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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration For Children and Families

45 CFR Part 1303

RIN 0970-AB87

Head Start Program

AGENCY: Administration on Children, Youth and Families (ACYF),
Administration for Children and Families (ACF), HHS.

ACTION: Final Rule.

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SUMMARY: The Administration on Children, Youth and Families is issuing
this final rule to implement timelines for conducting administrative
hearings on adverse actions taken against Head Start grantees and to
make additional changes to the regulations designed to expedite the
appeals process.

EFFECTIVE DATES: March 2, 2000.

FOR FURTHER INFORMATION CONTACT: Douglas Klafehn, Deputy Associate
Commissioner, Head Start Bureau, Administration on Children, Youth and
Families, 330 C Street, SW, Washington, DC 20447; (202) 205-8572.

SUPPLEMENTARY INFORMATION:

I. Program Purpose

Head Start is authorized under the Head Start Act (42 U.S.C. 9801
et seq.). It is a national program providing comprehensive
developmental services to low-income pre-school children primarily age
three to the age of compulsory school attendance, and their families.
To help enrolled children achieve their full potential, Head Start
programs provide comprehensive health, nutritional, educational, social
and other services. Also, section 645A of the Head Start Act provides
authority to fund programs for families with infants and toddlers.
Programs receiving funds under the authority of this section are
referred to as Early Head Start programs. Head Start programs are
required to provide for the direct participation of the parents of
enrolled children in the development, conduct, and direction of local
programs. Parents also receive training and education to foster their
understanding of and involvement in the development of their children.
In fiscal year 1998, Head Start served 823,000 children through a
network of over 2,000 grantees and delegate agencies.

While Head Start is intended to serve primarily children whose
families have incomes at or below the poverty line, or who receive
public assistance, Head Start policy permits up to 10 percent of the
children in local programs to be from families who do not meet these
low-income criteria. The Act also requires that a minimum of 10 percent
of the enrollment opportunities in each program be made available to
children with disabilities. Such children are expected to participate
in the full range of Head Start services and activities with their non-
disabled peers and to receive needed special education and related
services.

II. Summary of the Major Provisions of the Final Rule

The authority for this final rule is section 646 of the Head Start
Act (42 U.S.C. 9841), as amended by Public Law 103-252, Title I of the
Human Services Amendments of 1994. ACF's changes to the regulations are designed to expedite the
appeals process and as specifically required by section 646(c) to
specify a timeline for administrative hearings on adverse actions taken
against grantees, and a timeline for conducting the administrative
hearing and issuing a decision. The final rule implements these
requirements.

Overall, the final rule on timelines, including the conforming
changes to other affected sections of the appeals requirements in part
1303, will save time and expenses while continuing to allow due process
to grantees appealing a proposed termination or denial of refunding. In
the past, a number of appeal proceedings have been protracted and
costly, partly because of the absence of statutory or regulatory
timelines for holding a hearing. Under the final rule on timelines,
decisions can be rendered in a shorter period of time thus allowing
quicker removal of a deficient grantee. This will help ensure that
children and their families receive high quality Head Start services
from a qualified provider.

III. Rulemaking History

On June 30, 1998, the Administration on Children, Youth and
Families (ACYF) published a Notice of Proposed Rulemaking (NPRM) in the
Federal Register (63 FR 35554) proposing: (1) Timelines for the
conducting of administrative hearings on adverse actions taken against
Head Start grantees; and (2) additional changes to the regulations
designed to expedite the appeals process. Copies of the proposed rule
were mailed to all Head Start grantees and delegate agencies.
Interested parties were given 60 days in which to comment. ACYF
received comments from three Head Start grantees and a private law firm
interested in Head Start appeals.

IV. Section by Section Discussion of the Comments on the NPRM

Of the four parties commenting on the NPRM, one was a general
expression of support for the proposed rule, while the other comments
were directed at specific sections of the NPRM. Only those sections for
which comments were made or to which technical changes were made are
discussed below. The discussion of the sections follows the order of
the NPRM table of contents and a notation is made wherever the section
designations have been changed or deleted in the final rule.

Section 1303.14 Appeal by a Grantee From a Termination of Financial
Assistance

Section 1303.14(c)

Comment: One commenter agreed that ACF should provide detailed
notices of termination of refunding. However, the commenter believes
that changes to the proposed rule would make it more equitable and
would help to streamline the appeals process. The comment states that
implicit in the Head Start Act's requirement for a full and fair
hearing is a requirement that sanctions are available to the
Departmental Appeals Board (The Board) for application to either party.
Accordingly, the significant sanctions for various failures as detailed
in the NPRM should be equally applicable to ACF. Without such
uniformity, the commenter stated that the regulations would be in
violation of the Head Start Act's requirement for a fair hearing
process.

Response: Sanctions may be applied to both parties under the
proposed regulations. It is unclear what additional sanctions the
commenter wishes imposed on the public if the Federal agency should
fail to comply with the requirements of the proposed provisions. What
ACF has proposed are sanctions that would compel the issuance of clear
statements of the findings and the factual and legal bases for them. We
believe this is fair to grantees while permitting the removal of poor
grantees from the program, both of which are within the statutory
purposes of the program. For these reasons, we have made no changes
based on this comment.

Section 1303.14 (c)(i) Notice of Termination

Comment: One commenter is concerned that the notice requirements
being imposed upon ACF are not written with the same degree of
specificity as Sec. 1303.14(d)(1-7) pertaining to the requirements for
Grantee Notices of Appeal. The commenter believes that ACF should be
required to submit the termination in writing, submit the findings of
fact, relevant citations for violations, and notice of right to appeal.
Response: The current regulations require specific statements about
proposed actions. The proposed regulations would require specific
findings of fact and citations of legal and policy provisions
applicable to the proposed action. We believe this is adequate. Moreover, if for any
reason they are not adequate, the Departmental Appeals Board can
require greater specificity. We note also that the proposed and
existing regulations require that termination and denial of refunding
letters give notice of appeal rights. The proposed rule requires that the notice spell out in specific
terms the legal basis for the termination. The object is to reduce the
need for the grantee to supplement its initial notice with additional
filings after the appeal is filed, which will streamline and expedite
the appeals process. Therefore, for the foregoing reasons, we have not
changed this section in the final rule.

Sections 1303.14(c)(6) and 1303.15(d)(4) Sanctions

Comment: Two commenters are concerned that these sections, though
they provide sanctions to be levied against ACF, do not provide for a
timeline upon which ACF is barred from reissuing the termination. The
commenters state that this section does not offer the deterring effect
as intended and that it imposes responsibilities upon ACF, but fails to
provide the enforcement element. However, the sanctions provided in
Sec. 1303.14(e) against the grantee/delegate are much more punitive
than those provided against ACF.

Response: For the reasons stated above in response to the previous
comment, we believe that the sanctions proposed against ACF in the
event that a notice of termination is deficient provide a fair remedy.
Furthermore, it would be inappropriate to penalize the public due to an
error by the Federal agency. Keeping an unqualified grantee in the
program would do just that. Providing a corrected notice avoids that
and gives the grantee all the notice due it. Therefore, we have not
made any changes.

Section 1303.14(d)(1-5) Document Production

Comment: One commenter was particularly concerned that
Sec. 1303.14(d)(5), which requires the grantee to submit a detailed
request and justification for the production of documents, is unduly
burdensome and serves as an effort to impede its ability to address the
many issues against it in the notice of termination. The commenter
believes that it should be sufficient that the request for the
production of documents is relevant to the issues at hand. The
commenter states that Sec. 1303.14(c)(i) sets forth the requirements
for the notification of the termination of the grant. It also believes
that if Sec. 1303.14(c)(i) was specific it would provide the grantee
sufficient notice and allow the grantee to be more specific in its
appeal. The commenter believes that as the regulation is now written,
it should be fair to assume that any request for documents is in
support of an anticipated defense in the appeal. Therefore, the
commenter believes it should follow that a grantee/delegate agency
should be able to request documents that are relevant to the appeal.
Furthermore, the commenter believes that grantees should not be
required to lay out their arguments before they are allowed to answer
the allegations. The commenter believes this regulation as it is now
written essentially requires that.

Response: We do not believe these objections are meritorious.
Current practice and the proposed regulations require specific notice.
Also, requiring a showing of relevance and reasonable basis for
believing a document exists is not equivalent to requiring a full
explanation of a grantee's arguments. Even if it were, the parties have
to lay out their arguments or positions at the outset anyway. We also
note the fact that non-renewal and termination actions rarely arise
overnight. Rather, grantees have been in contact with ACF over the
specifics of non-compliance deficiencies. Considerable exchange of
views and information is generally the case.

Generally, on-site reviews have been conducted and the findings
shared with the grantee, including the bases for those findings.
Morever, with respect to documentation, the vast majority of the
documents are those obtained by ACF from the grantee itself. It has
been ACF's experience that considerable time is wasted on so-called
"fishing expeditions'' when blanket requests are filed for documents
without any objective reason to believe they exist. The purpose of the
regulation is to avoid those situations.
There is no desire to deny a party the ability to request and
obtain relevant documents. There is a desire to avoid unfounded and
generalized requests that are not based on some reasonable basis to
believe the documents exist.

ACF would also note that generally it files all documents in its
possession that pertain to the case, except those that are privileged.
It does this even when it does not expect to rely on a particular
document. The purpose in doing this is to avoid haggling over
production of documents and to expedite the process. This also helps
ensure that the Board has the fullest possible picture of the grantee
and the dispute, and that the documents are available should they
become relevant to an issue during the course of the proceedings.

Section 1303.14(d)(1-7)

Comment: One commenter suggests that the rule be clarified to
indicate whether the grantee's funding will be affected during the
appeals process and whether the proposed change would supplement the
existing section or act as a substitute to the current section.
Response: The NPRM proposes no changes in this regard and current
regulations provide for continued funding to a grantee during the
appeals process unless the grant has also been suspended.

Sections 1303.14(d)(e) and 1303.15(h) Appeal

Comment: We received two comments on this section. The first
indicated that the increase in time for a grantee to file an appeal
from 10 to 30 days is clearly warranted. Nevertheless, the commenter
believes that the new requirements for the content of the appeal not
only are unworkable but also are prejudicial to grantees because they
will force grantees, even more than before, to do a dump of all
documents in their possession remotely related to their appeal in order
to ensure that all documents necessary to a grantee's case are
available at the hearing. The commenter believes that an appropriate
change to the proposed rule would be to provide for a process similar
to that already informally employed by the Board-- an initial
submission of documents followed by a final submission after the
conclusion of discovery and rulings on preliminary motions. Such a
process is very common in judicial and administrative proceedings and
provides the parties a real opportunity to respond to fully developed
issues.

Second, the commenter suggests that the requirement that the
grantee provide all documents that are relevant is also prejudicial in
that any documents not immediately submitted will be excluded under the
proposed rules. Thus, to mount an effective defense, a grantee will be
forced to expend significant sums on attorney time and other costs in
order to search files for any documents remotely related to the appeal
and submit them. The commenter argues, therefore, that the result of
this proposed rule will be to give grantees a Hobson's choice of either
high costs to file an appeal (costs that are largely not covered by
Head Start) or exclusion of potentially crucial documents.

Response: We have considered the comments objecting to the
requirement that grantees submit all relevant documents with their
original appeals. The crux of the objection is that this will force
grantees to dump all documents that might conceivably be relevant,
resulting in excessive search time and, presumably, an unduly
cumbersome record, although the latter point was not raised. We believe
there is some merit to this comment. In response to this comment, we have changed Sec. 1303.14(d) by
adding a new paragraph (6) and renumbering proposed paragraphs (6) and
(7) as (7) and (8), respectively. Also, for purposes of clarity, we
have added a time-frame for ACF's response to the appeal. The new
paragraph (6) reads as follows:

Grantees may submit additional documents within 14 days of
receipt of the documentation submitted by ACF in response to the
grantee's appeal and submission of documents. The ACF response to
the appeal and initial submittals of the grantee shall be filed no
later than 30 days after ACF's receipt of the material. In response
to such a submittal by the grantee, ACF may submit additional
documents should it have any, or request discovery in connection
with the new documents, or both, but must do so within 10 days of
receipt of the additional filings.

ACF believes this substantially meets the concerns of the
commenter, while still providing for expeditious conduct of the appeal.
It also permits ACF to obtain more information on the new documents if
it is unfamiliar with them. ACF does not believe any change to
paragraph (e) of the regulation is necessary as a result of the change.
The sanctions would apply if a grantee did not submit the documents at
the outset, or within 14 days of receipt of the ACF initial filing, if
the conditions for an exception do not exist. Of course, these
provisions do not mean that all documents submitted by the parties are
automatically entitled to be admitted into the record. The Board may
exclude irrelevant documents, or those for which authenticity cannot be
established, or for other appropriate reasons as the Board determines.

Section 1303.15(d)(4) Appeal by a Grantee From a Denial of Refunding

Comment: One commenter objects to 30 days for a grantee to
initially appeal and suggested 60 days instead, with a possibility of
one 30-day extension due to extreme unavoidable circumstances. In order
to make the notice from ACF more useful, the commenter proposes that
ACF be required to structure its notice of termination or denial of
refunding in a manner similar to a complaint in Federal court with
numbered paragraphs containing factual allegations. The commenter
states that in this way, as in a court of law, a grantee can provide a
specific response to each factual allegation and between the
termination notice and the grantee's responses, it will be clear what
facts, if any, are clearly in dispute.

The increase in time for a grantee to file an appeal from 10 to 30
days is clearly warranted. Nevertheless, the commenter believes that
the new requirements for the content of the notice of appeal not only
are unworkable but also are prejudicial to grantees.
Response: The proposed revision to paragraph (d) clarifies the
existing rule by requiring ACF to state in specific details the legal
basis of the decision to deny refunding to a grantee. As stated in the
NPRM, the objective is to reduce the need for the grantee to supplement
its initial appeal with additional filings and thereby streamline and
expedite the appeals process.

The increase in the amount of time to appeal a termination from 10
to 30 days is being made to give grantees more time in which to develop
their initial appeal submission, which will allow for quicker
resolution of appeals. The comment presented by a public agency
regarding this change states that it is fair and supports the proposed
change. If more time is needed, it may be requested of the Departmental
Appeals Board in advance of the due date in accordance with
Sec. 1303.8. Further, ACF does not believe that using court practice as
a model is either necessary or desirable. Administrative proceedings
are generally designed to be less formal and to be expeditious, goals
not furthered by the suggestion. In view of the foregoing, we did not
change the rule.

Section 1303.14(h) Right To Participate in Hearing

Comment: One commenter believes that the ability of a Head Start
grantee to participate in the hearing process should not be impacted by
the fact that they are a delegate agency. The commenter believes
delegate agencies should be able to participate as a matter of right.
Response: We do not support this suggestion. First, the appeal
right by statute is vested in a grantee and not in its delegate
agencies. Secondly, a grantee may elicit evidence and testimony from
delegate agencies and their personnel in support of its appeal, if such
evidence and testimony is available, and present that as part of its
own case. Thirdly, the proposed regulation does afford a delegate whose
conduct is the source of grounds for non-renewal or termination the
right to participate. ACF does not see the need to automatically expand
the number of parties in a proceeding. Any other party may petition the
Board to participate under the proposed regulations. It is ACF's intent
that under those circumstances the Board will apply the tests under 45
CFR 16.16 in determining the right to participate. One of those
conditions is that the intervention not cause undue delay. We would
note that the costs of intervention by a delegate agency that is not
appearing as a matter of right are not allowable costs under the
grantee's grant.

Section 1303.15(d)(3) Appeal by a Grantee From Denial of Refunding

In reviewing the NPRM, we realized that we had inadvertently failed
to revise this paragraph to conform it to the comparable provision on
terminations. The termination provisions are in Section 1303.14(c). We
have done so in the final rule. We believe it is clear that the intent
with respect to termination and non-renewal actions was to have them be
as identical as possible since they are, for all practical purposes,
identical actions. They are separately provided for due to the Head
Start Act's reference to them as separate actions. We have made the
assumption that those who commented on the termination provisions would
have the same comments about them in the denial of refunding section.
Our responses to those comments are the same here.

Section 1303.16(d) Conduct of Hearing

Comment: One commenter said that ACF's justification for the use of
written direct testimony is that it is more efficient and reduces the
hearing time and expense. However, the commenter maintains that ACF and
the agency/delegates still will have to provide written testimony,
which can be more time consuming and expensive.
Further, the commenter maintains that written direct testimony does
not allow for the many nuances that may arise with live direct
testimony. Also, the commenter argues that the use of prepared direct
testimony does not provide active participation by the presiding
officer. One commenter believes that prepared testimony is prejudicial to
grantees.

Response: ACF does not believe that the comments warrant a change
in the regulations as proposed. ACF has experience with the use of
prepared direct testimony in these and similar cases.

That experience does not support the commenter's view that it
impairs the Board's ability to assess credibility and the demeanor of
witnesses. While there may be rareinstances when a key witness is not
subject to cross-examination or questioning by the Board, in our view
that would be a rare occurrence. As to the cost savings, by way of
clarification not only is there a reduction in transcript costs, but
there is also a reduction in travel costs for all the Federal personnel
and Federal witnesses.

Moreover, as we noted in the preamble to the NPRM, the use of
prepared direct testimony reduces the time of the hearing. A major
public benefit of this is that Federal personnel are therefore away
from their other duties for less time. This means there is less
disruption in the conduct of Federal business. Since these personnel
also have to provide services to other grantees, this is another major
benefit of the use of prepared direct testimony.

As to the comment that use of prepared direct testimony will
preclude a grantee from making its case to the Board, we know of no
evidence to support that statement. Our experience is that a grantee
can make its case to the Board using prepared direct testimony. ACF has
the same view of the comment that the use of prepared direct testimony
will cost grantees more money than live direct testimony. Even if true,
however, we do not believe thatthose costs would be comparable to the
added costs to taxpayers of having to pay added travel costs of keeping
Federal personnel and witnesses on-site during a week or more of live
direct testimony.

ACF does not believe that the use of prepared direct evidence
favors or prejudices any party. The provision operates equally on all
parties with respect to the presentation of evidence. Observing the
demeanor of witnesses is a consideration that applies to all witnesses
and that intrinsically does not work for or against one party over
another. Therefore, ACF does not consider the comments as warranting
any change to the proposed regulations.

We believe the comment that the proposal would limit a grantee's
ability to advocate for itself and children and their families is not
valid. First, as noted above, our experience is that grantees can
advocate for themselves when the procedure of prepared direct testimony
is used. Second, ACF is charged with advocating for children and their
families as well. Therefore, they are not without advocacy on their
behalf. Indeed, concern over thechildren and families is the motivating
factor in the intense efforts ACF engages in to secure interim grantees
to take over services after non-renewal or termination of a grant.
Moreover, as the District Court recently noted in denying a preliminary
injunction brought by a Head Start grantee whose grant was terminated,
a grantee does not have standing to raise the concerns of children and
their families in receiving Head Start services from a particular
provider. Mansfield-Richland-Morrow Total Operation Against Poverty v.
Donna E. Shalala, "Memorandum Opinion,'' p. 18, November 25, 1998.

Section 1303.17 Time for Hearing and Decision

Comment: Four commenters expressed concern regarding the amount of
time for a hearing and decision. According to the commenters, the new
timelines proposed by ACF have two defects. First, the commenters believe that the rule is not clear concerning
the 60-days for a decision; specifically,whether the 60-days begins to
run after briefing and oral arguments or from some other point in time.
Second, with respect to the overall timelines, there was a concern
that the timelines would drive up the cost of hearings to grantees. By
requiring complex litigation to be concluded in approximately seven to
nine months, it is stated that ACF will succeed in forcing grantees to
utilize more attorneys to keep up with the demands of such litigation.
Response: We changed the regulation to clarify that the 60 days for
a decision starts when the record for an appeal is closed. The record
is closed when the last permissible submission is received by the
Board.

In response to the first part of this comment we have changed the
last sentence of Sec. 1303.17(a) to provide that the 60 day period for
the decision begins to run after the Board's receipt of the last
permissible submittal. The submittal of unauthorized material will not
stay or prolong the due date of the final decision. There is no reason to believe that the total amount of attorney
time devoted to an appeal will change because of the timelines. The
fact it will be expended over a shorter period of time does not
necessarily mean more attorney time will be required or that costs will
be greater. The intent of Congress is to expedite these appeals and
that is of prime importance.

V. Impact Analysis

Executive Order 12866

Executive Order 12866 requires that regulations be drafted to
ensure that they are consistent with the priorities and principles set
forth in the Executive Order. The Department has determined that this
rule is consistent with these priorities and principles. This final
rule implements the statutory requirement for Head Start grantee
appeals to be heard and decided within certain, defined time frames.

Regulatory Flexibility Act of 1980

The Regulatory Flexibility Act (5 U.S.C. Ch. 6) requires the
Federal government to anticipate and reduce the impact of rules and
paperwork requirements on small businesses. For each rule with a
"significant economic impact on a substantial number of small
entities'' an analysis must be prepared describing the rule's impact on
small entities. Small entities are defined by the Act to include small
businesses, small non-profit organizations and small governmental
entities. While these regulations would affect small entities, they
would not affect a substantial number. For this reason, the Secretary
certifies that this rule will not have a significant impact on
substantial numbers of small entities.

Paperwork Reduction Act

Under the Paperwork Reduction Act of 1995, Public Law 104-13, all
Departments are required to submit to the Office of Management and
Budget (OMB) for review and approval any reporting or recordkeeping
requirements inherent in a proposed or final rule. This final rule
contains information collection in Sec. 1303.14, (written grantee
appeal) Sec. 1303.15 (appeal of denial of refunding) and
Sec. 1303.16(d) (written direct testimony) which have been submitted to
OMB for review and approval.

The respondents to the information collection requirements in the
rule are Head Start grantees, which may be State or local nonprofit or
for-profit agencies or organizations.
The Department needs to require the collection of certain
information to conform to the administrative rules that provide for a
hearing by grantees against which adverse action is contemplated.
The grantees that will be affected by these requirements will be
those for which the Department is contemplating adverse action either
by terminating financial assistance or by denying an application for
funding.

Based upon our experience we estimate that adverse action would be
contemplated against ten grantees in a given year. A written grantee
appeal (addressed in Sec. 1303.14) and an appeal of denial of refunding
(addressed in Sec. 1303.15) is a one time activity which is preceded by one action which is to research the allegations by
checking program records and preparing a written response. We
previously estimated the time it would take to research records and
prepare a letter at 16 hours per instance for a total burden of 160
hours, approved under OMB control number 0980-0242. There is no new
additional burden anticipated in the final rule for these sections.
A new burden is estimated for written direct testimony (addressed
in Sec. 1301.16(d)). We estimate an additional burden of 10 hours for
each grantee for a total new burden of 100 hours annually.
The Administration for Children and Families (ACF) will consider
comments by the public on these proposed collections of information in:
Evaluating whether the proposed collections are necessary for
the proper performance of the functions of ACF, including whether
the information will have practical utility;
Evaluating the accuracy of ACF's estimate of the burden of the
proposed collections of information, including the validity of the
methodology and assumptions used; Enhancing the quality, usefulness, and clarity of the
information to be collected; and Minimizing the burden of the collection of information on those
who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technology, e.g.,
permitting electronic submission of responses.

OMB is required to make a decision concerning the collection of
information contained in this final rule between 30 and 60 days after
publication of this document in the Federal Register. Therefore, a
comment is best assured of having its full effect if OMB receives it
within 30 days of publication. Written comments to OMB for the proposed
information collection should be sent directly to the following: Office
of Management and Budget, Paperwork Reduction Project, 725 17th Street,
NW, Washington, DC 20503, Attn: Wendy Taylor.

Unfunded Mandates Reform Act of 1995

Section 202 of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1532) requires that a covered agency prepare a budgetary impact
statement before promulgating a rule that includes any Federal mandate
that may result in the expenditure by State, local, and Tribal
governments, in the aggregate, or by the private sector, of $100
million or more in any one year.

If a covered agency must prepare a budgetary impact statement,
section 205 further requires that it select the most cost-effective and
least burdensome alternative that achieves the objectives of the rule
and is consistent with the statutory requirements. In addition, section
205 requires a plan for informing and advising any small government
that may be significantly or uniquely impacted by the proposed rule.
We have determined that this final rule will not impose a mandate
that will result in the expenditure by State, local, and Tribal
governments, in the aggregate, or by the private sector, of more than
$100 million in any one year. Accordingly, we have not prepared a
budgetary impact statement, specifically addressed the regulatory
alternatives considered, or prepared a plan for informing and advising
any significantly or uniquely impacted small government.

Congressional Review of Rulemaking

This rule is not a "major'' rule as defined in Chapter 8 of 5
U.S.C.

Executive Order 13132

Executive Order 13132 on Federalism applies to policies that have
federalism implications, defined as ``regulations, legislative comments
or proposed legislation, and other policy statements or actions that
have substantial direct effects on the States, on the relationship
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government.''
This rule does not have federalism implications as defined in the
Executive order.

The Family Impact Requirement

Section 654 of the Treasury and General Government Appropriations
Act of 1999 requires a family impact assessment affecting family well-
being. We have determined that this action will not affect the family.
Therefore, no analysis or certification of the impact of this action
was developed.

List of Subjects in 45 CFR Part 1303

Administrative Practice and Procedure, Education of the
disadvantaged, Grant programs-social programs, Reporting and
recordkeeping requirements.

For the reasons set forth in the Preamble, 45 CFR part 1303 is
amended to read as follows:

PART 1303--APPEAL PROCEDURES FOR HEAD START GRANTEES AND CURRENT OR
PROSPECTIVE DELEGATE AGENCIES

1. The authority citation for part 1303 continues to read as
follows:

Authority: 42 U.S.C. 9801 et seq.

2. Section 1303.14 is amended by republishing paragraph (c),
introductory text, revising paragraphs (c)(1), (2) and (5); removing
paragraph (e); redesignating paragraphs (d) and (f) through (j) as
paragraphs (f) through (k); adding new paragraphs (c)(6), (d) and (e);
and revising the newly redesignated paragraph (h), to read as follows:

Sec. 1303.14 Appeal by a grantee from a termination of financial
assistance.

* * * * *
(c) A notice of termination shall set forth:
(1) The legal basis for the termination under paragraph (b) of this
section, the factual findings on which the termination is based or
reference to specific findings in another document that form the basis
for the termination (such as reference to item numbers in an on-site
review report or instrument), and citation to any statutory provisions,
regulations, or policy issuances on which ACF is relying for its
determination.

(2) The fact that the termination may be appealed within 30 days to
the Departmental Appeals Board (with a copy of the appeal sent to the
responsible HHS official and the Commissioner, ACYF) and that such
appeal shall be governed by 45 CFR part 16, except as otherwise
provided in the Head Start appeals regulations, and that any grantee
that requests a hearing shall be afforded one, as mandated by 42.
U.S.C. 9841.
* * * * *
(5) That the grantee's appeal must meet the requirements set forth
in paragraph (d) of this section.

(6) That a failure by the responsible HHS official to meet the
requirements of this paragraph may result in the dismissal of the
termination action without prejudice, or the remand of that action for
the purpose of reissuing it with the necessary corrections.

(d) A grantee's appeal must:
(1) Be in writing;
(2) Specifically identify what factual findings are disputed;
(3) Identify any legal issues raised, including relevant citations;
(4) Include an original and two copies of each document the grantee
believes is relevant and supportive of its position (unless the grantee
has obtained permission from the Departmental Appeals Board to submit
fewer copies);
(5) Include any request for specifically identified documents the
grantee wishes to obtain from ACF and a statement of the relevance of
the requested documents, and a statement that the grantee has attempted
informally to obtain the documents from ACF and was unable to do so;
(6) Grantees may submit additional documents within 14 days of
receipt of the documentation submitted by ACF in response to the
grantee's appeal and initial submittals. The ACF response to the appeal
and initial submittals of the grantee shall be filed no later than 30
days after ACF's receipt of the material. In response to such a
submittal, ACF may submit additional documents should it have any, or
request discovery in connection with the new documents, or both, but
must do so within 10 days of receipt of the additional filings;
(7) Include a statement on whether the grantee is requesting a
hearing; and
(8) Be filed with the Departmental Appeals Board and be served on
the responsible HHS official who issued the termination notice and on
the Commissioner of ACYF. The grantee must also serve a copy of the
appeal on any delegate agency that would be financially affected at the
time the grantee files its appeal.

(e) The Departmental Appeals Board sanctions with respect to a
grantee's failure to comply with the provisions of paragraph (d) of
this section are as follows:
(1) If in the judgment of the Departmental Appeals Board a grantee
has failed to substantially comply with the provisions of the preceding
paragraphs of this section, its appeal must be dismissed with
prejudice.
(2) If the Departmental Appeals Board concludes that the grantee's
failures are not substantial, but are confined to one or a few specific
instances, it shall bar the submittal of an omitted document, or
preclude the raising of an argument or objection not timely raised in
the appeal, or deny a request for a document or other ``discovery''
request not timely made.
(3) The sanctions set forth in paragraphs (e)(1) and (2) of this
section shall not apply if the Departmental Appeals Board determines
that the grantee has shown good cause for its failure to comply with
the relevant requirements. Delays in obtaining representation shall not
constitute good cause. Matters within the control of its agents and
attorneys shall be deemed to be within the control of the grantee.
* * * * *
(h) If the responsible HHS official initiated termination
proceedings because of the activities of a delegate agency, that
delegate agency may participate in the hearing as a matter of right.
Any other delegate agency, person, agency or organization that wishes
to participate in the hearing may request permission to do so from the
Departmental Appeals Board. Any request for participation, including a
request by a delegate agency, must be filed within 30 days of the
grantee's appeal.
* * * * *
3. Section 1303.15 is amended by revising paragraphs (b)(2), (d)(1)
and (d)(3), and adding new paragraphs (d)(4), (f), (g) and (h) to read
as follows:

Sec. 1303.15 Appeal by a grantee from a denial of refunding.

(b) * * *
(2) Any such appeals must be filed within 30 days after the grantee
receives notice of the decision to deny refunding.
* * * * *
(d) * * *
(1) The legal basis for the denial of refunding under paragraph (c)
of this section, the factual findings on which the denial of refunding
is based or references to specific findings in another document that
form the basis for the denial of refunding (such as reference to item
numbers in an on-site review report or instrument), and citation to any
statutory provisions, regulations or policy issuances on which ACF is
relying for its determination.
* * * * *
(3) If the responsible HHS official has initiated denial of
refunding proceedings because of the activities of a delegate agency,
the delegate agency may participate in the hearing as a matter of
right. Any other delegate agency, person, agency or organization that
wishes to participate in the hearing may request permission to do so
from the Departmental Appeals Board. Any request for participation,
including a request by a delegate agency, must be filed within 30 days
of the grantee's appeal.
* * * * *
(4) A statement that failure of the notice of denial of refunding
to meet the requirements of this paragraph may result in the dismissal
of the denial of refunding action without prejudice, or the remand of
that action for the purpose of reissuing it with the necessary
corrections.
* * * * *

(f) If the responsible HHS official has initiated denial of
refunding proceedings because of the activities of a delegate agency,
that delegate agency may participate in the hearing as a matter of
right. Any other delegate agency, person, agency or organization that
wishes to participate in the hearing may request permission to do so
from the Departmental Appeals Board. Any request for participation,
including a request by a delegate agency, must be filed within 30 days
of the grantee's appeal.

(g) Paragraphs (i), (j), and (k) of 45 CFR 1303.14 shall apply to
appeals of denials of refunding.

(h) The Departmental Appeals Board sanctions with respect to a
grantee's appeal of denial of refunding are as follows:
(1) If in the judgment of the Departmental Appeals Board a grantee
has failed to substantially comply with the provisions of the preceding
paragraphs of this section, its appeal must be dismissed with
prejudice.
(2) If the Departmental Appeals Board concludes that the grantee's
failure to comply is not substantial, but is confined to one or a few
specific instances, it shall bar the submittal of an omitted document,
or preclude the raising of an argument or objection not timely raised
in the appeal, or deny a request for a document or other ``discovery''
request not timely made.
(3) The sanctions set forth in paragraphs (h)(1) and (2) of this
section shall not apply if the Departmental Appeals Board determines
that a grantee has shown good cause for its failure to comply with the
relevant requirements. Delays in obtaining representation shall not
constitute good cause. Matters within the control of its agents and
attorneys shall be deemed to be within the control of the grantee.

4. Section 1303.16 is amended by redesignating paragraphs (d)
through (g) as paragraphs (e) through (h); adding a new paragraph (d);
and revising newly redesignated paragraph (f) to read as follows:

Sec. 1303.16 Conduct of hearing.

* * * * *
(d) Prepared written direct testimony will be used in appeals under
this part in lieu of oral direct testimony. When the parties submit
prepared written direct testimony, witnesses must be available at the
hearing for cross-examination and redirect examination. If a party can
show substantial hardship in using prepared written direct testimony,
the Departmental Appeals Board may exempt it from the requirement.
However, such hardship must be more than difficulty in doing so, and it
must be shown with respect to each witness.
* * * * *

(f) Any person or organization that wishes to participate in a
proceeding may apply for permission to do so from the Departmental
Appeals Board. This application must be made within 30 days of the grantee's appeal in the
case of the appeal of termination or denial of refunding, and as soon
as possible after the notice of suspension has been received by the
grantee. It must state the applicant's interest in the proceeding, the
evidence or arguments the applicant intends to contribute, and the
necessity for the introduction of such evidence or arguments.

5. Section 1303.17 is added to read as follows:

Sec. 1303.17 Time for hearing and decision.

(a) Any hearing on an appeal by a grantee from a notice of
suspension, termination, or denial of refunding must be commenced no
later than 120 days from the date the grantee's appeal is received by
the Departmental Appeals Board. The final decision in an appeal whether
or not there is a hearing must be rendered not later than 60 days after
the closing of the record, i.e., 60 days after the Board receives the
final authorized submission in the case.
(b) All hearings will be conducted expeditiously and without undue
delay or postponement.
(c) The time periods established in paragraph(a) of this section
may be extended if:
(1) The parties jointly request a stay to engage in settlement
negotiations,
(2) Either party requests summary disposition; or
(3) The Departmental Appeals Board determines that the Board is
unable to hold a hearing or render its decision within the specified
time period for reasons beyond the control of either party or the
Board.

Catalog of Domestic Assistance Program Number 93.600, Project Head
Start)

Dated: June 16, 1999.
Olivia A. Golden,
Assistant Secretary for Children and Families.
Approved: October 5, 1999.
Donna E. Shalala,
Secretary.
[FR Doc. 00-2049 Filed 1-31-00; 8:45 am]
BILLING CODE 4184-01-P

Last Modified: 09/20/2004

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