[Code of Federal Regulations]
[Title 34, Volume 2]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 34CFR361.11]

[Page 276-277]
 
                           TITLE 34--EDUCATION
 
            REHABILITATIVE SERVICES, DEPARTMENT OF EDUCATION
 
PART 361--STATE VOCATIONAL REHABILITATION SERVICES PROGRAM--Table of Contents
 
      Subpart B--State Plan and Other Requirements for Vocational 
                         Rehabilitation Services
 
Sec.  361.11  Withholding of funds.

    (a) Basis for withholding. The Secretary may withhold or limit 
payments under section 111 or 622(a) of the Act, as provided by section 
107(c) and (d) of the Act, if the Secretary determines that--
    (1) The State plan, including the supported employment supplement, 
has

[[Page 277]]

been so changed that it no longer conforms with the requirements of this 
part or 34 CFR part 363; or
    (2) In the administration of the State plan, there has been a 
failure to comply substantially with any provision of that plan or a 
program improvement plan established in accordance with section 
106(b)(2) of the Act.
    (b) Informal resolution. Prior to withholding or limiting payments 
in accordance with this section, the Secretary attempts to resolve 
disputed issues informally with State officials.
    (c) Notice. If, after reasonable effort has been made to resolve the 
dispute, no resolution has been reached, the Secretary provides notice 
to the State agency of the intention to withhold or limit payments and 
of the opportunity for a hearing.
    (d) Withholding hearing. If the State agency requests a hearing, the 
Secretary designates one or more individuals, either from the Department 
or elsewhere, not responsible for or connected with the administration 
of this Program, to conduct a hearing in accordance with the provisions 
of 34 CFR part 81, subpart A.
    (e) Initial decision. The hearing officer issues an initial decision 
in accordance with 34 CFR 81.41.
    (f) Petition for review of an initial decision. The State agency may 
seek the Secretary's review of the initial decision in accordance with 
34 CFR 81.42.
    (g) Review by the Secretary. The Secretary reviews the initial 
decision in accordance with 34 CFR 81.43.
    (h) Final decision of the Department. The final decision of the 
Department is made in accordance with 34 CFR 81.44.
    (i) Judicial review. A State may appeal the Secretary's decision to 
withhold or limit payments by filing a petition for review with the U.S. 
Court of Appeals for the circuit in which the State is located, in 
accordance with section 107(d) of the Act.

(Authority: Sections 101(b), 107(c), and 107(d) of the Act; 29 U.S.C. 
721(b), 727(c)(1) and (2), and 727(d))

                             Administration