1. (a) If a grantee fails to comply with the terms of a grant or of this chapter, the council will, in its discretion, no sooner than 15 days after providing the grantee with written notice of the failure to comply, suspend the grant. A grantee may not use grant money to pay an obligation incurred during the period of the suspension; however, the grantee may pay an obligation incurred before the period of suspension if the grantee obtains the approval of the council and if payment of the obligation would otherwise be allowed under this chapter or under the terms of the grant. A suspension under this subsection remains in effect until

   1. (1) the grantee takes corrective action and gives assurance of the corrective action satisfactory to the council,
   2. (2) the grantee successfully appeals the suspension, or
   3. (3) the council or grantee terminates the grant.
2. (b) The council will, in its discretion, terminate a grant, in whole or in part, before the end of the grant period if the grantee fails to comply with the terms of the grant or of this chapter. The council will notify the grantee in writing at least 30 days before the termination. The notice will state the reasons for the termination, the effective date, and the portion of the grant to be terminated if the termination is partial. The council will, in its discretion, make necessary arrangements for managing the grant before the effective date of the termination and for closing the grant.
3. (c) The council will, in its discretion, terminate a grant, in whole or in part, before the end of the grant period, with the consent of the grantee.
4. (d) A grantee may terminate a grant, in whole or in part, before the end of the grant period upon written notification to the council stating the reasons for the termination, the effective date, and the portion of the grant to be terminated if the termination is partial.
5. (e) If a grant is terminated, payments to the grantee or recovery of money by the council will be made in accordance with the rights and liabilities of the grantee and the council. The grantee may not incur new obligations to be paid with money from a terminated grant or the terminated portion of a grant after receiving notice of the termination of the grant. The grantee shall make a reasonable effort to cancel as many as possible of the grantee's outstanding obligations that, but for the termination, would be payable, in whole or in part, with money from the grant. However, to the extent that the grantee cannot cancel those obligations, the council will, in its discretion, provide for payments to the grantee to satisfy that part of an obligation that, but for the termination, would be payable with money from the grant, if the obligation was properly incurred before the grantee received notice of the termination.

(Eff. 6/25/88, Register 106)

Authority: AS 18.66.050