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until completion of the action and res- (1) Repayment of any or all forms of olution of all issues that arise from it, Federal financial assistance received or until the end of the regular three- by the IHE when it was in violation of year period, whichever is later.

this part; and

(2) The termination of any or all (Approved by the Office of Management and

forms of Federal financial assistance Budget under control number 1880-0522)

that (Authority: 20 U.S.C. 1145g)

(i)(A) Except as specified in paragraph (b)(2)(ii) of this section, ends an

IHE'S eligibility to receive any or all Subpart C [Reserved]

forms of Federal financial assistance.

The Secretary specifies which forms of Subpart D- Responses and Sanc

Federal financial assistance would be tions issued or imposed by affected; and the Secretary for Violations by (B) Prohibits an IHE from making an IHE

any new obligations against Federal

funds; and $ 86.300 What constitutes a violation of (ii) For purposes of an IHE's particithis part by an IHE?

pation in the student financial assistAn IHE violates this part by

ance programs authorized by title IV of (a) Receiving any form of Federal fi

the Higher Education Act of 1965 as nancial assistance after becoming in

amended, has the same effect as a ter

mination under 34 CFR 668.94. eligible to receive that assistance because of failure to submit a certifi

(Authority: 20 U.S.C. 1145g) cation in accordance with $ 86.3(b); or

[55 FR 33581, Aug. 16, 1990, as amended at 61 (b) Violating its certification. Viola

FR 66225, Dec. 17, 1996) tion of a certification includes failure of an IHE to

$ 86.302 What are the procedures used (1) Adopt or implement its drug pre- by the Secretary for providing invention program; or

formation or technical assistance? (2) Consistently enforce its discipli- (a) The Secretary provides informanary sanctions for violations by stu- tion or technical assistance to an IHE dents and employees of the standards in writing, through site visits, or by of conduct adopted by an IHE under

other means. $ 86.100(a)(1).

(b) The IHE shall inform the Sec

retary of any corrective action it has (Authority: 20 U.S.C. 1145g)

taken within a period specified by the [55 FR 33581, Aug. 16, 1990, as amended at 61 Secretary. FR 66226, Dec. 17, 1996]

(Authority: 20 U.S.C. 1145g) $ 86.301 What actions may the Sec- [55 FR 33581, Aug. 16, 1990, as amended at 61

retary take if an IHE violates this FR 66225, Dec. 17, 1996]

part? (a) If an IHE violates its certifi

$ 86.303 What are the procedures used

by the Secretary for issuing a recation, the Secretary may issue a re

sponse other than the formulation sponse to the IHE. A response may in- of a compliance agreement or the clude, but is not limited to

provision of information or tech(1) Provision of information and tech

nical assistance? nical assistance; and

(a) If the Secretary intends to issue a (2) Formulation of a a compliance

response other than the formulation of agreement designed to bring the IHE

a compliance agreement or the proviinto full compliance with this part as sion of information or technical assistsoon as feasible.

ance, the Secretary notifies the IHE in (b) If an IHE receives any form of writing ofFederal financial assistance without (1) The Secretary's determination having submitted a certification or that there are grounds to issue a reviolates its certification, the Secretary sponse other than the formulation of a may impose one or more sanctions on compliance agreement or providing inthe IHE, including

formation or technical assistance; and

(2) The response the Secretary intends to issue.

(b) An IHE may submit written comments to the Secretary on the determination under paragraph (a)(1) of this section and the intended response under paragraph (a)(2) of this section within 30 days after the date the IHE receives the notification of the Secretary's intent to issue a response.

(c) Based on the initial notification and the written comments of the IHE the Secretary makes a final determination and, if appropriate, issues a final response.

(d) The IHE shall inform the Secretary of the corrective action it has taken in order to comply with the terms of the Secretary's response within a period specified by the Secretary.

(e) If an IHE does not comply with the terms of a response issued by the Secretary, the Secretary may issue an additional response or impose a sanction on the IHE in accordance with the procedures in 886.304.

days after the date of receipt of the notice of intent; and

(3) Informs the IHE that the repayment of Federal financial assistance will not be required or that the termination will not be effective on the date specified in the notice if the designated Department official receives, within a 30-day period beginning on the date the IHE receives the notice of intent described in this paragraph,

(i) Written material indicating why the repayment of Federal financial assistance or termination should not take place; or

(ii) A request for a hearing that contains a concise statement of disputed issues of law and fact, the IHE's position with respect to these issues, and, if appropriate, a description of which Federal financial assistance the IHE contends need not be repaid.

(b) If the IHE does not request a hearing but submits written material,

(1) The IHE receives no additional opportunity to request or receive a hearing; and

(2) The designated Department official, after considering the written material, notifies the IHE in writing whether

(i) Any or all of the Federal financial assistance must be repaid; or

(ii) The proposed termination is dismissed or imposed as of a specified date.

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]

$ 86.304 What are the procedures used

by the Secretary to demand repay. ment of Federal financial assistance or terminate an IHE's eligibility for any or all forms of Federal financial assistance?

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996)

Subpart E-Appeal Procedures

(a) A designated Department official begins a proceeding for repayment of Federal financial assistance or termination, or both, of an IHE's eligibility for any or all forms of Federal financial assistance by sending the IHE a notice by certified mail with return receipt requested. This notice

(1) Informs the IHE of the Secretary's intent to demand repayment of Federal financial assistance or to terminate, describes the consequences of that action, and identifies the alleged violations that constitute the basis for the action;

(2) Specifies, as appropriate

(i) The amount of Federal financial assistance that must be repaid and the date by which the IHE must repay the funds; and

(ii) The proposed effective date of the termination, which must be at least 30

$ 86.400 What is the scope of this sub

part? (a) The procedures in this subpart are the exclusive procedures governing appeals of decisions by a designated Department official to demand the repayment of Federal financial assistance or terminate the eligibility of an IHE to receive some or all forms of Federal financial assistance for violations of this part.

(b) An Administrative Law Judge (ALJ) hears appeals under this subpart.

(Authority: 20 U.S.C. 1145g)

(55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]

§ 86.401 What are the authority and re

sponsibility of the ALJ?

8 86.404 How may a party commu

nicate with an ALJ?

(a) The ALJ regulates the course of the proceeding and conduct of the parties during the hearing and takes all steps necessary to conduct a fair and impartial proceeding.

(b) The ALJ is not authorized to issue subpoenas.

(c) The ALJ takes whatever measures are appropriate to expedite the proceeding. These measures may include, but are not limited to

(1) Scheduling of conferences;

(2) Setting time limits for hearings and submission of written documents; and

(3) Terminating the hearing and issuing a decision against a party if that party does not meet those time limits.

(d) The scope of the ALJ's review is limited to determining whether

(1) The THE received any form of Federal financial assistance after becoming ineligible to receive that assistance because of failure to submit a certification; or

(2) The IHE violated its certification.

(a) A party may not communicate with an ALJ on any fact at issue in the case or on any matter relevant to the merits of the case unless the other party is given notice and an opportunity to participate.

(b)(1) To obtain an order or ruling from an ALJ, a party shall make a motion to the ALJ.

(2) Except for a request for an extension of time, a motion must be made in writing unless the parties appear in person or participate in a conference telephone call. The ALJ may require a party to reduce an oral motion to writing.

(3) If a party files a written motion, the party shall do so in accordance with 8 86.405.

(4) Except for a request for an extension of time, the ALJ may not grant a party's written motion without the consent of the other party unless the other party has had at least 21 days from the date of service of the motion to respond. However, the ALJ may deny a motion without awaiting a response.

(5) The date of service of a motion is determined by the standards for determining a filing date in $ 86.405(d).

(Authority: 20 U.S.C. 1145g)

(55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996)

(Authority: 20 U.S.C. 1145g)

$ 86.402 Who may be a party in a hear.

ing under this subpart? (a) Only the designated Department official and the IHE that is the subject of the proposed termination or recovery of Federal financial assistance may be parties in a hearing under this subpart.

(b) Except as provided in this subpart, no person or organization other than a party may participate in a hearing under this subpart.

$ 86.405 What are the requirements for

filing written submissions? (a) Any written submission under this subpart must be filed by hand-delivery, by mail, or by facsimile transmission. The Secretary discourages the use of facsimile transmission for documents longer than five pages.

(b)-If a party files a brief or other document, the party shall serve a copy of the filed material on the other party on the filing date by hand-delivery or by mail. If agreed upon by the parties, service of a document may be made upon the other party by facsimile transmission.

(c) Any written submission must be accompanied by a statement certifying the date that the filed material was filed and served on the other party.

(d)(1) The filing date for a written submission is the date the document is

(1) Hand-delivered;

(Authority: 20 U.S.C. 1145g)

(55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]

8 86.403 May a party be represented by

counsel?

A party may be represented by counsel.

(Authority: 20 U.S.C. 1145g)

(ii) Mailed; or (iii) Sent by facsimile transmission.

(2) If a scheduled filing date falls on a Saturday, Sunday, or Federal holiday, the filing deadline is the next Federal business day.

(e) A party filing by facsimile transmission is responsible for confirming that a complete and legible copy of the document was received by the Department.

(f) If a document is filed by facsimile transmission, the Secretary or the designated Department official, as applicable, may require the filing of a follow-up hard copy by hand-delivery or by mail within a reasonable period of time.

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(Authority: 20 U.S.C. 1145g)

[57 FR 56795, Nov. 30, 1992]

$ 86.406 What must the ALJ do if the

parties enter settlement negotiations?

(a) If the parties to a case file a joint motion requesting a stay of the proceedings for settlement negotiations or for the parties to obtain approval of a settlement agreement, the ALJ grants the stay.

(b) The following are not admissible in any proceeding under this part:

(1) Evidence of conduct during settlement negotiations.

(2) Statements made during settlement negotiations.

(3) Terms of settlement offers.

(c) The parties may not disclose the contents of settlement negotiations to the ALJ. If the parties enter into a settlement agreement and file a joint motion to dismiss the case, the ALJ grants the motion.

(a)(1) A pre-hearing conference may be convened by the ALJ if the ALJ thinks that such a conference would be useful, or if requested by

(i) The designated Department official; or

(ii) The IHE.

(2) The purpose of a pre-hearing conference is to allow the parties to settle, narrow, or clarify the dispute.

(b) A pre-hearing conference may consist of

(1) A conference telephone call; (2) An informal meeting; or

(3) The submission and exchange of written material.

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(Authority: 20 U.S.C. 1145g)

$ 86.407 What are the procedures for

scheduling a hearing? (a) If the IHE requests a hearing by the time specified in $86.304(a)(3), the designated Department official sets the date and the place.

(b)(1) The date is at least 15 days after the designated Department official receives the request and no later than 45 days after the request for hearing is received by the Department.

(2) On the motion of either or both parties, the ALJ may extend the period

(a) A hearing on the record is an orderly presentation of arguments and evidence conducted by an ALJ.

(b) An ALJ conducts the hearing entirely on the basis of briefs and other written submissions unless

(1) The ALJ determines, after reviewing all appropriate submissions, that an evidentiary hearing is needed to resolve a material factual issue in dispute; or

(2) The ALJ determines, after reviewing all appropriate submissions, that oral argument is needed to clarify the issues in the case.

(c) The hearing process may be expedited as agreed by the ALJ, the designated Department official, and the IHE. Procedures to expedite may include, but are not limited to, the following:

(1) A restriction on the number or length of submissions.

(2) The conduct of the hearing by telephone conference call.

(3) A review limited to the written record.

(4) A certification by the parties to facts and legal authorities not in dispute.

(d)(1) The formal rules of evidence and procedures applicable to proceedings in a court of law are not applicable.

(2) The designated Department official has the burden of persuasion in any proceeding under this subpart.

(3)(i) The parties may agree to exchange relevant documents and information.

(ii) The ALJ may not order discovery, as provided for under the Federal Rules of Civil Procedure, or any other exchange between the parties of documents or information.

(4) The ALJ accepts only evidence that is relevant and material to the proceeding and is not unduly repetitious.

(e) The ALJ makes a transcribed record of any evidentiary hearing or oral argument that is held, and makes the record available to

(1) The designated Department official; and

(2) The IHE on its request and upon payment of a fee comparable to that prescribed under the Department of Education Freedom of Information Act regulations (34 CFR part 5).

(iii) The date on which the ALJ terminates the hearing in accordance with $ 86.401(c)(3).

(2) The ALJ's decision states whether the violation or violations contained in the Secretary's notification occurred, and articulates the reasons for the ALJ's finding.

(3) The ALJ bases findings of fact only on evidence in the hearing record and on matters given judicial notice.

(b)(1) The ALJ's decision is the final decision of the agency. However, the Secretary reviews the decision on request of either party, and may review the decision on his or her own initiative.

(2) If the Secretary decides to review the decision on his or her own initiative, the Secretary informs the parties of his or her intention to review by written notice sent within 15 days of the Secretary's receipt of the ALJ's decision.

(c)(1) Either party may request review by the Secretary by submitting a brief or written materials to the Secretary within 20 days of the party's receipt of the ALJ's decision. The submission must explain why the decision of the ALJ should be modified, reversed, or remanded. The other party shall respond within 20 days of receipt of the brief or written materials filed by the opposing party.

(2) Neither party may introduce new evidence on review.

(d) The decision of the ALJ ordering the repayment of Federal financial assistance or terminating the eligibility of an IHE does not take effect pending the Secretary's review. (e)(1) The Secretary reviews

reviews the ALJ's decision considering only evidence introduced into the record.

(2) The Secretary's decision may affirm, modify, reverse or remand the ALJ's decision and includes a statement of reasons for the decision.

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]

(Authority: 20 U.S.C. 1145g)

[55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996)

$ 86.410 What are the procedures for

issuance of a decision? (a)(1) The ALJ issues a written decision to the IHE, the designated Department official, and the Secretary by certified mail, return receipt requested, within 30 days after

(i) The last brief is filed;

(ii) The last day of the hearing if one is held; or

$ 86.411 What are the procedures for

requesting reinstatement of eligi

bility? (a)(1) An IHE whose eligibility to receive any or all forms of Federal financial assistance has been terminated

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