Impact Aid Programs

Issuing agencies

Abstract

The U.S. Department of Education (Department) amends the regulations that govern Impact Aid Programs (IAP) to make technical changes, to include correcting grammatical, spelling, and typographical errors; correcting or updating statutory authority citations and regulatory cross-references; and updating mailing and delivery methods. The technical amendments described in this document do not add or change any regulatory, recordkeeping, or reporting requirement or change interpretation of any regulation.

Full Text

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<title>Federal Register, Volume 91 Issue 194 (Thursday, October 8, 2026)</title>
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[Federal Register Volume 91, Number 194 (Thursday, October 8, 2026)]
[Rules and Regulations]
[Pages 64268-64274]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-20687]


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DEPARTMENT OF EDUCATION

34 CFR Part 222

RIN 1810-AB66


Impact Aid Programs

AGENCY: Office of Elementary and Secondary Education, U.S. Department 
of Education.

ACTION: Final regulations.

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SUMMARY: The U.S. Department of Education (Department) amends the 
regulations that govern Impact Aid Programs (IAP) to make technical 
changes, to include correcting grammatical, spelling, and typographical 
errors; correcting or updating statutory authority citations and 
regulatory cross-references; and updating mailing and delivery methods. 
The technical amendments described in this document do not add or 
change any regulatory, recordkeeping, or reporting requirement or 
change interpretation of any regulation.

DATES: These regulations are effective November 9, 2026.

FOR FURTHER INFORMATION CONTACT: U.S. Department of Education, 400 
Maryland Avenue SW, Washington, DC 20202. Telephone: (202) 260-0405. 
Email: <a href="/cdn-cgi/l/email-protection#0e67637e6f6d7a206f676a4e6b6a20696178"><span class="__cf_email__" data-cfemail="bdd4d0cddcdec993dcd4d9fdd8d993dad2cb">[email&#160;protected]</span></a>.
    If you are deaf, hard of hearing, or have a speech disability and 
wish to access telecommunications relay services, please dial 7-1-1.

SUPPLEMENTARY INFORMATION: Due to the number of non-substantive 
technical changes made in this document, not all individual amendments 
are discussed below in this document's preamble, but all changes are 
described in the regulatory text section of this document.
    With regard to updating statutory authority citations, the 
Department is primarily revising the statutory authority citations for 
the regulations contained in 34 CFR part 222, which is the section of 
the IAP regulations that govern the programs under title VII of the 
Elementary and Secondary Education Act of 1965 (ESEA) to local 
educational agencies (LEAs) in areas affected by Federal activities. 
These regulations govern the collection of data for grants, the 
administration of grants, and the resolution of overpayments, 
administrative hearings, and requests for reconsideration for programs 
authorized under 20 U.S.C. 7100-7714.

All Subparts

    The Department is changing the statutory references in this part 
from: 8002 to 7002, 8003 to 7003, 8004 to 7004, 8005 to 7005, 8007 to 
7007, 8008 to 7008, 8009 to 7009, 8011 to 7011, 8012 to 7012, and 8013 
to 7013 to reflect the change from Title VIII to Title VII of the ESEA, 
as amended. Additionally, the Department is updating the statutory 
title in all subparts from Title VIII to Title VII. The specific 
changes will be summarized for each subpart in the revised regulatory 
language section.
    The Department is spelling out acronyms the first time they are 
used in a Subpart.

Subpart E--Payments for Heavily Impacted Local Educational Agencies 
Under Section 7003(b)(2) of the Act

    Statute: Section 7003 of the ESEA.
    Current Regulations: 34 CFR 222.61(a) specifies that IAP uses third 
preceding fiscal year data to determine an LEA's eligibility and 
payments under section 7003(b)(2). Subsection (b) requires that all 
LEAs that are subject to the tax rate requirement use generally 
comparable LEAs that are identified in section 222.74 or all LEAs in 
the applicant's State to meet the tax rate requirement. Paragraph (c) 
aligns the definition of ``tax rate for general fund purposes'' with 
the definition of ``local real property tax rates for current 
expenditures purposes'' in section 8013(4) of the ESEA and the 
regulations at section 222.2. Section 222.75 describes how the 
Department computes average per-pupil expenditure of a generally 
comparable LEA by dividing the sum of the total current expenditures 
for the third preceding fiscal year for the identified generally 
comparable LEAs by the sum of the total ADA of those LEAs for the same 
fiscal year.
    New Regulations: The Department is reorganizing section 222.61 to 
align its structure with the statute and improve readability. This 
reorganization includes adding descriptive headers to each paragraph 
and consolidating related data requirements.
    Data and Tax Rates. Paragraph (a) now includes the header ``Data.'' 
Paragraph (b) is updated with the header ``Tax rate'' and is divided 
into two subparagraphs to clarify data requirements. Paragraph (b)(1) 
outlines the two options for tax rate data: using generally comparable 
LEAs identified in

[[Page 64269]]

section 222.74 or using all LEAs in the State. Paragraph (b)(2) 
incorporates the definitions for ``tax rate for general fund purposes'' 
and ``current expenditures,'' which were previously located in 
paragraph (c).
    Per-Pupil Expenditures. The Department is removing and reserving 
section 222.75. The requirements for computing average per-pupil 
expenditures of generally comparable LEAs, formerly located in section 
222.75, are moved to paragraph (c) of this section under the new header 
``Per-pupil expenditure.''
    Reasons: The Department is adding headers to improve the clarity of 
the regulations and deleting a reference to ``new'' LEA because the 
ESEA no longer maintains a distinction between new and continuing LEAs. 
The Department is combining subsection (b) and (c) under new (b) with 
the tax rate header to better organize the regulations using existing 
regulatory language. The Department is removing section 222.75 and 
adding it to paragraph (c) since it was a data element related to 
eligibility so that all related data elements are contained within one 
location in the regulations.
    Statute: Section 7003(b)(2) of the ESEA.
    Current Regulations: Section 222.62 specifies the requirements an 
applicant must meet to be considered for an IAP payment. Paragraph (a) 
requires that an LEA that wishes to be considered for heavily impacted 
funding must annually submit the required information indicating tax 
rate eligibility with its annual section 7003 IAP application and that 
the final LEA tax rate eligibility must be verified by the State 
educational agency (SEA) under the process described in section 222.73. 
Paragraph (b) defines who is eligible to receive a ``continuing'' 
payment as an LEA that received a payment in fiscal year 2000 and meets 
the eligibility requirements in section 222.63. Paragraph (c) defines 
who is eligible for a ``new'' payment as an LEA that did not receive a 
heavily impacted payment in fiscal year 2000 and meets the eligibility 
criteria in section 222.64. Section 222.65 details other requirements 
an LEA must meet to be eligible for a heavily impacted payment, 
including that an LEA must timely apply for assistance and meet all 
statutory and regulatory requirements, and must meet applicable tax 
rate requirements.
    New Regulations: This reorganization consolidates requirements by 
incorporating the provisions of section 222.65 into section 222.62. 
Consequently, the Department is removing and reserving section 222.65.
    The revised structure of section 222.62 is as follows:
    Paragraph (a) requires an LEA to submit a timely application, 
provide a copy to its SEA, and meet all statutory and regulatory 
requirements to be considered for funding.
    Paragraph (b) requires an LEA to indicate on its application that 
it wishes to be considered for a heavily impacted payment. The LEA must 
also submit relevant per-pupil expenditure information and tax rate 
verification.
    Paragraph (c) requires an LEA to meet the eligibility criteria in 
section 222.63 for two consecutive years. This paragraph also cross-
references section 222.66, which details the requirements for losing or 
resuming eligibility and the ``hold harmless'' payment provisions.
    Reasons: The Department is revising the heading of section 222.62 
to clarify that this section specifies the requirements for receiving a 
payment rather than the process for determining eligibility. Consistent 
with the current statute, the Department is updating the requirements 
related to ``new'' and ``continuing'' LEAs because the ESEA no longer 
uses those terms to distinguish LEAs. Additionally, these revisions 
more accurately reflect that the regulations specify the requirements 
an LEA must meet to receive a payment, not a determination of 
eligibility. The Department is moving the requirements from section 
222.65 into section 222.62 so that all the requirements related to 
receiving a payment are in one place. The Department is revising this 
section using language from existing regulations and the current 
statute to reflect the application steps and requirements an LEA must 
take to receive a heavily impacted section 7003(b)(2) payment.
    Statute: Section 7003(b)(2) of the ESEA.
    Current Regulations: Section 222.63 specifies eligibility 
requirements for a ``continuing'' LEA. Section 222.64 specifies the 
eligibility requirements for a ``new'' LEA.
    New Regulations: The Department is revising section 222.63 to align 
with the ESEA, as amended by the National Defense Authorization Act for 
Fiscal Year 2016 and the Consolidated Appropriations Act, 2018. The 
Department is also removing and reserving section 222.64.
    (a) Eligibility Under Section 7003(b)(2)(B)(II). Paragraph (a) 
implements three criteria that an LEA must meet to be eligible:
    Enrollment. Paragraph (a)(1) requires an enrollment of at least 45 
percent federally connected children in average daily attendance (ADA).
    Per-Pupil Expenditure. Paragraph (a)(2) establishes per-pupil 
expenditure requirements based on an LEA's FY 2001 funding status:
    FY 2001 Recipients: If enrollment exceeds 350 students, the per-
pupil expenditure must be less than the national or State average. If 
enrollment is 350 or fewer, no per-pupil expenditure requirement 
applies.
    Non-FY 2001 Recipients: If enrollment exceeds 350 students, the 
per-pupil expenditure must be less than the State average. If 
enrollment is 350 or fewer, the per-pupil expenditure must be less than 
the per-pupil expenditure of one generally comparable LEA or the 
average of three generally comparable LEAs, whichever is greater.
    Tax Rate. Paragraph (a)(3) requires a tax rate for general fund 
purposes of at least 95 percent of the State average or the average 
rate of generally comparable LEAs.
    (b) Eligibility for FY 2001 Recipients. Paragraph (b) implements 
four mandatory criteria for LEAs that received heavily impacted 
payments in FY 2001:
    Enrollment. At least 35 percent federally connected children in 
ADA, including children described in ESEA section 7003(a)(1)(F) and 
(G).
    Per-pupil expenditure. If enrollment exceeds 350, the per-pupil 
expenditure must be less than the national or State average. If 
enrollment is 350 or fewer, no per-pupil expenditure requirement 
applies.
    Tax Rate. A tax rate of at least 95 percent of the State average or 
the average rate of generally comparable LEAs.
    Historical Eligibility. The LEA must have been eligible for a 
heavily impacted payment in FY 2001.
    Eligibility Under Section 7003(b)(2)(B)(III). Paragraph (c) 
requires LEAs to meet three criteria:
    Enrollment. An LEA must have at least 30 percent federally 
connected children in ADA. Alternatively, an LEA may have at least 20 
percent federally connected children in ADA if:
    For the three preceding fiscal years, at least 65 percent of the 
LEA's membership was eligible for free or reduced-price lunch; and the 
LEA was eligible under section 7003(b)(2)(G) in 2017 due to military 
housing privatization.
    Tax Rate. A tax rate of at least 125 percent of the State or 
national average, or the average rate of generally comparable LEAs.
    Historical Payment. The LEA must have received a heavily impacted

[[Page 64270]]

payment for a fiscal year prior to FY 2017.
    Eligibility for Large LEAs. Paragraph (d) implements two 
requirements for LEAs with large enrollments:
    Enrollment. A total enrollment of at least 25,000 students, of 
which at least 35 percent are federally connected. Additionally, the 
LEA must enroll at least 3,500 children described in section 
7003(a)(1)(A) and (B), or at least 7,000 children described in section 
7003(a)(1)(D).
    Historical Payment for Large local educational agencies. The LEA 
must have received a heavily impacted payment under section 
8003(b)(2)(E) for FY 2015.
    Boundary-Based Eligibility. Paragraph (e) provides two criteria. An 
LEA is eligible if it meets either of the following:
    The LEA shares the same boundaries as a federal military 
installation; or
    The LEA shares the same boundaries as an island held in trust by 
the United States and has no taxing authority.
    Reasons: The Department is updating the requirements to align with 
the amendments to the ESEA affecting eligibility, including the 2015 
ESSA amendments, the 2015 NDAA amendments, and the 2018 Consolidated 
Appropriations Act. More specifically, the 2015 ESSA amendments to the 
ESEA created five new eligibility categories described above. The 2015 
NDAA amendments affected the per-pupil expenditure requirements in two 
of those categories, ESEA section 7003(b)(2)(B)(II) and 
7003(b)(2)(B)(V), for fiscal years 2017, 2018, and 2019. The 2018 
Consolidated Appropriations Act made the 2015 NDAA per-pupil 
expenditure changes permanent. The Department is also reorganizing the 
list of eligibility criteria in each of the categories for greater 
clarity, to be more easily comprehensible to prospective applicants.
    Statute: Section 7003(b)(2) of the ESEA.
    Current Regulations: Section 222.66 specifies how LEAs lose and 
resume eligibility. Subsection (a) provides that if a continuing LEA is 
no longer eligible, it will still receive a payment in the first year 
based on the number of children in ADA as if the LEA were eligible. 
Subsection (b) provides that a continuing LEA must be eligible for two 
consecutive years to receive a payment in the second year and that in 
the first year the LEA will only receive a basic support payment under 
section 7003(b)(1). Subsection (c) provides that a new LEA may resume 
eligibility for heavily impacted payment if it meets the eligibility 
criteria in the year in which it applies.
    New Regulations: The Department is revising this section to clarify 
payment rules for LEAs that lose eligibility. The changes incorporate 
existing statutory and regulatory requirements.
    One-year ineligibility: Under paragraph (a)(1), an LEA that 
received a heavily impacted payment last year but failed to meet 
requirements this year will still receive a payment for the first year 
of ineligibility. The payment will be based on the number of children 
in ADA as if the LEA were still eligible.
    Two-year ineligibility (Tax Rate): Under paragraph (a)(2), an LEA 
that fails to meet the tax rate requirement for two consecutive years, 
will receive payments for both years. These payments are based on the 
ADA count from the LEA's application.
    Resuming Eligibility: Under paragraph (b), to resume eligibility, 
an LEA must meet all application and eligibility requirements for two 
consecutive years. The LEA will receive a payment in the second year.
    Reasons: The Department is revising the regulations to restate the 
current statutory requirements related to losing and regaining 
eligibility, and the hold harmless payments.
    Section 222.68--The Department is updating the regulatory 
references due to the reorganization of Sec.  222.62 and Sec.  222.63.
    Section 222.74--The Department is updating the regulatory 
references due to the reorganization of Sec.  222.62 and Sec.  222.63.

Subpart G--Special Provisions for Local Educational Agencies That Claim 
Children Residing on Indian Lands

    Section 222.92--The Department is updating the regulatory 
references due to the reorganization of Sec.  222.62 and Sec.  222.63.
    Section 222.94--The Department is correcting capitalization and 
making a grammatical correction by removing extraneous punctuation.
    Section 222.118(d)--The Department is removing the reference to 
obsolete technology and updating the manner in which an applicant may 
request a withholding hearing.

Subpart J--Impact Aid Administrative Hearings and Judicial Review Under 
Section 7011 of the Act

    Sections 222.153-154--The Department is removing references to 
obsolete technology and updating the manner in which an applicant may 
request an administrative hearing.
    Section 222.155--The Department is revising to clarify that an 
administrative hearing under this subpart may be held by telephone or 
video conference.

Subpart K--Determinations Under Section 7009 of the Act

    Section 222.165(c)--The Department is revising to clarify that an 
administrative hearing under this subpart may be held by telephone or 
video conference.
    Section 222.165(f)--The Department is revising to remove references 
to obsolete technology and adding the options for submitting documents 
by email or the electronic filing system maintained by the Office of 
Hearings and Appeals.

Waiver of Proposed Rulemaking and Delayed Effective Date

    In accordance with the Administrative Procedure Act (APA), 5 U.S.C. 
553, the Department generally offers interested parties the opportunity 
to comment on proposed regulations. However, the APA provides that an 
agency is not required to conduct notice-and-comment rulemaking when 
the agency, for good cause, finds that the requirement is 
impracticable, unnecessary, or contrary to the public interest. 5 
U.S.C. 553(b)(B). There is good cause to waive rulemaking here as 
unnecessary.
    Rulemaking is ``unnecessary'' in those situations in which ``the 
administrative rule is a routine determination, insignificant in nature 
and impact, and inconsequential to the industry and to the public.'' 
Utility Solid Waste Activities Group v. EPA, 236 F.3d 749, 755 (D.C. 
Cir. 2001) (quoting U.S. Department of Justice, Attorney General's 
Manual on the Administrative Procedure Act 31 (1947)) and South 
Carolina v. Block, 558 F. Supp. 1004, 1016 (D.S.C. 1983). However, the 
regulatory changes in this document are necessary to make routine 
technical updates and non-substantive technical corrections. Thus, the 
Department has determined that publication of a proposed rule is 
unnecessary under 5 U.S.C. 553(b)(B).
    The APA generally requires that regulations be published at least 
30 days before their effective date, unless the agency has good cause 
to implement its regulations sooner. 5 U.S.C. 553(d)(3). As previously 
stated, because the final regulations make routine technical updates 
and non-substantive technical corrections, there is good cause to waive 
the delayed effective date in the APA and make the final regulations 
effective upon publication.

[[Page 64271]]

Executive Orders 12866, 13563, and 14192

    Regulatory Impact Analysis: This regulatory action is not a 
significant regulatory action subject to review by the Office of 
Management and Budget under section 3(f) of Executive Order 12866. This 
regulatory action is not considered an ``Executive Order 14192 
regulatory action.'' We have also reviewed this regulatory action under 
Executive Order 13563. We are issuing these final regulations only on a 
reasoned determination that their benefits would justify their costs. 
The Department believes that this regulatory action is consistent with 
the principles in Executive Order 13563. We also have determined that 
this regulatory action would not unduly interfere with State, local, 
and Tribal governments in the exercise of their governmental functions.
    Potential Costs and Benefits: In accordance with these Executive 
Orders, the Department has assessed the potential costs and benefits, 
both quantitative and qualitative, of this regulatory action. These 
final regulations are not expected to have a significant impact because 
they are designed to merely make routine technical updates and non-
substantive technical corrections. We believe any costs would be de 
minimis and will be significantly outweighed by the potential benefits 
of ensuring clarity and consistency of the regulations.

Regulatory Flexibility Act Certification

    The Regulatory Flexibility Act does not apply to this rulemaking 
because there is good cause to waive notice and comment under 5 U.S.C. 
553.

Paperwork Reduction Act of 1995

    These final regulations do not create any new information 
collection requirements.

Intergovernmental Review

    The programs covered in this notice are subject to Executive Order 
12372 and the regulations in 34 CFR part 79. One of the objectives of 
the Executive order is to foster an intergovernmental partnership and a 
strengthened federalism. The Executive order relies on processes 
developed by State and local governments for coordination and review of 
proposed Federal financial assistance.
    This document provides early notification of our specific plans and 
actions for these programs.
    Accessible Format: On request to the program contact person listed 
under FOR FURTHER INFORMATION CONTACT, individuals with disabilities 
can obtain this document in an accessible format. The Department will 
provide the requestor with an accessible format that may include Rich 
Text Format (RTF) or text format (txt), a thumb drive, an MP3 file, 
braille, large print, audiotape, or compact disc, or another accessible 
format.
    Electronic Access to This Document: The official version of this 
document is the document published in the Federal Register. You may 
access the official edition of the Federal Register and the Code of 
Federal Regulations at <a href="http://www.govinfo.gov">www.govinfo.gov</a>. You may also access documents 
of the Department published in the Federal Register by using the 
article search feature at <a href="http://www.federalregister.gov">www.federalregister.gov</a>.

List of Subjects for 34 CFR Part 222

    Administrative practice and procedure, Education of individuals 
with disabilities, Elementary and secondary education, federally 
affected areas, Formula grant programs--education, Indians--
education, Military child--education, Reporting and recordkeeping 
requirements.

Kirsten Baesler,
Assistant Secretary, Office of Elementary and Secondary Education.

    For the reasons discussed in the preamble, the Department of 
Education amends 34 CFR part 222 as follows:

PART 222--IMPACT AID PROGRAMS

0
1. The authority citation for part 222 is revised to read as follows:

    Authority:  20 U.S.C. 7701-7714, Pub. L. 114-95, title VII, 
Sec.  7001, 129 Stat. 1802; unless otherwise noted.2. Amend part 222 
by removing the text listed in the ``Remove'' column and adding in 
its place the text listed in the ``Add'' column wherever they appear 
in part 222:

------------------------------------------------------------------------
                  Remove                                 Add
------------------------------------------------------------------------
section 8002..............................  section 7002.
section 8003..............................  section 7003.
section 8004..............................  section 7004.
section 8005..............................  section 7005.
section 8007..............................  section 7007.
section 8008..............................  section 7008.
section 8009..............................  section 7009.
section 8011..............................  section 7011.
section 8012..............................  section 7012.
section 8013..............................  section 7013.
Title VIII................................  Title VII.
ALJ.......................................  Administrative law judge.
ESEA......................................  Elementary and Secondary
                                             Education Act.
IPPs......................................  Indian Policies Procedures.
LEA.......................................  local educational agency.
PPE.......................................  per-pupil expenditure.
SEA.......................................  state educational agency.
------------------------------------------------------------------------


0
3. In Sec.  222.2 in paragraph (c) amend paragraph (1)(i) of the 
definition of ``Parent employed on Federal property'' by revising 
Example 2 to read as follows:


Sec.  222.2  What definitions apply to this part?

* * * * *
    (c) * * *
    Parent employed on Federal property
    (1) * * *
    (i) * * *
    Example 2: Becca works at a privately owned convenience store on 
leased property on a military installation in Maine. Becca's children 
attend school at LEA E, a Maine public school district. On a daily 
basis, including on the survey date, Becca reports to work at the 
convenience store where she works her entire shift. Becca meets the 
definition of a ``parent employed on Federal property'' for LEA E 
because, although Becca is not a Federal employee, her duty station is 
the convenience store, which is located on an eligible Federal property 
within the same State as LEA E. LEA E may claim Becca's children on its 
Impact Aid application.
* * * * *

0
4. Section 222.22 is amended by revising paragraph (a) to read as 
follows:


Sec.  222.22  How does the Secretary treat compensation from Federal 
activities for purposes of determining eligibility and payments?

    (a) An LEA with an otherwise approvable application is eligible to 
receive assistance under section 7002 for a fiscal year only if the LEA 
meets the requirements in subpart A of these regulations and Sec.  
222.21, and is not substantially compensated for the loss in revenue 
resulting from Federal ownership of real property by increases in 
revenue accruing to the LEA during the previous fiscal year from 
Federal activities with respect to the eligible Federal property in the 
LEA.
* * * * *

0
5. Revise the heading of Subpart E to read as follows:

Subpart E--Payments for Heavily Impacted Local Educational Agencies 
Under Section 7003(b)(2) of the Act

0
6. Revise Sec.  222.61 to read as follows:


Sec.  222.61  What data are used to determine a local educational 
agency's eligibility under section 7003(b)(2) of the Act?

    (a) Data. Computations and determinations made about an LEA's

[[Page 64272]]

eligibility under section 7003(b)(2) in Sec. Sec.  222.61 through 
222.66 are based on the LEA's final student, revenue, expenditure, and 
tax data from the third fiscal year preceding the fiscal year for which 
it seeks assistance.
    (b) Tax rate. (1) Consistent with the requirements in Sec. Sec.  
222.68 through 222.74, the tax rate LEAs used for meeting the 
applicable tax rate requirement are either:
    (i) The generally comparable LEAs that are identified in Sec.  
222.74; or
    (ii) All LEAs in the applicant's State.
    (2) As used in this subpart, the phrase ``tax rate for general fund 
purposes'' means ``local real property tax rates for current 
expenditures purposes'' as defined in Sec.  222.2. ``Current 
expenditures'' is defined in section 7013(4) of the ESEA.
    (c) Per-pupil expenditure. For LEAs described in Sec.  222.63(a) 
and (b), the Secretary computes average per-pupil expenditures by 
dividing the sum of the total current expenditures for the third 
preceding fiscal year for those LEAs which the Secretary has determined 
to be generally comparable, consistent with Sec.  222.74, by the sum of 
the total ADA of those LEAs for the same fiscal year.

0
7. Revise Sec.  222.62 to read as follows:


Sec.  222.62  How does a local educational agency receive a payment 
under section 7003(b)(2)(B) for heavily impacted districts?

    (a) An LEA must annually apply for assistance under section 
7003(b)(1) Basic Support Payment by submitting a timely application to 
the Secretary and providing its state educational agency (SEA) with a 
copy of the application and must meet all the other application and 
eligibility requirements in statute and these regulations.
    (b) An LEA must note on its annual Impact Aid application that it 
wishes to be considered for a heavily impacted payment under section 
7003(b)(2)(B), and the SEA must submit relevant average per-pupil 
expenditure information and verify the LEA's tax rate under the process 
described in Sec.  222.73.
    (c) An LEA must meet the eligibility criteria listed in Sec.  
222.63 for two consecutive application years and, consistent with Sec.  
222.66, will not receive a heavily impacted payment for the first year 
of eligibility.

0
8. Revise Sec.  222.63 to read as follows:


Sec.  222.63  What are the eligibility criteria that must be satisfied 
for a local educational agency to receive a payment under section 
7003(b)(2)(B)?

    A heavily impacted LEA must meet one of the following criteria--
    (a) * * *
    (1) Enrollment. An enrollment of federally connected children 
described in section 7003(a)(1) equal to at least 45 percent of the 
total number of children in average daily attendance in the LEA;
    (2) Per-pupil expenditure. (i) For a district that received a basic 
support payment for fiscal year 2001 under section 8003(b)(2)(B) of the 
ESEA (as such section was in effect for such fiscal year):
    (ii) If total student enrollment is more than 350 students, a per-
pupil expenditure that is less than the average per-pupil expenditure 
of the state in which the agency is located, consistent with Sec.  
222.74, or a per-pupil expenditure that is less than the average per-
pupil expenditures of all States; or
    (iii) If the LEA has a total student enrollment that is less than 
350 students, they shall be deemed to have satisfied the per-pupil 
expenditure per-pupil expenditure requirements; or
    (iv) For a district that did not receive a support payment for 
fiscal year 2015 under section 8003(b)(2)(B) of the ESEA (as such 
section was in effect for such fiscal year):
    (A) If total student enrollment is 350 or more students, a per-
pupil expenditure that is less than the State average per-pupil 
expenditure; or
    (B) If total student enrollment is less than 350 students, a per-
pupil expenditure that is less than the average per-pupil expenditure 
of a generally comparable LEA or 3 generally comparable LEAs (whichever 
average per-pupil expenditure is greater), in the state in which the 
agency is located, consistent with Sec.  222.74; and
    (3) Tax rate. A tax rate for general fund purposes of at least 95 
percent of the State average tax rate or the average tax rate of 
generally comparable LEAs identified under Sec.  222.74.
    (b)(1) Enrollment. An enrollment of federally connected children 
equal to at least 35 percent of total students in ADA in the LEA, 
including children described in subparagraphs (F) and (G) of section 
7003(a)(1);
    (2) Per-pupil expenditure. For a district that received a basic 
support payment for fiscal year 2001 under section 8003(b)(2)(B) of the 
ESEA (as such section was in effect for such fiscal year):
    (i) If total student enrollment is more than 350 students, the LEA 
must have a per-pupil expenditure that is less than the average per-
pupil expenditure of the State in which the agency is located, 
consistent with Sec.  222.74, or a per-pupil expenditure that is less 
than the average per-pupil expenditure of all States; or
    (ii) If the LEA has a total student enrollment that is less than 
350 students, they shall be deemed to have satisfied the per-pupil 
expenditure requirements;
    (3) Tax rate. A tax rate for general fund purposes of at least 95 
percent of the State average tax rate or the average tax rate of 
generally comparable LEAs in the State identified under Sec.  222.74; 
and
    (4) Basic support payments for Local Educational Agencies that were 
eligible in 2001. Local educational agencies that were eligible to 
receive a heavily impacted payment for fiscal year 2001.
    (c)(1) Enrollment. Had an enrollment of federally connected 
children described in section 7003(a)(1) that is:
    (i) Equal to at least 30 percent of the total number of children in 
ADA in the LEA; or
    (ii) Equal to at least 20 percent of the total number of children 
in ADA in the LEA, and for the 3 fiscal years proceeding for which this 
determination was made, the average enrollment of non-federally 
connected children eligible for a free or reduced price lunch under the 
Richard B. Russell National School Lunch Act is equal to or at least 65 
percent, and received assistance for fiscal year 2017 pursuant to the 
privatization of military housing under section 7003(b)(2)(G); and
    (2) Tax rate. A tax rate for general fund purposes which is not 
less than 125 percent of the State average tax rate or the average tax 
rate of generally comparable LEAS identified under Sec.  222.74; and
    (3) Historical Payment. Received a heavily impacted payment for a 
fiscal year prior to fiscal year 2017.
    (d)(1) Enrollment. A total student enrollment of at least 25,000 
students, of which at least 35 percent are children described in 
section 7003(a)(1), and at least 3,500 such children are described in 
subparagraphs (A) and (B) of that section or at least 7,000 such 
children are described in subparagraph (D) of that section; and
    (2) Historical payment. Received a heavily impacted payment for 
fiscal year 2015 under ESEA section 8003(b)(2)(E), as so in effect.


Sec. Sec.  222.64 and 222.65  [Removed and Reserved]

0
9. Remove and reserve Sec. Sec.  222.64 and 222.65.

0
10. Section 222.66 is revised to read as follows:


Sec.  222.66  How does a local educational agency receive a hold 
harmless payment and lose and resume eligibility under section 
7003(b)(2)?

    (a) Hold-harmless payments. (1) Except as provided in paragraph 
(a)(2)

[[Page 64273]]

of this section, an LEA that received a payment as a heavily impacted 
LEA in the preceding year but fails to meet the eligibility 
requirements in the following fiscal year will still receive a heavily 
impacted payment in the first year of ineligibility, based on the 
number of children in ADA that would be counted for that application if 
the LEA were eligible.
    (2) For an LEA that is required to have a tax rate of at least 95 
percent of the average tax rate for general fund purposes, and would be 
eligible for a heavily impacted payment except that it fails to meet 
that tax rate requirement for two consecutive fiscal years, the LEA 
will still receive a heavily impacted payment in the first two years of 
ineligibility, based on the number of children in ADA that would be 
counted for that application if the LEA were eligible.
    (b) Resumption of Payment. After a heavily impacted LEA becomes 
ineligible for one or more fiscal years, the LEA may resume eligibility 
for a heavily impacted payment if it meets all application and 
eligibility requirements for two consecutive fiscal years. In the first 
fiscal year the LEA resumes meeting the application and eligibility 
requirements, it will not receive a heavily impacted payment in that 
year but instead will receive a basic support payment under section 
7003(b)(1) for that year. The LEA will receive a heavily impacted 
payment in the second consecutive year that it meets application and 
eligibility requirements.
    (c) Example. An LEA applies for a section 7003(b)(2) payment for 
the first time and meets the applicable eligibility criteria. The LEA 
does not receive a section 7003(b)(2) payment for federal fiscal year 
(FFY) 1 and must apply and meet the requirements again in FFY 2 before 
it can receive a 7003(b)(2) payment (see Sec.  222.62). If that LEA is 
later ineligible for a year, it can receive a 7003(b)(2) payment again 
only if it meets the eligibility criteria for two consecutive years. 
The LEA is entitled to receive a hold-harmless payment under 7003(b)(2) 
the first year it is ineligible. If, for example, an LEA becomes 
ineligible in FFY 3, the LEA will still receive a (b)(2) ``hold 
harmless'' payment. If the LEA applies and meets the requirements in 
FFY 4, the LEA will not receive a payment under 7003(b)(2) but would 
instead be eligible for a section 7003(b)(1) payment. In FFY 5, if the 
LEA applies and meets the eligibility requirements for 7003(b)(2), the 
LEA will receive a section 7003(b)(2) payment. The effects of these 
requirements on an applicant's status and payments are summarized in 
the table below. This example is intended to convey typical (b)(2) 
hold-harmless situations and is not intended to cover anomalies.

                                         Table 1 to Paragraph (c)--Summary of Hold-Harmless Status and Payments
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                           FFY 1                  FFY 2                    FFY 3                    FFY 4                  FFY 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
7003(b)(2) Eligibility...........  Yes..................  Yes..................  No.......................  Yes..................  Yes.
Payment Type.....................  7003(b)(1)...........  7003(b)(2)...........  Hold Harmless............  7003(b)(1)...........  7003(b)(2).
--------------------------------------------------------------------------------------------------------------------------------------------------------


0
11. Amend Sec.  222.68 by revising paragraphs (a) and (c) introductory 
text to read as follows:


Sec.  222.68  How does the Secretary determine whether a fiscally 
independent local educational agency meets the applicable tax rate 
requirement?

    (a) To determine whether a fiscally independent LEA, as defined in 
Sec.  222.2(c), meets the applicable tax rate requirement in Sec.  
222.63, the Secretary compares the LEA's local real property tax rate 
for current expenditure purposes, as defined in Sec.  222.2(c) 
(referred to in this part as ``tax rate'' or ``tax rates''), with the 
tax rates of its generally comparable LEAs.
* * * * *
    (c) The Secretary determines that an LEA described in Sec. Sec.  
222.63 meets the applicable tax rate requirement if--
* * * * *

0
12. Amend Sec.  222.74 by revising paragraph (b) introductory text to 
read as follows:


Sec.  222.74  How does the Secretary identify generally comparable 
local educational agencies for purposes of section 7003(b)(2)?

* * * * *
    (b) For applicant LEAs described in Sec.  222.63(a), (b) or (c), to 
identify the one or three generally comparable LEAs, the Secretary uses 
the following procedures:
* * * * *


Sec.  222.75  [Removed]

0
13. Remove Sec.  222.75.

0
14. Section 222.94 is amended by revising paragraph (b)(1) to read as 
follows:


Sec.  222.94   What are the responsibilities of the LEA with regard to 
Indian policies and procedures?

* * * * *
    (b) * * *
    (1) Disseminate relevant applications, evaluations, program plans 
and information related to the LEA's education program and activities 
with sufficient advance notice to allow tribes and parents of Indian 
children the opportunity to review and make recommendations.
* * * * *

0
15. Section 222.118 is amended by revising paragraph (d) to read as 
follows:


Sec.  222.118  How are withholding hearings conducted in this subpart?

* * * * *
    (d) Filing requirements. (1) All written submissions must be filed 
with the hearing examiner by hand-delivery, mail, email, or the 
electronic filing system maintained by the Office of Hearings and 
Appeals.
    (2) If agreed upon by the parties, a party may serve a document 
upon the other party by email, or the electronic filing system 
maintained by the Office of Hearings and Appeals.
    (3) The filing date for a written submission under this subpart is 
the date the document is
    (i) Hand-delivered; or
    (ii) Mailed; or
    (iii) Emailed; or
    (iv) Filed with the electronic filing system maintained by the 
Office of Hearings and Appeals.
    (4) A party filing by email is responsible for confirming that a 
complete and legible copy of the document was timely received by the 
hearing examiner.
* * * * *

0
16. Amend Sec.  222.153 by revising paragraph (a) to read as follows:


Sec.  222.153  How must a local educational agency request an 
administrative hearing?

    (a)(1) If it mails the hearing request, address it to the 
Secretary, c/o Director, Impact Aid Program, U.S. Department of 
Education, 400 Maryland Avenue SW, Washington, DC 20202-6244;
    (2) If it hand-delivers the hearing request, deliver it to the 
Director, Impact Aid Program, U.S. Department of

[[Page 64274]]

Education, 400 Maryland Avenue SW, Washington, DC 20202-6244; or
    (3) If it emails the hearing request, send it to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="09406479686a7d2748606d496c6d276e667f">[email&#160;protected]</a>.
    Note to paragraph (a): The Secretary encourages applicants 
requesting an IAP hearing to email their requests. Because of enhanced 
security procedures, building access for non-official staff may be 
limited. Applicants should be prepared to mail or email their hearing 
requests if they or their courier is unable to obtain access to the 
building.
* * * * *

0
17. Revise Sec.  222.154 to read as follows:


Sec.  222.154  How must written submissions under this subpart be 
filed?

    (a) All written submissions under this part must be filed by hand-
delivery, mail, email, or the electronic filing system maintained by 
the Office of Hearings and Appeals.
    (b) If agreed upon by the parties, a party may serve a document 
upon the other party by email or the electronic filing system 
maintained by the Office of Hearings and Appeals.
    (c) The filing date for a written submission under this subpart is 
the date the document is
    (1) Hand-delivered; or
    (2) Mailed; or
    (3) Emailed; or
    (4) Filed with the electronic filing system maintained by the 
Office of Hearings and Appeals.
    (d) A party filing by email is responsible for confirming that a 
complete and legible copy of the document was timely received by the 
administrative law judge.

0
18. Section 222.155 is revised to read as follows:


Sec.  222.155  When and where is an administrative hearing held?

    Administrative hearings under this subpart are held at the offices 
of the Department in Washington, DC, at a time fixed by the 
administrative law judge, unless the administrative law judge selects 
another place based upon the convenience of the parties. Administrative 
hearings may also be held by telephone or video conference at the 
discretion of the administrative law judge.

0
19. Amend Sec.  222.165 by revising paragraphs (c) and (f) to read as 
follows:


Sec.  222.165  What procedures does the Secretary follow after making a 
determination under section 7009?

* * * * *
    (c) Time and place of hearing. The hearing is held at a time and 
place fixed by the Secretary or the Secretary's delegate (with due 
regard to the mutual convenience of the parties). Administrative 
hearings may also be held by telephone or video conference at the 
discretion of the administrative law judge.
* * * * *
    (f) Filing requirements. (1) Any written submission under this 
section must be filed by hand-delivery, mail, email, or the electronic 
filing system maintained by the Office of Hearings and Appeals.
    (2) If agreed upon by the parties, service of a document may be 
made upon the other party by mail, email or the electronic filing 
system maintained by the Office of Hearings and Appeals.
    (3) The filing date for a written submission under this section is 
the date the document is
    (i) Hand-delivered; or
    (ii) Mailed; or
    (iii) Emailed; or
    (iv) Filed with the electronic filing system maintained by the 
Office of Hearings and firming that a complete and legible copy of the 
document was received by the Department.
    (4) A party filing by email is responsible for confirming that a 
complete and legible copy of the document was received by the 
Department.
* * * * *
[FR Doc. 2026-20687 Filed 10-7-26; 8:45 am]
BILLING CODE 4000-01-P


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