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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 para

graph (b)(2)(ii) of this section, ends an Subpart C [Reserved] IHE's eligibility to receive any or all

forms of Federal financial assistance. Subpart D— Responses and Sanc- The Secretary specifies which forms of tions issued or Imposed by affected; and

Federal financial assistance would be 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 tereligible to receive that assistance be mination under 34 CFR 668.94. cause 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(Authority: 20 U.S.C. 1145g)

retary of any corrective action it has

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 cation, the Secretary may issue a re

by the Secretary for issuing 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 compliance response other than the formulation of agreement designed to bring the IHE

à 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 $ 86.304. (Authority: 20 U.S.C. 1145g) (55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996)

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? (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

Subpart E-Appeal Procedures $ 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)

886.401 What are the authority and re

sponsibility of the 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 IHE 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. (Authority: 20 U.S.C. 1145g) (55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996)

$86.404 How may a party commu

nicate with an ALJ? (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) 8 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

(i) Hand-delivered;

886.402 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 hear ing under this subpart. (Authority: 20 U.S.C. 1145g) (55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996)

$ 86.403 May a party be represented by

counsel? A party may be represented by counsel.

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

before the hearing is scheduled beyond the 45 days specified in paragraph (b)(1)

(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. (Authority: 20 U.S.C. 1145g) [57 FR 56795, Nov. 30, 1992]

(c) No termination takes effect until after a hearing is held and a decision is issued by the Department.

(d) With the approval of the ALJ and the consent of the designated Department official and the IHE, any time schedule specified in this section may be shortened.

(Authority: 20 U.S.C. 1145g) (55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996)

886.406 What must the ALJ do if the

parties enter settlement negotia

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

$86.408 What are the procedures for

conducting a pre-hearing con

ference? (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. (Authority: 20 U.S.C. 1145g) (55 FR 33581, Aug. 16, 1990, as amended at 61 FR 66225, Dec. 17, 1996]

8 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

$ 86.409 What are the procedures for

conducting a hearing on the

record? (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 expe (iii) The date on which the ALJ terdited as agreed by the ALJ, the des- minates the hearing in accordance with ignated Department official, and the $ 86.401(c)(3). IHE. Procedures to expedite may in (2) The ALJ's decision states whether clude, but are not limited to, the fol the violation or violations contained in lowing:

the Secretary's notification occurred, (1) A restriction on the number or and articulates the reasons for the length of submissions.

ALJ's finding. (2) The conduct of the hearing by (3) The ALJ bases findings of fact telephone conference call.

only on evidence in the hearing record (3) A review limited to the written and on matters given judicial notice. record.

(b)(1) The ALJ's decision is the final (4) A certification by the parties to decision of the agency. However, the facts and legal authorities not in dis Secretary reviews the decision on repute.

quest of either party, and may review (d)(1) The formal rules of evidence the decision on his or her own initiaand procedures applicable to pro tive. ceedings in a court of law are not appli (2) If the Secretary decides to review cable.

the decision on his or her own initia(2) The designated Department offi tive, the Secretary informs the parties cial has the burden of persuasion in of his or her intention to review by any proceeding under this subpart. written notice sent within 15 days of

(3)(i) The parties may agree to ex the Secretary's receipt of the ALJ's dechange relevant documents and infor cision. mation.

(c)(1) Either party may request re(ii) The ALJ may not order dis view by the Secretary by submitting a covery, as provided for under the Fed brief or written materials to the Seceral Rules of Civil Procedure, or any retary within 20 days of the party's reother exchange between the parties of ceipt of the ALJ's decision. The subdocuments or information.

mission must explain why the decision (4) The ALJ accepts only evidence of the ALJ should be modified, rethat is relevant and material to the versed, or remanded. The other party proceeding and is not unduly repeti shall respond within 20 days of receipt tious.

of the brief or written materials filed (e) The ALJ makes a transcribed by the opposing party. record of any evidentiary hearing or (2) Neither party may introduce new oral argument that is held, and makes evidence on review. the record available to

(d) The decision of the ALJ ordering (1) The designated Department offi the repayment of Federal financial ascial; and

sistance or terminating the eligibility (2) The IHE on its request and upon of an IHE does not take effect pending payment of a fee comparable to that the Secretary's review. prescribed under the Department of (e)(1) The Secretary reviews the Education Freedom of Information Act ALJ's decision considering only eviregulations (34 CFR part 5).

dence introduced into the record. (Authority: 20 U.S.C. 1145g)

(2) The Secretary's decision may af

firm, modify, reverse or remand the (55 FR 33581, Aug. 16, 1990, as amended at 61

ALJ's decision and includes a stateFR 66225, Dec. 17, 1996)

ment of reasons for the decision. 886.410 What are the procedures for (Authority: 20 U.S.C. 1145g) issuance of a decision?

(55 FR 33581, Aug. 16, 1990, as amended at 61 (a)(1) The ALJ issues a written deci FR 66225, Dec. 17, 1996) sion to the IHE, the designated Department official, and the Secretary by cer $ 86.411 What are the procedures for tified mail, return receipt requested, requesting reinstatement of eligiwithin 30 days after

bility? (i) The last brief is filed;

(a)(1) An IHE whose eligibility to re(ii) The last day of the hearing if one ceive any or all forms of Federal finanis held; or

cial assistance has been terminated

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