[Federal Register Volume 69, Number 50 (Monday, March 15, 2004)]
[Rules and Regulations]
[Pages 12234-12240]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-5670]



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Part IV





Department of Education





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34 CFR Part 222



Impact Aid Programs; Final Rule



Office of Elementary and Secondary Education; Overview Information; 
Impact Aid Discretionary Construction Program; Notice Inviting 
Applications for New Awards for Fiscal Years (FYs) 2003 and 2004; 
Notice

  Federal Register / Vol. 69, No. 50 / Monday, March 15, 2004 / Rules 
and Regulations  

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DEPARTMENT OF EDUCATION

34 CFR Part 222

RIN 1810-AA96


Impact Aid Programs

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

ACTION: Final rule.

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SUMMARY: The Secretary issues these final 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 
(NCLB). 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 final 
regulations incorporate statutory requirements and provide guidance for 
applying and qualifying for, as well as spending, the Federal funds 
provided under this program. These final regulations apply to the grant 
competitions after fiscal year (FY) 2002.

EFFECTIVE DATE: April 14, 2004.

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 Internet: [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 Impact 
Aid Discretionary Construction program, which is authorized under 
section 8007(b) of the Act, as amended by the NCLB (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.
    On October 22, 2003, the Secretary published a notice of proposed 
rulemaking (NPRM) for this program in the Federal Register (68 FR 
60598). The NPRM was similar to the final FY 2002 regulations, but we 
included clarifying language based on our experiences in implementing 
this program. These clarifications were made in Sec. Sec.  222.172, 
222.173, and 222.176 of title 34 of the Code of Federal Regulations.
    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. In the 
preamble to the NPRM, the Secretary summarized and discussed on pages 
60598 and 60599 the substantive issues under the sections of the 
regulations to which they pertain.
    These final regulations reflect one change from the NPRM, resulting 
from public comments. Section 222.192 is amended to specify that when 
assessing a grant recipient's available resources for capital 
improvements, the Secretary will not consider funds associated with 
legally binding written commitments in a district's capital fund that 
have been obligated but not yet liquidated.

Analysis of Comments and Changes

    In response to the Secretary's invitation in the NPRM, two parties 
submitted comments on the proposed regulations. An analysis of the 
comments and of the change in the regulations since publication of the 
NPRM follows. Generally, we do not address technical and other minor 
changes--and suggested changes the law does not authorize the Secretary 
to make.

Available Local Funds (Section 222.192)

    Comment: One commenter recommended that we amend the regulations to 
allow the Secretary, when assessing a potential grantee's available 
capital resources, to review revised annual audit reports or other 
written proof of binding obligations that the grantee has made but not 
yet paid for.
    Discussion: 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. We agree that the 
regulations and the program implementation would be improved with the 
change recommended by the commenter. We also believe that the benefits 
of this provision to the few cases to which it would apply justify the 
minimal costs to the applicants required to submit the documents that 
would be associated with this addition.
    Change: The Secretary will also exclude from consideration capital 
funds that a grantee can show have been committed by a written binding 
agreement but have not yet been paid from the grantee's capital fund. 
We have amended Sec.  222.192 to reflect this revision.

Permissible Uses of Funds (Section 222.172)

    Comment: One commenter expressed a concern that Sec.  222.172 would 
prohibit any grants to LEAs that do not hold title to a school 
facility. In the commenter's State, LEAs often have exclusive use 
through ground leases of a school facility located on Indian lands.
    Discussion: The regulations provide that an LEA may receive 
emergency or modernization grants for repairs or renovations to a 
facility in which it has an interest, including a leasehold interest. 
Accordingly, LEAs leasing space on Indian lands for their schools would 
be eligible to receive these types of grants, but as noted in Sec.  
222.172(c), we would not allow a grant to completely replace a school 
(new construction) for which the applicant does not hold title. We do 
not believe a change to the regulations is necessary.
    Change: None.

Executive Order 12866

    We have reviewed these final regulations in accordance with 
Executive Order 12866. Under the terms of the order we have assessed 
the potential costs and benefits of this regulatory action.
    The potential costs associated with the final regulations are those 
resulting from statutory requirements and those we have determined to 
be necessary for administering this program effectively and 
efficiently.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of these final regulations, we have determined that 
the benefits of the regulations 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

    We discussed the potential costs and benefits of these final 
regulations in the preamble to the NPRM under the heading Paperwork 
Reduction Act of

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1995. We include additional discussion of potential costs and benefits 
in the section of this preamble titled Analysis of Comments and 
Changes.

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 are 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 submitted by small entities. In 
addition, we do not believe that the regulations have a significant 
economic impact on the limited number of small LEAs affected because 
the regulations do not impose excessive regulatory burdens or require 
unnecessary Federal supervision.
    The regulations 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 is not able to award 
these funds without the specified application information. The 
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 grant applications.
    In addition, electronic applications will be available for the 
competition to award FY 2004 funds, which will further minimize burden 
to all applicants. The software will populate certain application data 
fields for applicants that submitted an Impact Aid section 8003 
application for FY 2004, 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 Secretary specifically invited comment in the NPRM on the 
effects of the proposed regulations on small entities but we received 
no comments on that topic. The regulations impose minimal paperwork 
burden requirements for all 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. The Paperwork Reduction Act of 1995 does not 
require you to respond to a collection of information unless it 
displays a valid OMB control number. We display the valid OMB control 
numbers assigned to the collections of information in these final 
regulations at the end of the affected sections of the regulations.

Intergovernmental Review

    This program is subject to the requirements of Executive Order 
12372 and the regulations in 34 CFR part 79. The objective of the 
Executive Order is to foster an intergovernmental partnership and a 
strengthened federalism by relying on processes developed by State and 
local governments for coordination and review of proposed Federal 
financial assistance.
    In accordance with the order, we intend this document to provide 
early notification of the Department's 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/news/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.gpoaccess.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: March 9, 2004.
Raymond Simon,
Assistant Secretary for Elementary and Secondary Education.

0
For the reasons discussed in the preamble, the Secretary amends title 
34 of the Code of Federal Regulations by revising subpart L of part 222 
to read as follows:

PART 222--IMPACT AID PROGRAMS

0
1. The authority citation for part 222 continues to read as follows:

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


0
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 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 will not receive funding under a 
Discretionary Construction grant?
222.174 What 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?

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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?

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)?

    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  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 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;
    (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 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; or
    (v) 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 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 a new school facility is permitted, 
emergency and modernization funds may be used only for a new school 
facility that is used for free public education. These funds may be 
used for 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 or machinery, and initial 
utility connections.

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

Sec.  222.173  What activities will not receive funding under a 
Discretionary Construction grant?

    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, such as a lease-hold 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 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.


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    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 from the example of 
supplanting 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 
Sec. Sec.  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 84 (Governmentwide Requirements for Drug-Free 
Workplace (Financial Assistance)).
    (8) 34 CFR part 85 (Governmentwide Debarment and Suspension 
(Nonprocurement)).
    (b) The regulations in 34 CFR part 222.

(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 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 10 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.
    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; heating, ventilation, 
or air conditioning; 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.
    (b) 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 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 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) Enrolls 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) Enrolls 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 75 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 poses a health or safety hazard to students and school 
personnel.

[[Page 12238]]


(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) Enrolls children living on Indian lands equal to at least 40 
percent of the total number of children in ADA; or
    (2) Enrolls 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 poses 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) Enrolls children living on Indian lands equal to at least 40 
percent of the total number of children in ADA in its schools; or
    (ii) Enrolls 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 
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) Enrolls children living on Indian lands equal to at least 40 
percent of the total number of children in ADA; or
    (2) Enrolls 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. An LEA must submit a separate 
application for each school for which it proposes a project, and may 
submit more than one application for a single school if multiple 
projects are proposed.

    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.

(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 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

[[Page 12239]]

    (2) For an applicant under section 8002 of the Act, the total 
enrollment, for the preceding year, in the LEA and in the school 
facility for which the LEA is seeking a grant, based on the fall State 
count date.
    (c) The 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 available to be taxed for 
school purposes;
    (4) State average assessed value per pupil of real property 
available to be taxed for school purposes;
    (5) Local real property tax levy, in mills or dollars, used to 
generate funds for capital expenditures; and
    (6) Sources and amounts 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 L 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) 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 member of the applicant LEA's staff.

(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 the need referenced in paragraph (a) of this section.

(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 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 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 that they are 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

[[Page 12240]]

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 34 CFR 
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 10 percent of the average 
annual capital expenditures of the applicant for the three previous 
fiscal years, whichever is greater. The Secretary will not consider 
capital funds that an LEA can demonstrate have been committed through 
signed contracts or other written binding agreements but have not yet 
been expended.

(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 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 four 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) Subject to the limitations of 34 CFR 75.564(c)(2) regarding 
indirect costs, 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 
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. 04-5670 Filed 3-12-04; 8:45 am]
BILLING CODE 4000-01-P