Limited Reductions of Funding, Termination, and Debarment Procedures; Recompetition; Enforcement; Suspension Procedures; Private Attorney Involvement, 10085-10099 [2013-03241]
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Federal Register / Vol. 78, No. 30 / Wednesday, February 13, 2013 / Rules and Regulations
* Elevation in feet
(NGVD)
+ Elevation in feet
(NAVD)
# Depth in feet
above ground
∧ Elevation in meters
(MSL)
Flooding source(s)
Location of referenced elevation
Soap Creek ..................................
At the confluence with Joe Pool Lake ..................
+540
+598
West Soap Creek .........................
Approximately 0.26 mile downstream of U.S.
Route 67.
At the confluence with Soap Creek ......................
Approximately 0.5 mile upstream of Ray White
Road.
10085
+601
+581
Communities affected
City of Grand Prairie, City of
Midlothian,
Unincorporated
Areas of Ellis County.
Unincorporated Areas of Ellis
County.
* National Geodetic Vertical Datum.
+ North American Vertical Datum.
# Depth in feet above ground.
∧ Mean Sea Level, rounded to the nearest 0.1 meter.
ADDRESSES
City of Cedar Hill
Maps are available for inspection at City Hall, 502 Cedar Street, Cedar Hill, TX 75104.
City of Grand Prairie
Maps are available for inspection at City Hall, 317 College Street, Grand Prairie, TX 75053.
City of Midlothian
Maps are available for inspection at City Hall, 104 West Avenue East, Midlothian, TX 76065.
Unincorporated Areas of Ellis County
Maps are available for inspection at the Ellis County Courthouse, 101 West Main Street, Waxahachie, TX 75165.
(Catalog of Federal Domestic Assistance No.
97.022, ‘‘Flood Insurance.’’)
James A. Walke,
Acting Deputy Associate Administrator for
Mitigation, Department of Homeland
Security, Federal Emergency Management
Agency.
[FR Doc. 2013–03258 Filed 2–12–13; 8:45 am]
BILLING CODE 9110–12–P
LEGAL SERVICES CORPORATION
45 CFR Parts 1606, 1614, 1618, and
1623
Limited Reductions of Funding,
Termination, and Debarment
Procedures; Recompetition;
Enforcement; Suspension Procedures;
Private Attorney Involvement
Legal Services Corporation.
Final rule.
AGENCY:
ACTION:
This final rule amends the
Legal Services Corporation’s regulations
on enforcement procedures through the
addition of options for limited
reductions of funding, expansion of
non-audit based suspensions for up to
ninety days, and immediate special
grant conditions for compliance issues.
The final rule provides updates and
enhancements to the rules regarding
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SUMMARY:
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enforcement generally, terminations,
debarments, and suspensions. It also
provides a technical conforming update
to a cross-reference in the private
attorney involvement regulation.
DATES: Effective Date: This rule is
effective as of March 15, 2013.
FOR FURTHER INFORMATION CONTACT:
Mark Freedman, Senior Assistant
General Counsel, Office of Legal Affairs,
Legal Services Corporation, 3333 K
Street NW., Washington, DC 20007;
202–295–1623 (phone); 202–337–6519
(fax); mfreedman@lsc.gov.
SUPPLEMENTARY INFORMATION:
I. Procedural Background
On January 31, 2012, the Legal
Services Corporation (LSC) published in
the Federal Register at 77 FR 4749 a
Notice of Proposed Rulemaking (NPRM)
proposing changes to LSC’s enforcement
mechanisms. On August 7, 2012, LSC
published in the Federal Register at 77
FR 46995 a Further Notice of Proposed
Rulemaking (FNPRM) expanding on the
NPRM. LSC is now publishing final
rules to conclude this rulemaking.
LSC undertook this rulemaking to add
three new enforcement options to the
LSC regulations regarding grants for the
provision of legal assistance:
(1) A new ‘‘limited reduction of
funding’’ that enables LSC to respond
quickly to instances of substantial
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violation of LSC requirements through
funding reductions of less than five
percent using more simple procedures
than for terminations of five percent or
greater;
(2) suspensions for non-audit based
compliance issues that could last for up
to ninety days, an increase from thirty
days in the previous rule; and
(3) special grant conditions regarding
compliance issues that LSC could add
immediately to a current grant.
In the course of the rulemaking, LSC
developed new administrative
procedures to enhance the opportunities
for informal resolution when LSC
proposes to undertake a limited
reduction of funding, a termination in
whole or in part, or a debarment. The
rule already provided for informal
resolution through an informal
conference with opportunities for
settlement or compromise. The rule has
enhanced the informal conference and
added procedures to provide for
resolution of the matter through prompt
corrective action agreements, when
appropriate.
This rulemaking also clarifies existing
regulations and makes conforming
changes to the rules in order to
accommodate the new process and
procedures indicated. All of the
comments and related memos submitted
to the LSC Board regarding this
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Federal Register / Vol. 78, No. 30 / Wednesday, February 13, 2013 / Rules and Regulations
rulemaking are available in the open
rulemaking section of LSC’s Web site at
www.lsc.gov.
https://www.lsc.gov/about/regulationsrules/open-rulemaking
After the effective date of the rule,
those materials will appear in the closed
rulemaking section.
https://www.lsc.gov/about/regulationsrules/closed-rulemaking
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II. General Authorities, Impetus for
Rulemaking, and Existing Regulatory
Compliance Mechanisms
The LSC Act provides general
authority to the Corporation ‘‘to insure
the compliance of recipients and their
employees with the provisions of [the
Act] and the rules, regulations, and
guidelines promulgated pursuant to [the
Act].’’ 42 U.S.C. 2996e(b)(1)(A). LSC’s
principal regulation discussing general
enforcement authority and procedures is
the Enforcement Procedures regulation
at 45 CFR part 1618. LSC uses a variety
of enforcement tools, formal and
informal, to ensure compliance. Among
these are informal consultations and
compliance training, on-site Case
Service Report/Case Management
System reviews, the imposition of
Required Corrective Actions (RCAs),
and the imposition of Special Grant
Conditions (SGCs) at the beginning of a
grant award period or at grant renewal.
Several enforcement tools involving
suspending or reducing funding to a
recipient to address significant noncompliance are provided in LSCadopted regulations. LSC has adopted
grant termination procedures (45 CFR
part 1606) that provide for the
termination of funding in whole or part
in cases of a recipient’s substantial
noncompliance with LSC statutory or
regulatory requirements and other
policies, instructions, or grant terms and
conditions. LSC has also adopted
suspension procedures (45 CFR part
1623) and disallowed-cost procedures
(45 CFR part 1630). Lastly, part 1606
provides authority for LSC to debar
recipients from eligibility to receive
future grants.
LSC amended the part 1606
termination procedures in 1998 and
created a separate provision for
reductions of funding of less than five
percent, which are not considered
terminations and not subject to the full
set of procedures that apply to
terminations. The 1998 amendments to
the rule required, however, that to
reduce funding to a recipient by less
than five percent, LSC would have to
establish additional procedures by
rulemaking. 45 CFR 1606.2(d)(2)(v). LSC
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commenced this rulemaking to establish
those procedures.
The majority of LSC recipients are in
substantial compliance with LSC
requirements most of the time. When
non-compliance occurs, recipients
almost always work diligently and
cooperatively with LSC staff to come
promptly into compliance, but there
have been exceptions and situations in
which LSC has felt the need for the kind
of enforcement tools covered by this
rulemaking.
This rulemaking also addresses a
problem in the previous rules regarding
LSC’s ability to take timely actions. LSC
can impose suspensions after as little as
eleven days of process, but the previous
rule limited suspensions to thirty days
(other than audit-based suspensions).
The next enforcement option available
to LSC was terminations, which require
five months or more of procedures if the
recipient uses all available levels of
review. Similarly, disallowed costs may
be available to recover improperly spent
funds, although that process is designed
for recovery rather than enforcement
and sanction. Also, disallowed costs can
take over five months to complete
(except for disallowed costs of less than
$2,500). This rulemaking provides for
suspensions of funding for up to ninety
days, for limited reductions of funding
that can be implemented in
approximately eighty days, and for
special grant conditions that can be
added immediately to an existing grant.
This rulemaking also addresses
concerns expressed by the Government
Accountability Office (GAO) in its
report, Legal Services Corporation:
Improved internal controls needed in
grants management and oversight,
GAO–08–37 (December 2007). In that
report, the GAO opined that LSC has
‘‘limited options for sanctioning or
replacing poor-performing recipients.’’
GAO–08–37 at 17. The existing
enforcement mechanisms available to
LSC are best suited to situations
involving numerous and/or very
significant violations that merit severe
actions such as terminations, or to
situations in which compliance issues
are technical or minor and can be
resolved through corrective actions,
grant conditions, and similar actions.
LSC has not had enforcement
mechanisms well suited to violations or
compliance issues in an intermediate
range (e.g., material but not extreme, or
multiple but not profuse) in situations
where a recipient does not voluntarily
take corrective action in a timely
manner. Furthermore, disallowed costs
are not a good substitute for an
intermediate range enforcement
mechanism. The amount of funds in
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question is not necessarily proportional
to the severity of the violation. Minor
violations could have large associated
costs while major violations could have
relatively small associated costs.
LSC significantly revised LSC’s
enforcement rules in 1998 in response
to Congressional changes to the
governing law. Prior to 1996, section
1011 of the LSC Act provided minimum
process requirements for suspensions
over thirty days, terminations, and
denials of refunding that included
hearing rights and review by
independent hearing examiners. 42
U.S.C. 2996j. LSC implemented these
statutory requirements in 1976 and 1978
through the original enforcement
regulations: part 1618 (General
enforcement thresholds), part 1606
(Terminations and denials of refunding),
and part 1623 (Suspensions). In 1996,
Congress suspended section 1011 via
riders to the annual LSC appropriation,
which have been reincorporated every
year thereafter, including some
modifications in 1998.
For the purposes of the funding
provided in this [FY 1996
Appropriations] Act, rights under
sections 1007(a)(9) [interim funding for
refunding applicants] and 1011 of the
Legal Services Corporation Act (42
U.S.C. 2996f(a)(9) and 42 U.S.C. 2996j)
shall not apply.
Pub. L. 104–134, section 503(f), 110
Stat. 1321 (1996) (FY 1996); Pub. L.
104–208, section 501(b), 110 Stat. 3009
(1996) (FY 1997) (reiterating the FY
1996 language). For FY 1998, Congress
reiterated the FY 1996 language and
further elaborated that LSC ‘‘may
terminate’’ a grant or contract if LSC
finds ‘‘that the recipient has failed to
comply with any requirement of the
Legal Services Corporation Act (42
U.S.C. 2996 et seq.), this
[appropriations] Act, or any other
applicable law relating to funding for
the Corporation * * *.’’ Pub. L. 105–
119, sections 501(b) and (c), 111 Stat.
2440 (1997) (FY 1998). Congress has
incorporated that language by reference
in every annual LSC appropriation since
1998. Congress also mandated in 1996
and thereafter that LSC have the option
to suspend funding to a recipient, in full
or in part, if the recipient fails to have
an acceptable audit. Audit-based
suspensions last until completion of an
acceptable audit. Pub. L. 104–134,
section 509(c), 110 Stat. 1321 (1996) (FY
1996) (incorporated by reference
thereafter).
LSC implemented these statutory
changes by revising 45 CFR parts 1606
and 1623. 63 FR 64636 (1998) (parts
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1606 and 1625), 63 FR 64646 (1998)
(part 1623). LSC explained that:
the new law in the appropriations act
emphasizes a congressional intent to
strengthen the ability of the Corporation to
ensure that recipients are in full compliance
with the LSC Act and regulations and other
applicable law. See H. Rep. No. 207, 105th.
Cong., 1st Sess. 140 (1997). Accordingly,
under this rule, the hearing procedures in
part 1606 have been streamlined. The
changes are intended to emphasize the
seriousness with which the Corporation takes
its obligation to ensure that recipients
comply with the terms of their grants and
provide quality legal assistance. At the same
time, the Corporation intends that recipients
be provided notice and a fair opportunity to
be heard before any termination or
debarment action is taken.
63 FR at 64637 (preamble to revised
parts 1606 and 1625). LSC further
elaborated in the preamble to the
rulemaking that:
[t]he legislative intent underlying Sections
501(b) and (c) of the Corporation’s FY 1998
appropriations act was to enable the
Corporation to streamline its due process
procedures in order to ensure that recipients
are in full compliance with LSC grant
requirements and restrictions.
Id. at 64640. LSC carefully balanced the
concerns for ongoing client services and
recipient rights with the clear direction
from Congress to enhance accountability
and oversight of recipients’ use of LSC
funds. The current rulemaking is
designed to build upon, but not
fundamentally alter, the rationale for the
1998 rulemaking.
The changes in this final rule reflect
LSC’s obligation to safeguard public
funds appropriated by Congress for civil
legal aid by ensuring compliance with
LSC rules, restrictions, and
requirements. These additions to the
enforcement mechanisms are consistent
with LSC’s understanding of Congress’s
intent to strengthen LSC’s enforcement
mechanisms, while carefully accounting
for the importance of continued delivery
of legal services and the rights of LSC
recipients.
III. Summary of Existing Compliance
Tools Not Covered by the Regulations
LSC uses a variety of non-regulation
based tools to track and ensure
compliance. Among these are informal
consultations and compliance training,
on-site Case Service Report/Case
Management System reviews, the
imposition of Required Corrective
Actions (RCAs), and the imposition of
Special Grant Conditions (SGCs) at the
beginning of a grant year.
LSC relies primarily on RCAs to
remedy compliance problems. The LSC
Office of Compliance and Enforcement
(OCE) estimates that in approximately
90 percent of cases in which RCAs are
imposed, recipients implement the
RCAs on a timely and satisfactory basis.
In approximately ten percent of the
cases, however, a recipient fails to
10087
implement the required corrective
actions in a timely or satisfactory
manner. In some instances in which
recipients have failed to implement
RCAs in a timely or satisfactory manner,
LSC has imposed SGCs. Although SGCs
may be substantively identical to the
measures contained in RCAs, SGCs
elevate the matter by formally
incorporating the conditions into the
recipient’s grant documents and
ensuring that the recipient’s Board
Chair, who has to sign the SGCs, is
aware of an ongoing problem. In recent
years, LSC has also used short-term
funding to encourage compliance by
providing a grant or successive grants
for less than a year (e.g., month-tomonth).
IV. Summary of Procedures for
Compliance Tools
Members of the LSC Board raised
concerns that the parallel and
interrelated procedures for different
enforcement mechanisms could be
confusing. For clarification, the table
below summarizes the enforcement
actions provided for in the rules and the
respective procedures for each. This
table uses the revised nomenclature
provided in the final rule. The prior
suspension and termination rules
contained inconsistencies in the terms
used for each stage of the process; those
terms have been standardized in the
final rule.
Limited reductions
Termination
Debarment
Suspension
§ 1606.2, Less than 5 Percent .......
§ 1606.2, 5 percent or more .........
§ 1606.2 ........................................
§ 1623.2
Type of Violation
Substantial violation, ......................
§ 1606.2 .........................................
Substantial violation, § 1606.2 ......
.......................................................
Substantial failure, § 1606.3(a)(2)
.......................................................
.......................................................
.......................................................
Good cause, § 1606.4(b) ..............
.......................................................
.......................................................
.......................................................
Substantial violation, § 1623.3(a),
§ 1606.2.
Prompt action is necessary,
§ 1623.3(a).
Failure of an audit, § 1623.3(b).
Procedure
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Preliminary
Determination,
§ 1606.6(a).
Compliance Agreement (if available and agreed to), § 1606.7(a).
Submission of Written Materials in
Opposition to the Preliminary
Determination (if no compliance
agreement), § 1606.7(b).
Informal Conference, § 1606.7(b)–
(e).
Draft Final Decision, § 1606.7(f) ....
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Preliminary
Determination,
§ 1606.6(a).
Compliance Agreement (if available
and
agreed
to),
§ 1606.7(a).
Submission of Written Materials in
Opposition to the Preliminary
Determination (if no compliance
agreement), § 1606.7(b).
Informal Conference, § 1606.7(b)–
(e).
Draft Final Decision, § 1606.7(f) ...
Hearing, § 1606.8 .........................
Recommended Decision, § 1606.9
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Preliminary
Determination,
§ 1606.6(a).
Compliance Agreement (if available
and
agreed
to),
§ 1606.7(a).
Submission of Written Materials in
Opposition to the Preliminary
Determination (if no compliance
agreement), § 1606.7(b).
Informal Conference, § 1606.7(b)–
(e).
Draft Final Decision, § 1606.7(f) ...
Hearing, § 1606.8.
Recommended Decision, § 1606.9.
Sfmt 4700
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Proposed
Determination,
§ 1623.4(b).
Prompt
Corrective
Action,
§ 1623.2.
Submission of Written Materials in
Opposition to the Proposed Determination, § 1623.4(f).
Informal Meeting, § 1623.4(b)–(f).
Final determination, § 1623.4(f).
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Limited reductions
Termination
Debarment
Suspension
Review by the LSC President,
§ 1606.10.
Review by the LSC President,
§ 1606.10.
Review by the LSC President,
§ 1606.10.
Final Decision, § 1606.10(e) ..........
Final Decision, § 1606.10(e) .........
Final Decision, § 1606.10(e) .........
Review by the LSC President (for
a suspension lasting more than
30 days not based on an audit
failure), § 1623.4(h).
Suspension Appeal Decision,
§ 1623.4(h)(3).
V. Commentary on Rulemaking Process
and Comments Received
LSC received nineteen comments on
the NPRM and eight comments on the
FNPRM. All of the comments and LSC’s
analysis of them are posted on the
rulemaking page of www.lsc.gov.https://
www.lsc.gov/about/regulations-rules
The most extensive comments on both
proposals were submitted by the LSC
Office of Inspector General (OIG), the
American Bar Association Standing
Committee on Legal Aid and Indigent
Defendants (SCLAID), and the National
Legal Aid and Defender Association
(NLADA). Colorado Legal Services and
the Northwest Justice Project (NJP) also
submitted detailed comments. The other
comments generally endorsed the
NLADA comments. Only the OIG fully
supported the rulemaking, although the
OIG recommended removing any time
limit on suspensions and expressed
concerns that the requirements for the
new special grant conditions were too
restrictive. SCLAID did not oppose the
rulemaking, but it strongly
recommended significant enhancements
to standards and procedures similar to
those recommended by NLADA.
NLADA, and most of the other
comments, opposed the rulemaking and
recommended significant enhancements
to standards and procedures if it
proceeded.
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a. New Compliance Tools
The NPRM proposed a new set of
procedures for limited reductions of
funding based on the existing
procedures for suspensions, which
provide for one level of review through
an informal meeting. In response to
comments that this did not provide
sufficient process, LSC revised the
proposal in the FNPRM in two ways.
First, the same process is used at the
initial stage for terminations and for
limited reductions. Thereafter, limited
reductions may be appealed to the LSC
President using procedures based on the
disallowed cost appeal procedures in 45
CFR part 1630. Some comments also
raised similar concerns for suspensions,
especially if they could last for up to
ninety days. In response, the final rule
also adds the same appeal process for
suspensions once they extend beyond
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thirty days (thirty-day suspensions have
always been permitted without further
appeal). The NPRM proposed allowing
LSC to impose SGCs immediately
during a grant term rather than waiting
for a new grant award or renewal. The
OIG’s comment expressed concern that
the SGC language might appear to
constrain some of LSC’s authority, and
other comments indicated concerns that
the SGC language was too vague. In the
FNPRM, LSC revised the language to
clarify that it applies to the kinds of
situations in which LSC has
investigated a matter and developed
RCAs. LSC may immediately impose
SGCs that incorporate those RCAs into
the grant documents.
b. Standards and Procedures
The comments that recommended
enhancements in the standards and
procedures were not limited to the
enforcement actions in the proposed
rulemaking. Rather, they recommended
revisions that would significantly
change the rules as they have existed
since 1998. In many cases, they would
return to the pre-1998 standards, such
as requiring non-LSC, independent
hearing examiners, or exceed those
standards, such as an increased intent
requirement and a safe harbor for
reliance on reasonable alternate
interpretations of the LSC rules. LSC
commenced this rulemaking to enhance
enforcement options within the
standards and procedures adopted in
the 1998 rulemaking to respond to
Congress’s changes in the enforcement
requirements of the LSC Act. The final
rule does not adopt the many
suggestions in the comments to change
that carefully constructed enforcement
framework. The OIG also suggested
adding a requirement for publication of
all final decisions to address due
process concerns in the comments
through transparency for those final
actions. Rather than incorporating that
suggestion as a regulatory requirement,
LSC will address it in the policies and
procedures for enforcement actions.
c. Informal Conference and Prompt
Corrective Actions
The final rule makes a number of
revisions to increase the focus on
attempts to resolve the violation at or
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before the informal conference. The
final rule adds to the notice of the
preliminary determination a
requirement for summarizing prior
attempts at resolution. The previous
rule required that the same LSC
employee who issued the notice would
hold the informal conference. The final
rule permits LSC to designate any senior
employee to hold the informal
conference, which provides LSC with
more flexibility to set a dispute
resolution tone. The final rule also adds
‘‘implementation of corrective actions’’
as an example of the types of settlement
or compromise envisioned for the
informal conference.
The final rule includes a new
alternative strategy for informal
resolution prior to the implementation
of an enforcement action. LSC has the
option of notifying the recipient that it
can avoid the enforcement action
through corrective action, if appropriate.
The recipient may elect to accept that
corrective action through timelines and
implementation plans acceptable to LSC
and documented in a compliance
agreement; LSC could hold the
enforcement action in abeyance so long
as the recipient honors the agreement. If
the recipient completes the corrective
actions to LSC’s satisfaction (in both
substance and timeliness), then LSC
would withdraw the preliminary
determination without implementing
the enforcement action. If LSC at any
time decides that the recipient has
failed to adhere to the agreed-upon
corrective action plan, including failing
to act in accordance with the
established timeline, then LSC could
continue with the enforcement process.
d. Suspension Appeals
In response to the comments received,
LSC has included in the final rule an
appeals process for suspensions that last
over thirty days. The appeals process is
based on the appeals process for limited
reductions of funding. As with
suspension decisions, the timeframe is
short to enable LSC to resolve the
appeal quickly. Unlike other
enforcement actions, suspensions are
enforced during the appeal period.
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e. Scope of Enforcement Action
The final rule discusses the scope of
partial terminations and limited
reductions of funding by using the
language of the previous rule regarding
the level of financial assistance
provided by the Corporation to a
recipient pursuant to a grant or contract.
45 CFR 1600.1 defines ‘‘financial
assistance’’ as the ‘‘annualized funding
from the Corporation granted under
section 1006(a)(1)(A) for the direct
delivery of legal assistance to eligible
clients.’’ These grants are for the
provision of general-purpose legal
assistance in a geographic area or to a
specific population. Currently, LSC
provides these grants for three types of
service areas: basic field, Native
American, and migrant. When LSC
awards multiple service areas to a
recipient (e.g., both a basic field service
area and migrant service area), it
typically does so through a single grant
or contract. Part 1606 enforcement
actions affect the level of financial
assistance, which will include all of the
1006(a)(1)(A) service areas.
Other LSC grants, under sections
1006(a)(1)(B) or (a)(3) of the LSC Act,
are not subject to these procedures.
Rather, LSC may provide for
terminations or other enforcement
actions for those grants pursuant to
policies and procedures specific to
those grant programs. For example,
funding for Technology Initiative Grants
is project-based and specifically tied to
acquisitions, tasks, and timelines.
The final rule implements the NPRM
provision that limited reductions apply
only to one grant year. The final rule
continues the provisions of the previous
rule that a partial termination
presumptively applies to only one grant
year, but that LSC can specify a longer
period up to the entire funding term.
VI. Section-by-Section Analysis
Part 1606—Termination, Limited
Reduction of Funding, and Debarment
Procedures; Recompetition
emcdonald on DSK67QTVN1PROD with RULES
1606.1
Purpose
Section 1601.1(b) contains two
additions. First, the phrase
‘‘proportional to the proposed action’’ is
added to modify ‘‘timely and fair due
process procedures.’’ This addition
corresponds to the addition of
procedures for limited reductions of
funding of less than five percent, which
do not include a hearing before a
hearing officer. The rule provides two
sets of overlapping procedures, one for
debarments and terminations of funding
(five percent and greater) and the other
for limited reductions of funding (less
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than five percent). Second, the phrase
‘‘or to impose a limited reduction of
funding’’ is added to the list of remedies
available under the rule.
A new § 1601.1(d) reflects a
reorganization of the rule in the interest
of clarity. It relocates the previous
§ 1606.2(c), without change, which
described provisions of other LSC
regulations that involve funding
changes but are not subject to the
termination procedures. This relocation
emphasizes and clarifies that the
indicated situations are not subject to
the actions under part 1606. A
corresponding change to matching
language in 45 CFR part 1614 is
included in this final rule.
1606.2 Definitions
This section has substantive and
structural changes. All of the definitions
now appear alphabetically.
The term ‘‘Corporation’’ is defined in
45 CFR 1600.1 to mean the Legal
Services Corporation. The definition has
been expanded here to provide that
decisions of the Corporation, such as
initiating a part 1606 proceeding, must
be made by an individual acting at the
level of, or senior to, an LSC office
director. A deputy director could make
these decisions if he or she is acting
with the authority of the director, such
as when the director’s position is
vacant, or the director is unavailable
due to an illness and the deputy director
has taken over the relevant
responsibilities. The FNPRM had
proposed that decisions could be made
by deputy directors. The final rule
narrows the circumstances in which
deputy directors can act, in part
responding to concerns raised by a
commenter.
‘‘Days’’ is added as a defined term to
mean calendar days as computed under
the Federal Rules of Civil Procedure,
unless business days are specified, in
which case Saturdays, Sundays, and
legal holidays recognized under those
rules are excluded. The rule had not
previously defined days, which could
have caused confusion regarding
deadlines. In particular, some deadlines
were five days, which in some cases
could be as little as two business days.
All time periods below fifteen days are
changed in the rule to business days.
‘‘Funding term’’ is added as a defined
term to mean the time period for an
award of financial assistance for a
service area as that term is used in
grant-making. The funding term is the
longest period between competitions for
a service area. Under 45 CFR part 1634,
LSC can award a section 1006(a)(1)(A)
grant or contract for up to five years,
which is the funding term. LSC provides
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section 1006(a)(1)(A) awards for a
maximum funding term, which is
normally no greater than three years.
Within the funding term, LSC provides
funding for grant award periods of no
more than one year, which can be
renewed for additional grant award
periods.
‘‘Limited reduction of funding’’ is
added as a defined term for reductions
of funding of less than five percent,
which the previous rule excluded from
the definition of terminations. Unlike
partial terminations, limited reductions
apply only to the current grant year.
‘‘LSC requirements’’ is added as a
defined term in 45 CFR part 1618 to
capture the full list of statutory,
regulatory, and other requirements that
apply to LSC grants or contracts for
financial assistance under the LSC Act.
Parts 1606 and 1623 of the previous
rules repeatedly referenced the list of
sources specified in this definition. For
both clarity and consistency, the term is
now defined using the language
appearing in the previous rules and is
cross-referenced in both parts 1606 and
1623.
‘‘Receipt’’ of materials is added as a
defined term to provide clarity in
calculating deadlines under the rule.
Formal service of process is not
required. Service must be sufficient to
ensure that both LSC and the recipient
are fully aware of the proceedings and
the actions taken by both entities at each
stage.
The definition of ‘‘recipient’’ is
functionally unchanged from the
previously published version of this
rule, which reiterated the definition at
45 CFR 1600.1. The final rule replaces
that reiteration with a simple crossreference.
The term ‘‘substantial
noncompliance’’ is clarified in this rule.
The term is defined to mean either a
substantial violation of the LSC
requirements or a substantial failure to
provide high quality, economical, and
effective legal assistance.
A definition of ‘‘substantial violation’’
has been added using the functional
definition from § 1606.3(a) without any
material modifications that would
change its meaning or application from
the previous rule.
The definition of ‘‘termination’’ has
been updated to reflect new definitions
in the rule and relocation of the crossreferences to other regulations; no
material modifications that would
change its meaning or application from
the previous rule have been made.
A definition of ‘‘violation’’ has been
added to make clear that the scope of
violations at issue under this rule is
limited to the LSC requirements.
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1606.3 Grounds for a Termination or a
Limited Reduction of Funding
The title of this section is updated to
add limited reductions of funding.
Section 1606.3(a) has minor
nomenclature changes to conform to the
new definitions and terms, including
the new definition of ‘‘substantial
violation,’’ but without any material
modifications that would change its
meaning or application from the
previous rule. The definition of a
‘‘substantial failure’’ remains in
§ 1606.3(a)(2) with two adjustments: 1)
the LSC appropriations have been added
as a measure of performance, and 2) the
term ‘‘guidance’’ is changed to
‘‘guidelines or instructions’’ consistent
with the use of those terms in lieu of
‘‘guidance’’ throughout the previous and
revised rules.
Section 1606.3(b) is added to specify
that LSC may impose a limited
reduction of funding for substantial
violations, but not substantial failures,
when LSC determines that a
termination, in whole or in part, is not
warranted. As with terminations, LSC
can base a limited reduction of funding
only on substantial violations occurring
within the past five years.
Section 1606.3(c), the former
paragraph (b), is changed to add limited
reductions of funding. The requirements
for a ‘‘substantial violation’’ are moved,
without material modifications that
would change their meaning or
application from the previous rule, to
the new definition of ‘‘substantial
violation.’’ As proposed in the NPRM
those same criteria apply to the
determination of the magnitude of a
proposed termination or limited
reduction of funding. LSC stated in the
NPRM that consideration of these
factors was already implicit in
considerations of how much funding
should be affected by a proposed
enforcement mechanism. SCLAID’s
comments recommended that LSC add
an entire new section and criteria for
determinations of magnitude, including
the impact on client services and other
funding for the recipient. The final rule
does not do so because the magnitude
of an enforcement action should relate
directly to the magnitude of the
violation and deterrence of future
violations. LSC has general discretion to
consider the totality of the situation
when deciding how to proceed with an
enforcement action to foster ongoing
compliance while minimizing
disruption of client services.
1606.4
Grounds for Debarment
This section does not include any
material modifications that would
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change its meaning or application from
the previous rule. All changes are
technical adjustments.
The language of section 1606.4(b)(4) is
modified to clarify that it applies to any
arrangements that are covered by
debarments, not only subgrants or
subcontracts, and that reference to a
debarred ‘‘IPA,’’ which is undefined in
the previous rule, means any debarred
independent public accountant or other
auditor.
Last, the reference to the ‘‘effective
date of this rule’’ in § 1606.4(b)(5) is
changed to December 23, 1998, the
effective date of the previous rule.
1606.5 Procedures
The heading and § 1606.5(a) are
updated to remove the limited reference
to terminations and debarments in order
to include limited reductions of
funding. These procedures are available
for, and apply to, all part 1606
enforcement mechanisms.
A new § 1606.5(b) is added to
correspond to the new level of review in
§ 1606.10 for limited reductions of
funding. The LSC President, or another
senior LSC employee, will hear any
final appeal of a limited reduction draft
final decision. Those procedures are
modeled on the 45 CFR part 1630 final
appeal procedures for disallowed costs.
The person hearing the appeal must
have not been involved in the prior
proceedings. The final rule requires that
LSC designate the person to hear the
final appeal before LSC considers
whether or not to proceed with a
preliminary determination for a limited
reduction of funding.
1606.6 Preliminary Determination and
Final Decision
The title of this section is updated to
include reference to a final decision,
which may be issued under this section
if the recipient does not request any
review of the preliminary
determination. The language of this
section is updated for clarity and to
include limited reductions of funding,
without material modifications that
would change its meaning or
application from the previous rule.
Section 1606.6(a)(6) is added to
explicitly provide an option for LSC to
specify corrective action that could
resolve the situation without a
termination or limited reduction of
funding. This language is based on the
previous suspension rule at 45 CFR part
1623; it does not appear in the previous
part 1606 rule. LSC is not required to
provide the recipient with a corrective
action option, and the recipient does not
have a right to avoid a termination or
limited reduction of funding through
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corrective actions unless explicitly
authorized by LSC. This language
provides a clear option for resolving
these situations through corrective
action if LSC determines that doing so
would be sufficient pursuant to the new
§ 1606.7(a).
Section 1606.6(a)(7) is added to
require that the preliminary
determination summarize any prior
attempts at resolution of the situation.
The addition of this paragraph does not
require LSC to seek resolution prior to
initiating a part 1606 action. Rather,
when LSC and the recipient have
attempted to resolve the situation, the
rule will now require that LSC
summarize those attempts and make
them part of the administrative record.
References to a ‘‘designated
employee’’ in this section are replaced
with references to the Corporation as the
actor, consistent with the definition of
Corporation.
1606.7 Corrective Action, Informal
Conference, Review of Written Materials
in Opposition to the Preliminary
Determination, and Final Decision
The title and content of this section
have been updated to expand and
clarify the options available after a
recipient receives a preliminary
determination. As stated in the previous
rule, the informal conference is
designed to create the opportunity for
narrowing the issues and exploring the
possibility of settlement or compromise.
The informal conference is retained
without material modifications that
would change its meaning or
application from the previous rule. The
rule is changed to permit any senior
LSC employee to hold the informal
conference rather than the previous
requirement that it be held by the same
employee who issued the preliminary
determination. In some cases, the same
employee should handle both matters to
bring consistent perspective and
experience to the matter. In other
situations, it may foster an atmosphere
of settlement or compromise to have
different LSC employees handle each
stage of the process.
This section now explicitly provides
an option for the recipient to submit
written materials in opposition to the
preliminary determination without a
request for an informal conference. This
option to present arguments in writing
only is based on the similar option in
the suspension rule at 45 CFR part 1623;
a conference is not required if the
recipient requests only a paper review.
1606.7(a) Corrective Action
Paragraph (a) provides a new option
for resolving a preliminary
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determination through adoption of any
corrective action proposed by LSC, in its
sole discretion, as a clear path to
settlement of the issues. A corrective
action proposed by the recipient that
significantly differs from the LSC
proposal may be considered at an
informal conference but not as part of
the § 1606.7(a) procedures. The
recipient must agree to the terms and
timing of implementation of the
corrective actions to the satisfaction of
LSC, as memorialized in a written
compliance agreement. If, at any time,
LSC determines that the recipient is not
sufficiently implementing the corrective
action, LSC can proceed to issue a draft
final decision, subject to the further
rights of review under later sections of
this part. If a recipient chooses this new
process, then the recipient cannot later
request an informal conference under
this section. This option responds to a
comment that the proposed rule did not
clearly address what would happen if
the recipient adopted the suggested
corrective action. It also implements
suggestions from the LSC Board that the
rule should provide better means of
alternative resolution when appropriate.
1606.7(b)–(g)
The provisions regarding the informal
conference have been revised to clarify
the procedures, permit any senior LSC
employee to hold the conference, and to
require that a draft decision to proceed
with the enforcement option contain a
summary of the issues raised in the
conference or in submitted written
materials.
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1606.8 Hearing for a Termination or
Debarment
The title of this section is updated to
specify that hearings are available only
for terminations and debarments, but
not for limited reductions of funding.
There are no material modifications that
would change the meaning or
application of this section from the
previous rule. The deadlines have been
designated as business or calendar days
consistent with the new definition of
days.
1606.9 Recommended Decision for
Termination or Debarment
The title and language of this section
are updated to specify that the
recommended decision is applicable
only to hearings for terminations or
debarments. The only substantive
change is a new § 1606.9(a)(2) that
permits the hearing officer to
recommend reducing a termination to
below five percent, and thus convert a
termination into a limited reduction of
funding. The previous rule permitted
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the hearing officer to recommend
terminations only, which would
exclude the option of funding
reductions of below five percent.
Reference to limited reductions of
funding is added to § 1606.9(a)(3) for
consistency without any material
modifications that would change its
meaning or application from the
previous rule referencing terminations
or debarments.
1606.10 Final Decision for a
Termination, Debarment, or Limited
Reduction of Funding
This section is updated to add direct
appeals to the LSC President, or
designee, of draft final decisions for
limited reductions of funding. This type
of appeal is similar to the final appeal
of a disallowed cost decision in 45 CFR
part 1630. The final review is identical
as that provided for in other part 1606
actions, with one exception. For limited
reduction of funding appeals to the
President, in which there in no right to
review by a hearing officer, new
paragraph (d) provides that the
President must not have had prior
involvement with the limited reduction
of funding proceedings under this part.
That provision is also based on the part
1630 process, which requires that the
President not review actions in which
he or she had prior involvement. As
discussed in the FNPRM, the President
is not disqualified merely because he or
she is briefed about the situation,
contacted by the recipient or other
parties, or otherwise is aware but not
actively involved in the part 1606
proceedings.
A number of comments recommended
that the hearing officers or the final
decision maker for appeals be non-LSC
employees. As discussed earlier, in 1996
Congress lifted the LSC Act requirement
for enforcement actions to be reviewed
by an independent hearing examiner.
The final rule does not change the
impartiality requirement for hearing
officers for terminations and debarment
that they have not had prior
involvement in the part 1606
enforcement action being reviewed. It
also does not change the ability of LSC
to suspend funding for up to thirty days
without impartial review. For the new
limited reductions of funding and
suspensions of over thirty days, the final
rule provides the same requirement of
impartiality for the LSC President or
other senior LSC employee providing
final review of the matter. These
impartiality requirements are sufficient
for the process rights of recipients
within the statutory framework and
LSC’s understanding of Congress’s
expectations for LSC’s enforcement
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procedures. Other changes to this
section clarify the process and deadlines
without substantive changes. The
FNPRM suggested adding the
§ 1606.6(a) preliminary determination
requirements to any final decision
modifying or extending the draft final
decision. That suggestion is not retained
in this final rule because it became
apparent during the comment period
that those requirements are tailored to
the preliminary determination, e.g.,
including the notice of rights to appeal
and continued funding, and are not
appropriate for final decisions.
1606.11 Qualifications on Hearing
Procedures
This section is updated for clarity
without material modifications that
would change its meaning or
application from the previous rule.
Section 1606.11(c)(3) is updated to
require that LSC provide the final
decision to the recipient within five
days of the expiration of the appeal
period. The previous rule stated that the
recommended decision would become
final if not appealed, but did not state
when it must be provided as a final
decision.
1606.12 Time and Waiver
This section is updated for clarity
without material modifications that
would change its meaning or
application from the previous rule.
1606.13 Interim and Other Funding,
Reprogramming, Implementation
This section is updated to include
reference to limited reductions of
funding. A new § 1606.13(d) is added to
state explicitly that the manner of
implementation is at the sole discretion
of LSC. For example, depending on the
situation, including the timing of the
action in the grant year and funding
term, LSC may choose to pro-rate a
partial termination or limited reduction
through the remaining grant payments
or to withhold the reduced funds in one
lump sum. The previous rule did not
address that issue and this new section
is consistent with the options available
to LSC within its discretion under that
rule.
Section 1606.13(e), the former
paragraph (d), is modified to remove the
reference to using the terminated or
reduced funds for the same service area,
as proposed in the NPRM. The previous
rule provided that LSC may keep the
funds in the same service area or
otherwise reallocate them for any basic
field purposes. Some of the comments
recommended keeping the existing rule.
As discussed in the NPRM, this
language is eliminated because it could
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lead to an erroneous expectation that
LSC would give preference to keeping
the funds from a termination in part or
from a limited reduction of funding in
the same service area in which the same
recipient continued to provide services
through the end of the funding term.
LSC had the authority under the
previous rule and has the authority
under this final rule to exercise its
discretion to determine the best use of
these funds in light of considerations
such as the needs of the service area, the
behavior of the recipient, and other uses
of recovered funds for emergencies or
special grants in other service areas. The
change in language does not change the
substance of the rule.
Part 1614—Private Attorney
Involvement
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1614.7(b) Failure To Comply
One technical update to 45 CFR part
1614 relates to this rulemaking.
Although not included in the NPRM or
FNPRM, this update includes no
material modifications that would
change the meaning or application of
this section from the previous rule and
is necessary to harmonize that rule with
this rulemaking and other prior changes
to the LSC regulations. Part 1614
requires that an LSC recipient expend
an amount equivalent to at least 12.5
percent of a basic field award on private
attorney involvement (PAI) activities.
The failure to do so may result in LSC
withholding or recovering some funds
from the recipient, depending on the
circumstances. Section 1614.7 of the
previous rule provided the requirements
for those situations and stated that the
withholding or recovery of funds for a
failure to meet the part 1614
requirements does not constitute either
a termination or a denial of refunding.
The reference to terminations is
changed to a reference to any action
under 45 CFR part 1606. The reference
to denials of refunding is eliminated, as
LSC withdrew the denial of refunding
regulation in 1998.
Part 1618—Enforcement Procedures
This final rule incorporates some
substantive changes and some extensive
structural, but non-substantive, changes
to 45 CFR part 1618 as proposed in the
FNPRM. The significant substantive
change to the rule involves adding the
imposition of special grant conditions
during a grant year to § 1618.5(c). The
final rule also changes references to
violations of the LSC Act throughout the
rule to violations of the LSC
requirements as the term ‘‘LSC
requirements’’ is defined for use in parts
1606 and 1623. The previous rule
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defined the ‘‘Act’’ as the LSC Act or the
LSC rules and regulations, but did not
include other applicable laws, such as
the LSC appropriations riders, or LSC
guidelines and instructions, which have
been included in both parts 1606 and
1623 as they have been updated over the
past thirty years. Part 1618 is both
outdated and confusing in this regard.
The new definition of LSC requirements
is based on the language used in parts
1606 and 1623, and this definition
applies in all three sections for
consistency and clarity.
Some of the comments suggested
changing the threshold standard under
§ 1618.5(b) for proceeding to
enforcement actions under parts 1606
and 1623. The rule provides that LSC
can proceed to consider enforcement
actions:
[w]henever there is substantial reason to
believe that a recipient has persistently or
intentionally violated the Act, or, after
notice, has failed to take appropriate
remedial or disciplinary action to insure
compliance by its employees with the Act,
and attempts at informal resolution have
been unsuccessful. * * *
45 CFR 1618.5(b). Those comments
suggested adding a ‘‘knowing and
willful’’ standard to this section. The
OIG’s comment notes that the 1998
rulemaking considered using ‘‘intent’’ as
a factor in the standard for terminations
and choose instead to use the defined
term ‘‘knowing and willful.’’ The final
rule does not change this language and
retains the longstanding ‘‘intent’’ prong
of the part 1618 analysis consistent with
original structure of the rule under the
LSC Act and the 1998 changes to parts
1606 and 1623. ‘‘Knowing and willful’’
was adopted in 1998 as a defined term
in those regulations as one of many
factors for consideration, while
‘‘intentionally violated’’ was retained in
part 1618.
1618.1
Purpose
The purpose section is updated to
incorporate the broader scope of the
LSC requirements.
1618.2
Definitions
The definitions section is updated to
incorporate the broader scope of the
LSC requirements. A definition of
‘‘violation’’ has been added to make
clear that the scope of violations at issue
under this rule is limited to the LSC
requirements.
1618.3
Complaints
The language of this section is
updated for clarity and to reference the
new definitions.
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1618.4
Duties of Recipients
The language of this section is
updated for clarity and to reference the
new definitions. A new § 1618.4(c) is
added to emphasize that this section
does not create rights for recipient
employees. Rather, this section is
designed to ensure that recipients adopt
and follow procedures designed to
ensure that employees implement and
follow the LSC requirements, and that
the recipient applies those requirements
consistent with LSC’s interpretation of
them.
1618.5
Duties of the Corporation
The language of this section is
updated for clarity and to reference the
new definitions and include reference to
limited reductions of funding. Section
1618.5(a) has a new final sentence
clarifying that LSC’s investigation of a
possible violation may be limited to
determining if the recipient is taking
sufficient actions.
The existing language in § 1618.5(b)
requires ‘‘attempts at informal
resolution’’ prior to proceeding to
consider enforcement actions under
some circumstances. There are no
changes to this language, but LSC notes
that the informal resolution referenced
here includes consideration of remedial
actions, preventative actions, and
sanctions, as discussed in the FNPRM.
A new § 1618.5(c) is added regarding
immediate special grant conditions.
Under previous LSC practice, special
grant conditions were imposed only
when a new grant was awarded or an
existing grant was renewed. Under that
practice, a recipient had an opportunity
to consider the special grant conditions
prior to agreeing to them. The NPRM
proposed language to permit LSC to
impose immediate grant conditions any
time that the § 1618.5(b) thresholds are
met. The FNPRM revised that language
to permit immediate special grant
conditions only after LSC determines
that three factors are met: (1) A violation
has occurred, (2) corrective actions are
required, and (3) special grant
conditions are needed prior to the next
renewal or competition. The immediate
special grant conditions enable LSC to
convert required corrective actions
contained in reports, such as OCE
reports, into specific grant requirements.
Part 1623—Suspension Procedures
The NPRM proposed to change only
the language regarding the thirty-day
limit on non-audit based suspensions to
increase it to a ninety-day limit. The
FNPRM, and this final rule, make a
number of non-substantive, technical
changes to harmonize the suspension
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rule with 45 CFR part 1606. In the
previous rule, some, but not all, of the
relevant definitions are repeated in both
rules. The final rule provides a cross
reference to the definitions in 45 CFR
part 1606 for consistency. An additional
change is made in the final rule to
permit commencement of other
enforcement actions during a
suspension. This change is consistent
with the overall rulemaking and the
revised enforcement mechanisms
structure.
Comments on the NPRM and the
FNPRM recommended an appeal
process for suspensions, especially
those that go beyond certain dollar
thresholds. The OIG agreed that some
appeal might be appropriate, but
expressed concern about adopting
appeal procedures that are too
cumbersome and emphasized that
appeals should occur during the
pendency of the suspension, which is
meant to protect funds from future
misuse. The final rule includes an
appeal procedure that mirrors the
procedure for limited reductions of
funding, which is based on the 45 CFR
part 1630 disallowed cost appeal
procedure.
The OIG also recommended
eliminating any time limit for
suspensions, and permitting
suspensions to continue until
compliance, as is the case for auditbased suspensions. In the 1998
rulemaking, LSC decided to retain a
thirty-day limit on suspensions because
LSC determined that a termination
process was more appropriate than a
prolonged suspension. 63 FR 64636 at
64638 (1998). In this rulemaking LSC
has expanded suspensions to ninety
days to make them more effective in
short timeframes, but LSC continues to
believe that terminations or reductions
of funding with their corresponding
procedures are more appropriate for
intractable concerns that cannot be
resolved within a limited suspension
period.
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1623.2
Definitions
The definitions of ‘‘knowing and
willful’’ and ‘‘recipient’’ are deleted and
replaced with a cross-reference to the
definitions in 45 CFR part 1606, which
include both of those terms. The
definitions are identical in the previous
rules and this change makes no
substantive change to either. The use of
the same definitions for other terms in
both rules provides consistency
throughout the regulations, e.g., ‘‘LSC
requirements’’ and ‘‘substantial
violation.’’
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1623.3
Grounds for Suspension
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The previous rule provided a
definition of ‘‘substantial violation’’
identical to the use of that term in 45
CFR part 1606. The term is deleted in
favor of the new cross-reference to
definitions in part 1606. There are no
substantive changes to the definition.
Similarly the term ‘‘LSC
requirements’’ replaces the list of LSC
requirements that appeared in this rule
and in other places in the regulations.
It is defined in 45 CFR part 1618 and
cross-referenced in 45 CFR part 1606.
List of Subjects
1623.4
45 CFR Part 1623
Administrative practice and
procedure, Grant programs-law, Legal
services.
For the reasons set forth above, and
under the authority of 42 U.S.C.
2996g(3), LSC proposes to amend 45
CFR chapter XVI as follows:
■ 1. 1. Revise part 1606 to read as
follows:
Suspension Procedures
In response to comments regarding
the need for appeals of suspensions,
LSC is adding an appeals process for
suspensions that last longer than thirty
days. The process is specified in
§ 1623.4(a) and (h). This addition
preserves the previous rule’s
requirements for commencing
suspensions based on notice and an
informal meeting and continuing those
suspensions for up to thirty days
without further appeal. If the
suspension lasts longer than thirty days,
then the recipient may appeal to the
LSC President. The appeal procedures
are based on the new part 1606 limited
reduction of funding appeal procedures,
which are in turn based on the part 1630
disallowed cost appeal procedures. The
discussion of those procedures in part
1606 applies equally to this section.
Unlike part 1606 actions, the
suspension will continue pending the
appeal. The final rule requires that LSC
issue a suspension decision within
fifteen calendar days of receipt of the
appeal in order to resolve the appeal
promptly.
New § 1623.4(d) and (e) are copied
from the revised informal conference
procedures in 45 CFR part 1606. That
language emphasizes seeking settlement
or compromise and provides that the
informal meeting can be conducted by
the same employee who issued the
proposed determination, or another
senior LSC employee.
Section 1623.4(k), regarding auditbased suspensions, is updated to state
that the new appeal process does not
apply to audit-based suspensions,
preserving the previous rule’s
requirements.
1623.6
Interim Funding
A technical change is made to
§ 1623.6(b) to state that suspended
funds will be ‘‘released’’ at the end of
the suspension period rather than
‘‘returned.’’
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45 CFR Part 1606
Administrative practice and
procedure, Grant programs-law, Legal
services.
45 CFR Part 1614
Grant programs-law, Legal services,
Reporting and recordkeeping
requirements.
45 CFR Part 1618
Grant programs-law, Legal services.
PART 1606—TERMINATION, LIMITED
REDUCTION OF FUNDING, AND
DEBARMENT PROCEDURES;
RECOMPETITION
Sec.
1606.1 Purpose.
1606.2 Definitions.
1606.3 Grounds for a termination or a
limited reduction of funding.
1606.4 Grounds for debarment.
1606.5 Procedures.
1606.6 Preliminary determination and final
decision.
1606.7 Corrective action, informal
conference, review of written materials,
and final decision.
1606.8 Hearing for a termination or
debarment.
1606.9 Recommended decision for a
termination or debarment.
1606.10 Final decision for a termination,
debarment, or limited reduction of
funding.
1606.11 Qualifications on hearing
procedures.
1606.12 Time and waiver.
1606.13 Interim and termination funding;
reprogramming, implementation.
1606.14 Recompetition.
Authority: 42 U.S.C. 2996e(b)(1),
2996f(a)(3), and 2996f(d); Pub. L. 105–119,
Title V, Secs. 501(b) and (c), 502, 503, and
504, 111 Stat. 2440, 2510–12; Pub. L. 104–
134, Title V, Sec. 503(f), 110 Stat. 1321,
1321–53.
§ 1606.1
Purpose.
The purpose of this rule is to:
(a) Ensure that the Corporation is able
to take timely action to deal with
incidents of substantial noncompliance
by recipients with a provision of the
LSC Act, the Corporation’s
appropriations act or other law
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applicable to LSC funds, a Corporation
rule, regulation, guideline or
instruction, or the terms and conditions
of the recipient’s grant or contract with
the Corporation;
(b) Provide timely and fair due
process procedures, proportional to the
proposed action, when the Corporation
has made a preliminary decision to
terminate a recipient’s LSC grant or
contract, to debar a recipient from
receiving future LSC awards of financial
assistance, or to impose a limited
reduction in funding; and
(c) Ensure that scarce funds are
provided to recipients who can provide
the most effective and economical legal
assistance to eligible clients.
(d) None of the following actions are
subject to the procedures or
requirements of this part:
(1) A reduction of funding required by
law, including but not limited to a
reduction in, or rescission of, the
Corporation’s appropriation that is
apportioned among all recipients of the
same class in proportion to their current
level of funding;
(2) A reduction or deduction of LSC
support for a recipient under the
Corporation’s fund balance regulation at
45 CFR part 1628;
(3) A recovery of disallowed costs
under the Corporation’s regulation on
costs standards and procedures at 45
CFR part 1630;
(4) A withholding of funds pursuant
to the Corporation’s Private Attorney
Involvement rule at 45 CFR part 1614.
emcdonald on DSK67QTVN1PROD with RULES
§ 1606.2
Definitions.
For the purposes of this part:
Corporation, when used to refer to
decisions by the Legal Services
Corporation, means that those decisions
are made by an individual acting with
a seniority level at, or equivalent to, the
level of an office director or higher.
Days shall mean the number of
calendar days as determined by the
rules for computing time in the Federal
Rules of Civil Procedure, Rule 6, except
that computation of business days shall
exclude Saturdays, Sundays, and legal
holidays (as defined in those rules).
Debarment means an action taken by
the Corporation to exclude a recipient
from receiving an additional award of
financial assistance from the
Corporation or from receiving additional
LSC funds from another recipient of the
Corporation pursuant to any other
means, including a subgrant,
subcontract or similar agreement, for the
period of time stated in the final
debarment decision.
Funding term means the maximum
time period for an award or awards of
financial assistance under section
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1006(a)(1)(A) of the LSC Act provided
by the Corporation to a recipient
selected pursuant the competition
requirements at 45 CFR part 1634. LSC
may award grants or contracts for a
period of the entire funding term or for
shorter periods that may be renewed or
extended up to the funding term.
Knowing and willful means that the
recipient had actual knowledge that its
action or lack thereof constituted a
violation and despite such knowledge,
undertook or failed to undertake the
action, as the case may be.
Limited reduction of funding means a
reduction of funding of less than five
percent of a recipient’s current level of
financial assistance imposed by the
Corporation in accordance with the
procedures and requirements of this
part. A limited reduction of funding will
affect only the recipient’s current year’s
funding.
LSC requirements means the same as
that term is defined in 45 CFR Part
1618.
Receipt of materials shall mean that
the materials were sent to the normal
address for physical mail, email, or fax
transmission, and there is reliable
secondary confirmation of delivery. For
physical delivery, confirmation may be
provided through tracking information
from the delivery service. For other
forms of delivery, confirmation may be
provided through a document such as a
confirmation email or a fax sent from an
authorized person at the recipient.
Receipt of materials by the LSC
recipient or the Corporation is sufficient
for the running of applicable time
periods. Proof of receipt by the Chair of
the governing body is not necessary
unless delivery to the recipient itself
cannot be reasonably accomplished.
Recipient means the same as the term
is defined in 45 CFR Part 1600.
Substantial noncompliance means
either a substantial violation, as defined
in this part, or a substantial failure, as
indicated at § 1606.3(a) of this part.
Substantial violation means a
violation that merits action under this
part based on consideration of the
following criteria by the Corporation:
(1) The number of restrictions or
requirements violated;
(2) Whether the violation represents
an instance of noncompliance with a
substantive statutory or regulatory
restriction or requirement, rather than
an instance of noncompliance with a
non-substantive technical or procedural
requirement;
(3) The extent to which the violation
is part of a pattern of noncompliance
with LSC requirements or restrictions;
(4) The extent to which the recipient
failed to take action to cure the violation
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when it became aware of the violation;
and
(5) Whether the violation was
knowing and willful.
Termination means that a recipient’s
level of financial assistance under its
grant or contract with the Corporation
will be reduced in whole or in part in
the amount of five percent or greater
prior to the expiration of the funding
term of a recipient’s current grant or
contract. A partial termination will
affect only the level of funding for the
current grant year, unless the
Corporation provides otherwise in the
final decision.
Violation means a violation by the
recipient of the LSC requirements.
§ 1606.3 Grounds for a termination or a
limited reduction of funding.
(a) A grant or contract may be
terminated in whole or in part when:
(1) There has been a substantial
violation by the recipient, and the
violation occurred less than 5 years
prior to the date the recipient receives
a preliminary determination pursuant to
§ 1606.6(a) of this part; or
(2) There has been a substantial
failure by the recipient to provide high
quality, economical, and effective legal
assistance, as measured by generally
accepted professional standards, the
provisions of the LSC Act or LSC
appropriations, or a rule, regulation,
including 45 CFR 1634.9(a)(2), or
guidelines or instructions issued by the
Corporation.
(b) The Corporation may impose a
limited reduction of funding when the
Corporation determines that there has
been a substantial violation by the
recipient but that termination of the
recipient’s grant, in whole or in part, is
not warranted, and the violation
occurred less than 5 years prior to the
date the recipient receives a preliminary
determination pursuant to § 1606.6(a) of
this part.
(c) A determination of whether there
has been a substantial violation for the
purposes of this part, and the magnitude
of any termination, in whole or in part,
or any limited reduction in funding,
shall be based on consideration of the
criteria set forth in the definition of
‘‘substantial violation’’ in § 1606.2 of
this part.
§ 1606.4
Grounds for debarment.
(a) The Corporation may debar a
recipient, on a showing of good cause,
from receiving an additional award of
financial assistance from the
Corporation.
(b) As used in paragraph (a) of this
section, ‘‘good cause’’ means:
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(1) A termination of financial
assistance to the recipient pursuant to
part 1640 of this chapter;
(2) A termination of financial
assistance in whole of the most recent
grant or contract of financial assistance;
(3) The substantial violation by the
recipient of the restrictions delineated
in § 1610.2(a) and (b) of this chapter,
provided that the violation occurred
within 5 years prior to the receipt of the
debarment notice by the recipient;
(4) Knowing entry by the recipient
into:
(i) Any agreement or arrangement,
including, but not limited to, a subgrant,
subcontract, or other similar agreement,
with an entity debarred by the
Corporation during the period of
debarment if so precluded by the terms
of the debarment; or
(ii) An agreement for professional
services with an independent public
accountant or other auditor debarred by
the Corporation during the period of
debarment if so precluded by the terms
of the debarment; or
(5) The filing of a lawsuit by a
recipient, provided that the lawsuit:
(i) Was filed on behalf of the recipient
as plaintiff, rather than on behalf of a
client of the recipient;
(ii) Named the Corporation, or any
agency or employee of a Federal, State,
or local government as a defendant;
(iii) Seeks judicial review of an action
by the Corporation or such government
agency that affects the recipient’s status
as a recipient of Federal funding, except
for a lawsuit that seeks review of
whether the Corporation or agency acted
outside of its statutory authority or
violated the recipient’s constitutional
rights; and
(iv) Was initiated after December 23,
1998.
emcdonald on DSK67QTVN1PROD with RULES
§ 1606.5
Procedures.
(a) Before any final action is taken
under this part, the recipient will be
provided notice and an opportunity to
be heard as set out in this part.
(b) Prior to a preliminary
determination involving a limited
reduction of funding, the Corporation
shall designate either the President or
another senior Corporation employee to
conduct any final review that is
requested pursuant to § 1606.10 of this
part. The Corporation shall ensure that
the person so designated has had no
prior involvement in the proceedings
under this part so as to meet the
criterion set out in § 1606.10(d) of this
part.
§ 1606.6 Preliminary determination and
final decision.
(a) When the Corporation has made a
preliminary determination of one or
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more of the following, the Corporation
shall issue a written notice to the
recipient and the Chair of the recipient’s
governing body: that a recipient’s grant
or contract should be terminated, that a
limited reduction of funding shall be
imposed, or that a recipient should be
debarred. The notice shall:
(1) State the substantial
noncompliance that constitutes the
grounds for the proposed action;
(2) Identify, with reasonable
specificity, any facts or documents
relied upon as justification for the
proposed action;
(3) Inform the recipient of the
proposed amount and proposed
effective date for the proposed action;
(4) Advise the recipient of its
procedural rights for review of the
proposed action under this part;
(5) Inform the recipient of its right to
receive interim funding pursuant to
§ 1606.13 of this part;
(6) Specify what, if any, corrective
action the recipient can take to avoid
the proposed action; and
(7) Summarize prior attempts, if any,
for resolution of the substantial
noncompliance.
(b) If the recipient does not request
review, as provided for in this part,
before the relevant time limits have
expired, then the Corporation may issue
a final decision to the recipient. No
further appeal or review will be
available under this part.
§ 1606.7 Corrective action, informal
conference, review of written materials, and
final decision.
(a) If the Corporation proposes a
corrective action in the preliminary
determination pursuant to § 1606.6(a)(6)
of this part, then the recipient may
accept and implement the corrective
action, in lieu of an informal conference
or submission of written materials
under this section, subject to the
following requirements:
(1) Within 10 business days of receipt
of the preliminary determination, the
recipient may submit a draft compliance
agreement to accept the terms of the
proposed corrective action, which must
include an implementation plan and
timeline;
(2) If the Corporation approves the
draft compliance agreement, including
any modifications suggested by the
recipient or the Corporation, then it
shall be memorialized in a final
compliance agreement signed by the
Corporation and the recipient, which
shall stay these proceedings;
(3) If the recipient completes the
terms of the written compliance
agreement in a time and manner that is
satisfactory to the Corporation, then the
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10095
Corporation shall withdraw the
preliminary determination; and
(4) If the Corporation determines at
any time that the recipient has not
presented an acceptable draft
compliance agreement, or has not
fulfilled any terms of the final
compliance agreement, then the
Corporation shall notify the recipient in
writing. Within 15 calendar days of that
notice, the Corporation shall modify or
affirm the preliminary determination as
a draft final decision. The draft final
decision shall summarize these attempts
at resolution. The draft final decision
need not engage in a detailed analysis
of the failure to resolve the substantial
noncompliance.
(b) A recipient may submit written
materials in opposition to the
preliminary determination, request an
informal conference, or both, as follows:
(1) For terminations or debarments,
within 30 calendar days of receipt of the
preliminary determination; or
(2) For limited reductions in funding,
within 10 business days of receipt of the
preliminary determination.
(c) Within 5 business days of receipt
of a request for a conference, the
Corporation shall notify the recipient of
the time and place the conference will
be held. Some or all of the participants
in the conference may attend via
telephone, unless the recipient requests
an in-person meeting between the
Corporation and at least one
representative of the recipient. If the
recipient requests an in-person meeting,
then other participants may attend via
telephone. Alternative means of
participation other than the telephone
are permissible at the sole discretion of
the Corporation.
(d) The informal conference shall be
conducted by the Corporation employee
who issued the preliminary
determination or any other Corporation
employee with a seniority level
equivalent to the level of an office
director or higher.
(e) At the informal conference, the
Corporation and the recipient shall both
have an opportunity to state their case,
seek to narrow the issues, explore the
possibilities of settlement or
compromise including implementation
of corrective actions, and submit written
materials.
(f) If an informal conference is
conducted or written materials are
submitted in opposition to the proposed
determination by the recipient, or both,
the Corporation shall consider any
written materials and any oral
presentation or written materials
submitted by the recipient at an
informal conference. Based on any of
these materials or the informal
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conference, or both, the Corporation
shall modify, withdraw, or affirm the
preliminary determination through a
draft final decision in writing, which
shall be provided to the recipient within
the later of 15 calendar days after the
conclusion of the informal conference or
after the recipient of written materials in
opposition to the proposed
determination (when no informal
conference is requested). Except for
decisions to withdraw the preliminary
determination, the draft final decision
shall include a summary of the issues
raised in the informal conference and
presented in any written materials. The
draft final decision need not engage in
a detailed analysis of all issues raised.
(g) If the recipient does not request
further process, as provided for in this
part, then, after the relevant time limits
have expired, the Corporation shall
notify the recipient that no further
appeal or review will be available under
this part and may proceed to issue the
final decision.
emcdonald on DSK67QTVN1PROD with RULES
§ 1606.8 Hearing for a termination or
debarment.
(a) For terminations or debarments
only, the recipient may make a written
request for a hearing within the later of:
30 calendar days of its receipt of the
preliminary determination, or 15
calendar days of receipt of the draft final
decision issued under § 1606.7 of this
part, as the case may be.
(b) Within 10 business days after
receipt of a request for a hearing, the
Corporation shall notify the recipient in
writing of the date, time, and place of
the hearing and the names of the
hearing officer and of the attorney who
will represent the Corporation. The
time, date, and location of the hearing
may be changed upon agreement of the
Corporation and the recipient.
(c) A hearing officer shall be
appointed by the President or designee
and may be an employee of the
Corporation. The hearing officer shall
not have been involved in the current
termination or debarment action, and
the President or designee shall
determine that the person is qualified to
preside over the hearing as an impartial
decision maker. An impartial decision
maker is a person who has not formed
a prejudgment on the case and does not
have a pecuniary interest or personal
bias in the outcome of the proceeding.
(d) The hearing shall be scheduled to
commence at the earliest appropriate
date, ordinarily not later than 30
calendar days after the Corporation
receives the notice required by
paragraph (b) of this section.
(e) The hearing officer shall preside
over and conduct a full and fair hearing,
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avoid delay, maintain order, and insure
that a record sufficient for full
disclosure of the facts and issues is
maintained.
(f) The hearing shall be open to the
public unless, for good cause and the
interests of justice, the hearing officer
determines otherwise.
(g) The Corporation and the recipient
shall be entitled to be represented by
counsel or by another person.
(h) At the hearing, the Corporation
and the recipient each may present its
case by oral or documentary evidence,
conduct examination and crossexamination of witnesses, examine any
documents submitted, and submit
rebuttal evidence.
(i) The hearing officer shall not be
bound by the technical rules of evidence
and may make any procedural or
evidentiary ruling that may help to
insure full disclosure of the facts, to
maintain order, or to avoid delay.
Irrelevant, immaterial, repetitious or
unduly prejudicial matter may be
excluded.
(j) Official notice may be taken of
published policies, rules, regulations,
guidelines, and instructions of the
Corporation, of any matter of which
judicial notice may be taken in a Federal
court, or of any other matter whose
existence, authenticity, or accuracy is
not open to serious question.
(k) A stenographic or electronic
record shall be made in a manner
determined by the hearing officer, and
a copy shall be made available to the
recipient at no cost.
(l) The Corporation shall have the
initial burden to show grounds for a
termination or debarment. The burden
of persuasion shall then shift to the
recipient to show by a preponderance of
evidence on the record that its funds
should not be terminated or that it
should not be debarred.
§ 1606.9 Recommended decision for a
termination or debarment.
(a) For termination or debarment
hearings under § 1606.8 of this part,
within 20 calendar days after the
conclusion of the hearing, the hearing
officer shall issue a written
recommended decision to the recipient
and the Corporation, which may:
(1) Terminate financial assistance to
the recipient commencing as of a
specific date;
(2) Impose a limited reduction of
funding commencing as of a specific
date;
(3) Continue the recipient’s current
level of financial assistance under the
grant or contract, subject to any
modification or condition that may be
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deemed necessary on the basis of
information adduced at the hearing; or
(4) Debar the recipient from receiving
an additional award of financial
assistance from the Corporation.
(b) The recommended decision shall
contain findings of the significant and
relevant facts and shall state the reasons
for the decision. Findings of fact shall
be based solely on the record of, and the
evidence adduced at the hearing or on
matters of which official notice was
taken.
§ 1606.10 Final decision for a termination,
debarment, or limited reduction of funding.
(a) If neither the Corporation nor the
recipient requests review by the
President of a draft final decision
pursuant to § 1606.7 of this part or a
recommended decision pursuant to
§ 1606.9, as provided for in this part,
within 10 business days after receipt by
the recipient, then the Corporation shall
issue to the recipient a final decision
containing either the draft final decision
or the recommended decision, as the
case may be. No further appeal or
review will be available under this part.
(b) The recipient or the Corporation
may seek review by the President of a
draft final decision or a recommended
decision. A request shall be made in
writing within 10 business days after
receipt of the draft final decision or
recommended decision by the party
seeking review and shall state in detail
the reasons for seeking review.
(c) The President’s review shall be
based solely on the administrative
record of the proceedings, including the
appeal to the President, and any
additional submissions, either oral or in
writing, that the President may request.
A recipient shall be given a copy of, and
an opportunity to respond to, any
additional submissions made to the
President. All submissions and
responses made to the President shall
become part of the administrative
record. Upon request, the Corporation
shall provide a copy of the
administrative record to the recipient.
(d) For an appeal of a draft final
decision involving a limited reduction
of funding pursuant to § 1606.7 of this
part (for which there is no right to a
hearing under § 1606.8 of this part) the
President may not review the appeal if
the President has had prior involvement
in the proceedings under this part. If the
President cannot review the appeal, or
the President chooses not to do so, then
the appeal shall be reviewed by either
the individual designated to do so
pursuant to § 1606.5(b) of this part, or
by another senior Corporation employee
designated by the President who has not
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had prior involvement in the
proceedings under this part.
(e) As soon as practicable after receipt
of the request for review of a draft final
decision or a recommended decision,
but not later than 30 calendar days
thereafter, the President or designee
shall adopt, modify, or reverse the draft
final decision or the recommended
decision, or direct further consideration
of the matter. In the event of
modification or reversal of a
recommended decision pursuant to
§ 1606.9 of this part, this decision shall
conform to the requirements of
§ 1606.9(b) of this part.
(f) The decision of the President or
designee under this section shall
become final upon receipt by the
recipient.
emcdonald on DSK67QTVN1PROD with RULES
§ 1606.11 Qualifications on hearing
procedures.
(a) Except as modified by paragraph
(c) of this section, the hearing rights set
out in §§ 1606.6 through 1606.10 of this
part shall apply to any action to debar
a recipient or to terminate a recipient’s
funding.
(b) The Corporation may
simultaneously take action to debar and
terminate a recipient within the same
hearing procedure that is set out in
§§ 1606.6 through 1606.10 of this part.
In such a case, the same hearing officer
shall oversee both the termination and
debarment actions in the same hearing.
(c) If the Corporation does not
simultaneously take action to debar and
terminate a recipient under paragraph
(b) of this section and initiates a
debarment action based on a prior
termination under § 1606.4(b)(1) or (2),
the hearing procedures set out in
§ 1606.6 through 1606.10 of this part
shall not apply. Instead:
(1) The President shall appoint a
hearing officer, as described in
§ 1606.8(c), to review the matter and
make a written recommended decision
on debarment.
(2) The hearing officer’s
recommended decision shall be based
solely on the information in the
administrative record of the termination
proceedings providing grounds for the
debarment and any additional
submissions, either oral or in writing,
that the hearing officer may request. The
recipient shall be given a copy of and
an opportunity to respond to any
additional submissions made to the
hearing officer. All submissions and
responses made to the hearing officer
shall become part of the administrative
record.
(3) If neither party appeals the hearing
officer’s recommended decision within
10 business days of receipt of the
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recommended decision, the decision
shall become final and the final decision
shall be issued by the Corporation to the
recipient within 5 business days.
(4) Either party may appeal the
recommended decision to the President
who shall review the matter and issue
a final written decision pursuant to
§ 1606.9(b).
(d) All final debarment decisions shall
state the effective date of the debarment
and the period of debarment, which
shall be commensurate with the
seriousness of the cause for debarment
but shall not be for longer than 6 years.
(e) The Corporation may reverse a
debarment decision upon request for the
following reasons:
(1) Newly discovered material
evidence;
(2) Reversal of the conviction or civil
judgment upon which the debarment
was based;
(3) Bona fide change in ownership or
management of a recipient;
(4) Elimination of other causes for
which the debarment was imposed; or
(5) Other reasons the Corporation
deems appropriate.
§ 1606.12
Time and waiver.
(a) Except for the 6-year time limit for
debarments in § 1606.11(d) of this part,
any period of time provided in these
rules may, upon good cause shown and
determined, be extended in writing:
(1) By the Corporation, unless a
hearing officer has been appointed;
(2) By the hearing officer, until the
recommended decision has been issued;
or
(3) By the President at any time.
(b) Failure by the Corporation to meet
a time requirement of this part does not
preclude the Corporation from
terminating a recipient’s grant or
contract with the Corporation or
imposing a limited reduction of
funding.
closeout or transition funding, or both,
if necessary to enable the recipient to
close or transfer current matters in a
manner consistent with the recipient’s
professional responsibilities to its
present clients.
(d) The Corporation has sole
discretion to determine the manner in
which the final decision is
implemented. The Corporation’s
discretion includes, but is not limited to
the decision to pro-rate the amount of
funds reduced over the remaining
disbursements in the funding term or
deduct the sum in a single
disbursement, or any other method the
Corporation deems appropriate.
(e) Funds recovered by the
Corporation pursuant to a termination
or limited reduction of funding shall be
reallocated by the Corporation for basic
field purposes at its sole discretion.
§ 1606.14
(a) Pending the completion of
termination or limited reduction of
funding proceedings under this part, the
Corporation shall provide the recipient
with the level of financial assistance
provided for under its current grant or
contract for financial assistance with the
Corporation.
(b) After a final decision has been
made to terminate a recipient’s grant or
contract or to impose a limited
reduction of funding, the recipient loses
all rights to the terminated or reduced
funds.
(c) After a final decision has been
made to terminate a recipient’s grant or
contract, the Corporation may authorize
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Recompetition.
After a final decision has been issued
by the Corporation terminating financial
assistance to a recipient in whole for
any service area, the Corporation shall
implement a new competitive bidding
process for the affected service area.
Until a new recipient has been awarded
a grant pursuant to such process, the
Corporation shall take all practical steps
to ensure the continued provision of
legal assistance in the service area
pursuant to § 1634.11 of this part.
PART 1614—PRIVATE ATTORNEY
INVOLVEMENT
2. The authority citation for part 1614
continues to read as follows:
■
Authority: Sec. 1007(a)(2)(C) and sec.
1007(a)(3); (42 U.S.C. 2996f(a)(2)(C) and 42
U.S.C. 2996f(a)(3)).
3. Amend § 1614.7 by revising
paragraph (b) to read as follows:
■
§ 1614.7
§ 1606.13 Interim and other funding,
reprogramming, implementation.
10097
Failure to comply.
*
*
*
*
*
(b) The withholding of funds under
this section shall not be construed as
any action under 45 CFR part 1606.
*
*
*
*
*
■ 4. Revise part 1618 to read as follows:
PART 1618—ENFORCEMENT
PROCEDURES
Sec.
1618.1
1618.2
1618.3
1618.4
1618.5
Purpose.
Definition.
Complaints.
Duties of recipients.
Duties of the Corporation.
Authority: 42 U.S.C. 2996e(b)(1),
2996e(b)(2), 2996e(b)(5), 2996f(a)(3),
2996f(d), and 2996g(e).
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§ 1618.1
Federal Register / Vol. 78, No. 30 / Wednesday, February 13, 2013 / Rules and Regulations
Purpose.
§ 1618.5
In order to ensure uniform and
consistent interpretation and
application of the provisions of the LSC
Act, the Corporation’s appropriations
act or other law applicable to LSC
funds, a Corporation rule, regulation,
guideline or instruction, or the terms
and conditions of the recipient’s grant
or contract with the Corporation, and to
prevent a question of whether these
requirements have been violated from
becoming an ancillary issue in any case
undertaken by a recipient, this part
establishes a systematic procedure for
enforcing compliance with them.
§ 1618.2
Definitions.
LSC requirements means the
provisions of the LSC Act, the
Corporation’s appropriations act or
other law applicable to LSC funds, a
Corporation rule, regulation, guideline
or instruction, or the terms or
conditions of the recipient’s grant or
contract with the Corporation.
Violation means a violation by the
recipient of the LSC requirements.
§ 1618.3
Complaints.
A complaint of a violation by a
recipient or an employee of a recipient
may be made to the recipient, the State
Advisory Council, or the Corporation.
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§ 1618.4
Duties of recipients.
(a) A recipient shall:
(1) Advise its employees of their
responsibilities under the LSC
requirements;
(2) Establish procedures, consistent
with the notice and hearing
requirements of section 1011 of the LSC
Act, for determining whether an
employee has committed a violation and
whether the violation merits a sanction
based on consideration of the totality of
the circumstances; and
(3) Establish a policy for determining
the appropriate sanction to be imposed
for a violation, including:
(i) Administrative reprimand if a
violation is found to be minor and
unintentional, or otherwise affected by
mitigating circumstances;
(ii) Suspension and termination of
employment; and
(iii) Other sanctions appropriate for
enforcement of the LSC requirements.
(b) Before suspending or terminating
the employment of any person for a
violation, a recipient shall consult the
Corporation to ensure that its
interpretation of these requirements is
consistent with Corporation policy.
(c) This section provides procedural
requirements between the Corporation
and recipients. It does not create rights
for recipient employees.
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15:25 Feb 12, 2013
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Duties of the Corporation.
(a) Whenever the Corporation learns
that there is reason to believe that a
recipient or a recipient’s employee may
have committed a violation, the
Corporation shall investigate the matter
promptly and attempt to resolve it
through informal consultation with the
recipient. Such actions may be limited
to determining if the recipient is
sufficiently investigating and resolving
the matter itself.
(b) Whenever there is substantial
reason to believe that a recipient has
persistently or intentionally violated the
LSC requirements, or, after notice, has
failed to take appropriate remedial or
disciplinary action to ensure
compliance by its employees with the
LSC requirements, and attempts at
informal resolution have been
unsuccessful, the Corporation may
proceed to suspend or terminate
financial support of the recipient, or
impose a limited reduction in funding,
pursuant to the procedures set forth in
parts 1623 and 1606, or may take other
action to enforce compliance with the
LSC requirements.
(c) Whenever the Corporation
determines that a recipient has
committed a violation, that corrective
actions by the recipient are required to
remedy the violation and/or prevent
recurrence of the violation, and that
imposition of special grant conditions
are needed prior to the next grant
renewal or competition for the service
area, the Corporation may immediately
impose Special Grant Conditions on the
recipient to require completion of those
corrective actions.
■ 5. Revise part 1623 to read as follows:
PART 1623—SUSPENSION
PROCEDURES
Sec.
1623.1
1623.2
1623.3
1623.4
1623.5
1623.6
Purpose.
Definitions.
Grounds for suspension.
Suspension procedures.
Time extensions and waiver.
Interim funding.
Authority: 42 U.S.C. 2996e(b)(1),
2996f(a)(3), and 2996f(d); Pub. L. 105–119,
Title V, Secs. 501(b), 502, and 503, 111 Stat.
2440, 2510–11; Pub. L. 104–134, Title V,
Secs. 503(f) and 509(c), 110 Stat. 1321, 1321–
53, 1321–58, and 1321–59.
§ 1623.1
Purpose.
The purpose of this rule is to:
(a) Ensure that the Corporation is able
to take prompt action when necessary to
safeguard LSC funds or to ensure the
compliance of a recipient with
applicable provisions of law, or a rule,
regulation, guideline or instruction
issued by the Corporation, or the terms
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Fmt 4700
Sfmt 4700
and conditions of a recipient’s grant or
contract with the Corporation; and
(b) Provide procedures for prompt
review that will ensure informed
deliberation by the Corporation when it
has made a proposed determination that
financial assistance to a recipient
should be suspended.
§ 1623.2
Definitions.
For the purposes of this part the
definitions in 45 CFR part 1606 shall
apply and also:
Suspension means an action taken
during the term of the recipient’s
current year’s grant or contract with the
Corporation that withholds financial
assistance to a recipient, in whole or in
part, until the end of the suspension
period pending prompt corrective action
by the recipient or a decision by the
Corporation to initiate termination
proceedings.
§ 1623.3
Grounds for suspension.
(a) Financial assistance provided to a
recipient may be suspended when the
Corporation determines that there has
been a substantial violation by the
recipient of the LSC requirements, and
the Corporation has reason to believe
that prompt action is necessary to:
(1) Safeguard LSC funds; or
(2) Ensure immediate corrective
action necessary to bring a recipient into
compliance with an applicable
provision of law, or a rule, regulation,
guideline or instruction issued by the
Corporation, or the terms and
conditions of the recipient’s grant or
contract with the Corporation.
(b) Financial assistance provided to a
recipient may also be suspended by the
Corporation pursuant to a
recommendation by the Office of
Inspector General when the recipient
has failed to have an acceptable audit in
accordance with the guidance
promulgated by the Corporation’s Office
of Inspector General.
§ 1623.4
Suspension procedures.
(a) Prior to a preliminary
determination involving a suspension of
funding, the Corporation shall designate
either the President or another senior
Corporation employee to conduct any
final review that is requested pursuant
this part. The Corporation shall ensure
that the person so designated has had no
prior involvement in the proceedings
under this part so as to meet the
criterion of impartiality described in
this section.
(b) When the Corporation has made a
proposed determination, based on the
grounds set out in § 1623.3 of this part,
that financial assistance to a recipient
should be suspended, the Corporation
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shall serve a written proposed
determination on the recipient. The
proposed determination shall:
(1) State the grounds and effective
date for the proposed suspension;
(2) Identify, with reasonable
specificity, any facts or documents
relied upon as justification for the
suspension;
(3) Specify what, if any, prompt
corrective action the recipient can take
to avoid or end the suspension;
(4) Advise the recipient that it may
request, within 5 business days of
receipt of the proposed determination,
an informal meeting with the
Corporation at which it may attempt to
show that the proposed suspension
should not be imposed; and
(5) Advise the recipient that, within
10 business days of its receipt of the
proposed determination and without
regard to whether it requests an
informal meeting, it may submit written
materials in opposition to the proposed
suspension.
(c) If the recipient requests an
informal meeting with the Corporation,
the Corporation shall designate the time
and place for the meeting. The meeting
shall occur within 5 business days after
the recipient’s request is received.
(d) The informal meeting shall be
conducted by the Corporation employee
who issued the preliminary
determination or any other Corporation
employee with a seniority level at, or
equivalent to, the level of an office
director or higher.
(e) At the informal meeting, the
Corporation and the recipient shall both
have an opportunity to state their case,
seek to narrow the issues, explore the
possibilities of settlement or
compromise including implementation
of corrective actions, and submit written
materials.
(f) The Corporation shall consider any
written materials submitted by the
recipient in opposition to the proposed
suspension and any oral presentation or
written materials submitted by the
recipient at an informal meeting. If, after
considering such materials, the
Corporation determines that the
recipient has failed to show that the
suspension should not become effective,
the Corporation may issue a written
final determination to suspend financial
assistance to the recipient in whole or
in part and under such terms and
conditions the Corporation deems
appropriate and necessary. The final
determination shall include a summary
of the issues raised in the informal
conference and presented in any written
materials. The final determination need
not engage in a detailed analysis of all
issues raised.
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15:25 Feb 12, 2013
Jkt 229001
(g) The final determination shall be
promptly transmitted to the recipient in
a manner that verifies receipt of the
determination by the recipient, and the
suspension shall become effective when
the final determination is received by
the recipient or on such later date as is
specified therein.
(h) If a suspension lasts for more than
30 days, then the recipient may seek
review of the suspension by the
President. A request may be made in
writing on the thirty-first day or any day
thereafter, and shall state, in detail, the
reasons for seeking review.
(1) The President may not review the
suspension appeal if the President has
had prior involvement in the
suspension proceedings. If the President
cannot review, or the President chooses
not to do so, then the appeal shall be
reviewed by either the individual
designated to do so pursuant to
§ 1623.4(a) of this part, or by another
senior Corporation employee designated
by the President who has not had prior
involvement in the suspension
proceedings.
(2) The President’s review shall be
based on the administrative record of
the proceedings, including the appeal to
the President, and any additional
submissions, either oral or in writing
that the President may request. A
recipient shall be given a copy of, and
an opportunity to respond to, any
additional submissions made to the
President. All submissions and
responses made to the President shall
become part of the administrative
record. Upon request, the Corporation
shall provide a copy of the
administrative record to the recipient.
(3) The President shall affirm, modify,
or terminate the suspension through a
suspension appeal decision within 15
calendar days of receipt of the appeal by
the Corporation, unless the Corporation
and the recipient agree to a later date.
(i) The Corporation may at any time
rescind or modify the terms of the final
determination to suspend and, on
written notice to the recipient, may
reinstate the suspension without further
proceedings under this part.
(j) Except as provided in § 1623.4(k) of
this part, the total time of a suspension
shall not exceed 90 calendar days,
unless the Corporation and the recipient
agree to a continuation of the
suspension without further proceedings
under this part.
(k) When the suspension is based on
the grounds in § 1623.3(b) of this part,
a recipient’s funds may be suspended
until an acceptable audit is completed.
No appeal to the President will be
available for audit-based suspensions
pursuant to § 1623.3(b).
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§ 1623.5
10099
Time extensions and waiver.
(a) Except for the time limits in
§ 1623.4(i) and (j), any period of time
provided in this part may be extended
by the Corporation for good cause.
Requests for extensions of time shall be
considered in light of the overall
objective that the procedures prescribed
by this part ordinarily shall be
concluded within 30 calendar days of
the service of the proposed
determination.
(b) Any other provision of this part
may be waived or modified by
agreement of the recipient and the
Corporation for good cause.
(c) Failure by the Corporation to meet
a time requirement of this part shall not
preclude the Corporation from
suspending a recipient’s grant or
contract with the Corporation.
§ 1623.6
Interim funding.
(a) Pending the completion of
suspension proceedings under this part,
the Corporation shall provide the
recipient with the level of financial
assistance provided for under its current
grant or contract with the Corporation.
(b) Funds withheld pursuant to a
suspension shall be released to the
recipient at the end of the suspension
period.
Dated: February 6, 2013.
Victor M. Fortuno.
Vice President & General Counsel.
[FR Doc. 2013–03241 Filed 2–12–13; 8:45 am]
BILLING CODE 7050–01–P
FEDERAL COMMUNICATIONS
COMMISSION
47 CFR Part 1
[CG Docket No. 12–129; FCC 12–129]
Implementation of the Middle Class
Tax Relief and Job Creation Act of
2012; Establishment of a Public Safety
Answering Point Do-Not-Call Registry
Federal Communications
Commission.
ACTION: Correcting amendments.
AGENCY:
This document contains a
correction to the final regulations of the
Commission’s rules, which were
published in the Federal Register on
November 29, 2012, 77 FR 71131. The
final regulations establish a do-not-call
registry for public safety answering
points (PSAP) and prohibit the use of
automatic dialing equipment to contact
those registered numbers.
DATES: Effective February 13, 2013.
FOR FURTHER INFORMATION CONTACT:
Richard D. Smith, Consumer and
SUMMARY:
E:\FR\FM\13FER1.SGM
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Agencies
[Federal Register Volume 78, Number 30 (Wednesday, February 13, 2013)]
[Rules and Regulations]
[Pages 10085-10099]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-03241]
=======================================================================
-----------------------------------------------------------------------
LEGAL SERVICES CORPORATION
45 CFR Parts 1606, 1614, 1618, and 1623
Limited Reductions of Funding, Termination, and Debarment
Procedures; Recompetition; Enforcement; Suspension Procedures; Private
Attorney Involvement
AGENCY: Legal Services Corporation.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule amends the Legal Services Corporation's
regulations on enforcement procedures through the addition of options
for limited reductions of funding, expansion of non-audit based
suspensions for up to ninety days, and immediate special grant
conditions for compliance issues. The final rule provides updates and
enhancements to the rules regarding enforcement generally,
terminations, debarments, and suspensions. It also provides a technical
conforming update to a cross-reference in the private attorney
involvement regulation.
DATES: Effective Date: This rule is effective as of March 15, 2013.
FOR FURTHER INFORMATION CONTACT: Mark Freedman, Senior Assistant
General Counsel, Office of Legal Affairs, Legal Services Corporation,
3333 K Street NW., Washington, DC 20007; 202-295-1623 (phone); 202-337-
6519 (fax); mfreedman@lsc.gov.
SUPPLEMENTARY INFORMATION:
I. Procedural Background
On January 31, 2012, the Legal Services Corporation (LSC) published
in the Federal Register at 77 FR 4749 a Notice of Proposed Rulemaking
(NPRM) proposing changes to LSC's enforcement mechanisms. On August 7,
2012, LSC published in the Federal Register at 77 FR 46995 a Further
Notice of Proposed Rulemaking (FNPRM) expanding on the NPRM. LSC is now
publishing final rules to conclude this rulemaking.
LSC undertook this rulemaking to add three new enforcement options
to the LSC regulations regarding grants for the provision of legal
assistance:
(1) A new ``limited reduction of funding'' that enables LSC to
respond quickly to instances of substantial violation of LSC
requirements through funding reductions of less than five percent using
more simple procedures than for terminations of five percent or
greater;
(2) suspensions for non-audit based compliance issues that could
last for up to ninety days, an increase from thirty days in the
previous rule; and
(3) special grant conditions regarding compliance issues that LSC
could add immediately to a current grant.
In the course of the rulemaking, LSC developed new administrative
procedures to enhance the opportunities for informal resolution when
LSC proposes to undertake a limited reduction of funding, a termination
in whole or in part, or a debarment. The rule already provided for
informal resolution through an informal conference with opportunities
for settlement or compromise. The rule has enhanced the informal
conference and added procedures to provide for resolution of the matter
through prompt corrective action agreements, when appropriate.
This rulemaking also clarifies existing regulations and makes
conforming changes to the rules in order to accommodate the new process
and procedures indicated. All of the comments and related memos
submitted to the LSC Board regarding this
[[Page 10086]]
rulemaking are available in the open rulemaking section of LSC's Web
site at www.lsc.gov.
https://www.lsc.gov/about/regulations-rules/open-rulemaking
After the effective date of the rule, those materials will appear
in the closed rulemaking section.
https://www.lsc.gov/about/regulations-rules/closed-rulemaking
II. General Authorities, Impetus for Rulemaking, and Existing
Regulatory Compliance Mechanisms
The LSC Act provides general authority to the Corporation ``to
insure the compliance of recipients and their employees with the
provisions of [the Act] and the rules, regulations, and guidelines
promulgated pursuant to [the Act].'' 42 U.S.C. 2996e(b)(1)(A). LSC's
principal regulation discussing general enforcement authority and
procedures is the Enforcement Procedures regulation at 45 CFR part
1618. LSC uses a variety of enforcement tools, formal and informal, to
ensure compliance. Among these are informal consultations and
compliance training, on-site Case Service Report/Case Management System
reviews, the imposition of Required Corrective Actions (RCAs), and the
imposition of Special Grant Conditions (SGCs) at the beginning of a
grant award period or at grant renewal. Several enforcement tools
involving suspending or reducing funding to a recipient to address
significant non-compliance are provided in LSC-adopted regulations. LSC
has adopted grant termination procedures (45 CFR part 1606) that
provide for the termination of funding in whole or part in cases of a
recipient's substantial noncompliance with LSC statutory or regulatory
requirements and other policies, instructions, or grant terms and
conditions. LSC has also adopted suspension procedures (45 CFR part
1623) and disallowed-cost procedures (45 CFR part 1630). Lastly, part
1606 provides authority for LSC to debar recipients from eligibility to
receive future grants.
LSC amended the part 1606 termination procedures in 1998 and
created a separate provision for reductions of funding of less than
five percent, which are not considered terminations and not subject to
the full set of procedures that apply to terminations. The 1998
amendments to the rule required, however, that to reduce funding to a
recipient by less than five percent, LSC would have to establish
additional procedures by rulemaking. 45 CFR 1606.2(d)(2)(v). LSC
commenced this rulemaking to establish those procedures.
The majority of LSC recipients are in substantial compliance with
LSC requirements most of the time. When non-compliance occurs,
recipients almost always work diligently and cooperatively with LSC
staff to come promptly into compliance, but there have been exceptions
and situations in which LSC has felt the need for the kind of
enforcement tools covered by this rulemaking.
This rulemaking also addresses a problem in the previous rules
regarding LSC's ability to take timely actions. LSC can impose
suspensions after as little as eleven days of process, but the previous
rule limited suspensions to thirty days (other than audit-based
suspensions). The next enforcement option available to LSC was
terminations, which require five months or more of procedures if the
recipient uses all available levels of review. Similarly, disallowed
costs may be available to recover improperly spent funds, although that
process is designed for recovery rather than enforcement and sanction.
Also, disallowed costs can take over five months to complete (except
for disallowed costs of less than $2,500). This rulemaking provides for
suspensions of funding for up to ninety days, for limited reductions of
funding that can be implemented in approximately eighty days, and for
special grant conditions that can be added immediately to an existing
grant.
This rulemaking also addresses concerns expressed by the Government
Accountability Office (GAO) in its report, Legal Services Corporation:
Improved internal controls needed in grants management and oversight,
GAO-08-37 (December 2007). In that report, the GAO opined that LSC has
``limited options for sanctioning or replacing poor-performing
recipients.'' GAO-08-37 at 17. The existing enforcement mechanisms
available to LSC are best suited to situations involving numerous and/
or very significant violations that merit severe actions such as
terminations, or to situations in which compliance issues are technical
or minor and can be resolved through corrective actions, grant
conditions, and similar actions. LSC has not had enforcement mechanisms
well suited to violations or compliance issues in an intermediate range
(e.g., material but not extreme, or multiple but not profuse) in
situations where a recipient does not voluntarily take corrective
action in a timely manner. Furthermore, disallowed costs are not a good
substitute for an intermediate range enforcement mechanism. The amount
of funds in question is not necessarily proportional to the severity of
the violation. Minor violations could have large associated costs while
major violations could have relatively small associated costs.
LSC significantly revised LSC's enforcement rules in 1998 in
response to Congressional changes to the governing law. Prior to 1996,
section 1011 of the LSC Act provided minimum process requirements for
suspensions over thirty days, terminations, and denials of refunding
that included hearing rights and review by independent hearing
examiners. 42 U.S.C. 2996j. LSC implemented these statutory
requirements in 1976 and 1978 through the original enforcement
regulations: part 1618 (General enforcement thresholds), part 1606
(Terminations and denials of refunding), and part 1623 (Suspensions).
In 1996, Congress suspended section 1011 via riders to the annual LSC
appropriation, which have been reincorporated every year thereafter,
including some modifications in 1998.
For the purposes of the funding provided in this [FY 1996
Appropriations] Act, rights under sections 1007(a)(9) [interim funding
for refunding applicants] and 1011 of the Legal Services Corporation
Act (42 U.S.C. 2996f(a)(9) and 42 U.S.C. 2996j) shall not apply.
Pub. L. 104-134, section 503(f), 110 Stat. 1321 (1996) (FY 1996); Pub.
L. 104-208, section 501(b), 110 Stat. 3009 (1996) (FY 1997)
(reiterating the FY 1996 language). For FY 1998, Congress reiterated
the FY 1996 language and further elaborated that LSC ``may terminate''
a grant or contract if LSC finds ``that the recipient has failed to
comply with any requirement of the Legal Services Corporation Act (42
U.S.C. 2996 et seq.), this [appropriations] Act, or any other
applicable law relating to funding for the Corporation * * *.'' Pub. L.
105-119, sections 501(b) and (c), 111 Stat. 2440 (1997) (FY 1998).
Congress has incorporated that language by reference in every annual
LSC appropriation since 1998. Congress also mandated in 1996 and
thereafter that LSC have the option to suspend funding to a recipient,
in full or in part, if the recipient fails to have an acceptable audit.
Audit-based suspensions last until completion of an acceptable audit.
Pub. L. 104-134, section 509(c), 110 Stat. 1321 (1996) (FY 1996)
(incorporated by reference thereafter).
LSC implemented these statutory changes by revising 45 CFR parts
1606 and 1623. 63 FR 64636 (1998) (parts
[[Page 10087]]
1606 and 1625), 63 FR 64646 (1998) (part 1623). LSC explained that:
the new law in the appropriations act emphasizes a congressional
intent to strengthen the ability of the Corporation to ensure that
recipients are in full compliance with the LSC Act and regulations
and other applicable law. See H. Rep. No. 207, 105th. Cong., 1st
Sess. 140 (1997). Accordingly, under this rule, the hearing
procedures in part 1606 have been streamlined. The changes are
intended to emphasize the seriousness with which the Corporation
takes its obligation to ensure that recipients comply with the terms
of their grants and provide quality legal assistance. At the same
time, the Corporation intends that recipients be provided notice and
a fair opportunity to be heard before any termination or debarment
action is taken.
63 FR at 64637 (preamble to revised parts 1606 and 1625). LSC further
elaborated in the preamble to the rulemaking that:
[t]he legislative intent underlying Sections 501(b) and (c) of the
Corporation's FY 1998 appropriations act was to enable the
Corporation to streamline its due process procedures in order to
ensure that recipients are in full compliance with LSC grant
requirements and restrictions.
Id. at 64640. LSC carefully balanced the concerns for ongoing client
services and recipient rights with the clear direction from Congress to
enhance accountability and oversight of recipients' use of LSC funds.
The current rulemaking is designed to build upon, but not fundamentally
alter, the rationale for the 1998 rulemaking.
The changes in this final rule reflect LSC's obligation to
safeguard public funds appropriated by Congress for civil legal aid by
ensuring compliance with LSC rules, restrictions, and requirements.
These additions to the enforcement mechanisms are consistent with LSC's
understanding of Congress's intent to strengthen LSC's enforcement
mechanisms, while carefully accounting for the importance of continued
delivery of legal services and the rights of LSC recipients.
III. Summary of Existing Compliance Tools Not Covered by the
Regulations
LSC uses a variety of non-regulation based tools to track and
ensure compliance. Among these are informal consultations and
compliance training, on-site Case Service Report/Case Management System
reviews, the imposition of Required Corrective Actions (RCAs), and the
imposition of Special Grant Conditions (SGCs) at the beginning of a
grant year.
LSC relies primarily on RCAs to remedy compliance problems. The LSC
Office of Compliance and Enforcement (OCE) estimates that in
approximately 90 percent of cases in which RCAs are imposed, recipients
implement the RCAs on a timely and satisfactory basis. In approximately
ten percent of the cases, however, a recipient fails to implement the
required corrective actions in a timely or satisfactory manner. In some
instances in which recipients have failed to implement RCAs in a timely
or satisfactory manner, LSC has imposed SGCs. Although SGCs may be
substantively identical to the measures contained in RCAs, SGCs elevate
the matter by formally incorporating the conditions into the
recipient's grant documents and ensuring that the recipient's Board
Chair, who has to sign the SGCs, is aware of an ongoing problem. In
recent years, LSC has also used short-term funding to encourage
compliance by providing a grant or successive grants for less than a
year (e.g., month-to-month).
IV. Summary of Procedures for Compliance Tools
Members of the LSC Board raised concerns that the parallel and
interrelated procedures for different enforcement mechanisms could be
confusing. For clarification, the table below summarizes the
enforcement actions provided for in the rules and the respective
procedures for each. This table uses the revised nomenclature provided
in the final rule. The prior suspension and termination rules contained
inconsistencies in the terms used for each stage of the process; those
terms have been standardized in the final rule.
----------------------------------------------------------------------------------------------------------------
Limited reductions Termination Debarment Suspension
----------------------------------------------------------------------------------------------------------------
Sec. 1606.2, Less than 5 Percent... Sec. 1606.2, 5 Sec. 1606.2.......... Sec. 1623.2
percent or more.
----------------------------------------------------------------------------------------------------------------
Type of Violation
----------------------------------------------------------------------------------------------------------------
Substantial violation,............... Substantial violation, ....................... Substantial violation,
Sec. 1606.2........................ Sec. 1606.2. Sec. 1623.3(a), Sec.
1606.2.
Substantial failure, ....................... .......................
Sec. 1606.3(a)(2).
....................... Good cause, Sec. .......................
1606.4(b).
....................... ....................... Prompt action is
necessary, Sec.
1623.3(a).
....................... ....................... Failure of an audit,
Sec. 1623.3(b).
----------------------------------------------------------------------------------------------------------------
Procedure
----------------------------------------------------------------------------------------------------------------
Preliminary Determination, Sec. Preliminary Preliminary Proposed Determination,
1606.6(a). Determination, Sec. Determination, Sec. Sec. 1623.4(b).
1606.6(a). 1606.6(a).
Compliance Agreement (if available Compliance Agreement Compliance Agreement Prompt Corrective
and agreed to), Sec. 1606.7(a). (if available and (if available and Action, Sec. 1623.2.
agreed to), Sec. agreed to), Sec.
1606.7(a). 1606.7(a).
Submission of Written Materials in Submission of Written Submission of Written Submission of Written
Opposition to the Preliminary Materials in Materials in Materials in
Determination (if no compliance Opposition to the Opposition to the Opposition to the
agreement), Sec. 1606.7(b). Preliminary Preliminary Proposed
Determination (if no Determination (if no Determination, Sec.
compliance agreement), compliance agreement), 1623.4(f).
Sec. 1606.7(b). Sec. 1606.7(b).
Informal Conference, Sec. 1606.7(b)- Informal Conference, Informal Conference, Informal Meeting, Sec.
(e). Sec. 1606.7(b)-(e). Sec. 1606.7(b)-(e). 1623.4(b)-(f).
Draft Final Decision, Sec. Draft Final Decision, Draft Final Decision, Final determination,
1606.7(f). Sec. 1606.7(f). Sec. 1606.7(f). Sec. 1623.4(f).
Hearing, Sec. 1606.8. Hearing, Sec. 1606.8.
Recommended Decision, Recommended Decision,
Sec. 1606.9. Sec. 1606.9.
[[Page 10088]]
Review by the LSC President, Sec. Review by the LSC Review by the LSC Review by the LSC
1606.10. President, Sec. President, Sec. President (for a
1606.10. 1606.10. suspension lasting
more than 30 days not
based on an audit
failure), Sec.
1623.4(h).
Final Decision, Sec. 1606.10(e).... Final Decision, Sec. Final Decision, Sec. Suspension Appeal
1606.10(e). 1606.10(e). Decision, Sec.
1623.4(h)(3).
----------------------------------------------------------------------------------------------------------------
V. Commentary on Rulemaking Process and Comments Received
LSC received nineteen comments on the NPRM and eight comments on
the FNPRM. All of the comments and LSC's analysis of them are posted on
the rulemaking page of www.lsc.gov.https://www.lsc.gov/about/
regulations-rules
The most extensive comments on both proposals were submitted by the
LSC Office of Inspector General (OIG), the American Bar Association
Standing Committee on Legal Aid and Indigent Defendants (SCLAID), and
the National Legal Aid and Defender Association (NLADA). Colorado Legal
Services and the Northwest Justice Project (NJP) also submitted
detailed comments. The other comments generally endorsed the NLADA
comments. Only the OIG fully supported the rulemaking, although the OIG
recommended removing any time limit on suspensions and expressed
concerns that the requirements for the new special grant conditions
were too restrictive. SCLAID did not oppose the rulemaking, but it
strongly recommended significant enhancements to standards and
procedures similar to those recommended by NLADA. NLADA, and most of
the other comments, opposed the rulemaking and recommended significant
enhancements to standards and procedures if it proceeded.
a. New Compliance Tools
The NPRM proposed a new set of procedures for limited reductions of
funding based on the existing procedures for suspensions, which provide
for one level of review through an informal meeting. In response to
comments that this did not provide sufficient process, LSC revised the
proposal in the FNPRM in two ways. First, the same process is used at
the initial stage for terminations and for limited reductions.
Thereafter, limited reductions may be appealed to the LSC President
using procedures based on the disallowed cost appeal procedures in 45
CFR part 1630. Some comments also raised similar concerns for
suspensions, especially if they could last for up to ninety days. In
response, the final rule also adds the same appeal process for
suspensions once they extend beyond thirty days (thirty-day suspensions
have always been permitted without further appeal). The NPRM proposed
allowing LSC to impose SGCs immediately during a grant term rather than
waiting for a new grant award or renewal. The OIG's comment expressed
concern that the SGC language might appear to constrain some of LSC's
authority, and other comments indicated concerns that the SGC language
was too vague. In the FNPRM, LSC revised the language to clarify that
it applies to the kinds of situations in which LSC has investigated a
matter and developed RCAs. LSC may immediately impose SGCs that
incorporate those RCAs into the grant documents.
b. Standards and Procedures
The comments that recommended enhancements in the standards and
procedures were not limited to the enforcement actions in the proposed
rulemaking. Rather, they recommended revisions that would significantly
change the rules as they have existed since 1998. In many cases, they
would return to the pre-1998 standards, such as requiring non-LSC,
independent hearing examiners, or exceed those standards, such as an
increased intent requirement and a safe harbor for reliance on
reasonable alternate interpretations of the LSC rules. LSC commenced
this rulemaking to enhance enforcement options within the standards and
procedures adopted in the 1998 rulemaking to respond to Congress's
changes in the enforcement requirements of the LSC Act. The final rule
does not adopt the many suggestions in the comments to change that
carefully constructed enforcement framework. The OIG also suggested
adding a requirement for publication of all final decisions to address
due process concerns in the comments through transparency for those
final actions. Rather than incorporating that suggestion as a
regulatory requirement, LSC will address it in the policies and
procedures for enforcement actions.
c. Informal Conference and Prompt Corrective Actions
The final rule makes a number of revisions to increase the focus on
attempts to resolve the violation at or before the informal conference.
The final rule adds to the notice of the preliminary determination a
requirement for summarizing prior attempts at resolution. The previous
rule required that the same LSC employee who issued the notice would
hold the informal conference. The final rule permits LSC to designate
any senior employee to hold the informal conference, which provides LSC
with more flexibility to set a dispute resolution tone. The final rule
also adds ``implementation of corrective actions'' as an example of the
types of settlement or compromise envisioned for the informal
conference.
The final rule includes a new alternative strategy for informal
resolution prior to the implementation of an enforcement action. LSC
has the option of notifying the recipient that it can avoid the
enforcement action through corrective action, if appropriate. The
recipient may elect to accept that corrective action through timelines
and implementation plans acceptable to LSC and documented in a
compliance agreement; LSC could hold the enforcement action in abeyance
so long as the recipient honors the agreement. If the recipient
completes the corrective actions to LSC's satisfaction (in both
substance and timeliness), then LSC would withdraw the preliminary
determination without implementing the enforcement action. If LSC at
any time decides that the recipient has failed to adhere to the agreed-
upon corrective action plan, including failing to act in accordance
with the established timeline, then LSC could continue with the
enforcement process.
d. Suspension Appeals
In response to the comments received, LSC has included in the final
rule an appeals process for suspensions that last over thirty days. The
appeals process is based on the appeals process for limited reductions
of funding. As with suspension decisions, the timeframe is short to
enable LSC to resolve the appeal quickly. Unlike other enforcement
actions, suspensions are enforced during the appeal period.
[[Page 10089]]
e. Scope of Enforcement Action
The final rule discusses the scope of partial terminations and
limited reductions of funding by using the language of the previous
rule regarding the level of financial assistance provided by the
Corporation to a recipient pursuant to a grant or contract. 45 CFR
1600.1 defines ``financial assistance'' as the ``annualized funding
from the Corporation granted under section 1006(a)(1)(A) for the direct
delivery of legal assistance to eligible clients.'' These grants are
for the provision of general-purpose legal assistance in a geographic
area or to a specific population. Currently, LSC provides these grants
for three types of service areas: basic field, Native American, and
migrant. When LSC awards multiple service areas to a recipient (e.g.,
both a basic field service area and migrant service area), it typically
does so through a single grant or contract. Part 1606 enforcement
actions affect the level of financial assistance, which will include
all of the 1006(a)(1)(A) service areas.
Other LSC grants, under sections 1006(a)(1)(B) or (a)(3) of the LSC
Act, are not subject to these procedures. Rather, LSC may provide for
terminations or other enforcement actions for those grants pursuant to
policies and procedures specific to those grant programs. For example,
funding for Technology Initiative Grants is project-based and
specifically tied to acquisitions, tasks, and timelines.
The final rule implements the NPRM provision that limited
reductions apply only to one grant year. The final rule continues the
provisions of the previous rule that a partial termination
presumptively applies to only one grant year, but that LSC can specify
a longer period up to the entire funding term.
VI. Section-by-Section Analysis
Part 1606--Termination, Limited Reduction of Funding, and Debarment
Procedures; Recompetition
1606.1 Purpose
Section 1601.1(b) contains two additions. First, the phrase
``proportional to the proposed action'' is added to modify ``timely and
fair due process procedures.'' This addition corresponds to the
addition of procedures for limited reductions of funding of less than
five percent, which do not include a hearing before a hearing officer.
The rule provides two sets of overlapping procedures, one for
debarments and terminations of funding (five percent and greater) and
the other for limited reductions of funding (less than five percent).
Second, the phrase ``or to impose a limited reduction of funding'' is
added to the list of remedies available under the rule.
A new Sec. 1601.1(d) reflects a reorganization of the rule in the
interest of clarity. It relocates the previous Sec. 1606.2(c), without
change, which described provisions of other LSC regulations that
involve funding changes but are not subject to the termination
procedures. This relocation emphasizes and clarifies that the indicated
situations are not subject to the actions under part 1606. A
corresponding change to matching language in 45 CFR part 1614 is
included in this final rule.
1606.2 Definitions
This section has substantive and structural changes. All of the
definitions now appear alphabetically.
The term ``Corporation'' is defined in 45 CFR 1600.1 to mean the
Legal Services Corporation. The definition has been expanded here to
provide that decisions of the Corporation, such as initiating a part
1606 proceeding, must be made by an individual acting at the level of,
or senior to, an LSC office director. A deputy director could make
these decisions if he or she is acting with the authority of the
director, such as when the director's position is vacant, or the
director is unavailable due to an illness and the deputy director has
taken over the relevant responsibilities. The FNPRM had proposed that
decisions could be made by deputy directors. The final rule narrows the
circumstances in which deputy directors can act, in part responding to
concerns raised by a commenter.
``Days'' is added as a defined term to mean calendar days as
computed under the Federal Rules of Civil Procedure, unless business
days are specified, in which case Saturdays, Sundays, and legal
holidays recognized under those rules are excluded. The rule had not
previously defined days, which could have caused confusion regarding
deadlines. In particular, some deadlines were five days, which in some
cases could be as little as two business days. All time periods below
fifteen days are changed in the rule to business days.
``Funding term'' is added as a defined term to mean the time period
for an award of financial assistance for a service area as that term is
used in grant-making. The funding term is the longest period between
competitions for a service area. Under 45 CFR part 1634, LSC can award
a section 1006(a)(1)(A) grant or contract for up to five years, which
is the funding term. LSC provides section 1006(a)(1)(A) awards for a
maximum funding term, which is normally no greater than three years.
Within the funding term, LSC provides funding for grant award periods
of no more than one year, which can be renewed for additional grant
award periods.
``Limited reduction of funding'' is added as a defined term for
reductions of funding of less than five percent, which the previous
rule excluded from the definition of terminations. Unlike partial
terminations, limited reductions apply only to the current grant year.
``LSC requirements'' is added as a defined term in 45 CFR part 1618
to capture the full list of statutory, regulatory, and other
requirements that apply to LSC grants or contracts for financial
assistance under the LSC Act. Parts 1606 and 1623 of the previous rules
repeatedly referenced the list of sources specified in this definition.
For both clarity and consistency, the term is now defined using the
language appearing in the previous rules and is cross-referenced in
both parts 1606 and 1623.
``Receipt'' of materials is added as a defined term to provide
clarity in calculating deadlines under the rule. Formal service of
process is not required. Service must be sufficient to ensure that both
LSC and the recipient are fully aware of the proceedings and the
actions taken by both entities at each stage.
The definition of ``recipient'' is functionally unchanged from the
previously published version of this rule, which reiterated the
definition at 45 CFR 1600.1. The final rule replaces that reiteration
with a simple cross-reference.
The term ``substantial noncompliance'' is clarified in this rule.
The term is defined to mean either a substantial violation of the LSC
requirements or a substantial failure to provide high quality,
economical, and effective legal assistance.
A definition of ``substantial violation'' has been added using the
functional definition from Sec. 1606.3(a) without any material
modifications that would change its meaning or application from the
previous rule.
The definition of ``termination'' has been updated to reflect new
definitions in the rule and relocation of the cross-references to other
regulations; no material modifications that would change its meaning or
application from the previous rule have been made.
A definition of ``violation'' has been added to make clear that the
scope of violations at issue under this rule is limited to the LSC
requirements.
[[Page 10090]]
1606.3 Grounds for a Termination or a Limited Reduction of Funding
The title of this section is updated to add limited reductions of
funding.
Section 1606.3(a) has minor nomenclature changes to conform to the
new definitions and terms, including the new definition of
``substantial violation,'' but without any material modifications that
would change its meaning or application from the previous rule. The
definition of a ``substantial failure'' remains in Sec. 1606.3(a)(2)
with two adjustments: 1) the LSC appropriations have been added as a
measure of performance, and 2) the term ``guidance'' is changed to
``guidelines or instructions'' consistent with the use of those terms
in lieu of ``guidance'' throughout the previous and revised rules.
Section 1606.3(b) is added to specify that LSC may impose a limited
reduction of funding for substantial violations, but not substantial
failures, when LSC determines that a termination, in whole or in part,
is not warranted. As with terminations, LSC can base a limited
reduction of funding only on substantial violations occurring within
the past five years.
Section 1606.3(c), the former paragraph (b), is changed to add
limited reductions of funding. The requirements for a ``substantial
violation'' are moved, without material modifications that would change
their meaning or application from the previous rule, to the new
definition of ``substantial violation.'' As proposed in the NPRM those
same criteria apply to the determination of the magnitude of a proposed
termination or limited reduction of funding. LSC stated in the NPRM
that consideration of these factors was already implicit in
considerations of how much funding should be affected by a proposed
enforcement mechanism. SCLAID's comments recommended that LSC add an
entire new section and criteria for determinations of magnitude,
including the impact on client services and other funding for the
recipient. The final rule does not do so because the magnitude of an
enforcement action should relate directly to the magnitude of the
violation and deterrence of future violations. LSC has general
discretion to consider the totality of the situation when deciding how
to proceed with an enforcement action to foster ongoing compliance
while minimizing disruption of client services.
1606.4 Grounds for Debarment
This section does not include any material modifications that would
change its meaning or application from the previous rule. All changes
are technical adjustments.
The language of section 1606.4(b)(4) is modified to clarify that it
applies to any arrangements that are covered by debarments, not only
subgrants or subcontracts, and that reference to a debarred ``IPA,''
which is undefined in the previous rule, means any debarred independent
public accountant or other auditor.
Last, the reference to the ``effective date of this rule'' in Sec.
1606.4(b)(5) is changed to December 23, 1998, the effective date of the
previous rule.
1606.5 Procedures
The heading and Sec. 1606.5(a) are updated to remove the limited
reference to terminations and debarments in order to include limited
reductions of funding. These procedures are available for, and apply
to, all part 1606 enforcement mechanisms.
A new Sec. 1606.5(b) is added to correspond to the new level of
review in Sec. 1606.10 for limited reductions of funding. The LSC
President, or another senior LSC employee, will hear any final appeal
of a limited reduction draft final decision. Those procedures are
modeled on the 45 CFR part 1630 final appeal procedures for disallowed
costs. The person hearing the appeal must have not been involved in the
prior proceedings. The final rule requires that LSC designate the
person to hear the final appeal before LSC considers whether or not to
proceed with a preliminary determination for a limited reduction of
funding.
1606.6 Preliminary Determination and Final Decision
The title of this section is updated to include reference to a
final decision, which may be issued under this section if the recipient
does not request any review of the preliminary determination. The
language of this section is updated for clarity and to include limited
reductions of funding, without material modifications that would change
its meaning or application from the previous rule.
Section 1606.6(a)(6) is added to explicitly provide an option for
LSC to specify corrective action that could resolve the situation
without a termination or limited reduction of funding. This language is
based on the previous suspension rule at 45 CFR part 1623; it does not
appear in the previous part 1606 rule. LSC is not required to provide
the recipient with a corrective action option, and the recipient does
not have a right to avoid a termination or limited reduction of funding
through corrective actions unless explicitly authorized by LSC. This
language provides a clear option for resolving these situations through
corrective action if LSC determines that doing so would be sufficient
pursuant to the new Sec. 1606.7(a).
Section 1606.6(a)(7) is added to require that the preliminary
determination summarize any prior attempts at resolution of the
situation. The addition of this paragraph does not require LSC to seek
resolution prior to initiating a part 1606 action. Rather, when LSC and
the recipient have attempted to resolve the situation, the rule will
now require that LSC summarize those attempts and make them part of the
administrative record.
References to a ``designated employee'' in this section are
replaced with references to the Corporation as the actor, consistent
with the definition of Corporation.
1606.7 Corrective Action, Informal Conference, Review of Written
Materials in Opposition to the Preliminary Determination, and Final
Decision
The title and content of this section have been updated to expand
and clarify the options available after a recipient receives a
preliminary determination. As stated in the previous rule, the informal
conference is designed to create the opportunity for narrowing the
issues and exploring the possibility of settlement or compromise. The
informal conference is retained without material modifications that
would change its meaning or application from the previous rule. The
rule is changed to permit any senior LSC employee to hold the informal
conference rather than the previous requirement that it be held by the
same employee who issued the preliminary determination. In some cases,
the same employee should handle both matters to bring consistent
perspective and experience to the matter. In other situations, it may
foster an atmosphere of settlement or compromise to have different LSC
employees handle each stage of the process.
This section now explicitly provides an option for the recipient to
submit written materials in opposition to the preliminary determination
without a request for an informal conference. This option to present
arguments in writing only is based on the similar option in the
suspension rule at 45 CFR part 1623; a conference is not required if
the recipient requests only a paper review.
1606.7(a) Corrective Action
Paragraph (a) provides a new option for resolving a preliminary
[[Page 10091]]
determination through adoption of any corrective action proposed by
LSC, in its sole discretion, as a clear path to settlement of the
issues. A corrective action proposed by the recipient that
significantly differs from the LSC proposal may be considered at an
informal conference but not as part of the Sec. 1606.7(a) procedures.
The recipient must agree to the terms and timing of implementation of
the corrective actions to the satisfaction of LSC, as memorialized in a
written compliance agreement. If, at any time, LSC determines that the
recipient is not sufficiently implementing the corrective action, LSC
can proceed to issue a draft final decision, subject to the further
rights of review under later sections of this part. If a recipient
chooses this new process, then the recipient cannot later request an
informal conference under this section. This option responds to a
comment that the proposed rule did not clearly address what would
happen if the recipient adopted the suggested corrective action. It
also implements suggestions from the LSC Board that the rule should
provide better means of alternative resolution when appropriate.
1606.7(b)-(g)
The provisions regarding the informal conference have been revised
to clarify the procedures, permit any senior LSC employee to hold the
conference, and to require that a draft decision to proceed with the
enforcement option contain a summary of the issues raised in the
conference or in submitted written materials.
1606.8 Hearing for a Termination or Debarment
The title of this section is updated to specify that hearings are
available only for terminations and debarments, but not for limited
reductions of funding. There are no material modifications that would
change the meaning or application of this section from the previous
rule. The deadlines have been designated as business or calendar days
consistent with the new definition of days.
1606.9 Recommended Decision for Termination or Debarment
The title and language of this section are updated to specify that
the recommended decision is applicable only to hearings for
terminations or debarments. The only substantive change is a new Sec.
1606.9(a)(2) that permits the hearing officer to recommend reducing a
termination to below five percent, and thus convert a termination into
a limited reduction of funding. The previous rule permitted the hearing
officer to recommend terminations only, which would exclude the option
of funding reductions of below five percent. Reference to limited
reductions of funding is added to Sec. 1606.9(a)(3) for consistency
without any material modifications that would change its meaning or
application from the previous rule referencing terminations or
debarments.
1606.10 Final Decision for a Termination, Debarment, or Limited
Reduction of Funding
This section is updated to add direct appeals to the LSC President,
or designee, of draft final decisions for limited reductions of
funding. This type of appeal is similar to the final appeal of a
disallowed cost decision in 45 CFR part 1630. The final review is
identical as that provided for in other part 1606 actions, with one
exception. For limited reduction of funding appeals to the President,
in which there in no right to review by a hearing officer, new
paragraph (d) provides that the President must not have had prior
involvement with the limited reduction of funding proceedings under
this part. That provision is also based on the part 1630 process, which
requires that the President not review actions in which he or she had
prior involvement. As discussed in the FNPRM, the President is not
disqualified merely because he or she is briefed about the situation,
contacted by the recipient or other parties, or otherwise is aware but
not actively involved in the part 1606 proceedings.
A number of comments recommended that the hearing officers or the
final decision maker for appeals be non-LSC employees. As discussed
earlier, in 1996 Congress lifted the LSC Act requirement for
enforcement actions to be reviewed by an independent hearing examiner.
The final rule does not change the impartiality requirement for hearing
officers for terminations and debarment that they have not had prior
involvement in the part 1606 enforcement action being reviewed. It also
does not change the ability of LSC to suspend funding for up to thirty
days without impartial review. For the new limited reductions of
funding and suspensions of over thirty days, the final rule provides
the same requirement of impartiality for the LSC President or other
senior LSC employee providing final review of the matter. These
impartiality requirements are sufficient for the process rights of
recipients within the statutory framework and LSC's understanding of
Congress's expectations for LSC's enforcement procedures. Other changes
to this section clarify the process and deadlines without substantive
changes. The FNPRM suggested adding the Sec. 1606.6(a) preliminary
determination requirements to any final decision modifying or extending
the draft final decision. That suggestion is not retained in this final
rule because it became apparent during the comment period that those
requirements are tailored to the preliminary determination, e.g.,
including the notice of rights to appeal and continued funding, and are
not appropriate for final decisions.
1606.11 Qualifications on Hearing Procedures
This section is updated for clarity without material modifications
that would change its meaning or application from the previous rule.
Section 1606.11(c)(3) is updated to require that LSC provide the final
decision to the recipient within five days of the expiration of the
appeal period. The previous rule stated that the recommended decision
would become final if not appealed, but did not state when it must be
provided as a final decision.
1606.12 Time and Waiver
This section is updated for clarity without material modifications
that would change its meaning or application from the previous rule.
1606.13 Interim and Other Funding, Reprogramming, Implementation
This section is updated to include reference to limited reductions
of funding. A new Sec. 1606.13(d) is added to state explicitly that
the manner of implementation is at the sole discretion of LSC. For
example, depending on the situation, including the timing of the action
in the grant year and funding term, LSC may choose to pro-rate a
partial termination or limited reduction through the remaining grant
payments or to withhold the reduced funds in one lump sum. The previous
rule did not address that issue and this new section is consistent with
the options available to LSC within its discretion under that rule.
Section 1606.13(e), the former paragraph (d), is modified to remove
the reference to using the terminated or reduced funds for the same
service area, as proposed in the NPRM. The previous rule provided that
LSC may keep the funds in the same service area or otherwise reallocate
them for any basic field purposes. Some of the comments recommended
keeping the existing rule. As discussed in the NPRM, this language is
eliminated because it could
[[Page 10092]]
lead to an erroneous expectation that LSC would give preference to
keeping the funds from a termination in part or from a limited
reduction of funding in the same service area in which the same
recipient continued to provide services through the end of the funding
term. LSC had the authority under the previous rule and has the
authority under this final rule to exercise its discretion to determine
the best use of these funds in light of considerations such as the
needs of the service area, the behavior of the recipient, and other
uses of recovered funds for emergencies or special grants in other
service areas. The change in language does not change the substance of
the rule.
Part 1614--Private Attorney Involvement
1614.7(b) Failure To Comply
One technical update to 45 CFR part 1614 relates to this
rulemaking. Although not included in the NPRM or FNPRM, this update
includes no material modifications that would change the meaning or
application of this section from the previous rule and is necessary to
harmonize that rule with this rulemaking and other prior changes to the
LSC regulations. Part 1614 requires that an LSC recipient expend an
amount equivalent to at least 12.5 percent of a basic field award on
private attorney involvement (PAI) activities. The failure to do so may
result in LSC withholding or recovering some funds from the recipient,
depending on the circumstances. Section 1614.7 of the previous rule
provided the requirements for those situations and stated that the
withholding or recovery of funds for a failure to meet the part 1614
requirements does not constitute either a termination or a denial of
refunding. The reference to terminations is changed to a reference to
any action under 45 CFR part 1606. The reference to denials of
refunding is eliminated, as LSC withdrew the denial of refunding
regulation in 1998.
Part 1618--Enforcement Procedures
This final rule incorporates some substantive changes and some
extensive structural, but non-substantive, changes to 45 CFR part 1618
as proposed in the FNPRM. The significant substantive change to the
rule involves adding the imposition of special grant conditions during
a grant year to Sec. 1618.5(c). The final rule also changes references
to violations of the LSC Act throughout the rule to violations of the
LSC requirements as the term ``LSC requirements'' is defined for use in
parts 1606 and 1623. The previous rule defined the ``Act'' as the LSC
Act or the LSC rules and regulations, but did not include other
applicable laws, such as the LSC appropriations riders, or LSC
guidelines and instructions, which have been included in both parts
1606 and 1623 as they have been updated over the past thirty years.
Part 1618 is both outdated and confusing in this regard. The new
definition of LSC requirements is based on the language used in parts
1606 and 1623, and this definition applies in all three sections for
consistency and clarity.
Some of the comments suggested changing the threshold standard
under Sec. 1618.5(b) for proceeding to enforcement actions under parts
1606 and 1623. The rule provides that LSC can proceed to consider
enforcement actions:
[w]henever there is substantial reason to believe that a
recipient has persistently or intentionally violated the Act, or,
after notice, has failed to take appropriate remedial or
disciplinary action to insure compliance by its employees with the
Act, and attempts at informal resolution have been unsuccessful. * *
*
45 CFR 1618.5(b). Those comments suggested adding a ``knowing and
willful'' standard to this section. The OIG's comment notes that the
1998 rulemaking considered using ``intent'' as a factor in the standard
for terminations and choose instead to use the defined term ``knowing
and willful.'' The final rule does not change this language and retains
the longstanding ``intent'' prong of the part 1618 analysis consistent
with original structure of the rule under the LSC Act and the 1998
changes to parts 1606 and 1623. ``Knowing and willful'' was adopted in
1998 as a defined term in those regulations as one of many factors for
consideration, while ``intentionally violated'' was retained in part
1618.
1618.1 Purpose
The purpose section is updated to incorporate the broader scope of
the LSC requirements.
1618.2 Definitions
The definitions section is updated to incorporate the broader scope
of the LSC requirements. A definition of ``violation'' has been added
to make clear that the scope of violations at issue under this rule is
limited to the LSC requirements.
1618.3 Complaints
The language of this section is updated for clarity and to
reference the new definitions.
1618.4 Duties of Recipients
The language of this section is updated for clarity and to
reference the new definitions. A new Sec. 1618.4(c) is added to
emphasize that this section does not create rights for recipient
employees. Rather, this section is designed to ensure that recipients
adopt and follow procedures designed to ensure that employees implement
and follow the LSC requirements, and that the recipient applies those
requirements consistent with LSC's interpretation of them.
1618.5 Duties of the Corporation
The language of this section is updated for clarity and to
reference the new definitions and include reference to limited
reductions of funding. Section 1618.5(a) has a new final sentence
clarifying that LSC's investigation of a possible violation may be
limited to determining if the recipient is taking sufficient actions.
The existing language in Sec. 1618.5(b) requires ``attempts at
informal resolution'' prior to proceeding to consider enforcement
actions under some circumstances. There are no changes to this
language, but LSC notes that the informal resolution referenced here
includes consideration of remedial actions, preventative actions, and
sanctions, as discussed in the FNPRM.
A new Sec. 1618.5(c) is added regarding immediate special grant
conditions. Under previous LSC practice, special grant conditions were
imposed only when a new grant was awarded or an existing grant was
renewed. Under that practice, a recipient had an opportunity to
consider the special grant conditions prior to agreeing to them. The
NPRM proposed language to permit LSC to impose immediate grant
conditions any time that the Sec. 1618.5(b) thresholds are met. The
FNPRM revised that language to permit immediate special grant
conditions only after LSC determines that three factors are met: (1) A
violation has occurred, (2) corrective actions are required, and (3)
special grant conditions are needed prior to the next renewal or
competition. The immediate special grant conditions enable LSC to
convert required corrective actions contained in reports, such as OCE
reports, into specific grant requirements.
Part 1623--Suspension Procedures
The NPRM proposed to change only the language regarding the thirty-
day limit on non-audit based suspensions to increase it to a ninety-day
limit. The FNPRM, and this final rule, make a number of non-
substantive, technical changes to harmonize the suspension
[[Page 10093]]
rule with 45 CFR part 1606. In the previous rule, some, but not all, of
the relevant definitions are repeated in both rules. The final rule
provides a cross reference to the definitions in 45 CFR part 1606 for
consistency. An additional change is made in the final rule to permit
commencement of other enforcement actions during a suspension. This
change is consistent with the overall rulemaking and the revised
enforcement mechanisms structure.
Comments on the NPRM and the FNPRM recommended an appeal process
for suspensions, especially those that go beyond certain dollar
thresholds. The OIG agreed that some appeal might be appropriate, but
expressed concern about adopting appeal procedures that are too
cumbersome and emphasized that appeals should occur during the pendency
of the suspension, which is meant to protect funds from future misuse.
The final rule includes an appeal procedure that mirrors the procedure
for limited reductions of funding, which is based on the 45 CFR part
1630 disallowed cost appeal procedure.
The OIG also recommended eliminating any time limit for
suspensions, and permitting suspensions to continue until compliance,
as is the case for audit-based suspensions. In the 1998 rulemaking, LSC
decided to retain a thirty-day limit on suspensions because LSC
determined that a termination process was more appropriate than a
prolonged suspension. 63 FR 64636 at 64638 (1998). In this rulemaking
LSC has expanded suspensions to ninety days to make them more effective
in short timeframes, but LSC continues to believe that terminations or
reductions of funding with their corresponding procedures are more
appropriate for intractable concerns that cannot be resolved within a
limited suspension period.
1623.2 Definitions
The definitions of ``knowing and willful'' and ``recipient'' are
deleted and replaced with a cross-reference to the definitions in 45
CFR part 1606, which include both of those terms. The definitions are
identical in the previous rules and this change makes no substantive
change to either. The use of the same definitions for other terms in
both rules provides consistency throughout the regulations, e.g., ``LSC
requirements'' and ``substantial violation.''
1623.3 Grounds for Suspension
The previous rule provided a definition of ``substantial
violation'' identical to the use of that term in 45 CFR part 1606. The
term is deleted in favor of the new cross-reference to definitions in
part 1606. There are no substantive changes to the definition.
Similarly the term ``LSC requirements'' replaces the list of LSC
requirements that appeared in this rule and in other places in the
regulations. It is defined in 45 CFR part 1618 and cross-referenced in
45 CFR part 1606.
1623.4 Suspension Procedures
In response to comments regarding the need for appeals of
suspensions, LSC is adding an appeals process for suspensions that last
longer than thirty days. The process is specified in Sec. 1623.4(a)
and (h). This addition preserves the previous rule's requirements for
commencing suspensions based on notice and an informal meeting and
continuing those suspensions for up to thirty days without further
appeal. If the suspension lasts longer than thirty days, then the
recipient may appeal to the LSC President. The appeal procedures are
based on the new part 1606 limited reduction of funding appeal
procedures, which are in turn based on the part 1630 disallowed cost
appeal procedures. The discussion of those procedures in part 1606
applies equally to this section. Unlike part 1606 actions, the
suspension will continue pending the appeal. The final rule requires
that LSC issue a suspension decision within fifteen calendar days of
receipt of the appeal in order to resolve the appeal promptly.
New Sec. 1623.4(d) and (e) are copied from the revised informal
conference procedures in 45 CFR part 1606. That language emphasizes
seeking settlement or compromise and provides that the informal meeting
can be conducted by the same employee who issued the proposed
determination, or another senior LSC employee.
Section 1623.4(k), regarding audit-based suspensions, is updated to
state that the new appeal process does not apply to audit-based
suspensions, preserving the previous rule's requirements.
1623.6 Interim Funding
A technical change is made to Sec. 1623.6(b) to state that
suspended funds will be ``released'' at the end of the suspension
period rather than ``returned.''
Promulgation of Regulations
List of Subjects
45 CFR Part 1606
Administrative practice and procedure, Grant programs-law, Legal
services.
45 CFR Part 1614
Grant programs-law, Legal services, Reporting and recordkeeping
requirements.
45 CFR Part 1618
Grant programs-law, Legal services.
45 CFR Part 1623
Administrative practice and procedure, Grant programs-law, Legal
services.
For the reasons set forth above, and under the authority of 42
U.S.C. 2996g(3), LSC proposes to amend 45 CFR chapter XVI as follows:
0
1. 1. Revise part 1606 to read as follows:
PART 1606--TERMINATION, LIMITED REDUCTION OF FUNDING, AND DEBARMENT
PROCEDURES; RECOMPETITION
Sec.
1606.1 Purpose.
1606.2 Definitions.
1606.3 Grounds for a termination or a limited reduction of funding.
1606.4 Grounds for debarment.
1606.5 Procedures.
1606.6 Preliminary determination and final decision.
1606.7 Corrective action, informal conference, review of written
materials, and final decision.
1606.8 Hearing for a termination or debarment.
1606.9 Recommended decision for a termination or debarment.
1606.10 Final decision for a termination, debarment, or limited
reduction of funding.
1606.11 Qualifications on hearing procedures.
1606.12 Time and waiver.
1606.13 Interim and termination funding; reprogramming,
implementation.
1606.14 Recompetition.
Authority: 42 U.S.C. 2996e(b)(1), 2996f(a)(3), and 2996f(d);
Pub. L. 105-119, Title V, Secs. 501(b) and (c), 502, 503, and 504,
111 Stat. 2440, 2510-12; Pub. L. 104-134, Title V, Sec. 503(f), 110
Stat. 1321, 1321-53.
Sec. 1606.1 Purpose.
The purpose of this rule is to:
(a) Ensure that the Corporation is able to take timely action to
deal with incidents of substantial noncompliance by recipients with a
provision of the LSC Act, the Corporation's appropriations act or other
law
[[Page 10094]]
applicable to LSC funds, a Corporation rule, regulation, guideline or
instruction, or the terms and conditions of the recipient's grant or
contract with the Corporation;
(b) Provide timely and fair due process procedures, proportional to
the proposed action, when the Corporation has made a preliminary
decision to terminate a recipient's LSC grant or contract, to debar a
recipient from receiving future LSC awards of financial assistance, or
to impose a limited reduction in funding; and
(c) Ensure that scarce funds are provided to recipients who can
provide the most effective and economical legal assistance to eligible
clients.
(d) None of the following actions are subject to the procedures or
requirements of this part:
(1) A reduction of funding required by law, including but not
limited to a reduction in, or rescission of, the Corporation's
appropriation that is apportioned among all recipients of the same
class in proportion to their current level of funding;
(2) A reduction or deduction of LSC support for a recipient under
the Corporation's fund balance regulation at 45 CFR part 1628;
(3) A recovery of disallowed costs under the Corporation's
regulation on costs standards and procedures at 45 CFR part 1630;
(4) A withholding of funds pursuant to the Corporation's Private
Attorney Involvement rule at 45 CFR part 1614.
Sec. 1606.2 Definitions.
For the purposes of this part:
Corporation, when used to refer to decisions by the Legal Services
Corporation, means that those decisions are made by an individual
acting with a seniority level at, or equivalent to, the level of an
office director or higher.
Days shall mean the number of calendar days as determined by the
rules for computing time in the Federal Rules of Civil Procedure, Rule
6, except that computation of business days shall exclude Saturdays,
Sundays, and legal holidays (as defined in those rules).
Debarment means an action taken by the Corporation to exclude a
recipient from receiving an additional award of financial assistance
from the Corporation or from receiving additional LSC funds from
another recipient of the Corporation pursuant to any other means,
including a subgrant, subcontract or similar agreement, for the period
of time stated in the final debarment decision.
Funding term means the maximum time period for an award or awards
of financial assistance under section 1006(a)(1)(A) of the LSC Act
provided by the Corporation to a recipient selected pursuant the
competition requirements at 45 CFR part 1634. LSC may award grants or
contracts for a period of the entire funding term or for shorter
periods that may be renewed or extended up to the funding term.
Knowing and willful means that the recipient had actual knowledge
that its action or lack thereof constituted a violation and despite
such knowledge, undertook or failed to undertake the action, as the
case may be.
Limited reduction of funding means a reduction of funding of less
than five percent of a recipient's current level of financial
assistance imposed by the Corporation in accordance with the procedures
and requirements of this part. A limited reduction of funding will
affect only the recipient's current year's funding.
LSC requirements means the same as that term is defined in 45 CFR
Part 1618.
Receipt of materials shall mean that the materials were sent to the
normal address for physical mail, email, or fax transmission, and there
is reliable secondary confirmation of delivery. For physical delivery,
confirmation may be provided through tracking information from the
delivery service. For other forms of delivery, confirmation may be
provided through a document such as a confirmation email or a fax sent
from an authorized person at the recipient. Receipt of materials by the
LSC recipient or the Corporation is sufficient for the running of
applicable time periods. Proof of receipt by the Chair of the governing
body is not necessary unless delivery to the recipient itself cannot be
reasonably accomplished.
Recipient means the same as the term is defined in 45 CFR Part
1600.
Substantial noncompliance means either a substantial violation, as
defined in this part, or a substantial failure, as indicated at Sec.
1606.3(a) of this part.
Substantial violation means a violation that merits action under
this part based on consideration of the following criteria by the
Corporation:
(1) The number of restrictions or requirements violated;
(2) Whether the violation represents an instance of noncompliance
with a substantive statutory or regulatory restriction or requirement,
rather than an instance of noncompliance with a non-substantive
technical or procedural requirement;
(3) The extent to which the violation is part of a pattern of
noncompliance with LSC requirements or restrictions;
(4) The extent to which the recipient failed to take action to cure
the violation when it became aware of the violation; and
(5) Whether the violation was knowing and willful.
Termination means that a recipient's level of financial assistance
under its grant or contract with the Corporation will be reduced in
whole or in part in the amount of five percent or greater prior to the
expiration of the funding term of a recipient's current grant or
contract. A partial termination will affect only the level of funding
for the current grant year, unless the Corporation provides otherwise
in the final decision.
Violation means a violation by the recipient of the LSC
requirements.
Sec. 1606.3 Grounds for a termination or a limited reduction of
funding.
(a) A grant or contract may be terminated in whole or in part when:
(1) There has been a substantial violation by the recipient, and
the violation occurred less than 5 years prior to the date the
recipient receives a preliminary determination pursuant to Sec.
1606.6(a) of this part; or
(2) There has been a substantial failure by the recipient to
provide high quality, economical, and effective legal assistance, as
measured by generally accepted professional standards, the provisions
of the LSC Act or LSC appropriations, or a rule, regulation, including
45 CFR 1634.9(a)(2), or guidelines or instructions issued by the
Corporation.
(b) The Corporation may impose a limited reduction of funding when
the Corporation determines that there has been a substantial violation
by the recipient but that termination of the recipient's grant, in
whole or in part, is not warranted, and the violation occurred less
than 5 years prior to the date the recipient receives a preliminary
determination pursuant to Sec. 1606.6(a) of this part.
(c) A determination of whether there has been a substantial
violation for the purposes of this part, and the magnitude of any
termination, in whole or in part, or any limited reduction in funding,
shall be based on consideration of the criteria set forth in the
definition of ``substantial violation'' in Sec. 1606.2 of this part.
Sec. 1606.4 Grounds for debarment.
(a) The Corporation may debar a recipient, on a showing of good
cause, from receiving an additional award of financial assistance from
the Corporation.
(b) As used in paragraph (a) of this section, ``good cause'' means:
[[Page 10095]]
(1) A termination of financial assistance to the recipient pursuant
to part 1640 of this chapter;
(2) A termination of financial assistance in whole of the most
recent grant or contract of financial assistance;
(3) The substantial violation by the recipient of the restrictions
delineated in Sec. 1610.2(a) and (b) of this chapter, provided that
the violation occurred within 5 years prior to the receipt of the
debarment notice by the recipient;
(4) Knowing entry by the recipient into:
(i) Any agreement or arrangement, including, but not limited to, a
subgrant, subcontract, or other similar agreement, with an entity
debarred by the Corporation during the period of debarment if so
precluded by the terms of the debarment; or
(ii) An agreement for professional services with an independent
public accountant or other auditor debarred by the Corporation during
the period of debarment if so precluded by the terms of the debarment;
or
(5) The filing of a lawsuit by a recipient, provided that the
lawsuit:
(i) Was filed on behalf of the recipient as plaintiff, rather than
on behalf of a client of the recipient;
(ii) Named the Corporation, or any agency or employee of a Federal,
State, or local government as a defendant;
(iii) Seeks judicial review of an action by the Corporation or such
government agency that affects the recipient's status as a recipient of
Federal funding, except for a lawsuit that seeks review of whether the
Corporation or agency acted outside of its statutory authority or
violated the recipient's constitutional rights; and
(iv) Was initiated after December 23, 1998.
Sec. 1606.5 Procedures.
(a) Before any final action is taken under this part, the recipient
will be provided notice and an opportunity to be heard as set out in
this part.
(b) Prior to a preliminary determination involving a limited
reduction of funding, the Corporation shall designate either the
President or another senior Corporation employee to conduct any final
review that is requested pursuant to Sec. 1606.10 of this part. The
Corporation shall ensure that the person so designated has had no prior
involvement in the proceedings under this part so as to meet the
criterion set out in Sec. 1606.10(d) of this part.
Sec. 1606.6 Preliminary determination and final decision.
(a) When the Corporation has made a preliminary determination of
one or more of the following, the Corporation shall issue a written
notice to the recipient and the Chair of the recipient's governing
body: that a recipient's grant or contract should be terminated, that a
limited reduction of funding shall be imposed, or that a recipient
should be debarred. The notice shall:
(1) State the substantial noncompliance that constitutes the
grounds for the proposed action;
(2) Identify, with reasonable specificity, any facts or documents
relied upon as justification for the proposed action;
(3) Inform the recipient of the proposed amount and proposed
effective date for the proposed action;
(4) Advise the recipient of its procedural rights for review of the
proposed action under this part;
(5) Inform the recipient of its right to receive interim funding
pursuant to Sec. 1606.13 of this part;
(6) Specify what, if any, corrective action the recipient can take
to avoid the proposed action; and
(7) Summarize prior attempts, if any, for resolution of the
substantial noncompliance.
(b) If the recipient does not request review, as provided for in
this part, before the relevant time limits have expired, then the
Corporation may issue a final decision to the recipient. No further
appeal or review will be available under this part.
Sec. 1606.7 Corrective action, informal conference, review of written
materials, and final decision.
(a) If the Corporation proposes a corrective action in the
preliminary determination pursuant to Sec. 1606.6(a)(6) of this part,
then the recipient may accept and implement the corrective action, in
lieu of an informal conference or submission of written materials under
this section, subject to the following requirements:
(1) Within 10 business days of receipt of the preliminary
determination, the recipient may submit a draft compliance agreement to
accept the terms of the proposed corrective action, which must include
an implementation plan and timeline;
(2) If the Corporation approves the draft compliance agreement,
including any modifications suggested by the recipient or the
Corporation, then it shall be memorialized in a final compliance
agreement signed by the Corporation and the recipient, which shall stay
these proceedings;
(3) If the recipient completes the terms of the written compliance
agreement in a time and manner that is satisfactory to the Corporation,
then the Corporation shall withdraw the preliminary determination; and
(4) If the Corporation determines at any time that the recipient
has not presented an acceptable draft compliance agreement, or has not
fulfilled any terms of the final compliance agreement, then the
Corporation shall notify the recipient in writing. Within 15 calendar
days of that notice, the Corporation shall modify or affirm the
preliminary determination as a draft final decision. The draft final
decision shall summarize these attempts at resolution. The draft final
decision need not engage in a detailed analysis of the failure to
resolve the substantial noncompliance.
(b) A recipient may submit written materials in opposition to the
preliminary determination, request an informal conference, or both, as
follows:
(1) For terminations or debarments, within 30 calendar days of
receipt of the preliminary determination; or
(2) For limited reductions in funding, within 10 business days of
receipt of the preliminary determination.
(c) Within 5 business days of receipt of a request for a
conference, the Corporation shall notify the recipient of the time and
place the conference will be held. Some or all of the participants in
the conference may attend via telephone, unless the recipient requests
an in-person meeting between the Corporation and at least one
representative of the recipient. If the recipient requests an in-person
meeting, then other participants may attend via telephone. Alternative
means of participation other than the telephone are permissible at the
sole discretion of the Corporation.
(d) The informal conference shall be conducted by the Corporation
employee who issued the preliminary determination or any other
Corporation employee with a seniority level equivalent to the level of
an office director or higher.
(e) At the informal conference, the Corporation and the recipient
shall both have an opportunity to state their case, seek to narrow the
issues, explore the possibilities of settlement or compromise including
implementation of corrective actions, and submit written materials.
(f) If an informal conference is conducted or written materials are
submitted in opposition to the proposed determination by the recipient,
or both, the Corporation shall consider any written materials and any
oral presentation or written materials submitted by the recipient at an
informal conference. Based on any of these materials or the informal
[[Page 10096]]
conference, or both, the Corporation shall modify, withdraw, or affirm
the preliminary determination through a draft final decision in
writing, which shall be provided to the recipient within the later of
15 calendar days after the conclusion of the informal conference or
after the recipient of written materials in opposition to the proposed
determination (when no informal conference is requested). Except for
decisions to withdraw the preliminary determination, the draft final
decision shall include a summary of the issues raised in the informal
conference and presented in any written materials. The draft final
decision need not engage in a detailed analysis of all issues raised.
(g) If the recipient does not request further process, as provided
for in this part, then, after the relevant time limits have expired,
the Corporation shall notify the recipient that no further appeal or
review will be available under this part and may proceed to issue the
final decision.
Sec. 1606.8 Hearing for a termination or debarment.
(a) For terminations or debarments only, the recipient may make a
written request for a hearing within the later of: 30 calendar days of
its receipt of the preliminary determination, or 15 calendar days of
receipt of the draft final decision issued under Sec. 1606.7 of this
part, as the case may be.
(b) Within 10 business days after receipt of a request for a
hearing, the Corporation shall notify the recipient in writing of the
date, time, and place of the hearing and the names of the hearing
officer and of the attorney who will represent the Corporation. The
time, date, and location of the hearing may be changed upon agreement
of the Corporation and the recipient.
(c) A hearing officer shall be appointed by the President or
designee and may be an employee of the Corporation. The hearing officer
shall not have been involved in the current termination or debarment
action, and the President or designee shall determine that the person
is qualified to preside over the hearing as an impartial decision
maker. An impartial decision maker is a person who has not formed a
prejudgment on the case and does not have a pecuniary interest or
personal bias in the outcome of the proceeding.
(d) The hearing shall be scheduled to commence at the earliest
appropriate date, ordinarily not later than 30 calendar days after the
Corporation receives the notice required by paragraph (b) of this
section.
(e) The hearing officer shall preside over and conduct a full and
fair hearing, avoid delay, maintain order, and insure that a record
sufficient for full disclosure of the facts and issues is maintained.
(f) The hearing shall be open to the public unless, for good cause
and the interests of justice, the hearing officer determines otherwise.
(g) The Corporation and the recipient shall be entitled to be
represented by counsel or by another person.
(h) At the hearing, the Corporation and the recipient each may
present its case by oral or documentary evidence, conduct examination
and cross-examination of witnesses, examine any documents submitted,
and submit rebuttal evidence.
(i) The hearing officer shall not be bound by the technical rules
of evidence and may make any procedural or evidentiary ruling that may
help to insure full disclosure of the facts, to maintain order, or to
avoid delay. Irrelevant, immaterial, repetitious or unduly prejudicial
matter may be excluded.
(j) Official notice may be taken of published policies, rules,
regulations, guidelines, and instructions of the Corporation, of any
matter of which judicial notice may be taken in a Federal court, or of
any other matter whose existence, authenticity, or accuracy is not open
to serious question.
(k) A stenographic or electronic record shall be made in a manner
determined by the hearing officer, and a copy shall be made available
to the recipient at no cost.
(l) The Corporation shall have the initial burden to show grounds
for a termination or debarment. The burden of persuasion shall then
shift to the recipient to show by a preponderance of evidence on the
record that its funds should not be terminated or that it should not be
debarred.
Sec. 1606.9 Recommended decision for a termination or debarment.
(a) For termination or debarment hearings under Sec. 1606.8 of
this part, within 20 calendar days after the conclusion of the hearing,
the hearing officer shall issue a written recommended decision to the
recipient and the Corporation, which may:
(1) Terminate financial assistance to the recipient commencing as
of a specific date;
(2) Impose a limited reduction of funding commencing as of a
specific date;
(3) Continue the recipient's current level of financial assistance
under the grant or contract, subject to any modification or condition
that may be deemed necessary on the basis of information adduced at the
hearing; or
(4) Debar the recipient from receiving an additional award of
financial assistance from the Corporation.
(b) The recommended decision shall contain findings of the
significant and relevant facts and shall state the reasons for the
decision. Findings of fact shall be based solely on the record of, and
the evidence adduced at the hearing or on matters of which official
notice was taken.
Sec. 1606.10 Final decision for a termination, debarment, or limited
reduction of funding.
(a) If neither the Corporation nor the recipient requests review by
the President of a draft final decision pursuant to Sec. 1606.7 of
this part or a recommended decision pursuant to Sec. 1606.9, as
provided for in this part, within 10 business days after receipt by the
recipient, then the Corporation shall issue to the recipient a final
decision containing either the draft final decision or the recommended
decision, as the case may be. No further appeal or review will be
available under this part.
(b) The recipient or the Corporation may seek review by the
President of a draft final decision or a recommended decision. A
request shall be made in writing within 10 business days after receipt
of the draft final decision or recommended decision by the party
seeking review and shall state in detail the reasons for seeking
review.
(c) The President's review shall be based solely on the
administrative record of the proceedings, including the appeal to the
President, and any additional submissions, either oral or in writing,
that the President may request. A recipient shall be given a copy of,
and an opportunity to respond to, any additional submissions made to
the President. All submissions and responses made to the President
shall become part of the administrative record. Upon request, the
Corporation shall provide a copy of the administrative record to the
recipient.
(d) For an appeal of a draft final decision involving a limited
reduction of funding pursuant to Sec. 1606.7 of this part (for which
there is no right to a hearing under Sec. 1606.8 of this part) the
President may not review the appeal if the President has had prior
involvement in the proceedings under this part. If the President cannot
review the appeal, or the President chooses not to do so, then the
appeal shall be reviewed by either the individual designated to do so
pursuant to Sec. 1606.5(b) of this part, or by another senior
Corporation employee designated by the President who has not
[[Page 10097]]
had prior involvement in the proceedings under this part.
(e) As soon as practicable after receipt of the request for review
of a draft final decision or a recommended decision, but not later than
30 calendar days thereafter, the President or designee shall adopt,
modify, or reverse the draft final decision or the recommended
decision, or direct further consideration of the matter. In the event
of modification or reversal of a recommended decision pursuant to Sec.
1606.9 of this part, this decision shall conform to the requirements of
Sec. 1606.9(b) of this part.
(f) The decision of the President or designee under this section
shall become final upon receipt by the recipient.
Sec. 1606.11 Qualifications on hearing procedures.
(a) Except as modified by paragraph (c) of this section, the
hearing rights set out in Sec. Sec. 1606.6 through 1606.10 of this
part shall apply to any action to debar a recipient or to terminate a
recipient's funding.
(b) The Corporation may simultaneously take action to debar and
terminate a recipient within the same hearing procedure that is set out
in Sec. Sec. 1606.6 through 1606.10 of this part. In such a case, the
same hearing officer shall oversee both the termination and debarment
actions in the same hearing.
(c) If the Corporation does not simultaneously take action to debar
and terminate a recipient under paragraph (b) of this section and
initiates a debarment action based on a prior termination under Sec.
1606.4(b)(1) or (2), the hearing procedures set out in Sec. 1606.6
through 1606.10 of this part shall not apply. Instead:
(1) The President shall appoint a hearing officer, as described in
Sec. 1606.8(c), to review the matter and make a written recommended
decision on debarment.
(2) The hearing officer's recommended decision shall be based
solely on the information in the administrative record of the
termination proceedings providing grounds for the debarment and any
additional submissions, either oral or in writing, that the hearing
officer may request. The recipient shall be given a copy of and an
opportunity to respond to any additional submissions made to the
hearing officer. All submissions and responses made to the hearing
officer shall become part of the administrative record.
(3) If neither party appeals the hearing officer's recommended
decision within 10 business days of receipt of the recommended
decision, the decision shall become final and the final decision shall
be issued by the Corporation to the recipient within 5 business days.
(4) Either party may appeal the recommended decision to the
President who shall review the matter and issue a final written
decision pursuant to Sec. 1606.9(b).
(d) All final debarment decisions shall state the effective date of
the debarment and the period of debarment, which shall be commensurate
with the seriousness of the cause for debarment but shall not be for
longer than 6 years.
(e) The Corporation may reverse a debarment decision upon request
for the following reasons:
(1) Newly discovered material evidence;
(2) Reversal of the conviction or civil judgment upon which the
debarment was based;
(3) Bona fide change in ownership or management of a recipient;
(4) Elimination of other causes for which the debarment was
imposed; or
(5) Other reasons the Corporation deems appropriate.
Sec. 1606.12 Time and waiver.
(a) Except for the 6-year time limit for debarments in Sec.
1606.11(d) of this part, any period of time provided in these rules
may, upon good cause shown and determined, be extended in writing:
(1) By the Corporation, unless a hearing officer has been
appointed;
(2) By the hearing officer, until the recommended decision has been
issued; or
(3) By the President at any time.
(b) Failure by the Corporation to meet a time requirement of this
part does not preclude the Corporation from terminating a recipient's
grant or contract with the Corporation or imposing a limited reduction
of funding.
Sec. 1606.13 Interim and other funding, reprogramming,
implementation.
(a) Pending the completion of termination or limited reduction of
funding proceedings under this part, the Corporation shall provide the
recipient with the level of financial assistance provided for under its
current grant or contract for financial assistance with the
Corporation.
(b) After a final decision has been made to terminate a recipient's
grant or contract or to impose a limited reduction of funding, the
recipient loses all rights to the terminated or reduced funds.
(c) After a final decision has been made to terminate a recipient's
grant or contract, the Corporation may authorize closeout or transition
funding, or both, if necessary to enable the recipient to close or
transfer current matters in a manner consistent with the recipient's
professional responsibilities to its present clients.
(d) The Corporation has sole discretion to determine the manner in
which the final decision is implemented. The Corporation's discretion
includes, but is not limited to the decision to pro-rate the amount of
funds reduced over the remaining disbursements in the funding term or
deduct the sum in a single disbursement, or any other method the
Corporation deems appropriate.
(e) Funds recovered by the Corporation pursuant to a termination or
limited reduction of funding shall be reallocated by the Corporation
for basic field purposes at its sole discretion.
Sec. 1606.14 Recompetition.
After a final decision has been issued by the Corporation
terminating financial assistance to a recipient in whole for any
service area, the Corporation shall implement a new competitive bidding
process for the affected service area. Until a new recipient has been
awarded a grant pursuant to such process, the Corporation shall take
all practical steps to ensure the continued provision of legal
assistance in the service area pursuant to Sec. 1634.11 of this part.
PART 1614--PRIVATE ATTORNEY INVOLVEMENT
0
2. The authority citation for part 1614 continues to read as follows:
Authority: Sec. 1007(a)(2)(C) and sec. 1007(a)(3); (42 U.S.C.
2996f(a)(2)(C) and 42 U.S.C. 2996f(a)(3)).
0
3. Amend Sec. 1614.7 by revising paragraph (b) to read as follows:
Sec. 1614.7 Failure to comply.
* * * * *
(b) The withholding of funds under this section shall not be
construed as any action under 45 CFR part 1606.
* * * * *
0
4. Revise part 1618 to read as follows:
PART 1618--ENFORCEMENT PROCEDURES
Sec.
1618.1 Purpose.
1618.2 Definition.
1618.3 Complaints.
1618.4 Duties of recipients.
1618.5 Duties of the Corporation.
Authority: 42 U.S.C. 2996e(b)(1), 2996e(b)(2), 2996e(b)(5),
2996f(a)(3), 2996f(d), and 2996g(e).
[[Page 10098]]
Sec. 1618.1 Purpose.
In order to ensure uniform and consistent interpretation and
application of the provisions of the LSC Act, the Corporation's
appropriations act or other law applicable to LSC funds, a Corporation
rule, regulation, guideline or instruction, or the terms and conditions
of the recipient's grant or contract with the Corporation, and to
prevent a question of whether these requirements have been violated
from becoming an ancillary issue in any case undertaken by a recipient,
this part establishes a systematic procedure for enforcing compliance
with them.
Sec. 1618.2 Definitions.
LSC requirements means the provisions of the LSC Act, the
Corporation's appropriations act or other law applicable to LSC funds,
a Corporation rule, regulation, guideline or instruction, or the terms
or conditions of the recipient's grant or contract with the
Corporation.
Violation means a violation by the recipient of the LSC
requirements.
Sec. 1618.3 Complaints.
A complaint of a violation by a recipient or an employee of a
recipient may be made to the recipient, the State Advisory Council, or
the Corporation.
Sec. 1618.4 Duties of recipients.
(a) A recipient shall:
(1) Advise its employees of their responsibilities under the LSC
requirements;
(2) Establish procedures, consistent with the notice and hearing
requirements of section 1011 of the LSC Act, for determining whether an
employee has committed a violation and whether the violation merits a
sanction based on consideration of the totality of the circumstances;
and
(3) Establish a policy for determining the appropriate sanction to
be imposed for a violation, including:
(i) Administrative reprimand if a violation is found to be minor
and unintentional, or otherwise affected by mitigating circumstances;
(ii) Suspension and termination of employment; and
(iii) Other sanctions appropriate for enforcement of the LSC
requirements.
(b) Before suspending or terminating the employment of any person
for a violation, a recipient shall consult the Corporation to ensure
that its interpretation of these requirements is consistent with
Corporation policy.
(c) This section provides procedural requirements between the
Corporation and recipients. It does not create rights for recipient
employees.
Sec. 1618.5 Duties of the Corporation.
(a) Whenever the Corporation learns that there is reason to believe
that a recipient or a recipient's employee may have committed a
violation, the Corporation shall investigate the matter promptly and
attempt to resolve it through informal consultation with the recipient.
Such actions may be limited to determining if the recipient is
sufficiently investigating and resolving the matter itself.
(b) Whenever there is substantial reason to believe that a
recipient has persistently or intentionally violated the LSC
requirements, or, after notice, has failed to take appropriate remedial
or disciplinary action to ensure compliance by its employees with the
LSC requirements, and attempts at informal resolution have been
unsuccessful, the Corporation may proceed to suspend or terminate
financial support of the recipient, or impose a limited reduction in
funding, pursuant to the procedures set forth in parts 1623 and 1606,
or may take other action to enforce compliance with the LSC
requirements.
(c) Whenever the Corporation determines that a recipient has
committed a violation, that corrective actions by the recipient are
required to remedy the violation and/or prevent recurrence of the
violation, and that imposition of special grant conditions are needed
prior to the next grant renewal or competition for the service area,
the Corporation may immediately impose Special Grant Conditions on the
recipient to require completion of those corrective actions.
0
5. Revise part 1623 to read as follows:
PART 1623--SUSPENSION PROCEDURES
Sec.
1623.1 Purpose.
1623.2 Definitions.
1623.3 Grounds for suspension.
1623.4 Suspension procedures.
1623.5 Time extensions and waiver.
1623.6 Interim funding.
Authority: 42 U.S.C. 2996e(b)(1), 2996f(a)(3), and 2996f(d);
Pub. L. 105-119, Title V, Secs. 501(b), 502, and 503, 111 Stat.
2440, 2510-11; Pub. L. 104-134, Title V, Secs. 503(f) and 509(c),
110 Stat. 1321, 1321-53, 1321-58, and 1321-59.
Sec. 1623.1 Purpose.
The purpose of this rule is to:
(a) Ensure that the Corporation is able to take prompt action when
necessary to safeguard LSC funds or to ensure the compliance of a
recipient with applicable provisions of law, or a rule, regulation,
guideline or instruction issued by the Corporation, or the terms and
conditions of a recipient's grant or contract with the Corporation; and
(b) Provide procedures for prompt review that will ensure informed
deliberation by the Corporation when it has made a proposed
determination that financial assistance to a recipient should be
suspended.
Sec. 1623.2 Definitions.
For the purposes of this part the definitions in 45 CFR part 1606
shall apply and also:
Suspension means an action taken during the term of the recipient's
current year's grant or contract with the Corporation that withholds
financial assistance to a recipient, in whole or in part, until the end
of the suspension period pending prompt corrective action by the
recipient or a decision by the Corporation to initiate termination
proceedings.
Sec. 1623.3 Grounds for suspension.
(a) Financial assistance provided to a recipient may be suspended
when the Corporation determines that there has been a substantial
violation by the recipient of the LSC requirements, and the Corporation
has reason to believe that prompt action is necessary to:
(1) Safeguard LSC funds; or
(2) Ensure immediate corrective action necessary to bring a
recipient into compliance with an applicable provision of law, or a
rule, regulation, guideline or instruction issued by the Corporation,
or the terms and conditions of the recipient's grant or contract with
the Corporation.
(b) Financial assistance provided to a recipient may also be
suspended by the Corporation pursuant to a recommendation by the Office
of Inspector General when the recipient has failed to have an
acceptable audit in accordance with the guidance promulgated by the
Corporation's Office of Inspector General.
Sec. 1623.4 Suspension procedures.
(a) Prior to a preliminary determination involving a suspension of
funding, the Corporation shall designate either the President or
another senior Corporation employee to conduct any final review that is
requested pursuant this part. The Corporation shall ensure that the
person so designated has had no prior involvement in the proceedings
under this part so as to meet the criterion of impartiality described
in this section.
(b) When the Corporation has made a proposed determination, based
on the grounds set out in Sec. 1623.3 of this part, that financial
assistance to a recipient should be suspended, the Corporation
[[Page 10099]]
shall serve a written proposed determination on the recipient. The
proposed determination shall:
(1) State the grounds and effective date for the proposed
suspension;
(2) Identify, with reasonable specificity, any facts or documents
relied upon as justification for the suspension;
(3) Specify what, if any, prompt corrective action the recipient
can take to avoid or end the suspension;
(4) Advise the recipient that it may request, within 5 business
days of receipt of the proposed determination, an informal meeting with
the Corporation at which it may attempt to show that the proposed
suspension should not be imposed; and
(5) Advise the recipient that, within 10 business days of its
receipt of the proposed determination and without regard to whether it
requests an informal meeting, it may submit written materials in
opposition to the proposed suspension.
(c) If the recipient requests an informal meeting with the
Corporation, the Corporation shall designate the time and place for the
meeting. The meeting shall occur within 5 business days after the
recipient's request is received.
(d) The informal meeting shall be conducted by the Corporation
employee who issued the preliminary determination or any other
Corporation employee with a seniority level at, or equivalent to, the
level of an office director or higher.
(e) At the informal meeting, the Corporation and the recipient
shall both have an opportunity to state their case, seek to narrow the
issues, explore the possibilities of settlement or compromise including
implementation of corrective actions, and submit written materials.
(f) The Corporation shall consider any written materials submitted
by the recipient in opposition to the proposed suspension and any oral
presentation or written materials submitted by the recipient at an
informal meeting. If, after considering such materials, the Corporation
determines that the recipient has failed to show that the suspension
should not become effective, the Corporation may issue a written final
determination to suspend financial assistance to the recipient in whole
or in part and under such terms and conditions the Corporation deems
appropriate and necessary. The final determination shall include a
summary of the issues raised in the informal conference and presented
in any written materials. The final determination need not engage in a
detailed analysis of all issues raised.
(g) The final determination shall be promptly transmitted to the
recipient in a manner that verifies receipt of the determination by the
recipient, and the suspension shall become effective when the final
determination is received by the recipient or on such later date as is
specified therein.
(h) If a suspension lasts for more than 30 days, then the recipient
may seek review of the suspension by the President. A request may be
made in writing on the thirty-first day or any day thereafter, and
shall state, in detail, the reasons for seeking review.
(1) The President may not review the suspension appeal if the
President has had prior involvement in the suspension proceedings. If
the President cannot review, or the President chooses not to do so,
then the appeal shall be reviewed by either the individual designated
to do so pursuant to Sec. 1623.4(a) of this part, or by another senior
Corporation employee designated by the President who has not had prior
involvement in the suspension proceedings.
(2) The President's review shall be based on the administrative
record of the proceedings, including the appeal to the President, and
any additional submissions, either oral or in writing that the
President may request. A recipient shall be given a copy of, and an
opportunity to respond to, any additional submissions made to the
President. All submissions and responses made to the President shall
become part of the administrative record. Upon request, the Corporation
shall provide a copy of the administrative record to the recipient.
(3) The President shall affirm, modify, or terminate the suspension
through a suspension appeal decision within 15 calendar days of receipt
of the appeal by the Corporation, unless the Corporation and the
recipient agree to a later date.
(i) The Corporation may at any time rescind or modify the terms of
the final determination to suspend and, on written notice to the
recipient, may reinstate the suspension without further proceedings
under this part.
(j) Except as provided in Sec. 1623.4(k) of this part, the total
time of a suspension shall not exceed 90 calendar days, unless the
Corporation and the recipient agree to a continuation of the suspension
without further proceedings under this part.
(k) When the suspension is based on the grounds in Sec. 1623.3(b)
of this part, a recipient's funds may be suspended until an acceptable
audit is completed. No appeal to the President will be available for
audit-based suspensions pursuant to Sec. 1623.3(b).
Sec. 1623.5 Time extensions and waiver.
(a) Except for the time limits in Sec. 1623.4(i) and (j), any
period of time provided in this part may be extended by the Corporation
for good cause. Requests for extensions of time shall be considered in
light of the overall objective that the procedures prescribed by this
part ordinarily shall be concluded within 30 calendar days of the
service of the proposed determination.
(b) Any other provision of this part may be waived or modified by
agreement of the recipient and the Corporation for good cause.
(c) Failure by the Corporation to meet a time requirement of this
part shall not preclude the Corporation from suspending a recipient's
grant or contract with the Corporation.
Sec. 1623.6 Interim funding.
(a) Pending the completion of suspension proceedings under this
part, the Corporation shall provide the recipient with the level of
financial assistance provided for under its current grant or contract
with the Corporation.
(b) Funds withheld pursuant to a suspension shall be released to
the recipient at the end of the suspension period.
Dated: February 6, 2013.
Victor M. Fortuno.
Vice President & General Counsel.
[FR Doc. 2013-03241 Filed 2-12-13; 8:45 am]
BILLING CODE 7050-01-P