' as defined in paragraph (c) of this section 
contributed to or taken into consideration in a State aid program 
subject to a determination under this subpart, but excluding all 
revenues from State and Federal sources.
    Revenue means an addition to assets that does not increase any 
liability, does not represent the recovery of an expenditure, does not 
represent the cancellation of certain liabilities without a 
corresponding increase in other liabilities or a decrease in assets, and 
does not represent a contribution of fund capital in food service or 
pupil activity funds. Furthermore, the term ``revenue'' includes only 
revenue for current expenditures.
    State aid means any contribution, no repayment for which is 
expected, made by a State to or on behalf of LEAs within the State for 
current expenditures for the provision of free public education.
    Total local tax revenues means all ``local tax revenues'' as defined 
in paragraph (c) of this section, including tax revenues for education 
programs for children needing special services, vocational education, 
transportation, and the like during the period in question but excluding 
all revenues from State and Federal sources.

(Authority: 20 U.S.C. 7709)

[60 FR 50778, Sept. 29, 1995, as amended at 62 FR 35419, July 1, 1997]



Sec. 222.162  What disparity standard must a State meet in order to be 

certified and how are disparities in current expenditures or revenues 
per pupil 
          measured?

    (a) Percentage disparity limitation. The Secretary considers that a 
State aid program equalizes expenditures if the disparity in the amount 
of current expenditures or revenues per pupil for free public education 
among LEAs in the State is no more than 25 percent. In determining the 
disparity percentage, the Secretary disregards LEAs with per pupil 
expenditures or revenues above the 95th or below the 5th percentile of 
those expenditures or revenues in the State. The method for calculating 
the percentage of disparity in a State is in the appendix to this 
subpart.
    (b)(1) Weighted average disparity for different grade level groups. 
If a State requests it, the Secretary will make separate disparity 
computations for different groups of LEAs in the State that have similar 
grade levels of instruction.
    (2) In those cases, the weighted average disparity for all groups, 
based on the proportionate number of pupils in each group, may not be 
more than the percentage provided in paragraph (a) of

[[Page 544]]

this section. The method for calculating the weighted average disparity 
percentage is set out in the appendix to this subpart.
    (c) Per pupil figure computations. In calculating the current 
expenditures or revenue disparities under this section, computations of 
per pupil figures are made on one of the following bases:
    (1) The per pupil amount of current expenditures or revenue for an 
LEA is computed on the basis of the total number of pupils receiving 
free public education in the schools of the agency. The total number of 
pupils is determined in accordance with whatever standard measurement of 
pupil count is used in the State.
    (2) If a State aid program uses ``weighted pupil,'' ``classroom,'' 
``instructional unit,'' or another designated measure of need in 
determining allocations of State aid to take account of special cost 
differentials, the computation of per pupil revenue or current 
expenditures may be made on those bases. The two allowable categories of 
special cost differentials are--
    (i) Those associated with pupils having special educational needs, 
such as children with disabilities, economically disadvantaged children, 
non-English speaking children, and gifted and talented children; and
    (ii) Those associated with particular types of LEAs such as those 
affected by geographical isolation, sparsity or density of population, 
high cost of living, or special socioeconomic characteristics within the 
area served by an LEA.
    (d) Revenues and current expenditures included in determinations. 
All revenues or current expenditures must be included for each LEA in 
the State in determining the percentage of disparity under paragraph (a) 
of this section.

(Authority: 20 U.S.C. 7709)

[60 FR 50778, Sept. 29, 1995, as amended at 62 FR 35419, July 1, 1997]



Sec. 222.163  What proportion of Impact Aid funds may a State take into 
consideration upon certification?

    (a) Provision of law. Section 8009(d)(1)(B) provides that, upon 
certification by the Secretary, in allocating State aid a State may 
consider as local resources funds received under sections 8002 and 
8003(b) (including hold harmless payments calculated under section 
8003(e)) and Pub. L. 81-874 only in proportion to the share that local 
tax revenues covered under a State equalization program are of total 
local tax revenues. Determinations of proportionality must be made on a 
case-by-case basis for each LEA affected and not on the basis of a 
general rule to be applied throughout a State.

(Authority: 20 U.S.C. 7709)

    (b) Computation of proportion. (1) In computing the share that local 
tax revenues covered under a State equalization program are of total 
local tax revenues for an LEA with respect to a program qualifying under 
Sec. 222.162, the proportion is obtained by dividing the amount of 
local tax revenues covered under the equalization program by the total 
local tax revenues attributable to current expenditures for free public 
education within that LEA.
    (2) In cases where there are no local tax revenues for current 
expenditures and the State provides all of those revenues on behalf of 
the LEA, the State may consider up to 100 percent of the funds received 
under the Act by that LEA in allocating State aid.

(Authority: 20 U.S.C. 7709(d)(1)(B))

    (c) Application of proportion to Impact Aid payments. Except as 
provided in Sec. 222.161(a)(1)(ii) and (iii), the proportion 
established under this section (or a lesser proportion) for any LEA 
receiving payments under sections 8002 and 8003(b) (including hold 
harmless payments calculated under section 8003(e)) and Pub. L. 81-874 
may be applied by a State to actual receipts of those payments or 
payments under Pub. L. 81-874.

(Authority: 20 U.S.C. 7709(d)(1)(B))



Sec. 222.164  What procedures does the Secretary follow in making a 
determination under section 8009?

    (a) Initiation. (1) A proceeding under this subpart leading to a 
determination by the Secretary under section 8009 may be initiated--
    (i) By the State educational agency (SEA) or other appropriate 
agency of the State;
    (ii) By an LEA; or

[[Page 545]]

    (iii) By the Secretary, if the Secretary has reason to believe that 
the State's action is in violation of section 8009.
    (2) Whenever a proceeding under this subpart is initiated, the party 
initiating the proceeding shall give adequate notice to the State and 
all LEAs in the State and provide them with a complete copy of the 
submission initiating the proceeding. In addition, the party initiating 
the proceeding shall notify the State and all LEAs in the State of their 
right to request from the Secretary, within 30 days of the initiation of 
a proceeding, the opportunity to present their views to the Secretary 
before the Secretary makes a determination.
    (b) Submission. (1) A submission by a State or LEA under this 
section must be made in the manner requested by the Secretary and must 
contain the information and assurances as may be required by the 
Secretary in order to reach a determination under section 8009 and this 
subpart.
    (2)(i) A State in a submission shall--
    (A) Demonstrate how its State aid program comports with Sec. 
222.162; and
    (B) Demonstrate for each LEA receiving funds under the Act that the 
proportion of those funds that will be taken into consideration comports 
with Sec. 222.163.
    (ii) The submission must be received by the Secretary no later than 
120 calendar days before the beginning of the State's fiscal year for 
the year of the determination, and must include (except as provided in 
Sec. 222.161(c)(2)) final second preceding fiscal year disparity data 
enabling the Secretary to determine whether the standard in Sec. 
222.162 has been met. The submission is considered timely if received by 
the Secretary on or before the filing deadline or if it bears a U.S. 
Postal Service postmark dated on or before the filing deadline.
    (3) An LEA in a submission must demonstrate whether the State aid 
program comports with section 8009.
    (4) Whenever a proceeding is initiated under this subpart, the 
Secretary may request from a State the data deemed necessary to make a 
determination. A failure on the part of a State to comply with that 
request within a reasonable period of time results in a summary 
determination by the Secretary that the State aid program of that State 
does not comport with the regulations in this subpart.
    (5) Before making a determination under section 8009, the Secretary 
affords the State, and all LEAs in the State, an opportunity to present 
their views as follows:
    (i) Upon receipt of a timely request for a predetermination hearing, 
the Secretary notifies all LEAs and the State of the time and place of 
the predetermination hearing.
    (ii) Predetermination hearings are informal and any LEA and the 
State may participate whether or not they requested the predetermination 
hearing.
    (iii) At the conclusion of the predetermination hearing, the 
Secretary holds the record open for 15 days for the submission of post-
hearing comments. The Secretary may extend the period for post-hearing 
comments for good cause for up to an additional 15 days.
    (iv) Instead of a predetermination hearing, if the party or parties 
requesting the predetermination hearing agree, they may present their 
views to the Secretary exclusively in writing. In such a case, the 
Secretary notifies all LEAs and the State that this alternative 
procedure is being followed and that they have up to 30 days from the 
date of the notice in which to submit their views in writing. Any LEA or 
the State may submit its views in writing within the specified time, 
regardless of whether it requested the opportunity to present its views.
    (c) Determinations. The Secretary reviews the participants' 
submissions and any views presented at a predetermination hearing under 
paragraph (b)(5) of this section, including views submitted during the 
post-hearing comment period. Based upon this review, the Secretary 
issues a written determination setting forth the reasons for the 
determination in sufficient detail to enable the State or LEAs to 
respond. The Secretary affords reasonable notice of a determination 
under this subpart and the opportunity for a

[[Page 546]]

hearing to the State or any LEA adversely affected by the determination.

(Approved by the Office of Management and Budget under control number 
1810-0036)

(Authority: 20 U.S.C. 7709)

    Note to paragraph (b)(2) of this section: The U.S. Postal Service 
does not uniformly provide a dated postmark. Before relying on this 
method, an applicant should check with its local post office.

[60 FR 50778, Sept. 29, 1995, as amended at 62 FR 35419, July 1, 1997]



Sec. 222.165  What procedures does the Secretary follow after making a 
determination under section 8009?

    (a) Request for hearing. (1) A State or LEA that is adversely 
affected by a determination under section 8009 and this subpart and that 
desires a hearing regarding that determination must submit a written 
request for a hearing within 30 days of receipt of the determination. 
The time within which a request must be filed may not be extended unless 
the Secretary, or the Secretary's delegatee, extends the time in writing 
at the time notice of the determination is given.
    (2) A request for a hearing in accordance with this section must 
specify the issues of fact and law to be considered.
    (3) If an LEA requests a hearing, it must furnish a copy of the 
request to the State. If a State requests a hearing, it must furnish a 
copy of the request to all LEAs in the State.
    (b) Right to intervene. Any LEA or State that is adversely affected 
by a determination shall have the right of intervention in the hearing.
    (c) Time and place of hearing. The hearing is held at a time and 
place fixed by the Secretary or the Secretary's delegatee (with due 
regard to the mutual convenience of the parties).
    (d) Counsel. In all proceedings under this section, all parties may 
be represented by counsel.
    (e) Proceedings. (1) The Secretary refers the matter in controversy 
to an administrative law judge (ALJ) appointed under 5 U.S.C. 3105.
    (2) The ALJ is bound by all applicable statutes and regulations and 
may neither waive them nor rule them invalid.
    (f) Filing requirements. (1) Any written submission under this 
section must be filed by hand-delivery, mail, or facsimile transmission. 
The Secretary discourages the use of facsimile transmission for 
documents longer than five pages.
    (2) If agreed upon by the parties, service of a document may be made 
upon the other party by facsimile transmission.
    (3) The filing date for a written submission under this section is 
the date the document is--
    (i) Hand-delivered;
    (ii) Mailed; or
    (iii) Sent by facsimile transmission.
    (4) A party filing by facsimile transmission is responsible for 
confirming that a complete and legible copy of the document was received 
by the Department.
    (5) Any party filing a document by facsimile transmission must file 
a follow-up hard copy by hand-delivery or mail within a reasonable 
period of time.
    (g) Procedural rules. (1) If, in the opinion of the ALJ, no dispute 
exists as to a material fact the resolution of which would be materially 
assisted by oral testimony, the ALJ shall afford each party to the 
proceeding an opportunity to present its case--
    (i) In whole or in part in writing; or
    (ii) In an informal conference after affording each party sufficient 
notice of the issues to be considered.
    (2) With respect to hearings involving a dispute as to a material 
fact the resolution of which would be materially assisted by oral 
testimony, the ALJ shall afford the following procedures to each party:
    (i) Sufficient notice of the issues to be considered at the hearing.
    (ii) An opportunity to make a record of the proceedings.
    (iii) An opportunity to present witnesses on the party's behalf.
    (iv) An opportunity to cross-examine other witnesses either orally 
or through written interrogatories.
    (h) Decisions. (1) The ALJ--
    (i) Makes written findings and an initial decision based upon the 
hearing record; and
    (ii) Forwards to the Secretary, and mails to each party, a copy of 
the written findings and initial decision.

[[Page 547]]

    (2) Appeals to the Secretary and the finality of initial decisions 
under section 8009 are governed by Sec. Sec. 222.157(b), 222.158, and 
222.159 of subpart J of this part.

(Authority: 20 U.S.C. 7709)

    (i) Corrective action. (1) Within 30 days after a determination by 
the Secretary that a State has been in violation of section 8009 unless 
the determination is timely appealed by the State, the State shall 
provide satisfactory written assurances that it will undertake 
appropriate corrective action if necessary.
    (2) A State found by the Secretary to have been in violation of 
section 8009 following a hearing shall provide, within 30 days after 
disposal of the hearing request (such as by a final decision issued 
under this subpart or withdrawal of the hearing request), satisfactory 
assurances that it is taking corrective action, if necessary.
    (3) At any time during a hearing under this subpart, a State may 
provide the Secretary appropriate assurances that it will undertake 
corrective action if necessary. The Secretary or the ALJ, as applicable, 
may stay the proceedings pending completion of corrective action.

(Authority: 20 U.S.C. 7709)

[60 FR 50778, Sept. 29, 1995, as amended at 62 FR 35420, July 1, 1997]



Sec. Sec. 222.166-222.169  [Reserved]

Appendix to Subpart K of Part 222--Determinations Under Section 8009 of 
 the Act--Methods of Calculations for Treatment of Impact Aid Payments 
                    Under State Equalization Programs

    The following paragraphs describe the methods for making certain 
calculations in conjunction with determinations made under the 
regulations in this subpart. Except as otherwise provided in the 
regulations, these methods are the only methods that may be used in 
making these calculations.
    1. Determinations of disparity standard compliance under Sec. 
222.162(b)(1).
    (a) The determinations of disparity in current expenditures or 
revenue per pupil are made by--
    (i) Ranking all LEAs having similar grade levels within the State on 
the basis of current expenditures or revenue per pupil for the second 
preceding fiscal year before the year of determination;
    (ii) Identifying those LEAs in each ranking that fall at the 95th 
and 5th percentiles of the total number of pupils in attendance in the 
schools of those LEAs; and
    (iii) Subtracting the lower current expenditure or revenue per pupil 
figure from the higher for those agencies identified in paragraph (ii) 
and dividing the difference by the lower figure.
    Example: In State X, after ranking all LEAs organized on a grade 9-
12 basis in order of the expenditures per pupil for the fiscal year in 
question, it is ascertained by counting the number of pupils in 
attendance in those agencies in ascending order of expenditure that the 
5th percentile of student population is reached at LEA A with a per 
pupil expenditure of $820, and that the 95th percentile of student 
population is reached at LEA B with a per pupil expenditure of $1,000. 
The percentage disparity between the 95th and 5th percentile LEAs is 22 
percent ($1,000-$820 = $180/$820). The program would meet the disparity 
standard for fiscal years before fiscal year 1998 but would not for 
subsequent years.
    (b) In cases under Sec. 222.162(b), where separate computations are 
made for different groups of LEAs, the disparity percentage for each 
group is obtained in the manner described in paragraph (a) above. Then 
the weighted average disparity percentage for the State as a whole is 
determined by--
    (i) Multiplying the disparity percentage for each group by the total 
number of pupils receiving free public education in the schools in that 
group;
    (ii) Summing the figures obtained in paragraph (b)(i); and
    (iii) Dividing the sum obtained in paragraph (b)(ii) by the total 
number of pupils for all the groups.

                                 Example
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Group 1 (grades 1-6), 80,000 pupilsx18.00%=....................   14,400
Group 2 (grades 7-12), 100,000 pupilsx22.00%=..................   22,000
Group 3 (grades 1-12), 20,000 pupilsx35.00%=...................    7,000
                                                                --------
    Total 200,000 pupils.......................................   43,400
    43,400/200,000=21.70% Disparity
------------------------------------------------------------------------

    2. Determinations under Sec. 222.163(b) as to maximum proportion of 
payments under the Act that may be taken into consideration by a State 
under an equalization program. The proportion that local tax revenues 
covered under a State equalization program are of total local tax 
revenues for a particular LEA shall be obtained by dividing: (a) The 
amount of local tax revenues covered under the equalization program by 
(b) the total local tax revenues

[[Page 548]]

attributable to current expenditures within the LEA. Local revenues that 
can be excluded from the proportion computation are those received from 
local non-tax sources such as interest, bake sales, gifts, donations, 
and in-kind contributions.

                                Examples

    Example 1. State A has an equalization program under which each LEA 
is guaranteed $900 per pupil less the LEA contribution based on a 
uniform tax levy. The LEA contribution from the uniform tax levy is 
considered under the equalization program. LEA X contributes the 
proceeds of the uniform tax levy, $700 per pupil, and the State 
contributes the $200 difference. No other local tax revenues are applied 
to current expenditures for education by LEA X. The percentage of funds 
under the Act that may be taken into consideration by State A for LEA X 
is 100 percent ($700/$700). If LEA X receives $100 per pupil in payments 
under the Act, $100 per pupil may be taken into consideration by State A 
in determining LEA X's relative financial resources and needs under the 
program. LEA X is regarded as contributing $800 and State A would now 
contribute the $100 difference.
    Example 2. The initial facts are the same as in Example 1, except 
that LEA X, under a permissible additional levy outside the equalization 
program, raises an additional $100 per pupil not covered under the 
equalization program. The permissible levy is not included in local tax 
revenues covered under the equalization program but it is included in 
total local tax revenues. The percentage of payments under the Act that 
may be taken into consideration is 87.5 percent ($700/$800). If LEA X 
receives $100 per pupil in payments under the Act, $87.50 per pupil may 
be taken into consideration. LEA X is now regarded as contributing 
$787.50 per pupil under the program and State A would now contribute 
$112.50 per pupil as the difference.
    Example 3. State B has an equalization program under which each LEA 
is guaranteed $900 per pupil for contributing the equivalent of a two 
mill tax levy. LEA X contributes $700 per pupil from a two mill tax levy 
and an additional $500 per pupil from local interest, bake sales, in-
kind contributions, and other non-tax local sources. The percentage of 
funds under the Act that may be taken into consideration by State A for 
LEA X is 100 percent ($700/$700). The local revenue received from 
interest, bake sales, in-kind contributions and other non-tax local 
revenues are excluded from the computation since they are from non-tax 
sources. If LEA X receives $100 per pupil in payments under the Act, 
$100 per pupil may be taken into consideration by State A in determining 
LEA X's relative financial resources and needs under the program. LEA X 
is regarded as contributing $800 and State A would now contribute the 
$100 difference.
    Example 4. State C has an equalization program in which each 
participating LEA is guaranteed a certain per pupil revenue at various 
levels of tax rates. For an eight mill rate the guarantee is $500, for 
nine mills $550, for 10 mills $600. LEA X levies a 10 mill rate and 
realizes $300 per pupil. Furthermore, it levies an additional 10 mills 
under a local leeway option realizing another $300 per pupil. The $300 
proceeds of the local leeway option are not included in local tax 
revenues covered under the equalization program, but they are included 
in total local tax revenues. The percentage of payments under the Act 
that may be taken into consideration is 50 percent ($300/$600). If LEA X 
receives $100 per pupil in payments under the Act, $50 per pupil may be 
taken into consideration. LEA X may be regarded as contributing $350 per 
pupil under the program and State B would now contribute $250 as the 
difference.
    Example 5. The initial facts are the same as in Example 4, except 
that LEA Y in State C, while taxing at the same 10 mill rate for both 
the equalization program and leeway allowance as LEA X, realizes $550 
per pupil for each tax. As with LEA X, the percentage of payments under 
the Act that may be taken into consideration for LEA Y is 50 percent 
(550/1100). If LEA Y receives $150 per pupil in payments under the Act, 
then up to $75 per pupil normally could be taken into consideration. 
However, since LEA Y would have received only $50 per pupil in State 
aid, only $50 of the allowable $75 could be taken into consideration. 
Thus, LEA Z may be regarded as contributing $600 per pupil under the 
program and State B would not contribute any State aid.



  Subpart L_Impact Aid Discretionary Construction Grant Program Under 
                       Section 8007(b) of the Act

    Source: 69 FR 12235, Mar. 15, 2004, unless otherwise noted.

                                 General



Sec. 222.170  What is the purpose of the Impact Aid Discretionary 
Construction grant program (Section 8007(b) of the Act)?

    The Impact Aid Discretionary Construction grant program provides 
competitive grants for emergency repairs and modernization of school 
facilities to certain eligible local educational

[[Page 549]]

agencies (LEAs) that receive formula Impact Aid funds.

(Authority: 20 U.S.C. 7707(b))



Sec. 222.171  What LEAs may be eligible for Discretionary Construction 
grants?

    (a) Applications for these grants are considered in four funding 
priority categories. The specific requirements for each priority are 
detailed in Sec. Sec. 222.177 through 222.182.
    (b)(1) Generally, to be eligible for an emergency construction 
grant, an LEA must--
    (i) Enroll a high proportion (at least 40 percent) of federally 
connected children in average daily attendance (ADA) who reside on 
Indian lands or who have a parent on active duty in the U.S. uniformed 
services;
    (ii) Have a school that enrolls a high proportion of one of these 
types of students;
    (iii) Be eligible for funding for heavily impacted LEAs under 
section 8003(b)(2) of the Act; or
    (iv) Meet the specific numeric requirements regarding bonding 
capacity.
    (2) The Secretary must also consider such factors as an LEA's total 
assessed value of real property that may be taxed for school purposes, 
its availability and use of bonding capacity, and the nature and 
severity of the emergency.
    (c)(1) Generally, to be eligible for a modernization construction 
grant, an LEA must--
    (i) Be eligible for Impact Aid funding under either section 8002 or 
8003 of the Act;
    (ii) Be eligible for funding for heavily impacted LEAs under section 
8003(b)(2) of the Act;
    (iii) Enroll a high proportion (at least 40 percent) of federally 
connected children in ADA who reside on Indian lands or who have a 
parent on active duty in the U.S. uniformed services;
    (iv) Have a school that enrolls a high proportion of one of these 
types of students; or
    (v) Meet the specific numeric requirements regarding bonding 
capacity.
    (2) The Secretary must also consider such factors as an LEA's total 
assessed value of real property that may be taxed for school purposes, 
its availability and use of bonding capacity, and the nature and 
severity of its need for modernization funds.

(Authority: 20 U.S.C. 7707(b))



Sec. 222.172  What activities may an LEA conduct with funds received under 
this program?

    (a) An LEA may use emergency grant funds received under this program 
only to repair, renovate, alter, and, in the limited circumstances 
described in paragraph (c) of this section, replace a public elementary 
or secondary school facility used for free public education to ensure 
the health and safety of students and personnel, including providing 
accessibility for the disabled as part of a larger project.
    (b) An LEA may use modernization grant funds received under this 
program only to renovate, alter, retrofit, extend, and, in the limited 
circumstances described in paragraph (c) of this section, replace a 
public elementary or secondary school facility used for free public 
education to provide school facilities that support a contemporary 
educational program for the LEA's students at normal capacity, and in 
accordance with the laws, standards, or common practices in the LEA's 
State.
    (c)(1) An emergency or modernization grant under this program may be 
used for the construction of a new school facility but only if the 
Secretary determines--
    (i) That the LEA holds title to the existing facility for which 
funding is requested; and
    (ii) In consultation with the grantee, that partial or complete 
replacement of the facility would be less expensive or more cost-
effective than improving the existing facility.
    (2) When construction of a new school facility is permitted, 
emergency and modernization funds may be used only for a new school 
facility that is used for free public education. These funds may be used 
for the--
    (i) Construction of instructional, resource, food service, and 
general or administrative support areas, so long as they are a part of 
the instructional facility; and

[[Page 550]]

    (ii) Purchase of initial equipment or machinery, and initial utility 
connections.

(Authority: 20 U.S.C. 7707(b))



Sec. 222.173  What activities will not receive funding under a 
Discretionary Construction grant?

    The Secretary does not fund the following activities under a 
Discretionary Construction grant:
    (a) Improvements to facilities for which the LEA does not have full 
title or other interest, such as a lease-hold interest.
    (b) Improvements to or repairs of school grounds, such as 
environmental remediation, traffic remediation, and landscaping, that do 
not directly involve instructional facilities.
    (c) Repair, renovation, alteration, or construction for stadiums or 
other facilities that are primarily used for athletic contests, 
exhibitions, and other events for which admission is charged to the 
general public.
    (d) Improvements to or repairs of teacher housing.
    (e) Except in the limited circumstances as provided in Sec. 
222.172(c), when new construction is permissible, acquisition of any 
interest in real property.
    (f) Maintenance costs associated with any of an LEA's school 
facilities.

(Authority: 20 U.S.C. 7707(b))



Sec. 222.174  What prohibitions apply to these funds?

    Grant funds under this program may not be used to supplant or 
replace other available non-Federal construction money. These grant 
funds may be used for emergency or modernization activities only to the 
extent that they supplement the amount of construction funds that would, 
in the absence of these grant funds, be available to a grantee from non-
Federal funds for these purposes.

    Example 1. ``Supplanting.'' An LEA signs a contract for a $300,000 
roof replacement and plans to use its capital expenditure fund to pay 
for the renovation. Since the LEA already has non-Federal funds 
available for the roof project, it may not now use a grant from this 
program to pay for the project or replace its own funds in order to 
conserve its capital fund.
    Example 2. ``Non-supplanting.'' The LEA from the example of 
supplanting that has the $300,000 roof commitment has also received a 
$400,000 estimate for the replacement of its facility's heating, 
ventilation, and air conditioning (HVAC) system. The LEA has not made 
any commitments for the HVAC system because it has no remaining funds 
available to pay for that work. Since other funds are not available, it 
would not be supplanting if the LEA received an emergency grant under 
this program to pay for the HVAC system.


(Authority: 20 U.S.C. 7707(b))



Sec. 222.175  What regulations apply to recipients of funds under this 
program?

    The following regulations apply to the Impact Aid Discretionary 
Construction program:
    (a) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (1) 34 CFR part 75 (Direct Grant Programs) except for 34 CFR 
Sec. Sec. 75.600 through 75.617.
    (2) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (3) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (4) 34 CFR part 80 (Uniform Administrative Requirements for Grants 
and Cooperative Agreements to State and Local Governments).
    (5) 34 CFR part 81 (General Education Provisions Act--Enforcement).
    (6) 34 CFR part 82 (New Restrictions on Lobbying).
    (7) 34 CFR part 84 (Governmentwide Requirements for Drug-Free 
Workplace (Financial Assistance)).
    (8) 34 CFR part 85 (Governmentwide Debarment and Suspension 
(Nonprocurement)).
    (b) The regulations in 34 CFR part 222.

(Authority: 20 U.S.C. 1221e-3)



Sec. 222.176  What definitions apply to this program?

    (a) In addition to the terms referenced in 34 CFR 222.2, the 
following definitions apply to this program:
    Bond limit means the cap or limit that a State may impose on an 
LEA's capacity for bonded indebtedness. For applicants in States that 
place no limit

[[Page 551]]

on an LEA's capacity for bonded indebtedness, the Secretary shall 
consider the LEA's bond limit to be 10 percent of its total assessed 
valuation.
    Construction means
    (1) Preparing drawings and specifications for school facilities;
    (2) Repairing, renovating, or altering school facilities;
    (3) Extending school facilities as described in Sec. 222.172(b);
    (4) Erecting or building school facilities, as described in Sec. 
222.172(c); and
    (5) Inspections or supervision related to school facilities 
projects.
    Emergency means a school facility condition that is so injurious or 
hazardous that it either poses an immediate threat to the health and 
safety of the facility's students and staff or can be reasonably 
expected to pose such a threat in the near future. These conditions can 
include deficiencies in the following building features: a roof; 
electrical wiring; a plumbing or sewage system; heating, ventilation, or 
air conditioning; the need to bring a school facility into compliance 
with fire and safety codes, or providing accessibility for the disabled 
as part of a larger project.
    Level of bonded indebtedness means the amount of long-term debt 
issued by an LEA divided by the LEA's bonding capacity.
    Minimal capacity to issue bonds means that the total assessed value 
of real property in an LEA that may be taxed for school purposes is at 
least $25,000,000 but not more than $50,000,000.
    Modernization means the repair, renovation, alteration, or extension 
of a public elementary or secondary school facility in order to support 
a contemporary educational program for an LEA's students in normal 
capacity, and in accordance with the laws, standards, or common 
practices in the LEA's State.
    No practical capacity to issue bonds means that the total assessed 
value of real property in an LEA that may be taxed for school purposes 
is less than $25,000,000.
    School facility means a building used to provide free public 
education, including instructional, resource, food service, and general 
or administrative support areas, so long as they are a part of the 
facility.
    Total assessed value per student means the assessed valuation of 
real property per pupil (AVPP), unless otherwise defined by an LEA's 
State.
    (b) The following terms used in this subpart are defined or 
referenced in 34 CFR 77.1:

Applicant
Application
Award
Contract
Department
EDGAR
Equipment
Fiscal year
Grant
Grantee
Project
Public
Real property
Recipient

(Authority: 20 U.S.C. 7707(b) and 1221e-3)

                               Eligibility



Sec. 222.177  What eligibility requirements must an LEA meet to apply 
for an emergency grant under the first priority?

    An LEA is eligible to apply for an emergency grant under the first 
priority of section 8007(b) of the Act if it--
    (a) Is eligible to receive formula construction funds for the fiscal 
year under section 8007(a) of the Act;
    (b)(1) Has no practical capacity to issue bonds;
    (2) Has minimal capacity to issue bonds and has used at least 75 
percent of its bond limit; or
    (3) Is eligible to receive funds for the fiscal year for heavily 
impacted districts under section 8003(b)(2) of the Act; and
    (c) Has a school facility emergency that the Secretary has 
determined poses a health or safety hazard to students and school 
personnel.

(Authority: 20 U.S.C. 7707(b))

[[Page 552]]



Sec. 222.178  What eligibility requirements must an LEA meet to apply 
for an emergency grant under the second priority?

    Except as provided in Sec. 222.179, an LEA is eligible to apply for 
an emergency grant under the second priority of section 8007(b) of the 
Act if it--
    (a) Is eligible to receive funds for the fiscal year under section 
8003(b) of the Act;
    (b)(1) Enrolls federally connected children living on Indian lands 
equal to at least 40 percent of the total number of children in average 
daily attendance (ADA) in its schools; or
    (2) Enrolls federally connected children with a parent in the U.S. 
uniformed services equal to at least 40 percent of the total number of 
children in ADA in its schools;
    (c) Has used at least 75 percent of its bond limit;
    (d) Has an average per-student assessed value of real property 
available to be taxed for school purposes that is below its State 
average; and
    (e) Has a school facility emergency that the Secretary has 
determined poses a health or safety hazard to students and school 
personnel.

(Authority: 20 U.S.C. 7707(b))



Sec. 222.179  Under what circumstances may an ineligible LEA apply on 
behalf of a school for an emergency grant under the second priority?

    An LEA that is eligible to receive section 8003(b) assistance for 
the fiscal year but that does not meet the other eligibility criteria 
described in Sec. 222.178(a) or (b) may apply on behalf of a school 
located within its geographic boundaries for an emergency grant under 
the second priority of section 8007(b) of the Act if--
    (a) The school--
    (1) Enrolls children living on Indian lands equal to at least 40 
percent of the total number of children in ADA; or
    (2) Enrolls children with a parent in the U.S. uniformed services 
equal to at least 40 percent of the total number of children in ADA;
    (b) The school has a school facility emergency that the Secretary 
has determined poses a health or safety hazard to students and school 
personnel;
    (c) The LEA has used at least 75 percent of its bond limit; and
    (d) The LEA has an average per-student assessed value of real 
property available to be taxed for school purposes that is below its 
State average.

(Authority: 20 U.S.C. 7707(b))



Sec. 222.180  What eligibility requirements must an LEA meet to apply 
for a modernization grant under the third priority?

    An LEA is eligible to apply for a modernization grant under the 
third priority of section 8007(b) of the Act if it--
    (a) Is eligible to receive funds for the fiscal year under section 
8002 or 8003(b) of the Act;
    (b)(1) Has no practical capacity to issue bonds;
    (2) Has minimal capacity to issue bonds and has used at least 75 
percent of its bond limit; or
    (3) Is eligible to receive funds for the fiscal year for heavily 
impacted districts under section 8003(b)(2) of the Act; and
    (c) Has facility needs resulting from the presence of the Federal 
Government, such as the enrollment of federally connected children, the 
presence of Federal property, or an increase in enrollment due to 
expanded Federal activities, housing privatization, or the acquisition 
of Federal property.

(Authority: 20 U.S.C. 7707(b))



Sec. 222.181  What eligibility requirements must an LEA meet to apply 
for a modernization grant under the fourth priority?

    An LEA is eligible to apply for a modernization grant under the 
fourth priority of section 8007(b) of the Act if it--
    (a)(1) Is eligible to receive funds for the fiscal year under 
section 8003(b) of the Act; and
    (i) Enrolls children living on Indian lands equal to at least 40 
percent of the total number of children in ADA in its schools; or
    (ii) Enrolls children with a parent in the U.S. uniformed services 
equal to at least 40 percent of the total number of children in ADA in 
its schools; or

[[Page 553]]

    (2) Is eligible to receive assistance for the fiscal year under 
section 8002 of the Act;
    (b) Has used at least 75 percent of its bond limit;
    (c) Has an average per-student assessed value of real property 
available to be taxed for school purposes that is below its State 
average; and
    (d) Has facility needs resulting from the presence of the Federal 
Government, such as the enrollment of federally connected children, the 
presence of Federal property, or an increase in enrollment due to 
expanded Federal activities, housing privatization, or the acquisition 
of Federal property.

(Authority: 20 U.S.C. 7707(b))



Sec. 222.182  Under what circumstances may an ineligible LEA apply on 
behalf of a school for a modernization grant under the fourth priority?

    An LEA that is eligible to receive a payment under Title VIII for 
the fiscal year but that does not meet the other eligibility criteria 
described in Sec. 222.181 may apply on behalf of a school located 
within its geographic boundaries for a modernization grant under the 
fourth priority of section 8007(b) of the Act if--
    (a) The school--
    (1) Enrolls children living on Indian lands equal to at least 40 
percent of the total number of children in ADA; or
    (2) Enrolls children with a parent in the U.S. uniformed services 
equal to at least 40 percent of the total number of children in ADA;
    (b) The LEA has used at least 75 percent of its bond limit;
    (c) The LEA has an average per-student assessed value of real 
property available to be taxed for school purposes that is below its 
State average; and
    (d) The school has facility needs resulting from the presence of the 
Federal Government, such as the enrollment of federally connected 
children, the presence of Federal property, or an increase in enrollment 
due to expanded Federal activities, housing privatization, or the 
acquisition of Federal property.

(Authority: 20 U.S.C. 7707(b))

                        How To Apply for a Grant



Sec. 222.183  How does an LEA apply for a grant?

    (a) To apply for funds under this program, an LEA may submit more 
than one application in a fiscal year. An LEA must submit a separate 
application for each school for which it proposes a project, and may 
submit more than one application for a single school if multiple 
projects are proposed.

    Examples: 1. An LEA wants to receive both an emergency and a 
modernization grant for one school that has a failing roof and that also 
needs significant classroom modernization. The LEA would submit an 
emergency repair grant application to address the roof issues and a 
separate modernization application to request funds to renovate 
classroom space.
    2. An LEA has five schools and seeks emergency grants to replace a 
roof and a boiler in one school and to replace windows in a second 
school. It should submit two applications--one for each of the two 
school facilities.
    3. An LEA has one school that has several conditions that need to be 
corrected--a failing roof, aging windows that impair the efficiency of 
the heating system, and asbestos in floor tiles. The LEA may submit a 
single application for all of these conditions or separate emergency 
repair grant applications for each condition, if the LEA judges that 
they present varying degrees of urgency.

    (b) An application must--
    (1) Contain the information required in Sec. Sec. 222.184 through 
222.186, as applicable, and in any application notice that the Secretary 
may publish in the Federal Register; and
    (2) Be timely filed in accordance with the provisions of the 
Secretary's application notice.

(Approved by the Office of Management and Budget under control number 
1810-0657)

(Authority: 20 U.S.C. 7707(b))



Sec. 222.184  What information must an application contain?

    An application for an emergency or modernization grant must contain 
the following information:
    (a) The name of the school facility the LEA is proposing to repair, 
construct, or modernize.
    (b)(1) For an applicant under section 8003(b) of the Act, the number 
of federally connected children described in

[[Page 554]]

section 8003(a)(1) enrolled in the school facility, as well as the total 
enrollment in the facility, for which the LEA is seeking a grant; or
    (2) For an applicant under section 8002 of the Act, the total 
enrollment, for the preceding year, in the LEA and in the school 
facility for which the LEA is seeking a grant, based on the fall State 
count date.
    (c) The identification of the LEA's interest in, or authority over, 
the school facility involved, such as an ownership interest or a lease 
arrangement.
    (d) The original construction date of the school facility that the 
LEA proposes to renovate or modernize.
    (e) The dates of any major renovations of that school facility and 
the areas of the school covered by the renovations.
    (f) The proportion of Federal acreage within the geographic 
boundaries of the LEA.
    (g) Fiscal data including the LEA's--
    (1) Maximum bonding capacity;
    (2) Amount of bonded debt;
    (3) Total assessed value of real property available to be taxed for 
school purposes;
    (4) State average assessed value per pupil of real property 
available to be taxed for school purposes;
    (5) Local real property tax levy, in mills or dollars, used to 
generate funds for capital expenditures; and
    (6) Sources and amounts of funds available for the proposed project.
    (h) A description of the need for funds and the proposed project for 
which a grant under this subpart L would be used, including a cost 
estimate for the project.
    (i) Applicable assurances and certifications identified in the 
approved grant application package.

(Approved by the Office of Management and Budget under control number 
1810-0657)

(Authority: 20 U.S.C. 7707(b))



Sec. 222.185  What additional information must be included in an emergency 
grant application?

    In addition to the information specified in Sec. 222.184, an 
application for an emergency grant must contain the following:
    (a) A description of the deficiency that poses a health or safety 
hazard to occupants of the facility.
    (b) A description of how the deficiency adversely affects the 
occupants and how it will be repaired.
    (c) A statement signed by an appropriate local official, as defined 
below, that the deficiency threatens the health and safety of occupants 
of the facility or prevents the use of the facility. An appropriate 
local official may include a local building inspector, a licensed 
architect, or a licensed structural engineer. An appropriate local 
official may not include a member of the applicant LEA's staff.

(Approved by the Office of Management and Budget under control number 
1810-0657)

(Authority: 20 U.S.C. 7707(b))



Sec. 222.186  What additional information must be included in a 
modernization grant application?

    In addition to the information specified in Sec. 222.184, an 
application for a modernization grant must contain a description of--
    (a) The need for modernization; and
    (b) How the applicant will use funds received under this program to 
address the need referenced in paragraph (a) of this section.

(Approved by the Office of Management and Budget under control number 
1810-0657)

(Authority: 20 U.S.C. 7707(b))



Sec. 222.187  Which year's data must an SEA or LEA provide?

    (a) Except as provided in paragraph (b) of this section, the 
Secretary will determine eligibility under this discretionary program 
based on student and fiscal data for each LEA from the fiscal year 
preceding the fiscal year for which the applicant is applying for funds.
    (b) If satisfactory fiscal data are not available from the preceding 
fiscal year, the Secretary will use data from the most recent fiscal 
year for which data that are satisfactory to the Secretary are 
available.

(Authority: 20 U.S.C. 7707(b))

[[Page 555]]

                           How Grants Are Made



Sec. 222.188  What priorities may the Secretary establish?

    In any given year, the Secretary may assign extra weight for certain 
facilities systems or emergency and modernization conditions by 
identifying the systems or conditions and their assigned weights in a 
notice published in the Federal Register.

(Authority: 20 U.S.C. 7707(b))



Sec. 222.189  What funding priority does the Secretary give to 
applications?

    (a) Except as provided in paragraph (b) of this section, the 
Secretary gives funding priority to applications in the following order:
    (1) First priority is given to applications described under Sec. 
222.177 and, among those applicants for emergency grants, priority is 
given to applications based on a rank order of the application quality 
factors referenced in Sec. 222.190, including the severity of the 
emergency.
    (2) After all eligible first-priority applications are funded, 
second priority is given to applications described under Sec. Sec. 
222.178 and 222.179 and, among those applicants for emergency grants, 
priority is given to applications based on a rank order of the 
application quality factors referenced in Sec. 222.190, including the 
severity of the emergency.
    (3) Third priority is given to applications described under Sec. 
222.180 and, among those applicants for modernization grants, priority 
is given to applications based on a rank order of the application 
quality factors referenced in Sec. 222.190, including the severity of 
the need for modernization.
    (4) Fourth priority is given to applications described under 
Sec. Sec. 222.181 and 222.182 and, among those applicants for 
modernization grants, priority is given to applications based on a rank 
order of the application quality factors referenced in Sec. 222.190, 
including the severity of the need for modernization.
    (b)(1) The Secretary makes awards in each priority described above 
until the Secretary is unable to make an approvable award in that 
priority.
    (2) If the Secretary is unable to fund a full project or a viable 
portion of a project, the Secretary may continue to fund down the list 
of high-ranking applicants within a priority.
    (3) The Secretary applies any remaining funds to awards in the next 
priority.
    (4) If an applicant does not receive an emergency or modernization 
grant in a fiscal year, the Secretary will, subject to the availability 
of funds and to the priority and award criteria, consider that 
application in the following year along with the next fiscal year's pool 
of applications.

    Example: The first five applicants in priority one have been funded. 
Three hundred thousand dollars remain available. Three unfunded 
applications remain in that priority. Application 6 requires a 
minimum of $500,000, application 7 requires $400,000, and 
application 8 requires $300,000 for a new roof and $150,000 for 
related wall and ceiling repairs. Applicant 8 agrees to accept 
the remaining $300,000 since the roof upgrade can be separated into a 
viable portion of applicant 8's total project. Applications 
6 and 7 will be retained for consideration in the next 
fiscal year and will compete again with that fiscal year's pool of 
applicants. Applicant 8 will have to submit a new application 
in the next fiscal year if it wishes to be considered for the unfunded 
portion of the current year's application.

(Authority: 20 U.S.C. 7707(b))



Sec. 222.190  How does the Secretary rank and select applicants?

    (a) To the extent that they are consistent with these regulations 
and section 8007(b) of the Act, the Secretary will follow grant 
selection procedures that are specified in 34 CFR 75.215 through 75.222. 
In general these procedures are based on the authorizing statute, the 
selection criteria, and any priorities or other applicable requirements 
that have been published in the Federal Register.
    (b) In the event of ties in numeric ranking, the Secretary may 
consider as tie-breaking factors: the severity of the emergency or the 
need for modernization; for applicants under section 8003 of the Act, 
the numbers of federally connected children who will benefit from the 
project; or for applicants under section 8002 of the Act, the numbers of 
children who will benefit from the project; the AVPP compared to the

[[Page 556]]

LEA's State average; and available resources or non-Federal funds 
available for the grant project.

(Authority: 20 U.S.C. 7707(b))



Sec. 222.191  What is the maximum award amount?

    (a) Subject to any applicable contribution requirements as described 
in Sec. Sec. 222.192 and 222.193, the procedures in 34 CFR 75.231 
through 75.236, and the provisions in paragraph (b) of this section, the 
Secretary may fund up to 100 percent of the allowable costs in an 
approved grantee's proposed project.
    (b) An award amount may not exceed the difference between--
    (1) The cost of the proposed project; and
    (2) The amount the grantee has available or will have available for 
this purpose from other sources, including local, State, and other 
Federal funds.

(Authority: 20 U.S.C. 7707(b))



Sec. 222.192  What local funds may be considered as available for this 
project?

    To determine the amount of local funds that an LEA has available 
under Sec. 222.191(b)(2) for a project under this program, the 
Secretary will consider as available all LEA funds that may be used for 
capital expenditures except $100,000 or 10 percent of the average annual 
capital expenditures of the applicant for the three previous fiscal 
years, whichever is greater. The Secretary will not consider capital 
funds that an LEA can demonstrate have been committed through signed 
contracts or other written binding agreements but have not yet been 
expended.

(Authority: 20 U.S.C. 7707(b))



Sec. 222.193  What other limitations on grant amounts apply?

    (a) Except as provided in paragraph (b) of this section and Sec. 
222.191, the amount of funds provided under an emergency grant or a 
modernization grant awarded to an eligible LEA is subject to the 
following limitations:
    (1) The award amount may not be more than 50 percent of the total 
cost of an approved project.
    (2) The total amount of grant funds may not exceed four million 
dollars during any four-year period.

    Example: An LEA that is awarded four million dollars in the first 
year may not receive any additional funds for the following three years.

    (b) Emergency or modernization grants to LEAs with no practical 
capacity to issue bonds as defined in Sec. 222.176 are not subject to 
the award limitations described in paragraph (a) of this section.

(Authority: 20 U.S.C. 7707(b))



Sec. 222.194  Are ``in-kind'' contributions permissible?

    (a) LEAs that are subject to the applicable matching requirement 
described in Sec. 222.193(a) may use allowable third party in-kind 
contributions as defined below to meet the requirements.
    (b) Third party in-kind contributions mean property or services that 
benefit this grant program and are contributed by non-Federal third 
parties without charge to the grantee or by a cost-type contractor under 
the grant agreement.
    (c) Subject to the limitations of 34 CFR 75.564(c)(2) regarding 
indirect costs, the provisions of 34 CFR 80.24 govern the allowability 
and valuation of in-kind contributions, except that it is permissible 
for a third party to contribute real property to a grantee for a project 
under this program, so long as no Federal funds are spent for the 
acquisition of real property.

(Authority: 20 U.S.C. 7707(b))

             Conditions and Requirements Grantees Must Meet



Sec. 222.195  How does the Secretary make funds available to grantees?

    The Secretary makes funds available to a grantee during a project 
period using the following procedure:
    (a) Upon final approval of the grant proposal, the Secretary 
authorizes a project period of up to 60 months based upon the nature of 
the grant proposal and the time needed to complete the project.
    (b) The Secretary then initially makes available to the grantee 10 
percent of the total award amount.

[[Page 557]]

    (c) After the grantee submits a copy of the emergency or 
modernization contract approved by the grantee's governing board, the 
Secretary makes available 80 percent of the total award amount to a 
grantee.
    (d) The Secretary makes available up to the remaining 10 percent of 
the total award amount to the grantee after the grantee submits a 
statement that--
    (1) Details any earnings, savings, or interest;
    (2) Certifies that--
    (i) The project is fully completed; and
    (ii) All the awarded funds have been spent for grant purposes; and
    (3) Is signed by the--
    (i) Chairperson of the governing board;
    (ii) Superintendent of schools; and
    (iii) Architect of the project.

(Authority: 20 U.S.C. 7707(b))



Sec. 222.196  What additional construction and legal requirements apply?

    (a) Except as provided in paragraph (b) of this section, a grantee 
under this program must comply with--
    (1) The general construction legal requirements identified in the 
grant application assurances;
    (2) The prevailing wage standards in the grantee's locality that are 
established by the Secretary of Labor in accordance with the Davis-Bacon 
Act (40 U.S.C. 276a, et seq.); and
    (3) All relevant Federal, State, and local environmental laws and 
regulations.
    (b) A grantee that qualifies for a grant because it enrolls a high 
proportion of federally connected children who reside on Indian lands is 
considered to receive a grant award primarily for the benefit of Indians 
and must therefore comply with the Indian preference requirements of 
section 7(b) of the Indian Self-Determination Act.

(Authority: 20 U.S.C. 7707(b) and 1221e-3)



PART 237_CHRISTA MCAULIFFE FELLOWSHIP PROGRAM--Table of Contents




                            Subpart A_General

Sec.
237.1 What is the Christa McAuliffe Fellowship Program?
237.2 Who is eligible to apply under the Christa McAuliffe Fellowship 
          Program?
237.3 How are awards distributed?
237.4 In what amount are fellowships awarded?
237.5 For what purposes may a fellow use an award?
237.6 What priorities may the Secretary establish?
237.7 What regulations apply?
237.8 What definitions apply?

               Subpart B_How Does One Apply for an Award?

237.10 How does an individual apply for a fellowship?

                   Subpart C_How Are Fellows Selected?

237.20 What are statewide panels?
237.21 What are the responsibilities of a statewide panel?

            Subpart D_What Conditions Must Be Met by Fellows?

237.30 What is the duration of a fellowship?
237.31 May a fellowship be awarded for two consecutive years?
237.32 What records and reports are required from fellows?
237.33 What is the service requirement for a fellowship?
237.34 What are the requirements for repayment of the fellowship?

    Authority: 20 U.S.C. 1113-1113e.

    Source: 52 FR 26466, July 14, 1987, unless otherwise noted.



                            Subpart A_General



Sec. 237.1  What is the Christa McAuliffe Fellowship Program?

    The Christa McAuliffe Fellowship Program (CMFP) is designed to 
reward excellence in teaching by encouraging outstanding teachers to 
continue their education, to develop innovative programs, to consult 
with or assist LEAs, private schools, or private school systems, and to 
engage in other educational activities that will improve the knowledge 
and skills of teachers and the education of students.

(Authority: 20 U.S.C. 1113, 1113b)



Sec. 237.2  Who is eligible to apply under the Christa McAuliffe 
Fellowship Program?

    An individual is eligible to apply for a Christa McAuliffe 
Fellowship if the individual at the time of application:

[[Page 558]]

    (a)(1) Is a citizen or national of the United States;
    (2) Is a permanent resident of the United States;
    (3) Provides evidence from the Immigration and Naturalization 
Service that the individuals is in the Unites Stated for other than a 
temporary purpose with the intention of becoming a citizen or permanent 
resident; or
    (4) Is a permanent resident of the Commonwealth of Puerto Rico, 
Guam, the Virgin Islands, American Samoa, the Trust Territory of the 
Pacific Islands, or the Northern Mariana Islands;
    (b) Is a full-time teacher in a public or private elementary or 
secondary school; and
    (c) Is eligible for a fellowship under 34 CFR 75.60.

(Authority: 20 U.S.C. 1113b, 1113d(a))

[52 FR 26466, July 14, 1987, as amended at 57 FR 30342, July 8, 1992]



Sec. 237.3  How are awards distributed?

    (a) Except as provided in section 563(a)(3) of the Act, the 
Secretary awards one national teacher fellowship under this part to an 
eligible teacher in each of the following:
    (1) Each congressional district in each of the fifty States.
    (2) The District of Columbia.
    (3) The Commonwealth of Puerto Rico.
    (4) Guam.
    (5) The Virgin Islands.
    (6) American Samoa.
    (7) The Northern Mariana Islands.
    (8) The Trust Territory of the Pacific Islands (Republic of Palau).
    (b)(1) If the conditions stated in section 563(a)(3) of the Act 
apply, the Secretary publishes an alternative distribution of fellowship 
under this part that:
    (i) Will permit fellowship awards at the level stated in Sec. 
237.4; and
    (ii) Is geographically equitable as determined by the Secretary.
    (2) The Secretary sends a notice of this distribution to each of the 
statewide panels established under Sec. 237.20.
    (c)(1) If a State fails to meet the applicable filing deadlines for 
fellowship recommendations established under this program, the Secretary 
does not make awards in that State.
    (2) In redistributing any returned or unused funds from a State, the 
Secretary takes into consideration, but is not limited to, the following 
factors:
    (i) The amount of funds available for redistribution.
    (ii) The number of States that request additional funds.
    (iii) The number of States that are willing to match fellowship 
funds.
    (iv) The requirements in Sec. 237.4(b) relating to minimum awards.

(Authority: 20 U.S.C. 1113b(a))

[52 FR 26466, July 14, 1987, as amended at 54 FR 10966, Mar. 15, 1989]



Sec. 237.4  In what amounts are fellowships awarded?

    (a) Maximum award. A fellowship awarded under this part may not 
exceed the national average salary of public school teachers in the most 
recent year for which satisfactory data are available, as determined by 
the Secretary. The Secretary urges statewide panels to award fellowships 
in the maximum amount.
    (b) Minimum award. Except as provided in paragraph (c) of this 
section, a fellowship awarded under this part may not be less than half 
the national average salary of public school teachers in the most recent 
year for which satisfactory data are available, as determined by the 
Secretary.
    (c) Partial award. If, after awarding one or more fellowships that 
meet the requirements of paragraphs (a) and (b) of this section, a State 
has insufficient funds for a maximum or minimum award, the State may 
make one partial award that may be less than the minimum award.

(Authority: 20 U.S.C. 1113b(a)(2))

[54 FR 10966, Mar. 15, 1989]



Sec. 237.5  For what purposes may a fellow use an award?

    Christa McAuliffe fellows may use fellowships awarded under this 
part for projects to improve education including:
    (a) Sabbaticals for study or research directly associated with 
objectives of this part, or academic improvement of the fellows.
    (b) Consultation with or assistance to LEAs, private schools, or 
private

[[Page 559]]

school systems other than those with which the fellow is employed or 
associated.
    (c) Development of special innovative programs.
    (d) Model teacher programs and staff development.

(Authority: 20 U.S.C. 1113b(b))



Sec. 237.6  What priorities may the Secretary establish?

    (a) The Secretary may annually establish, as a priority, one or more 
of the projects listed in Sec. 237.5.
    (b) The Secretary announces any annual priorities in a notice 
published in the Federal Register.

(Authority: 20 U.S.C. 1113d(a))



Sec. 237.7  What regulations apply?

    The following regulations apply to the Christa McAuliffe Fellowship 
Program:
    (a) The Education Department General Administrative Regulations 
(EDGAR) in 34 CFR 75.60 and 75.61 (regarding the ineligibility of 
certain individuals to receive assistance) and part 77 (Definitions That 
Apply to Department Regulations.
    (b) The regulations in this part 237.

(Authority: 20 U.S.C. 1113d(a))

[52 FR 26466, July 14, 1987, as amended at 57 FR 30342, July 8, 1992]



Sec. 237.8  What definitions apply?

    (a) The following definitions apply to terms used in this part:
    Act means the Higher Education Act of 1965, as amended.
    Fellow means a fellowship recipient under this part.
    Fellowship means an award made to a person under this part.
    (b) Definitions in EDGAR. The following terms used in this part are 
defined in 34 CFR 77.1:

Department
EDGAR
Elementary school
Local educational agency
Private
Public
Secondary school
Secretary
State educational agency

(Authority: 20 U.S.C. 1113d(a))



               Subpart B_How Does One Apply for an Award?



Sec. 237.10  How does an individual apply for a fellowship?

    (a) To apply for a fellowship under this part, an individual must 
submit an application containing a proposal for a fellowship project as 
described in Sec. 237.5, indicating the extent to which the applicant 
wishes to continue current teaching duties.
    (b) The application shall provide this application to the 
appropriate LEA for comment prior to submission to the statewide panel 
for the State within which the proposal project is to be conducted as 
described in Sec. 237.20.
    (c) The applicant shall submit the application to the statewide 
panel within the deadline established by the panel.

(Authority: 20 U.S.C. 1113c, 1113d(a))



                   Subpart C_How Are Fellows Selected?



Sec. 237.20  What are the statewide panels?

    (a) Recipients of Christa McAuliffe Fellowships in each State are 
selected by a seven-member statewide panel appointed by the chief State 
elected official, acting in consultation with the State educational 
agency (SEA), or by an existing panel designated by the chief State 
elected official and approved by the Secretary.
    (b) The statewide panel must be representative of school 
administrators, teachers, parents, and institutions of higher education.

(Authority: 20 U.S.C. 1113c)



Sec. 237.21  What are the responsibilities of a statewide panel?

    (a) Each statewide panel has the responsibility for:
    (1) Establishing its own operating procedures regarding the 
fellowship selection process; and
    (2) Disseminating information and application materials to the LEAs, 
private schools, and private school systems regarding the fellowship 
competition.
    (b) Each panel may impose reasonable administrative requirements for

[[Page 560]]

the submission, handling, and processing of applications.
    (c) Each statewide panel must consult with the appropriate LEA in 
evaluating proposals from applicants.
    (d) In their applications to the statewide panel, individuals must 
include:
    (1) Two recommendations from teaching peers;
    (2) A recommendation from the principal; and
    (3) A recommendation from the superintendent on the quality of the 
proposal and its educational benefit.
    (e) A statewide panel may establish additional criteria, consistent 
with the Act, for the award of fellowships in its area as it considers 
appropriate.
    (f) A statewide panel shall submit to the Secretary its selections 
for recipients of fellowships under this part within the schedule 
established by the Secretary.

(Authority: 20 U.S.C. 1113d)



            Subpart D_What Conditions Must Be Met by Fellows?



Sec. 237.30  What is the duration of a fellowship?

    An individual may receive a Christa McAuliffe Fellowship under this 
program for up to 12 months.

(Authority: 20 U.S.C. 1113d(a))



Sec. 237.31  May a fellowship be awarded for two consecutive years?

    A Christa McAuliffe fellow may not receive an award for any two 
consecutive years.

(Authority: 20 U.S.C. 1113b(a)(2))



Sec. 237.32  What records and reports are required from fellows?

    Each fellow shall keep any records and submit any reports that are 
required by the Secretary.

(Authority: 20 U.S.C. 1113d(a))



Sec. 237.33  What is the service requirement for a fellowship?

    (a) Except as provided in paragraph (b) of this section, a fellow 
must return to a teaching position in the fellow's current LEA, private 
school, or private school system for at least two years following the 
completion of the fellowship.
    (b) In the case of extenuating circumstances (for example, temporary 
disability), a fellow has a five-year period in which to fulfill the 
two-year teaching requirement in paragraph (a) of this section.

(Authority: 20 U.S.C. 1113b(a)(2), 1113d)

[54 FR 10966, Mar. 15, 1989]



Sec. 237.34  What are the requirements for repayment of the fellowship?

    (a) If a fellow does not carry out the activities described in the 
approved application or does not comply with Sec. 237.33, the fellow 
shall make repayment in accordance with this section.
    (b) The Secretary prorates the amount a fellow is required to repay 
based on the length of time the fellow carried out the fellowship 
activities, and held a teaching position in accordance with Sec. 237.33 
compared to the length of time that would have been involved if the 
fellow has fully met these requirements.

(Authority: 20 U.S.C. 1113e)



PART 263_INDIAN EDUCATION DISCRETIONARY GRANT PROGRAMS--Table of Contents




               Subpart A_Professional Development Program

Sec.
263.1 What is the Professional Development program?
263.2 Who is eligible to apply under the Professional Development 
          program?
263.3 What definitions apply to the Professional Development program?
263.4 What training costs may a Professional Development program 
          include?
263.5 What priority is given to certain projects and applicants?
263.6 How does the Secretary evaluate applications for the Professional 
          Development program?
263.7 What are the requirements for a leave of absence?
263.8 What are the payback requirements?
263.9 When does payback begin?
263.10 What are the payback reporting requirements?

[[Page 561]]

       Subpart B_Demonstration Grants for Indian Children Program

263.20 What definitions apply to the Demonstration Grants for Indian 
          Children program?
263.21 What priority is given to certain projects and applicants?

    Authority: 20 U.S.C. 7441 and 7442, unless otherwise noted.

    Source:  68 FR 43640, July 24, 2003, unless otherwise noted.



               Subpart A_Professional Development Program



Sec. 263.1  What is the Professional Development program?

    (a) The Professional Development program provides grants to eligible 
entities to--
    (1) Increase the number of qualified Indian individuals in 
professions that serve Indian people;
    (2) Provide training to qualified Indian individuals to become 
teachers, administrators, teacher aides, social workers, and ancillary 
educational personnel; and
    (3) Improve the skills of qualified Indian individuals who serve in 
the education field.
    (b) The Professional Development program requires individuals who 
receive training to--
    (1) Perform work related to the training received under the program 
and that benefits Indian people, or to repay all or a prorated part of 
the assistance received under the program; and
    (2) Report to the Secretary on the individual's compliance with the 
work requirement.

(Authority: 20 U.S.C. 7442)



Sec. 263.2  Who is eligible to apply under the Professional Development 
program?

    (a) In order to be eligible for either pre-service or in-service 
training programs, an applicant must be an eligible entity which means--
    (1) An institution of higher education, including an Indian 
institution of higher education;
    (2) A State educational agency in consortium with an institution of 
higher education;
    (3) A local educational agency in consortium with an institution of 
higher education;
    (4) An Indian tribe or Indian organization in consortium with an 
institution of higher education; or
    (5) A Bureau of Indian Affairs (Bureau)-funded school.
    (b) Bureau-funded schools are eligible applicants for--
    (1) An in-service training program; and
    (2) A pre-service training program when the Bureau-funded school 
applies in consortium with an institution of higher education that is 
accredited to provide the coursework and level of degree required by the 
project.
    (c) Eligibility of an applicant requiring a consortium with any 
institution of higher education, including Indian institutions of higher 
education, requires that the institution of higher education be 
accredited to provide the coursework and level of degree required by the 
project.

(Authority: 20 U.S.C. 7442)



Sec. 263.3  What definitions apply to the Professional Development program?

    The following definitions apply to the Professional Development 
program:
    Bureau-funded school means a Bureau school, a contract or grant 
school, or a school for which assistance is provided under the Tribally 
Controlled Schools Act of 1988.
    Department means the U.S. Department of Education.
    Dependent allowance means costs for the care of minor children under 
the age of 18 who reside with the training participant and for whom the 
participant has responsibility. The term does not include financial 
obligations for payment of child support required of the participant.
    Expenses means tuition and required fees; health insurance required 
by the institution of higher education; room, personal living expenses, 
and board at or near the institution; dependent allowance; and 
instructional supplies.
    Full course load means the number of credit hours that the 
institution requires of a full-time student.

[[Page 562]]

    Full-time student means a student who--
    (1) Is a degree candidate for a baccalaureate or graduate degree;
    (2) Carries a full course load; and
    (3) Is not employed for more than 20 hours a week.
    Good standing means a cumulative grade point average of at least 2.0 
on a 4.0 grade point scale in which failing grades are computed as part 
of the average, or another appropriate standard established by the 
institution.
    Graduate degree means a post-baccalaureate degree awarded by an 
institution of higher education beyond the undergraduate level.
    Indian means an individual who is--
    (1) A member of an Indian tribe or band, as membership is defined by 
the Indian tribe or band, including any tribe or band terminated since 
1940, and any tribe or band recognized by the State in which the tribe 
or band resides;
    (2) A descendant of a parent or grandparent who meets the 
requirements of paragraph (1) of this definition;
    (3) Considered by the Secretary of the Interior to be an Indian for 
any purpose;
    (4) An Eskimo, Aleut, or other Alaska Native; or
    (5) A member of an organized Indian group that received a grant 
under the Indian Education Act of 1988 as it was in effect October 19, 
1994.
    Indian institution of higher education means an accredited college 
or university within the United States cited in section 532 of the 
Equity in Educational Land-Grant Status Act of 1994, any other 
institution that qualifies for funding under the Tribally Controlled 
College or University Assistance Act of 1978, and the Navajo Community 
College, authorized in the Navajo Community College Assistance Act of 
1978.
    Indian organization means an organization that--
    (1) Is legally established--
    (i) By tribal or inter-tribal charter or in accordance with State or 
tribal law; and
    (ii) With appropriate constitution, by-laws, or articles of 
incorporation;
    (2) Has as its primary purpose the promotion of the education of 
Indians;
    (3) Is controlled by a governing board, the majority of which is 
Indian;
    (4) If located on an Indian reservation, operates with the sanction 
or by charter of the governing body of that reservation;
    (5) Is neither an organization or subdivision of, nor under the 
direct control of, any institution of higher education; and
    (6) Is not an agency of State or local government.
    Induction services means services provided after the participant 
completes his or her training program and includes, at a minimum, these 
activities:
    (1) Mentoring, coaching, and consultation services for the 
participant to improve performance,
    (2) Access to research materials and information on teaching and 
learning,
    (3) Periodic assessment of, and feedback sessions on, the 
participant's performance, provided in coordination with the 
participant's supervisor,
    (4) Periodic meetings or seminars for participants to enhance 
collaboration, feedback, and peer networking and support.
    In-service training means professional activities and opportunities 
designed to enhance the skills and abilities of individuals in their 
current areas of employment.
    Institution of higher education means an accredited college or 
university within the United States that awards a baccalaureate or post-
baccalaureate degree.
    Participant means an Indian individual who is being trained under 
the Professional Development program.
    Payback means work-related service or cash reimbursement to the 
Department of Education for the training received under the Professional 
Development program.
    Pre-service training means training to Indian individuals to prepare 
them to meet the requirements for licensing or certification in a 
professional field requiring at least a baccalaureate degree.
    Professional development activities means in-service training 
offered to enhance the skills and abilities of individual participants.
    Secretary means the Secretary of the Department of Education or an 
official or employee of the Department acting

[[Page 563]]

for the Secretary under a delegation of authority.
    Stipend means that portion of an award that is used for room and 
board and personal living expenses.
    Note: Only full-time students are eligible for stipends.
    Undergraduate degree means a baccalaureate (bachelor's) degree 
awarded by an institution of higher education.

(Authority: 20 U.S.C. 7442 and 7491)



Sec. 263.4  What training costs may a Professional Development program 
include?

    (a) A Professional Development program may include, as training 
costs, assistance to either--
    (1) Fully finance a student's educational expenses; or
    (2) Supplement other financial aid--including Federal funding other 
than loans--for meeting a student's educational expenses.
    (b) The Secretary announces the expected maximum amounts for 
stipends and other costs--including training costs--in the annual 
application notice published in the Federal Register.

(Authority: 20 U.S.C. 7442)



Sec. 263.5  What priority is given to certain projects and applicants?

    (a) The Secretary awards a total of 5 points to an application 
submitted by an Indian tribe, Indian organization, or an Indian 
institution of higher education that is eligible to participate in the 
Professional Development program. A consortium application of eligible 
entities that meets the requirements of 34 CFR 75.127 through 75.129 of 
EDGAR and includes an Indian tribe, Indian organization or Indian 
institution of higher education will be considered eligible to receive 
the 5 priority points. The consortium agreement, signed by all parties, 
must be submitted with the application in order to be considered as a 
consortium application.
    (b) The Secretary awards a total of 5 points to an application 
submitted by a consortium of eligible applicants that includes a tribal 
college or university and that designates that tribal college or 
university as the fiscal agent for the application. The consortium 
application of eligible entities must meet the requirements of 34 CFR 
75.127 through 75.129 of EDGAR to be considered eligible to receive the 
5 priority points. These competitive preference points are in addition 
to the 5 competitive preference points that may be given under paragraph 
(a) of this section. The consortium agreement, signed by all parties, 
must be submitted with the application in order to be considered as a 
consortium application.
    (c) The Secretary may give absolute preference reserving all or a 
portion of the funds available for new awards under the Professional 
Development program, to only those applications that meet one of the 
following priorities selected for a fiscal year. The Secretary announces 
the absolute priority selected in the annual application notice 
published in the Federal Register.
    (1) Pre-Service training for teachers. This priority provides 
support and training to Indian individuals to complete a pre-service 
education program that enables these individuals to meet the 
requirements for full State certification or licensure as a teacher 
through--
    (i) Training that leads to a bachelor's degree in education before 
the end of the award period; or
    (ii) For States allowing a degree in a specific subject area, 
training that leads to a bachelor's degree in the subject area as long 
as the training meets the requirements for full State teacher 
certification or licensure; or
    (iii) Training in a current or new specialized teaching assignment 
that requires at least a bachelor's degree and in which a documented 
teacher shortage exists; and
    (iv) One-year induction services after graduation, certification, or 
licensure, provided during the award period to graduates of the pre-
service program while they are completing their first year of work in 
schools with significant Indian student populations.
    Note to paragraph (c)(1): In working with various institutions of 
higher education and State certification/licensure requirements, we 
found that States requiring a degree in a specific subject area (e.g., 
specialty areas or teaching at the secondary level) generally

[[Page 564]]

require a Master's degree or fifth-year requirement before an individual 
can be certified or licensed as a teacher. These students would be 
eligible to participate as long as their training meets the requirements 
for full State certification or licensure as a teacher.
    (2) Pre-service administrator training. This priority provides--
    (i) Support and training to Indian individuals to complete a 
master's degree in education administration that is provided before the 
end of the award period and that allows participants to meet the 
requirements for State certification or licensure as an education 
administrator; and
    (ii) One year of induction services, during the award period, to 
participants after graduation, certification, or licensure, while they 
are completing their first year of work as administrators in schools 
with significant Indian student populations.

(Authority: 20 U.S.C. 7442 and 7473)



Sec. 263.6  How does the Secretary evaluate applications for the 
Professional Development program?

    The following criteria, with the total number of points available in 
parenthesis, are used to evaluate an application for a new award:
    (a) Need for project (5) points. In determining the need for the 
proposed project, the Secretary considers the following:
    (1) The extent to which the proposed project will prepare personnel 
in specific fields in which shortages have been demonstrated; and
    (2) The extent to which specific gaps or weaknesses in local 
capacity to provide, improve, or expand services that address the needs 
of the community or region have been identified and will be addressed by 
the proposed project, including the nature and magnitude of those gaps 
or weaknesses.
    (b) Significance (10) points. In determining the significance of the 
proposed project, the Secretary considers the following:
    (1) The potential contribution of the proposed project to increase 
effective strategies for teaching and student achievement;
    (2) The likelihood that the proposed project will build local 
capacity to provide, improve, or expand services that address the needs 
of the target population; and
    (3) The likelihood that the proposed project will result in system 
change or improvement.
    (c) Quality of the project design (15) points. The Secretary 
considers the following factors in determining the quality of the design 
of the proposed project:
    (1) The extent to which the goals, objectives, and outcomes to be 
achieved by the proposed project are clearly specified and measurable;
    (2) The extent to which the design of the proposed project reflects 
up-to-date knowledge from scientifically-based research and effective 
practices on how to improve teaching and learning to support student 
proficiency in meeting rigorous academic standards;
    (3) The extent to which performance feedback and continuous 
improvement of participant performance are integral to the design of the 
proposed project; and
    (4) The extent to which the proposed project will establish linkages 
with other appropriate agencies and organizations providing educational 
services to the population of students to be served by the participants.
    (d) Quality of project services (15) points. The Secretary considers 
the following factors:
    (1) The extent to which the services to be provided by the proposed 
project reflect up-to-date knowledge of scientifically-based research 
and effective practice;
    (2) The extent to which the training or professional development 
services to be provided by the proposed project are of sufficient 
quality, intensity, and duration to lead to improvements in the 
achievement of students as measured against rigorous academic standards; 
and
    (3) The extent to which the services to be provided by the proposed 
project involve the collaboration of appropriate partners for maximizing 
the effectiveness of the training and project services provided.
    (e) Quality of project personnel (15) points. The Secretary 
considers the following factors when determining the quality of the 
personnel who will carry out the proposed project:

[[Page 565]]

    (1) The qualifications, including relevant training and experience, 
of the project director;
    (2) The qualifications, including relevant training and experience, 
of key project personnel; and
    (3) The qualifications, including relevant training and experience, 
of project consultants or subcontractors.
    (f) Adequacy of resources (10) points. In determining the adequacy 
of support for the proposed project, the Secretary considers the 
following factors:
    (1) The relevance and demonstrated commitment of each partner in the 
proposed project to the implementation and success of the project;
    (2) The extent to which the costs are reasonable in relation to the 
design of the program, program objectives, number of persons to be 
served, and the anticipated results and benefits; and
    (3) The potential for the incorporation of project purposes, 
activities, or benefits into the ongoing program of the agency or 
organization at the end of Federal funding.
    (g) Quality of the management plan (15) points. In determining the 
quality of the management plan for the proposed project, the Secretary 
considers the following factors:
    (1) The adequacy of procedures for ensuring feedback and continuous 
improvement in the performance of program participants in meeting the 
needs of the population they are to serve;
    (2) The adequacy of the management plan to achieve the objectives of 
the proposed project during the award period, including clearly defined 
responsibilities, timelines, and milestones for accomplishing project 
tasks; and
    (3) The extent to which the time commitments of the project director 
and other key personnel are appropriate and adequate to meet the 
objectives of the proposed project.
    (h) Quality of the project evaluation (15) points. In determining 
the quality of the evaluation, the Secretary considers the following 
factors:
    (1) The extent to which the methods of evaluation are thorough, 
feasible, and appropriate to the context within which the project 
operates and the effectiveness of project implementation strategies;
    (2) The extent to which the methods of evaluation will provide 
performance feedback on participants and permit periodic assessment of 
progress toward achieving the intended outcomes; and
    (3) The extent to which the methods of evaluation include the use of 
objective output measures that are directly related to the intended 
outcomes of the project and will produce both quantitative and 
qualitative data to the extent possible.

(Approved by the Office of Management and Budget under control number 
1810-0580)

(Authority: 20 U.S.C. 7442)



Sec. 263.7  What are the requirements for a leave of absence?

    (a) A participant shall submit a written request for a leave of 
absence to the project director not less than 30 days prior to 
withdrawal or completion of a grading period, unless an emergency 
situation has occurred and the project director chooses to waive the 
prior notification requirement.
    (b) The project director may approve a leave of absence, for a 
period not longer than one academic year, provided a training 
participant has successfully completed at least one academic year.
    (c) The project director permits a leave of absence only if the 
institution of higher education certifies that the training participant 
is eligible to resume his or her course of study at the end of the leave 
of absence.

(Approved by the Office of Management and Budget under control number 
1810-0580)

(Authority: 20 U.S.C. 7442)



Sec. 263.8  What are the payback requirements?

    (a) Individuals receiving assistance under the Professional 
Development program are required to--
    (1) Sign an agreement, at the time of selection for training, to 
meet the provisions of the payback requirement; and
    (2) Perform work related to the training received and that benefits 
Indian people; or
    (3) Repay all or a prorated part of the assistance received.
    (b) The period of time required for a work-related payback is 
equivalent to

[[Page 566]]

the total period of time for which training was actually received under 
the Professional Development program.
    (c) The cash payback required shall be equivalent to the total 
amount of funds received and expended for training received under these 
programs and may be prorated based on any approved work-related service 
the participant performs.

(Approved by the Office of Management and Budget under control number 
1810-0580)

(Authority: 20 U.S.C. 7442)



Sec. 263.9  When does payback begin?

    (a) For all participants who complete their training under the 
Professional Development program, payback shall begin within six months 
from the date of completion of the training.
    (b) For participants who do not complete their training under the 
Professional Development program, payback shall begin within six months 
from the date the fellow leaves the Professional Development program, 
unless he or she continues as a full-time student without interruption, 
in a program leading to a degree in an accredited institution of higher 
education.
    (1) If the participant leaves the Professional Development program, 
but plans to continue his or her education as a full-time student, the 
Secretary may defer the payback requirement until the participant has 
completed his or her educational program. Written requests for deferment 
shall be submitted to the Secretary within 30 days of leaving the 
Professional Development program and shall provide the following 
information--
    (i) The name of the accredited institution the student will be 
attending;
    (ii) A copy of the letter of admission from the institution;
    (iii) The degree being sought; and
    (iv) The projected date of completion.
    (2) After approval by the Secretary for deferment of the payback 
provision on the basis of continuing as a full-time student, former 
participants are required to submit to the Secretary a status report 
from an academic advisor or other authorized representative of the 
institution of higher education, showing verification of enrollment and 
status, after every grading period.

(Approved by the Office of Management and Budget under control number 
1810-0580)

(Authority: 20 U.S.C. 7442)



Sec. 263.10  What are the payback reporting requirements?

    (a) Notice of intent. Participants shall submit to the Secretary, 
within 30 days of completion of their training program, a written notice 
of intent to complete a work-related or cash payback, or to continue in 
a degree program as a full-time student.
    (b) Work-related payback. If the participant proposes a work-related 
payback, the written notice of intent shall include information 
explaining how the work-related service is related to the training 
received and how it benefits Indian people.
    (1) For work-related service, the Secretary shall review each 
participant's payback plan to determine if the work-related service is 
related to the training received and that it benefits Indian people. The 
Secretary approves the payback plan if a determination is made that the 
work-related service to be performed is related to the training received 
and benefits Indian people, meets all applicable statutory and 
regulatory requirements, and is otherwise appropriate.
    (2) The payback plan for work-related service shall identify where, 
when, the type of service, and for whom the work will be performed.
    (3) A participant shall notify the Secretary in writing of any 
change in the work-related service being performed within 30 days of 
such change.
    (4) For work-related payback, individuals shall submit a status 
report every six months beginning from the date the work-related service 
is to begin. The reports shall include a certification from the 
participant's employer that the service(s) have been performed without 
interruption.
    (5) For participants that initiate, but cannot complete, a work-
related payback, the payback reverts to a cash payback that is prorated 
based upon the amount of time the work-related payback has been 
completed.

[[Page 567]]

    (c) Cash payback. If a cash payback is to be made, the Department 
will contact the participant to establish an appropriate schedule for 
payments.

(Approved by the Office of Management and Budget under control number 
1810-0580)

(Authority: 20 U.S.C. 7442)



       Subpart B_Demonstration Grants for Indian Children Program



Sec. 263.20  What definitions apply to the Demonstration Grants for 
Indian Children program?

    The following definitions apply to the Demonstration Grants for 
Indian Children program:
    Federally supported elementary or secondary school for Indian 
students means an elementary or secondary school that is operated or 
funded, through a contract or grant, by the Bureau of Indian Affairs.
    Indian means an individual who is--
    (1) A member of an Indian tribe or band, as membership is defined by 
the Indian tribe or band, including any tribe or band terminated since 
1940, and any tribe or band recognized by the State in which the tribe 
or band resides;
    (2) A descendant of a parent or grandparent who meets the 
requirements described in paragraph (1) of this definition;
    (3) Considered by the Secretary of the Interior to be an Indian for 
any purpose;
    (4) An Eskimo, Aleut, or other Alaska Native; or
    (5) A member of an organized Indian group that received a grant 
under the Indian Education Act of 1988 as it was in effect October 19, 
1994.
    Indian institution of higher education means an accredited college 
or university within the United States cited in section 532 of the 
Equity in Educational Land-Grant Status Act of 1994, any other 
institution that qualifies for funding under the Tribally Controlled 
College or University Assistance Act of 1978, and the Navajo Community 
College, authorized in the Navajo Community College Assistance Act of 
1978.
    Indian organization means an organization that:
    (1) Is legally established:
    (i) By tribal or inter-tribal charter or in accordance with State or 
tribal law; and
    (ii) With appropriate constitution, by-laws, or articles of 
incorporation;
    (2) Has as its primary purpose the promotion of the education of 
Indians;
    (3) Is controlled by a governing board, the majority of which is 
Indian;
    (4) If located on an Indian reservation, operates with the sanction 
or by charter of the governing body of that reservation;
    (5) Is neither an organization or subdivision of, nor under the 
direct control of, any institution of higher education; and
    (6) Is not an agency of State or local government.
    Professional development activities means in-service training 
offered to enhance the skills and abilities of individuals that may be 
part of, but not exclusively, the activities provided in a Demonstration 
Grants for Indian Children program.

(Authority: 20 U.S.C. 7441)



Sec. 263.21  What priority is given to certain projects and applicants?

    (a) The Secretary awards a total of 5 competitive preference 
priority points to an application that presents a plan for combining two 
or more of the activities described in section 7121(c) of the Act over a 
period of more than one year.
    (b) The Secretary awards a total of 5 competitive preference 
priority points to an application submitted by an Indian tribe, Indian 
organization, or Indian institution of higher education that is eligible 
to participate in the Demonstration Grants for Indian Children program. 
A consortium of eligible entities that meets the requirements of 34 CFR 
75.127 through 75.129 of EDGAR and includes an Indian tribe, Indian 
organization, or Indian institution of higher education will be 
considered eligible to receive the five (5) priority points. The 
consortium agreement, signed by all parties, must be submitted with the 
application in order to be considered as a consortium application. These 
competitive preference points are in addition to the 5 competitive 
preference points that may be

[[Page 568]]

given under paragraph (a) of this section.
    (c) The Secretary may give absolute preference reserving all or a 
portion of the funds available for new awards under the Demonstration 
Grants for Indian Children program, to only those applications that meet 
one or more of the following priorities selected for a fiscal year. The 
Secretary announces the absolute priority selected in the annual 
application notice published in the Federal Register.
    (1) School readiness projects that provide age appropriate 
educational programs and language skills to three- and four-year-old 
Indian students to prepare them for successful entry into school at the 
kindergarten school level.
    (2) Early childhood and kindergarten programs, including family-
based preschool programs, emphasizing school readiness and parental 
skills.
    (3) College preparatory programs for secondary school students 
designed to increase competency and skills in challenging subject 
matters, including math and science, to enable Indian students to 
successfully transition to postsecondary education.

(Authority: 20 U.S.C. 7441 and 7473)



PART 270_DESEGREGATION OF PUBLIC EDUCATION--Table of Contents




Sec.
270.1 What are the Desegregation of Public Education Programs?
270.2 What regulations apply to these programs?
270.3 What definitions apply to these programs?
270.4 What types of projects are funded under these programs?
270.5 What stipends and related reimbursements are authorized under 
          these programs?
270.6 What limitation is imposed on providing race and national origin 
          desegregation assistance under these programs?

    Authority: 42 U.S.C. 2000c-2000c-2, 2000-5, unless otherwise noted.

    Source: 52 FR 24963, July 1, 1987, unless otherwise noted.



Sec. 270.1  What are the Desegregation of Public Education Programs?

    The Desegregation of Public Education Programs provide grants to 
projects that help public school districts and personnel in the 
preparation, adoption, and implementation of plans for the desegregation 
of public schools and in the development of effective methods of coping 
with special educational problems occasioned by desegregation.

(Authority: 42 U.S.C. 2000c-2000c-2, 2000c-5)



Sec. 270.2  What regulations apply to these programs?

    The following regulations apply to these programs:
    (a) The Education Department General Administrative Regulations 
(EDGAR) in 34 CFR part 74 (Administration of Grants), part 75 (Direct 
Grant Programs), part 77 (Definitions That Apply to Department 
Regulations), part 78 (Education Appeal Board), and part 79 
(Intergovernmental Review of Department of Education Programs and 
Activities), except that 34 CFR 75.200 through 75.217 (relating to the 
evaluation and competitive review of grants) do not apply to grants 
awarded under 34 CFR part 271 and 34 CFR 75.232 (relating to the cost 
analysis) does not apply to grants under 34 CFR part 272.
    (b) The regulations in this part and in 34 CFR parts 271 and 272.

(Authority: 42 U.S.C. 2000c-2000c-2, 2000c-5)



Sec. 270.3  What definitions apply to these programs?

    In addition to the definitions in 34 CFR 77.1, the following 
definitions apply to the regulations in this part:
    Desegregation assistance means the provision of technical assistance 
(including training) in the areas of race, sex, and national origin 
desegregation of public elementary and secondary schools.

(Authority: 42 U.S.C. 2000c-2000c-2, 2000c-5)

    Desegregation assistance areas means the areas of race, sex, and 
national origin desegregation.

(Authority: 42 U.S.C. 2000c-2000c-2, 2000c-5)

    Desegregation Assistance Center means a regional desegregation 
technical assistance and training center funded under 34 CFR part 272.

(Authority: 42 U.S.C. 2000c-2000c-2, 2000c-5)


[[Page 569]]


    Limited English proficiency has the same meaning under this part as 
the same term defined in 34 CFR 500.4 of the General Provisions 
regulations for the Bilingual Education Program.

(Authority: 20 U.S.C. 3223(a)(1))

    National origin desegregation means the assignment of students to 
public schools and within those schools without regard to their national 
origin, including providing students of limited English proficiency with 
a full opportunity for participation in all educational programs.

(Authority: 42 U.S.C. 2000c(b))

    Public school means any elementary or secondary educational 
institution operated by a State, subdivision of a State, or governmental 
agency within a State, or operated wholly or predemoninantly from or 
through the use of governmental funds or property, or funds or property 
derived from governmental sources.

(Authority: 42 U.S.C. 2000c(c))

    Public school personnel means school board members and persons who 
are employed by or who work in the schools of a responsible governmental 
agency, as that term is defined in this section.

(Authority: 42 U.S.C. 2000c(c); 2000c-2000c-2, 2000c-5)

    Race desegregation means the assignment of students to public 
schools and within those schools without regard to their race including 
providing students with a full opportunity for participation in all 
educational programs regardless of their race. ``Race desegregation'' 
does not mean the assignment of students to public schools to correct 
conditions of racial separation that are not the result of State or 
local law or official action.

(Authority: 42 U.S.C. 2000c(b))

    Responsible governmental agency means any school board, State, 
municipality, school district, or other governmental unit legally 
responsible for operating a public school or schools.

(Authority: 42 U.S.C. 2000c-2)

    School board means any agency or agencies that administer a system 
of one or more public schools and any other agency that is responsible 
for the assignment of students to or within that system.

(Authority: 42 U.S.C. 2000c(d))

    Sex desegregation means the assignment of students to public schools 
and within those schools without regard to their sex including providing 
students with a full opportunity for participation in all educational 
programs regardless of their sex.

(Authority: 42 U.S.C. 2000c(b))



Sec. 270.4  What types of projects are funded under these programs?

    The Secretary may fund--
    (a) State Educational Agency (SEAs) projects; and
    (b) Desegregation Assistance Centers (DACs).

(Authority: 42 U.S.C. 2000c-2000c-2, 2000c-5)



Sec. 270.5  What stipends and related reimbursements are authorized 
under these programs?

    (a) The recipient of an award under 34 CFR parts 271 and 272 may 
pay:
    (1) Stipends to public school personnel who participate in technical 
assistance or training activities funded under these parts for the 
period of their attendance, if the person to whom the stipend is paid 
receives no other compensation for that period; or
    (2) Reimbursement to a responsible governmental agency that pays 
substitutes for public school personnel who:
    (i) Participate in technical assistance or training activities 
funded under these parts; and
    (ii) Are being compensated by that responsible governmental agency 
for the period of their attendance.
    (b) A recipient may pay the stipends and reimbursements described in 
this section only if it demonstrates that the payment of these costs is 
necessary to the success of the technical assistance or training 
activity, and will not exceed 20 percent of the total award.
    (c) If a recipient is authorized by the Secretary to pay stipends or 
reimbursements (or any combination of these payments), the recipient 
shall determine the conditions and rates for

[[Page 570]]

these payments in accordance with appropriate State policies, or in the 
absence of State Policies, in accordance with local policies.
    (d) A recipient of a grant under 34 CFR parts 271 and 272 may pay a 
travel allowance described in these parts only to a person who 
participates in a technical assistance or training activity.
    (e) If the participant does not complete the entire scheduled 
activity, the recipient may pay the participant's transportation to his 
or her residence or place of employment only if the participant left the 
training activity because of circumstances not reasonably within his or 
her control.

(Authority: 42 U.S.C. 2000c-2000c-2, 2000c-5)



Sec. 270.6  What limitation is imposed on providing race and national 
origin desegregation assistance under these programs?

    (a) Except as provided in paragraph (b) of this section, a recipient 
of a grant for race or national origin desegregation assistance under 
these programs may not use funds to assist in the development or 
implementation of activities or the development of curriculum materials 
for the direct instruction of students to improve their academic and 
vocational achievement levels.
    (b) A recipient of a grant for national origin desegregation 
assistance under these programs may use funds to assist in the 
development and implementation of activities or the development of 
curriculum materials for the direct instructional of students of limited 
English proficiency, to afford these students a full opportunity to 
participate in all educational programs.

(Authority: 42 U.S.C. 2000c-2000c-2, 2000c-5)



PART 271_STATE EDUCATIONAL AGENCY DESEGREGATION PROGRAM--Table of Contents




                            Subpart A_General

Sec.
271.1 What is the State Educational Agency Desegregation Program?
271.2 Who is eligible to apply for assistance under this program?
271.3 What regulations apply to this program?
271.4 What definitions apply to this program?

Subpart B_What Kinds of Activities Does the Secretary Assist Under This 
                                Program?

271.10 What types of projects may be funded?
271.11 Who may receive desegregation assistance under this program?

              Subpart C_How Does an SEA Apply for a Grant?

271.20 What conditions must an applicant meet to obtain funding?

             Subpart D_How Does the Secretary Make a Grant?

271.30 How does the Secretary evaluate an application?
271.31 How does the Secretary determine the amount of the grant?

    Authority: 42 U.S.C. 2000c-2000c-2, 2000c-5, unless otherwise noted.

    Source: 52 FR 24964, July 1, 1987, unless otherwise noted.



                            Subpart A_General



Sec. 271.1  What is the State Educational Agency Desegregation Program?

    This program provides grants to State educational agencies (SEAs) to 
enable them to provide technical assistance (including training) at the 
request of school boards and other responsible governmental agencies in 
the preparation, adoption, and implementation of plans for the 
desegregation of public schools and in the development of effective 
methods of coping with special educational problems occasioned by 
desegregation.

(Authority: 42 U.S.C. 2000c-2000c-2, 2000c-5)



Sec. 271.2  Who is eligible to apply for assistance under this program?

    An SEA is eligible to apply for a grant under this program. An SEA 
shall submit one application to provide technical assistance in one, 
two, or all three of the desegregation assistance areas, as defined in 
34 CFR 270.3.

(Authority: 42 U.S.C. 2000c-2)



Sec. 271.3  What regulations apply to this program?

    The following regulations apply to the SEA program:

[[Page 571]]

    (a) The regulations in 34 CFR part 270.
    (b) The regulations in this part.

(Authority: 42 U.S.C. 2000c-2)



Sec. 271.4  What definitions apply to this program?

    The definitions in 34 CFR 270.3 apply to the SEA program

(Authority: 42 U.S.C. 2000c-2)



Subpart B_What Kinds of Activities Does the Secretary Assist Under This 
                                Program?



Sec. 271.10  What types of projects may be funded?

    The Secretary awards grants to SEAs for projects offering technical 
assistance (including training) to school boards and other responsible 
governmental agencies, at their request, for desegregation assistance in 
the preparation, adoption, and implementation of desegregation plans. 
Desegregation assistance may include, among other activities:
    (a) Dissemination of information regarding effective methods of 
coping with special educational problems occasioned by desegregation;
    (b) Assistance and advice in coping with these problems; and
    (c) Training designed to improve the ability of teachers, 
supervisors, counselors, parents, community members, and other 
elementary or secondary school personnel to deal effectively with 
special educational problems occasioned by desegregation.

(Authority: 42 U.S.C.3000c-2)



Sec. 271.11  Who may receive desegregation assistance under this program?

    (a) A grantee may provide assistance only if the assistance is 
requested by a responsible governmental agency (other than the SEA) in 
its State.
    (b) A grantee may provide assistance only to the following persons:
    (1) Public school personnel.
    (2) Students enrolled in public schools, parents of those students, 
and other community members.

(Authority: 42 U.S.C. 2000c-2)



              Subpart C_How Does an SEA Apply for a Grant?



Sec. 271.20  What conditions must an applicant meet to obtain funding?

    To obtain funding under this program:
    (a) An applicant must demonstrate its leadership in facilitating 
desegregation (in each of the desegregation assistance areas for which 
it has applied) as indicated by policies and procedures adopted by the 
SEA to assist in the desegregation process;
    (b) The applicant's project director must have access to the Chief 
State School Officer;
    (c) The applicant must have a plan of the steps that it has taken or 
would take to inform the LEAs it will serve, public school personnel, 
students, and parents of the desegregation assistance available;
    (d) The applicant must have familiarity with the desegregation-
related needs and problems of the school boards and other responsible 
governmental agencies in its State;
    (e) The assistance to be provided by the applicant must be designed 
to meet the desegregation needs (in each of the desegregation assistance 
areas for which it has applied) within its State;
    (f) The applicant must identify specific desegregation problems that 
would be addressed by its proposed project;
    (g) The applicant must have a plan for coordination with other 
related desegregation programs in its State, that will prevent 
duplication of assistance when a responsible governmental agency 
requests assistance from both the SEA and the DAC or other program;
    (h) The applicant must provide a plan of operation for the proposed 
project that includes:
    (1) An effective plan of management that ensures proper and 
efficient administration of the project;
    (2) A clear description of how the objectives of the project relate 
to the purposes of the program;
    (3) The way the applicant plans to use its resources and personnel 
to achieve each objective; and

[[Page 572]]

    (4) How the applicant will ensure that project participants who are 
otherwise eligible to participate are selected without regard to race, 
national origin, color, sex, age, or handicapping condition.
    (i) The applicant must have familiarity with materials used in 
providing technical assistance and training in each of the desegregation 
assistance areas for which it has applied;
    (j) The key personnel the applicant plans to use on the project must 
be qualified, as determined by:
    (1) The experience and training of the project director and other 
key personnel; and
    (2) The time that the project director and other key personnel will 
devote to the project to ensure its success;
    (k) The applicant, as part of its nondiscriminatory employment 
practices, shall ensure that its personnel are selected for employment 
without regard to race, color, national origin, gender, age or 
handicapping condition.
    (l) The project must have an adequate budget to support the project 
activities, and costs must be reasonable in relation to the objectives 
of the project; and
    (m) The applicant must have an evaluation plan that includes methods 
of evaluation that are appropriate for the project and, to the extent 
possible, are objective and produce data that are quantifiable.

(Approved by the Office of Management and Budget under control number 
1810-0030)

(Authority: 42 U.S.C. 2000c-2)



             Subpart D_How Does the Secretary Make a Grant?



Sec. 271.30  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application submitted under this part 
on the basis of the requirements in Sec. 271.20.
    (b) The Secretary identifies those applications that satisfactorily 
address each of the factors included in Sec. 271.20.
    (c) The Secretary notifies an SEA whose application does not 
satisfactorily address each of the requirements in Sec. 271.20 and 
permits the SEA to amend its application. If the amended application 
meets each of the requirements of Sec. 271.20, the Secretary approves 
it for funding.

(Authority: 42 U.S.C. 2000c-2)



Sec. 271.31  How does the Secretary determine the amount of the grant?

    The Secretary awards a grant to each SEA whose application meets the 
requirements of Sec. 271.20. The Secretary determines the amount of a 
grant, pursuant to the cost analysis under 34 CFR 75.232, on the basis 
of:
    (a) The amount of funds available for all grants under this part;
    (b) The magnitude of the expected needs of responsible governmental 
agencies for desegregation assistance and the cost of providing that 
assistance to meet those needs, in the State for which an application is 
approved, as compared with the magnitude of the expected needs for 
desegregation assistance, and the cost of providing it, in all States 
for which applications are approved for funding;
    (c) The size and the racial or ethnic diversity of the student 
population of the State;
    (d) The extent to which the applicant will effectively and 
efficiently use funds awarded to it, including, if relevant, 
consideration of its previous use of funds awarded under this program; 
and
    (e) Any other information concerning desegregation problems and 
proposed activities that the Secretary finds relevant in the applicant's 
State.

(Authority: 42 U.S.C. 2000c-2)



PART 272_DESEGREGATION ASSISTANCE CENTER PROGRAM--Table of Contents




                            Subpart A_General

Sec.
272.1 What is the Desegregation Assistance Center Program?
272.2 Who is eligible to receive a grant under this program?
272.3 What regulations apply to this program?
272.4 What definitions apply to this program?

 Subpart B_What Kinds of Activities Does the Secretary Fund Under This 
                                Program?

272.10 What types of projects may be funded?

[[Page 573]]

272.11 Who may receive desegregation assistance under this program?
272.12 What geographic regions do the DACs serve?

Subpart C [Reserved]

             Subpart D_How Does the Secretary Make a Grant?

272.30 What criteria does the Secretary use to make a grant?
272.31 How does the Secretary evaluate an application for a grant?
272.32 How does the Secretary determine the amount of a grant?

    Subpart E_What Conditions Must Be Met by a Recipient of a Grant?

272.40 What conditions must be met by a recipient of a grant?

    Authority: 42 U.S.C. 2000c-2000c-2, 2000c-5, unless otherwise noted.

    Source: 52 FR 24965, July 1, 1987, unless otherwise noted.



                            Subpart A_General



Sec. 272.1  What is the Desegregation Assistance Center Program?

    This program provides financial assistance to operate regional 
Desegregation Assistance Centers (DACs), to enable them to provide 
technical assistance (including training) at the request of school 
boards and other responsible governmental agencies in the preparation, 
adoption, and implementation of plans for the desegregation of public 
schools, and in the development of effective methods of copying with 
special educational problems occasioned by desegregation.

(Authority: 42 U.S.C. 2000c-2)



Sec. 272.2  Who is eligible to receive a grant under this program?

    A public agency (other than a State educational agency or a school 
board) or private, nonprofit organization is eligible to receive a grant 
under this program.

(Authority: 42 U.S.C. 2000c-2)



Sec. 272.3  What regulations apply to this program?

    The following regulations apply to the DAC program:
    (a) The regulations in 34 CFR part 270.
    (b) The regulations in this part.

(Authority: 42 U.S.C. 2000c-2)



Sec. 272.4  What definitions apply to this program?

    The definitions in 34 CFR 270.3 apply to the DAC program.

(Authority: 42 U.S.C. 2000c-2)



 Subpart B_What Kinds of Activities Does the Secretary Fund Under This 
                                Program?



Sec. 272.10  What types of projects may be funded?

    (a) The Secretary may award funds to DACs for projects offering 
technical assistance (including training) to school boards and other 
responsible governmental agencies, at their request, for assistance in 
the preparation, adoption, and implementation of desegregation plans.
    (b) A project must provide technical assistance in all three of the 
desegregation assistance areas, as defined in 34 CFR 270.3.
    (c) Desegregation assistance may include, among other activities:
    (1) Dissemination of information regarding effective methods of 
coping with special educational problems occasioned by desegregation;
    (2) Assistance and advice in coping with these problems; and
    (3) Training designed to improve the ability of teachers, 
supervisors, counselors, parents, community members, and other 
elementary or secondary school personnel to deal effectively with 
special educational problems occasioned by desegregation.

(Authority: 42 U.S.C. 2000c-2)



Sec. 272.11  Who may receive desegregation assistance under this program?

    (a) The recipient of a grant under this part may provide assistance 
only if requested by school boards and other responsible governmental 
agencies located in its geographical service area.
    (b) The recipient may provide assistance only to the following 
persons:
    (1) Public school personnel.

[[Page 574]]

    (2) Students enrolled in public schools, parents of those students, 
and other community members.

(Authority: 42 U.S.C. 2000c-2)



Sec. 272.12  What geographic regions do the DACs serve?

    The Secretary awards a grant to provide race, sex, and national 
origin desegregation assistance under this program in each of the 
following geographic regions:
    (a) Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, 
Vermont.
    (b) New York, New Jersey, Puerto Rico, Virgin Islands.
    (c) Delaware, District of Columbia, Maryland, Pennsylvania, 
Virginia, West Virginia.
    (d) Alabama, Florida, Georgia, Kentucky, Mississippi, North 
Carolina, South Carolina, Tennessee.
    (e) Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin.
    (f) Arkansas, Louisiana, New Mexico, Oklahoma, Texas.
    (g) Iowa, Kansas, Missouri, Nebraska.
    (h) Colorado, Montana, North Dakota, South Dakota, Utah, Wyoming.
    (i) Arizona, California, Nevada.
    (j) Alaska, American Samoa, Guam, Hawaii, Idaho, Northern Mariana 
Islands, Oregon, Trust Territory of the Pacific Islands, Washington.

(Authority: 42 U.S.C. 2000c-2000c-2, 2000c-5)

Subpart C [Reserved]



             Subpart D_How Does the Secretary Make a Grant?



Sec. 272.30  What criteria does the Secretary use to make a grant?

    The Secretary uses the following criteria to evaluate applications 
for DAC grants.
    (a) Mission and strategy. (30 points) The Secretary reviews each 
application to determine the extent to which the applicant understands 
effective practices for addressing problems in each of the desegregation 
assistance areas, including the extent to which the applicant:
    (1) Understands the mission of the proposed DAC;
    (2) Is familiar with relevant research, theory, materials, and 
training models;
    (3) Is familiar with the types of problems that arise in each of the 
desegregation assistance areas;
    (4) Is familiar with relevant strategies for technical assistance 
and training; and
    (5) Is familiar with the desegregation needs of responsible 
governmental agencies in its designated region.
    (b) Organizational capability. (15 points) The Secretary reviews 
each application to determine the ability of the applicant to sustain a 
long-term, high-quality, and coherent program of technical assistance 
and training, including the extent to which the applicant:
    (1) Demonstrates the commitment to provide the services of 
appropriate faculty or staff members from its organization;
    (2) Selects project staff with an appropriate mixture of scholarly 
and practitioner backgrounds; and
    (3) Has had past successes in rendering technical assistance and 
training in the desegregation assistance areas, including collaborating 
with other individuals and organizations.
    (c) Plan of operation. (25 points) The Secretary reviews each 
application to determine the quality of the plan of operation for the 
project, including the extent to which:
    (1) The design of the project is of high quality;
    (2) The plan of management ensures proper and efficient 
administration of the project;
    (3) The applicant plans to use its resources and personnel 
effectively to achieve each objective; and
    (4) The applicant will ensure that project participants who are 
otherwise eligible to participate are selected without regard to race, 
color, national origin, sex, age, or handicapping condition.
    (d) Quality of key personnel. (15 points)
    (1) The Secretary reviews each application to determine the 
qualifications of the key personnel that the applicant plans to use on 
the project, including:
    (i) The qualifications of the project director;

[[Page 575]]

    (ii) The qualifications of the other key personnel to be used in the 
project;
    (iii) The time that each person referred to in paragraphs (d)(1) (i) 
and (ii) of this section will commit to the project; and
    (iv) How the applicant, as part of its nondiscriminatory employment 
practices, will ensure that its personnel are selected for employment 
without regard to race, color, national origin, gender, age, or 
handicapping condition.
    (2) To determine personnel qualifications, under paragraphs (d)(1) 
(i) and (ii) of this section, the Secretary considers:
    (i) Experience and training in fields related to the objectives of 
the project; and
    (ii) Any other qualifications that pertain to the quality of the 
project.
    (e) Budget and cost effectiveness. (5 points) The Secretary reviews 
each application to determine the extent to which:
    (1) The budget for the project is adequate to support the project 
activities; and
    (2) Costs are reasonable in relation to the objectives of the 
project.
    (f) Evaluation plan. (5 points) The Secretary reviews each 
application to determine the quality of the evaluation plan for the 
project, including the extent to which the methods of evaluation:
    (1) Are appropriate for the project; and
    (2) To the extent possible, are objective and produce data that are 
quantifiable.
    (g) Adequacy of resources. (5 points) The Secretary reviews each 
application to determine the adequacy of the resources that the 
applicant plans to devote to the project, including facilities, 
equipment, and supplies.

(Approved by the Office of Management and Budget under control number 
1810-0517)

(Authority: 42 U.S.C. 2000c-2)



Sec. 272.31  How does the Secretary evaluate an application for a grant?

    (a) The Secretary evaluates the application on the basis of the 
criteria in Sec. 272.30.
    (b) The Secretary selects the highest ranking application for each 
geographical service area to receive a grant.

(Authority: 42 U.S.C. 2000c-2)



Sec. 272.32  How does the Secretary determine the amount of a grant?

    The Secretary determines the amount of a grant on the basis of:
    (a) The amount of funds available for all grants under this part;
    (b) A cost analysis of the project (that shows whether the applicant 
will achieve the objectives of the project with reasonable efficiency 
and economy under the budget in the application), by which the 
Secretary:
    (1) Verifies the cost data in the detailed budget for the project;
    (2) Evaluates specific elements of costs; and
    (3) Examines costs to determine if they are necessary, reasonable, 
and allowable under applicable statutes and regulations;
    (c) The magnitude of the expected needs or responsible governmental 
agencies for desegregation assistance in the geographic region, and the 
cost of providing that assistance to meet those needs, as compared with 
the magnitude of the expected needs for desegregation assistance, and 
the cost of providing it, in all geographic regions for which 
applications are approved for funding;
    (d) The size and the racial or ethnic diversity of the student 
population of the geographic region for which the DAC will provide 
services; and
    (e) Any other information concerning desegregation problems and 
proposed activities that the Secretary finds relevant in the applicant's 
geographic region.

(Authority: 42 U.S.C. 2000c-2)



    Subpart E_What Conditions Must Be Met by a Recipient of a Grant?



Sec. 272.40  What conditions must be met by a recipient of a grant?

    A recipient of a grant under this part must:
    (a) Operate a DAC in the geographic region to be served;
    (b) Have a full-time project director; and

[[Page 576]]

    (c) Coordinate assistance in its geographic region with appropriate 
SEAs funded under 34 CFR part 271. As part of this coordination, the 
recipient shall develop plans to prevent duplication of assistance when 
a responsible governmental agency requests assistance from both the DAC 
and the appropriate SEA.

(Authority: 42 U.S.C. 2000c-2)



PART 280_MAGNET SCHOOLS ASSISTANCE PROGRAM--Table of Contents




                            Subpart A_General

Sec.
280.1 What is the Magnet Schools Assistance Program?
280.2 Who is eligible to apply for a grant?
280.3 What regulations apply to this program?
280.4 What definitions apply to this program?

 Subpart B_What Types of Projects Does the Secretary Assist Under This 
                                Program?

280.10 What types of projects does the Secretary assist?

                Subpart C_How Does One Apply for a Grant?

280.20 How does one apply for a grant?

             Subpart D_How Does the Secretary Make a Grant?

280.30 How does the Secretary evaluate an application?
280.31 What selection criteria does the Secretary use?
280.32 How is priority given to applicants?
280.33 How does the Secretary select applications for new grants with 
          funds appropriated in excess of $75 million?

           Subpart E_What Conditions Must Be Met by a Grantee?

280.40 What costs are allowable?
280.41 What are the limitations on allowable costs?

    Authority: 20 U.S.C. 7231-7231j, unless otherwise noted.



                            Subpart A_General



Sec. 280.1  What is the Magnet Schools Assistance Program?

    The Magnet Schools Assistance Program provides grants to eligible 
local educational agencies (LEAs) or consortia of LEAs for use in magnet 
schools that are part of an approved desegregation plan and that are 
designed to bring students from different social, economic, ethnic and 
racial backgrounds together. The purposes of the program are to support, 
through financial assistance to eligible LEAs or consortia of LEAs--
    (a) The elimination, reduction, or prevention of minority group 
isolation in elementary and secondary schools with substantial portions 
of minority students, which shall include assisting in the efforts of 
the United States to achieve voluntary desegregation in public schools;
    (b) The development and implementation of magnet school projects 
that will assist LEAs in achieving systemic reforms and providing all 
students the opportunity to meet challenging State academic content 
standards and student academic achievement standards;
    (c) The development and design of innovative educational methods and 
practices that promote diversity and increase choices in public 
elementary schools and public secondary schools and public educational 
programs;
    (d) Courses of instruction within magnet schools that will 
substantially strengthen the knowledge of academic subjects and the 
attainment of tangible and marketable vocational, technological, and 
professional skills of students attending such schools;
    (e) Improvement of the capacity of LEAs, including through 
professional development, to continue operating magnet schools at a high 
performance level after Federal funding for the magnet schools is 
terminated; and
    (f) Ensuring that all students enrolled in the magnet school 
programs have equitable access to high quality education that will 
enable the students to succeed academically and continue with 
postsecondary education or productive employment.

(Authority: 20 U.S.C. 7231)

[51 FR 20414, June 4, 1986, as amended at 60 FR 14865, Mar. 20, 1995; 69 
FR 4996, Feb. 2, 2004]

[[Page 577]]



Sec. 280.2  Who is eligible to apply for a grant?

    (a) An LEA or consortia of LEAs is eligible to receive assistance 
under this part if the LEA or consortia of LEAs meets any of the 
following requirements:
    (1) The LEA or consortia of LEAs is implementing a plan undertaken 
pursuant to a final order of a court of the United States, or a court of 
any State, or any other State agency or official of competent 
jurisdiction, and the order requires the desegregation of minority group 
segregated children or faculty in the elementary and secondary schools 
of that agency or those agencies.
    (2) The LEA or consortia of LEAs adopted and is implementing on 
either a voluntary basis or as required under title VI of the Civil 
Rights Act of 1964--or will adopt and implement if assistance is made 
available under this part--a plan that has been approved by the 
Secretary as adequate under title VI.
    (b) The Secretary approves a voluntary plan under paragraph (a)(2) 
of this section only if he determines that for each magnet school for 
which funding is sought--
    (1) The magnet school will reduce, eliminate, or prevent minority 
group isolation within the period of the grant award, either in the 
magnet school or in a feeder school, as appropriate; and
    (2) The establishment of the magnet school will not result in an 
increase of minority enrollment, at the magnet school or at any feeder 
school, above the districtwide percentage of minority group students in 
the LEA's schools at the grade levels served by that magnet school.

(Authority: 20 U.S.C. 7231c)

[50 FR 21191, May 22, 1985, as amended at 54 FR 19508, May 5, 1989; 57 
FR 61508, Dec. 24, 1992; 60 FR 14865, Mar. 20, 1995; 69 FR 4996, Feb. 2, 
2004]



Sec. 280.3  What regulations apply to this program?

    The following regulations apply to the Magnet Schools Assistance 
Program:
    (a) The Education Department General Administrative Regulations 
(EDGAR), 34 CFR parts 75 (Direct grant programs), 77 (Definitions apply 
to Department regulations), 79 (Intergovernmental Review of Department 
of Education programs and activities), 80 (Uniform Administrative 
Requirements for Grants and Cooperative Agreements to State and Local 
Governments), and 85 (Governmentwide Debarment and Suspension 
(Nonprocurement) and Governmentwide Requirements for Drug-Free Workplace 
(Grants)).
    (b) The regulations in this part.

(Authority: 20 U.S.C. 7231-7231j)

[50 FR 21191, May 22, 1985, as amended at 54 FR 19508, May 5, 1989; 69 
FR 4996, Feb. 2, 2004]



Sec. 280.4  What definitions apply to this program?

    (a) Definitions in EDGAR. The following terms used in this part are 
defined in 34 CFR part 77:

Applicant
Application
Budget
EDGAR
Elementary school
Equipment
Facilities
Fiscal year
Local educational agency
Project
Secondary school
Secretary
State

    (b) Definitions that apply to this program. The following 
definitions also apply to this part:
    Act means the Elementary and Secondary Education Act of 1965 as 
amended by title V, Part C of the No Child Left Behind Act of 2001, Pub. 
L. 107-110 (20 U.S.C. 7231-7231j).
    Desegregation, in reference to a plan, means a plan for the 
reassignment of children or faculty to remedy the illegal separation of 
minority group children or faculty in the schools of an LEA or a plan 
for the reduction, elimination, or prevention of minority group 
isolation in one or more of the schools of an LEA.
    Feeder school means a school from which students are drawn to attend 
a magnet school.
    Magnet school means a public elementary school, public secondary 
school, public elementary education center, or public secondary 
education center that offers a special curriculum capable of

[[Page 578]]

attracting substantial numbers of students of different racial 
backgrounds.
    Minority group means the following:
    (1) American Indian or Alaskan Native. A person having origins in 
any of the original peoples of North America, and who maintains cultural 
identification through tribal affiliation or community recognition.
    (2) Asian of Pacific Islander. A person having origins in any of the 
original peoples of the Far East, Southeast Asia, the Indian 
subcontinent, or the Pacific Islands. This area includes, for example, 
China, India, Japan, Korea, the Philippine Islands, and Samoa.
    (3) Black (Not of Hispanic Origin). A person having origins in any 
of the black racial groups of Africa.
    (4) Hispanic. A person of Mexican, Puerto Rican, Cuban, Central or 
South American, or other Spanish culture or origin, regardless of race.
    Minority group isolation, in reference to a school, means a 
condition in which minority group children constitute more than 50 
percent of the enrollment of the school.
    Special curriculum means a course of study embracing subject matter 
or a teaching methodology that is not generally offered to students of 
the same age or grade level in the same LEA or consortium of LEAs, as 
the students to whom the special curriculum is offered in the magnet 
schools. This term does not include:
    (1) A course of study or a part of a course of study designed solely 
to provide basic educational services to handicapped students or to 
students of limited English-speaking ability;
    (2) A course of study or a part of a course of study in which any 
student is unable to participate because of his or her limited English-
speaking ability;
    (3) A course of study or a part of a course of study in which any 
student is unable to participate because of his or her limited financial 
resources; or
    (4) A course of study or a part of a course of study that fails to 
provide for a participating student's meeting the requirements for 
completion of elementary or secondary education in the same period as 
other students enrolled in the applicant's schools.

(Authority: 20 U.S.C. 7231-7231j)

[50 FR 21191, May 22, 1985, as amended at 51 FR 20414, June 4, 1986; 54 
FR 19508 and 19509, May 5, 1989; 57 FR 61509, Dec. 24, 1992; 60 FR 
14865, Mar. 20, 1995; 69 FR 4996, Feb. 2, 2004]



 Subpart B_What Types of Projects Does the Secretary Assist Under This 
                                Program?



Sec. 280.10  What types of projects does the Secretary assist?

    (a) The Secretary funds applications proposing projects in magnet 
schools that are part of an approved desegregation plan and that are 
designed to bring students from different social, economic, ethnic, and 
racial backgrounds together.
    (b) For the purposes of this part, an approved desegregation plan is 
a desegregation plan described in Sec. 280.2 (a) or (b).
    (c) In the case of a desegregation plan described in Sec. 
280.2(a)(1), any modification to that plan must be approved by the 
court, agency, or official that approved the plan.

(Authority: 20 U.S.C. 7203)

[50 FR 21191, May 22, 1985, as amended at 51 FR 20414, June 4, 1986; 54 
FR 19508 and 19509, May 5, 1989]



                Subpart C_How Does One Apply for a Grant?



Sec. 280.20  How does one apply for a grant?

    (a) Each eligible LEA or consortium of LEAs that desires to receive 
assistance under this part shall submit an annual application to the 
Secretary.
    (b) In its application, the LEA or consortium of LEAs shall provide 
assurances that it--
    (1) Will use funds made available under this part for the purposes 
specified in section 5301(b) of the Act;
    (2) Will employ highly qualified teachers in the courses of 
instruction assisted under this part;
    (3) Will not engage in discrimination based upon race, religion, 
color, national origin, sex, or disability in the hiring, promotion, or 
assignment of

[[Page 579]]

employees of the agency or other personnel for whom the agency has any 
administrative responsibility;
    (4) Will not engage in discrimination based upon race, religion, 
color, national origin, sex, or disability in the assignment of students 
to schools or to courses of instruction within schools of the agency, 
except to carry out the approved desegregation plan;
    (5) Will not engage in discrimination based upon race, religion, 
color, national origin, sex, or disability in designing or operating 
extracurricular activities for students;
    (6) Will carry out a high-quality education program that will 
encourage greater parental decisionmaking and involvement; and
    (7) Will give students residing in the local attendance area of the 
proposed magnet school program equitable consideration for placement in 
the program, consistent with desegregation guidelines and the capacity 
of the applicant to accommodate students.
    (c) In addition to the assurances listed in paragraph (b) of this 
section, the LEA or consortium of LEAs shall provide such other 
assurances as the Secretary determines necessary to carry out the 
provisions of this part.
    (d) Upon request, the LEA or consortium of LEAs shall submit any 
information that is necessary for the Assistant Secretary for Civil 
Rights to determine whether the assurances required in paragraphs (b) 
(3), (4), and (5) of this section will be met.
    (e) An LEA or consortium of LEAs that has an approved desegregation 
plan shall submit each of the following with its application:
    (1) A copy of the plan.
    (2) An assurance that the plan is being implemented as approved.
    (f) An LEA or consortium of LEAs that does not have an approved 
desegregation plan shall submit each of the following with its 
application:
    (1) A copy of the plan the LEA or consortium of LEAs is submitting 
for approval.
    (2) A copy of a school board resolution or other evidence of final 
official action adopting and implementing the plan, or agreeing to adopt 
and implement it upon the award of assistance under this part.
    (3) Evidence that the plan is a desegregation plan as defined in 
Sec. 280.4(b).
    (4) For an LEA or consortium of LEAs that seeks assistance for 
existing magnet schools--
    (i) Enrollment numbers and percentages, for minority and non-
minority group students, for each magnet school for which funding is 
sought and each feeder school--
    (A) For the school year prior to the creation of each magnet school;
    (B) For the school year in which the application is submitted; and
    (C) For each of the school years of the proposed grant cycle (i.e., 
projected enrollment figures); and
    (ii) Districtwide enrollment numbers and percentages for minority 
group students in the LEA's or consortium of LEAs' schools, for grade 
levels involved in the applicant's magnet schools (e.g., K-6, 7-9, 10-
12)--
    (A) For the school year prior to the creation of each magnet school;
    (B) For the school year in which the application is submitted; and
    (C) For each of the school years of the proposed grant cycle (i.e., 
projected enrollment figures).
    (5) For an LEA or consortium of LEAs that seeks assistance for new 
magnet schools--
    (i) Enrollment numbers and percentages, for minority and non-
minority group students, for each magnet school for which funding is 
sought and for each feeder school--
    (A) For the school year in which the application is submitted; and
    (B) For each of the school years of the proposed grant cycle (i.e., 
projected enrollment figures); and
    (ii) Districtwide numbers and percentages of minority group students 
in the LEA's or consortium of LEAs' schools, for the grade levels 
involved in the applicant's magnet schools (e.g., K-6, 7-9, 10-12)--
    (A) For the school year in which the application is submitted; and
    (B) For each of the school years of the proposed grant cycle (i.e., 
projected enrollment figures).
    (g) An applicant that does not have an approved desegregation plan, 
and demonstrates that it cannot provide some portion of the information 
requested under paragraphs (f)(4) and (5)

[[Page 580]]

of this section, may provide other information (in lieu of that portion 
of the information not provided in response to paragraphs (f)(4) and (5) 
of this section) to demonstrate that the creation or operation of its 
proposed magnet school would reduce, eliminate, or prevent minority 
group isolation in the applicant's schools and would not result in an 
increase of minority student isolation at one of the applicant's schools 
above the districtwide percentage for minority students at the same 
grade levels as those served in the magnet school.
    (h) After reviewing the information provided in response to 
paragraph (f)(4) or (5) of this section, or as provided under paragraph 
(g) of this section, the Secretary may request other information, if 
necessary (e.g., demographic data concerning the attendance areas in 
which the magnet schools are or will be located), to determine whether 
to approve an LEA's or consortium of LEAs' plan.
    (i) In addition to including the assurances required by this 
section, an LEA or consortium of LEAs shall describe in its 
application--
    (1) How the applicant will use assistance made available under this 
part to promote desegregation, including how the proposed magnet school 
programs will increase interaction among students of different social, 
economic, ethnic, and racial backgrounds;
    (2) How and to what extent the assistance will increase student 
academic achievement in instructional areas offered;
    (3) How the LEA or consortium of LEAs will continue the magnet 
schools program after assistance under this part is no longer available, 
including, if applicable, why magnet schools previously established or 
supported with Magnet Schools Assistance Program grant funds cannot be 
continued without the use of funds under this part;
    (4) How assistance will be used to--
    (i) Improve student academic achievement for all students attending 
the magnet school programs; and
    (ii) Implement services and activities that are consistent with 
other programs under the Act and other statutes, as appropriate; and
    (5) What criteria will be used in selecting students to attend the 
proposed magnet schools program.

(Approved by the Office of Management and Budget under control number 
1855-0011)

(Authority: 20 U.S.C. 7231d)

[50 FR 21191, May 22, 1985, as amended at 54 FR 19508, May 5, 1989; 57 
FR 61509, Dec. 24, 1992; 60 FR 14865, Mar. 20, 1995; 69 FR 4997, Feb. 2, 
2004]



             Subpart D_How Does the Secretary Make a Grant?



Sec. 280.30  How does the Secretary evaluate an application?

    (a) The Secretary evaluates an application submitted under this part 
on the basis of the criteria in Sec. 280.31 and the priority factors in 
Sec. 280.32.
    (b) The Secretary awards up to 100 points for the extent to which an 
application meets the criteria described in Sec. 280.31. The maximum 
possible points for each complete criterion are indicated in parentheses 
after the heading for that criterion.
    (c) The Secretary then awards up to 30 additional points based upon 
the priority factors in Sec. 280.32.

(Authority: 20 U.S.C. 7231-7231j)

[50 FR 21191, May 22, 1985, as amended at 60 FR 14866, Mar. 20, 1995; 69 
FR 4997, Feb. 2, 2004]



Sec. 280.31  What selection criteria does the Secretary use?

    The Secretary uses the following selection criteria in evaluating 
each application:
    (a) Plan of operation. (25 points) (1) The Secretary reviews each 
application to determine the quality of the plan of operation for the 
project.
    (2) The Secretary determines the extent to which the applicant 
demonstrates--
    (i) The effectiveness of its management plan to ensure proper and 
efficient administration of the project;
    (ii) The effectiveness of its plan to attain specific outcomes 
that--
    (A) Will accomplish the purposes of the program;
    (B) Are attainable within the project period;
    (C) Are measurable and quantifiable; and

[[Page 581]]

    (D) For multi-year projects, can be used to determine the project's 
progress in meeting its intended outcomes;
    (iii) The effectiveness of its plan for utilizing its resources and 
personnel to achieve the objectives of the project, including how well 
it utilizes key personnel to complete tasks and achieve the objectives 
of the project;
    (iv) How it will ensure equal access and treatment for eligible 
project participants who have been traditionally underrepresented in 
courses or activities offered as part of the magnet school, e.g., women 
and girls in mathematics, science or technology courses, and disabled 
students; and
    (v) The effectiveness of its plan to recruit students from different 
social, economic, ethnic, and racial backgrounds into the magnet 
schools.
    (b) Quality of personnel. (10 points) (1) The Secretary reviews each 
application to determine the qualifications of the personnel the 
applicant plans to use on the project.
    (2) The Secretary determines the extent to which--
    (i) The project director (if one is used) is qualified to manage the 
project;
    (ii) Other key personnel are qualified to manage the project;
    (iii) Teachers who will provide instruction in participating magnet 
schools are qualified to implement the special curriculum of the magnet 
schools; and
    (iv) The applicant, as part of its nondiscriminatory employment 
practices will ensure that its personnel are selected for employment 
without regard to race, religion, color, national origin, sex, age, or 
disability.
    (3) To determine personnel qualifications the Secretary considers 
experience and training in fields related to the objectives of the 
project, including the key personnel's knowledge of and experience in 
curriculum development and desegregation strategies.
    (c) Quality of project design. (35 points) (1) The Secretary reviews 
each application to determine the quality of the project design.
    (2) The Secretary determines the extent to which each magnet school 
for which funding is sought will--
    (i) Foster interaction among students of different social, economic, 
ethnic, and racial backgrounds in classroom activities, extracurricular 
activities, or other activities in the magnet schools (or, if 
appropriate, in the schools in which the magnet school programs 
operate);
    (ii) Address the educational needs of the students who will be 
enrolled in the magnet schools;
    (iii) Carry out a high quality educational program that will 
substantially strengthen students' reading skills or knowledge of 
mathematics, science, history, geography, English, foreign languages, 
art, music, or vocational, technological, and professional skills;
    (iv) Encourage greater parental decisionmaking and involvement; and
    (v) Improve the racial balance of students in the applicant's 
schools by reducing, eliminating, or preventing minority group isolation 
in its schools.
    (d) Budget and resources. (5 points) The Secretary reviews each 
application to determine the adequacy of the resources and the cost-
effectiveness of the budget for the project, including--
    (1) The adequacy of the facilities that the applicant plans to use;
    (2) The adequacy of the equipment and supplies that the applicant 
plans to use; and
    (3) The adequacy and reasonableness of the budget for the project in 
relation to the objectives of the project.
    (e) Evaluation plan. (15 points) The Secretary determines the extent 
to which the evaluation plan for the project--
    (1) Includes methods that are appropriate for the project;
    (2) Will determine how successful the project is in meeting its 
intended outcomes, including its goals for desegregating its students 
and increasing student achievement; and
    (3) Includes methods that are objective and that will produce data 
that are quantifiable.
    (f) Commitment and capacity. (10 points) (1) The Secretary reviews 
each application to determine whether the applicant is likely to 
continue the magnet school activities after assistance under this part 
is no longer available.

[[Page 582]]

    (2) The Secretary determines the extent to which the applicant--
    (i) Is committed to the magnet schools project; and
    (ii) Has identified other resources to continue support for the 
magnet school activities when assistance under this program is no longer 
available.

(Approved by the Office of Management and Budget under control number 
1855-0011)

(Authority: 20 U.S.C. 7231-7231j)

[57 FR 61509, Dec. 24, 1992, as amended at 60 FR 14866, Mar. 20, 1995; 
69 FR 4997, Feb. 2, 2004]



Sec. 280.32  How is priority given to applicants?

    (a) How priority is given. In addition to the points awarded under 
Sec. 280.31, the Secretary gives priority to the factors listed in 
paragraphs (b) through (d) of this section by awarding additional points 
for these factors. The Secretary indicates in the application notice 
published in the Federal Register how these additional points will be 
distributed.
    (b) Need for assistance. The Secretary evaluates the applicant's 
need for assistance under this part, by considering--
    (1) The costs of fully implementing the magnet schools project as 
proposed;
    (2) The resources available to the applicant to carry out the 
project if funds under the program were not provided;
    (3) The extent to which the costs of the project exceed the 
applicant's resources; and
    (4) The difficulty of effectively carrying out the approved plan and 
the project for which assistance is sought, including consideration of 
how the design of the magnet school project--e.g., the type of program 
proposed, the location of the magnet school within the LEA--impacts on 
the applicant's ability to successfully carry out the approved plan.
    (c) New or revised magnet schools projects. The Secretary determines 
the extent to which the applicant proposes to carry out new magnet 
schools projects or significantly revise existing magnet schools 
projects.
    (d) Selection of students. The Secretary determines the extent to 
which the applicant proposes to select students to attend magnet schools 
by methods such as lottery, rather than through academic examination.

(Authority: 20 U.S.C. 7231e))

[57 FR 61510, Dec. 24, 1992, as amended at 60 FR 14866, Mar. 20, 1995; 
63 FR 8020, Feb. 17, 1998; 69 FR 4997, Feb. 2, 2004]



Sec. 280.33  How does the Secretary select applications for new grants 
with funds appropriated in excess of $75 million?

    (a) In selecting among applicants for funds appropriated for this 
program in excess of $75 million, the Secretary first identifies those 
remaining applicants that did not receive funds under this program in 
the last fiscal year of the previous funding cycle.
    (b) The Secretary then awards ten additional points to each 
applicant identified under paragraph (a) of this section.

(Authority: 20 U.S.C. 7231j)

[54 FR 19509, May 5, 1989, as amended at 69 FR 4997, Feb. 2, 2004]



           Subpart E_What Conditions Must Be Met by a Grantee?



Sec. 280.40  What costs are allowable?

    An LEA or consortium of LEAs may use funds received under this part 
for the following activities:
    (a) Planning and promotional activities directly related to the 
development, expansion, continuation, or enhancement of academic 
programs and services offered at magnet schools, though planning 
activities are subject to the restrictions in Sec. 280.41(a) and do not 
include activities described under paragraph (f) of this section.
    (b) The acquisition of books, materials, and equipment (including 
computers) and the maintenance and operation of materials, equipment and 
computers. Any books, materials or equipment purchased with grant funds 
must be:
    (1) Necessary for the conduct of programs in magnet schools; and
    (2) Directly related to improving student academic achievement based 
on the State's challenging academic content standards and student 
academic achievement standards or directly related to improving student 
reading

[[Page 583]]

skills or knowledge of mathematics, science, history, geography, 
English, foreign languages, art, or music, or to improving vocational, 
technological, or professional skills.
    (c) The payment or subsidization of the compensation of elementary 
and secondary school teachers:
    (1) Who are highly qualified;
    (2) Who are necessary to conduct programs in magnet schools; and
    (3) Whose employment is directly related to improving student 
academic achievement based on the State's challenging academic content 
standards and student academic achievement standards or directly related 
to improving student reading skills or knowledge of mathematics, 
science, history, geography, English, foreign languages, art, or music, 
or to improving vocational, technological, or professional skills.
    (d) The payment or subsidization of the compensation of 
instructional staff, where applicable, who satisfy the requirements of 
paragraphs (c)(2) and (3) of this section.
    (e) With respect to a magnet school program offered to less than the 
entire school population, for instructional activities that--
    (1) Are designed to make available the special curriculum of the 
magnet school program to students enrolled in the school, but not in the 
magnet school program; and
    (2) Further the purposes of the program.
    (f) Activities, which may include professional development, that 
will build the recipient's capacity to operate magnet school programs 
once the grant period has ended.
    (g) Activities to enable the LEA or consortium of LEAs to have more 
flexibility in the administration of a magnet school program in order to 
serve students attending a school who are not enrolled in a magnet 
school program.
    (h) Activities to enable the LEA or consortium of LEAs to have 
flexibility in designing magnet schools for students in all grades.

(Authority: 20 U.S.C. 7231f)

[51 FR 20414, June 4, 1986, as amended at 54 FR 19509, May 5, 1989; 60 
FR 14866, Mar. 20, 1995; 69 FR 4997, Feb. 2, 2004]



Sec. 280.41  What are the limitations on allowable costs?

    An LEA or consortium of LEAs that receives assistance under this 
part may not--
    (a) Expend for planning more than 50 percent of the funds received 
for the first fiscal year, and 15 percent of the funds received for the 
second or the third fiscal year;
    (b) Use funds for transportation; or
    (c) Use funds for any activity that does not augment academic 
improvement.

(Authority: 20 U.S.C. 7231g, 7231h(b))

[60 FR 14866, Mar. 20, 1995, as amended at 69 FR 4997, Feb. 2, 2004]



PART 299_GENERAL PROVISIONS--Table of Contents




                   Subpart A_Purpose and Applicability

Sec.
299.1 What are the purpose and scope of these regulations?
299.2 What general administrative regulations apply to ESEA programs?

                      Subpart B_Selection Criteria

299.3 What priority may the Secretary establish for activities in an 
          Empowerment Zone or Enterprise Community?

     Subpart C_Consolidation of State and Local Administrative Funds

299.4 What requirements apply to the consolidation of State and local 
          administrative funds?

                      Subpart D_Fiscal Requirements

299.5 What maintenance of effort requirements apply to ESEA programs?

       Subpart E_Services to Private School Students and Teachers

299.6 What are the responsibilities of a recipient of funds for 
          providing services to children and teachers in private 
          schools?
299.7 What are the factors for determining equitable participation of 
          children and teachers in private schools?
299.8 What are the requirements to ensure that funds do not benefit a 
          private school?
299.9 What are the requirements concerning property, equipment, and 
          supplies for the benefit of private school children and 
          teachers?

[[Page 584]]

                     Subpart F_Complaint Procedures

299.10 What complaint procedures shall an SEA adopt?
299.11 What items are included in the complaint procedures?
299.12 How does an organization or individual file a complaint?

    Authority: 20 U.S.C. 1221e-3(a)(1), 6511(a), and 7373(b), unless 
otherwise noted.

    Source: 62 FR 28252, May 22, 1997, unless otherwise noted.



                   Subpart A_Purpose and Applicability



Sec. 299.1  What are the purpose and scope of these regulations?

    (a) This part establishes uniform administrative rules for programs 
in titles I through XIII of the Elementary and Secondary Education Act 
of 1965, as amended (ESEA). As indicated in particular sections of this 
part, certain provisions apply only to a specific group of programs.
    (b) If an ESEA program does not have implementing regulations, the 
Secretary implements the program under the authorizing statute, and, to 
the extent applicable, title XIV of ESEA, the General Education 
Provisions Act, the regulations in this part, and the Education 
Department General Administrative Regulations (34 CFR parts 74 through 
86) that are not inconsistent with specific statutory provisions of 
ESEA.

(Authority: 20 U.S.C. 1221e-3(a)(1))



Sec. 299.2  What general administrative regulations apply to ESEA programs?

    With regard to the applicability of Education Department General 
Administrative Regulations (EDGAR) in part 80 to the ESEA programs 
except for title VIII programs (Impact Aid) (in addition to any other 
specific implementing regulations):
    (a) 34 CFR part 80 (Uniform Administrative Requirements for Grants 
and Cooperative Agreements to State and Local Governments) applies to 
State, local, and Indian tribal governments under direct grant programs 
(as defined in 34 CFR 75.1(b)), and programs under title XI of ESEA.
    (b) 34 CFR part 80 also applies to State, local, and Indian tribal 
governments under all other programs under the ESEA and to programs 
under title III of the Goals 2000: Educate America Act (title III of 
Goals 2000), unless a State formally adopts its own written fiscal and 
administrative requirements for expending and accounting for all funds 
received by State educational agencies (SEAs) and local educational 
agencies (LEAs) under the ESEA and title III of Goals 2000. If a State 
adopts its own alternative requirements, the requirements must be 
available for inspection upon the request of the Secretary or the 
Secretary's representatives and must--
    (1) Be sufficiently specific to ensure that funds received under 
ESEA and title III of Goals 2000 are used in compliance with all 
applicable statutory and regulatory provisions;
    (2) Ensure that funds received for programs under ESEA and title III 
of Goals 2000 are spent only for reasonable and necessary costs of 
operating those programs; and
    (3) Ensure that funds received under ESEA and title III of Goals 
2000 are not used for general expenses required to carry out other 
responsibilities of State or local governments.

    Note: 34 CFR 222.13 indicates which EDGAR provisions apply to title 
VIII programs (Impact Aid).
    Note:  To meet the first of the three standards, alternative State 
provisions must, among other things, ensure that costs are allocable to 
a particular cost objective.

(Authority: 20 U.S.C. 1221e-3(a)(1))



                      Subpart B_Selection Criteria



Sec. 299.3  What priority may the Secretary establish for activities in 
an Empowerment Zone or Enterprise Community?

    For any ESEA discretionary grant program, the Secretary may 
establish a priority, as authorized by 34 CFR 75.105(b), for projects 
that will--
    (a) Use a significant portion of the program funds to address 
substantial problems in an Empowerment Zone, including a Supplemental 
Empowerment

[[Page 585]]

Zone, or an Enterprise Community designated by the United States 
Department of Housing and Urban Development or the United States 
Department of Agriculture; and
    (b) Contribute to systemic educational reform in such an Empowerment 
Zone, including a Supplemental Empowerment Zone, or such an Enterprise 
Community, and are made an integral part of the Zone or Community's 
comprehensive community revitalization strategies.

(Authority: 20 U.S.C. 2831(a))



     Subpart C_Consolidation of State and Local Administrative Funds



Sec. 299.4  What requirements apply to the consolidation of State and 
local administrative funds?

    An SEA may adopt and use its own reasonable standards in determining 
whether--
    (a) The majority of its resources for administrative purposes comes 
from non-Federal sources to permit the consolidation of State 
administrative funds in accordance with section 14201 of the Act; and
    (b) To approve an LEA's consolidation of its administrative funds in 
accordance with section 14203 of the Act.

(Authority: 20 U.S.C. 8821 and 8823)



                      Subpart D_Fiscal Requirements



Sec. 299.5  What maintenance of effort requirements apply to ESEA programs?

    (a) General. An LEA receiving funds under an applicable program 
listed in paragraph (b) of this section may receive its full allocation 
of funds only if the SEA finds that either the combined fiscal effort 
per student or the aggregate expenditures of State and local funds with 
respect to the provision of free public education in the LEA for the 
preceding fiscal year was not less than 90 percent of the combined 
fiscal effort per student or the aggregate expenditures for the second 
preceding fiscal year.
    (b) Applicable programs. This subpart is applicable to the following 
programs:
    (1) Part A of title I (Improving Basic Programs Operated by Local 
Educational Agencies).
    (2) Title II (Eisenhower Professional Development Program) (other 
than section 2103 and part C of this title).
    (3) Subpart 2 of part A of title III (State and Local Programs for 
School Technology Resources).
    (4) Part A of title IV (Safe and Drug-Free Schools and Communities) 
(other than section 4114).
    (c) Meaning of ``preceding fiscal year''. For purposes of 
determining if the requirement of paragraph (a) of this section is met, 
the ``preceding fiscal year'' means the Federal fiscal year, or the 12-
month fiscal period most commonly used in a State for official reporting 
purposes, prior to the beginning of the Federal fiscal year in which 
funds are available for obligation by the Department.

    Example: For fiscal year 1995 funds that are first made available on 
July 1, 1995, if a State is using the Federal fiscal year, the 
``preceding fiscal year'' is Federal fiscal year 1994 (which began on 
October 1, 1993 and ended September 30, 1994) and the ``second preceding 
fiscal year'' is Federal fiscal year 1993 (which began on October 1, 
1992). If a State is using a fiscal year that begins on July 1, 1995, 
the ``preceding fiscal year'' is the 12-month period ending on June 30, 
1994, and the ``second preceding fiscal year'' is the period ending on 
June 30, 1993.

    (d) Expenditures. (1) In determining an LEA's compliance with 
paragraph (a) of this section, the SEA shall consider only the LEA's 
expenditures from State and local funds for free public education. These 
include expenditures for administration, instruction, attendance and 
health services, pupil transportation services, operation and 
maintenance of plant, fixed charges, and net expenditures to cover 
deficits for food services and student body activities.
    (2) The SEA may not consider the following expenditures in 
determining an LEA's compliance with the requirements in paragraph (a) 
of this section:
    (i) Any expenditures for community services, capital outlay, debt 
service or supplemental expenses made as a result of a Presidentially 
declared disaster.

[[Page 586]]

    (ii) Any expenditures made from funds provided by the Federal 
Government.

(Authority: 20 U.S.C. 8891)



       Subpart E_Services to Private School Students and Teachers



Sec. 299.6  What are the responsibilities of a recipient of funds for 
providing services to children and teachers in private schools?

    (a) General. An agency or consortium of agencies receiving funds 
under an applicable program listed in paragraph (b) of this section, 
after timely and meaningful consultation with appropriate private school 
officials (in accordance with the statute), shall provide special 
educational services or other benefits under this subpart on an 
equitable basis to eligible children who are enrolled in private 
elementary and secondary schools, and to their teachers and other 
educational personnel.
    (b) Applicable programs. This subpart is applicable to the following 
programs:
    (1) Part C of title I (Migrant Education).
    (2) Title II (Professional Development) (other than section 2103 and 
part C of this title).
    (3) Title III (Technology for Education) (other than part B of this 
title) (Star Schools).
    (4) Part A of title IV (Safe and Drug-Free Schools and Communities) 
(other than section 4114).
    (5) Title VI (Innovative Education Program Strategies).
    (6) Title VII (Bilingual Education).
    (c) Provisions not applicable. Sections 75.650 and 76.650 through 
76.662 of title 34 of the Code of Federal Regulations (participation of 
students enrolled in private schools) do not apply to programs listed in 
paragraph (b) of this section.

(Authority: 20 U.S.C. 8893)



Sec. 299.7  What are the factors for determining equitable participation 
of children and teachers in private schools?

    (a) Equal expenditures. (1) Expenditures of funds made by an agency 
or consortium of agencies under a program listed in Sec. 299.6 (b) for 
services for eligible private school children and their teachers and 
other educational personnel must be equal on a per-pupil basis to the 
amount of funds expended for participating public school children and 
their teachers and other educational personnel, taking into account the 
number and educational needs of those children and their teachers and 
other educational personnel.
    (2) Before determining equal expenditures under paragraph (a)(1) of 
this section, an agency or consortium of agencies shall pay for the 
reasonable and necessary administrative costs of providing services to 
public and private school children and their teachers and other 
educational personnel from the agency's or consortium of agencies' total 
allocation of funds under the applicable ESEA program.
    (b) Services on an equitable basis. (1) The services that an agency 
or consortium of agencies provides to eligible private school children 
and their teachers and other educational personnel must also be 
equitable in comparison to the services and other benefits provided to 
public school children and their teachers or other educational personnel 
participating in a program under this subpart.
    (2) Services are equitable if the agency or consortium of agencies--
    (i) Addresses and assesses the specific needs and educational 
progress of eligible private school children and their teachers and 
other educational personnel on a comparable basis to public school 
children and their teachers and other educational personnel;
    (ii) Determines the number of students and their teachers and other 
educational personnel to be served on an equitable basis;
    (iii) Meets the equal expenditure requirements under paragraph (a) 
of this section; and
    (iv) Provides private school children and their teachers and other 
educational personnel with an opportunity to participate that--
    (A) Is equitable to the opportunity and benefits provided to public 
school children and their teachers and other educational personnel; and
    (B) Provides reasonable promise of participating private school 
children

[[Page 587]]

meeting challenging academic standards called for by the State's student 
performance standards and of private school teachers and other 
educational personnel assisting their students in meeting high 
standards.
    (3) The agency or consortium of agencies shall make the final 
decisions with respect to the services to be provided to eligible 
private school children and their teachers and the other educational 
personnel.
    (c) If the needs of private school children, their teachers and 
other educational personnel are different from the needs of children, 
teachers and other educational personnel in the public schools, the 
agency or consortium of agencies shall provide program benefits for the 
private school children, teachers, and other educational personnel that 
are different from the benefits it provides for the public school 
children and their teachers and other educational personnel.

(Authority: 20 U.S.C. 8893)



Sec. 299.8  What are the requirements to ensure that funds do not 
benefit a private school?

    (a) An agency or consortium of agencies shall use funds under a 
program listed in Sec. 299.6(b) to provide services that supplement, 
and in no case supplant, the level of services that would, in the 
absence of services provided under that program, be available to 
participating children and their teachers and other educational 
personnel in private schools.
    (b) An agency or consortium of agencies shall use funds under a 
program listed in Sec. 299.6(b) to meet the special educational needs 
of participating children who attend a private school and their teachers 
and other educational personnel, but may not use those funds for--
    (1) The needs of the private school; or
    (2) The general needs of children and their teachers and other 
educational personnel in the private school.

(Authority: 20 U.S.C. 8893)



Sec. 299.9  What are the requirements concerning property, equipment, 
and supplies for the benefit of private school children and teachers?

    (a) A public agency must keep title to, and exercise continuing 
administrative control of, all property, equipment, and supplies that 
the public agency acquires with funds under a program listed in Sec. 
299.6(b) for the benefit of eligible private school children and their 
teachers and other educational personnel.
    (b) The public agency may place equipment and supplies in a private 
school for the period of time needed for the program.
    (c) The public agency shall ensure that the equipment and supplies 
placed in a private school--
    (1) Are used only for proper purposes of the program; and
    (2) Can be removed from the private school without remodeling the 
private school facility.
    (d) The public agency must remove equipment and supplies from a 
private school if--
    (1) The equipment and supplies are no longer needed for the purposes 
of the program; or
    (2) Removal is necessary to avoid unauthorized use of the equipment 
or supplies for other than the purposes of the program.
    (e) No funds may be used for repairs, minor remodeling, or 
construction of private school facilities.
    (f) For the purpose of this section, the term public agency includes 
the agency or consortium of agencies.

(Authority: 20 U.S.C. 8893)



                     Subpart F_Complaint Procedures



Sec. 299.10  What complaint procedures shall an SEA adopt?

    (a) General. An SEA shall adopt written procedures, consistent with 
State law, for--
    (1) Receiving and resolving any complaint from an organization or 
individual that the SEA or an agency or consortium of agencies is 
violating a Federal statute or regulation that applies to an applicable 
program listed in paragraph (b) of this section;
    (2) Reviewing an appeal from a decision of an agency or consortium 
of

[[Page 588]]

agencies with respect to a complaint; and
    (3) Conducting an independent on-site investigation of a complaint 
if the SEA determines that an on-site investigation is necessary.
    (b) Applicable programs. This subpart is applicable to the following 
programs:
    (1) Part A of title I (Improving Basic Programs Operated by Local 
Educational Agencies).
    (2) Part B of title I (Even Start Family Literacy Programs) (other 
than the federally administered direct grants for Indian tribes and 
tribal organizations, children of migratory workers, Statewide family 
literacy initiatives, and a prison that house women and children).
    (3) Part C of title I (Migrant Education).
    (4) Part D of title I (Children and Youth Who Are Neglected, 
Delinquent, or At Risk of Dropping Out).
    (5) Title II (Eisenhower Professional Development Program) (other 
than section 2103 and part C of this title).
    (6) Subpart 2 of part A of title III (State and Local Programs for 
School Technology Resources).
    (7) Part A of title IV (Safe and Drug-Free Schools and Communities) 
(other than section 4114).
    (8) Title VI (Innovative Education Program Strategies).
    (9) Part C of title VII (Emergency Immigrant Education)

(Approved by the Office of Management and Budget under OMB control 
number 1810-0591)

(Authority: 20 U.S.C. 1221e-3(a)(1), 8895)



Sec. 299.11  What items are included in the complaint procedures?

    An SEA shall include the following in its complaint procedures:
    (a) A reasonable time limit after the SEA receives a complaint for 
resolving the complaint in writing, including a provision for carrying 
out an independent on-site investigation, if necessary.
    (b) An extension of the time limit under paragraph (a) of this 
section only if exceptional circumstances exist with respect to a 
particular complaint.
    (c) The right for the complainant to request the Secretary to review 
the final decision of the SEA, at the Secretary's discretion. In matters 
involving violations of section 14503 (participation of private school 
children), the Secretary will follow the procedures in section 14505(b).

(Approved by the Office of Management and Budget under OMB control 
number 1810-0591)

    (d) A requirement for LEAs to disseminate, free of charge, adequate 
information about the complaint procedures to parents of students, and 
appropriate private school officials or representatives.

(Authority: 20 U.S.C. 1221e-3(a)(1), 8895)



Sec. 299.12  How does an organization or individual file a complaint?

    An organization or individual may file a written signed complaint 
with an SEA. The complaint must be in writing and signed by the 
complainant, and include--
    (a) A statement that the SEA or an agency or consortium of agencies 
has violated a requirement of a Federal statute or regulation that 
applies to an applicable program; and
    (b) The facts on which the statement is based and the specific 
requirement allegedly violated.

(Approved by the Office of Management and Budget under OMB control 
number 1810-0591)

(Authority: 20 U.S.C. 1221e-3(a)(1), 8895)

[[Page 589]]



                              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.

  Material Approved for Incorporation by Reference
  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 591]]

            Material Approved for Incorporation by Reference

                      (Revised as of July 1, 2004)

  The Director of the Federal Register has approved under 5 U.S.C. 
552(a) and 1 CFR Part 51 the incorporation by reference of the following 
publications. This list contains only those incorporations by reference 
effective as of the revision date of this volume. Incorporations by 
reference found within a regulation are effective upon the effective 
date of that regulation. For more information on incorporation by 
reference, see the preliminary pages of this volume.


34 CFR (PARTS 1 TO 299)

OFFICE OF THE SECRETARY, DEPARTMENT OF EDUCATION
                                                                  34 CFR


American Society of Heating, Refrigerating, and Air Conditioning 
Engineers (ASHRAE)

  1791 Tullie Circle, NE., Atlanta, GA 30329
ASHRAE 90A-1980, Sections 1-9.....................                75.616
ASHRAE 90B-1975, Sections 10-11...................                75.616
ASHRAE 90C-1977, Section 12.......................                75.616


American National Standards Institute, Inc.

  25 West 43rd Street, Fourth floor, New York, NY 
  10036; Telephone: (212) 642-4900
ANSI A117.1-61 (R 71).............................             104.23(c)
  Specifications for Making Buildings and 
  Facilities Accessible to, and Usable by, the 
  Physically Handicapped

[[Page 593]]



                    Table of CFR Titles and Chapters




                      (Revised as of July 1, 2004)

                      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--Grants and Agreements

            Subtitle A--Office of Management and Budget Guidance 
                for Grants and Agreements
         I  [Reserved]
        II  Office of Management and Budget Circulars and Guidance 
                [Reserved]
            Subtitle B--Federal Agency Regulations for Grants and 
                Agreements [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)

[[Page 594]]

        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)
    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)
        LV  National Endowment for the Arts (Part 6501)
       LVI  National Endowment for the Humanities (Part 6601)
      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)
     LXVII  Institute of Museum and Library Services (Part 7701)
      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)

[[Page 595]]

     LXXVI  Federal Retirement Thrift Investment Board (Part 8601)
    LXXVII  Office of Management and Budget (Part 8701)

                      Title 6--Homeland Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 0--99)

                         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)
        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)
        XX  Local Television Loan Guarantee Board (Parts 2200--
                2299)

[[Page 596]]

      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)
      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  Department of Homeland Security (Immigration and 
                Naturalization) (Parts 1--499)
         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 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)

[[Page 597]]

       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)
         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, Department of 
                Commerce (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board, 
                Department of Commerce (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)

[[Page 598]]

       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)
       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)

[[Page 599]]

          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  Bureau of Customs and Border Protection, Department of 
                Homeland Security; Department of the Treasury 
                (Parts 0--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Bureau of Immigration and Customs Enforcement, 
                Department of Homeland Security (Parts 400--599)

                     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)

[[Page 600]]

        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 Regulations (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)

                          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]

[[Page 601]]

       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)

                           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  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--399)
        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--699)

[[Page 602]]

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--299)
       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)
        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  Employee Benefits Security 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)

[[Page 603]]

        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)

                      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 Homeland Security (Parts 
                1--199)
        II  Corps of Engineers, Department of the Army (Parts 
                200--399)

[[Page 604]]

        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)
        XI  National Institute for Literacy (Parts 1100--1199)
            Subtitle C--Regulations Relating to Education
       XII  National Council on Disability (Parts 1200--1299)

                        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)

[[Page 605]]

             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--1099)
        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)
       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)

[[Page 606]]

       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 of Travel Expenses from a Non-Federal Source 
                (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)

                   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--10010)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency, Department of 
                Homeland Security (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

[[Page 607]]

        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)
     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 Homeland Security (Parts 
                1--199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Homeland Security (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)

[[Page 608]]

       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)
        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)
        30  Department of Homeland Security, Homeland Security 
                Acquisition Regulation (HSAR) (Parts 3000--3099)
        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)

[[Page 609]]

        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        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 Homeland Security (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)
        XI  Bureau of Transportation Statistics, Department of 
                Transportation (Parts 1400--1499)
       XII  Transportation Security Administration, Department of 
                Homeland Security (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)

[[Page 610]]

         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 611]]





           Alphabetical List of Agencies Appearing in the CFR




                      (Revised as of July 1, 2004)

                                                  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
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
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

[[Page 612]]

Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
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 and Border Protection Bureau              19, I
Defense Contract Audit Agency                     32, I
Defense Department                                5, XXVI; 32, Subtitle A; 
                                                  40, VII

[[Page 613]]

  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  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
Employee Benefits Security Administration         29, XXV
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

[[Page 614]]

  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
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

[[Page 615]]

  Federal Management Regulation                   41, 102
  Federal Property Management Regulations         41, 101
  Federal Travel Regulation System                41, Subtitle F
  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; 42, I
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  6, I
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Customs and Border Protection Bureau            19, I
  Federal Emergency Management Agency             44, I
  Immigration and Customs Enforcement Bureau      19, IV
  Immigration and Naturalization                  8, I
  Transportation Security Administration          49, XII
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 Customs Enforcement Bureau        19, IV
Immigration and Naturalization                    8, I
Immigration Review, Executive Office for          8, V
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; 42, I
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

[[Page 616]]

  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
  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
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  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 Review, Executive Office for        8, V
  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
  Employee Benefits Security Administration       29, XXV
  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
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A

[[Page 617]]

  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
Local Television Loan Guarantee Board             7, XX
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
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

[[Page 618]]

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
Peace Corps                                       22, III
Pennsylvania Avenue Development Corporation       36, IX
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

[[Page 619]]

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
  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
  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 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 and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs and Border Protection Bureau            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 621]]



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

34 CFR
                                                                   66 FR
                                                                    Page
Subtitle A
75.224 Added.......................................................60138
75.225 Added.......................................................60138

                                  2002

34 CFR
                                                                   67 FR
                                                                    Page
Subtitle A
36 Added...........................................................69655
75.225 (a)(2) corrected.............................................4316
Chapter II
200 Heading and authority citation revised.........................45039
    Authority citation revised.....................................71715
200.1--200.29 (Subpart A) Undesignated center headings removed.....71715
200.1 Undesignated center heading and section revised..............45039
200.2 Revised......................................................45039
200.3 Revised......................................................45039
200.4 Revised......................................................45039
200.5 Revised......................................................45039
200.6 Revised......................................................45039
    (a)(2) revised.................................................71715
200.7 Added........................................................45042
    (c) and (d) added..............................................71715
200.8 Undesignated center heading transferred to 200.18; section 
        redesignated as 200.18; new 200.8 added....................45042
200.9 Added........................................................45043
200.10 Redesignated as 200.14; new 200.10 added....................45043
200.11 Undesignated center heading added; section revised..........71715
200.12 Revised.....................................................71716
200.13 Undesignated center heading added; section revised; OMB 
        number.....................................................71716
200.14 Redesignated from 200.10....................................45043
    Revised........................................................71716
200.15 Revised.....................................................71716
200.16 Revised.....................................................71716
200.17 Amended.....................................................45042
    Revised........................................................71716
200.18 Undesignated center heading transferred from 200.8; section 
        redesignated from 200.8....................................45042
    Revised........................................................71716
200.19 Added.......................................................71717
200.20 Revised.....................................................71717
200.21 Revised.....................................................71718
200.22 Removed.....................................................71718
200.23 Removed.....................................................71718
200.24 Removed.....................................................71718
200.25 Undesignated center heading added; section revised..........71718
200.26 Added; OMB number...........................................71718
200.27 Revised; OMB number.........................................71719
200.28 Revised; OMB number.........................................71719
200.29 Added.......................................................71720
200.30 Transferred to subpart A; undesignated center heading 
        added; section revised; OMB number.........................71720
200.31 Added; OMB number...........................................71721
200.32 Added.......................................................71721
200.33 Added; OMB number...........................................71721

[[Page 622]]

200.34 Added; OMB number...........................................71721
200.35 Added.......................................................71721
200.36 Added; OMB number...........................................71721
200.37 Added; OMB number...........................................71721
200.38 Added; OMB number...........................................71721
200.39 Added; OMB number...........................................71721
200.40 Transferred to subpart A; revised...........................71723
200.41 Transferred to subpart A; revised; OMB number...............71723
200.42 Transferred to subpart A; revised; OMB number...............71723
200.43 Transferred to subpart A; revised; OMB number...............71723
200.44 Transferred to subpart A; revised...........................71723
200.45 Transferred to subpart A; revised; OMB number...............71723
200.46 Added; OMB number...........................................71725
200.47 Added; OMB number...........................................71725
200.48 Added.......................................................71725
200.49 Added; OMB number...........................................71725
200.50 Transferred to subpart A; revised; OMB number...............71727
200.51 Transferred to subpart A; revised; OMB number...............71727
200.52 Added; OMB number...........................................71728
200.53 Added; OMB number...........................................71728
200.55 Undesignated center heading and section added...............71729
200.56 Added; OMB number...........................................71729
200.57 Added; OMB number...........................................71729
200.58 Added.......................................................71729
200.59 Added.......................................................71729
200.60 Transferred to subpart A; revised...........................71731
200.61 Transferred to subpart A; revised...........................71731
200.62 Undesignated center heading and section added; OMB number 
                                                                   71732
200.63 Transferred to subpart A; revised; OMB number...............71732
200.64 Added.......................................................71732
200.65 Transferred to subpart A; revised...........................71733
200.66 Added.......................................................71733
200.67 Added.......................................................71733
200.70 Undesignated center heading and section added; OMB number 
                                                                   71733
200.71 Added; OMB number...........................................71733
200.72 Added; OMB number...........................................71733
200.73 Added; OMB number...........................................71733
200.74 Added; OMB number...........................................71733
200.75 Added; OMB number...........................................71733
200.77 Undesignated center heading and section added...............71735
200.78 Added.......................................................71735
200.79 Undesignated center heading and section added...............71736
200.80 (Subpart B) revised.........................................71736
200.81--200.89 (Subpart C) revised; OMB numbers....................71736
200.90--200.99 (Subpart D) revised; OMB numbers....................71738
200.91 OMB number..................................................71738
200.100--200.109 (Subpart E) revised; OMB numbers..................71738
200.100 OMB number.................................................71739
222.170--222.196 (Subpart L) Added.................................53682
263 Revised........................................................47696

                                  2003

34 CFR
                                                                   68 FR
                                                                    Page
Subtitle A
34 Added............................................................8142
84 Added....................................................66557, 66610
84.100--84.670 Authority citation added............................66611
84.510 (c) amended.................................................66610
84.605 (a)(2) amended..............................................66610
85 Revised..................................................66544, 66611
85.25--85.1020 Authority citations added...........................66612
85.220 (c) and (d) added...........................................66612
85.310 (c) added...................................................66612
85.315 (c) added...................................................66612
85.415 (c) added...................................................66612
85.440 Added.......................................................66612
85.611 Added.......................................................66612
85.612 Added.......................................................66613
85.711 Added.......................................................66613
85.811 Added.......................................................66613
85.942 Added.......................................................66614
85.952 Added.......................................................66614
85.995 (c) added...................................................66614
85.1016 Added......................................................66614
85.1017 Added......................................................66614
85.1018 Added......................................................66614
85 Appendix amended.....................................................
Chapter II
200.1 (a)(1) revised; (d) and (e) redesignated as (e) and (f); new 
        (d) added..................................................68702
200.6 (a)(2)(ii) revised; (a)(2)(iii) added........................68702
200.13 (b) corrected................................................1008

[[Page 623]]

    (b) introductory text and (1) revised; (c) redesignated as 
(d); new (c) added.................................................68703
200.29 (a)(1) correctly designated..................................1008
200.82 Introductory text corrected.................................19152
200.83 OMB Number..................................................19152
200.84 OMB Number..................................................19152
200.86 Corrected...................................................19152
200.88 OMB Number..................................................19152
263 Revised........................................................43640
263.6 OMB number...................................................43643
263.7 OMB number...................................................43643
263.8 OMB number...................................................43643
263.9 OMB number...................................................43644
263.10 OMB number..................................................43644

                                  2004

   (Regulations published from January 1, 2004, through July 1, 2004)

34 CFR
                                                                   69 FR
                                                                    Page
Title 34 Nomenclature change.......................................18803
Subtitle A
5b.11 (b) introductory text, (c)(1) introductory text, (2) 
        introductory text, (d)(1) introductory text and (e) 
        amended; (d)(1) designation and (2) removed; (d)(1)(i), 
        (ii) and (iii) redesignated as (d)(1), (2) and (3).........12246
74.44 (f) added; eff. 7-6-04.......................................31710
75.52 Added; eff. 7-6-04...........................................31710
75.532 (a)(2) revised; (a)(3), (4) and (b) removed; eff. 7-6-04....31711
76.52 Added; eff. 7-6-04...........................................31711
76.532 (a)(3), (4) and (b) removed; eff. 7-6-04....................31711
80.36 (j) added; eff. 7-6-04.......................................31711
99.30 (d) added....................................................21671
Chapter II
222.170--222.196 (Subpart L) Revised...............................12234
252 Waiver.........................................................30577
257 Waiver.........................................................30577
280 Authority citation revised......................................4996
280.1 Introductory text, (a) and (d) amended; (b), (c) and 
        authority citation revised; (e) and (f) added...............4996
280.2 Authority citation revised....................................4996
280.3 (a) amended; authority citation revised.......................4996
280.4 (a) amended; authority citation revised.......................4996
280.20 (b)(1), (2), (7), (i)(1), (2) and (5) amended; (i)(3), (4) 
        and authority citation revised; OMB number..................4997
280.30 (c) amended; authority citation revised; OMB number..........4997
280.31 (c)(2)(iii) amended; authority citation revised..............4997
280.32 (a) amended; (e) and (f) removed; authority citation 
        revised.....................................................4997
280.33 Authority citation revised...................................4997
280.40 (a), (b) introductory text, (2), (c)(1) and (3) amended; 
        (f), (g) and (h) added; authority citation revised..........4997
280.41 (a) and authority citation revised; (b) and (c) amended; 
        (d) removed.................................................4997


                                  [all]