[Federal Register Volume 68, Number 204 (Wednesday, October 22, 2003)]
[Proposed Rules]
[Pages 60598-60606]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-26650]



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Part V





Department of Education





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34 CFR Part 222



Impact Aid Programs; Proposed Rule

  Federal Register / Vol. 68, No. 204 / Wednesday, October 22, 2003 / 
Proposed Rules  

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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: Notice of proposed rulemaking.

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SUMMARY: The Secretary issues these proposed regulations to implement 
the Impact Aid Discretionary Construction Program, which is authorized 
under section 8007(b) of the Elementary and Secondary Education Act of 
1965 (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 formula funds. These proposed regulations 
incorporate statutory requirements and provide guidance for applying 
and qualifying for, as well as spending, the Federal funds provided 
under this program. These proposed regulations would apply to the grant 
competitions after fiscal year (FY) 2002.

DATES: We must receive your comments on these proposed regulations on 
or before November 21, 2003.

ADDRESSES: Address all comments about these proposed regulations to 
Catherine Schagh, Director, Impact Aid Program, U.S. Department of 
Education, 400 Maryland Avenue, SW., Washington, DC 20202-6244. If you 
prefer to send comments through the Internet, use the following 
address: [email protected].
    If you want to comment on the information requirements, you must 
send your comments to the Office of Management and Budget at the 
address listed in the Paperwork Reduction Act of 1980 section of this 
preamble. You may also send a copy of these comments to the Department 
representative named in this section.

FOR FURTHER INFORMATION CONTACT: Marilyn Hall, Impact Aid Program, U.S. 
Department of Education, 400 Maryland Avenue, SW., Washington, DC 
20202-6244. Telephone: (202) 260-3858 or via the 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: 

Invitation to Comment

    We invite you to submit comments regarding these proposed 
regulations. To ensure that your comments have maximum effect in 
developing the final regulations, we urge you to identify clearly the 
specific section or sections of the proposed regulations that each of 
your comments addresses and to arrange your comments in the same order 
as the proposed regulations. The Secretary is particularly interested 
in comments on proposed Sec. Sec.  222.176, 222.185, and 222.192.
    We invite you to assist us in complying with the specific 
requirements of Executive Order 12866 and its overall requirement of 
reducing regulatory burden that might result from these proposed 
regulations. Please let us know of any further opportunities we should 
take to reduce potential costs or increase potential benefits while 
preserving the effective and efficient administration of the program.
    During and after the comment period, you may inspect all public 
comments about these proposed regulations in Room 3C101, 400 Maryland 
Avenue, SW., Washington, DC, 20202-6244 between the hours of 8:30 a.m. 
and 4 p.m., Eastern time, Monday through Friday of each week except 
Federal holidays.

Assistance to Individuals With Disabilities in Reviewing the Rulemaking 
Record

    On request, we will supply an appropriate aid, such as a reader or 
print magnifier, to an individual with a disability who needs 
assistance to review the comments or other documents in the public 
rulemaking record for these proposed regulations. If you want to 
schedule an appointment for this type of aid, please contact the person 
listed under FOR FURTHER INFORMATION CONTACT.

Background

    These proposed regulations implement the Impact Aid Discretionary 
Construction 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). Final regulations for the FY 2002 grant 
competition were published in the Federal Register on August 16, 2002. 
These proposed regulations are similar to the final FY 2002 
regulations, but we have included clarifying language based on our own 
experiences in implementing this program. These clarifications are made 
in sections 222.172, 222.173, and 222.176. These proposed regulations 
are otherwise substantially identical to the final rule for FY 2002.
    The purpose of the Impact Aid Discretionary Construction Program is 
to assist certain eligible Impact Aid school districts in meeting the 
emergency or modernization needs of their school facilities.
    The following is a summary of the proposed regulatory provisions, 
such as interpretations of statutory text, and 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 proposed regulations detail the types of construction 
activities that recipients of emergency and modernization grants may 
conduct with grant funds. The regulations clarify that allowable 
repairs and improvements must be for educational facilities, and this 
does not include improvements to school grounds or teacher housing. 
These proposed provisions also clarify that both emergency and 
modernization grants may be used for new construction only if a local 
educational agency (LEA) holds title to an existing facility and the 
proposed construction meets the standards detailed in the regulations 
for determining that improving a current facility is less cost-
effective than replacing it.

Section 222.173 What Activities Are Prohibited?

    Proposed 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 these funds to be used for the construction of a new building in 
limited circumstances. Since a building is also typically considered to 
be ``real property,'' the proposed 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.

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Section 222.176 What Definitions Apply to This Program?

    The proposed 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, including 
accessibility for the disabled as part of a larger project. The 
proposed definition also provides examples of some of the types of 
health and safety conditions that the Secretary anticipates the 
emergency grants will address.
    The proposed 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 for these grants to be used to fund facility 
modernization projects that exceed a State's standards.

Sections 222.177-182 Eligibility

    The statutory eligibility criteria for emergency and modernization 
grants are complex and are further complicated by funding provisions 
that specify, in descending priority order, two emergency grant and two 
modernization grant eligibility categories. These proposed 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 understand, 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.

Sections 222.183-187 How To Apply for a Grant

    The statute does not specify a complete application process; the 
proposed 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 proposed regulations specify that the 
applications must be based on student and fiscal data from the 
preceding fiscal year, unless satisfactory fiscal data from that year 
are not available.
    The regulations clarify that an applicant may submit more than one 
emergency repair application for the same facility, and may also submit 
both modernization and emergency repair applications for the same 
facility. Emergency repair grant applications must include an 
independent certification of the health and safety concerns, signed by 
a local building inspector, a licensed architect, or a licensed 
engineer.

Sections 222.188-194 How Grants Are Made

    The Department will review applications separately among the four 
funding priorities. Field readers will review the applications by 
category, based on the selection criteria and any other applicable 
factors that will be detailed in an application notice published in the 
Federal Register. Field readers will also evaluate and make 
recommendations to the Department as to whether emergency repair 
applications submitted under the first and second priorities represent 
valid health and safety considerations under the program definitions. 
Similarly, when field readers review modernization applications under 
the third and fourth priorities, they will evaluate and make 
recommendations to the Department as to whether those applications 
represent valid modernization considerations under the program 
definitions.
    Prior to making final funding decisions and determining final grant 
awards, 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. The 
Secretary considers as available to fund the project the closing 
capital fund balance identified in the LEA's audited financial report 
for the prior year, not including $100,000 or ten percent of the 
average annual capital expenditures of the applicant for the three 
previous fiscal years, whichever is greater.
    As detailed in the ``Eligibility'' portion of the proposed 
regulations, the Secretary will generally fund all eligible 
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. If they do not accept the 
lower grant award, the application is carried over and considered in 
the next year's competition.

Executive Order 12866

1. 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 proposed 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 would 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.

2. Clarity of the Regulations

    Executive Order 12866 and the Presidential memorandum on ``Plain 
Language in Government Writing'' require each agency to write 
regulations that are easy to understand.
    The Secretary invites comments on how to make these proposed 
regulations easier to understand, including answers to questions such 
as the following:
    [sbull] Are the requirements in the proposed regulations clearly 
stated?
    [sbull] Do the proposed regulations contain technical terms or 
other wording that interferes with their clarity?
    [sbull] Does the format of the proposed regulations (grouping and 
order of sections, use of headings, paragraphing, etc.) aid or reduce 
their clarity?
    [sbull] Would the proposed regulations be easier to understand if 
we divided them

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into more (but shorter) sections? (A ``section'' is preceded by the 
symbol ``Sec.  '' and a numbered heading; for example, Sec.  222.189 
What funding priority does the Secretary give to applications?)
    [sbull] Could the description of the proposed regulations in the 
``Supplementary Information'' section of this preamble be more helpful 
in making the proposed regulations easier to understand? If so, how?
    [sbull] What else could we do to make the proposed regulations 
easier to understand?
    Send any comments that concern how the Department could make these 
proposed regulations easier to understand to the person listed in the 
ADDRESSES section of the preamble.

Regulatory Flexibility Act Certification

    The Secretary certifies that these proposed 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, in the FY 2002 grant competition, fewer than 40 applications 
that were eligible to be evaluated by field readers were small 
entities. In addition, we do not believe that the regulations would 
have a significant economic impact on the limited number of small LEAs 
affected because the regulations would not impose excessive regulatory 
burdens or require unnecessary Federal supervision.
    The proposed regulations would benefit both small and large 
entities in that they clarify confusing and complex statutory 
requirements. Also, since the statute requires Impact Aid school 
districts to apply if they wish to receive these discretionary funds, 
the Department would not be able to award these funds without the 
specified application information. The proposed application process 
will ensure that districts do not provide significant amounts of 
information that is already available to the Department from annual 
Impact Aid formula fund applications.
    In addition, we anticipate that electronic applications will first 
be available for the FY 2003 competition, which will further minimize 
burden to all applicants. The software will populate certain 
application data fields for applicants that submitted an FY 2003 Impact 
Aid section 8003 application, and will have built-in checks for 
completion of all necessary items. This software will reduce the burden 
on applicants of organizing and entering data that were already 
submitted to the Impact Aid Program, will help applicants determine 
whether their LEAs meet the program's eligibility requirements, and 
will reduce the number of errors in applications. Also, whenever 
possible, certain fiscal data are collected from State agencies, which 
are not defined as ``small entities'' in the Regulatory Flexibility 
Act.
    The regulations would impose minimal paperwork burden requirements 
for all applicants and minimal requirements with which the grant 
recipients must comply. However, the Secretary specifically invites 
comments on the effects of the proposed regulations on small entities, 
and on whether there may be further opportunities to reduce any 
potential adverse impact or increase potential benefits resulting from 
these proposed regulations without impeding the effective and efficient 
administration of the Impact Aid Discretionary Construction Program.
    Commenters are requested to describe the nature of any effect and 
provide empirical data and other factual support for their views to the 
extent possible. These comments will be placed in the public comment 
file and considered in the preparation of the final regulations.

Paperwork Reduction Act of 1995

    Sections 222.183, 222.184, 222.185, and 222.186 contain information 
collection requirements. Under 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 granted provisional clearance on the information 
collection requirements associated with the FY 2002 grant application 
package. The Department nevertheless sought public comment on these 
information collection requirements for the FY 2003 application, but 
did not receive any comments.
    The Department will use the information collected in the 
application to determine whether an applicant meets 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 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 the annual reporting and 
recordkeeping burden for this collection of information to average 5.25 
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. In addition, we estimate that 188 of these 
applications will include the preparation of an emergency certification 
form, requiring 0.75 hours for completion by an independent certifying 
official. 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--
    [sbull] Deciding whether the proposed collection is necessary for 
the proper performance of our functions, including whether the 
information will have practical use;
    [sbull] Evaluating the accuracy of our estimate of the burden of 
the proposed collection, including the validity of our methodology and 
assumptions;
    [sbull] Enhancing the quality, usefulness, and clarity of the 
information we collect; and
    [sbull] 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

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after publication of this document in the Federal Register.

Intergovernmental Review

    This program is subject to Executive Order 12372 and the 
regulations in 34 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: 
http://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/programs/8007b/.

    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 Program)

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: October 17, 2003.
Ronald J. Tomalis,
Acting Assistant Secretary for Elementary and Secondary Education.

    For the reasons discussed in the preamble, the Secretary proposes 
to amend title 34 of the Code of Federal Regulations by revising 
subpart L of 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. Revise subpart L of 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 subpart?

Eligibility

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

How to Apply for a Grant

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

How Grants Are Made

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

Conditions and Requirements Grantees Must Meet

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

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

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 formula 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. The specific requirements for each priority are 
detailed in Sec. Sec.  222.177 through 222.182.
    (b)(1) Generally, to be eligible for an emergency construction 
grant, an LEA must--
    (i) Enroll a high proportion (at least 40 percent) of federally 
connected children in average daily attendance (ADA) who reside on 
Indian lands or who 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 the specific numeric requirements regarding bonding 
capacity.
    (2) The Secretary must also consider such factors as an LEA's total 
assessed value of real property that may be taxed for school purposes, 
its availability and use of bonding capacity, and the nature and 
severity of the emergency.
    (c)(1) Generally, to be eligible for a modernization construction 
grant, an LEA must--
    (i) Be eligible for Impact Aid funding under either section 8002 or 
8003 of the Act;

[[Page 60602]]

    (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 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 the 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) An LEA may use emergency grant funds received under this 
program only to repair, renovate, alter, and, in the limited 
circumstances described in paragraph (c) of this section replace a 
public elementary or secondary school facility used for free public 
education to ensure the health and safety of students and personnel, 
including providing accessibility for the disabled as part of a larger 
project.
    (b) An LEA may use modernization grant funds received under this 
program only to renovate, alter, retrofit, extend, and, in the limited 
circumstances described in paragraph (c) of this section replace a 
public elementary or secondary school facility used for free public 
education to provide school facilities that support a contemporary 
educational program for the LEA's students at normal capacity, and in 
accordance with the laws, standards, or common practices in the LEA's 
State.
    (c)(1) An emergency or modernization grant under this program may 
be used for the construction of a new school facility but only if the 
Secretary determines--
    (i) That the LEA holds title to the existing facility for which 
funding is requested; and
    (ii) In consultation with the grantee, that partial or complete 
replacement of the facility would be less expensive or more cost-
effective than improving the existing facility.
    (2) When construction of new school facilities is permitted, 
emergency and modernization funds may be used only for new school 
facilities that are used for free public education. These 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 a 
Discretionary Construction grant:
    (a) Improvements to facilities for which the LEA does not have full 
title or other interest.
    (b) Improvements to or repairs of school grounds, such as 
environmental remediation, traffic remediation, and landscaping, that 
do not directly involve instructional facilities.
    (c) Repair, renovation, alteration, or construction for stadiums or 
other facilities that are primarily used for athletic contests, 
exhibitions, and other events for which admission is charged to the 
general public.
    (d) Improvements to or repairs of teacher housing.
    (e) Except in the limited circumstances as provided in Sec.  
222.172(c), when new construction is permissible, acquisition of any 
interest in real property.
    (f) Maintenance costs associated with any of an LEA's school 
facilities.

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


Sec.  222.174  What 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.
    Example of 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 of 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 
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.

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


Sec.  222.176  What definitions apply to this subpart?

    (a) In addition to the terms referenced in 34 CFR Sec.  222.2, the 
following definitions apply to this program:
    Bond limit means the cap or limit that a State may impose on an 
LEA's capacity for bonded indebtedness. For applicants in States that 
place no limit 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 
Sec.  222.172(c); and (5) inspections or supervision related to school 
facilities projects.

[[Page 60603]]

    Emergency means a school facility condition that is so injurious or 
hazardous that it either poses an immediate threat to the health and 
safety of the facility's students and staff or can be reasonably 
expected to pose such a threat in the near future. These conditions can 
include deficiencies in the following building features: a roof; 
electrical wiring; a plumbing or sewage system; or heating, 
ventilation, or air conditioning; or the need to bring a school 
facility into compliance with fire and safety codes, or providing 
accessibility for the disabled as part of a larger project.
    Level of bonded indebtedness means the amount of long-term debt 
issued by an LEA divided by the LEA's bonding capacity.
    Minimal capacity to issue bonds means that the total assessed value 
of real property in an LEA that may be taxed for school purposes is at 
least $25,000,000 but not more than $50,000,000.
    Modernization means the repair, renovation, alteration, or 
extension of a public elementary or secondary school facility in order 
to support a contemporary educational program for an LEA's students in 
normal capacity, and in accordance with the laws, standards, or common 
practices in the LEA's State.
    No practical capacity to issue bonds means that the total assessed 
value of real property in an LEA that may be taxed for school purposes 
is less than $25,000,000.
    School facility means a building used to provide free public 
education, including instructional, resource, food service, and general 
or administrative support areas, so long as they are a part of the 
facility.
    Total assessed value per student means the assessed valuation of 
real property per pupil (AVPP), unless otherwise defined by an LEA's 
State.

(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
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 
available to be taxed for school purposes that is below its State 
average; and
    (e) Has a school facility emergency that the Secretary has 
determined 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 available to be taxed for school purposes that is below its 
State average.

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


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

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

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


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

    An LEA is eligible to apply for a modernization grant under the 
fourth priority of section 8007(b) of the Act if it--
    (a)(1) Is eligible to receive funds for the fiscal year under 
section 8003(b) of the Act; and
    (i) 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

[[Page 60604]]

    (2) Is eligible to receive assistance for the fiscal year under 
section 8002 of the Act;
    (b) Has used at least 75 percent of its bond limit;
    (c) Has an average per-student assessed value of real property 
available to be taxed for school purposes that is below its State 
average; and
    (d) Has facility needs resulting from the presence of the Federal 
Government, such as the enrollment of federally connected children, the 
presence of Federal property, or an increase in enrollment due to 
expanded Federal activities, housing privatization, or the acquisition 
of Federal property.

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


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

    An LEA that is eligible to receive a payment under Title VIII for 
the fiscal year but that does not meet the other eligibility criteria 
described in Sec.  222.181 may apply on behalf of a school located 
within its geographic boundaries for a modernization grant under the 
fourth priority of section 8007(b) of the Act if--
    (a) The school--
    (1) 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 available to be taxed for school purposes that is below its 
State average; and
    (d) The school has facility needs resulting from the presence of 
the Federal Government, such as the enrollment of federally connected 
children, the presence of Federal property, or an increase in 
enrollment due to expanded Federal activities, housing privatization, 
or the acquisition of Federal property.

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

How To Apply for a Grant


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

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

    Examples: 1. An LEA wants to receive both an emergency and a 
modernization grant for one school that has a failing roof and that 
also needs significant classroom modernization. The LEA would submit 
an emergency repair grant application to address the roof issues and 
a separate modernization application to request funds to renovate 
classroom space.
    2. An LEA has five schools and seeks emergency grants to replace 
a roof and a boiler in one school and to replace windows in a second 
school. It should submit two applications--one for each of the two 
school facilities.
    3. An LEA has one school that has several conditions that need 
to be corrected--a failing roof, aging windows that impair the 
efficiency of the heating system, and asbestos in floor tiles. The 
LEA may submit a single application for all of these conditions or 
separate emergency repair grant applications for each condition, if 
the LEA judges that they present varying degrees of urgency.

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

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


Sec.  222.184  What information must an application contain?

    An application for an emergency or modernization grant must contain 
the following information:
    (a) The name of the school facility the LEA is proposing to repair, 
construct, or modernize.
    (b)(1) For an applicant under section 8003(b) of the Act, the 
number of federally connected children described in section 8003(a)(1) 
enrolled in the school facility, as well as the total enrollment in the 
facility, for which the LEA is seeking a grant; or
    (2) For an applicant under section 8002 of the Act, the total 
enrollment (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 geographic 
boundaries of the LEA.
    (g) Fiscal data including the LEA's--
    (1) Maximum bonding capacity;
    (2) Amount of bonded debt;
    (3) Total assessed value of real property 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.

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


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

    In addition to the information specified in Sec.  222.184, an 
application for an emergency grant must contain the following:
    (a) A description of the deficiency that poses a health or safety 
hazard to occupants of the facility.
    (b) A description of how the deficiency adversely affects the 
occupants and how it will be repaired.
    (c) A statement signed by an appropriate local official, as defined 
below, that the deficiency threatens the health and safety of occupants 
of the facility or prevents the use of the facility. An appropriate 
local official may include a local building inspector, a licensed 
architect, or a licensed structural engineer. An appropriate local 
official may not include a staff person of the applicant LEA.

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


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

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

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


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

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

[[Page 60605]]

that are satisfactory to the Secretary are available.

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

How Grants Are Made


Sec.  222.188  What priorities may the Secretary establish?

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

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


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

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

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

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

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

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

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


Sec.  222.191  What is the maximum award amount?

    (a) Subject to any applicable contribution requirements as 
described in Sec. Sec.  222.192 and 222.193, the procedures in 
Sec. Sec.  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 the 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.

    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 by 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

[[Page 60606]]

a project under this program, so long as no Federal funds are spent for 
the acquisition of real property.

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

Conditions and Requirements Grantees Must Meet


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

    The Secretary makes funds available to a grantee during a project 
period using the following procedure:
    (a) Upon final approval of the grant proposal, the Secretary 
authorizes a project period of up to 60 months based upon the nature of 
the grant proposal and the time needed to complete the project.
    (b) The Secretary then initially makes available to the grantee 10 
percent of the total award amount.
    (c) After the grantee submits a copy of the emergency or 
modernization contract approved by the grantee's governing board, the 
Secretary makes available 80 percent of the total award amount to a 
grantee.
    (d) The Secretary makes available up to the remaining 10 percent of 
the total award amount to the grantee after the grantee submits a 
statement that--
    (1) Details any earnings, savings, or interest;
    (2) Certifies that--
    (i) The project is fully completed; and
    (ii) All the awarded funds have been spent for grant purposes; and
    (3) Is signed by the--
    (i) Chairperson of the governing board;
    (ii) Superintendent of schools; and
    (iii) Architect of the project.

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


Sec.  222.196  What additional construction and legal requirements 
apply?

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

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

[FR Doc. 03-26650 Filed 10-21-03; 8:45 am]
BILLING CODE 4000-01-U