[Federal Register Volume 72, Number 16 (Thursday, January 25, 2007)]
[Rules and Regulations]
[Pages 3698-3703]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-1177]



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Part III





Department of Education





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34 CFR Part 76



 State-Administered Programs; Final Rule

  Federal Register / Vol. 72, No. 16 / Thursday January 25, 2007 / 
Rules and Regulations  

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DEPARTMENT OF EDUCATION

34 CFR Part 76

RIN 1890-AA13


State-Administered Programs

AGENCY: Department of Education.

ACTION: Final regulations.

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SUMMARY: The Secretary amends the regulations in 34 CFR part 76 
governing State reporting requirements. These final regulations require 
States to submit their performance reports, financial reports, and any 
other required reports, in the manner prescribed by the Secretary, 
including through electronic submission, if the Secretary has obtained 
approval from the Office of Management and Budget (OMB) under the 
Paperwork Reduction Act of 1995 (PRA). Failure to submit such reports 
in the manner prescribed by the Secretary constitutes a failure, under 
section 454 of the General Education Provisions Act, 20 U.S.C. 1234c, 
to comply substantially with a requirement of law applicable to the 
funds made available under the program for which the reports are 
submitted. If the Secretary chooses to require submission of 
information electronically, the Secretary may establish a transition 
period during which a State would not be required to submit such 
information electronically in the format prescribed by the Secretary, 
if the State meets certain requirements.

DATES: These regulations are effective February 26, 2007.

FOR FURTHER INFORMATION CONTACT: Patrick Sherrill, U.S. Department of 
Education, 400 Maryland Avenue, SW., room 6C103, Washington, DC 20202. 
Telephone: (202) 708-8196 or via Internet: [email protected].
    If you use a telecommunications device for the deaf (TDD), you may 
call the Federal Relay Service (FRS) 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: On April 27, 2006, the Secretary published a 
notice of proposed rulemaking (NPRM) in the Federal Register (71 FR 
24824).
    In the preamble to the NPRM, the Secretary discussed on pages 24826 
to 24828 the major changes proposed to the current regulations. These 
changes are summarized as follows:
     Under proposed Sec.  76.720(c)(1), States would have to 
comply with the Secretary's requirements concerning the manner in which 
reports are submitted to the Department.
     Under proposed Sec.  76.720(c)(2), failure by a State to 
submit reports in the manner prescribed by the Secretary would 
constitute a failure, under section 454 of the General Education 
Provisions Act (20 U.S.C. 1234c), to comply substantially with a 
requirement of law applicable to the Department's programs.
     Under proposed Sec.  76.720(c)(3), which applies to 
reports that the Secretary requires to be submitted electronically, the 
Secretary would have the discretion to establish a transition period of 
up to two years during which a State would not be required to submit 
information electronically in the format prescribed by the Secretary if 
the State submits to the Secretary (a) evidence satisfactory to the 
Secretary that the State is unable to comply, (b) the information 
requested in the report, through an alternative means deemed acceptable 
by the Secretary, and (c) a plan showing how the State would come into 
compliance with the data submission requirements specified in the data 
collection instrument.
    There are no differences between the NPRM and these final 
regulations.
    These regulations highlight that the Department may require, 
through the PRA clearance process, that States report certain 
information electronically and establish that the Department may take 
administrative action against a State for failure to submit reports in 
the manner prescribed by the Secretary. These regulations will 
facilitate the use of the Department's electronic EDFacts data 
management system (EDFacts).
    As explained in the NPRM, States have been submitting data through 
the Education Data Exchange Network (EDEN) voluntarily for the past two 
years. EDEN has acted as the Department's central repository and 
electronic data collection system for over 140 common data elements on 
student achievement, school characteristics, demographics, and program 
financial information. The Department is now in the process of 
increasing the EDEN capabilities to include, in addition to the Web-
based interface that allows States to submit data electronically into 
EDEN, a capability for States, Department staff, and, eventually, the 
public, to query the database and independently analyze the data 
subject to all applicable privacy protections for disclosing 
statistical data. To signal the increased capabilities of the system, 
the Department is renaming EDEN and the expanded Web-based interface 
``EDFacts.'' Accordingly, except as otherwise noted, we will describe 
the expanded system using the name ``EDFacts'' in this final rulemaking 
document.
    The Department has now obtained approval from OMB to require the 
electronic submission of data through EDFacts. The Department published 
both PRA notices for this data collection under the title ``Annual 
Mandatory Collection of Elementary and Secondary Education Data for the 
Education Data Exchange Network.'' Because we have changed the name of 
the Education Data Exchange Network to EDFacts, the title of the 
justification for OMB Control No. 1875-0240 has been changed to 
``Annual Mandatory Collection of Elementary and Secondary Education 
Data through EDFacts.'' We also note that some of the language in the 
Supporting Statement for this collection has been changed from that 
which was originally posted in the Education Department Information 
Collection System (EDICS). The Department's goal in requiring 
electronic submission of information, including data submitted through 
EDFacts, is to reduce State-reporting burden significantly and to 
streamline dozens of data collections currently required by the 
Department.

Analysis of Comments

    In response to the Secretary's invitation in the NPRM, 
approximately 21 parties submitted comments on the proposed regulations 
and the Department's plan to require States to submit data 
electronically through EDFacts beginning with data from the 2006-07 
school year. To the extent these comments related to specific elements 
of the EDFacts data collection request (1875-0240) we have addressed 
those comments as part of the PRA clearance process for EDFacts, and 
have not included responses to those comments in this document. For an 
analysis of those comments, you may download Attachment E ``Paperwork 
Reduction Act Submission Supporting Statement--Annual Mandatory 
Collection of Elementary and Secondary Education Data through EDFacts: 
EDFacts Response to Public Comments'' at the following Web site: http://edicsweb.ed.gov/browse/downldatt.cfm?pkg_serial_num=3017.
    An analysis of the comments relating to the proposed regulations 
follows.
    We group major issues according to subject. Generally, we do not 
address technical or minor changes, and suggested changes that we are 
not authorized to make under the law.

[[Page 3699]]

Section 76.720 State Reporting Requirements Nature and Schedule of 
Reports Covered by Sec.  76.720

    Comment: A few commenters asked about the reports covered by these 
regulations. Specifically, they asked what was meant by the phrase 
``other reports by the Secretary'' in paragraph (a) of proposed Sec.  
76.720. One of the commenters asked the Department to provide a list of 
these proposed reports for review. A couple of commenters were 
concerned about which reports might be required ``more frequently than 
annually''. One commenter asked the Department to provide a ``reporting 
schedule'' for review.
    Discussion: We included the phrase ``other reports by the 
Secretary'' in Sec.  76.720(a) to establish that the requirements 
described in Sec.  76.720 apply to all State reports that are now, and 
may in the future be, required by the Secretary and have been approved 
by OMB under the PRA, not just those reports that are specifically 
enumerated in the current regulations. The ability of the Secretary to 
require reporting more frequently than annually is not a proposed 
change; it can be found in current Sec.  76.720(c). See also 34 CFR 
80.41(b)(3)(frequency of financial reporting). The schedule for 
submitting data to EDFacts is included in the clearance package for 
that data collection (1875-0240), includes proposed annual data 
submission dates for each of the data groups, and has been provided to 
the State data coordinators.
    Changes: None.
    Comment: A number of commenters requested clarification on what 
constitutes the ``quality level'' expected in the submission of data 
under proposed Sec.  76.720(c)(1).
    Discussion: Section 76.720(c)(1) provides that States must submit 
reports at the quality level specified in the data collection 
instrument. Accordingly, the Department will specify in each data 
collection instrument the data quality standards that are applicable to 
the reports subject to the data collection instrument. Under the 
Department's Information Quality Guidelines, the Department seeks to 
ensure that data it disseminates to the public are accurate, reliable, 
and useful. Thus, it is important for data submitted to the Department 
to be complete, timely, accurate, valid, and useful.
    For example, for data that would be submitted through EDFacts, the 
Department expects to establish data quality standards in collaboration 
with its State partners, so that the data will be helpful to the 
Department, its State partners, and the public. The Department will 
continue to work with States to provide them with detailed feedback 
that they can use to analyze the quality of the data they submit to the 
Department, and to establish mutually agreeable criteria that the 
Department can use to certify the data submitted through EDFacts.
    Changes: None.

Potential Penalties Under Sec.  76.720(c)(2)

    Comment: One commenter recommended that the Secretary not impose 
penalties under Sec.  76.720(c)(2) for failure to comply with the 
reporting requirements of the proposed regulations; others supported 
the ability of the Secretary to impose penalties after a reasonable 
transition period. Another commenter recommended that enforcement under 
Sec.  76.720(c)(2) depend on whether a State is making reasonable, 
good-faith efforts to comply with the requirements. Several other 
commenters asked for clarity on how the penalties would be determined, 
specifically asking about when a State would be considered out of 
compliance, how penalties would be calculated, and whether funds would 
be withheld from administrative or program allocations, or both. 
Finally, a commenter asked if States would be penalized under Sec.  
76.720(c)(2) for failure of local educational agencies (LEAs) to report 
directly to the Office for Civil Rights (OCR) in the Department.
    Discussion: As explained in the preamble to the NPRM, failure of a 
recipient to comply with the Department's reporting requirements, 
including submitting reports electronically, harms the Federal interest 
in establishing what the Department deems is an efficient and effective 
means of obtaining accurate, reliable, and valid information on the 
performance of the Department's programs and the success of States in 
meeting their goals under such laws as the No Child Left Behind Act of 
2001 (Pub. L. 107-110). Thus, we determined that it was necessary to 
highlight, through these regulations, the importance of the 
Department's reporting requirements. Moreover, we determined that, for 
the Department's reporting requirements to be meaningful, it was 
essential for the Secretary to have the appropriate tools to enforce 
them. That being said, the Department will consider many factors in 
determining whether to impose appropriate sanctions, including whether 
a State is making reasonable, good-faith efforts to comply with the 
reporting requirements and, in the case of mandatory electronic 
reporting, whether a State has submitted a transition plan and whether 
that plan is sufficiently detailed to explain how the State would 
provide the requested data within the transition period.
    To be clear, the Department is not interested in penalizing States 
for minor, technical infractions but is instead focused on 
collaborating with States to strengthen the States' own data systems 
and the use of data collected through those systems to improve 
education within their States. Part of the ability to use data 
effectively depends on the completeness of those data. Accordingly, the 
Department will work with States to establish reasonable criteria for 
what a complete submission entails.
    In addition, the Department plans to continue to work closely with 
States as partners in the identification, collection, and reporting of 
complete, accurate, timely, and valid education information, to 
minimize the need for the Department to take administrative action to 
compel compliance with these regulations.
    For example, with respect to EDFacts data, the Department currently 
requests each State to submit an individual State data submission plan 
to address the unique data submission challenges of each State data 
provider. Working together with States, the Department has provided 
tools to help States assess their specific challenges and to develop 
individualized State data submission plans and reporting schedules for 
EDFacts data. The Department also will adopt the suggestion of one 
commenter that the Department conduct site visits with individual 
States to determine their capacity to collect and report data, and to 
develop phase-in plans and agreements for each. In all cases, the 
Department is committed to providing the support that is needed to help 
individual States that are making reasonable, concerted, good-faith 
efforts to comply with the EDFacts data submission requirements.
    Furthermore, the Department anticipates that States will vary in 
their capacity to report data electronically in accordance with Sec.  
76.720. For that reason, under Sec.  76.720(c)(3), States may report 
data through an alternative means for up to two years following the 
date the States otherwise would be required to submit the data 
electronically if they meet the requirements in paragraphs (c)(3)(i) 
through (c)(3)(iii) of Sec.  76.720. These requirements include 
developing a plan for coming into compliance with the reporting 
requirements within two years. The Department will work directly with 
individual States to develop and implement those plans,

[[Page 3700]]

and we anticipate they will be customized to address individual State 
capacities. The Department is also open to the possibility that some of 
these required data might be submitted by a State to a multi-State data 
repository, or ``public utility,'' maintained by, and for, the States, 
provided that the data repository enters into agreements with the 
participating States and the Department to ensure that data from the 
repository are provided to EDFacts.
    Should the Department determine that administrative action is 
necessary, the Department would determine on a case-by-case basis 
whether and how sanctions would be imposed by considering factors such 
as the existence of an approved State data submission plan, the history 
of the State's efforts to provide required data to the Department, and 
evidence of a State's progress in improving its education data systems. 
For example, the Department may decide to commence action to withhold 
administrative funds from a State if the Department determines that the 
State was not making reasonable and good-faith efforts to implement a 
transition plan under Sec.  76.720(c)(3)(iii) to submit reports 
electronically.
    Finally, under 34 CFR 76.500, States and their subgrantees are 
responsible for compliance with the civil rights statutes and 
regulations enforced by OCR, including the obligation to provide civil 
rights data when requested by OCR. As part of its data collection 
activities, OCR has been collecting data both from States, and directly 
from LEAs. The Department cannot specially alter or suspend the civil 
rights responsibilities of States or LEAs during the migration of the 
Civil Rights Data Collection (CRDC) into EDFacts. During the migration 
process, when data are requested from an LEA, the primary focus of 
OCR's efforts will continue to be on the LEA's obligation to submit the 
required data. Virtually all of the LEAs participating in the 2006 CRDC 
have notified the Department that they are planning to provide their 
data submissions electronically. However, LEAs submitting CRDC data to 
the Department will continue to have the option of electing other 
formats, including paper forms.
    Changes: None.

Transition Period for Mandatory Electronic Submission Requirements 
Under Sec.  76.720(c)(3)

    Comment: Six commenters expressed support for the two-year 
transition period described in Sec.  76.720(c)(3). One commenter noted 
that a longer transition period would only serve to delay the presence 
of a fully populated data repository and would, therefore, result in 
the continued practice of duplicative data collections. Many other 
commenters questioned whether the two-year transition period was a 
sufficient amount of time for States to establish the data systems 
needed to supply the reliable and quality data that are being requested 
for the EDFacts data collection. Commenters suggested alternatives, 
ranging from two to five years, because of issues such as the need to 
obtain legislative approval within their States.
    Discussion: The Department appreciates that many States will find 
it challenging to make the needed changes to their data systems to be 
able to report their data to the Department electronically for any 
collection of data. The Department recognizes that any automated 
information system will require some significant work to modify it for 
the collection, storage, protection, and reporting of any data that 
were previously uncollected. For this reason, the Department has 
determined that it is appropriate for the Secretary to have the 
discretion to establish a transition period of up to two years during 
which a State would not be required to submit information 
electronically in the format prescribed by the Secretary, if the State 
meets certain requirements. Because the need for good data is so 
important, the Department believes that the two-year transition period 
is reasonable.
    The two-year transition period applies to the EDFacts data 
collection. Thus, if a State is not able to submit all of the required 
data electronically to EDFacts by the specified reporting deadline, the 
State must submit to the Secretary, in accordance with Sec.  
76.720(c)(3), evidence that the State cannot comply with the electronic 
submission reporting requirement, the information requested in the 
report through an alternative means acceptable to the Secretary, and a 
plan for submitting the reports in the required electronic manner no 
later than two years after the reporting deadline.
    We recognize that States may need guidance in developing their 
plans under Sec.  76.520(c)(3)(iii) with respect to the EDFACTS data 
collection. To address that need, we included in our EDFACTS data 
collection submission to OMB proposed guidance to States on when the 
Department would expect States to be able to submit certain data 
elements electronically to EDFACTS. The guidance, for example, 
identifies those EDFACTS data groups that the Department believes all 
States should have the capability to submit electronically to EDFACTS 
for the 2006-2007 school year. If a State cannot submit all of those 
data groups electronically for the 2006-2007 award year, the State 
would provide the Secretary with evidence about which data groups it 
could not submit electronically for the 2006-2007 award year and 
propose a transition plan. Under the transition plan, the State would 
submit those data groups that could be provided electronically to 
EDFACTS for the 2006-2007 school year and would provide all other 
required data elements to the Department through an alternative means 
in accordance with Sec.  76.720(c)(3)(ii). The State would include in 
its transition plan information on when, within the two year transition 
period, it would submit the other data elements electronically through 
EDFACTS. We are providing as guidance information about when the 
Department would expect States to be able to provide data 
electronically through EDFACTS; States may need to structure their 
transition plans differently depending on their capacities. In all 
cases, however, we will work cooperatively with States to provide them 
support in their efforts to comply with the EDFACTS data collection 
requests.
    Changes: None.
    Comment: Most commenters cited scarce State resources as the reason 
the two-year transition period in Sec.  76.720 was inadequate. Several 
commenters stated that to comply with the proposed regulations they 
would need to restructure their current data systems and, thus, would 
require more financial and human resources. One commenter estimated 
that it would need 4 years and $840,000 to comply with the reporting 
requirements in the EDFACTS data collection. Many commenters stated 
that States would need more staff to prepare and report data to 
EDFACTS. Several commenters suggested that the Federal Government 
provide the funding for additional staff to lead the data collection 
and reporting effort, explaining that the work needed at least one 
full-time-equivalent position similar to the position funded by the 
National Center for Education Statistics to manage data for the 
National Assessment of Educational Progress. One commenter suggested 
that the responsibilities of such a position include submitting and 
maintaining the data submission plan, managing and submitting files, 
reviewing and commenting on future changes, and using EDFACTS for 
reporting to management.
    Discussion: Over the last two fiscal years, the Congress has 
appropriated nearly $50 million to assist States in developing State 
Longitudinal Data Systems. The Department is continuing

[[Page 3701]]

to explore ways to increase funding, and expand State access to these 
funds.
    Changes: None.
    Comment: One State recommended that the two-year transition period 
be understood as a minimum period of time during which States can 
obtain the first data set on any new variable. Another State noted that 
forcing States to report data before they have a complete data set 
could result in inaccurate data being reported.
    Discussion: These regulations address only the submission of data 
in the form and format required by the Secretary and not the process by 
which States obtain or collect data to be reported to the Department. 
Whether specific data are available and the cost of acquiring or 
collecting those data are matters that are best addressed in the PRA 
public comment and clearance process for each information collection 
package. That being noted, the Department's goal continues to be to 
obtain accurate, reliable, and useful data from States, in order to 
monitor and evaluate the States' performance and use of Department 
funds.
    Changes: None.

General Comments

    Comment: Several commenters expressed concern that they do not 
currently collect some of the data requested through EDFACTS and that, 
therefore, it would be unfair to penalize them for not having the data 
or to require them to establish new data collection efforts.
    Discussion: As part of the public comment period required under the 
PRA, States have been given the opportunity to identify any problems 
they expect to have in supplying the data required under the EDFACTS 
data collection (1875-0240). The Department has invited comment 
multiple times on exactly which data elements are not available from 
the States. The Department has also invited States to provide this 
information as part of one of the two public comment periods under the 
PRA for the most recent request for collection of EDFACTS data, or as 
part of the ongoing work with the States to implement EDFACTS. As noted 
elsewhere in this section, every effort will be made in the EDFACTS 
collection to require only those data that are needed by the Department 
in order to monitor and evaluate a State's performance in using funds 
awarded by the Department.
    Changes: None.
    Comment: A number of commenters expressed concern that the 
consolidated, mandatory collection of data through EDFACTS would not 
eliminate the numerous, redundant program collections currently 
required of States. One commenter suggested that the Department ought 
to provide a timeframe in which each data collection is to be 
eliminated. Several others suggested that, once data are available to 
the Department through EDFACTS, the Department take swift action to 
require program offices to cease collecting similar data though other 
means and set a clear schedule with specific dates for when each data 
collection is to be eliminated. If not, one commenter warned, 
participation in EDFACTS might not be worth the effort for States. 
Several commenters noted that there is no language in the regulations 
to make the use of EDFACTS mandatory for program offices within the 
Department, and that they are concerned that if this is not explicit 
within the regulations, program offices may continue to require their 
own reports.
    Discussion: The Department's goal is to eliminate duplicative 
reporting and, accordingly, the Department is working to ensure that as 
many of its program offices as possible use EDFacts. In the future, if 
a program office sends forward a proposal to request data through a 
program-specific data collection, and those data are already being 
collected through EDFacts, the Secretary will, through the internal and 
PRA clearance processes, deny approval for such duplicate collections. 
However, if any duplicative data elements should slip through the 
clearance processes, States can alert the Secretary through the public 
comment period under the PRA, ensuring that redundant data collections 
are eliminated.
    Changes: None.
    Comment: There were several requests by commenters for the 
Department to explain the rationale for certain data elements and for a 
clear indication of what data elements are going to be eliminated now 
and in the future. Some States said that they do not collect or use 
some of the proposed data elements and that reporting those data will 
create extra burden. Some commenters said that States want a 
comprehensive data map or crosswalk for each and every data element 
that corresponds to the Federal law that authorizes its collection, the 
current Department collection forms that collect it, and the actual 
Federal use of the data, so that they can see that coordination exists 
between the efforts to collect data through EDFacts and the efforts of 
the Department's program staff to collect data outside the EDFacts 
context. One commenter noted that program staff and EDFacts staff 
frequently send mixed messages about which data are required to be 
submitted.
    Discussion: The Department will continue to use the clearance 
process under the PRA to analyze the national costs and benefits of 
each data element it requires. Proposed data collections will face a 
rigorous internal clearance process at the Department before being 
added to an EDFacts collection--and then phased in, if necessary. The 
Department asks States to inform it of any and every Department program 
office message that may seem to be ``at odds'' with what has been 
written here, so that it can improve its communication with the public 
about data collection. To help prevent these mixed messages, the 
Department has convened a cross-program committee composed of many 
senior Department program managers to discuss shared data definitions 
and data usage and to ensure internal agency collaboration.
    Changes: None.
    Comment: One commenter asked if it could submit school and district 
data, and have the Department aggregate those data to the State level, 
rather than submitting all three levels of data.
    Discussion: EDFacts has the technical capacity to aggregate school 
data to the district level and district data to the State level. The 
Department has not done this yet because it is concerned that some data 
might be missed in the aggregation process. The Department will work 
with any State that agrees to certify that the school-level data that 
it submits through EDFacts is complete in all cells and that the 
aggregations of those cells produce complete data at the district and 
State levels. The Department is willing to make available the State 
data aggregation option and allow States to submit only school-level 
data.
    Changes: None.

Section 76.722 Subgrantee Reporting Requirements

    Comment: None.
    Discussion: Current Sec.  76.722 provides that ``[a] State may 
require a subgrantee to furnish reports that the State needs to carry 
out its responsibilities under the program.'' In the NPRM, we proposed 
to amend Sec.  76.722 slightly in order to make that provision 
consistent with the language in proposed Sec.  76.720, which requires 
States to submit reports ``in a manner prescribed by the Secretary.'' 
Thus, proposed Sec.  76.722 provides that ``[a] State may require a 
subgrantee to submit reports in a manner and format that assists the 
State * * *.'' Upon intradepartmental review of the language in 
proposed Sec.  76.722, we thought it prudent to clarify that we do

[[Page 3702]]

not intend for this language to grant to States any authority that they 
do not already have to collect information from LEAs to help States 
carry out their responsibilities under the Department's programs. That 
is, a State may only require its LEAs to submit reports in a particular 
manner or format if that State has the requisite authority to do so 
under its State laws and regulations. In implementing proposed Sec.  
76.722, the Department expects that each State will take into account 
the capacity of their LEAs to submit reports in the manner and format 
determined appropriate by the State.
    Changes: None.

Executive Order 12866

    We have reviewed these final regulations in accordance with 
Executive Order 12866. Under the terms of the order, the Secretary must 
determine whether this regulatory action is ``significant'' and 
therefore subject to the requirements of the Executive Order and 
subject to review by OMB. Section 3(f) of Executive Order 12866 defines 
a ``significant regulatory action'' as an action likely to result in a 
rule that may (1) have an annual effect on the economy of $100 million 
or more, or adversely affect a sector of the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, 
local or tribal governments or communities in a material way (also 
referred to as an ``economically significant'' rule); (2) create 
serious inconsistency or otherwise interfere with an action taken or 
planned by another agency; (3) materially alter the budgetary impacts 
of entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raise novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive order. The Department has 
assessed the potential costs and benefits of this regulatory action.
    The potential costs associated with the final regulations are those 
we have determined to be necessary for administering the requirements 
of the Department's State-administered programs 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 summarized the potential costs and benefits of these final 
regulations in the preamble to the NPRM (71 FR 24828). We include 
additional discussion of potential costs and benefits in the section of 
this preamble titled Analysis of Comments.

Paperwork Reduction Act of 1995

    The paperwork burden in Sec.  76.720(c)(3)(iii) is approved under 
the PRA as part of the burden in the Annual Mandatory Collection of 
Elementary and Secondary Education Data for EDFacts (1875-0240).

Intergovernmental Review

    These regulations affect State-administered programs of the 
Department that are subject to Executive Order 12372 and the 
regulations in 34 CFR part 79. The objective of the Executive order is 
to foster an intergovernmental partnership and to strengthen 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 
these programs.

Assessment of Educational Impact

    In the NPRM we requested comments on whether the proposed 
regulations would require transmission of information that any other 
agency or authority of the United States gathers or makes available.
    Based on the response to the NPRM and on our review, we have 
determined that these final regulations do not require transmission of 
information that any other agency or authority of the United States 
gathers or makes available.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments, and on the private sector. These final regulations do not 
impose any Federal mandates on any State, local, or tribal governments, 
or the private sector, within the meaning of the Unfunded Mandates 
Reform Act of 1995.

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.


    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 does not apply.)

List of Subjects in 34 CFR Part 76

    Elementary and secondary education, Reporting and recordkeeping 
requirements.

    Dated: January 22, 2007.
Margaret Spellings,
Secretary of Education.

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For the reasons discussed in the preamble, the Secretary amends part 76 
of title 34 of the Code of Federal Regulations as follows:

PART 76--STATE-ADMINISTERED PROGRAMS

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1. The authority citation for part 76 is revised to read as follows:

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


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2. Section 76.720 is revised to read as follows:


Sec.  76.720  State reporting requirements.

    (a) This section applies to a State's reports required under 34 CFR 
80.40 (Monitoring and reporting of program performance) and 34 CFR 
80.41 (Financial reporting), and other reports required by the 
Secretary and approved by the Office of Management and Budget (OMB) 
under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3520.
    (b) A State must submit these reports annually unless--
    (1) The Secretary allows less frequent reporting; or
    (2) The Secretary requires a State to report more frequently than 
annually, including reporting under 34 CFR 80.12 (Special grant or 
subgrant conditions for ``high-risk'' grantees) or 34 CFR 80.20 
(Standards for financial management systems).
    (c)(1) A State must submit these reports in the manner prescribed 
by the

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Secretary, including submitting any of these reports electronically and 
at the quality level specified in the data collection instrument.
    (2) Failure by a State to submit reports in accordance with 
paragraph (c)(1) of this section constitutes a failure, under section 
454 of the General Education Provisions Act, 20 U.S.C. 1234c, to comply 
substantially with a requirement of law applicable to the funds made 
available under that program.
    (3) For reports that the Secretary requires to be submitted in an 
electronic manner, the Secretary may establish a transition period of 
up to two years following the date the State otherwise would be 
required to report the data in the electronic manner, during which time 
a State will not be required to comply with that specific electronic 
submission requirement, if the State submits to the Secretary--
    (i) Evidence satisfactory to the Secretary that the State will not 
be able to comply with the electronic submission requirement specified 
by the Secretary in the data collection instrument on the first date 
the State otherwise would be required to report the data 
electronically;
    (ii) Information requested in the report through an alternative 
means that is acceptable to the Secretary, such as through an 
alternative electronic means; and
    (iii) A plan for submitting the reports in the required electronic 
manner and at the level of quality specified in the data collection 
instrument no later than the date two years after the first date the 
State otherwise would be required to report the data in the electronic 
manner prescribed by the Secretary.

(Authority: 20 U.S.C. 1221e-3, 1231a, and 3474)


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3. Section 76.722 is revised to read as follows:


Sec.  76.722  Subgrantee reporting requirements.

    A State may require a subgrantee to submit reports in a manner and 
format that assists the State in complying with the requirements under 
34 CFR 76.720 and in carrying out other responsibilities under the 
program.

(Authority: 20 U.S.C. 1221e-3, 1231a, and 3474)

 [FR Doc. E7-1177 Filed 1-24-07; 8:45 am]
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