[Federal Register Volume 61, Number 43 (Monday, March 4, 1996)]
[Rules and Regulations]
[Pages 8454-8455]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-4911]




[[Page 8453]]

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Part VIII





Department of Education





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34 CFR Part 75



Education Department General Administrative Regulations--Direct Grant 
Programs; Final Rule

  Federal Register / Vol. 61, No. 43 / Monday, March 4, 1996 / Rules 
and Regulations   

[[Page 8454]]


DEPARTMENT OF EDUCATION

34 CFR Part 75

RIN 1880-AA68


Education Department General Administrative Regulations--Direct 
Grant Programs

AGENCY: Department of Education.

ACTION: Final Regulations.

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SUMMARY: The Secretary amends the Education Department General 
Administrative Regulations (EDGAR) that govern discretionary grant 
programs. These regulations clarify that the Secretary may reject 
applications that propose project funding levels that exceed the 
maximum award amount established in an application notice published in 
the Federal Register. The Secretary issues these regulations to clarify 
the meaning of existing regulations that govern the application review 
process.

EFFECTIVE DATE: These regulations take effect on April 3, 1996.

FOR FURTHER INFORMATION CONTACT: Mary A. Smith, Office of the General 
Counsel, U.S. Department of Education, 600 Independence Avenue SW., 
Room 5113, FB10, Washington, D.C. 20202-2241. Individuals who use a 
telecommunications device for the deaf may call the Federal Information 
Relay Service (FIRS) at 1-800-877-8339 between 8 a.m. and 8 p.m., 
Eastern time, Monday through Friday.

SUPPLEMENTARY INFORMATION: The Secretary takes this action to implement 
a recommendation made by a quality improvement team for improving the 
discretionary grant award process.
    Under current practice, the Department reviews applications that 
exceed the upper dollar limit of the estimated range of grant awards 
expected to be made under a competition but, when the awards are made, 
in most cases, the Department funds the projects at amounts within the 
funding range.
    In conducting competitions, the Department generally publishes 
application notices that specify the estimated amounts or estimated 
ranges of awards. However, because these amounts or ranges are 
estimated, applicants often request funding at levels above the 
estimated levels. Under most competitions, the practice of the 
Department has been to establish grant award amounts for successful 
applicants that are at or below the amounts specified in the estimates. 
However, in some cases, the Department has made awards that exceeded 
the estimates specified in the application notice.
    The Department has been guided by the underlying principle that 
applicants for discretionary grants must be afforded basic fairness in 
the competitive grant award process. Most of the time applicants who 
propose projects that exceed the upper limit of the specified range of 
awards can propose to do significantly more than applicants who propose 
funding consistent with the estimates. In these circumstances, 
applicants who request funds that exceed these amounts are likely to 
receive better scores from reviewers. If those applicants are then 
selected for funding, the Department, in most cases, negotiates with 
the applicants to reduce the cost of the projects to bring them within 
the estimated funding range. As a result, many of the activities in 
these applications have to be significantly modified, reduced, or 
eliminated. The result is that the projects negotiated for final award 
often differ substantially from the applications that were highly rated 
by the reviewers. This practice has the potential of rewarding 
applicants who originally request funding above the funding range and 
penalizing applicants who follow the estimates.
    However, this is not always the case. Sometimes the Department is 
unsure what a highly qualified project should cost. This is especially 
true when an educational technology is being explored or the Department 
is supporting research in a new field. In these situations, the 
Department may not have confidence that it has correctly estimated what 
the funded projects will cost. Thus, the Secretary would not put a 
maximum limitation on the competition to account for the possibility 
that applicants might need more funds than specified in the expected 
range in order to successfully implement the program's goals.
    These regulations would clarify that the Secretary has discretion 
to establish funding limits for awards, and provide for the inclusion 
of information on maximum funding levels in application notices.
    Under Sec. 75.101(a)(2), the Secretary may include in an 
application notice the amount of funds available for grants and the 
estimated number and amounts of those grants. Some application notices 
have included the estimated amount of funds available for each grant, 
and some application notices have given an estimated award amount. As 
the provision in Sec. 75.101(a)(2) is currently worded, it is unclear 
whether the application notice may include a maximum award amount. 
These amendments to Sec. 75.101 clarify that the Secretary may include 
an estimated amount of funds available for each grant and, if 
appropriate, a maximum amount of funds available for each grant.
    The Secretary also amends 34 CFR 75.104 to require that if a 
maximum award amount is established, the Secretary may reject 
applications that propose a budget that would exceed the maximum award 
amount.
    These amendments will ensure better service to the Department's 
customers by permitting the Department to reject applications that 
exceed a maximum amount. This process will enable the Department to 
make awards more quickly and at less cost.

Executive Order 12866

    These 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 the regulatory action.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--the Secretary has determined that the benefits of the 
regulations in clarifying and improving the Department's grant 
application review process justify the costs.
    The Secretary has also determined that this regulatory action does 
not unduly interfere with State, local, and tribal governments in the 
exercise of their governmental functions.
    Summary of potential costs and benefits: There are no identified 
costs associated with these regulations. The potential benefits of 
these regulations are discussed elsewhere in this preamble under the 
following heading: Supplementary Information.

Regulatory Flexibility Act Certification

    The Secretary certifies that these regulations would not have a 
significant economic impact on a substantial number of small entities. 
The small entities affected would be small local educational agencies, 
community-based organizations, nonprofit organizations, and 
institutions of higher education. However, these regulations would have 
no economic impact on any of the entities affected and would merely 
ensure a fairer application review process.

Paperwork Reduction Act of 1995

    These regulations have been examined under the Paperwork Reduction 
Act of 1995 and have been found to contain no information collection 
requirements. 

[[Page 8455]]


Waiver of Rulemaking

    It is the practice of the Secretary to offer interested parties the 
opportunity to comment on proposed regulations in accordance with the 
Administrative Procedure Act (5 U.S.C. 553). However, because the 
Secretary is interpreting existing regulations to allow an application 
notice to include an estimated amount of funds available for each grant 
or a maximum amount of funds available for each grant and because the 
Secretary is establishing a procedural rule necessary for the 
Department to conduct grant application review processes, the Secretary 
has determined, pursuant to 5 U.S.C. 553(b)(A), that proposed 
rulemaking requirements do not apply.

List of Subjects in 34 CFR Part 75

    Education Department, Grant programs--education, Grant 
administration, Incorporation by reference.

    Dated: February 28, 1996.
Richard W. Riley,
Secretary of Education.

(Catalog of Federal Domestic Assistance Number does not apply)

    The Secretary amends Part 75 of Title 34 of the Code of Federal 
Regulations as follows:

PART 75--DIRECT GRANT PROGRAMS

    1. The authority citation for Part 75 continues to read as follows:

    Authority: 20 U.S.C. 1221e-3 and 3474, unless otherwise noted.

    2. Section 75.101 is amended by revising paragraph (a)(2) to read 
as follows:


Sec. 75.101  Information in the application notice that helps an 
applicant apply.

    (a) * * *
    (2) The amount of funds available for grants, the estimated number 
of those grants, the estimated amounts of those grants and, if 
appropriate, the maximum award amounts of those grants.
* * * * *
    3. Section 75.104 is revised to read as follows:


Sec. 75.104  Applicants must meet procedural rules.

    (a) The Secretary may make a grant only to an eligible party that 
submits an application.
    (b) If a maximum award amount is established in a notice published 
in the Federal Register, the Secretary may reject without consideration 
or evaluation any application that proposes a project funding level 
that exceeds the stated maximum award amount.

(Authority: 20 U.S.C. 1221e-3 and 3474)

[FR Doc. 96-4911 Filed 3-1-96; 8:45 am]
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