[Federal Register Volume 67, Number 159 (Friday, August 16, 2002)]
[Rules and Regulations]
[Pages 53680-53687]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-20651]



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Part III





Department of Education





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34 CFR Part 222



Impact Aid Programs; Final Rule

  Federal Register / Vol. 67, No. 159 / Friday, August 16, 2002 / Rules 
and Regulations  

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DEPARTMENT OF EDUCATION

34 CFR Part 222

RIN 1810-AA94


Impact Aid Programs

AGENCY: Office of Elementary and Secondary Education, Department of 
Education.

ACTION: Final regulations.

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SUMMARY: The Secretary issues these final regulations to implement a 
new Impact Aid discretionary construction grant program, which is 
authorized under section 8007(b) of the Elementary and Secondary 
Education Act (the Act), as amended by the No Child Left Behind Act of 
2001. The program provides competitive grants for emergency repairs and 
modernization of school facilities to certain eligible school districts 
that receive Impact Aid funds. These final regulations incorporate 
statutory requirements and provide requirements for applying and 
qualifying for, as well as spending, the Federal funds provided under 
this program. These final regulations apply only to the fiscal year 
(FY) 2002 grant competition.

DATES: These regulations are effective September 16, 2002.

FOR FURTHER INFORMATION CONTACT: Catherine Schagh, Impact Aid Program, 
U.S. Department of Education, 400 Maryland Avenue, SW., Washington, DC 
20202-6244. Telephone: (202) 260-3858 or via Internet, at: 
[email protected].
    If you use a telecommunications device for the deaf (TDD), you may 
call the Federal Information Relay Service (FIRS) at 1-800-877-8339.
    Individuals with disabilities may obtain this document in an 
alternative format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person listed under FOR FURTHER 
INFORMATION CONTACT.

SUPPLEMENTARY INFORMATION: These final regulations implement the new 
discretionary Impact Aid construction grant program, which is 
authorized under section 8007(b) of the Act, as amended by the No Child 
Left Behind Act of 2001 (Pub. L. 107-110, enacted January 8, 2002).
    The purpose of the program is to assist eligible Impact Aid school 
districts in meeting the emergency or modernization needs of their 
school facilities.
    The following is a summary of the regulatory provisions, such as 
interpretations of statutory text, or standards and procedures for the 
operation of the program, that the Secretary believes are necessary for 
implementing the statute. We discuss substantive issues under the 
sections of the regulations to which they pertain. Generally, we do not 
address regulatory provisions that are technical or otherwise minor in 
effect.

Section 222.172  What Activities May an LEA Conduct With Funds Under 
This Program?

    The regulations detail the types of construction activities that 
recipients of emergency and modernization grants may conduct with grant 
funds. These provisions also clarify that both emergency and 
modernization grants may only be used for new construction when an LEA 
holds title to an existing facility and when the proposed construction 
meets the standards detailed in the regulations for determining that 
improving a current facility is more costly than replacing it.

Section 222.173  What Activities Are Prohibited?

    Section 222.173 specifies the various types of activities that may 
not be supported with grant funds under this program. The statute 
prohibits using grant funds for acquiring real property but allows for 
the new construction of a building in limited circumstances. Since a 
building is also typically considered to be real property, the 
provision clarifies, consistent with the authorizing statute, that 
grant funds cannot be used to acquire an interest in real property 
except when the Secretary determines under Sec. 222.173 that 
construction of a new building will be permitted.

Section 222.176  What Definitions Apply to This Program?

    The regulations define the term ``emergency'' to include health and 
safety conditions that present an immediate threat to the building's 
occupants, as well as those conditions that will present health and 
safety hazards in the very near future. The definition also provides 
examples of some of the types of health and safety conditions that the 
Secretary anticipates the emergency grants will address.
    The provisions clarify that ``modernization'' grants must be used 
to repair, renovate, alter, or extend facilities in order to support a 
contemporary educational program that is consistent with the laws, 
standards, or common practices in the LEA's State. Since the Secretary 
anticipates that the need for these grants will exceed the amount of 
available funds, this provision clarifies that the Secretary does not 
intend that these grants be used to fund facility modernization 
projects that exceed a State's standards.

Eligibility

    The statutory eligibility criteria for emergency and modernization 
grants are complex and further complicated by funding provisions that 
specify, in descending priority order, two emergency grant and two 
modernization grant eligibility categories. These regulations provide 
details on each of the four eligibility categories so that applicants 
can determine under which funding priority their application will be 
considered. This will be particularly important for applicants to 
consider because the statute mandates that the Secretary must first use 
available funds for applications in the first priority. After all 
eligible applications in the first priority have been funded, the 
Secretary considers applications in the second priority, followed by 
the third and fourth priorities in descending order.

How To Apply for a Grant

    The statute does not specify a complete application process; the 
regulations provide for an application that requests objective and 
subjective information that will be used to rank applicants. An 
applicant will also be required to agree to certain assurances that are 
contained in the application package. In addition, the Secretary, 
before making final award decisions, will request detailed data on the 
funds that the highest-ranked applicants have available to contribute 
to their proposed projects. The regulations specify that the 
applications will be based on student and fiscal data from the 
preceding fiscal year, unless satisfactory fiscal data from that year 
are not available.

How Grants Are Made

    The Department will review applications separately among the four 
funding priorities. Panel reviewers will rank the applications by 
category based on the selection criteria and any other applicable 
factors that will be detailed in an application closing notice 
published in the Federal Register.
    Prior to making final funding decisions and determining final grant 
amounts, the Secretary may verify certain data with applicants' States 
and will also assess available resources for all highly ranked 
grantees, limitations on the grant awards for certain grantee 
categories, and the availability of in-kind contributions.
    As detailed in the ``Eligibility'' portion of the regulations, the 
Secretary will generally fund all eligible

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applications in the first application priority group before funding 
applications in each of the next three groups. This will vary if the 
remaining funds are insufficient to fund another project in the 
highest-priority group but adequate to fund a project in the next 
priority group. The next-ranked applicants in the higher-priority group 
will be offered the opportunity to accept funds for a portion of their 
projects before lower-priority projects are funded. If they accept the 
lower grant amount, they would forfeit the right to have their 
applications carried over and considered for funding in the next year's 
competition. However, they could submit new applications for the next 
year for the remainder of their projects.

Executive Order 12866

Potential Costs and Benefits

    Under Executive Order 12866, we have assessed the potential costs 
and benefits of this regulatory action. The potential costs associated 
with the regulations are those resulting from statutory requirements 
and those we have determined to be necessary for administering this 
program effectively and efficiently. Elsewhere in this SUPPLEMENTARY 
INFORMATION section we identify and explain burdens specifically 
associated with information collection requirements. See the heading 
Paperwork Reduction Act of 1995.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of this regulatory action, we have determined that the 
benefits justify the costs. We have 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

    The Secretary believes that these regulations are necessary to 
clarify complex statutory provisions. The costs associated with these 
provisions are not only minimal but also justified in terms of the 
benefits.

Waiver of Proposed Rulemaking

    Under the Administrative Procedure Act (5 U.S.C. 553), the 
Department generally offers interested parties the opportunity to 
comment on proposed regulations. However, in order to make timely grant 
awards for FY 2002, the Secretary has decided to issue these final 
regulations without first publishing proposed regulations for public 
comment. These regulations will apply to the FY 2002 grant competition 
only. The Secretary takes this action under section 437(d)(1) of the 
General Education Provisions Act.
    At a later date the Assistant Secretary plans to publish a notice 
of proposed rulemaking for this program and offer interested parties 
the opportunity to comment. The proposed regulations would apply to 
grant competitions under the program beginning in FY 2003.

Regulatory Flexibility Act Certification

    The Secretary certifies that these regulations will not have a 
significant economic impact on a substantial number of small entities. 
The small entities that would be affected by these regulations are 
small LEAs receiving Federal funds under this program. However, the 
regulations would not have a significant economic impact on the small 
LEAs affected because the regulations will not impose excessive 
regulatory burdens or require unnecessary Federal supervision. The 
regulations would impose minimal paperwork burden requirements for 
applicants and minimal requirements with which the grant recipients 
must comply.

Paperwork Reduction Act of 1995

    Sections 222.183, 222.184, 222.185, and 222.186 contain information 
collection requirements. As required by the Paperwork Reduction Act of 
1995 (44 U.S.C. 3507(d)), the Department of Education submitted a copy 
of the information collection ``Impact Aid Discretionary Construction 
Grant Program'' to the Office of Management and Budget (OMB) for its 
review and approval. OMB has granted provisional clearance on the 
information collection requirements associated with this grant 
application. The Department nevertheless continues to seek public 
comment on these information collection requirements.
    The Department will use the information collected in the 
application to determine whether applicants meet the basic eligibility 
requirements of section 8007(b) of the Act, to determine whether the 
applicant is requesting an emergency or modernization grant, and to 
determine which of the four priorities described in the statute applies 
to the individual application. In addition, information on the 
application will be used to evaluate applications within each of the 
four priorities. Among the criteria the Secretary is required to 
consider are the applicant's total assessed value of real property that 
may be taxed for school purposes, its use of bonding capacity, and the 
nature and severity of its need for funds.
    Since the statute requires applicants to apply for funds, the 
Department would not be able to award these funds without the 
application to collect the required information.
    We collect information only once for each school for which the 
applicant seeks funds. We estimate annual reporting and recordkeeping 
burden for this collection of information to average 3.3 hours for each 
respondent for 250 applicants, including the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. Thus, we estimate the total annual reporting 
and recordkeeping burden for this collection to be 1,453.5 hours.
    If you want to comment on the information collection requirements, 
please send your comments to the Office of Information and Regulatory 
Affairs, OMB, room 10235, New Executive Office Building, Washington, DC 
20503; Attention: Desk Officer for U.S. Department of Education. You 
may also send a copy of these comments to the Department representative 
named in the FOR FURTHER INFORMATION section of this preamble.
    We consider your comments on this proposed collection of 
information in--
     Deciding whether the proposed collection is necessary for 
the proper performance of our functions, including whether the 
information will have practical use;
     Evaluating the accuracy of our estimate of the burden of 
the proposed collection, including the validity of our methodology and 
assumptions;
     Enhancing the quality, usefulness, and clarity of the 
information we collect; and
     Minimizing the burden on those who must respond. This 
includes exploring the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques or other forms 
of information technology; e.g., permitting electronic submission of 
responses.
    Your comments will be considered for the FY 2003 competition. To 
ensure that OMB gives your comments full consideration, we ask that you 
send comments concerning the collection of information contained in 
these regulations between 30 and 60 days after publication of this 
document in the Federal Register.

Intergovernmental Review

    This program is subject to Executive Order 12372 and the 
regulations in 34

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CFR part 79. One of the objectives of the Executive Order is to foster 
an intergovernmental partnership and a strengthened federalism. The 
Executive Order relies on processes developed by State and local 
governments for coordination and review of proposed Federal financial 
assistance.
    This document provides early notification of our specific plans and 
actions for this program.

Electronic Access to This Document

    You may view this document, as well as all other Department of 
Education documents published in the Federal Register, in text or Adobe 
Portable Document Format (PDF) on the Internet at the following site: 
www.ed.gov/legislation/FedRegister.
    To use PDF you must have Adobe Acrobat Reader, which is available 
free at this site. If you have questions about using PDF, call the U.S. 
Government Printing Office (GPO), toll free, at 1-888-293-6498; or in 
the Washington, DC, area at (202) 512-1530.
    You may also view this document in PDF at the following site: 
http://www.ed.gov/offices/OESE/ImpactAid/.

    Note: The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO Access at: http://www.access.gpo.gov/nara/index.html.

(Catalog of Federal Domestic Assistance Number 84.041C Impact Aid 
Discretionary Construction Grants.)

List of Subjects in 34 CFR Part 222

    Education, Education of children with disabilities, Educational 
facilities, Elementary and secondary education, Federally affected 
areas, Grant programs--education, Indians--education, Public housing, 
Reporting and recordkeeping requirements, School construction, Schools.

    Dated: August 8, 2002.
Susan B. Neuman,
Assistant Secretary for Elementary and Secondary Education.

    For the reasons discussed in the preamble, the Secretary amends 
title 34 of the Code of Federal Regulations by adding a new subpart L 
to part 222 to read as follows:

PART 222--IMPACT AID PROGRAMS

    1. The authority citation for part 222 continues to read as 
follows:

    Authority: 20 U.S.C. 7701-7714, unless otherwise noted.


    2. Add subpart L to part 222 to read as follows:
Subpart L--Impact Aid Discretionary Construction Grant Program Under 
Section 8007(b) of the Act

General

Sec.
222.170   What is the purpose of the Impact Aid Discretionary 
Construction grant program (Section 8007(b) of the Act)?
222.171   In general, what LEAs may be eligible for Discretionary 
Construction grants?
222.172   What activities may an LEA conduct with funds received 
under this program?
222.173   What activities are prohibited?
222.174   What other prohibitions apply to these funds?
222.175   What regulations apply to recipients of funds under this 
program?
222.176   What definitions apply to this program?

Eligibility

222.177   What eligibility requirements must an LEA meet to apply 
for an emergency grant under the first priority?
222.178   What eligibility requirements must an LEA meet to apply 
for an emergency grant under the second priority?
222.179   Under what circumstances may an ineligible LEA apply on 
behalf of a school for an emergency grant under the second priority?
222.180   What eligibility requirements must an LEA meet to apply 
for a modernization grant under the third priority?
222.181   What eligibility requirements must an LEA meet to apply 
for a modernization grant under the fourth priority?
222.182   Under what circumstances may an ineligible LEA apply on 
behalf of a school for a modernization grant under the fourth 
priority?

How To Apply for a Grant

222.183   How does an LEA apply for a grant?
222.184   What information must an application contain?
222.185   What additional information must be included in an 
emergency grant application?
222.186   What additional information must be included in a 
modernization grant application?
222.187   Which year's data must an SEA or LEA provide?

How Grants Are Made

222.188   What priority may the Secretary establish?
222.189   What funding priority does the Secretary give to 
applications?
222.190   How does the Secretary rank and select applicants?
222.191   What is the maximum award amount?
222.192   What local funds may be considered as available for this 
project?
222.193   What other limitations on grant amounts apply?
222.194   Are ``in-kind'' contributions permissible?

Conditions and Requirements Grantees Must Meet

222.195   How does the Secretary make funds available to grantees?
222.196   What additional construction requirements apply?

    Authority: 20 U.S.C. 7701-7714, unless otherwise noted.

General


Sec. 222.170  What is the purpose of the Impact Aid Discretionary 
Construction grant program (Section 8007(b) of the Act)?

    The Impact Aid Discretionary Construction grant program provides 
competitive grants for emergency repairs and modernization of school 
facilities to certain eligible local educational agencies (LEAs) that 
receive Impact Aid funds.

(Authority: 20 U.S.C. 7707(b))


Sec. 222.171  In general, what LEAs may be eligible for Discretionary 
Construction grants?

    (a) Applications for these grants are considered in four funding 
priority categories. Complete information about the specific 
requirements for each priority is detailed in Secs. 222.177 through 
222.182.
    (b)(1) Generally, to be eligible for an emergency construction 
grant, an LEA must--
    (i) Enroll a high proportion (at least 40 percent) of federally 
connected children in average daily attendance (ADA) who reside on 
Indian lands or who reside on Federal property and have a parent on 
active duty in the U.S. uniformed services;
    (ii) Have a school that enrolls a high proportion of one of these 
types of students;
    (iii) Be eligible for funding for heavily impacted LEAs under 
section 8003(b)(2) of the Act; or
    (iv) Meet specific numeric requirements regarding bonding capacity.
    (2) The Secretary must also consider such factors as an LEA's total 
assessed value of real property that may be taxed for school purposes, 
its availability and use of bonding capacity, and the nature and 
severity of the emergency.
    (c)(1) Generally, to be eligible for a modernization construction 
grant, an LEA must--
    (i) Be eligible for Impact Aid funding under either section 8002 or 
8003 of the Act;
    (ii) Be eligible for funding for heavily impacted LEAs under 
section 8003(b)(2) of the Act;
    (iii) Enroll a high proportion (at least 40 percent) of federally 
connected children in ADA who reside on Indian lands or who reside on 
Federal property

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and have a parent on active duty in the U.S. uniformed services;
    (iv) Have a school that enrolls a high proportion of one of these 
types of students;
    (v) Meet specific numeric requirements regarding bonding capacity; 
or
    (vi) Be eligible for funding under section 8002 of the Act 
(payments for Federal property).
    (2) The Secretary must also consider such factors as an LEA's total 
assessed value of real property that may be taxed for school purposes, 
its availability and use of bonding capacity, and the nature and 
severity of its need for modernization funds.

(Authority: 20 U.S.C. 7707(b))


Sec. 222.172  What activities may an LEA conduct with funds received 
under this program?

    (a) Except as provided in paragraph (c) of this section, an LEA may 
use emergency grant funds received under this program only to repair, 
renovate, or alter a public elementary or secondary school facility 
used for free public education to ensure the health, safety, and well-
being of students and personnel.
    (b) Except as provided in paragraph (c) of this section, an LEA may 
use modernization grant funds received under this program only to 
repair, renovate, alter, or extend a public elementary or secondary 
school facility used for free public education to provide school 
facilities that support a contemporary educational program for the 
LEA's students at normal capacity, and in accordance with the laws, 
standards, or common practices in the LEA's State.
    (c)(1) An emergency or modernization grant under this program may 
be used for the construction of a new school facility but only if the 
Secretary determines--
    (i) That the LEA holds title to the existing facility for which 
funding is requested; and
    (ii) In consultation with a grantee, that partial or complete 
replacement of the facility would be less expensive or more cost-
effective than improving the existing facility.
    (2) When construction of school facilities is permitted, emergency 
and modernization funds may be used for new school facilities that are 
used for free public education. This may include the--
    (i) Construction of instructional, resource, food service, and 
general or administrative support areas, so long as they are a part of 
the instructional facility; and
    (ii) Purchase of initial equipment, machinery, and initial utility 
connections.

(Authority: 20 U.S.C. 7707(b))


Sec. 222.173  What activities are prohibited?

    The Secretary does not fund the following activities under this 
grant:
    (a) Improvements on facilities for which the LEA does not have full 
title or other interest.
    (b) Repair, renovation, alteration or construction for stadiums or 
other facilities that are primarily used for athletic contests, 
exhibitions, and other events for which admission is charged to the 
general public.
    (c) Except in the limited circumstances as provided in 
Sec. 222.172(c), when new construction is permissible, acquisition of 
any interest in real property.
    (d) Maintenance costs associated with any of an LEA's school 
facilities.

(Authority: 20 U.S.C. 7707(b))


Sec. 222.174  What other prohibitions apply to these funds?

    Grant funds under this program may not be used to supplant or 
replace other available non-Federal construction money. These grant 
funds may be used for emergency or modernization activities only to the 
extent that they supplement the amount of construction funds that 
would, in the absence of these grant funds, be available to a grantee 
from non-Federal funds for these purposes. Examples follow:

    Example 1. ``Supplanting'': An LEA signs a contract for a 
$300,000 roof replacement and plans to use its capital expenditure 
fund to pay for the renovation. Since the LEA already has non-
Federal funds available for the roof project, it may not now use a 
grant from this program to pay for the project or replace its own 
funds in order to conserve its capital fund.
    Example 2. ``Non-supplanting'': The LEA above that has the 
$300,000 roof commitment has also received a $400,000 estimate for 
the replacement of its facility's heating, ventilation, and air 
conditioning (HVAC) system. The LEA has not made any commitments for 
the HVAC system because it has no remaining funds available to pay 
for that work. Since other funds are not available, it would not be 
supplanting if the LEA received an emergency grant under this 
program to pay for the HVAC system.

(Authority: 20 U.S.C. 7707(b))


Sec. 222.175  What regulations apply to recipients of funds under this 
program?

    The following regulations apply to the Impact Aid Discretionary 
Construction program:
    (a) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (1) 34 CFR part 75 (Direct Grant Programs) except for 34 CFR 75.600 
through 75.617.
    (2) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (3) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (4) 34 CFR part 80 (Uniform Administrative Requirements for Grants 
and Cooperative Agreements to State and Local Governments).
    (5) 34 CFR part 81 (General Education Provisions Act--Enforcement).
    (6) 34 CFR part 82 (New Restrictions on Lobbying).
    (7) 34 CFR part 85 (Governmentwide Debarment and Suspension 
(Nonprocurement) and Governmentwide Requirements for Drug-Free 
Workplace (Grants)).
    (b) The regulations in 34 CFR part 222, including subpart L.

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


Sec. 222.176  What definitions apply to this program?

    (a) In addition to the terms referenced in 34 CFR Sec. 222.2, the 
following definitions apply to this subpart:
    Bond limit means the cap or limit that a State may impose on an 
LEA's capacity for bonded indebtedness. For applicants in States that 
place no limit on an LEA's capacity for bonded indebtedness, the 
Secretary shall consider the LEA's bond limit to be ten percent of its 
total assessed valuation.
    Construction means:
    (1) Preparing drawings and specifications for school facilities;
    (2) Repairing, renovating, or altering school facilities;
    (3) Extending school facilities as described in Sec. 222.172(b);
    (4) Erecting or building school facilities, as described in 
222.172(c); and
    (5) Inspections or supervision related to school facilities 
projects.
    Emergency means a school facility condition that is so injurious or 
hazardous that it either poses an immediate threat to the health and 
safety of the facility's students and staff or can be reasonably 
expected to pose such a threat in the near future. These conditions can 
include the need to repair, replace, or install: a roof; electrical 
wiring; a plumbing or sewage system; or heating, ventilation, or air 
conditioning; or to bring a school facility into compliance with fire 
and safety codes.
    Level of bonded indebtedness means the amount of long-term debt 
issued by an LEA divided by the LEA's bonding capacity.
    Minimal capacity to issue bonds means that the total assessed value 
of

[[Page 53684]]

real property in an LEA that may be taxed for school purposes is at 
least $25,000,000 but not more than $50,000,000.
    Modernization means the repair, renovation, alteration, or 
extension of a public elementary or secondary school facility in order 
to support a contemporary educational program for an LEA's students in 
normal capacity, and in accordance with the laws, standards or common 
practices in the LEA's State.
    No practical capacity to issue bonds means that the total assessed 
value of real property in an LEA that may be taxed for school purposes 
is less than $25,000,000.
    Total assessed value per student means the assessed valuation of 
real property per pupil (AVPP), unless otherwise defined by an LEA's 
State.

(Authority: 20 U.S.C. 7707(b))

    (b) Definitions in EDGAR. The following terms used in this subpart 
are defined or referenced in 34 CFR 77.1:


Applicant

Application

Award

Contract

Department

EDGAR

Equipment

Facilities

Fiscal year

Grant

Grantee

Project

Public

Real property

Recipient

(Authority: 20 U.S.C. 7707(b) and 1221e-3)

Eligibility


Sec. 222.177  What eligibility requirements must an LEA meet to apply 
for an emergency grant under the first priority?

    An LEA is eligible to apply for an emergency grant under the first 
priority of section 8007(b) of the Act if it--
    (a) Is eligible to receive formula construction funds for the 
fiscal year under section 8007(a) of the Act;
    (b)(1) Has no practical capacity to issue bonds;
    (2) Has minimal capacity to issue bonds and has used at least 
seventy-five percent of its bond limit; or
    (3) Is eligible to receive funds for the fiscal year for heavily 
impacted districts under section 8003(b)(2) of the Act; and
    (c) Has a school facility emergency that the Secretary has 
determined poses a health or safety hazard to students and school 
personnel.

(Authority: 20 U.S.C. 7707(b))


Sec. 222.178  What eligibility requirements must an LEA meet to apply 
for an emergency grant under the second priority?

    Except as provided in Sec. 222.179, an LEA is eligible to apply for 
an emergency grant under the second priority of section 8007(b) of the 
Act if it--
    (a) Is eligible to receive funds for the fiscal year under section 
8003(b) of the Act;
    (b)(1) Has federally connected children living on Indian lands 
equal to at least 40 percent of the total number of children in average 
daily attendance (ADA) in its schools; or
    (2) Has federally connected children with a parent in the U.S. 
uniformed services equal to at least 40 percent of the total number of 
children in ADA in its schools;
    (c) Has used at least seventy-five percent of its bond limit;
    (d) Has an average per student assessed value of real property 
taxable for school purposes that is below its State average; and
    (e) Has a school facility emergency that the Secretary has 
determined is a health or safety hazard to students and school 
personnel.

(Authority: 20 U.S.C. 7707(b))


Sec. 222.179  Under what circumstances may an ineligible LEA apply on 
behalf of a school for an emergency grant under the second priority?

    An LEA that is eligible to receive section 8003(b) assistance for 
the fiscal year but that does not meet the other eligibility criteria 
described in Sec. 222.178(a) or (b) may apply on behalf of a school 
located within its geographic boundaries for an emergency grant under 
the second priority of section 8007(b) of the Act if--
    (a) The school--
    (1) Has children living on Indian lands equal to at least 40 
percent of the total number of children in ADA; or
    (2) Has children with a parent in the U.S. uniformed services equal 
to at least 40 percent of the total number of children in ADA;
    (b) The school has a school facility emergency that the Secretary 
has determined is a health or safety hazard to students and school 
personnel;
    (c) The LEA has used at least 75 percent of its bond limit; and
    (d) The LEA has an average per-student assessed value of real 
property that may be taxed for school purposes that is below its State 
average.

(Authority: 20 U.S.C. 7707(b))


Sec. 222.180  What eligibility requirements must an LEA meet to apply 
for a modernization grant under the third priority?

    An LEA is eligible to apply for a modernization grant under the 
third priority of section 8007(b) of the Act if it--
    (a) Is eligible to receive funds for the fiscal year under section 
8002 or 8003(b) of the Act;
    (b)(1) Has no practical capacity to issue bonds;
    (2) Has minimal capacity to issue bonds and has used at least 75 
percent of its bond limit; or
    (3) Is eligible to receive funds for the fiscal year for heavily 
impacted districts under section 8003(b)(2) of the Act, and
    (c) Has facility needs resulting from the presence of the Federal 
Government, such as the enrollment of federally connected children, the 
presence of Federal property, or an increase in enrollment due to 
expanded Federal activities, housing privatization, or the acquisition 
of Federal property.

(Authority: 20 U.S.C. 7707(b))


Sec. 222.181  What eligibility requirements must an LEA meet to apply 
for a modernization grant under the fourth priority?

    An LEA is eligible to apply for a modernization grant under the 
fourth priority of section 8007(b) of the Act if it--
    (a)(1) Is eligible to receive funds for the fiscal year under 
section 8003(b) of the Act; and
    (i) Has children living on Indian lands equal to at least 40 
percent of the total number of children in ADA in its schools; or
    (ii) Has children with a parent in the U.S. uniformed services 
equal to at least 40 percent of the total number of children in ADA in 
its schools; or
    (2) Is eligible to receive assistance for the fiscal year under 
section 8002 of the Act;
    (b) Has used at least 75 percent of its bond limit;
    (c) Has an average per-student assessed value of real property that 
may be taxed for school purposes that is below its State average; and
    (d) Has facility needs resulting from the presence of the Federal 
Government, such as the enrollment of federally connected children, the 
presence of Federal property, or an increase in enrollment due to 
expanded Federal activities, housing privatization, or the acquisition 
of Federal property.

(Authority: 20 U.S.C. 7707(b))

[[Page 53685]]

Sec. 222.182  Under what circumstances may an ineligible LEA apply on 
behalf of a school for a modernization grant under the fourth priority?

    An LEA that is eligible to receive a payment under Title VIII for 
the fiscal year but that does not meet the other eligibility criteria 
described in Sec. 222.181 may apply on behalf of a school located 
within its geographic boundaries for a modernization grant under the 
fourth priority of section 8007(b) of the Act if--
    (a) The school--
    (1)Has children living on Indian lands equal to at least 40 percent 
of the total number of children in ADA; or
    (2) Has children with a parent in the U.S. uniformed services equal 
to at least 40 percent of the total number of children in ADA;
    (b) The LEA has used at least 75 percent of its bond limit;
    (c) The LEA has an average per-student assessed value of real 
property taxable for school purposes that is below its State average; 
and
    (d) The school has facility needs resulting from the presence of 
the Federal Government, such as the enrollment of federally connected 
children, the presence of Federal property, or an increase in 
enrollment due to expanded Federal activities, housing privatization, 
or the acquisition of Federal property.

(Authority: 20 U.S.C. 7707(b))

How To Apply for a Grant


Sec. 222.183  How does an LEA apply for a grant?

    (a) To apply for funds under this program, an LEA may submit more 
than one application in a fiscal year. Examples follow:

    Example 1: An LEA would submit two applications if it wants to 
receive both an emergency and a modernization grant for one 
particular school facility.
    Example 2: If an LEA has five schools and seeks emergency grants 
to replace a roof and a boiler in one school and to replace windows 
in a second school, it should submit two applications'one for each 
of the two school facilities that the LEA wants to renovate.

    (b) An application must--
    (1) Contain the information required in Secs. 222.184 through 
222.186, as applicable, and in a Federal Register closing date notice 
that the Secretary will publish; and
    (2) Be timely filed in accordance with the provisions of the 
Secretary's published closing date notice.

(Approved by the Office of Management and Budget under control 
number 1810-0657)

(Authority: 20 U.S.C. 7707(b))


Sec. 222.184  What information must an application contain?

    An application for an emergency or modernization grant must contain 
the following:
    (a) The name of the school facility the LEA is proposing to repair, 
construct, or modernize.
    (b)(1) For an applicant under section 8003(b) of the Act, the 
number of federally connected children described in section 8003(a)(1) 
enrolled in the school facility for which the LEA is seeking a grant; 
or
    (2) For an applicant under section 8002 of the Act, the total 
enrollment (based on the fall State count date) for the preceding year 
in the LEA and in the school facility for which the LEA is seeking a 
grant.
    (c) An identification of the LEA's interest in, or authority over, 
the school facility involved, such as an ownership interest or a lease 
arrangement.
    (d) The original construction date of the school facility that the 
LEA proposes to renovate or modernize.
    (e) The dates of any major renovations of that school facility and 
the areas of the school covered by the renovations.
    (f) The proportion of Federal acreage within the LEA.
    (g) Fiscal data including the LEA's--
    (1) Maximum bonding capacity;
    (2) Amount of bonded debt;
    (3) Total assessed value of real property for school purposes;
    (4) State average assessed value per pupil of real property that 
was taxed for school purposes;
    (5) Local real property tax levy, in mills or dollars, that was 
used for capital expenditures; and
    (6) Sources of funds available for the proposed project.
    (h) A description of the need for funds and the proposed project 
for which a grant under this subpart would be used, including a cost 
estimate for the project.
    (i) Applicable assurances and certifications identified in the 
approved grant application package.

(Approved by the Office of Management and Budget under control 
number 1810-0657)

(Authority: 20 U.S.C. 7707(b))

Sec. 222.185  What additional information must be included in an 
emergency grant application?

    In addition to the information specified in Sec. 222.184, an 
application for an emergency grant must contain the following:
    (a)A description of the deficiency that poses a health or safety 
hazard to occupants of the facility.
    (b) A description of how the deficiency adversely affects the 
occupants and how it will be repaired.
    (c)(1) A statement signed by an appropriate local official, as 
defined below, that the deficiency threatens the health and safety of 
occupants of the facility or prevents the use of the facility.
    (2) An appropriate local official may include a fire marshal, city 
zoning official, State building inspector, military installation 
official, Indian Health Service official, contractor, or other 
individual who is responsible for inspecting school facilities and 
identifying the health and safety deficiencies. An appropriate local 
official may not include a staff person or other individual associated 
with an applicant LEA.

(Approved by the Office of Management and Budget under control 
number 1810-0657)
(Authority: 20 U.S.C. 7707(b))


Sec. 222.186  What additional information must be included in a 
modernization grant application?

    In addition to the information specified in Sec. 222.184, an 
application for a modernization grant must contain a description of--
    (a) The need for modernization; and
    (b) How the applicant will use funds received under this program to 
address it.

(Approved by the Office of Management and Budget under control 
number 1810-0657)

(Authority: 20 U.S.C. 7707(b))


Sec. 222.187  Which year's data must an SEA or LEA provide?

    (a) Except as provided in paragraph (b) of this section, the 
Secretary will determine eligibility under this discretionary grant 
program based on student and fiscal data for each local educational 
agency from the fiscal year preceding the fiscal year for which the 
applicant is applying for funds.
    (b) If satisfactory fiscal data are not available from the 
preceding fiscal year, the Secretary will use data from the most recent 
fiscal year for which data that are satisfactory to the Secretary are 
available.

How Grants Are Made


Sec. 222.188  What priority may the Secretary establish?

    In any given year, the Secretary may assign extra weight for 
certain systems or emergency and modernization conditions by 
identifying the systems or conditions and their assigned weights in a 
notice published in the Federal Register.

(Authority: 20 U.S.C. 7707(b))

[[Page 53686]]

Sec. 222.189  What funding priority does the Secretary give to 
applications?

    (a) Except as provided in paragraph (b) of this section, the 
Secretary gives funding priority to applications in the following 
order:
    (1) First priority is given to applications described under 
Sec. 222.177 and, among those applicants for emergency grants, priority 
is given to applications based on a rank order of the application 
quality factors referenced in Sec. 222.190, including the severity of 
the emergency.
    (2) After all eligible first-priority applications are funded, 
second priority is given to applications described under Secs. 222.178 
and 222.179 and, among those applicants for emergency grants, priority 
is given to applications based on a rank order of the application 
quality factors referenced in Sec. 222.190, including the severity of 
the emergency.
    (3) Third priority is given to applications described under 
Sec. 222.180 and, among those applicants for modernization grants, 
priority is given to applications based on a rank order of the 
application quality factors referenced in Sec. 222.190, including the 
severity of the need for modernization.
    (4) Fourth priority is given to applications described under 
Secs. 222.181 and 222.182 and, among those applicants for modernization 
grants, priority is given to applications based on a rank order of the 
application quality factors referenced in Sec. 222.190, including the 
severity of the need for modernization.
    (b)(1) The Secretary makes awards in each priority described above 
until the Secretary is unable to make an approvable award in that 
priority.
    (2) If the Secretary is unable to fund a full project or a viable 
portion of a project, the Secretary may continue to fund down the list 
of high-ranking applicants within a priority.
    (3) The Secretary applies any remaining funds to awards in the next 
priority.
    (4) If an applicant does not receive an emergency or modernization 
grant in a fiscal year, the Secretary will, subject to the availability 
of funds and to the priority and award criteria, consider that 
application in the following year along with the next fiscal year's 
pool of applications. An example follows:

    Example: The first five applicants in priority one have been 
funded. Three hundred thousand dollars remain available. Three 
unfunded applications remain in that priority. Application 
6 requires a minimum of $500,000, application 7 
requires $400,000, and application 8 requires $300,000 for 
a new roof and $150,000 for related wall and ceiling repairs. 
Applicant 8 agrees to accept the remaining $300,000 since 
the roof upgrade can be separated into a viable portion of applicant 
8's total project. Applications 6 and 7 
will be retained for consideration in the next fiscal year and will 
compete again with that fiscal year's pool of applicants. Applicant 
8 will have to submit a new application if it wishes to be 
considered for the unfunded portion of the current year's 
application.

(Authority: 20 U.S.C. 7707(b))


Sec. 222.190  How does the Secretary rank and select applicants?

    (a) To the extent consistent with these regulations and section 
8007(b) of the Act, the Secretary will follow grant selection 
procedures that are specified in 34 CFR Secs. 75.215 through 75.222. In 
general these procedures are based on the authorizing statute, the 
selection criteria, and any priorities or other applicable requirements 
that have been published in the Federal Register.
    (b) In the event of ties in numeric ranking, the Secretary may 
consider as tie-breaking factors: the severity of the emergency or the 
need for modernization; for applicants under section 8003 of the Act, 
the numbers of federally connected children who will benefit from the 
project; or for applicants under section 8002 of the Act, the numbers 
of children who will benefit from the project; the assessed valuation 
of real property per student compared to the LEA's State average; and 
available resources or non-Federal funds available for the grant 
project.

(Authority: 20 U.S.C. 7707(b))


Sec. 222.191  What is the maximum award amount?

    (a) Subject to any applicable contribution requirements as 
described in Secs. 222.192 and 222.193, the procedures in Secs. 75.231 
through 75.236, and the provisions in paragraph (b) of this section, 
the Secretary may fund up to 100 percent of the allowable costs in an 
approved grantee's proposed project.
    (b) An award amount may not exceed the difference between--
    (1) The cost of the proposed project; and
    (2) The amount the grantee has available or will have available for 
this purpose from other sources, including local, state, and other 
Federal funds.

(Authority: 20 U.S.C. 7707(b))


Sec. 222.192  What local funds may be considered as available for this 
project?

    To determine the amount of local funds that an LEA has available 
under Sec. 222.191(b)(2) for a project under this program, the 
Secretary will consider as available all LEA funds that may be used for 
capital expenditures except $100,000 or ten percent of the average 
annual capital expenditures of the applicant for three previous fiscal 
years, whichever is greater.

(Authority: 20 U.S.C. 7707(b))


Sec. 222.193  What other limitations on grant amounts apply?

    (a) Except as provided in paragraph (b) of this section and 
Sec. 222.191, the amount of funds provided under an emergency grant or 
a modernization grant awarded under this subsection to an eligible LEA 
is subject to the following limitations:
    (1) The award amount may not be more than 50 percent of the total 
cost of an approved project.
    (2) The total amount of grant funds may not exceed four million 
dollars during any four-year period. An example follows:

    Example: An LEA that is awarded $4 million dollars in the first 
year may not receive any additional funds for the following three 
years.

    (b) Emergency or modernization grants to LEAs with no practical 
capacity to issue bonds as defined in Sec. 222.176 are not subject to 
the award limitations described in paragraph (a) of this section.

(Authority: 20 U.S.C. 7707(b))


Sec. 222.194  Are ``in-kind'' contributions permissible?

    (a) LEAs that are subject to the applicable matching requirement 
described in Sec. 222.193(a) may use allowable third party in-kind 
contributions as defined below to meet the requirements.
    (b) Third party in-kind contributions mean property or services 
that benefit this grant program and are contributed by non-Federal 
third parties without charge to the grantee or a cost-type contractor 
under the grant agreement.
    (c) The provisions of 34 CFR 80.24 govern the allowability and 
valuation of in-kind contributions, except that it is permissible for a 
third party to contribute real property to a grantee for a project 
under this program, so long as no Federal funds are spent for the 
acquisition of real property.

(Authority: 20 U.S.C. 7707(b))

Conditions and Requirements Grantees Must Meet


Sec. 222.195  How does the Secretary make funds available to grantees?

    The Secretary makes funds available to a grantee during a project 
period using the following procedure:
    (a) Upon final approval of the grant proposal, the Secretary makes 
available 10 percent of the total award amount to the grantee.

[[Page 53687]]

    (b) After the grantee submits a copy of the emergency or 
modernization contract approved by the grantee's governing board, the 
Secretary makes available 80 percent of the total award amount to a 
grantee.
    (c) The Secretary makes available up to the remaining 10 percent of 
the total award amount to the grantee after the grantee submits a 
statement that--
    (1) Details any earnings, savings, or interest;
    (2) Certifies that--
    (i) The project is fully completed; and
    (ii) All the awarded funds have been spent for grant purposes; and
    (3) Is signed by the--
    (i) Chairperson of the governing board;
    (ii) Superintendent of schools; and
    (iii) Architect of the project.

(Authority: 20 U.S.C. 7707(b))


Sec. 222.196  What additional construction requirements apply?

    (a) Except as provided in paragraph (b) of this section, a grantee 
under this program must comply with--
    (1) The general construction legal requirements identified in the 
grant application assurances;
    (2) The prevailing wage standards in the grantee's locality that 
are established by the Secretary of Labor in accordance with the Davis-
Bacon Act (40 USCA 276a, et seq.); and
    (3) All relevant Federal, state, and local environmental laws and 
regulations.
    (b) A grantee that qualifies for a grant because it enrolls a high 
proportion of federally connected children who reside on Indian lands 
is considered to receive a grant award primarily for the benefit of 
Indians and must therefore comply with the Indian preference 
requirements of section 7(b) of the Indian Self-Determination Act.

(Authority: 20 U.S.C. 7707(b) and 1221e-3)

[FR Doc. 02-20651 Filed 8-15-02; 8:45 am]
BILLING CODE 4000-01-P