Financial Eligibility, 45545-45565 [05-15553]
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EPA APPROVED REGULATIONS IN THE TEXAS SIP—Continued
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State approval/submittal date
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EPA approval date
Explanation
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Subchapter C—Vehicle Inspection and Maintenance; Low Income Vehicle Repair Assistance, Retrofit, and Accelerated Vehicle Retirement
Program; and Early Action Compact Counties
Division 3: Early Action Compact Counties
Section 114.80 ......
Applicability ...................................
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Vehicle Emissions Inspection Requirements.
Control Requirements ...................
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Prohibitions ...................................
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Equipment Evaluation Procedures
for Vehicle Exhaust Gas Analyzers.
Low Income Repair Assistance
Program (LIRAP) for Participating Early Action Compact
Counties.
Inspection and Maintenance Fees
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Section 114.87 ......
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Section
[FR Doc. 05–15607 Filed 8–5–05; 8:45 am]
SUPPLEMENTARY INFORMATION:
BILLING CODE 6560–50–P
1007(a) of the Legal Services
Corporation Act requires LSC to
establish guidelines, including setting
maximum income levels, for the
determination of applicants’ financial
eligibility for LSC-funded legal
assistance. Part 1611 implements this
provision, setting forth the requirements
relating to determination and
documentation of client financial
eligibility. Part 1611 also sets forth
requirements related to client retainer
agreements.
LEGAL SERVICES CORPORATION
45 CFR Part 1611
Financial Eligibility
Legal Services Corporation.
Final rule.
AGENCY:
ACTION:
SUMMARY: The Legal Services
Corporation (‘‘LSC’’ or ‘‘Corporation’’) is
amending its regulations relating to
financial eligibility for LSC-funded legal
services and client retainer agreements.
The revisions are intended to reorganize
the regulation to make it easier to read
and follow; simplify and streamline the
requirements of the rule to ease
administrative burdens faced by LSC
recipients in implementing the
regulation and to aid LSC in
enforcement of the regulation; and to
clarify the focus of the regulation on the
financial eligibility of applicants for
LSC-funded legal services.
DATES: This final rule is effective
September 7, 2005.
FOR FURTHER INFORMATION CONTACT:
Mattie C. Condray, Senior Assistant
General Counsel, Office of Legal Affairs,
Legal Services Corporation, 3333 K. St.,
NW., Washington, DC 20007–3522;
(202) 295–1624 (phone); (202) 337–6519
(fax); mcondray@lsc.gov. (e-mail).
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Procedural Background
On June 30, 2001, LSC initiated a
Negotiated Rulemaking and appointed a
Working Group comprised of
representatives of LSC (including the
Office of Inspector General), the
National Legal Aid and Defenders
Association, the Center for Law and
Social Policy, the American Bar
Association’s Standing Committee on
Legal Aid and Indigent Defendants and
a number of individual LSC recipient
programs. The Negotiated Rulemaking
Working Group met three times
throughout 2002 and developed a Draft
Notice of Proposed Rulemaking (NPRM)
which was the basis for the NPRM
published by LSC on November 22,
2002 proposing significant revisions to
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Part 1611 (67 FR 70376).1 Futher action
on the rulemaking was suspended, in
deference to a request by Representative
James Sensenbrenner, Chairman of the
U.S. House of Representatives Judiciary
Committee, that LSC suspend action on
the rulemaking pending the
confirmation of new LSC Board of
Directors members appointed by
President Bush.
After the confirmation of nine new
board members and the appointment of
a new LSC President, the reconstituted
Operations and Regulations Committee
resumed consideration of the Part 1611
rulemaking in early 2004. At the
meeting of the full Board of Directors on
April 30, 2005, the Board approved the
republication of a revised NPRM for
public comment. That NPRM was
published on May 24, 2005 (70 FR
29695).
LSC received thirteen (13) comments
on the NPRM, including nine comments
from individual LSC grant recipients,
one comment from a senior attorney
with a recipient commenting in his
personal capacity, one comment from a
member of the public, and comments
from the Center for Law and Social
Policy on behalf of the National Legal
Aid and Defenders Association, and the
American Bar Association’s Standing
Committee on Legal Aid and Indigent
1 For additional discussion of the Negotiated
Rulemaking Working Group, see 67 FR 70376
(November 22, 2002).
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Defendants. With minor exceptions
(discussed in greater detail below), the
commenters strongly supported the
proposed revisions. Upon receipt of the
comments, LSC prepared a Draft Final
Rule discussing the comments and
making permanent the proposed
revisions. The Draft Final Rule was
considered by the Operations and
Regulations Committee of the Board of
Directors at its meeting of July 28, 2005,
and the Final Rule was adopted by the
Board of Directors at its meeting of July
30, 2005.
Revisions to Part 1611
While specific revisions are discussed
in greater detail in the Section-bySection analysis below, it should be
noted that the revisions reflect several
overall goals of the original Negotiated
Rulemaking Working Group:
Reorganization of the regulation to make
it easier to read and follow;
simplification and streamlining of the
requirements of the rule to ease
administrative burdens faced by LSC
recipients in implementing the
regulation, facilitate compliance and aid
LSC in enforcement of the regulation;
and clarification of the focus of the
regulation on the financial eligibility of
applicants for LSC-funded legal services
as an issue separate from decisions on
whether to accept a particular client for
service. In particular, LSC is
significantly reorganizing and
simplifing the sections of the rule which
set forth the various requirements
relating to establishment of recipient
annual income and asset ceilings,
authorized exceptions and
determinations of eligibility. These
changes are intended to clarify the
regulation and include substantive
changes to make intake simpler and less
burdensome and render basic financial
eligibility determinations easier for
recipients to make. LSC is also moving
the existing provisions on group
representation, with some amendment,
to a separate section of the regulation.
Finally, LSC is simplifying and
clarifying the retainer agreement
requirement.
Title of Part 1611
LSC is changing the title of Part 1611
from ‘‘Eligibility’’ to ‘‘Financial
Eligibility.’’ This change is intended,
first, to make clear that with respect to
individuals seeking LSC-funded legal
assistance, the standards of this part
deal only with the financial eligibility of
such persons. LSC believes this change
will help clarify that a finding of
financial eligibility under Part 1611
does not create an entitlement to
service. Rather, financial eligibility is
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merely a threshold question and the
issue of whether any otherwise eligible
applicant will be provided with legal
assistance is a matter for the recipient to
determine with reference to its priorities
and resources. In addition, this part
does not address eligibility based on
citizenship or alienage status; those
eligibility requirements are set forth in
Part 1626 of LSC’s regulations,
Restrictions on Legal Assistance to
Aliens. Finally, LSC received one
comment suggesting that because this
Part contains LSC’s requirements
pertaining to when and how recipients
must execute retainer agreements with
clients (a subject not directly related to
financial eligibility determinations), that
the title of this Part should refer to
retainer agreements. While the
requirements for retainer agreements are
included in this Part, it primarily
addresses financial eligibility and LSC
disagrees that retainer agreements
should be specifically included in the
title of this Part.
Section-by-Section Analysis
Section 1611.1—Purpose
LSC is revising this section to make
clear that the standards of this part
concern only the financial eligibility of
persons seeking LSC-funded legal
assistance and that a finding of financial
eligibility under Part 1611 does not
create an entitlement to service. In
addition, LSC is removing the language
in the current regulation referring to
giving preferences to ‘‘those least able to
obtain legal assistance.’’ Although the
original LSC Act contained language
indicating that recipients should
provide preferences in service to the
poorest among applicants, that language
was deleted when the Act was
reauthorized in 1977 and has remained
out of the legislation ever since.
Moreover, section 504(a)(9) of the FY
1996 appropriations act, Public Law
104–134 (incorporated by reference in
the current appropriations act and
implemented by regulation at 45 CFR
Part 1620) provides that recipients are to
make service determinations in
accordance with written priorities,
which take into account factors other
than the relative poverty among
applicants. Thus, as there is no statutory
basis for a preference for those least able
to afford assistance and because LSC
believes that the regulation should focus
on financial eligibility determinations
without reference to issues relating to
determinations by a recipient to provide
services to a particular applicant, LSC
has determined that such language
should be removed from the regulation.
LSC is also adding language specifying
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that this Part also sets forth financial
standards for groups seeking legal
assistance supported by LSC funds.
Finally, LSC is adding a reference to the
retainer agreement requirement in the
purpose section to provide a notice at
the beginning of the regulation that this
subject is included in Part 1611. LSC
received several comments specifically
supporting and no comments objecting
to these changes. LSC adopts the
revisions as proposed.
Section 1611.2—Definitions
LSC is adding definitions for several
terms and amending the definitions for
each of the existing terms currently
defined in the regulation. LSC believes
that the new definitions and the
amended definitions will help to make
the regulation more easily
comprehensible.
Section 1611.2(a)—Advice and Counsel
LSC is adding a definition of the term
‘‘advice and counsel’’ as that term
appears in proposed section 1611.9,
Retainer Agreements. Under the new
definition, ‘‘advice and counsel’’ is
defined as limited legal assistance that
involves the review of information
relevant to the client’s legal problem(s)
and counseling the client on the
relevant law or action(s) to take to
address the legal problem(s). Advice
and counsel does not encompass
drafting of documents or making thirdparty contacts on behalf of the client.
Thus, for example, advising a client of
what notice a landlord is required to
provide to a tenant before evicting the
tenant would fall under ‘‘advice and
counsel,’’ but making a phone call to a
landlord to prevent the landlord from
evicting a tenant would not be
considered ‘‘advice and counsel.’’
Several commenters specifically
supported this proposed definition, and
no commenters opposed the proposed
definition. Accordingly, LSC adopts the
definition as proposed.
Three of the commenters who
specifically supported this proposed
definition did express a concern,
however, about the statement in the
preamble to the NPRM in which LSC
stated that LSC anticipates that advice
and counsel will generally be
characterized by a one-time or very
short term relationship between the
attorney and the client. These
commenters noted that there are any
number of situations in which a
recipient attorney has to do some
research in order to properly advise a
client or in which the attorney provides
advice and counsel to a client on a
limited number of occasions, but over a
somewhat extended period of time.
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These commenters suggested deleting
any reference to an anticipated time
period in relation to the intended
meaning of ‘‘advice and counsel.’’
The use of the word ‘‘generally’’ in
the sentence the commenters objected to
was intended to convey that LSC is
aware that there are circumstances in
which a case would qualify as ‘‘advice
and counsel’’ notwithstanding that the
advice and counsel may be provided
over a somewhat extended time period.
Nonetheless, it is the case that many, if
not most, advice and counsel cases
involve a short-term relationship
between the attorney and the client.
Even if the attorney must do some
research prior to providing advice, LSC
does not expect that the need to do
research will create a relationship
which extends for a significant period of
time in most cases. Indeed, part of the
justification for exempting advice and
counsel cases from the retainer
agreement requirement has been the fact
that such relationships are of generally
short duration, such that requiring the
recipient to ensure an executed retainer
agreement is obtained may take longer
than the time it takes for the attorney to
provide the advice and counsel to the
client. If, instead, it was the case that
advice and counsel cases typically last
for a long time, the opportunity to
obtain retainer agreements would not be
lacking. Thus, LSC continues to
anticipate that in most cases ‘‘advice
and counsel’’ will be characterized by a
one-time or short term relationship
between the attorney and the client, but
recognizes that this may not always be
the case. Whether a particular case
meets the definition of ‘‘advice and
counsel’’ or not will continue to be
determined on a case-by-case basis,
considering the facts and circumstances.
Section 1611.2(b)—Applicable Rules of
Professional Responsibility
LSC is adding a definition of the term
‘‘applicable rules of professional
responsibility’’ as that term appears in
proposed sections 1611.8, Change in
Financial Eligibility Status and 1611.9,
Retainer Agreements. This definition is
intended to make clear that the
references in the regulation refer to the
rules of ethics and professional
responsibility applicable to attorneys in
the jurisdiction where the recipient
either provides legal services or
maintains its records. LSC received no
comments objecting to this definition
and adopts the definition as proposed.
Section 1611.2(c)—Applicant
Consistent with the intention to keep
the focus of the regulation on the
standards and criteria for determining
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the financial eligibility of persons
seeking legal assistance supported with
LSC funds, LSC has decided to use the
term ‘‘applicant’’ throughout the
regulation to emphasize the distinction
between applicants, clients, and persons
seeking or receiving assistance
supported by other than LSC funds.
Accordingly, LSC is adding a definition
of applicant providing that an applicant
is an individual seeking legal assistance
supported with LSC funds. Groups,
corporations and associations are
specifically excluded from this
definition, as the eligibility of groups is
addressed wholly within section 1611.6.
Recipients currently may provide
legal assistance without regard to a
person’s financial eligibility under Part
1611 when the assistance is supported
wholly by non-LSC funds. LSC is not
changing this (in fact, this principle is
restated in section 1611.4(a)) and
believes that the use of the term
applicant as adopted herein will help to
clarify the application of the rule.
LSC received no comments objecting
to these changes and adopts the
revisions as proposed.
Section 1611.2(d)—Assets
LSC is adding a definition of the term
assets to the regulation. The new
definition, ‘‘cash or other resources that
are readily convertible to cash, which
are currently and actually available to
the applicant,’’ is intended to provide
some guidance to recipients as to what
is meant by the term assets, yet provide
considerable latitude to recipients in
developing a description of assets that
addresses local concerns and
conditions. The key concepts intended
in this definition are (1) ready
convertibility to cash; and (2)
availability of the resource to the
applicant.
Although the term is not defined in
the regulation, current section 1611.6(c)
states that ‘‘assets considered shall
include all liquid and non-liquid assets
* * *’’ The intent of this requirement is
that recipients are supposed to consider
all assets upon which the applicant
could draw in obtaining private legal
assistance. While there was no intent to
change the underlying requirement, in
discussing the issues of assets and asset
ceilings in the Working Group it became
apparent that the terms ‘‘liquid’’ and
‘‘non-liquid’’ were obscuring
understanding of the regulation. To
some, the term ‘‘non-liquid’’ implied
something not readily convertible to
cash, while to others the term implied
an asset that was simply something
other than cash, without regard to the
ease of converting the asset to cash.
Thus, the Working Group agreed that
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the terms ‘‘liquid’’ and ‘‘non-liquid’’
should be eliminated and that the
regulation should focus instead on the
ready convertibility of the asset to cash.
The other key concept in the
definition of asset is the availability of
the resource to the applicant. Although
the current regulation notes that the
recipient’s asset guidelines ‘‘shall take
into account impediments to an
individual’s access to assets of the
family unit or household,’’ the Working
Group was of the opinion that this
principle could be more clearly
articulated. LSC believes that the
proposed language accomplishes that
purpose.
LSC received numerous comments
specifically supporting the proposed
definition of assets. LSC, however, also
received one comment expressing
concern that defining assets as resources
‘‘readily convertible to cash’’ could
preclude recipients from deeming all
non-primary residence real estate as an
asset and require a more lengthy inquiry
into the property’s ready convertibility
to cash. LSC notes at the outset that
under the current rules, recipients are
already required to ‘‘take into account
impediments’’ to access to the
resources. Thus, to the extent that the
monetary value of a particular
applicant’s real property is not available
to an applicant, recipients should
already be taking that inaccessibility
into account in reviewing the
applicant’s resources. Nonetheless, LSC
believes that recipients currently have
sufficient discretion to establish a
rebuttable presumption that an
applicant’s non-primary residence real
property is a resource readily
convertible to cash and countable
toward the recipient’s asset ceiling and
also to determine that a particular piece
of property is not readily convertible to
cash and, as such, should not be
considered a resource available to the
applicant for the purpose of the asset
ceiling. Nothing in the rule being
adopted today disturbs that discretion.
Accordingly, LSC adopts the definition
as proposed.
Section 1611.2(e)—Brief Services
LSC is adding a definition of the term
‘‘brief services’’ as it is used in section
1611.9, Retainer Agreements. LSC notes
that brief services is legal assistance
characterized primarily by being
distinguishable from both extended
service and advice and counsel. Under
the new definition, brief service is the
performance of a discrete task (or tasks)
which are not incident to continuous
representation in a case but which
involve more than the mere provision of
advice and counsel. Examples of brief
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services include activities such as the
drafting of documents or personalized
assistance with the completion of
pleadings being prepared and filed by
pro se litigants, and making limited
third-party contacts on behalf of a client
over, in most instances, a short time
period.
LSC received two comments
specifically supporting the proposed
definition. LSC received one comment
noting that the proposed definition does
not address the relative simplicity or
brevity of documents which may be
drafted by a recipient within the scope
of brief service. This commenter was
concerned that the definition was
contrary to the Case Service Reporting
(CSR) definition of ‘‘brief services.’’ This
commenter suggested changing the
definition or adding a statement that the
definition in the regulation should not
apply to the CSR. LSC notes that this
definition of ‘‘brief services’’ is, while
not identical, specifically intended to be
fully consistent with the definition of
‘‘brief services’’ in the CSR. As such,
LSC disagrees that the definitions are
inconsistent and LSC adopts the
definition as proposed.
Section 1611.2(f)—Extended Service
LSC is adding a definition of the term
‘‘extended service’’ as that term is used
in section 1611.9, Retainer Agreements.
As defined, extended service means
legal assistance characterized by the
performance of multiple tasks incident
to continuous representation in which
the recipient undertakes responsibility
for protecting or advancing the client’s
interests beyond advice and counsel or
brief services. Examples of extended
service include representation of a
client in litigation, administrative
adjudicative proceeding, alternate
dispute resolution proceeding, or
extended negotiations with a third
party. LSC received no comments
objecting to the proposed definition and
adopts the definition as proposed.
Section 1611.2(f)—Governmental
Program for Low Income Individuals or
Families
LSC is changing the term that is used
in the regulation from ‘‘governmental
program for the poor’’ to ‘‘governmental
program for low income individuals and
families.’’ This change is not intended
to create any substantive change in the
current definition, but merely reflect
preferred nomenclature. LSC received
no comments objecting to this change
and adopts the revision as proposed.
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Section 1611.2(g)—Governmental
Program for Persons With Disabilities
LSC is adding a definition of the term
‘‘governmental program for persons
with disabilities.’’ LSC is including in
the authorized exceptions to the annual
income ceilings an exception relating to
applicants seeking to obtain or maintain
govermental benefits for persons with
disabilities. Accordingly, it is
appropriate to include a definition for
this term. The definition, ‘‘any Federal,
State or local program that provides
benefits of any kind to persons whose
eligibility is determined on the basis of
mental and/or physical disability,’’ is
intended to be similar in structure and
application to the definition of the term
‘‘governmental program for low income
individuals and families.’’ LSC received
no comments objecting to the proposed
definition and adopts the definition as
proposed.
Section 1611.2(h)—Income
LSC is revising the current definition
of income to refer to the total cash
receipts of a ‘‘household,’’ instead of a
‘‘family unit’’ and to make clear that
recipients have the discretion to define
the term household in any reasonable
manner. Currently, the definition of
income refers to ‘‘family unit,’’ while
the phrase ‘‘household or family unit’’
appears in the section on asset ceilings.
It appears that there is no difference
intended by the use of different terms in
these sections and LSC believes that it
is appropriate to simplify the regulation
to use the same single term in each
provision, without creating a
substantive change in the meaning of
either term. LSC has decided to use
‘‘household’’ instead of ‘‘family unit’’
because it is a simpler, more
understandable term.
As noted above, LSC does not intend
the use of the term ‘‘household’’ to have
a different meaning from the current
term ‘‘family unit.’’ Under current
guidance from the LSC Office of Legal
Affairs, recipients have considerable
latitude in defining the term ‘‘family
unit.’’ Specifically, OLA External
Opinion No. EX–2000–1011 states:
Neither the LSC Act nor the LSC
regulations define ‘‘family unit’’ for client
eligibility purposes. The Corporation will
defer to recipient determinations on this
issue, within reason. Recipients may
consider living arrangements, familial
relationships, legal responsibility, financial
responsibility or family unit definitions used
by government benefits agencies, amongst
other factors, in making such decisions.
LSC intends that this standard would
also apply to definitions of ‘‘household’’
and the definition makes this clear.
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LSC received one comment
specifically supporting the change from
‘‘household or family unit’’ to
‘‘household.’’ This commenter
suggested that the change would
provide ‘‘more flexibility’’ to recipients.
LSC notes that the change in the
terminology used in the regulation in
this instance is not creating any
substantive change. As noted above,
recipients already have considerable
discretion and flexibility to determine
the scope of an applicant’s household;
the change in terminology being
adopted with this final rule neither
increases nor decreases that discretion
and flexibility. LSC adopts the change
in terminology as proposed.
Throughout the course of the
rulemaking field representatives have
suggested deleting the words ‘‘before
taxes’’ from the definition of income.
Five commenters reiterated this position
in comments on the NPRM, while one
commenter specifically opposed
deleting ‘‘before taxes’’ from the
definition of income. Such a change is
desirable, the proponents contend,
because automatically deducted taxes
are not available for an applicant’s use
and the failure to take current taxes into
account in determining income has an
adverse impact on the working poor.
While it is undoubtedly true that
automatically deducted taxes are not
available to an applicant, LSC agrees
with the other commenter that the
definition of income is not the
appropriate place in the regulation to
deal with this issue.
Taking the phrase ‘‘before taxes’’ out
of the definition of income would
effectively change the meaning of
income from gross income to net income
after taxes. The term income has meant
gross income since the original adoption
of the financial eligibility regulation in
1976. See 41 FR 51604, at 51606,
November 23, 1976. The maximum
income guidelines are based on the
Department of Health and Human
Services (DHHS) Federal Poverty
Guidelines amounts. DHHS’’ Federal
Poverty Guidelines are, by law, based on
the Census Bureau’s Federal Poverty
Thresholds, which are calculated using
gross income before taxes. 42 U.S.C.
9902(2); Office of Management and
Budget Directive No. 14 (May 1978).
Changing the definition of income
effectively from gross to net after taxes
would introduce two different uses of
the term income into the regulations
(one use in the income guidelines
published annually by LSC in Appendix
A to Part 1611 and another use in the
text of the regulation). This is
problematic in two ways.
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First, with respect to the annual
income ceiling limits, unilaterally
changing the standard from gross to net
income after taxes would arguably
exceed LSC’s authority. LSC is required
by the LSC Act to set its maximum
income guidelines in consultation with
the Office of Management and Budget
and the Governors of the states. 42
U.S.C. 2996f(a)(2)(A). The annual
income ceiling agreed to by LSC, OMB
and the Governors (set at 125% of the
Federal Poverty Guidelines amounts)
was arrived at based on gross income;
changing to a net income after taxes
standard would effectively increase the
annual ceiling amounts beyond what
was agreed. LSC is concerned that it
could only undertake such an action in
consultation with OMB and the
Governors, which consultation has not
happened.
Second, adopting a net income after
taxes standard would, as one
commenter noted, increase the upper
income limit as well. This would have
the effect of further increasing the
potential eligible applicant pool.
Although LSC believes that the slight
increase in the eligible applicant pool
which will result from increasing the
upper income limit from 187.5% to
200% of the Federal Poverty Guidelines
amounts is justifiable (see discussion of
section 1611.5, below), LSC is
concerned that an additional increase in
the eligible applicant pool is not
necessary to effectively deal with the
practical problem that taxes, indeed,
represent funds unavailable to the
applicant.
It was suggested in several comments
that adopting a net income after taxes
standard is preferable because it would
be easier for recipients as they would
only have to consider ‘‘take home pay’’
in computing income at intake.
However, as one commenter noted, take
home pay is often not simply pay net of
taxes; there are other deductions from
gross pay which an applicant could
have (e.g., 401(k) deductions, medical
savings account deductions, insurance
premium deductions, child support,
garnishments). In such cases, the
recipient would not be able to simply
determine that income equaled take
home pay, but would have to identify
and add amounts for such deductions
from gross pay back in when
determining the applicant’s income. In
addition, some, but not all, of such other
deductions from pay could qualify as
factors under the allowable exceptions
to the annual income ceiling amounts.
LSC is concerned that this would add
confusion in the income determination
process, contrary to the intent of this
rulemaking.
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None of the comments supporting
removal of ‘‘before taxes’’ from the
definition of income addressed the
problems discussed above. Moreover,
LSC believes that the practical problem
(that taxes, indeed, are funds
unavailable to the applicant), is better
addressed by treating taxes as a separate
factor which can be considered by the
recipient in making financial eligibility
determinations. (This matter is
presented in greater detail in the
discussion of section 1611.5, below.)
Further, although LSC does not consider
defining income as gross income (rather
than net after taxes) as presenting any
‘‘apparent preference’’ for non-working
applicants, permitting current taxes to
be a factor to be considered by the
recipient in making financial eligibility
determinations eliminates any such
apparent preference that may be
perceived as existing. Accordingly, LSC
declines to remove the words ‘‘before
taxes’’ from the definition of income.
In addition, LSC is moving the
information on what is encompassed by
the term ‘‘total cash receipts’’ into the
definition of income. LSC believes that
having this information in the definition
of income, rather than in a separate
definition will make the regulation
easier to understand, particularly as the
term ‘‘total cash receipts’’ is used only
in the definition of income. In
incorporating the language on ‘‘total
cash receipts,’’ LSC is retaining the
current definition of the term without
any substantive amendment, but
reorganizing it to make it easier to
understand. Specifically, LSC is
separating the definition into two
sentences, one of which sets forth those
things which are included in total cash
receipts and one which sets forth those
things which are specifically excluded
from the definition of total cash
receipts. It is worth noting that the list
of items included is not intended to be
exhaustive, while the list of items to be
excluded is intended to be exhaustive.
LSC received no comments objecting to
these changes and adopts the revisions
as proposed.
Finally, LSC wishes to restate in this
preamble guidance on the treatment of
Indian trust fund monies in making
income determinations. Several
provisions of Federal law regulate
whether or not income or interests in
Indian trusts are taxable or should be
considered as resources or income for
federal benefits. See 25 U.S.C. 1407–
1408; 25 U.S.C. 117a–117c. Under the
terms of those laws, LSC has determined
that recipients may disregard up to
$2000 per year of funds received by
individual Native Americans that are
derived from income or interests in
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Indian trusts from being considered
income for the purpose of determining
financial eligibility of Native American
applicants for service, and that such
funds or interests of individual Native
Americans in trust or restricted lands
should not be considered as a resource
for the purpose of LSC financial
eligibility. See LSC Office of Legal
Affairs External Opinion 99–17, August
27, 1999.
As noted in External Opinion 99–17,
the exclusion applies only to funds and
other interests held in trust by the
federal government and investment
income accrued therefrom. The
following have been found to qualify for
the exclusion from income in
determining eligibility for various
government benefits: income from the
sale of timber from land held in trust;
income derived from farming and
ranching operations on reservation land
held in trust by the federal government;
income derived from rentals, royalties,
and sales proceeds from natural
resources of land held in trust; sales
proceeds from crops grown on land held
in trust; and use of land held in trust for
grazing purposes. On the other hand,
per capita distributions of revenues
from gaming activity on tribal trust
property are not protected because such
funds are not held in trust by the federal
government. Thus, such distributions
are considered to be income for
purposes of determining LSC financial
eligibility.
Total Cash Receipts
LSC is deleting the definition of ‘‘total
cash reciepts,’’ currently at section
1611.2(h), as a separately defined term
in the regulation. Rather, LSC has
reorganized the information contained
in the definition and moved it directly
into the definition of ‘‘income.’’ As
noted above, the only place the term
‘‘total cash reciepts’’ is used is in the
defintion of ‘‘income’’ and LSC believes
that having a separate definition for
‘‘total cash reciepts’’ is cumbersome and
unnecessary. LSC received no
comments objecting to this change and
adopts the revision as proposed.
Section 1611.3—Financial Eligibility
Policies
LSC is creating a new section 1611.3,
Financial Eligibility Policies, based on
requirements currently found in
sections 1611.5(a), 1611.3(a)–(c) and
1611.6. The comments generally
supported these revisions, although LSC
received a few comments suggesting
some changes to what was proposed.
LSC adopts the revisions as proposed,
with certain amendments, as discussed
below.
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The new section 1611.3 addresses in
one section recipients’ responsibilities
for adopting and implementing financial
eligibility policies. Under the new
section, the current requirement that
recipients’ governing bodies have to
adopt policies for determining financial
eligibility is retained. However, LSC is
changing the current requirement for an
annual review of these policies and
instead will now require recipients’
governing bodies to conduct triennial
reviews of policies. The Working Group
agreed that an annual review was
unnecessary and has tended to result in
rather pro forma reviews of policies.
LSC believes that a triennial review
requirement will be sufficient to ensure
that financial eligibility policies remain
relevant and will encourage a more
thorough and thoughtful review when
such review is undertaken. The section
also adds an express requirement that
recipients adopt implementing
procedures. While this is already
implicit in the current regulation, LSC
believes it is preferable for this
requirement to be expressly stated. Such
implementing procedures may be
adopted either by a recipient’s
governing body or by the recipient’s
management. LSC received several
comments supporting these changes and
no comments objecting to them.
Accordingly, LSC adopts the revisions
as proposed.
Section 1611.3 also contains certain
minimum requirements for the content
of recipient’s financial eligibility
policies. Specifically, LSC is requiring
that the recipient’s financial eligibility
policy must:
• Specify that only applicants for
service determined to be financially
eligible under the policy may be further
considered for LSC-funded service;
• Establish annual income ceilings of
no more than 125% of the current
DHHS Federal Poverty Guidelines
amounts;
• Establish asset ceilings; and
• Specify that, notwithstanding any
other provisions of the regulation or the
recipient’s financial eligibility policies,
in assessing the financial eligibility of
an individual known to be a victim of
domestic violence, the recipient shall
consider only the income and assets of
the applicant and shall not consider any
assets jointly held with the abuser.
In establishing income and asset
ceilings, the recipient will have to
consider the cost of living in the
locality; the number of clients who can
be served by the resources of recipient;
the potentially eligible population at
various ceilings; and the availability of
other sources of legal assistance. With
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respect to assets of domestic violence
victims jointly held with their abusers,
this requirement applies when the
applicant has made the recipient aware
that he or she is a victim of domestic
violence.
In addition, this section permits
recipients to adopt financial eligibility
policies which provide for authorized
exceptions to the annual income ceiling
pursuant to section 1611.5 and for
waiver of the asset ceiling for an
applicant in a particular case under
unusual circumstances and when
approved by the Executive Director or
his/her designee. Finally, LSC will
permit recipients to adopt financial
eligibility policies which permit
financial eligibility to be established by
reference to an applicant’s receipt of
benefits from a governmental program
for low-income individuals or families
consistent with section 1611.4(b).
These provisions are, with two
exceptions, based directly on current
requirements with a few substantive
changes. First among the changes,
recipients will no longer be required to
routinely submit their asset ceilings to
LSC. This requirement appears to serve
little or no purpose, as compliance with
this requirement has been spotty and
LSC has taken no action to obtain the
information from recipients which have
not automatically submitted it.
Moreover, the information collected is
not being put to any routine use. In
addition, LSC has not had a parallel
requirement for the submission of
income ceilings. LSC has determined
that this requirement can be eliminated
without any adverse effect on program
compliance with or Corporation
enforcement of the regulation. LSC
received several comments supporting
this change and no comments objecting
to it. Accordingly, LSC adopts the
revision as proposed.
Another substantive change is that
recipients will be permitted to provide
in their financial eligibility policies for
the exclusion of (in addition to a
primary residence, as provided for in
the existing regulation) vehicles used for
transportation, assets used in producing
income (such as a farmer’s tractor or a
carpenter’s tools) and other assets
excluded from attachment under State
or Federal law from the calculation of
assets. In identifying other assets
excluded from attachment under State
or Federal law, LSC has in mind assets
that are excluded from bankruptcy
proceedings or other assets that may not
be attached for the satisfaction of a debt,
etc.
Most of the comments received
reiterated the position that field
representatives had expressed during
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the Working Group discussions and in
comments to the November 2002 NPRM,
that the list of excludable assets should
be illustrative, rather than exhaustive.
The commenters argue that having an
illustrative rather than an exhaustive list
will provide recipients with greater
flexibility in developing asset policies
and note that many recipients already
exclude certain other assets.
Commenters alternatively suggested
some specific assets be added to the list,
such as household furnishings,
computers, and such assets which are
excluded from other governmental
benefit programs for which the
applicant is eligible. A few comments
also specifically suggested that the
exclusion for vehicles should not be
limited to vehicles needed for work.
One of these commenters noted that the
Social Security Administration has
recently changed its rules on eligibility
for Supplemental Security Income (SSI)
to exclude from an SSI applicant’s
assets one vehicle used for
transportation, without specific regard
to the particular transportation use (as
was previously the case), provided it is
not strictly a recreational vehicle such
as a dune buggy. See 70 FR 6340, at
6342–43 (February 7, 2005).
LSC believes that some of the
comments indicate that LSC was not
clear in the NPRM about the
relationship between the asset ceiling
adopted by a recipient and the list of
excludable items. Under the current
regulation recipients are required to
adopt asset ceilings based on the
economy and the relative cost of living
in the service area. Recipients are also
to take into account special needs of the
elderly, institutionalized and persons
with disabilities, along with the
reasonable equity value in work-related
equipment used to provide income.
Implicit in the requirement is the
expectation that the recipient will set its
ceiling at a level as to cover the value
of such things as household furnishings,
clothing and other personal affects of
applicant (and members of applicant’s
households) and other such assets as
applicants may reasonably be expected
to have without liquidating in the
attempt to secure legal assistance. Once
the asset ceiling has been set, the
recipient is expected to consider all of
the applicant’s assets against that
ceiling, except for the value of a
principle residence. The exclusion of a
principle residence is intended to
ensure that homeowners do not exceed
the asset ceiling just on the value of the
home.
With the NPRM, LSC proposed to
allow recipients to exclude from the
asset computation a limited number of
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additional assets which would be likely
to cause an applicant to exceed the
applicable asset ceiling without
liquidation of that or other significant
household assets. As such, LSC
continues to prefer to retain the
approach in the current regulation in
which the list of excludable assets is set
forth in toto. LSC believes that this
approach emphasizes the policy that
most assets are to be considered and
maintains a basic level of consistency
nationally with respect to this issue.
LSC continues to expect that recipients
will set asset ceilings and asset ceiling
waiver policies so as to permit
applicants to have reasonable amounts
of assets which will not count against
them in eligibility determinations and
believes that the new language does
afford recipients some additional
flexibility in developing asset ceilings,
consistent with the policy articulated
above particularly in light of the
amendment to the asset ceiling waiver
standard discussed below.
Turning to comments on the specific
proposed excludable assets, LSC agrees
that it is neither necessary nor desirable
to restrict the exclusion for vehicles to
those used for work only. There are
many situations in which a vehicle is an
applicant’s only reliable, accessible
method of transportation for vital life
activities other than work, such as
education and training activities,
reaching medical appointments, grocery
shopping, transporting children to
school or activities, etc. As such, it is
reasonable to consider such vehicles as
among the significant assets that a
recipient should be able to own and not
have counted towards the applicant’s
applicable asset ceiling. Accordingly,
LSC is amending the language in
proposed 1611.2(d)(1) which read
‘‘vehicles required for work’’ and
adopting instead the language ‘‘vehicles
required for transportation.’’ Under this
formulation, the value of vehicles which
are not used for transportation, such as
vehicles used purely for recreational
activities (e.g., dune buggies, golf carts,
go-karts, and the like) would have to be
included in determining whether an
applicant’s assets exceed the recipient’s
applicable asset ceiling.
LSC declines, however, to expand the
list to include the exclusion of any
assets excluded under benefits programs
for low income persons for which the
applicant is eligible. There are myriad
benefit programs with a widely varying
range of excludable assets. Some
programs have relatively low asset
ceilings, but exclude more assets from
the calculation, while other programs
exclude fewer assets, but have higher
asset ceilings. If LSC were to include all
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assets excludable under all benefits
program for low-income individuals, the
relative national consistency which LSC
believes is important would be
impeded. As noted above, LSC believes
that the revised language does afford
recipients sufficient additional
flexibility in developing asset ceiling
policies.
As noted above, LSC is changing the
asset ceiling waiver standard slightly.
The current regulation permits waiver
in ‘‘unusual or extremely meritorious
situations;’’ the new rule permits waiver
in ‘‘unusual circumstances.’’ The
Working Group determined that the
current language is unnecessarily
stringent and that it is unclear what the
difference is intended to be between
‘‘unusual’’ and ‘‘extremely meritorious.’’
It was suggested in the Working Group
that the standard should be ‘‘where
appropriate.’’ LSC, however, felt that the
regulation should continue to reflect the
policy that waivers of the asset ceilings
should only be granted sparingly and
not as a matter of course. The Working
Group agreed that the revised language
accomplishes this goal, while providing
some additional appropriate discretion
to recipients. In addition, where the
current rule requires all waiver
decisions to be made by the Executive
Director, LSC proposed to permit those
decisions to be made by the Executive
Director or his/her designee. LSC
believes it is important that a person in
significant authority be involved in
making asset ceiling waiver decisions,
but recognizes that, especially as more
recipients have consolidated and now
serve larger areas, it is important for
recipients to have the discretion to
delegate certain authority to regional or
branch office managers or directors to
increase administrative efficiency. LSC
received several comments supporting
this change and no comments objecting
to it. Accordingly, LSC adopts the
revision as proposed.
The first totally new element is the
language regarding victims of domestic
violence. This new language
implements LSC’s FY 1998
appropriations law. Specifically, section
506 of that act provides:
In establishing the income or assets of an
individual who is a victim of domestic
violence, under section 1007(a)(2) of the
Legal Services Corporation Act (42 U.S.C.
2996f(a)(2)), to determine if the individual is
eligible for legal assistance, a recipient
described in such section shall consider only
the assets and income of the individual and
shall not include any jointly held assets.
Public Law 105–119, 111 Stat. 2440
(November 26, 1997). Although this law
has been in effect since 1997, it has
never been formally incorporated into
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Part 1611. Nevertheless, this provision
of law applies regardless of whether it
appears in the regulation. However,
incorporating this language into the
regulation is appropriate, particularly in
light of the goal of this rulemaking to
clarify the requirements relating to
financial eligibility determinations.2
LSC received one comment asking
whether this proposal means that the
financial eligibility of an applicant who
is the victim of domestic violence is to
be determined solely on the basis of the
applicant’s income and assets, without
regard to the income and assets of other
members of the household (beyond the
alleged perpetrator of the domestic
violence). LSC intended that the income
of the alleged perpetrator and assets
jointly held by the applicant with the
alleged perpetrator must be disregarded
in assessing the financial eligibility of
the applicant, but that income and
assets not jointly held with the alleged
perpetrator of other members of the
household (as defined by the recipient)
would have to be considered in the
financial eligibility assessment. LSC
acknowledges that the language of the
statute (and LSC’s originally proposed
implementation thereof) could be read
so as to suggest that only the applicant’s
individual income and assets may be
counted. However, LSC believes that
such a reading would require a
substantive change to the financial
eligibility requirements that Congress
did not intend.
At the time of adoption of section 506,
the regulation permitted recipients to
take into account an applicant’s ability
to access certain assets (including assets
of alleged perpetrators of domestic
violence) and permitted recipients to
consider the applicant’s lack of access to
the alleged perpetrator’s income as an
‘‘other significant factor related to the
inability to afford legal assistance.’’ 45
CFR 1611.6(d); 1611.5(b)(1)(E).
However, in some cases, the victim’s
household income including the income
of the alleged perpetrator was above the
upper income limit, such that the
recipient was not able to even apply the
‘‘significant other factors’’ factor to
make a determination of eligibility and
in some cases there was a problem
related to the extent to which the victim
could access household assets over
2 This point is demonstrated by the fact that LSC
received one comment specifically supporting the
implementation of section 506 into Part 1611 on the
basis that the new language in 1611 would provide
recipients with enhanced ability to provide legal
assistance to victims of domestic violence. Rather,
the incorporation of this statutory mandate into the
regulation at this time does not create any
substantive change in the authority and
responsibility recipients have had with respect to
this issue since 1997.
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which the alleged perpetrator had joint
control. Thus, the practical problem
addressed by section 506 is that in many
cases a victim of domestic violence
cannot draw upon the income or assets
of the alleged perpetrator (including
jointly held assets) as a source of funds
with which to obtain private legal
assistance.
As the report language accompanying
Public Law 105–119 notes, Congress
was ‘‘aware that the current statute and
regulations * * * already provide for
such determinations to be made’’ but
‘‘given concerns regarding access to the
legal system for victims of domestic
violence, the conferees have included
this provision to provide greater clarity
regarding this matter.’’ H. Rpt. 105–405,
p. 186. This indicates that Congress did
not intend to require significant changes
to LSC’s regulations on financial
eligibility, but rather only that Congress,
in adopting section 506, wanted to
ensure that the income and assets of the
alleged perpetrator (which are generally
under the control of the perpetrator and
which the victim cannot readily access)
not render the victim financially
ineligible for legal assistance. As the
regulation did not then provide for
disregarding the income and assets of
other members of the victim’s
household not jointly held with the
alleged perpetrator in the assessment of
the victim’s financial eligibility, LSC
does not believe Congress was
attempting to change the general
requirement that LSC consider the
income and assets of other members of
the victim’s household in making
financial eligibility determinations as
long as they are available to the victim.
In light of the foregoing, LSC is
amending section 1611.3(e) to make this
clearer by revising it to read:
domestic violence or involves the
perpetrator as an adverse party. Neither
the statute (nor the accompanying report
language) specify that the request for
legal assistance must relate to
alleviating the domestic violence or
require the perpetrator to be an adverse
party. As such, as noted above, the
special rule applies at any time when
the applicant has made the recipient
aware that he or she is a victim of
domestic violence. LSC does not find it
likely that applicants who are victims of
domestic violence identify themselves
as such in seeking legal assistance in
matters wholly unrelated to the
domestic violence. However, if an
applicant seeking assistance with an
unrelated matter self-identifies as a
victim, LSC believes that this would
likely be done as a way of explaining
why certain income and/or assets are
unavailable for use in obtaining private
legal assistance. As such, the rationale
of the special rule would appear to be
satisfied and recipients should have the
ability to disregard the perpetrator’s
income and assets (including jointly
held assets) in such situations. LSC does
not believe the risk that an applicant
would self-identify as a domestic
violence victim in order to circumvent
the financial eligibility requirements is
significant and is confident a recipient
would explore the situation further if
the recipient suspected the claims of the
applicant were specious.
Finally, LSC has decided to permit
recipients to adopt financial eligibility
policies which permit financial
eligibility to be established by reference
to an applicant’s receipt of benefits from
a governmental program for low-income
individuals or families consistent with
section 1611.4(b). This issue is
discussed in greater detail below.
Notwithstanding any other provision of
this Part, or other provision of the recipient’s
financial eligibility policies, every recipient
shall specify as part of its financial eligibility
policies that in assessing the income or assets
of an applicant who is a victim of domestic
violence, the recipient shall consider only
the assets and income of the applicant and
members of the applicant’s household other
than those of the alleged perpetrator of the
domestic violence and shall not include any
assets held by the alleged perpetrator of the
domestic violence, jointly held by the
applicant with the alleged perpetrator of the
domestic violence, or assets jointly held by
any member of the applicant’s household
with the alleged perpetrator of the domestic
violence.
Section 1611.4—Financial Eligibility for
Legal Assistance
This section sets forth the basic
requirement that recipients may provide
legal assistance supported with LSC
funds only to those individuals whom
the recipient has determined are
financially eligible for such assistance
pursuant to their policies, consistent
with this Part. This section also contains
a statement that nothing in Part 1611
prohibits a recipient from providing
legal assistance to an individual without
regard to that individual’s income and
assets if the legal assistance is supported
wholly by funds from a source other
than LSC (regardless of whether LSC
funds were used as a match to obtain
such other funds, as is the case with
Title III or VOCA grant funds) and the
assistance is otherwise permissible
under applicable law and regulation.
LSC also received a comment
requesting clarification of whether the
special rule applies in all cases
involving a victim of domestic violence
or only in cases in which the request for
assistance is related to alleviating the
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This section further provides that a
recipient may find an applicant to be
financially eligible if the applicant’s
assets are at or below the recipient’s
applicable asset ceiling level (or the
ceiling has been properly waived) and
the applicant’s income is at or below the
recipient’s applicable income ceiling, or
if one or more of the authorized
exceptions to the ceiling applies. These
provisions are based on existing
provisions found in sections 1611.3,
1611.4 and 1611.6. As revised, the new
provisions do not represent a
substantive change, but LSC believes
having the basic statements as to who
may be found to be financially eligible
for assistance in one section makes the
regulation much clearer. In addition,
where the existing regulation uses a
construction that speaks to when a
recipient may provide legal assistance,
the new language emphasizes the point
that the requirements speak only to
determinations of financial eligibility
and not to decisions regarding whether
or not to actually provide legal
assistance. LSC received several
comments supporting these changes and
no comments opposing these changes.
Accordingly, LSC adopts the revisions
as proposed.
LSC is also incorporating into this
section a significant substantive change
to the regulation. Consistent with
section 1611.3 as discussed above the
regulation will now permit recipients to
determine an applicant to be financially
eligible because the applicant’s income
is derived solely from a governmental
program for low-income individuals or
families, provided that the recipient’s
governing body has determined that the
income standards of the governmental
program are at or below 125% of the
Federal Poverty Guidelines amounts.
For many recipients, a significant
proportion of applicants rely on
governmental benefits for low-income
individuals and families as their sole
source of income. In order to qualify for
these benefits, such persons have
already been screened by the agency
providing the benefits (using an
eligibility determination process that is
at least as strict as the one required
under LSC regulations) and determined
to be financially eligible for those
benefits. In Working Group discussions,
many representatives of the field noted
that if they could rely on the
determinations made by these agencies
without having to otherwise make an
independent inquiry into financial
eligibility, it would substantially ease
the administrative burden involved in
making financial eligibility
determinations.
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The Working Group also noted that
current LSC practice permits recipients
to determine that an applicant’s assets
are within the recipient’s asset ceiling
level without additional review if the
applicant is receiving govermental
benefits for low-income individuals and
families, eligibility for which includes
an asset test. Key to this practice is that
the recipient’s governing body has to
take some identifiable action to
recognize the asset test of the
governmental benefit program being
relied upon. This ensures that the
eligibility standards of the governmental
program have been carefully considered
and are incorporated into the overall
financial eligibility policies adopted and
regularly reviewed by the recipient’s
governing body. As this practice has
proved efficient and effective, it was
determined that a parallel process could
also be adopted for income screening
and that these practices should be
expressly included in the regulations. It
is important to note that this provision
would only apply to applicants whose
sole source of income is derived from
such benefits. Applicants who also have
income derived from other sources
would be subject to an independent
inquiry and assessment of financial
eligibility.
LSC received several comments
supporting these changes and one
comment suggesting expanding this
authority to permit recipients to make a
determination that an applicant is
financially eligible on the basis of
receipt of governmental benefits for low
income persons even when the
applicant has another source of income,
provided that the applicant’s additional
income was counted in determining
eligibility for a governmental benefit
program for low income persons (such
as supplemental security income (SSI),
in which the benefit is decreased as an
offset to the other income). LSC is
concerned that in such situations it
cannot be guaranteed that an applicant’s
income would of necessity remain
below the recipient’s applicable income
ceiling. The SSI program, for example,
does not offset all other income dollar
for dollar. Thus, an individual living
alone whose income is solely derived
from SSI will have an income of $579/
month, while an individual living alone
receiving Social Security income of $99
will receive an SSI payment of $500/
month, for a total income of $599/
month, and an individual living alone,
with a monthly earned income of $317
and a state governmental benefit
payment of $15/month, will receive an
SSI benefit of $463/month, for a total
monthly income of $795/month. See,
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Understanding Supplemental Security
Income, Social Security Administration
Web site, https://www.ssa.gov/notices/
supplemental-security-income/textincome-ussi.htm. With the streamlined
financial eligibility determination
requirements LSC is adopting, LSC
believes that performing a full financial
eligibility screen on persons having
income derived from sources in
addition to governmental benefits for
low income persons does not present an
undue administrative burden and is
necessary to ensure that only those who
meet the recipient’s financial eligibility
criteria (based on applicable LSC laws
and regulations) are determined to be
financially eligible for LSC-funded legal
assistance. Accordingly, LSC declines to
expand the scope of § 1611.4(c) and
adopts the revisions as proposed.
LSC received one additional comment
about the basic financial eligibility
criteria for LSC-funded legal assistance.
This commenter suggested that the
determination of an applicant’s
financial eligibility be conditioned
somehow upon the financial
circumstances of the adverse party(ies)
with whom the applicant has the
problem for which the legal assistance
is sought. LSC’s financial eligibility
requirements are based upon the
statutory mandate that the eligibility of
clients be based upon the assets and
income of the applicant, the fixed debts,
medical expenses and other factors
which affect the applicant’s ability to
afford legal assistance, and the cost of
living in the locality. See 42 U.S.C.
2996f(a)(2)(B). With the exception of the
cost of living in the locality, all of the
criteria set forth in the LSC Act relate to
the ability of the applicant to afford
legal assistance. There is no suggestion
in either the Act itself or in its
legislative history, that the financial
circumstances of adverse parties are at
all relevant to the determination of an
financial eligibility of the applicant.
Moreover, LSC believes that
conditioning a determination of
financial eligibility upon the financial
situation of adverse parties would
unfairly discriminate against some
persons who are otherwise unable to
afford private legal assistance and
would be inconsistent with LSC
statutory mission of fostering equal
access to justice. See 42 U.S.C. 2996.
Accordingly, LSC declines to add as a
criteria for determining financial
eligibility an assessment of the financial
situation of potential or actual adverse
parties.3
3 This commenter also suggested that LSC adopt
requirements relating to the regular sharing among
the various parties to a case of information about
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Section 1611.5—Authorized Exceptions
to the Annual Income Ceiling
This section provides for authorized
exceptions to the annual income ceiling.
The language, like the current language
of sections 1611.4 and 1611.5, on which
it is based, is permissive. A recipient is
at liberty to include some, none, or all
of the authorized exceptions discussed
below in its financial eligibility policies.
Thus, to the extent a recipient chooses
to avail itself of the authority provided
in this section, a recipient is permitted
to determine a particular applicant is
financially eligible for assistance,
notwithstanding that the applicant’s
income is in excess of the recipient’s
applicable income ceiling, if the
applicant’s situation fits within one or
more of the authorized exceptions. In
making such determinations, however,
the recipient will also have to detemine
that the applicant’s assets are at or
below the recipient’s applicable asset
ceiling (or the ceiling would have had
to have been waived). This requirement
is consistent with the current regulation,
but is affirmatively stated for greater
clarity. LSC received one comment
specifically supporting this clarification
and LSC adopts the language as
proposed.
Under the revised section, there are
two situations in which an applicant’s
income could exceed the recipient’s
income ceiling without an absolute
upper limit: (1) Where the applicant is
seeking to maintain governmental
benefits for low-income individuals and
families; and (2) where the executive
director (or his/her designee)
determines, on the basis of
documentation received by the
recipient, that the applicant’s income is
primarily committed to medical or
nursing home expenses and, in
considering only that portion of the
applicant’s income which is not so
committed, the applicant would
otherwise be financially eligible.
The first instance represents a new
addition to the regulation. Currently, an
applicant seeking to obtain
governmental benefits for low income
persons may be deemed financially
eligible if the applicant’s income does
not exceed 150% of the LSC national
eligibility level. The existing regulation,
however, does not specifically address
applicants seeking to maintain such
benefits. Thus, under the current
regulation, an applicant whose income
costs expended by all parties (including hours and
costs for attorney time) during the course of a
recipient’s representation of a client. This
suggestion does not address financial eligibility
determinations or the retainer agreement
requirements. As such, it is outside the scope of this
rulemaking and is not further addressed.
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is over the income ceiling but under
150% of the LSC national eligibility
level may be deemed financially eligible
for assistance in obtaining benefits, but
not for assistance in maintaining them.
Thus, the applicant seeking assistance
to maintain benefits would have to be
turned down, but that same applicant
could then be found financially eligible
for assistance to re-obtain such benefits
once the benefits were lost.
Accordingly, LSC is addressing this
problem in the regulation. However,
unlike the situation in obtaining the
benefits, in seeking to maintain benefits
LSC considers an upper limit on income
unnecessary since in such cases the
applicant’s income will necessarily be
rather limited (for the applicant to have
been eligible in the first place for the
benefits he or she is seeking to
maintain). LSC received several
comments supporting these changes and
no comments opposing them.
Accordingly, LSC adopts the revisions
as proposed.
The second instance is taken from
section 1611.5(b)(1)(B) of the current
regulation addressing instances in
which the applicant’s income is
primarily devoted to medical or nursing
home expenses and does not represent
a substantive change in the current
regulation. LSC is now specifying in the
regulation, however, that in such cases
the recipient is required to make a
determination of financial eligibility
with regard to the applicant’s remaining
income. The existing regulation could
be read to permit an applicant with an
income of $300,000 to be deemed
financially eligible if $250,000 of the
income is devoted to nursing home
expenses, notwithstanding that the
applicant’s remaining income is
$50,000—substantially in excess of the
income ceiling. This situation is not
intended, and, indeed, LSC has no
reason to believe recipients are serving
such persons. However, consistent with
the overall goal of clarifying the
regulation, LSC believes that a
requirement that an applicant must be
otherwise financially eligible
considering only that portion of the
applicant’s income which is not devoted
to medical or nursing home expenses
should be clearly set forth in the
regulation.
LSC received several comments
generally supporting this change (and
none opposing it) but asking LSC to
delete the requirement that the
determination that the applicant’s
income is primarily committed to
medical or nursing home expenses be
made by the Executive Director or his/
her designee. These commenters argued
that removing this requirement would
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afford recipients greater administrative
flexibility in making financial eligibility
determinations. The existing rule,
however, does requires that the
Executive Director make determinations
regarding whether an applicant’s
income is primarily committed to
medical or nursing home expenses. LSC
believes it is important to continue this
requirement in this instance because a
recipient is making a determination of
financial eligibility for an applicant
whose income exceeds the otherwise
absolute upper limit of the income
ceiling, and such a determination
should be made by a person in
significant authority.4 This is similar to
the LSC view regarding decisions to
waive the asset ceiling. LSC does
understand, however, that it is
important for recipients to have the
discretion to delegate certain authority
to regional or branch office managers or
directors to increase administrative
efficiency. This is why LSC proposed
broadening the existing rule to permit
the Executive Director to designate a
responsible individual to make such
determinations. LSC believes that this
approach provides additional
administrative flexibility to recipients
yet is consistent with the underlying
policy. Accordingly, LSC adopts the
revision as proposed.
LSC is also permitting exceptions for
certain situations in which the
applicant’s income is in excess of the
recipient’s applicable income ceiling,
but does not exceed 200% of the
applicable Federal Poverty Guidelines
amount. At the outset, LSC notes that
this section changes the current upper
income limit of 150% of the LSC
national income guidelines amount,
which is 150% of 125% of the Federal
Poverty Guidelines amounts, or 187.5%
of the Federal Poverty Guidelines
amounts. Under the new regulation, the
maximum upper limit increases to
200% of the Federal Poverty Guidelines
amounts. Consequently, recipients will
be able to consider applicants having
slightly higher incomes than was
previously possible. (For example, the
2005 LSC income guideline for a
applicant in a three member household
in the 48 contiguous states and the
District of Columbia is $20,113. Under
the existing rule, the maximum upper
4 This situation is distinguishable from the other
exception to the absolute income limit relating to
applicants seeking to maintain governmental
benefits for low income persons. As noted above,
in those instances, the applicant’s income will
already be rather limited, even if exceeding the
absolute income ceiling. In the medical/nursing
home expenses situation, this may not be the case
and the applicant’s income may be considerably in
excess of the ceiling.
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income limit for an applicant with a
three member household is $30,170;
under the new rule the maximum
income limit for that household will be
$32,180.) This action will slightly
increase the pool of potential applicants
for service. However, LSC believes that
this slight increase in the eligible
applicant pool will not have a negative
impact on the quantity or quality of
services delivered. Rather, this change
recognizes the changing demographic of
the legal services client base, which
now increasingly includes the working
poor. Moreover, amending the rule to
increase the upper limit to 200% of the
Federal Poverty Guidelines amounts
will further simplify the regulation,
which will aid grantees and their staff
in making financial eligibility
determinations. LSC received several
comments strongly supporting this
change, including one comment which
noted that the change will allow for
significant improvement in facilitating
service collaboration and referrals
among LSC and non-LSC service
providers in many states because 200%
of the Federal Poverty Guidelines
amounts is used as an upper limit for
income eligibility for a wide variety of
programs providing services to low
income persons. LSC received no
comments opposing this change. LSC
accordingly adopts this revision as
proposed.
Turning to the exceptions, LSC is
retaining the current exception for
individuals seeking to obtain
governmental benefits for low-income
individuals and families. Second, LSC is
adding an exception for individuals
seeking to obtain or maintain
governmental benefits for persons with
mental and/or physical disabilties.
Many disability benefit programs
provide only subsistance support and
those individuals should be treated the
same way as those seeking to obtain
benefits available on the basis of
financial need. However, many persons
with disabilties who are eligible for
disability benefits may not be
particularly economically
disadvantaged and should not be
eligible for legal assistance simply by
virtue of eligibility for such disability
benefits. Therefore, those applicants
must have incomes below 200% of the
applicable poverty level in order to be
considered financially eligible for LSCfunded services. LSC received several
comments supporting these provisions
and no comments opposing them.
Accordingly, LSC adopts these
exceptions as proposed.
Finally, the revised regulation
maintains the current authorized
exceptions found in the factors listed in
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current section 1611.5. Specifically, the
recipient will be permitted to determine
an applicant whose income is below
200% of the applicable Federal Poverty
Guidelines amount to be financially
eligible for legal assistance supported
with LSC funds based on one or more
enumerated factors that affect the
applicant’s ability to afford legal
assistance. As in the current regulation,
recipients will not be required to apply
these factors in a ‘‘spend down’’
fashion. That is, although recipients are
permitted to do so, they are not required
to determine that, after deducting the
allowable expenses, the applicant’s
income is below the applicable income
ceiling before determining the applicant
to be financially eligible. The regulation
is also amended to clarify that the
factors apply to the applicant and
members of the applicant’s household.
The factors proposed are identical to the
ones in the current regulation, with the
following exceptions:
• The factor relating to medical
expenses is restated to make clear that
it refers only to unreimbursed medical
expenses, but that medical insurance
premiums are included;
• The factor relating to employment
expenses is reorganized for clarity and
would expressly include expenses
related to job training or educational
activities in preparation for
employment;
• The factor relating to expenses
associated with age or disability no
longer refers to resident members of the
family as a reference to the applicant or
members of the applicant’s household
has been incorporated elsewhere in this
section of the regulation;
• The factor relating to fixed debts
and obligations is amended to read only
‘‘fixed debts and obligations;’’
• A new factor, ‘‘current taxes’’ is
added to the list.
With regard to ‘‘fixed debts and
obligations,’’ the current regulation
provides little guidance as to what is
meant by this term, except to
specifically include unpaid taxes from
prior years. LSC has decided to simply
use the term ‘‘fixed debts and
obligations,’’ while providing guidance
in the preamble as to what is
encompassed by the term. LSC believes
that this approach will provide
recipients with flexibility in applying
the rule, while providing more guidance
than could easily be contained in
regulatory text.
Prior guidance from the LSC Office of
Legal Affairs has stated that, ‘‘in the
absence of any regulatory definition or
guidance as to the meaning of ‘fixed
debts and obligations,’ the common
meaning of the term applies’’ and that
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it encompasses debts fixed as to both
time and amount. See Letter of
November 1, 1993 from J. Kelly Martin,
LSC Assistant General Counsel, to
Stephen St. Hilaire, Executive Director,
Camden Regional Legal Services, Inc.
Examples of such ‘‘fixed debts and
obligations’’ would include mortgage
payments, rent, child support, alimony,
business equipment loan payments, and
unpaid taxes from prior years. LSC
intends that this term also include rent
in addition to mortgage payments.
Previous OLA opinions have addressed
mortgage payments but not rent and rent
has, heretofore, not been considered a
fixed debt. LSC now sees no rational
distinction between the two for the
purposes of this regulation; in addition,
LSC received several comments
supporting the inclusion of rent as a
fixed debt or obligation and no
comments opposed. Therefore LSC will
treat rent and mortgage expenses in a
similar manner.
The term ‘‘fixed debts and
obligations,’’ however, is not without
limit. It is not intended to include
expenses, such as food costs, utilities,
credit card debt, etc. These types of
debts are usually not fixed as to time
and amount. The Working Group
considered whether there were
additional factors which should be
enumerated in this section and several
members of the Working Group
proposed adding other factors, such as
utilities, to the list. Several commenters
supported adding utilities to the overall
list of factors. Although, as the
commenters note, applicants must pay
for some measure of utilities, the same
can be said for clothing and food, which
are also certainly basic necessary
expenses. However, these sorts of costs
have never been covered by the types of
expenses which recipients are generally
permitted to consider in determining
the ability of an applicant to afford legal
assistance. With the exception of
housing expenses (which fall under the
heading of fixed debts and obligations,
a category which does not generally
include utilities because utility bills are
not typically fixed as to time and
amount), the other factors represent
expenses for items which may not be
particularly extraordinary, but which
are for things other than the most basic
necessities. Accordingly, LSC declines
to add utilities to the list of fixed debts
and obligations.
Related to the treatment of utilities,
two commenters supported the idea LSC
clarify that recipients have the
flexibility to consider unusually high
utility costs as an ‘‘other significant
factor’’ under section 1611.5(a)(vii). LSC
agrees that, under certain unusual
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45555
circumstances, utility bills could be
considered an ‘‘other significant factor’’
affecting an applicant’s ability to afford
legal assistance. LSC does not intend
that section 1611.5(a)(vii) be used to
routinely consider applicants’ utility
costs. This is true even if utility costs
are typically high for an applicant
because, for example, the applicant lives
in a very hot or very cold area of the
country. However, there may be
circumstances in which an area of the
country suffers a period of unusually
hot or cold weather, or perhaps a
discreet time period in which heating
oil or gas prices are significantly higher
than the normal range of prevailing
prices. In addition, an individual
applicant may have unusually high
utility bills because of a malfunctioning
furnace or some other problem with
their home that they cannot get their
landlord to fix or that they cannot afford
to fix themselves. In such unusual
circumstances, it could be appropriate
for a recipient to take into account the
extra amount of utility costs incurred by
an applicant as an ‘‘other significant
factor’’ in making a financial eligibility
determination.
As noted above, another issue is
whether to include current taxes within
the scope of the term ‘‘fixed debts and
obligations.’’ Prior to 1983, Part 1611
included current taxes along with past
due unpaid taxes as a fixed debt. When
the regulation was changed in 1983, the
reference to taxes was amended to refer
only to unpaid prior year taxes. This
change was justified on the basis that
the 1611.5 factors were intended to
account only for ‘‘special
circumstances’’ affecting the ability to
afford legal assistance. See 48 FR 54201
at 54203 (November 30, 1983). However,
given that other types of expenses
included in the list do not seem to be
particularly ‘‘special’’ (e.g., mortgage
payments; child care expenses), LSC no
longer finds this explanation persuasive.
Rather, LSC believes that the exclusion
of current taxes, but not prior unpaid
taxes, from the list of factors which
recipients’ may consider under
exceptions to the income ceiling has the
effect of punishing those persons who
are in compliance with the law in favor
of persons who are delinquent in their
legal responsibility to pay taxes.
Moreover, as noted above, applicants for
legal services are increasingly the
working poor. Excluding current taxes
has a disproportionate effect on
applicants who work versus applicants
who do not work. Consequently, in the
November 2002 NPRM, LSC proposed
including current taxes within scope of
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the term ‘‘fixed debts and obligations’’
(as they had been prior to 1983).
When the Operations and Regulations
Committee once again addressed this
issue, field representatives reiterated
their recommendation that the term
‘‘income’’ should be defined as income
after taxes. LSC continues to believe, as
noted above, that effectively defining
income as net income, while the LSC
income guidelines (and the underlying
DHHS Federal Poverty Guidelines
amounts on which the LSC guidelines
are based) are calculated on the basis of
gross income would make the regulation
internally inconsistent. Rather, LSC
believes that considering taxes as a
factor which can be considered by the
recipient in making financial eligibility
determinations addresses the practical
problem raised by the commenters.
However, the Committee considered
current taxes as a fundamentally
different kind of expense than the other
expenses falling within the scope of
‘‘fixed debts or obligations.’’ Instead, the
Committee recommended, and the
Board agreed, that current taxes should
be a separate category of authorized
exception to the annual income ceiling.
Accordingly, LSC proposed adding a
new subsection (iv) to section
1611.5(a)(4) and specifically invited
comment on the proposed addition of
an authorized exception for current
taxes and on the appropriate scope and
specific terminology which LSC should
use to describe and define this proposed
exception.
LSC received numerous comments
reiterating the position that ‘‘income’’
should be defined as net after taxes, but
that in the alternative (should LSC
retain income as gross income)
supported the proposal to include
current taxes as a separate factor which
recipients may consider as an
authorized exception to the income
ceiling. The one comment LSC received
supporting LSC’s proposal to retain the
phrase ‘‘before taxes’’ in the definition
of income expressly supported also
treating current taxes as a separate factor
which recipients may consider as an
authorized exception to the income
ceiling. All of these commenters also
supported including a discussion in the
preamble of what taxes should be
included in the scope of the term
‘‘current taxes’’ rather than specifying a
particular list in the text of the
regulation. LSC agrees that such an
approach is preferable. LSC believes
that permitting some flexibility in the
scope of the term ‘‘current taxes’’ is
appropriate and in keeping with the
intent of this rulemaking, although LSC
also believes that the term ‘‘current
taxes’’ should not be without limits.
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Thus, LSC intends that ‘‘current taxes’’
should include local, State and Federal
income and employment taxes, Social
Security and Medicare taxes, and local
property taxes (including special
property tax assessments) but not sales
taxes or excise fees, such as airline
ticket fees, hotel occupancy taxes, gas
taxes, cigarette taxes, etc. Past tax debts,
having become fixed debts owing,
remain a fixed debt or obligation which
recipients may consider under that
factor.
Section 1611.6—Representation of
Groups
The eligibility of groups for legal
assistance supported with LSC funds
was a subject of extensive discussion
among both the members of the Working
Group and at the 2004 and 2005
meetings of the current Operations and
Regulations Committee. Prior to 1983,
the regulation permitted representation
of groups that were either primarily
composed of eligible persons, or which
had as their primary purpose the
furtherance of the interests of persons in
the community unable to afford legal
assistance. In 1983, the regulation was
amended to preclude the use of LSC
funds for the representation of groups
unless they were composed primarily of
individuals financially eligible for
service.
During the Working Group meetings,
representatives from the field proposed
that LSC revise the regulation to once
again permit the representation of
groups which, although not primarily
composed of eligible persons, have as a
primary function the delivery of
services to, or furtherance of the
interests of, persons in the community
unable to afford legal assistance.
Examples of such a group might be a
food bank or a rural community
development corporation working to
develop affordable housing in an
isolated community. Field
representatives noted that in such cases,
there may not be local counsel willing
to provide pro bono representation and
that the group might not otherwise be
able to afford private counsel. Further,
the field representatives noted that
restricting recipients to representing
with LSC funds only those groups
primarily composed of eligible
individuals prevents them from
providing legal assistance in the most
efficient manner possible as other
groups may be better able to accomplish
results benefitting more members of the
eligible community than would
representation of eligible individuals or
groups composed primarily of such
individuals. Field representatives also
noted that the rule requires that the
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group would have to provide
information showing that it lacks and
has no means of obtaining the funds to
retain private counsel, so that the rule
would not permit representation of well
funded groups.
The LSC representatives were
concerned that allowing the use of LSC
funds to support the representation of
groups not composed primarily of
eligible clients would be problematic. In
the examples given, the ‘‘primary
function’’ of the group is easily
discernable. It may be, however, that
there is or can be a wide variety of
opinion on what the ‘‘primary function’’
of any group is and on what is ‘‘in the
interests’’ of the eligible client
community. The LSC representatives
were concerned that the risk and effort
related to articulating and enforcing a
necessarily subjective standard would
be inappropriate. Rather, LSC
representatives were of the opinion that
already scarce legal services resources
would be better devoted to providing
assistance to eligible individuals or
groups of eligible individuals. In the
end, the Working Group did not achieve
consensus on this issue and the Draft
NPRM did not propose to permit the
representation of groups other than
those primarily composed of eligible
individuals.
In its deliberations on the Draft
NPRM, the prior Board’s Operations and
Regulations Committee acknowledged
the legitimacy of the concerns of the
LSC representatives, but determined
that the value of permitting the
representation of groups having a
primary function of providing services
to, or furthering the interests of, those
who would be financially eligible
outweighed any risks attendant upon
such representation. In approving the
recommendation of the Committee, the
Board directed that the Draft NPRM be
amended to propose permitting such
representation (including any
conforming amendments necessary)
prior to publication of the NPRM for
comment. The NPRM published in
November 2002 reflected this direction.
When the new Operations and
Regulations Committee considered this
issue, field representatives once again
supported changing the regulation to
permit the representation of groups
having as their primary function the
provision of services to, or furthering
the interests of, those who would be
financially eligible (providing the group
could demonstrate its inability to afford
to retain private counsel), while LSC
Management initially once again
supported permitting only the
representation of groups primarily
composed of eligible individuals.
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However, upon further reflection and
consideration of the arguments made by
the field and the comments made by
members of the Operations and
Regulation Committee, LSC
Management ultimately recommended
that the regulation could be broadened
to permit the representation, in addition
to groups primarly composed of eligible
individuals, groups which have as a
primary activity the delivery of services
to persons who would be eligible.
Management continued to recommend
that the regulation not permit the
representation of groups whose primary
activity is the ‘‘furtherance of the
interests of’’ persons who would be
eligible.
The Board agreed that permitting LSC
recipients to use LSC funds for the
representation of groups which provide
services to low income persons is
consistent with the LSC mission and
could be an efficient use of LSC
resources, provided that the legal
assistance is related to the services the
group provides. The Board also agreed
that extending the permissible use of
LSC funds for the representation of
groups whose primary activity is the
‘‘furtherance of the interests of’’ low
income persons would not be
appropriate because of the necessarily
subjective nature of determining what is
in the ‘‘furtherance of the interests of’’
low income persons.
Accordingly, LSC proposed to permit
a recipient to provide legal assistance
supported with LSC funds to a group,
corporation, association or other entity
if the recipient has determined that the
group, corporation, association or other
entity lacks and has no practical means
of obtaining private counsel in the
matter for which representation is
sought and either:
(1) The group, or for a nonmembership group, the organizing or
operating body of the group, is primarily
composed of individuals who would be
financially eligible for legal assistance
under the Act; or
(2) The group has as a principal
activity the delivery of services to those
persons in the community who would
be financially eligible for LSC-funded
legal assistance and the legal assistance
sought relates to such activity.
Under the proposal, any group
seeking LSC-funded legal assistance
would have to lack, and have no
practical means of obtaining, the funds
to obtain private counsel. LSC received
no comments opposing this proposal
and adopts it as proposed. LSC notes
that there are instances in which a
group without funds to pay for private
legal counsel may, nonetheless, be able
to obtain pro bono private counsel,
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although there are many instances in
which no such pro bono private counsel
is available. LSC understands that
recipients currently take into account
the availability of pro bono private
counsel when determining whether to
accept an eligible group as a client. LSC
expects that this practice will continue.
Proposed subsection (1) above,
relating to the eligibility and
representation of groups composed
primarily of eligible individuals,
represents the practice under the
current section 1611.5(c). The new rule
is intended to have the same
interpretation of ‘‘primarily composed’’
that has developed and been adopted in
practice over the years since 1983. In
the case of membership groups, at least
a majority of the members would have
to be individuals who would be
financially eligible; in the case of nonmembership groups, at least a majority
of members of the governing body
would have to be individuals who
would be financially eligible. LSC
received no comments opposing this
proposal and adopts it as proposed.
The latter instance (proposed
subsection (2), above) represents a
variation on one of the situations
permitted by the pre-1983 rule, although
the language has been revised to focus
on ‘‘principal activity’’ rather than
‘‘primary purpose’’ (or ‘‘primary
activity’’) and the rule permits only the
representation of groups which have as
a principal activity the delivery of
services to low income persons.
Limiting permissible representation to
groups which have as a ‘‘principal
activity’’ the provision of services to low
income persons and the exclusion of
groups which act in the ‘‘furtherance of
the interest of the poor’’ are intended to
make the analysis required in
determining the permissibility of the
representation more objective.
All but one of the comments strongly
supported the addition of groups having
as a principal activity the delivery of
services to those persons in the
community who would be financially
eligible for legal assistance.5 The
commenters stated that this change, if
adopted, will provide recipients with
much needed flexibility to address
pressing legal needs of low income
persons in their communities. One
comment noted in particular that
providing legal assistance to human
services organizations results in positive
benefits to thousands of low income
individuals and is generally very much
supported by local communities.
Examples cited by the commenter
5 The remaining comment did not address this
aspect of the proposed rule.
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include helping a domestic violence
shelter keep its residents’ information
confidential and providing legal
assistance in the creation of an indigent
health care plan providing free medical
services to low income persons.
Although the Office of Inspector
General (OIG) did not file separate
comments on the NPRM, the OIG has
previously raised a question as to
whether permitting the representation of
groups not comprised of eligible clients
is problematic because, in its view,
neither the LSC Act itself nor the
legislative history endorse the premise
that LSC may permit the representation
of groups that are not composed of
eligible clients. Although LSC
appreciates the OIG’s comments, LSC
believes that the proposed regulatory
requirements are consistent with the
applicable laws. The LSC Act, on its
face, does not prohibit the
representation of groups other than
those composed of otherwise eligible
individuals. The Act only speaks to
‘‘eligible clients’’ and there is nothing in
the text of the Act which suggests that
a group which has as its principal
activity the provision of services to
persons who would be eligible for LSCfunded legal assistance is necessarily
excluded from the scope of the term
‘‘eligible clients.’’ In addition, LSC
believes that the legislative history of
the Act and the 1977 LSC Act
amendments is not dispositive on the
issue of whether the statute was
intended to prohibit the representation
of groups other than those comprised of
eligible individuals. Rather, support for
the notion that Congress contemplated
the provision of legal assistance to
groups providing services to eligible
clients can be seen in the comments
Senator Riegle made in discussing an
amendment relating to the prohibition
by recipients on organizing:
A similar clarification is made in section
9(c) [of the Senate Reauthorization Bill]
regarding the prohibition on organizing
activities. Legal Services should not directly
organize groups. However, it should provide
full representation, education and outreach
to those organized groups who are made up
of or which represent eligible clients.
Congressional Record of October 10,
1977, p. S 16804. (emphasis added).
Accordingly, LSC is adopting the
proposal to permit recipients to provide
legal assistance to groups having as a
principal activity the delivery of
services to those persons who would be
eligible for LSC-funded legal assistance.
In addition, LSC is adopting the
proposed further limitation that the
legal assistance must be related to the
services delivered by the group. One
commenter objected to this limitation.
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This commenter stated that legal
assistance in an unrelated matter could
have a significant impact on an
organization’s ability to provide its
services. LSC notes that although there
may be instances in which an unrelated
legal matter could ultimately have an
impact on the group’s delivery of
services, LSC believes that this
limitation is important. LSC believes
that this limitation, along with the
limitation relating to the group’s
‘‘principal activity,’’ will avoid creating
a potential situation whereby recipients
might feel free to undertake broad based
social change activities, but will permit
recipients to provide legal assistance
that will enable a group to pursue its
goals of service to the eligible client
community. LSC believes that these
limitations will help ensure that LSC
funds will be used to provide
financially eligible groups with the dayto-day legal services which are the
hallmark of LSC-funded legal assistance.
Finally, LSC notes that if a recipient
wishes to provide legal assistance to a
group whose principal activity is the
delivery of services to low income
persons in a legal matter not related to
that service, the recipient may provide
that legal assistance with non-LSC
funds, provided the legal assistance is
otherwise permissible under applicable
law and regulations.
LSC is adding a provision to the
regulation specifying the manner of
determining the eligibility of groups.
Although the practice has been that
recipients must collect information that
reasonably demonstrates that the group
meets the eligibility requirements set
forth in the regulation, standards for
determining and documenting the
eligibility of groups has not previously
been specifically addressed in the
regulation. LSC Management does not
believe that recipients are representing
ineligible groups, but the Working
Group was nevertheless in agreement
that it is important and appropriate for
the regulation to expressly state the
Corporation’s expectations in this area.
The November 2002 NPRM would have
required a recipient to collect
information reasonably demonstrating
that the group meets the eligibility
requirements set forth in the regulation.
In written comments filed in response
to the November 2002 NPRM, and again
in the course of the new Operations and
Regulation Committee’s 2004 and 2005
deliberations, the OIG expressed
concern that the proposed rule should
provide eligibility criteria sufficient to
ensure that groups seeking LSC-funded
legal assistance qualify for such legal
assistance and should require grantees
to retain adequate documentation of
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such group eligibility. Although LSC
believes that the November 2002
proposed financial eligibility standards
for groups effectuated the principal
criterion in the Act that those seeking
LSC-funded legal assistance must be
financially unable to afford legal
assistance and were in no way
inconsistent with the LSC Act, LSC does
agree with the OIG that the standards for
determining the eligibility of groups can
and should be more specific than those
set forth in the November 2002 NPRM.
Accordingly, in assessing the
eligibility of a group, LSC proposed to
require recipients to consider the
resources available to the group, such as
the group’s income and income
prospects, assets and obligations. LSC
also proposed that for a group primarily
composed of individuals who would be
financially eligible for LSC-funded legal
assistance under the Act, the recipient
would also have to consider whether the
characteristics of the persons primarily
composing the group are consistent with
financial eligibility under the Act. LSC
further proposed that for a group having
as a principal activity the delivery of
services to those persons in the
community who would be financially
eligible for LSC-funded legal assistance
under the Act, the recipient would also
have to consider whether the
characteristics of the persons served by
the group are consistent with financial
eligibility under the Act and whether
the legal assistance sought relates to the
principal activity of the group. Finally,
LSC proposed to require a recipient to
document group eligibility
determinations by collecting
information that reasonably
demonstrates that the group meets the
eligibility criteria set forth in the rule.
All but one of the commenters
supported the proposal to require
recipients to consider the resources
available to the group, such as the
group’s income and income prospects,
assets and obligations.6 Several of the
commenters, however, opposed the
proposed requirement that the recipient
must determine whether the
characteristics of the group (or the
characteristics of the persons receiving
the services of the group) are consistent
with financial eligibility for LSC-funded
legal assistance. These commenters
suggested that these proposals were not
clear and could lead to disputes
between LSC and recipients over
whether the articulated standard was
met. These commenters suggested that it
would be sufficient only to require that
recipients consider and collect
6 The other comment did not address the proposal
regarding group eligibility.
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information that ‘‘reasonably
demonstrates’’ that the group meets the
eligibility criteria.
As discussed above, LSC believes that
it is important that the regulation
specify what information recipients
must consider in order to make
determinations that the eligibility
criteria are met. In the case of individual
applicants, the eligibility criteria are
that applicants must have income and
assets valued at below the set levels and
the regulation expressly requires
recipients specifically consider the
applicant’s income and assets.
Similarly, since the group eligibility
criteria include that the group or the
persons served by the group must be
those who would be financially eligible,
it is appropriate for the regulation to
expressly require that recipients
consider whether the group or the
persons served by the group are those
who would be financially eligible.
In discussions during the Operations
and Regulations committee meetings on
this subject, it was noted that the
November 2002 NPRM standards for
determining the eligibility of a group
(which the commenters essentially
suggest LSC adopt) were intended to
reflect the current, unwritten practice
with regard to determinations of
eligibility of groups primarily composed
of eligible individuals. The information
adduced during those discussions
indicated that recipients generally
consider the nature and financial and
other socioeconomic characteristics of
the group in making group eligibility
determinations, particularly in cases in
which the group is sufficiently large as
to make individualized screening a
majority of the members of the group
impracticable. LSC believed (and still
believes) that the standard set forth in
the proposed rule fairly reflects the
current practice. Contrary to the concern
expressed by the commenters, this
practice has not proved to be
problematic to date, nor is there any
suggestion in the comments that LSC is
currently ‘‘second guessing’’ recipients’
determinations of group eligibility. LSC
does not anticipate that incorporating
the currently unwritten standard into
the regulation will change this situation.
LSC is, however, slightly modifying the
language in the final rule to specify that
it is the financial and other
socioeconomic characteristics of the
group (or the persons being served by
the group) which recipients must
consider in making eligibility
determinations and that those particular
characteristics must be consisent with
those of persons who are financially
eligible for LSC-funded legal asssitance.
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The following are examples of how
the new rule on group eligibility will
apply:
Example 1: Group primarily composed of
eligible individuals
A public housing tenants’ association seeks
representation to require the landlord to
provide required maintenance services to the
buildings and grounds. To make a
determination of eligibility, the recipient
would have to review the resources available
to the group (such as any assets and
liabilities of the tenants’ association, i.e.,
dues or other monetary donations to the
association; outstanding bills or obligations
of the association) and make a determination
that the association lacks the financial
resources with which to hire private counsel.
In addition, the recipient would have to
determine that a majority of the association
(or the association’s organizing body) are
persons who would be financially eligible
under the Act by considering whether the
group’s financial and other socioeconomic
characteristics are consistent with those of
persons who are financially eligible under
the Act. The recipient could perform a
standard eligibility screen on the members of
the tenants’ association (or its organizing
body) or could make a determination that the
requirement is met on the basis that financial
eligibility for residency in the public housing
complex in the recipient’s area is consistent
with the recipient’s financial eligibility
policies. The recipient would have to be able
to support its determination of eligibility by
collecting and maintaining such information
as reasonably demonstrates that the tenants’
association had met the eligibility criteria.
Example 2: Group primarily composed of
eligible individuals
Five women who are currently on public
assistance have come together as a group to
open and operate a daycare center. The group
has a grant from the state social services
agency which permits the grant to be used of
obtaining legal assistance and a line of credit
secured by the Small Business
Administration to create and operate this
business. The group seeks legal assistance in
obtaining the necessary permits and
negotiating a lease for space for the center.
To make a determination of eligibility, the
recipient would have to review the resources
available to the group (such as the grant, line
of credit, other funds available, as well as
liabilities, such as costs for obtaining
licenses, space rental, etc) to see if the group
lacks the financial resources with which to
hire private counsel. In addition, the
recipient would have to determine that a
majority of the women are persons who
would be financially eligible under the Act
by considering the financial and other
socioeconomic characteristics of the women.
In this case, although the women (being
recipients of public assistance) are likely
persons who would be eligible for legal
assistance under the Act, the group’s grant
and line of credit may provide enough
resources to the group so as to enable the
group to obtain private legal assistance. If the
recipient determines that this is the case, the
recipient would not be able to provide the
group LSC-funded legal assistance.
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Example 3: Group which has as a principal
activity the provision of services to those
who would be financially eligible under the
Act.
A community group runs a food bank
which distributes food to low-income
persons in the community. The community
group is a 501(c)(3) organization which is run
by a volunteer board of directors who are not
personally financially eligible for LSCfunded legal assistance. The food bank
warehouse occupies rented space. The group
is seeking legal assistance to renegotiate its
lease to obtain favorable long-term lease
terms to allow it to remain in the warehouse
space. To make a determination of eligibility,
the recipient would have to review the
resources available to the group (i.e., how
much the group takes in donations, what the
group’s expenses are) and make a
determination based on that information that
the group lacks the financial resources with
which to hire private counsel. In addition,
the recipient would have to determine that
the group has as a principal activity the
provision of services to those would would
be financially eligible for LSC-funded legal
assistance. In this case, the recipient could
consider such financial and other
socioeconomic characteristics of the group
being served such as homeless status,
eligibility for the services offered, etc. The
recipient would also have to consider the
relative significance of the food bank in
comparison to the other activities of the
community group and to determine that the
legal assistance sought related to that service.
In this case, renegotiation of the lease
appears related to the provision of the
service. The recipient would have to be able
to support its determination of eligibility by
collecting and maintaining such information
as reasonably demonstrates that the
community group had met the eligibility
criteria.
Example 4: Group which has as a principal
activity the provision of services to persons
who would be financially eligible under the
Act
A non-profit organization runs a shelter for
homeless families. The Board of the shelter
is comprised of persons who would not be
financially eligible for assistance under the
Act. The shelter seeks legal assistance in
defending itself against a claim for damages
filed by a person who came to the shelter
uninvited to distribute a menu for a local
take out restaurant and slipped and fell on
ice on the shelter’s stairs. To make a
determination of eligibility, the recipient
would have to review the resources available
to the group (i.e., how much the shelter
receives in donations, the shelter’s expenses,
etc.) and make a determination based on that
information that the group lacks the financial
resources with which to hire private counsel.
In addition, the recipient would have to
determine that the group has as a principal
activity the provision of services to those
would be financially eligible for LSC-funded
legal assistance. In this case, the recipient
would consider the financial and other
socioeconomic characteristics of the group
being served (homeless status, financial
eligibility for access to the shelter, etc.). The
recipient would also have to assess whether
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the legal assistance being sought relates to
the principal activity. In this case, the tort
claim is unlikely to be related to the primary
activity of the shelter and, as such, the
recipient would not be able to provide LSCfunded legal assistance to the shelter.
In addition, the revised rule retains
and restates the current provision of the
rule that these requirements apply only
to a recipient providing legal assistance
supported by LSC funds, provided that
regardless of the source of funds used,
any legal assistance provided to a group
must be otherwise permissible under
applicable law and regulation.
LSC notes that, as with other aspects
of this rule, section 1611.6 does not
speak to eligibility of groups for legal
assistance under other applicable law
and regulation. For example, the
eligibility of a group under proposed
section 1611.6 does not address issues
related to the eligibility of the group
under Part 1626 of LSC’s regulations,
concerning citizenship and alien status
eligibility. Similarly, the fact that a
recipient may determine a group to be
eligible for legal assistance under this
Part, does not address other questions
relating to permissibility of the
representation (i.e., this Part does not
confer authority for the representation
of a group on restricted matters, such as
class action lawsuits or redistricting
matters, etc.)
Finally, LSC notes that in the
November 2002 NPRM, this section was
numbered 1611.8 and placed at the end
of that proposed regulation. LSC is now
placing this section before the sections
on Manner of Determining Financial
Eligibility, Change in Financial
Eligibility Status and Retainer
Agreements as those sections are
applicable to both groups and
individual applicants and clients.
Section 1611.7—Manner of Determining
Financial Eligibility
LSC is making several revisions to
this section. First, LSC is including a
requirement that in making financial
eligibility determinations a recipient
shall make reasonable inquiry regarding
sources of the applicant’s income,
income prospects and assets and shall
record income and asset information in
the manner specified for determining
financial eligibility in section 1611.4.
This requirement replaces the process
currently required by section 1611.5,
whereby a recipient is effectively
required to conduct a lengthy and often
cumbersome inquiry as to the
applicant’s income, assets and income
prospects, including inquiry into a
detailed list of factors relating to an
applicant’s specific financial situation
and ability to afford private counsel.
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The Working Group discussed this issue
at length and representatives of the field
noted that conducting such a detailed
inquiry in most cases is a task which is
often difficult to accomplish efficiently
at the point of intake, especially as
much of intake is performed by
volunteers, interns or receptionists.
Rather, many recipients, in practice,
conduct a somewhat abbreviated
version of the otherwise required
process, inquiring into current income,
assets, income prospects and probing for
additional information based on the
responses provided, the requirements of
the regulation and their knowledge of
local circumstances. This approach, the
field representatives noted, is less prone
to error and assists in fostering an
appropriate attorney-client relationship
with individuals accepted as clients. As
LSC is not finding widespread instances
of service being provided to financially
ineligible persons, it was agreed that the
process required by the existing
regulation is unduly complicated and
that the simplified requirement
proposed would be adequate to ensure
that recipients are making sufficient
inquiry into applicants’ financial
situations to determine financial
eligibility status under the regulation
while being less administratively
burdensome for recipients and more
conducive to the development of the
attorney-client relationship. LSC also
believes that adoption of the
streamlined financial eligibility
determination process will aid the
Corporation in conducting compliance
reviews.
As noted above, LSC originally
proposed in the November 2002 NPRM,
to include this provision in proposed
section 1611.4, Financial Eligibility for
Legal Assistance. Upon reflection, LSC
believes that as this requirement is
really a requirement as to how financial
eligibility determinations are to be
made, it is better included in this
section on the manner of determining
financial eligibility. LSC believes that
this will improve the organization and
clarity of the regulation.
Second, LSC is deleting the
requirement in existing paragraph (a) of
this section that LSC eligibility forms
and procedures must be approved by
the Corporation. It has been LSC’s
experience that receiving the forms has
not enhanced its ability to conduct
oversight of recipients. These
documents are readily available to LSC
from recipients when needed. This
requirement appears only to create
unnecessary work for recipients and
LSC staff without serving any policy
purpose.
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LSC is also adding a provision to the
regulation making clear that a recipient
agreeing to extend legal assistance to a
client referred from another recipient
may rely upon the referring recipient’s
determination of financial eligibility,
provided that the referring recipient
provides and the receiving recipient
retains a copy of the eligibility form
documenting the financial eligibility of
the client. This is the currently accepted
practice, but is addressed nowhere in
the existing regulation.
LSC received several comments
supporting these changes and no
comments opposing them. Accordingly,
LSC adopts the revisions as proposed.
Section 1611.8—Change in Financial
Eligibility Status
LSC is adding language to this section
to provide that if a recipient later learns
of information which indicates that a
client never was, in fact, financially
eligible, the recipient must discontinue
the representation consistent with the
applicable rules of professional
responsibility. This addition is being
adopted because sometimes, after an
applicant or group has been accepted as
a client, the recipient discovers or the
client discloses information that
indicates that the client was not, in fact,
financially eligible for service. This
situation is not covered by the existing
regulation because the client may not
have experienced a change in
circumstance but rather, the recipient
has discovered new pertinent
information about the client. LSC notes
that the new language, like the current
regulation, is not intended to require a
recipient to make affirmative inquiry
after accepting an applicant or group as
a client for information that would
indicate a change in circumstance or the
presence of additional information
regarding the client’s financial
eligibility.
The regulation requires that when a
client is found to be no longer
financially eligible on the basis of later
discovered information, the recipient
shall discontinue representation
supported with LSC funds, if
discontinuing the representation is not
inconsistent with applicable rules of
professional responsibility. This
language is parallel to the current
requirement regarding discontinuation
of representation upon a change in
circumstance. LSC wishes to note that,
to the extent that discontinuation of
representation is not possible because of
professional responsibility reasons, a
recipient may continue to provide
representation supported by LSC funds.
This is currently the case and LSC
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intends to make no change in the
regulation on this point.
In addition, LSC is changing the name
of this section from ‘‘change in
circumstances’’ to ‘‘change in financial
eligibility status’’ to reflect the addition
of the later discovered information
provision.
LSC received several comments
supporting these changes and no
comments opposing them. LSC
accordingly adopts the revisions as
proposed.
Section 1611.9—Retainer Agreements
The retainer agreement requirement,
found at section 1611.8 of the existing
regulation, was the subject of significant
discussion in the Working Group.
Representatives of the field agreed with
the LSC representatives that a retainer
agreement may be appropriate under
certain circumstances, but argued that
this regulatory requirement is not
required by statute, is not justified
under applicable rules of professional
responsibility, may be unnecessarily
burdensome in some instances and is
not related to financial eligibility
determinations. They contended that,
barring a statutory mandate, decisions
about the use of retainer agreements,
like those involving many other matters
relating to the best manner of providing
high quality legal assistance, should be
determined by a recipient’s Board,
management and staff, with guidance
from LSC. They urged LSC to delete this
requirement. The LSC representatives,
however, were of the opinion that the
existing provision in the regulations
requiring the execution of retainer
agreements is professionally desirable,
authorized in accordance with LSC’s
mandate under Section 1007(a)(1) of the
Act to assure the maintenance of the
highest quality of service and
professional standards, and appropriate
to assure that there are no
misunderstandings as to what services
are to be rendered to a particular client.
Retainer agreements protect the attorney
and recipient in cases of an unfounded
malpractice claim and protect the client
if the attorney and the recipient should
fail to provide legal assistance
measuring up to professional standards.
In the end, the Working Group was
unable to reach consensus on this issue
and the Draft NPRM retained a
provision generally requiring the
execution of retainer agreements, along
with proposing requirements for client
service notices and PAI referral notices
in lieu of retainer agreements under
certain circumstances.
After deliberations on the Draft
NPRM, the Board determined to propose
elimination of the retainer agreement
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requirement altogether and the
November 2002 NPRM published by
LSC reflected this determination. With
the exception of the comments of the
LSC OIG, all of the comments LSC
received on the November 2002 NPRM
supported the elimination of the
retainer agreement requirement.
With the appointment of the new
members of the Board of Directors and
the new LSC President, LSC had the
opportunity to reconsider this proposal.
Field representatives reiterated their
support for elimination of the retainer
agreement requirement from the
regulation, while LSC Management
reiterated its support for retention of a
retainer agreement requirement for
extended service in the regulation, with
certain amendments intended to clarify
and streamline the requirement. The
Board agrees with Management. LSC is
committed to keeping a retainer
agreement requirement in the
regulations. LSC considers the practice
of providing retainer agreements to be
professionally desirable and in
accordance with its mandate under
Section 1007(a)(1) of the Act to assure
the maintenance of the highest quality
of service and professional standards
and to assure that there are no
misunderstandings as to what services
are to be rendered to a particular client.
Retainer agreements protect the attorney
and recipient in cases of an unfounded
malpractice claim and protect the client
if the attorney and the recipient should
fail to provide legal assistance
measuring up to professional standards.
LSC agrees, however, that there are
changes that can be made in the retainer
agreement requirement to clarify the
application of the requirement and to
lessen the burden on recipients, without
interfering with the underlying goals of
the requirements. First, LSC believes
that it is not necessary for LSC to
approve retainer agreements and
proposes to remove the requirement at
current section 1611.8(a) that retainer
agreements be in a form approved by
LSC. Instead, LSC is requiring the
retainer agreements must be in a form
consistent with the local rules of
professional responsibility and must
contain statements identifying the legal
problem for which representation is
being provided and the nature of the
legal services to be provided. LSC
believes that this simplification will
eliminate possible sources of confusion
for recipients in drafting retainer
agreements, yet will continue to foster
the essential communication between
the recipient and the client.
Second, LSC is clarifying the
circumstances in which retainer
agreements are required. Under current
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section 1611.8(b) a recipient is not
required to execute a retainer agreement
‘‘when the only service to be provided
is brief advice and consultation.’’
Although the plain language of this
provision would seem to encompass
situations in which the attorney is
providing only some information and
guidance on a suggested course of action
to the client, it has over the years, come
to include brief services such as drafting
simple documents or making limited
contacts (by phone or in writing) with
third parties, such as a landlord, an
employer or a government benefits
agency, on behalf of the client. LSC has
determined that the discrepancy
between the plain language and the
practical meaning of the exception must
be corrected.
During the public deliberations on
this matter in the 2004 and 2005
Operations and Regulations Committee
meetings, LSC considered different
approaches to resolving the discrepancy
between the regulation as written and
the prevailing practice. Field
representatives suggested in the event
that a retainer agreement requirement
remains in the rule (although still
preferring the elimination of any such
requirement) that the language of the
exception should reflect the current
practice by expressly including brief
service type activities along with advice
and counsel. They asserted that the
proposed rule should add no new
administrative or regulatory burdens on
recipients. While recognizing the value
of retainer agreements in some
circumstances, the field representatives
also argued that the rules of professional
responsibility in most jurisdictions do
not require that a retainer agreement be
executed or that any other form of
notice be provided in the brief service
context. Although LSC Management
expressed the belief that while some
form of written communication between
the attorney and the client in brief
services cases about the nature of the
relationship and a clear understanding
as to what services are to be rendered
is important to achieving the highest
quality of legal service and professional
standards, it ultimately recommended
against requiring grantees to provide
specific written communications to
clients when only brief services are
being provided.
Most of the comments LSC received
on the NPRM reiterated the arguments
previously made by field
representatives. At the same time,
however, the commenters noted that if
LSC was going to remain committed to
maintaining a retainer agreement
requirement in the regulation, that the
proposed revisions were an appropriate
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45561
and helpful change from the current
requirement. In particular, several
comments supported proposals to
exclude PAI attorneys from the scope of
the requirement and to delete the
requirement for LSC prior approval of
retainer agreement forms.
After considering all of the various
arguments on this matter in LSC has
determined that, on balance, written
communications in brief services cases
represents a ‘‘best practice’’ and, for the
purposes of a regulatory requirement,
the current practice by which retainer
agreements are only required when the
recipient is providing extended service
to the client is appropriate. Accordingly,
LSC is adopting the revisions as
proposed. Under the new rule,
recipients will only be required to
execute retainer agreements when
providing extended services to clients.
Extended service is characterized by the
performance of multiple tasks incident
to continuous representation in a case.
Examples of extended service include
representation of a client in litigation,
an administrative adjudicative
proceeding, alternative dispute
resolution proceeding, and more than
brief representation of a client in
negotiations with a third party. In
addition, LSC is retaining the provision
in the current regulation that the
retainer agreement must be executed
when representation commences or as
soon thereafter as is practicable.
To further clarify the regulation, LSC
is including express language specifying
that recipients are not required to
execute retainer agreements if the only
services being provided are advice and
counsel or brief service. Advice and
counsel is characterized by a limited
relationship between the attorney and
the client in which the attorney does no
more than review information and
provide information and guidance to the
client. Advice and counsel does not
encompass drafting of documents or
making third-party contacts on behalf of
the client. LSC notes also that it
proposes to use the term ‘‘advice and
counsel’’ instead of ‘‘advice and
consultation’’ because the term ‘‘advice
and counsel’’ is a widely understood
case reporting term throughout the legal
services community and LSC believe
that use of the standard term will be
simpler and clearer. Brief service is the
performance of a discrete task (or tasks)
which are not incident to continuous
representation in a case but which
involve more than the mere provision of
advice and counsel. Examples of brief
service include activities, such as the
drafting of documents such as a contract
or a will for a client or the making of
one or a few third-party contacts on
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behalf of a client in a narrow time
period. In advice and counsel and brief
service cases, the interaction between
the recipient and the client is generally
limited in nature and duration so that
executing a retainer agreement is
administratively burdensome. In these
situations it may take more time and
effort for the recipient to prepare the
retainer and ensure that the client has
signed and returned an executed copy of
the retainer agreement to the recipient
than it takes for the recipient to provide
the service to the client. At that point,
the benefit of having the executed
retainer agreement is outweighed by the
effort required to comply with the
requirement.
Finally, LSC is adding a statement to
the regulation providing that no written
retainer agreement is required for legal
services provided to the client by a
private attorney pursuant to 45 CFR Part
1614. Until now, LSC has consistently
interpreted the retainer agreement
requirement as applying to cases
handled by private attorneys pursuant
to a recipient’s PAI program and OLA
has advised recipients that the best
course of action is to have the client
execute retainer agreements with both
the recipient and with the private
attorney (OLA Opinion 99–03, August 9,
1999). Recipients have reported that
entering into retainer agreements with
clients with whom it does not have ongoing direct relationships does not
further the goal of the retainer
agreement requirement and that
ensuring that retainer agreements be
executed between clients and private
attorneys is unduly administratively
burdensome. LSC agrees.
The application of the retainer
agreement requirement comes from the
current structure of the text of the
regulation. Under the current regulation,
a recipient is required to execute a
retainer agreement (unless otherwise
excepted) ‘‘with each client who
receives legal services from the
recipient.’’ Cases referred to private
attorneys pursuant to a recipient’s PAI
program remain cases of the recipient
and the clients in those cases remain
clients of the recipient and the client is
considered to be receiving some legal
services from the recipient. However, by
amending the language of the text of the
regulation to say that the recipient is
only required to execute a retainer
agreement ‘‘when the recipient is
providing extended service to the
client’’ the necessity of applying the
requirement to PAI cases is removed. In
cases handled by PAI attorneys,
although the client can be said to be
receiving some legal services from the
recipient, the recipient is not providing
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extended services. Although this change
to the language alone could arguably be
sufficient to remove the necessity of
applying the retainer agreement
requirement to cases being handled by
PAI attorneys, LSC believes the text of
the regulation should be further
clarified to explicitly so state.
Other
LSC received numerous comments
supporting LSC’s decision not to
incorporate the requirements of section
509(h) of LSC’s FY 1996 appropriations
act. Public Law 104–134, 110 Stat. 1321
(carried forward in each successive
appropriation, including the current
appropriation, Public Law 108–447, 118
Stat. 2809) with respect to records
covered by this Part. Section 509(h)
provides that, among other records,
eligibility records ‘‘shall be made
available to any auditor or monitor of
the recipient * * * except for such
records subject to the attorney-client
privilege.’’ During the prior stages of
this rulemaking, there had been some
discussion and consideration of having
this language expressly incorporated
into Part 1611. LSC continues to believe
that, as 509(h) covers significantly more
than eligibility records, having a full
discussion of the meaning of 509(h) in
the context of 1611, which addresses
only financial eligibility issues, is not
appropriate. LSC is making final its
decision not to address 509(h)
requirements in this rule. For a fuller
discussion of this issue, see the
preamble to the November 22, 2002
NPRM, 67 FR 70376.
List of Subjects in 45 CFR Part 1611
Legal services.
I For reasons set forth in the preamble,
LSC revises 45 CFR part 1611 to read as
follows:
PART 1611—FINANCIAL ELIGIBILITY
Sec.
1611.1 Purpose.
1611.2 Definitions.
1611.3 Financial eligibility policies.
1611.4 Financial eligibility for legal
assistance.
1611.5 Authorized exceptions to the
recipient’s annual income ceiling.
1611.6 Representation of groups.
1611.7 Manner of determining financial
eligibility.
1611.8 Changes in financial eligibility
status.
1611.9 Retainer agreements.
Appendix A to Part 1611—Legal Services
Corporation Poverty Guidelines
Authority: 42 U.S.C. 2996e(b)(1),
2996e(b)(3), 2996f(a)(1), 2996f(a)(2); Section
509(h) of Pub. L. 104–134, 110 Stat. 1321
(1996); Pub. L. 105–119, 111 Stat. 2512
(1998).
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§ 1611.1
Purpose.
This part sets forth requirements
relating to the financial eligibility of
individual applicants for legal
assistance supported with LSC funds
and recipients’ responsibilities in
making financial eligibility
determinations. This part is not
intended to and does not create any
entitlement to service for persons
deemed financially eligible. This part
also seeks to ensure that financial
eligibility is determined in a manner
conducive to development of an
effective attorney-client relationship. In
addition, this part sets forth standards
relating to the eligibility of groups for
legal assistance supported with LSC
funds. Finally, this part sets forth
requirements relating to recipients’
responsibilities in executing retainer
agreements with clients.
§ 1611.2
Definitions.
(a) ‘‘Advice and counsel’’ means legal
assistance that is limited to the review
of information relevant to the client’s
legal problem(s) and counseling the
client on the relevant law and/or
suggested course of action. Advice and
counsel does not encompass drafting of
documents or making third-party
contacts on behalf of the client.
(b) ‘‘Applicable rules of professional
responsibility’’ means the rules of ethics
and professional responsibility
generally applicable to attorneys in the
jurisdiction where the recipient
provides legal services.
(c) ‘‘Applicant’’ means an individual
who is seeking legal assistance
supported with LSC funds from a
recipient. The term does not include a
group, corporation or association.
(d) ‘‘Assets’’ means cash or other
resources of the applicant or members of
the applicant’s household that are
readily convertible to cash, which are
currently and actually available to the
applicant.
(e) ‘‘Brief services’’ means legal
assistance in which the recipient
undertakes to provide a discrete and
time-limited service to a client beyond
advice and consultation, including but
not limited to activities, such as the
drafting of documents or making limited
third party contacts on behalf of a client.
(f) ‘‘Extended service’’ means legal
assistance characterized by the
performance of multiple tasks incident
to continuous representation. Examples
of extended service would include
representation of a client in litigation,
an administrative adjudicative
proceeding, alternative dispute
resolution proceeding, extended
negotiations with a third party, or other
legal representation in which the
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recipient undertakes responsibility for
protecting or advancing a client’s
interest beyond advice and counsel or
brief services.
(g) ‘‘Governmental program for low
income individuals or families’’ means
any Federal, State or local program that
provides benefits of any kind to persons
whose eligibility is determined on the
basis of financial need.
(h) ‘‘Governmental program for
persons with disabilities’’ means any
Federal, State or local program that
provides benefits of any kind to persons
whose eligibility is determined on the
basis of mental and/or physical
disability.
(i) ‘‘Income’’ means actual current
annual total cash receipts before taxes of
all persons who are resident members
and contribute to the support of an
applicant’s household, as that term is
defined by the recipient. Total cash
receipts include, but are not limited to,
wages and salaries before any
deduction; income from selfemployment after deductions for
business or farm expenses; regular
payments from governmental programs
for low income persons or persons with
disabilities; social security payments;
unemployment and worker’s
compensation payments; strike benefits
from union funds; veterans benefits;
training stipends; alimony; child
support payments; military family
allotments; public or private employee
pension benefits; regular insurance or
annuity payments; income from
dividends, interest, rents, royalties or
from estates and trusts; and other
regular or recurring sources of financial
support that are currently and actually
available to the applicant. Total cash
receipts do not include the value of food
or rent received by the applicant in lieu
of wages; money withdrawn from a
bank; tax refunds; gifts; compensation
and/or one-time insurance payments for
injuries sustained; non-cash benefits;
and up to $2,000 per year of funds
received by individual Native
Americans that is derived from Indian
trust income or other distributions
exempt by statute.
§ 1611.3
Financial eligibility policies.
(a) The governing body of a recipient
shall adopt policies consistent with this
part for determining the financial
eligibility of applicants and groups. The
governing body shall review its
financial eligibility policies at least once
every three years and make adjustments
as necessary. The recipient shall
implement procedures consistent with
its policies.
(b) As part of its financial eligibility
policies, every recipient shall specify
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that only individuals and groups
determined to be financially eligible
under the recipient’s financial eligibility
policies and LSC regulations may
receive legal assistance supported with
LSC funds.
(c)(1) As part of its financial eligibility
policies, every recipient shall establish
annual income ceilings for individuals
and households, which may not exceed
one hundred and twenty five percent
(125%) of the current official Federal
Poverty Guidelines amounts. The
Corporation shall annually calculate
125% of the Federal Poverty Guidelines
amounts and publish such calculations
in the Federal Register as a revision to
Appendix A to this part.
(2) As part of its financial eligibility
policies, a recipient may adopt
authorized exceptions to its annual
income ceilings consistent with
§ 1611.5.
(d)(1) As part of its financial
eligibility policies, every recipient shall
establish reasonable asset ceilings for
individuals and households. In
establishing asset ceilings, the recipient
may exclude consideration of a
household’s principal residence,
vehicles used for transportation, assets
used in producing income, and other
assets which are exempt from
attachment under State or Federal law.
(2) The recipient’s policies may
provide authority for waiver of its asset
ceilings for specific applicants under
unusual circumstances and when
approved by the recipient’s Executive
Director, or his/her designee. When the
asset ceiling is waived, the recipient
shall record the reasons for such waiver
and shall keep such records as are
necessary to inform the Corporation of
the reasons for such waiver.
(e) Notwithstanding any other
provision of this part, or other provision
of the recipient’s financial eligibility
policies, every recipient shall specify as
part of its financial eligibility policies
that in assessing the income or assets of
an applicant who is a victim of domestic
violence, the recipient shall consider
only the assets and income of the
applicant and members of the
applicant’s household other than those
of the alleged perpetrator of the
domestic violence and shall not include
any assets held by the alleged
perpetrator of the domestic violence,
jointly held by the applicant with the
alleged perpetrator of the domestic
violence, or assets jointly held by any
member of the applicant’s household
with the alleged perpetrator of the
domestic violence.
(f) As part of its financial eligibility
policies, a recipient may adopt policies
that permit financial eligibility to be
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45563
established by reference to an
applicant’s receipt of benefits from a
governmental program for low-income
individuals or families consistent with
§ 1611.4(c).
(g) Before establishing its financial
eligibility policies, a recipient shall
consider the cost of living in the service
area or locality and other relevant
factors, including but not limited to:
(1) The number of clients who can be
served by the resources of the recipient;
(2) The population that would be
eligible at and below alternative income
and asset ceilings; and
(3) The availability and cost of legal
services provided by the private bar and
other free or low cost legal services
providers in the area.
§ 1611.4 Financial eligibility for legal
assistance.
(a) A recipient may provide legal
assistance supported with LSC funds
only to individuals whom the recipient
has determined to be financially eligible
for such assistance. Nothing in this part,
however, prohibits a recipient from
providing legal assistance to an
individual without regard to that
individual’s income and assets if the
legal assistance is wholly supported by
funds from a source other than LSC, and
is otherwise permissible under
applicable law and regulation.
(b) Consistent with the recipient’s
financial eligibility policies and this
part, the recipient may determine an
applicant to be financially eligible for
legal assistance if the applicant’s assets
do not exceed the recipient’s applicable
asset ceiling established pursuant to
§ 1611.3(d)(1), or the applicable asset
ceiling has been waived pursuant
§ 1611.3(d)(2), and:
(1) The applicant’s income is at or
below the recipient’s applicable annual
income ceiling; or
(2) The applicant’s income exceeds
the recipient’s applicable annual
income ceiling but one or more of the
authorized exceptions to the annual
income ceilings, as provided in
§ 1611.5, applies.
(c) Consistent with the recipient’s
policies, a recipient may determine an
applicant to be financially eligible
without making an independent
determination of income or assets, if the
applicant’s income is derived solely
from a governmental program for lowincome individuals or families,
provided that the recipient’s governing
body has determined that the income
standards of the governmental program
are at or below 125% of the Federal
Poverty Guidelines amounts and that
the governmental program has eligibility
standards which include an assets test.
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§ 1611.5 Authorized exceptions to the
annual income ceiling.
(a) Consistent with the recipient’s
policies and this Part, a recipient may
determine an applicant whose income
exceeds the recipient’s applicable
annual income ceiling to be financially
eligible if the applicant’s assets do not
exceed the recipient’s applicable asset
ceiling established pursuant to
§ 1611.3(d), or the asset ceiling has been
waived pursuant to § 1611.3(d)(2), and:
(1) The applicant is seeking legal
assistance to maintain benefits provided
by a governmental program for low
income individuals or families; or
(2) The Executive Director of the
recipient, or his/her designee, has
determined on the basis of
documentation received by the
recipient, that the applicant’s income is
primarily committed to medical or
nursing home expenses and that,
excluding such portion of the
applicant’s income which is committed
to medical or nursing home expenses,
the applicant would otherwise be
financially eligible for service; or
(3) The applicant’s income does not
exceed 200% of the applicable Federal
Poverty Guidelines amount and:
(i) The applicant is seeking legal
assistance to obtain governmental
benefits for low income individuals and
families; or
(ii) The applicant is seeking legal
assistance to obtain or maintain
governmental benefits for persons with
disabilities; or
(4) The applicant’s income does not
exceed 200% of the applicable Federal
Poverty Guidelines amount and the
recipient has determined that the
applicant should be considered
financially eligible based on
consideration of one or more of the
following factors as applicable to the
applicant or members of the applicant’s
household:
(i) Current income prospects, taking
into account seasonal variations in
income;
(ii) Unreimbursed medical expenses
and medical insurance premiums;
(iii) Fixed debts and obligations;
(iv) Expenses such as dependent care,
transportation, clothing and equipment
expenses necessary for employment, job
training, or educational activities in
preparation for employment;
(v) Non-medical expenses associated
with age or disability;
(vi) Current taxes; or
(vii) Other significant factors that the
recipient has determined affect the
applicant’s ability to afford legal
assistance.
(b) In the event that a recipient
determines that an applicant is
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financially eligible pursuant to this
section and is provided legal assistance,
the recipient shall document the basis
for the financial eligibility
determination. The recipient shall keep
such records as may be necessary to
inform the Corporation of the specific
facts and factors relied on to make such
determination.
§ 1611.6
Representation of groups.
(a) A recipient may provide legal
assistance to a group, corporation,
association or other entity if it provides
information showing that it lacks, and
has no practical means of obtaining,
funds to retain private counsel and
either:
(1) The group, or for a nonmembership group the organizing or
operating body of the group, is primarily
composed of individuals who would be
financially eligible for LSC-funded legal
assistance; or
(2) The group has as a principal
activity the delivery of services to those
persons in the community who would
be financially eligible for LSC-funded
legal assistance and the legal assistance
sought relates to such activity.
(b)(1) In order to make a
determination that a group, corporation,
association or other entity is eligible for
legal services as required by paragraph
(a) of this section, a recipient shall
consider the resources available to the
group, such as the group’s income and
income prospects, assets and obligations
and either:
(i) For a group primarily composed of
individuals who would be financially
eligible for LSC-funded legal assistance,
whether the financial or other
socioeconomic characteristics of the
persons comprising the group are
consistent with those of persons who
are financially eligible for LSC-funded
legal assistance; or
(ii) For a group having as a principal
activity the delivery of services to those
persons in the community who would
be financially eligible for LSC-funded
legal assistance, whether the financial or
other socioeconomic characteristics of
the persons served by the group are
consistent with those of persons who
are financially eligible for LSC-funded
legal assistance and the assistance
sought relates to such activity of the
group.
(2) A recipient shall collect
information that reasonably
demonstrates that the group,
corporation, association or other entity
meets the eligibility criteria set forth
herein.
(c) The eligibility requirements set
forth herein apply only to legal
assistance supported by funds from
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LSC, provided that any legal assistance
provided by a recipient, regardless of
the source of funds supporting the
assistance, must be otherwise
permissible under applicable law and
regulation.
§ 1611.7 Manner of determining financial
eligibility.
(a)(1) In making financial eligibility
determinations regarding individual
applicants, a recipient shall make
reasonable inquiry regarding sources of
the applicant’s income, income
prospects and assets. The recipient shall
record income and asset information in
the manner specified in this section.
(2) In making financial eligibility
determinations regarding groups seeking
LSC-supported legal assistance, a
recipient shall follow the requirements
set forth in § 1611.6(b) of this part.
(b) A recipient shall adopt simple
intake forms and procedures to obtain
information from applicants and groups
to determine financial eligibility in a
manner that promotes the development
of trust between attorney and client. The
forms shall be preserved by the
recipient.
(c) If there is substantial reason to
doubt the accuracy of the financial
eligibility information provided by an
applicant or group, a recipient shall
make appropriate inquiry to verify the
information, in a manner consistent
with the attorney-client relationship.
(d) When one recipient has
determined that a client is financially
eligible for service in a particular case
or matter, that recipient may request
another recipient to extend legal
assistance or undertake representation
on behalf of that client in the same case
or matter in reliance upon the initial
financial eligibility determination. In
such cases, the receiving recipient is not
required to review or redetermine the
client’s financial eligibility unless there
is a change in financial eligibility status
as described in § 1611.8 or there is
substantial reason to doubt the validity
of the original determination, provided
that the referring recipient provides and
the receiving recipient retains a copy of
the intake form documenting the
financial eligibility of the client.
§ 1611.8
status.
Change in financial eligibility
(a) If, after making a determination of
financial eligibility and accepting a
client for service, the recipient becomes
aware that a client has become
financially ineligible through a change
in circumstances, a recipient shall
discontinue representation supported
with LSC funds if the change in
circumstances is sufficient, and is likely
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to continue, to enable the client to
afford private legal assistance, and
discontinuation is not inconsistent with
applicable rules of professional
responsibility.
(b) If, after making a determination of
financial eligibility and accepting a
client for service, the recipient later
determines that the client is financially
ineligible on the basis of later
discovered or disclosed information, a
recipient shall discontinue
representation supported with LSC
funds if the discontinuation is not
inconsistent with applicable rules of
professional responsibility.
ii For family units with more than eight members, add $5,100 for each additional member
in a family.
iii For family units with more than eight members, add $4,688 for each additional member
in a family.
§ 1611.9
49 CFR Part 551
Retainer agreements.
(a) When a recipient provides
extended service to a client, the
recipient shall execute a written retainer
agreement with the client. The retainer
agreement shall be executed when
representation commences or as soon
thereafter as is practicable. Such
retainer agreement must be in a form
consistent with the applicable rules of
professional responsibility and
prevailing practices in the recipient’s
service area and shall include, at a
minimum, a statement identifying the
legal problem for which representation
is sought, and the nature of the legal
services to be provided.
(b) No written retainer agreement is
required for advice and counsel or brief
service provided by the recipient to the
client or for legal services provided to
the client by a private attorney pursuant
to 45 CFR part 1614.
(c) The recipient shall maintain
copies of all retainer agreements
generated in accordance with this
section.
Appendix A to Part 1611
LEGAL SERVICES CORPORATION 2005
POVERTY GUIDELINES *
Size of
family
unit
1
2
3
4
5
6
7
8
48 Contiguous
States
and the
District of
Columbia i
.........
.........
.........
.........
.........
.........
.........
.........
$11,963
16,038
20,113
24,188
28,263
32,338
36,413
40,488
Alaska ii
$14,938
20,038
25,138
30,238
35,338
40,438
45,538
50,638
Hawaii iii
$13,763
18,450
23,138
27,825
32,513
37,200
41,888
46,575
* The figures in this table represent 125% of
the poverty guidelines by family size as determined by the Department of Health and
Human Services.
i For family units with more than eight members, add $4,075 for each additional member
in a family.
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Victor M. Fortuno,
Vice President & General Counsel.
[FR Doc. 05–15553 Filed 8–5–05; 8:45 am]
BILLING CODE 7050–01–P
DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety
Administration
[Docket No. NHTSA–2005–21972]
RIN 2127–AJ69
Service of Process on Foreign
Manufacturers and Importers
National Highway Traffic
Safety Administration (NHTSA),
Department of Transportation (DOT).
ACTION: Final rule.
AGENCY:
SUMMARY: This final rule amends
NHTSA’s regulation on service of
process on foreign manufacturers and
importers to clarify existing regulatory
requirements by rephrasing the
regulation in a plain language, question
and answer format and inserting an
appendix containing a suggested
designation form for use by foreign
manufacturers and their agents. It also
will enhance communications between
foreign manufacturers and the agency by
spelling out existing requirements for
providing notice to NHTSA of changes
in company name, address and product
names, and changing the office to which
foreign manufacturers must submit
designation and related documents to
reflect organizational changes occurring
since the regulation was adopted.
EFFECTIVE DATE: This final rule becomes
effective October 7, 2005.
Petitions: Any petitions for
reconsideration of today’s final rule
must be received by NHTSA not later
than September 22, 2005.
FOR FURTHER INFORMATION CONTACT: Ms.
Dana Sade, Office of the Chief Counsel,
at (202) 366–1834, facsimile (202) 366–
3820. You may send mail to Ms. Sade
at the National Highway Traffic Safety
Administration, 400 Seventh Street,
SW., Washington, DC 20590.
SUPPLEMENTARY INFORMATION: NHTSA
published a rule on December 25, 1968
that established a procedure for foreign
manufacturers, assemblers and
importers of motor vehicles and motor
vehicle equipment (hereinafter referred
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45565
to as ‘‘foreign manufacturers’’) to
designate an agent for service of process
in the United States. Over time, NHTSA
has found that many foreign
manufacturers have submitted
incomplete designation documents
containing common errors and
omissions. Often NHTSA receives
designation documents not properly
dated or signed, or otherwise lacking
information necessary to effect a valid
designation or replacement of agent
under the regulation. NHTSA has found
also that foreign manufacturers often fail
to provide adequate notice to NHTSA of
changes in company name, address and
product names or trademarks.
This document clarifies existing
regulatory requirements by rephrasing
49 CFR part 551, subpart D in a plain
language, question and answer format
and inserting an appendix containing a
suggested designation form for use by
foreign manufacturers and their agents.
It also will enhance communications
between foreign manufacturers and the
agency by spelling out requirements for
providing notice to NHTSA of changes
in company name, address and product
names, marks, or other designations of
origin. Finally, it changes the NHTSA
office to which foreign manufacturers
must submit documents, as a result of
organizational changes that have
occurred in the agency since the
regulation was adopted.
The purpose of the amendments is to
make clearer the requirements of 49 CFR
part 551, subpart D and improve
communications between the agency
and foreign manufacturers, thereby
reducing the burdens associated with
repeated filings to correct common
errors. Since they are technical
amendments only and make no
substantive changes to the regulation,
pursuant to 5 U.S.C. 553(b)(3)(B) prior
notice and comment are not required.
Statutory Basis for the Final Rule
Section 110(e) of the National Traffic
and Motor Vehicle Safety Act of 1966
(49 U.S.C. 30164) requires a foreign
manufacturer offering a motor vehicle or
motor vehicle equipment for
importation into the United States to
designate a permanent resident of the
United States as its agent upon whom
service of notices and processes may be
made in administrative and judicial
proceedings. This final rule revises a
regulation that implements that
statutory requirement at 49 CFR Part
551, Subpart D.
E:\FR\FM\08AUR1.SGM
08AUR1
Agencies
[Federal Register Volume 70, Number 151 (Monday, August 8, 2005)]
[Rules and Regulations]
[Pages 45545-45565]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-15553]
=======================================================================
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LEGAL SERVICES CORPORATION
45 CFR Part 1611
Financial Eligibility
AGENCY: Legal Services Corporation.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Legal Services Corporation (``LSC'' or ``Corporation'') is
amending its regulations relating to financial eligibility for LSC-
funded legal services and client retainer agreements. The revisions are
intended to reorganize the regulation to make it easier to read and
follow; simplify and streamline the requirements of the rule to ease
administrative burdens faced by LSC recipients in implementing the
regulation and to aid LSC in enforcement of the regulation; and to
clarify the focus of the regulation on the financial eligibility of
applicants for LSC-funded legal services.
DATES: This final rule is effective September 7, 2005.
FOR FURTHER INFORMATION CONTACT: Mattie C. Condray, Senior Assistant
General Counsel, Office of Legal Affairs, Legal Services Corporation,
3333 K. St., NW., Washington, DC 20007-3522; (202) 295-1624 (phone);
(202) 337-6519 (fax); mcondray@lsc.gov. (e-mail).
SUPPLEMENTARY INFORMATION: Section 1007(a) of the Legal Services
Corporation Act requires LSC to establish guidelines, including setting
maximum income levels, for the determination of applicants' financial
eligibility for LSC-funded legal assistance. Part 1611 implements this
provision, setting forth the requirements relating to determination and
documentation of client financial eligibility. Part 1611 also sets
forth requirements related to client retainer agreements.
Procedural Background
On June 30, 2001, LSC initiated a Negotiated Rulemaking and
appointed a Working Group comprised of representatives of LSC
(including the Office of Inspector General), the National Legal Aid and
Defenders Association, the Center for Law and Social Policy, the
American Bar Association's Standing Committee on Legal Aid and Indigent
Defendants and a number of individual LSC recipient programs. The
Negotiated Rulemaking Working Group met three times throughout 2002 and
developed a Draft Notice of Proposed Rulemaking (NPRM) which was the
basis for the NPRM published by LSC on November 22, 2002 proposing
significant revisions to Part 1611 (67 FR 70376).\1\ Futher action on
the rulemaking was suspended, in deference to a request by
Representative James Sensenbrenner, Chairman of the U.S. House of
Representatives Judiciary Committee, that LSC suspend action on the
rulemaking pending the confirmation of new LSC Board of Directors
members appointed by President Bush.
---------------------------------------------------------------------------
\1\ For additional discussion of the Negotiated Rulemaking
Working Group, see 67 FR 70376 (November 22, 2002).
---------------------------------------------------------------------------
After the confirmation of nine new board members and the
appointment of a new LSC President, the reconstituted Operations and
Regulations Committee resumed consideration of the Part 1611 rulemaking
in early 2004. At the meeting of the full Board of Directors on April
30, 2005, the Board approved the republication of a revised NPRM for
public comment. That NPRM was published on May 24, 2005 (70 FR 29695).
LSC received thirteen (13) comments on the NPRM, including nine
comments from individual LSC grant recipients, one comment from a
senior attorney with a recipient commenting in his personal capacity,
one comment from a member of the public, and comments from the Center
for Law and Social Policy on behalf of the National Legal Aid and
Defenders Association, and the American Bar Association's Standing
Committee on Legal Aid and Indigent
[[Page 45546]]
Defendants. With minor exceptions (discussed in greater detail below),
the commenters strongly supported the proposed revisions. Upon receipt
of the comments, LSC prepared a Draft Final Rule discussing the
comments and making permanent the proposed revisions. The Draft Final
Rule was considered by the Operations and Regulations Committee of the
Board of Directors at its meeting of July 28, 2005, and the Final Rule
was adopted by the Board of Directors at its meeting of July 30, 2005.
Revisions to Part 1611
While specific revisions are discussed in greater detail in the
Section-by-Section analysis below, it should be noted that the
revisions reflect several overall goals of the original Negotiated
Rulemaking Working Group: Reorganization of the regulation to make it
easier to read and follow; simplification and streamlining of the
requirements of the rule to ease administrative burdens faced by LSC
recipients in implementing the regulation, facilitate compliance and
aid LSC in enforcement of the regulation; and clarification of the
focus of the regulation on the financial eligibility of applicants for
LSC-funded legal services as an issue separate from decisions on
whether to accept a particular client for service. In particular, LSC
is significantly reorganizing and simplifing the sections of the rule
which set forth the various requirements relating to establishment of
recipient annual income and asset ceilings, authorized exceptions and
determinations of eligibility. These changes are intended to clarify
the regulation and include substantive changes to make intake simpler
and less burdensome and render basic financial eligibility
determinations easier for recipients to make. LSC is also moving the
existing provisions on group representation, with some amendment, to a
separate section of the regulation. Finally, LSC is simplifying and
clarifying the retainer agreement requirement.
Title of Part 1611
LSC is changing the title of Part 1611 from ``Eligibility'' to
``Financial Eligibility.'' This change is intended, first, to make
clear that with respect to individuals seeking LSC-funded legal
assistance, the standards of this part deal only with the financial
eligibility of such persons. LSC believes this change will help clarify
that a finding of financial eligibility under Part 1611 does not create
an entitlement to service. Rather, financial eligibility is merely a
threshold question and the issue of whether any otherwise eligible
applicant will be provided with legal assistance is a matter for the
recipient to determine with reference to its priorities and resources.
In addition, this part does not address eligibility based on
citizenship or alienage status; those eligibility requirements are set
forth in Part 1626 of LSC's regulations, Restrictions on Legal
Assistance to Aliens. Finally, LSC received one comment suggesting that
because this Part contains LSC's requirements pertaining to when and
how recipients must execute retainer agreements with clients (a subject
not directly related to financial eligibility determinations), that the
title of this Part should refer to retainer agreements. While the
requirements for retainer agreements are included in this Part, it
primarily addresses financial eligibility and LSC disagrees that
retainer agreements should be specifically included in the title of
this Part.
Section-by-Section Analysis
Section 1611.1--Purpose
LSC is revising this section to make clear that the standards of
this part concern only the financial eligibility of persons seeking
LSC-funded legal assistance and that a finding of financial eligibility
under Part 1611 does not create an entitlement to service. In addition,
LSC is removing the language in the current regulation referring to
giving preferences to ``those least able to obtain legal assistance.''
Although the original LSC Act contained language indicating that
recipients should provide preferences in service to the poorest among
applicants, that language was deleted when the Act was reauthorized in
1977 and has remained out of the legislation ever since. Moreover,
section 504(a)(9) of the FY 1996 appropriations act, Public Law 104-134
(incorporated by reference in the current appropriations act and
implemented by regulation at 45 CFR Part 1620) provides that recipients
are to make service determinations in accordance with written
priorities, which take into account factors other than the relative
poverty among applicants. Thus, as there is no statutory basis for a
preference for those least able to afford assistance and because LSC
believes that the regulation should focus on financial eligibility
determinations without reference to issues relating to determinations
by a recipient to provide services to a particular applicant, LSC has
determined that such language should be removed from the regulation.
LSC is also adding language specifying that this Part also sets forth
financial standards for groups seeking legal assistance supported by
LSC funds. Finally, LSC is adding a reference to the retainer agreement
requirement in the purpose section to provide a notice at the beginning
of the regulation that this subject is included in Part 1611. LSC
received several comments specifically supporting and no comments
objecting to these changes. LSC adopts the revisions as proposed.
Section 1611.2--Definitions
LSC is adding definitions for several terms and amending the
definitions for each of the existing terms currently defined in the
regulation. LSC believes that the new definitions and the amended
definitions will help to make the regulation more easily
comprehensible.
Section 1611.2(a)--Advice and Counsel
LSC is adding a definition of the term ``advice and counsel'' as
that term appears in proposed section 1611.9, Retainer Agreements.
Under the new definition, ``advice and counsel'' is defined as limited
legal assistance that involves the review of information relevant to
the client's legal problem(s) and counseling the client on the relevant
law or action(s) to take to address the legal problem(s). Advice and
counsel does not encompass drafting of documents or making third-party
contacts on behalf of the client. Thus, for example, advising a client
of what notice a landlord is required to provide to a tenant before
evicting the tenant would fall under ``advice and counsel,'' but making
a phone call to a landlord to prevent the landlord from evicting a
tenant would not be considered ``advice and counsel.'' Several
commenters specifically supported this proposed definition, and no
commenters opposed the proposed definition. Accordingly, LSC adopts the
definition as proposed.
Three of the commenters who specifically supported this proposed
definition did express a concern, however, about the statement in the
preamble to the NPRM in which LSC stated that LSC anticipates that
advice and counsel will generally be characterized by a one-time or
very short term relationship between the attorney and the client. These
commenters noted that there are any number of situations in which a
recipient attorney has to do some research in order to properly advise
a client or in which the attorney provides advice and counsel to a
client on a limited number of occasions, but over a somewhat extended
period of time.
[[Page 45547]]
These commenters suggested deleting any reference to an anticipated
time period in relation to the intended meaning of ``advice and
counsel.''
The use of the word ``generally'' in the sentence the commenters
objected to was intended to convey that LSC is aware that there are
circumstances in which a case would qualify as ``advice and counsel''
notwithstanding that the advice and counsel may be provided over a
somewhat extended time period. Nonetheless, it is the case that many,
if not most, advice and counsel cases involve a short-term relationship
between the attorney and the client. Even if the attorney must do some
research prior to providing advice, LSC does not expect that the need
to do research will create a relationship which extends for a
significant period of time in most cases. Indeed, part of the
justification for exempting advice and counsel cases from the retainer
agreement requirement has been the fact that such relationships are of
generally short duration, such that requiring the recipient to ensure
an executed retainer agreement is obtained may take longer than the
time it takes for the attorney to provide the advice and counsel to the
client. If, instead, it was the case that advice and counsel cases
typically last for a long time, the opportunity to obtain retainer
agreements would not be lacking. Thus, LSC continues to anticipate that
in most cases ``advice and counsel'' will be characterized by a one-
time or short term relationship between the attorney and the client,
but recognizes that this may not always be the case. Whether a
particular case meets the definition of ``advice and counsel'' or not
will continue to be determined on a case-by-case basis, considering the
facts and circumstances.
Section 1611.2(b)--Applicable Rules of Professional Responsibility
LSC is adding a definition of the term ``applicable rules of
professional responsibility'' as that term appears in proposed sections
1611.8, Change in Financial Eligibility Status and 1611.9, Retainer
Agreements. This definition is intended to make clear that the
references in the regulation refer to the rules of ethics and
professional responsibility applicable to attorneys in the jurisdiction
where the recipient either provides legal services or maintains its
records. LSC received no comments objecting to this definition and
adopts the definition as proposed.
Section 1611.2(c)--Applicant
Consistent with the intention to keep the focus of the regulation
on the standards and criteria for determining the financial eligibility
of persons seeking legal assistance supported with LSC funds, LSC has
decided to use the term ``applicant'' throughout the regulation to
emphasize the distinction between applicants, clients, and persons
seeking or receiving assistance supported by other than LSC funds.
Accordingly, LSC is adding a definition of applicant providing that an
applicant is an individual seeking legal assistance supported with LSC
funds. Groups, corporations and associations are specifically excluded
from this definition, as the eligibility of groups is addressed wholly
within section 1611.6.
Recipients currently may provide legal assistance without regard to
a person's financial eligibility under Part 1611 when the assistance is
supported wholly by non-LSC funds. LSC is not changing this (in fact,
this principle is restated in section 1611.4(a)) and believes that the
use of the term applicant as adopted herein will help to clarify the
application of the rule.
LSC received no comments objecting to these changes and adopts the
revisions as proposed.
Section 1611.2(d)--Assets
LSC is adding a definition of the term assets to the regulation.
The new definition, ``cash or other resources that are readily
convertible to cash, which are currently and actually available to the
applicant,'' is intended to provide some guidance to recipients as to
what is meant by the term assets, yet provide considerable latitude to
recipients in developing a description of assets that addresses local
concerns and conditions. The key concepts intended in this definition
are (1) ready convertibility to cash; and (2) availability of the
resource to the applicant.
Although the term is not defined in the regulation, current section
1611.6(c) states that ``assets considered shall include all liquid and
non-liquid assets * * *'' The intent of this requirement is that
recipients are supposed to consider all assets upon which the applicant
could draw in obtaining private legal assistance. While there was no
intent to change the underlying requirement, in discussing the issues
of assets and asset ceilings in the Working Group it became apparent
that the terms ``liquid'' and ``non-liquid'' were obscuring
understanding of the regulation. To some, the term ``non-liquid''
implied something not readily convertible to cash, while to others the
term implied an asset that was simply something other than cash,
without regard to the ease of converting the asset to cash. Thus, the
Working Group agreed that the terms ``liquid'' and ``non-liquid''
should be eliminated and that the regulation should focus instead on
the ready convertibility of the asset to cash.
The other key concept in the definition of asset is the
availability of the resource to the applicant. Although the current
regulation notes that the recipient's asset guidelines ``shall take
into account impediments to an individual's access to assets of the
family unit or household,'' the Working Group was of the opinion that
this principle could be more clearly articulated. LSC believes that the
proposed language accomplishes that purpose.
LSC received numerous comments specifically supporting the proposed
definition of assets. LSC, however, also received one comment
expressing concern that defining assets as resources ``readily
convertible to cash'' could preclude recipients from deeming all non-
primary residence real estate as an asset and require a more lengthy
inquiry into the property's ready convertibility to cash. LSC notes at
the outset that under the current rules, recipients are already
required to ``take into account impediments'' to access to the
resources. Thus, to the extent that the monetary value of a particular
applicant's real property is not available to an applicant, recipients
should already be taking that inaccessibility into account in reviewing
the applicant's resources. Nonetheless, LSC believes that recipients
currently have sufficient discretion to establish a rebuttable
presumption that an applicant's non-primary residence real property is
a resource readily convertible to cash and countable toward the
recipient's asset ceiling and also to determine that a particular piece
of property is not readily convertible to cash and, as such, should not
be considered a resource available to the applicant for the purpose of
the asset ceiling. Nothing in the rule being adopted today disturbs
that discretion. Accordingly, LSC adopts the definition as proposed.
Section 1611.2(e)--Brief Services
LSC is adding a definition of the term ``brief services'' as it is
used in section 1611.9, Retainer Agreements. LSC notes that brief
services is legal assistance characterized primarily by being
distinguishable from both extended service and advice and counsel.
Under the new definition, brief service is the performance of a
discrete task (or tasks) which are not incident to continuous
representation in a case but which involve more than the mere provision
of advice and counsel. Examples of brief
[[Page 45548]]
services include activities such as the drafting of documents or
personalized assistance with the completion of pleadings being prepared
and filed by pro se litigants, and making limited third-party contacts
on behalf of a client over, in most instances, a short time period.
LSC received two comments specifically supporting the proposed
definition. LSC received one comment noting that the proposed
definition does not address the relative simplicity or brevity of
documents which may be drafted by a recipient within the scope of brief
service. This commenter was concerned that the definition was contrary
to the Case Service Reporting (CSR) definition of ``brief services.''
This commenter suggested changing the definition or adding a statement
that the definition in the regulation should not apply to the CSR. LSC
notes that this definition of ``brief services'' is, while not
identical, specifically intended to be fully consistent with the
definition of ``brief services'' in the CSR. As such, LSC disagrees
that the definitions are inconsistent and LSC adopts the definition as
proposed.
Section 1611.2(f)--Extended Service
LSC is adding a definition of the term ``extended service'' as that
term is used in section 1611.9, Retainer Agreements. As defined,
extended service means legal assistance characterized by the
performance of multiple tasks incident to continuous representation in
which the recipient undertakes responsibility for protecting or
advancing the client's interests beyond advice and counsel or brief
services. Examples of extended service include representation of a
client in litigation, administrative adjudicative proceeding, alternate
dispute resolution proceeding, or extended negotiations with a third
party. LSC received no comments objecting to the proposed definition
and adopts the definition as proposed.
Section 1611.2(f)--Governmental Program for Low Income Individuals or
Families
LSC is changing the term that is used in the regulation from
``governmental program for the poor'' to ``governmental program for low
income individuals and families.'' This change is not intended to
create any substantive change in the current definition, but merely
reflect preferred nomenclature. LSC received no comments objecting to
this change and adopts the revision as proposed.
Section 1611.2(g)--Governmental Program for Persons With Disabilities
LSC is adding a definition of the term ``governmental program for
persons with disabilities.'' LSC is including in the authorized
exceptions to the annual income ceilings an exception relating to
applicants seeking to obtain or maintain govermental benefits for
persons with disabilities. Accordingly, it is appropriate to include a
definition for this term. The definition, ``any Federal, State or local
program that provides benefits of any kind to persons whose eligibility
is determined on the basis of mental and/or physical disability,'' is
intended to be similar in structure and application to the definition
of the term ``governmental program for low income individuals and
families.'' LSC received no comments objecting to the proposed
definition and adopts the definition as proposed.
Section 1611.2(h)--Income
LSC is revising the current definition of income to refer to the
total cash receipts of a ``household,'' instead of a ``family unit''
and to make clear that recipients have the discretion to define the
term household in any reasonable manner. Currently, the definition of
income refers to ``family unit,'' while the phrase ``household or
family unit'' appears in the section on asset ceilings. It appears that
there is no difference intended by the use of different terms in these
sections and LSC believes that it is appropriate to simplify the
regulation to use the same single term in each provision, without
creating a substantive change in the meaning of either term. LSC has
decided to use ``household'' instead of ``family unit'' because it is a
simpler, more understandable term.
As noted above, LSC does not intend the use of the term
``household'' to have a different meaning from the current term
``family unit.'' Under current guidance from the LSC Office of Legal
Affairs, recipients have considerable latitude in defining the term
``family unit.'' Specifically, OLA External Opinion No. EX-2000-1011
states:
Neither the LSC Act nor the LSC regulations define ``family
unit'' for client eligibility purposes. The Corporation will defer
to recipient determinations on this issue, within reason. Recipients
may consider living arrangements, familial relationships, legal
responsibility, financial responsibility or family unit definitions
used by government benefits agencies, amongst other factors, in
making such decisions.
LSC intends that this standard would also apply to definitions of
``household'' and the definition makes this clear.
LSC received one comment specifically supporting the change from
``household or family unit'' to ``household.'' This commenter suggested
that the change would provide ``more flexibility'' to recipients. LSC
notes that the change in the terminology used in the regulation in this
instance is not creating any substantive change. As noted above,
recipients already have considerable discretion and flexibility to
determine the scope of an applicant's household; the change in
terminology being adopted with this final rule neither increases nor
decreases that discretion and flexibility. LSC adopts the change in
terminology as proposed.
Throughout the course of the rulemaking field representatives have
suggested deleting the words ``before taxes'' from the definition of
income. Five commenters reiterated this position in comments on the
NPRM, while one commenter specifically opposed deleting ``before
taxes'' from the definition of income. Such a change is desirable, the
proponents contend, because automatically deducted taxes are not
available for an applicant's use and the failure to take current taxes
into account in determining income has an adverse impact on the working
poor. While it is undoubtedly true that automatically deducted taxes
are not available to an applicant, LSC agrees with the other commenter
that the definition of income is not the appropriate place in the
regulation to deal with this issue.
Taking the phrase ``before taxes'' out of the definition of income
would effectively change the meaning of income from gross income to net
income after taxes. The term income has meant gross income since the
original adoption of the financial eligibility regulation in 1976. See
41 FR 51604, at 51606, November 23, 1976. The maximum income guidelines
are based on the Department of Health and Human Services (DHHS) Federal
Poverty Guidelines amounts. DHHS'' Federal Poverty Guidelines are, by
law, based on the Census Bureau's Federal Poverty Thresholds, which are
calculated using gross income before taxes. 42 U.S.C. 9902(2); Office
of Management and Budget Directive No. 14 (May 1978). Changing the
definition of income effectively from gross to net after taxes would
introduce two different uses of the term income into the regulations
(one use in the income guidelines published annually by LSC in Appendix
A to Part 1611 and another use in the text of the regulation). This is
problematic in two ways.
[[Page 45549]]
First, with respect to the annual income ceiling limits,
unilaterally changing the standard from gross to net income after taxes
would arguably exceed LSC's authority. LSC is required by the LSC Act
to set its maximum income guidelines in consultation with the Office of
Management and Budget and the Governors of the states. 42 U.S.C.
2996f(a)(2)(A). The annual income ceiling agreed to by LSC, OMB and the
Governors (set at 125% of the Federal Poverty Guidelines amounts) was
arrived at based on gross income; changing to a net income after taxes
standard would effectively increase the annual ceiling amounts beyond
what was agreed. LSC is concerned that it could only undertake such an
action in consultation with OMB and the Governors, which consultation
has not happened.
Second, adopting a net income after taxes standard would, as one
commenter noted, increase the upper income limit as well. This would
have the effect of further increasing the potential eligible applicant
pool. Although LSC believes that the slight increase in the eligible
applicant pool which will result from increasing the upper income limit
from 187.5% to 200% of the Federal Poverty Guidelines amounts is
justifiable (see discussion of section 1611.5, below), LSC is concerned
that an additional increase in the eligible applicant pool is not
necessary to effectively deal with the practical problem that taxes,
indeed, represent funds unavailable to the applicant.
It was suggested in several comments that adopting a net income
after taxes standard is preferable because it would be easier for
recipients as they would only have to consider ``take home pay'' in
computing income at intake. However, as one commenter noted, take home
pay is often not simply pay net of taxes; there are other deductions
from gross pay which an applicant could have (e.g., 401(k) deductions,
medical savings account deductions, insurance premium deductions, child
support, garnishments). In such cases, the recipient would not be able
to simply determine that income equaled take home pay, but would have
to identify and add amounts for such deductions from gross pay back in
when determining the applicant's income. In addition, some, but not
all, of such other deductions from pay could qualify as factors under
the allowable exceptions to the annual income ceiling amounts. LSC is
concerned that this would add confusion in the income determination
process, contrary to the intent of this rulemaking.
None of the comments supporting removal of ``before taxes'' from
the definition of income addressed the problems discussed above.
Moreover, LSC believes that the practical problem (that taxes, indeed,
are funds unavailable to the applicant), is better addressed by
treating taxes as a separate factor which can be considered by the
recipient in making financial eligibility determinations. (This matter
is presented in greater detail in the discussion of section 1611.5,
below.) Further, although LSC does not consider defining income as
gross income (rather than net after taxes) as presenting any ``apparent
preference'' for non-working applicants, permitting current taxes to be
a factor to be considered by the recipient in making financial
eligibility determinations eliminates any such apparent preference that
may be perceived as existing. Accordingly, LSC declines to remove the
words ``before taxes'' from the definition of income.
In addition, LSC is moving the information on what is encompassed
by the term ``total cash receipts'' into the definition of income. LSC
believes that having this information in the definition of income,
rather than in a separate definition will make the regulation easier to
understand, particularly as the term ``total cash receipts'' is used
only in the definition of income. In incorporating the language on
``total cash receipts,'' LSC is retaining the current definition of the
term without any substantive amendment, but reorganizing it to make it
easier to understand. Specifically, LSC is separating the definition
into two sentences, one of which sets forth those things which are
included in total cash receipts and one which sets forth those things
which are specifically excluded from the definition of total cash
receipts. It is worth noting that the list of items included is not
intended to be exhaustive, while the list of items to be excluded is
intended to be exhaustive. LSC received no comments objecting to these
changes and adopts the revisions as proposed.
Finally, LSC wishes to restate in this preamble guidance on the
treatment of Indian trust fund monies in making income determinations.
Several provisions of Federal law regulate whether or not income or
interests in Indian trusts are taxable or should be considered as
resources or income for federal benefits. See 25 U.S.C. 1407-1408; 25
U.S.C. 117a-117c. Under the terms of those laws, LSC has determined
that recipients may disregard up to $2000 per year of funds received by
individual Native Americans that are derived from income or interests
in Indian trusts from being considered income for the purpose of
determining financial eligibility of Native American applicants for
service, and that such funds or interests of individual Native
Americans in trust or restricted lands should not be considered as a
resource for the purpose of LSC financial eligibility. See LSC Office
of Legal Affairs External Opinion 99-17, August 27, 1999.
As noted in External Opinion 99-17, the exclusion applies only to
funds and other interests held in trust by the federal government and
investment income accrued therefrom. The following have been found to
qualify for the exclusion from income in determining eligibility for
various government benefits: income from the sale of timber from land
held in trust; income derived from farming and ranching operations on
reservation land held in trust by the federal government; income
derived from rentals, royalties, and sales proceeds from natural
resources of land held in trust; sales proceeds from crops grown on
land held in trust; and use of land held in trust for grazing purposes.
On the other hand, per capita distributions of revenues from gaming
activity on tribal trust property are not protected because such funds
are not held in trust by the federal government. Thus, such
distributions are considered to be income for purposes of determining
LSC financial eligibility.
Total Cash Receipts
LSC is deleting the definition of ``total cash reciepts,''
currently at section 1611.2(h), as a separately defined term in the
regulation. Rather, LSC has reorganized the information contained in
the definition and moved it directly into the definition of ``income.''
As noted above, the only place the term ``total cash reciepts'' is used
is in the defintion of ``income'' and LSC believes that having a
separate definition for ``total cash reciepts'' is cumbersome and
unnecessary. LSC received no comments objecting to this change and
adopts the revision as proposed.
Section 1611.3--Financial Eligibility Policies
LSC is creating a new section 1611.3, Financial Eligibility
Policies, based on requirements currently found in sections 1611.5(a),
1611.3(a)-(c) and 1611.6. The comments generally supported these
revisions, although LSC received a few comments suggesting some changes
to what was proposed. LSC adopts the revisions as proposed, with
certain amendments, as discussed below.
[[Page 45550]]
The new section 1611.3 addresses in one section recipients'
responsibilities for adopting and implementing financial eligibility
policies. Under the new section, the current requirement that
recipients' governing bodies have to adopt policies for determining
financial eligibility is retained. However, LSC is changing the current
requirement for an annual review of these policies and instead will now
require recipients' governing bodies to conduct triennial reviews of
policies. The Working Group agreed that an annual review was
unnecessary and has tended to result in rather pro forma reviews of
policies. LSC believes that a triennial review requirement will be
sufficient to ensure that financial eligibility policies remain
relevant and will encourage a more thorough and thoughtful review when
such review is undertaken. The section also adds an express requirement
that recipients adopt implementing procedures. While this is already
implicit in the current regulation, LSC believes it is preferable for
this requirement to be expressly stated. Such implementing procedures
may be adopted either by a recipient's governing body or by the
recipient's management. LSC received several comments supporting these
changes and no comments objecting to them. Accordingly, LSC adopts the
revisions as proposed.
Section 1611.3 also contains certain minimum requirements for the
content of recipient's financial eligibility policies. Specifically,
LSC is requiring that the recipient's financial eligibility policy
must:
Specify that only applicants for service determined to be
financially eligible under the policy may be further considered for
LSC-funded service;
Establish annual income ceilings of no more than 125% of
the current DHHS Federal Poverty Guidelines amounts;
Establish asset ceilings; and
Specify that, notwithstanding any other provisions of the
regulation or the recipient's financial eligibility policies, in
assessing the financial eligibility of an individual known to be a
victim of domestic violence, the recipient shall consider only the
income and assets of the applicant and shall not consider any assets
jointly held with the abuser.
In establishing income and asset ceilings, the recipient will have to
consider the cost of living in the locality; the number of clients who
can be served by the resources of recipient; the potentially eligible
population at various ceilings; and the availability of other sources
of legal assistance. With respect to assets of domestic violence
victims jointly held with their abusers, this requirement applies when
the applicant has made the recipient aware that he or she is a victim
of domestic violence.
In addition, this section permits recipients to adopt financial
eligibility policies which provide for authorized exceptions to the
annual income ceiling pursuant to section 1611.5 and for waiver of the
asset ceiling for an applicant in a particular case under unusual
circumstances and when approved by the Executive Director or his/her
designee. Finally, LSC will permit recipients to adopt financial
eligibility policies which permit financial eligibility to be
established by reference to an applicant's receipt of benefits from a
governmental program for low-income individuals or families consistent
with section 1611.4(b).
These provisions are, with two exceptions, based directly on
current requirements with a few substantive changes. First among the
changes, recipients will no longer be required to routinely submit
their asset ceilings to LSC. This requirement appears to serve little
or no purpose, as compliance with this requirement has been spotty and
LSC has taken no action to obtain the information from recipients which
have not automatically submitted it. Moreover, the information
collected is not being put to any routine use. In addition, LSC has not
had a parallel requirement for the submission of income ceilings. LSC
has determined that this requirement can be eliminated without any
adverse effect on program compliance with or Corporation enforcement of
the regulation. LSC received several comments supporting this change
and no comments objecting to it. Accordingly, LSC adopts the revision
as proposed.
Another substantive change is that recipients will be permitted to
provide in their financial eligibility policies for the exclusion of
(in addition to a primary residence, as provided for in the existing
regulation) vehicles used for transportation, assets used in producing
income (such as a farmer's tractor or a carpenter's tools) and other
assets excluded from attachment under State or Federal law from the
calculation of assets. In identifying other assets excluded from
attachment under State or Federal law, LSC has in mind assets that are
excluded from bankruptcy proceedings or other assets that may not be
attached for the satisfaction of a debt, etc.
Most of the comments received reiterated the position that field
representatives had expressed during the Working Group discussions and
in comments to the November 2002 NPRM, that the list of excludable
assets should be illustrative, rather than exhaustive. The commenters
argue that having an illustrative rather than an exhaustive list will
provide recipients with greater flexibility in developing asset
policies and note that many recipients already exclude certain other
assets. Commenters alternatively suggested some specific assets be
added to the list, such as household furnishings, computers, and such
assets which are excluded from other governmental benefit programs for
which the applicant is eligible. A few comments also specifically
suggested that the exclusion for vehicles should not be limited to
vehicles needed for work. One of these commenters noted that the Social
Security Administration has recently changed its rules on eligibility
for Supplemental Security Income (SSI) to exclude from an SSI
applicant's assets one vehicle used for transportation, without
specific regard to the particular transportation use (as was previously
the case), provided it is not strictly a recreational vehicle such as a
dune buggy. See 70 FR 6340, at 6342-43 (February 7, 2005).
LSC believes that some of the comments indicate that LSC was not
clear in the NPRM about the relationship between the asset ceiling
adopted by a recipient and the list of excludable items. Under the
current regulation recipients are required to adopt asset ceilings
based on the economy and the relative cost of living in the service
area. Recipients are also to take into account special needs of the
elderly, institutionalized and persons with disabilities, along with
the reasonable equity value in work-related equipment used to provide
income. Implicit in the requirement is the expectation that the
recipient will set its ceiling at a level as to cover the value of such
things as household furnishings, clothing and other personal affects of
applicant (and members of applicant's households) and other such assets
as applicants may reasonably be expected to have without liquidating in
the attempt to secure legal assistance. Once the asset ceiling has been
set, the recipient is expected to consider all of the applicant's
assets against that ceiling, except for the value of a principle
residence. The exclusion of a principle residence is intended to ensure
that homeowners do not exceed the asset ceiling just on the value of
the home.
With the NPRM, LSC proposed to allow recipients to exclude from the
asset computation a limited number of
[[Page 45551]]
additional assets which would be likely to cause an applicant to exceed
the applicable asset ceiling without liquidation of that or other
significant household assets. As such, LSC continues to prefer to
retain the approach in the current regulation in which the list of
excludable assets is set forth in toto. LSC believes that this approach
emphasizes the policy that most assets are to be considered and
maintains a basic level of consistency nationally with respect to this
issue. LSC continues to expect that recipients will set asset ceilings
and asset ceiling waiver policies so as to permit applicants to have
reasonable amounts of assets which will not count against them in
eligibility determinations and believes that the new language does
afford recipients some additional flexibility in developing asset
ceilings, consistent with the policy articulated above particularly in
light of the amendment to the asset ceiling waiver standard discussed
below.
Turning to comments on the specific proposed excludable assets, LSC
agrees that it is neither necessary nor desirable to restrict the
exclusion for vehicles to those used for work only. There are many
situations in which a vehicle is an applicant's only reliable,
accessible method of transportation for vital life activities other
than work, such as education and training activities, reaching medical
appointments, grocery shopping, transporting children to school or
activities, etc. As such, it is reasonable to consider such vehicles as
among the significant assets that a recipient should be able to own and
not have counted towards the applicant's applicable asset ceiling.
Accordingly, LSC is amending the language in proposed 1611.2(d)(1)
which read ``vehicles required for work'' and adopting instead the
language ``vehicles required for transportation.'' Under this
formulation, the value of vehicles which are not used for
transportation, such as vehicles used purely for recreational
activities (e.g., dune buggies, golf carts, go-karts, and the like)
would have to be included in determining whether an applicant's assets
exceed the recipient's applicable asset ceiling.
LSC declines, however, to expand the list to include the exclusion
of any assets excluded under benefits programs for low income persons
for which the applicant is eligible. There are myriad benefit programs
with a widely varying range of excludable assets. Some programs have
relatively low asset ceilings, but exclude more assets from the
calculation, while other programs exclude fewer assets, but have higher
asset ceilings. If LSC were to include all assets excludable under all
benefits program for low-income individuals, the relative national
consistency which LSC believes is important would be impeded. As noted
above, LSC believes that the revised language does afford recipients
sufficient additional flexibility in developing asset ceiling policies.
As noted above, LSC is changing the asset ceiling waiver standard
slightly. The current regulation permits waiver in ``unusual or
extremely meritorious situations;'' the new rule permits waiver in
``unusual circumstances.'' The Working Group determined that the
current language is unnecessarily stringent and that it is unclear what
the difference is intended to be between ``unusual'' and ``extremely
meritorious.'' It was suggested in the Working Group that the standard
should be ``where appropriate.'' LSC, however, felt that the regulation
should continue to reflect the policy that waivers of the asset
ceilings should only be granted sparingly and not as a matter of
course. The Working Group agreed that the revised language accomplishes
this goal, while providing some additional appropriate discretion to
recipients. In addition, where the current rule requires all waiver
decisions to be made by the Executive Director, LSC proposed to permit
those decisions to be made by the Executive Director or his/her
designee. LSC believes it is important that a person in significant
authority be involved in making asset ceiling waiver decisions, but
recognizes that, especially as more recipients have consolidated and
now serve larger areas, it is important for recipients to have the
discretion to delegate certain authority to regional or branch office
managers or directors to increase administrative efficiency. LSC
received several comments supporting this change and no comments
objecting to it. Accordingly, LSC adopts the revision as proposed.
The first totally new element is the language regarding victims of
domestic violence. This new language implements LSC's FY 1998
appropriations law. Specifically, section 506 of that act provides:
In establishing the income or assets of an individual who is a
victim of domestic violence, under section 1007(a)(2) of the Legal
Services Corporation Act (42 U.S.C. 2996f(a)(2)), to determine if
the individual is eligible for legal assistance, a recipient
described in such section shall consider only the assets and income
of the individual and shall not include any jointly held assets.
Public Law 105-119, 111 Stat. 2440 (November 26, 1997). Although this
law has been in effect since 1997, it has never been formally
incorporated into Part 1611. Nevertheless, this provision of law
applies regardless of whether it appears in the regulation. However,
incorporating this language into the regulation is appropriate,
particularly in light of the goal of this rulemaking to clarify the
requirements relating to financial eligibility determinations.\2\
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\2\ This point is demonstrated by the fact that LSC received one
comment specifically supporting the implementation of section 506
into Part 1611 on the basis that the new language in 1611 would
provide recipients with enhanced ability to provide legal assistance
to victims of domestic violence. Rather, the incorporation of this
statutory mandate into the regulation at this time does not create
any substantive change in the authority and responsibility
recipients have had with respect to this issue since 1997.
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LSC received one comment asking whether this proposal means that
the financial eligibility of an applicant who is the victim of domestic
violence is to be determined solely on the basis of the applicant's
income and assets, without regard to the income and assets of other
members of the household (beyond the alleged perpetrator of the
domestic violence). LSC intended that the income of the alleged
perpetrator and assets jointly held by the applicant with the alleged
perpetrator must be disregarded in assessing the financial eligibility
of the applicant, but that income and assets not jointly held with the
alleged perpetrator of other members of the household (as defined by
the recipient) would have to be considered in the financial eligibility
assessment. LSC acknowledges that the language of the statute (and
LSC's originally proposed implementation thereof) could be read so as
to suggest that only the applicant's individual income and assets may
be counted. However, LSC believes that such a reading would require a
substantive change to the financial eligibility requirements that
Congress did not intend.
At the time of adoption of section 506, the regulation permitted
recipients to take into account an applicant's ability to access
certain assets (including assets of alleged perpetrators of domestic
violence) and permitted recipients to consider the applicant's lack of
access to the alleged perpetrator's income as an ``other significant
factor related to the inability to afford legal assistance.'' 45 CFR
1611.6(d); 1611.5(b)(1)(E). However, in some cases, the victim's
household income including the income of the alleged perpetrator was
above the upper income limit, such that the recipient was not able to
even apply the ``significant other factors'' factor to make a
determination of eligibility and in some cases there was a problem
related to the extent to which the victim could access household assets
over
[[Page 45552]]
which the alleged perpetrator had joint control. Thus, the practical
problem addressed by section 506 is that in many cases a victim of
domestic violence cannot draw upon the income or assets of the alleged
perpetrator (including jointly held assets) as a source of funds with
which to obtain private legal assistance.
As the report language accompanying Public Law 105-119 notes,
Congress was ``aware that the current statute and regulations * * *
already provide for such determinations to be made'' but ``given
concerns regarding access to the legal system for victims of domestic
violence, the conferees have included this provision to provide greater
clarity regarding this matter.'' H. Rpt. 105-405, p. 186. This
indicates that Congress did not intend to require significant changes
to LSC's regulations on financial eligibility, but rather only that
Congress, in adopting section 506, wanted to ensure that the income and
assets of the alleged perpetrator (which are generally under the
control of the perpetrator and which the victim cannot readily access)
not render the victim financially ineligible for legal assistance. As
the regulation did not then provide for disregarding the income and
assets of other members of the victim's household not jointly held with
the alleged perpetrator in the assessment of the victim's financial
eligibility, LSC does not believe Congress was attempting to change the
general requirement that LSC consider the income and assets of other
members of the victim's household in making financial eligibility
determinations as long as they are available to the victim.
In light of the foregoing, LSC is amending section 1611.3(e) to
make this clearer by revising it to read:
Notwithstanding any other provision of this Part, or other
provision of the recipient's financial eligibility policies, every
recipient shall specify as part of its financial eligibility
policies that in assessing the income or assets of an applicant who
is a victim of domestic violence, the recipient shall consider only
the assets and income of the applicant and members of the
applicant's household other than those of the alleged perpetrator of
the domestic violence and shall not include any assets held by the
alleged perpetrator of the domestic violence, jointly held by the
applicant with the alleged perpetrator of the domestic violence, or
assets jointly held by any member of the applicant's household with
the alleged perpetrator of the domestic violence.
LSC also received a comment requesting clarification of whether the
special rule applies in all cases involving a victim of domestic
violence or only in cases in which the request for assistance is
related to alleviating the domestic violence or involves the
perpetrator as an adverse party. Neither the statute (nor the
accompanying report language) specify that the request for legal
assistance must relate to alleviating the domestic violence or require
the perpetrator to be an adverse party. As such, as noted above, the
special rule applies at any time when the applicant has made the
recipient aware that he or she is a victim of domestic violence. LSC
does not find it likely that applicants who are victims of domestic
violence identify themselves as such in seeking legal assistance in
matters wholly unrelated to the domestic violence. However, if an
applicant seeking assistance with an unrelated matter self-identifies
as a victim, LSC believes that this would likely be done as a way of
explaining why certain income and/or assets are unavailable for use in
obtaining private legal assistance. As such, the rationale of the
special rule would appear to be satisfied and recipients should have
the ability to disregard the perpetrator's income and assets (including
jointly held assets) in such situations. LSC does not believe the risk
that an applicant would self-identify as a domestic violence victim in
order to circumvent the financial eligibility requirements is
significant and is confident a recipient would explore the situation
further if the recipient suspected the claims of the applicant were
specious.
Finally, LSC has decided to permit recipients to adopt financial
eligibility policies which permit financial eligibility to be
established by reference to an applicant's receipt of benefits from a
governmental program for low-income individuals or families consistent
with section 1611.4(b). This issue is discussed in greater detail
below.
Section 1611.4--Financial Eligibility for Legal Assistance
This section sets forth the basic requirement that recipients may
provide legal assistance supported with LSC funds only to those
individuals whom the recipient has determined are financially eligible
for such assistance pursuant to their policies, consistent with this
Part. This section also contains a statement that nothing in Part 1611
prohibits a recipient from providing legal assistance to an individual
without regard to that individual's income and assets if the legal
assistance is supported wholly by funds from a source other than LSC
(regardless of whether LSC funds were used as a match to obtain such
other funds, as is the case with Title III or VOCA grant funds) and the
assistance is otherwise permissible under applicable law and
regulation. This section further provides that a recipient may find an
applicant to be financially eligible if the applicant's assets are at
or below the recipient's applicable asset ceiling level (or the ceiling
has been properly waived) and the applicant's income is at or below the
recipient's applicable income ceiling, or if one or more of the
authorized exceptions to the ceiling applies. These provisions are
based on existing provisions found in sections 1611.3, 1611.4 and
1611.6. As revised, the new provisions do not represent a substantive
change, but LSC believes having the basic statements as to who may be
found to be financially eligible for assistance in one section makes
the regulation much clearer. In addition, where the existing regulation
uses a construction that speaks to when a recipient may provide legal
assistance, the new language emphasizes the point that the requirements
speak only to determinations of financial eligibility and not to
decisions regarding whether or not to actually provide legal
assistance. LSC received several comments supporting these changes and
no comments opposing these changes. Accordingly, LSC adopts the
revisions as proposed.
LSC is also incorporating into this section a significant
substantive change to the regulation. Consistent with section 1611.3 as
discussed above the regulation will now permit recipients to determine
an applicant to be financially eligible because the applicant's income
is derived solely from a governmental program for low-income
individuals or families, provided that the recipient's governing body
has determined that the income standards of the governmental program
are at or below 125% of the Federal Poverty Guidelines amounts. For
many recipients, a significant proportion of applicants rely on
governmental benefits for low-income individuals and families as their
sole source of income. In order to qualify for these benefits, such
persons have already been screened by the agency providing the benefits
(using an eligibility determination process that is at least as strict
as the one required under LSC regulations) and determined to be
financially eligible for those benefits. In Working Group discussions,
many representatives of the field noted that if they could rely on the
determinations made by these agencies without having to otherwise make
an independent inquiry into financial eligibility, it would
substantially ease the administrative burden involved in making
financial eligibility determinations.
[[Page 45553]]
The Working Group also noted that current LSC practice permits
recipients to determine that an applicant's assets are within the
recipient's asset ceiling level without additional review if the
applicant is receiving govermental benefits for low-income individuals
and families, eligibility for which includes an asset test. Key to this
practice is that the recipient's governing body has to take some
identifiable action to recognize the asset test of the governmental
benefit program being relied upon. This ensures that the eligibility
standards of the governmental program have been carefully considered
and are incorporated into the overall financial eligibility policies
adopted and regularly reviewed by the recipient's governing body. As
this practice has proved efficient and effective, it was determined
that a parallel process could also be adopted for income screening and
that these practices should be expressly included in the regulations.
It is important to note that this provision would only apply to
applicants whose sole source of income is derived from such benefits.
Applicants who also have income derived from other sources would be
subject to an independent inquiry and assessment of financial
eligibility.
LSC received several comments supporting these changes and one
comment suggesting expanding this authority to permit recipients to
make a determination that an applicant is financially eligible on the
basis of receipt of governmental benefits for low income persons even
when the applicant has another source of income, provided that the
applicant's additional income was counted in determining eligibility
for a governmental benefit program for low income persons (such as
supplemental security income (SSI), in which the benefit is decreased
as an offset to the other income). LSC is concerned that in such
situations it cannot be guaranteed that an applicant's income would of
necessity remain below the recipient's applicable income ceiling. The
SSI program, for example, does not offset all other income dollar for
dollar. Thus, an individual living alone whose income is solely derived
from SSI will have an income of $579/month, while an individual living
alone receiving Social Security income of $99 will receive an SSI
payment of $500/month, for a total income of $599/month, and an
individual living alone, with a monthly earned income of $317 and a
state governmental benefit payment of $15/month, will receive an SSI
benefit of $463/month, for a total monthly income of $795/month. See,
Understanding Supplemental Security Income, Social Security
Administration Web site, https://www.ssa.gov/notices/supplemental-
security-income/text-income-ussi.htm. With the streamlined financial
eligibility determination requirements LSC is adopting, LSC believes
that performing a full financial eligibility screen on persons having
income derived from sources in addition to governmental benefits for
low income persons does not present an undue administrative burden and
is necessary to ensure that only those who meet the recipient's
financial eligibility criteria (based on applicable LSC laws and
regulations) are determined to be financially eligible for LSC-funded
legal assistance. Accordingly, LSC declines to expand the scope of
Sec. 1611.4(c) and adopts the revisions as proposed.
LSC received one additional comment about the basic financial
eligibility criteria for LSC-funded legal assistance. This commenter
suggested that the determination of an applicant's financial
eligibility be conditioned somehow upon the financial circumstances of
the adverse party(ies) with whom the applicant has the problem for
which the legal assistance is sought. LSC's financial eligibility
requirements are based upon the statutory mandate that the eligibility
of clients be based upon the assets and income of the applicant, the
fixed debts, medical expenses and other factors which affect the
applicant's ability to afford legal assistance, and the cost of living
in the locality. See 42 U.S.C. 2996f(a)(2)(B). With the exception of
the cost of living in the locality, all of the criteria set forth in
the LSC Act relate to the ability of the applicant to afford legal
assistance. There is no suggestion in either the Act itself or in its
legislative history, that the financial circumstances of adverse
parties are at all relevant to the determination of an financial
eligibility of the applicant. Moreover, LSC believes that conditioning
a determination of financial eligibility upon the financial situation
of adverse parties would unfairly discriminate against some persons who
are otherwise unable to afford private legal assistance and would be
inconsistent with LSC statutory mission of fostering equal access to
justice. See 42 U.S.C. 2996. Accordingly, LSC declines to add as a
criteria for determining financial eligibility an assessment of the
financial situation of potential or actual adverse parties.\3\
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\3\ This commenter also suggested that LSC adopt requirements
relating to the regular sharing among the various parties to a case
of information about costs expended by all parties (including hours
and costs for attorney time) during the course of a recipient's
representation of a client. This suggestion does not address
financial eligibility determinations or the retainer agreement
requirements. As such, it is outside the scope of this rulemaking
and is not further addressed.
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Section 1611.5--Authorized Exceptions to the Annual Income Ceiling
This section provides for authorized exceptions to the annual
income ceiling. The language, like the current language of sections
1611.4 and 1611.5, on which it is based, is permissive. A recipient is
at liberty to include some, none, or all of the authorized exceptions
discussed below in its financial eligibility policies. Thus, to the
extent a recipient chooses to avail itself of the authority provided in
this section, a recipient is permitted to determine a particular
applicant is financially eligible for assistance, notwithstanding that
the applicant's income is in excess of the recipient's applicable
income ceiling, if the applicant's situation fits within one or more of
the authorized exceptions. In making such determinations, however, the
recipient will also have to detemine that the applicant's assets are at
or below the recipient's applicable asset ceiling (or the ceiling would
have had to have been waived). This requirement is consistent with the
current regulation, but is affirmatively stated for greater clarity.
LSC received one comment specifically supporting this clarification and
LSC adopts the language as proposed.
Under the revised section, there are two situations in which an
applica