Head Start Program

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: Notice of Proposed Rulemaking.

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SUMMARY: The Administration on Children, Youth and Families is issuing

this Notice of Proposed Rulemaking to propose timelines for the

conducting of administrative hearings on adverse actions taken against

Head Start grantees and to make additional changes to the regulations

designed to expedite the appeals process.

DATES: In order to be considered, comments on this proposed rule must

be received on or before August 31, 1998.

ADDRESSES: Please address comments to the Associate Commissioner, Head

Start Bureau, Administration on Children, Youth and Families, PO Box

1182, Washington, DC 20013. Beginning 14 days after close of the

comment period, comments will be available for public inspection in

Room 2219, 330 C Street, SW., Washington, DC 20201, Monday through

Friday between the hours of 9 a.m. and 4 p.m.

FOR FURTHER INFORMATION CONTACT: Jim S. Kolb (202) 205-8580.

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 primarily to low-income preschool 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. Additionally, 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 1996, Head Start served 752,000 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 Proposed Regulation

The authority for this Notice of Proposed Rulemaking (NPRM) is

section 646 of the Head Start Act (42 U.S.C. 9841), as amended by Pub.

L. 103-252, Title I of the Human Services Amendments of 1994. ACF

proposes to make changes to the regulations 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 by which the person conducting the

administrative hearing shall issue a decision based on the hearing. The

proposed rule implements these requirements.

Overall, this proposed rule on timelines, including the conforming

changes to other affected sections of the appeals requirements in part

1303, will have the effect of saving time and expenses while continuing

to allow due process to a grantee appealing a proposed termination or

denial of refunding decision. 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

[[Page 35555]]

hearing. Under the proposed 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. Section by Section Discussion of the NPRM

Section 1303.14 Appeal by a Grantee from a Termination of Financial

Assistance

The proposed rule makes several changes to this section. ACF is

proposing to revise section 1303.14(c)(1) to state in greater detail

the information which it must include in letters of termination. Under

the proposed regulation the Agency will be required to state the legal

basis for termination, 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 the Agency is

relying for its determination. This change will reduce the need for the

Agency to supplement its initial notice with additional filings after

the appeal is filed and thereby streamline and expedite the appeals

process.

The Agency is also proposing to amend the regulation to increase

the amount of time for a grantee to appeal a termination from 10 days

to 30 days. The change is being made to give grantees more time in

which to develop their initial appeal submission. More complete

submissions will allow quicker resolutions of appeals. This increase in

time to file appeals carries with it more responsibility for filing

properly, as discussed below.

The last sentence in Sec. 1303.14(c)(2) is being deleted because

the standard for content of the request for a hearing will now appear

in the revised Sec. 1303.14(d).

The Agency is also proposing new language for Sec. 1303.14(d) which

requires the grantee to state in more detail the basis of its appeal of

the termination. This change will reduce the need for the grantees to

supplement their initial request for a hearing with additional filings

and thereby streamline and expedite the appeals process. ACF is also

proposing a change in Sec. 1303.14(c)(5) to make it consistent with the

new Sec. 1303.14(d). A new Sec. 1303.14(c)(6) is added to provide for

two sanctions against ACF in the event that a notice of termination is

deficient.

If in the judgment of the Departmental Appeals Board a grantee

fails to comply with these requirements in a substantial manner its

appeal must be rejected, with prejudice. The burden shall be on a

grantee to show good cause for any failure to comply with these

requirements. Workload difficulties shall not normally constitute good

cause, unless the Departmental Appeals Board determines that

adjustments cannot be made by the grantee and that the conflicting

matters reasonably take precedence over the expeditious conduct of the

appeal. Thus, for example, a grantee must show extenuating

circumstances for its failure to provide documents in its possession at

the time of its appeal and to raise arguments or objections that would

logically be raised or made in light of the notice of termination. If

the failure is not substantial, the appeal may proceed, but the omitted

document must be excluded and the omitted argument or objection barred.

These provisions flow from the purpose of these changes, which is to

expedite appeals, and in light of the fact that grantees will have

twenty more days to file their appeals than is the case under current

regulations. The proposed regulation does provide relief from the

sanctions under exceptional circumstances, as the Departmental Appeals

Board may determine in accordance with the regulations. The new

paragraph on sanctions is (e).

The current Sec. 1303.14(e) is deleted and a portion of its

contents revised and added as the last sentence in the new paragraph

(d)(7) of this section. It would require the grantee to serve notice of

the appeal and request for a hearing on any delegate agency which would

be financially affected at the time the grantee files its appeal.

However, failure to do so would be between the delegate and grantee and

would not prevent the non-renewal or termination action from

proceeding. Any remedy would be between the grantee and delegate

agency.

The proposed revision of Sec. 1303.14(g) to be redesignated as (i)

includes a new requirement that delegate agencies, requesting an

opportunity to participate in a hearing, must do so within 30 days of

the grantee's request for a hearing. This new requirement is consistent

with the overall thrust of the proposed provision which is to minimize

delays and require the parties to eliminate possible sources of delay

in the proceedings.

Section 1303.15 Appeal by a Grantee From a Denial of Refunding

ACF is proposing to revise paragraph (b)(2) of this provision to

give grantees 30 instead of 10 days in which to appeal denial of

refunding. This proposed change will make this provision consistent

with revised Sec. 1303.14(c)(2). The additional time will allow

grantees to provide more complete submissions which will allow quicker

resolutions of appeals. The proposed revision to paragraph (d) will

require ACF to state in more detail the basis of the decision to deny

refunding to a grantee. The additional information in the notice will

reduce the need for the Agency to supplement its initial notice with

filing after the appeal is filed and thereby streamline and expedite

the appeals process. Paragraph (d) also provides for two sanctions

against ACF in the event that a notice of denial of refunding is

deficient. The Agency also is proposing to add paragraphs (f), (g) and

(h) to 45 CFR 1303.15 to make the procedures for appeals of denials of

refunding consistent with those for termination appeals in 45 CFR

1303.14.

Section 1303.16 Conduct of Hearing

The proposed revision would specifically require the parties to use

prepared written direct testimony. ACF's experience with prepared

written testimony has shown it is more efficient in terms of clear

presentation of direct testimony and the reduction of hearing time and

expense, including the absence of agency staff from their normal

duties. Direct testimony is the testimony of witnesses in response to

the questions of the attorney for the party which called them. After a

witness's direct testimony is presented to the Board, the attorney for

the opposing party has an opportunity to cross examine, and the

attorney for the party which called the witness has another opportunity

to ask additional questions, a process known as ``redirect

examination.'' Prepared direct testimony by parties eliminates the need

for live direct testimony at the hearing. However, cross examination

and redirect examination will be live at the hearing. This permits the

presiding member to assess witness credibility through direct

observation. Use of prepared written direct testimony by the parties

can result in a significant reduction in the amount of time needed for

a hearing and the cost of compiling transcripts of hearings. Based on

it own experience, ACF believes this approach will contribute to

streamlining the Head Start appeals process. Changes also are proposed

in the wording of 45 CFR 1303.16(e) to make it consistent with the

[[Page 35556]]

proposed changes in 45 CFR 1303.14(e) and (g).

Section 1303.17 Time for hearing and decision

This proposed rule implements section 646(c) of the Head Start Act,

which directs the Secretary to specify timelines for commencing

hearings and rendering decisions.

The Head Start Act and implementing regulations in 45 CFR part 1303

seek to strike a balance between the need to ensure that all Head Start

programs are of high quality and are responsive to the families they

serve, on the one hand, and protection of existing grantees from

arbitrary or baseless adverse actions, on the other. Assuring that all

Head Start programs provide quality services is a goal of the

Department and the Congress, as reflected in the report of the Advisory

Committee on Head Start Quality and Expansion and the amendments made

to the Head Start Act by Title I of the Human Services Amendments of

1994. Those amendments added section 641A of the Act (42 U.S.C. 9836A)

which, in subsection (d), sets out in detail the actions which must be

taken with respect to a grantee which has been found, during an on-site

review, to have quality deficiencies. This subsection directs the

Secretary to require programs to correct all identified deficiencies

either immediately or within one year of notification by the Department

of the deficiencies under an approved Quality Improvement Plan. The

Department must initiate proceedings to terminate the Head Start grant

of any agency which does not correct all identified deficiencies within

the prescribed time frames. Grantees which wish to appeal a proposed

termination may do so to the Department of Health and Human Services

Departmental Appeals Board.

The proposed rule requires that any hearing of 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 close of the proceedings,

including submission of the briefs and the holding of oral argument, if

allowed or required by the Departmental Appeals Board.

Currently, there are no timelines for the hearings or the decisions

on appeals by grantees. The proposed timelines will ensure an

expeditious and more predictable review process, allow sufficient time

for consideration of the case, and protect the grantees' statutory

right to the opportunity for a full and fair hearing.

IV. 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 Notice of

Proposed Rulemaking 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, Pub. L. 104-13, all

Departments are required to submit to the Office of Management and

Budget (OMB) for review and approval any reporting or record-keeping

requirement inherent in a proposed or final rule. This NPRM does not

contain any information collection or record-keeping requirements.

List of Subjects in 45 CFR Part 1303

Administrative practice and procedure, Education of the

disadvantaged, Grant--programs-social programs, Reporting and

recordkeeping requirements.

(Catalog of Domestic Assistance Program Number 93.600, Project Head

Start)

Dated: December 24, 1997.

Olivia A. Golden,

Assistant Secretary for Children and Families.

Approved: March 20, 1998.

Donna E. Shalala,

Secretary.

For the reasons set forth in the Preamble, 45 CFR part 1303 is

proposed to be 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 revising paragraphs (c)(1), (2)

and (5); removing paragraph (e); redesignating paragraphs (d) and (f)

through (j) as paragraphs (f) through (r); adding new paragraphs

(c)(6), (d) and (e); and revising the newly redesignated paragraph (i)

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 notice of appeal and request for hearing

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.

[[Page 35557]]

(d) A grantee's notice of appeal and request for hearing 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, 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) Include a statement on whether the grantee is requesting a

hearing; and

(7) Be filed with the Departmental Appeals Board and be served on

the ACF official who issued the termination notice. The grantee must

serve notice of the appeal and any request for a hearing on any

delegate agency which would be financially affected at the time the

grantee files its appeal.

(e) The Departmental Appeals Board sanctions with respect to a

grantee's notice of appeal and request for hearing 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 grantees's

failures are not substantial, but are confined to 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 a grantee has shown good cause for its failures 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.

* * * * *

(i) 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

presiding officer of the hearing. Any request for participation,

including a request by a delegate agency, must be filed within 30 days

of the grantee's notice of appeal and request for hearing.

* * * * *

3. Section 1303.15 is amended by revising paragraphs (b)(2) and (d)

(1) 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 (a)

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.

* * * * *

(4) A statement that failure by the responsible HHS official 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 presiding officer of the hearing. Such participation shall

not, without the consent of ACYF and the grantees, alter the time

limitations for the delivery of papers or other procedures set forth in

this section.

(g) Paragraphs (j), (k), and (l) 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 grantees's

failures are not substantial, but are confined to 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 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 failures 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 prepared written

direct testimony is submitted by the parties, 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 presiding

officer. This application, which must be made within 30 days of the

grantee's notice of appeal and request for hearing 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, shall

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:

[[Page 35558]]

Sec. 1303.17 Time for hearing and decision.

(a) Any hearing of 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 close of the proceedings, including submission of the briefs and

oral argument, if allowed or required by the Departmental Appeals

Board, and completion of final transcripts and any other applicable

corrections to them.

(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.

[FR Doc. 98-17296 Filed 6-29-98; 8:45 am]

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