Fee-Generating Cases, 23502-23504 [2011-10116]
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Federal Register / Vol. 76, No. 81 / Wednesday, April 27, 2011 / Rules and Regulations
Community
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State and location
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Oregon:
Ashland, City of, Jackson County .........
410090
Central Point, City of, Jackson County
410092
Eagle Point, City of, Jackson County ....
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Gold Hill, City of, Jackson County ........
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Jackson County, Unincorporated Areas
415589
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410095
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410098
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*do = Ditto.
Code for reading third column: Emerg.—Emergency; Reg.—Regular; Susp. —Suspension.
Dated: April 15, 2011.
Sandra K. Knight,
Deputy Federal Insurance and
Mitigation Administrator, Mitigation.
[FR Doc. 2011–10174 Filed 4–26–11; 8:45 am]
BILLING CODE 9110–12–P
LEGAL SERVICES CORPORATION
45 CFR Part 1609
Fee-Generating Cases
Legal Services Corporation.
Final rule.
AGENCY:
ACTION:
This final rule amends the
Legal Services Corporation’s regulation
on fee-generating cases to clarify that it
applies only to LSC and private nonLSC funds.
DATES: This final rule becomes effective
on May 27, 2011.
FOR FURTHER INFORMATION CONTACT:
Mattie Cohan, Senior Assistant General
Counsel, Office of Legal Affairs, Legal
Services Corporation, 3333 K Street,
NW., Washington, DC 20007; 202–295–
1624 (ph); 202–337–6519 (fax);
mcohan@lsc.gov.
SUPPLEMENTARY INFORMATION:
WReier-Aviles on DSKGBLS3C1PROD with RULES
SUMMARY:
Background
This final rule follows the publication
of a Notice of Proposed Rulemaking
published by the Legal Services
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Corporation (LSC) on February 4, 2011
proposing to amend LSC’s regulation at
45 CFR part 1609 on fee-generating
cases to clarify that it applies only to
LSC and private non-LSC funds. 76 FR
6381. On April 15, 2011, the LSC Board
of Directors adopted the proposed
changes and authorized the publication
of this final rule.
Generally, the substantive LSC
restrictions on LSC recipients fall into
two categories: ‘‘entity restrictions’’ and
‘‘LSC funds restrictions.’’ ‘‘Entity
restrictions’’ apply to all activities of a
recipient regardless of the funding
source (except for the use of tribal funds
as intended) and generally originate in
section 504 of LSC’s FY 1996
appropriations act (the provisions of
which have been carried forward in
subsequent appropriations). In contrast,
‘‘LSC funds restrictions’’ usually
originate from the LSC Act and apply to
the use of LSC funds and private funds,
but not to tribal or public non-LSC
funds used as intended. LSC’s
regulation at 45 CFR part 1609, FeeGenerating Cases, is based on
§ 1007(b)(1) of the LSC Act, which
provides that no funds made available
by the Corporation may be used to
provide legal assistance, except as per
LSC regulation, with respect to any feegenerating case. The fee-generating case
provision of the LSC Act is an ‘‘LSC
funds restriction.’’ However, § 1609.3(a),
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Fmt 4700
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as currently written, is not limited to the
use of LSC funds. Rather it reads as an
‘‘entity restriction’’ reaching all of an
LSC recipient’s funds. Its wording
follows the same structure as other
entity restrictions such as part 1617—
Class Actions, which states that
‘‘Recipients are prohibited from
initiating or participating in any class
action.’’ 45 CFR 617.3.
From its initial adoption in 1976
through 1996, part 1609 followed the
language of the LSC Act and was
expressly applied as an LSC funds
restriction At that time, § 1609.3
provided that: ‘‘[n]o recipient shall use
funds received from the Corporation to
provide legal assistance in a feegenerating case unless’’ one of the
regulatory exceptions applied. 41 FR
18528 (proposed rule May 5, 1976), 41
FR 38505 (final rule Sept. 10, 1976), and
49 FR 19656 (final rule May 9, 1984)
(the last final rule prior to 1996)
(emphasis added).
In 1996 LSC revised part 1609 in
conjunction with the enactment of the
part 1642 entity prohibition on
recipients claiming or collecting and
retaining attorneys’ fees. In the revision
the language was changed from the prior
‘‘Corporation funds’’ prohibition to the
more general ‘‘no recipient’’ entity
prohibition. Notably though, there is no
discussion in the preamble to the
proposed or final regulation of any
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Federal Register / Vol. 76, No. 81 / Wednesday, April 27, 2011 / Rules and Regulations
significant substantive change in scope.
61 FR 45765 (proposed rule August 29,
1996) and 62 FR 19398 (final rule April
21, 1997). Nor is there any such
discussion in any of the relevant LSC
Board transcripts. Rather, the only
mention of the change in language is the
following discussion of the revised
§ 1609.3:
WReier-Aviles on DSKGBLS3C1PROD with RULES
This section defines the limits within
which recipients may undertake feegenerating cases. This new section
reorganizes and replaces §§ 1609.3 and
1609.4 of the current rule in order to make
them easier to understand.
Id. (appearing in the preambles to both
the proposed and final rules) (emphasis
added). The regulatory history contains
extensive discussions of policy and
regulatory nuances regarding the thennew attorneys’ fees provisions and their
relationship with the fee-generating case
restriction in Part 1609. These
discussions involved the LSC Board,
LSC management, the LSC OIG and
representatives of recipients.
Considering the attention paid to this
and the other regulations implemented
in 1996 and 1997, it seems very unusual
that LSC would adopt such a significant
substantive change to part 1609 without
any discussion, any description of the
change in the preamble to the rule, or
any comments by the OIG or
representatives of recipients.
Notwithstanding the 1997 regulatory
change, LSC has not applied part 1609
as an entity restriction, but has rather
continued to apply it as an restriction
applying only to a recipient’s LSC and
private non-LSC funds. For example, the
LSC Compliance Supplement to the LSC
Audit Guide, which provides guidance
to auditors regarding recipient
compliance with the substantive LSC
restrictions, states that part 1609 means
that ‘‘[r]ecipients may not use
Corporation or private funds to provide
legal assistance in a fee-generating case
unless’’ one of the regulatory exceptions
applies. It does not instruct auditors to
read part 1609 as applying to tribal or
public non-LSC funds. The Compliance
Supplement was last revised in
December 1998 (after part 1609 had
been amended).
In addition, LSC’s regulation on the
use of non-LSC funds at 45 CFR part
1610 treats the fee-generating case
restriction as an LSC funds restriction,
rather than as an entity restriction,
notwithstanding than express language
of § 1609.3. Generally part 1610 works
in tandem with the other regulations;
each regulation (other than part 1610)
expressly specifies whether it applies to
a recipient’s use of LSC funds (usually
referred to as ‘‘Corporation funds’’) or if
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it applies to the recipient entirely and
part 1610 categorizes each substantive
LSC restriction as either an ‘‘LSC Act
restriction’’ based on the provisions of
the LSC Act 1 or an ‘‘entity restriction’’
(based on section 504 of the LSC FY
1996 appropriations act) and then
variously applies those other regulations
to the use of non-LSC funds depending
on whether the substantive restriction is
an LSC Act (funds) restriction or a
section 504 (entity) restriction. 45 CFR
1610.3 and 1610.4. The definitions
section of part 1610 includes the feegenerating case restriction found in
section 1007(b)(1) of the LSC Act and
part 1609 of the Corporation’s
regulations as an LSC Act restriction,
not as an entity restriction. 45 CFR
1610.2(a)(3).
Section 1610.3 contains a general
prohibition regarding the use of nonLSC funds, providing that recipient may
not use non-LSC funds for any purpose
prohibited by the LSC Act or for any
activity prohibited by or inconsistent
with Section 504, unless such use is
authorized by §§ 1610.4, 1610.6 or
1610.7 of this part. Section 1610.4(b)
contains a public non-LSC funds
exception to the LSC Act restrictions but
not the section 504 entity restrictions,
providing that a recipient may receive
public or IOLTA funds and use them in
accordance with the specific purposes
for which they were provided, if the
funds are not used for any activity
prohibited by or inconsistent with
section 504. Thus § 1610.4(b) permits
the use of public non-LSC or IOLTA
funds for all activities categorized as
‘‘LSC Act restrictions’’ in § 1610.2,
which includes Part 1609. Normally the
exception for public non-LSC funds
only applies to regulations that
themselves are limited to LSC funds and
private funds. Part 1609 is an anomaly
in that it uses ‘‘entity’’ language to apply
to the use of all funds, but is treated by
part 1610 as an ‘‘LSC Act’’ restriction
that does not apply to public non-LSC
funds. There is, thus, a conflict between
the language of parts 1610 and 1609.2
1 Part 1610 actually refers to the fee-generating
case and other ‘‘LSC fund’’ restrictions as ‘‘LSC Act
restrictions. Referring to these as ‘‘LSC Act’’
restrictions is somewhat of a misnomer in that some
of the restrictions in the LSC Act are entity
restrictions on all funds and LSC has at times
imposed restrictions on recipients’ LSC and private
funds that do not appear in the LSC Act.
Nonetheless, it is the term used by part 1610.
2 It is worth noting that parts 1609 and 1610 were
revised contemporaneously in 1996 and 1997. Parts
1609 and 1610 were issued as interim rules on
August 29, 1996. 61 FR 45765 (Part 1609) and 61
FR 45740 (Part 1610). At this time, part 1609
contained the revised language while part 1610
continued to treat it as an LSC Act restriction. Part
1609 was finalized on April 21, 1997, with the
revised language, while Part 1610 was still under
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23503
In sum, while the language of part
1609 changed in 1996 from a restriction
on LSC funds to a restriction on all
funds, the preamble to the rule indicates
that substantive changes to the rule
were not intended. In addition, parts
1609 and 1610 are in direct conflict
regarding the scope of part 1609.
Finally, LSC has not itself applied part
1609 as an entity restriction in practice
and has issued guidance in the form of
the LSC Compliance Supplement to the
Audit Guide applying the restriction
only as a restriction on a recipient’s LSC
and private non-LSC funds (and not
applying to a recipient’s available
public-non LSC funds). Accordingly,
LSC believes that the part 1609 needs to
be clarified to correct the apparent
mistake in drafting and to the express
language of part 1609 into conformance
with: the apparent intent of the
Corporation in 1996 when it revised
part 1609; the clear language of part
1610; and LSC practice.
Amendment of Part 1609
As discussed above, LSC believes that
the 1997 change to the language of part
1609 appearing to extend the scope of
the fee-generating case restrictions
beyond LSC and private non-LSC funds
to be an entity restriction was not
intended, but instead was a mistake
made in the attempt to ‘‘simplify’’ the
language of the regulation without any
substantive change to the meaning of
the regulation. LSC bases this belief
upon the various indicia discussed
above, such as the preamble to the final
rule amending part 1609; the clear scope
of the language in the LSC Act; the
treatment of part 1609 in part 1610;
LSC’s own guidance in the LSC
Compliance Supplement to the Audit
Guide and LSC’s ongoing practice.
LSC thus proposed to amend the
language of part 1609 to clarify that it
reaches only LSC and private non-LSC
funds. 76 FR 6381 (Feb. 4, 2011). LSC
received only three comments on the
proposed rule, all of which fully
supported the change. Accordingly, LSC
is amending part 1609 as proposed
without further change.
LSC believes that amending the
regulation in this way is preferable to
maintaining the status quo. Although
LSC has not previously encountered
significant problems being caused by
revision. 62 FR 19398. A new final rule on part
1610 was subsequently published on May 21, 1997.
62 FR. 27695. Notwithstanding the final language
of part 1609 (appearing to apply the fee-generating
case restriction as an entity restriction), the
finalized part 1610 continued to apply the feegenerating case restriction as applying only to LSC
and private non-LSC funds as had been the case
prior to the revision of part 1609.
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27APR1
WReier-Aviles on DSKGBLS3C1PROD with RULES
23504
Federal Register / Vol. 76, No. 81 / Wednesday, April 27, 2011 / Rules and Regulations
the apparently inaccurate wording of
§ 1609.3, the matter came to LSC’s
attention through a question raised in
the course of a compliance visit being
conducted by the Corporation’s Office of
Compliance and Enforcement. Given the
question being raised internally at LSC
and the clear conflict between the
regulations (1609 and 1610), LSC does
not believe it would be appropriate to
permit this situation to continue,
particularly when there is a simple and
straightforward solution to the problem.
LSC further believes that amending
the regulation in this way brings the
regulation into conformity with the
provisions of the LSC Act (and is not
inconsistent with anything in the
applicable appropriations acts).
Moreover, it resolves the conflict
between parts 1609 and 1610 and
reflects the intention of the Corporation
in 1997 to refrain from making a
substantive change to the previously
existing (pre-1997) scope of the
regulation. In addition, amending part
1609 in this way is consistent with the
existing LSC guidance and practice. As
noted above, the LSC Compliance
Supplement to the Audit Guide
guidance to auditors does not instruct
them to apply the restrictions to a
recipient’s public non-LSC funds and to
our knowledge the auditors have not
been reporting instances of a recipient’s
use of public non-LSC funds as
problematic with respect to the
regulation. Further, LSC’s practice has
not been to apply the restriction to a
recipient’s public non-LSC funds.
Finally, to LSC’s knowledge, the general
understanding and practice in the field
has been that the restriction does not
apply to a recipient’s public non-LSC
funds. This understanding was
confirmed in the comments LSC
received on the proposed rule. Thus,
amending part 1609 to clarify that it
applies as an restriction on LSC and
private non-LSC funds, rather than as an
entity restriction, does not create any
substantive change from current
practice.
In light of the above, LSC amends
§ 1609.3(a) to clarify that a recipient
may not use Corporation funds to
provide legal assistance in a feegenerating case (unless one of the
exceptions apply). As 45 CFR 1610.4 is
being amended, that provision will
continue to subject a recipient’s private
funds to the fee-generating case
restrictions in part 1609.
List of Subjects in 45 CFR Part 1609
Grant programs—law, Legal services.
For reasons set forth above, and under
the authority of 42 U.S.C. 2996g(e), LSC
amends 45 CFR part 1609 as follows:
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PART 1609—FEE-GENERATING
CASES
1. The authority citation for part 1609
continues to read as follows:
■
Authority: 42 U.S.C. 2996f(b)(1); 42 U.S.C.
2996e(c)(1).
2. Section 1609.3 is amended by
revising paragraph (a) introductory text
to read as follows:
■
§ 1609.3
General requirements.
(a) Except as provided in paragraph
(b) of this section, a recipient may not
use Corporation funds to provide legal
assistance in a fee-generating case
unless:
*
*
*
*
*
Victor M. Fortuno,
Vice President & General Counsel.
[FR Doc. 2011–10116 Filed 4–26–11; 8:45 am]
BILLING CODE 7050–01–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Part 207
RIN 0750–AH12
Defense Federal Acquisition
Regulation Supplement; Definition of
Multiple-Award Contract (DFARS Case
2011–D016)
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Final rule.
AGENCY:
DoD is issuing a final rule
amending the Defense Federal
Acquisition Regulation Supplement
(DFARS) to revise the definition of
multiple-award contract.
DATES: Effective Date: April 27, 2011.
FOR FURTHER INFORMATION CONTACT: Mr.
Dustin Pitsch, 703–602–0289.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Background
This DFARS case is amending the
definition of ‘‘multiple-award contract’’
at DFARS 207.107–2. The revised
DFARS language is correcting previous
imprecision in implementing the
statute. No policy or substantive
changes are made. The final rule
amendments are made to correct the
current definition by—
—Deleting ‘‘Orders placed using’’ to
reflect that the multiple-award
contract is the basic schedule
contract, and not the individual
orders placed under it;
PO 00000
Frm 00056
Fmt 4700
Sfmt 4700
—Adding ‘‘or Department of Veterans
Affairs’’ to correctly reflect the
agencies that have statutory authority
to issue schedule contracts; and
—Adding hyphens where appropriate
for unit modifiers.
DoD has issued a final rule because
this change does not have a significant
effect beyond the internal operating
procedures of DoD and does not have a
significant cost or administrative impact
on contractors or offerors. Therefore,
public comment is not required in
accordance with 41 U.S.C 1707.
II. Executive Order 12866 and
Executive Order 13563
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). Executive Order 13563
emphasizes the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility. This is not
a significant regulatory action and,
therefore, was not subject to review
under Section 6(b) of Executive Order
12866, Regulatory Planning and Review,
dated September 30, 1993. This rule is
not a major rule under 5 U.S.C. 804.
III. Regulatory Flexibility Act
The Regulatory Flexibility Act does
not apply to this rule. This final rule
does not constitute a significant DFARS
revision within the meaning of FAR
1.501 and public comment is not
required in accordance with 41 U.S.C.
418b(a).
IV. Paperwork Reduction Act
This final rule does not contain any
information collection requirements that
require the approval of the Office of
Management and Budget under the
Paperwork Reduction Act (44 U.S.C.
chapter 35).
List of Subjects in 48 CFR Part 207
Government procurement.
Mary Overstreet,
Editor, Defense Acquisition Regulations
System.
Therefore, 48 CFR part 207 is
amended as follows:
PART 207—ACQUISITION PLANNING
1. The authority citation for 48 CFR
part 207 continues to read as follows:
■
Authority: 41 U.S.C. 1303 and 48 CFR
chapter 1.
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27APR1
]]>Agencies
[Federal Register Volume 76, Number 81 (Wednesday, April 27, 2011)]
[Rules and Regulations]
[Pages 23502-23504]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-10116]
=======================================================================
-----------------------------------------------------------------------
LEGAL SERVICES CORPORATION
45 CFR Part 1609
Fee-Generating Cases
AGENCY: Legal Services Corporation.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule amends the Legal Services Corporation's
regulation on fee-generating cases to clarify that it applies only to
LSC and private non-LSC funds.
DATES: This final rule becomes effective on May 27, 2011.
FOR FURTHER INFORMATION CONTACT: Mattie Cohan, Senior Assistant General
Counsel, Office of Legal Affairs, Legal Services Corporation, 3333 K
Street, NW., Washington, DC 20007; 202-295-1624 (ph); 202-337-6519
(fax); mcohan@lsc.gov.
SUPPLEMENTARY INFORMATION:
Background
This final rule follows the publication of a Notice of Proposed
Rulemaking published by the Legal Services Corporation (LSC) on
February 4, 2011 proposing to amend LSC's regulation at 45 CFR part
1609 on fee-generating cases to clarify that it applies only to LSC and
private non-LSC funds. 76 FR 6381. On April 15, 2011, the LSC Board of
Directors adopted the proposed changes and authorized the publication
of this final rule.
Generally, the substantive LSC restrictions on LSC recipients fall
into two categories: ``entity restrictions'' and ``LSC funds
restrictions.'' ``Entity restrictions'' apply to all activities of a
recipient regardless of the funding source (except for the use of
tribal funds as intended) and generally originate in section 504 of
LSC's FY 1996 appropriations act (the provisions of which have been
carried forward in subsequent appropriations). In contrast, ``LSC funds
restrictions'' usually originate from the LSC Act and apply to the use
of LSC funds and private funds, but not to tribal or public non-LSC
funds used as intended. LSC's regulation at 45 CFR part 1609, Fee-
Generating Cases, is based on Sec. 1007(b)(1) of the LSC Act, which
provides that no funds made available by the Corporation may be used to
provide legal assistance, except as per LSC regulation, with respect to
any fee-generating case. The fee-generating case provision of the LSC
Act is an ``LSC funds restriction.'' However, Sec. 1609.3(a), as
currently written, is not limited to the use of LSC funds. Rather it
reads as an ``entity restriction'' reaching all of an LSC recipient's
funds. Its wording follows the same structure as other entity
restrictions such as part 1617--Class Actions, which states that
``Recipients are prohibited from initiating or participating in any
class action.'' 45 CFR 617.3.
From its initial adoption in 1976 through 1996, part 1609 followed
the language of the LSC Act and was expressly applied as an LSC funds
restriction At that time, Sec. 1609.3 provided that: ``[n]o recipient
shall use funds received from the Corporation to provide legal
assistance in a fee-generating case unless'' one of the regulatory
exceptions applied. 41 FR 18528 (proposed rule May 5, 1976), 41 FR
38505 (final rule Sept. 10, 1976), and 49 FR 19656 (final rule May 9,
1984) (the last final rule prior to 1996) (emphasis added).
In 1996 LSC revised part 1609 in conjunction with the enactment of
the part 1642 entity prohibition on recipients claiming or collecting
and retaining attorneys' fees. In the revision the language was changed
from the prior ``Corporation funds'' prohibition to the more general
``no recipient'' entity prohibition. Notably though, there is no
discussion in the preamble to the proposed or final regulation of any
[[Page 23503]]
significant substantive change in scope. 61 FR 45765 (proposed rule
August 29, 1996) and 62 FR 19398 (final rule April 21, 1997). Nor is
there any such discussion in any of the relevant LSC Board transcripts.
Rather, the only mention of the change in language is the following
discussion of the revised Sec. 1609.3:
This section defines the limits within which recipients may
undertake fee-generating cases. This new section reorganizes and
replaces Sec. Sec. 1609.3 and 1609.4 of the current rule in order
to make them easier to understand.
Id. (appearing in the preambles to both the proposed and final rules)
(emphasis added). The regulatory history contains extensive discussions
of policy and regulatory nuances regarding the then-new attorneys' fees
provisions and their relationship with the fee-generating case
restriction in Part 1609. These discussions involved the LSC Board, LSC
management, the LSC OIG and representatives of recipients. Considering
the attention paid to this and the other regulations implemented in
1996 and 1997, it seems very unusual that LSC would adopt such a
significant substantive change to part 1609 without any discussion, any
description of the change in the preamble to the rule, or any comments
by the OIG or representatives of recipients.
Notwithstanding the 1997 regulatory change, LSC has not applied
part 1609 as an entity restriction, but has rather continued to apply
it as an restriction applying only to a recipient's LSC and private
non-LSC funds. For example, the LSC Compliance Supplement to the LSC
Audit Guide, which provides guidance to auditors regarding recipient
compliance with the substantive LSC restrictions, states that part 1609
means that ``[r]ecipients may not use Corporation or private funds to
provide legal assistance in a fee-generating case unless'' one of the
regulatory exceptions applies. It does not instruct auditors to read
part 1609 as applying to tribal or public non-LSC funds. The Compliance
Supplement was last revised in December 1998 (after part 1609 had been
amended).
In addition, LSC's regulation on the use of non-LSC funds at 45 CFR
part 1610 treats the fee-generating case restriction as an LSC funds
restriction, rather than as an entity restriction, notwithstanding than
express language of Sec. 1609.3. Generally part 1610 works in tandem
with the other regulations; each regulation (other than part 1610)
expressly specifies whether it applies to a recipient's use of LSC
funds (usually referred to as ``Corporation funds'') or if it applies
to the recipient entirely and part 1610 categorizes each substantive
LSC restriction as either an ``LSC Act restriction'' based on the
provisions of the LSC Act \1\ or an ``entity restriction'' (based on
section 504 of the LSC FY 1996 appropriations act) and then variously
applies those other regulations to the use of non-LSC funds depending
on whether the substantive restriction is an LSC Act (funds)
restriction or a section 504 (entity) restriction. 45 CFR 1610.3 and
1610.4. The definitions section of part 1610 includes the fee-
generating case restriction found in section 1007(b)(1) of the LSC Act
and part 1609 of the Corporation's regulations as an LSC Act
restriction, not as an entity restriction. 45 CFR 1610.2(a)(3).
---------------------------------------------------------------------------
\1\ Part 1610 actually refers to the fee-generating case and
other ``LSC fund'' restrictions as ``LSC Act restrictions. Referring
to these as ``LSC Act'' restrictions is somewhat of a misnomer in
that some of the restrictions in the LSC Act are entity restrictions
on all funds and LSC has at times imposed restrictions on
recipients' LSC and private funds that do not appear in the LSC Act.
Nonetheless, it is the term used by part 1610.
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Section 1610.3 contains a general prohibition regarding the use of
non-LSC funds, providing that recipient may not use non-LSC funds for
any purpose prohibited by the LSC Act or for any activity prohibited by
or inconsistent with Section 504, unless such use is authorized by
Sec. Sec. 1610.4, 1610.6 or 1610.7 of this part. Section 1610.4(b)
contains a public non-LSC funds exception to the LSC Act restrictions
but not the section 504 entity restrictions, providing that a recipient
may receive public or IOLTA funds and use them in accordance with the
specific purposes for which they were provided, if the funds are not
used for any activity prohibited by or inconsistent with section 504.
Thus Sec. 1610.4(b) permits the use of public non-LSC or IOLTA funds
for all activities categorized as ``LSC Act restrictions'' in Sec.
1610.2, which includes Part 1609. Normally the exception for public
non-LSC funds only applies to regulations that themselves are limited
to LSC funds and private funds. Part 1609 is an anomaly in that it uses
``entity'' language to apply to the use of all funds, but is treated by
part 1610 as an ``LSC Act'' restriction that does not apply to public
non-LSC funds. There is, thus, a conflict between the language of parts
1610 and 1609.\2\
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\2\ It is worth noting that parts 1609 and 1610 were revised
contemporaneously in 1996 and 1997. Parts 1609 and 1610 were issued
as interim rules on August 29, 1996. 61 FR 45765 (Part 1609) and 61
FR 45740 (Part 1610). At this time, part 1609 contained the revised
language while part 1610 continued to treat it as an LSC Act
restriction. Part 1609 was finalized on April 21, 1997, with the
revised language, while Part 1610 was still under revision. 62 FR
19398. A new final rule on part 1610 was subsequently published on
May 21, 1997. 62 FR. 27695. Notwithstanding the final language of
part 1609 (appearing to apply the fee-generating case restriction as
an entity restriction), the finalized part 1610 continued to apply
the fee-generating case restriction as applying only to LSC and
private non-LSC funds as had been the case prior to the revision of
part 1609.
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In sum, while the language of part 1609 changed in 1996 from a
restriction on LSC funds to a restriction on all funds, the preamble to
the rule indicates that substantive changes to the rule were not
intended. In addition, parts 1609 and 1610 are in direct conflict
regarding the scope of part 1609. Finally, LSC has not itself applied
part 1609 as an entity restriction in practice and has issued guidance
in the form of the LSC Compliance Supplement to the Audit Guide
applying the restriction only as a restriction on a recipient's LSC and
private non-LSC funds (and not applying to a recipient's available
public-non LSC funds). Accordingly, LSC believes that the part 1609
needs to be clarified to correct the apparent mistake in drafting and
to the express language of part 1609 into conformance with: the
apparent intent of the Corporation in 1996 when it revised part 1609;
the clear language of part 1610; and LSC practice.
Amendment of Part 1609
As discussed above, LSC believes that the 1997 change to the
language of part 1609 appearing to extend the scope of the fee-
generating case restrictions beyond LSC and private non-LSC funds to be
an entity restriction was not intended, but instead was a mistake made
in the attempt to ``simplify'' the language of the regulation without
any substantive change to the meaning of the regulation. LSC bases this
belief upon the various indicia discussed above, such as the preamble
to the final rule amending part 1609; the clear scope of the language
in the LSC Act; the treatment of part 1609 in part 1610; LSC's own
guidance in the LSC Compliance Supplement to the Audit Guide and LSC's
ongoing practice.
LSC thus proposed to amend the language of part 1609 to clarify
that it reaches only LSC and private non-LSC funds. 76 FR 6381 (Feb. 4,
2011). LSC received only three comments on the proposed rule, all of
which fully supported the change. Accordingly, LSC is amending part
1609 as proposed without further change.
LSC believes that amending the regulation in this way is preferable
to maintaining the status quo. Although LSC has not previously
encountered significant problems being caused by
[[Page 23504]]
the apparently inaccurate wording of Sec. 1609.3, the matter came to
LSC's attention through a question raised in the course of a compliance
visit being conducted by the Corporation's Office of Compliance and
Enforcement. Given the question being raised internally at LSC and the
clear conflict between the regulations (1609 and 1610), LSC does not
believe it would be appropriate to permit this situation to continue,
particularly when there is a simple and straightforward solution to the
problem.
LSC further believes that amending the regulation in this way
brings the regulation into conformity with the provisions of the LSC
Act (and is not inconsistent with anything in the applicable
appropriations acts). Moreover, it resolves the conflict between parts
1609 and 1610 and reflects the intention of the Corporation in 1997 to
refrain from making a substantive change to the previously existing
(pre-1997) scope of the regulation. In addition, amending part 1609 in
this way is consistent with the existing LSC guidance and practice. As
noted above, the LSC Compliance Supplement to the Audit Guide guidance
to auditors does not instruct them to apply the restrictions to a
recipient's public non-LSC funds and to our knowledge the auditors have
not been reporting instances of a recipient's use of public non-LSC
funds as problematic with respect to the regulation. Further, LSC's
practice has not been to apply the restriction to a recipient's public
non-LSC funds. Finally, to LSC's knowledge, the general understanding
and practice in the field has been that the restriction does not apply
to a recipient's public non-LSC funds. This understanding was confirmed
in the comments LSC received on the proposed rule. Thus, amending part
1609 to clarify that it applies as an restriction on LSC and private
non-LSC funds, rather than as an entity restriction, does not create
any substantive change from current practice.
In light of the above, LSC amends Sec. 1609.3(a) to clarify that a
recipient may not use Corporation funds to provide legal assistance in
a fee-generating case (unless one of the exceptions apply). As 45 CFR
1610.4 is being amended, that provision will continue to subject a
recipient's private funds to the fee-generating case restrictions in
part 1609.
List of Subjects in 45 CFR Part 1609
Grant programs--law, Legal services.
For reasons set forth above, and under the authority of 42 U.S.C.
2996g(e), LSC amends 45 CFR part 1609 as follows:
PART 1609--FEE-GENERATING CASES
0
1. The authority citation for part 1609 continues to read as follows:
Authority: 42 U.S.C. 2996f(b)(1); 42 U.S.C. 2996e(c)(1).
0
2. Section 1609.3 is amended by revising paragraph (a) introductory
text to read as follows:
Sec. 1609.3 General requirements.
(a) Except as provided in paragraph (b) of this section, a
recipient may not use Corporation funds to provide legal assistance in
a fee-generating case unless:
* * * * *
Victor M. Fortuno,
Vice President & General Counsel.
[FR Doc. 2011-10116 Filed 4-26-11; 8:45 am]
BILLING CODE 7050-01-P
