[Code of Federal Regulations]
[Title 34, Volume 1]
[Revised as of July 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 34CFR81.33]

[Page 232-233]
 
                           TITLE 34--EDUCATION
 
PART 81--GENERAL EDUCATION PROVISIONS ACT--ENFORCEMENT--Table of Contents
 
                Subpart B--Hearings for Recovery of Funds
 
Sec. 81.33  Mitigating circumstances.

    (a) A recipient that is a State or local educational agency and that 
has made an unallowable expenditure or otherwise failed to account 
properly for funds is not required to return any amount that is 
attributable to the mitigating circumstances described in paragraph (b), 
(c), or (d) of this section.
    (b) Mitigating circumstances exist if it would be unjust to compel 
the recovery of funds because the recipient's violation was caused by 
erroneous written guidance from the department. To prove mitigating 
circumstances under this paragraph, the recipient shall prove that--
    (1) The guidance was provided in response to a specific written 
request from the recipient that was submitted to the Department at the 
address provided by notice published in the Federal Register under this 
section;
    (2) The guidance was provided by a Departmental official authorized 
to provide the guidance, as described by that notice;

[[Page 233]]

    (3) The recipient actually relied on the guidance as the basis for 
the conduct that constituted the violation; and
    (4) The recipient's reliance on the guidance was reasonable.
    (c) Mitigating circumstances exist if it would be unjust to compel 
the recovery of funds because the recipient's violation was caused by 
the Department's failure to provide timely guidance. To prove mitigating 
circumstances under this paragraph, the recipient shall prove that--
    (1) The recipient in good faith submitted a written request for 
guidance with respect to the legality of a proposed expenditure or 
practice;
    (2) The request was submitted to the Department at the address 
provided by notice published in the Federal Register under this section;
    (3) The request--
    (i) Accurately described the proposed expenditure or practice; and
    (ii) Included the facts necessary for the Department's determination 
of its legality;
    (4) The request contained the certification of the chief legal 
officer of the appropriate State educational agency that the officer--
    (i) Examined the proposed expenditure or practice; and
    (ii) Believed it was permissible under State and Federal law 
applicable at the time of the certification;
    (5) The recipient reasonably believed the proposed expenditure or 
practice was permissible under State and Federal law applicable at the 
time it submitted the request to the Department;
    (6) No Departmental official authorized to provide the requested 
guidance responded to the request within 90 days of its receipt by the 
Department; and
    (7) The recipient made the proposed expenditure or engaged in the 
proposed practice after the expiration of the 90-day period.
    (d) Mitigating circumstances exist if it would be unjust to compel 
the recovery of funds because the recipient's violation was caused by 
the recipient's compliance with a judicial decree from a court of 
competent jurisdiction. To prove mitigating circumstances under this 
paragraph, the recipient shall prove that--
    (1) The recipient was legally bound by the decree;
    (2) The recipient actually relied on the decree when it engaged in 
the conduct that constituted the violation; and
    (3) The recipient's reliance on the decree was reasonable.
    (e) If a Departmental official authorized to provide the requested 
guidance responds to a request described in paragraph (c) of this 
section more than 90 days after its receipt, the recipient that made the 
request shall comply with the guidance at the earliest practicable time.

(Authority: 20 U.S.C. 1221e-3, 1234(f)(1), 1234b(b), and 3474(a))

[54 FR 19512, May 5, 1989. Redesignated at 58 FR 43473, Aug. 16, 1993]