[Federal Register Volume 59, Number 244 (Wednesday, December 21, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31312]


[[Page Unknown]]

[Federal Register: December 21, 1994]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Part 402

RIN: 0970-AB28

 

State Legalization Impact Assistance Grants (SLIAG)

AGENCY: Administration for Children and Families, HHS, Office of 
Refugee Resettlement.

ACTION: Final rule.

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

SUMMARY: This rule implements section 204(b)(4) of the Immigration 
Reform and Control Act of 1986, as amended by the Labor/Health and 
Human Services FY 1993 Appropriations Act, Public Law 102-394, and the 
Labor/Health and Human Services FY 1995 Appropriations Act, Public Law 
103-333. Section 204(b)(4) provides that SLIAG grant funds unexpended 
as of December 30, 1994, be reallocated to States with unreimbursed 
SLIAG-related costs, to the extent to which funds are available. The 
reallocated funds will be available to States for reimbursement of 
SLIAG-related costs through July 31, 1995.

DATES: The rule is effective December 21, 1994.

FOR FURTHER INFORMATION CONTACT: David B. Smith, Director, Division of 
State Legalization and Repatriation, Office of Refugee Resettlement, 
Administration for Children and Families, 370 L'Enfant Promenade, SW., 
6th floor, Washington, DC 20447. Telephone: (202) 401-9255.

SUPPLEMENTARY INFORMATION:

Background

    State Legalization Impact Assistance Grants (SLIAG) are mandated by 
the Immigration Reform and Control Act (IRCA) (Pub. L. 99-603), as 
amended. The purpose of SLIAG is to lessen the financial impact on 
State and local governments that resulted from the legalization of 
certain previously illegal aliens under IRCA. The SLIAG program 
provides reimbursement to States for the costs of certain public 
assistance, public health, and education services they have provided to 
these eligible legalized aliens through September 30, 1994.
    The Labor/Health and Human Services FY 1993 Appropriations Act, 
Public Law 102-394, dated October 6, 1992, amended section 204(b)(4) of 
IRCA to provide that any funds not expended as of December 30 1994, be 
reallocated to participating States which have expended their entire 
allotments and which have incurred unreimbursed SLIAG-related costs. 
The basis for the reallocation is each State's percentage share of 
total unreimbursed SLIAG-related costs in all States with such costs.
    In order to implement the amendment, the Department published a 
notice of proposed rulemaking on May 31, 1994. We received nine 
comments from two commenters on the proposed rule. Our response to 
these comments is set forth below.
    In addition, we have revised the final rule to make it consistent 
with the amendment to IRCA in the Labor/Health and Human Services FY 
1995 Appropriations Act, Public Law 103-333. The amendment provides 
that States use reallocated funds to reimburse accepted SLIAG-related 
costs within 90 days of the award of the funds but no later than July 
31, 1995. This change to the final rule is also discussed below.

Section 402.2, Definitions

    The amendment to IRCA requires that unexpended funds from SLIAG 
grants be reallocated to States with unreimbursed SLIAG-related costs. 
In the final rule, ``unexpended funds'' is defined as the amount by 
which a State's allotments through FY 1994 exceed the State's SLIAG-
related costs as of December 30, 1994.

Comment (Definition of ``Unexpended Funds'')

    One commenter suggested that the definition of unexpended funds 
should be revised to mean the amount by which a State's allotments 
exceed the amount of the State's drawdowns from its allotments as of 
December 30, 1994. The commenter suggested that States' drawdowns may 
be higher than their accepted SLIAG-related costs and that the 
definition of unexpended funds in the proposed rule would be unworkable 
unless the rule were further amended to require States to repay amounts 
by which drawdowns exceed accepted costs. The commenter also noted that 
States can appeal any order for repayment of funds and that an appeal 
can be time-consuming.

Response

    We have chosen to use SLIAG-related costs rather than drawdowns in 
calculating unexpended funds for the following reasons. First, the 
current SLIAG regulation at Sec. 402.20 provides that Department rules 
at 45 CFR part 92 apply to grants awarded under the SLIAG program. Part 
92 requires that grantees refund to the Department any unobligated 
grant funds after the end of the funding period (45 CFR 92.50(d)(2)). 
Grantees are further required to liquidate obligations of grant funds 
no later than 90 days following the end of the funding period of a 
grant (45 CFR 92.23(b)). We believe that the regulation does therefore 
already meet one concern of the commenter, since it requires that 
States refund the amounts by which their drawdowns from their 
allotments exceed their SLIAG-related costs. In the case of SLIAG 
grants, refund of unobligated amounts is required after the due date of 
the final cost reports on December 29, 1994.
    Second, if we had chosen to use drawdowns rather than SLIAG-related 
costs to determine unexpended funds, the total amount of unexpended 
funds might be lower than if we use SLIAG-related costs. The commenter, 
for instance, suggests that States' drawdowns may be higher than their 
accepted SLIAG-related costs. If a State with drawdowns higher than its 
accepted SLIAG-related costs were, in its final cost report, unable to 
document the additional costs for which it was claiming reimbursement, 
the State would be required to refund the amount of the excess 
drawdown. If we were to use the definition proposed by the commenter, 
we would be precluded from including that amount (i.e., the amount of 
the excess drawdown) in the total of unexpended funds. We believe that 
using accepted SLIAG-related costs instead of drawdowns will ensure 
that the maximum amount of unexpended funds is available for 
reallocation.
    The commenter also suggests that drawdowns rather than SLIAG-
related costs be used in determining unexpended funds because States 
with drawdowns greater than accepted SLIAG-related costs can appeal an 
order for repayment and such an appeal can be time-consuming. In the 
final rule, we have allowed 90 days for States to submit their final 
cost reports; we have allowed an additional 76 days for States to 
respond to our comments on their final cost reports and to submit 
revisions. In view of the amount of time we have allowed in the final 
rule to States to submit their final cost reports and to submit revised 
reports, if necessary, we believe that the likelihood of any appeal is 
slight. Although an appeal would reduce the unexpended funds available 
for reallocation as of March 15, 1995, we believe that the total amount 
of unexpended funds available for reallocation will be greater using 
SLIAG-related costs, rather than drawdowns, as the basis for 
determining unexpended funds.
    Finally, although some States may have drawdowns which exceed their 
accepted SLIAG-related costs as of December 30, 1994, other States have 
chosen, during the course of the SLIAG program, to draw down funds only 
after SLIAG-related costs have been accepted by the Department. We 
believe that the definition proposed by the commenter might unfairly 
penalize States which have chosen to draw down funds after acceptance 
by the Department of their SLIAG-related costs. In particular, use of 
this commenter's suggested definition might require us to take back and 
reallocate to other States funds granted to such States which exceed 
their drawdowns but are less than their accepted SLIAG-related costs, 
leaving these States with unreimbursed SLIAG-related costs. To avoid 
creating a new group of States with SLIAG-related costs for which they 
would not receive reimbursement, we have not incorporated the 
suggestion of this commenter in the final rule.

Section 402.11, Limitations on Use of SLIAG Funds

    In the SLIAG regulation, States are required to document and report 
to the Department the SLIAG-related costs they have incurred in 
providing services to eligible legalized aliens through September 30, 
1994. The cost reports are due 90 days after the end of the final year. 
The final cost reports for grants awarded under Secs. 402.31 and 402.33 
are therefore due December 29, 1994. In the final rule, Sec. 402.11 has 
been amended to provide that, for States to receive reimbursement from 
SLIAG funds, costs submitted by States must be accepted by the 
Department as allowable by March 15, 1995.

Comment (Limitations on Use of SLIAG Funds)

    One commenter suggested that the requirement that SLIAG funds be 
available for reimbursement only for SLIAG-related costs accepted as 
allowable by the Department as of March 15, 1995, be deleted. The 
commenter suggested that this requirement would be unfair to local 
governments which cannot report SLIAG-related costs directly to the 
Department nor respond directly to comments. The commenter also noted 
that the proposed rule provided no mechanism for appealing decisions by 
the Department not to accept costs while under the existing regulation, 
States can appeal disallowances before repaying funds.

Response

    In the proposed rule, we established the deadline of March 15, 
1995, for accepting SLIAG-related costs for two reasons. We believe 
that this date provides as long a period of time as possible for States 
to respond to our comments on their final cost reports and to submit 
revised cost reports while ensuring that there is adequate time for the 
Department to complete the reallocation process and for States with 
unreimbursed SLIAG-related costs to draw down reallocated funds by July 
31, 1995. Specifically, we are allowing 76 days between the due date of 
the final cost reports on December 29, 1994, and the final date for 
acceptance by the Department of SLIAG-related costs on March 15, 1995, 
to States for revisions of their costs reports.
    Although the commenter expressed concern about the impact of the 
deadline of March 15, 1995, on local governments, we believe that this 
deadline does allow adequate time for States (the grantees under the 
SLIAG program) to document, review, submit, and revise their SLIAG-
related costs, incurred by both State and local governments, 
Furthermore, we have no reason to believe that any extension of the 
March 15, 1995, deadline would necessarily ensure that local 
governments would be able to work out with State grantees problems with 
the cost submissions of the local governments. We have retained the 
deadline of March 15, 1995, in the final rule as we believe it provides 
sufficient time both for States to report their SLIAG-related costs and 
for States with unreimbursed SLIAG-related costs to draw down their 
reallocated funds.
    Finally, the commenter notes that the proposed rule provides no 
mechanism for appealing decisions by the Department not to accept costs 
after March 15, 1995. In developing the parameters for reallocating 
unexpended funds to States with unreimbursed SLIAG-related costs, we 
were concerned with ensuring that the reallocation of unexpended funds 
and the drawdown of the reallotted funds by States would be completed 
by the statutory deadline. In order to ensure that the reallocation 
takes place in a timely manner, we have established the date of March 
15, 1995, as the final date on which SLIAG-related costs will be 
accepted by the Department prior to the reallocation of unexpended 
funds. We have not included in the final rule any mechanism for 
revisiting the Department's decision not to consider in its 
reallocation determinations any costs which have not been submitted to 
the Department by March 15, 1995. However, with respect to costs which 
a State has submitted by March 15, 1995, but which have not been 
accepted by the Department, Sec. 402.25 of the regulation permits such 
a State to appeal to the Departmental Appeals Board an order requiring 
the State to repay amounts disallowed.
    The Labor/Health and Human Services FY 1995 Appropriations Act, 
Public Law 103-333, amended 204(b)(4) of IRCA to provide that States 
use reallocated funds to reimburse SLIAG-related costs within 90 days 
of the award of the reallotted funds but no later than July 31, 1995. 
We have therefore revised Sec. 402.11(q) to incorporate this provision. 
States are reimbursed for their SLIAG-related costs when they draw down 
funds from their allotments. This provision applies also to a State's 
reimbursing other governmental entities within the State for SLIAG-
related costs they have incurred. These costs must have been submitted 
by the State in annual cost reports by December 29, 1994, and accepted 
by the Department by March 15, 1995.

Section 402.26, Time Period for Obligation and Expenditure of Grant 
Funds

    This section of the rule stated that any obligations of grant funds 
by a State must be expended within the time limit set by 45 CFR 
92.23(b). It also stated that this deadline could be extended by the 
Secretary at the request of a State. We proposed to revise this section 
by establishing the deadline for expending obligations as December 29, 
1994, and by deleting the provision allowing a State to request an 
extension of this deadline. We noted in the preamble of the Notice of 
Proposed Rulemaking that we were proposing this revision to ensure that 
we would be able to determine the amount of unexpended funds as of 
December 30, 1994, as mandated by the amendment to IRCA.

Comment

    We received two comments on this section of the proposed rule. The 
first commenter suggested a revision to specify that only obligations 
from grant funds awarded under Secs. 402.31 and 402.33 must be 
liquidated by December 29, 1994, and that grant funds awarded under 
Sec. 402.34 be available for obligation and expenditure through June 
30, 1995. The second commenter suggested that the section be revised to 
allow obligations incurred through September 30, 1994, to be expended 
through June 30, 1995, with funds awarded under Sec. 402.34.

Response

    With regard to the first comment, it was not our intent in our 
proposed wording of this provision to limit what States could do with 
funds received under Sec. 402.34. The provision to which the commenter 
refers; i.e., that obligations be expended by December 29, 1994, was 
intended, as noted above, to provide a basis for determining the total 
amount of unexpended funds from grants awarded under Secs. 402.31 and 
402.33 as of December 30, 1994, as required by the amendment to IRCA.
    Since the purpose of the reallocation of unexpended funds is to 
reimburse States for costs incurred prior to October 1, 1994, we do not 
believe that the time limit of 45 CFR 92.23(b) is applicable to the 
reallotted funds. In response to this comment and to clarify our intent 
in this provision, we are revising the wording of the first sentence of 
Sec. 402.26(b) to specify that the time limit for liquidating 
obligations pertains only to funds awarded under Sec. 402.31 and 
Sec. 402.33. We are further revising Sec. 402.26(b) to state explicitly 
that the time limit of 45 CFR 92.23(b) does not apply to funds awarded 
under Sec. 402.34.
    As noted above, we also have revised the final rule to be 
consistent with the amendment to IRCA made by the FY 1995 Labor/Health 
and Human Services Appropriations Act, Public Law 103-333. Section 
402.11(q) provides that States use reallocated funds to reimburse 
SLIAG-related costs within 90 days of the award of the funds but no 
later than July 31, 1995.
    Finally, we have revised Sec. 402.51 to indicate that no reporting 
on obligations or expenditures is required for funds allotted under 
Sec. 402.34.
    The second commenter suggested that States be allowed to liquidate 
obligations incurred before October 1, 1994, through the statutory 
deadline with funds allocated under Sec. 402.34. From the beginning of 
the SLIAG program, the regulation has defined SLIAG-related cost as an 
expenditure by a State or local government. Costs incurred by private 
providers and State obligations with private providers have, therefore, 
not been accepted as SLIAG-related costs for reimbursement. This 
definition of SLIAG-related costs incorporates IRCA's goal of 
reimbursing State and local governments for their costs resulting from 
the legalization of certain aliens. It also has ensured that 
allocations of SLIAG funds are based on actual costs incurred by States 
and that allocations have not been influenced by States' obligating 
large amounts of funds. In view of this existing definition, 
obligations incurred by States prior to October 1, 1994, but not 
expended by December 29, 1994, cannot be considered SLIAG-related costs 
acceptable for reimbursement with reallocated funds. This suggestion 
has therefore not been incorporated in the final rule.

Section 402.30, Basis of awards; Section 402.40, General

    The final rule in Sec. 402.30 states that no application is 
necessary for receiving reallocated funds; reallocated funds will be 
awarded to States whose annual cost reports show that their accepted 
SLIAG-related costs exceed their allotments under Secs. 402.31 and 
402.33. Section 402.40 provides that, to be eligible for reallocated 
funds, States must submit annual reports which document that their 
SLIAG-related costs exceed the amount of their allotments under 
Secs. 402.31 and 402.33.

Comment

    One commenter suggested that both of these sections be revised. 
According to this commenter, Sec. 402.30 should be revised to state 
that reallocated funds would be awarded to States which have drawn down 
the full amount of their allotments as of December 30, 1994. The 
commenter also suggested that Sec. 402.40 be revised to provide that, 
to be eligible for reallocated funds, States must have drawn down their 
entire allotments as of December 30, 1994.

Response

    As we noted above, we believe that the best way to meet the goal of 
the amendment to IRCA is to define unexpended funds as the difference 
between a State's allotments through FY 1994 and the State's SLIAG-
related costs. The final rule therefore incorporates this definition. 
For this reason, we believe that the basis of eligibility and the basis 
of awards should also be based on a State's SLIAG-related costs, rather 
than on drawdowns. The final rule therefore states that reallocated 
funds will be awarded to States whose annual cost reports show that 
their accepted SLIAG-related costs exceed their allotments under 
Sec. 402.31 and Sec. 402.33. It also states that, to be eligible for 
reallocated funds, States must submit annual reports which document 
that their SLIAG-related costs exceed the amount of their allotments 
under Sec. 402.31 and Sec. 402.33.

Section 402.34 Allocation of unexpended funds

    This section provides that unexpended funds will be reallocated 
based on the percentage share of unreimbursed SLIAG-related costs of 
each State with such costs to the total of all unreimbursed SLIAG-
related costs. The section provides further that the allotments awarded 
to States will be the amount of the reallocation or the amount of each 
State's unreimbursed SLIAG-related costs, whichever is less.

Comment

    We received comments from both commenters on this section. Both 
suggested that the reallocated amounts should be each State's 
percentage share of the unexpended funds even if that amount exceeds 
the amount of a State's total unreimbursed SLIAG-related costs. One 
commenter suggested that reallocating all unexpended funds would make 
it possible for States with unreimbursed SLIAG-related costs as of 
December 30, 1994, to be reimbursed for any additional SLIAG-related 
costs they might be able to identify, document, and submit to the 
Department after March 15, 1995.

Response

    There are two reasons why we are not revising the rule in 
accordance with these suggestions. First, the purpose of funds 
reallocated under this amendment to IRCA is to reimburse States for 
costs they incurred in providing services to eligible legalized aliens 
prior to October 1, 1994. Under this final rule, States are allowed 90 
days (until December 29, 1994) to submit final reports documenting 
their SLIAG-related costs. They are allowed an additional 76 days 
(until March 15, 1995) to respond to comments and revise their 
submissions before the unexpended funds are reallocated. We believe 
that the amount of time we are already providing to States is adequate 
to document and submit SLIAG-related costs incurred prior to October 1, 
1994.
    Second, and more important, we believe that extending the period 
during which States with unreimbursed SLIAG-related costs could 
continue to attempt to identify and document SLIAG-related costs would 
not be in accordance with the intent of the amendment to IRCA. We 
believe that it was intended that all States participating in SLIAG 
would have the same amount of time to identify, document, and submit 
SLIAG-related costs and that the purpose of the amendment was to 
provide reimbursement to States with unreimbursed SLIAG-related costs 
only for those costs documented and submitted during that equal period 
of time. Since extending the period of time for identifying additional 
costs for all States would make it impossible to determine the total 
amount of unexpended funds for reallocation, we conclude that the 
intent of the amendment was to provide reimbursement only for SLIAG-
related costs submitted by participating States by December 29, 1994. 
For these two reasons, we are not incorporating these suggestions in 
the final rule.

Section 402.51, Reporting

    In this section, we revised the reporting requirements to provide 
for funds awarded under Sec. 402.34. Since all SLIAG-related costs will 
have been submitted to, and accepted by, the Department by March 15, 
1995, we attempted to keep reporting as simple as possible by not 
requiring that States with unreimbursed SLIAG-related costs submit an 
additional annual cost report after July 31, 1995.

Comment

    One commenter suggested that the rule be revised to allow States to 
submit reports on their SLIAG-related costs by September 28, 1995. The 
commenter suggested that this change would be necessary if the 
regulation were also revised to allow States to continue to identify, 
document, and submit SLIAG-related costs for reimbursement until June 
30, 1995.

Response

    As we have noted above, we believe that the amount of time we have 
allowed in the regulation for documenting and submitting SLIAG-related 
costs is both adequate and equitable. Since States will not be allowed 
to submit additional SLIAG-related costs to the Department after March 
15, 1995, we have not incorporated this suggestion in the final rule.

Effective Date

    This rule is effective upon publication. While this rule would not 
normally be effective until 30 days after its publication, we have 
found, pursuant to 5 U.S.C. 553(d)(3) that good cause exists for 
waiving the waiting period for this rule. Specifically, we have 
determined that an immediate effective date is necessary to provide 
States with adequate notice of the procedures which will be used to 
reallocate unexpended SLIAG funds as mandated by IRCA. If the effective 
date for this rule is delayed, States may not have sufficient time to 
gather and submit to the Department the cost information which is 
integral to the reallocation process. Accordingly, we have found that 
the usual 30 day waiting period is impracticable and unnecessary.

Regulatory Procedures

Executive Order 12866

    Executive Order 12866 requires that regulations be reviewed to 
ensure that they are consistent with priorities and principles set 
forth in the Executive Order. The Department has determined that this 
rule is consistent with these priorities and principles. An assessment 
of the costs and benefits of available regulatory alternatives 
(including not regulating) demonstrated that the approach taken in the 
regulation is the most cost-effective and least burdensome while still 
achieving the regulatory objectives.

Paperwork Reduction Act

    This rule imposes no new reporting or recordkeeping requirements, 
and therefore, no approvals are necessary under section 3504 of the 
Paperwork Reduction Act of 1980 (Pub. L. 96-511).

Regulatory Flexibility Act

    The Regulatory Flexibility Act (Pub. L. 96-354) requires the 
Federal government to anticipate and reduce the impact of regulations 
and paperwork requirements on small entities.
    The primary impact of this rule is on State governments. Therefore, 
we certify that this rule will not have a significant economic impact 
on a substantial number of small entities because it affects the 
reallocation and reallotment of SLIAG funds to State governments. Thus, 
a regulatory flexibility analysis is not required.

(Catalogue of Federal Domestic Assistance Program No. 93.565, State 
Legalization Impact Assistance Grants)

List of Subjects in 45 CFR Part 402

    Administrative cost, Aliens, Allocation formula, Allotment, 
Education, Grant programs, Immigration, Immigration Reform and Control 
Act, Public assistance, Public health assistance, Reporting and 
recordkeeping requirements, State Legalization Impact Assistance 
Grants.

    Dated: October 27, 1994.
Mary Jo Bane,
Assistant Secretary for Children and Families.

    Dated: December 15, 1994.
Donna Shalala,
Secretary, Department of Health and Human Services.

    For the reasons set out in the preamble, 45 CFR part 402 is amended 
as set forth below.

PART 402--STATE LEGALIZATION IMPACT ASSISTANCE GRANTS

    1. The authority citation for Part 402 continues to read as 
follows:

    Authority: 8 U.S.C. 1255a note, as amended.

    2. Section 402.2 is amended by revising the definitions of 
``allocation'' and ``allotment'' and by adding definitions for 
``unexpended funds'' and ``unreimbursed SLIAG-related costs'' to read 
as follows:


Sec. 402.2  Definitions.

* * * * *
    Allocation  means an amount designated for a State, as determined 
under Sec. 402.31, Sec. 402.33, or Sec. 402.34.
    Allotment means the total amount awarded to a State, as determined 
under Sec. 402.31, Sec. 402.33, or Sec. 402.34.
* * * * *
    Unexpended funds means the amount by which allotments awarded to a 
State, as determined under Sec. 402.31 and Sec. 402.33 of this part, 
exceed the State's SLIAG-related costs, as defined in this part, 
reported in annual reports pursuant to Sec. 402.51 and accepted by the 
Department as of March 15, 1995.
    Unreimbursed SLIAG-related costs means the amount by which a 
State's total SLIAG-related costs, as defined in this part, reported in 
annual reports pursuant to Sec. 402.51 and accepted by the Department 
as of March 15, 1995, exceed the allotments awarded to a State, as 
determined under Sec. 402.31 and Sec. 402.33 of this part.
    3. Section 402.10(a) is revised to read as follows:


Sec. 402.10  Allowable use of funds.

    (a) Funds provided under Sec. 402.31 and 402.33 of this part for a 
fiscal year may be used only with respect to SLIAG-related costs 
incurred in that fiscal year or succeeding fiscal years, except that 
funds provided for FY 1993 and FY 1994 may be used for SLIAG-related 
costs incurred in FY 1990 or succeeding years. Funds provided under 
Sec. 402.34 of this part may be used with respect to SLIAG-related 
costs incurred in any fiscal year of the program. Funds may be used, 
subject to Secs. 402.11 and 402.26, for the following activities, as 
defined in this part:
    (1) Public assistance;
    (2) Public health assistance;
    (3) Educational services;
    (4) Employment discrimination education and outreach;
    (5) Phase II outreach;
    (6) SLIAG administrative costs; and
    (7) Program administrative costs.
* * * * *
    4. In Sec. 402.11, paragraphs (p) and (q) are added to read as 
follows:


Sec. 402.11  Limitations on use of SLIAG funds.

* * * * *
    (p) Funds provided under this part may be used only for SLIAG-
related costs submitted to the Department pursuant to Sec. 402.51 and 
accepted as allowable costs by March 15, 1995.
    (q) Funds made available to a State pursuant to Sec. 402.34 shall 
be utilized by the State to reimburse all allowable costs within 90 
days after such State has received a reallocation of funds from the 
Secretary, but in no event later than July 31, 1995.
    5. In Sec. 402.26, paragraph (b) is revised to read as follows:


Sec. 402.26  Time period for obligation and expenditure of grant funds.

* * * * *
    (b) Obligations by the State of funds awarded under Sec. 402.31 and 
Sec. 402.33 must be liquidated within the time limit set by 45 CFR 
92.23(b). This time limit will not be extended. The time limit 
established by 45 CFR 92.23(b) does not apply to funds awarded under 
Sec. 402.34.
    6. Section 402.30 is amended by revising the first sentence and 
adding a second sentence to read as follows:


Sec. 402.30  Basis of awards.

    The Secretary will award funds in a fiscal year under Sec. 402.31 
or Sec. 402.33 to States with approved applications for that fiscal 
year in accordance with the apportionment of funds from the Office of 
Management and Budget. The Secretary will award funds under Sec. 402.34 
to States whose annual reports submitted pursuant to Sec. 402.51 
establish that their allowable SLIAG-related costs exceed the total of 
their allotments, as determined under Sec. 402.31 and Sec. 402.33. * * 
*
    7. Section 402.34 is added to read as follows:


Sec. 402.34  Allocation of unexpended funds.

    (a) Any unexpended funds, as defined in this part, from allotments 
awarded to States under Sec. 402.31 and Sec. 402.33 of this part, will 
be allocated to States with unreimbursed SLIAG-related costs, as 
defined in this part.
    (b) To determine the allocations, the ratio of each State's 
unreimbursed SLIAG-related costs to the total of all such costs in all 
States will be calculated. The ratio for each State with unreimbursed 
SLIAG-related costs will be multiplied by total unexpended funds to 
determine the allocation for each State. The amount allotted to a State 
will be the amount of the State's allocation under this section or the 
amount of the State's unreimbursed SLIAG-related costs, whichever is 
less.
    8. Section 402.40 is amended by revising the first sentence and 
adding a third sentence to read as follows:


Sec. 402.40  General.

    In order to be eligible for funds available under Sec. 402.31 and 
Sec. 402.33 of this part in a fiscal year, a State must submit an 
annual application. * * * In order to be eligible for funds under 
Sec. 402.34 of this part, a State must submit annual reports pursuant 
to Sec. 402.51 which establish that the State has incurred SLIAG-
related costs in excess of the amount of the allotments it received 
under Sec. 402.31 and Sec. 402.33 of this part.
    9. Section 402.51 is amended by redesignating paragraph (a) as 
paragraph (a)(1) and revising the first sentence of that paragraph, by 
adding paragraph (a)(2), and by revising the introductory text of 
paragraph (c) to read as follows:


Sec. 402.51  Reporting.

    (a)(1) After the end of each Federal fiscal year through FY 1994 
for which it received or during which it obligated or expended SLIAG 
funds and by the due date indicated below, a State must submit annual 
reports containing the information identified in (c) and (e) of this 
section. * * *
    (2) A State which receives funds pursuant to Sec. 402.31 and 
Sec. 402.33 and which expends funds pursuant to Sec. 402.26(b) must 
submit a report containing the information identified in paragraph (e) 
of this section. The report is due no later than December 29, 1994.
* * * * *
    (c) A State's annual report must provide information on the status 
of each fiscal year's funds, as of September 30, for the fiscal year 
for funds received under Sec. 402.31 and Sec. 402.33, including:
* * * * *

(Approved by the Office of Management and Budget under control 
number 0970-0079)
[FR Doc. 94-31312 Filed 12-20-94; 8:45 a.m.]
BILLING CODE 4184-01-M