[Federal Register Volume 84, Number 145 (Monday, July 29, 2019)]
[Proposed Rules]
[Pages 36504-36507]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-16062]


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DEPARTMENT OF EDUCATION

34 CFR Chapter II

[Docket ID ED-2019-OPEPD-0019]
1875-AA12


Secretary's Proposed Priority for Discretionary Grant Programs

AGENCY: Department of Education.

ACTION: Proposed priority.

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SUMMARY: The Secretary of Education proposes to establish a priority 
for discretionary grant programs that would align the Department of 
Education's (the Department's) discretionary grant investments with the 
Administration's Opportunity Zones initiative, which aims to spur 
economic development and job creation in distressed communities.

DATES: We must receive your comments on or before August 28, 2019.

ADDRESSES: Submit your comments through the Federal eRulemaking Portal 
or via postal mail, commercial delivery, or hand delivery. We will not 
accept comments submitted by fax or by email or those submitted after 
the comment period. To ensure that we do not receive duplicate copies, 
please submit your comments only once. In addition, please include the 
Docket ID at the top of your comments.
     Federal eRulemaking Portal: Go to www.regulations.gov to 
submit your comments electronically. Information on using 
Regulations.gov, including instructions for accessing agency documents, 
submitting comments, and viewing the docket, is available on the site 
under ``Help.''
     Postal Mail, Commercial Delivery, or Hand Delivery: If you 
mail or deliver your comments about this proposed priority, address 
them to Allison Holte, U.S. Department of Education, 400 Maryland 
Avenue SW, Room 4W243, Washington, DC 20202-5970.
    Privacy Note: The Department's policy is to make all comments 
received from members of the public available for public viewing in 
their entirety on the Federal eRulemaking Portal at 
www.regulations.gov. Therefore, commenters should be careful to include 
in their comments only information that they wish to make publicly 
available.

FOR FURTHER INFORMATION CONTACT: Allison Holte, U.S. Department of 
Education, 400 Maryland Avenue SW, Room 4W243, Washington, DC 20202-
5970. Telephone: (202) 205-7726. Email: [email protected].
    If you use a telecommunications device for the deaf (TDD) or a text 
telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-
800-877-8339.

SUPPLEMENTARY INFORMATION:
    Invitation to Comment: We invite you to submit comments regarding 
the proposed priority. To ensure that your comments have maximum effect 
in developing the notice of final priority, we urge you to identify 
clearly the specific issues that each comment addresses. We are 
particularly interested in comments that provide examples of how 
Qualified Opportunity Funds can support activities carried out under 
the Department's discretionary grant programs.
    We invite you to assist us in complying with the specific 
requirements of Executive Orders 12866, 13563, and 13771 and their 
overall requirement of reducing regulatory burden that might result 
from this proposed priority. Please let us know of any further ways we 
could reduce potential costs or increase potential benefits while 
preserving the effective and efficient administration of our programs.
    During and after the comment period, you may inspect all public 
comments about the proposed priority by accessing Regulations.gov. You 
may also inspect the comments in person in 400 Maryland Avenue SW, Room 
4W243, Washington, DC, between the hours of 8:30 a.m. and 4:00 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 provide an appropriate 
accommodation or auxiliary aid to an individual with a disability who 
needs assistance to review the comments or other documents in the 
public rulemaking record for the proposed priority. If you

[[Page 36505]]

want to schedule an appointment for this type of accommodation or 
auxiliary aid, please contact the person listed under FOR FURTHER 
INFORMATION CONTACT.
    Program Authority: 20 U.S.C. 1221e-3.
    Proposed Priority: This document contains one proposed priority.
    Spurring Investment in Qualified Opportunity Zones.
    Background: Public Law (Pub. L.) 115-97 authorized the designation 
of Qualified Opportunity Zones (i.e., designated distressed 
communities) to promote economic development and job creation in 
distressed communities through preferential tax treatment for 
investors. Distressed communities could qualify as Opportunity Zones if 
they are nominated for that designation by the Chief Executive Officer 
of their State and then certified by the Secretary of the Treasury. The 
Secretary of the Treasury has certified more than 8,700 Qualified 
Opportunity Zones, approximately 12 percent of U.S. Census Tracts, 
across the 50 States, the District of Columbia, and five U.S. 
Territories.\1\
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    \1\ See: https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx.
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    Specifically, Public Law 115-97 added sections 1400Z-2 and 1400Z-1 
of the Internal Revenue Code of 1986 (IRC) to encourage economic growth 
and investment in Qualified Opportunity Zones by providing Federal 
income tax benefits to taxpayers who invest in businesses located 
within these zones. Section 1400Z-2 provides two main tax incentives to 
encourage investment in Qualified Opportunity Zones. First, it allows 
for the deferral of inclusion in gross income for certain gains to the 
extent that corresponding amounts are reinvested in a Qualified 
Opportunity Fund. Second, it excludes from gross income the post-
acquisition gains on investments in a Qualified Opportunity Fund that 
are held for at least 10 years.
    Through this proposed priority, we seek to expand and improve the 
opportunities available to individuals in Qualified Opportunity Zones 
by (1) encouraging applicants to plan projects in Qualified Opportunity 
Zones; (2) soliciting applications from eligible entities who are 
located in Qualified Opportunity Zones; or (3) soliciting applications 
from eligible entities that have received investments, including 
accessing real estate that has received investment from Qualified 
Opportunity Funds for a purpose directly related to their proposed 
projects. A list of Qualified Opportunity Zones is available at: 
www.cdfifund.gov/Pages/Opportunity-Zones.aspx.
    Under this proposed priority, the Department would have flexibility 
to use one or more of the priority's subparts in a given competition 
and, with respect to subpart (c), may give applicants additional time 
prior to the Department's award of grants to provide evidence of 
investment from a Qualified Opportunity Fund. We recognize that such 
additional time may be needed to enable an applicant to provide 
documentation of investment from a Qualified Opportunity Fund or that 
real estate they are accessing has received investment from a Qualified 
Opportunity Fund. If the Department elects to give applicants 
additional time, we will announce in the notice inviting applications 
(NIA) the deadline by which such evidence must be provided.
    The Department may make changes to this proposed priority in 
response to final regulations from the Department of the Treasury when 
those regulations are published. Commenters are encouraged to view the 
proposed regulations, ``Investing in Qualified Opportunity Funds,'' 
which were originally published in the Federal Register on October 29, 
2018 (83 FR 54279), and then updated on May 1, 2019 (84 FR 18652), and 
are available at www.federalregister.gov/d/2018-23382 and 
www.federalregister.gov/documents/2019/05/01/2019-08075/investing-in-qualified-opportunity-funds, respectively.
    Proposed Priority: Under this priority, an applicant must 
demonstrate one or more of the following:
    (a) The area in which the applicant proposes to provide services 
overlaps with a Qualified Opportunity Zone, as designated by the 
Secretary of the Treasury under section 1400Z-1 of the IRC. An 
applicant must--
    (i) Provide the census tract number of the Qualified Opportunity 
Zone(s) in which it proposes to provide services; and
    (ii) Describe how the applicant will provide services in the 
Qualified Opportunity Zone(s).
    (b) The applicant is located in a Qualified Opportunity Zone. The 
applicant is located in a Qualified Opportunity Zone if the applicant 
has multiple locations, at least one of which is within a Qualified 
Opportunity Zone, or if the applicant's location overlaps with a 
Qualified Opportunity Zone. The applicant must provide the census tract 
number of the Qualified Opportunity Zone in which it is located.
    (c) The applicant has received, or will receive by a date specified 
by the Department, an investment, including access to real property, 
from a Qualified Opportunity Fund under section 1400Z-2 of the IRC for 
a purpose directly related to its proposed project. An applicant must--
    (i) Identify the Qualified Opportunity Fund from which it has 
received or will receive an investment; and
    (ii) Describe how the investment would be directly related to its 
proposed project.

Types of Priorities

    When inviting applications for a competition using one or more 
priorities, we designate the type of each priority as absolute, 
competitive preference, or invitational through a notice in the Federal 
Register. The effect of each type of priority follows:
    Absolute priority: Under an absolute priority, we consider only 
applications that meet the priority (34 CFR 75.105(c)(3)).
    Competitive preference priority: Under a competitive preference 
priority, we give competitive preference to an application by (1) 
awarding additional points, depending on the extent to which the 
application meets the priority (34 CFR 75.105(c)(2)(i)); or (2) 
selecting an application that meets the priority over an application of 
comparable merit that does not meet the priority (34 CFR 
75.105(c)(2)(ii)).
    Invitational priority: Under an invitational priority, we are 
particularly interested in applications that meet the priority. 
However, we do not give an application that meets the priority a 
preference over other applications (34 CFR 75.105(c)(1)).

Final Priority

    We will announce the final priorities, requirements, definitions, 
and selection criteria in a document in the Federal Register. We will 
determine the final priority after considering public comments and 
other information available to the Department. This document does not 
preclude us from proposing additional priorities, requirements, 
definitions, or selection criteria, subject to meeting applicable 
rulemaking requirements.
    Note: This document does not solicit applications. In any year in 
which we choose to use this priority, we invite applications through a 
notice in the Federal Register.

Executive Orders 12866, 13563, and 13771

Regulatory Impact Analysis

    Under Executive Order 12866, it must be determined whether this 
regulatory action is ``significant'' and, therefore,

[[Page 36506]]

subject to the requirements of the Executive order and subject to 
review by the Office of Management and Budget (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 stated in the 
Executive order.
    This proposed regulatory action is a significant regulatory action 
subject to review by OMB under section 3(f) of Executive Order 12866.
    Under Executive Order 13771, for each new rule that the Department 
proposes for notice and comment or otherwise promulgates that is a 
significant regulatory action under Executive Order 12866, and that 
imposes total costs greater than zero, it must identify two 
deregulatory actions. For FY 2019, any new incremental costs associated 
with a new regulation must be fully offset by the elimination of 
existing costs through deregulatory actions. Although this regulatory 
action is a significant regulatory action, the requirements of 
Executive Order 13771 do not apply because this regulatory action is a 
``transfer rule'' not covered by the Executive order.
    We have also reviewed this proposed regulatory action under 
Executive Order 13563, which supplements and explicitly reaffirms the 
principles, structures, and definitions governing regulatory review 
established in Executive Order 12866. To the extent permitted by law, 
Executive Order 13563 requires that an agency--
    (1) Propose or adopt regulations only upon a reasoned determination 
that their benefits justify their costs (recognizing that some benefits 
and costs are difficult to quantify);
    (2) Tailor its regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives and taking into 
account--among other things and to the extent practicable--the costs of 
cumulative regulations;
    (3) In choosing among alternative regulatory approaches, select 
those approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity);
    (4) To the extent feasible, specify performance objectives, rather 
than the behavior or manner of compliance a regulated entity must 
adopt; and
    (5) Identify and assess available alternatives to direct 
regulation, including economic incentives--such as user fees or 
marketable permits--to encourage the desired behavior, or provide 
information that enables the public to make choices.
    Executive Order 13563 also requires an agency ``to use the best 
available techniques to quantify anticipated present and future 
benefits and costs as accurately as possible.'' The Office of 
Information and Regulatory Affairs of OMB has emphasized that these 
techniques may include ``identifying changing future compliance costs 
that might result from technological innovation or anticipated 
behavioral changes.''
    We are issuing this proposed priority only on a reasoned 
determination that its benefits would justify its costs. In choosing 
among alternative regulatory approaches, we selected those approaches 
that would maximize net benefits. Based on the analysis that follows, 
the Department believes that this regulatory action is consistent with 
the principles in Executive Order 13563.
    We also have determined that this regulatory action would not 
unduly interfere with State, local, and Tribal governments in the 
exercise of their governmental functions.
    In accordance with both Executive orders, the Department has 
assessed the potential costs and benefits, both quantitative and 
qualitative, of this regulatory action. The potential costs are those 
resulting from statutory requirements and those we have determined as 
necessary for administering the Department's programs and activities.

Discussion of Potential Costs and Benefits

    The Department believes that this regulatory action would not 
impose significant costs on eligible entities, whose participation in 
our programs is voluntary. Additionally, the benefits of the proposed 
priority outweigh any associated costs because it would result in the 
Department's discretionary grant programs selecting high-quality 
applications to implement activities that are designed to increase 
education opportunities and improve education outcomes while also 
targeting investment in our Nation's most economically distressed 
communities.
    The Secretary believes that the costs imposed on applicants by the 
proposed priority would be limited to paperwork burden related to 
preparing an application for a discretionary grant program that is 
using the priority in its competition. The proposed priority would 
likely result in Federal funds transferring from areas that are not 
designated as Qualified Opportunity Zones to areas that have received 
that designation. However, the Department has no way of meaningfully 
estimating the amount of such transfers because the number of programs 
that may use the proposed priority in a future grant competition is 
unknown, the amount of future funding available for new awards in such 
programs is unknown, and the number of applicants likely to apply for 
grants under the proposed priority is unknown. Some of the Department's 
discretionary grant programs have included priorities for Qualified 
Opportunity Zones in their fiscal year 2019 competitions, but those 
competitions have not yet closed.
    Regulatory Flexibility Act Certification: The Secretary certifies 
that this proposed regulatory action would not have a significant 
economic impact on a substantial number of small entities. The U.S. 
Small Business Administration (SBA) Size Standards define proprietary 
institutions as small businesses if they are independently owned and 
operated, are not dominant in their field of operation, and have total 
annual revenue below $7,000,000. Nonprofit institutions are defined as 
small entities if they are independently owned and operated and not 
dominant in their field of operation. Public institutions are defined 
as small organizations if they are operated by a government overseeing 
a population below 50,000.
    We certify that that this proposed regulatory action would not have 
a significant economic impact on small entities. This proposed priority 
would be used in the Department's discretionary grant competitions, and 
small entities may choose whether to participate. The Secretary 
believes that the costs imposed on small entities by the proposed 
priority would be limited to paperwork burden related to preparing an 
application for a discretionary grant program that is using the 
priority in its competition. Further, the Secretary believes that this 
proposed priority may help small entities because it would allow the 
Department to provide incentives for applicants to

[[Page 36507]]

conduct their projects in Qualified Opportunity Zones, thus directing 
additional resources to some small entities in our Nation's most 
economically distressed communities.
    Intergovernmental Review: Some of the programs affected by this 
proposed priority are 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.
    Accessible Format: Individuals with disabilities can obtain this 
document in an accessible format (e.g., braille, large print, 
audiotape, or compact disc) on request to the program contact person 
listed under FOR FURTHER INFORMATION CONTACT.
    Electronic Access to This Document: The official version of this 
document is the document published in the Federal Register. You may 
access the official edition of the Federal Register and the Code of 
Federal Regulations at www.govinfo.gov. At this site you can view this 
document, as well as all other documents of this Department published 
in the Federal Register, in text or Portable Document Format (PDF). To 
use PDF you must have Adobe Acrobat Reader, which is available free at 
the site.
    You may also access documents of the Department published in the 
Federal Register by using the article search feature at 
www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department.

    Dated: July 24, 2019.
Betsy DeVos,
Secretary of Education.
[FR Doc. 2019-16062 Filed 7-26-19; 8:45 am]
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