Department of Education--Grant Extensions
B-303845, Jan 3, 2006
1. Department of Education's 4-year extension of a 5-year grant made to an Historically Black Graduate Institution (HBGI) was improper given the plain language of the authorizing statute limiting grants to HBGIs to a period not to exceed 5 years. 20 U.S.C. sect. 1063b(b). 2. Department of Education's 4-year extension of a 5-year grant made to an Historically Black College and University (HBCU) amounted to an improper waiver of its regulations, which limited the duration of HBCU grant periods to 5 years. 34 C.F.R. sect. 608.11.
B-303845, Department of Education -- Grant Extensions, January 3, 2006
1. Department of Education's 4-year extension of a 5-year grant made to an Historically Black Graduate Institution (HBGI) was improper given the plain language of the authorizing statute limiting grants to HBGIs to a period not to exceed 5 years. 20 U.S.C. sect. 1063b(b).
2. Department of Education's 4-year extension of a 5-year grant made to an Historically Black College and University (HBCU) amounted to an improper waiver of its regulations, which limited the duration of HBCU grant periods to 5 years. 34 C.F.R. sect. 608.11.
Between July 2003 and August 2004, our Office undertook an examination of the Department of Education's (Education) management of grant programs to benefit low-income and minority serving postsecondary institutions authorized by Titles III and V of the Higher Education Act of 1965 (HEA), Pub. L. No. 89-329, 79 Stat. 1219 (
For the reasons explained below, we conclude that these extensions were improper. Education should strictly adhere to the duration restrictions for grant periods as set up in the authorizing legislation and implementing regulations, and terminate grants improperly extended. If, at that time, Education determines that additional assistance is warranted, Education could award a new grant to that institution. In the alternative, Education may wish to seek legislative changes that would allow for extensions to 5-year grants.
Title III, Part B of the Higher Education Act of 1965, as amended, 20 U.S.C. sections 1060--1063c, contains provisions which provide for and govern grants to HBCUs and HBGIs. Section 1063b, which specifically applies to HBGIs, provides that [g]rants shall be made for a period not to exceed 5 years. 20 U.S.C. sect. 1063b(b). The Act does not contain a similar limitation regarding grant duration for HBCUs. See 20 U.S.C. sections 1060--1063, 1063a, 1063c. Education's implementing regulations, however, provide that grants to both HBCUs and HBGIs may be awarded for a period of up to five academic years. 34 C.F.R. sect. 608.11 (HBCUs), sect. 609.11(HBGIs) (2004).
In our 2004 review of Education's management of Title III and Title V grant programs, we found that grantees commonly reported difficulties implementing their grant projects, including problems related to hiring and staffing, construction delays, challenges implementing technology and distance learning, and state budget shortages. GAO-04-961 at 13. As a result of these challenges, grantees often needed additional time to complete planned activities.
In November 2004, Education's General Counsel responded that the 5'year limitation applies only to the initial term of the grant at the time of award, and that the subsequent extension of a grant is not barred by the governing provisions. Letter from Brian W. Jones, General Counsel, Department of Education, to Dayna K. Shah, Associate General Counsel, GAO, November 29, 2004 (Jones Letter). Moreover, the General Counsel pointed out that the implementing regulations for HBCU and HBGI grants, 34 C.F.R. sections 608.3(a)(2) and 609.3(a)(2), respectively, incorporate 34 C.F.R. sect. 75.261, which permits extension of the grant award period under certain circumstances. Id.
The issues presented are: (1) whether Education has authority to make 4-year extensions to 5-year grants to HBGIs; and (2) whether the 4-year extensions to 5-year grants to HBCUs are permissible.
Extensions to HBGI Grants
The statute at issue with respect to the HBGI grants reads, in relevant part, as follows: Grants shall be made for a period not to exceed 5 years. 20 U.S.C. sect. 1063b(b).
The starting point for interpreting a statute is the plain meaning of the statutory language. Consumer Product Safety Comm'n v. GTE Sylvania, Inc., 447
Education argues that the 5-year limitation applies only to the initial grant, and that it may thereafter make extensions since there is no express prohibition of extensions in the statute. Jones Letter. As a general proposition, an agency's interpretation of a statute it is charged with administering is entitled to deference. Chevron, U.S.A., Inc. v. Natural Resources Defense Council Inc., 467 U.S. 837, 843--44 (1984). This deference, however, is not without limits, as the agency's interpretation must be reasonable and based on a permissible construction of the statute.
Education also argues that the implementing regulation found at 34 C.F.R. sect. 609.3(a)(2), which incorporates 34 C.F.R. sections 75.261(a) and (c), provides for the extension of grants. Section 75.261(a) provides grantees a one-time extension for a period up to twelve months, without Education's approval, but only if certain additional requirements are met, including ED regulations ... , statutes or the conditions of an award do not prohibit the extension. On its face, a 4-year extension cannot be justified by this provision; the regulation permits only a 1'year extension. In any case, at issue here are 5-year HBGI grants, and any extension to a 5-year HBGI grant would violate the statutory 5-year limitation on HBGI grants at 20 U.S.C. sect. 1063b(b), hence not meeting the requirements of section 75.261(a) that an extension is permitted only if there is no statute that prohibits the extension.
Section 75.261(c) provides the terms under which Education may grant an extension when agency approval is required. However, one of the requirements is that [t]he extension does not violate any statute or regulations; ... . Again, since extensions beyond an aggregate 5 years (base term plus any extensions) violate the 5-year statutory limitation at 20 U.S.C. sect. 1063b(b), the extensions cannot be justified by 34 C.F.R. sect. 75.261(c). Since the statute limits the duration of HBGI grants to 5 years, Education, in extending the grants by 4 years, essentially has created 9-year grants, and therefore exceeded its authority.
While the grant authorizing legislation, 20 U.S.C. sections 1060--1063c, contains no restriction on grant duration with respect to grants to HBCUs, Education's implementing regulations for grants to HBCUs, 34 C.F.R. part 608, contain the following limitation: The Secretary may award a grant under this part for a period of up to five academic years. 34 C.F.R. sect. 608.11.
To determine the effect of this regulation upon the agency's grantmaking discretion, we look to the Administrative Procedure Act (APA), 5 U.S.C. sections 551--706, which generally governs agency rulemaking and adjudications. The APA section on rulemaking, section 553, draws a distinction between substantive rules, also called legislative rules, and interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice. 5 U.S.C. sect. 553(b)(A), (d); Chrysler Corp.v. Brown, 441
In Troy Corp. v. Browner, 120 F.3d 277 (D.C. Cir. 1997), the D.C. Circuit Court of Appeals defined a legislative rule as one that (1) 'supplements' a statute; (2) 'effect[s] a change in existing law or policy'; or (3) 'grant[s] rights, impose[s] obligations, or produce[s] other significant effects on private interests.'
Applying these principles, we conclude that 34 C.F.R. sect. 608.11 is a legislative rule, and as such, is binding on the agency. It imposes a 5-year limitation on the term of grants awarded under the program which does not exist in the authorizing statute; in the words of the standard defined in
The Secretary proposes regulations to govern the [HBCU] Program and the [HBGI] Program. The regulations are needed to implement these two new programs, each of which is authorized under Part B of Title III of the Higher Education Act of 1965 (HEA) as amended by the Higher Education Act Amendments of 1986, Pub. L. 99-498.
52 Fed. Reg. 22,274. Subsequently, on
Having determined that the regulation here is binding on Education, we turn to the interpretation of its language. To interpret a regulation we must look at its plain language and consider the terms in accordance with their common meaning. Lockheed Corp. v. Widnall, 113 F.3d 1225, 1227 (Fed. Cir. 1997). The plain language of the regulation authorizes the agency to award grants for periods of up to five academic years. We conclude, therefore, that Education can award grants to HBCUs for periods no longer than 5 academic years. The 4-year extensions to 5-year grants certainly have the effect of creating grants of periods longer than 5 years, and therefore are improper.
We conclude that: (1) the 4-year extensions made to 5-year grants to HBGIs were improper, since the plain language of the authorizing statute specifies that grants to HBGIs are not to exceed 5 years; and (2) the 4-year extensions made to 5-year grants to HBCUs were improper since Education's binding regulations limit those grants to 5 years. Adherence to the existing framework for grantmaking, as laid out in the statute and implementing regulations, provides structure and consistency, which in turn promotes the goals of proper administration and accounting, as well as fairness to all grant applicants. Education therefore should strictly adhere to the duration restrictions for grant periods and terminate grants improperly extended.
To the extent that Education determines at that time that additional assistance is warranted, Education could award a new grant to that institution. A new grant, of course, would constitute a new obligation of Education that would be chargeable to appropriations current at the time Education awards the new grant. B-289801,
Anthony H. Gamboa
 The Higher Education Amendments of 1986, Pub. L. No. 99-498, 100 Stat. 1268 (
 For reasons unclear, section 608.11 cites 20 U.S.C. sect. 1063b(b) as authority for this 5'year limitation on HBCU grants, although section 1063b, by its terms, applies only to HBGIs.
 In the
 Under the APA, regulations governing public property, loans, grants, benefits, or contracts are ordinarily exempt from the notice and comment requirements for legislative rulemaking. 5 U.S.C. sect. 553(a)(2). However, Education (by its predecessor, the Department of Health, Education and Welfare) waived this exemption in 1971, see 36 Fed. Reg. 2532 (
 In addition, our review of the Notice of Proposed Rulemaking, 52 Fed. Reg. 22,274–22,281 (Jun. 10, 1987), and the Final Rule, 52 Fed. Reg. 30,536–30,543 (Aug. 14, 1987), for this regulation when it was first promulgated in 1987, revealed no contrary intent.