Implementation of OMB Guidance on Nonprocurement Debarment and Suspension, 18671-18679 [2012-7358]

Agencies

• DEPARTMENT OF EDUCATION

[Federal Register Volume 77, Number 60 (Wednesday, March 28, 2012)]
[Rules and Regulations]
[Pages 18671-18679]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-7358]



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Federal Register / Vol. 77, No. 60 / Wednesday, March 28, 2012 / 
Rules and Regulations

[[Page 18671]]



DEPARTMENT OF EDUCATION

2 CFR Part 3485

34 CFR Parts 77, 85, 668, and 682

[Docket ID ED-2012-OS-0007]
RIN 1890-AA17


Implementation of OMB Guidance on Nonprocurement Debarment and 
Suspension

AGENCY: Department of Education.

ACTION: Final regulations and request for technical comments.

-----------------------------------------------------------------------

SUMMARY: The Secretary of the Department of Education (Department) 
establishes a new part in 2 CFR that adopts the Office of Management 
and Budget's (OMB's) guidance, as supplemented by this new part, as the 
Department's regulations for nonprocurement debarment and suspension. 
The Secretary removes regulations that contain the Department's current 
implementation of the Governmentwide common rule on nonprocurement 
debarment and suspension. The Secretary also amends regulations to 
correct citations as appropriate. The new part will serve the same 
purposes as, and is substantively identical to, the nonprocurement 
suspension and debarment common rule published in the Federal Register 
on November 26, 2003.
    On August 31, 2005, OMB established interim final guidance that was 
substantively identical to the common rule and directed Federal 
agencies to adopt those guidelines as regulations. On November 15, 
2006, OMB published final guidance.
    These final regulations adopt the OMB guidance as regulations of 
the Department. In addition, the Department adds those requirements 
that describe how the Department implements suspension and debarment 
requirements in the context of Title IV of the Higher Education Act of 
1965, as amended (HEA). This regulatory action is an administrative 
simplification that makes no substantive change in the Department's 
policy or procedures for nonprocurement debarment and suspension. We do 
not intend any substantive changes to the Department's debarment and 
suspension regulations. To be sure we achieved that objective, we ask 
for technical comments about whether the new regulations are 
substantively different than the existing regulations.

DATES: These final regulations are effective April 27, 2012. In order 
for us to consider your comments, we must receive them on or before 
April 27, 2012.

ADDRESSES: Submit your comments through the Federal eRulemaking Portal 
or via postal mail, commercial delivery, or hand delivery. We will not 
accept comments by fax or by email. To ensure that we do not receive 
duplicate copies, please submit your comments only one time. In 
addition, please include the Docket ID and the term ``Nonprocurement 
Debarment and Suspension'' at the top of your comments.
     Federal eRulemaking Portal: Go to www.regulations.gov to 
submit your comments electronically. Information on using 
Regulations.gov, including instructions for accessing agency documents, 
submitting comments, and viewing the docket, is available on the site 
under ``How To Use This Site.''
     Postal Mail, Commercial Delivery, or Hand Delivery. If you 
mail or deliver your comments about the final regulations, address them 
to Alfreida Pettiford, U.S. Department of Education, 400 Maryland 
Avenue SW., Room 7100, Potomac Center Plaza, Washington, DC 20202-2550.
     Privacy Note: The Department's policy for comments 
received from members of the public (including comments submitted by 
mail, commercial delivery, or hand delivery) is to make these 
submissions available for public viewing in their entirety on the 
Federal eRulemaking Portal at www.regulations.gov. Therefore, 
commenters should be careful to include in their comments only 
information that they wish to make publicly available on the Internet.

FOR FURTHER INFORMATION CONTACT: Alfreida Pettiford, U.S. Department of 
Education, 400 Maryland Avenue SW., Room 7100, Potomac Center Plaza, 
Washington, DC 20202-2550. Telephone: (202) 245-6110.
    If you use a telecommunications device for the deaf (TDD), call the 
Federal Relay Service (FRS), toll-free, at 1-800-877-8339.
    Individuals with disabilities may obtain this document in an 
accessible format (e.g., braille, large print, audiotape, or compact 
disc) on request to the contact person listed in this section.

SUPPLEMENTARY INFORMATION:
    Invitation to Comment: We invite you to submit comments regarding 
these final regulations to assist us in complying with the specific 
requirements of Executive Order 12866 and Executive Order 13563 and 
their overall requirement of reducing regulatory burden that might 
result from these final regulations.
    During and after the comment period, you may inspect all public 
comments about this regulatory action by accessing Regulations.gov. You 
may also inspect the public comments in person at the Department of 
Education, 550 12th Street SW., Room 7100, Washington, DC, between the 
hours of 8:30 a.m. and 4 p.m., Washington, DC time, Monday through 
Friday of each week except Federal holidays.
    Assistance to Individuals With Disabilities in Reviewing the 
Rulemaking Record: On request, we will provide an appropriate 
accommodation or auxiliary aid to an individual with a disability who 
needs assistance to review the comments or other documents in the 
public rulemaking record for these regulations. If you want to schedule 
an appointment for this type of accommodation or auxiliary aid, please 
contact the person listed under FOR FURTHER INFORMATION CONTACT.

Background

    In 2003, the Department joined with 32 other agencies to revise the 
nonprocurement debarment and suspension regulations that these agencies 
had adopted jointly in 1998. See 68 FR 66534 (November 26, 2003). The 
regulations that the agencies adopted were referred to as ``the common 
rule.''

[[Page 18672]]

    On November 15, 2006, the Office of Management and Budget (OMB) 
issued final guidance for Governmentwide nonprocurement suspension and 
debarment (71 FR 66431). This guidance, located in 2 CFR part 180, is 
substantively the same as the common rule, but is published in a form 
that each agency can adopt, thus eliminating the need for each agency 
to publish a separate version of the same rule. The guidance also makes 
it possible to update Governmentwide requirements without each agency 
having to re-promulgate its own rules.
    The Department's current regulations on nonprocurement debarment 
and suspension are found in 34 CFR part 85. In accordance with OMB's 
guidance, these final regulations establish the Department's 
nonprocurement debarment and suspension regulations in subtitle B of 
title 2 of the CFR. The new 2 CFR part 3485 adopts the OMB guidelines 
with the same additions and clarifications that the Department made to 
the Governmentwide common rule on this subject issued on November 26, 
2003 (68 FR 66609). The substance of the Department's nonprocurement 
debarment and suspension regulations is unchanged.
    These final regulations remove 34 CFR part 85 from the CFR, which 
is the current location for the Department's nonprocurement debarment 
and suspension regulations. We also amend the definition of EDGAR in 34 
CFR part 77 to remove the reference to part 85.
    Finally, these final regulations amend 34 CFR parts 668 and 682 to 
update cross references to the debarment and suspension regulations in 
2 CFR parts 180 and 3485.

Waiver of Rulemaking

    Under the Administrative Procedure Act (APA) (5 U.S.C. 553), the 
Department is generally required to publish a notice of proposed 
rulemaking and provide the public with an opportunity to comment on 
proposed regulations prior to establishing a final rule.
    However, we are waiving the notice-and-comment rulemaking 
requirements under the APA. Section 553(b) of the APA provides that an 
agency is not required to conduct notice-and-comment rulemaking when 
the agency for good cause finds that notice and public procedure 
thereon are impracticable, unnecessary, or contrary to the public 
interest. The Secretary has determined that it is unnecessary to 
conduct notice-and-comment rulemaking because these regulatory 
amendments to 2 CFR are an administrative simplification that do not 
make substantive changes to the Department's policy or procedures for 
nonprocurement debarment and suspension. The Department is therefore 
publishing the revisions as final regulations and not as proposed 
regulations.
    Nonetheless, because we intend the new part to make no changes in 
current policies and procedures, we specifically invite comments on any 
unintended changes in substantive content that the new 2 CFR part 3485 
would make relative to the November 2003 common rule published by the 
Department on November 26, 2003 (68 FR 66534, 66609-66615).
    If the Department receives comments that result in any changes to 
the final regulation, we will make timely publication of those changes 
in the Federal Register.

Adoption of OMB Guidance

    We add Sec.  3485.12 to adopt the OMB guidance on suspension and 
debarment. Section 3485.12(a) adopts subparts A through I of the 
guidance in 2 CFR part 180 as a regulation of the Department.
    The Department's current debarment and suspension regulations in 34 
CFR part 85 contain additional requirements that must be met to make 
debarment and suspension actions taken by the Department or other 
agencies apply to participants in the programs authorized under title 
IV of the HEA. These final regulations place those same modifications 
in 2 CFR part 3485 so that debarment and suspension actions can be 
applied to participants in title IV HEA programs. In each section of 
these final regulations that adopt a requirement in the OMB guidance 
that must be modified, the section restates the standard OMB guidance 
and adds one or more paragraphs that contain the needed changes.

General Education Provisions Act Requirements

    Section 437(b) of the General Education Provisions Act (GEPA) 
requires that immediately following each substantive provision of the 
Department's regulations, the Department must provide the citations to 
the particular section or sections of statutory law or other legal 
authority on which that provision is based. The substantive provision 
in these final regulations that adopts the guidance in 2 CFR part 180 
is 2 CFR 3485.12. Because the authority citations for all of the 
sections adopted by the Department are the same, the Department 
provides the authority citation for all of the adopted guidance in 
paragraph (d) of Sec.  3485.12. Other sections in part 3485 that 
supplement the guidance in part 180 or relate to the effectiveness of 
debarment and suspension actions against participants in the title IV, 
HEA programs list the authority citations for those sections at the end 
of each of those sections.

Executive Orders 12866 and 13563

    OMB has determined these regulations to be a non-significant 
regulatory action for the purposes of Executive Order 12866. We have 
also determined that this regulatory action does not unduly interfere 
with State, local, and tribal governments in the exercise of their 
governmental functions. Finally, we have reviewed these regulations 
under Executive Order 13563, which supplements and explicitly reaffirms 
the principles, structures, and definitions governing regulatory review 
established in Executive Order 12866. In accordance with both Executive 
orders, the Department has assessed the potential costs and benefits of 
this regulatory action. As this regulatory action is a recodification 
of existing regulations without substantive change, the potential costs 
associated with this regulatory action are only those that result from 
existing statutory requirements and those we have determined as 
necessary for administering the Department's programs and activities.

Regulatory Flexibility Act Certification

    The Secretary certifies that this regulatory action will not have a 
significant adverse impact on a substantial number of small entities. 
The Secretary makes this certification because the action recodifies 
existing regulations without substantive change.

Paperwork Reduction Act of 1995

    This regulatory action will not impose any additional reporting or 
recordkeeping requirements under the Paperwork Reduction Act of 1995.

Federalism (Executive Order 13132)

    This regulatory action does not have Federalism implications, as 
set forth in Executive Order 13132. It will not 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.

Assessment of Educational Impact

    In accordance with section 444 of the General Education Provisions 
Act (GEPA), 20 U.S.C. 1221e-4, when the

[[Page 18673]]

Department published the notice of proposed rulemaking for the 
debarment and suspension common rule on January 23, 2002 (67 FR 3272 
and 3328), we requested comments on whether those proposed regulations 
would require transmission of information that any other agency or 
authority of the United States gathers or makes available.
    We did not receive any comments in response to that request and, 
based on our own review, have determined that these final regulations 
do not require such a transmission of information.
    Electronic Access to This Document: The official version of this 
document is the document published in the Federal Register. Free 
Internet access to the official edition of the Federal Register is 
available via the Federal Digital System at https://www.gpo.gov/fdsys. 
At this site you can view this document, as well as all other documents 
of this Department published in the Federal Register, in text or Adobe 
Portable Document Format (PDF). To use PDF you must have Adobe Acrobat 
Reader, which is available free at this site.
    You may also access documents of the Department published in the 
Federal Register by using the article search feature at https://www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department.

(Catalog of Federal Domestic Assistance Number does not apply.)

List of Subjects

2 CFR Part 3485

    Administrative practice and procedure, Debarment and suspension, 
Grant programs, Loan programs, Reporting and recordkeeping 
requirements.

34 CFR Part 77

    Definitions, Education Department, Grant programs--education.

34 CFR Part 85

    Administrative practice and procedure, Debarment and suspension, 
Drug abuse, Grant programs, Loan programs, Reporting and recordkeeping 
requirements.

34 CFR Part 668

    Administrative practice and procedure, Colleges and universities, 
Consumer protection, Grant programs--education, Loan programs--
education, Reporting and recordkeeping requirements, Student aid.

34 CFR Part 682

    Administrative practice and procedure, Colleges and universities, 
Education, Loan programs--education, Reporting and recordkeeping 
requirements, Student aid, Vocational education.

    Dated: March 22, 2012.
Arne Duncan,
Secretary of Education.

    For the reasons discussed in the preamble, under the authority of 
20 U.S.C. 1221e-3 and 3474, the Secretary amends Title 2, subtitle B, 
and Title 34, parts 77, 85, 668, and 682 of the Code of Federal 
Regulations as follows:

Title 2--Grants and Agreements

0
1. Add Chapter XXXIV, consisting of part 3485, to Subtitle B of Title 2 
to read as follows:

Chapter XXXIV--Department of Education

PART 3485--NONPROCUREMENT DEBARMENT AND SUSPENSION

3485.12 What does this part do?
3485.22 Does this part apply to me?
3485.32 What policies and procedures must I follow?
Subpart A--General
3485.137 May the Department grant an exception to let an excluded 
person participate in a covered transaction?
Subpart B--Covered Transactions
3485.220 Are any procurement contracts included as covered 
transactions?
Subpart C--Responsibilities of Participants Regarding Transactions
3485.310 What must I do if a Federal agency excludes a person with 
whom I am already doing business in a covered transaction?
3485.315 May I use the services of an excluded person as a principal 
under a covered transaction?
3485.330 What methods must I use to pass requirements down to 
participants at lower tiers with whom I intend to do business?
Subpart D--Responsibilities of the Department's Officials Regarding 
Transactions
3485.415 What must I do if a Federal agency excludes the participant 
or a principal after I enter into a covered transaction?
3485.437 What method do I use to communicate to a participant the 
requirements described in Sec.  180.435 of this title?
Subpart E--[Reserved]
Subpart F--General Principles Relating to Suspension and Debarment 
Actions
3485.611 What procedures do we use for a suspension or debarment 
action involving title IV, HEA transactions?
3485.612 When does an exclusion by another agency affect the ability 
of the excluded person to participate in a title IV, HEA 
transaction?
Subpart G--Suspension
3485.711 When does a suspension affect title IV, HEA transactions?
Subpart H--Debarment
3485.811 When does a debarment affect title IV, HEA transactions?
Subpart I--Definitions
3485.937 ED Deciding Official.
3485.952 HEA.
3485.995 Principal.
3485.1016 Title IV, HEA participant.
3485.1017 Title IV, HEA program.
3485.1018 Title IV, HEA transaction.
Subpart J--[Reserved]
Appendix A to Part 3485--Covered Transactions

    Authority:  E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 
CFR 1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 
(31 U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474, 
unless otherwise noted.


Sec.  3485.12  What does this part do?

    (a)(1) The Department of Education (the ``Department'' or ``ED'') 
adopts subparts A through I of the Office of Management and Budget 
guidance in 2 CFR part 180. Thus, this part gives regulatory effect to 
the OMB guidance and supplements the guidance as needed for the 
Department. This part satisfies the requirements in section 3 of 
Executive Order 12549, ``Debarment and Suspension'' (3 CFR part 1986 
Comp., p. 189), Executive Order 12689, ``Debarment and Suspension'' (3 
CFR part 1989 Comp., p. 235) and 31 U.S.C. 6101 note (Section 2455, 
Pub. L. 103-355, 108 Stat. 3327).
    (2) The table of contents for this part contains only those 
sections in part 3485 that include supplements to the guidance in part 
180 and new sections needed to implement the guidance for the 
Department's programs. In those sections of the OMB guidance that are 
supplemented, the section in part 3485 includes both the text of the 
OMB guidance that is not affected by the change and any additional 
paragraphs that need to be added to the OMB guidance. For example, 
Sec.  180.220 of this title contains only paragraphs (a) and (b). The 
text of Sec.  3485.220, which supplements Sec.  180.220 to extend 
lower-tier transactions to certain transactions below the primary tier, 
includes both the text of paragraph (a) and (b) of Sec.  180.220 and 
the text of added paragraph (c).
    (3) In those sections in part 180 that do not have paragraph 
designations and that the Department supplements, the

[[Page 18674]]

section in this part implementing the OMB guidance designates the 
undesignated paragraph from part 180 as paragraph (a) and the first 
supplemental paragraph as paragraph (b). For example, 2 CFR 180.330 
includes an undesignated lead in paragraph and two subparagraphs 
designated (a) and (b). In Sec.  3485.330, the undesignated paragraph 
in 2 CFR 180.330 is designated paragraph (a) and the two subparagraphs 
are designated paragraphs (1) and (2). The added paragraphs are 
designated paragraph (b) and (c).
    (b) The authority for all the provisions in 2 CFR part 180 as 
adopted in this part is listed as follows.

    Authority:  E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 
CFR 1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 
(31 U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474.

(Authority: E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 CFR 
1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474, unless 
otherwise noted.)

Sec.  3485.22  Does this part apply to me?

    This part applies to you if you are--
    (a) A participant or principal in a ``covered transaction'' (see 
subpart B of this part and the definition of ``nonprocurement 
transaction'' in Sec.  180.970 of this title).
    (b) A respondent in a suspension or debarment action of the 
Department.
    (c) An ED deciding official; or
    (d) An ED officer authorized to enter into any type of 
nonprocurement transaction that is a covered transaction.

(Authority: E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 CFR 
1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Sec.  3485.32  What policies and procedures must I follow?

    The Department's policies and procedures that you must follow are 
the policies and procedures specified in this part and in Subparts A 
through I of 2 CFR part 180. The contracts that are covered 
transactions, for example, are specified in Sec.  3485.220. Section 
180.205 of this title does not require supplementation, so it is not 
included in the table of contents for this part and is not separately 
stated in this part.

(Authority: E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 CFR 
1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Subpart A--General


Sec.  3485.137  May the Department grant an exception to let an 
excluded person participate in a covered transaction?

    (a) Yes, the Secretary delegates to the ED Deciding Official the 
authority under this section to grant an exception permitting an 
excluded person to participate in a particular covered transaction.
    (b) If the ED Deciding Official grants an exception, the exception 
must be in writing and state the reason(s) for deviating from the 
Governmentwide policy in Executive Order 12549.

(Authority: E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 CFR 
1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Subpart B--Covered Transactions


Sec.  3485.220  Are any procurement contracts included as covered 
transactions?

    (a) Covered transactions under this part--
    (1) Do not include any procurement contracts awarded directly by a 
Federal agency; but
    (2) Do include some procurement contracts awarded by non-Federal 
participants in nonprocurement covered transactions.
    (b) Specifically, a contract for goods or services is a covered 
transaction if any of the following applies:
    (1) The contract is awarded by a participant in a nonprocurement 
transaction that is covered under Sec.  180.210 of this title, and the 
amount of the contract is expected to equal or exceed $25,000.
    (2) The contract requires the consent of an official of a Federal 
agency. In that case, the contract, regardless of the amount, always is 
a covered transaction, and it does not matter who awarded it. For 
example, it could be a subcontract awarded by a contractor at a tier 
below a nonprocurement transaction, as shown in the Appendix To Part 
3485--Covered Transactions.
    (3) The contract is for Federally-required audit services.
    (4) The contract is to perform services as a third party servicer 
in connection with a title IV, HEA program.
    (c) In addition to the contracts covered under 2 CFR 180.220(b) of 
the OMB guidance, this part applies to any contract, regardless of 
tier, that is awarded by a contractor, subcontractor, supplier, 
consultant, or its agent or representative in any transaction, if the 
contract is to be funded or provided by ED under a covered 
nonprocurement transaction and the amount of the contract is expected 
to equal or exceed $25,000. This extends the coverage of the ED 
nonprocurement suspension and debarment requirements to all lower tiers 
of subcontracts under covered nonprocurement transactions, as permitted 
under the OMB guidance at 2 CFR 180.220(c) (see optional lower tier 
coverage in the figure in Appendix A to Part 3485--Covered 
Transactions).

(Authority: E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 CFR 
1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Subpart C--Responsibilities of Participants Regarding Transactions


Sec.  3485.310  What must I do if a Federal agency excludes a person 
with whom I am already doing business in a covered transaction?

    (a) You as a participant may continue covered transactions with an 
excluded person if the transactions were in existence when the agency 
excluded the person. However, you are not required to continue the 
transactions, and you may consider termination. You should make a 
decision about whether to terminate and the type of termination action, 
if any, only after a thorough review to ensure that the action is 
proper and appropriate.
    (b) You may not renew or extend covered transactions (other than 
no-cost time extensions) with any excluded person, unless another 
Federal agency responsible for the transaction grants an exception 
under Sec.  180.135 of this title or ED grants an exception under Sec.  
3485.137.
    (c) If you are a title IV, HEA participant, you may not continue a 
title IV, HEA transaction with an excluded person after the effective 
date of the exclusion unless permitted by 34 CFR 668.26, 682.702, or 
668.94, as applicable.

(Authority: E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 CFR 
1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Sec.  3485.315  May I use the services of an excluded person as a 
principal under a covered transaction?

    (a) You as a participant may continue to use the services of an 
excluded person as a principal under a covered transaction if you were 
using the services of that person in the transaction before the person 
was excluded. However, you are not required to continue using that 
person's services as a principal. You should make a decision about 
whether to discontinue that person's services only after a thorough

[[Page 18675]]

review to ensure that the action is proper and appropriate.
    (b) You may not begin to use the services of an excluded person as 
a principal under a covered transaction unless another Federal agency 
responsible for the transaction grants an exception under Sec.  180.135 
of this title or, if ED took the action, an ED deciding official grants 
an exception under Sec.  3485.137.
    (c) If you are a title IV, HEA participant--
    (1) You may not renew or extend the term of any contract or 
agreement for the services of an excluded person as a principal with 
respect to a title IV, HEA transaction; and
    (2) You may not continue to use the services of that excluded 
person as a principal under this kind of an agreement or arrangement 
more than 90 days after you learn of the exclusion or after the close 
of the Federal fiscal year in which the exclusion takes effect, 
whichever is later.

(Authority: E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 CFR 
1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Sec.  3485.330  What methods must I use to pass requirements down to 
participants at lower tiers with whom I intend to do business?

    (a) Before entering into a covered transaction with a participant 
at the next lower tier, you must require that participant to--
    (1) Comply with this subpart as a condition of participation in the 
transaction. You must do so using the method specified in paragraph (b) 
of this section; and
    (2) Pass the requirement to comply with this subpart to each person 
with whom the participant enters into a covered transaction at the next 
lower tier.
    (b) To communicate the requirements in this part to a participant, 
you must include a term or condition in the transaction that requires 
the participant's compliance with part 180, subpart C, of this title, 
as adopted at Sec.  3485.12, and requires the participant to include a 
similar term or condition in lower-tier covered transactions.
    (c) The failure of a participant to include a requirement to comply 
with Subpart C of 2 CFR part 180 in the agreement with a lower tier 
participant does not affect the lower tier participant's 
responsibilities under this part.

(Authority: E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 CFR 
1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Subpart D--Responsibilities of the Department's Officials Regarding 
Transactions


Sec.  3485.415  What must I do if a Federal agency excludes the 
participant or a principal after I enter into a covered transaction?

    (a) You as a Federal agency official may continue covered 
transactions with an excluded person, or under which an excluded person 
is a principal, if the transactions were in existence when the person 
was excluded. You are not required to continue the transactions, 
however, and you may consider termination. You should make a decision 
about whether to terminate and the type of termination action, if any, 
only after a thorough review to ensure that the action is proper.
    (b) You may not renew or extend covered transactions (other than 
no-cost time extensions) with any excluded person, or under which an 
excluded person is a principal, unless you obtain an exception under 
Sec.  3485.137.
    (c) Title IV, HEA transactions. If you are a title IV, HEA 
participant--
    (1) You may not renew or extend the term of any contract or 
agreement for the services of an excluded person as a principal with 
respect to a title IV, HEA transaction; and
    (2) You may not continue to use the services of that excluded 
person as a principal under this kind of an agreement or arrangement 
more than 90 days after you learn of the exclusion or after the close 
of the Federal fiscal year in which the exclusion takes effect, 
whichever is later.

(Authority: E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 CFR 
1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Sec.  3485.437  What method do I use to communicate to a participant 
the requirements described in Sec.  180.435 of this title?

    To communicate the requirements in this part to a participant, you 
must include a term or condition in the transaction that requires the 
participant's compliance with part 180, subpart C, of this title, as 
adopted at Sec.  3485.12 and requires the participant to include a 
similar term or condition in lower-tier covered transactions.

(Authority: E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 CFR 
1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Subpart E--[Reserved]

Subpart F--General Principles Relating to Suspension and Debarment 
Actions


Sec.  3485.611  What procedures do we use for a suspension or debarment 
action involving a title IV, HEA transaction?

    (a) If we suspend a title IV, HEA participant under Executive Order 
12549, we use the following procedures to ensure that the suspension 
prevents participation in title IV, HEA transactions:
    (1) The notification procedures in Sec.  180.715 of this title.
    (2) Instead of the procedures in Sec. Sec.  180.720 through 180.760 
of this title, the procedures in 34 CFR part 668, subpart G, or 34 CFR 
part 682, subpart D or G, as applicable.
    (3) In addition to the findings and conclusions required by 34 CFR 
part 668, subpart G, or 34 CFR part 682, subpart D or G, the suspending 
official, and, on appeal, the Secretary determines whether there is 
sufficient cause for suspension as explained in Sec.  180.700 of this 
title.
    (b) If we debar a title IV, HEA participant under E.O. 12549, we 
use the following procedures to ensure that the debarment also 
precludes participation in title IV, HEA transactions:
    (1) The notification procedures in Sec. Sec.  180.805 and 180.870 
of this title.
    (2) Instead of the procedures in Sec. Sec.  180.810 through 180.885 
of this title, the procedures in 34 CFR part 668, subpart G, or 34 CFR 
part 682, subpart D or G, as applicable.
    (3) On appeal from a decision debarring a title IV, HEA 
participant, we issue a final decision after we receive any written 
materials from the parties.
    (4) In addition to the findings and conclusions required by 34 CFR 
part 668, subpart G, or 34 CFR part 682, subpart D or G, the debarring 
official, and, on appeal, the Secretary determines whether there is 
sufficient cause for debarment as explained in Sec.  180.800 of this 
title.

(Authority: E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 CFR 
1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Sec.  3485.612  When does an exclusion by another agency affect the 
ability of the excluded person to participate in a title IV, HEA 
transaction?

    (a) If a title IV, HEA participant is debarred by another agency 
under E.O. 12549, using procedures described in paragraph (d) of this 
section, that party is not eligible to enter into title IV, HEA

[[Page 18676]]

transactions for the duration of the debarment.
    (b)(1) If a title IV, HEA participant is suspended by another 
agency under E.O. 12549 or under a proposed debarment under the Federal 
Acquisition Regulation (FAR) (48 CFR part 9, subpart 9.4), using 
procedures described in paragraph (d) of this section, that party is 
not eligible to enter into title IV, HEA transactions for the duration 
of the suspension.
    (2)(i) The suspension of title IV, HEA eligibility as a result of 
suspension by another agency lasts for at least 60 days.
    (ii) If the excluded party does not object to the suspension, the 
60-day period begins on the 35th day after that agency issues the 
notice of suspension.
    (iii) If the excluded party objects to the suspension, the 60-day 
period begins on the date of the decision of the suspending official.
    (3) The suspension of title IV, HEA eligibility does not end on the 
60th day if--
    (i) The excluded party agrees to an extension; or
    (ii) Before the 60th day we begin a limitation or termination 
proceeding against the excluded party under 34 CFR part 668, subpart G, 
or part 682, subpart D or G.
    (c)(1) If a title IV, HEA participant is debarred or suspended by 
another Federal agency--
    (i) We notify the participant whether the debarment or suspension 
prohibits participation in title IV, HEA transactions; and
    (ii) If participation is prohibited, we state the effective date 
and duration of the prohibition.
    (2) If a debarment or suspension by another agency prohibits 
participation in title IV, HEA transactions, that prohibition takes 
effect 20 days after we mail notice of our action.
    (3) If the Department or another Federal agency suspends a title 
IV, HEA participant, we determine whether grounds exist for an 
emergency action against the participant under 34 CFR part 668, subpart 
G, or part 682, subpart D or G, as applicable.
    (4) We use the procedures in Sec.  3485.611 to exclude a title IV, 
HEA participant excluded by another Federal agency using procedures 
that did not meet the standards in paragraph (d) of this section.
    (d) If a title IV, HEA participant is excluded by another agency, 
we debar, terminate, or suspend the participant--as provided under this 
part, 34 CFR part 668, or 34 CFR part 682, as applicable--if that 
agency followed procedures that gave the excluded party--
    (1) Notice of the proposed action;
    (2) An opportunity to submit and have considered evidence and 
argument to oppose the proposed action;
    (3) An opportunity to present its objection at a hearing--
    (i) At which the agency has the burden of persuasion by a 
preponderance of the evidence that there is cause for the exclusion; 
and
    (ii) Conducted by an impartial person who does not also exercise 
prosecutorial or investigative responsibilities with respect to the 
exclusion action;
    (4) An opportunity to present witness testimony, unless the hearing 
official finds that there is no genuine dispute about a material fact;
    (5) An opportunity to have agency witnesses with personal knowledge 
of material facts in genuine dispute testify about those facts, if the 
hearing official determines their testimony to be needed, in light of 
other available evidence and witnesses; and
    (6) A written decision stating findings of fact and conclusions of 
law on which the decision is rendered.

(Authority: E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 CFR 
1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Subpart G--Suspension


Sec.  3485.711  When does a suspension affect title IV, HEA 
transactions?

    (a) A suspension under Sec.  3485.611(a) takes effect immediately 
if the Secretary takes an emergency action under 34 CFR part 668, 
subpart G, or 34 CFR part 682, subpart D or G, at the same time the 
Secretary issues the suspension.
    (b)(1) Except as provided under paragraph (a) of this section, a 
suspension under Sec.  3485.611(a) takes effect 20 days after those 
procedures are complete.
    (2) If the respondent appeals the suspension to the Secretary 
before the expiration of the 20 days under paragraph (b)(1) of this 
section, the suspension takes effect when the respondent receives the 
Secretary's decision.

(Authority: E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 CFR 
1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Subpart H--Debarment


Sec.  3485.811  When does a debarment affect title IV, HEA 
transactions?

    (a) A debarment under Sec.  3485.611(b) takes effect 30 days after 
those procedures are complete.
    (b) If the respondent appeals the debarment to the Secretary before 
the expiration of the 30 days under paragraph (a) of this section, the 
debarment takes effect when the respondent receives the Secretary's 
decision.

(Authority: E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 CFR 
1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Subpart I--Definitions


Sec.  3485.937  ED Deciding Official.

    The ED Deciding Official is an officer of the Department who has 
delegated authority under the procedures of the Department of Education 
to decide whether to affirm a suspension or enter a debarment.

(Authority: E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 CFR 
1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Sec.  3485.952  HEA.

    HEA means the Higher Education Act of 1965, as amended.

(Authority: E.O. 12549 (3 CFR 1986 Comp., p. 189); E.O. 12689 (3 CFR 
1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Sec.  3485.995  Principal.

    Principal means--
    (a) An officer, director, owner, partner, principal investigator, 
or other person within a participant with management or supervisory 
responsibilities related to a covered transaction; or
    (b) A consultant or other person, whether or not employed by the 
participant or paid with Federal funds, who--
    (1) Is in a position to handle Federal funds;
    (2) Is in a position to influence or control the use of those 
funds; or
    (3) Occupies a technical or professional position capable of 
substantially influencing the development or outcome of an activity 
required to perform the covered transaction.
    (c) For the purposes of Department of Education title IV, HEA 
transactions--
    (1) A third-party servicer, as defined in 34 CFR 668.2 or 682.200; 
or
    (2) Any person who provides services described in 34 CFR 668.2 or 
682.200 to a title IV, HEA participant, whether or not that person is 
retained or paid directly by the title IV, HEA participant.

(Authority: E.O. 12549 (3 CFR 1986 Comp., p.189); E.O. 12689 (3 CFR 
1989 Comp., p.235); sec. 2455, Pub. L. 103-355, 108 Stat.

[[Page 18677]]

3327 (31 U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Sec.  3485.1016  Title IV, HEA participant.

    A title IV, HEA participant is--
    (a) An institution described in 34 CFR 600.4, 600.5, or 600.6 that 
provides postsecondary education; or
    (b) A lender, third-party servicer, or guaranty agency, as those 
terms are defined in 34 CFR 668.2 or 682.200.

(Authority: E.O. 12549 (3 CFR 1986 Comp., p.189); E.O. 12689 (3 CFR 
1989 Comp., p.235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Sec.  3485.1017  Title IV, HEA program.

    A title IV, HEA program includes any program listed in 34 CFR 
668.1(c).

(Authority: E.O. 12549 (3 CFR 1986 Comp., p.189); E.O. 12689 (3 CFR 
1989 Comp., p. 235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Sec.  3485.1018  Title IV, HEA transaction.

    A title IV, HEA transaction includes--
    (a) A disbursement or delivery of funds provided under a title IV, 
HEA program to a student or borrower;
    (b) A certification by an educational institution of eligibility 
for a loan under a title IV, HEA program;
    (c) Guaranteeing a loan made under a title IV, HEA program; and
    (d) The acquisition or exercise of any servicing responsibility for 
a grant, loan, or work study assistance under a title IV, HEA program.

(Authority: E.O. 12549 (3 CFR 1986 Comp., p.189); E.O. 12689 (3 CFR 
1989 Comp., p.235); sec. 2455, Pub. L. 103-355, 108 Stat. 3327 (31 
U.S.C. 6101 note); 20 U.S.C. 1082, 1094, 1221e-3, and 3474)

Subpart J--[Reserved]

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Title 34--Education

PART 77--DEFINITIONS THAT APPLY TO DEPARTMENT REGULATIONS

0
2. The authority citation for part 77 is added to read as follows:

    Authority:  20 U.S.C. 1221e-3, 2831(a), 2974(b), and 3474.

0
3. Section 77.1(c) is amended by revising the definition of ``EDGAR'' 
to read as follows:


Sec.  77.1  Definitions that apply to all Department programs.

* * * * *
    (c) * * *
    EDGAR means the Education Department General Administrative 
Regulations (34 CFR parts 74, 75, 76, 77, 79, 80, 81, 82, 84, 86, 97, 
98, and 99).
* * * * *

PART 85--[REMOVED]

0
4. Remove 34 CFR part 85.

PART 668--STUDENT ASSISTANCE GENERAL PROVISIONS

0
5. The authority citation for part 668 continues to read as follows:

    Authority: 20 U.S.C. 1001, 1002, 1003, 1070g, 1085, 1088, 1091, 
1092, 1094, 1099c, and 1099c-1, unless otherwise noted.


0
6. Section 668.16 is amended by revising paragraph (k) to read as 
follows:


Sec.  668.16  Standards of administrative capability.

* * * * *
    (k) Is not, and does not have any principal or affiliate of the 
institution (as those terms are defined in 2 CFR parts 180 and 3485) 
that is--
    (1) Debarred or suspended under Executive Order 12549 (3 CFR, 1986 
Comp., p. 189) or the Federal Acquisition Regulations (FAR), 48 CFR 
part 9, subpart 9.4; or
    (2) Engaging in any activity that is a cause under 2 CFR 180.700 or 
180.800, as adopted at 2 CFR 3485.12, for debarment or suspension under 
E.O. 12549 (3 CFR, 1986 Comp., p. 189) or the FAR, 48 CFR part 9, 
subpart 9.4;
* * * * *


Sec.  668.82  [Amended]

0
7. Section 668.82 is amended by:
0
a. In paragraph (e)(1)(i)(B), removing the words ``Cause exists under 
34 CFR 85.700 or 85.800'' and adding, in their place, the words ``Cause 
exists under 2 CFR 180.700 or 180.800, as both those sections are 
adopted at 2 CFR 3485.12,''.
0
b. In paragraph (f)(1) introductory text, removing the words ``under 
procedures described in 34 CFR 85.612(d)'' and adding, in their place, 
the words ``under the procedures described in 2 CFR 3485.612(d)''.
0
c. In paragraph (f)(2)(i) introductory text, removing the words ``under 
procedures described in 34 CFR 85.612(d)'' and, adding in their place, 
the words ``under the procedures described in 2 CFR 3485.612(d)''.
0
d. In paragraph (f)(2)(ii) introductory text, removing the words 
``under 34 CFR 85.201(b)'' and adding, in their place, ``under 2 CFR 
3485.612(c)''.

PART 682--FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAM

0
8. The authority citation for part 682 continues to read as follows:

    Authority: 20 U.S.C. 1071 to 1087-2, unless otherwise noted.

Sec.  682.200  [Amended]

0
9. In Sec.  682.200, paragraph (b), the definition of ``Lender'' is 
amended by:
0
a. In paragraph (6)(i), removing the words ``(as those terms are 
defined in 34 CFR part 85)'' and adding, in their place, the words 
``(as those terms are defined in 2 CFR parts 180 and 3485)''.
0
b. In paragraph (6)(ii), removing the words ``as defined in 34 CFR part 
85'' and adding, in their place, the words ``as defined in 2 CFR parts 
180 and 3485''.

Sec.  682.416  [Amended]

0
10. Section 682.416(d)(1)(ii)(B) is amended by removing the words 
``cause under 34 CFR 85.700 or 85.800'' and adding, in their place, the 
words ``cause under 2 CFR 180.700 or 180.800, as those sections are 
adopted at 2 CFR 3485.12''.

Sec.  682.706  [Amended]

0
11. Section 682.706(b)(7) is amended by removing the words ``meet the 
standards described in 34 CFR 85.201(c)'' and adding, in their place, 
the words ``meet the standards described in 2 CFR 3485.612(d)''.

[FR Doc. 2012-7358 Filed 3-27-12; 8:45 am]
BILLING CODE 4000-01-P