classified information within industry), except that functions vested by that Order in the head of a department shall be performed by the head of the appropriate operating agency;

(f) An option to the individual concerned to have the hearing open or closed to the public;

(g) A determination of the place of the hearing which takes into consideration the convenience of the individual concerned and any witnesses who might be testifying at the hearing. § 10.5

Hearing before Board or a Hearing Officer.

The hearing may be conducted, as determined by the Board Chairman, before the full Board as the hearing body, or before a Hearing Officer. The Hearing Officer may be (a) one of the members of the Board or (b) a nonmember who is qualified as a Hearing Officer under the Administrative Procedure Act. § 10.6

Preliminary decision; initial decision; final decision.

When the hearing is conducted by the Board itself, it shall prepare an initial decision for submission to the constituent agency. When the hearing is conducted before a Hearing Officer, the Hearing Officer shall prepare a preliminary decision for submission to the Board. The preliminary decision shall be reviewed by the Board and shall become the initial decision of the Board unless, and to the extent that, it is changed or modified by the Board. The initial decision of the Board shall be transmitted to the constituent agency, and shall become the final decision of the constituent agency, unless, and to the extent that, it is changed or modified by the constituent agency.

§ 10.7

Notice to the individual concerned and opportunity to submit comment on preliminary decision and initial decision.

Copies of the preliminary decision, if any, and of the initial decision shall be mailed promptly by the Hearing Officer or the Board, as the case may be, to the individual, or his counsel, with a notice affording him an opportunity to submit written comments thereon, within a specified reasonable time, to the Board in the case of a preliminary decision, and to the constituent agency in the case of an initial decision.

(a) "Act" means the Federal Property and Administrative Services Act of 1949, Public Law 152, 81st Congress (63 Stat. 377), as amended (40 U.S.C. 471 et seq.). Terms defined in the Act and not defined in this section, shall have in this part the meaning given to them in the Act.

(b) "Accredited" means approval by a recognized accreditation board or association on a regional, State, or national level, such as a State Board of Education or Health, State University, Middle States Association of College of Surgeons, etc. A college, university, or secondary school may be said to be accredited if the credits are accepted for transfer purposes by no fewer than three accredited colleges, universities, or secondary schools not connected or associated with it.

(c) "Administrator" means the Administrator of General Services.

(d) "Assigned property" means real and related personal property which, in the discretion of the Administrator or his designee, has been made available to the Department for transfer for educational or for public health purposes, including research.

(e) "Department" means the Department of Health, Education, and Welfare.

(f) "Disposal agency" means the executive agency of the Government which

has authority to assign or to consider assignment of property to the Department for transfer for health and educational utilization.

(g) "Excess" when used with respect to real property means any real property under the control of any Department or agency in the executive branch of the Government which is not required for its needs and the discharge of its responsibilities as determined by the head thereof.

(h) "Fair market value" means the highest price estimated in terms of money which the property will bring if exposed for sale in the open market by a seller who is willing but not obliged to sell, allowing a reasonable time to find a buyer who is willing but not obliged to buy, both parties having full knowledge of all the uses to which it is adapted and for which it is capable of being used.

(i) "Holding Agency" means the executive agency of the Government which has control and accountability for the real property involved.

(j) "Nonprofit institution" as used in this part means any institution, organization, or association, whether incorporated or unincorporated, no part of the net earnings of which inures or may lawfully inure to the benefit of any private shareholder or individual, and which has been held by the Internal Revenue Service to be tax-exempt under either the provisions of section 101(6) of the 1939 Internal Revenue Code, or section 501(c)(3) of the 1954 Internal Revenue Code.

(k) "Off-site property" means surplus buildings, underground utilities and all other removable improvements, including related personal property, to be transferred where located, by the Department for educational or for public health purposes, including research, for removal and use away from the site.

(1) "On-site" means surplus real property, including related personalty, to be transferred by the Department for educational or for public health purposes, including research, for use in place.

(m) "Public benefit allowance" means a discount on the purchase price of real property to be transferred for educational or public health purposes, including research, representing any benefit determined by the Secretary which has accrued or may accrue to the United States from use of surplus real property

for educational or public health purposes, including research.

(n) "Related personal property" means any personal property, (1) which is located on and is (i) an integral or necessary part of, or is (ii) essential to the operation of real property, or (2) which is determined by the Administrator to be otherwise related to the real property.

(0) "Secretary" means the Secretary of Health, Education, and Welfare.

(p) "State" means a State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, and the territories and possessions of the United States.

(q) "Surplus" when used with respect to real property means any excess real property not required for the needs and the discharge of the responsibilities of all Federal agencies as determined by the Administrator or his designee.

(a) It is the policy of the Department to foster and assure maximum utilization of surplus real property for educational and public health purposes, including research.

(b) Transfers may be made only to States, their political subdivisions, and instrumentalities, tax-supported educational or public health institutions, and nonprofit educational or public health institutions which have been held exempt from taxation under section 101 (6) of the Internal Revenue Code of 1939 (now substantially reenacted in section 501(c)(3) of the Internal Revenue Code of 1954).

(c) Real property will be requested for assignment only when the Department has determined that the property is suitable and needed for public health or educational purposes. The amounts of both real and related personal property to be transferred shall not be excessive to normal operating requirements. Such property, except for transfers contemplated under § 12.10 will not

be requested for assignment unless it is needed at the time of application for educational or for public health purposes, including research, or unless it will be so needed within the immediate foreseeable future. When construction is contemplated, the initiation of construction of the major functional facility in the approved program must begin within 18 months after the date of transfer. Construction shall be deemed to have been initiated when the transferee executes a contract providing a firm date in the reasonably near future for actual commencement of construction. The Department may, in its discretion, grant extensions of the 18-month period where the transferee can factually demonstrate that it has exercised due diligence in attempting to initiate construction within the said period and that such construction will be initiated during the period of any such extension.

(d) Land may be requested for assignment for transfer in accordance with § 12.10, for public tax-supported educational and public health purposes where, although there is no immediate need for the property, population trends, location, present facilities and plans for additional facilities justify immediate transfer to reasonably provide for future needs.

(e) Transfers will be made only when the proposed program is not in conflict with State or local zoning restrictions, building codes, or similar limitations.

(f) Only those activities devoted to academic, vocational or professional instruction, or organized and operated to promote and protect the public health, are eligible. Examples of such eligible activities are universities, colleges, junior colleges, junior or senior high schools, elementary schools or school systems, vocational or specialized schools, research activities, public libraries, and similar activities primarily educational in character, general and specialty hospitals, mental institutions, clinics, health sanitation activities (including water and sewer departments), facilities providing public health services, and similar activities devoted primarily to the protection and promotion of public health. The program of an institution eligible for a transfer must contemplate use of the property as an integral part of an activity of the kind above described. The activity must obtain such licenses for

operations as may be required by State and local law.

(g) Use of the property applied for must be for a fundamental educational or public health purpose. Examples of such fundamental utilizations are classrooms, vocational shops, libraries, laboratories, auditoriums, gymnasiums, cafeterias, dormitories, faculty housing, infirmaries, recreational facilities, hospitals, clinics, facilities providing public health services, and similar utilization. The property applied for must be for a purpose for which the eligible organization would be authorized to expend its own funds to acquire.

(h) An applicant's plan of operation shall not be approved unless it includes a provision that the applicant will not discriminate because of race, color, creed, or national origin in the use of any portions of the property.

§ 12.4 Limitations.

(a) Surplus property transferred pursuant to this part shall be disposed of "as is," "where is," and without warranty of any kind.

(b) Unless excepted by the General Services Administration from the assignment of property to this Department, mineral rights will, in all cases, be conveyed together with the surface rights. However, where the property to be conveyed overlies a known mineral structure of commercial value, the Department, in its discretion will:

(1) Convey the mineral rights separately from the surface rights upon payment by the transferee of the fair value thereof, as determined by the Department, without application of the public benefit allowance; or

(2) Convey the mineral rights together with the surface rights with the requirement in the conveyance instrument that, during the period of restricted use, all revenues or the reasonable value, as determined by the Department, of benefits to the transferee deriving directly or indirectly from any and all mineral leases or royalties shall be considered to have been received and held in trust by the transferee for the United States and shall be subject to direction and control of the Department, together with a reservation to the Government, in the conveyance instrument, at its option, to revert title to any and all mineral interests conveyed at any time during the period of restricted

use.

§ 12.5 Awards.

Where there is more than one applicant for the same property, the following principles shall be observed:

(a) Greater consideration will be given to programs of utilization most nearly consistent with the Government's purpose in acquiring or using the property. For instance, a surplus hospital will be considered for transfer for a health program in preference to an educational program if all other factors are equal.

(b) Property will be awarded to the applicant having a program of utilization which provides, in the opinion of the Department, the greatest public benefit.

(c) The Department will have, as an objective, the apportionment of an available property to fit the needs of as many applicant health and educational programs as is practicable.

§ 12.6 Notice of available property.

Reasonable publicity shall be given to the availability of surplus real property which is suitable for assignment to the Department for disposal for educational or public health use. The Department shall establish procedures reasonably calculated to afford all eligible users having a legitimate interest in acquiring property for educational or public health purposes including research who show due diligence a full and complete opportunity to make an application therefor: Provided, however, That publicity need not be given as to the availability of surplus real property which is occupied and being used by an applicant for eligible educational or public health purposes, including research, at the time the property is declared excess and the Department determines that the applicant has a continuing need for the property.

§ 12.7 Applications for surplus real

property.

Applications for surplus real property for educational or public health purposes, including research, shall be made to the Department through the regional office specified in the notice of availability. Where cooperative agreements have been entered into with State Agencies for Surplus Property and where a State instrumentality has been designated by State law or executive order to represent or assist educational and health institu

tions in acquiring Federal surplus real property, the applications will be made through State Agencies or instrumentalities to regional offices of the Department.

§ 12.8 Assignment of surplus real property.

(a) Notice of interest in a specific property for educational or public health utilization shall be furnished the General Services Administration or other agency having disposal jurisdiction by the Department at the earliest possible date.

(b) Requests to the Administrator, or his designee disposal agency, for assignment of surplus real property to the Department for disposal for educational and public health purposes, including research, shall be based on the following conditions:

(1) There is an acceptable application for the property of record with the Department.

(2) The applicant is willing, authorized, and in a position to assume immediate care, custody, and maintenance of the property.

(3) The applicant is able, willing and authorized to pay the external administrative expenses incident to a transfer.

(c) A copy of each request for assignment of surplus real property shall be furnished the holding agency.

§ 12.9 General disposal terms and conditions.

(a) Surplus real property disposals under this part shall be limited to transactions which are primarily for educational or public health purposes, including research. Transferees shall be entitled to public benefit allowances which shall be applied against the sale price of the property to be conveyed. These allowances will be computed in consideration of benefits which have accrued or may accrue to the United States from the use of such property for educational or public health purposes, including research. The computation of these public benefit allowances shall be in accordance with Exhibits A and B attached hereto and made a part hereof.

(b) Transfer of surplus real property for educational or public health purposes is subject to the disapproval of the Administrator within 30 days after notice is given to him of a proposed transfer.

(c) Transfer shall be on the following terms and conditions:

(1) The transferee shall be obligated to utilize the property continuously in accordance with an approved plan of operation.

(2) The transferee shall not be perImitted to sell, lease, rent, mortgage, encumber, or otherwise dispose of the property, or any part thereof, without prior written authorization of the Department or its designee.

(3) The transferee shall file with the Department such reports covering the utilization of the property as may be required.

(4) In the event the property is sold, leased, encumbered, disposed of, or is used for purposes other than those set forth in the approved plan without the consent of the Department, all revenues or the reasonable value, as determined by the Department, of benefits to the transferee deriving directly or indirectly from such use shall be considered to have been received and held in trust by the transferee for the United States and shall be subject to direction and control of the Department. The provisions of this paragraph shall not impair or affect the rights reserved to the United States in subparagraph (6) of this paragraph.

(5) It is not the Department's policy to require transferees to carry insurance as a condition of transfer. However, where a transferee carries insurance against damages to or loss of on-site property due to fire or other hazards, and where loss of or damage to transferred Federal surplus real property occurs, said insurance and all moneys payable to the transferee, its successors or assigns, thereunder shall be held in trust by the transferee, its successors or assigns. All such moneys shall promptly used by the transferee for the purpose of repairing and restoring the property for its former use, or replacing it with equivalent or more suitable facilities. If not so used, there shall be paid to the Treasurer of the United States an amount not exceeding the unamortized public benefit allowance of the buildings, structures or improvements lost, damaged, or destroyed.

be

(6) With respect to on-site property, in the event of noncompliance with any of the conditions of the transfer, title to the property transferred, and right to immediate possession shall, at the option

of the Department, revert to the Government. In the event title is reverted to the United States for noncompliance or voluntarily reconveyed in lieu of reverter, the transferee, at the option of the Department, shall be responsible and be required to reimburse the Government for the decreased value of the property not due to reasonable wear and tear, acts of God, and alterations and conversions made by the transferee to adapt the property to the educational or health use for which the property was acquired. The Government shall, in addition thereto, be reimbursed for such damages including such costs as may be incurred in recovering title to or possession of the property as it may sustain as the result of the noncompliance.

(7) With respect to off-site property, in the event of noncompliance with any of the terms and conditions of the transfer, the unearned public benefit allowance shall, at the option of the Department, become immediately due and payable or, if the property or any portion thereof is sold, leased, or otherwise disposed of without authorization from the Department or its designee, such sale, lease, or other disposal shall be for the benefit and account of the United States and the United States shall be entitled to the proceeds of any such disposal. In the event the transferee fails to remove the property or any portion thereof within the time specified, then, in addition to the rights reserved above, at the option of the Department, all right, title, and interest in and to such unremoved property shall be retransferred to other eligible applicants or shall be forfeited to the United States.

(8) With respect to on-site property, the Government, at its option, shall have the right during any period of emergency declared by the President of the United States or by the Congress of the United States to the full unrestricted use of the surplus real property, or of any portion thereof, disposed of in accordance with the provisions of this part. Such use may be either exclusive or nonexclusive. Prior to the expiration or termination of the period of restricted use by the transferee, the Government shall not be obligated to pay rent or any other fees or charges during the period of emergency, except that the Government shall (i) bear the entire cost of maintenance of such portion of the property used by it exclusively