40422 Federal Register / Vol. 62, No. 144 / Monday, July 28, 1997 / Rules and Regulations

DEPARTMENT OF EDUCATION

34 CFR Part 75

RIN: 1880–AA76

Direct Grant Programs

AGENCY: Department of Education.

ACTION: Final rule.

SUMMARY: The Secretary amends Part 75,

Education Department General

Administrative Regulations (EDGAR),

which governs the administration of the

Department’s discretionary grant

programs. These amendments revise

certain sections of Part 75 to remove

conflicts with Part 74, which was

revised in July 1994. These amendments

provide virtually all discretionary

grantees the greater administrative

flexibility to take certain actions

without the prior approval of the

Department that is permitted under the

revised Part 74 for grantees subject to

that part. Special Projects and Centers

funded by the National Institute on

Disability and Rehabilitation Research

will continue to need prior approval to

extend their projects due to unique

circumstances associated with those

programs. The Secretary retains

discretion under these amendments to

require prior approval for any of the

actions permitted under the revised

regulations if needed in appropriate

circumstances.

EFFECTIVE DATES: These regulations take

effect on August 27, 1997. These

regulations apply to direct grants

outstanding on the effective date of the

regulations and to all grants made on or

after the effective date of the

regulations. With respect to the

following NIDRR programs, these

regulations become applicable on

October 1, 1997:

The Knowledge Dissemination and

Utilization Centers and Disability and

Technical Assistance Centers programs

under 34 CFR Part 350, Subpart B,

§§ 350.17–350.19;

The Rehabilitation Research and

Training Centers program under 34 CFR

Part 350, Subpart C;

The Rehabilitation Engineering

Research Centers program under 34 CFR

Part 350, Subpart D;

The Special Projects and

Demonstrations for Spinal Cord Injuries

programs under 34 CFR Part 359.

ADDRESSES: While the Secretary is

publishing these procedural rules as

final regulations, the Secretary is

interested in comments on the effect of

these changes and ways to improve the

discretionary grant administration

process of the Department. Written

comments should be sent to: Greg Vick,

U.S. Department of Education, Grants

Policy and Oversight Staff, Mail Stop

4248, Washington, DC 20202. Copies of

comments submitted to the Department

will be available for public inspection,

until the regulations become effective,

in Room 3652, GSA National Capital

Region Building, 7th and D Streets, SW.,

Washington, DC between the hours of

9:00 a.m. and 4:30 p.m., Monday

through Friday of each week except

Federal holidays.

FOR FURTHER INFORMATION CONTACT: Greg

Vick, (202) 708–8199. Individuals who

use a telecommunications device for the

deaf (TDD) may call the Federal

Information Relay Service (FIRS) at 1–

800–877–8339 between 8 a.m. and 5

p.m., Eastern time, Monday through

Friday.

SUPPLEMENTARY INFORMATION:

Background

On November 29, 1993 (58 FR 62992),

the Office of Management and Budget

(OMB) published a revised version of

OMB Circular A–110, which establishes

uniform administrative requirements for

Federal grants and cooperative

agreements awarded to institutions of

higher education, hospitals, and other

non-profit organizations. On July 6,

1994 (59 FR 34722), the Secretary

revised Part 74 (Administration of

Grants) of EDGAR to apply the

provisions of the revised circular to

Department of Education grantees that

are members of the covered groups.

The revised Part 74 gave the Secretary

discretion to dispense with certain prior

approval procedures in Part 74 and

various OMB circulars, in order to

permit a grantee: (1) To extend its grant

automatically at the end of a project

period for a period of up to one year

without prior approval if the

Department obligated no additional

funds; (2) to carry funds over from one

budget period to the next without

limitation; (3) to obligate funds up to 90

days before the effective date of the

grant award without prior approval; and

(4) to make transfers of funds between

direct cost budget categories for certain

kinds of grants. However, because

regulations in Part 80, which applies to

governments, and Part 75, which

applies to direct grants to any kind of

organization, conflict with the new rules

in Part 74, these amendments are

needed to remove the barriers to use of

the discretion authorized in Part 74.

Under the amendments, virtually all

direct grantees of the Department can

benefit from the reduced burden in Part

74.

Extending a Project Period

As currently written, § 75.261,

binding on all classes of grantees,

requires them to take certain steps

before the Department will consider

extending the end date of a project

period. This regulation conflicts with

the Secretary’s discretion under

§ 74.25(e). The new language for

§ 75.261 provides that grantees of the

Department may extend their grants as

provided in Part 74 unless a statute,

certain regulations or a grant condition

prohibits that discretion.

There are situations in which the

Secretary might prohibit a grantee from

exercising the no-prior-approval

discretion otherwise available under the

revised § 75.261 by including conditions

in the notification of grant award. For

example, some grants that support

programs for training teachers include

funds for both salaries for professors

and scholarships for students. If a

grantee does not receive new funding

for its program, the grantee may try to

extend the project period of the award

and use any remaining funds to pay

salaries for professors without paying

stipends to students so they could

benefit from the program. To avoid such

a result, the Secretary might require

prior approval for an extension.

The Secretary also would refuse to

permit a grantee to extend its project

period if, pursuant to statute, the funds

would not be available for expenditure

(liquidation of obligations) during the

extended period. Under the account

closing provisions of Public Law 101–

510, funds must be obligated and

expended within five years after their

availability for obligation by ED expired.

If funds are not obligated and expended

by a grantee within this period, they

revert automatically to the U.S.

Treasury. If a grantee were to

unilaterally extend its project period so

that the funds were no longer available

for expenditure, the grantee would

suffer from the automatic withdrawal of

its authority to liquidate obligations at

the start of or in the middle of a budget

period.

The Secretary does not expect this

unanticipated consequence in the future

because the Department is in the

process of converting to a new financial

management system that will track all

funds by the fiscal year they were made

available for obligation by the

Department. Under this new financial

management system, grantees would be

required to expend funds from earlier

budget periods of their grants before

drawing on funds from later budget

periods. Budget periods for

discretionary grants are not exactly
Federal Register / Vol. 62, No. 144 / Monday, July 28, 1997 / Rules and Regulations 40423

synchronous with the period funds are

available for obligation by ED. However,

requiring grantees to obligate funds from

earlier budget periods will ensure that,

when a grantee gets to its last budget

period, the funds obligated during that

last period will not have been available

to the grantee more than five years after

the end of the availability for obligation

by the Department. During the period of

transition to the new financial system,

ED will monitor expenditures closely

and might include conditions in some

grants that would require prior approval

for extensions. Thus, ED could check its

records to be sure that the grantee

would have funds available for

expenditure under the account-closing

provisions of Public Law 101–510

before permitting any extension.

Certain programs of NIDRR require

special treatment regarding the

authority of grantees to extend their

grants. As a result, the regulations

require grantees to request prior

approval to extend their projects under

the Knowledge Dissemination and

Utilization Centers and Disability and

Technical Assistance Centers programs,

Rehabilitation Research and Training

Centers program, the Rehabilitation

Engineering Research Centers program,

and the Special Projects and

Demonstrations for Spinal Cord Injuries

programs. The special regulation for

these NIDRR programs is necessary to

prevent confusion among constituents

that could result if there were more than

one center or special project in a given

topical or geographical area. Also, if

some of the grantees under these

programs lost competitions for the next

centers or special projects grants and

extended their projects, the Assistant

Secretary might be unable to ensure that

each of these grantees would have

access to the required ED information

and expertise or to the multi-center

databases required for many

rehabilitation research grantees.

The Secretary has established a

delayed effective date for the regulations

as applied to these programs because

their regulations were recently

amended, changing many of the

citations to the relevant subparts and

sections. The program amendments

become effective on October 1, 1997.

Thus, to avoid the confusion of multiple

citations in the regulations, these

amendments are made effective for

these programs on the same date as the

program regulations become effective.

The end result of the delayed effective

date is that the current regulation,

requiring prior approval for extension of

grants past the end of the project period,

will be continued under the new

program and EDGAR regulations that

become effective on October 1, 1997.

Carrying Funds Forward

Section 75.253(c) provides that the

Secretary considers funds remaining

unused by the grantee at the end of a

budget period in deciding how much

new money to make available to a

project for the next budget period.

Under the current regulation, if the

unused funds are needed to complete

activities from the prior budget period,

the Secretary adds those unused funds

to the funds to be granted for the next

budget period, with the result that the

grantee gets funds sufficient to complete

the unfinished activities and to carry

out all new activities as well.

However, if the funds are not needed

to complete unfinished activities, the

Secretary reduces the amount of new

funds made available to the grant by the

amount of remaining funds that are

carried into the next budget period.

Thus the Department’s current

regulation—in the same manner as the

new Part 74—has traditionally provided

for carrying over unused funds from a

previous budget period but requires the

Secretary to consider those funds in

deciding how much new money to make

available to a grantee.

The Secretary sees the value in many

or most cases of letting grantees carry all

of their unused funds forward

automatically and making all of the

remaining funds from the previous

budget period available for obligation

during the next budget period,

especially since doing so will eliminate

a significant paperwork burden for the

many grantees who otherwise would

have to write to the Department to

request specific authorization for

carrying over unused funds to the

following budget period.

Therefore, the Secretary amends

§ 75.253(c) so that it clearly provides

that grantees may carry over unused

funds from the previous budget period

into a new budget period and gives the

Secretary discretion to consider those

funds in determining whether to reduce

the amount of new funds made available

to the grant for the next budget period.

Examples of cases where the Secretary

might use this discretion include grants

to ‘‘high-risk’’ grantees, grants that do

not show a sufficient rate of expenditure

to indicate substantial progress had

been made by the grantee, as required

by § 75.253(a)(2)(i), or awards where the

grantee has completed the activities of

the budget period and does not need

extra funds to cover the activities

planned for the next budget period. The

conditions of a continuation award will

alert the grantee in those specific

instances where the Department has

either reduced the amount of new funds

made available for a new budget period

or might reduce the amount of new

funds, depending on what information

the Department gets from regular

grantee reports or, in limited

circumstances, from information

provided under § 75.253(c)(2)(i).

Spending Grant Funds Before Getting

an Award

Both Part 74 and Part 80 incorporate

by reference OMB circulars A–21, A–87,

and A–122, which govern allowable

expenditures under most grant awards,

thus giving them the force of law. The

relevant circulars allow grantees to

expend funds before the effective date of

the award only with the prior approval

of the awarding agency (so-called ‘‘preagreement’’ or ‘‘pre-award’’ costs).

Section 74.25(e)(1) now allows a grantee

to incur certain pre-award costs under

the conditions specified in that section.

However, no similar authority exists in

Part 80 for grantees subject to that Part.

The Secretary adds a new § 75.263,

which permits all types of grantees to

expend funds before the effective date of

the grant as permitted in § 74.25, unless

a statute, regulations other than Part 80

regulations, or, in rare circumstances,

grant conditions prohibit those

expenditures.

Cumulative Transfers Among Budget

Categories

Under Part 80 recipients of grants in

excess of $100,000 are required to

obtain the approval of the Department

before making cumulative cost transfers

among categories in a project budget

that would exceed ten percent of the

current total approved budget

(§ 80.30(c)(1)(ii)). By contrast, the

revised Part 74 authorizes grantees to

make these transfers unless the

Secretary imposes a limitation on

transfers in a particular case. Thus, Part

80 grantees and those subject to Part 74

are subject to inconsistent treatment in

regard to this matter. To resolve this

discrepancy, the Secretary adds a new

§ 75.264, which has the effect of

applying the rule in Part 74 to all

grantees, including those covered by

Part 80.

Conclusion

These amendments reduce regulatory

and administrative burden on

discretionary grantees and give them

more flexibility in planning and

implementing their program activities.

These regulations also reduce

paperwork burden.
40424 Federal Register / Vol. 62, No. 144 / Monday, July 28, 1997 / Rules and Regulations

Waiver of Proposed Rulemaking

In accordance with the

Administrative Procedure Act (5 U.S.C.

553), it is the practice of the Secretary

to offer interested parties the

opportunity to comment on proposed

regulations. However, these

amendments make procedural changes

only and do not establish new

substantive policy. Therefore, under 5

U.S.C. 553(b)(A), proposed rulemaking

is not required.

Regulatory Flexibility Act Certification

These regulations would not have a

significant economic impact on a

substantial number of small entities.

These regulations could affect State

agencies, nonprofit organizations,

institutions of higher education and

individuals. State agencies, and

individuals, however, are not defined as

‘‘small entities’’ in the Regulatory

Flexibility Act.

The small entities that could be

affected by these regulations are

institutions of higher education, local

educational agencies, community-based

organizations, hospitals, and nonprofit

organizations receiving Federal funds

under a direct grant program. The final

regulations, however, would not have a

significant economic impact on these

entities because the amendments relieve

regulatory burden.

Paperwork Reduction Act of 1995

The amendments have been examined

under the Paperwork Reduction Act of

1995 and have been found to contain no

information collection requirements.

These regulations reduce paperwork

burden.

Intergovernmental Review

Some of the programs that would be

affected by these regulations are 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 States and local

governments for coordination and

review of proposed Federal financial

assistance.

In accordance with the order, this

document is intended to provide early

notification of the Department’s specific

plans and actions for these programs.

Assessment of Education Impact

Based on its own review, the

Department has determined that the

regulations in this document would not

require transmission of information that

is being gathered by or is available from

any other agency or authority of the

United States.

List of Subjects in 34 CFR Part 75

Administrative practice and

procedure, Continuation funding,

Education, Grant programs—education,

Grants administration, Incorporation by

reference, Performance reports,

Reporting and record keeping

requirements, Unobligated funds.

(Catalog of Federal Domestic Assistance

Number does not apply)

Dated: July 21, 1997.

Richard W. Riley,

Secretary of Education.

The Secretary amends part 75 of title

34 of the Code of Federal Regulations as

follows:

PART 75—DIRECT GRANT

PROGRAMS

1. The authority citation for part 75

continues to read as follows:

Authority: 20 U.S.C. 1221e–3 and 3474,

unless otherwise noted.

2. Section 75.253(c) is revised to read

as follows:

§ 75.253 Continuation of a multi-year

project after the first budget period.

* * * * *

(c)(1) Notwithstanding any regulatory

requirements in 34 CFR part 80, a

grantee may expend funds that have not

been obligated at the end of a budget

period for obligations of the subsequent

budget period if—

(i) The obligation is for an allowable

cost that falls within the scope and

objectives of the project; and

(ii) ED regulations other than 34 CFR

part 80, statutes, or the conditions of the

grant do not prohibit the obligation.

Note: See 34 CFR 74.25(e)(2).

(2) The Secretary may—

(i) Require the grantee to send a

written statement describing how the

funds made available under this section

will be used; and

(ii) Determine the amount of new

funds that the Department will make

available for the subsequent budget

period after considering the statement

the grantee provides under paragraph

(c)(2)(i) of this section or any other

information available to the Secretary

about the use of funds under the grant.

(3) In determining the amount of new

funds to make available to a grantee

under this section, the Secretary

considers whether the unobligated

funds made available are needed to

complete activities that were planned

for completion in the prior budget

period.

* * * * *

3. Section 75.261 is amended by

redesignating the current paragraphs (a)

and (b) as paragraphs (c) and (d); adding

new paragraphs (a) and (b); revising the

introductory text of the newly

designated paragraph (c); amending

newly designated paragraph (c)(4)(ii)(C)

by removing ‘‘(a)(4)(ii)(A)’’ and adding,

in its place, ‘‘(c)(4)(ii)(A)’’; and adding

‘‘Waiver.’’ at the beginning of newly

designated paragraph (d) to read as

follows:

§ 75.261 Extension of a project period.

(a) General rule. A grantee may,

notwithstanding any regulatory

requirement in 34 CFR part 80, extend

the project period of an award one time

for a period up to twelve months

without the prior approval of the

Secretary, if—

(1) The grantee meets the

requirements for extension of 34 CFR

74.25(e)(2); and

(2) ED regulations other than the

regulations in 34 CFR part 80, statutes

or the conditions of an award do not

prohibit the extension.

(b) Specific rule for certain programs

of the National Institute on Disability

and Rehabilitation Research.

Notwithstanding paragraph (a) of this

section, grantees under the following

programs of NIDRR must request prior

approval to extend their grants under

paragraph (c) of this section:

(1) The Knowledge Dissemination and

Utilization Centers and Disability and

Technical Assistance Centers authorized

under 29 U.S.C. 761a(b)(2), (4), (5), (6),

and (11) and implemented at 34 CFR

part 350, subpart B, §§ 350.17–350.19.

(2) The Rehabilitation Research and

Training Centers program authorized

under 29 U.S.C. 762(b) and

implemented at 34 CFR part 350,

subpart C.

(3) The Rehabilitation Engineering

Research Centers authorized under 29

U.S.C. 762(b)(3) and implemented at 34

CFR part 350, subpart D.

(4) The Special Projects and

Demonstrations for Spinal Cord Injuries

authorized under 29 U.S.C. 762(b)(4)

and implemented at 34 CFR part 359.

(c) Other regulations. If ED

regulations, other than the regulations

in 34 CFR part 80, or the conditions of

the award require the grantee to get

prior approval to extend the project

period, the Secretary may permit the

grantee to extend the project period if—

* * * * *

4. A new § 75.263 is added to subpart

D to read as follows:
Federal Register / Vol. 62, No. 144 / Monday, July 28, 1997 / Rules and Regulations 40425

§ 75.263 Pre-award costs; waiver of

approval.

A grantee may, notwithstanding any

requirement in 34 CFR part 80, incur

pre-award costs as specified in 34 CFR

74.25(e)(1) unless—

(a) ED regulations other than 34 CFR

part 80 or a statute prohibit these costs;

or

(b) The conditions of the award

prohibit these costs.

(Authority: 20 U.S.C. 1221e–3 and 3474;

OMB Circulars A–21, A–87, and A–122)

5. A new § 75.264 is added to subpart

D to read as follows:

§ 75.264 Transfers among budget

categories.

A grantee may, notwithstanding any

requirement in 34 CFR part 80, make

transfers as specified in 34 CFR 74.25

unless—

(a) ED regulations other than 34 CFR

part 80 or a statute prohibit these

transfers; or

(b) The conditions of the grant

prohibit these transfers.

(Authority: 20 U.S.C. 1221e–3 and 3474)

[FR Doc. 97–19761 Filed 7–25–97; 8:45 am]

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