Flexibility for Head Start Designation Renewals in Certain Emergencies, 78787-78792 [2020-26033]

Agencies

• DEPARTMENT OF HEALTH AND HUMAN SERVICES
• Administration for Children and Families

[Federal Register Volume 85, Number 235 (Monday, December 7, 2020)]
[Rules and Regulations]
[Pages 78787-78792]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-26033]


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

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Parts 1304

RIN 0970-AC85


Flexibility for Head Start Designation Renewals in Certain 
Emergencies

AGENCY: Office of Head Start (OHS), Administration for Children and 
Families (ACF), Department of Health and Human Services (HHS).

ACTION: Interim final rule.

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

SUMMARY: This interim final rule adds a new provision to the Head Start 
Program Performance Standards (HSPPS) to establish parameters by which 
ACF may make designation renewal determinations during a federally 
declared major disaster, emergency, or public health emergency (PHE) 
and in the absence of all normally required data.

DATES: This interim final rule is effective on December 7, 2020.
    Comment date: To be assured consideration, comments on this final 
rule must be received on or before February 5, 2021.

ADDRESSES: You may submit comments, identified by [docket number and/or 
RIN number], by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Office of Head Start, Attention: Director of Policy 
and Planning, 330 C Street SW, 4th Floor, Washington, DC 20201.
    Instructions: All submissions received must include the agency name 
and docket number or RIN for this rulemaking. All comments received 
will be posted without change to https://www.regulations.gov, including 
any personal information provided.

FOR FURTHER INFORMATION CONTACT: Colleen Rathgeb, Office of Head Start, 
at [email protected] or 1-866-763-6481. Deaf and hearing impaired 
individuals may call the Federal Dual Party Relay Service at 1-800-877-
8339 between 8 a.m. and 7 p.m. Eastern Standard Time.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Statutory Authority
II. Executive Summary
    A. Purpose of the Interim Final Rule
    B. Interim Final Rule Justification
III. Background
IV. Provisions of the Interim Final Rule
V. Regulatory Process Matters
    Regulatory Flexibility Act
    Unfunded Mandates Reform Act
    Treasury and General Government Appropriations Act of 1999
    Federalism Assessment Executive Order 13132
    Congressional Review
    Paperwork Reduction Act of 1995
    Regulatory Planning and Review Executive Order 12866, Executive 
Order 13563, and Executive Order 13771
VI. Regulatory Impact Analysis

Tribal Consultation Statement

I. Statutory Authority

    ACF publishes this interim final rule under the authority granted 
to the Secretary of Health and Human Services (the Secretary) by 
sections 641(a), 641(c), and 644(c), of the Head Start Act, as amended 
by the Improving Head Start for School Readiness Act of 2007 (Pub. L. 
110-134).

II. Executive Summary

Purpose of the Interim Final Rule

    The Improving Head Start for School Readiness Act of 2007 (the 2007 
Reauthorization) of the Head Start Act (the Act) required ACF to 
establish a system for determining whether Head Start (including Early 
Head Start) grantees are delivering high-quality and comprehensive 
services to the children and families they serve. In 2011, ACF issued a 
regulation (76 FR 70009) to establish the Designation Renewal System 
(DRS) to meet this requirement. Under the DRS, all Head Start grants 
were transitioned from indefinite to 5-year grant periods, and any 
grant that meets one or more of seven specified conditions during the 
5-year project period is subject to an open competition for continued 
funding. Any Head Start grant that does not meet one of the seven DRS 
conditions becomes eligible for a new noncompetitive 5-year grant. The 
Act lays out the types of data that must be considered as part of these 
DRS determinations. Three of the seven conditions of the DRS were 
revised through a final rule published on August 28, 2020. Due to the 
ongoing 2019 Novel Coronavirus (COVID-19) pandemic, the ability of ACF 
to collect all data on grants required for making determinations under 
the DRS has been severely impaired. This issue is described further in 
the following paragraph. Furthermore, there may be major disasters, 
emergencies, or PHEs in the future that similarly impact ACF's ability 
to collect all information required for making DRS determinations.
    Therefore, this interim final rule adds a new section to the HSPPS 
regulation under Part 1304 Subpart B, Designation Renewal. This new 
section, Sec.  1304.17, establishes parameters by which ACF may make a 
designation renewal determination when certain federally declared 
emergencies prevent collection of all normally required data. As with 
COVID-19, a major disaster or emergency declared by the President under 
section 401 or 501 of the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act (42 U.S.C.

[[Page 78788]]

5170 and 5191) or another PHE declared by the Secretary of Health and 
Human Services (HHS) under section 319 of the Public Health Service Act 
(42 U.S.C. 247d) may necessitate extended, unanticipated program 
closures or temporary shifts to different program models or service 
delivery mechanisms, which can make certain monitoring or data 
collection activities unsafe, impossible, and/or invalid. In these 
situations, ACF may lack certain required data to make designation 
renewal determinations. In cases where a grantee's 5-year grant is 
ending and all required data are not available due to the impacts of a 
federally declared disaster or emergency, Sec.  1304.17 allows ACF to 
still determine if an open competition is required, or if the grant may 
be renewed noncompetitively based on the conditions for which ACF has 
data. Without Sec.  1304.17, ACF would not be able to make DRS 
determinations, which could result in the loss of critical Head Start 
services in impacted communities.

Interim Final Rule Justification

    On January 31, 2020, Health and Human Services Secretary Alex M. 
Azar II (the Secretary) determined that a PHE exists retroactive to 
January 27, 2020,\1\ under section 319 of the Public Health Service Act 
(42 U.S.C. 247d), in response to COVID-19, and on April 21, 2020, the 
Secretary renewed, effective April 26, 2020, the determination that a 
PHE exists.\2\ On July 23, 2020, the Secretary again renewed this 
determination that a PHE exists, effective July 25, 2020.\3\ The 
Secretary renewed this determination on October 2, 2020, effective 
October 23, 2020. On March 13, 2020, the President declared that the 
COVID-19 pandemic in the United States constitutes a national 
emergency,\4\ beginning March 1, 2020.
---------------------------------------------------------------------------

    \1\ https://www.phe.gov/emergency/news/healthactions/phe/Pages/2019-nCoV.aspx.
    \2\ https://www.phe.gov/emergency/news/healthactions/phe/Pages/covid19-21apr2020.aspx.
    \3\ https://www.phe.gov/emergency/news/healthactions/phe/Pages/covid19-23June2020.aspx.
    \4\ https://www.whitehouse.gov/presidential-actions/proclamation-declaring-national-emergency-concerning-novel-coronavirus-disease-covid-19-outbreak/.
---------------------------------------------------------------------------

    The current PHE requires urgent action on the part of ACF to 
establish a process by which ACF will meet the requirements of the Act 
to make designation renewal determinations while ensuring the safety of 
Head Start program staff, children, and families. As a cohort of Head 
Start grants approach the end of their 5-year grant periods during the 
on-going COVID-19 pandemic, ACF must make a determination under the DRS 
for these grantees to either receive a new 5-year grant non-
competitively or to require an open competition. Extended program 
closures due to the PHE have made, and continue to make, it impossible 
for ACF to collect certain data elements relevant to the seven DRS 
conditions and required as part of designation renewal determinations. 
In the absence of a DRS determination, these communities could be left 
without any Head Start services during a particularly challenging time 
for the children and families Head Start programs serve. To ensure 
children and families do not lose access to Head Start services during 
a federally declared disaster or emergency, now and in the future, this 
interim final rule is needed to quickly establish the process by which 
DRS determinations will be made under these circumstances.
    Ensuring the health and safety of Head Start staff, children, and 
families is of utmost importance. This IFR directly supports that goal, 
while establishing a process for ACF to meet the requirements of the 
Act to make designation renewal determinations during the COVID-19 
pandemic and certain other federally declared disasters or emergencies. 
It is critically important that ACF implements this IFR as quickly as 
possible. Due to the ongoing PHE, ACF finds good cause to waive notice 
and comment rulemaking as ACF believes it would be impracticable and 
contrary to the public interest for it to undertake normal notice and 
comment rulemaking procedures, as that would delay giving ACF the 
flexibility to make DRS determinations with the data available and to 
ensure the continuity of critical Head Start services in impacted 
communities. For the same reasons, because ACF cannot afford any delay 
in effectuating this IFR, ACF finds good cause to waive the 30-day 
delay in the effective date and, moreover, to make this IFR applicable 
as of publication.

III. Background

    Since its inception in 1965, Head Start has been a leader in 
helping children from low-income families reach kindergarten more 
prepared to succeed in school. Through the 2007 Reauthorization, 
Congress required HHS to ensure these children receive the highest 
quality services possible. In support of that requirement, the 2007 
Reauthorization directed the Secretary to establish the Designation 
Renewal System (DRS) to (1) identify Head Start grantees delivering a 
high-quality and comprehensive Head Start program that could receive 
funding noncompetitively for a 5-year period and grantees not 
delivering a high-quality and comprehensive Head Start program that 
will be required to compete for continued funding, and (2) transition 
all grants from indefinite grants to 5-year grant periods. Congress 
required that decisions about which grantees would have to compete be 
based on budget and fiscal management data (including annual audits), 
program monitoring reviews, classroom quality--and in particular 
teacher-child interactions--as measured by a valid and reliable 
research-based observational instrument, and other program information.
    In 2011, HHS published a final rule to establish the DRS that 
included seven conditions. Grants that met one or more of the seven 
conditions would have their funding subject to an open competition for 
the next 5-year grant period. Grantees that did not meet a condition 
became eligible to receive a new noncompetitive 5-year grant. Following 
the transition of all grants from indefinite to 5-year project periods 
and considering available data and research, a 2020 final rule \5\ 
revised the DRS and made changes to three of the seven DRS conditions. 
Effective November 9, 2020, Head Start grants that meet one or more of 
the following seven conditions under the DRS are subject to an open 
competition: (1) Two or more deficiencies under section 641A(c)(1)(A), 
(C), or (D) of the Act; (2) failure to establish, use, and analyze 
children's progress on agency-established school readiness goals; (3) 
scores below competitive thresholds in any of the three domains of the 
Classroom Assessment Scoring System: Pre-K (CLASS); (4) revocation of a 
license to operate a center or program; (5) suspension from the 
program; (6) debarment from receiving federal or state funds or 
disqualification from the Child and Adult Care Food Program (CACFP); 
and/or (7) either an audit finding of being at risk for failing to 
continue as a ``going concern,'' or two or more audit findings of 
material weakness or questioned costs associated with its Head Start 
funds in audit reports submitted to the Federal Audit Clearinghouse (in 
accordance with section 647 of the Act) for a financial period within 
the current project period.
---------------------------------------------------------------------------

    \5\ https://www.federalregister.gov/documents/2020/08/28/2020-17746/head-start-designation-renewal-system.
---------------------------------------------------------------------------

    The notice and comment process for the 2020 final rule predated the 
COVID-19 pandemic. In the 2019 notice of proposed rulemaking on the 
DRS, HHS did not propose any flexibilities within the DRS to make 
designation renewal determinations in the absence of certain

[[Page 78789]]

data related to the seven conditions due to a federally declared major 
disaster, emergency, or PHE. Therefore, these flexibilities could not 
be included in the DRS final rule that was published on August 28, 
2020.

IV. Provisions of the Interim Final Rule

    All Head Start grants now operate on a 5-year project period. As a 
cohort of Head Start grants conclude their 5-year grant period, ACF 
must make a determination whether grants may be renewed 
noncompetitively or if they will be subject to an open competition. The 
Act requires ACF to consider a number of factors in making a 
designation renewal determination. As described previously, a federally 
declared major disaster or emergency or PHE can make it unsafe or 
impossible to collect some of these required data on grants. In 
particular with the COVID-19 pandemic, ACF has been, and continues to 
be, unable to collect data from a valid, reliable, research-based, 
observational measure of classroom quality as required by the Act. The 
reasons for this are further elaborated in the following paragraph. It 
is possible that future disasters or emergencies could also preclude 
ACF from collecting other required data elements necessary for DRS 
determinations.
    ACF meets the requirement in the Act to use a valid, reliable, 
research-based, observational measure of classroom quality as part of 
DRS determinations through the administration of the Classroom 
Assessment Scoring System: Pre-K (CLASS). The CLASS measures the 
quality of teacher-child interactions on a seven-point scale in three 
areas or domains: Emotional Support, Classroom Organization, and 
Instructional Support. As part of the established ACF monitoring 
process for Head Start grantees, trained reviewers administer the CLASS 
on-site in a sample of Head Start classrooms for each grant. The scores 
for each classroom within a grant are then averaged to create grant-
level scores. If a grant receives an average CLASS score below the 
following competitive thresholds for any of the three CLASS domains, 
the grant is designated for competition under the DRS: A 5 for 
Emotional Support, 5 for Classroom Organization, and 2.3 for 
Instructional Support.\6\ Each year, ACF schedules a subset of Head 
Start grantees for CLASS reviews, depending on where in the 5-year 
project period each grant is. The completion of these CLASS reviews 
within a certain window of time is critical to ensure ACF can complete 
the necessary subsequent steps for each grant, to determine and notify 
the grantee of their status as either competitive or non-competitive 
under the DRS with sufficient time prior to the end of their current 5-
year project period to run the necessary competitive processes.
---------------------------------------------------------------------------

    \6\ As promulgated in the DRS final rule published on August 28, 
2020, the competitive threshold for the Instructional Support domain 
is 2.3 for CLASS reviews conducted up through July 31, 2025, and 
then this threshold increases to 2.5 for CLASS reviews conducted on 
or after August 1, 2025.
---------------------------------------------------------------------------

    In March 2020, ACF made the decision to temporarily suspend the 
administration of CLASS reviews in Head Start classrooms due to the 
COVID-19 PHE. At that time, ACF was concerned about jeopardizing the 
health and safety of Head Start children and staff by sending outside 
observers into Head Start classrooms to conduct CLASS reviews. Many 
Head Start classrooms across the country closed due to increased health 
and safety concerns amid the spread of COVID-19. Due to the evolving 
nature of the COVID-19 pandemic, ACF has been uncertain about the 
ability to resume CLASS reviews during the 2020-2021 program year. 
Therefore, in an information memorandum directed to Head Start and 
Early Head Start grantees published on September 24, 2020, ACF 
announced the decision to suspend all CLASS reviews for the 2020-2021 
program year.\7\
---------------------------------------------------------------------------

    \7\ https://eclkc.ohs.acf.hhs.gov/policy/im/acf-im-hs-20-05.
---------------------------------------------------------------------------

    There are multiple factors that informed this decision. First, as 
the impacts of the COVID-19 pandemic are very different in different 
parts of the country, Head Start programs must make locally determined 
decisions regarding whether they can safely operate in-person services 
for children and families. Programs that do not operate in-person 
services for a period of time are, instead, providing some type of 
remote or virtual services for enrolled children and families. The 
CLASS tool was not originally designed to conduct observations of 
virtual interactions between teachers and children, and the research on 
such use of the tool is very limited. Therefore, if a program is closed 
for in-person services for an extended period due to the pandemic, and 
even if the program is providing virtual services, ACF cannot conduct 
CLASS reviews of virtual teaching for monitoring and oversight purposes 
with those programs.
    Second, as previously alluded, for Head Start programs that are 
providing in-person services to children and families during part or 
all of the 2020-2021 program year, ACF is not able to send additional 
outside individuals into classrooms to conduct CLASS observations 
without increasing the risk of exposing Head Start children and staff 
to the virus. This is consistent with best practice guidance from the 
Centers for Disease Control and Prevention on safely providing child 
care in group settings during the COVID-19 pandemic.\8\
---------------------------------------------------------------------------

    \8\ https://www.cdc.gov/coronavirus/2019-ncov/community/schools-childcare/guidance-for-childcare.html#open.
---------------------------------------------------------------------------

    Finally, ACF expects that Head Start services may look very 
different during the 2020-2021 program year due to the COVID-19 
pandemic and the PHE. Therefore, ACF strongly believes the CLASS 
instrument would not capture an accurate picture of teacher-child 
interactions during this program year. For instance, due to the fact 
that some programs will likely be operating virtual services for part 
or all of their enrollment, and this might change throughout the 
program year, there is a lot of uncertainty for ACF around the 
availability of a sufficient sample size for CLASS observations for any 
given grantee.
    In addition, ACF expects that in-person classroom interactions and 
activities may not be `typical' during the 2020-2021 program year, as 
the result of modifications made for the safety of children, families, 
and staff. For example, classrooms will likely have smaller group sizes 
and more individual time for children to allow for physical distancing 
(as opposed to small and large group time, which are usually common in 
early childhood classrooms). Staff and children will likely be wearing 
masks, and a key part of accurate CLASS observations depends on the 
observer being able to observe the reactions of the children to their 
teacher during an observation period.
    Furthermore, ACF expects child attendance will be lower than normal 
during the 2020-2021 program year, whether out of parental fear of 
sending their children back to in-person Head Start settings due to 
possible exposure to the virus, or out of proactive measures taken by 
the program to reduce classroom group sizes. For these reasons, ACF 
believes the scores a grantee would receive on a CLASS review during 
this unusual time would be systematically different from, and not 
representative of, program learning environments that are more 
typically observed throughout the 5-year grant period.
    While ACF strongly believes it is still important to promote high-
quality learning environments for all children

[[Page 78790]]

served in Head Start, the health and safety of children and staff 
during this PHE, as well as the appropriate use of the CLASS tool, are 
also paramount considerations for ACF. Therefore, ACF has made the 
determination that a valid and reliable observational instrument that 
assesses classroom quality as required by the Act does not exist during 
the current PHE, so ACF cannot fulfill this requirement during this 
time. The implementation of this IFR provides ACF the flexibility to 
proceed with DRS determinations in the absence of CLASS data that is 
the result of the ongoing PHE. This IFR also provides this flexibility 
for a federally declared major disaster, emergency, or PHE in the 
future, which could also impact the administration of CLASS or the 
collection of other data elements necessary for making DRS 
determinations. The flexibility will allow ACF to ensure the continuity 
of critical Head Start services for the nation's most vulnerable 
children and families. As stated previously, ensuring high quality 
classroom learning environments for enrolled children is still an 
important priority for ACF. ACF offers a wealth of training and 
technical assistance (TTA) resources to promote quality improvement in 
classroom learning environments and teacher-child interactions, 
including materials on the Early Childhood Learning Knowledge Center 
website, interactive webinars and learning modules, and online 
opportunities for grantees to share and learn about best practices with 
other grantees. ACF also funds a regional TTA system, which includes 
individualized support from regional specialists for grantees on an as-
needed basis and at the discretion of each ACF region.
    In summary, the provision established in Sec.  1304.17 allows ACF 
to make designation renewal decisions with the data available when the 
determination must be made in order to ensure the continuity of Head 
Start services, even if certain federally declared emergencies or 
disasters preclude ACF from collecting all of the data required in the 
Head Start Act. This flexibility ensures the safety of Head Start 
staff, children, and families and the continuity of Head Start 
services.

V. Regulatory Process Matters

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), see 5 U.S.C. 605(b) as 
amended by the Small Business Regulatory Enforcement Fairness Act, 
requires federal agencies to determine, to the extent feasible, a 
rule's impact on small entities, explore regulatory options for 
reducing any significant impact on a substantial number of such 
entities, and explain their regulatory approach. The term ``small 
entities,'' as defined in the RFA, comprises small businesses, not-for-
profit organizations that are independently owned and operated and are 
not dominant in their fields, and governmental jurisdictions with 
populations of less than 50,000. Under this definition, some Head Start 
grantees may be small entities. HHS considers a rule to have a 
significant impact on a substantial number of small entities if it has 
at least a 3 percent impact on revenue on at least 5 percent of small 
entities. However, the Secretary certifies, under 5 U.S.C. 605(b), as 
enacted by the RFA (Pub. L. 96-354), that this rule will not have a 
significant impact on a substantial number of small entities. During a 
major disaster or emergency or PHE--such as COVID-19--in which ACF is 
not able to collect all data elements required for DRS determinations 
and must exercise the flexibility set forth in Sec.  1304.17 of the 
HSPPS, ACF expects there to be fewer grantees in competition for the 
relevant competition cycles. Therefore, ACF does not expect there to be 
a significant impact on a substantial number of small entities. 
However, ACF invites comments on this IFR if any member of the public 
believes their business, organization, or governmental jurisdiction 
qualifies as a small entity and that the actions set forth in this IFR 
would have a significant economic impact on that small entity.

Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (UMRA), see 2 U.S.C. 1501 
et seq., was enacted to avoid imposing unfunded federal mandates on 
state, local, and tribal governments, or on the private sector. Section 
202 of UMRA requires that agencies assess anticipated costs and 
benefits before issuing any rule whose mandates require spending in any 
one year of $100 million in 1995 dollars, updated annually for 
inflation. In 2020, that threshold is approximately $156 million. This 
rule does not contain mandates that will impose spending costs on 
state, local, or tribal governments in the aggregate, or on the private 
sector, in excess of the threshold.

Treasury and General Government Appropriations Act of 1999

    Section 654 of the Treasury and General Government Appropriations 
Act of 1999 requires federal agencies to determine whether a policy or 
regulation may negatively affect family well-being. If the agency 
determines a policy or regulation negatively affects family well-being, 
then the agency must prepare an impact assessment addressing seven 
criteria specified in the law. ACF believes it is not necessary to 
prepare a family policymaking assessment, see Public Law 105-277, 
because the action it takes in this interim final rule will not have 
any impact on the autonomy or integrity of the family as an 
institution. However, ACF invites public comment on whether the actions 
set forth in this interim final rule would have a negative effect on 
family well-being.

Federalism Assessment Executive Order 13132

    Executive Order 13132 requires federal agencies to consult with 
state and local government officials if they develop regulatory 
policies with federalism implications. Federalism is rooted in the 
belief that issues that are not national in scope or significance are 
most appropriately addressed by the level of government close to the 
people. This rule will not have substantial direct impact on the 
states, on the relationship between the federal government and the 
states, or on the distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with section 6 
of Executive Order 13132, it is determined that this action does not 
have sufficient federalism implications to warrant the preparation of a 
federalism summary impact statement.

Congressional Review

    The Congressional Review Act (CRA) allows Congress to review 
``major'' rules issued by federal agencies before the rules take 
effect, see 5 U.S.C. 802(a). The CRA defines a major rule as one that 
has resulted, or is likely to result, in (1) an annual effect on the 
economy of $100 million or more; (2) a major increase in costs or 
prices for consumers, individual industries, federal, state, or local 
government agencies, or geographic regions; or (3) significant adverse 
effects on competition, employment, investment, productivity, or 
innovation, or on the ability of United States-based enterprises to 
compete with foreign-based enterprises in domestic and export markets, 
see 5 U.S.C. Chapter 8. This action is not a major rule because it will 
not have such effect.

Paperwork Reduction Act of 1995

    The Paperwork Reduction Act of 1995, Public Law 104-13, seeks to 
minimize government-imposed burden

[[Page 78791]]

from information collections on the public. In keeping with the notion 
that government information is a valuable asset, it also is intended to 
improve the practical utility, quality, and clarity of information 
collected, maintained, and disclosed.
    The Paperwork Reduction Act defines ``information'' as any 
statement or estimate of fact or opinion, regardless of form or format, 
whether numerical, graphic, or narrative form, and whether oral or 
maintained on paper, electronic, or other media (5 CFR 1320.3(h)). This 
includes requests for information to be sent to the government, such as 
forms, written reports and surveys, recordkeeping requirements, and 
third-party or public disclosures (5 CFR 1320.3(c)). This action does 
not include any new information collection requirements or changes to 
existing information collection requirements.

Regulatory Planning and Review Executive Order 12866, Executive Order 
13563, and Executive Order 13771

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 is supplemental to, and reaffirms the principles, 
structures, and definitions governing regulatory review as established 
in, Executive Order 12866, emphasizing the importance of quantifying 
both costs and benefits, of reducing costs, of harmonizing rules, and 
of promoting flexibility. Section 3(f) of Executive Order 12866 defines 
a ``significant regulatory action'' as an action that is likely to 
result in a rule (1) having an annual effect on the economy of $100 
million or more in any 1 year, or adversely and materially affecting a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or Tribal 
governments or communities (also referred to as ``economically 
significant''); (2) creating a serious inconsistency or otherwise 
interfering with an action taken or planned by another agency; (3) 
materially altering the budgetary impacts of entitlement grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raising novel legal or policy issues arising out of 
legal mandates, the President's priorities, or the principles set forth 
in the Executive Order. A regulatory impact analysis must be prepared 
for major rules with economically significant effects ($100 million or 
more in any 1 year), and an ``economically significant'' regulatory 
action is subject to review by the Office of Management and Budget. ACF 
does not expect this to be a significant rule.
    Executive Order 13771, entitled ``Reducing Regulation and 
Controlling Regulatory Costs,'' was issued on January 30, 2017 (82 FR 
9339, February 3, 2017) and requires that the costs associated with 
significant new regulations ``shall, to the extent permitted by law, be 
offset by the elimination of existing costs associated with at least 
two prior regulations.'' This rulemaking is not expected to be subject 
to the requirements of Executive Order 13771 because it would result in 
no more than de minimis costs.

VI. Regulatory Impact Analysis

Need for Regulatory Action

    This regulatory action is necessary to provide ACF the flexibility 
to make determinations under the Head Start DRS, even in the absence of 
all required data, if this lack of data is due to a major disaster or 
emergency or PHE. The on-going PHE due to COVD-19 has prevented ACF 
from conducting on-site observations of grantees with the CLASS tool 
(an observational measure of the quality teacher-child interactions in 
the classroom), which is required by regulation. Data from these 
observations provide one piece of information for determining whether a 
Head Start grant can be renewed non-competitively or must compete with 
other potential applicants for continued funding. Several grants (60) 
whose five year project periods are ending in FY 2022 would typically 
have their CLASS reviews completed by ACF as part of the federal 
monitoring process sometime during FY 2020 or FY 2021. However, due to 
the PHE, ACF has not conducted CLASS reviews since March 2020 and has 
decided not to conduct any future CLASS reviews until at least the fall 
of 2021. So these 60 grants whose five year project periods are nearing 
completion do not yet have CLASS data as part of federal monitoring. 
Without this regulatory action, CLASS reviews for these 60 grants would 
have to be conducted in the fall of 2021, and several other decisions 
must be made by ACF after the CLASS reviews are completed, but before 
funding can be renewed either competitive or non-competitively. 
Therefore, having to conduct CLASS reviews for these grants so late in 
their project periods creates a strong risk of the project periods 
expiring before ACF can complete the grant renewal process for these 60 
grants. This puts the Head Start services for enrolled children and 
families at great risk in the impacted service areas.

Cost Savings Analysis

    There are approximately 2,200 grants in Head Start. Absent this 
final rule, it is estimated that 60 or 3 percent of all Head Start 
grants will require CLASS reviews to be conducted in FY 2022 for 
renewal determinations that must also be made in FY 2022. CLASS reviews 
would need to be conducted to acquire the necessary data to make 
renewal determinations as described in the Head Start Act and the Head 
Start Program Performance Standards. Typically, CLASS reviews cost 
about $8,500 per grant to the federal government. This primarily 
includes the cost of travel, lodging, and wages for CLASS reviewers. 
The total baseline cost of the 60 CLASS reviews in FY 2022 is estimated 
at $510,000.
    Across all Head Start grants, ACF estimates that approximately 13 
percent of grants meet the CLASS condition of the DRS and are, 
therefore, required to compete for continued funding. If ACF applies 
this percentage to the 60 grants lacking CLASS data due to the COVID-19 
pandemic, this results in an estimate of approximately 8 of these 60 
grants that would be required to compete for continued funding due to 
low CLASS scores if they did have CLASS data available.
    The cost for competition associated with completing a competitive 
application is estimated at $3,097 per applicant. This assumption 
includes 60 hours per competitive application at a cost of 
approximately $51.62 per hour in staff time (ACF multiplies an hourly 
wage of approximately $25.81 by two to account for fringe benefits). 
Applications would likely be completed by a combination of the Head 
Start Assistant Director and other managers in an early childhood 
program (i.e., Child Development Manager or Family and Community 
Partnership Manager). The average hourly wage for these positions is 
based on the U.S. Bureau of Labor Statistics Job Code 11-9031. ACF 
multiplies $3,097 per applicant by sixteen to account for the eight 
incumbent grantees applying for funds as well as eight non-incumbent 
applicants for those service areas. This results in a baseline 
estimated cost of $49,552 for these eight grantees to complete 
competitive applications in FY 2022 if they did in fact have to 
compete, as well as eight additional applicants. The total baseline 
cost for conducting CLASS reviews for these 60 grants and for 
competition associated

[[Page 78792]]

with 8 of these 60 grants is $559,552. With this final rule, these 
baseline costs would not apply and are therefore cost savings in this 
analysis.
    With this final rule, those eight grantees that would have been 
required to compete in FY 2022 would instead need to complete an annual 
grant application for a new annual award. ACF assumes it takes 
approximately 33 hours of staff time to complete a non-competitive 
application. Using the same assumptions as above for hourly wage, ACF 
estimates it costs approximately $1,703 per grant to complete a non-
competitive application. ACF multiplies this by eight grants, which 
results in a total cost of approximately $13,624 for these grantees to 
complete a non-competitive continuation application in FY 2022. Taking 
this cost into account, the total cost savings associated with this 
final rule is approximately $545,928. This includes cost savings to 
those entities that are not existing Head Start grantees as there would 
be no funding opportunity to which they would submit a competitive 
application.
    A qualitative opportunity cost for this new rule is fewer 
opportunities for entities that are not existing Head Start grantees to 
be able to compete and potentially grow as an early childhood provider 
in their community, for the eight communities where grants were not 
designated for competition due to potentially low CLASS scores. There 
is also the qualitative cost of children continuing to be served by 
grantees which may be providing lower quality classroom learning 
environments that would have led to competition. However, ACF believes 
there is an added benefit of existing grantees still receiving DRS 
determinations in a timely manner and not experiencing undue stress 
around the status of their grant, particularly in the midst of COVID-19 
when continuity of Head Start services for children and families is 
critically important. Additionally, these grantees would be able to 
continue to access and receive support from OHS through OHS' extensive 
training and technical assistance system, to facilitate continued 
quality improvement in classroom quality care and service provision for 
children and families.
    ACF does not believe there will be a significant economic impact 
from this regulatory action since the flexibility in this interim final 
rule will only be exercised when necessary. A federally declared major 
disaster, emergency, or PHE that limits the ability of ACF to collect 
all data necessary to assess programs for DRS determinations, such as 
the COVID-19 PHE, are rare and, therefore, ACF anticipates this 
flexibility will rarely be exercised. ACF also anticipates that this 
flexibility will be exercised in more localized disasters in the future 
that affect a very small subset of grantees.
    This RIA analyzes a one-year time horizon covering FY 2022. In the 
coming years, ACF anticipates very few grants being impacted by the 
provision in this interim final rule. However, ACF also recognizes it 
is difficult to predict future potential emergencies or disasters when 
ACF may need to again exercise the flexibility laid out in this 
regulatory provision, resulting in uncertainty around potential costs 
and cost savings. ACF invites public comment on the reasonableness of 
the assumptions in this regulatory impact analysis.

Tribal Consultation Statement

    ACF conducts an average of five tribal consultations each year for 
those tribes operating Head Start and Early Head Start. The 
consultations are held in four geographic areas across the country: 
Southwest, Northwest, Midwest (Northern and Southern), and Eastern. The 
consultations are often held in conjunction with other tribal meetings 
or conferences, to ensure the opportunity for most of the 150 tribes 
that operate Head Start and Early Head Start programs are be able to 
attend and voice their concerns about issues regarding service 
delivery. ACF completes a report after each consultation, and then 
compiles a final report that summarizes the consultations and submits 
the report to the Secretary at the end of the year. ACF invites public 
comment on this interim final rule if there are concerns specific to 
Native communities and programs.

List of Subjects in 45 CFR Part 1304

    Designation Renewal System, Classroom Assessment Scoring System 
(CLASS), COVID-19, Education of disadvantaged, Grant programs--social 
programs, Head Start, Monitoring.

    Dated: November 11, 2020.
Lynn A. Johnson,
Assistant Secretary for Children and Families.
    Approved: November 13, 2020.
Alex M. Azar, II,
Secretary.
    For the reasons discussed in the preamble, ACF amends 45 CFR part 
1304 as follows:

PART 1304--FEDERAL ADMINISTRATIVE PROCEDURES

0
1. The authority citation for part 1304 continues to read as:

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


0
2. Add Sec.  1304.17 to Subpart B to read as follows:

Subpart B--Designation Renewal


Sec.  1304.17  Flexibility for Head Start Designation Renewal 
Determinations in Certain Emergencies.

    (a) In reviewing the relevant data as described in Sec.  
1304.15(b), if ACF determines that one or more data elements described 
in the conditions in section Sec.  1304.11 is not available due to an 
emergency described in paragraph (b) of this section, ACF may make a 
designation renewal determination based on the data elements that are 
available.
    (b) The emergencies are:
    (1) A major disaster declared by the President under section 401 of 
the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 
U.S.C. 5170).
    (2) An emergency declared by the President under section 501 of the 
Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 
U.S.C. 5191).
    (3) A public health emergency declared by the Secretary pursuant to 
section 319 of the Public Health Service Act (42 U.S.C. 247d).

[FR Doc. 2020-26033 Filed 12-4-20; 8:45 am]
BILLING CODE 4184-01-P