[Federal Register Volume 59, Number 91 (Thursday, May 12, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-11543]


[[Page Unknown]]

[Federal Register: May 12, 1994]


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Part III





Department of Education





_______________________________________________________________________



34 CFR Part 364, et al.




Independent Living Services Programs; Proposed Rule
DEPARTMENT OF EDUCATION

34 CFR Parts 364, 365, 366, and 367

RIN 1820-AB18

 
Independent Living Services Programs

AGENCY: Department of Education.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Secretary proposes to issue new regulations and to amend 
existing regulations governing the State Independent Living Services 
(SILS), Centers for Independent Living (CIL), and Independent Living 
Services for Older Individuals Who Are Blind (OIB) programs. These 
proposed regulations are needed to implement chapters 1 and 2 of title 
VII of the Rehabilitation Act of 1973 (Act), as amended.

DATES: Comments must be received on or before June 13, 1994.

ADDRESSES: All comments concerning these proposed regulations should be 
addressed to Commissioner, Rehabilitation Services Administration, U.S. 
Department of Education, 400 Maryland Avenue, SW., room 3028, Mary E. 
Switzer Building, Washington, DC 20202-2575.
    A copy of any comments that concern information collection 
requirements also should be sent to the Office of Management and Budget 
at the address listed in the Paperwork Reduction Act section of this 
preamble.

FOR FURTHER INFORMATION CONTACT: John Nelson, U.S. Department of 
Education, 400 Maryland Avenue, SW., room 3326, Mary E. Switzer 
Building, Washington, DC 20202-2741. Telephone or TDD: (202) 205-9362.

SUPPLEMENTARY INFORMATION: These proposed regulations would implement 
chapters 1 and 2 of title VII of the Act by adding a new part 364 and 
revising parts 365, 366, and 367 of the regulations governing the SILS, 
CIL, and OIB programs.
    The SILS, CIL, and OIB programs are an important part of the 
National Education Goals. These programs support National Education 
Goal 6 of the Goals 2000: Educate America Act: Every adult American 
will be literate and will possess the knowledge and skills necessary to 
compete in a global economy and exercise the rights and 
responsibilities of citizenship.
    Executive Order 12866 encourages Federal agencies to solicit 
earlier and greater public participation in the development of 
regulations. In response, the Assistant Secretary of the Office of 
Special Education and Rehabilitative Services (OSERS) and the Acting 
Commissioner of the Rehabilitation Services Administration (RSA) sent, 
on December 20, 1993, over 400 letters, along with computer diskettes 
that included the most up-to-date draft of the proposed regulations, to 
State vocational rehabilitation (VR) agencies, Statewide Independent 
Living Councils, centers for independent living (centers), constituent 
organizations, and other interested parties and individuals, inviting 
their participation in a series of public meetings and teleconferences 
on the proposed regulations. On that same date, the Assistant Secretary 
of OSERS and the Acting Commissioner of RSA also made available the 
draft of the proposed regulations on the ``DIMENET'' and ``RSA BBS'' 
electronic bulletin boards. Public meetings were held on January 10 and 
13 and February 1, 1994. The teleconferences were conducted on January 
24, 25, and 26, 1994. A cross section of individuals representing a 
wide variety of independent living (IL) organizations and viewpoints on 
IL participated. In general, most commenters were pleased with the 
draft regulations. The Secretary carefully considered all comments 
received during the public meetings and teleconferences.
    Because of the time needed to make competitive awards under part C 
of chapter 1 and under chapter 2 of title VII of the Act, the Secretary 
proposes a 30-day comment period for these proposed regulations. As 
described in the ``Summary of Major Provisions,'' the Secretary already 
has revised the proposed regulations in response to the extensive 
comments received on the draft of these proposed regulations that was 
distributed to the public on December 20, 1993. In addition, the 
Secretary will make this notice of proposed rulemaking (NPRM) available 
through electronic bulletin boards on the date of publication of the 
NPRM in the Federal Register. The access numbers for the electronic 
bulletin boards are as follows:

DIMENET Access Number: (508) 880-5412
RSA BBS Access Number: (202) 205-5574

    Distribution through the electronic bulletin boards will ensure 
timely availability of the NPRM. Therefore, the Secretary believes that 
the public interest will be served best by allowing the public 30 days 
to comment on the proposed regulations.

Summary of Major Provisions

    The following is a summary of the major provisions in these 
proposed regulations. The summary identifies changes in the regulations 
that are mandated by changes in the statute. Other changes described in 
the summary are regulations proposed by the Secretary. In addition, 
significant changes made to the proposed regulations as a result of 
public comments received during the public meetings and teleconferences 
are discussed in this preamble.
    In addition, the Secretary proposes to change all references to 
``individual with a severe disability'' to ``individual with a 
significant disability.'' The Secretary proposes to define an 
individual with a significant disability to mean an individual with a 
severe physical or mental impairment whose ability to function 
independently in the family or community or whose ability to obtain, 
maintain, or advance in employment is substantially limited and for 
whom the delivery of IL services will improve the ability to function, 
continue functioning, or move toward functioning independently in the 
family or community or to continue in employment, respectively. This 
definition is derived from the definition of an ``individual with a 
severe disability'' in section 7(15)(B) of the Act. The Secretary is 
concerned that the term ``severe'' has largely negative connotations 
and associations in common usage and believes that the term 
``significant'' may be preferred by persons with disabilities. 
Consequently, the Secretary proposes to use the term ``significant 
disability'' as a synonym for the term ``severe disability'' in 
referring to an individual's disability. No change in meaning is 
intended by this change in nomenclature.
    On October 27, 1993, the Secretary published a separate NPRM in the 
Federal Register (58 FR 57938) soliciting comments on this proposed 
change. The comment period on the ``Nomenclature NPRM'' expired on 
December 13, 1993. The Secretary received only 37 comments on the 
change proposed in the ``Nomenclature NPRM,'' with no clear majority in 
favor or against. These commenters expressed a wide range of views on 
the proposed change. Commenters favoring the proposed change generally 
expressed the view that the term ``significant'' is less pejorative 
than the term ``severe'' in referring to an individual's disability 
and, thus, would support a more positive philosophy. These comments 
were generally received from commenters with an interest in the IL 
services and CIL programs authorized by title VII of the Act. 
Commenters opposing the change raised several issues. Some suggested 
that the proposed change is not technically accurate and that a change 
in meaning would result despite departmental assurances to the 
contrary. Others suggested that the proposed change would be confusing 
and burdensome to implement and that the proposed change should be made 
through legislation rather than through rulemaking. These comments were 
generally received from commenters with an interest in the VR services 
programs authorized by title I of the Act.
    Also on October 27, 1993, the Secretary published a separate NPRM 
(58 FR 57942) on the indicators of minimum compliance with the 
evaluation standards in section 725(b) of the Act. The ``Indicators 
NPRM'' notified the public of the ``Nomenclature NPRM'' and advised the 
public to limit comments on the proposed nomenclature change to the 
``Nomenclature NPRM.'' However, many of the comments received on the 
``Indicators NPRM'' also included comments on the proposed change in 
terms from ``severe'' to ``significant.'' Of the 102 comments on the 
``Indicators NPRM,'' only 4 expressed concern with the proposed change 
of the term ``severe'' to ``significant.'' Approximately 28 commenters 
specifically approved of the proposed change and 24 commenters used the 
new terminology in their own comments, implicitly indicating their 
approval of the proposed change. That is, these 24 commenters used the 
term ``significant'' instead of the term ``severe'' in their comments, 
even though they did not specifically approve of the proposed change. 
The remaining 50 commenters expressed no views on the proposed change 
and did not use either of the terms ``severe'' or ``significant'' in 
their comments. Based on the number of comments received from the IL 
community supporting the proposed change from ``severe'' to 
``significant'' in the ``Indicators NPRM,'' the Secretary proposes to 
substitute the term ``significant'' for the term ``severe'' in this 
NPRM.
    Further support for changing the term ``severe'' to ``significant'' 
in this NPRM is based on the fact that Congress totally revised title 
VII of the Act when it passed the 1992 and 1993 Amendments. The 
argument that it would be burdensome to implement the proposed change 
(e.g., because of the need to revise existing forms and reporting 
formats) is inapplicable to implementation of the changes made to the 
IL programs by the 1992 and 1993 Amendments because the major changes 
to title VII of the Act have necessitated major revisions to the 
regulations implementing title VII. Thus, States and other recipients 
of funds under title VII will have to make extensive revisions (e.g., 
in existing regulations, forms, and reporting formats) to be consistent 
with these changes and substituting the term ``significant'' for 
``severe'' as part of these revisions would not add any significant 
additional burden.

Part 364

    Proposed part 364 contains general provisions that would be 
applicable to the SILS and CIL programs, authorized by parts B and C, 
respectively, of chapter 1 of title VII of the Act. In addition, some 
provisions in proposed part 364 also are made specifically applicable 
to the OIB program authorized by chapter 2 of title VII of the Act.
    Proposed Sec. 364.4 lists the definitions that apply to these 
programs, including ``administrative support services,'' ``advocacy,'' 
``attendant care,'' ``cross-disability,'' ``individual with a 
significant disability,'' ``minority group,'' ``nonresidential,'' 
``peer relationships,'' ``peer role models,'' ``service provider,'' 
``significant disability,'' ``transportation,'' and ``unserved and 
underserved.''
    The definition of ``administrative support services'' is based on 
the State plan requirement in section 704(c) of the Act regarding the 
State's role if the CIL program is administered by the State pursuant 
to section 723 of the Act. The definition of ``cross-disability'' is 
based on section 725(b)(2) of the Act. The definition of an 
``individual with a significant disability'' is the definition of 
``individual with a severe disability'' used in section 7(15)(B) of the 
Act. The definition of ``service provider'' is derived from the manner 
in which this term is used in section 704(e) of the Act. The definition 
of ``significant disability'' is derived from section 7(15)(B) of the 
Act. The definition of ``unserved and underserved'' is derived from 
sections 704(l), 713(7), and 725(c)(10) and (11) of the Act and the 
legislative history of these statutory provisions.
    The definitions of ``attendant care'' and ``transportation'' are 
based on the definitions of these terms found in Sec. 365.1(c)(3) of 
the existing regulations for the SILS. The definition of ``advocacy'' 
is the same definition used in the Client Assistance Program (CAP) 
authorized under section 112 of the Act. The definition of ``minority 
group'' is based on the general definition of this term used by the 
U.S. Department of Education (ED). Finally, the definitions of 
``nonresidential,'' ``peer relationships,'' and ``peer role models'' 
are derived from the generally accepted understanding of these terms in 
the IL community.
    Proposed Sec. 364.5 would not allow the use of expenditures made 
with non-Federal funds in a particular fiscal year as an allowable cost 
to offset any costs disallowed in a notice of disallowance decision or 
preliminary departmental decision unless the expenditures were reported 
as costs charged to the program on the final financial status reports 
for that program prior to the commencement of the audit or compliance 
review that formed the basis for the disallowance. This provision is 
designed to lessen the confusion surrounding the use of unreported 
costs as an offset against disallowed costs and to lessen the 
litigation costs associated with this practice. This provision also 
incorporates the Department's current practice with respect to programs 
under the Act.
    Proposed Sec. 364.6 would define and address the use of ``program 
income'' for grantees under the IL programs authorized under title VII 
of the Act. Program income could be used for additional program 
expenditures or as a deduction from total allowable costs, but not to 
meet the non-Federal share requirement under 34 CFR 365.12(b).
    Proposed Sec. 364.7 would incorporate section 19 of the Act that 
permits the carryover of unobligated Federal funds from one fiscal year 
to the next. However, pursuant to the 1993 Amendments, proposed 
Sec. 364.7(b) would not permit recipients of discretionary grants under 
sections 722 and 752 of the Act to carry over Federal funds.
    Proposed Sec. 364.13 would implement section 706(a) of the Act 
concerning when the Secretary may withhold, reduce, limit, or terminate 
payments to a State under chapter 1 of title VII of the Act. The 
Secretary has revised proposed Sec. 364.13 to make it more consistent 
with section 107(c), which is incorporated into title VII of the Act 
through section 706(a)(2)(A).
    Proposed Sec. 364.20 would implement the State plan requirements in 
section 704 of the Act. These requirements relate to the State plan's 
form and content, duration (three years), development, and periodic 
review and revision (at least once every three years), and to public 
hearings on the State plan.
    Proposed Sec. 364.20(c) would incorporate the requirement in 
section 704(a)(2) of the Act that the designated State unit (DSU) and 
the Statewide Independent Living Council (SILC) must jointly develop 
the State's IL plan and that the Director of the DSU and the 
chairperson of the SILC must jointly sign the State's IL plan.
    Proposed Secs. 364.20(d) and 364.22(c) would incorporate the 
statutory requirement in section 704(a) as it applies to the 
development and submission of a State's IL plan under section 704 of 
the Act and part 364. Section 704 of the Act requires a single State IL 
plan to be developed and signed by the DSU and the SILC. Nothing in the 
language of section 704 permits a DSU for individuals who are blind to 
submit a separate State IL plan for serving individuals who are blind. 
However, Sec. 364.20(d) of the proposed regulations would require that, 
in a State where there is a separate State agency that is the sole 
State agency authorized by law to provide IL services to individuals 
who are blind, that separate agency for individuals who are blind also 
must be included in the development of, and sign, the State IL plan.
    Proposed Sec. 364.20(e) would require an assurance in the State 
plan that the DSU actively consults with the Director of the CAP 
authorized by section 112 of the Act during the development of the 
State plan.
    Proposed Sec. 364.20(g) would require an assurance in the State 
plan that the DSU conducts public meetings to provide all segments of 
the public, including interested groups, organizations, and 
individuals, an opportunity to comment on the State plan prior to its 
submission to the Secretary and on any revisions to the approved State 
plan. The Secretary revised proposed Sec. 364.20(g) to explain more 
comprehensively what a State is expected to do to comply with section 
704 (a) and (m)(6) of the Act.
    Finally, proposed Sec. 364.20(h) would require an assurance in the 
State plan that, at the public meetings to develop the State plan, the 
DSU identifies those provisions in the State plan that are State-
imposed requirements (i.e., requirements imposed by State rule or 
policy that are beyond what would be required to comply with the 
regulations in proposed 34 CFR parts 364, 365, 366, and 367).
    In response to public comment on the draft regulations, the 
Secretary has added language to proposed Sec. 364.21 that establishes 
the SILC's responsibility for funds it receives under section 705(e) of 
the Act and protects the SILC's independence. In addition, the 
Secretary has added language to this section that requires the State 
plan to include a description of the resource plan for the SILC that is 
required by section 705(e) of the Act.
    Proposed Secs. 364.23 and 364.24 would revise the staffing and 
staff development requirements in existing 34 CFR 365.6 and 365.7 to 
reflect the changes made by the 1992 Amendments (Pub. L. 102-569) and 
the 1993 Amendments (Pub. L. 103-73). These requirements would apply to 
all service providers.
    Proposed Sec. 364.23(a) would require the State plan to include an 
assurance that service providers have personnel who are specialists in 
the development and provision of IL services to individuals with 
significant disabilities and in the development of and support to 
centers for independent living (centers). Proposed Sec. 364.23(b) would 
require the State plan to include an assurance that service providers 
have personnel available who are able to communicate with applicants 
for and recipients of IL services under title VII of the Act who need 
special modes of communication or whose English proficiency is limited. 
In response to public comment on the draft regulations, the Secretary 
added language to this section to include specific examples of special 
modes of communication that should be available for individuals who 
need special modes of communication. Finally, proposed Sec. 364.24 
would require the State plan to include an assurance that the service 
provider has adequate staff development programs to ensure that staff 
are able to provide quality services to meet the needs of individuals 
with significant disabilities.
    These proposed staffing requirements, which are in Secs. 365.6 and 
365.7 of the existing regulations for the SILS program, are consistent 
with section 504 of the Act, the Americans with Disabilities Act of 
1990 (Pub. L. 101-336, 42 U.S.C. 12101-12213), and title VI of the 
Civil Rights Act of 1964 (Pub. L. 88-352, 42 U.S.C. 2000d-2000d-6). 
These proposed staffing requirements have proven useful in the past, 
and centers have identified staff development as a significant area of 
need.
    Proposed Sec. 364.28 would implement the statutory requirement that 
a State must incorporate into the State plan required by section 704 of 
the Act any new methods or approaches for the provision of IL services 
to older individuals who are blind that are developed under a project 
funded under chapter 2 of title VII of the Act. A DSU would be required 
to incorporate into and describe in the State plan any new methods or 
approaches that are developed under a project funded under chapter 2 of 
title VII of the Act that the DSU determines to be effective.
    In response to public comment on the draft regulations, the 
Secretary has added language to proposed Sec. 364.30 that would require 
service providers to provide information about the CAP in formats that 
are accessible to individuals who seek or receive IL services.
    Proposed Sec. 364.40(a) would incorporate the statutory provision 
that makes any individual with a significant disability eligible for IL 
services under the SILS and CIL programs. In addition, proposed 
Sec. 364.40(b) would make it clear that any individual could seek 
information about IL services under these programs and request referral 
to other services and programs for individuals with significant 
disabilities, as appropriate.
    Proposed Sec. 364.41 would require the State to provide an 
assurance that eligibility requirements are applied in a 
nondiscriminatory manner and that no State or local residence 
requirement will be imposed for IL services. The purpose of the 
prohibition on a residency requirement is to ensure continuity of 
services if an individual moves from one State to another during the 
time he or she is receiving IL services. Proposed Sec. 364.41 is 
consistent with section 101(a)(14) of the Act regarding the prohibition 
on residency requirements for VR services.
    In response to public comment on the draft regulations, the 
Secretary has specified additional information that would have to be 
included in the statement of the objectives that would be required by 
proposed Sec. 364.42. The Secretary believes that the statement of 
objectives required by section 704(d) of the Act should reflect the 
importance of this part of the State plan to the State IL services 
programs and address the overall goals and mission of the State's IL 
programs and services, the various priorities for services and 
populations to be served (including the priorities established by 
centers pursuant to section 725(c)(4) of the Act), the types of 
services to be provided, the financial plan for the use of Federal and 
non-Federal funds to meet the objectives in the State plan, and how 
funds received under sections 711, 721, and 752 of the Act will further 
the objectives in the State plan.
    Proposed Sec. 364.43(b) would incorporate the statutory 
requirements in section 704(e) and (f) of the Act. Section 704(e) of 
the Act requires that the State must provide IL services to individuals 
with a significant disability with Federal, State, or other funds. 
Proposed Sec. 364.43(b) would permit a State to meet its statutory 
mandate under section 704(e) with Federal, State, or other funds.
    Proposed Sec. 364.43(e) would incorporate the statutory requirement 
in section 725(b)(2) of the Act that, in the determination of 
eligibility, if a State contracts with or awards a grant for the 
general operation of a center, it must delegate to the center all 
functions related to the determination of eligibility for services. If 
a State contracts with or awards a grant for the provision of specific 
IL services to individuals, the State may choose either to delegate to 
the IL service provider all authority for the determination of 
eligibility for these services and for the development of an IL plan 
for individuals receiving these services or to retain this authority.
    Proposed Secs. 364.50 through 364.56 would impose post-award 
conditions on the State and its subgrantees or contractors regarding 
the processing of referrals and applications (Sec. 364.50), 
determinations of eligibility and ineligibility (Sec. 364.51), 
initiation and development of an IL plan (Sec. 364.52), maintenance of 
consumer service records (Sec. 364.53), prohibition on durational 
limitations for IL services (Sec. 364.54), compliance with standards 
for service providers (Sec. 364.55), and procedures for the protection, 
use, and release of personal information (Sec. 364.56).
    Proposed Secs. 364.51, 364.52, and 364.53 would incorporate 
sections 704(e) and 725(b)(2) of the Act. In addition, proposed 
Sec. 364.53 would be consistent with the proposed indicators of what 
constitutes compliance with the evaluation standards in section 725(b) 
of the Act.
    Proposed Secs. 364.54, 364.55, and 364.56 would keep important 
protections for consumers of IL services that exist in the current SILS 
regulations. In particular, the Secretary revised proposed Sec. 364.56 
to make it more consistent with the current SILS regulations.
    Proposed Sec. 364.57 also would permit the DSU to delegate its 
functions and responsibilities under proposed Secs. 364.50, 364.51 
(subject to proposed Sec. 364.43(d)), 364.52, 364.53, and 364.56 to the 
service provider to which the DSU awards a grant or with which the DSU 
contracts to provide IL services in the State. Allowing the DSUs to 
delegate these functions and responsibilities permits the States 
greater flexibility in the operation of the SILS program.
    In response to public comment on the draft regulations, the 
Secretary has added a new proposed Sec. 364.58 that would require each 
service provider to establish appeals procedures and policies that an 
individual could use to obtain review of decisions made by the service 
provider concerning the individual's request for IL services or the 
provision of IL services to the individual. Proposed Sec. 364.58 also 
would require the service provider to inform each individual who seeks 
or receives IL services about those appeals procedures and policies in 
formats that are accessible to individuals who seek or receive IL 
services.
    Proposed Sec. 364.59 would require a State to include in its State 
plan any financial needs test that would be used by a service provider 
to determine whether an individual with a significant disability could 
obtain IL services at no cost to the individual. Proposed 
Sec. 364.59(d)(1) would require a service provider to maintain written 
policies covering the specific types of IL services for which a 
financial needs test could be applied and to maintain documentation of 
an individual's participation in the costs of any IL services.

Part 365

    Proposed part 365 contains regulations for the SILS program 
authorized by part B of chapter 1 of title VII of the Act. Pursuant to 
proposed Sec. 365.11(c), if a State has designated a DSU to provide IL 
services for the general population of individuals with disabilities 
and a separate DSU to provide IL services for individuals who are 
blind, the State would have total discretion, without any interference 
from ED, to determine how it would divide the funds allotted to the 
State under part 365 between these two DSUs. The division of funds is a 
matter internal to the States, and the regulations would not exclude or 
mandate the involvement of the SILC in this decision.
    Proposed Sec. 365.13 would impose requirements that a State would 
have to meet to satisfy its non-Federal share matching requirement 
under section 712(b) of the Act and proposed Sec. 365.12. Proposed 
Sec. 365.13(b) would prohibit a State from using cash contributions to 
satisfy its non-Federal share matching requirement if the contribution 
is for expenditures that benefit or will benefit in any way the donor, 
an individual to whom the donor is related by blood or marriage or with 
whom the donor has a close personal relationship, or an individual, 
entity, or organization with whom the donor shares a financial 
interest. Pursuant to proposed Sec. 365.13(c), the receipt of a grant, 
subgrant, or contract under section 713 of the Act or a grant, 
subgrant, or assistance contract under section 723 of the Act from the 
DSU would not be considered a benefit to the donor if the grant, 
subgrant, or contract was awarded under the State's regular competitive 
procedures.
    Conversely, proposed Sec. 365.14(a) would prohibit a State from 
conditioning the award of a grant, subgrant, or contract under section 
713 of the Act or a grant, subgrant, or assistance contract under 
section 723 of the Act on a cash or in-kind contribution from an 
applicant. Proposed Sec. 365.14(b) also would prohibit an individual, 
entity, or organization that is a grantee or subgrantee of the State, 
or has a contract with the State, from conditioning the award of a 
subgrant or subcontract on a cash or in-kind contribution to the State 
or to the grantee or contractor of the State.
    Proposed Sec. 365.15 would impose the restrictions in Sec. 365.14 
on a State's use of in-kind contributions to meet the matching 
requirement in section 712(b) of the Act. The Secretary has not 
proposed to impose on in-kind contributions the restrictions in 
Sec. 365.13 because fewer problems have arisen in the past as a result 
of the use of this type of contribution for matching purposes.
    The proposed limitations on the use of restricted contributions to 
meet a State's matching requirement would clarify the limitations in 
existing 34 CFR part 365. (See existing 34 CFR 361.76, which is 
incorporated by reference into the existing SILS program regulations by 
existing 34 CFR 365.15.) The proposed limitations would prevent States 
from making awards based on an applicant's ability to contribute the 
matching funds rather than on the programmatic merit of the applicant's 
proposal. The proposed limitations would not prohibit a State from 
accepting restricted contributions for providing services or benefits 
to a particular individual or group of individuals. The proposed 
limitations would prohibit a State only from using these restricted 
contributions to meet its matching share requirement if the donor of 
the cash contributions has restricted their use to expenditures that 
benefit or will benefit in any way the donor, an individual to whom the 
donor is related by blood or marriage or with whom the donor has a 
close personal relationship, or an individual, entity, or organization 
with whom the donor shares a financial interest.
    The proposed limitations on the use of restricted contributions to 
meet a State's matching requirement would ensure that the services and 
benefits that are provided under a program funded with 90 percent 
Federal money would be available to an eligible individual without 
regard to the individual's relationship to the donor. The proposed 
limitations also would ensure that an eligible applicant that is unable 
to contribute the State's share of expenditures for the program would 
not be disqualified from receiving a grant, subgrant, or contract under 
the program. To allow a State to condition the award of a grant, 
subgrant, or contract on the recipient's contribution of the State's 
matching requirement would be tantamount to allowing the State to 
impose additional eligibility requirements to participate in the 
program. This action would contradict 34 CFR 76.770(g), which prohibits 
a State from acting in any manner that prevents eligible applicants 
from applying under the program.
    Finally, the proposed limitations on the use of restricted 
contributions to meet a State's matching requirement also are intended 
to prevent the sale of grants, subgrants, or contracts by the States to 
the highest bidder. ED has always required, unless directed by law to 
do otherwise, that the award of grants, subgrants, or contracts by 
States be made under a fair competitive process that is free from 
favoritism on the assumption that fair competition will result in the 
best qualified applicant receiving the grant, subgrant, or contract. To 
allow a State to award a grant, subgrant, or contract on the basis of 
the amount that the eligible applicant can contribute to the State's 
matching requirement would be inconsistent with the advantages that ED 
has always presumed result from fair competition.
    Proposed Sec. 365.16 would implement the requirements in Office of 
Management and Budget (OMB) Circulars A-87 and A-122 that the following 
must be treated as a reduction of expenditures charged to the grant, 
subgrant, or contract awarded under part 365 and may not be used for 
meeting the State's matching requirement: Rebates, deductions, refunds, 
discounts, or reductions to the price of goods, products, equipment, 
rental property, real property, or services; and premiums, bonuses, 
gifts, and any other payments related to the purchase of goods, 
products, equipment, rental property, real property, or services.
    Proposed Secs. 365.20 and 365.21 would incorporate the requirements 
in sections 704(e) and (f) and 713 of the Act. As stated previously, 
section 704(e) of the Act requires that the State must provide IL 
services to individuals with a significant disability. Section 704(f) 
of the Act permits the State to provide these IL services through 
grants or contracts with third parties. Section 713 of the Act permits 
the State to use funds received under part B of chapter 1 of title VII 
of the Act to provide the resources described in section 705(e) of the 
Act relating to the SILC and to fund various activities related to IL 
services and centers. Proposed Sec. 365.20(a) would permit the State to 
use funds received under part B of chapter 1 of title VII of the Act to 
provide the IL services required pursuant to section 704(e) of the Act.
    Proposed Sec. 365.21(b) would allow a State to provide information 
and referral services independent of other IL services. Frequently, 
individuals without a disability seek information from centers on 
behalf of an individual with a significant disability. Allowing States 
to provide information and referral services furthers the dissemination 
of information and the provision of IL services to individuals with 
significant disabilities. Proposed Sec. 365.21(b) also would allow a 
State to provide information and referral services without regard to 
subpart G of part 366. (Subpart G includes the indicators of what 
constitutes minimum compliance with the evaluation standards in section 
725(b) of the Act and was published separately in the October 27, 1993 
``Indicators NPRM'' referred to previously. When these regulations are 
published in final, subpart G will be included in 34 CFR part 366, 
along with any changes made to Subpart G as a result of the public 
comment received on the ``Indicators NPRM.'')
    Proposed Sec. 365.23 identifies the Education Department General 
Administrative Regulations and requirements that would apply if a State 
makes a subgrant or enters into a contract.
    Proposed Sec. 365.30 would require the DSU to develop, establish, 
and maintain written standards and procedures to be applied by the 
service provider to ensure expeditious and equitable handling of 
referrals and applications for IL services from individuals with 
significant disabilities.
    Proposed Sec. 365.31 would require the DSU to develop, establish, 
and maintain written standards for the provision of IL services to be 
met by service providers that do not meet the standards and assurances 
in section 725 of the Act and Subparts F and G of 34 CFR part 366 and 
that are used by the DSU to provide IL services to individuals with 
significant disabilities. Proposed Sec. 365.31 also would require the 
DSU to assure that participating service providers meet all applicable 
State licensure or certification requirements. Providers used by the 
DSU to provide IL services that meet the requirements of section 725 of 
the Act and proposed subparts F and G of part 366 would not have to 
meet the standards developed by the DSU if the standards developed by 
the DSU are different than the Federal requirements. The requirements 
for written standards in Secs. 365.30 and 365.31, which existed in the 
former regulations for the SILS program, provide important protections 
for consumers of IL services.

Part 366

    Proposed part 366 contains regulations regarding the CIL program 
authorized by part C of chapter 1 of title VII of the Act.
    Under proposed Sec. 366.2(b), the expansion of an existing center 
through the establishment of a physically separate and complete 
facility at a different geographical location would be considered the 
same as establishing a new center for purposes of section 722(d) of the 
Act and proposed Secs. 366.24 and 366.25, which would establish the 
procedures for making an award to a new center. This proposed provision 
would facilitate the expansion of the CIL program and the establishment 
of statewide networks of centers through the use of the expertise of 
currently existing centers. However, pursuant to proposed 
Sec. 366.22(a)(1), any funds received by an existing center to 
establish a new center at a different geographical location pursuant to 
proposed Sec. 366.2(b)(2) would not be included in determining the 
level of funding to the existing center in any fiscal year that the new 
center applies for and receives funds as a separate center.
    Proposed Sec. 366.3 lists the various activities that the Secretary 
is authorized by statute to fund under the CIL program. Pursuant to 
proposed Sec. 366.3(a), an eligible agency may use funds awarded under 
subpart B of this part to carry out training and technical assistance 
activities described in proposed Sec. 366.11(b). Pursuant to proposed 
Sec. 366.3(b), an eligible agency may use funds under Subparts C and D 
of Part 366 to plan, conduct, administer, and evaluate centers, and to 
carry out activities that would further a center's compliance with the 
evaluation standards in section 725(b) of the Act and with the 
assurances in section 725(c) of the Act.
    Pursuant to proposed Sec. 366.14, the Secretary would use the 
selection criteria in proposed Sec. 366.15 to evaluate applications 
from entities with experience in the operation of centers for awards to 
provide training and technical assistance to eligible agencies, 
centers, and SILCs to plan, develop, conduct, administer, and evaluate 
centers. The selection criteria are based on section 721(b) of the Act 
and Sec. 75.210 of the Education Department General Administrative 
Regulations (EDGAR).
    Proposed Secs. 366.20 through 366.28 would incorporate the 
statutory requirements that apply if the amount of Federal funds 
allotted to the State under section 721(c) and (d) of the Act to 
support the general operation of centers is greater than the amount of 
State funds earmarked for the same purpose, as determined pursuant to 
proposed Secs. 366.30 and 366.31, or that apply even if this condition 
is met but the Director of the DSU (Director) does not submit to the 
Secretary and obtain approval of an application to award grants under 
section 723 of the Act and proposed Sec. 366.32.
    Pursuant to proposed Sec. 366.22(b) if, after meeting the 
priorities in proposed Sec. 366.22(a)(1) and (2), there are 
insufficient funds under the State's allotment to fund a new center 
under proposed Sec. 366.22(a)(3), the Secretary may use the excess 
funds in the State to assist existing centers or may reallot these 
funds in accordance with section 721(d) of the Act. This proposed 
provision is designed to give the Secretary added flexibility to 
respond to the local needs within a State.
    Pursuant to proposed Sec. 366.26, the Secretary would use the 
statutory selection criteria from section 722(d)(2)(B) of the Act, as 
incorporated in proposed Sec. 366.27, to evaluate applications for 
awards to centers under section 722 of the Act. In response to public 
comment on the draft regulations, the Secretary has increased the value 
of the ``Extent of the need for the project'' from 15 to 20 points and 
decreased the value of the ``Plan of operation'' from 25 to 20 points 
in proposed Sec. 366.27 (a) and (g), respectively. The Secretary also 
has added language to the selection criterion on the ``Extent of the 
need for the project'' that would encourage an applicant to provide 
information on whether the applicant proposes to serve an area that has 
been identified in the State plan as a priority service area.
    Proposed Sec. 366.28 would clarify existing authority implicit in 
the Act permitting the Secretary to use funds from the allotment of one 
State to award a grant to a center located in another State if the 
Secretary determines that the proposal of the out-of-State center to 
serve individuals with significant disabilities who reside in the other 
State is consistent with the State plan of the State in which these 
individuals reside. Nothing in the Act limits the award of funds 
allotted to a State under section 721 of the Act to eligible agencies 
only in that State. This proposed provision would allow the Secretary 
to fund the most qualified applicant and would facilitate the provision 
of services to unserved and underserved areas in a State in the most 
efficient and economical manner.
    Proposed Secs. 366.29 through 366.38 would incorporate the 
statutory requirements applicable if the Director submits to the 
Secretary and obtains approval of an application to award grants under 
section 723 of the Act and proposed Sec. 366.32 and the amount of State 
funds earmarked to support the general operation of centers is equal to 
or greater than the amount of Federal funds allotted to the State for 
the same purpose, as determined pursuant to proposed Secs. 366.29 and 
366.31.
    Proposed Sec. 366.29(a)(2) would incorporate section 
723(a)(1)(A)(i) of the Act. Pursuant to proposed Sec. 366.29(a)(2), if 
a State submits an application for a fiscal year to award grants under 
section 723 of the Act and subpart D of 34 CFR part 366, the Secretary 
would determine whether the amount of State funds that were earmarked 
by the State to support the general operation of centers meeting the 
requirements of part C of chapter 1 of title VII of the Act in the 
second fiscal year preceding the fiscal year for which the application 
is submitted equaled or exceeded the amount of funds allotted to the 
State under section 721 (c) and (d) of the Act (or part B of title VII 
of the Act as in effect on October 28, 1992) for that preceding fiscal 
year.
    Pursuant to proposed Sec. 366.29(c), the second fiscal year 
preceding the fiscal year for which the State submits an application to 
administer the CIL program under section 723 of the Act and subpart D 
of 34 CFR part 366 would be considered the ``preceding fiscal year'' 
for purposes of section 723(a)(1)(A)(iii) of the Act. For example, if 
fiscal year (FY) 1995 is the fiscal year for which the State submits an 
application to administer the CIL program under this subpart, FY 1993 
would be the ``preceding fiscal year.'' The Secretary chose the second 
fiscal year preceding the fiscal year for which the State submits an 
application to administer the CIL program as the ``preceding fiscal 
year'' because that year would be the most recent year for which 
complete financial data would be available to the Secretary to make his 
determination. The Secretary would make any adjustments necessary to 
accommodate a State's multi-year funding cycle or fiscal year that does 
not coincide with the Federal fiscal year.
    Pursuant to proposed Sec. 366.30(a), the amount of State funds that 
are earmarked by a State to support the general operation of centers 
would not include: (1) Federal funds used for the general operation of 
centers; (2) State funds used to purchase services from a center, 
including State funds used for grants or contracts for personal 
assistance or skills training; (3) State attendant care funds; or (4) 
Social Security Administration reimbursement funds. Proposed 
Sec. 366.30(c) implements congressional intent as expressed in S. Rep. 
No. 102-357, 102d Cong., 2d Sess. 92 (1992).
    Pursuant to proposed Sec. 366.30(b), ``earmarked funds'' would mean 
funds appropriated by the State and expressly or clearly identified as 
State expenditures in the relevant fiscal year for the sole purpose of 
funding the general operation of centers. ``Earmarked funds'' would be 
described in this manner for purposes of this proposed provision to 
ensure consistency among the States for what should be included as 
``earmarked funds.''
    Pursuant to proposed Sec. 366.31, if the State submits an 
application to administer the CIL program under section 723 of the Act 
and subpart D of 34 CFR part 366 for a fiscal year, but did not earmark 
the amount of State funds required by proposed Sec. 366.29(a)(2) in the 
preceding fiscal year, the State would be ineligible to make grants 
under section 723 of the Act and subpart D of 34 CFR part 366 after the 
end of the fiscal year succeeding the preceding fiscal year and for 
each succeeding fiscal year.

    Example: A State meets the earmarking requirement in FY 1995. 
However, in reviewing the State's application to administer the CIL 
program in FY 1998, the Secretary determines that the State failed 
to meet the earmarking requirement in FY 1996. The State could 
continue to award grants in FY 1997 but could not do so in FY 1998 
and succeeding fiscal years.

    Once the Secretary determines that a State failed to earmark the 
required amount of funds in the second fiscal year preceding the fiscal 
year for which the State submits an application to administer the CIL 
program, the State would be precluded from administering the CIL 
program in succeeding fiscal years. The Secretary believes that this 
proposed result most clearly reflects the intent of Congress. The 
Secretary also believes that allowing States to re-qualify would be 
disruptive to the consistent administration of the CIL program within a 
State.
    In those States in which there is both a DSU responsible for 
providing IL services to the general population and a DSU responsible 
for providing IL services for individuals who are blind, proposed 
Sec. 366.32(d) would provide that the word ``Director,'' as used in 
subparts D and E of part 366, would mean ``the Director of the general 
DSU.'' This provision is proposed because only the general agency in a 
State has authority under State law to provide IL services on a cross-
disability basis. However, both State units would be required to 
consult with each other with respect to the provision of services for 
individuals who are blind.
    Because the Department distinguishes between procurement contracts 
and assistance contracts at the State level, proposed Sec. 366.32(e) 
would permit the Director to enter into assistance contracts with 
centers to carry out section 723 of the Act. The Department considers 
assistance contracts awarded by a State as equivalent to subgrants. 
Proposed Sec. 366.32(e) would define an assistance contract awarded by 
a State as an instrument whose principal purpose is merely to transfer 
funds allotted to the State under section 721 (c) and (d) of the Act 
and 34 CFR part 366 to an eligible agency to carry out section 723 of 
the Act rather than as an instrument to procure services under specific 
terms and conditions determined by the Director. If the DSU were to use 
an assistance contract to award funds under section 723 of the Act, the 
DSU would not be permitted to add any requirements, terms, or 
conditions to the assistance contract other than those that would be 
permitted if the assistance contract were a subgrant. Under an 
assistance contract, the DSU would assume a role consistent with that 
of the Secretary under section 722 of the Act; i.e., the role of the 
DSU would be to ensure that the terms of the assistance contract (which 
are established by chapter 1 of title VII of the Act and the 
implementing regulations in 34 CFR parts 364, 365, and 366) are 
satisfied.
    Conversely, proposed Sec. 366.32(f) would implement congressional 
intent to prohibit the Director from entering into procurement 
contracts with centers to carry out section 723 of the Act. See H.R. 
Rep. No. 102-822, 102d Cong., 2d Sess. 137 (1992) and S. Rep. No. 102-
357, 92. Proposed Sec. 366.32(f) would define a procurement contract as 
an instrument whose principal purpose is to acquire (by purchase, 
lease, or barter) property or services for the direct benefit or use of 
the DSU. Under a procurement contract, the DSU prescribes the specific 
services it intends to procure and the terms and conditions of the 
procurement.
    Pursuant to proposed Sec. 366.32(g), in the enforcement of any 
breach of the terms and conditions of an assistance contract, the DSU 
would be required to follow the procedures established in proposed 
Secs. 366.40 through 366.45.
    Pursuant to proposed Sec. 366.34(b), if the order of priorities in 
proposed Sec. 366.22 is followed and, after meeting the priorities in 
proposed Sec. 366.22(a) (1) and (2), there are insufficient funds under 
the State's allotment under section 721 (c) and (d) of the Act to fund 
a new center under proposed Sec. 366.22(a)(3), the Director would be 
permitted to use any excess funds in the State to assist existing 
centers or to return these funds to the Secretary for reallotment in 
accordance with section 721(d) of the Act. Proposed Sec. 366.34(b) 
would give the Director of a DSU the same discretion that the Secretary 
would have under proposed Sec. 366.22(b).
    Proposed Secs. 366.39 through 366.45 would establish the 
enforcement and appeals procedures if the Secretary or the Director 
determines that a center receiving funds under section 722 or 723, 
respectively, of the Act is not in compliance with the standards and 
assurances in section 725 (b) and (c) of the Act and subparts F and G 
of part 366. Pursuant to section 722(g)(1) of the Act, if the Secretary 
determines that a center receiving funds under section 722(a) of the 
Act is not in compliance with the standards and assurances in section 
725(b) of the Act, the Secretary is required to notify the center of 
the center's noncompliance. Pursuant to section 722(g)(2) of the Act, 
the Secretary is required to terminate funds 90 days after notifying a 
center that it is not in compliance with the standards and assurances 
in section 725(b) of the Act unless the center submits a corrective 
action plan to achieve compliance within 90 days after the Secretary's 
notification and the plan is approved by the Secretary. Proposed 
Sec. 366.39 (a) and (b) would implement section 722(g) (1) and (2) of 
the Act.
    Pursuant to proposed Sec. 366.39(a), the Secretary would notify the 
center that the Secretary will offer technical assistance to a center 
to develop a corrective action plan to comply with the standards and 
assurance. Pursuant to proposed Sec. 366.39(b)(2), the Secretary would 
notify the center that termination of funds would occur within 90 days 
after the center received notice of its noncompliance unless the center 
requests a hearing pursuant to proposed Sec. 366.39 (c) or (d).
    Proposed Sec. 366.39(c) would give a center 30 days from the date 
it receives the Secretary's written notice disapproving its corrective 
action plan to file a formal written appeal with the Secretary.
    Pursuant to proposed Sec. 366.39(f), the Secretary would issue a 
written decision to terminate funds after a hearing if the center is 
found out of compliance with the standards and assurances in section 
725(b) of the Act and subparts F and G of 34 CFR part 366 or the 
center's corrective action plan cannot be approved.
    Proposed Secs. 366.40 through 366.43 would incorporate similar 
statutory requirements related to enforcement and appeals procedures 
that the Director shall use before terminating a center's funds or 
taking other significant adverse action against a center. The due 
process procedures in proposed Secs. 366.40 through 366.43 are designed 
to provide every opportunity for a dispute between a Director and a 
center to be resolved at the State level before the dispute is appealed 
to the Secretary.
    Pursuant to proposed Sec. 366.40(b), unless a center submits and 
obtains approval of a corrective action plan, the Director would 
terminate all funds to a center under section 723 of the Act 90 days 
after the date that the center receives the initial written notice of 
its noncompliance from the Director or 90 days after the date that the 
center receives the Secretary's final decision pursuant to proposed 
Sec. 366.46(c), whichever is later.
    Proposed Sec. 366.41 describes the minimum amount of information 
that the Secretary believes the initial written notice sent from the 
Director to the center would have to contain to meet the statutory 
requirement of providing notice to the center of the center's 
noncompliance, including notice to the center that it would have 90 
days from the date of receipt of the Director's initial written notice 
to submit a corrective action plan to the Director and 120 days from 
the date of receipt of the Director's initial written notice to appeal 
to the Secretary the decision described in a Director's initial written 
notice.
    Pursuant to proposed Sec. 366.42, if the center submits a 
corrective action plan, the Director would have to provide the center 
with a final written decision approving or disapproving the center's 
corrective action plan and informing the center, if appropriate, of the 
termination of funds or other proposed significant adverse action 
against the center. Pursuant to proposed Sec. 366.42(c), a Director's 
final written decision would not take effect until 30 days after the 
center receives it or, if appealed to the Secretary, until the 
Secretary issues a final decision.
    Proposed Sec. 366.43 describes the minimum amount of information 
that the Secretary believes the final written decision from the 
Director would have to contain to meet the statutory requirement of 
providing notice to the center of the center's noncompliance with 
statutory requirements, including the reasons why the Director could 
not approve the center's corrective action plan, if such a plan was 
submitted by the center, and notice to the center that it has the right 
to appeal the Director's final written decision to the Secretary.
    Proposed Sec. 366.44 describes the procedures that a center would 
have to follow to appeal to the Secretary a final written decision from 
the Director. Pursuant to proposed Sec. 366.44(a), if a Director did 
not approve a center's corrective action plan, the center would be 
given 30 days following receipt of the Director's final written 
decision to appeal to the Secretary. Pursuant to proposed 
Sec. 366.44(b), if a center does not submit a corrective action plan, 
the center would be given 120 days following receipt of the Director's 
initial written notice to appeal to the Secretary.
    Proposed Sec. 366.44(c) through (f) describe how a center would 
file an appeal to the Secretary. Proposed Sec. 366.44(g) would allow 
the center to request an informal hearing with the Secretary, to which 
the Director also would be invited to attend.
    Proposed Sec. 366.44(h) would stay a Director's decision to 
terminate funds as of the date that the center files a formal written 
appeal with the Secretary.
    Proposed Sec. 366.45 describes the procedures that a Director would 
have to follow upon receipt of a copy of the formal written appeal that 
the center files with the Secretary.
    Proposed Sec. 366.46 describes the review procedures the Secretary 
would follow upon receipt of a formal written appeal from a center.
    All of the proposed provisions in proposed subpart E regarding the 
enforcement of statutory requirements that centers must meet are 
designed to ensure due process and fairness.
    In response to public comment on the draft regulations, the 
Secretary has added language to clarify the intent of proposed 
Sec. 366.50. Section 725(c)(2) of the Act requires that the governing 
board of a center must be composed of a majority of individuals with a 
significant disability. The statutory definition of an individual with 
a significant disability is limited to individuals who are receiving or 
who could benefit from receiving IL services. If the statutory 
definition is used to determine membership on the governing board, 
those individuals with a significant disability who already have gained 
their independence, either through the receipt of IL services or on 
their own, could not be part of the majority of the governing board. 
Therefore, the Secretary has added language at the end of proposed 
Sec. 366.50(b) that would modify the definition of an individual with a 
significant disability for purposes of this proposed section only. The 
proposed definition would permit those individuals with a significant 
disability who already have gained their independence, either through 
the receipt of IL services or on their own, to be part of the majority 
of the governing board.

Part 367

    Proposed part 367 contains regulations regarding the OIB program, 
authorized by chapter 2 of title VII of the Act.
    In addition to incorporating the definitions in proposed 
Sec. 364.4, proposed Sec. 367.5 includes the statutory definitions for 
``older individual who is blind'' and ``independent living services for 
older individuals who are blind.''
    Pursuant to proposed Sec. 367.21, the Secretary would use the 
selection criteria in proposed Sec. 367.22, which are based on 
Sec. 75.210 of EDGAR, to evaluate applications for discretionary grants 
under section 752(b)(1) of the Act.
    In response to public comment on the draft regulations, the 
Secretary has increased the value of ``Plan of operation'' from 20 to 
25 points and decreased the value of ``Likelihood of sustaining the 
program'' from 15 to 10 points in proposed Sec. 367.22(b) and (h), 
respectively.
    Pursuant to proposed Sec. 367.23, the Secretary also would consider 
the geographic distribution of projects in awarding these discretionary 
grants. The Secretary believes that it is important to have this 
program operate in as many States as possible, and this proposed 
provision would give the Secretary the flexibility to accomplish this 
purpose.
    Finally, proposed Sec. 367.41(a)(1) would incorporate section 
752(g) of the Act that gives the designated State agency discretion to 
operate or administer the OIB program or projects under Part 367 
through grants to public or private nonprofit agencies or 
organizations. In addition, proposed Sec. 367.41(a)(2) would 
incorporate section 752(i)(2)(A) of the Act that gives the designated 
State agency discretion to operate or administer the program or 
projects under Part 367 either directly or through grants, as permitted 
by section 752(g) of the Act and Sec. 367.41(a), or contracts. The 
general authority to operate or administer the OIB through grants or 
contracts given to States in section 752(i)(2)(A) of the Act is 
overridden by the specific language in section 752(g) of the Act 
limiting a State's authority to award grants only to public or private 
nonprofit agencies or organizations. Because Congress could have added 
contracts to section 752(g) or deleted the very specific reference to 
public or private nonprofit agencies or organizations in section 
752(g), proposed Sec. 367.41(a)(2) permits a State to contract only 
with individuals, entities, or organizations that are not public or 
private nonprofit agencies or organizations. However, proposed 
Sec. 367.41(b) would permit States to use assistance contracts awarded 
by a State (which are similar to subgrants), but not procurement 
contracts, in a manner consistent with 34 CFR 366.32(e) through 
366.32(g).

Executive Order 12866

Assessment of Costs and Benefits

    These proposed regulations have been reviewed in accordance with 
Executive Order 12866. Under the terms of the order the Secretary has 
assessed the potential costs and benefits of this regulatory action.
    The potential costs associated with the proposed regulations are 
those resulting from statutory requirements and those determined by the 
Secretary to be necessary for administering these programs effectively 
and efficiently. Burdens specifically associated with information 
collection requirements, if any, are identified and explained elsewhere 
in this preamble under the heading Paperwork Reduction Act of 1980.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of these proposed regulations, the Secretary has 
determined that the benefits of the proposed regulations justify the 
costs.
    The Secretary also determined that this regulatory action does not 
unduly interfere with State, local, and tribal governments in the 
exercise of their governmental functions.
    To assist the Department in complying with the specific 
requirements of Executive Order 12866, the Secretary invites comment on 
whether there may be further opportunities to reduce any potential 
costs or increase potential benefits resulting from these proposed 
regulations without impeding the effective and efficient administration 
of the program.

Clarity of the Regulations

    Executive Order 12866 requires each agency to write regulations 
that are easy to understand.
    The Secretary invites comments on how to make these proposed 
regulations easier to understand, including answers to questions such 
as the following:
    (1) Are the requirements in the proposed regulations clearly 
stated?
    (2) Do the regulations contain technical terms or other wording 
that interferes with their clarity?
    (3) Does the format of the regulations (grouping and order of 
sections, use of headings, paragraphing, etc.) aid or reduce their 
clarity? Would the regulations be easier to understand if they were 
divided into more (but shorter) sections? (A ``section'' is preceded by 
the symbol ``Sec. '' and a numbered heading; for example, Sec. 364.10.)
    (4) Is the description of the regulations in the ``Supplementary 
Information'' section of this preamble helpful in understanding the 
regulations? How could this description be more helpful in making the 
regulations easier to understand?
    (5) What else could the Department do to make the regulations 
easier to understand?
    A copy of any comments that concern how the Department could make 
these proposed regulations easier to understand should be sent to 
Stanley M. Cohen, Regulations Quality Officer, U.S. Department of 
Education, 400 Maryland Avenue SW. (room 5125, FOB-6), Washington, DC 
20202-2241.

Regulatory Flexibility Act Certification

    The Secretary certifies that these proposed regulations would not 
have a significant economic impact on a substantial number of small 
entities.
    The small entities that would be affected by these proposed 
regulations are centers receiving Federal funds under these programs. 
However, the regulations would not have a significant economic impact 
on the centers affected because the regulations would not impose 
excessive regulatory burdens or require unnecessary Federal 
supervision. The regulations would impose minimal requirements to 
ensure the proper expenditure of program funds.

Paperwork Reduction Act of 1980

    Sections 364.10, 364.11, 364.12, 364.13, 364.20, 364.21, 364.22, 
364.23, 364.24, 364.25, 364.26, 364.27, 364.28, 364.29, 364.30, 364.31, 
364.32, 364.33, 364.34, 364.35, 364.36, 364.37, 364.38, 364.39, 364.40, 
364.41, 364.42, 364.43, 364.51, 364.52, 364.53, 365.2, 365.10, 365.30, 
365.31, 366.2, 366.12, 366.15, 366.21, 366.22, 366.23, 366.24, 366.25, 
366.27, 366.28, 366.29, 366.32, 366.33, 366.37, 366.38, 366.39, 366.40, 
366.41, 366.42, 366.43, 366.44, 366.45, 366.50, 367.10, 367.11, 367.22, 
367.31, 367.32, and 367.42 contain information collection requirements. 
As required by the Paperwork Reduction Act of 1980, the Department of 
Education will submit a copy of these sections to the Office of 
Management and Budget (OMB) for its review. (44 U.S.C. 3504(h).)
    State agencies and centers are eligible to apply for grants under 
these proposed regulations. The Department needs and uses the 
information to make grants. Annual public reporting burden for this 
collection of information is estimated to average 40 hours per response 
for 240 respondents, including the time for reviewing instructions, 
searching existing data sources, gathering and maintaining the data 
needed, and completing and reviewing the collection of information.
    Organizations and individuals desiring to submit comments on the 
information collection requirements should direct them to the Office of 
Information and Regulatory Affairs, OMB, room 3002, New Executive 
Office Building, Washington, DC 20503; Attention: Daniel J. Chenok.

Intergovernmental Review

    These programs are subject to the requirements of Executive Order 
12372 and the regulations in 34 CFR part 79. The objective of the 
Executive order is to foster an intergovernmental partnership and a 
strengthened federalism by relying on processes developed by State and 
local governments for coordination and review of proposed Federal 
financial assistance.
    In accordance with the order, this document is intended to provide 
early notification of the Department's specific plans and actions for 
this program.

Invitation To Comment

    Interested persons are invited to submit comments and 
recommendations regarding these proposed regulations.
    All comments submitted in response to these proposed regulations 
will be available for public inspection, during and after the comment 
period, in room 3214, Mary E. Switzer Building, 330 C Street SW., 
Washington, DC, between the hours of 8:30 a.m. and 4 p.m., Monday 
through Friday of each week except Federal holidays.

Assessment of Educational Impact

    The Secretary particularly requests comments on whether the 
proposed regulations in this document would require transmission of 
information that is being gathered by or is available from any other 
agency or authority of the United States.

List of Subjects in 34 CFR Parts 364, 365, 366, and 367

    Centers for independent living, Independent living services for 
older individuals who are blind, Reporting and recordkeeping 
requirements, State independent living services.

(Catalog of Federal Domestic Assistance Numbers: 84.132 Centers for 
Independent Living; 84.169 State Independent Living Services; and 
84.177 Independent Living Services for Older Individuals Who Are 
Blind)

    Dated: May 9, 1994.
Richard W. Riley,
Secretary of Education.

    The Secretary proposes to amend title 34 of the Code of Federal 
Regulations by adding a new part 364 and by revising parts 365, 366, 
and 367 to read as follows:

PART 364--STATE INDEPENDENT LIVING SERVICES PROGRAM AND CENTERS FOR 
INDEPENDENT LIVING PROGRAM: GENERAL PROVISIONS

Subpart A--General

Sec.
364.1  What programs are covered?
364.2  What is the purpose of the programs authorized by Chapter 1 
of Title VII?
364.3  What regulations apply?
364.4  What definitions apply?
364.5  What are the limitations on allowable costs?
364.6  What is program income and how may it be used?
364.7  What requirements apply to the obligation of Federal funds 
and program income?
Subpart B--What Are the Application Requirements?
364.10  What are the application requirements?
364.11  When must the State plan be submitted for approval?
364.12  How does the Secretary approve State plans?
364.13  Under what circumstances may funds be withheld, reduced, 
limited, or terminated?

Subpart C--What Are the State Plan Requirements?

364.20  What are the general requirements for a State plan?
364.21  What are the requirements for the statewide Independent 
Living Council (SILC)?
364.22  What is the State's responsibility for administration of the 
programs authorized by Chapter 1 of Title VII?
364.23  What are the staffing requirements?
364.24  What assurances are required for staff development?
364.25  What are the requirements for a statewide network of centers 
for independent living?
364.26  What are the requirements for cooperation, coordination, and 
working relationships?
364.27  What are the requirements for coordinating independent 
living (IL) services?
364.28  What requirements relate to IL services for older 
individuals who are blind?
364.29  What are the requirements for coordinating Federal and State 
sources of funding?
364.30  What notice must be given about the Client Assistance 
Program (CAP)?
364.31  What are the affirmative action requirements?
364.32  What are the requirements for outreach?
364.33  What is required to meet minority needs?
364.34  What are the fiscal and accounting requirements?
364.35  What records must be maintained?
364.36  What are the reporting requirements?
364.37  What access to records must be provided?
364.38  What methods of evaluation must the State plan include?
364.39  What requirements apply to the administration of grants 
under the Centers for Independent Living program?
364.40  Who is eligible to receive IL services?
364.41  What assurances must be included regarding eligibility?
364.42  What objectives and information must be included in the 
State plan?
364.43  What requirements apply to the provision of State IL 
services?
Subpart D--What Conditions Must Be Met After an Award?
364.50  What requirements apply to the processing of referrals and 
applications?
364.51  What requirements apply to determinations of eligibility or 
ineligibility?
364.52  What are the requirements for an IL plan?
364.53  What records must be maintained for the individual?
364.54  What are the durational limitations on IL services?
364.55  What standards shall service providers meet?
364.56  What are the special requirements pertaining to the 
protection, use, and release of personal information?
364.57  What functions and responsibilities may the State delegate?
364.58  What appeal procedures must be available to consumers?
364.59  May the financial need of an individual be considered to 
determine his or her participation in the costs of IL services?

    Authority: 29 U.S.C. 796-796f-5, unless otherwise noted.

Subpart A--General


Sec. 364.1  What programs are covered?

    (a) This part includes general requirements applicable to the 
conduct of the following programs authorized under title VII of the 
Rehabilitation Act of 1973, as amended:
    (1) The State Independent Living Services (SILS) program (34 CFR 
part 365).
    (2) The Centers for Independent Living (CIL) program (34 CFR part 
366).
    (b) Some provisions in this part also are made specifically 
applicable to the Independent Living Services for Older Individuals Who 
Are Blind (OIB) program (34 CFR part 367).

(Authority: 29 U.S.C. 711(c) and 796-796f-5)


Sec. 364.2  What is the purpose of the programs authorized by chapter 1 
of title VII?

    The purpose of the SILS and CIL programs authorized by chapter 1 of 
title VII of the Act is to promote a philosophy of independent living 
(IL), including a philosophy of consumer control, peer support, self-
help, self-determination, equal access, and individual and system 
advocacy, to maximize the leadership, empowerment, independence, and 
productivity of individuals with significant disabilities, and to 
promote and maximize the integration and full inclusion of individuals 
with significant disabilities into the mainstream of American society 
by providing financial assistance to States--
    (a) For providing, expanding, and improving the provision of IL 
services;
    (b) To develop and support statewide networks of centers for 
independent living (centers); and
    (c) For improving working relationships among--
    (1) SILS programs;
    (2) Centers;
    (3) Statewide Independent Living Councils (SILCs) established under 
section 705 of the Act;
    (4) State vocational rehabilitation (VR) programs receiving 
assistance under title I and under part C of title VI of the Act;
    (5) Client assistance programs receiving assistance under section 
112 of the Act;
    (6) Programs funded under other titles of the Act;
    (7) Programs funded under other Federal law; and
    (8) Programs funded through non-Federal sources.

(Authority: 29 U.S.C. 796)


Sec. 364.3  What regulations apply?

    The following regulations apply to the SILS and CIL programs:
    (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), with respect 
to grants or subgrants to an eligible agency that is not a State or 
local government or Indian tribal organization.
    (2) 34 CFR part 75 (Direct Grant Programs), with respect to grants 
under subparts B and C of 34 CFR part 366.
    (3) 34 CFR part 76 (State-Administered Programs), with respect to 
grants under 34 CFR part 365 and subpart D of 34 CFR part 366.
    (4) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (5) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (6) 34 CFR part 80 (Uniform Administrative Requirements for Grants 
and Cooperative Agreements to State and Local Governments), with 
respect to grants to an eligible agency that is a State or local 
government or Indian tribal organization.
    (7) 34 CFR part 81 (General Education Provisions Act--Enforcement).
    (8) 34 CFR part 82 (New Restrictions on Lobbying).
    (9) 34 CFR part 85 (Governmentwide Debarment and Suspension 
(Nonprocurement) and Governmentwide Requirements for Drug-Free 
Workplace (Grants)).
    (10) 34 CFR part 86 (Drug-Free Schools and Campuses).
    (b) The regulations in this part 364.
    (c) The regulations in 34 CFR parts 365 and 366 as applicable.

(Authority: 29 U.S.C. 711(c))


Sec. 364.4  What definitions apply?

    (a) Definitions in EDGAR. The following terms used in this part and 
in 34 CFR parts 365, 366, and 367 are defined in 34 CFR 77.1:

Applicant
Application
Award
Department
EDGAR
Fiscal year
Nonprofit
Private
Project
Public
Secretary

    (b) Other definitions. The following definitions also apply to this 
part and to 34 CFR parts 365, 366, and 367:
    Act means the Rehabilitation Act of 1973, as amended.
    Administrative support services mean assistance to support IL 
programs and the activities of centers and may include financial and 
technical assistance in planning, budget development, and evaluation of 
center activities, and support for financial management (including 
audits), personnel development, and recordkeeping activities.

(Authority: 29 U.S.C. 796c(c)(2))

    Advocacy means pleading an individual's cause or speaking or 
writing in support of an individual. To the extent permitted by State 
law or the rules of the agency before which an individual is appearing, 
a non-lawyer may engage in advocacy on behalf of another individual. 
Advocacy may--
    (1) Involve representing an individual--
    (i) Before private entities or organizations, government agencies 
(whether State, local, or Federal), or in a court of law (whether State 
or Federal); or
    (ii) In negotiations or mediation, in formal or informal 
administrative proceedings before government agencies (whether State, 
local, or Federal), or in legal proceedings in a court of law; and
    (2) Be on behalf of--
    (i) A single individual, in which case it is individual advocacy;
    (ii) A group or class of individuals, in which case it is systems 
(or systemic) advocacy; or
    (iii) Oneself, in which case it is self advocacy.
    Attendant care means a personal assistance service provided to an 
individual with significant disabilities in performing a variety of 
tasks required to meet essential personal needs in areas such as 
bathing, communicating, cooking, dressing, eating, homemaking, 
toileting, and transportation.

(Authority: 20 U.S.C. 706(30)(B)(vi))

    Center for independent living means a consumer-controlled, 
community-based, cross-disability, nonresidential, private nonprofit 
agency that--
    (1) Is designed and operated within a local community by 
individuals with disabilities; and
    (2) Provides an array of IL services.

(Authority: 29 U.S.C. 796a(1))

    Consumer control means, with respect to a center or eligible 
agency, that the center or eligible agency vests power and authority in 
individuals with disabilities, including individuals who are or have 
been recipients of IL services.

(Authority: 29 U.S.C. 796a(2))

    Cross-disability means, with respect to a center, that a center 
provides IL services to individuals representing a range of significant 
disabilities and does not require the presence of one or more specific 
significant disabilities before determining that an individual is 
eligible for IL services.

(Authority: 29 U.S.C. 796a(1))

    Designated State agency or State agency means the sole State agency 
designated to administer (or supervise local administration of) the 
State plan for VR services. The term includes the State agency for 
individuals who are blind, if that agency has been designated as the 
sole State agency with respect to that part of the State VR plan 
relating to the vocational rehabilitation of individuals who are blind.

(Authority: 29 U.S.C. 706(3) and 721(a)(1)(A))

    Designated State unit means either--
    (1) The State agency VR bureau, division, or other organizational 
unit that is primarily concerned with the vocational rehabilitation, or 
vocational and other rehabilitation, of individuals with disabilities 
and that is responsible for the administration of the VR program of the 
State agency; or
    (2) The independent State commission, board, or other agency that 
has the vocational rehabilitation, or vocational and other 
rehabilitation, of individuals with disabilities as its primary 
function.

(Authority: 29 U.S.C. 706(3) and 721(a)(2)(A))

    Eligible agency means a consumer-controlled, community-based, 
cross-disability, nonresidential, private, nonprofit agency.

(Authority: 29 U.S.C. 796f-5)

    Independent living core services mean, for purposes of services 
that are supported under the SILS or CIL programs--
    (1) Information and referral services;
    (2) IL skills training;
    (3) Peer counseling, including cross-disability peer counseling; 
and
    (4) Individual and systems advocacy.

(Authority: 29 U.S.C. 706(29))

    Independent living services includes the independent living core 
services and--
    (1) Counseling services, including psychological, 
psychotherapeutic, and related services;
    (2) Services related to securing housing or shelter, including 
services related to community group living, that are supportive of the 
purposes of the Act, and adaptive housing services, including 
appropriate accommodations to and modifications of any space used to 
serve, or to be occupied by, individuals with significant disabilities;
    (3) Rehabilitation technology;
    (4) Mobility training;
    (5) Services and training for individuals with cognitive and 
sensory disabilities, including life skills training and interpreter 
and reader services;
    (6) Personal assistance services, including attendant care and the 
training of personnel providing these services;
    (7) Surveys, directories, and other activities to identify 
appropriate housing, recreation opportunities, and accessible 
transportation, and other support services;
    (8) Consumer information programs on rehabilitation and IL services 
available under the Act, especially for minorities and other 
individuals with significant disabilities who have traditionally been 
unserved or underserved by programs under the Act;
    (9) Education and training necessary for living in a community and 
participating in community activities;
    (10) Supported living;
    (11) Transportation, including referral and assistance for 
transportation;
    (12) Physical rehabilitation;
    (13) Therapeutic treatment;
    (14) Provision of needed prostheses and other appliances and 
devices;
    (15) Individual and group social and recreational services;
    (16) Training to develop skills specifically designed for youths 
who are individuals with significant disabilities to promote self-
awareness and esteem, develop advocacy and self-empowerment skills, and 
explore career options;
    (17) Services for children;
    (18) Services under other Federal, State, or local programs 
designed to provide resources, training, counseling, or other 
assistance of substantial benefit in enhancing the independence, 
productivity, and quality of life of individuals with significant 
disabilities;
    (19) Appropriate preventive services to decrease the need of 
individuals with significant disabilities assisted under the Act for 
similar services in the future;
    (20) Community awareness programs to enhance the understanding and 
integration into society of individuals with significant disabilities; 
and
    (21) Any other services that may be necessary to improve the 
ability of an individual with a significant disability to function, 
continue functioning, or move toward functioning independently in the 
family or community or to continue in employment and that are not 
inconsistent with any other provisions of the Act.

(Authority: 29 U.S.C. 796e-2(1))

    Individual with a disability means an individual who--
    (1) Has a physical, mental, cognitive, or sensory impairment that 
substantially limits one or more of the individual's major life 
activities;
    (2) Has a record of such an impairment; or
    (3) Is regarded as having such an impairment.

(Authority: 29 U.S.C. 706(8)(B))

    Individual with a significant disability means an individual with a 
severe physical or mental impairment whose ability to function 
independently in the family or community or whose ability to obtain, 
maintain, or advance in employment is substantially limited and for 
whom the delivery of IL services will improve the ability to function, 
continue functioning, or move toward functioning independently in the 
family or community or to continue in employment.

(Authority: 29 U.S.C. 706(15)(B))

    Minority group means Alaskan Natives, American Indians, Asian 
Americans, Blacks (African Americans), Hispanic Americans, Native 
Hawaiians, and Pacific Islanders.
    Nonresidential means, with respect to a center, that the center, as 
of October 1, 1994, does not operate or manage housing or shelter to 
individuals as an IL service on either a temporary or long-term basis 
unless the housing or shelter is--
    (1) Incidental to the overall operation of the center;
    (2) Necessary so that the individual may receive an IL service; and
    (3) Limited to a period not to exceed eight weeks during any six-
month period.

(Authority: 29 U.S.C. 796a, 796f-1(f) and 706f-2(f))

    Peer relationships mean relationships involving mutual support and 
assistance among individuals with significant disabilities who are 
actively pursuing IL goals.
    Peer role models mean individuals with significant disabilities 
whose achievements can serve as a positive example for other 
individuals with significant disabilities.
    Personal assistance services mean a range of IL services, provided 
by one or more persons, designed to assist an individual with a 
significant disability to perform daily living activities on or off the 
job that the individual would typically perform if the individual did 
not have a disability. These IL services must be designed to increase 
the individual's control in life and ability to perform everyday 
activities on or off the job.

(Authority: 29 U.S.C. 706(11))

    Service provider means--
    (1) A DSU that directly provides IL services to individuals with 
significant disabilities;
    (2) A center that receives financial assistance under parts B and C 
of Chapter 1 of Title VII of the Act; or
    (3) Any other entity or individual that meets the requirements of 
Sec. 364.43(e) and provides IL services under a grant or contract from 
the DSU pursuant to Sec. 364.43(b).

(Authority: 29 U.S.C. 711(c) and 796(e))

    Significant disability means a severe physical or mental impairment 
that substantially limits an individual's ability to function 
independently in the family or community or to obtain, maintain, or 
advance in employment.
    State means, except for sections 711(a)(2)(A) and 721(c)(2)(A) and 
where otherwise specified in the Act, in addition to each of the 
several States of the United States, the District of Columbia, the 
Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, 
American Samoa, the Commonwealth of the Northern Mariana Islands, and 
the Republic of Palau (until the Compact of Free Association with Palau 
takes effect).

(Authority: 29 U.S.C. 706(16))

    State plan means the State IL plan required under section 704 of 
Title VII of the Act.
    Transportation means travel and related expenses that are necessary 
to enable an individual with a significant disability to benefit from 
another IL service and travel and related expenses for an attendant or 
aide if the services of that attendant or aide are necessary to enable 
an individual with a significant disability to benefit from that IL 
service.

(Authority: 29 U.S.C. 706(30)(B)(xi) and 711(c))

    Unserved and underserved groups or populations, with respect to 
groups or populations of individuals with significant disabilities in a 
State, include, but are not limited to, groups or populations of 
individuals with significant disabilities who--
    (1) Have cognitive and sensory impairments;
    (2) Are members of racial and ethnic minority groups;
    (3) Live in rural areas; or
    (4) Have been identified by the eligible agency as unserved or 
underserved within a center's project area.

(Authority: 29 U.S.C. 706, 711(c), and 796f--796f-5)


Sec. 364.5  What are the limitations on allowable costs?

    Expenditures made with non-Federal funds in a particular fiscal 
year that are not reported as costs charged to the program on the final 
financial status reports for that program prior to the commencement of 
an audit or compliance review for that year may not be used as an 
allowable cost to offset any costs disallowed in a notice of 
disallowance decision or preliminary departmental decision based on 
that audit or compliance review.

(Authority: 29 U.S.C. 711(c))


Sec. 364.6  What is program income and how may it be used?

    (a) Definition. Program income means gross income received by a 
grantee under Title VII of the Act that is directly generated by an 
activity supported under 34 CFR part 365, 366, or 367.
    (b) Sources. Sources of program income include, but are not limited 
to, payments received from workers' compensation funds or fees for 
services to defray part or all of the costs of services provided to 
particular clients.
    (c) Use of program income. (1) Program income, whenever earned, 
must be used for the provision of IL services or the administration of 
the State plan, as appropriate.
    (2) A service provider is authorized to treat program income as--
    (i) A deduction from total allowable costs charged to a Federal 
grant, in accordance with 34 CFR 80.25(g)(1); or
    (ii) An addition to the grant funds to be used for additional 
allowable program expenditures, in accordance with 34 CFR 80.25(g)(2).
    (3) Program income may not be used to meet the non-Federal share 
requirement under 34 CFR 365.12(b).

(Authority: 29 U.S.C. 711(c); 34 CFR 80.25)


Sec. 364.7  What requirements apply to the obligation of Federal funds 
and program income?

    (a) Except as provided in paragraphs (b) and (c) of this section, 
any Federal funds, including reallotted funds, that are appropriated 
for a fiscal year to carry out a program under 34 CFR part 365, 366, or 
367 that are not obligated by the DSU or center prior to the beginning 
of the succeeding fiscal year, and any program income received during a 
fiscal year that is not obligated by the DSU or center prior to the 
beginning of the succeeding fiscal year, must remain available for 
obligation by the DSU or center during that succeeding fiscal year.
    (b) Federal funds appropriated for a fiscal year under part B of 
chapter 1 and under chapter 2 of title VII of the Act remain available 
for obligation in the succeeding fiscal year only to the extent that 
the DSU complied with any matching requirement by obligating, in 
accordance with 34 CFR 76.707, the non-Federal share in the fiscal year 
for which the funds were appropriated.
    (c) The provisions of paragraphs (a) and (b) of this section do not 
apply to discretionary grants awarded by the Secretary under sections 
722 and 752 of the Act.

(Authority: 29 U.S.C. 718)

Subpart B--What Are the Application Requirements?


Sec. 364.10  What are the application requirements?

    To receive a grant from a State's allotment of funds under parts B 
and C of chapter 1 of title VII of the Act and 34 CFR parts 365 and 
366, a State shall submit to the Secretary, and obtain approval of, a 
three-year State plan meeting the requirements in subpart C of this 
part.

(Authority: 29 U.S.C. 796c(a)(1))


Sec. 364.11  When must the State plan be submitted for approval?

    The designated State unit (DSU) shall submit to the Secretary for 
approval the three-year State plan no later than July 1 of the year 
preceding the first fiscal year of the three-year period for which the 
State plan is submitted.

(Authority: 29 U.S.C. 796c(a)(4))


Sec. 364.12  How does the Secretary approve State plans?

    (a) General. The Secretary approves a State plan that the Secretary 
determines meets the requirements of section 704 of the Act and 
subparts B through D of this part and disapproves a plan that does not 
meet these requirements.
    (b) Informal resolution. If the Secretary intends to disapprove the 
State plan, the Secretary attempts to resolve disputed issues 
informally with State officials.
    (c) Notice of formal hearing. If, after reasonable effort has been 
made to resolve the dispute informally, no resolution has been reached, 
the Secretary provides written notice to the DSU of the intention to 
disapprove the State plan and of the opportunity for a hearing.
    (d) Hearing. (1) If the DSU requests a hearing, the Secretary 
designates one or more individuals, either from the Department or 
elsewhere, not responsible for or connected with the Department's 
administration of the programs authorized by Title VII of the Act, to 
conduct a hearing.
    (2) If more than one individual is designated, the Secretary 
designates one of those individuals as the Chief Hearing Official of 
the Hearing Panel. If one individual is designated, that individual is 
the Hearing Official.
    (e) Judicial review. A State may appeal the Secretary's decision to 
disapprove its State plan by filing a petition for review with the U.S. 
Court of Appeals for the circuit in which the State is located, in 
accordance with section 107(d) of the Act.

(Authority: 29 U.S.C. 711(c) and 796d-1(a))


Sec. 364.13  Under what circumstances may funds be withheld, reduced, 
limited, or terminated?

    (a) When withheld, reduced, limited, or terminated. Payments to a 
State under chapter 1 of title VII of the Act may be withheld, reduced, 
limited, or terminated as provided by section 107(c) of the Act if the 
Secretary finds that--
    (1) The State plan has been so changed that it no longer conforms 
with the requirements of section 704 of the Act; or
    (2) In the administration of the State plan, there is a failure to 
comply substantially with any provision of the plan.
    (b) Informal resolution. If the Secretary intends to withhold, 
reduce, limit, or terminate payment of funds to a State under Title VII 
of the Act as provided by section 107(c) of the Act, the Secretary 
attempts to resolve disputed issues informally with State officials.
    (c) Notice of formal hearing. If, after reasonable effort has been 
made to resolve the dispute informally, no resolution has been reached, 
the Secretary provides written notice to the DSU of the intention to 
withhold, reduce, limit, or terminate payment of funds under Title VII 
of the Act and of the opportunity for a hearing.
    (d) Hearing. If the DSU requests a hearing, the Secretary 
designates an administrative law judge (ALJ) in the Office of 
Administrative Law Judges to conduct a hearing in accordance with the 
provisions of 34 CFR part 81, subpart A.
    (e) Initial decision. The ALJ issues an initial decision in 
accordance with 34 CFR 81.41.
    (f) Petition for review of an initial decision. The DSU may seek 
the Secretary's review of an ALJ's initial decision in accordance with 
34 CFR 81.42.
    (g) Review by the Secretary. The Secretary reviews an ALJ's initial 
decision in accordance with 34 CFR 81.43.
    (h) Final decision of the Department. The ALJ's initial decision 
becomes the final decision of the Department in accordance with 34 CFR 
81.44.
    (i) Judicial review. A State may appeal the Secretary's final 
decision to withhold, reduce, limit, or terminate payment of funds to a 
State under Title VII of the Act by filing a petition for review with 
the U.S. Court of Appeals for the circuit in which the State is 
located, in accordance with section 107(d) of the Act.

(Authority: 29 U.S.C. 727(c)-(d) and 796d-1(a)) Subpart C--What Are 
the State Plan Requirements?


Sec. 364.20  What are the general requirements for a State plan?

    (a) Form and content. The State plan must contain, in the form 
prescribed by the Secretary, the information required by this part and 
any other information requested by the Secretary.
    (b) Duration. (1) The State plan must cover a three-year period and 
must be amended whenever necessary to reflect any material change in 
State law, organization, policy, or agency operations that affects the 
administration of the State plan.
    (2) The Secretary may require a State to submit an interim State 
plan for a period of less than three years following a reauthorization 
of the Act and prior to the effective date of final regulations.
    (c) Joint development-single agency. The State plan must be 
jointly--
    (1) Developed by the DSU and the SILC; and
    (2) Signed by the--
    (i) Director of the DSU (Director); and
    (ii) Chairperson of the SILC, acting on behalf of and at the 
direction of the SILC.
    (d) Joint development-separate agency for individuals who are 
blind. If a separate State agency is authorized by State law as the 
sole State agency with authority to administer or supervise the 
administration of that part of the State plan relating to the 
vocational rehabilitation of individuals who are blind, the State plan 
must be jointly--
    (1) Developed by the DSU, the SILC, and the separate State agency 
authorized to provide VR services for individuals who are blind; and
    (2) Signed by the--
    (i) Director;
    (ii) Director of the separate State agency authorized to provide VR 
services for individuals who are blind; and
    (iii) Chairperson of the SILC, acting on behalf of and at the 
direction of the SILC.

(Cross-reference: See Sec. 364.22(c).)

    (e) The State plan must assure that, as appropriate, the DSU 
actively consults in the development of the State plan with the 
Director of the client assistance program authorized under section 112 
of the Act.
    (f) Periodic review and revision. The State plan must provide for 
the review and revision of the plan, at least once every three years, 
to ensure the existence of appropriate planning, financial support and 
coordination, and other assistance to appropriately address, on a 
statewide and comprehensive basis, the needs in the State for--
    (1) Providing State IL services;
    (2) Developing and supporting a statewide network of centers; and
    (3) Working relationships between--
    (i) Programs providing IL services and supporting or establishing 
centers; and
    (ii) The VR program established under title I of the Act, and other 
programs providing services for individuals with disabilities.
    (g) Public hearings. (1) The State plan must assure that the DSU 
conducts public meetings to provide all segments of the public, 
including interested groups, organizations, and individuals, an 
opportunity to comment on the State plan prior to its submission to the 
Secretary and on any revisions to the approved State plan. The DSU may 
meet the public participation requirement by holding the public 
meetings before a preliminary draft State plan is prepared or by 
providing a preliminary draft State plan for comment at the public 
meetings.
    (2) The State plan must assure that the DSU establishes and 
maintains a written description of procedures for conducting public 
meetings in accordance with the following requirements:
    (i) The DSU shall provide appropriate and sufficient notice of the 
public meetings. Appropriate and sufficient notice means notice 
provided at least 30 days prior to the public meeting through various 
media available to the general public, such as newspapers and public 
service announcements, and through specific contacts with appropriate 
constituency groups and organizations identified by the DSU and SILC.
    (ii) The DSU shall make reasonable accommodation to individuals 
with disabilities who rely on special modes of communication in the 
conduct of the public meetings, including providing sign language 
interpreters and audio-loops.
    (iii) The DSU shall provide the notices of the public meetings, any 
written material provided prior to or at the public meetings, and the 
approved State plan in accessible formats for individuals who rely on 
special modes of communication.
    (h) The State plan must assure that, at the public meetings to 
develop the State plan, the DSU identifies those provisions in the 
State plan that are State-imposed requirements. For purposes of this 
section, a State-imposed requirement includes any State rule or policy 
relating to the DSU's administration or operation of IL programs under 
title VII of the Act, including any rule or policy based on State 
interpretation of any Federal law, regulation, or guideline, that is 
beyond what would be required to comply with the regulations in 34 CFR 
parts 364, 365, 366, and 367.

(Authority: 29 U.S.C. 711(c) and 796c (a) and (m)(6))


Sec. 364.21  What are the requirements for the Statewide Independent 
Living Council (SILC)?

    (a) Establishment. (1) To be eligible to receive assistance under 
chapter 1 of title VII of the Act, each State shall establish a SILC 
that meets the requirements of section 705 of the Act.
    (2) The SILC may not be established as an entity within a State 
agency, including the designated State agency or DSU. The SILC shall be 
independent of the DSU and all other State agencies.
    (b) Appointment and composition--(1) Appointment. Members of the 
SILC must be appointed by the Governor or the appropriate entity within 
the State responsible, in accordance with State law, for making 
appointments.
    (2) Composition. (i) The SILC must include--
    (A) At least one director of a center chosen by the directors of 
centers within the State; and
    (B) As ex officio, nonvoting members, a representative from the DSU 
and representatives from other State agencies that provide services to 
individuals with disabilities.
    (ii) The SILC may include--
    (A) Other representatives from centers;
    (B) Parents and legal guardians of individuals with disabilities;
    (C) Advocates of and for individuals with disabilities;
    (D) Representatives from private businesses;
    (E) Representatives from organizations that provide services for 
individuals with disabilities; and
    (F) Other appropriate individuals.
    (iii) A majority of the members of the SILC must be individuals 
with disabilities, as defined in Sec. 364.4(b), and not employed by any 
State agency or center.
    (c) Qualifications. The SILC must be composed of members--
    (1) Who provide statewide representation;
    (2) Who represent a broad range of individuals with disabilities; 
and
    (3) Who are knowledgeable about centers and IL services.
    (d) Voting members. A majority of the voting members of the SILC 
must be individuals with disabilities, as defined in Sec. 364.4(b), and 
not employed by any State agency or center.
    (e) Chairperson--(1) In general. Except as provided in paragraph 
(e)(2) of this section, the SILC shall select a chairperson from among 
the voting membership of the SILC.
    (2) Designation by Governor. In States in which the Governor does 
not have veto power pursuant to State law, the Governor shall designate 
a voting member of the SILC to serve as the chairperson of the SILC or 
shall require the SILC to so designate a voting member.
    (f) Terms of appointment. Each member of the SILC shall serve for a 
term of three years, except that--
    (1) A member appointed to fill a vacancy occurring prior to the 
expiration of the term for which a predecessor was appointed must be 
appointed for the remainder of that term;
    (2) The terms of service of the members initially appointed must be 
(as specified by the appointing authority) for the fewer number of 
years as will provide for the expiration of terms on a staggered basis; 
and
    (3) No member of the SILC may serve for more than two consecutive 
full terms.
    (g) Duties. The SILC shall--
    (1) Jointly develop and sign (in conjunction with the DSU) the 
State plan required by section 704 of the Act and Sec. 364.20;
    (2) Monitor, review, and evaluate the implementation of the State 
plan;
    (3) Coordinate activities with the State Rehabilitation Advisory 
Council established under section 105 of the Act and councils that 
address the needs of specific disability populations and issues under 
other Federal law;
    (4) Ensure that all regularly scheduled meetings of the SILC are 
open to the public and sufficient advance notice is provided; and
    (5) Submit to the Secretary all periodic reports as the Secretary 
may reasonably request and keep all records, and afford access to all 
records, as the Secretary finds necessary to verify the periodic 
reports.
    (h) Hearings. The SILC is authorized to hold any hearings and 
forums that the SILC determines to be necessary to carry out its 
duties.
    (i) Resource plan. (1) The SILC shall prepare, in conjunction with 
the DSU, a resource plan for the provision of resources, including 
staff and personnel, made available under parts B and C of chapter 1 of 
title VII of the Act, part C of title I of the Act, and from other 
public and private sources that may be necessary to carry out the 
functions of the SILC under this part.
    (2) The SILC's resource plan must, to the maximum extent possible, 
rely on the use of resources in existence during the period of 
implementation of the State plan.
    (3) No conditions or requirements may be included in the SILC's 
resource plan that may compromise the independence of the SILC.
    (4) The SILC is responsible for the proper expenditure of funds and 
use of resources that it receives under the resource plan.
    (5) A description of the SILC's resource plan required by paragraph 
(i)(1) of this section must be included in the State plan.
    (j) Staff. (1) The SILC shall, consistent with State law, supervise 
and evaluate its staff and other personnel as may be necessary to carry 
out its functions under this section.
    (2) While assisting the SILC in carrying out its duties, staff and 
other personnel made available to the SILC by the DSU may not be 
assigned duties by the designated State agency or DSU, or any other 
agency or office of the State, that would create a conflict of 
interest.
    (k) Reimbursement and compensation. The SILC may use the resources 
described in paragraph (i) of this section to reimburse members of the 
SILC for reasonable and necessary expenses of attending SILC meetings 
and performing SILC duties (including child care and personal 
assistance services) and to pay compensation to a member of the SILC, 
if the member is not employed or must forfeit wages from other 
employment, for each day the member is engaged in performing SILC 
duties.
    (l) Conflict of interest. No member of the SILC is permitted to 
cast a vote on any matter that may provide direct financial benefit to 
the member or the member's organization, that creates some other 
conflict of interest, or that otherwise gives the appearance of a 
conflict of interest under State law, unless that member announces 
publicly to all members of the SILC and to the public prior to his or 
her vote of the possible financial benefit, conflict of interest, or 
appearance of a conflict of interest.

(Authority: 29 U.S.C. 796d)


Sec. 364.22  What is the State's responsibility for administration of 
the programs authorized by Chapter 1 of Title VII?

    (a) General. The State plan must identify the DSU as the entity 
that, on behalf of the State, shall--
    (1) Receive, account for, and disburse funds received by the State 
under part B of chapter 1 and section 723 of title VII of the Act (and 
34 CFR parts 365 and 366, as applicable) based on the plan;
    (2) Provide, as applicable, administrative support services for the 
SILS and CIL programs under part B of chapter 1 and section 723 of 
title VII of the Act, respectively, and 34 CFR parts 365 and 366, 
respectively;
    (3) Keep records and afford access to these records as the 
Secretary finds to be necessary with respect to the SILS and CIL 
programs; and
    (4) Submit additional information or provide assurances as the 
Secretary may require with respect to the SILS and CIL programs.
    (b) Provision of administrative support services. The State plan 
must describe the administrative support services to be provided by the 
DSU under paragraph (a)(2) of this section.
    (c) Designation of State unit for individuals who are blind. The 
State plan may designate a State agency or the organizational unit of a 
State agency that is authorized under State law to provide VR services 
to individuals who are blind under a State VR plan as the DSU to 
administer that part of the State IL plan under which IL services are 
provided to individuals who are blind.

(Authority: 29 U.S.C. 796c(c))


Sec. 364.23  What are the staffing requirements?

    (a) General staffing requirement. The State plan must assure that 
the staff of the service provider includes personnel who are 
specialists in the development and provision of IL services and in the 
development and support of centers.
    (b) Special communication needs staffing. The State plan must also 
assure that, to the maximum extent feasible, the service provider makes 
available personnel able to communicate--
    (1) With individuals with significant disabilities who rely on 
special modes of communication, such as manual communication, nonverbal 
communication devices, Braille, or audio tapes, and who apply for or 
receive IL services under title VII of the Act; and
    (2) In the native languages of individuals with significant 
disabilities whose English proficiency is limited and who apply for or 
receive IL services under title VII of the Act.

(Authority: 29 U.S.C. 711(c) and 796c(a)(1))


Sec. 364.24  What assurances are required for staff development?

    The State plan must assure that the service provider establishes 
and maintains a program of staff development for all classes of 
positions involved in providing IL services and, if appropriate, in 
administering the CIL program. The staff development program must 
emphasize improving the skills of staff directly responsible for the 
provision of IL services, including knowledge of the IL philosophy.

(Authority: 29 U.S.C. 711(c) and 796c(a)(1))


Sec. 364.25  What are the requirements for a statewide network of 
centers for independent living?

    (a) The State plan must include a design for the establishment of a 
statewide network of centers that comply with the standards and 
assurances in section 725(b) and (c) of the Act and subparts F and G of 
34 CFR part 366.
    (b) The design required by paragraph (a) of this section must 
identify unserved and underserved areas and must provide an order of 
priority for serving these areas.

(Authority: 29 U.S.C. 711(c) and 796c(g))


Sec. 364.26  What are the requirements for cooperation, coordination, 
and working relationships?

    (a) The State plan must include steps that will be taken to 
maximize the cooperation, coordination, and working relationships 
among--
    (1) The SILS program, the SILC, and centers; and
    (2) The DSU, other State agencies represented on the SILC, other 
councils that address the needs of specific disability populations and 
issues, and other public and private entities determined to be 
appropriate by the SILC.
    (b) The State plan must identify the entities to which the DSU and 
the SILC will relate in carrying out the requirements of paragraph (a) 
of this section.

(Authority: 29 U.S.C. 796c(i))


Sec. 364.27  What are the requirements for coordinating independent 
living (IL) services?

    The State plan must describe how IL services funded under chapter 1 
of title VII of the Act will be coordinated with, and complement, other 
services, to avoid unnecessary duplication with other Federal, State, 
and local programs, including the OIB program authorized by chapter 2 
of title VII of the Act, that provide IL- or VR-related services. This 
description must include those services provided by State and local 
agencies administering the special education, vocational education, 
developmental disabilities services, public health, mental health, 
housing, transportation, and veterans' programs, and the programs 
authorized under titles XVIII through XX of the Social Security Act 
within the State.

(Authority: 29 U.S.C. 796c(j) and 752(i)(2)(C))


Sec. 364.28  What requirements relate to IL services for older 
individuals who are blind?

    The State plan must include an assurance that the DSU will seek to 
incorporate into and describe in the State plan any new methods or 
approaches for the provision to older individuals who are blind of IL 
services that are developed under a project funded under chapter 2 of 
title VII of the Act and that the DSU determines to be effective.

(Authority: 29 U.S.C. 711(c), 796c(j), and 796k(h))


Sec. 364.29  What are the requirements for coordinating Federal and 
State sources of funding?

    (a) The State plan must describe efforts to coordinate Federal and 
State funding for centers and IL services.
    (b) The State plan must identify the amounts, sources, and purposes 
of the funding to be coordinated under paragraph (a) of this section, 
including the amount of State funds earmarked for the general operation 
of centers.

(Authority: 29 U.S.C. 796c(k))

    Cross-reference: See 34 CFR 366.30(a).


Sec. 364.30  What notice must be given about the Client Assistance 
Program (CAP)?

    The State plan must include satisfactory assurances that all 
service providers will use formats that are accessible to notify 
individuals seeking or receiving IL services under Chapter 1 of title 
VII about--
    (a) The availability of the CAP authorized by section 112 of the 
Act;
    (b) The purposes of the services provided under the CAP; and
    (c) How to contact the CAP.

(Authority: 29 U.S.C. 718a and 796c(m)(1))


Sec. 364.31  What are the affirmative action requirements?

    The State plan must include satisfactory assurances that all 
recipients of financial assistance under parts B and C of chapter 1 of 
title VII of the Act will take affirmative action to employ and advance 
in employment qualified individuals with significant disabilities on 
the same terms and conditions required with respect to the employment 
of individuals with disabilities under section 503 of the Act.

(Authority: 29 U.S.C. 796c(m)(2))


Sec. 364.32  What are the requirements for outreach?

    (a) With respect to IL services and centers funded under chapter 1 
of title VII of the Act, the plan must include steps to be taken 
regarding outreach to populations in the State that are unserved or 
underserved by programs under title VII, including minority groups and 
urban and rural populations.
    (b) The State plan must identify the populations to be designated 
for special outreach efforts under paragraph (a) of this section and 
the geographic areas in which they reside.

(Authority: 29 U.S.C. 796c(l))


Sec. 364.33  What is required to meet minority needs?

    The State plan must demonstrate how the State will address the 
needs of individuals with significant disabilities from minority group 
backgrounds.

(Authority: 29 U.S.C. 711(c), 718b(b), and 796c(l))


Sec. 364.34  What are the fiscal and accounting requirements?

    In addition to complying with applicable EDGAR fiscal and 
accounting requirements, the State plan must include satisfactory 
assurances that all recipients of financial assistance under parts B 
and C of chapter 1 of title VII of the Act will adopt those fiscal 
control and fund accounting procedures as may be necessary to ensure 
the proper disbursement of and accounting for those funds.

(Authority: 29 U.S.C. 796c(m)(3))


Sec. 364.35  What records must be maintained?

    In addition to complying with applicable EDGAR recordkeeping 
requirements, the State plan must include satisfactory assurances that 
all recipients of financial assistance under parts B and C of chapter 1 
of title VII of the Act will maintain--
    (a) Records that fully disclose and document--
    (1) The amount and disposition by the recipient of that financial 
assistance;
    (2) The total cost of the project or undertaking in connection with 
which the financial assistance is given or used;
    (3) The amount of that portion of the cost of the project or 
undertaking supplied by other sources; and
    (4) Compliance with the requirements of chapter 1 of title VII of 
the Act and this part; and
    (b) Other records that the Secretary determines to be appropriate 
to facilitate an effective audit.

(Authority: 29 U.S.C. 796c(m)(4))


Sec. 364.36  What are the reporting requirements?

    With respect to the records that are required by Sec. 364.35, the 
State plan must include satisfactory assurances that all recipients of 
financial assistance under parts B and C of Chapter 1 and under chapter 
2 of title VII of the Act will submit reports that the Secretary 
determines to be appropriate.

(Authority: 29 U.S.C. 796c(m)(4)(D))


Sec. 364.37  What access to records must be provided?

    For the purpose of conducting audits, examinations, and compliance 
reviews, the State plan must include satisfactory assurances that all 
recipients of financial assistance under parts B and C of chapter 1 and 
Chapter 2 of title VII of the Act will provide access to the Secretary 
and the Comptroller General, or any of their duly authorized 
representatives, to--
    (a) The records maintained under Sec. 364.35;
    (b) Any other books, documents, papers, and records of the 
recipients that are pertinent to the financial assistance received 
under chapter 1 of title VII of the Act; and
    (c) All individual case records or files or consumer service 
records of individuals served under 34 CFR parts 365, 366, or 367, 
including names, addresses, photographs, and records of evaluation 
included in those individual case records or files or consumer service 
records.

(Authority: 29 U.S.C. 711(c) and 796c(m)(4)(c) and (5))


Sec. 364.38  What methods of evaluation must the State plan include?

    The State plan must establish a method for the periodic evaluation 
of the effectiveness of the plan in meeting the objectives established 
in Sec. 364.42, including evaluation of satisfaction by individuals 
with significant disabilities who have participated in the program.

(Authority: 29 U.S.C. 796c(n))


Sec. 364.39  What requirements apply to the administration of grants 
under the Centers for Independent Living program?

    In States in which State funding for centers equals or exceeds the 
amount of funds allotted to the State under part C of title VII of the 
Act, as determined pursuant to 34 CFR 366.29 and 366.31, and in which 
the State elects to administer the CIL program as provided in section 
723 of the Act, the State plan must include policies, practices, and 
procedures that are consistent with section 723 of the Act to govern 
the awarding of grants to centers and the oversight of these centers.

(Authority: 29 U.S.C. 796c(g) and (h), 796f-1(d), and 796f-2(d)).


Sec. 364.40  Who is eligible to receive IL services?

    The State plan must assure that--
    (a) Any individual with a significant disability, as defined in 
Sec. 364.4(b), is eligible for IL services under the SILS and CIL 
programs authorized under chapter 1 of title VII of the Act;
    (b) Any individual may seek information about IL services under 
these programs and request referral to other services and programs for 
individuals with significant disabilities, as appropriate; and
    (c) The determination of an individual's eligibility for IL 
services under the SILS and CIL programs meets the requirements of 
Sec. 364.51.

(Authority: 29 U.S.C. 706(15)(B) and 796b)


Sec. 364.41  What assurances must be included regarding eligibility?

    (a) The State plan must assure that the service provider applies 
eligibility requirements without regard to age, gender, race, creed, 
color, national origin, or type of significant disability of the 
individual applying for IL services.
    (b) The State plan must assure that the service provider does not 
impose any State or local residence requirement that excludes from IL 
services under the plan any individual who is present in the State and 
who is otherwise eligible for IL services.

(Authority: 29 U.S.C. 711(c) and 796c(a)(1))


Sec. 364.42  What objectives and information must be included in the 
State plan?

    (a) The State plan must specifically describe--
    (1) The objectives to be achieved;
    (2) The financial plan for the use of Federal and non-Federal funds 
to meet these objectives; and
    (3) How funds received under sections 711, 721, and 752 of the Act 
will further these objectives.
    (b) The objectives required by paragraph (a) of this section must 
address--
    (1) The overall goals and mission of the State's IL programs and 
services;
    (2) The various priorities for the types of services and 
populations to be served; and
    (3) The types of services to be provided.
    (c) In developing the objectives required by paragraph (a) of this 
section, the DSU and the SILC shall consider, and incorporate if 
appropriate, the priorities and objectives established by centers 
pursuant to section 725(c)(4) of the Act.
    (d) The State plan must establish timeframes for the achievement of 
the objectives required by paragraph (a) of this section.
    (e) The State plan must explain how the objectives required by 
paragraph (a) of this section are consistent with and further the 
purpose of chapter 1 of title VII of the Act, as stated in section 701 
of the Act and Sec. 364.2.

(Authority: 29 U.S.C. 796c(d))


Sec. 364.43  What requirements apply to the provision of State IL 
services?

    (a) The State plan must describe the extent and scope of IL 
services to be provided under title VII of the Act to meet the 
objectives stated in Sec. 364.42.
    (b) The State plan must provide that the State directly, or through 
grants or contracts, will provide IL services with Federal, State, or 
other funds.
    (c) IL services provided to individuals with significant 
disabilities must be in accordance with an IL plan that meets the 
requirements of Sec. 364.52 and that is mutually agreed upon by--
    (1) An appropriate staff member of the service provider; and
    (2) The individual, unless the individual signs a waiver stating 
that an IL plan is unnecessary.
    (d) If the State provides the IL services that it is required to 
provide by paragraph (b) of this section through grants or contracts 
with third parties, the State plan must describe these arrangements.
    (e) If the State contracts with or awards a grant to a center for 
the general operation of the center, the State shall delegate to the 
center the determination of an individual's eligibility for services 
from that center. If the State contracts with or awards a grant to a 
third party to provide specific IL services, the State may choose to 
delegate to the IL service provider the determination of eligibility 
for these services and the development of an IL plan for individuals 
who receive these services.

(Authority: 29 U.S.C. 711(c), 796c(e)-(f), and 796f-4(b)(2))

    Cross-reference: See 34 CFR Part 365.

Subpart D--What Conditions Must Be Met After an Award?


Sec. 364.50  What requirements apply to the processing of referrals and 
applications?

    The service provider shall apply the standards and procedures 
established by the DSU pursuant to 34 CFR 365.30 to ensure expeditious 
and equitable handling of referrals and applications for IL services 
from individuals with significant disabilities.

(Authority: 29 U.S.C. 711(c) and 796-796f-5)


Sec. 364.51  What requirements apply to determinations of eligibility 
or ineligibility?

    (a) Eligibility. (1) Before or at the same time as an applicant for 
IL services may begin receiving IL services funded under this part, the 
service provider shall determine the applicant's eligibility and 
maintain documentation that the applicant has met the basic 
requirements specified in Sec. 364.40.
    (2) The documentation must be dated and signed by an appropriate 
staff member of the service provider.
    (b) Ineligibility. (1) If a determination is made that an applicant 
for IL services is not an individual with a significant disability, the 
service provider shall provide documentation of the ineligibility 
determination that is dated and signed by an appropriate staff member.
    (2)(i) The service provider may determine an applicant to be 
ineligible for IL services only after full consultation with the 
applicant or, if the applicant chooses, the applicant's parent, 
guardian, or other legally authorized advocate or representative, or 
after providing a clear opportunity for this consultation.
    (ii) The service provider shall notify the applicant in writing of 
the action taken and inform the applicant or, if the applicant chooses, 
the applicant's parent, guardian, or other legally authorized advocate 
or representative, of the applicant's rights and the means by which the 
applicant may appeal the action taken.

(Cross-reference: See Sec. 364.58(a).)

    (iii) The service provider shall provide a detailed explanation of 
the availability and purposes of the client assistance program 
established within the State under section 112 of the Act, including 
information on how to contact the program.
    (iv) If appropriate, the service provider shall refer the applicant 
to other agencies and facilities, including the State's VR program 
under 34 CFR part 361.
    (c) Review of ineligibility determination. (1) If an applicant for 
IL services has been found ineligible, the service provider shall 
review the applicant's current status no later than 12 months after the 
determination has been made.
    (2) The review need not be conducted in situations where the 
applicant has refused the review, the applicant is no longer present in 
the State, or the applicant's whereabouts are unknown.

(Authority: 29 U.S.C. 711(c) and 796c(e))


Sec. 364.52  What are the requirements for an IL plan?

    (a) General. (1) Unless the individual who is to be provided IL 
services under this part signs a waiver in accordance with paragraph 
(a)(2) of this section, the service provider, in collaboration with the 
individual with a significant disability, shall develop and 
periodically review an IL plan for the individual in accordance with 
the requirements in Sec. 364.43(c) and paragraphs (b) through (e) of 
this section.
    (2) The requirements of this section with respect to an IL plan do 
not apply if the individual signs a waiver stating that an IL plan is 
unnecessary.
    (3) Subject to paragraph (a)(2) of this section, the service 
provider shall provide each IL service in accordance with the IL plan.
    (b) Initiation and development of an IL plan. (1) Development of an 
individual's IL plan must be initiated after documentation of 
eligibility under Sec. 364.51(a) and must indicate the goals or 
objectives established, the services to be provided, and the 
anticipated duration of the service program and each component service.
    (2) The IL plan must be developed jointly and signed by the 
appropriate staff member of the service provider and the individual 
with a significant disability or, if consistent with State law and the 
individual chooses, the individual's guardian, parent, or other legally 
authorized advocate or representative.
    (3) A copy of the IL plan, and any amendments, must be provided to 
the individual with a significant disability or, if consistent with 
State law and the individual chooses, the individual's guardian, 
parent, or other legally authorized advocate or representative.
    (c) Review. (1) The IL plan must be reviewed as often as necessary 
but at least on an annual basis to determine whether services should be 
continued, modified, or discontinued, or whether the individual should 
be referred to a program of VR services under 34 CFR part 361 or to any 
other program of assistance.
    (2) Each individual with a significant disability or, if consistent 
with State law and the individual chooses, the individual's guardian, 
parent, or other legally authorized advocate or representative, must be 
given an opportunity to review the IL plan and, if necessary, jointly 
redevelop and agree by signature to its terms.
    (d) Coordination with vocational rehabilitation, developmental 
disabilities, and special education programs. The development of the IL 
plan and the provision of IL services must be coordinated to the 
maximum extent possible with any individualized--
    (1) Written rehabilitation program for VR services for that 
individual;
    (2) Habilitation program for the individual prepared under the 
Developmental Disabilities Assistance and Bill of Rights Act; and
    (3) Education program for the individual prepared under part B of 
the Individuals with Disabilities Education Act.
    (e) Termination of services. If the service provider intends to 
terminate services to an individual receiving IL services under an IL 
plan, the service provider shall follow the procedures in 
Sec. 364.51(b)(2)(ii) through (iv) and (c).

(Authority: 29 U.S.C. 711(c) and 796c(e))


Sec. 364.53  What records must be maintained for the individual?

    For each applicant for IL services and for each individual 
receiving IL services, the service provider shall maintain a consumer 
service record that includes--
    (a) Documentation concerning eligibility or ineligibility for 
services;
    (b) The services requested by the consumer;
    (c) Either the IL plan developed with the consumer or a waiver 
signed by the consumer stating that an IL plan is unnecessary;
    (d) The services actually provided to the consumer; and
    (e) The IL goals or objectives--
    (1) Established with the consumer, whether or not in the consumer's 
IL plan; and
    (2) Achieved by the consumer.

(Authority: 29 U.S.C. 711(c), 712 and 796c(m)(4)(B))


Sec. 364.54  What are the durational limitations on IL services?

    The service provider may not impose any uniform durational 
limitations on the provision of IL services, except as otherwise 
provided by Federal law or regulation.

(Authority: 29 U.S.C. 711(c) and 796-796f-5)


Sec. 364.55  What standards shall service providers meet?

    In providing IL services to individuals with significant 
disabilities, service providers shall comply with--
    (a) The written standards for IL service providers established by 
the DSU pursuant to 34 CFR 365.31; and
    (b) All applicable State or Federal licensure or certification 
requirements.

(Authority: 29 U.S.C. 711(c) and 796-796f-5)


Sec. 364.56  What are the special requirements pertaining to the 
protection, use, and release of personal information?

    (a) General provisions. The State plan must assure that each 
service provider will adopt and implement policies and procedures to 
safeguard the confidentiality of all personal information, including 
photographs and lists of names. These policies and procedures must 
assure that--
    (1) Specific safeguards protect current and stored personal 
information;
    (2) All applicants for, or recipients of, IL services and, as 
appropriate, those individuals' legally authorized representatives, 
service providers, cooperating agencies, and interested persons are 
informed of the confidentiality of personal information and the 
conditions for gaining access to and releasing this information;
    (3) All applicants or their legally authorized representatives are 
informed about the service provider's need to collect personal 
information and the policies governing its use, including--
    (i) Identification of the authority under which information is 
collected;
    (ii) Explanation of the principal purposes for which the service 
provider intends to use or release the information;
    (iii) Explanation of whether providing requested information to the 
service provider is mandatory or voluntary and the effects to the 
individual of not providing requested information;
    (iv) Identification of those situations in which the service 
provider requires or does not require informed written consent of the 
individual or his or her legally authorized representative before 
information may be released; and
    (v) Identification of other agencies to which information is 
routinely released;
    (4) Persons who are unable to communicate in English or who rely on 
special modes of communication must be provided an explanation of 
service provider policies and procedures affecting personal information 
through methods that can be adequately understood by them;
    (5) At least the same protections are provided to individuals with 
significant disabilities as provided by State laws and regulations; and
    (6) Access to records is governed by rules established by the 
service provider and any fees charged for copies of records are 
reasonable and cover only extraordinary costs of duplication or making 
extensive searches.
    (b) Service provider use. All personal information in the 
possession of the service provider may be used only for the purposes 
directly connected with the provision of IL services and the 
administration of the IL program under which IL services are provided. 
Information containing identifiable personal information may not be 
shared with advisory or other bodies that do not have official 
responsibility for the provision of IL services or the administration 
of the IL program under which IL services are provided. In the 
provision of IL services or the administration of the IL program under 
which IL services are provided, the service provider may obtain 
personal information from other service providers and cooperating 
agencies under assurances that the information may not be further 
divulged, except as provided under paragraphs (c), (d), and (e) of this 
section.
    (c) Release to recipients of IL services. (1) Except as provided in 
paragraphs (c)(2) and (c)(3) of this section, if requested in writing 
by a recipient of IL services, the service provider shall release all 
information in that individual's record of services to the individual 
or the individual's legally authorized representative in a timely 
manner.
    (2) Medical, psychological, or other information that the service 
provider determines may be harmful to the individual may not be 
released directly to the individual, but must be provided through a 
qualified medical or psychological professional or the individual's 
legally authorized representative.
    (3) If personal information has been obtained from another agency 
or organization, it may be released only by, or under the conditions 
established by, the other agency or organization.
    (d) Release for audit, evaluation, and research. Personal 
information may be released to an organization, agency, or individual 
engaged in audit, evaluation, or research activities only for purposes 
directly connected with the administration of an IL program, or for 
purposes that would significantly improve the quality of life for 
individuals with significant disabilities and only if the organization, 
agency, or individual assures that--
    (1) The information will be used only for the purposes for which it 
is being provided;
    (2) The information will be released only to persons officially 
connected with the audit, evaluation, or research;
    (3) The information will not be released to the involved 
individual;
    (4) The information will be managed in a manner to safeguard 
confidentiality; and
    (5) The final product will not reveal any personally identifying 
information without the informed written consent of the involved 
individual or the individual's legally authorized representative.
    (e) Release to other programs or authorities. (1) Upon receiving 
the informed written consent of the individual or, if appropriate, the 
individual's legally authorized representative, the service provider 
may release personal information to another agency or organization for 
the latter's program purposes only to the extent that the information 
may be released to the involved individual and only to the extent that 
the other agency or organization demonstrates that the information 
requested is necessary for the proper administration of its program.
    (2) Medical or psychological information that the service provider 
determines may be harmful to the individual may be released if the 
other agency or organization assures the service provider that the 
information will be used only for the purpose for which it is being 
provided and will not be further released to the individual.
    (3) The service provider shall release personal information if 
required by Federal laws or regulations.
    (4) The service provider shall release personal information in 
response to investigations in connection with law enforcement, fraud, 
or abuse, unless expressly prohibited by Federal or State laws or 
regulations, and in response to judicial order.
    (5) The service provider also may release personal information to 
protect the individual or others if the individual poses a threat to 
his or her safety or to the safety of others.

(Authority: 29 U.S.C. 711(c))


Sec. 364.57  What functions and responsibilities may the State 
delegate?

    A DSU may carry out the functions and responsibilities described in 
Secs. 364.50, 364.51 (subject to Sec. 364.43(d)), 364.52, 364.53, and 
364.56 or, except as otherwise provided, may delegate these functions 
and responsibilities to the appropriate service provider with which the 
DSU subgrants or contracts to provide IL services.

(Authority: 29 U.S.C. 711(c), 796c(f) and 796e-2)


Sec. 364.58  What appeal procedures must be available to consumers?

    Each service provider shall--
    (a) Establish policies and procedures that an individual may use to 
obtain review of decisions made by the service provider concerning the 
individual's request for IL services or the provision of IL services to 
the individual; and
    (b) Use formats that are accessible to inform each individual who 
seeks or is receiving IL services from the service provider about the 
procedures required by paragraph (a) of this section.

(Authority: 29 U.S.C. 711(c))


Sec. 364.59  May the financial need of an individual be considered to 
determine his or her participation in the costs of IL services?

    (a) No Federal requirement. There is no Federal requirement that 
the financial need of an individual eligible for IL services be 
considered in the provision of IL services.
    (b) State plan requirements. The State plan must--
    (1) Specify the types of IL services for which a financial need 
test may be applied; and
    (2) Assure that any consideration of financial need is applied 
uniformly so that all individuals who are eligible for IL services are 
treated equally.
    (c) Financial need. Consistent with paragraph (b) of this section, 
a service provider may choose to consider the financial need of an 
individual who is eligible for IL services.
    (d) Written policies and documentation. If the service provider 
chooses to consider financial need--
    (1) It shall maintain written policies covering the specific types 
of IL services for which a financial need test will be applied; and
    (2) It shall document the individual's participation in the cost of 
any IL services, including financial need information.

(Authority: 29 U.S.C. 711(c))

PART 365--STATE INDEPENDENT LIVING SERVICES

Subpart A--General

Sec.
365.1  What is the State Independent Living Services (SILS) program?
365.2  Who is eligible for an award?
365.3  What regulations apply?

Subpart B--How Does the Secretary Make a Grant to a State?

365.10  How does a State apply for a grant?
365.11  How is the allotment of Federal funds for State independent 
living (IL) services computed?
365.12  How are payments from allotments for IL services made?
365.13  What requirements apply if the State's non-Federal share s 
in cash?
365.14  What conditions relating to cash or in-kind contributions 
apply to awards to grantees, subgrantees, or contractors?
365.15  What requirements apply if the State's non-Federal share is 
in kind?
365.16  What requirements apply to refunds and rebates?

Subpart C--For What Purpose Are Funds Authorized or Required To Be 
Used?

365.20  What are the authorized uses of funds?
365.21  What funds may the State use to provide the IL core 
services?
365.22  What additional IL services may the State provide?
365.23  How does a State make a subgrant or enter into a contract?

Subpart D--What Conditions Must Be Met After an Award?

365.30  What are the standards for processing referrals and 
applications?
365.31  What are the standards for service providers?

    Authority: 29 U.S.C. 796e-796e-2, unless otherwise noted.

Subpart A--General


Sec. 365.1  What is the State Independent Living Services (SILS) 
program?

    The Secretary provides financial assistance to States under the 
SILS program authorized by part B of chapter 1 of title VII of the Act 
to--
    (a) Provide the resources described in the resource plan required 
by section 705(e) of the Act and 34 CFR 364.21(d) relating to the 
Statewide IL Council (SILC);
    (b) Provide to individuals with significant disabilities the 
independent living (IL) services required by section 704(e) of the Act;
    (c) Demonstrate ways to expand and improve IL services;
    (d) Support the operation of centers for independent living 
(centers) that are in compliance with the standards and assurances in 
section 725(b) and (c) of the Act and subparts F and G of 34 CFR part 
366;
    (e) Support activities to increase the capacities of public or 
nonprofit agencies and organizations and other entities to develop 
comprehensive approaches or systems for providing IL services;
    (f) Conduct studies and analyses, gather information, develop model 
policies and procedures, and present information, approaches, 
strategies, findings, conclusions, and recommendations to Federal, 
State, and local policy makers in order to enhance IL services for 
individuals with significant disabilities;
    (g) Train individuals with significant disabilities, individuals 
with disabilities, individuals providing services to individuals with 
significant disabilities, and other persons regarding the IL 
philosophy; and
    (h) Provide outreach to populations that are unserved or 
underserved by programs under Title VII of the Act, including minority 
groups and urban and rural populations.

(Authority: 29 U.S.C. 796e)


Sec. 365.2  Who is eligible for an award?

    Any designated State unit (DSU) identified by the State pursuant to 
34 CFR 364.22 is eligible to apply for assistance under this part in 
accordance with 34 CFR 364.10 and 364.11.

(Authority: 29 U.S.C. 796c(a) (1) and (c) and 796e(a))


Sec. 365.3  What regulations apply?

    The following regulations apply to this part:
    (a) The regulations in 34 CFR part 364.
    (b) The regulations in this part 365.

(Authority: 29 U.S.C. 711(c) and 796e)

Subpart B--How Does the Secretary Make a Grant to a State?


Sec. 365.10  How does a State apply for a grant?

    To receive a grant under this part, a State shall submit to the 
Secretary and obtain approval of a State plan that meets the 
requirements of part A of title VII of the Act and subparts B and C of 
34 CFR part 364.

(Authority: 29 U.S.C. 796c(a)(1) and (c) and 796e(a))


Sec. 365.11  How is the allotment of Federal funds for State 
independent living (IL) services computed?

    (a) The allotment of Federal funds for State IL services for each 
State is computed in accordance with the requirements of section 
711(a)(1) of the Act.
    (b) The allotment of Federal funds for Guam, American Samoa, the 
United States Virgin Islands, the Commonwealth of the Northern Mariana 
Islands, and the Republic of Palau is computed in accordance with 
section 711(a)(2) of the Act.
    (c) If the State plan designates, pursuant to Sec. 364.22(c), a 
unit to administer the part of the plan under which State IL services 
are provided for individuals who are blind and a separate or different 
unit to administer the rest of the plan, the division of the State's 
allotment between these two units is a matter for State determination.

(Authority: 29 U.S.C. 711(c) and 796e(a))


Sec. 365.12  How are payments from allotments for IL services made?

    (a) From the allotment of a State for a fiscal year under 
Sec. 365.11, the Secretary pays to the State the Federal share of the 
expenditures incurred by the State during the year in accordance with 
the State plan approved under section 706 of the Act. After any 
necessary adjustments resulting from previously made overpayments or 
underpayments, the payments may be made in advance or by reimbursement, 
in installments, and on conditions that the Secretary may determine.
    (b)(1) The Federal share with respect to any State for any fiscal 
year is 90 percent of the expenditures incurred by the State during 
that fiscal year under its State plan approved under section 706 of the 
Act.
    (2) The non-Federal share of the cost of any project that receives 
assistance through an allotment under this part may be provided in cash 
or in kind, fairly evaluated, including plant, equipment, or services.

(Authority: U.S.C. 796e-1)


Sec. 365.13  What requirements apply if the State's non-Federal share 
is in cash?

    (a) Except as further limited by paragraph (b) of this section, 
expenditures that meet the requirements of 34 CFR 80.24(a) through 
(b)(6) may be used to meet the non-Federal share matching requirement 
under section 712(b) of the Act if--
    (1) The expenditures are made with funds made available by 
appropriation directly to the designated State agency or with funds 
made available by allotment or transfer from any other unit of State or 
local government;
    (2) The expenditures are made with cash contributions from a donor 
that are deposited in the account of the designated State agency in 
accordance with State law for expenditure by, and at the sole 
discretion of, the DSU for activities identified or described in the 
State plan and authorized by Sec. 365.20; or
    (3) The expenditures are made with cash contributions from a donor 
that are earmarked for meeting the State's share for--
    (i) Providing particular services (e.g., personal assistance 
services);
    (ii) Serving individuals with certain types of disabilities (e.g., 
older individuals who are blind);
    (iii) Providing services to special groups that State or Federal 
law permits to be targeted for services (e.g., children of migrant 
laborers); or
    (iv) Carrying out particular types of administrative activities 
permissible under State law.
    (b) Cash contributions are permissible under paragraph (a)(3) of 
this section only if the cash contributions are not used for 
expenditures that benefit or will benefit in any way the donor, an 
individual to whom the donor is related by blood or marriage or with 
whom the donor has a close personal relationship, or an individual, 
entity, or organization with whom the donor shares a financial 
interest.
    (c) The receipt of a grant, subgrant, or contract under section 713 
of the Act or a grant, subgrant, or assistance contract under section 
723 of the Act from the DSU is not considered a benefit to the donor of 
a cash contribution for purposes of paragraph (b) of this section if 
the grant, subgrant, or contract was awarded under the State's regular 
competitive procedures.
    (d) For purposes of this section, a donor may be a private agency, 
a profit-making or nonprofit organization, or an individual.

(Authority: 29 U.S.C. 711(c) and 796e-1(b))


Sec. 365.14  What conditions relating to cash or in-kind contributions 
apply to awards to grantees, subgrantees, or contractors?

    (a) A State may not condition the award of a grant, subgrant, or 
contract under section 713 of the Act or a grant, subgrant, or 
assistance contract under section 723 of the Act on the requirement 
that the applicant for the grant or subgrant make a cash or in-kind 
contribution of any particular amount or value to the State.
    (b) An individual, entity, or organization that is a grantee or 
subgrantee of the State, or has a contract with the State, may not 
condition the award of a subgrant or subcontract under section 713 of 
the Act or section 723 of the Act on the requirement that the applicant 
for the subgrant or subcontract make a cash or in-kind contribution of 
any particular amount or value to the State or to the grantee or 
contractor of the State.


(Authority: 29 U.S.C. 711(c) and 796e-1(b))


Sec. 365.15  What requirements apply if the State's non-Federal share 
is in kind?

    Subject to Sec. 365.14, in-kind contributions may be--
    (a) Used to meet the matching requirement under section 712(b) of 
the Act if the in-kind contributions meet the requirements of 34 CFR 
80.24(b)(7) through (g) and if the in-kind contributions would be 
considered allowable costs under this part, as determined by the cost 
principles made applicable by either subpart Q of 34 CFR part 74 or 34 
CFR 80.22, as appropriate; and
    (b) Made to the program or project by the State or by a third party 
(i.e., an individual, entity, or organization, whether local, public, 
private, for profit, or nonprofit), including a third party that is a 
grantee, subgrantee, or contractor that is receiving or will receive 
assistance under sections 713 or 723 of the Act.

(Authority: 29 U.S.C. 711(c) and 796e-1(b))


Sec. 365.16  What requirements apply to refunds and rebates?

    The following must be treated as a reduction of expenditures 
charged to the grant, subgrant, or contract awarded under this part and 
may not be used for meeting the State's matching requirement under 
section 712(b) of the Act:
    (a) Rebates, deductions, refunds, discounts, or reductions to the 
price of goods, products, equipment, rental property, real property, or 
services.
    (b) Premiums, bonuses, gifts, and any other payments related to the 
purchase of goods, products, equipment, rental property, real property, 
or services.

(Authority: 29 U.S.C. 711(c), 796e-1(b), and OMB Circulars A-87 and 
A-122)

Subpart C--For What Purpose Are Funds Authorized or Required To Be 
Used?


Sec. 365.20  What are the authorized uses of funds?

    The State may use funds received under this part to support the 
activities listed in Sec. 365.1 and to meet its obligation under 
section 704(e) of the Act and 34 CFR 364.43(b).

(Authority: 29 U.S.C. 796e-2)


Sec. 365.21  What funds may the State use to provide the IL core 
services?

    (a) In providing IL services as required under section 704(e) of 
the Act and 34 CFR 364.43(b), a State may use funds provided under this 
part to provide directly, or through grants or contracts, the following 
IL core services:
    (1) Information and referral services.
    (2) IL skills training.
    (3) Peer counseling, including cross-disability peer counseling.
    (4) Individual and systems advocacy.
    (b) Information and referral services may be provided independently 
of the other services described in paragraph (a) of this section and 
without regard to subpart G of 34 CFR part 366.

(Authority: 29 U.S.C. 711(c) and 796c(e))


Sec. 365.22  What additional IL services may the State provide?

    In addition to IL core services that the State is required to 
provide under section 704(e) of the Act and 34 CFR 364.43(b), the State 
may use funds received under part B of Chapter 1 of title VII of the 
Act to provide the IL services defined in 34 CFR 364.4 (Independent 
living services).

(Authority: 29 U.S.C. 796e-2(1))


Sec. 365.23  How does a State make a subgrant or enter into a contract?

    If a State makes a subgrant or enters into a contract to provide IL 
services to meet its obligation under section 704(e) of the Act--
    (a) The provisions of this part apply to both the State and the 
entity or individual to whom it awards a subgrant or with whom it 
enters into a contract; and
    (b) The provisions concerning the administration of subgrants and 
contracts in 34 CFR parts 76 and 80 apply to the State.

(Authority: 29 U.S.C. 711(c), 796c(f), and 796e-2)

    Cross-reference: See 34 CFR parts 74, 76, and 80.

Subpart D--What Conditions Must Be Met After an Award?


Sec. 365.30  What are the standards for processing referrals and 
applications?

    The DSU shall develop, establish, and maintain written standards 
and procedures to be applied by the service provider to assure 
expeditious and equitable handling of referrals and applications for IL 
services from individuals with significant disabilities.

(Authority: 29 U.S.C. 711(c) and 796e)


Sec. 365.31  What are the standards for service providers?

    (a) The DSU shall develop, establish, make available to the public, 
maintain, and implement written minimum standards for the provision of 
IL services to be met by providers that do not meet the standards and 
assurances in section 725 of the Act and subparts F and G of 34 CFR 
part 366 and that are used by the DSU to provide IL services to 
individuals with significant disabilities.
    (b) The DSU shall assure that participating service providers meet 
all applicable State licensure or certification requirements.

(Authority: 29 U.S.C. 711(c))

PART 366--CENTERS FOR INDEPENDENT LIVING

Subpart A--General

Sec.
366.1  What is the Centers for Independent Living (CIL) program?
366.2  What agencies are eligible for assistance under the CIL 
program?
366.3  What activities may the Secretary fund?
366.4  What regulations apply?
366.5  How are program funds allotted?

Subpart B--Training and Technical Assistance

366.10  What agencies are eligible for assistance to provide 
training and technical assistance?
366.11  What financial assistance does the Secretary provide for 
training and technical assistance?
366.12  How does the Secretary make an award?
366.13  How does the Secretary determine funding priorities?
366.14  How does the Secretary evaluate an application?
366.15  What selection criteria does the Secretary use?
Subpart C--Grants to Centers for Independent Living (Centers) in States 
in Which Federal Funding Exceeds State Funding
366.20  When does the Secretary award grants to centers?
366.21  What are the application requirements for existing eligible 
agencies?
366.22  What is the order of priorities?
366.23  What grants must be made to existing eligible agencies?
366.24  How is an award made to a new center?
366.25  What additional factor does the Secretary use in making a 
grant for a new center under Sec. 366.24?
366.26  How does the Secretary evaluate an application?
366.27  What selection criteria does the Secretary use?
366.28  Under what circumstances may the Secretary award a grant to 
a center in one State to serve individuals in another State?
Subpart D--Grants to Centers in States in Which State Funding Equals or 
Exceeds Federal Funding

Determining Whether State Funding Equals or Exceeds Federal Funding

366.29  When may the Director of the designated State unit (DSU) 
award grants to centers?
366.30  What are earmarked funds?
366.31  What happens if the amount of earmarked funds does not equal 
or exceed the amount of Federal funds for a preceding fiscal year?

Awarding Grants

366.32  Under what circumstances may the DSU make grants?
366.33  What are the application requirements for existing eligible 
agencies?
366.34  What is the order of priorities?
366.35  What grants must be made to existing eligible agencies?
366.36  How is an award made to a new center?
366.37  What procedures does the Director of the DSU (Director) use 
in making a grant for a new center?
366.38  What are the procedures for review of centers?

Subpart E--Enforcement and Appeals Procedures

366.39  What procedures does the Secretary use for enforcement?
366.40  How does the Director initiate enforcement procedures?
366.41  What must be included in an initial written notice from the 
Director?
366.42  When does a Director issue a final written decision?
366.43  What must be included in the Director's final written 
decision?
366.44  How does a center appeal a decision included in a Director's 
initial written notice or a Director's final written decision?
366.45  What must a Director do upon receipt of a copy of a center's 
formal written appeal to the Secretary?
366.46  How does the Secretary review a center's appeal of a 
decision included in a Director's initial written notice or a 
Director's final written decision?

Subpart F--Assurances for Centers

366.50  What assurances shall a center provide and comply with?

    Authority: 29 U.S.C. 796f through 796f-5, unless otherwise 
noted.

Subpart A--General


Sec. 366.1  What is the Centers for Independent Living (CIL) program?

    The CIL program provides financial assistance for planning, 
conducting, administering, and evaluating centers for independent 
living (centers) that comply with the standards and assurances in 
section 725 (b) and (c) of the Act, consistent with the design included 
in the State plan pursuant to 34 CFR 364.25 for establishing a 
statewide network of centers.

(Authority: 29 U.S.C. 796f, 796f-1(a)(2), and 796f-2(a)(1)(A)(ii))


Sec. 366.2  What agencies are eligible for assistance under the CIL 
program?

    (a) In any State in which the Secretary has approved the State plan 
required by section 704 of the Act, an applicant may receive a grant 
under subparts C or D of this part, as applicable, if the applicant 
demonstrates in its application submitted pursuant to Sec. 366.21, 
366.24, 366.33, 366.35, or 366.36 that it--
    (1) Has the power and authority to--
    (i) Carry out the purpose of part C of title VII of the Act and 
perform the functions listed in section 725 (b) and (c) of the Act and 
subparts F and G of this part within a community; and
    (ii) Receive and administer--
    (A) Funds under this part;
    (B) Funds and contributions from private or public sources that may 
be used in support of a center; and
    (C) Funds from other public and private programs; and
    (2) Is able to plan, conduct, administer, and evaluate a center 
consistent with the standards and assurances in section 725 (b) and (c) 
of the Act and subparts F and G of this part.
    (b) An applicant is eligible to apply as a new center if it--
    (1) Has never received funds under part C of chapter 1 of title VII 
of the Act;
    (2) Proposes the expansion of an existing center through the 
establishment of a separate and complete facility at a different 
geographical location; or
    (3) Receives assistance under part B of chapter 1 of title VII of 
the Act (or received assistance under part A of title VII of the Act as 
in effect on October 28, 1992) for a fiscal year for the general 
operation of a center; and
    (4) Meets the requirements of Sec. 366.24;
    (c) A State that received assistance in fiscal year (FY) 1993 to 
directly operate a center in accordance with section 724(a) of the Act 
is eligible to continue to receive assistance under this part to 
directly operate that center for FY 1994 or a succeeding fiscal year 
if, for the fiscal year for which assistance is sought--
    (1) No nonprofit private agency submits and obtains approval of an 
acceptable application under sections 722 or 723 of the Act or 
Sec. 366.21 or Sec. 366.24 to operate a center for that fiscal year 
before a date specified by the Secretary; or
    (2) After funding all applications so submitted and approved, the 
Secretary determines that funds remain available to provide that 
assistance.
    (d) Except for the requirement that the center be a private 
nonprofit agency, a center that is operated by a State that receives 
assistance under paragraph (a), (b), or (c) of this section shall 
comply with all of the requirements of Part C of title VII of the Act 
and the requirements in subparts C or D, as applicable, and F of this 
part.
    (e) Eligibility requirements for assistance under Subpart B of this 
part are described in Sec. 366.10.

(Authority: 29 U.S.C. 711(c), 796f-1(b) and (d)(3), 796f-2(b), and 
796f-3(a)(2) and (b))


Sec. 366.3  What activities may the Secretary fund?

    (a) An eligible agency may use funds awarded under subpart B of 
this part to carry out activities described in Sec. 366.11(b).
    (b) An eligible agency may use funds awarded under subparts C and D 
of this part to--
    (1) Plan, conduct, administer, and evaluate centers that comply 
with the standards and assurances in section 725(b) and (c) of the Act;
    (2) Promote and practice the independent living (IL) philosophy in 
accordance with Evaluation Standard 1 (``Philosophy'');
    (3) Provide IL services (including IL core services and, as 
appropriate, a combination of any other IL services specified in 
section 7(30)(B) of the Act) to individuals with a range of significant 
disabilities in accordance with Evaluation Standards 2 and 5 
(``Provision of services'' and ``Independent living core services,'' 
respectively);
    (4) Facilitate the development and achievement of IL goals selected 
by individuals with significant disabilities who seek assistance from 
the center in accordance with Evaluation Standard 3 (``Independent 
living goals'');
    (5) Increase the availability and improve the quality of community 
options for independent living in order to facilitate the development 
and achievement of IL goals by individuals with significant 
disabilities in accordance with Evaluation Standard 4 (``Community 
options'');
    (6) Increase the capacity of communities within the service area of 
the center to meet the needs of individuals with significant 
disabilities in accordance with Evaluation Standard 6 (``Activities to 
increase community capacity'');
    (7) Conduct resource development activities to obtain funding from 
sources other than chapter 1 of title VII of the Act in accordance with 
Evaluation Standard 7 (Resource development activities); and
    (8) Conduct activities necessary to comply with the assurances in 
section 725(c) of the Act, including, but not limited to the following:
    (i) Aggressive outreach regarding services provided through the 
center in an effort to reach populations of individuals with 
significant disabilities that are unserved or underserved by programs 
under title VII of the Act, especially minority groups and urban and 
rural populations.
    (ii) Training for center staff on how to serve unserved and 
underserved populations, including minority groups and urban and rural 
populations.

(Authority: 29 U.S.C. 796f through 796f-4)

(Cross-reference: See Sec. 366.71 in Subpart G.)


Sec. 366.4  What regulations apply?

    The following regulations apply to the CIL program:
    (a) The regulations in 34 CFR part 364.
    (b) The regulations in this part 366.

(Authority: 29 U.S.C. 711(c) and 796f-796f-5)


Sec. 366.5  How are program funds allotted?

    (a) The Secretary allots Federal funds appropriated for FY 1994 and 
subsequent fiscal years for the CIL program to each State in accordance 
with the requirements of section 721 of the Act.
    (b)(1) After the Secretary makes the reservation required by 
section 721(b) of the Act, the Secretary makes an allotment, from the 
remainder of the amount appropriated for a fiscal year to carry out 
Part C of Title VII of the Act, to each State whose State plan has been 
approved under section 706 of the Act and 34 CFR part 364.
    (2) The Secretary makes the allotment under paragraph (b)(1) of 
this section subject to sections 721(c)(1)(B) and (C), 721(c)(2) and 
(3), and 721(d) of the Act.

(Authority: 29 U.S.C. 796f)

Subpart B--Training and Technical Assistance


Sec. 366.10  What agencies are eligible for assistance to provide 
training and technical assistance?

    Entities that have experience in the operation of centers are 
eligible to apply for grants to provide training and technical 
assistance under section 721(b) of the Act to eligible agencies, 
centers, and Statewide Independent Living Councils (SILCs).

(Authority: 29 U.S.C. 796f(b)(1))


Sec. 366.11  What financial assistance does the Secretary provide for 
training and technical assistance?

    (a) From funds, if any, reserved under section 721(b)(1) of the Act 
to carry out the purposes of this subpart, the Secretary makes grants 
to, and enters into contracts, cooperative agreements, and other 
arrangements with, entities that have experience in the operation of 
centers.
    (b) An entity receiving assistance in accordance with paragraph (a) 
of this section shall provide training and technical assistance to 
eligible agencies, centers, and SILCs to plan, develop, conduct, 
administer, and evaluate centers.

(Authority: 29 U.S.C. 796f(b)(1)-(3))

Sec. 366.12  How does the Secretary make an award?

    (a) To be eligible to receive a grant or enter into a contract or 
other arrangement under section 721(b) of the Act and this subpart, an 
applicant shall submit an application to the Secretary containing a 
proposal to provide training and technical assistance to eligible 
agencies, centers, and SILCs and any additional information at the time 
and in the manner that the Secretary may require.
    (b) The Secretary provides for peer review of grant applications by 
panels that include persons who are not Federal government employees 
and who have experience in the operation of centers.

(Authority: 29 U.S.C. 711(c) and 796f(b))


Sec. 366.13  How does the Secretary determine funding priorities?

    In making awards under this section, the Secretary determines 
funding priorities in accordance with the training and technical 
assistance needs identified by the survey of SILCs and centers required 
by section 721(b)(3) of the Act.

(Authority: 29 U.S.C. 796f(b)(3))


Sec. 366.14  How does the Secretary evaluate an application?

    (a) The Secretary evaluates each application for a grant under this 
subpart on the basis of the criteria in Sec. 366.15.
    (b) The Secretary awards up to 100 points for these criteria.
    (c) The maximum possible score for each criterion is indicated in 
parentheses.

(Authority: 29 U.S.C. 796f(b)(3))


Sec. 366.15  What selection criteria does the Secretary use?

    The Secretary uses the following criteria to evaluate applications 
for new awards for training and technical assistance:
    (a) Meeting the purposes of the program (30 points).
    The Secretary reviews each application to determine how well the 
project will be able to meet the purpose of the program of providing 
training and technical assistance to eligible agencies, centers, and 
SILCs with respect to planning, developing, conducting, administering, 
and evaluating centers, including consideration of--
    (1) The objectives of the project; and
    (2) How the objectives further training and technical assistance 
with respect to planning, developing, conducting, administering, and 
evaluating centers.
    (b) Extent of need for the project (20 points). The Secretary 
reviews each application to determine the extent to which the project 
meets specific needs recognized in Title VII of the Act, including 
consideration of--
    (1) The needs addressed by the project;
    (2) How the applicant identified those needs;
    (3) How those needs will be met by the project; and
    (4) The benefits to be gained by meeting those needs.
    (c) Plan of operation (15 points). The Secretary reviews each 
application for information that shows the quality of the plan of 
operation for the project, including--
    (1) The quality of the design of the project;
    (2) The extent to which the plan of management ensures proper and 
efficient administration of the project;
    (3) How well the objectives of the project relate to the purpose of 
the program;
    (4) The quality of the applicant's plan to use its resources and 
personnel to achieve each objective; and
    (5) How the applicant will ensure that project participants who are 
otherwise eligible to participate are selected without regard to race, 
color, national origin, gender, age, or disability.
    (d) Quality of key personnel (7 points).
    (1) The Secretary reviews each application for information that 
shows the qualifications of the key personnel the applicant plans to 
use on the project, including--
    (i) The qualifications of the project director, if one is to be 
used;
    (ii) The qualifications of each of the other management and 
decision-making 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;
    (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 
disability; and
    (v) The extent to which the applicant, as part of its 
nondiscriminatory employment practices, encourages applications for 
employment from persons who are members of groups that have been 
traditionally under-represented, including members of racial or ethnic 
minority groups, women, persons with disabilities, and elderly 
individuals.
    (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 objectives of the 
project.
    (e) Budget and cost effectiveness (5 points). The Secretary reviews 
each application for information that shows the extent to which--
    (1) The budget is adequate to support the project; 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 applicant's methods of 
evaluation--
    (1) Are appropriate to the project;
    (2) Will determine how successful the project is in meeting its 
goals and objectives; and
    (3) Are objective and produce data that are quantifiable.

(Cross-reference: See 34 CFR 75.590.)

    (g) Adequacy of resources (3 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.
    (h) Extent of prior experience (15 points). The Secretary reviews 
each application to determine the extent of experience the applicant 
has in the operation of centers and with providing training and 
technical assistance to centers, including--
    (1) Training and technical assistance with planning, developing, 
and administering centers;
    (2) The scope of training and technical assistance provided, 
including methods used to conduct training and technical assistance for 
centers;
    (3) Knowledge of techniques and approaches for evaluating centers; 
and
    (4) The capacity for providing training and technical assistance as 
demonstrated by previous experience in these areas.

(Authority: 29 U.S.C. 711(c) and 796f(b))

Subpart C--Grants to Centers for Independent Living (Centers) in 
States in Which Federal Funding Exceeds State Funding


Sec. 366.20  When does the Secretary award grants to centers?

    The Secretary awards grants to centers in a State in a fiscal year 
if--
    (a) The amount of Federal funds allotted to the State under section 
721 (c) and (d) of the Act to support the general operation of centers 
is greater than the amount of State funds earmarked for the same 
purpose, as determined pursuant to Secs. 366.29 and 366.31; or
    (b) The Director of a designated State unit (DSU) does not submit 
to the Secretary and obtain approval of an application to award grants 
under section 723 of the Act and Sec. 366.32 (a) and (b).

(Authority: 29 U.S.C. 796f-1 and 796f-2(a)(2))


Sec. 366.21  What are the application requirements for existing 
eligible agencies?

    To be eligible for assistance, an eligible agency shall submit--
    (a) An application at the time, in the manner, and containing the 
information that is required;
    (b) An assurance that the eligible agency meets the requirements of 
Sec. 366.2; and
    (c) The assurances required by section 725(c) of the Act and 
subpart F of this part.

(Authority: 29 U.S.C. 796f-1(b))


Sec. 366.22  What is the order of priorities?

    (a) In accordance with a State's allotment and to the extent funds 
are available, the order of priorities for allocating funds among 
centers within a State is as follows:
    (1) Existing centers, as described in Sec. 366.23, that comply with 
the standards and assurances in section 725 (b) and (c) of the Act and 
subparts F and G of this part first receive the level of funding each 
center received in the previous year. However, any funds received by an 
existing center to establish a new center at a different geographical 
location pursuant to proposed Sec. 366.2(b)(2) are not included in 
determining the level of funding to the existing center in any fiscal 
year that the new center applies for and receives funds as a separate 
center.
    (2) Existing centers that meet the requirements of paragraph (a)(1) 
of this section then receive a cost-of-living increase in accordance 
with procedures consistent with section 721(c)(3) of the Act.
    (3) New centers, as described in Sec. 366.2(b), that comply with 
the standards and assurances in section 725(b) and (c) of the Act and 
subparts F and G of this part.
    (b) If, after meeting the priorities in paragraphs (a) (1) and (2) 
of this section, there are insufficient funds under the State's 
allotment under section 721 (c) and (d) of the Act to fund a new center 
under paragraph (a)(3) of this section, the Secretary may--
    (1) Use the excess funds in the State to assist existing centers; 
or
    (2) Reallot these funds in accordance with section 721(d) of the 
Act.

(Authority: 29 U.S.C. 711(c) and 796f-1(e))


Sec. 366.23  What grants must be made to existing eligible agencies?

    (a) In accordance with the order of priorities established in 
Sec. 366.22, an eligible agency may receive a grant if the eligible 
agency demonstrates in its application that it--
    (1) Meets the requirements in Sec. 366.21 or Sec. 366.24;
    (2) Is receiving funds under Part C of Title VII of the Act on 
September 30, 1993; and
    (3) Is in compliance with the program and fiscal standards and 
assurances in section 725 (b) and (c) of the Act and subparts F and G 
of this part. (The indicators of minimum compliance in subpart G of 
this part are used to determine compliance with the evaluation 
standards in section 725(b) of the Act.)
    (b) For purposes of this section, an eligible agency is receiving 
funds under Part C of Title VII of the Act on September 30, 1993, if it 
was awarded a grant on or before that date, i.e., during FY 1993.

(Authority: 29 U.S.C. 796f-1(c))


Sec. 366.24  How is an award made to a new center?

    (a) To apply for a grant as a new center, an eligible agency 
shall--
    (1) Meet the requirements of Sec. 366.2(b);
    (2) Submit an application that meets the requirements of 
Sec. 366.21; and
    (3) Meet the requirements of this section.
    (b) Subject to the order of priorities established in Sec. 366.22, 
a grant for a new center may be awarded to the most qualified eligible 
agency that applies for funds under this section, if--
    (1) (i) No center serves a geographic area of a State; or
    (ii) A geographic area of a State is underserved by centers serving 
other areas of the State;
    (2) The eligible agency proposes to serve the geographic area that 
is unserved or underserved in the State; and
    (3) The increase in the allotment of the State under section 721 of 
the Act for a fiscal year, as compared with the immediately preceding 
fiscal year, is sufficient to support an additional center in the 
State.
    (c) The establishment of a new center under this subpart must be 
consistent with the design included in the State plan pursuant to 34 
CFR 364.25 for establishing a statewide network of centers.
    (d) An applicant may satisfy the requirements of paragraph (c) of 
this section by submitting appropriate documentation demonstrating that 
the establishment of a new center is consistent with the design in the 
State plan required by 34 CFR 364.25.

(Authority: 29 U.S.C. 796f-1(d))


Sec. 366.25  What additional factor does the Secretary use in making a 
grant for a new center under Sec. 366.24?

    In selecting from among applicants for a grant under Sec. 366.24 
for a new center, the Secretary considers comments regarding the 
application, if any, by the SILC in the State in which the applicant is 
located.

(Authority: 29 U.S.C. 796f-1(d)(1))


Sec. 366.26  How does the Secretary evaluate an application?

    (a) The Secretary evaluates each application for a grant under this 
subpart on the basis of the criteria in Sec. 366.27.
    (b) The Secretary awards up to 100 points for these criteria.
    (c) The maximum possible score for each criterion is indicated in 
parentheses.

(Authority: 29 U.S.C. 796f(b)(3))


Sec. 366.27  What selection criteria does the Secretary use?

    In evaluating each application for a new center under this part, 
the Secretary uses the following selection criteria:
    (a) Extent of the need for the project (20 points).
    (1) The Secretary reviews each application for persuasive evidence 
that shows the extent to which the project meets the specific needs for 
the program, including considerations of--
    (i) The needs addressed by the project;
    (ii) How the applicant identified those needs (e.g., whether from 
the 1990 census data or other current sources);
    (iii) How those needs will be met by the project; and
    (iv) The benefits to be gained by meeting those needs.
    (2) The Secretary looks for information that shows that the need 
for the center has been established based on an assessment of the 
ability of existing programs and facilities to meet the need for IL 
services of individuals with significant disabilities in the geographic 
area to be served.
    (3) The Secretary looks for information that shows--
    (i) That the applicant proposes to establish a new center to serve 
a priority service area that is identified in the current State plan; 
and
    (ii) The priority that the State has placed on establishing a new 
center in this proposed service area.
    (b) Past performance (5 points). The Secretary reviews each 
application for information that shows the past performance of the 
applicant in successfully providing services comparable to the IL core 
services and other IL services listed in section 7 (29) and (30) of the 
Act and 34 CFR 365.21 and 365.22 and other services that empower 
individuals with significant disabilities.
    (c) Meeting the standards and the assurances (25 points). The 
Secretary reviews each application for information that shows--
    (1) Evidence of demonstrated success in satisfying, or a clearly 
defined plan to satisfy, the standards in section 725(b) of the Act and 
subpart G of this part; and
    (2) Convincing evidence of demonstrated success in satisfying, or a 
clearly defined plan to satisfy, the assurances in section 725(c) of 
the Act and subpart F of this part.
    (d) Quality of key personnel (10 points).
    (1) The Secretary reviews each application for information that 
shows the qualifications of the key personnel the applicant plans to 
use on the project, including--
    (i) The qualifications of the project director, if one is to be 
used;
    (ii) The qualifications of each of the other management and 
decision-making 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;
    (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 
disability; and
    (v) The extent to which the applicant, as part of its 
nondiscriminatory employment practices, encourages applications for 
employment from persons who are members of groups that have been 
traditionally under-represented, including--
    (A) Members of racial or ethnic minority groups;
    (B) Women;
    (C) Persons with disabilities; and
    (D) Elderly individuals.
    (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 objectives of the 
project.
    (e) Budget and cost effectiveness (10 points). The Secretary 
reviews each application for information that shows the extent to 
which--
    (1) The budget is adequate to support the project; and
    (2) Costs are reasonable in relation to the objectives of the 
project.
    (f) Evaluation plan (5 points).
    The Secretary reviews each application for information that shows 
the quality of the evaluation plan for the project, including the 
extent to which the applicant's methods of evaluation--
    (1) Are appropriate for the project;
    (2) Will determine how successful the project is in meeting its 
goals and objectives; and
    (3) Are objective and produce data that are quantifiable.

(Cross-reference: See 34 CFR 75.590)

    (g) Plan of operation (20 points). The Secretary reviews each 
application for information that shows the quality of the plan of 
operation for the project, including--
    (1) The quality of the design of the project;
    (2) The extent to which the plan of management ensures proper and 
efficient administration of the project;
    (3) How well the objectives of the project relate to the purpose of 
the program;
    (4) The quality and adequacy of the applicant's plan to use its 
resources (including funding, facilities, equipment, and supplies) and 
personnel to achieve each objective;
    (5) How the applicant will ensure that project participants who are 
otherwise eligible to participate are selected without regard to race, 
color, national origin, gender, age, or disability; and
    (6) A clear description of how the applicant will provide equal 
access to services for eligible project participants who are members of 
groups that have been traditionally under-represented, including--
    (i) Members of racial or ethnic minority groups;
    (ii) Women;
    (iii) Elderly individuals; and
    (iv) Children and youth.
    (h) Involvement of individuals with significant disabilities (5 
points).
    (1) The Secretary reviews each application for information that 
shows that individuals with significant disabilities are appropriately 
involved in conducting center activities.
    (2) The Secretary looks for information that shows that individuals 
with significant disabilities or their parents, guardians, or other 
legally authorized representatives or advocates, as appropriate, will 
be substantially involved in planning, policy direction, and management 
of the center, and, to the greatest extent possible, that individuals 
with significant disabilities will be employed by the center.

(Authority: 29 U.S.C. 796f-1(d)(2)(B))


Sec. 366.28  Under what circumstances may the Secretary award a grant 
to a center in one State to serve individuals in another State?

    (a) The Secretary may use funds from the allotment of one State to 
award a grant to a center located in another State if the Secretary 
determines that the proposal of the out-of-State center to serve 
individuals with significant disabilities who reside in the other State 
is consistent with the State plan of the State in which these 
individuals reside.
    (b) An applicant shall submit documentation demonstrating that the 
arrangements described in paragraph (a) of this section are consistent 
with the State plan of the State in which the individuals reside.

(Authority: 29 U.S.C. 711(c) and 796f(c) and (d))

Subpart D--Grants to Centers in States in Which State Funding 
Equals or Exceeds Federal Funding

Determining Whether State Funding Equals or Exceeds Federal Funding


Sec. 366.29  When may the Director of the designated State unit (DSU) 
award grants to centers?

    (a) The Director of the DSU (Director) may award grants under 
section 723 of the Act and this subpart to centers in a State in a 
fiscal year if--
    (1) The Director submits to the Secretary and obtains approval of 
an application to award grants for that fiscal year under section 723 
of the Act and Sec. 366.32 (a) and (b); and
    (2) The Secretary determines that the amount of State funds that 
were earmarked by the State to support the general operation of centers 
meeting the requirements of Part C of Chapter 1 of Title VII of the Act 
in the second fiscal year preceding the fiscal year for which the 
application is submitted equaled or exceeded the amount of funds 
allotted to the State under section 721 (c) and (d) of the Act (or Part 
B of Title VII of the Act as in effect on October 28, 1992) for that 
preceding fiscal year.
    (b) For purposes of section 723(a)(1)(A)(iii) of the Act and this 
subpart, the second fiscal year preceding the fiscal year for which the 
State submits an application to administer the CIL program is 
considered the ``preceding fiscal year.'' Example: If FY 1995 is the 
fiscal year for which the State submits an application to administer 
the CIL program under this subpart, FY 1993 is the ``preceding fiscal 
year.'' In determining the ``preceding fiscal year'' under this 
subpart, the Secretary makes any adjustments necessary to accommodate a 
State's multi-year funding cycle or fiscal year that does not coincide 
with the Federal fiscal year.

(Authority: 29 U.S.C. 796f-2(a)(3))


Sec. 366.30  What are earmarked funds?

    (a) For purposes of this subpart, the amount of State funds that 
were earmarked by a State to support the general operation of centers 
does not include--
    (1) Federal funds used for the general operation of centers;
    (2) State funds used to purchase services from a center, including 
State funds used for grants or contracts for personal assistance or 
skills training;
    (3) State attendant care funds; or
    (4) Social Security Administration reimbursement funds.
    (b) For purposes of this subpart, ``earmarked funds'' means funds 
appropriated by the State and expressly or clearly identified as State 
expenditures in the relevant fiscal year for the sole purpose of 
funding the general operation of centers.

(Authority: 29 U.S.C. 711(c) and 796f-2(a)(1)(A))


Sec. 366.31  What happens if the amount of earmarked funds does not 
equal or exceed the amount of Federal funds for a preceding fiscal 
year?

    If the State submits an application to administer the CIL program 
under section 723 of the Act and this subpart for a fiscal year, but 
did not earmark the amount of State funds required by Sec. 366.29(a)(2) 
in the preceding fiscal year, the State shall be ineligible to make 
grants under section 723 of the Act and this subpart after the end of 
the fiscal year succeeding the preceding fiscal year and for each 
succeeding fiscal year.

    Example: A State meets the earmarking requirement in FY 1994.
    It also meets this requirement in FY 1995. However, in reviewing 
the State's application to administer the CIL program in FY 1998, 
the Secretary determines that the State failed to meet the 
earmarking requirement in FY 1996. The State may continue to award 
grants in FY 1997 but may not do so in FY 1998 and succeeding fiscal 
years.

(Authority: 29 U.S.C. 796f-2(a)(1)(B))

Awarding Grants


Sec. 366.32  Under what circumstances may the DSU make grants?

    (a) To be eligible to award grants under this subpart and to carry 
out section 723 of the Act for a fiscal year, the Director must submit 
to the Secretary for approval an application at the time and in the 
manner that the Secretary may require and that includes, at a minimum--
    (1) Information demonstrating that the amount of funds earmarked by 
the State for the general operation of centers meets the requirements 
in Sec. 366.29(a)(1); and
    (2) A summary of the annual reports submitted to the Director from 
centers in accordance with Sec. 366.50(n).
    (b) If the amount of funds earmarked by the State for the general 
operation of centers meets the requirements in Sec. 366.29(a)(1), the 
Secretary approves the application and designates the Director to award 
the grants and carry out section 723 of the Act.
    (c) If the Secretary designates the Director to award grants and 
carry out section 723 of the Act under paragraph (b) of this section, 
the Director makes grants to eligible agencies in a State, as described 
in Sec. 366.2, for a fiscal year from the amount of funds allotted to 
the State under section 721 (c) and (d) of the Act.
    (d) (1) In the case of a State in which there is both a DSU 
responsible for providing IL services to the general population and a 
DSU responsible for providing IL services for individuals who are 
blind, for purposes of subparts D and E of this part, the ``Director'' 
shall be the Director of the general DSU.
    (2) The State units described in paragraph (d)(1) of this section 
shall periodically consult with each other with respect to the 
provision of services for individuals who are blind.
    (e) The Director may enter into assistance contracts with centers 
to carry out section 723 of the Act. For purposes of this paragraph, an 
assistance contract is an instrument whose principal purpose is to 
transfer funds allotted to the State under section 721(c) and (d) of 
the Act and this part to an eligible agency to carry out section 723 of 
the Act. Under an assistance contract, the DSU shall assume a role 
consistent with that of the Secretary under section 722 of the Act. If 
the DSU uses an assistance contract to award funds under section 723 of 
the Act, the DSU may not add any requirements, terms, or conditions to 
the assistance contract other than those that would be permitted if the 
assistance contract were a grant rather than an assistance contract. 
Under an assistance contract, as defined in this paragraph, the role of 
the DSU is to ensure that the terms of the assistance contract, which 
are established by Chapter 1 of Title VII of the Act and the 
implementing regulations in this part and 34 CFR part 364, are 
satisfied.
    (f) The Director may not enter into procurement contracts with 
centers to carry out section 723 of the Act. For purposes of this 
paragraph, a procurement contract is an instrument whose principal 
purpose is to acquire (by purchase, lease, or barter) property or 
services for the direct benefit or use of the DSU. Under a procurement 
contract, the DSU prescribes the specific services it intends to 
procure and the terms and conditions of the procurement.
    (g) In the enforcement of any breach of the terms and conditions of 
an assistance contract, the DSU shall follow the procedures established 
in Secs. 366.40 through 366.45.

(Authority: 29 U.S.C. 711(c) and 796f-2(a)(2))


Sec. 366.33  What are the application requirements for existing 
eligible agencies?

    To be eligible for assistance under this subpart, an eligible 
agency shall comply with the requirements in Sec. 366.21.

(Authority: 29 U.S.C. 796f-2(b))


Sec. 366.34  What is the order of priorities?

    (a) Unless the Director and the chairperson of the SILC, or other 
individual designated by the SILC to act on behalf of and at the 
direction of the SILC, jointly agree on another order of priorities, 
the Director shall follow the order of priorities in Sec. 366.22 for 
allocating funds among centers within a State, to the extent funds are 
available.
    (b) If the order of priorities in Sec. 366.22 is followed and, 
after meeting the priorities in Sec. 366.22(a)(1) and (2), there are 
insufficient funds under the State's allotment under section 721 (c) 
and (d) of the Act to fund a new center under Sec. 366.22(a)(3), the 
Director may--
    (1) Use the excess funds in the State to assist existing centers; 
or
    (2) Return these funds to the Secretary for reallotment in 
accordance with section 721(d) of the Act.

(Authority: 29 U.S.C. 711(c) and 796f-2(e))


Sec. 366.35  What grants must be made to existing eligible agencies?

    In accordance with the order of priorities established in 
Sec. 366.34(a), an eligible agency may receive a grant under this 
subpart if the eligible agency meets the applicable requirements in 
Secs. 366.2, 366.21, and 366.23.

(Authority: 29 U.S.C. 796f-2(c))


Sec. 366.36  How is an award made to a new center?

    To be eligible for a grant as a new center under this subpart, an 
eligible agency shall meet the requirements for a new center in 
Secs. 366.2(b) and 366.24, except that the award of a grant to a new 
center under this section is subject to the order of priorities in 
Sec. 366.34(a).

(Authority: 29 U.S.C. 796f-2(d))


Sec. 366.37  What procedures does the Director of the DSU (Director) 
use in making a grant for a new center?

    (a) In selecting from among applicants for a grant for a new center 
under Sec. 366.24 of this subpart--
    (1) The Director and the chairperson of the SILC, or other 
individual designated by the SILC to act on behalf of and at the 
direction of the SILC, shall jointly appoint a peer review committee 
that shall rank applications in accordance with the standards and 
assurances in section 725 (b) and (c) of the Act and subparts F and G 
of this part and any criteria jointly established by the Director and 
the chairperson or other designated individual;
    (2) The peer review committee shall consider the ability of each 
applicant to operate a center and shall recommend an applicant to 
receive a grant under this subpart, based on either the selection 
criteria in Sec. 366.27 or the following:
    (i) Evidence of the need for a center, consistent with the State 
plan.
    (ii) Any past performance of the applicant in providing services 
comparable to IL services.
    (iii) The plan for complying with, or demonstrated success in 
complying with, the standards and the assurances in section 725 (b) and 
(c) of the Act and subparts F and G of this part.
    (iv) The quality of key personnel of the applicant and the 
involvement of individuals with significant disabilities by the 
applicant.
    (v) The budget and cost-effectiveness of the applicant.
    (vi) The evaluation plan of the applicant.
    (vii) The ability of the applicant to carry out the plans 
identified in paragraphs (a)(2) (iii) and (vi) of this section.
    (b) The Director shall award the grant on the basis of the 
recommendations of the peer review committee if the actions of the 
committee are consistent with Federal and State law.

(Authority: 29 U.S.C. 796f-2(d)(2))


Sec. 366.38  What are the procedures for review of centers?

    (a) The Director shall, in accordance with section 723 (g)(1) and 
(h) of the Act, periodically review each center receiving funds under 
section 723 of the Act to determine whether the center is in compliance 
with the standards and assurances in section 725 (b) and (c) of the Act 
and subparts F and G of this part.
    (b) The periodic reviews of centers required by paragraph (a) of 
this section must include annual on-site compliance reviews of at least 
15 percent of the centers assisted under section 723 of the Act in that 
State in each year.
    (c) Each team that conducts an on-site compliance review of a 
center shall include at least one person who is not an employee of the 
designated State agency, who has experience in the operation of 
centers, and who is jointly selected by the Director and the 
chairperson of the SILC, or other individual designated by the SILC to 
act on behalf of and at the direction of the SILC.
    (d) A copy of each review under this section shall be provided to 
the Secretary and the SILC.

(Authority: 29 U.S.C. 711(c) and 796f-2(g)(1) and (h))

Subpart E--Enforcement and Appeals Procedures


Sec. 366.39  What procedures does the Secretary use for enforcement?

    (a) If the Secretary determines that any center receiving funds 
under this part is not in compliance with the standards and assurances 
in section 725 (b) and (c) of the Act and subparts F and G of this 
part, the Secretary immediately notifies the center, by certified mail, 
return receipt requested, or other means that provide proof of receipt, 
that the center is out of compliance. The Secretary also offers 
technical assistance to the center to develop a corrective action plan 
to comply with the standards and assurances.
    (b) The Secretary terminates all funds under section 721 of the Act 
to that center 90 days after the date of the notification required by 
paragraph (a) of this section unless--
    (1) The center submits, within 90 days after receiving the 
notification required by paragraph (a) of this section, a corrective 
action plan to achieve compliance that is approved by the Secretary; or
    (2) The center requests a hearing pursuant to paragraph (c) or (d) 
of this section.
    (c) If the Secretary does not approve a center's corrective action 
plan submitted pursuant to paragraph (b)(1) of this section, the center 
has 30 days from receipt of the Secretary's written notice of 
disapproval of the center's corrective action plan to request a hearing 
by submitting a formal written request that gives the reasons why the 
center believes that the Secretary should have approved the center's 
corrective action plan.
    (d) If the center does not submit a corrective action plan to the 
Secretary, the center has 90 days after receiving the notification 
required by paragraph (a) of this section to request a hearing by 
submitting a formal written request that gives the reasons why the 
center believes that the Secretary should have found the center in 
compliance with the standards and assurances in section 725 (b) and (c) 
of the Act and subparts F and G of this part.
    (e) The date of filing a formal written request for a hearing to 
the Secretary under paragraph (c) or (d) of this section is determined 
in a manner consistent with the requirements of 34 CFR 81.12.
    (f) The Secretary issues a written decision to terminate funds to 
the center if, after providing reasonable notice and an opportunity for 
a hearing, the Secretary finds that--
    (1) The center receiving funds under this part is not in compliance 
with the standards and assurances in section 725 (b) and (c) of the Act 
and subparts F and G of this part; or
    (2) The center's corrective action plan submitted under paragraph 
(b)(1) of this section cannot be approved.
    (g) The Secretary's decision to terminate funds to a center 
pursuant to paragraph (f) of this section takes effect upon issuance.

(Authority: 29 U.S.C. 711(c) and 796f-1(g))


Sec. 366.40  How does the Director initiate enforcement procedures?

    (a) If the Director determines that any center receiving funds 
under this part is not in compliance with the standards and assurances 
in section 725 (b) and (c) of the Act and subparts F and G of this 
part, the Director shall immediately provide the center, by certified 
mail, return receipt requested, or other means that provide proof of 
receipt, with an initial written notice that the center is out of 
compliance with the standards and assurances and that the Director will 
terminate the center's funds or take other proposed significant adverse 
action against the center 90 days after the center's receipt of this 
initial written notice. The Director shall provide technical assistance 
to the center to develop a corrective action plan to comply with the 
standards and assurances.
    (b) Unless the center submits, within 90 days after receiving the 
notification required by paragraph (a) of this section, a corrective 
action plan to achieve compliance that is approved by the Director or, 
if appealed, by the Secretary, the Director shall terminate all funds 
under section 723 of the Act to a center 90 days after the later of--
    (1) The date that the center receives the initial written notice 
required by paragraph (a) of this section; or
    (2) The date that the center receives the Secretary's final 
decision issued pursuant to Sec. 366.46(c) if--
    (i) The center files a formal written appeal of the Director's 
final written decision pursuant to Sec. 366.44(a); or
    (ii) The center files a formal written appeal of the decision 
described in the Director's initial written notice pursuant to 
Sec. 366.44(b).

(Authority: 29 U.S.C. 711(c) and 796f-2(g) and (i))


Sec. 366.41  What must be included in an initial written notice from 
the Director?

    The initial written notice required by Sec. 366.40(a) must--
    (a) Include, at a minimum, the following:
    (1) The name of the center.
    (2) The reason or reasons for proposing the termination of funds or 
other significant adverse action against the center, including any 
evidence that the center has failed to comply with any of the 
evaluation standards or assurances in section 725 (b) and (c) of the 
Act and subparts F and G of this part.
    (3) The effective date of the proposed termination of funds or 
other significant adverse action against the center;
    (b) Be given 90 days in advance of the date the Director intends to 
terminate a center's funds or take any other significant adverse action 
against the center;
    (c) Inform the center that it has 90 days from the date the center 
receives the notice to submit a corrective action plan;
    (d) Inform the center that it may seek mediation and conciliation 
in accordance with Sec. 366.40(a) to resolve any dispute with the 
Director within the 90 days before the proposed termination of funds or 
other significant adverse action against the center; and
    (e) Inform the center that, if mediation and conciliation are not 
successful and the Director does not issue a final written decision 
pursuant to Sec. 366.42, the center may appeal to the Secretary the 
decision described in the Director's initial written notice on or after 
the 90th day, but not later than the 120th day, after the center 
receives the Director's initial decision.

(Authority: 29 U.S.C. 711(c) and 796f-2 (g) and (i))


Sec. 366.42  When does a Director issue a final written decision?

    (a) If the center submits a corrective action plan in accordance 
with Sec. 366.40(b), the Director shall provide to the center, not 
later than the 120th day after the center receives the Director's 
initial written notice, a final written decision approving or 
disapproving the center's corrective action plan and informing the 
center, if appropriate, of the termination of the center's funds or any 
other proposed significant adverse action against the center.
    (b) The Director shall send the final written decision to the 
center by registered or certified mail, return receipt requested, or 
other means that provide a record that the center received the 
Director's final written decision.
    (c) A Director's final written decision to terminate funds or take 
any other adverse action against a center may not take effect until 30 
days after the date that the center receives it.
    (d) If a center appeals pursuant to Sec. 366.44(a), the Director's 
final written decision to terminate funds or take any other adverse 
action against a center does not take effect until the Secretary issues 
a final decision.

(Authority: 29 U.S.C. 711(c) and 796f-2 (g) and (i))


Sec. 366.43  What must be included in the Director's final written 
decision?

    The Director's final written decision to disapprove a center's 
corrective action plan required by Sec. 366.42 must--
    (a) Address any response from the center to the Director's initial 
written notice to terminate funds or take other significant adverse 
action against the center;
    (b) Include a statement of the reasons why the Director could not 
approve the corrective action plan; and
    (c) Inform the center of its right to appeal to the Secretary the 
Director's final written decision to terminate funds or take any other 
significant adverse action against the center.


(Authority: 29 U.S.C. 711(c) and 796f-2 (g) and (i))


Sec. 366.44  How does a center appeal a decision included in a 
Director's initial written notice or a Director's final written 
decision?

    (a) To obtain the Secretary's review of a Director's final written 
decision to disapprove a center's corrective action plan submitted 
pursuant to Sec. 366.40(b), the center shall file, within 30 days from 
receipt of the Director's final written decision, a formal written 
appeal with the Secretary giving the reasons why the center believes 
that the Director should have approved the center's corrective action 
plan.

(Cross-reference: See Sec. 366.42)

    (b) To obtain the Secretary's review of a decision described in a 
Director's initial written notice, a center that does not submit a 
corrective action plan to a Director shall file, in accordance with 
paragraph (c)(1)(i) of this section, a formal written appeal with the 
Secretary giving the reasons why the center believes that the Director 
should have found the center in compliance with the standards and 
assurances in section 725 (b) and (c) of the Act and subparts F and G 
of this part.
    (c) To appeal to the Secretary a decision described in a Director's 
initial written notice or a Director's final written decision to 
disapprove a center's corrective action plan and to terminate or take 
other significant adverse action, a center shall file with the 
Secretary--
    (1) A formal written appeal--
    (i) On or after the 90th day but not later than the 120th day 
following a center's receipt of a Director's initial written notice; or
    (ii) On or before the 30th day after a center's receipt of the 
Director's final written decision to disapprove a center's corrective 
action plan and to terminate or take other significant adverse action;
    (2) A copy of the corrective action plan, if any, submitted to the 
Director; and
    (3) One copy each of any other written submissions sent to the 
Director in response to the Director's initial written notice to 
terminate funds or take other significant adverse action against the 
center.
    (d) The date of filing a formal written appeal to the Secretary 
under paragraph (c) of this section is determined in a manner 
consistent with the requirements of 34 CFR 81.12.
    (e) If the center files a formal written appeal with the Secretary, 
the center shall send a separate copy of this appeal to the Director by 
registered or certified mail, return receipt requested, or other means 
that provide a record that the Director received a separate copy of the 
center's written appeal.
    (f) The center's formal written appeal to the Secretary must state 
why--
    (1) The Director has not met the burden of showing that the center 
is not in compliance with the standards and assurances in section 725 
(b) and (c) of the Act and in subparts F and G of this part;
    (2) The corrective action plan, if any, should have been approved; 
or
    (3) The Director has not met the procedural requirements of 
Secs. 366.40 through 366.45.
    (g) As part of its submissions under this section, the center may 
request an informal meeting with the Secretary at which representatives 
of both parties will have an opportunity to present their views on the 
issues raised in the appeal.
    (h) A Director's decision to terminate funds that is described in 
an initial written notice or final written decision is stayed as of the 
date (determined pursuant to paragraph (d) of this section) that the 
center files a formal written appeal with the Secretary.

(Authority: 29 U.S.C. 711(c) and 796f-2(g)(2) and (i))


Sec. 366.45  What must a Director do upon receipt of a copy of a 
center's formal written appeal to the Secretary?

    (a) If the center files a formal written appeal in accordance with 
Sec. 366.44(c), the Director shall, within 15 days of receipt of the 
center's appeal, submit to the Secretary one copy each of the 
following:
    (1) The Director's initial written notice to terminate funds or 
take any other significant adverse action against the center sent to 
the center.
    (2) The Director's final written decision, if any, to disapprove 
the center's corrective action plan and to terminate the center's funds 
or take any other significant adverse action against the center.
    (3) Any other written documentation or submissions the Director 
wishes the Secretary to consider.
    (4) Any other information requested by the Secretary.
    (b) As part of its submissions under this section, the Director may 
request an informal meeting with the Secretary at which representatives 
of both parties will have an opportunity to present their views on the 
issues raised in the appeal.

(Authority: 29 U.S.C. 711(c) and 796f-2(g)(2) and (i))


Sec. 366.46  How does the Secretary review a center's appeal of a 
decision included in a Director's initial written notice or a 
Director's final written decision?

    (a) If either party requests a meeting under Secs. 366.44(g) or 
366.45(b), the meeting is to be held within 30 days of the date of the 
Secretary's receipt of the submissions from the Director that are 
required by Sec. 366.45(a). The Secretary promptly notifies the parties 
of the date and place of the meeting.
    (b) Within 30 days of the informal meeting permitted under 
paragraph (a) of this section or, if neither party has requested an 
informal meeting, within 60 days of the date of receipt of the 
submissions required from the Director by Sec. 366.45(a), the Secretary 
issues to the parties the Secretary's decision.
    (c) The Secretary reviews a decision included in a Director's 
initial written notice or a Director's final written decision to 
disapprove the center's corrective action plan and to terminate the 
center's funds or take any other significant adverse action against the 
center based on the record submitted under Secs. 366.44 and 366.45 and 
may affirm or, if the Secretary finds that the decision included in a 
Director's initial written notice or a Director's final written 
decision is not supported by the evidence or is not in accordance with 
the law, may--
    (1) Remand the appeal for further findings; or
    (2) Reverse the decision described in the Director's initial 
written notice or the Director's final written decision to disapprove 
the center's corrective action plan and to terminate funds or take any 
other significant adverse action against the center.
    (d) The Secretary sends copies of his or her decision to the 
parties by registered or certified mail, return receipt requested, or 
other means that provide a record of receipt by both parties.
    (e) If the Secretary affirms the decision described in a Director's 
initial written notice or the Director's final written decision, the 
Director's decision takes effect on the date of the Secretary's final 
decision to affirm.

(Authority: 29 U.S.C. 711(c) and 796f-2(g)(2) and (i))

Subpart F--Assurances for Centers


Sec. 366.50  What assurances shall a center provide and comply with?

    To be eligible for assistance under this part, an eligible agency 
shall provide satisfactory assurances that--
    (a) The applicant is an eligible agency;
    (b) The center will be designed and operated within local 
communities by individuals with disabilities, including an assurance 
that the center will have a board that is the principal governing body 
of the center and a majority of which must be composed of individuals 
with significant disabilities. (For purposes of this paragraph, an 
individual with a significant disability means an individual with a 
significant physical or mental impairment whose ability to function 
independently in the family or community or whose ability to obtain, 
maintain, or advance in employment is substantially limited.);
    (c) The applicant will comply with the standards in subpart G;
    (d) The applicant will establish clear priorities through--
    (1) Annual and three-year program and financial planning objectives 
for the center, including overall goals or a mission for the center;
    (2) A work plan for achieving the goals or mission, specific 
objectives, service priorities, and types of services to be provided; 
and
    (3) A description that demonstrates how the proposed activities of 
the applicant are consistent with the most recent three-year State plan 
under section 704 of the Act;
    (e) The applicant will use sound organizational and personnel 
assignment practices, including taking affirmative action to employ and 
advance in employment qualified individuals with significant 
disabilities on the same terms and conditions required with respect to 
the employment of individuals with disabilities under section 503 of 
the Act;
    (f) The applicant will ensure that the majority of the staff, and 
individuals in decision-making positions, of the applicant are 
individuals with disabilities;
    (g) The applicant will practice sound fiscal management, including 
making arrangements for an annual independent fiscal audit;
    (h) The applicant will conduct an annual self-evaluation, prepare 
an annual report, and maintain records adequate to measure performance 
with respect to the standards in Subpart G;
    (i) The annual report and the records of the center's performance 
required by paragraph (h) of this section must each contain information 
regarding, at a minimum--
    (1) The extent to which the center is in compliance with the 
standards in section 725(b) of the Act and subpart G of this part;
    (2) The number and types of individuals with significant 
disabilities receiving services through the center;
    (3) The types of services provided through the center and the 
number of individuals with significant disabilities receiving each type 
of service;
    (4) The sources and amounts of funding for the operation of the 
center;
    (5) The number of individuals with significant disabilities who are 
employed by, and the number who are in management and decision-making 
positions in, the center;
    (6) The number of individuals from minority populations who are 
employed by, and the number who are in management and decision-making 
positions in, the center; and
    (7) A comparison, if appropriate, of the activities of the center 
in prior years with the activities of the center in most recent years;
    (j) Individuals with significant disabilities who are seeking or 
receiving services at the center will be notified by the center of the 
existence of, the availability of, and how to contact the client 
assistance program;
    (k) Aggressive outreach regarding services provided through the 
center will be conducted in an effort to reach populations of 
individuals with significant disabilities that are unserved or 
underserved by programs under title VII of the Act, especially minority 
groups and urban and rural populations;
    (l) Staff at centers will receive training on how to serve unserved 
and underserved populations, including minority groups and urban and 
rural populations;
    (m) The center will submit to the SILC a copy of its approved grant 
application and the annual report required under paragraph (h) of this 
section;
    (n) The center will prepare and submit to the DSU, if the center 
received a grant from the Director, or to the Secretary, if the center 
received a grant from the Secretary, at the end of each fiscal year, 
the annual report that is required to be prepared pursuant to paragraph 
(h) of this section and that contains the information described in 
paragraph (i) of this section; and
    (o) An IL plan as described in section 704(e) of the Act will be 
developed for each individual who will receive services under this part 
unless the individual signs a waiver stating that an IL plan is 
unnecessary.

(Authority: 29 U.S.C. 796f-4)

PART 367--INDEPENDENT LIVING SERVICES FOR OLDER INDIVIDUALS WHO ARE 
BLIND

Subpart A--General

Sec.
367.1  What is the Independent Living Services for Older Individuals 
Who Are Blind program?
367.2  Who is eligible for an award?
367.3  What activities may the Secretary fund?
367.4  What regulations apply?
367.5  What definitions apply?

Subpart B--What Are the Application Requirements?

367.10  How does a designated State agency (DSA) apply for an award?
367.11  What assurances must a DSA include in its application?
Subpart C--How Does the Secretary Award Discretionary Grants on a 
Competitive Basis?
367.20  Under what circumstances does the Secretary award 
discretionary grants on a competitive basis to States?
367.21  How does the Secretary evaluate an application for a 
discretionary grant?
367.22  What selection criteria does the Secretary use?
367.23  What additional factor does the Secretary consider?

Subpart D--How Does the Secretary Award Contingent Formula Grants?

367.30  Under what circumstances does the Secretary award contingent 
formula grants to States?
367.31  How are allotments made?
367.32  How does the Secretary reallot funds under section 752(j)(4) 
of the Act?

Subpart E--What Conditions Must Be Met After an Award?

367.40  What matching requirements apply?
367.41  When may a DSA award grants or contracts?
367.42  When does the Secretary award noncompetitive continuation 
grants?

    Authority: 29 U.S.C. 796k, unless otherwise noted.

Subpart A--General


Sec. 367.1  What is the Independent Living Services for Older 
Individuals Who Are Blind program?

    This program supports projects that--
    (a) Provide independent living (IL) services to older individuals 
who are blind as these services are described in Sec. 367.3(b);
    (b) Conduct activities that will improve or expand services for 
these individuals; and
    (c) Conduct activities to help improve public understanding of the 
problems of these individuals.


(Authority: 29 U.S.C. 796k (a) and (b))


Sec. 367.2  Who is eligible for an award?

    Any designated State agency (DSA) is eligible for an award under 
this program if the DSA--
    (a) Is authorized to provide rehabilitation services to individuals 
who are blind; and
    (b) Submits to and obtains approval from the Secretary of an 
application that meets the requirements of section 752(i) of the Act 
and Secs. 367.10 and 367.11.

(Authority: 29 U.S.C. 796k(a)(2))

    Cross-reference: See 34 CFR 364.4(b).


Sec. 367.3  What activities may the Secretary fund?

    (a) The DSA may use funds awarded under this part for the 
activities described in Sec. 367.1 and paragraph (b) of this section.
    (b) For purposes of Sec. 367.1(a), IL services for older 
individuals who are blind include--
    (1) Services to help correct blindness, such as--
    (i) Outreach services;
    (ii) Visual screening;
    (iii) Surgical or therapeutic treatment to prevent, correct, or 
modify disabling eye conditions; and
    (iv) Hospitalization related to these services;
    (2) The provision of eyeglasses and other visual aids;
    (3) The provision of services and equipment to assist an older 
individual who is blind to become more mobile and more self-sufficient;
    (4) Mobility training, Braille instruction, and other services and 
equipment to help an older individual who is blind adjust to blindness;
    (5) Guide services, reader services, and transportation;
    (6) Any other appropriate service designed to assist an older 
individual who is blind in coping with daily living activities, 
including supportive services and rehabilitation teaching services;
    (7) IL skills training, information and referral services, peer 
counseling, and individual advocacy training; and
    (8) Other IL services, as defined in section 7(30) of the Act and 
as listed in 34 CFR 365.22.

(Authority: 29 U.S.C. 796k (d) and (e))


Sec. 367.4  What regulations apply?

    The following regulations apply to the Independent Living Services 
for Older Individuals Who Are Blind program:
    (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), with respect 
to subgrants to an entity that is not a State or local government or 
Indian tribal organization.
    (2) 34 CFR part 75 (Direct Grant Programs), with respect to grants 
under subpart C.
    (3) 34 CFR part 76 (State-Administered Programs), with respect to 
grants under subpart D.
    (4) 34 CFR part 77 (Definitions That Apply to Department 
Regulations).
    (5) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (6) 34 CFR part 80 (Uniform Administrative Requirements for Grants 
and Cooperative Agreements to State and Local Governments).
    (7) 34 CFR part 81 (General Education Provisions Act--Enforcement).
    (8) 34 CFR part 82 (New Restrictions on Lobbying).
    (9) 34 CFR part 85 (Governmentwide Debarment and Suspension 
(Nonprocurement) and Governmentwide Requirements for Drug-Free 
Workplace (Grants)).
    (10) 34 CFR part 86 (Drug-Free Schools and Campuses).
    (b) The regulations in this part 367.
    (c) The following provisions in 34 CFR part 364:
    (1) Section 364.4 (What definitions apply?).
    (2) Section 364.5 (What are the limitations on allowable costs?).
    (3) Section 364.6 (What is program income and how may it be used?)
    (4) Section 364.7 (What requirements apply to the obligation of 
Federal funds and program income?)
    (5) Section 364.30 (What notice must be given about the Client 
Assistance Program (CAP)?).
    (6) Section 364.37 (What access to records must be provided?).
    (7) Section 364.56 (What are the special requirements pertaining to 
the protection, use, and release of personal information?).
    (d) The following provisions in 34 CFR part 365:
    (1) Section 365.13 (What requirements apply if the State's non-
Federal share is in cash?).
    (2) Section 365.14 (What conditions relating to cash or in-kind 
contributions apply to awards to grantees, subgrantees, or 
contractors?).
    (3) Section 365.15 (What requirements apply if the State's non-
Federal share is in kind?).
    (4) Section 365.16 (What requirements apply to refunds and 
rebates?).

(Authority: 29 U.S.C. 711(c) and 796k)


Sec. 367.5  What definitions apply?

    In addition to the definitions in 34 CFR 364.4, the following 
definitions also apply to this part:
    Independent living services for older individuals who are blind 
means those services listed in Sec. 367.3(b).

    Older individual who is blind means an individual age fifty-five or 
older whose severe visual impairment makes competitive employment 
extremely difficult to obtain but for whom IL goals are feasible.
(Authority: 29 U.S.C. 711(c) and 796j)

Subpart B--What Are the Application Requirements?


Sec. 367.10  How does a designated State agency (DSA) apply for an 
award?

    To receive a grant under section 752(i) or a reallotment grant 
under section 752(j)(4) of the Act, a DSA must submit to and obtain 
approval from the Secretary of an application for assistance under this 
program at the time, in the form and manner, and containing the 
agreements, assurances, and information, that the Secretary determines 
to be necessary to carry out this program.

(Authority: 29 U.S.C. 796k (c)(2) and (i)(1))


Sec. 367.11  What assurances must a DSA include in its application?

    An application for a grant under section 752(i) or a reallotment 
grant under section 752(j)(4) of the Act must contain an assurance 
that--
    (a) Grant funds will be expended only for the purposes described in 
Sec. 367.1;
    (b) With respect to the costs of the program to be carried out by 
the State pursuant to this part, the State will make available, 
directly or through donations from public or private entities, non-
Federal contributions toward these costs in an amount that is not less 
than $1 for each $9 of Federal funds provided in the grant;
    (c) In carrying out Sec. 367.1 (a) and (b), and consistent with 34 
CFR 364.28, the DSA will seek to incorporate into and describe in the 
State plan under section 704 of the Act any new methods and approaches 
relating to IL services for older individuals who are blind that are 
developed by projects funded under this part and that the DSA 
determines to be effective;
    (d) At the end of each fiscal year, the DSA will prepare and submit 
to the Secretary a report, with respect to each project or program the 
DSA operates or administers under this part, whether directly or 
through a grant or contract, that contains, at a minimum, information 
on--
    (1) The number and types of older individuals who are blind, 
including older individuals who are blind from minority backgrounds, 
and are receiving services;
    (2) The types of services provided and the number of older 
individuals who are blind and are receiving each type of service;
    (3) The sources and amounts of funding for the operation of each 
project or program;
    (4) The amounts and percentages of resources committed to each type 
of service provided;
    (5) Data on actions taken to employ, and advance in employment, 
qualified--
    (i) Individuals with significant disabilities;
    (ii) Older individuals with significant disabilities who are blind;
    (iii) Individuals who are members of racial or ethnic minority 
groups;
    (iv) Women; and
    (v) Elderly individuals;
    (6) A comparison, if appropriate, of prior year activities with the 
activities of the most recent year; and
    (7) Any new methods and approaches relating to IL services for 
older individuals who are blind that are developed by projects funded 
under this part;
    (e) The DSA will--
    (1) Provide services that contribute to the maintenance of, or the 
increased independence of, older individuals who are blind; and--
    (2) Engage in--(i) Capacity-building activities, including 
collaboration with other agencies and organizations;
    (ii) Activities to promote community awareness, involvement, and 
assistance; and
    (iii) Outreach efforts;
    (f) The application is consistent with the State plan for providing 
IL services required by section 704 of the Act and subpart C of 34 CFR 
part 364; and

    (g) The applicant has been designated by the State as the sole 
State agency authorized to provide rehabilitation services to 
individuals who are blind.

(Authority: 29 U.S.C. 711(c) and 796k (d), (f), (h), and (i))

Subpart C--How Does the Secretary Award Discretionary Grants on a 
Competitive Basis?


Sec. 367.20  Under what circumstances does the Secretary award 
discretionary grants on a competitive basis to States?

    (a) In the case of a fiscal year for which the amount appropriated 
under section 753 of the Act is less than $13,000,000, the Secretary 
awards discretionary grants under this part on a competitive basis to 
States.
    (b) Subparts A, B, C, and E of this part govern the award of 
competitive grants under this part.

(Authority: 29 U.S.C. 796k (b)(1))


Sec. 367.21  How does the Secretary evaluate an application for a 
discretionary grant?

    (a) The Secretary evaluates an application for a discretionary 
grant on the basis of the criteria in Sec. 367.22.
    (b) The Secretary awards up to 100 points for these criteria.
    (c) The maximum possible score for each criterion is indicated in 
parentheses.

(Authority: 29 U.S.C. 711(c) and 796k(b)(1) and (i)(1))


Sec. 367.22  What selection criteria does the Secretary use?

    The Secretary uses the following criteria to evaluate an 
application for a discretionary grant:
    (a) Extent of need for the project (20 points).
    (1) The Secretary reviews each application to determine the extent 
to which the project meets the specific needs of the program, including 
consideration of--
    (i) The needs addressed by the project;
    (ii) How the applicant identified those needs;
    (iii) How those needs will be met by the project; and
    (iv) The benefits to be gained by meeting those needs.
    (2) The Secretary reviews each application to determine)--
    (i) The extent that the need for IL services for older individuals 
who are blind is justified, in terms of complementing or expanding 
existing IL and aging programs and facilities; and
    (ii) The potential of the project to support the overall mission of 
the IL program, as stated in section 701 of the Act.
    (b) Plan of operation (25 points). The Secretary reviews each 
application to determine the quality of the plan of operation for the 
project, including--
    (1) The quality of the design of the project;
    (2) The extent to which the plan of management ensures proper and 
efficient administration of the project;
    (3) How well the objectives of the project relate to the purpose of 
the program;
    (4) The quality and adequacy of the applicant's plan to use its 
resources (including funding, facilities, equipment, and supplies) and 
personnel to achieve each objective;
    (5) How the applicant will ensure that project participants who are 
otherwise eligible to participate are selected without regard to race, 
color, national origin, gender, age, or disability;
    (6) A clear description of how the applicant will provide equal 
access to services for eligible project participants who are members of 
groups that have been traditionally under-represented, including 
members of racial or ethnic minority groups; and
    (7) The extent to which the plan of operation and management 
includes involvement by older individuals who are blind in planning and 
conducting program activities.
    (c) Quality of key personnel (10 points).
    (1) The Secretary reviews each application to determine the 
qualifications of the key personnel the applicant plans to use on the 
project, including--
    (i) The qualifications of the project director;
    (ii) The qualifications of each of the other management and 
decision-making personnel to be used in the project;
    (iii) The time that each person referred to in paragraphs (c)(1) 
(i) and (ii) of this section will commit to the project;
    (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 
disability; and
    (v) The extent to which the applicant, as part of its 
nondiscriminatory employment practices, encourages applications for 
employment from persons who are members of groups that have been 
traditionally under-represented, including--
    (A) Members of racial or ethnic minority groups;
    (B) Women;
    (C) Persons with disabilities; and
    (D) Elderly individuals.
    (2) To determine personnel qualifications under paragraphs (c)(1) 
(i) and (ii) of this section, the Secretary considers--
    (i) Experience and training in fields related to the scope of the 
project; and
    (ii) Any other qualifications that pertain to the objectives of the 
project.
    (d) Budget and cost effectiveness (5 points). The Secretary reviews 
each application to determine the extent to which--
    (1) The budget is adequate to support the project;
    (2) Costs are reasonable in relation to the objectives of the 
project; and
    (3) The applicant demonstrates the cost-effectiveness of project 
services in comparison with alternative services and programs available 
to older individuals who are blind.
    (e) 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 applicant's methods of 
evaluation--
    (1) Accurately evaluate the success and cost-effectiveness of the 
project;
    (2) Are objective and produce data that are quantifiable; and
    (3) Will determine how successful the project is in meeting its 
goals and objectives.

(Cross-reference: See 34 CFR 75.590)

    (f) 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 accessibility of 
facilities, equipment, and supplies.
    (g) Service comprehensiveness (20 points).
    (1) The Secretary reviews each application to determine the extent 
to which the proposed outreach activities promote maximum participation 
of the target population within the geographic area served by the 
project.
    (2) The Secretary reviews each application to determine the extent 
to which the availability of the following services that will meet the 
IL needs of older individuals with varying degrees of significant 
visual impairment are included:
    (i) Orientation and mobility skills training that will enable older 
individuals who are blind to travel independently, safely, and 
confidently in familiar and unfamiliar environments.
    (ii) Skills training in Braille, handwriting, typewriting, or other 
means of communication.
    (iii) Communication aids, such as large print, cassette tape 
recorders, and readers.
    (iv) Training to perform daily living activities, such as meal 
preparation, identifying coins and currency, selection of clothing, 
telling time, and maintaining a household.
    (v) Provision of low-vision services and aids, such as magnifiers 
to perform reading and mobility tasks.
    (vi) Family and peer counseling services to assist older 
individuals who are blind adjust emotionally to the loss of vision as 
well as to assist in their integration into the community and its 
resources.
    (vii) Any other needed services, such as transportation or guide 
services, provided to individuals with significant disabilities under 
the State IL program authorized by 34 CFR Part 365.
    (h) Likelihood of sustaining the program (10 points). The Secretary 
reviews each application to determine--
    (1) The likelihood that the service program will be sustained after 
the completion of Federal project grant assistance;
    (2) The extent to which the applicant intends to continue to 
operate the service program through cooperative agreements and other 
formal arrangements; and
    (3) The extent to which the applicant will identify and, to the 
extent possible, use comparable services and benefits that are 
available under other programs for which project participants may be 
eligible.

(Authority: 29 U.S.C. 711(c) and 796k (b)(1) and (i)(1))


Sec. 367.23  What additional factor does the Secretary consider?

    In addition to the criteria in Sec. 367.22, the Secretary considers 
the geographic distribution of projects in making an award.

(Authority: 29 U.S.C. 711(c) and 796k(b)(1) and (i)(1))

Subpart D--How Does the Secretary Award Contingent Formula Grants?


Sec. 367.30  Under what circumstances does the Secretary award 
contingent formula grants to States?

    (a) In the case of a fiscal year for which the amount appropriated 
under section 753 of the Act is equal to or greater than $13,000,000, 
grants under this part are made to States from allotments under section 
752(c)(2) of the Act.
    (b) Subparts A, B, D, and E of this part govern the award of 
formula grants under this part.

(Authority: 29 U.S.C. 796k(c))


Sec. 367.31 How are allotments made?

    (a) For purposes of making grants under section 752(c) of the Act 
and this subpart, the Secretary makes an allotment to each State in an 
amount determined in accordance with section 752(j) of the Act.
    (b) The Secretary makes a grant to a DSA in the amount of the 
allotment to the State under section 752(j) of the Act if the DSA 
submits to and obtains approval from the Secretary of an application 
for assistance under this program that meets the requirements of 
section 752(i) of the Act and Secs. 367.10 and 367.11.

(Authority: 29 U.S.C. 796k(c)(2))


Sec. 367.32  How does the Secretary reallot funds under section 
752(j)(4) of the Act?

    (a) From the amounts specified in paragraph (b) of this section, 
the Secretary may make reallotment grants to States, as determined by 
the Secretary, whose population of older individuals who are blind has 
a substantial need for the services specified in section 752(d) of the 
Act and Sec. 367.3(b), relative to the populations in other States of 
older individuals who are blind.
    (b) The amounts referred to in paragraph (a) of this section are 
any amounts that are not paid to States under section 752(c)(2) of the 
Act and Sec. 367.31 as a result of--
    (1) The failure of a DSA to prepare, submit, and receive approval 
of an application under section 752(i) of the Act and in accordance 
with Secs. 367.10 and 367.11; or
    (2) Information received by the Secretary from the DSA that the DSA 
does not intend to expend the full amount of the State's allotment 
under section 752(c) of the Act and this subpart.
    (c) A reallotment grant to a State under paragraph (a) of this 
section is subject to the same conditions as grants made under section 
752(a) of the Act and this part.
    (d) Any funds made available to a State for any fiscal year 
pursuant to this section are regarded as an increase in the allotment 
of the State under Sec. 367.31 for that fiscal year only.

(Authority: 29 U.S.C. 796k(j)(4))

Subpart E--What Conditions Must Be Met After an Award?


Sec. 367.40  What matching requirements apply?

    (a) Non-Federal contributions required by Sec. 367.11(b) may be in 
cash or in kind, fairly evaluated, including plant, equipment, or 
services.
    (b) For purposes of non-Federal contributions required by 
Sec. 367.11(b), amounts provided by the Federal Government, or services 
assisted or subsidized to any significant extent by the Federal 
Government, may not be included in determining the amount of non-
Federal contributions.

(Authority: 29 U.S.C. 796k(f))


Sec. 367.41  When may a DSA award grants or contracts?

    (a) A DSA may operate or administer the program or projects under 
this part to carry out the purposes specified in Sec. 367.1, either 
directly or through--
    (1) Grants to public or private nonprofit agencies or 
organizations; or
    (2) Contracts with individuals, entities, or organizations that are 
not public or private nonprofit agencies or organizations.
    (b) Notwithstanding paragraph (a) of this section, a DSA may enter 
into assistance contracts, but not procurement contracts, with public 
or private nonprofit agencies or organizations in a manner consistent 
with 34 CFR 366.32(e).

(Authority: 29 U.S.C. 796k(g) and (i)(2)(A))


Sec. 367.42  When does the Secretary award noncompetitive continuation 
grants?

    (a) In the case of a fiscal year for which the amount appropriated 
under section 753 of the Act is less than $13,000,000, the Secretary 
awards noncompetitive continuation grants for a multi-year project to 
pay for the costs of activities for which a grant was awarded--
    (1) Under chapter 2 of title VII of the Act; or
    (2) Under part C of title VII of the Act, as in effect on October 
28, 1992.
    (b) To be eligible to receive a noncompetitive continuation grant 
under this part, a grantee must satisfy the applicable requirements in 
this part and in 34 CFR 75.253.

(Authority: 29 U.S.C. 796k(b)(2))

[FR Doc. 94-11543 Filed 5-11-94; 8:45 am]
BILLING CODE 4000-01-P