Application of Federal Law to LSC Recipients, 5716-5718 [2015-01893]
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Federal Register / Vol. 80, No. 22 / Tuesday, February 3, 2015 / Proposed Rules
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Authority: E.O. 13653, 76 FR 3821, Jan. 21,
2011; E.O. 12866, 58 FR 51735, Oct. 4, 1993.
Dated: January 28, 2015.
Christopher P. Lu,
Deputy Secretary.
[FR Doc. 2015–01916 Filed 2–2–15; 8:45 am]
BILLING CODE 4510–23–P
LEGAL SERVICES CORPORATION
45 CFR Part 1640
Application of Federal Law to LSC
Recipients
Legal Services Corporation.
Notice of proposed rulemaking.
AGENCY:
ACTION:
This proposed rule updates
the Legal Services Corporation (LSC or
Corporation) regulation on the
application of Federal law to LSC
recipients. The FY 1996 appropriations
act (incorporated in LSC’s
appropriations by reference annually
thereafter) subjects LSC recipients to
Federal law relating to the proper use of
Federal funds. This proposed rule will
provide recipients with notice of the
applicable Federal laws each recipient
must agree to be subject to under this
rule, the consequences of a violation of
an applicable Federal law, and where
LSC will maintain the list of applicable
laws.
DATES: Comments must be submitted by
March 5, 2015.
ADDRESSES: Written comments must be
submitted to Stefanie K. Davis, Assistant
General Counsel, Legal Services
Corporation, 3333 K Street NW.,
Washington, DC 20007; (202) 337–6519
(fax) or lscrulemaking@lsc.gov.
Electronic submissions are preferred via
email with attachments in Acrobat PDF
format. Written comments sent to any
other address or received after the end
of the comment period may not be
considered by LSC.
FOR FURTHER INFORMATION CONTACT:
Stefanie K. Davis, Assistant General
SUMMARY:
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Counsel, Legal Services Corporation,
3333 K Street NW., Washington, DC
20007; (202) 295–1563 (phone), (202)
337–6519 (fax), or lscrulemaking@
lsc.gov.
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Background
Section 504(a)(19) of LSC’s FY 1996
appropriations act required LSC
recipients to enter into a contract that
subjected recipients to ‘‘all provisions of
Federal law relating to the proper use of
Federal funds.’’ Sec. 504(a)(19), Public
Law 104–134, title V; 110 Stat. 1321. By
its terms, a violation of Sec. 504(a)(19)
renders any LSC grant or contract null
and void. The provision has been
incorporated by reference into each of
LSC’s annual appropriations act since.
Accordingly, the preamble and text of
this proposed rule continue to refer to
the appropriate section number of the
FY 1996 appropriations act.
The Corporation first issued 45 CFR
part 1640 as an interim rule in 1996 to
implement Sec. 504(a)(19). 61 FR 45760
(Aug. 29, 1996). The interim rule was
put in place to provide immediate
guidance to LSC recipients on
legislation that was already in effect and
carried significant penalties for
noncompliance. Id. In the preamble to
the interim rule, LSC announced that it
was interpreting the statutory phrase
‘‘all provisions of Federal law relating to
the proper use of Federal funds’’ to
mean ‘‘with respect to [a recipient’s]
LSC funds, all programs should be
subject to Federal laws which address
issues of waste, fraud and abuse of
Federal funds.’’ Id. LSC based its
interpretation on legislative history that
appeared to limit the applicable laws to
those dealing with fraud, waste, and
abuse of Federal funds.
In particular, LSC relied on two
congressional documents to support its
interpretation. First, the Corporation
cited to the House Report for H.R. 2076,
which was a prior effort to enact a
provision similar to section 504(a)(19).
The relevant language in that report
stated:
[S]ection 504(20) requires all programs
receiving Federal funds to comply with
Federal statutes and regulations governing
waste, fraud, and abuse of Federal funds.
H. Rep. No. 104–196, 104th Cong., 1st
Sess. 116 (July 1995) (emphasis added).
Second, LSC cited section 5 of H.R.
1806, the Legal Services Reform Act of
1995, which was an unsuccessful
attempt to revise the LSC Act. As an
extension of his remarks introducing
H.R. 1806, Rep. McCollum submitted a
partial summary of the bill, including a
discussion of section 5 entitled
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rljohnson on DSK3VPTVN1PROD with PROPOSALS
‘‘Application of waste, fraud, and abuse
laws.’’ 141 Cong. Rec. E1220–21 (daily
ed. June 9, 1995). Section 5 itself was
titled ‘‘Protection Against Theft and
Fraud,’’ and expressly included
provisions of Title 18 of the U.S. Code
pertaining to criminal offenses
involving the misuse of Federal funds,
as well as provisions of the False Claims
Act. H.R. 1806, 104th Cong., § 5 (1995).
LSC adopted the list of statutes in
section 5, with one exception. Through
negotiation with LSC’s Office of
Inspector General (OIG), LSC
determined that two other criminal
statutes should be included in the list.
61 FR 45760. These statutes prohibit
bribery of public officials and witnesses
and conspiracy to defraud the United
States. Id. at 45761.
Minor changes to the interim rule, not
affecting this list, were made before the
final rule was published in 1997. 62 FR
19424–19427 (April 21, 1997). LSC has
not revised Part 1640 since the
publication of the final rule.
II. LSC’s Consideration of the
Applicable Federal Laws
Since the final rule was published,
Congress has amended or passed other
Federal laws relating to the proper use
of Federal funds. In 2014, OIG raised
concerns that the § 1640.2(a)(1) list of
applicable Federal laws is now underinclusive. As an example, OIG noted the
omission of 18 U.S.C. 666, which
prohibits theft or bribery concerning
programs receiving Federal funds and is
the basis for many of OIG’s referrals to
the Department of Justice for
prosecution. Subsequently, LSC staff
researched other Federal laws
applicable to fraud, waste, and abuse of
Federal funds. The search revealed at
least two other Federal laws relating to
the proper use of Federal funds
currently missing from the § 1640.2(a)(1)
list: 18 U.S.C. 285—Taking or using
papers relating to claims, and 18 U.S.C.
1031—Major fraud against the United
States.
In response to OIG’s concern, LSC
initially considered removing all
statutory references from the regulation
and instead drafting a definition of
‘‘Federal law relating to the proper use
of Federal funds’’ to encompass all the
applicable Federal laws without the
need to specifically list the statutory
references. LSC staff concluded that any
possible definition would either narrow
the scope of Section 504(a)(19) too
much or allow for too broad of an
interpretation of the provision. LSC
subsequently based its options for
revising Part 1640 on two
considerations: whether the list of
‘‘Federal law relating to the proper use
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of Federal funds’’ should remain in Part
1640 or be moved to LSC’s Web site,
and whether the list should remain
exhaustive or be made illustrative. LSC
considered whether each option for
amending the regulation appropriately
balanced the desire for notice to
recipients about the ‘‘Federal law
relating to the proper use of Federal
funds’’ covered by the rule with LSC’s
interest in expeditiously amending the
list of such laws whenever Congress acts
to add, repeal, or amend them.
First, the Corporation considered
adding the missing statutes to the
current § 1640.2(a)(1) list and revising
the language to make it clear that the list
of statutes is merely illustrative. LSC
staff concluded that an illustrative list
would not give recipients adequate
notice about which laws may be
included in this part. Second, LSC
considered simply adding the three
missing statutes to the current list in
§ 1640.2(a)(1) and retaining the list’s
exhaustive nature. LSC staff concluded
that this option would not address OIG’s
concerns about the rule becoming overor under-inclusive as laws governing the
proper use of Federal funds are
amended, added, or repealed. Nor
would this option improve LSC’s ability
to update the list in a timely fashion.
Finally, LSC considered removing all
statutory references from the regulation
and instead referring readers to the LSC
Web site, where LSC would maintain an
easily updated list of applicable
statutes. LSC staff concluded that this
option would allow LSC more flexibility
to update and revise the list of laws in
a timely manner. This option would
also provide recipients with adequate
notice of the applicable laws because
LSC would provide a link to the list in
the annual contractual agreement.
LSC proposes to adopt this last option
using an exhaustive list of statutes. This
approach would require a minor
modification in the contractual
agreement between the Corporation and
its recipients, which currently directs
recipients to the § 1640.2(a)(1) list. The
Corporation refers to this contractual
agreement as the ‘‘LSC Grant
Assurances,’’ and requires recipients to
consent to the agreement annually as a
condition of receiving LSC funding. The
Grant Assurances would be modified to
direct recipients to the Corporation’s
Web site, where the list of applicable
laws would be maintained.
As required by the LSC Rulemaking
Protocol, LSC staff prepared an
explanatory rulemaking options paper,
accompanied by a proposed rule
amending Part 1640. On January 22,
2015, the Committee voted to authorize
LSC to initiate rulemaking and to
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recommend that the Board approve
publishing the proposed rule. On
January 24, 2015, the Board approved
the proposed rule for publication in the
Federal Register for notice and
comment. A section by section analysis
of the proposed rule is provided below.
III. Proposed List of Federal Laws
Relating to the Proper Use of Federal
Funds
LSC proposes to post the following
list of applicable Federal laws relating
to the proper use of Federal funds on
the Corporation’s Web site. The list
would be subject to change as
legislation changes. LSC seeks comment
on both the proposal to remove the list
from Part 1640 and the proposed list of
statutes.
1. 18 U.S.C. 201 (Bribery of Public
Officials and Witnesses);
2. 18 U.S.C. 285 (Taking or using papers
relating to claims);
3. 18 U.S.C. 286 (Conspiracy to Defraud
the Government With Respect to
Claims);
4. 18 U.S.C. 287 (False, Fictitious or
Fraudulent Claims);
5. 18 U.S.C. 371 (Conspiracy to Commit
Offense or Defraud the United States);
6. 18 U.S.C. 641 (Public Money,
Property or Records);
7. 18 U.S.C. 666 (Theft or bribery
concerning programs receiving
Federal funds);
8. 18 U.S.C. 1001 (Statements or Entries
Generally);
9. 18 U.S.C. 1002 (Possession of False
Papers to Defraud the United States);
10. 18 U.S.C. 1031 (Major fraud against
the United States);
11. 18 U.S.C. 1516 (Obstruction of
Federal Audit);
12. 31 U.S.C. 3729 (False Claims);
13. 31 U.S.C. 3730 (Civil Actions for
False Claims), except that actions that
are authorized by 31 U.S.C. 3730(b) to
be brought by persons may not be
brought against the Corporation, any
recipient, subrecipient, grantee, or
contractor of the Corporation, or its
employees;
14. 31 U.S.C. 3731 (False Claims
Procedure);
15. 31 U.S.C. 3732 (False Claims
Jurisdiction); and
16. 31 U.S.C. 3733 (Civil Investigative
Demands).
IV. Proposed Changes
1640.1
Purpose
LSC proposes to revise § 1640.1 to
reflect the changes to § 1640.2.
1640.2
Applicable Federal laws
LSC proposes to delete existing
§ 1640.2(a)(1), redesignate § 1640.2(a)(2)
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as § 1640.2(b), and redesignate existing
§ 1640.2(b)(1) and (2) as § 1640.4(a)(1)
and (b)(1) respectively.
Proposed § 1640.2(a) states that the
Corporation will maintain a public list
of applicable Federal laws. The list will
be maintained on the Corporation’s Web
site. The contract between the
Corporation and the recipient, currently
referred to as the LSC Grant Assurances,
will be revised to provide recipients
with a link to the list.
Removing the list of statutes from the
text of the rule will allow the
Corporation to modify the list as needed
with approval of the Board, rather than
requiring LSC to engage in rulemaking
prior to making any necessary changes.
This change will allow LSC to update
the list more quickly in response to
congressional actions adding, amending,
or repealing ‘‘Federal law relating to the
proper use of Federal funds.’’
Modification of the list with Board
approval does not rule out notice and
comment for any changes, but it also
does not require notice and comment for
any changes. LSC will provide
recipients with notice any time the list
is modified.
Proposed § 1640.2(b) renumbers and
revises existing § 1640.2(a)(2) for clarity
and readability. LSC made no
substantive changes to this subsection.
Recipients are reminded that OIG has
statutory responsibility to investigate
the activities covered by the applicable
Federal laws. Although the contractual
agreement with the Corporation would
apply only to LSC funds, recipients are
further reminded that OIG investigates
reports of possible theft or misuse of a
recipient’s non-LSC funds as well as its
LSC funds and would report any theft
or misuse that is found to the
appropriate Federal or State authorities.
rljohnson on DSK3VPTVN1PROD with PROPOSALS
1640.3 Contractual Agreement
LSC proposes to revise existing
§ 1640.3 to reflect the removal of the list
of Federal law relating to the proper use
of Federal funds from § 1640.2. LSC also
proposes minor editorial changes to the
rule.
1640.4 Violation of Agreement
LSC proposes to redesignate existing
§ 1640.2(b)(1) and (2) as § 1640.4(a) and
(c) respectively. The proposed move
will group each definition in existing
§ 1640.2(b) with each definition’s
consequence for violating the agreement
in existing § 1640.4. LSC made no
substantive changes to this subsection,
but has revised the text for clarity.
List of Subjects in 45 CFR Part 1640
Fraud; Grant programs—law; Legal
services.
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For the reasons set forth in the
preamble, the Legal Services
Corporation proposes to revise 45 CFR
part 1640 to read as follows:
PART 1640—APPLICATION OF
FEDERAL LAW TO LSC RECIPIENTS
Sec.
1640.1
1640.2
1640.3
1640.4
Purpose
Applicable Federal laws
Contractual agreement
Violation of agreement
Authority: 42 U.S.C. 2996g(e).
§ 1640.1
Purpose.
The purpose of this part is to ensure
that recipients use their LSC funds in
accordance with Federal law related to
the proper use of Federal funds. This
part also provides notice to recipients of
the consequences of a violation of such
Federal laws by a recipient, its
employees or board members.
§ 1640.2
Applicable Federal laws.
(a) LSC will maintain a public list of
applicable Federal laws relating to the
proper use of Federal funds on its Web
site and provide recipients with a link
to the list in the contractual agreement.
The list may be modified with the
approval of the Corporation’s Board of
Directors. LSC will provide recipients
with notice when the list is modified.
(b) For the purposes of this part and
the laws referenced in paragraph (a) of
this section, LSC is considered a Federal
agency and a recipient’s LSC funds are
considered Federal funds provided by
grant or contract.
§ 1640.3
Contractual agreement.
As a condition of receiving LSC
funds, a recipient must enter into a
written agreement with the Corporation
that, with respect to its LSC funds, will
subject the recipient to the applicable
Federal laws relating to the proper use
of Federal funds. The agreement must
include a statement that all of the
recipient’s employees and board
members have been informed of such
Federal law and of the consequences of
a violation of such law, both to the
recipient and to themselves as
individuals.
§ 1640.4
have been exhausted or the time for
appeal has expired.
(b) A violation of the agreement by a
recipient based on recipient conduct
will result in the Corporation
terminating the recipient’s LSC grant or
contract without need for a termination
hearing. While an appeal of a conviction
or judgment is pending, the Corporation
may take any necessary steps to
safeguard its funds.
(c) LSC will determine that the
recipient has violated the agreement
described in § 1640.3 when an employee
or board member of the recipient has
been convicted of, or judgment has been
entered against the employee or board
member for, a violation of an applicable
Federal law relating to the proper use of
Federal funds with respect to the
recipient’s grant or contract with LSC,
by the court having jurisdiction of the
matter, and any appeals of the
conviction or judgment have been
exhausted or the time for appeal has
expired, and the Corporation finds that
the recipient has knowingly or through
gross negligence allowed the employee
or board member to engage in such
activities.
(d) A violation of the agreement by
the recipient based on employee or
board member conduct will result in the
Corporation terminating the recipient’s
LSC grant or contract. Prior to
termination, the Corporation will
provide notice and an opportunity to be
heard for the sole purpose of
determining whether the recipient
knowingly or through gross negligence
allowed the employee or board member
to engage in the activities leading to the
conviction or judgment. While an
appeal of a conviction or judgment or a
hearing is pending, the Corporation may
take any necessary steps to safeguard its
funds.
Dated: January 28, 2015.
Stefanie K. Davis,
Assistant General Counsel.
[FR Doc. 2015–01893 Filed 2–2–15; 8:45 am]
BILLING CODE 7050–01–P
Violation of agreement.
(a) LSC will determine that a recipient
has violated the agreement described in
§ 1640.3 when the recipient has been
convicted of, or judgment has been
entered against the recipient for, a
violation of an applicable Federal law
relating to the proper use of Federal
funds with respect to its LSC grant or
contract, by the court having
jurisdiction of the matter, and any
appeals of the conviction or judgment
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]]>Agencies
[Federal Register Volume 80, Number 22 (Tuesday, February 3, 2015)]
[Proposed Rules]
[Pages 5716-5718]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-01893]
=======================================================================
-----------------------------------------------------------------------
LEGAL SERVICES CORPORATION
45 CFR Part 1640
Application of Federal Law to LSC Recipients
AGENCY: Legal Services Corporation.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: This proposed rule updates the Legal Services Corporation (LSC
or Corporation) regulation on the application of Federal law to LSC
recipients. The FY 1996 appropriations act (incorporated in LSC's
appropriations by reference annually thereafter) subjects LSC
recipients to Federal law relating to the proper use of Federal funds.
This proposed rule will provide recipients with notice of the
applicable Federal laws each recipient must agree to be subject to
under this rule, the consequences of a violation of an applicable
Federal law, and where LSC will maintain the list of applicable laws.
DATES: Comments must be submitted by March 5, 2015.
ADDRESSES: Written comments must be submitted to Stefanie K. Davis,
Assistant General Counsel, Legal Services Corporation, 3333 K Street
NW., Washington, DC 20007; (202) 337-6519 (fax) or
lscrulemaking@lsc.gov. Electronic submissions are preferred via email
with attachments in Acrobat PDF format. Written comments sent to any
other address or received after the end of the comment period may not
be considered by LSC.
FOR FURTHER INFORMATION CONTACT: Stefanie K. Davis, Assistant General
Counsel, Legal Services Corporation, 3333 K Street NW., Washington, DC
20007; (202) 295-1563 (phone), (202) 337-6519 (fax), or
lscrulemaking@lsc.gov.
SUPPLEMENTARY INFORMATION:
I. Statutory and Regulatory Background
Section 504(a)(19) of LSC's FY 1996 appropriations act required LSC
recipients to enter into a contract that subjected recipients to ``all
provisions of Federal law relating to the proper use of Federal
funds.'' Sec. 504(a)(19), Public Law 104-134, title V; 110 Stat. 1321.
By its terms, a violation of Sec. 504(a)(19) renders any LSC grant or
contract null and void. The provision has been incorporated by
reference into each of LSC's annual appropriations act since.
Accordingly, the preamble and text of this proposed rule continue to
refer to the appropriate section number of the FY 1996 appropriations
act.
The Corporation first issued 45 CFR part 1640 as an interim rule in
1996 to implement Sec. 504(a)(19). 61 FR 45760 (Aug. 29, 1996). The
interim rule was put in place to provide immediate guidance to LSC
recipients on legislation that was already in effect and carried
significant penalties for noncompliance. Id. In the preamble to the
interim rule, LSC announced that it was interpreting the statutory
phrase ``all provisions of Federal law relating to the proper use of
Federal funds'' to mean ``with respect to [a recipient's] LSC funds,
all programs should be subject to Federal laws which address issues of
waste, fraud and abuse of Federal funds.'' Id. LSC based its
interpretation on legislative history that appeared to limit the
applicable laws to those dealing with fraud, waste, and abuse of
Federal funds.
In particular, LSC relied on two congressional documents to support
its interpretation. First, the Corporation cited to the House Report
for H.R. 2076, which was a prior effort to enact a provision similar to
section 504(a)(19). The relevant language in that report stated:
[S]ection 504(20) requires all programs receiving Federal funds
to comply with Federal statutes and regulations governing waste,
fraud, and abuse of Federal funds.
H. Rep. No. 104-196, 104th Cong., 1st Sess. 116 (July 1995) (emphasis
added). Second, LSC cited section 5 of H.R. 1806, the Legal Services
Reform Act of 1995, which was an unsuccessful attempt to revise the LSC
Act. As an extension of his remarks introducing H.R. 1806, Rep.
McCollum submitted a partial summary of the bill, including a
discussion of section 5 entitled
[[Page 5717]]
``Application of waste, fraud, and abuse laws.'' 141 Cong. Rec. E1220-
21 (daily ed. June 9, 1995). Section 5 itself was titled ``Protection
Against Theft and Fraud,'' and expressly included provisions of Title
18 of the U.S. Code pertaining to criminal offenses involving the
misuse of Federal funds, as well as provisions of the False Claims Act.
H.R. 1806, 104th Cong., Sec. 5 (1995).
LSC adopted the list of statutes in section 5, with one exception.
Through negotiation with LSC's Office of Inspector General (OIG), LSC
determined that two other criminal statutes should be included in the
list. 61 FR 45760. These statutes prohibit bribery of public officials
and witnesses and conspiracy to defraud the United States. Id. at
45761.
Minor changes to the interim rule, not affecting this list, were
made before the final rule was published in 1997. 62 FR 19424-19427
(April 21, 1997). LSC has not revised Part 1640 since the publication
of the final rule.
II. LSC's Consideration of the Applicable Federal Laws
Since the final rule was published, Congress has amended or passed
other Federal laws relating to the proper use of Federal funds. In
2014, OIG raised concerns that the Sec. 1640.2(a)(1) list of
applicable Federal laws is now under-inclusive. As an example, OIG
noted the omission of 18 U.S.C. 666, which prohibits theft or bribery
concerning programs receiving Federal funds and is the basis for many
of OIG's referrals to the Department of Justice for prosecution.
Subsequently, LSC staff researched other Federal laws applicable to
fraud, waste, and abuse of Federal funds. The search revealed at least
two other Federal laws relating to the proper use of Federal funds
currently missing from the Sec. 1640.2(a)(1) list: 18 U.S.C. 285--
Taking or using papers relating to claims, and 18 U.S.C. 1031--Major
fraud against the United States.
In response to OIG's concern, LSC initially considered removing all
statutory references from the regulation and instead drafting a
definition of ``Federal law relating to the proper use of Federal
funds'' to encompass all the applicable Federal laws without the need
to specifically list the statutory references. LSC staff concluded that
any possible definition would either narrow the scope of Section
504(a)(19) too much or allow for too broad of an interpretation of the
provision. LSC subsequently based its options for revising Part 1640 on
two considerations: whether the list of ``Federal law relating to the
proper use of Federal funds'' should remain in Part 1640 or be moved to
LSC's Web site, and whether the list should remain exhaustive or be
made illustrative. LSC considered whether each option for amending the
regulation appropriately balanced the desire for notice to recipients
about the ``Federal law relating to the proper use of Federal funds''
covered by the rule with LSC's interest in expeditiously amending the
list of such laws whenever Congress acts to add, repeal, or amend them.
First, the Corporation considered adding the missing statutes to
the current Sec. 1640.2(a)(1) list and revising the language to make
it clear that the list of statutes is merely illustrative. LSC staff
concluded that an illustrative list would not give recipients adequate
notice about which laws may be included in this part. Second, LSC
considered simply adding the three missing statutes to the current list
in Sec. 1640.2(a)(1) and retaining the list's exhaustive nature. LSC
staff concluded that this option would not address OIG's concerns about
the rule becoming over- or under-inclusive as laws governing the proper
use of Federal funds are amended, added, or repealed. Nor would this
option improve LSC's ability to update the list in a timely fashion.
Finally, LSC considered removing all statutory references from the
regulation and instead referring readers to the LSC Web site, where LSC
would maintain an easily updated list of applicable statutes. LSC staff
concluded that this option would allow LSC more flexibility to update
and revise the list of laws in a timely manner. This option would also
provide recipients with adequate notice of the applicable laws because
LSC would provide a link to the list in the annual contractual
agreement.
LSC proposes to adopt this last option using an exhaustive list of
statutes. This approach would require a minor modification in the
contractual agreement between the Corporation and its recipients, which
currently directs recipients to the Sec. 1640.2(a)(1) list. The
Corporation refers to this contractual agreement as the ``LSC Grant
Assurances,'' and requires recipients to consent to the agreement
annually as a condition of receiving LSC funding. The Grant Assurances
would be modified to direct recipients to the Corporation's Web site,
where the list of applicable laws would be maintained.
As required by the LSC Rulemaking Protocol, LSC staff prepared an
explanatory rulemaking options paper, accompanied by a proposed rule
amending Part 1640. On January 22, 2015, the Committee voted to
authorize LSC to initiate rulemaking and to recommend that the Board
approve publishing the proposed rule. On January 24, 2015, the Board
approved the proposed rule for publication in the Federal Register for
notice and comment. A section by section analysis of the proposed rule
is provided below.
III. Proposed List of Federal Laws Relating to the Proper Use of
Federal Funds
LSC proposes to post the following list of applicable Federal laws
relating to the proper use of Federal funds on the Corporation's Web
site. The list would be subject to change as legislation changes. LSC
seeks comment on both the proposal to remove the list from Part 1640
and the proposed list of statutes.
1. 18 U.S.C. 201 (Bribery of Public Officials and Witnesses);
2. 18 U.S.C. 285 (Taking or using papers relating to claims);
3. 18 U.S.C. 286 (Conspiracy to Defraud the Government With Respect to
Claims);
4. 18 U.S.C. 287 (False, Fictitious or Fraudulent Claims);
5. 18 U.S.C. 371 (Conspiracy to Commit Offense or Defraud the United
States);
6. 18 U.S.C. 641 (Public Money, Property or Records);
7. 18 U.S.C. 666 (Theft or bribery concerning programs receiving
Federal funds);
8. 18 U.S.C. 1001 (Statements or Entries Generally);
9. 18 U.S.C. 1002 (Possession of False Papers to Defraud the United
States);
10. 18 U.S.C. 1031 (Major fraud against the United States);
11. 18 U.S.C. 1516 (Obstruction of Federal Audit);
12. 31 U.S.C. 3729 (False Claims);
13. 31 U.S.C. 3730 (Civil Actions for False Claims), except that
actions that are authorized by 31 U.S.C. 3730(b) to be brought by
persons may not be brought against the Corporation, any recipient,
subrecipient, grantee, or contractor of the Corporation, or its
employees;
14. 31 U.S.C. 3731 (False Claims Procedure);
15. 31 U.S.C. 3732 (False Claims Jurisdiction); and
16. 31 U.S.C. 3733 (Civil Investigative Demands).
IV. Proposed Changes
1640.1 Purpose
LSC proposes to revise Sec. 1640.1 to reflect the changes to Sec.
1640.2.
1640.2 Applicable Federal laws
LSC proposes to delete existing Sec. 1640.2(a)(1), redesignate
Sec. 1640.2(a)(2)
[[Page 5718]]
as Sec. 1640.2(b), and redesignate existing Sec. 1640.2(b)(1) and (2)
as Sec. 1640.4(a)(1) and (b)(1) respectively.
Proposed Sec. 1640.2(a) states that the Corporation will maintain
a public list of applicable Federal laws. The list will be maintained
on the Corporation's Web site. The contract between the Corporation and
the recipient, currently referred to as the LSC Grant Assurances, will
be revised to provide recipients with a link to the list.
Removing the list of statutes from the text of the rule will allow
the Corporation to modify the list as needed with approval of the
Board, rather than requiring LSC to engage in rulemaking prior to
making any necessary changes. This change will allow LSC to update the
list more quickly in response to congressional actions adding,
amending, or repealing ``Federal law relating to the proper use of
Federal funds.'' Modification of the list with Board approval does not
rule out notice and comment for any changes, but it also does not
require notice and comment for any changes. LSC will provide recipients
with notice any time the list is modified.
Proposed Sec. 1640.2(b) renumbers and revises existing Sec.
1640.2(a)(2) for clarity and readability. LSC made no substantive
changes to this subsection.
Recipients are reminded that OIG has statutory responsibility to
investigate the activities covered by the applicable Federal laws.
Although the contractual agreement with the Corporation would apply
only to LSC funds, recipients are further reminded that OIG
investigates reports of possible theft or misuse of a recipient's non-
LSC funds as well as its LSC funds and would report any theft or misuse
that is found to the appropriate Federal or State authorities.
1640.3 Contractual Agreement
LSC proposes to revise existing Sec. 1640.3 to reflect the removal
of the list of Federal law relating to the proper use of Federal funds
from Sec. 1640.2. LSC also proposes minor editorial changes to the
rule.
1640.4 Violation of Agreement
LSC proposes to redesignate existing Sec. 1640.2(b)(1) and (2) as
Sec. 1640.4(a) and (c) respectively. The proposed move will group each
definition in existing Sec. 1640.2(b) with each definition's
consequence for violating the agreement in existing Sec. 1640.4. LSC
made no substantive changes to this subsection, but has revised the
text for clarity.
List of Subjects in 45 CFR Part 1640
Fraud; Grant programs--law; Legal services.
For the reasons set forth in the preamble, the Legal Services
Corporation proposes to revise 45 CFR part 1640 to read as follows:
PART 1640--APPLICATION OF FEDERAL LAW TO LSC RECIPIENTS
Sec.
1640.1 Purpose
1640.2 Applicable Federal laws
1640.3 Contractual agreement
1640.4 Violation of agreement
Authority: 42 U.S.C. 2996g(e).
Sec. 1640.1 Purpose.
The purpose of this part is to ensure that recipients use their LSC
funds in accordance with Federal law related to the proper use of
Federal funds. This part also provides notice to recipients of the
consequences of a violation of such Federal laws by a recipient, its
employees or board members.
Sec. 1640.2 Applicable Federal laws.
(a) LSC will maintain a public list of applicable Federal laws
relating to the proper use of Federal funds on its Web site and provide
recipients with a link to the list in the contractual agreement. The
list may be modified with the approval of the Corporation's Board of
Directors. LSC will provide recipients with notice when the list is
modified.
(b) For the purposes of this part and the laws referenced in
paragraph (a) of this section, LSC is considered a Federal agency and a
recipient's LSC funds are considered Federal funds provided by grant or
contract.
Sec. 1640.3 Contractual agreement.
As a condition of receiving LSC funds, a recipient must enter into
a written agreement with the Corporation that, with respect to its LSC
funds, will subject the recipient to the applicable Federal laws
relating to the proper use of Federal funds. The agreement must include
a statement that all of the recipient's employees and board members
have been informed of such Federal law and of the consequences of a
violation of such law, both to the recipient and to themselves as
individuals.
Sec. 1640.4 Violation of agreement.
(a) LSC will determine that a recipient has violated the agreement
described in Sec. 1640.3 when the recipient has been convicted of, or
judgment has been entered against the recipient for, a violation of an
applicable Federal law relating to the proper use of Federal funds with
respect to its LSC grant or contract, by the court having jurisdiction
of the matter, and any appeals of the conviction or judgment have been
exhausted or the time for appeal has expired.
(b) A violation of the agreement by a recipient based on recipient
conduct will result in the Corporation terminating the recipient's LSC
grant or contract without need for a termination hearing. While an
appeal of a conviction or judgment is pending, the Corporation may take
any necessary steps to safeguard its funds.
(c) LSC will determine that the recipient has violated the
agreement described in Sec. 1640.3 when an employee or board member of
the recipient has been convicted of, or judgment has been entered
against the employee or board member for, a violation of an applicable
Federal law relating to the proper use of Federal funds with respect to
the recipient's grant or contract with LSC, by the court having
jurisdiction of the matter, and any appeals of the conviction or
judgment have been exhausted or the time for appeal has expired, and
the Corporation finds that the recipient has knowingly or through gross
negligence allowed the employee or board member to engage in such
activities.
(d) A violation of the agreement by the recipient based on employee
or board member conduct will result in the Corporation terminating the
recipient's LSC grant or contract. Prior to termination, the
Corporation will provide notice and an opportunity to be heard for the
sole purpose of determining whether the recipient knowingly or through
gross negligence allowed the employee or board member to engage in the
activities leading to the conviction or judgment. While an appeal of a
conviction or judgment or a hearing is pending, the Corporation may
take any necessary steps to safeguard its funds.
Dated: January 28, 2015.
Stefanie K. Davis,
Assistant General Counsel.
[FR Doc. 2015-01893 Filed 2-2-15; 8:45 am]
BILLING CODE 7050-01-P
